Link of the Day
The U.S. Census Bureau explains here the relationship between building permits, housing starts, and housing completions. This demonstrates that government data is subject to many more variables than we think. Thanks to Builder Online's Tumblr feed for the tip.
Chuck Prince Home Sale No Easier Than Fixing Subprime. “Former Citigroup Inc. CEO Charles O. “Chuck” Prince III… has cut the price [on his] Greenwich, Connecticut house by $300,000 to $5.85 million, according to the property listing. The housing recession has hit the bedroom communities that Wall Street favors most. MLS, brokers: The median home price fell 8.1% in Greenwich in Q1’08 from Q1’07. Declines were as much as 25% in 14 of 19 wealthy Manhattan suburbs in Connecticut, New Jersey and Westchester County, New York, since January. The drop shows that 83,000 job cuts and $393 billion of mortgage-related losses at financial firms are damaging even the most expensive U.S. real estate markets.” (Bloomberg, June 18th)
Hampton Roads Home Prices Begin To Show Signs Of Slump. “Virginia, northeastern North Carolina: Through May, Hampton Roads median sales prices [are] down 1.1% from the first five months of last year… Real Estate Information Network regional MLS: The number of active listings across the region… climbed to 15,183 at the end of May, almost 11% higher than the same time last year. Current listings are almost five times the number in May 2004… As of the end of May, according to REIN's data, the median price of active listings fell to $289,900, down more than 9% from $320,000 a year earlier.” (Hampton Roads.com, June 18th)
Portland Home Prices, Sales Edge Up. Oregon: “Median home prices in the… Portland [area] increased 4.5% from April-May, rising from $280,000 to $287,500. That is 3.2% less than the $297,000 median price in May 2007. Regional MLS: Despite the increase in prices, sales activity picked up from April-May. Closed sales were up 17.8% and pending sales grew 2.6%. These figures are both more than 30% below May 2007 levels. The average time a home stays on the market dropped to 72 days compared with 79 days for the year-to-date. The average time in May 2007 was 53 days, while the year-to-date average was 60 days a year ago.” (SWCOMM Connection, June 17th)
Houston Home Prices Show Fourth Consecutive Monthly Increase. “Houston Association of Realtors: Sales of single-family homes slid 15.3% on a year-over-year basis, with May marking the ninth straight monthly decline. Positive year-over-year sales activity continued in the low-end, single-family home market, with a 12.6% increase among homes priced below $80,000. The average price of a single-family home rose by 0.6% last month to $214,732 from $213,430 in May 2007. That's the second-highest average price since the figure peaked at $218,583 in June 2007.” (Houston Business Journal, June 17th)
Home Prices Continue Downward Spiral. California: “DataQuick Information Systems. San Diego: May's median price was down nearly 23% from a year earlier [$380,000] the lowest level… since September 2003… San Diego's median home price peaked in November 2005 at $517,500. Since then, the median has fallen 26.5%... Demand remains soft, with 2,979 sales last month, representing a 12% decline from May 2007. Moreover, overall sales volume last month was lower than any May since 1995, when San Diego County was considerably smaller in terms of population and employment. New homes and condos showed the most dramatic sales declines as builders mothball operations and offer incentives to slash their inventories.” (Sign On San Diego, June 17th)
Home Sales Up As Median Price Falls To $610,000. California: “More single-family homes priced under $500,000 sold in Santa Cruz County in May… Gary Gangnes of Real Options Realty: Thirty of the 37 sales less than $500,000 were either bank-owned properties following foreclosure or a "short sale.” That helps explain why the median price dropped to $610,000 in May from $661,000 in April. It's down 19.7% from last May, when the median was $760,000… Of the 125 sales in May, 29% were for less than $500,000, Ganges said, similar to January, when 33% of sales sold for less than $500,000 and the median plunged to $599,000.” (San Jose Mercury News, June 17th)
Housing Permits Nearly Halved In Oakland Through May. “Michigan: The number of residential construction permits issued this year in Oakland County dropped by 42.3% compared to last year. By the end of May, 237 permits issued for single family houses. Last year during the same time frame there had been 411, according to Clarkston-based Housing Consultants Inc., which tracks residential construction data in Southeast Michigan Including rentals, there were 337 permits issued in Oakland so far this year, a 52% decrease compared to last year, reflecting the region's housing market.” (Oakland Business Review via MLive, June 16th)
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Interesting collection of data, and points to a selective recovery in some markets. Portland didn't appreciate as fast as some other areas, so it's not surprising that sales and DOM figures are improving. The volume of business relative to last year may result from fewer mortgage products being available for marginal buyers, but one would have to do more research to find out.
CA, on the other hand, looks grim and getting worse. The Santa Cruz County stat that more than 80% of sales below $500,000 were either REO or short sales is telling. This implies that these homes were going to sit on the market at high list prices indefinitely without significant price cuts.
It's interesting to see how much of a discount REO listings have to the previous sales price. In Northern NV, we've seen homes that sold for $450,000 in 2006 being offered as REO properties for a 35% discount--below $295,000. And these homes don't have any deferred maintenance to speak of, just the normal wear and tear of everyday living. Many of them are less than 4 years old.
It's good to see that lenders are willing to price aggressively to move their product. But for people in those neighborhoods who want to sell, or refinance, every foreclosure that sells drags down the values of nearby properties. And in some neighborhoods, foreclosures are the only properties that are selling.
A classic case of unintended consequences.
Thanks again for the research!
Bill
What a disaster.
Always interesting to hear what you have to say. So do you think that the uptick in sales in California signals a turn in that market? The higher sales numbers there are obviously because of the flood of foreclosures, but do you think it will make a bottom or not? One commenter wrote elsewhere that only when affordability returns will the market bottom. So if all these foreclosures are being bought up, does that make the whole market there affordable?
Thanks for the kind words. I appreciate it.
As far as a bottom in the CA market, it's hard to say whether affordability truly exists yet, since the affordability index in many California communities is still below 50%, and in coastal areas is still below 20% (I saw a statistic that said SF affordability was 8%). But it stands to reason that more foreclosed product entering the market will drive down sales prices. The biggest continuing risk, I think, is the amount of standing inventory still waiting to be absorbed. Until the number of sold properties starts to consistently surpass the number newly listed (whether by residents or by banks), the inventory overhang will persist. And that could take another year, if the Alt-A and neg am resets produce a 'second wave' of foreclosed properties washing ashore.
Always a pleasure reading your compilations. Keep up the great work!
Bill