Southern California Home Sales Rise: No, That's Not a Typo

The bad news: the median price of a home sold in Southern California last month dropped by 31% from a year ago. The good news--which far outweighs the bad news, if you want my opinion: the volume of home sales in Southern California rose by 14% last month, the first rise in 33 months.

So after nearly three years of decline, Southern California home prices have at last reached a true clearing level. Very encouraging. Some observers will deny it, and point out that the bulk of sales are foreclosure-related. Duh! What else would you expect? Distress-related properties dominate inventory. The point is that the market can’t begin to return to normal until a process is in place for getting all those properties off the market. With sales rising at last, that process is accelerating. Good.

In any event, here’s the last year’s worth of sales and pricing data from Orange County in particular:

Comments

[CLH:]

Good news but the important part is that ordinary people can again afford to buy houses. (without out losing an arm and leg doing it)

2008 Aug 20 07:21 AM

[SA Guest:]

This site is an excellent resource for real estate data and analysis in the California market:

www.dqnews.com/News/Ca...

2008 Aug 20 07:27 AM

[Griz:]

Three phases of an asset price bubble:
1.) Irrational Exhuberance
2.) Saturation - As depicted by inventory build & transaction slow down
3.) Market Clearing - Accelerating transactional activity at ever weakening prices

The trick is to wait to buy until this market clearing phase has completed over the next 12-24 months as then you can be assured that PRICES will have bottomed.

2008 Aug 20 08:42 AM

[1worldcurrency:]

"Duh." Wait till these foreclosed houses are foreclosed. Derivatives indeed. Moron.

2008 Aug 20 08:51 AM

[cristian:]

Dead cat bounce, the economy is still in the outhouse. Jobs are literally going South, people were cannibalizing their equity to make up for wage stagnation. Now a credit squeeze is in, so after a the euphoria of a speculative bubble is gone, things are the same or worse. An uglier, meaner housing market.

The presidential candidates cannot see beyond short term gimmicks for an economy that requires long term solutions.

It is a sad day for America, when Paris Hilton can utter a saner energy policy than the presidential candidates put together.

2008 Aug 20 08:54 AM

[User 6666:]

You are right christian. Let's put Paris in the white house. She really is considerably more competant than anyone in the house or the senate and is a better candidate. The insiders are 100% bs and there's no getting around or over that.

2008 Aug 20 09:23 AM

[LiquidSoapD...:]

Paris did say some smart-sounding stuff. If she's elected, hopefully shell keep her writers!

I think the charts would have been even more informative if you said the total number of zip codes so we'd know what the raw "number of zips" meant on a percentage basis (a quick count on my part shows 150 zip codes in O.C.). So even in the rosier of the two charts, 2/3 of the zip codes experienced declines in prices.

Hmmm, I'm still confused looking at both charts. Why are the changes in median prices so different that the changes in overall prices?

I think a lot of buyers have been on the sidelines watching prices drop. Some waiting because homes were beyond what they could afford, and some waiting because everyone knows the market has been tanking, and few want to buy and watch their home lose a ton of value immediately after buying it. So now homes are within the reach of more people, there's talk of a bottom, and there are some foreclosure bargains. So there's finally some buying going on. But I also think there will be plenty more distressed properties added to the market, out-pacing the buying, so prices will continue to fall for awhile.

2008 Aug 20 10:03 AM

[Timbo:]

During the last California downturn it was 4 years from sales bottom to price bottom. Look it up. Pick up in sales does not imply price stability.

2008 Aug 20 12:36 PM