Home Sales 'Getting Towards Healthy'

Published: Thursday, April 16, 2009 6:44 PM PDT

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Home sales in the county were up 43 percent year-over-year in March, totaling 3,020 for the month, according to the latest MDA DataQuick numbers released yesterday.

March's sales total was an increase of 22 percent from February, and marked the ninth consecutive year-over-year increase in the number of homes sold.

The biggest increase came in the number of sales of resale detached houses -- 61 percent more sold last month than sold in March 2008. Resale condos logged a 50 percent increase. New construction was the only category to show a negative year-over-year comparison -- the category was down 36 percent.

The increase in sales might bode well for a closely watched metric for a housing market's health. I wrote about that metric in December -- inventory, a count of the number of homes for sale, is often set against buyer activity to determine how a housing market is faring.

At the time I wrote that story there were about 15,000 homes on the market.

Today, Peter Dennehy, senior vice president of Sullivan Group Realty Advisors, pulled an estimated number of homes for sale from ZIPRealty, a real estate listings website, and said the current number of homes on the market has dropped to about 12,200.

Here's how analysts put inventory numbers in context: Take the number of homes for sale and divide it by the number of sales in a month. That gives a metric called "months of supply." In the boom years, you can imagine, the months of supply was very low, as only a few thousand homes were ever listed at a time, and sales were high.

Across the country, a rule of thumb for a slow real estate year is when a market has 12 months of supply. In San Diego, the rule is closer to four to six months of supply.

So, with these numbers, take the 12,200 homes on the market, divide them by the 3,020 homes that sold last month, and there appear to be about four months of inventory on the market, Dennehy said -- a ratio that he said is "getting towards 'healthy.'"

When I wrote that story in December, the resale market had about seven months of supply.

But it's important to remember that banks could be unleashing a new flood of homes they've repossessed. In many cases, banks have held off on listing the homes while they waited to see what federal lawmakers would end up requiring them to do to abate the foreclosure rate.

As Rich Toscano recently pointed out, "the foreclosure onslaught continues."

There were 7,858 foreclosure notices filed in the county last month, according to new RealtyTrac numbers released today.

That's up 29 percent from February and up 36 percent year-over-year.

Foreclosure filings are the records filed when a home reaches a new stage of foreclosure; there are three stages -- notice of default, notice of trustee's sale, and bank repossession.

That increase in foreclosed homes could adversely affect that months of inventory ratio. We'll keep you posted.

-- KELLY BENNETT