Thursday, November 12, 2009


Extrapolations. I was going to title this, "Simple Math", but I like the word extrapolations...

So the housing inventory "plummets" in Bend? (Bulletin, 11/12/09)

Pardon me if I doubt it.

It seems to me a little simple math could have been applied to this assertion. How many houses were coming on the market for sale before this sudden decline, and how many after?

Is it likely with the high unemployment in Bend that fewer people are needing to put their house for sale?

So what do we get? Several quotes from real estate agents, which I consider all but useless as news.

And this from a California economist, Bill Watkins -- "That's absolutely good news. A decline in housing inventory is a precondition for a recovery."


So have we really had a decline in housing inventory? Or is there shadow inventory waiting to come onto the market?

How many houses were taken off the market without selling?

Later on in the story, Mr. Watkins has part of the answer: "He believes banks have generally been slow to list foreclosure properties, and that may account for some of Bend's decline in inventory."

"There's some evidence banks are slowing down their foreclosure process to keep the market more orderly..."

Nice phrasing: "More orderly..."

If you don't mind, I'll apply this reasoning to my own store.

My customers often look at my selection and say, "Wow! That title must have sold really well since you only have one left!"

Or "Wow! That title must have sold really poorly since you have a dozen left!"

Not really. In the former case, the title is such a dog I only ordered 2, and I have 1 left. In the latter case, the title is such a good seller I ordered 75, and I have 12 left.

What I've learned to do is leave between 1 and 5 copies out for sale, no more. If I have more, I keep them behind the counter and refill as needed.

Because you can't beat human psychology.


blackdog said...

Also I'd be curious to know who's buying the houses and drawing the inventory down. Is it scavengers who are hoping to pick up properties cheap and make a quick buck by flipping them when prices turn up a little bit, or is it people buying houses because they actually plan to live in them? Typically the scavengers are the first to get back into a post-bubble market.

Duncan McGeary said...

Don't lots of house sellers try to sell through spring and summer, and then take the house off the market in Winter? Would that account for some of the drop in October?

What's the historical seasonal variation?

blackdog said...

"Don't lots of house sellers try to sell through spring and summer, and then take the house off the market in Winter? Would that account for some of the drop in October?"

Very likely. The supposed big drop in inventory also doesn't reflect "discouraged sellers" -- people who have just given up trying to sell their houses.

tim said...

Houses near me have gone up for sale and come off the market without selling. The owners have "given up" on selling for the time being.

Does that qualify for the kind of "inventory reduction" we should be happy about?

Yes, houses under 300k are selling. So tell me, is a median at $220k anything that was predicted in the Bulletin a year or two or three ago?

The Bulletin doesn't exactly have a good track record on real estate predictions. Who would listen to them?