John Lockwood is the gift that keeps on giving. Today we learn the forclosure ratio in Sacramento is not so bad. John dons his proffesorial robes and thus intones:What’s the real [foreclosure] ratio?
To get an idea, let’s focus exclusively on single family homes for a moment. According to the 2006 Sacramento County General Plan, in 2006 there were 149,368 single family homes in Sacramento County. In 2005, 21,103 single family homes sold through the MLS in the county. In 2006, the number was down to 13,597. Averaging those two years, we get 17,350, which is 11.62% of the 149,368 homes. (Or put another way, a home turns over on average every 8.6 years).
The number of foreclosures is rising every month, but let’s take stock of where we are now, as of September 14, 2007. How many unsold, foreclosed single family homes are inventory right now? The answer the MLS gives is 1,724 for bank-owned single family homes in Sacramento County. Dividing our 1,724 bank owned single family homes by our total number, 149,368, gives us 1.15%
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Alright, alright. Settle down, stop laughing. Math innumeracy is not funny even when it happens to a realtor. Should we all chip in and get John a clue of should we let him keep on keeping on for our continued amusement?
18 comments:
First, murst, housing market burst.
NR
And now that I've established squatter's rights on this thread, let me suggest a new government program:"No Realtor Left Behind".
NR
too funny NR!!!!
Dammit. Why not list how many houses have notices of default filed against them? That will increase the %.
Sorry for not embedding the link, but here's the article out of today's Sac Bee regarding foreclosures in the Sac area.
http://www.sacbee.com/103/story/378452.html
I appreciate trying to put a positive spin on something negative. But I'm lost on John's take of the situation.
Not to be outdone, Purva just posted, roughly speaking, that 10x income for a mortgage is quite normal. And that median incomes have nothing to do with median home prices.
Purva:
"Or how do you explain San Diego where the median price of a home is $566,700 and the median income is $55,637?"
Uhhh,... loose lending, dumbass.
Sac RE Agent, I like this comment from "mrtopproducer".
"Despite this negative news, I have learned that real estate is all about the long term and long term shelter, appreciation, tax incentives and building equity beats rental receipts.
There are many opportunities for both the home buyer and investor and real estate has a cycle of boom and bust, look for the solver lining."
@Tyrone
Money is "produced" by the Intaglio process. When "i" as in interest become negative, then sins are buried.
@Lou Minati
Solvers will always beat those "born with silver spoons"
Did Purva really say that?!?!? Sweet Jeebus what a moronic a-hole!
What's his next genius statement?
"People were spending on cunsumer goods like plasma tv's and new cars during the housing boom..so median income MUST have been higher than S55,637!"
Even better
"Casey bought eight houses in 1 year with no job, therefore you don't need a job or money to buy houses!"
Off topic update on the foreclosure next door here in Vegas: today, six weeks after the family moved out a realtroll™ sign was installed.
The agent carrying the listing is Tom Flippin. I nearly busted a gut into a double hernia laughing when I saw that.
No news on the underwater FKB two doors down trying to rent out his albatross.
I'm still doing what I can to improve the neighborhood by pissing on the weed growing in the foreclosed home front yard.
So, only six weeks from family moveout to realtroll™ action here on Vegas foreclosure front on my street.
Charles Whitman update.
Robert, when your blog was all-Casey-all-the-time I would just surf through here in a matter of seconds looking for any non-casey related threads and then move on.
Didn't you post a thread back then about David Crisp predicting what is essentially happening now?
His percentages seem fine. 1724 / 149368 is roughly 0.0115 as he wrote. Is it an apples/oranges situation?
There are a few problems with his numbers. One is that he's only considering the current number of bank-owned properties, when there are a LOT in the pipeline. He also throws out the 2005/2006 average sales figures, when the 2007 numbers will be far lower.
But the real problem is that he's comparing the number of foreclosed homes to the current total of homes. Interesting, but not entirely relevant figure. The directly relevant figure is the number of sales that are of foreclosed homes relative to the total number of sales. That number is much higher (approaching 10%?), and the higher it goes, the more downward pressure on prices.
And even as foreclosures increase, total sales are decreasing, so more and more sales will be foreclosed homes at increasingly discounted prices. Homeowners trying to sell will be pitted not just against a growing number of other people trying to sell, but against banks who are increasingly determined to rid themselves of foreclosed properties, and who can and will slash prices to do so. The "need to sell" inventory is growing extremely rapidly, and will push prices down, much more than the misleading 1.15% figure would indicate.
In Sacratomato, there is 1 foreclosure for every 2 closings.
http://www.sacbee.com/103/story/378452.html
Ouch!
The directly relevant figure is the number of sales that are of foreclosed homes relative to the total number of sales. That number is much higher (approaching 10%?), and the higher it goes, the more downward pressure on prices.
25.3%. Yes. That's part of John's math problems. The other is yearly sales versus an instaneous snapshot of REOs in the MLS. Not all REOs are MLS and even if he wanted to do MLS he should have counted all the REOs over the past year and not the snapshot. We already know that of the REOs went off the market this month. I'd venture without doing the math that his 1.2% should be 4-5x higher by his own logic. Note, "without doing the math" means I understand the issues and report reasonable conclusions, a rare trait in the world of RE hucksterism. If I get an objection I'll have to defend with real math but I should hope by now I get a little leeway.
Tell the RE clones to put this in their pipe and smoke it.
http://money.cnn.com/2007/09/19/real_estate/steep_home_price_drops_coming/index.htm?postversion=2007091912
Soft landing my butt..
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