Out Fox The $treet

We've reported at numerous times over the last 6 months that the housing market in California is showing signs of bottoming. One of the biggest signs is in this OC Register report that housing listings have hit a level not seen since October 2005. The period when the slump began. From that level the inventory levels continued to soar until mid 2008 causing housing prices to decline. That trend has now completely reversed and the inventory levels are getting pretty low. With interest rates low and housing affordability at highs, these inventory levels are consistent with higher prices going forward. Or at least stable prices that sure beat constant declines. It would take 6.3 months to sell last month’s inventory of houses for sale at May’s sales pace. That’s the lowest level since October 2005, considered the start of the housing slump because sales began to falter then. That’s three months quicker than the year before. The revised May 2008 listings index showed that it would have...

Apparently to great shock in the rest of the world, housing is actually showing signs of life this shouldn't be a big surprise to this blog as we've been noting the growing sales volume in places like California for months now. Apparently it is now spreading to FL and Las Vegas. The pattern appears to be that once prices are down roughly 40%, the investors and first time home buyers come rushing in. This article by BusinessWeek shows the disconnect between the main media outlets and reality. With Housing Affordability off the charts, it shouldn't be surprising that volumes are picking up. It doesn't mean that prices will go up any time soon, but stability is huge especially for banks. Investors expecting a huge decline in the market might be caught off guard with this news. For the Garvins, who weren't eligible for the government tax credit, record-low interest rates were a big enticement. With the rate on their 30-year fixed-rate mortgage at 4.75%, the payment ...

The news surrounding Home Sales continue to improve. Existing home sales rose unexpectedly in December. As we've reported in the past, home sales in areas such as California have been increasing at a dramatic rate. This is whats needed to stem the bleeding. Prices have finally gotten low enough to increase demand. Combine that with fewer houses being built and we'll soon enough work off the inventory. So the negative is the record drop to housing prices to $175K, but at the same time the inventory dropping to 9 months is very encouraging that the housing market is about to reach equilibrium. The National Association of Realtors said Monday that sales of existing homes rose 6.5 percent to an annual rate of 4.74 million in December, from a downwardly revised pace of 4.45 million in November. The results were better than expected. December's sales had been forecasted to fall to a pace of 4.4 million units, according to Thomson Reuters. The nationwide median sales price plunge...

This little nugget is reported in the OC Register. You won't hear this news from the mainstream media, but we've been reporting on this for several months. The supply of homes in the epicenter of the housing problem of Orange County in California is declining at a fast rate. Inventory peaked at nearly 18K homes September 2007 and has steadily dropped to below 12K now. Whats really interesting is that houses under $750K have a reasonably low turnover of only 5 months. The critics would claim that houses are being held off the market due to the drastically lower prices, therefore, reducing inventories. In reality though, the lack of willing sellers at these levels combined with more buyers coming in at these low prices is what creates a bottom and a reversal in the market. The stats don't lie and they definitely show how inventory levels kept growing and peaked in the late summer when supply was too high, but in 2008 inventory peaked in March. Don't be surprised when CA ...

Interesting article in the LA Times about a real estate boom in Santa Anna. 10x the sales volume of last year and houses receiving multiple offers sure sounds like a bottom. When somebody has to make an offer on 3 houses before getting a house, its difficult for the market to fall. Definitely a sign of demand outstripping supply at the current levels though its key to note that its 45% below the peak levels. Still, investors will have more confidence in banks once the housing market has hit bottom. Banks also will be more willing to lend money. Also, its interesting to note how bearish the article is about possible future declines due to job loses and such. Overly bearish if you ask me. All told, 357 homes in Santa Ana were in escrow in October, almost 10 times the volume of a year ago. Debini said the house they bought was actually the third they bid on. All of the foreclosed houses they pursued drew multiple offers, and they were outbid in their two previous attempts, she said.

Now this did occur before the Oct melt down in the financial markets, but it's a very encouraging that the price drops have finally led to more buyers. According to this LA Times story the median price is down 33% from the peak last year. Sales were also up from August and the hardest hit county of Riverside saw the biggest sales increase of 106%. Doesn't appear that there is a lack of qualified buyers when the price hits an attractive level. Thats an estimated $6B worth of new mortgages and roughly $9B as the original value that just left the books of weak mortgage holders and ended up in the hands of strong, financially solid holders. The median Southern California home sales price was $308,500 in September, the lowest since May 2003 and down 33% from the September 2007 peak of $462,000 The number of homes sold in Los Angeles, Orange, San Bernardino, Riverside, Ventura and San Diego counties shot up 65% compared with September 2007. A total of 20,497 homes closed escrow i...