Recent history of Redondo Beach asking prices - and other notes
I've spent some time this weekend trying to resolve some unresolved inventory records in my database. My database has been running pretty much evenly divided by inventory records that have sale records and those that don't. I am almost at 2000 records.
Keep this in mind as you hear realtors talk about "pent-up buying demand" over the coming months. What I never hear realtors talk about is pent-up selling demand. I have a database of nearly 1000 unresolved inventory records for Redondo Beach.
Anyway, back to the history of asking prices. I thought I'd look and see if asking prices have gotten any more reasonable over the course of time. The chart is the median of original asking price of properties newly listed in that month, not the current asking prices of all unresolved inventory.
It looks like asking prices have come down, somewhat. Ignore that crazy spike at the beginning of the graph. That just means my database was not populated yet and I have very few inventory records at the beginning of my dataset. The data gets more richly populated, and presumably more accurate, over time.
I'm assuming the slight rise we are seeing now is in anticipation of a spring selling season. So far there is no evidence of a bounce yet in the home sale numbers, but I have been seeing a few properties in my area get sold, and quite a few For Rent or For Lease signs going up.
I should probably add a moving average. This month, I added a lot of new bubbly construction from Merit Real Estate to my inventory table which may also account for the slight rise in asking price.
One realtor knocked on my door last week while I was taking a shower, and I was kind of sorry I missed her. She's the same lady who knocked on our door last June and invited us to an open house (and she did get that house sold, though the original asking price of $760,000 and the final sale price was $670,000). She left a sheet of recent sales in the neighborhood. I very much appreciated that she didn't try to calculate a median sale price as if to imply that that is what homes are worth. She didn't try to dazzle me with statistical bullshit - she simply listed the sales.
But she left another sheet of paper talking about FHA loans as an option in financing a purchase. Let's see - no income limit, no sales price limit, no FICO score requirement, no reserve requirement - haven't we heard this someplace before? Oh yeah! The subprime mess and the credit market meltdown! Only now the FHA is insuring lenders by collecting premiums from the borrowers. Oh, they throw in one stipulation - bring 5%, no questions asked. I suppose that's better than 0% down, but doesn't leave me any assurance that credit restrictions are really all that much tighter.
This just drives home why I am so bearish. Assuming for one wild and crazy moment that the government succeeds in reinflating this bubble, and the Ginzu falling knife shoppers come pouring back into the market and get FHA loans, do you think that the FHA is going to be able to collect enough in premiums to compensate for potential losses?
If this decline continues, victory for realtors will mean being able to convince sellers to lower their prices and get properties sold. But they won't tell you in the local papers how much the seller had to reduce his original asking price to get a place sold. I am working pretty hard to tally those statistics and publish them here, since you won't get them elsewhere.
Monthly dollar volume charts will get published next weekend. Stay tuned.