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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (45090)	11/8/2005 2:55:51 PM
From: loantech	Read Replies (1) \| Respond to of 110194

Ramsey please review the posts between mish and I. Everyone including me knows mish is sharper than a tack. That is true mish! <g> But we have difference in opinion comparing wages and home costs from 1953 to 2004. I say wages are not keeping up at all and have presented some data and some anecdotal evidence. Let us know please. Starting here: Message 21865432

To: Ramsey Su who wrote (45090)	11/8/2005 5:41:03 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

An analysis of San Diego market by realtor Bob Casagrand... "Total sales for October were 2,695 single family units sold. This was a substantial - 15.6% - decline from the 3,192 sales level of October 04. While our Year-to-date sales level of 33,682 tracks within 3.5% of the 2004 sales level of 34,944. Typically, the 4th quarter drops about 14% in sales from the 3rd quarter so this by itself is not alarming. Although this decline has started a bit early with Septembers' 9% decline followed by Octobers' negative results. "We typically see a decline in inventory during this period which we are not seeing this year so far. The inventory at this writing is 15,897 homes, up by almost 200 homes from my last newsletter. Based on October sales this inventory computes to a 180 day supply. The average price for single family homes in October was $600,968, up 3.9% from last October's average of $578,640. However, when you factor in the decline in entry level buyers and the change in buying pattern it would appear that October actually had about a 3% decline in real prices. With the current upward trend in interest rates, particularly Adjustable Rate Mortgages, this decline in buyers could accelerate. In San Diego, 50% of all mortgages are interest only adjustable rate mortgages, 17% are adjustable rate and 33% are fixed rate loans. Lending institutions could get nervous about interest only loans in a market with equity beginning to tip down. It is important to remember that buyers buy and qualify for a "monthly payment", any increase in rates increases the monthly payment putting more homes out of reach. The use of 40 year amortized loans could negate part or all of interest rate increases and I would expect to see a broader use of these loans in the market. The average days on market in October was 59 days, up from 41 days in October 04. I would expect to see this number continue to climb due to the inventory levels. The two key numbers that tell you the relationship of buyers to homes for sale and what price trends could occur are Days Supply of Inventory and the Average Days on Market to sell. I have had a number of people tell me that there are a lot of "not serious" sellers on the market and that will help hold prices steady. I believe that there are a number of "sell at my price" or not at all on the market. However, unless they identify themselves to everyone, their home being on the market has the same impact as the "serious" seller. The person who must sell their home makes their pricing decision based on the perceived competition to establish their acceptable pricing level. In short, the non-serious seller is helping establish a new lower market price for their home. Remember, the 2005 buying levels had double digit price increases in the Spring of 2004 - what is different is the number of homes on the market and increasing interest rates."