We’ve Forgotten What Normal Is
The Daily Bulletin reports from California. “California home sales slipped in August after two months of increases as the median home price rose, the California Association of Realtors reported. August marked the 10th straight month that sales were below the 400,000 level and the 13th straight month that sales have declined on a year-over-year basis. Sales in August decreased 1.2 percent from 398,940 in July and were down 9.3 percent from 434,910 in August 2013, according to CAR. ‘With more homeowners in a position to list their homes for sale following rising home prices, housing supply is improving across all price ranges as would-be sellers may be seeing this as an opportunity to list their homes for sale,’ said CAR President Kevin Brown.”
The Central Valley Business Times. “What happened to the housing recovery? Perhaps it went on vacation last month. In August, 34,269 California single-family homes and condominiums were sold, down 4.2 percent from July’s total of 35,787 and a decline of 13.5 percent from 39,614 sales in August 2013, according to figures compiled by PropertyRadar Inc. August 2014 sales were the lowest August sales since 2010, it says. On a regional basis, over the past 12 months sales are down 18.8 percent in the Central Valley, down 15.7 percent in the Bay Area, and down 16.7 percent in Southern California.”
“‘The bloom is definitely off the California real estate rose,’ says Madeline Schnapp, director of economic research for PropertyRadar. ‘The rapid rise in prices over the past two years has outstripped the ability of many would-be California homeowners to purchase.’”
The Press Democrat. “Sonoma County home sales slowed in August to the lowest level in four years, according to The Press Democrat’s monthly housing report compiled by Pacific Union International VP Rick Laws. Sales declined 15.1 percent from a year earlier and were the smallest number for the month since 400 homes were sold in August 2010. The county’s median sales price declined to $475,000 in August from $510,000 in July. The median remained 8.7 percent higher than a year ago.”
“Sales may have dropped because buyers face tougher standards to obtain home loans and because there are fewer foreclosures and shorts sales on the market than in the last four years, said Gerrett Snedaker, a senior VP in Sonoma for Wine Country Group by Better Homes and Gardens Real Estate. ‘I think we’re still working some normalization into the market after seven years of disruption,’ Snedaker said. ‘It’s been so long, we’ve forgotten what normal is.’”
The Orange County Register. “What are house hunters in San Bernardino trying to tell us? August’s Southern California housing market fit all-too-familiar 2014 themes, according to trends within CoreLogic DataQuick’s monthly report. First, the buying pace stayed cool, with 20,369 homes sold in the six counties – the slowest August in four years and down 18.5 percent from August 2013. It was the 11th consecutive month of year-over-year homebuying declines. Second, selling prices stayed high, but appreciation slowed.”
“My trusty spreadsheet tells me that such an extended streak of San Bernardino over-performance is a bit of a rarity in the past quarter-century of CoreLogic DataQuick record keeping. The two previous noteworthy lengthy streaks were: 14 straight months (and 16 out of 18 months) in 1990-91 as the late 1980s boom was ending, and 19 straight months (and 24 out of 25) in the 2004-06 boom years. This year’s house shopper is clearly balking at various conditions that significantly pushed up Southern California selling prices. The regional median price is up 70 percent since its 2009 bottom.”
“It’s also a good bet that this same pricing phobia gave an edge to the often sensitive San Bernardino market. And comparatively, San Bernardino home sales are only down 9.8 percent in a year. Only Orange County – down 9.3 percent – has fared better. That leaves us to fret whether this cycle of anxiety over affordability ends badly for everyone in Southern California – as it did twice before in the past quarter-century.”
The Sacramento Bee. “Two dozen protesters wearing yellow T-shirts marched through a downtown Sacramento conference room and chanted slogans Tuesday during a meeting of the California Housing Finance Agency’s board of directors. The members of the Alliance of Californians for Community Empowerment demanded that the agency’s Keep Your Home California program move faster in distributing $2 billion in federal aid for struggling homeowners.”
“Keep Your Home California still has about $1 billion of the money it received from the U.S. Treasury Department’s Hardest Hit Fund several years ago. It must spend that remaining amount by 2017. Critics say the program has been dragging its feet as more homes are lost to foreclosure. ‘What do we want? Principal reduction! When do we want it? Now!’ the protesters chanted as they marched in circles around the room.”
The Record Bee. “Nearly two-and-a-half decades after his father purchased property and began building a house in Cobb, Rob Somerton is unsure how much longer he will be its owner. Somerton claims that Bank of America has been trying to foreclose on the house since 2011, using the Mortgage Electronic Recording System,or MERS. ‘They could foreclose in a month, or they can drag it out longer,’ Somerton said. ‘I really don’t know.’”
“‘Something has to be done about this,’ Somerton said. ‘It ruins lives. You can’t imagine the anguish and stress something like this does to a person.’”
I saw yesterday that CAR had their report out, but almost none of the papers covered it. No problem, I thought, in the morning they’ll be all over it. Nope. Anyway, here it is. Check out Marin, Napa, SF, San Mateo, Santa Cruz, etc.
A reader sent this in:
‘The Christopherson family, once owners of Sonoma County’s largest homebuilding company, are preparing early next year to break ground on their first residential subdivision here since the housing market’s crash. However, family members say their new company won’t focus solely on new home construction. Instead, along with building new residences, their enterprise will include three other divisions to sell, flip and renovate existing homes. Working with investors…the Christophersons have flipped at least 70 homes in the past five years and are on track to complete up to 25 this year, said Brenda Christopherson. The completed homes vary in price from $400,000 to $1.4 million, with several of late listed between $700,000 and $900,000.’
‘Before the last recession, the Santa Rosa company employed more than 200 people and was building homes in nine counties. The trade publication Professional Builder ranked it as the nation’s 179th-largest builder in 2007 with $113 million in revenues. But when the financial crisis hit that year, homebuilders around the U.S. soon found themselves unable to sell homes, borrow money or pay their bills. Christopherson Homes eventually closed its doors. Christopherson said the company was ’so upside down’ that it could not pay back lenders, vendors and others it owed money.’
“‘If we were able to live another couple hundred years, there’s no way we could meet all of our commitments,’ he said.”
We’ll be reading about this shack builders bankruptcy inside 24 months.
“‘If we were able to live another couple hundred years, there’s no way we could meet all of our commitments,’ he said.”
….so then, who picked up the tab??? - Yeah, it’s rhetorical.
‘The number of homes sold in San Luis Obispo County in August fell year over year across all categories, including new homes, resale single-family homes and condos. But the overall median home price rose 3.5 percent to $440,000 — continuing the trend of higher prices but fewer sales.’
‘The total number of homes sold fell 15.4 percent to 324 units in August, compared with 383 in the same month a year ago, according to DataQuick of San Diego. That’s the fewest number of homes sold in an August since 2011.’
Check out the graph on prices.
Month after month of falling housing prices. Nice. Very positive data right there.
The psychology has changed. Price drops and sales reductions will soon accelerate.
My parents live in Cambria, in the house my mother inherited from her mother. They are in serious danger of running out of water…two wells that are just about dry to service local residences and businesses.
And there are plenty of other counties in the state that are red tagged on water supply.
Why anyone would be buying in California right now is beyond me.
You’re right those loony environmentalists refused to allow any kind of desalination plants to be build just in case the fresh water supply ran out….
finally after 40 years you may get a big one running…http://www.mercurynews.com/science/ci_25859513/nations-largest-ocean-desalination-plant-goes-up-near
Should prop up Oregon and Washington prices when it’s time to move north.
Underwater, above water, out of water. They have ‘em all in the Golden State.
“Why anyone would be buying in California right now is beyond me.”
They have been brainwashed since birth by a never ending stream of propaganda from the largest trade organization in the country. The NAR looks after its army of parasite members quite well. Their ability to lobby their fellow sociopaths (aka our elected officials) is perhaps only second to the Banksters.
‘The economic recovery in California struggled through the first half of the year but now is picking up speed, driven by improvements in the real estate and the job markets, according to a quarterly report from Beacon Economics and City National Bank.’
‘Even so, economists warned that California’s still high cost of living could affect employment down the line. “Businesses will be hard-pressed to recruit mid-skilled workers in a state where the median price of a house is well over twice the national average,” said Beacon founding partner Christopher Thornberg.’
You want supply? Here’s your supply. Just rest your finger as you page down:
‘The Downtown (LA) development scene has been moving forward at a steady clip for more than a year, with a coterie of real estate players and investors recognizing that the community is ripe for additional housing, entertainment options and office space. Still, things ratcheted up even more than could be expected in just the last four months.”
From the CVBT article:
‘On a county level, median price increases have slowed or peaked in many of California’s largest counties. In August, 13 of California’s 26 largest counties experienced monthly price declines compared to only six in March.’
‘Negative equity continues to decline but remains at historically high levels. In August, slightly more than 1.0 million California homeowners, or 11.6 percent were underwater. Cash sales totaled 7,547 in August and were 22.0 percent of total sales. Cash sales have been steadily declining, down 46.2 percent, since reaching a peak of 14,028, or 40.0 percent of total sales in August 2011.’
‘Flip sales fell 2.3 percent for the month and are down 36.5 percent for the year. Flip sales are defined as properties that have been resold within six months. Flip sales peaked in October 2012 and have declined 38.2 percent.’
‘Institutional investor LLC and LP purchases edged up 0.9 percent for the month but are down 23.0 percent from August 2013.’
Here’s a source for some of the data.
http://www.propertyradar.com/reports/real-property-report-california-august-2014
‘Historically, Southern California, as a lure first for domestic migrants and, later, for foreign immigrants, has been an incubator of families. As recently as 2000, the proportion of population ages 5-14 in Los Angeles and Orange counties stood at 16 percent, the sixth-highest level among the nation’s 52 largest metropolitan areas. Thirteen years later, that proportion had dropped to 12.8 percent, ranking 33rd. The area experienced a 20 percent drop in its share of youngsters, the largest decline among U.S. metro areas.’
‘Of course, not everywhere in Southern California has experienced such a precipitous shift. The Inland Empire, which stands apart in census data, remains a relative bastion of familialism, with 15.3 percent of the population between ages 5-14. Yet even the Inland Empire is slipping somewhat, from having the highest percentage of children to a ranking of fourth, and experiencing a 17 percent decline in children’s share of the population, the fourth-largest percentage drop in the nation.’
‘High housing prices seem to have a direct impact on family formation, pushing people further out to the periphery or, in some cases, out of the region entirely. Overall, according to recent analysis of census data, high-cost areas tend to repel families; almost all the most expensive areas in the country, such as the Bay Area, New York and Boston, have all experienced strong drops in numbers of children.’
‘This has resulted, as demographer Ali Modarres has demonstrated, in a gradual emptying out of families from the poor, but still expensive, inner core of Los Angeles. These areas tend to be heavily immigrant, and once were seen as the generators of a new generation of Angelenos. Now, however, as Modarres suggests, these areas are also “getting old,” with grandparents remaining but the new generation headed to other locales within or beyond the region. This process, he notes, has been accelerated by a decline in immigration to the region, particularly among Latinos, who long settled in these areas.’
‘The bloom is definitely off the California real estate rose,’
How many more times will the REIC trot out this tired cliche before the Housing Bubble is finally a fading memory?
It’s their way of saying that the odor of the rotting stinking corpse that is housing can no longer be contained.
LOL.
The tape worm Realtors will take their cut under all circumstances, all they want is to see is the churn. They have lies dressed up with catchy phrases for all phases of housing. Its always a good time to buy or sell a house.
A friend of mine put his home up for rent at 2750 per month. He was told 2400 was the most he could get. He has 3 people interested one willing to pay 3 months rent in advance. The 3 month in advance guy has to move because the landlord is selling all his rentals.
2750 per month !! My mortgage is less than 1500 a month and his is about the same.
Craig’s list 1700 square feet 3 bedroom large lot. He will allow pets. I told him hes crazy and should sell.
Other friend is in escrow he decided to sell instead of being a landlord smart guy that’s in Camarrillo CA. where the buyers got the down from grandma.
Sell Smart. VERY Smart lad.
Post a link.
“Somerton said. ‘It ruins lives. You can’t imagine the anguish and stress something like this does to a person.”
It’s your debt. You did it to yourself. Figure that out and the way to freedom is clear.
“The borrower is slave to the lender”.
” You can’t imagine the anguish and stress something like this does to a person.”
Wondering how long you can rent for free sure does take a toll..
Remember…. houses are depreciating assets that take dollars from your wallet.
“That leaves us to fret whether this cycle of anxiety over affordability ends badly for everyone in Southern California – as it did twice before in the past quarter-century.”
Don’t touch the SoCal housing purchase market with a ten foot pole, and you will have no need to fret.
“That leaves us to fret whether this cycle of anxiety over affordability ends badly for everyone in Southern California – as it did twice before in the past quarter-century.”
There was a good downturn in the early 1980’s, remember, so from about 1980 to 2006 that’s three times in a quarter century.
We showed up in 1996, which was perfect timing for catching the bottom in the early-1990s bust.
My impression is that government-sponsored housing market reflation did not come into play during that episode as it has since the Fed stepped in to prop up the market starting in early 2012.
An old-timer in my circle once told me he bought his first California house back in 1959. He also indicated prices were very attractive at the time.