It's going to be a Long Summer

Yesterday, DataQuick reported another all-time record for the median home price in Southern California - $505,000 - up almost five percent from one year ago.

Though sales volume for the month of March declined to a ten-year low, overall prices remained firm largely as a result of that light blue line in the chart below - Los Angeles County.

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According to the report, the price increase was due to a "drop-off in sales of entry-level homes", where the decline in the number of lower priced sales in the data caused the median (the point above and below which there are an equal number of sales) to decline.

While prices in Los Angeles County rose 6.3 percent from year ago levels, Ventura County (from where this blog originates) has now wrested control of the negative territory in the chart below from San Diego. The year-over-year declines in Ventura have exceeded that of San Diego for three of the last five months.

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With the exception of huge Los Angeles County all other regions hover around the zero level of annual appreciation, making both buyers and sellers anxious.

The pressure on sales volume is severe. While seasonal factors make for fewer sales in January and February than any other month in the year, March is the "rebound" month where buyers re-enter the market and sales volume typically rises 50 percent or more from February levels. As shown in the shaded areas in the chart below, there wasn't much of a rebound this year.

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Instead of a 50 percent increase from February, sales in March rose by only 10 or 20 percent making the firm prices all the more surprising.

The chart below showing year-over-year changes to sales volume helps to clarify the price picture. That is, how the decline in sales of entry level homes is skewing the headline number. Lower priced (see first chart) and late-to-the party San Bernardino and Riverside Counties saw tremendous declines in sales volume in this report.

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Both counties reported sales volume almost 50 percent below last March, removing many of the sales in the $300,000 to $400,000 range from the overall dataset pushing the median price up higher than it would otherwise be.

This is analogous to the federal government's labor report where, despite the fact that there can be more unemployed workers from one month to the next, the unemployment rate can go down due to changes in the overall labor force.

It's going to be a long summer - packed with lots of interesting analysis of real estate sales and price data.