Searching For A Bottom
As the market continues to slow….
Since 2005 when we closed 41 total residential units in the local Mesquite MLS, January closings have gone to 38 in 2006, 28 in 2007 and now 26 in 2008. Inventory, specifically property being listed, grew 7.2 new listings to each 1 that went into pending status in January 2008.
While the total number of properties for sale only increased about 3%, the other properties went out as failed listings, either expired or withdrawn. The number of vacant properties remains very high and most of what has been rented is running large negative cash flows. Some of those failed listings will be tomorrow’s foreclosures and short sales. Many people must sell.
The speculative buying fad of the recent past, that pushed builders to capacity, caused lenders to become shady street venders hocking stolen goods in dark alleys and led normally smart buyers into mindless bidding wars, now looks like an $8 cup of cold Starbucks coffee.
If you are wondering where they got the stolen goods, take a look at the consumers faced with payments they can’t afford combined with negative equity positions. Take a look around the world at the values of the CDO’s held by every type of investor, from institutions to pensions to 401K plans and individual investors. It is the stuff you hear on the nightly news; those write downs that they now say exceed 260 billion and are likely on their way to half a trillion. Greed at every level seems to have gotten the best of them all.
At January’s closed numbers there is a 16 month supply actively listed today. There are at least 50% more out there that need to sell, that’s a 24 month supply, without any new starts until 2010. The builders will keep building because they have to. They speculated on the land and lots of it!
Mortgage interest rates are extremely attractive. Qualifying for a mortgage has gone back to: Can the borrower actually afford to make the payments? Key word being afford, and that of course relates directly to prices, as well as rates.
The principles of, supply and demand, price competition, and affordability will be setting the rules for 2008 and beyond. Stimulus plan or not.
Chris W. Miller
ERA Brokers Consolidated
Mesquite NV 89027
702- 346-7200
435-862-5951
Tags: mesquite foreclosures, mesquite home builders, mesquite homes, mesquite market, Mesquite Nevada real estate, mesquite real estate