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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: q_long who wrote (21551)	6/11/2004 1:32:45 PM
From: ild	Respond to of 306849

Some RE for sale inventory numbers for my location: Irvine, Orange County. It was very low in March but now it's a lot more than normal. On 3/15 Irvine: 138 All OC 18961 On 6/11 Irvine: 650 All OC 28739 Last year on 6/11 Irvine: 299 Last year on 9/28 Irvine: 390 (highest in 2003) There is definately an overhang of available properties. I don't see how it can get dissolved without reduction in asking prices. I spoke with a realtor yesterday. She confirmed that inventory is now plentiful and there are no more multiple bids. Sales are still very brisk because buyers are scared by raising interest rates and snapping reasonably priced properties. By "reasonably priced" she meant that the property's price isn't higher than the last sale. She added that she has never seen so many deals falling out of escrow. Reasons -- buyers didn't lock the rates or buyers just changed their mind because of much bigger selection available. Other observation. Current most popular mortgage plan is 5/1 ARM. It's fixed for the first 5 years and becomes fully adjustable after. Here is the chart of 5 year treasury yield. It was < 2% in June 2003, it was 2.6% in March, now it's at 4%. stockcharts.com[w,a]dacayiay[dd][pb200!b50!f][vc60][iLa12,26,9]&pref=G So this 5/1 mortgage is now at 5.250% plus closing costs, no points. This is higher than 30 year fixed was a year ago. Even "pure" adjustable rates have moved 0.25% up in the last few weeks. I'm surprised that I haven't heard about a case where an appraisal didn't approve a selling price. Will we see lawsuits where recent buyers sue everyone who let them buy overpriced properties? Another striking fact. Even though I'm bearish on RE I can't imagine that in September 2004 RE prices here will be just 10% up over their September 2003 levels. This would assume 15%-20% down from today's level.