Inside the Numbers

New Home Sales and Case-Shiller Numbers Easily Misunderstood

This week, two important real estate numbers were reported that had a positive spin put on them that wasn’t really warranted. 

First, New Home Sales were announced for the Month of June by the Census Bureau.  Last month, the May number was reported at 300,000 homes (on an annualized basis) and the forecast was for the sales rate to be at 310,000 homes (annualized) in June, providing an average for the two months of a 305,000 sales rate.  The June number surprised to the high side, coming in at 330,000 which helped spark the market on Monday.  The problem?  The May number was revised downward to 267,000 to provide an average for the two months of 298,000 homes, LOWER than the forecast.  I don’t know why the initial forecast was off by 11% for May.  It could be that since new home sales are calculated when the contract is signed and not when the sale closes, many of the sales cancelled.  If that’s the case,  I would think that the Census Bureau would have allowed for that.  It’s a pretty big mistake, and hopefully we don’t see it again next month.  I like the fact that the government was able to put a positive spin on a negative number, but surprised that the press didn’t question it at all.

The second number was the Case-Shiller Home Prices Index that was released on Wednesday.  The 10 city composite was up 5.4% and the 20 city composite was up 4.6% compared to a year ago.  Case-Shiller is a great index and tool for tracking the real estate market and I know a lot of large banks and investors rely on it because it actually looks at sales of the same home over different periods rather than a median which changes as the size and type of home change.  This makes it a very reliable number.  The weakness is that it is not able to track recent trends.  The reason is that it is a 3 month moving average with a 2 month lag.  In other words, the numbers that were reported up on July 27th were the months of March, April and May – the end of the tax credit when people were paying more than homes were worth to capture the tax credit.  We won’t see the result of the end of the tax credit until the July, August, and September numbers come out in late November. 

So, while I welcome the good press for the real estate market, tread carefully; there was more to the story.

Monday Morning Coffee – The Drip System and a Sink Hole

Monday Morning Coffee

A Sink Hole in San Diego or Why I Have to be Good at Real Estate

Good morning,

I hope you had a great weekend.  Ours was a little slow with only one open house and activity generally slow, Cori and I actually were able to see a movie – Early Grammy betting tip: Salt will not win best picture.  Those of you who have read the last couple of Coffees will remember that I am slooooowwwwlllllyyyyy converting our “spray everything including the side of the house” sprinkler system to a drip system.  Well, it slowed down again this week when I discovered a small sink hole in my back/side yard. 

Now, I am brave enough to try and conserve some water and be more efficient in my application thereof, but when it comes to undermining the integrity of the hardscape in the backyard, I draw the line.   So, I called the gardener in (he is not the same that installed the original system) and fortunately the problem was that the initial contractor did not use much glue at a specific joint and the increased pressure from capping some of the sprinklers caused the joints to slip out.  He quickly fixed it and there should be no more problems…unless there are more joints with insufficient glue. 

Hmm.  I think I will proceed slowly.

Speaking of slowly, how about that real estate market?  This morning, the Census Bureau is set to announce the number of new home sales in June.  When the May number came out is was 30 something percent under last year and increased the worry for a double dip recession.  Well, if you want to sound smart this morning – it’s going to be low again.  So show off at the coffee machine and predict about a 30-35% drop from last year with  the numbers being close to May of this year (the reason is that the tax credit sucked all the demand into the early part of the year).    The residential resale side is really slowing also (at least in San Diego).  Last July, we sold about 2,900 homes throughout the county and last month it was just over 3,000.  Right now, with five workdays to go and sixteen behind us, we have 1,591 closed.  My guess is that we close about 2,350 for the month which would be about a 20% drop from last year .  I expect the homes in escrow will be about the same at the end of the month as last month, indicating the liklihood that August will bel slow also.

With this slowdown, there are some good opportunities for patient investors – and there will be more coming down the line.  I think the end of this year will provide some excellent opportuntites for investors looking for one or two properties in San Diego.  For people buying a home, I don’t think there is a problem buying a home now, as long as you are planning on staying several years.  Yes, the market is going to go down a bit, but if you have found the right house for your family, there is no guarantee it will be there once the market falls a little, and these rates are incredible.

No new listings this week, so time for the Coffee:

A Healthy Life

  by: Jaye Lewis

I’ve never been an athlete. I’ve never been much interested in sports, ever since I stopped playing touch-football with the boys, when I hit puberty. I’ve tried tennis. I hit the ball too high, too long, and way over into left field. I’ve tried softball. Thank goodness that ball is “soft” and big, because it felt just awful when it hit me in the eye. I tried running, but I couldn’t get anyone to chase me.

I tried swimming, but even though I float like a cork, and have had numerous lessons, I can’t seem to get over the idea, that I’m really going to drown. Finally, I settled on walking, and for a number of years, I walked 3 to 5 miles a day. I realize that there is an Olympic sport referred to as “walking,” but when I tried that, all I succeeded in doing was throwing my hip out.

I’m definitely NOT an athlete, but I make do, especially in my “mid-life” years. Which brings a question to my mind. When did I hit mid-life? I remember when I hit thirty. I had to visit a grief counselor, because I knew my life was over. I remember forty. I had to see a grief counselor, the day after my first child graduated from high-school and moved out of the house, because I knew my life was over. I remember forty-four. For some reason I thought my life was over. Then I hit fifty, and I was all excited, because I was able to join an organization called AARP. My husband was, especially, excited because he is younger than I, and he got to join, too!

Fifty became the magic age. I knew that as long as I was in good health, in this day and age, I probably had a good fifty years ahead of me. Then came the asthma. O.K., I had that much earlier, but it only became life threatening after fifty. Then came the firbromyalgia. O.K., I had THAT earlier, but it’s not life threatening. Then came the arthritis, and, more recently, at fifty-five, came the diabetes. Somewhere, along in there, I became very interested in pharmaceuticals, and, finally, one day, I became free.

I began by noticing the sunsets, and I had the time to stop and really wonder, at the beauty and the magnitude of it all. Then I moved onto the sunrises, and I quickly found out that if I wasted the early morning, I missed the loveliest part of the day. Then I began to notice how grateful I was to be able to witness the changing of the seasons. The first whisper of spring; the rustling of the leaves beneath my feet, in the fall; that first breathless covering of a winter’s snow; and in the summer, all the flowers, and the buzzing of a bumblebee.

When illness would hit me, I found that I, actually, enjoyed the solitude. A time to reflect, gather my thoughts, and pray, at leisure. I found that I was “experiencing” this mid-life season, and I was no longer missing every moment, shackled to the chains of worry, and what “might” be. I found that worrying about tomorrow, only served to make me overlook the blessings of today.

It’s not always easy. A few loads of laundry, and a pile of dishes can take an entire day; but then I don’t push myself a lot. So, I forget to make the bed, as I watch the rosy glow of dawn meet the rising sun. I have time to walk our little, wooded acre with my little dachshund straining at the leash. I get to read the “signs,” with my Happy Dog, sniff the air, and gaze out at nowhere, studying the sky, with the same intensity that my little dog studies the ground.

I get to meet the day, every day. I get to say “good-night,” to the sunsets. I’ve studied a lot of sunsets, in the last five years, and I’ve never seen two that were alike. I get to know my Creator as I never have before, and I’ve gotten to make MY mind up, about the mysteries of life; and I have grown certain, that all this was no accident.

I feed the birds, and I take great delight in their multicolored hues, especially in the spring. I drag a chair to stand on, so that I can fill the feeders to the brim, myself. I say a little prayer, as I wobble, a little cock-eyed on the chair, and I laugh, at myself, and all the pretensions of my younger life. I take great delight in my life. I thank God for all the precious little things of every day. Friends. Family. Neighbors. And health. A health of the soul. For I have come to understand what real health is, and when you have REAL health, then you truly have everything.

Have a Great Week!

Scott

Monday Morning Coffee – Real Estate Slowdown Coming

Monday Morning Coffee
Real Estate Slowdown Ahead

Good morning,
I hope you had a great weekend – and for those of you who extended the 4th of July weekend into a weeks vacation – congratulations. Now, get back to work:-)

The market has definitely slowed, which has allowed me to get to a couple of projects around the house. We had planted a few vegetables and we have a spaghetti squash and butternut squash plants that have taken over the side yard and are about to try and break into the house. This made me finally tackle the sprinkler system in the yard – trying to convert it to a drip so I stop wattering the house and patio. Of course, only when I got to Home Depot did I realize that I did not even know how much I did not know about what I was trying to do. Four trips back and forth and eight sprinklers (about 40 to go) have been transitioned to drip or capped off – and only three of them leak.

But I digress from the main point, and that is that the only reason I have time to do this is the market has slowed down. Two weeks ago (I took last Monday off too) I said that things felt like they were slowing down. In July of 2009, we sold over 2800 homes. So far, 6 business days into a 21 day month, we have 475 sold. Now, the homes in escrow have increased by 300 so far this month, which might indicate that closings will ramp up at the end of the month, but I still think we could be down by about 20-25%. I hope I am wrong, but it sure feels slow out there. It is moving to a buyers’ market and I think now is the wrong time to try and squeeze every last dollar out of your home if you are selling. The risk/reward of holding out over the summer is not in the sellers favor right now.

That said, we have three great listings to tell you about – should have been four, but we bucked the trend and sold one of them last week:

3 bed townhome in 4S Ranch. This home is in the Gianni complex on the north side of 4S Ranch and is impeccably updated. Walking distance to Monterey Ridge, the Gianni complex is very popular for young families with elementary aged children. The home is priced at $429k.

South 4S Ranch View Home – This is one of two homes we have on Lone Bluff Way. This home is 4 beds, 3 1/2 baths, almost 2,900sf and a great view of Black Mountain. The yard is big enough for a pool. It is priced at $720k and we have 2 offers in. It will likely be gone by Monday evening. So if you are interested, let us know ASAP.

4 bed with loft – This is the other home available on Lone Bluff Way. It has a bedroom dowstairs as well as 3 beds and a large loft upstairs. It is over 3,200 sf of living space on a great cul-d-sac on the south side of 4S Ranch. Asking price is $745k.

That’s it for this week. Enjoy the Coffee (and tell all your friends to help the market and buy a house!)

This week’s edition comes because of those darn books you read to 4 year olds. You know, the ones you can’t get out of your head. Interestingly, there is sometimes more to learn from children’s books than from “adult” books. So, here is some wisdom from Theodore Geisel:

• A person’s a person, no matter how small.
• You have brains in your head. You have feet in your shoes. You can steer yourself, any direction you choose.
• Don’t cry because it’s over. Smile because it happened.
• Today is your day! Your mountain is waiting. So… get on your way.
• If you never did, you should. These things are fun, and fun is good.
• And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed.
• Sometimes the questions are complicated and the answers are simple.
• All alone! Whether you like it or not, alone is something you’ll be quite a lot.
• The more that you read, the more things you will know. The more that you learn, the more places you’ll go.
• Today was good. Today was fun. Tomorrow is another one.
• Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.
• I’m afraid sometimes you’ll play lonely games too, games you can’t win because you’ll play against you
• I’m sorry to say so but, sadly it’s true that bang-ups and hang-ups can happen to you
• I know up on the top you are seeing great sights, but down at the bottom we, too, should have rights.

By Theodore Geisel (aka Dr. Seuss).

Cmon, I can’t be serious every week,

Scott Voak

San Diego June Home Sales Numbers

San Diego Home Inventory Rises – Sales Fall

*Note that this data is from the SANDICOR MLS as of July 5, 2009 and does not include homes sold by builders that were not sold through the MLS (New Construction) nor homes sold at Trustee Sale (Foreclosures).

Current numbers shown for June 2010 San Diego Home Sales indicate both a rise in supply and a drop in demand.  The combined affect is an increase inventory (as measured by months required to sell the existing homes for sale at the sales rate of the past year) of 19% over 12 months ago (although at 4.3 months, it is still not at a level that can be considered high).  The specific numbers are:

• There were 3,004 homes sold in June of 2010 as compared to 3,288 a year ago and 3,219 in May of 2010.
  • After last month’s drop in homes that were in escrow, this was to be expected.  Although, it is still dissappointing in that we all hoped the tax credit would help keep demand going through June.
• At the end of the month there were 12,175 homes on the market as opposed to 9,443 a year ago and 11,257 at the end of May, 2010.
  • This was caused by a combination of fewer homes going into escrow (lower demand) and the normal increase in inventory we see over the summer.  Both are expected as the tax credit expiring removed the urgency to purchase for a lot of first time home buyers (similar to when Cash for Clunkers expired for cars, we will likely see an extended period of below average demand for houses now that the tax credit has expired).
• Homes in escrow dropped to 4,961 from 6,862 a year ago and 5,546 in May of 2010. 
  • In the last two  months, the number of homes in escrow has dropped 23%, which points to continued slowness.
• Homes that are “Contingent” fell by 5% in June.  This is  a designation most commonly used for short sale homes that are awaiting bank approval of an offer and might mean that the banks are in fact getting better an processing short sales in a timely fashion.

Monday Morning Coffee

Monday Morning Coffee

Successful Haircut!

Good morning,

I hope you had a great weekend.  Saturday was a milestone of sorts as it is the first time I took Zach for a haircut where he didn’t completely freak out and yell “Done! Done! Done!” from the moment we walked it.  I was so relieved he got his own hot dog at Costco.  Well, we were supposed to share it, but he figured out if he tore the bun and gave it to me, he could have the hot dog to himself. 

Saturday evening we went to Rythm and Vine with our friends John and Jean.  It was a Boys & Girls Club fund raiser with local restaurants, wineries and breweries sampling their specialties. 

The market continues to be very hot in advance of the Federal Tax Credit expiring, with lower priced homes receiving multiple offers and getting bid up over asking price.  Everyone is working like crazy to try and help people get into homes and hoping it doesn’t completely slow down once we get to May.

We were able to get two of the four homes I wrote about last week on the market.  The other two will come this week.  Here are the ones that we opened up for the first time on Sunday:

4 Bedroom in Garden Gate at 4S Ranch.  This is a 2,317 sf Plan 3 home with a full bedroom downstairs, an oversized granite island in the kitchen and a great southern exposure with a view of Black Mountain.

3 Bedroom in Garden Gate at 4S Ranch.  This is a 1,914 sf Plan 1 home with an office and full bath downstairs (the office can be used as a guest  bedroom with an armoir).  The highlight of this home is that it is the largest lot in Garden Gate and has a sunset ocean view (the ocean is a ways a way, but on a clear day, you can definitely see it).

That’s it.  Will have 3 more for you next week.

Enjoy the Coffee!

A Different Kind of Athlete

  by: Jaye Lewis, , Source Unknown

We found out that Jenny was hearing impaired, when she was four and a half years old. Several surgeries and speech classes later, when she was seven, we found out that Jenny had Juvenile Rheumatoid Arthritis.

She could not put pressure on the heels of her feet, so she walked on tiptoe, and when the pain became unbearable, I carried her. Jenny was fortunate, though, because she did not suffer the deformities, often associated with JRV.

All through grade school, and on into high school, Jenny suffered, yet never complained. She took her medicine, and I would often wrap her feet in steaming towels, and hold her until the pain eased. But, as soon as she could withstand the pain, Jenny, immediately, carried on, as though she were pain free.

She wore a smile on her face, a song on her lips, and a love and acceptance of others, that was, simply, amazing. I don’t remember her ever voicing self-pity. She ran, when she could run. She played when she could play, and she danced when she could dance. And, when she could do none of these things, she took her medicine, and she waited until she could.

Jenny, a beautiful blonde, with warm brown eyes, was never a cheerleader. She never competed in a sport. She could not even take part in a Gym Class, though she took the same health class four years in a row, just so she could pass with a substitute credit each year. She joined the band. She won a place in the Governor’s School for the Arts; yet, no one in the Charleston, South Carolina School System knew what to do with Jenny. The perimeters were, simply, not in place to deal with a student, who was both active and handicapped.

Jenny continued to have one surgery after another on her ears, all through school. Her hearing improved to 60%, and she taught herself to read lips. She carried a pillow to school, all through high school, and once, when she suddenly experienced crippling pain, her friends scooped her up, and carried her from class to class.

She was totally mainstreamed, popular, and funny, attending every football game, cheering the team on, carrying her pillow everywhere she went, so that she could cushion the pain, when she sat down. Then came her senior year. She would be considered for scholarships; however school activities, especially sports, could often mean the difference between receiving an award or losing out.

So Jenny came to a decision; and in her quirky, unorthodox manner, she began to bombard the high school football coach. She begged. She pleaded. She promised. She got her best friend to sign up with her. Finally the coach gave in, with the admonition, “If you miss ONE game, you’re out!” So, Jenny became Manager of the Garrett High School Football Team.

She carried big buckets of water to her teammates. She bandaged knees and ankles before every game. She massaged necks and backs. She gave pep talks. She was continually at their beck and call, and it turned out to be one of the best years for Garrett High School Football Team, in its twenty-five year history. Often Jenny could be seen carrying a bucket of water in each hand, nearly dragging them, along with her pillow tucked under her arm.

When asked why he thought that the team was winning all their games, even in the face of injury, one linebacker explained, in his soft, Charleston drawl, “Well, when you’ve been knocked down, and you can’t seem to move, you look up and see Jenny Lewis, limping across the field, dragging her buckets and carrying her pillow. It makes anything the rest of us may suffer seem pretty insignificant.”

At the Senior Awards ceremony, Jenny received a number of scholarships to College of Charleston. Her favorite scholarship, however, was a small one from the Charleston Women’s Club. The President of the Women’s Club listed Jenny’s accomplishments, starting with her grades, and ending with an excited, “…and the first girl to letter in football, in Garrett High School history!!”

Have a Great Week!

Scott Voak

858 688 0189

Treasury Department Foreclosure Report

Foreclosure and Mortgage Deliquencies

Q4 2009

I finally finished the OCC and OTS Mmortgage Metrics Report for the fourth quarter of 2009 (I know you’re jealous at how much fun I get to have).   The report looks at all first liens held by most of the largest mortgage servicers.  It covers almost 34 million loans totaling almost $6 trillion.  It is the raw data before it gets spun by the press or politicians.  Here are some highlights and lowlights from the report:

Delinquent Mortgages

• Mortgage performance declined for the seventh consecutive quarter.  Delinquent mortgages and mortgages in foreclosure rose to 13.6% of all mortgages (once again, just talking about first mortgages).

• The percentage of mortages 30-59 days late stayed stable, most of the increase was in seriously delinquent mortgages.  This may be a positive as it is showing that the pace of new delinquencies is not picking up, and that loans are staying seriously delinquent longer which is an indication that banks are working longer to modify before moving to foreclosure.

• Option Arms continue to be the worst performing loans with only 662% current.

• There was a large increase in the number of seriously delinquent prime loans as the number jumped fro 838k to 976k in one quarter.  Almost 1 in 25 prime borrowers is more than 60 days late on the mortgage.

• Overall, 7.1% of all mortgages are seriously delinquent (60+ days late) and an additional 3.4% are 30-59 days late.

• Although the Sub-Prime and Alt-A loans have the highest percentage of delinquencies, the Prime loans have the highest number – this is important as if the percentage of prime loans going bad keeps rising it has a real chance of bringing the market down again.  However, these are also the borrowers that have the best chance of recovering if employment and the economy continue to recover after the stimulus expires.

Home Retention Actions

• The number of home retention actions slipped by 19.1% compared to the third quarter.  This is probably likely to the fact that HAMP received so much publicity in the third quarter that most people who were eligible applied then. 
• Discouraging number on the HAMP program was that although 349k people had entered the 3 month trial period in the second and third quarters, only 21k of those received permanent modifications during the fourth quarter.  That’s about a 6% conversion rate (it’s too early to have data to see how many re-default).  If that is an accurate number (it is possible that many were delayed past 3 months by paperwork issues, etc.) then the program is really a failure.  Let’s hope the numbers get better.
• More than 50% of HAMP trial plans and modifications are for prime borrowers
• There were almost twice as many home retentions started as foreclosures (this would also explain the increase in seriously delinquent mortgages as they stay delinquent until fully modified).
• The percentage of loans modified that had principal reductions fell to 6.8%.  Rate reduction and capitalization (adding your late payments back to the loan) were the most common modifications.
• HAMP modifications only included principal reduction 0.1% of the time, but they did utilize principal deferral 26.8% of the time.
• 42% of all modifications decreased payments by 20% or more – this is important to the  borrower being able to keep up with payments on the modified mortgage.
• 82% of HAMP modifications decreased payments by 20% or more.

Modified Loan Performance

•  The performance of modifications continues to improve over time:
  • Only 33.5% of loans done in the second quarter of 2009 were 60+ days late six months later compared to 42.7% of loans in the first quarter.
  • Only 14.7% of loans modified in the third quarter were 60+ days late 90 days later as compared to 30.8% of the loans done in the first quarter of 2009.
• Loans 30+ days late were obviously a higher percentage; 47.5% after 6 months for loans modified in the second quarter and 29.8% after 3 months for loans modified in the third quarter.  Both of these are significantly better than they were prior to the second quarter.
• The highest Re-Default rate is for Government-Guaranteed loans (FHA, VA, etc.)  with 67.8% 60% days late a year after modification (these are obviously reflecting pre-HAMP modifications as none have been modified for a year yet).
• One reason to be a little more positive about HAMP modifications (if more get completed) is that they seem to be reducing payments by 20% or more, and historically loans that have payments reduced by 20% or more have a re-default rate of only 39.8% a year later (as opposed to 67% if the payments are unchanged).

Foreclosures

• Newly initiated foreclosures declined in the 4th quarter as homes are staying in the seriously delinquent phase longer as lenders are working harder on modifications.
• Completed foreclosures increased by 8.6% over the previous quarter and 35.7% higher than a year ago. 
• There are almost 4x as many foreclosures as short sales and Deed-in-Lieu actions, although short sales are up 96.8% over a year ago.
• 7.8% of all subprime mortgages are in foreclosure while only 2.3% of prime mortgages are in foreclosure (however since there are more prime mortgages, there are actually more total prime loans in foreclosure than subprime).

A couple of key numbers to look at next quarter will be:

• How many of the HAMP trial periods get converted to permanent modifications.
• If the loans that are seriously delinquent transfer into the foreclosed or modified category.
• If loans modified in the third quarter of 2009 and later continue to have a lower re-delinquency rate.

I expect that the data for the first quarter will continue to improve and the real questions will come with the second and third quarter data as that data will reflect the market after the stimulus has expired.

San Diego Home Sales – March Numbers

San Diego Resale Activity

March, 2010

An early look at San Diego home sales for March shows sales almost even with last year (2664 in 2010 vs 2717 in 2009).  As 2010 numbers are preliminary, I expect that by the time all San Diego Real Estate agents convert their escrows to solds, the 2010 number will by higher than 2009 by a small number. 

The number of homes actively offered for sale in San Diego at the end of March fell by 37% when compared to a year ago.  This number has been consistent all quarter but will shrink dramatically next month and then swing positive in May as we are entering the period where the inventory had it’s large contraction last year.    Current inventory is sitting at 10,011 homes (up from 9,584 in February).  

Homes in escrow are almost identical to last year and about 8% above February. 

I would expect that this month we will see closings in the 2700-2900 range, above last year as buyers rush to take advantage of the dual state and federal tax credits before the federal credit expires at the end of the month.  Because the $8,000 federal credit is good for buyers who are in escrow by April 30th, I expect the number of homes in escrow to rise as we are seeing multiple offers on all reasonably priced listings under $650k.   I believe the overall result will be solid sales and prices in April and May with some softening into the summer (when compared to historical numbers – June may have more sales than April, but not as many more as is typical)

Monday Morning Coffee – California Tax Credit

Monday Morning Coffee

 California Tax Credit

Good morning!

I hope you enjoyed the great weather this weekend and got out a bit.  A couple of good things last week that will effect the real estate market (good in terms of real estate, you will have to decide for yourself if they are good long term).  First of all, the Governator signed a California Home Buyers’ Tax Credit that will help offset the expiration of the Federal Tax Credit next month.  The credit is $10k max spread over 3 years.  More details on the blog.  The second was that it appears Greece is going to get its own bailout.  The reason this is good is that a default by Greece could have a ripple affect throughout the European Union and to all the bondholders of Greek debt – many of whom happen to also be the people and/or countries we need to buy mortgage debt.  So, the fact they didn’t just los e a bunch of money is a good thing.  The downside is that instead of a depression in Greece, the pain will be spread and diffused throughout Europe and while this brings a chance of a larger problem later, for today’s San Diego real estate market, it’s good you will be able to get a loan next month.

Ok, we have three new listings coming.  Two will come on this week (photos Tuesday) and one next week.  Here’s the best part – none are short sales!

• This week we have a 2300+sf  4 bedroom home in Garden Gate @ 4S Ranch.  There is a bedroom downstairs.  We will be hitting the market in the low $600k range.  It has a very private backyard and we sold the one next to it last month in about 8 seconds.
• The second one for this week is on the picturesque 4S Ranch Pkwy and is a 1600+sf Summerwood home.  Very nice 3 bedroom with beautiful hardwood floors.  It will be priced in the low $500k range.
• Next week we have another Garden Gate home at just over 1900sf.  This is a 4 bedroom with a peek ocean view.

If you are interested in any of these, please give me a call.

That’s it, Enjoy the Coffee!

The Life We Choose

Here’s the premise: We are all, right now, living the life we choose.

This choice, of course, is not a single, monumental choice. No one decides, for example, “I’m going to move to L.A., and in five years I will be a waiter in a so-so restaurant, planning to get my 8-by-10’s done real soon so that I can find an agent and become a star,” or “I’m going to marry a dreadful person and we’ll live together in a loveless marriage, staying together only for the kids, who I don’t much like, either.”

No. The choices I’m talking about here are made daily, hourly, moment by moment.

Do we try something new, or stick to the tried-and-true? Do we take a risk, or eat what’s already on our dish? Do we ponder a thrilling adventure, or contemplate what’s on TV? Do we walk over and meet that interesting stranger, or do we play it safe? Do we indulge our heart, or cater to our fear?

The bottom-line question: Do we pursue what we want, or do we do what’s comfortable?

For the most part, most people most often choose comfort – the familiar, the time-honored, the well-worn but well-known. After a lifetime of choosing between comfort and risk, we are left with the life we currently have.

And it was all of our own choosing.

Peter McWilliams

Have a Great Week!

Scott Voak

858 688 0189

February San Diego Sales Numbers

February San Diego Home Sales

Looking at February sales numbers, there were 2059 homes sold (includes all types and relies on the hope that agents have listed homes sold as “sold” in mls). This is an 8% reduction from last year and combined with January’s 10% reduction, puts us about 400 homes behind last year at this time. The trend is likely to continue, as there are also fewer homes in escrow than there were last year.
The slower pace of sales is more than offset by the lower number of listings (37%) than we had at this time last year. This makes sense as inventory really started to dive last year in April as the banks were actively holding off the foreclosure process. Inventory was down at the end of February compared to the end of January by about 5% (550 homes), but there is already an additional 400 homes on the market on the 6th of March.
The graph below shows the last 6 years activity (I’m going to have to go to a quarterly graph soon)

San Diego Home Sales (MLS)

A couple of interesting points to see when it is graphed out like this:

1. Sales volume (demand) has remained fairly consistent since late 2006 with the exception of the specific issues we had in the mortage markets in September of 07 and November of 08. 
2. The increase in March 09 was when the Fed started purchasing mortgages (which is supposed to end this month).
3. The drop in sales in January (last month) can be attributed to two factors:  First, there were a lot of closing in October and November as people were trying to beat the expected expiration of the tax credit (which is now been pushed to April contract/June close).  Second, new mortgage rules have stretched out closings past the normal 30 days.  You can see this in the fact that at the same time closings have fallen, homes in escrow increased – the activity is there, the government just put a kink in the hose with all the new regulations.  I expect we will see a strong March in terms of closings as these homes work their way through escrow.

An interesting chart to look at takes a look at inventory levels over the last several years.  For the chart below, I am measuring inventory of San Diego homes differently than others do.  I am including all homes that are Active on the market, plus those that are Pending and Contingent.  The reason for this is twofold:  The Contingent designation is relatively new.  In the past, these homes might have been included in Active or Pending, so there would be errors either before or after the Contingent designation was created if I did not capture all the activity.  Also, there are buyers with offers on multiple shortsale homes and they aren’t going to close on more than one of them.  Showing all the homes that are available and in some stage of closing vs those that close each month helps mitigate this factor. 

San Diego Home Sales - Inventory Levels

Note: Inventory is calculated using a 12 month average of sales.

At first look, the graph doesn’t provide much interesting information.  But when you look at the % change in inventory, you can see that it started to rise in the second half of last year.  While this is akin to saying “things are getting better because we are losing fewer jobs every month,” it is a start of a change.  It shows that inventory is reaching an equilibrium on its own and the creates the possibilty that when the stimulus and tax credit expire, we may see inventory start to climb on its own – with or without the banks releaseing foreclosures.

Monday Morning Coffee – Politics as Usual

Monday Morning Coffee

Delaying Foreclosures to Get Re-Elected

February 28, 2010

Good morning,

I hope you had a nice weekend.  We had the open house for our Rancho Bernardo office on Friday afternoon and had a nice turnout.  Thank you to everyone who stopped by.  After being cooped up in the house Saturday, it was nice getting out for a walk with Zach before going to the office on Sunday.  Most of Sunday was spent getting data ported over to our new web site which should be up and running by the end of the week.  Things are getting really busy and with the typical spring increase in activity coupled with ramping up the new office and switching over all our web sites, sleep seems to be  a luxury right now.  Very glad the team is running smoothly right now – speaking of team, Cori is doing well enough in her recovery from the multiple back surgeries that she is back handling our property management again.  It is nice to have her involved again.

A couple of quick notes on the market.  Things seem a little slower now than they were a couple of months ago.  Not so much that homes aren’t selling, but instead of 7-8 offers, we are getting 1 or 2.  It could just be that everyone bought when they thought the tax credit was expiring, but it could also be the start of a trend.

I saw an article last week that didn’t make sense.  The headline was: Obama May Prohibit Home-Loan Forelcosures Without HAMP Review.  I know some of you out there are going to make that silly argument about that Constitution thingy we studied in school, but I think there is a clause they didn’t tell us about where the President can ignore certain parts of it if he really needs to.  The effect of a HAMP review would be to delay the foreclosures for about three months (plus another three while they get the systems in place to process everything), so another 6 months of artificially tight supply.

Then, another piece fell into place on Friday.  A colleague of mine who does a lot of work with the foreclosure departments at many large banks and loan servicers was told that the banks are being pressured to keep their foreclosures off the market until after the mid-term elections.  That made me wonder if maybe the HAMP review proposal was designed to keep the foreclosures from hitting the market until after the election in November.  

Ok, so I went back and did a quick re-read of that same Constitution we slept through in high school.  And guess what?  The whole ”ignore sections of this document if they are inconvenient to your current crises or desire to be re-elected” clause never made it in there. 

I know I am making light of a bad situation, but I think that we ought to consult the original rule book every once and awhile to make sure we are still playing the right game.

Ok, enough on the whole Government hijacking the country theme.  Let’s talk about a positive!

We’ve got a great new listing in 4S Ranch.  This home has 4 bedroom suites (1 downstairs), a loft, and a great layout for the growing family.  Due to allergies of one of the children, almost every room has engineered wood flooring and the house is spotless.  If you know anyone wanting to move into the Poway School District, please shoot them over to the site.

We have a couple more new ones, but the virtual tours are not ready yet, so I will have them next week – along with the new web site!

Enjoy the Coffee!!!

Bad Temper

There once was a little boy who had a bad temper. His father gave him a bag of nails and told him that every time he lost his temper, he must hammer a nail into the back of the fence.

The first day, the boy had driven 37 nails into the fence. Over the next few weeks, as he learned to control his anger, the number of nails hammered daily gradually dwindled down. He discovered it was easier to hold his temper than to drive those nails into the fence.

Finally the day came when the boy didn’t lose his temper at all. He told his father about it and the father suggested that the boy now pull out one nail for each day that he was able to hold his temper. The days passed and the boy was finally able to tell his father that all the nails were gone.

The father took his son by the hand and led him to the fence. He said, “You have done well, my son, but look at the holes in the fence. The fence will never be the same. When you say things in anger, they leave a scar just like this one. You can put a knife in a man and draw it out. It won’t matter how many times you say I’m sorry the wound is still there. A verbal wound is as bad as a physical one.”

 Have a Great Week!

Scott Voak