This seems right

High end mortgages  are tanking Business Insider:

Look at unit sales over $1 million in Sarasota County Florida and all appears well. Twelve-month sales equaled 128 units at March 1 versus 151 units the previous year. The 15 percent fall in sales is real, but it isn’t scary. If you want to sell your home there, you may not like the rest of the math as much.

Talk to Hannerle Moore, an agent at Michael Saunders & Co. She suggests a sobering strategy. Reduce prices at least 40 percent from 2005 highs.

“I tell them, ‘You could be the lady who has had her home on the market for 936 days, or you could sell,’” Moore told the Sarasota Herald Tribune (Are High-End Properties Going Down? 4/26/10).

In putting together this story, I was unable to get all the data I was after on high-end inventory. I am firing shotgun to lead to something worth knowing. My review runs near and far in six posts starting today and includes most importantly data on the mortgage performance of jumbo mortgages. My hypothesis is that mortgage performance serves as a leading indicator of both future inventory and price trends. The worse the payment performance, the more prices will fall. Signs of serious distress on many other measures have been in open evidence for expensive properties and we will see it most clearly in jumbo mortgage performance.

Consider the statement of National Association of Realtors’ chief economist Lawrence Yun. Almost exactly a year ago he said the supply of existing homes for sale over $750,000 had reached a forty-month supply (High-End Foreclosures Are Next, 5/27/09, CNBC). Translate that into something you understand: Inventory was SIX TIMES higher than it should be.

3 Comments

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3 responses to “This seems right

  1. cos cobber

    CF, what are the sales stats for the month of June to date? Seems slow to me except on the low end. Even there, as many houses sell, the same amount seem to come on the market leaving the low end fairly flush with product.

  2. Fly Girl

    Drove by 450 North this morning, sadly still sitting and forlorn. Your last thread about this house was in April. Any update since then?

  3. out looking in

    Wow- this is news? Sounds like the nation still has idontgetititis…Lake Forest with 50 homes for sale over $3mm? Not even at the peak should there have been 50 homes valued at over $3mm (unless every lot ON Lake Michigan was for sale)…it’s going to take time (and perhaps bulldozers) to heal this market…but the recovery will most likley be L-shaped and take many years (or a massive devaluation of the dollar) to cure