What's going into escrow - Irvine and maybe some Tustin too

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<colgroup><col style="WIDTH: 48pt" width="64"></col><col style="WIDTH: 53pt; mso-width-source: userset; mso-width-alt: 2560" width="70"></col><col style="WIDTH: 48pt" span="2" width="64"></col></colgroup>







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<u>Inventory</u>

<u>Sales</u>

<u>Ratio</u>





Aug-07

1268

229

5.54





Sep-07

1235

165

7.48





Oct-07

1187

133

8.92





Nov-07

1154

119

9.70





Dec-07

1051

179

5.87





Jan-08

905

135

6.70







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<p>Slight uptick in the months inventory figure for Irvine in January. Anyone have any idea how many months inventory is typically on the market in a stable price environment? Is it 3-4?</p>
 
Don't know 123. I used the Dataquick figures... Not sure if they are just MLS or all sales. My calc is very rudimentary. Only doing it to get an idea of roughly how many months is on the market and what the trend is doing.
 
<p><em>"Did you notice awgee that the sales differential as a percent of average sales for the month has been improving since the summer? Will you do a similar post come this August and September when sales volumes are actually up year-over-year?"</em></p>

<p>Please excuse me for being dense, but what is "the sales differential as a percent of average sales for the month"?</p>

<p>Will I do a similar post of what? The post I did previously where I copied the info from Lansners blog? </p>

<p><em>"That's a 41% drop in transaction volume and a 44% decline in dollars flowing through the broker-based network. </em></p>

<p><em>The average sales price was $705,143 in January, down 5% in a year."</em></p>

<p>I will if you want me to and if it is published again. I won't promise to figure it out myself though. </p>

<p>If I am reading you correctly, you think home sales will increase? Do you think the current problems in the credit markets will have any effect on home sales for the next few months? Will there be any more problems in the credit markets? Or are there really even any problems now?</p>
 
Sales volume is bound to increase. We are 80% below sales volume of the peak, and we are experiencing the slowest sales volume ever recorded. It is hard to imagine sales getting any worse. We will not likely see sales volume increase in a year-over-year basis until next January when we have the record low to compare against. The key thing to watch is where the sales volume picks up, and what happens to prices when it does. I think we may be looking at an escalation of sales volume indicative of panic selling later this year. When volumes increase, and prices continue to decline, particularly if they are declining month-over-month, we are seeing panic selling. If the volume picks up on the low end -- which it must if prices are ever to go up again -- the short term impact on the median will be devastating. The good news is, if we see panic selling, that is a sign of market capitulation. That will help reduce inventory levels. Unfortunately, it will also drive prices into the dirt which will put many, many homeowners underwater and unable to refinance when their ARM explodes. This in turn will fuel the foreclosures which will bring the next round of price drops. The dynamic I just described is what has been going on in San Diego's market, and it is coming our way.
 
<p>I'm amazed that the median is reflecting a near 20% drop over 7 months time... That's an epic decline. </p>

<p>Imagine if it shows a 30% decline by 12 months off peak? I'd think that would have to spur some panic selling, although that's about the time the holders should be holding.</p>
 
IR - I can imagine sales volume decreasing. But only if the credit crunch becomes a complete credit stop (ie. the banks are already not buying the municipals at auction - what's next?). Restricing buyers to cash & carry would certainly do it...
 
<p>On that note, we have another escrow, this one in Quail Hill:</p>

<p><a href="http://www.ipoplaya.com">www.ipoplaya.com</a></p>

<p>With 26 escrows started this month and February not even half over, March's sales numbers should be strong relative to the previous six months or so. The majority of Irvine escrows seem to be ending in closed sales... Rates have been climbing of late, so that could kill some of these transactions.</p>

<p>47 Carriage also closed. $282 per sf... West Irvine is nose-diving. Boy I am sure glad I own here... NOT!</p>
 
<p class="MsoNormal">Hey Ipop,</p>

<p class="MsoNormal">Did I read that correctly, 47 Carriage closed $12.5K below asking price? It's like a slow death waiting for larger price cuts than 12.5k.</p>
 
<p>Yeah ten, only a smidge below asking and that was on a backup offer as well I believe.</p>

<p>$280 per sf. That is pretty darn good as it relates to recent price history so I didn't expect that much off list. 2400sf 4/2.5 places are still looking for low $800s to high $700s even in West Irvine.</p>

<p> </p>
 
<p class="MsoNormal">Very interesting, for some reason I thought the declines off list price we’re larger. Should this continue to be the case, then your prediction on Parma will hit the mark. </p>
 
<p>Realtor John reports "more homes have gone into escrow over the past few weeks than during any period since August of last year."</p>

<p>http://bubbletracking.blogspot.com/2008/02/over-weekend-jim-realtor-pointed-out.html</p>
 
You have to consider the ratio of buyers to sellers while looking at the lower inventory number for Irvine. If too few buyers are chasing too many properties in Irvine then that small inventory number is still too much.
 
<p>Heard a rumor from someone who has a pal at a local bank that their bank wasn't going to do IO in a month, it'd be interest + principal only.</p>

<p>Maybe people are trying to get in before the monthly payments go up.</p>
 
I would not be surprised if a lot of these properties going into escrow either fall out of escrow or if the final price paid is significantly lower than the listed price. In either case, I think that the market is heading towards the moment of truth.
 
socal - Yes, there were folks in 2007 talking about an increase in escrow openings. And there are folks in 2008 talking about an increase in excrow openings. How much ya wanna bet there will be folks in 2009 talking about an increase in escrow openings?
 
<p>Miami Dade's figures were off in the 40s for Oct, November and December. Haven't heard about January yet.</p>

<p>I am seeing some bargain hunters and seeing a little more movement.</p>
 
<p>"socal - Yes, there were folks in 2007 talking about an increase in escrow openings. And there are folks in 2008 talking about an increase in excrow openings. How much ya wanna bet there will be folks in 2009 talking about an increase in escrow openings?"</p>

<p>Interestingly, during the period from the end of January though 2/15 last year, inventory increased in Irvine by over 30 homes. For the same period this year, there has actually been a decrease in inventory... Maybe the folks talking about increased escrow activity in 2008 are right this time? It's hard to be wrong when sales volumes have been as low as they have been over the past six months.</p>
 
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