The Week In Review

The statistics ran against the recent run of prolonged recovery this past week in the Zip Code –- 26 new homes came on the market, and only 17 went into Pending. There were also 17 homes that closed escrow.

In the Meadows, three new homes came on the market, and one went off at $680,000.In an unusual move, three Meadows homes were “Withdrawn.” That is an unusual number, and there was no common thread.

This market defies analysis, but that won’t stop me from trying.

The wild cards are a huge inventory of foreclosures that the banks are sitting on without putting on the market, as a means of keeping prices semi-stable while getting some money rather than no money and having to do repairs.

Added to that large but unknown supply are a large but unknown number of homes that people would like to sell, some of which have been marketed before but withdrawn in frustration, and others which have never been put on the market.

No one has any control over the timing or the pricing of that inventory, but whenever the timing and whatever the price, it will either lower further the prices in those lower price ranges where foreclosures historically occur, or sustain the length of the existing recession.

That said, there is nothing in this hidden inventory to help the Seller, and much to help the Buyer for years to come. The status quo looks to be the foreseeable future.

MLS Update May 28

Two new listings in Hidden Meadows, one 1,772 s.f. home on Red Stone in the Covenant, and one 3, 126 s.f. single-level home (2.53 acres) on Canyon Country Lane, out of the Covenant.

I know the Canyon Country home, and it is a beauty with views, and a Guest House.

In the Zip Code in general, there were 16 new homes listed in the past 72 hours, 14 homes go into Pendings, and six homes closed escrow.

 

Holistic Analysis

The Dow Jones/Case-Stiller Report says that today’s San Diego prices are still 47% higher than the year 2000 – just to put this “housing crash” into perspective.

The problems I see ahead are headed by “the shin bone is connected to the knee bone…” and our housing market is not in a vacuum.

The State of California is a mess. This will not come as a shock to you, but let’s look at specifics. We have the highest paid teachers in America (NEA website) and our students stand 47th in academics (see The National Report Card of the US Dept of Education.)

We have the highest paid Legislators in the United States, but their work has put us into virtual bankruptcy. Los Angeles has the HIGHEST pay of any city council in the nation, and each council members have 20 Aids EACH, plus EIGHT free cars! (If they each took a 50% pay cut they would then make what San Diego City Council members make!)

We have one city already in actual bankruptcy (Vallejo), and others examining the viability of doing so. We have high rollers and businesses moving out of state IN DROVES.

We can’t ask the nation to help us out – they are “out of money” as the President says.

And, the UN predicts that the world economy will not expand next year, but contract.

There is no White Knight out there, and while housing may well stop its precipitous decline, salvation is not right around the corner.

But it is the economy of California that impacts greatly our local housing market. The California economy is at its nadir quite simply because of public employee labor unions – that is the absolute truth. Their salaries, and their pensions are the driving force behind our problems, and since their salaries and pensions are the result of contracts negotiated and signed by our politicians.

Those politicians, whether still in office or retired (on the gold-plated contracts THEY negotiated) look around and say it was someone else’s fault – but it isn’t.

You can hardly blame the unions for negotiating the best deal they could, any more than you can blame the UAW for negotiating their contracts that ruined GM and Chrysler.

If our homes are still 47% higher than the year 2000, perhaps we need to reset the government to 47% higher than the year 2000 – and since we have expanded government 100% more during that time, that would be a huge reduction.

Until we get this entire economy under control, there is little hope for our housing market, because it is only a small part of the overall California economy.

We need a holistic approach to the entire problem, but particularly the public sector unions, their pay and their pensions.

Analysis

This market defies analysis, but that won’t stop me from trying.

The wild cards are a huge inventory of foreclosures that the banks are sitting on without putting on the market, as a means of keeping prices semi-stable while getting some money rather than no money and having to do repairs.

Added to that large but unknown supply are a large but unknown number of homes that people would like to sell, some of which have been marketed before but withdrawn in frustration, and others which have never been put on the market.

No one has any control over the timing or the pricing of that inventory, but whenever the timing and whatever the price, it will either lower further the prices in those lower price ranges where foreclosures historically occur, or sustain the length of the existing recession.

That said, there is nothing in this hidden inventory to help the Seller, and much to help the Buyer for years to come. The status quo looks to be the foreseeable status quo.

Over the past 72 hours, absolutely nothing happened in Hidden Meadows real estate. Rather typical for a weekend.

Analysis

Mark Sanford, Republican Governor of South Carolina, recently said, “”Our government has now ‘spent, lent, or committed’ $12.8 trillion in its attempt to blunt the recession.”

(The number is confirmed by new Pulitzer-winning, http://www.politifact.com .)

When you read the tea leaves, that is a major future problem. My advice to everyone is to refinance as soon as possible to today’s ultra-low rates because there are several scenarios for the future that spell major, even uber inflation.

Of course the Obama administration knows this also. They know that the U.S. is in danger of losing their AAA rating for the first time in decades, They know that China is reluctant to buy more U.S. debt, and if they do it gives them still more leverage over our world-wide political actions.

My belief is that the Obama administration THINKS they can “manage” the situation, but with all due respect,  they may be bright but they are inexperienced and overmatched by events. The President has said that his spending is unsustainable, but then he insists of sustaining it and then promising to extend it further with a medical plan.

I am not sanguine that he can pull it off – backing off spending just after recovery is assured but in time to recover before inflation gets a solid hold. 

Even Alan Greenspan, the Wisest of the Wise, had to admit that he missed signals that brought us here, and the Obama team has nowhere near the strength or experience that the Greenspan team brought to the economic table.

I have no idea what is going to happen, but the prudent thing to do is to do whatever it is that your medium range (4-6 years) plans tell you to do. If you are planning to move, you have a year, perhaps two to do it with relatively low rates – but perhaps not even that long.

Life has a habit of frowning on plans, and there are so many variables that predictions  are chancy, but whatever happens it is best to hedge your bets and steer the safe course.

The prudent course is to lock in now – either the re-finance, or the sale and new purchase. If you are considering moving, you have the best of all possible worlds — low fixed interest rates and high availability of homes. If you are waiting for a large market recovery to move to a retirement home, the wait may exceed your actuarial table.

The only likely major change in the foreseeable future, is higher interest rates…not higher prices.

The Week in Review

Very good statistics this week, following excellent statistics last week.

In the past seven days in the Zip Code there were 19 new listings, and 21 Pendings. That continues a virtually unbroken string of many weeks where there were more homes going off the market in Pendings (or sales) than coming on the market.

One new listing in the Meadows this past week, and three homes went into Pending. That means a total of seven Pendings (or sales) in the past 14 days – absolutely unheard of number of sales – and most of them were regular homes, not low-priced or distressed homes.

Eleven homes closed escrow in the Zip Code, but none in The Meadows. The only statistical interest I have in Closed Escrows is the final price, because their timing can be anytime between two weeks and three months. Determining anything on a time line with closings, therefore, is meaningless, except in a long, long period. Since I work in week-long increments, Closings simply do not work.

The numbers are starting to look as if the local market is strengthening. Perhaps built-up demand is kicking in..

Each week I send a list of all available Meadows homes by e-mail to anyone who asks for it by e-mail (allen@allenhemphill.com) and additionally I leave a dozen copies or more at Alex’s Deli in the Meadows.

Caravan Review

My knowledge of the Meadows, and with 32 year s as a real estate Broker, lets me believe that I can read homes without seeing them – based upon location and knowledge of the Meadows.

Sometimes, I just get crossed up.

I thought that with the four homes on the Realtors Caravan, that I was going to love two and hate two.

I was absolutely right, but missed completely on which two in each category.

Because I simply love Treeside and Rim, as streets, I thought those would be my favorite homes – wrong.

And, because of the price on the Meadow Glen Way East, and the location of the home in the Summit, I thought those homes would not impress me. Wrong again!

It just goes to demonstrate that prejudice, for whatever reason , simply cannot be supported without individual examination.

The totality of the Caravan is that I really liked the Meadow Glen Way East home at $440,000 – and the home in the Summit Pinion Trail at $650,000.

I don’t think the Pinion Trail home will appraise at $650,000, so my opinion is that it is overpriced, but it is a terrific single-story, 3,200+ s.f. on the golf course on a quiet cul-de-sac, and absolutely gorgeous…