Monday, August 18, 2008
Earlier this morning, DataQuick reported on Southern California real estate sales activity for the month of July.
Sales were up 17 percent from a year ago, largely a result of foreclosures and short sales, but they came in 23 percent below the average July sales volume going all the way back to 1988.
More importantly, prices were down ... way down.
With the exception of Ventura County (our old stomping ground), where the median home price was flat at $420,000 (which still sounds like a lot of money for an average house), prices tumbled in every other area, the once-hot Inland Empire counties of San Berardino and Riverside now in a heated battle to see which will first claim the title of a 40 percent decline from the peak.
Riverside came within a whisker last month and, given its momemtum as shown below in light blue, it will be tough for San Berdu to make up that ground.
Los Angeles County holds the title of "least worst" decline with a year-over-year drop in median price of 27 percent, or, if you're keeping track, about a $150,000 haircut from the mid-2007 price.
That could be part of the reason lenders are yanking home equity lines of credit today as quickly as they were extending them a few years back.
Surely there are realtors out there who are telling their clients that sales have picked up and that they "gotta buy now" before prices go back up.
And surely, some will buy as a result.
For about the millionth time, an increase in sales volume is only an indication that a housing bottom has been reached if you sell real estate for a living. This means that you might earn a commission check or two this year. If you're a buyer, concerned more about sales price, your bottom probably won't come for a couple more years.
Since Marshall "almost all
if not all of those gains are here to stay" Prentice has now retired, new DataQuick President John Walsh gets the DataQuick commentary duty:
What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods.So far, so good for the new guy. Just stick to the facts.
Prices have reverted to the 2003 or 2004 level, depending on the county, but there's still more work to do.
I don't know where it was, but, some dope in some newspaper the other day said that the ratio of home price-to-median family income had come down from somewhere around 13 to under 10 in some part of the country and that real estate was becoming affordable again.
He failed to mention that the historical average for this ratio is somewhere around 3.
You'll know when home prices hit a bottom - people won't be talking about them anymore.