The May edition of Glen’s East Bay Housing Numbers show that housing inventories continued to climb at an unusually fast pace, up 64% since the beginning of the year. Since January 1st the month’s supply has increased from 1.7 months to 2.8 months while the pending over active ratio dropped from 1.66 to 1.18.
When comparing these numbers to May of 2009, we’re able to put this in a better perspective.
Last year’s May numbers are similar to this year’s as follows:
1) Active Listings (Homes for sale) are roughly within 2% of last year’s numbers.
2) Pending Sales (Homes in contract) are within 5% of last year’s numbers.
3) We now have a 2.8 month supply, the same as last year.
4) The Pending over active ratio was 1.15 last year, now 1.18.
Although it’s typical to see a swing up in homes coming onto the market from December to May, we haven’t seen an increase of this size so quickly since I have been tracking these numbers (2005).
I think the real question to ask here is not why are we seeing such a huge increase but why were December’s numbers so low?
Government programs and concerns over bank financial statements were an influence. REOs continued to dominate sales while few were coming on to replenish the market. As an REO agent, dealing in foreclosed properties, our assignments dropped off dramatically beginning last fall. Other REO agents confirmed similar circumstances. This is also consistent with what many media sources have indicated.
A comparison over a four month period, between this year and last year, shows a dramatic drop in REO sales. 32% of the sales over the last 4 months have been REOs. For the same four month period last year, 63% of sales were REOs.
This year’s increase was not dominated by distressed properties coming onto the market. Active listings, pending sales, and sales over the last 4 months are all down by about 5% compared to what they were at the beginning of the year.
From what we’re hearing, this may change in the coming months. Foreclosure activity has increased over the last few weeks and we, as well as other agents, are beginning to see new assignments.
All indications are that distressed properties will continue to be a factor for several years.
