Housing sales begin the dreaded double dip out west. Not everything there is applicable to Greenwich, of course, but the factors the author cites as responsible for the drop – negative equity, the slow process of clearing foreclosures, etc. are present here, too.
Organic sales — me selling a house to you and the true gauge of the health of the housing market — have stabilized at very low levels due to epidemic effective negative equity while foreclosure-resales languish due to the artificial lack of supply. In addition, median prices are again trending lower, as organic sales remain depressed and over the past couple of months, distressed sales have picked up slightly as a percentage of total sales.
In Feb, new Notices-of-Default outpaced sales by 10%, meaning the supply pool is filling quicker than it’s draining, and the mid-to-high end market continues to fall. Lastly, comps were easy in Jan and Feb and the tough comps begin in March through year-end — the first two months of 2010 were only a taster.
We are running out of sellers and buyers quickly, as HAMP has kept distress inventory at extremely low levels relative to last year and epidemic effective negative equity — not enough equity to sell (pay a Realtor and put a down payment on a new house) and re-buy — has trapped 10s of millions in their houses across the nation.
Additionally, flip-resales that have provided a noticeable boost in sales counts due to double-counting will diminish in 2010 due to the heavy handed foreclosure prevention in 2009, providing a further drag that few are looking for.
What now? With foreclosures artificially depressed for the past year due to HAMP and other aggressive initiatives, houses that are most in demand are becoming scarce.