Okay... help me understand this... sales volume is down -35%+ below average, and lower than some of the worst of times in the 90s. Foreclosures are increasing at a faster rate than the 90s, and continue to increase at an even more rapid pace. Interest rates went down in 93, and the job declines stopped, but home sales increased, then only to see values go down and foreclosures increase. This wouldn't be because of people getting into low short term rates would it? This is what is known as a dead cat bounce. In the 90s the high end took a while to feel the effects, but they did, and what makes it different this time? Yet, there are more people living here, and there are more homes than in the 90s. But, there are less transactions for more people, more homes, not as awful job declines, more and increasing foreclosures, interest rates lower by 150 BPS than the lowest in the 90s, so... how the hell is it that more homes are going into escrow can be seen as a good sign?
Maybe... I need to put this into terms a CFO can understand...
You sell a product, that has a larger client base than it did 15 years ago. However, your transactions are below what they were then, and over 35% less than last year. You also have more competition, and more of the same product out there to chose from, and yet more and more is being added. You keep lowering your price, but less and less buyers are buying.
Your clients have the ability to finance their purchases, at a cost the same it was, when you had a record sales volume in 2003, and that sales volume was 135% higher than it is now, and it costs 15% less too. Yet, their cash flow is greater than in 2003.
Your accounts receivable is not paying their bills at a record pace YOY, at a 800% increase. And, month after month, quarter after quarter, it gets worse and worse.
You have the largest amount of inventory you have ever seen, and it keeps increasing. Pretty soon, some of your competitors are going to fail, and dump the inventory they have at fire sale prices. Which, will create a chain effect, and more and more will dump their inventory at lower and lower prices. And, still the transactions are less.
And, I am the nutter right? I mean, since you have started this thread, there has not been a single close of escrow, yet there has been about 10+ homes going back to the bank in the $700k loan amount range. If I include all of Irvine it looks worse. Really, seriously, truly, you need to read this, and analyze this post, because I am not the nutter here. You don't need to be a CFO to understand those numbers, you don't even need to understand basic algebra, all you need is common sense. The banks are closing on more transactions than people are closing on.
