Tuesday, October 21, 2008
Foreclosure sales continued to push real estate prices down in Southern California as reported yesterday by DataQuick. Equivalent price levels in San Diego County have not been seen since ... well, it's hard to say. The chart below only goes back to the end of 2002.
As shown above circled in red, the green line that searched for comparable home prices in San Diego failed to intersect a price that was less than or equal to the September 2008 median price of $328,000.
The closest that could be found was $336,000 in January of 2003.
The color coded intersection scheme above results in comparable prices for the six Southern California counties as indicated below:
At current prices, even though they are down considerably from their various peaks occurring between late-2005 and early-2007, homes are still quite expensive in Southern California.
If you've ever seen a median home in Southern California, you'd concur.
With foreclosures accounting for a full 50 percent of all transactions, sales volume increased an 'unprecedented' 65 percent from year ago levels, however, since most of these sales were placed under contract in August (before the latest escalation of the credit crisis), another sales record is not expected next month.
The fact that September of 2007, when the credit crisis first began, produced the lowest level of sales on record also helped to produce the astonishing increase in sales. Last month's record improvement was actually the second worst September in the DataQuick data going back to 1988.
Since Marshall "almost all if not all of those gains are here to stay" Prentice is now retired, new DataQuick President John Walsh once again provides the commentary:
Steep price declines, especially inland, have improved housing affordability quite a bit and may keep sales levels well above the record lows we saw late last year and early this year. It will depend on the severity of this economic downturn. Nicely done.
The year-over-year changes in price shown below are starting to look "less bad", but when you improve from minus 40 percent to minus 37 percent (as was the case for poster child San Bernardino County last month), does it really matter?
Having prepared these charts for three or four years now, I continue to be surprised at the rate of descent for home prices.
For some reason, I always thought it would be a more gradual decline.