MBA: Purchase Applications Decline

Submitted by
CalculatedRisk on Wed, 06/04/2008 - 5:05am (9 comments)
in
MiTurn wrote on Wed, 6/4/2008 - 5:24 am

First?

picosec wrote on Wed, 6/4/2008 - 5:45 am

Last night I looked at the characteristics of homes that have been listed for sale in CA during the last 7 days; specifically the fraction that are either REO or short sales. It appears that if anything, these types of offerings are increasing.

Examples...
Inner-city Oakland - 50% are REO, 25%Short-Sale
El Cerrito - 14% and 28%
Tara Hills - 50% and 7%
Hayward - 33% and 50%

and looking at Moreno Valley in SoCal, 80% and 10%!

In these markets distressed homes dominate the availability. Nearly everyone who doesn't really need to sell is on the sidelines (for now). This implies that there will be a pent-up supply of homes for a fairly long time, providing pressure to keep prices down.

CalculatedRisk wrote on Wed, 6/4/2008 - 5:49 am

picosec, absolutely. Most of these areas are going to get crushed.

I expect prices to continue to fall, possible for several years.

Best Wishes.

charlie wrote on Wed, 6/4/2008 - 5:50 am

I guess if there's a silver lining, it's that less borrowing, in of itself, tends to lower interest rates. Lower demand = lower prices.

Yal wrote on Wed, 6/4/2008 - 6:03 am

"Nearly everyone who doesn't really need to sell is on the sidelines (for now). "

this mean that the bottom is NOT here. Bottom is when everyone thinks it is going lower...

Bob_in_MA wrote on Wed, 6/4/2008 - 6:08 am

There was also a big jump in rates, up 21 bps for the 30 yr FRM.

Cobradriver wrote on Wed, 6/4/2008 - 6:21 am

picosec | 06.04.08 - 9:50 am | #

We have kinda stabilized right now on the lower end here in our area of SW Florida. The big rush to the exits is larger tracts of land. Most are along the lines of 2+ acres. A year ago there were maybe 25-50 listings of these tracts. As of last night we had over 400 on the MLS.
No major price reductions.
Yet.
These along with the 300k plus market are going to crush our area again.
A home on my street recently got ZERO bids at a auction. The minimum starting was 50k. It MIGHT be worth 30-35k. The bank loaned 167k against it two years ago.

Chris

Elvis wrote on Wed, 6/4/2008 - 8:05 am

As the Shiller 100 year YOY change in home prices graph indicates, this time prices are lubricated, so finding a price bottom might happened quicker than in the past (about 2 more years), but, for many years thereafter, prices should skip along the bottom.

Cal wrote on Wed, 6/4/2008 - 11:35 am

Like we saw a spike last year because people who weren't reporting to MBA were going out of business and thus the spike represented the MBA members gaining markets share.

Is it possible we are seeing the same issue happening now with some major MBA members shutting down their wholesale side or going out of business?

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