Sixty days have passed since I took a snapshot of the pendings. The two-month-later status of those pendings is shown below. The likelihood of closing for the various types of Pending statuses follows the trend seen thirty days later. Again "pending short sale" has the lowest percentage of closings; a 26% closing rate. Although double the 13% observed after thirty days, 26% still pales compared to the closing rate for those listings "pending-loan" and pending-call"; 82% and 71%, respectively.
Furthermore, the pending short sales have the highest percentage of withdrawn or expired listings (14%), as well as listings placed back on the market (26%). This means 40% have failed to close. Even if every one of the 34% that are still pending close successfully, that means that pending short sales have, at best, a 60% close rate. In actuality, the close rate is probably less. We’ll see when I revisit the numbers next month [pendings post 90 days].
| "Pending" Status | # | % | closed 30 days later | closed 60 days later | back on market (active) | still pending | with-drawn or expired | |
| Active/Pending-Call | 97 | 12.5 | 52% | 71% | 11% | 14% | 3% | |
| Active/Pending-Loan | 307 | 39.5 | 58% | 82% | 6% | 8% | 4% | |
| Active/Pending-House | 17 | 2.2 | 29% | 53% | 12% | 24% | 12% | |
| Active/Pending-Short Sale | 199 | 25.6 | 13% | 26% | 26% | 34% | 14% | |
| Pending – No Show | 158 | 20.0 | 42% | 52% | 5% | 36% | 7% | |
| total | 787 | 99.8 |
Despite the long odds of a short sale situation closing, these types of sales remain popular among Buyers — 10% sold and 27% under contract (pending) – see below. This is due to the perception of "getting a deal" with these types of sales. For the same reason bank-owned properties are also popular with buyers – with 39% sold and another 28% under contract, 60 days later.
| "Special Condition of Sale" | # | % |
closed 60 days later |
under contract (pending) 60 days later |
| Bank Owned | 409 | 9.5 | 39% | 28% |
| Relocation | 20 | 0.5 | 25% | 10% |
| Short Sale | 503 | 11.7 |
10% |
27% |
| Subject to Court Approval | 24 | 0.6 | 33% | 4% |
| Other | 273 | 6.3 | 23% | 18% |
| None | 2,869 | 66.6 | 12% | 10% |
| Not yet specified | 207 | 4.8 | 3% | 4% |
| total | 4,305 | 100.0 |
I will update these tables again in another thirty days.
Data courtesy of the Northern Nevada Regional MLS – June 2008.
GreenNV
I am struck that homes listed as REOs were more than 3X more likely to close than private party homes.
Some interesting data mined from the May reports from the Center for Regional Studies:
43.5% of resales (103 of 237 SFR and condos) were REOs, up from 3% (14 of 468) YOY. Sales volume is down about 49%. When you factor out the REOs, sales volume for Joe Reseller is down 70% YOY.
The median value of homes at foreclosure has fallen 22% YOY, from $270,998 to $210,417 in May 2008. (This may be a red herring, depending on how they are determining this value. The “loss” being recorded is often significantly under the loan balance). The median resale price of REOs was $214,000 in May 2008.
GreenNV
Another fun fact I forgot to mention. From May 2007 to May 2008, there have been 1335 homes foreclosed upon, about 1.2% of every home in the county. Of these, 635 have been subsequently sold, leaving 700 still out there. If every Joe Reseller yanked their home from the MLS today, it would still take 3 full months to clear the REO inventory at today’s monthly sales volume. That’s how much of it is out there today, and the REO inventory is breeding like tribbles!
Martin
This info provided by Guy and GreenNV is very telling. It blows a hole in the recent realtor hype about how the market is picking up. Yes, sales activity is up, but it’s almost all REOs and short sales. And almost all at the bottom end of the market. It’s amazing that in the past year almost 50% of all foreclosures have sold, while every month only about 6% of all MLS listings sell. This good work just goes to show what some independent research can disclose. Meanwhile, the RGJ just spews out the monthly realtor shuck and jive.
And the foreclosures continue to roll on. How can anybody suggest the bottom is near?
Great work Guy and GreenNV.
billddrummer
Guy and GreenNV,
Excellent work, I salute you as well.
What will be interesting (and was alluded to on the Creep thread) is what will happen as higher value homes enter the foreclosure pipeline. Will that unstick the $300-$500K band that’s been moribund for the past year? Will it dramatically expand inventory even further in that sector? Will some of those homes go on the market at 50% discounts, as banks get even more aggressive at clearing REO inventory? Will non-foreclosed homeowners mail in their keys when they find that their homes have lost 40% of their value, and their $100K upside down?
Anyone who has any answers, feel free to comment. And please comment even if you don’t.
BanteringBear
billddrummer:
I believe we are going to witness massive price compression. All properties will eventually come down significantly leading to much less price discrepancy. We currently have a situation in which comparable properties are listed at $750k, and $450k respectively, with not much difference between the two. It’s very irrational. Ultimately, there will be a return to traditional pricing in which a $450k house is vastly superior to a $250k house. That’s just not the case right now.
CommercialLender
Hello, all, long time reader, but first time poster. Great blog, everyone.
Guy,
when I go to other sites like Trulia and search for all homes (including TH and condos) in Reno/Sparks, I get 7,298 total homes for sale, as of today. Supposedly this data comes directly from the MLS. How are these numbers so far off from yours, which was in the mid 4,000’s?
billddrummer
To CommercialLender,
Welcome.
As for your question, I wonder if that includes new product for sale that’s not shown in the MLS. I’m not that familiar with how developers market their products vs. the existing home market tools that exist, but if a builder opts not to market through MLS, and prefers to go straight to buyers, that might explain part of the discrepancy.
Another thing that might be happening is duplicate listings because of reciprocity agreements among realtors. I’ve seen some listings appear multiple places simply because two (or more) realtors are promoting the same property.
Any other thoughts are encouraged.
a reader
from my recent leg work:
a) builders offering good price on SFR and good floor plans are selling really well, e.g. Centex’s Sierra Crest at Cyan.
b) builders offering good price on SFR but bad floor plans are generating traffics, without much sales though, e.g. KB.
c) builders charging high price on SFR or focusing on condos/townhomes are not doing well.
d) resale SFR can sell quickly if priced $30K below average. however, much of sales are due to investors calling bottoms. if you still remember all the bottom-calling during nasdaq bust of 2000-2002…
Guy Johnson
CommercialLender,
Thank you for reading our blog, and thanks for the question. Unfortunately, I do not know what accounts for Trulia’s higher number of listings. My first inclination is that Trulia must be including non-MLS listed properties. As billddrummer suggested above, this could include builder inventory, or even FSBOs. But what I think is really going on is that Trulia is simply counting ALL residential properties listed through our MLS, which by the way encompasses a much wider area than just Reno-Sparks. If I query our MLS (the Northern Nevada Regional MLS) for all residential listings, it returns 7,741.
Future Buyer
Hi Guy–off the subject. Beautiful house in Arrowcreek. Walked through it yesterday afternoon. Perfect for us with the exception that we would need it to come down in price just a tad–500k! Let me know if you foresee any price reductions in the future…
CommercialLender
Guy,
Thanks for the input. If Trulia.com is correct, and your total MLS numbers are too, then the months/years of inventory are double what we’ve expected.
Guy Johnson
CommercialLender,
Not necessarily true; if we assume Trulia is simply reporting listings for a wider area than just Reno-Sparks. For example, when I calculate inventory I take the number of active listings for a particular area and then divide by the number of solds, in the past thirty days, for that same area. So, for all of Reno-Sparks (MLS area #100) there are 4,660 active listings. There have been 383 solds in the last thirty days in this area #100. That yields a little over 12 months of inventory.
If I instead take a look at the inventory for our entire MLS (all of Northern Nevada), I find 549 solds and 7,743 active listings. That gives us a little over 14 months of inventory.
That being said, if Trulia is indeed including other sources of inventory (builders stock, FSBO) in their listing count, then you are correct; actual inventory is higher than what we report based off of our MLS numbers.