We've now closed our spreadsheet for the month of March, and here we are with the highest inventory figure MBC has reported since its inception a year ago: 97 SFRs west of Sepulveda.
It has been a steep and almost unbridled climb since the first of the year.
As is clear in the graph, we've now substantially exceeded the June 2007 peak of 83.
It could be worse. In the month of March, we saw 7 cancellations, expirations and withdrawals. (Ignoring, of course, the cancellations followed immediately by a bogus re-list.)
We saw 13 sales (new escrows) in this period west of Sepulveda, which also helped tamp down inventory levels. That figure was lower, however, than February's new-deal figure of 19.
--------------------------------------------
UPDATE: We revised the graph, inventory and sales numbers slightly after publication. Turns out we had to re-open the spreadsheets for a moment to make changes.
Monday, March 31, 2008
Inventory Swelling
Subscribe to:
Post Comments (Atom)
64 comments:
i agree with you completely - in most of MB the inventory is exploding upward this would certainly indicate lower prices going forward
however in the walk streets west of highland and south of the pier there is almost no inventory -
i know of a number of people who live in other parts of MB who are looking to move to that neighborhod and there is almost nothing available, even for the people that want to pay the $5 million admission price
mb is a collection of micro markets
Yes, the recent inventory increases are definitely ahead of a normal curve for this time of year. Not to mention, I believe the large number of open houses on weekends to be a barometer of sorts. Anyone that's sold their home knows what a pain in the patooty it is to get your house ready and then disappear for the better part of the day, only to discover when you return that almost nobody came by. I walked through 2 homes in my neighborhood that were not even listed in the TBR and the sign-in sheets were blank along with realtors that seemed pretty depressed. One of them even mentioned that the listing price was, in their opinion, "...definitely too high..." and I would likely be surprised by how a much lower offer might be received.
I disagree with MBW and the above two comments. From someone in the trenches with access to historical data, I offer the following:
Inventory is high, now, and that is certainly contrary to historical trends, where inventory typically drops in the Spring due to an influx of buyers BUT it is not all that high by historical standards. Some perspective:
Available SFRS in MB
Feb, 2008 - 136
Mar, 2008 - 145
2nd Quarter, 2002 - 156 (average)
3rd Quarter, 2006 - 159 (average)
Even prior to 9/11, the number of available SFRs in MB was higher than today. The point is that there was a 4-year period, from mid-2002 to mid-2006, where inventory was lower than historical norms due to excess demand. With demand slackening, the numbers are looking more 'normal', not dire.
Had two open houses this weekend. Traffic was good at both. Not saying the market is strong but there are definitely people out looking for bargains.
7:41am - That is sort of what I thought (though, I don't have access to data) when I read this piece. I guess the caviat is the fact that MBW's data only goes back one year (not much of a sample, MBW...I figured you would do some research and go back a bit to identify trends).
5:54am - Agreed on the micro markets. It is pretty interesting.
7:04am - Does ANYONE really even sign those sign in sheets? I know I don't. I wouldn't use that as a basis for attendance. Granted, I went to zero open houses this weekend, so I couldn't comment on what was going on, but I certainly don't bother signing in, and I imagine most others wouldn't bother either. As for prices, there are definitely some pipe dreams out there!
Thanks to 7:41 for a thoughtful and data-rooted response – partly agreeing and partly disagreeing.
I don't have access to do that kind of research, so it's helpful that you can provide it.
You say the numbers are "normal" not "dire." OK.
7:41
Thanks for supplying data showing the run-up from 2002-2006. That was a period of excess demand. Now, we are in a period of excess supply. Given market economics, prices should drop. Stubborn sellers who are holding firm need to realize they missed the boat.
7:41 here again. Just to clarify, when I say the inventory currently is 'normal', you can deduce from that my conclusion that, based on historical data, the inventory numbers for the 4 years between mid-2002 and mid-2006 were abnormally low.
I've gone to 5 open houses over the last few weeks just to see some specific houses that looked interesting. At each house there were others looking. I never signed in. My impression is that most people don't sign the register.
Also, regarding the south end walkstreets, I mentioned yesterday that 129 6th, a tear down, is back on the market even though a sale closed in February. Also on the market is 132 2nd, a fully built out modern home. These are two prime southend locations.
8:19, it's not excess supply, it's back to the normal level.
Realize also that over 25% of the 94 active listings are new (2007-2008) construction. That's certainly a big chunk and each of them are at the higher end of the price scale. The good ones (good builder / good execution / good location) are still selling. The rest of those spec houses are having a harder time finding a buyer.
Regarding another SE walkstreet house, 341 10th Street, some realtors think it's fairly priced at $3.3 and others say Sellers are reaching given the size of the place (and b/c some of the sf comes from the apartment, which has only so-so finishes). Any buzz on what potential buyers who are going to the open houses are saying? Yes, I'm trying to figure out how to price my own place.....
Re 341 10th
I went there last weekend. The place seemed very depressing and oddly laid out. And NO FIREPLACE. That would be a deal killer for me.
341 10th "depressing?" Really? I found a lot to like.
One oddity, agreed: 2 half-baths downstairs. What else?
Overall I liked the finishes and layout just fine. But it's 2400 sq. ft. of living space now, and who knows what it might be like with the rental unit integrated into the current home? It's priced as one continuous unit but it's not.
Just walked by 129 6th. They changed the sign to "for rent". The word is plans are being developed for a new house.
The level of inventory is very relevant, but it is most useful when compared to the number of properties in escrow. As of January 1, there were 106 properties on the market in MB with 25 in escrow. That equates to approximately 4.24 months of supply. As of today, there is a seemingly staggering 177 properties on the market in MB, but there is also another 50 in escrow. Quick math: 3.54 months supply. More inventory doesn't necessarily equal a slower market. The number of proeprties in escrow increased by 100% in the first quarter! We're not back to the heyday, but let's keep this in perspective. Most markets around the country would love to have a three and a half month supply of homes, but the national average is around a year!
There are several categories of available listings to consider when forming an opinion on the condition of the market in my opinion.
New building inventory has to sell
Sellers moving out of area for jobs have to sell but may get subsidy on sale from company.
Sellers trading up can decide to stay put.
Sellers trading down may have to sell because they can't afford (lost job, whatever) or may be empty nesters waiting to get price.
Point being, to really understand the market you have to understand the motivation of the sellers.
I would also like to see the number of homes on the amrket expressed as a percentage of the overall number of homes in the area. I think MB still has a pretty low % of home on the market.
Having been around a few decades, the last time I saw the market really tank was in the early 90's and the number of listed homes in MB was in the 450 range. We have a ways to go to get there.
When looking at MB west of Sepulveda, you're talking about a very small market where there still appears to have reasonable demand. Until that demand drops or the supply greatly increases this market won't tank.
I'm not saying it won't and it looks like the trend is there but we are a long way from it today.
With the way things are going into escrow and then falling out these days, I would think inventory compared to sales would be the only relevant data to compare.
Regardless of whether it is 3 months supply or 4 months supply, it is refreshing that in Manhattan Beach there is some supply. The increase in supply is also forcing builders to re-think their pricing on properties (see East Manhattan) and also weeds out those sellers simply testing the market.
Will it ever be cheap to live here? No. But at least buying and selling real estate can get back to a time where you can view several properties, weigh the differences in each, and then act, if you choose.
In other words, a normal market...
Anon 11:18,
You make a valid point, sales numbers would be great, but we don't sell the same number of homes every month, so you would have to go off of averages which wwould unfairly skew the higher and lower volume months. When you use properties in escrow, you are dealing with current data. Even if they sometimes fall out of escrow, it is still the most reliable and true measure we have. The percentage of home that fall out of escrow is probably smaller than you think. You just hear more about them because your blogger likes to make them news.
11:14am - very good points. the big diff between the 450 homes for sale then and the 155+ now is, back then, it was driven by job layoffs in aerospace. we dont have that same pressure now. huge difference!
So the rest of the country right now is having downturn do to job layoffs?
I don't think so.
You've constructed a logical fallacy.
A: In the '90's house prices dropped
B: Price drops were accounted for by aereospace jobs.
C: Therefore, house price drops are caused by aereospace layoffs.
And now:
A: Price drops are caused by aereospace layoffs
B: There have been no areaspace layoffs
C: Therefore, there can be no price drops.
Bunk. Why is LA down 16% y-o-y? Why is US down y-o-y? Is it caused by layoffs?
Don't think so.
Normal Schmormal. The MB inventory trend (4 week running avg.) is up over 40% from 2007. At this time last year, listings were trending down before Easter and began to trend slightly up right after, peaking in June. Which by the way is the "normal" trend, if indeed there is a "normal" in residential real estate sales. This year, listings have steadily increased since January.
It's the trend that matters, not the snapshot.
129 6th will tell us what the land is selling for in this neighborhood
i think the last data point is that land in this neighborhood gets 1200 to 1500 a square foot depending on the view and proximity to downtown
let's see how many trees residents really are standing on the sidelines with $5 million ready to build their dream west of highland - i would bet that there are some but not a huge #
When the last bubble burst in real estate, the aerospacers had long since been gentrified/transfered out of the area. They started leaving in the late 70's and were pretty much gone by the time the last bubble began to pop in the early 90's.
Whoa there 12:30, it seems like you're making the weird link to aerospace layoffs. the tanking of the aerospace wasn't the cause of the tanking of the real estate market, but it was a huge influence.
12:32 I think the post said there is a start to a trend but we aren't there (450 active listings) yet.
if you lived in MB in 1992 chances are you knew plenty of people that had to leave - they were forced to leave MB in order to find jobs
i don't see that happening yet - i don't see many people who live in MB today who are offered a job outside the area but can't find a job in the area and just have to move
perhaps i just am not talking to the right people
There was a question a week or so ago about good builders and someone mentioned Mike Davis. There's a new listing today in the 800 block of 18th (American Martyrs area) that's a really nice example of his (at least, it's nice from the curb - I don't know about inside).
Hmm - what we see in Manhattan beach is getting some coverage nationally -
Report: Nation's Gentrified Neighborhoods Threatened By Aristocratization
March 31, 2008 | Issue 44•14
WASHINGTON—According to a report released Tuesday by the Brookings Institution, a Washington-based think tank, the recent influx of exceedingly affluent powder-wigged aristocrats into the nation's gentrified urban areas is pushing out young white professionals, some of whom have lived in these neighborhoods for as many as seven years.
Enlarge Image
Multibillion-dollar castles like this one have been popping up all over Brooklyn.
Maureen Kennedy, a housing policy expert and lead author of the report, said that the enormous treasure-based wealth of the aristocracy makes it impossible for those living on modest trust funds to hold onto their co-ops and converted factory loft spaces.
"When you have a bejeweled, buckle-shoed duke willing to pay 11 or 12 times the asking price for a block of renovated brownstones—and usually up front with satchels of solid gold guineas—hardworking white-collar people who only make a few hundred thousand dollars a year simply cannot compete," Kennedy said. "If this trend continues, these exclusive, vibrant communities with their sidewalk cafés and faux dive bars will soon be a thing of the past."
According to Kennedy, one of the most pressing concerns associated with rapid aristocratization is the drastic transformation of the metropolitan landscape in a way that fails to maximize livable space.
"A three-block section of [Chicago neighborhood] Wicker Park that once accommodated eight families, two vintage clothing stores, a French cleaners, and a gourmet bakery has been completely razed to make way for a private livery stable and carriage house," Kennedy said. "The space is now entirely unusable for affordable upper-income condominium housing. No one can live there except for the odd stable boy or footman who gets permission to sleep in the hayloft."
Many of those affected by the ostentatious reshaping of their once purely upmarket neighborhoods said that they often wish for a return back to the privileged communities they helped to overdevelop just a few years ago.
Bizarre article (2:03).
I'm 12:30. Wasn't me that made the link to areospace, that was 12:19. I was TRYING to refute it. I don't think layoffs have anything with the current downturn, but there seems to be a pervasive myth that is often put out that the only way that we will have a downturn is through areaspace layoffs (sorry, can't seem to spell that word).
I think that that is silly.
History doesn't repeat itself, but it does rhyme.
(Apologies to Mark Twain, who was certainly not talking about Manhattan Beach real estate.)
The above article is a pretty funny April Fool's joke. However, I'm guessing some of the nouveau MB locals who read it might take it seriously enough to fondly hope the same thing happens here before someone rudely points out the sarcasm.
Manhattan Beach will never be in the same class as Beverly Hills, Brentwood, Bel Air, Pacific Palisades, Newport Beach, Laguna, etc., etc., or even Cheviot Hills or North Santa Monica for that matter. It just won't happen, at least not until -
Chevron shuts down and billions are spent cleaning it up
Hyperion shuts down
LAX shuts down
Gardena, Lawndale and Hawthorne are gentrified enough to form a buffer.
Hey...wait a minute...maybe if...nah...
Well, MB may not be in the same class as Brentwood or Bel Air or Beverly Hills (in your opinion)
but if that is true, why the hell do people from all over the world come to spend $1300 a square foot for raw land in the south end walk streets? You do NOT see land prices like that in Brentwood, bel Air or Beverly Hills.
So the people with real cash to put on the barrel obviously think that some parts of MB are not only in that league but actually in a superior league
money talks, and money is changing hands for land at those prices - just check the recent sales
12:30pm/2:17pm - i think you misunderstood my comment. i said it was aerospace last time. this time, we are not having the same job loss pressure. make sense?
If your point is "we don't have pressure from areospace layoffs" it would make sense.
May also be somewhat irrelevant. I've only met three people working in that particular industry that live in Manhattan Beach.
It is probably even irrelevant in an even broader sense. In 2004-2005 time frame when Greenspan was talking about how he only saw "froth", the wisdom at the time that a housing downturn could not ocurr without job losses first happening.
The national downturn has certainly dispelled that myth, however.
The next myth that fell was that this is a "sub-prime" problem. The downturn has moved into Alt-A territory since then.
It now looks like there are three problems:
-Loose underwriting standards >>> people that shouldn't have got loans, did.
-Excessive leverage (more loan than you can afford) >>people borrowed more than they could afford
-Excessive speculation >>> high returns for a few years drove a lot of people into the market.
I know of two realtors that bought "flips" even this year in MB.
I would say that things have not returned to normal yet.
I just caught a new listing that should have squeezed in before March 31 – Erol Flynn's former home at 3421 Manhattan Ave. (per listing). That would raise inventory to 96; I won't redo this graph however.
794 27th Street was just reduced another 100,000(now at 2,299,0000. Down 300,000 now
I know this blog only covers West of Sepulveda, however there have been quite a few mark downs East.
1227 6th is now $1,959,000. They started at 2,298,000.
MB Watcher also mentioned the home on Boundary is now at 2,099,000. I think they started at 2.5 or 2.6.
There just seems to be so many homes that sell for far less then what they are asking. Are these just stubborn sellers or bad advice from agents?
Are sellers still thinking they will get what their neighbor recieved for their house 2 years ago?
not that it is in the 90266, but add to that list a recent new Scharr home in HB (411 28th) was last marked down to 2,199,000 from $2,700,000 and i understand is in escrow at 2,170,000.
more to come...?
Sellers are always the last to acknowledge that the real estate market has slowed. That's why it's often best to be the 2nd or 3rd listing agent on a difficult property in a slow market.
Hey MB Watcher, is that an April Fools joke, or did Errol Flynn really live in MB?
re: Errol Flynn, it was news to me but that's how it appears in the listing. For real.
10:50, why would you divide homes on market by # of homes in escrow to find out the number of months of supply. We are seeing longer escrows right now and lets say most lapse into at least two different calendar months, sometimes three. Please explain as I would think the number of homes that close in a given month would be a better way to look at it.
465 30th just lowered - although only a measly 70k I believe.
Fantastic discussion! Appreciate the civility: Thank you all!
The comments come across as a branding attempt. Yes inventory is higher, but higher than what? Well, it's 43% higher than last March!
If one goes further back, then perhaps it isn't so high -- although in all these numbers, we don't have MLS generated West MB specific numbers -- all the numbers are for MB in toto. Is it possible for someone to verify the high of 450 homes for sale in early 1990's or was it later, in the '93-'94 period, at the worst point in the crunch down? We are at the very beginning of this down-cycle in MB, and one would expect increasing inventory at this stage, just as MBW documents, but not the apex number, which will likely be reached many months into the down cycle.
As others have pointed out, inventory to sales ratios end up being the standard way to tease out the tension between supply and demand. Although it is a snapshot, it's the best we have. For west MB, this ratio for March is at 97 listings (MBW's revised number) / 14 sales = 7 months worth of supply. Case-Schiller does a variant of this, where they have a three month moving average to account for idiosyncratic monthly fluctuations for their sales data. A similar method applied to the inventory/sales ratio for Jan-Mar (256/32) = 8 months supply, so the March number isn't much of an aberration -- its lower than the average for first quarter 2008. (Data courtesy of MBW's spreadsheet)
The logical fallacy about past "lay-offs" is clear -- it is not that lay-offs had no effect, rather, it is that they are not necessary for prices to drop, they may well augment the decline if a recession hits the local region hard. "Lay-offs" have had little causal relationship in the LA region in creating the massive price drops related to a constriction of credit. Assuming current trajectories, the C-S for LA in Feb will likely be in the 18-19% YoY drop.
Easy credit, the prime supporter of irrational prices here and elsewhere no longer exists. Underwriting standards of lenders are unlikely to change in the face of a regionally cliff-diving housing market -- especially because they are unable to unload these mortgages and may tighten in the face of accelerating regional declines. This lack of credit will likely be a substantial component of the progressive grind downwards; likely following a classic sinusoidal descend, slow to start and gathering momentum over time:
http://krugman.blogs.nytimes.com/2007/12/20/charting-the-housing-bubble/
The more one looks at this chart the more prescient it gets as a model to think about what's coming. Note that in the last cycle, the LA region curve intersected the national curve on both the way up and the way down and overshoot the national curve on the way down -- assuming a similar dynamic (and moderate inflation) in this cycle, we have about a 40%+ drop ahead of us -- the red line is a moving target downwards -- coastal regions will likely follow a similar path with a right phase shift and perhaps a "beach" bonus of a slightly shallower drop.
Anon7, While your analysis of supply sounds reasonable, it's just more spin. If you want to look at the number of months supply, you can't just use one section of a city and one type of property. That's like analyzing the level of supply of SFR's on Poinsettia and assuming it is valid across the entire city. Our ciy is made up of SFR's, townhomes, and condos and each represents a VERY important segment of our real estate market...just as important as that space East of Seuplveda with the same zip code.
The most widely accepted method of measuring current supply is to take the number of properties active on the market and divide it by the number in escrow. It's not perfect, but it is the best way to determine TODAY's inventory.
Anon7
Excellent post. Thanks for explaining things so clearly.
Agree w/ 7:39. Anon7's analysis is deeply flawed, mere 'renter' spin.
As of this morning, active inventory, including townhomes and condos, in all of MB is 180, pending is 51. That's 3.5 months supply of available housing. A bear market is defined as a minimum of 6 months available housing. This market is more neutral, with buyers enjoying the advantage in some segments, sellers in others.
Sorry. Can't argue with facts.
Anon7,
You wrote: "We are at the very beginning of this down-cycle in MB, and one would expect increasing inventory at this stage..."
How do you know? What if the security markets rebound? What if foreign investment rises, thereby putting downward pressure on interest rates for the 10 yr and 30 yr bonds?
Your analysis is tied to and teeters on this assumption...
Location, location, location...MB is a micro-market, with a few sub-micro markets (sand, tree, hills, east sepuvelda--townhomes, SFRs, etc.)...rash generalizations about the effect of the general economy and the real estate markets in other areas of the US or SoCal are not necessarily accurate forecasts for MB economy and real estate. Unfortunately, MBC has only been in existence for a year and we lack the data from the 90s to help guide us (even though the factors for that recession are different from the ones we are facing now).
Thank you all for your comments.
7:39: We are speaking here specifically of SFR West of Sepulveda -- the dataset MBW generates, not townhomes, condos... Anyone interested in SFR west of Sepulveda aught to find this data of particular interest. This dataset suggests a 8 month supply of SFR in the West MB -- it's hard to argue with numbers!
10:20: Data supporting this blog is of West MB. The 3.5 month supply is fantasy in this context.
10:27: The universe of imaginable "what ifs" is certainly large. It's an interesting exercise in speculative mental gymnastics! Their significance in an accelerating downward slide, given rapidly worsening national and regional trends with now increasing inventory locally is at best fantasy.
What is driving the cart downhill as we all know, is a severe restriction of credit availability and a near complete reversal to far stricter underwriting standards (Wall St and foreign investment don't change that): there is very little money available to keep inflating the housing bubble folks, its that simple. The bellow which inflated the current bubble has already ground to a halt, the deflation is well underway.
For substantive thought which addresses at some length why market are unlikely to rally and foreigners are staying away from US investments with attendant trends, have a look at:
At the Bundesbank Lecture, Berlin, Germany
Chairman Ben S. Bernanke
September 11, 2007
Global Imbalances: Recent Developments and Prospects
http://www.federalreserve.gov/newsevents/speech/bernanke20070911a.htm
(Btw the dollar reached an all time low against the Euro on 3/31/08 at 1.58)
and
The Current Financial Challenges: Policy and Regulatory Implications
Timothy Geithner, President and Chief Executive Officer, NY Fed
Remarks at the Council on Foreign Relations Corporate Conference 2008, New York City
http://www.newyorkfed.org/newsevents/speeches/2008/gei080306.html
...
So, no -- in the land of the usual talking points, anything is possible! In the world of bounded reality, the dye is essentially cast: We have a bursting bubble nationally and regionally with on the ground effects in MB gradually emerging.
The coming year will likely clarify these trends further.
www.online.wsj.com
U.S. Slump Takes Toll Across Globe
By Marcus Walker in Berlin, James Hookway in Bangkok, Thailand, John Lyons in Mexico City and James T. Areddy in Shanghai
Word Count: 2,129 | Companies Featured in This Article: General Motors
Here's a big lesson of the first international financial crisis of the 21st century: Some old-fashioned economies are weathering the storm better than those that borrowed big to spur growth or those that bet heavily on debt-strapped American consumers.
The U.S., the economy at the center of the turmoil, is dragging down world growth. On Wednesday, Federal Reserve Chairman Ben Bernanke gave his most pessimistic assessment to date of the U.S. economy's outlook, strongly suggesting that a recession is likely. In testimony before Congress, he also said the Fed projects slower global growth over the coming quarters.
The full testimony is at:
http://www.federalreserve.gov/newsevents/testimony/bernanke20080402a.htm
I am re-posting an anonymous comment, since deleted, devoid of an offensive portion (see below):
Anon7 said "Data supporting this blog is of West MB. The 3.5 month supply is fantasy in this context." As usual, he is completely mistaken on his facts (probably couldn't find a relevant cut-and-paste article). As of 10 minutes ago, there are 118 single family homes for sale west of PCH and 32 in escrow, according to the MLS. Simple math (maybe not so simple for him) tells us that works out to a little less than 3.7 months of supply.
----------------------
OK, MBW here again.
The poster also referenced a specific other poster by name rather than using the poster's handle. I don't know if that person was right or wrong about the other poster's name, but if we're going to have anonymous comments, as I think we will, we'll need to agree not to go outing each other (commenters, anyway).
And yes, I'm sure long-gone (?) Huggy would have a field day with this call (Huggy was called many "real" names). I'm glad I don't have to debate her on this.
This dataset suggests a 8 month supply of SFR in the West MB -- it's hard to argue with numbers!
It's not that hard if there's just one data point! Even if your math is correct, since MBC only has one year of data, there's no telling what the supply was two, four, seven, or twenty years ago this month-- even he admitted that. It could have always been what it is now (within his limited area of coverage), every Spring back to 1950!
Susan, the statement about 7-8 months of housing supply west of PCH in MB is incorrect. The actual figure is 3.7 months. Don't take the statements from the bears on this blog seriously - more often than not, they are intended as propaganda rather than fact.
Also, there have been several instances of higher inventory overhang in the past 7 years - a good portion of 2001 prior to 9/11 (and a heavy spike up in months of inventory after 9/11 for obvious reasons), first half of 2002, last quarter of 2006 are some examples.
Susan M.
Your point is well taken -- we certainly cannot compare data across time with an "n" of 1 year and we aren't attempting to do that.
What was stated above is this:
"For west MB, this ratio for March is at 97 listings (MBW's revised number) / 14 sales = 7 months worth of supply. Case-Schiller does a variant of this, where they have a three month moving average to account for idiosyncratic monthly fluctuations for their sales data. A similar method applied to the inventory/sales ratio for Jan-Mar (256/32) = 8 months supply, so the March number isn't much of an aberration -- its lower than the average for first quarter 2008. (Data courtesy of MBW's spreadsheet)"
Now, the contention from Anons above is that we use MLS data (supposedly specific for West MB in one instance, which is news to me b/c this wasn't available previously) for listings and dividing by the "number in escrow" and then calling this quotient a "months of supply".
The slight of hands is transparent.
Escrow is usually more than 30 days and with contingencies, can be much longer, so what is being done is in effect a division by a sales pipeline of several months, falsely skewing the result downward. This result cannot with any integrity be called "months of supply" it is literally the number of listings/ number in escrow (most of which are in escrow for over 31 days).
What's more, MBC's data imho is the more transparent and accurate one -- we all have it, can question it and can see short-term emerging trends.
So we can all reflect on this data: there really are 8 months of supply for SFR in West MB -- taking the average of Jan-March, more opaque, unverifiable MLS data notwithstanding.
the statement about 7-8 months of housing supply west of PCH in MB is incorrect.
It does sound like he screwed up, but I was giving him the benefit of the doubt. Even if he'd been right, though, it's a relatively meaningless number when there's nothing to compare it to. About the only conclusion you could legitimately draw is that the "months of inventory" stat for the area West of Sepulveda is twice as high as for MB as a whole. (Which makes no sense.)
Susan -
Anon7 is an inveterate cut-and-paste 'renter' liar who regularly spews propaganda because, as a MB homeowner wannabe, he thinks it's in his best interest to convey a misimpression of our local RE market.
His logic is flawed because he is comparing two entirely different metrics - the existing inventory as of one day, today, with a previous month's closed sales which is a lagging statistic. The inventory today could be substantially higher than at any time during the past month (could also be lower, which is when he will stop citing this metric). Also, sales could be spiking upward at month's end due to more buyers coming out in the spring, lower interest rates, whatever (name your hypothetical).
The point is pending sales, as of today, and existing inventory, as of today, compares apples to apples .
Leave it to one of MBW's cult to then fall back on the old "I don't have access to the MLS so therefore I'm going to rely totally on MBC's incomplete data" argument. That's why Anon7 is perpetually in the dark.
Just remember, anon7 is an opthalmologist and homeowner wannabe, not someone with any real estate knowledge.
Just remember, anon7 is an opthalmologist [sic] and homeowner wannabe, not someone with any real estate knowledge.
The notion that one must work in the RE industry to be knowledgeable about RE is laughable.
Susan-
I just checked the MLS a minute ago to confirm that there are 118 homes, condos etc available west of PCH and 32 in escrow. This maths out to 3.7 months of inventory and doesn't take into account several homes currently in escrow that have not yet been reported on the MLS. The 7-8 months figure is baloney.
Interestingly, if you look at just single family homes and eliminate all condos and townhouses, the numbers are even more conservative - 99 actives, 29 in escrow or 3.4 months supply.
Ignore the propaganda, focus on the facts and you'll get a more accurate picture of our market. It's the anon7's and the 'waiting to buys' of the world who want to use this blog to dissemble and confuse the uninitiated.
Waiting to Buy. I am not that poster, but I don't think he/she said that you have to be in that industry to know about it. They simply said he is a homeowner wannabe (ie, he doesn't own property) AND he has no knowledge. Where did you read that one has to be in that industry to be knowledgeable?
Maybe the discrepancy in months' supply is coming from one person using all props currently pending and another using just the number going into escrow in a given month.
I believe the usual calculation is the former (all props in escrow at a moment in time vs. all actives at the time). The other metric is interesting, too – it essentially tells you what percentage of a given month's inventory sold. It seems to me that different calculation is more subject to the arbitrariness of start/end dates – even if they're understandable cutoffs like 1st/last of a month.
SO I haven't been to this site for 4 days, and was pleasantly surprised to see thoughtful, compelling comments....
Until I saw Anon7 is back with his copy and paste meaningless articles
MBW wrote: "And yes, I'm sure long-gone (?) Huggy would have a field day with this call (Huggy was called many "real" names). I'm glad I don't have to debate her on this."
Her? I would never have guessed.
Anon 11:54, they're only meaningful when you can read and understand them.
9:41:
It was implied when he mentioned the fact that Anon7 is an ophthalmologist. If that wasn't the implication, then why bring it up?
12:34- Thank you for that thoughtful insight. Hopefully, you can make sense of the articles and use it to your advantage to make money rather than wasting your time reading this blather.
Post a Comment