We have been collecting statistics for south Orange County CA. residential real estate since July of 2002′ on a weekly basis. We’ve created and have been charting our own proprietary Months of Inventory calculation which is based upon the No. of Homes Active for Sale and No. of Homes in Escrow. The traditional Months of Inventory calculation that the major Banks and Title companies quote, is based upon Active Homes for Sale Inventory and the No. of Homes that have sold in the past Quarter or the past 6 months. The problem with this indicator, is by the time information is gathered, calculated and disseminated, it is based on information that is 4 to 7 months stale… If you work in the industry, that is dated and almost useless information…. Although the Press may love it… Our Months of Inventory calculation is much more time sensitive… essentially a ‘Real Time’ report. We have also created our own Pricing Indicator which is also much more time sensitive then we the established press produces. It is based upon a moving average of the Price/SqFt for Detached Homes and Condos in a calculated range of sizes and cities.
I went out on a limb to state 2 weeks ago, and ‘rang the dinner bell’ as the time to start buying. The Stats we gathered this morning, have further supported this stand. Looking at the 1st Graph above, the overall Months of Inventory has dropped from a high of 17.5 months (which is a very soft Buyers Market) in Oct of 07’ down to 5.3 Months today, which is a Neutral Market !!! As a matter of additional fact, the low price range of properties below $450K, have now reached the top end of a ‘Sellers Market’ at 4 Months of Inventory. Granted, many of the sales in this price range are Bank Owned REO’s and Short Sales. Most of these properties are selling in the first week of being on the market with multiple offers and some are getting bid up by 3% to 5% above the asking price.
Looking at the 2nd Graph above, you will notice that the overall number of homes sold in Escrow (Pending) is now at a level of 1,060 properties, which is more than any day in the year of 2007’ and a level we have not been at since June of 2006’. You will also notice on this Graph, that the number of Homes Active for Sale has remained flat since January of this year. The Doomsdayers and Naysayers will say that this is just the quiet before the big storm rolls in… or a Dead Cat bounce for Stock Market enthusiasts… Claiming that there is a another new and much larger wave of financially troubled homeowners out there who will be forced to dump their home on the market this year and next… I for one do Not buy that claim. Yes, the market will slow down from here as the summer months roll in as usual… Yes, there are many troubled homeowners who have yet to sell their home…. and Yes, there is some more pain to go…. But I think we have seen the worst with regard to price reductions… 
There may be a little bit more down side to go with regard to pricing, but I still expect prices to flatten at around $300/SqFt for Condos and around $320/SqFt for detached Homes (See 3rd Graph Above)… I don’t expect to see any measurable price appreciation for a couple of years from now, but now is a great time to be shopping for a bargain priced move up estate, trophy investment, move down property, first time home etc.
