Wikinvest Wire

"The floodgates could open"

Tuesday, March 17, 2009

Dataquick reported February real estate sales data for Southern California earlier today and it looks as though the median price stopped declining for the first time in almost two years.

After dropping to a six-year low last month, the median price across all of Southern California held steady at just $250,000 - that still sounds like a lot of money.

You'd likely agree if you've ever seen a median home in Southern California.

As shown above, prices in all six counties are now down more than forty percent from their peak and San Berdoo looks as though it may crack the minus 60 percent threshold as soon as next month.

Median home prices going back to late 2002 are shown below - note that both San Diego and Orange County posted advances from January to February.
IMAGE Since Marshall "almost all if not all of those gains are here to stay" Prentice is now retired, new DataQuick President John Walsh provides the commentary:

The market is so tilted away from normal mainstream activity that it's impossible to generalize or predict based on the atypical patterns we're seeing. That means that normal demand and supply is building up. The floodgates could open once mortgage credit starts to open up.
Well, maybe if the banks sense that things are stabilizing a bit, we'll see a flood of bank-owned properties on the market, but it's hard to imagine you really need floodgates to hold back demand right about now given the state of the local economy.

Foreclosures were said to account for 56.4 percent of all February sales, unchanged from last month, up from a 36.2 percent share a year ago.

These distressed sales have contributed to year-over-year price declines that now far exceed any of the annual gains a few years back, prices in the Inland Empire continuing to plunge while declines in other areas slow.
IMAGE Pricing in my old stomping ground of Ventura County have improved dramatically over the last couple months, from an annual decline of 36 percent in December to a drop of just 27 percent in February.

In the words of inimitable groundskeeper Carl Spackler from the 1980 movie classic Caddyshack, "So we got that goin' for us, which is nice".


Nick said...

That quote is hilarious. I can just see the flood of recently unemployed or fearful people, not knowing if they are going to still have a paycheck in six month, chomping at the bit to buy a new house. It's just a matter of getting enough capital into the big banks, and they will be willing to again finance those people who want to buy McMansions on stated income loans, right? Because that worked out so well for them last time, and investors are warming up to buying junk MBS's again, right?

Unless, as you said, he meant the floodgates of shadow inventory the banks are holding, waiting for the right "sellers market" to come along... in which case I could agree. Beware the flood...

Anonymous said...

he's starting to sound more like marshal prentice each month

Anonymous said...

Ok Ok. That STILL doesnt account for the FACT California is going Bankrupt. I guess selling homes would certainly flood the market and it will stagnate. Like a smelly
pond California has become. Well it
isnt over for you guys yet.

Anonymous said...

Let's get back to fundamentals instead of being blown to and fro by every random wiggle in the price curve. Median house prices will fall to 3X median income before bottoming. If things go badly, it will fall farther than that.

So, please folks - stop getting excited every time the price curve develops a minor pimple. Just look at the curve for the Dow around 1929. How many upticks can you count before finally bottoming out?

AJ said...

DataQuick? Are you sure that shouldn't be DataQuack?

I found out today that the median value of a house in the Pittsburgh area in 2007 (before the bubble burst!) was an astonishing $84,500. I've lived here my whole life, so I don't understand how people could afford a $250,000 house even now.

Anonymous said...

The only thing flooding the market is BS, and LOTS of it.

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