Wikinvest Wire

Record decline in SoCal home prices

Wednesday, December 17, 2008

Yesterday, Dataquick reported that the median home price across all of Southern California had fallen below $300,000 for the first time since April of 2003, a record 34.5 percent decline from a year ago. Here's what it looks like for each county over the last six years.
IMAGEAs you can discern from the chart above, in both San Diego and Riverside Counties, the median price has already moved back to 2002 levels (or before) with San Bernardino and Ventura Counties looking to follow suit in the months ahead.

From the price peaks, which occurred between late-2005 and early-2007 depending upon the area, the declines are even more horrific as shown to the right.

Even during the 1990s Southern California housing bust, no areas saw declines of 50 percent - if memory serves, a 40 percent drop is about as bad as it got back then.

Foreclosures accounted for an astounding 55 percent of all home sales and the overall number of sales rose again from a year ago.

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:

Bargains and bargain hunters have kept this market alive through some of the bleakest financial news in memory. There's this renewed sense that you can score a 'deal' - something that had been missing for many years. Last month's Southland sales weren't great, given they were the second-lowest for any November in 16 years. But they could have been a lot worse.

Many first-time homebuyers are, understandably, cheering as foreclosures dominate sales, tugging down prices and raising affordability. For home sellers and the industry, though, one concern over foreclosures representing half of all sales is that those transactions simply repay lenders. They don't trigger a move-up purchase.
It didn't look as though the year-over-year price declines could get any worse, but they did. The -40 to -50 percent range had to be opened up to accommodate the 43.9 percent decline originating in San Bernardino which remains the poster-child for the housing bust in the area.
IMAGE Median prices will probably see some support in the months ahead as more higher-end homes come on to the market as foreclosure sales - not that the median will go up, but that it will stop going down so fast.


Anonymous said...

How accurate can this be? In Rowland Heights,CA. Prices came down by 30,000 which does not mean much. I use to live in Rowland heights back in 95. A new Houses was priced around 300,000. During the boom the houses sold for 850,000. Now those houses are selling for 820,000. Arcadia, Pasadena, Diamond bar etc.. all the same. didnt move that much. What greedy pigs!

Francis said...

Most of these "declines" are just the boom correcting itself. Case-Shiller graphs predict housing prices to fall back to their 1997-98 prices (in bubble areas). We have only seen the BEGINNING of the mortgage foreclosures, as all the Alt-A, and Option ARMS are starting to reset now, and it takes 2 years to foreclose and offer a house up for sale.

Typical sustainable housing prices are 3x average household income, or 20x yearly rent. Average household income in L.A. is around 50k, so houses should be around 150k. We have a long waaaay to correct people.

repo4sale said...

1=Ca Real Estate Cycles 8-12 yrs.
2=Top2Bottom Bottom2Top 8-12 yrs.
3=Same in Calif. since 1950s
4=Top 1988 & 2006
5=Bottom 1995 & 2014+?
6=2006 to 2014= 8 years to bottom.
7=2nd wave Repos bigger than 1st!
8=2012-16 would be a perfect time to really analyze & buy if you are EMOTIONAL VS. ANALYTICAL!
9=My record? 198 sales from 2001 to 2006, 2 year hold 1165% avg. Gross profit.
10=All based on Charts, Graphs & watching EMOTIONAL PEOPLE BUY LIKE CATTLE!

guy 1 said...

Some corrections to Repo info. First, although the 80s run topped in 88, it actually hung out there. Drop didn't really start until 1991. So it was really a four year drop. Same here, top has hung out from 2006 through 2007. (nominal regional declines) The decline didn't really pick up steam until 2008. (about time, I sold out in 05 and have been waiting 3 years). In addition, the 90's drop did not have an insane federal reserve printing money trying to re pump up the bubble. This will be over in 2010 at the latest, and we never will reach the true bottom. This time its different. Your only hope is that the recession gets worse, which is a good possibility.

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