Eric Edelman's San Diego Real Estate Blog

Opinions and observations on current market conditions in San Diego, CA.

http://ow.ly/5rt2T Check out my new vide

Posted by ericedelman on June 27, 2011

http://ow.ly/5rt2T Check out my new video on the “Simplified Short Sale” process. I think you’ll enjoy it!

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http://www.edelmans.com/?p=573 -Banks ar

Posted by ericedelman on June 21, 2011

http://www.edelmans.com/?p=573 -Banks are a huge part of why the market has not yet recovered. Check out my new video blog to learn more!

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How’s The Market: Shadow Inventory. Conspiracy Theory or Reality Check?

Posted by ericedelman on May 4, 2011

There is often passing reference made in the mainstream media to the “shadow inventory” in the real estate market. I’ve never actually heard anyone in the mainstream press explain it in a way that is accurate or would make sense to the average person. So, I think most people and many real estate agents dismiss the mention of shadow inventory as some sort of conspiracy theory cooked up to sell newspapers. Nothing could be further from the truth.

The truth is, shadow inventory is all to real and it is going to keep home prices flat or very likely declining for the next several months if not longer. Shadow inventory are the homes currently in various stages of foreclosure, but not yet on the market. These include bank owned homes not yet listed for sale and home owners who have received notices of trustee’s sale or notices of default. Since the cure rate on mortgages over 90 days late is virtually nill, it is an absolute certainty any home currently in any stage of foreclosure will have to be sold. The homes in the shadow inventory which are not already bank owned will either be sold as short sale or they will become bank owned and be sold that way. Either way, there are a large number of homes in existing inventory and about an equal number of homes in the shadows.

All this is easy to talk about, but let me put some real numbers to it so you can see for yourself. Looking at the San Diego I-15/SR56 corridor (zip codes 92126-92131 and 92064, City of Poway). There are currently 1458 shadow inventory homes. The number of active inventory homes is very similar at 1448. This includes all attached and detached homes in these zip codes. There is as much shadow inventory as there is currently active. That fact means nothing unless we take a look at how much of the active inventory is being absorbed on a monthly basis. In the past 30 days, 357 homes have closed escrow. There are currently 589 in escrow, so given the current active inventory there is around a three month supply of housing in the I-15. At current levels of supply and demand, prices have been somewhat declining so far this year. Once you add the shadow inventory into the mix, there is around six months worth of supply and prices are almost sure to continue on the same trend or even worse.

My prediction for 2011 is a 5-8% drop in the median price. We’ll have to wait for the year end numbers to see if I’m right. All of the information I laid out above can be confirmed my looking at the zip code data and foreclosure data on our website. You can see all this very clearly for yourself.

Does all this mean, if you are looking to buy a home, you should wait for prices to go down more? Maybe, but if interest rates go up at all (and they’ve got no where to go but up) your purchasing power will be reduced, so a price drop doesn’t help you. My feeling is, if you are thinking about buying a home, now is absolutely the right time. When purchasing anything with borrowed money, you must consider the cost, as much, if not more than the price. Do you remember the exact sticker price you paid for last car? Most people don’t. What you do remember is how much you write a check for every month to pay that note off. Buy when the time is right for you and you find the house you want to live in for the next few years. Values will eventually go back up again, but not in short term. You must think of a home as a 5-10 year investment at a minimum.

Does this mean if you need to sell your home for some reason you should sell now. One word answer. YES! Sell now before more competition comes on the market. Don’t let your neighbor put their home up 1st and walk away with your equity. I’ve helped a few people already this year who thought they were selling for too little and then came back and thanked me later when they had their home equity in their pocket and values in their neighborhoods continue to drop. 8% is a lot of money when you are talking about a $400,000 property. Don’t loose any more than you’ve already lost. If you must sell this year, get the property on fast with an agent who knows how to get you top dollar and listen to your agent when it comes to pricing and offers.

Hopefully this has been helpful in explaining what the meaning and implications of shadow inventory are for our local market. As always, I’m here to answer questions and am happy to do so.

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http://ow.ly/4CSjE – 04/18/2011 “How’s

Posted by ericedelman on April 18, 2011

http://ow.ly/4CSjE – 04/18/2011 “How’s The Market” update. Focusing on detached homes in 92127.

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http://ow.ly/4Bf7q Great price reduction

Posted by ericedelman on April 15, 2011

http://ow.ly/4Bf7q Great price reduction on this Scripps Ranch town home! Eric’s “Deal of the Week”

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http://ow.ly/4p7DA Check out my latest b

Posted by ericedelman on March 29, 2011

http://ow.ly/4p7DA Check out my latest blog post. Scripps Ranch 92131 home inventory. Single family vs. condo for the past 12 months.

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http://ow.ly/4ofnO Check out my “How’s

Posted by ericedelman on March 28, 2011

http://ow.ly/4ofnO Check out my “How’s The Market” Report for this week! Just posted on my website.

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Check out my Monday “How’s the Market

Posted by ericedelman on March 21, 2011

Check out my Monday “How’s the Market” report for San Diego, 92128. http://www.edelmans.com

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How’s the market in Mira Mesa, 92126? C

Posted by ericedelman on March 16, 2011

How’s the market in Mira Mesa, 92126? Check out the latest blog post on http://www.edelmans.com

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http://ow.ly/49I8c How’s the market in

Posted by ericedelman on March 8, 2011

http://ow.ly/49I8c How’s the market in 92129? Check out single family home prices for the past 12 months.

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