"Traditional Seller" -- Decoded

Mom, Apple Pie -- and No Banks

Probably the most popular term on MLS at the moment -- right after "mint," "move-in condition," and "experienced short sale agent" -- is "traditional seller."

No, that doesn't mean the owners believe in "Mom and apple pie," dress conservatively (no face jewelry or tattoos), or otherwise have an "Ozzie and Harriet" profile (if you're too young for that reference, think, Phil and Claire Dunphy from Modern Family).

Rather, it means that: a) the Sellers have title to the home, not a bank (it's not a foreclosure); and b) they don't need the bank(s) that hold their mortgage to take a haircut for them to be able to sell (it's not a short sale).

Listings with this language are most common in areas where foreclosures and short sales are dominant, and "traditional sellers" need a way to distinguish themselves.

Are Title Insurance Companies Bracing for a Tidal Wave of Claims? Nah.

National Moratorium
on Foreclosures

Surprise, Surprise . . . the same banking behemoths that recklessly originated trillions in dubious mortgages -- fuel for Wall Street's securitization juggernaut -- are apparently now running roughshod over the rights of delinquent borrowers as they seek to foreclose on their homes.

How big a problem is this?

And who's going to pay for it?

Background

To investigate (a little), I checked the stocks of three, large publicly-traded title insurance companies.

My theory is that if hundreds of thousands (millions?) of homes were wrongfully foreclosed on, there is going to be a tsunami of title insurance claims in the offing, brought by Buyers of those homes who in fact . . . may own nothing.

So, is the stock market clobbering the largest, publicly traded title insurance companies, in anticipation of all those pending claims?

Claims? What Claims?

Hardly.

Three of the biggest, publicly traded title insurance companies -- Fidelity National, First American Financial, and Old Republic -- are all trading in the middle of (or above) their 52 week price ranges.

Which is certainly curious, given their presumed exposure to this brewing mess.

I don't have a ready explanation, but my guesses are: 1) the companies somehow don't do much business in the markets (FL, CA, Las Vegas) where the problem is greatest; 2) they've already reinsured or otherwise laid off the risk of those claims (or think they have -- can you say, "insolvent counter-party?"); and/or 3) the title insurance companies -- and their investors -- figure that the banks, not they, will ultimately bear responsibility.

And by "the banks," I mean "us" -- the taxpayers now standing behind those too-big-to-fail entities.

P.S.: maybe "tidal wave" should be "title wave."

On Sale: Basswood Road

Chain-Reaction "For Sale" Signs

It's one of those anomalies that you see from time to time -- and that understandably gives Buyers pause: a block where every other house seems to be for sale.

At the moment, that phenomenon seems to characterize Basswood Road, a 3 block-long street just west of Cedar Lake that straddles France Ave. (all but the very east end is in St. Louis Park; the rest is in Minneapolis).

What's going on?

I see three factors at play:

One. The "clogged pipeline" effect.

Two of the four (soon to be 5!) houses on the market were originally listed more than 18 months ago.

Rather than reduce their prices incrementally when they failed to sell, the owners have been holding their ground, literally.

While that strategy can work in a rising market, in a falling or flat market it causes a home to be "marooned," overpriced and stagnant -- and gumming up the pipeline for more recent home sellers.

Two. Functional obsolescence.

Much of the housing stock in the area consists of ramblers built in the 1950's: sturdy and solid, to be sure, but now functionally obsolete in many cases.

That often means only one hall bath for all the Bedrooms (vs. a private Master Bath); a dated, too-small Kitchen; and small and too few Bedrooms.

As I've written before, while mortgages have never been cheaper, (major) remodeling dollars are especially scarce now.

Three. Generational turnover.

Several of the Sellers have been in the neighborhood for 25-plus years.

They're now empty nesters who need less space, don't want to do maintenance, and want to travel more.

In other words, it's just time for them to sell.

Having all bought around the same time, it's natural for them to now move on at the same time.

Sizing it All Up

So, what should Buyers make of all the homes for sale on Basswood now?

And should you ever steer clear when you see too many "For Sale" signs?

My answers: "not so much," and "yes, depending."

Certainly where the explanation is rampant foreclosures, Buyers are wise to stay away: foreclosures are like an undertow that pull down the value of all nearby homes.

Ditto for unalloyed negatives like new (or wider) nearby freeways, garbage incinerators, power stations and the like.

However, when other factors are at play (the case on Basswood), and the neighborhood is in a great location with good housing stock, such temporary "Seller gluts" can be great opportunities.

"Last Chance to Buy This House Before the Price Drops Dramatically!"

Houses on the Verge
(of Foreclosure)

As sales pitches go, it's not quite as lame as the infamous National Lampoon cover at right ("If You Don't Buy This Magazine, We'll Kill This Dog").

Still, you wouldn't exactly label as "enticing" a house that sought to attract Buyers with this hook: "Hurry! Act now before the home goes back to the bank!"

That's because homes that go into foreclosure typically fall dramatically in price, usually after an interval of 6-8 months off the market (and the same period of neglect).

Other disincentives: homes about to be foreclosed on frequently already suffer from neglect (who's got money for maintenance?); and, by definition, homes usually get foreclosed on when they're saddled with a too-big mortgage -- an issue that *foreclosure at least resolves.

Most Buyers, rationally, tend to run from -- not towards -- such "opportunities."

*In theory, short sales are the other way that debt-burdened homes can be relieved of some of that debt. In practice, however, banks haven't been willing to do that . . . and something like 75% of all would-be short sales progress to foreclosure.

4 Magic Words (to a Realtor)

Getting a Realtor's Attention

Want to get a quick response from a Realtor?

Here are the four magic words: "I-Have-an-Offer."

The only possible exception to that is a foreclosure.

Then, I'm not sure even calling to say the building was on fire would work.

Sold! . . . Not Sold! . . . Sold! . .

Back on the Market Twice (in 10 days);

Third Time's the Charm?

The image I have in my head for this St. Louis Park foreclosure is a traffic light, alternately blinking green, then red, then green, etc.

That's because in less than 2 weeks on the market, it's already gone "Pending" twice, and each time has quickly come back on the market.

What's going on?

Be Careful What You Bid For

Given the price, $89.9k, location (just Southeast of 394 and 100), and the fact that it's a foreclosure, you'd certainly speculate that an overeager Buyer won a (presumed) bidding war, then either couldn't perform financially, or, re-did their math after carefully going through the home -- I did last week, and it's a total mess -- and reconsidered.

After all, foreclosure Buyers have been known to bid first, and do their homework second -- if and when they actually get the property.

It's also the case that sometimes condition is irrelevant, because the home is a tear-down. However, given the limited upside on the immediate block, I don't see that happening here.

Yet another possibility is that the bank dropped some bomb on the Buyer in the custom contracts it routinely substitutes for the standard Minnesota forms everyone else uses.

Possible, but less likely given that banks typically sell "As is," and provide no disclosure whatsoever.

So which of the above is it?

To paraphrase that old commercial for a hair color product ("only your hairdresser knows for sure"), in this case, only the listing agent knows for sure.

"The Prisoner's Dilemma," Real Estate Edition

Game Theory & Strategic Default

Should I stay or should I go now?
If I go there will be trouble
And if I stay it will be double
So you gotta let me know
Should I stay or should I go

--The Clash, "Should I Stay or Should I Go?" lyrics

As more homeowners nationally find themselves "underwater," i.e., they owe more than their properties are worth, they face a difficult decision: should they continue to pay the mortgage -- very possibly throwing good money after bad -- or should they simply walk away ("strategically default")?

To answer the question, some homeowners invoke morality ("should we break our promise to the bank?"); others, a cost-benefit analysis ("will the savings we realize exceed the damage to our credit?").

However, arguably the most important criterion is to ask, "what are my neighbors likely to do?"

Game theory aficionados will recognize this as a variant of the Prisoner's Dilemma.

The classic version of the Prisoner's Dilemma is presented as follows:

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated both prisoners, visit each of them to offer the same deal. If one testifies (defects from the other) for the prosecution against the other and the other remains silent (cooperates with the other), the betrayer goes free and the silent accomplice receives the full 10-year sentence.

If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?

Source: Wikipedia

Like the classic version, in the real estate version of the Prisoner's Dilemma, there are also four options.

The optimal outcome (Option #1) is for all underwater homeowners to continue to pay their mortgages.

That way, foreclosures abate, home prices (and the economy) start to recover in earnest, and borrowers gradually dig out from the holes they're in.

Bare Cupboards

At the other extreme, if underwater homeowners strategically default en masse (Option #4) . . . all hell breaks loose.

The tidal wave of foreclosures swamps still-teetering banks (notwithstanding the grotesque bonuses they've continued to pay out); still-fragile national housing prices resume their free-fall; and the resulting mess necessitates the "Mother of all Bailouts."

Except that this time, the government's cupboards are already bare, because Wall Street made off with the first bailout (and then some).

Options #2 & #3

Which leaves Options #2 and #3: you default but your neighbors don't -- and vice versa.

Clearly, the better outcome for any single underwater homeowner is the former.

That way, you move on to cheaper housing (albeit with damaged credit), but the housing market and overall economy stay afloat. (While borrowers in so-called "deficiency states" are potentially liable for any mortgage shortfall, the risk of that happening appears to be low.)

On the other hand, if your neighbors default and you don't (Option #3) . . . you're very much left holding the bag.

As bank foreclosures inundate your neighborhood, property values plummet, making you further underwater. Meanwhile, living on a block full of foreclosed homes poses its own safety and quality of life issues.

Best Outcome vs. Likeliest

So, how is the housing version of the Prisoner's Dilemma likely to play out?

To forestall the horrific consequences of Option #4 -- widespread strategic default -- one would expect rational banks to finally get serious about proactively reducing the principal balances of underwater mortgages.

Of course, that assumes that "rational bank" isn't an oxymoron.

Cedar Lake Steal?

Where: 16xx Cedar Lake Parkway, just northwest of Minneapolis' Cedar Lake

What: 2,500 sq. foot. contemporary overlooking the lake
How (much): list price is $247,900

When: (re)listed January 22

Who: co-listed by Teams International and RE/MAX Associates

You could easily spend $1 million-plus (still) for a home overlooking Cedar Lake in Southwest Minneapolis.

So, it's attention-getting when a home just off the lake is for sale for only $248k -- down from $549,000 when it first hit the market in October, 2008. That's less than half(!) the $522,500 tax assessed value.

So, what's the catch?

It turns out that there are several.

They include a wood exterior that's in such bad repair that mold is evident on several interior walls; a plastic swimming pool -- practically full -- positioned below a major roof leak (one of several that were visible); and an incoherent floor plan with only one bathroom in the whole house (and that practically in the middle of the Kitchen).

So, it's a pass, right?

At least for my client.

However, even if the house is a 'goner -- likely in my opinion -- the land alone is still worth the asking price.

Apparently, someone else agreed: the listing agent's front desk said the bank-Seller (a shock, I know) has just accepted an offer.

Foreclosures: 50 Cents on the Dollar

Valuing Foreclosures in 3 Easy Steps

Based on showing dozens (hundreds?) of foreclosed properties to clients the last year or so, I've developed the following, "ball park" formula for pricing them:

Step 1: determine their peak value (usually, sometime in mid-2006).

Step 2: Subtract 50%.

Step 3: Add or subtract 10% for above or below average condition.

The only caveat in applying step 3 is that "average condition" for a foreclosure isn't the same thing as "average condition" for a traditional (non-bank owned) home.

With the former, you can expect to find damaged and/or dirty floor coverings, deferred maintenance (interior and exterior), and 2-3 small plumbing "projects."

On a $150k foreclosed home, addressing those items could cost anywhere from $5k to $15k.

Foreclosure Buyers' Trump Card

Not a Deal . . Until it Is

If selling foreclosures is a card game, the bank-owners would seem to be holding the best cards.

After all, they can decide whom to sell to, what price they'll accept, and what contracts and which title companies to use (theirs!).

No wonder so many prospective Buyers find the process frustrating.

However, as I like to remind my Buyer clients as they wait -- and wait -- for their deals to come together, the one card they hold is a big one: the right to pull the plug.

Up until the time all parties have signed off on the Purchase Agreement and any addenda, the Buyer has the right to revoke their offer (or counter-offer, as the case may be).

Especially in a housing market where's there supposed to be more inventory -- especially foreclosures -- in the pipeline, that would seem to be potent leverage.

Foreclosure Snags & Delays

Dotting the Dots in the I's

The latest delay in a foreclosure deal where I'm representing the Buyer?

The pre-approval letter from their lender lacked the lender's signature.

The bank might as well have objected to the font type and size in my client's offer.

What's especially annoying is that the bank-owner was sitting on my client's offer a full two weeks before they decided they needed a signed pre-approval letter. (For the record, the required signature took about two hours to procure.)

Unfortunately, such slow motion, bureaucratic snags are typical in foreclosure deals.

Deal-by-Checklist

Holding up a deal for want of a would-be lender's signature is silly, because the Bank could easily have called the lender to verify the Buyer's financial bona fides (which is what I do when I represent Sellers). It's doubly silly because everyone knows that pre-approval letters don't mean anything.

They're not binding on the prospective Buyer, who's not obligated to use the lender that generated the pre-approval letter. And they're not binding on the lender, who's yet to perform the bulk of their due diligence.

All that really counts is whether the Buyer's loan gets final underwriting approval from a still-solvent bank, which in turn depends on how strong the Buyer is financially, and whether the home appraises.

But you don't get to any of those until there's a signed-off deal.

Which we're still waiting on.

Squeaky Clean Offers

That's why my routine advice to Buyers interested in a foreclosed home is to make their offer as simple and clean as possible, to minimize the potential for ridiculous, time-eating snags like this one.

(And no, I don't think anyone from the bank is reading this blog.)

P.S.: if there's an upside to any of the perfunctory, deal-by-checklist protocol the foreclosure banks all seem to be following, it's the "entry barriers" they present to any subsequent Buyers. In other words, flushing Buyer #1's offer means starting the whole, laborious process over with Buyer #2 (or #3 or #4 or #5 . . . ).

Call it the foreclosure equivalent of "dancing with the one who brung 'ya."

2010: Year of the Short Sale?

Short Sales: Hurdles and Consequences

Short sales continue to be a huge factor in the Twin Cities housing market.

How do I know?

I've been showing a new client who's a first-time Buyer properties within 5 miles of South St. Paul the last few weeks, literally from Maplewood to Cottage Grove. Out of perhaps 100 homes I've screened online that met the client's criteria (price, square feet, number of bedrooms and baths, etc.), I'd estimate that more than two-thirds were "potential short sales."

In fact, the percentage is likely even higher, because invariably when the MLS field asking for short sale status is left blank . . . the home is a potential short sale.

Even taking into account the lower bracket price range (under $200k), those numbers are staggering.

New MNAR Form

Another sign that short sales loom large is a new form that the MN Association of Realtors has rushed out to help Realtors and their clients deal with potential short sales.

The forms lists the following seven "risks and ramifications":

1. Failure to obtain approval from all lender(s)/creditor(s) with a mortgage/lien against the property may prevent the sale from closing.
2. Short sale approvals from all lender(s)/creditor(s) are time consuming, may delay closing, and may not be accomplished within expected timelines.
3. Creditors will likely require disclosure of personal assets and financial records, including copies of tax returns, to determine approval of a short sale.
4. A short sale may require seller to pay off some or all of the amounts owed after closing.
5. Seller's credit will be impacted as a result of a short sale transaction.
6. Seller may incur tax consequences as a result of a short sale.
7. The approval of a short sale is never guaranteed.

Got all that?

Neither do most Sellers.

In fact, the form goes on to recommend that the prospective short seller consult with appropriate "tax, financial, and legal advisors" to determine if a short sale is appropriate.

My guess is that someone too financially strapped to pay their mortgage either doesn't have an attorney or accountant -- or doesn't have the money to pay them.

No wonder something like 75% of all short sales progress to foreclosure.

Chinese Drywall in Minnesota?

New Bank Disclaimer

Chinese drywall may not have made its way to Minnesota yet -- but Chinese dry wall disclosures have.

I'm currently representing a Buyer interested in a bank-owned property where, in addition to the usual "As Is" disclaimers, there's a separate disclaimer addressing Chinese drywall.

If you didn't know, tainted Chinese drywall has popped up as a major issue in other markets, notably Florida and Southern California.

Which may explain why the bank in this case is requiring the drywall disclosure: it's based in Southern California, where it has undoubtedly run into the issue.

Just like Target -- once upon a time -- stocked its Southern California stores with the same gloves and antifreeze that it sold in Minnesota, many national banks have a "one size fits all" policy regarding the legal forms they use to dispose of their foreclosures.

Goldilocks Approach to Mortgage Modification

Stopping the Runaway Foreclosure Train

The [mortgage modification] rules now being applied . . . have a Goldilocks quality. To get a modification a borrower has to need it a lot, but not too much. If the home is “underwater” — worth less than the balance of the loan securing it — but the borrower can still afford the payments, there is to be no modification. If the borrower is in such bad straits that default is likely even with a modification, again that borrower is supposed to be turned down.

Modifications [go] to those who come up with the right income number, neither too high to qualify nor too low to be likely to meet the modified payments.

--Floyd Norris, "Why Many Home Loan Modifications Fail"; The New York Times (12/3/09)

The low percentage of successful mortgage modifications says volumes about (non-existent) underwriting standards in many parts of the country a few years ago.

In the language of another children's story, the "Three Little Pigs," mortgages are like homes made of straw, wood, and brick in their ability to withstand adverse financial conditions (the proverbial "wolf at the door").

Even straw is too generous in the case of millions of subprime and Option-ARM loans made to already marginal borrowers.

The material that comes to mind is paper -- as in all the Triple A, mortgage-backed "paper" sold by the trillions to investors world-wide.

How ironic.

Don't Go By Asking Prices

Sold! (For 1/3 of Tax Assessed Value)

What: 3BR/3BA walkout rambler with almost 2,600 FSF

Where: 2625 Quentin Ave. South, in St. Louis Park's Fern Hill neighborhood

How much: originally listed for $226,800 on Aug. 5.

When: closed Nov. 18 (Thursday); just posted on MLS this morning.

"Exhibit A" under the category, "don't go by asking price" would be this Fern Hill rambler.

Originally listed for $226,800 back in August, this foreclosure had a tax assessed value of $387,500. That consisted of $158,700 for the land, and $228,800 for the building.

The bank-owner took two, 5% price cuts, then finally got a deal in late October.

It closed Thursday.

So . . . . drum roll . . . . what did the Buyer pay?

Try $130,000.

No, that's not a typo.

Why So Low?

The short explanation is "supply and demand."

The longer explanation is that the house is a tear-down, due to the worst mold damage I've personally ever seen (I showed the house multiple times).

So, you toss out the building value, and focus exclusively on the land.

As I've blogged previously about valuing tear-downs, the analysis -- based on back testing dozens of Twin Cities deals the last 6-8 years -- is to determine the top of the block, add 20% for well-done, new construction, then divide by 3.5.

In this case, the corresponding formula is $400k x 120% = $480k; $480k divided by 3.5 = $137k.

Bingo! (Take off a little extra because of tight credit for new construction, and a soft market for more expensive homes.)

P.S.: and yes, you need to know the "comp's" -- which I do -- to know that the top of the block is $400k.

(More) Naked Swimmers

"Botttom's Up" Real Estate Recovery

You don't know who's swimming naked until the tides goes out.
--Warren Buffett

3,500 FSF is the new 5,000 FSF.
--Ross Kaplan

The housing recovery is happening from the bottom up.

As any active Realtor can readily report, the lower the price bracket, the stronger the housing market; the higher, the weaker.

Clearly, that's why Congress is now extending tax incentives to so-called move-up Buyers, rather than just first-time Buyers.

Upper Bracket Woes

So where does that leave owners of upper bracket homes? (In the Twin Cities, three years ago I would have put the threshold for upper bracket homes around $800k; now . . . it's a lot lower.)

In many cases, straining under too-big mortgages on houses that have depreciated in value.

Most at risk are those who bought roughly between 2004-2007, using a lot of leverage; who have jobs or are in businesses most exposed to the recession; and whose other assets, like stocks, are down significantly (although less than last Spring!).

For those folks, the tide is continuing to run out.

That's why I expect the foreclosure pain to continue moving "up market," at least in the short run.

P.S.: one more aggravating factor for would-be sellers of larger, upper bracket homes: Americans' love affair with "big, bigger, biggest" is at least temporarily on hold. I call this phenomenon, "3,500 (square feet) is the new 5,000."

Realtor-to-Realtor Letters

"X" Factor: Realtor's Credibility

First there was the "Dear Seller" letter, drafted by the Buyer ("We loved your home from the minute we walked in . . .")

Then came the "experienced short-sale agent" claims on MLS, dangled by listing agents trying to convince prospective Buyers that the odds of a deal will be better (better, but still not good).

Call it a "Dear Buyer" letter.

Now, there's the "Dear Listing Agent" letter, drafted by the Buyer's Agent to reassure the bank-owner of a foreclosure.

Who would write such a letter?

Me.

I'm currently representing clients competing for a foreclosed property that, due to its advanced deterioration, is in fact a tear-down.

Because the local municipality is known for strict oversight, that could create headaches for the bank trying to unload the property.

So, how -- besides price and terms -- do you make your client's offer stand out?

By letting the Bank and its Realtor know that, because you and your client have existing relationships with city staff, know the required procedures, and have already had contractors assess the property's condition (all true) . . . the odds of a consummated deal are much better.

Name Games, Cont.

'Non-Distressed,' 'Unforced,' 'Optional'

A continuing thread on this blog has been the so-far lurching efforts to label key features of today's economic landscape ("We Have Some With Ham, Too")

So, while it's certainly not a household term yet, "The Great Recession" looks increasingly likely to be what we collectively call what's happened the last two years or so (vs. the more unwieldy, "The Worst Recession Since the 1930's").

On the real estate front, the industry still hasn't agreed what to call a "normal" sale.

Of course, until recently, that's what the vast majority of residential housing transactions were.

However, the last year or so -- longer in places like AZ, FL, and So. CA -- the market has been dominated by so-called lender-mediated sales.

These include both foreclosures, where the bank has title, and short sales, where the homeowner still has title, but needs the bank to reduce the mortgage balance to be able to sell (in the majority of cases, the bank(s) refuse, and home progresses to foreclosure).

Locally, Realtors have been using the term "traditional" sale to describe a plain vanilla deal with no lender in the mix.

Elsewhere, popular synonyms include "non-distressed," "unforced," and "optional" sales.

You can see why there's no consensus yet . . .

Broken Deals -- Foreclosures

Feeding Frenzy Aftermath: Broken Deals

Broken lines, broken strings,
Broken threads, broken springs,
Broken idols, broken heads,
People sleeping in broken beds.
Ain't no use jiving
Ain't no use joking
Everything is broken.

--lyrics, "Everything is Broken" (Bob Dylan)

Lo and behold, four to six weeks after some of the wildest bidding wars for foreclosure properties this Spring and early Summer, what do you see?

Broken deals, with the properties put back on the market.

(No, no broken hearts in any of these transactions.)

In many, many cases, the banks knowingly fomented Buyer feeding frenzies by listing the homes anywhere from 20% to 50% below market (I've personally documented many such cases on this blog).

The predictable result was 5, 10, and sometimes even 20-plus offers for the same, derelict foreclosed home.

Seller Games Beget Buyer Games

At some point, many of these runners-up decided to fight fire with fire.

So, at least anecdotally, I've heard stories of Buyer submitting simultaneous offers on multiple homes, committing to unrealistic closing timetables, and representing themselves as all-cash Buyers or financially qualified even though they weren't.

It's not exactly a shock, then, when the banks find that they've been stood up.

Maybe they'll conduct all these "rebound" listings more responsibly.

Next post: 'Broken Deals -- Traditional Sales' (non-lender mediated)

May '09 Case-Shiller Stats

Market Snapshot: Case-Shiller vs. Ross Kaplan

According to the just-released S&P/Case-Shiller home-price index, Minneapolis home prices rose 1% in May. If you like raw statistics, the May number was 109.77, vs. 108.51 in April.

Notwithstanding the "scientific" ring of such precise numbers, my Realtor's, "boots-on-the-ground" take is that things are much more amorphous.

Here's what I can confidently report as of late July:

--the window for getting a great deal on a foreclosure is closed, at least for now. The supply is down dramatically, and anything priced below market routinely draws multiple offers, negating whatever discount there may have been.

--the top end of the Twin Cities market -- high six figures and above -- remains very soft, with supply approaching almost 3 years.

--Overall Twin Cities inventory has quietly shrunk, from a peak of 34,000 units, to about 23,000 units now. Given that a balanced market is high teens, and a Seller's market mid-teens or lower . . . downward price pressure has clearly abated. In other words, we're bottoming (I do believe the Case-Shiller numbers are correctly reflecting that).

--That said, the "wild card" now isn't supply, but demand. Specifically, stuff like wages, jobs, and consumer confidence. The Buyers I'm working with are pleasantly surprised by their choices, but still quite cautious.

As I've previously written on this blog, the "one-size-fits-all" approach to the local housing market obscures lots of nuances.