Everything’s Pointing In The Same Direction In California
The Voice of San Diego reports from California. “When I was talking with Andrew LePage yesterday about these housing numbers, he sent me a breakdown of the median prices for homes sold in December as a function of the size of the homes. The size-adjusted, or price-per-square-foot median gives us a bit more clarity on one of the murkiest home price measures.”
“‘Even the relatively large declines in the median don’t tell the whole story,’ LePage said. ‘Everybody knows there’s a significant correction underway. Everything’s pointing in the same direction, a lot of what’s selling right now is where you have a really motivated seller, or a foreclosure.’”
“LePage looked at all of the sales in December to see what the last action on the property had been. For 31 percent of the sales in December, that last action was a foreclosure. (That’s compared to 4 percent in December 2006.)”
“For resale detached homes, the median price per square foot fell the sharpest in East and South County neighborhoods. In the last three months of the year, the price per square foot for East County homes was $268, a 15 percent drop from December 2006, and a 21 percent drop from that area’s peak.”
“In the South County, the median price per square foot for resale detached homes was $256, a year-over-year change of 21.5 percent and a drop from the peak of 23.5 percent.”
“Compared to that, the other three subsections of the county showed these drops: Central San Diego: 7.3 percent year-over-year, 12.4 percent off peak. North County coast: 6.8 percent year-over-year, 13.5 percent off peak. North County inland: 11.9 percent year-over-year, 17.2 percent off peak.”
The Union Tribune. “Los Angeles economist Christopher Thornberg, who in 2004 predicted the bursting of the real estate bubble, cautioned prospective buyers to hold off. Prices have a way to fall before hitting bottom, he said.”
“‘Sure, it’s a good time to buy if you don’t mind losing 10 to 15 percent of the sales price,’ said Thornberg. ‘There’s no recovery in 2008, no bottom in 2008. Prices are falling at a pretty rapid pace and will continue to fall through 2008 and into 2009, and that’s the most critical thing to keep in mind.’”
“Resale houses, representing 43.5 percent of all transactions in December, had a median price of $470,000, down $30,000 from November and $70,000 below December 2006. That was a record year-over-year drop on a dollar basis.”
The Orange County Register. “At the peak of the housing boom in 2004-04, the monthly sales pace was equal to 660,000 homes a year, Realtor figures show.”
“By the start of 2007, it had dropped to 450,000 homes a year, then fell again to 360,000-a-year pace after the subprime meltdown. At year’s end, California home sales had slipped below 300,000 a year for the first time since the 1980s.”
“Steve Thomas, president RE/MAX Real Estate Servicesin Aliso Viejo, estimated that prices in Orange County fell about 10 percent from the June 2006 peak, dropping to 2005 price levels. ‘And this year, the tree will shake a little bit more, and we’ll come down to 2004 levels,’ he said.”
“Pat Veling, president of a Brea consulting firm, believes that in many communities in Orange County – places like Yorba Linda, Tustin, Irvine and Huntington Beach – prices already dropped to late 2004 levels, wiping out three years of price appreciation.”
“Condos with less desirable floor plans, houses backing up to busy roads or power lines and homes in more depressed areas like Santa Ana, Anaheim and other north-central cities have seen price drops ranging from 15 to 30 percent, said Thomas.”
“Median home prices fell in 61 of Orange County’s 83 ZIP codes last year and increased in just 17. The biggest drop occurred in east Garden Grove’s 92840, where the median price fell 15.3 percent to $500,000.”
“But even some of the county’s most desirable neighborhoods saw prices falling, with ZIP codes showing double-digit declines in parts of Irvine, Huntington Beach, Yorba Linda and Newport Beach.”
“Veling’s data shows that just 55 percent of the county’s active real estate agents participated in at least one sale last year – half of them with just one or two sales apiece. The remaining 45 percent ‘had no income in 2007,’ he said.”
“Agent Sheri Maxwell said knows at least a dozen agents who have left the business. In one case, Maxwell said, a lender approved a loan with a 10 percent down payment for one of her clients. On the day escrow was supposed to close, however, the lender balked, demanding a 20 percent down payment.”
“‘Who has $130,000 just sitting around?’ Maxwell said. ‘We all felt it. It was probably one of my hardest years.’”
The Recordnet. “Existing-home sales are picking up momentum in San Joaquin County. Pending sales jumped from 392 in November to 459 last month countywide, a 17 percent increase, according to figures from the latest Coldwell Banker Grupe-TrendGraphix sales report.”
“Meanwhile, the median selling price continued to slip, falling to $293,000, the first time the countywide median has been less than $300,000 since April 2004, when the median selling price stood at $290,000.”
“‘Price is king,’ said Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton.”
“Foreclosures are accounting for about 70 percent of the monthly sales, he said, and investors are accounting for about half the buyers.”
“But unlike in the real estate boom years, these investors aren’t ‘flippers’ - buyers looking to resell in a year or two to cash in on fast-rising equity. Now they are looking for long-term investments, he said, and prices are low enough that monthly rental fees basically can cover the mortgage payments.”
The Santa Cruz Sentinel. “76 homes sold in December, the fewest sales for any month in 11 years, according to Gary Gangnes of Real Options Realty, who compiles the statistics. ‘It’s a lot slower for all of us,’ said Pam Spehar, a Boulder Creek agent.”
“First-time home buyers, seeing the median price drop a mere 1 percent, may have given up, not realizing changes in the market. ‘Buyers tend to wait until it’s a sellers’ market,’ said Spehar, noting 50 homes currently on the market in Santa Cruz County priced under $450,000.”
“One reason for lower prices: ‘Short sales.’ Case in point: 244 Redwood Road in Boulder Creek. The owners paid $296,000 for the two-bedroom home in 2004, listed it for $250,000 and sold it for $247,000.”
“Real estate agent Bob Bickers brokered December’s most expensive sale, a three-bedroom house at 63 Geoffroy Drive in Live Oak with ocean views near Privates Beach, to an out-of-county buyer for $3.6 million.”
“While high-end homes seem unaffected by changes in mortgage guidelines, even those prices are ‘not as good as they were,’ Bickers said.”
“The Geoffroy Drive home was initially listed for $4.95 million. When it didn’t get any offers, the price was cut by $1 million, and three potential buyers expressed interest.”
“‘It generated a sense of urgency,’ Bickers said.”
The Daily Press. “Local Realtors still see a slow market going into 2008 for the High Desert and say it is mostly due to a ‘wait and see’ attitude that permeates the current buyers market.”
“Agent Jill Lakin says most people are waiting to see how low prices will go. ‘They don’t want to buy now and see the price drop even more,’ she added.”
“Jack Fales of Ambassador Realty, estimates that about 30 percent of the people drive down the hill everyday for work. He says many of them sold their houses down the hill and came up here because they could afford a larger home and better lifestyle, but still have to make the commute.”
“Fales says even that dynamic has changed. ‘Now that the market has gone to zero, even the affordable homes aren’t going,’ Fales said.”
“Another problem occurring in today’s real estate market is that many new homeowners are ending up ‘house poor.’”
“‘When they get qualified for the maximum payment they don’t have any money left after driving up and down the hill. When gas goes to $3.15, now they can’t landscape, they can’t fence, a lot of them now are vacant,’ Fales added.”
“Lakin says it is definitely a buyers market, even for new homes. ‘For the first time in a long time, people are actually being able to make offers on new homes,’ Lakin said.”
“One Realtor says there is something else that homeowners and home buyers in the High Desert are waiting to see, especially the commuters: When are all the new jobs being touted by city officials actually going to get here?”
The Daily Bulletin. “When Federal Reserve Board Chairman Ben Bernanke said last week that the economy was in bad enough shape that further rate cuts would likely be needed, it was good news for some people. Unfortunately, though, those folks that rate cuts would help aren’t the ones who need it the most.”
“A consensus of local realtors commenting Monday agreed that while rate cuts will help those with home equity lines of credit, they’ll have little or no effect on people hoping to buy or sell homes.”
“‘This isn’t going to be any help to the average guy trying to qualify for a loan,’ said Kirk Stoffel of Century 21 Showcase in Highland. ‘The major issue right now is getting people qualified. All the 100 percent loans are gone. Rate cuts won’t help us at all.’”
“Upland Realtor Michael McCasland was even more blunt. ‘The last two rate cuts didn’t even cause a blip in the market,’ he said. ‘A half-point cut now will have no effect at all. The biggest problem is that because loan guidelines have been stiffened so much, the buyer pool has dried up completely.”
“‘Lenders are looking for different reasons not to make loans right now. They’re very afraid of making mistakes,’ he said.”
“Lender reluctance isn’t the only problem, said Bill Velto of Tarbell Realtors in Upland. ‘The only way a rate cut would have any effect is if it helps to build confidence,” he said. ‘People are very apprehensive right now. It’s almost as though they have lost faith in the system. I don’t think a half-point cut is enough.’”
The Tribune. “Style Gifts and Accents, a home furnishings and kitchenware store in San Luis Obispo’s Higuera Plaza, has closed after five years of doing business.”
“Tim Davis said the store’s five-year lease was ending, and he needed to decide whether he wanted to keep the retail operation going for another five years. After contemplating the future, he decided to let the store go.”
“‘Being an independent retailer, you’re sort of fighting the whole trend of retail going to the big-box stores, and with the general economy trending toward a recession, I decided the whole risk-reward of keeping the business open was just not worth it,’ Davis said.”
“Davis said he has seen a downturn in his business the past two years and, he said, ‘2008 doesn’t look like it’s going to be any prettier.’”
“Tony Flatos, a director with the building’s property manager, said he does not have a prospect for the spot. ‘Right now, it’s anybody’s guess,’ Flatos said. ‘The picture for small retailers is not really good right now, and it’s not just at that shopping center, it’s all over the county.’”
“Davis did not know what type of business would fill the now-empty, 1,650-square-foot space, which is between Trader Joe’s and Food 4 Less. ‘We just hope it’ll be something that’s recession-resistant,’ he said.”