California Home Sales: 43% Year Over Year Increase! 25 comments
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Business - California home sales rise for fourth month - sacbee.com.
In contrast to the national news that existing home sales rose from June to July but are still below the levels from a year ago, California is bucking the national trend by showing its 4th straight month of year over year sales gains. Many pundits and commenters poo-poo monthly sales gains, claiming only year over year gains will signal the end of the housing down turn. This data could be a signal.
You may also note the median price is 40% lower than a year ago. There are a couple of explanations for this. First, the majority of purchases are repo properties which are selling at deep discounts due to the severe state of disrepair of most of the properties. Second, most of the sales are taking place in the inland counties where property is much less costly that coastal or major city (LA, SF, San Diego) areas. So much for the end of long commutes due to high gas prices.
My sense is that Californians in particular have a strong desire to own their own home. California is a state of immigrants and many of them feel home ownership is a part of the American dream. They are taking advantage of the current price weakness to get their piece of the dream.
A final note on home prices. The Case-Shiller report made big news with a year over year price decline of about 16%. This report tracks homes in 20 cities. I took a close look at the Office of Federal Housing Enterprise Oversight [OFHEO] survey released yesterday and found some surprising facts. The OFHEO index is a purchase only index tracking the repeat sales of the same single family properties. Here are some facts from the report released 8/26/2008:
- Nationwide year over year price decline of 4.8%.
- 30 states showed year over year price increases.
- Only 3 states, CA, FL and NV, showed year over year price decreases of greater that 10%.
My conclusion is that at least in the West, the increased home sales will start working to absorb the bank owned inventory and point to a resumption of more normal real estate conditions. There are different ways to look at prices, but they may not have fallen as far as many believe, especially outside of the foreclosed inventory. As the public and even the media start to realize there is a bottom to this crisis, it will be interesting to see the effects on both the housing and stock markets.
Disclosure: None
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This article has 25 comments:
Regards
I certainly expect to see a little bump in prices while rates remain low, and that will induce a whole lot of bottom-calling. I also believe very strongly that after a mania as long as we had, the pain will last longer than real estate touts will ever be willing to believe.
I'm seeing it in my own neighborhood. Within ten years, many of my retired neighbors will most likely sell the homes they are in. Housing will be soft for years.
You lost me right there, and that was just the first sentence. It's not hard to show an increase in home sales if you keep revising the previous month's number down each month later. The fact that you never refute this and even seem to go along saying that "California is bucking [this] trend" tells me that you, like many others here have pointed out, have no idea what you are talking about.
You lost me right there, and that was just the first sentence. It's not hard to show an increase in home sales if you keep revising the previous month's number down each month later. The fact that you never refute this and even seem to go along saying that "California is bucking [this] trend" tells me that you, like many others here have pointed out, have no idea what you are talking about.
Moral of this story is that there are better exercises than jumping to conclusions and riding on guesses.
Just check patrick.net, there is whole wave of alt-a and low/no doc (meaning liar loans), and now prime is performing worse than sub-prime as people are getting stuck with -ve acquity.
What we have seen is only tip of the ice-berg. I suspect, home prices have atleast 20-30% to drop yet.
Patrick version: "California median price dropped 40.3% in year"
Very one-sided site leading the pessimists.
I live in the city of Folsom, California, one of the most beautiful places to live. Two homes down the street from me just sold on foreclosure after being on the market for over 14 months for $450,000 when it was selling for over $750,000 18 months ago. Nothing is selling unless there's a huge haircut. These are good people with jobs just walking away from their homes as the mortgages reset and they cannot afford the payments. Why can't the mortgage holders sell these homes back to these people at the lower prices based on current value. It would be a lot cheaper just to do that and it would eliminate the mortgage crisis. If we can uselessly throw away over $500 billion of taxpayers money on the Iraqis why not give it to our own people? What's happening is a planned shifting of wealth from the masses to the ultra rich. It happens like clockwork every 8 to 10 years - we had it in the early 70s with Nixon, in the 80s with Reagan, in the 90s with Bush Sr and in 2000 with Bush Jr. And by the way, all Republican Presidencies!!!!
Remember the homeownership rate in CA remained among the bottom 5 in the country during the boom, never exceeding about 58%. There is pent up demand, it can afford current prices and it is acting now
Builders are beginning to shop for lots again
If you want to live in Banning, Hemet or Moreno Valley - hang in there and wait another year or two.
The permabears have beaten themseleves on the head for so long with their incessant repetition of belief that they have become numb to the facts. They are the same kind of intellects as the permabulls - unable to accept facts that indicate change in conditions
I used to live in CA but its too expensive to work there because they want 8% state income tax so they can waste it on stuff that isn't needed. I like working in TX where the property tax is higher but nothing like what it would cost me to pay 8+% income tax.
Take Housing:
Back in 1998 and even as late as 2002 when everyone was saying to buy homes in places like Los Angeles and San Diego many of us looked with bewilderment. Home prices in these areas were over valued back then and they still are today. The income to housing cost data shows that the median house should cost around 200k in San Diego. This is exactly where prices are headed. Prices will continue to fall with a few small bounces in certain areas, but you will not see a real bottom until 2012 or 2013. When this bottom is put it you will not see a ramp up of any sort. Adjusted for inflation homes in California, particularly in Los Angeles and San Diego will be lower 15 years from now. There is no catalyst for a California housing boom. California no longer gets the huge influx of migrants from other parts of the United States. These educated folk that California could count on since after WWII no longer chose California. In fact, the educated are leaving California in droves, destined for much better managed states such as Texas, Colorado, Oregon, Utah, Nevada, and Arizona. Georgia and the Carolina's as well. The demographic shift spells longer term, certain trouble for Southern California real estate. The uneducated hispanic population is not going to produce the wealth needed to support sky high home valuations. This will begin to be evident by 2025. Those who chose to call this comment racist, then be my guest. I don't care. The long term forecast for the entire state of California is dismal at best.