Irvine Housing Blog |  |
| Irvine time to sell current inventory ballons to five months Posted: 20 Oct 2011 03:30 AM PDT The Irvine housing market has five months of supply of homes available for sale which represents almost a 20% increase over last month's measure. Irvine Home Address ... 21 UPLAND Irvine, CA 92602 Well I'm takin' my time, I'm just movin' along Houses are taking a long time to sell in Irvine today. It's rare to see this kind of weakness in Irvine. Usually, the constricted supply keeps prices elevated and makes the pace of sales relatively brisk. That is not today's market. Months of supply is a good indicator of macro trends impacting the US housing market. The chart below from Calculated Risk shows the strong correlation between months of supply and the change in price. Months of supply is my least favorite indicator of market action on a local level. It's too volatile, and it says little about the forces underlying the market. The smaller the area, the more volatile it becomes because there are so few data points. Of course, that doesn't mean realtors don't try to use it. Since it is volatile, it's relatively easy to make note of recent changes and blow them out of proportion to create false urgency. Irvine homes take 9% more time to sell By JONATHAN LANSNER -- October 12, 2011
I have a problem with Steve Thomas's math. Rather than use the accepted method of calculation -- inventory divided by closed sales -- Thomas uses opened escrows, a number always larger than closed sales because many properties fall out of escrow. By making the denominator of this fraction larger, he consistently understates the actual months of supply. Closed sales is an easy number to obtain from the MLS data, so there is no reason to use opened escrows over closed sales other than the desire to make the months of supply look smaller. A smaller month of supply number makes the market look better than it really is, and appears to be intended to create false urgency in buyers. Below are the actual calculations of months of supply done properly for Irvine over the last two months by zip code. The volatility of the numbers is apparent. The increase in months of supply from 4.3 to 5.0 is nearly a 20% increase from August to September. Zip codes that were disasters in August were healthy in September and visa versa. The usefulness of this information is suspect. How should someone use this data? Should buyers accelerate their plans or put them off? What about sellers? I doubt many people base their decisions on this data, nor should they. From the post yesterday, 92603 (Turtle Rock, Turtle Ridge and Quail Hill) are the villages showing the most recent weakness, and the months of supply does reinforce that idea. Aggregate numbers are somewhat more accurate because they are less susceptible to small changes in inventory or sales. The aggregate numbers for Irvine also show the increased months of supply caused by hefty inventories and slow sales. However, months of supply is generally going to increase in September and October because sales drop off faster than inventory is removed from the market. It's November when sellers typically give up and hibernate for the winter. The sellers active from mid-November through February are the most motivated. Horrible realtor ad of the dayHome ownership is under attack... or is it that loan owners are not being responsible with their payments? From the video below, you would assume responsible people are being forced out of their homes. The reality is irresponsible people are being forced out of the bank's home.
25%-30% off the high endThe owners of today's featured property paid $1,200,000 in the summer of 2005 using a $959,900 first mortgage and a $100,000 HELOC. The house appreciated for a year, and they increased their mortgage to a $1,000,000 first mortgage and a $96,500 HELOC. It appears they have been dutifully paying the mortgage ever since. However, most people who attempt a short sale aren't paying their mortgage, so they could be delinquent and in shadow inventory (delinquent on the mortgage and no notices filed). In any case, their asking price is 25% less than they paid, and if it sells, they will lose their down payment, and the lender will be out a nice chunk as well. This is the kind of short sale that will take forever to get approved as the lenders will not want to absorb the loss and the borrower will not want to pay the difference. ------------------------------------------------------------------------------------------------------------------------------------------- Irvine House Address ... 21 UPLAND Irvine, CA 92602
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