Orange County, California (Santa Ana, Anaheim, Irvine), the Southern California glamour spot next door to LA, was one of the epicenters of the housing bubble, and now its earth shaking collapse. Given its size and market leadership, we look to it as a bellwether indicator.
We see numerous anecdotal reports in the housing blogs and mainstream media about how bad things are there. Clearly, sellers in Orange County are getting the message. Listing prices are now down 15.4% over the past year, with more than 3/4 of that “adjustment” coming in the past 6 months and more than half coming in the past 3 months. Inventory is going through its usual winter contraction, but remains more than 25% above last year’s. In spite of the price correction, there’s still an inventory problem.
But the situation in Orange County is downright bullish compared to what’s going on in Riverside.
And the inventory correction may be over in both markets. Data for the past week shows big jumps in inventory in both counties, up 1.9% in Orange County, and 5.2% in Riverside. Indeed, 90% of the biggest US metro markets showed inventory increases over the past week, according to Housingtracker.net. Is the downtrend in prices about to get worse?
Looking at the big California Metros, here’s how things have looked over the past year and 6 months.
Not a pretty picture, and with inventories beginning to rise again, one that could get uglier.
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The picture is badly distorted by the artistic device of describing unsold inventory in terms of time, i.e., a six month inventory. When they have a hard time selling anything, how is it that they come up “12 month inventory”. In many cases it will take years, not months. NAR statistics are not to be trusted.
The Real Person!
Author Lee Adler acts as a real person and passed all tests against spambots. Anti-Spam by CleanTalk.
Yeah. The reamtors report months of supply. I report it as the inventory to sales ratio. The number is the same, but the way I look at it is that if the number is 10 it means that only one in 10 listings on the market has sold that month.
So if your house sells, it’s kind of like winning the lottery. 😀
The Real Person!
Author Lee Adler acts as a real person and passed all tests against spambots. Anti-Spam by CleanTalk.
The Reamtors play another trick with the inventory to sales ratio. They annualize the sales rate but not the inventory. That makes the slow months like December look better than the actually are. If the seasonally adjusted rate is 9, the actual rate is probably closer to 10 or 11.
uh-oh
CalculatedRisk
Tuesday, January 29, 2008
CNBC: Bond Insurer Downgrades Could Come Tomorrow
From CNBC: Bond Insurers Face Downgrade Despite Call for Delay
Wall Street bond rating agencies are poised to downgrade two big bond insurers, Ambac Financial Group and MBIA … the downgrades could come as early as Wednesday.
A downgrade would lead to significant write-downs on Wall Street, and more losses for investors, but it’s unclear how large the write-downs will be.