OT...but funny

The biggest loser.....

It's been a while since we saw a house here so lets take a look at a home that has fallen in value a whopping 63%. 16622 Catalonia Dr is a 5400 s/f Mcmansion up in Woodcrest. This behemoth sold new in Dec. 2006 for $1.381 million. Today it is listed at $512k. It's an REO now so no short sale BS to deal with. The price is solid based on comps so I don't think it will get bid way up. I'd say this area has "corrected" back to about where it would have been had there been no bubble.

I've looked at quite a lot of this model in this tract. I'd never buy one of them though. They are just way too big. If you have a family of 20 or yearn for the MTV "Cribs" lifestyle then these might be for you. I'd prefer something I can afford to maintain, heat, cool, etc.

The ups and downs in the IE

I noticed Housingtracker.net was running again after being offline for a while. Looking at the median listing price data it looks to be pretty stable over the last year or so at $240k. It's kinda fun looking at the numbers and seeing the peak in 2006 at over $460k. Then the crash to the low in early 2009 of $217k. It's crept up to the current $240k in the summer and fall of 2009. In the areas I watch the prices seem to have leveled out. There have been a few great deals closed compared to the comps but these all look like inside deals. Most (if not all) of them never hit the open market. Fraud? I'm sure quite a few of them were technically fraudulent. But other than those the sales prices are about the same today as in late 2008.

The inventory numbers are another fun set to look at. We hit a high of nearly 60,000 in late 2007 when the market seized up as prices fell, buyers vanished and lending dried up. The inventory started to fall once the government started all the bailout/workout BS. The low water mark for inventory was around the holidays last year. We have been creeping up ever since. Banks are starting to ramp up the foreclosures (more slowly than anticipated though). Short sales are now being encouraged by banks and that's also helping pump up the numbers. We are getting close to 32,000 but there is still a serious shortage of good properties. I'm seeing lots of overpriced listings and lots of trash. The pearls are few and far between.



For you history buffs, here's the data for the last few years.

Month	SFH+Condo Inventory	25th Percentile	Median	75th Percentile
Jun 2010	31,100	$150,750	$242,450	$422,500
May 2010	30,478	$150,600	$240,960	$420,180
Apr 2010	29,844	$149,950	$237,975	$412,450
Mar 2010	27,466	$149,910	$235,000	$399,978
Feb 2010	25,888	$147,675	$230,975	$398,225
Jan 2010	25,155	$147,450	$229,225	$397,500
Dec 2009	25,435	$149,225	$232,125	$403,737
Nov 2009	26,575	$149,920	$238,400	$420,010
Oct 2009	27,569	$149,175	$236,250	$423,450
Sep 2009	27,493	$149,925	$239,500	$435,988
Aug 2009	28,410	$148,882	$237,880	$431,400
Jul 2009	29,257	$147,313	$235,225	$429,250
Jun 2009	30,584	$144,980	$229,760	$414,790
May 2009	32,614	$143,725	$225,000	$401,973
Apr 2009	35,365	$140,000	$219,850	$387,500
Mar 2009	38,625	$139,960	$217,080	$369,580
Feb 2009	40,003	$143,125	$219,148	$364,750
Jan 2009	41,594	$148,976	$222,615	$364,140
Dec 2008	43,995	$155,997	$228,843	$371,270
Nov 2008	45,466	$162,791	$234,869	$378,171
Oct 2008	47,030	$169,812	$241,097	$385,301
Sep 2008	48,794	$179,945	$253,064	$396,132
Aug 2008	48,928	$189,183	$264,707	$410,471
Jul 2008	50,281	$198,565	$274,909	$423,742
Jun 2008	50,874	$209,673	$291,266	$445,107
May 2008	51,306	$220,983	$308,857	$455,220
Apr 2008	52,578	$237,943	$319,005	$475,726
Mar 2008	53,200	$252,057	$336,952	$493,538
Feb 2008	53,347	$265,768	$352,536	$507,636
Jan 2008	53,971	$277,607	$366,177	$518,359
Dec 2007	55,808	$289,994	$374,137	$534,693
Nov 2007	58,257	$301,146	$387,907	$546,581
Oct 2007	57,873	$312,784	$398,326	$561,045
Sep 2007	59,183	$317,841	$407,566	$564,659
Aug 2007	56,879	$328,547	$415,993	$578,136
Jul 2007	56,592	$337,269	$423,300	$592,323
Jun 2007	55,370	$341,823	$426,332	$601,018
May 2007	53,371	$347,533	$434,838	$609,832
Apr 2007	51,233	$350,796	$440,705	$615,759
Mar 2007	46,932	$354,807	$444,272	$620,370
Feb 2007	44,865	$355,285	$444,140	$620,370
Jan 2007	41,962	$355,100	$444,712	$620,370
Dec 2006	44,794	$358,810	$445,173	$620,370
Nov 2006	47,124	$359,605	$445,463	$621,387
Oct 2006	48,067	$360,038	$449,609	$621,387
Sep 2006	47,561	$363,553	$450,500	$621,457
Aug 2006	46,408	$365,700	$453,627	$625,172
Jul 2006	44,460	$369,940	$456,393	$636,981
Jun 2006	41,618	$370,894	$460,939	$643,759
May 2006	38,227	$370,894	$461,100	$649,048
Apr 2006	35,332	$370,576	$461,100	$652,575

Now do you think prices have bottomed? The inflation adjusted price chart from Schiller still puts prices the highest they've been in the last 130 years. Of course that chart does not factor in the size of the homes or any other changes to the home. It just takes the median price (adjusted for inflation). Since homes are probably at least twice the size and have many more features, you could certainly make the argument that they could be less expensive. I'd say the chart is useful for entertainment purposes only or possibly useful if used on a cross section of older homes. But using it across the board when in the last 10 to 20 years the size and extravagance of homes has gone way up isn't practical.

Delusional builders

With the shortage of homes and the competition to buy the good ones a few builders are throwing up sticks again. The prices they are asking leave me scratching my head wondering how they will sell any. But remarkably enough people seem to be buying them. How they are getting loans is beyond me.

Pacific Homes has started building again in Moreno Valley. They had folded this tract up for a couple of years but I noticed they were building again when I was over playing golf at The Ranch GC. They were asking nearly $700k for these at the peak. Now they are asking just over $400k. But that is still nearly $100 s/f (in MoVal?). The average price in this area is closer to $80 s/f. So purchasing one of these new homes puts you about 20% underwater the minute you take the keys. It's like buying a new car.

26891 Cimarron Canyon is a new home and it's mini McMansion in this tract. Not done just yet but the builder has it listed for $409k or $97 s/f



Or you can buy 26991 Cimarron Canyon. This home was built in 2007 and sold for $571k, which was a good deal at the time because they were asking a lot more for these just a few months prior to that. But this one has already gone back to the bank and is offered as an REO for $312k or $75 s/f. The house looks nice, it's not thrashed it's just priced in line with most of the other stuff in MoVal.



So how do builders figure they can get 20% more for the same house? How to people get loans on these things? There's no way a legitimate appraisal will come in at those new home prices. And what the hell are they doing building more 4000 s/f homes?