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Apr-16-2008Southern California home prices take another hit(topic overview)
CONTENTS:
- A total of 2,691 homes sold in March, down from 3,680 for March 2007, while the median price of a home in Riverside County last month was $306,250, down from $420,000 in the same month a year ago, according to La Jolla-based DataQuick Information Systems. (More...)
- Neith credited a recent sale of a house in the West Adams area of Los Angeles to the seller's pricing it below others in the area. (More...)
- Now that things have cooled off, prices will fall to what should have always been considered affordable - three to three and a half times the median average income. (More...)
- Bruce Norris, a Riverside real estate investor and consultant, predicted that the already high volume of lender-owned homes "will explode in the next 18 months" as another wave of adjustable mortgages resets to higher interest rates. (More...)
- You have volume 2/3's less than the peak and half as much as normal times combined with huge price drops and distressed sales. (More...)
- "We had one house where the bank offered the tenants $2,500 relocation assistance, but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. (More...)
- When the much of LA comes down 40% or so, the contrast between Beaches and everyone else will be too great. (More...)
- Comparing median prices to median income ignores the effect of interest rates. (More...)
- The median is the midpoint, where half the homes sold for more and half for less. (More...)
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A total of 2,691 homes sold in March, down from 3,680 for March 2007, while the median price of a home in Riverside County last month was $306,250, down from $420,000 in the same month a year ago, according to La Jolla-based DataQuick Information Systems. According to DataQuick, the traditional seasonal boost in sales between February and March across Southern California was less than half of its normal level, reaching a record low. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom," said Marshall Prentice, DataQuick president. [1] The spring buying season got off to a weak start last month, with home prices dropping faster in Riverside and San Bernardino counties than anywhere else in Southern California and sales continuing to plunge year over year. Sales picked up from February to March in both counties. The seasonal bounce was less than usual, with record foreclosures and fearful buyers taking a toll, according to DataQuick Information Systems, which on Tuesday released its monthly housing report for Southern California. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense weve hit bottom.[2]
Nearly 38 percent of the homes sold last month in Southern California had been foreclosed on in the prior year, according to DataQuick. The seasonal boost in sales from February to March was less than half its normal level and a record low, DataQuick reported. "Although prices have fallen off their peaks in most places, the magnitude of the decline continues to vary widely, with the largest discounts concentrated in markets rife with foreclosure resales," DataQuick President Marshall Prentice said.[3] Orange County remained Southern California's most expensive housing market with a median sales price of $506,000, but that was still 20 percent below last year's level. The depressed market is prompting many prospective home sellers to stay on the sidelines until they see signs of an upturn, said Marshall Prentice, DataQuick's president. "Often what we're left with, especially in inland areas, are sales driven by foreclosure or the threat of it," he said.[4]
Home sales picked up in Inland Southern California in March but the boost was unimpressive, and prices remained in a free fall, indicating that the housing market is not on its way to a recovery, according to DataQuick Information Systems. March is the start of the busiest time of the year for home shoppers, but the spring rush this year was about half as heavy as usual, according to DataQuick, a La Jolla-based real-estate research firm.[5]
With homes in or facing foreclosure accounting for more than one-third of sales, activity in Southern California inches up in March while the median price falls. The traditional spring home-buying season is off to its worst start in 20 years, data released Tuesday show, with sales so weak that foreclosures now account for more than one-third of all market activity.[6] The median price represents the point where half the homes sell for more and half sell for less. Tuesday's report covered Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties - a region that once ranked among the nation's hottest real estate markets as lenders aggressively lowered their rates and standards for qualifying for home loans. As it turned out, many borrowers couldn't afford their mortgages after they adjusted upward from temporarily low rates. That has led to a wave of foreclosures that is prompting lenders to sell Southern California homes at sharp discounts and depressing the value of neighboring properties.[4] Home sales typically pick up in spring, when the weather gets warmer and parents of school-age children look to buy so that any move can be made over the summer. This year was no exception: March sales in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties were up 18.8% from February. That increase, while welcomed by the real estate industry, pales in comparison to previous seasons.[6]
RIVERSIDE Home sales in Riverside County dropped 26.9 percent in March, compared to the same month a year ago, while prices dipped by 27.1 percent, a real estate information service reported Tuesday.[1]
I like my life." There is little for homeowners to like, though, about the steep plunge in home values in inland areas such as west Escondido, Encanto, Paradise Hills, Fallbrook and Spring Valley, which experienced declines of 30 percent or more last quarter. Part of the blame may lie with the high number of foreclosures some of these neighborhoods have experienced, which in turn drag prices down for the whole area, say real estate agents. "I think we've all seen that folks are out looking at the bargains, so those are a large percentage of what's selling the bank foreclosures and short sale properties," said Lori Staehling, president of the San Diego Association of Realtors. "They're generally in poor condition, and the banks want 30-day sales, so prices are lower. "But it doesn't necessarily mean every home in the county has gone down by those percentages."[7] "I think that combination (of consumer interest and financing options) is starting to put some heartbeats into a heart that was barely beating at the beginning of the year," Dennehy said. Longtime DataQuick analyst John Karevoll said he has picked up early signs of a possible bottoming out of the housing downturn in southern Riverside County, where many San Diego workers live. Karevoll also said he thinks there is pent-up demand from would-be buyers who have been largely shut out of the market since last summer. "The market needs to get its footing and it's not going to get its footing until a bottom has been determined," Karevoll said. He predicted that San Diego's overall median may slip another $45,000 and bottom out at around $350,000. "If that happens between now and summer, I think there is also an equal chance that the median could go back over $500,000 by the end of the year," he said. "That's how crazy it is out there." That prediction assumes San Diego is not in a recession, even if the rest of country is. If a serious economic downturn develops, Karevoll said, many homeowners may lose their jobs, default on their homes and extend the real estate woes well into 2009.[8] San Diego County's median home price tumbled below the $400,000 mark last month for the first time in nearly five years as the region grappled with rising foreclosures and defaults, DataQuick Information Systems reported yesterday.[8] San Diego County's median home price dropped below the $400,000 mark last month for the first time since late 2003, driven largely by discounted foreclosure sales, DataQuick Information Systems reported Tuesday.[9]
By comparison, resale home prices for the entire county fell 21 percent during the same period, according to statistics released yesterday by DataQuick Information Systems. Prices declined for all but three of the county's 59 ZIP codes that recorded at least 20 sales between Jan. 1 and March 31 of this year and last.[7] Sales of new and existing homes and condominiums in Ventura County plunged 45 percent last month, falling from 999 sales a year ago to 549 sales in March, DataQuick Information Systems reported today.[3]
The median price of homes sold in a six-county region stood at $385,000 in March, a sobering comedown from the same time last year when the area's median had reached a record $505,000, according to data released Tuesday by DataQuick Information Services.[10] The median price of homes sold was $430,000, a 24.1 percent drop from $566,750 a year ago, according to the La Jolla-based real estate information service.[3] In Encanto, where the median price of a resale home slid nearly 38 percent last quarter compared with a year earlier, foreclosure sales have been on the rise, said real estate agent Steve Lemack. Making matters worse, many disgruntled owners who have lost their homes have stripped them clean, depressing prices further, he said.[7]
Foreclosures accounted for 56 percent of the sales in Riverside County, where the median price of a home fell 27 percent to $306,250.[4] San Bernardino's median price was $265,000, 28.2 percent lower than March 2007. The all-time highs for median home prices in the Inland area are $380,000 in San Bernardino County and $432,000 in Riverside County, both in late 2006.[5] The median home price last month in San Bernardino County hit $265,000, falling more than 28 percent since March 2007.[2]
The erosion was even worse in San Bernardino County, where the median home price plunged 28 percent to $265,000.[4]
The end of the housing slump is not in sight, said Chapman University economist Esmael Adibi. He said for housing to return to historic balance with incomes, he expects median home prices in Riverside and San Bernardino counties to fall at least another 8 percent, which he expects will happen in 2009. The price decline could be more, he added, because in such real estate cycles, "prices tend to overcorrect."[2] SAN FRANCISCO - Southern California home prices plummeted 24 percent in March, jerking property values to a nearly four-year low amid the real estate market's deepening distress.[10] Southern California real estate took another beating in March when prices plunged by record amounts and foreclosures accounted for nearly 40 percent of sales, an industry tracker said Tuesday.[11] The onset of spring did little to thaw Southern California's semi-frozen housing market, says a LaJolla-based real estate information company. The usual seasonal boost in sales between February and March was less than half its normal level and a record low.[12]
The only difference during the boom was easy credit and speculation that turned housing into a short term get-rich-you-can't-lose commodity instead of a long term retirement residence. As reported in this blog, The Southern California median house price in Jan 1997 was $147k (beginning of the bubble). Compare that to the March 2007 peak of $505k! That's a 246% rise folks, all with median income levels essentially unchanged (when adjusted for inflation) over that same time period. If credit remains tight, meaning, like it always has been historically (before the boom), then only real incomes will become the factor for buying levels, and with a big recession ahead, real incomes will not be going up for a while, and even when they do, they don't go up quickly.[13] The median price of a Southern California home was $385,000 in March, a 5.6% drop from February and a 24% decrease from a year ago. It's the lowest level seen since April 2004.[14] The median price for a Southern California home fell below $400,000, to $385,000. Homes are now typically selling for what they fetched in April 2004, with the median price 20% below the market peak of $505,000 last year.[6]
As it stands now, Southern California homes haven't been worth so little since April 2004, when the region's median price stood at $380,000, DataQuick said.[10]
Prices remain high, with the median cost of a home at $829,500, compared with $725,000 a year earlier, according to DataQuick. Laura Godfrey, an environmental attorney, recently sold her Ocean Beach cottage of two years and traded it in for a significant upgrade to a $957,000 Spanish revival house with an ocean view. While she broke even on the sale of her house, she was able to buy her new house for nearly $350,000 less than the original asking price.[7] Yet, during the last quarter a few coastal areas were able to eke out a healthy rate of price appreciation reminiscent of the housing boom. Environmental attorney Laura Godfrey, with her beagles Isabella and William, recently sold her Ocean Beach cottage of two years and traded it in for a significant upgrade to a $957,000 Spanish revival house with an ocean view. Take Ocean Beach, which experienced a 14.4 percent year-over-year increase in the median price of a resale home during the first quarter of this year.[7]
Marcell said at the insistence of Wall Street mortgage investors, tighter lending qualifications also have been imposed on Federal Housing Administration borrowers since the ceiling on FHA-insured mortgages was raised to $500,000 from $362,790 in the Inland counties. He said such borrowers, mostly prospective first-time homebuyers, are now being required to provide credit scores. "I dont think Congress realized the investors were going to be so gun-shy, but they are because they got stuck with so many delinquencies and foreclosures," Marcell said. Marlene Lopez, 39, a real estate agent, has been trying to sell her five-bedroom house in Lake Elsinore for two months. Only three shoppers have come by to see it, she said, although the house that she bought two years ago for $535,000 is now listed for $399,000. Lopez, who has to sell because of a divorce, said she is competing with a huge inventory of distressed properties, including empty houses in her development that the builder hasnt sold. Real estate analysts said they believe that many people are postponing home purchases until prices stop declining and they are more certain about how a recession could affect their jobs and spending power.[2] "Often what we're left with, especially in inland areas, are sales driven by foreclosure or the threat of it." Homeowners who aren't facing foreclosure, meanwhile, often cling to outdated notions of what their properties are worth, real estate agents say. David Emerson, a Lakewood real estate broker, said he was still able to quickly sell houses when owners priced them realistically. A broker for 25 years, Emerson said much of his work now involved telling sellers what they might not want to hear. "You go from being like a doctor who delivers babies," in a booming real estate market, he said, "to being an oncologist, just giving people bad news all day long."[6]
The overall median stood at $385,000, down 23.8 percent from March 2007, and sales totaled 21,856, down 41.4 percent over the same period. Set against this trend are anecdotal accounts from San Diego builders and real estate agents, who say their open houses are drawing more visitors and that sales offices are attracting more potential buyers.[8] The March sales volume of 2,108 homes was up from February, as is usually the case, but down 34.5 percent from March 2007. Dan Williams, president of San Diego Lending Solutions, a mortgage brokerage, said many of his customers are frustrated because even when they want to buy and can qualify for a loan, lenders take two weeks or more to grant approval. "It has absolutely gotten more difficult," he said, even for buyers with good credit and 5 or 10 percent down payments. If buyers can negotiate their way to a purchase and mortgage, they can benefit from relatively low interest rates an average 5.9 percent last week for 30-year, fixed-rate loans on top of the depreciated price levels. "It is at least bringing a few homes into the affordability category for home buyers," said Andrew Poat, vice president for policy at the San Diego Regional Economic Development Corp.[8]
LePage said the March sales and price data are based on escrow closings of sales initiated a month earlier and do not reflect the stimulus legislation that Congress enacted last month to overcome a serious credit crunch and make mortgages more available for homebuying and refinancing. John Marcell, a California Association of Mortgage Brokers official who lobbied for the reforms, said they are not working as well as hoped. He said the legislation raised the ceiling for government-sponsored Fannie Mae and Freddie Mac mortgages to $500,000 from $417,000 in Riverside and San Bernardino counties However, lenders who offer the larger loans are charging higher interest rates and tightening underwriting qualifications for borrowers.[2] Riverside and San Bernardino counties last month led Southern California in percentage of foreclosure sales, reaching 56.4 percent of total sales in Riverside County and 48.7 percent in San Bernardino County.[2] In San Bernardino County, home sales fell 38 percent year over year to 1,534.[2] The drop is even steeper in San Bernardino County, where the 1,534 sales were 38 percent less than March 2007.[5] Riverside had the least drop in sales, off 26.9 percent, followed by San Diego and San Bernardino, down 38 percent.[9] A total of 12,808 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March, says the report Tuesday from DataQuick Information Systems. That was up 18.8 percent from 10,777 the previous month but down 41.4 percent from 21,856 in March 2007.[12] Price declines ranged from 18.5 percent in Los Angeles County to 28.2 percent in San Bernardino County, said La Jolla-based DataQuick Information Systems, and indicate that the housing slump is deepening.[11]
Los Angeles prices dropped the least, off 18.5 percent, followed by San Diego and Orange County, down 19.6 percent.[9]
Median home prices in San Diego County neighborhoods varied dramatically in the first quarter of the year.[7] In Riverside County, the median home price -- the point at which half of the homes were priced higher and half lower -- dropped more than 27 percent in a year to $306,250 last month, which was the lowest it has been since March 2004.[2] Orange County's median home price tumbled by $14,000 from February to March, aided by the increase in discounted sales of foreclosed homes that's being seen across the Southland.[14]
The overall median price for homes sold in March was $395,000, the lowest since November 2003. That marked a 4.8 percent drop from February and a 19.4 percent decline from March 2007.[9] Last month's median price was down 5.6 percent from February's $408,000 and down a record 23.8 percent from $505,000 in March 2007.[1]
For the entire six-county region, the median price tumbled 23.8 percent, also a record, to $385,000. That's $120,000 in equity lost over the past 12 months and the lowest price since April 2004. "This was a correction that was much needed. If we didn't have this kind of a correction in prices, I think the regional economy would have ended up paying a heavy price for it," said Nima Nattagh, a real estate market consultant.[11] Bucking the trend were Encinitas, La Jolla and Ocean Beach, which experienced price gains, while in Mission Beach and Pacific Beach, the median price remained relatively unchanged from last year to this. That comes as little surprise to real estate agent Cindy Wing, who sells homes in the 92107 ZIP code, which includes Ocean Beach, Sunset Cliffs and part of Point Loma. "We're selling paradise because it's the beach, and it's beautiful," Wing said. "That's how I feel when I sell. It's kind of a vacation feel in your everyday life. It's affordable compared to areas like Del Mar and La Jolla."[7] Realtors need to learn that being a real estate expert doesn't mean repeating the phrease "Now is the time to buy." They deserve to have their paychecks drop so bad because they are so out of touch with the market. New home construction starts will probably bottom out late this year, but price declines and inventories of homes for sale will continue to remain a factor for some time.[3] DataQuick said the sharp drop in median sales prices reflects a combination of factors: depreciation, especially in areas hit hard by foreclosures, and a plunge in sales of more expensive homes because of tight credit for jumbo mortgages. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom," said Marshal Prentice, DataQuick president.[13] For the last 20 years, March home sales have on average been 38% higher than February sales, DataQuick said. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom," DataQuick President Marshall Prentice said.[6]
Since last August, when the continuing credit crunch hit, sales have plunged for more expensive homes financed with "jumbo" mortgages, which until recently were defined as loans over $417,000. Sales financed with these larger loans, which the credit crunch made more expensive and harder to get, accounted for just 15 percent of Southland sales last month, down from about 40 percent a year ago, says DataQuick. It is unclear how much home sales might be affected this spring and summer by the recent increases to the limits for so-called conforming loans and FHA loans, it says.[12] The 24 percent drop in value of homes represented the steepest one-year decline recorded by DataQuick since the research firm began tracking Southern California home sales in 1988.[10] DataQuick reported that overall Southern California price and sales drops were worse than in San Diego.[8] Southern California's historic housing slump worsened in March as bargain-hunters buying foreclosed properties pushed median sales prices down to levels last seen in early 2004, DataQuick reported today in another gloomy assessment of the regional housing market.[13]
Sales in the six-county Southern California region were down 41.4 percent to 12,808 from a year earlier and prices were off 23.8 percent to $385,000.[9] DataQuick President Marshall Prentice said in a statement that nearly 38 percent of all sales in Southern California involved properties that had been foreclosed on at some point in the prior year.[9] There were 12,808 sales last month in Southern California, a 41.4 percent drop from 21,856 sales a year ago.[3]
Ryan Ratcliff of the UCLA Anderson Forecast said Southern California home prices are being heavily influenced by the rising number of foreclosure sales.[8] In recent months, foreclosure resales typically sold for about 15 percent less than other homes in the surrounding area. When these foreclosure resales dominate a market, accounting for more than half of all sales, they tend to tug home prices down by an extra 5 percent to 10 percent when compared with communities where foreclosure resales are less common, DataQuick says.[12] In Riverside County, more than half of all sales were foreclosures. That's helping to drive prices even lower, DataQuick said, because foreclosures typically sell at a 15% discount to surrounding properties.[6] Sales of homes that had been previously foreclosed on continue to dominate the regional market: More than one in three homes sold in the region, nearly 38%, had been foreclosed on at some point in the previous year. Foreclosure resales are highest in Riverside County, where they made up 56.4% of March sales.[13] Last month there were 2,691 home sales in Riverside County, almost 27 percent fewer than in March 2007.[2]
Foreclosure sales, now at record levels in some areas, ranged from 28.8 percent in Los Angeles County to 56.4 percent in Riverside County.[11] At the county level, foreclosure resales ranged from 28.8 percent in Los Angeles County to 56.4 percent in Riverside County. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom.[12]
A year ago, the proportion was only 8 percent. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom," Prentice said.[9]
The average sales count for the month since 1988 is 25,407 transactions. "We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom," said Marshall Prentice, DataQuick president.[11] Often what we're left with, especially in inland areas, are sales driven by foreclosure or the threat of it. Although prices have fallen off their peaks in most places, the magnitude of the decline continues to vary widely, with the largest discounts concentrated in markets rife with foreclosure resales," says Marshall Prentice, DataQuick president.[12] Often what we are left with, especially in the Inland areas, are sales driven by foreclosures or the threat of it," DataQuick President Marshall Prentice said in a prepared statement.[2]
More grim news could emerge Thursday when DataQuick plans to release March's home sales figures for the San Francisco Bay area and the entire state.[10] The typical spring "bounce" in sales from February to March was the weakest ever measured by DataQuick, indicating the spring selling season is off to a historically weak start. Over the last 20 years, the average increase in home sales from February to March in the region was 38%; this year it was just 18%.[13]
Nearly 38% of Southern California homes sold in March had been foreclosed at some point in the prior year, up from 8% in March 2007, DataQuick Information Systems said.[6] More than a third of the Southern California homes sold last month had been through a foreclosures at some point during the past year, according to DataQuick.[4]
DataQuick's analysis shows California median home prices dropping by roughly $2,300 per week over the last year.[13] As median home prices continue to decline, it seems no community is immune to the slumping real estate market.[7] Like planning for old age and death, it is a subject worth dealing with sooner rather than later. "Home values have doubled in the past four years and almost all, if not all, of those gains are here to stay," said Marshall Prentice, DataQuick president. Has anyone noticed how this link is no longer accessible from the main web site ( http://www.venturacountystar.com ) or the local news web site ( http://www.venturacountystar.com/news/ne. Why does the VC Star always try to hide this type of information? It's as if the real estate industry has them in it's back pocket.[3] There are fewer and fewer good public schools out there and more parents chasing the same houses in the same areas. 30 years ago you had good schools in the SFV and areas like Lawndale or Hawthorne or San Gabriel or Gardena. Now you send your kids to schools in those neighborhoods at their own risk. The number of good public school districts somewhat centrally located in SoCal can fit on one hand and all of these areas are completely built out. No new construction less than $1M. Fewer houses in these areas with larger population of desperate parents will push up the demand curve. Now I'''m not saying that we won'''t see lower prices in these areas because we certainly will, but whatever the level of pain is, it'''ll be less than what poor areas with crappy schools will see.[13] School district is always a big factor in home purchase for people with children. That was my issue two years ago looking for a house in Arcadia, S. Pasadena, San Marino, and La Canada. Those areas has gone completely out of my price range.[13]
While bargain-priced foreclosures are attracting an influx of first-time buyers and spurring sales in some of the most distressed neighborhoods, home sales are scarcer in upscale communities that are foreclosure-free, LePage said. He also said houses priced above the regions median dont seem to have depreciated as much as homes in lower price ranges.[2] The weak start to the home buying season also saw another record dive in the median sales price, the result of depreciation, slow sales for higher-priced abodes and growing sales for discounted homes fresh out of foreclosure.[12]
DataQuick attributes the record decline to slow sales for higher-priced homes, depreciation and growing sales of discounted homes that were recent foreclosures.[3]
Last year an Appeals Court ruled that the assumption that the "sale" price was the Prop 13 base value did not apply to foreclosure sales per California law (the position of the County assessor).[13] The tax assessor is free to ignore the current foreclosure sale price and assess taxes based on the bubble prices which may not be seen again for years. People buying foreclosures should not assume that these lower current market values will form the basis for their property taxes.[13]
I think people will mistakenly believe that because sales are happening at very low volume levels that values are holding. In truth ANY (shiller, ofheo, median, whatever) price measurement is going to break down in periods of low volume, none of them will measurely accurately the true value of the market.[13] Median sales prices dropped 5.6% from February levels, to $380,000 -- the lowest level since April 2004, and a decline of 23.8% from peak pricing levels of $505,000.[13]
As recently as last month, I was just thinking that my 30-40% price decline prediction was overly pessimistic with all the bailout plans being proposed. $380,000 seems affordable enough until you look at the median household income of LA County residents, which is ~$60,000 annually. This is just the beginning.[13] Alex, I am not seeing AGI. Are you trying to compare the median income to the median price? If so, even back in the year 2000, LA median price was 6 times the median income. I hope they continue to slide. They were artificially high, and still are.[13] The overall median stood at $395,000, down $20,000 from February and off 19.4 percent from a year earlier. It was the first time since November 2003 that prices were below $400,000.[8] The median, representing the midpoint of all prices reported, has now sunk $122,500, or 23.7 percent, from the peak of $517,500 in November 2005, DataQuick figures show.[9]
Median prices here are down $123,000, or about 20%, from a year ago, and are off nearly 22% from OC's record high of $645,000, set last June.[14] The median price paid for a Southland home was $385,000 last month, the lowest since $380,000 in April 2004.[12] The sharp and sudden drop of the Southland median price reflects a combination of factors, mainly depreciation, especially in areas hammered by foreclosures, and a big shift in the types of homes selling.[12]
You probably won't see a bottom in prices until 2009." There's no comfort in the statistics for San Diego area home builders who have largely halted construction on new projects and phases as they wait out the market's downturn.[8] There were 2,108 sales in March, down 34.5 percent from March 2007 and the lowest March total since DataQuick began tracking the San Diego market in 1988.[9] In March, jumbo loans accounted for 15 percent of sales, down from about 40 percent a year ago.[11] There were 2,691 sales in Riverside County last month, down almost 27 percent from a year ago.[5] Ocean Beach's allure as a funky beach community with a strong sense of neighborhood has helped draw buyers, even in tough economic times, although sales last quarter were still down 37 percent from a year ago.[7] More than one out of three Southland homes that resold last month, nearly 38 percent, had been foreclosed on at some point in the prior year. This time last year such sales were only 8 percent of the market.[12] Over the past 20 years Southland sales have risen by an average of 38 percent between February and March.[12]
Nearly 38% of Southland sales in March were resales of previously foreclosed homes. That's up from 8% a year ago.[14]
There were still 12,808 sales in Southern CA last month. That is low, but obviously there are people still buying, albeit those are the homes that are in the conforming loan range (under $417,000).[3] Across Southern California, sales were up 19% from a month ago, to 12,808 new and resale homes and condos.[14] Sales across Southern California were down 23.8 percent from the same month in 2007.[5]
About 19 percent more Southern California homes were sold in March than in February, far below the historical average increase of 38 percent for the two months. That's notable because March heralds the start of the busiest home-buying season - a period that typically lasts through the summer.[10] Last month, 38 percent of the 12,808 homes sold were foreclosures, the company said, up from 8 percent a year ago.[11]
The median fell to $385,000, a 23.8 percent decline from $505,000 a year ago.[3] The biggest decline was in west Escondido, ZIP code 92029, where the median price was down 42.9 percent.[7] Do you the raw numbers? Could you give a more detailed breakdown to see what is going on? Give the percent decline and sales number decline for different price segments (200k-500k, 500k-800k, 800k-1 mil, 1 mil - 2 mil etc. ) and do it for so cal and just la county.[13]
The prices will continue to drop until one can buy an average house for 300,000 or less. Under Bush-Gallegly economics that is all most people in Ventura County can afford assuming they don't get some kind of trick loan.[3] I ran the numbers and private school was much cheaper for me. If price do drop significantly, I will buy another house but not at these prices. Just remember, many of the people who moved into these nicer school district also cannot afford the area in the first place if not for the loans.[13]
The month-over-month increase was 7.9 percent compared with 12.4 percent in February-March 2007 and 43.9 percent in February-March 2006. Resale houses and condos both saw year-over-year price drops, while the new housing category, including newly built houses and condos and new condo conversions, was up 7.1 percent.[9]
The four-bedroom Craftsman house could have been listed for $850,000 a few years ago, Neith said, but the owner priced it at $725,000 and sold it in a month for close to full price.[6] Median house prices nationally have gone up at basically the rate of inflation for the last 100 years, not including the boom starting in 2000.[13]
The median home in VenCo has been losing $250/day for the last 27 months. Comparable houses in Austin Texas cost 1/5th what they run in VenCo. Put whatever premium you want and you still don't come up with a 5x difference. There is no way to predict a bottom at this point.[3] The market is not doing anything crazy, it is just returning to a state of balance where homebuyers had to actually WORK at their credit score and SAVE enough money to put down on a house. Families who focus on those basic principles can afford a house in today's market, and to a large extent, it's nice to see the ridiculous bubble burst. This idea that some Pollyannas have about the Westside being immune to the housing implosion is ludicrous. It's a sliding scale. Do you think that houses costing $190k east of La Cienega isn't going to have an effect on those houses west of La Cienega. You think someone will still pay $600k median to be on the other side of the street? This is of course an exaggeration, but you take my point. For a number of reasons, the nicest areas are the last to feel the effects, but they do feel the exact same effects as every other area.[13] Many parts of LA will go beyond 01-02. Like since a house in Riverside and Manhattan Beach are made of the same materials, they should be priced the same. Sorry, I just think people are ignorant and wishful thinking if they think this is the case.[13]
I don't see much movement. I still see people who bought in 2005,2006 in the Los Feliz and Hancock Park areas that have still decided that their house appreciated 20-50% in that time. Maybe the real estate ego is larger in these areas.[13] Face99 - Exactly what I have been thinking for quite some time. It's all about the numbers and how they are like water seeking its own level. The real estate market became super-heated over the last few years pushing prices well away from their "natural" level.[3] I hope the prices come crashing down harder. It's pretty hard to get inflate real estate prices without a 1 year adjustable rate interest only option 100% financing.[6]
"There are just too many foreclosures coming down the pike," Emerson said. Natalie Neith, a Beverly Hills real estate agent, has also seen a modest pickup in open-house traffic and sales recently, but like Emerson she sees more foreclosures coming.[6] Maybe after a summer of sales data we can tell if we are 1, 2 or more years from the bottom but anyone predicting a bottom from the information available is lying. It just isn't possible yet. Where's SmashyCrashy? He usually has extraordinarily pithy things to say about articles like these. They usually post a story at midnight regarding the DQ report. This is the first time in memory they did not.[3]
I never thought it would hit home like it has. My brother Kevin lives in a large home in Phoenix, AZ, and after several refinances and purchases of madly expensive things like pools, jewelery, $2K purses for his wife and what not, Kevin finds himself about $200K upside down. The insane thing is his 14 year old son actually has to cut the grass now, instead of the team of landscapers he used to have to do it. Final thought: Now that my brother cant afford to buy his wife $2K purses and shoes and what not any longer, how long does the marriage last? No more expensive dinners, trips, all gone. And, OH NO, but she might just have to get a job now. THE HORROR. I give their marriage one year. How many others out there like this? I bet MUCH MORE than anyone reading this thinks.[13] I remember three years ago when Donald Trump talked about how much money could be made in foreclosures over the next 5 years. I have no sympathy for the people who overextended themselves to purchase homes at these ridiculous levels. I hear these stories, and think, "you knew you couldn't afford to live there in the first place, don't put your hand out now[13]
IMO, median income and home prices have to match up, and that is at 3-4X. I have no idea when that will happen, but I'm confident when it does, that people will have reason (and means) to purchase again.[13] Christopher Thornberg, an economist with the Beacon Economics research and consulting firm in Los Angeles, welcomed the price retreat. "For all these declines, you still have home prices relative to income at higher-than-normal levels," Thornberg said. "Everybody tries to paint this as a problem with the subprime mortgage industry. It's not.[8]
I agree with both of you in regards to homes maintaining if not slightly increasing in value in certain areas of Los Angeles (i.e, Beverly Hills, Bel Air, etc.). I agree that homes in these areas will not drop to 2001/2002 levels. For the rest of us (80% of the population in L.A.) that can't afford to buy in these expensive neighborhoods we are better off waiting a year or two to save an additional 20% to 25% from peak levels.[13] Okay, that may be the case, but it then calls into question the judgement of those sellers--do they realize that when the bottom is reached their potential value may be far less than what they might get by selling immediately? Reaching the bottom doesn't mean they can resume marketing at their old price, it means the damage is now baked in and they must offer at a new, lower price. Many folks in this blog have predicted that home prices will come back down to 2001/2002 levels and these same folks have been laughed at by some of you RE folks out there.[13] Prices will continue to go down. It's simple. While I welcome this great news, and of course will join in the chorus of everyone else who says this is needed and long overdue, we now have the new problem of determining just how far down this market will go, and how far it will overshoot on the downside. Peter, in his Q&A; session, said he thought we had until 2009 or 2010 before we hit bottom.[13]
Worst depression since the Great Depression. not a depression worse than the Great Depression, and I was stating housing prices will continue to fall for 3-4 years. We can never have another Great Depression, because we produce more food than we could ever eat and most people have some kind of roof over their head.[3] The ladder is broken, the move up market is broken. The high end market is in denial about the reality because they only know they aren't selling, they don't know what price they would sell at. Then you get a few smattering of sales and people take them all as gospel and market price. It isn't.[13] Number one, March ALWAYS has higher sales than February, to imply that positive move has any meaning on the market is representative of someone who is manipulating the data, to put it nicely. I wonder what is stalling all those high end sales? I bet if they lowered their prices the 25%, more of them might sell.[13]
DataQuick: "March was the seventh consecutive month in which sales have fallen to the lowest level on record for that particular month."[13] Sales have increased an average of about 38% from February to March the past 20 years, with the onset of spring, according to DataQuick.[14] There continued to be few buyers in the market, with sales volume the lowest of any March in 20 years.[8]
By contrast, when prices were skyrocketing during the seller's market five years ago, the listing total was a third as big. For owners who bought before the recent run-up, prices still are more than double what they were in March 1999.[8] Contributing to the March price slide are the types of homes that are selling, DataQuick said.[11] In the Inland counties, the median price was dragged down in part by an extraordinarily large volume of foreclosure resales that lenders have deeply discounted, said DataQuick analyst Andrew LePage.[2] According to DataQuick, there is no sign that foreclosures will ease anytime soon and further price drops are expected in the coming months.[11]
During the first quarter, foreclosure resales accounted for roughly half of the 24 homes sold, according to DataQuick analyst Andrew LePage.[7] Foreclosure resales -- houses sold after being foreclosed on -- continue to dominate many inland neighborhoods, DataQuick says.[12] About 36.6 percent of resale houses and condos that sold in March had gone through that process, a likely all-time high, according to DataQuick analyst Andrew LePage.[8]
Neith credited a recent sale of a house in the West Adams area of Los Angeles to the seller's pricing it below others in the area. [6] Agree with the above posters that the numbers are skewed as the outlying/undesireable areas are the ones having the fire sales bringing the median down.[13] "Often what we're left with, especially in inland areas, are sales driven by foreclosure or the threat of it."[9]
Since last August, when the credit crunch hit, sales of more expensive homes financed with "jumbo" mortgages have plunged because of tighter loan standards.[11] There's little reason to believe the worst is over yet, given the sagging economy and the unwillingness of lenders to gamble on prospective home buyers who had no trouble qualifying for home loans just a year or two ago.[10] There is no housing crisis! The crisis was when prices got so out of control that only the extremely wealthy could afford one without a "creative" loan.[13]
Now that things have cooled off, prices will fall to what should have always been considered affordable - three to three and a half times the median average income. For VC, that's around $300K. During these corrections, keep in mind that prices always overshoot these targets on the way down. [3] Last month's median was down 5.6 percent from February's $408,000, and down a record 23.8 percent from $505,000 in February 2007. That peak median of $505,000 was reached several times last spring and summer.[12]
Prices peaked at $517,500 in November 2005 and have retreated 23.7 percent since. Would-be buyers remain largely on the sidelines, spooked by the jittery economy and worried they might be overpaying.[8]
"I think prices in Southern California were way out of whack relative to what the economy could support," Nattagh said.[11] A recent government-mandated change designed to encourage lenders to offer more mortgages above $417,000 could still lubricate the market by expanding the number of buyers who can afford to bid on Southern California's more expensive homes.[10]
Bruce Norris, a Riverside real estate investor and consultant, predicted that the already high volume of lender-owned homes "will explode in the next 18 months" as another wave of adjustable mortgages resets to higher interest rates. [2] I close my eyes and remember a parasitic Real Estate agent bringing me to a home that, incidentally, had two bidding couples in the living room.[13]
I didn't hear one person talk about how the media was stimulating the real estate market in 2003 to 2006 when countless stories were printed/aired on how that market was skyrocketing to the moon. They were just reporting the current situation. If you are looking to blame anyone, look at Greenspan - he was the one to start this mess by lowering rates to 1% and hold them there for so long. This gave speculators a new market to speculate in, and banks began (and continued) to develop financial instruments to help them along. As time went on, these two parties continued to "up the anty" to unsustainable levels - hence the current mess.[3]
You have volume 2/3's less than the peak and half as much as normal times combined with huge price drops and distressed sales. It is telling you everything you need to know. [3] Tighter credit standards, a domino run of unemployment, and falling sales revenues in a lot of industries point to a deeper downturn in my opinion. Bush bails out builders instead of homeowners? So corrupt! The rich want free trade until it hurts industry, then they're all for "social" government bail outs. This was all uncessary. If they'd required 20% down a long time ago, this boom/bust cycle would never have happened. This is a funny story.[13]
"We had one house where the bank offered the tenants $2,500 relocation assistance, but the day we were supposed to go to give the check, no one was there, and the owners had stripped the kitchen of the counters, the sink and all the appliances, the water heater and the toilets. They even dug up the trees in the backyard," Lemack said. [7] We're considering renting our house and moving to a rental in SD. We'll run about $500 a month in the red on the rental, but perhaps the decrease in fuel costs will offset some of that. It's all a mess and it's not getting better soon.[13]
The cost of sending my 3 kids to private schools K-12 will run me $400-$500K. If I'''m looking at two similar houses but one is in a crappy school district (like LAUSD) and one is in a good district (like South Pas), I'''m automatically added $500K to the value of the S.Pas school house.[13]
Look across the country, houses that are 1,000,000 in Ventura county sell for $250,000.[3]
In my nice, solid 50 year old Riverside area, our houses are essentially value-less.[13] Yep a great depression is in our future. I know this is bad for ppl who already own one, but my boyfriend and I are thinking this might be the only chance we get to buy in Calif. We've been getting our financial "ducks in a row" for the last four years, getting things paid off from divorces, but we still don't have a down payment, just some towards closing. My parents bought their first house when they were 21; I'm almost 40 and I still don't have one. It's depressing, but we're going to talk to a financial guy soon to see what programs are available (definately fixed rates). If these three criteria are met, then buy whenever you can with no worries. Until these criteria are met, don't buy.[3]
When the much of LA comes down 40% or so, the contrast between Beaches and everyone else will be too great. Too few would chose to pay that much of a premium for a beach area, those areas will correct too, but will be the last to do so. It will still be more expensive at the beach, as it is now and always has been. I knew this was going to be bad (Mozillo & Co. last year said the bottom was 2008, now it's 2009/2010 as we're about halfway thru 2008. [13] Prices continue to hold steady in more desirable areas of LA County. Other less desirable areas are seeing greater price adjustments.[13] Realtor Joda Mize has a slightly different perspective. "This area is known as a very nice area, and it has the highest list price of the four Escondido ZIP codes," she said. "When you have a depreciating market, higher-priced homes won't sell as quickly because buyers are right now looking for the great deals out there, and they want to capitalize on that."[7] In west Escondido, typically an area of the city that has higher-priced homes, foreclosures were also a factor, although to a lesser degree.[7] Higher-priced homes are not moving, and the only interest appears to be from buyers looking for abodes with depressed values currently in foreclosure, DataQuick reports.[5]
"I think the foreclosure problem will be with us for a while," Ratcliff said. "So the question is how many of those unworkable loans are still in the pipeline." His best guess is that the flood of foreclosures won't ease until early next year, as fewer subprime loans remain.[8] Nationwide, foreclosure-related filings -- including notices of loans in default -- were up 57% in March, according to RealtyTrac, an Irvine firm that sells default data. These filings include notices of loans in default, in which borrowers may be able to avoid foreclosure if they strike deals with their lenders.[6]
Comparing median prices to median income ignores the effect of interest rates. [13] The nicer neighborhoods aren't immune to dropping in inflation-adjusted price over the next 3-4 years either. Puckhead, you don't think they had similiar issues in Tokyo? It won't happen overnight, but by 2011 Bel Air and South Pas will be off 60% for the peak.[13]
The median is the midpoint, where half the homes sold for more and half for less. [3]
SOURCES
1. SignOnSanDiego.com > News > Temecula/Riverside -- County home sales in March down 27 percent from 2007
2. Inland home prices drop fastest in region | Inland News | PE.com | Southern California News | News for Inland Southern California
3. Housing woes continue to hammer market in March : Breaking : Ventura County Star
4. Median price of SoCal homes plunged 24 pct to 4-year low - Forbes.com
5. Home sales pick up in Inland -- but unimpressively | Business | PE.com | Southern California News | News for Inland Southern California
6. Foreclosure glut further depresses housing prices - Los Angeles Times
7. SignOnSanDiego.com > News > Business -- Slump spares a few areas
8. SignOnSanDiego.com > News > Business -- Median price keeps falling
9. SignOnSanDiego.com > News > Business -- County median home price drops below $400,000
10. Median price of SoCal homes plunges - SGVTribune.com
11. Real-estate prices nosedive - LA Daily News
12. Central Valley Business Times
13. L.A. Land : Los Angeles Times : Rewind: SoCal home prices fall to 2004 levels
14. Orange County Business Journal Online
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