California In ‘New, Emerging’ Market
The California realtors have the May numbers out. “The median price of an existing home in California increased 8 percent in May and sales decreased 21.1 percent compared with the same period a year ago, CAR reported today. ‘The median price of a home continued to increase in May, but at a more sustainable 8 percent rate,’ said C.A.R. President Vince Malta. ‘This is the first time since November 2001 that the median price did not increase by double digits.’”
“Statewide home resale activity decreased 21.1 percent from the 618,920 sales pace recorded in May 2005. ‘Year-to-date sales are down 19.5 percent,’ said C.A.R. Chief Economist Leslie Appleton-Young.”
“C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2006 was 5.9 months, compared with 2.7 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.”
From the Desert Sun. “Coachella Valley market continues to move in favor of buyers, although sales counts in May were 19.7 lower than a year ago, with a total of 1,131 properties sold. Rocio Flores, a real estate agent in Indio, said valley resale homes are competing not only with each other, but increasingly with new-construction houses being offered up with significant pricing incentives, free upgrades and other lures.”
“David Richer of Palm Desert, who moved to the valley from Los Angeles just over two years ago..(has) been renting while he tracks local real estate patterns and decides when to jump in as a buyer. He recently saw brand-new, 3,000-square-foot homes in a posh La Quinta subdivision, going for $700,000 a few months ago but now being offered at around $530,000.”
“Richer has a hunch that prices at all levels could be changing significantly in the coming year, especially as some current owners feel stretched by rising monthly payments on their adjustable-rate loans. ‘I think a lot of people got into this market in a panic, thinking they’d never have another chance to buy,’ Richer said.”
The Daily Breeze. “In May, the numbers were practically screaming as the inventory of homes for sale in the South Bay beach cities nearly tripled from a year earlier.”
“‘I’ve been through a few of these cycles and I would expect this adjustment to last for a while, until prices get real again, however long that takes. I’m thinking years,’ said Manhattan Beach real estate broker Jim Gallagher. ‘But I think we’re going to be in this market for a while. This new, emerging market.’”
Here are the CAR/Dataquick numbers by area. Don’t miss the tables at the bottom of the CAR link. It looks like every city/region has sales declines in the double digits.
Yolo county down 11% YOY. OUCH!
No YOY price appreciation for any of the Sacramento region’s four counties. Graph here.
Sacramento: 0.00%
Placer: -2.02%
El Dorado: -3.89%
Yolo: -11.14%
Holy Crap. That’s all I’ve got to say.
They’ll have to pry my gun from my cold dead fingers is all I’ve got to say. (apologies to bottomfeeder)
San Diego: 0.0%
Now that’s a beautiful thing!
That is great news. However, Stockton trips me up since their foreclosure rate is one of the highest in the nation.
la jolla down 30% wow.la jolla condos for me.
I guess the “RE never goes down” should be changed to never goes down except in YOLO or Boston or ….
Yeah! Now that we have YOY declines in Sacramento, the bust has officially begun (somebody mark the calendar!) Can any other region make this claim yet? If not, I would say that Sacramento hereby gets the very dubious award for “Ground Zero of the Housing Bubble”.
South Bay of LA has YoY price declines. Remarkable. This area was expected to be the very last to get hit. Perhaps the interest rate situation and the affordability issues are making the beach more vulnerable early in the cycle this time around, as opposed to previous crashes.
It really is different this time. LOL!
Eh, to a degree. Pallos Verde is still up over 10%
Personally I’m excited to see some strong negative YOY and flat YOY in San Diego county, especially in some of the “richer” areas like La Jolla. Should be interesting to see how this plays out over the next few years…
Sorry man Queens Creek, AZ gets that dubious distinction.
Get ready for the NAR to officially dump YoY comparisons. Next it’ll be 2yrs back as the measuring point, then 3, then 4… until there’s a MoM uptick (way down the road). Then they’ll gradually work their way back up to YoY, when the numbers suit them.
Bet on it.
I’ll say it again, for Santa Clara County, the median wages do not support those price increases.
I’m considerrig a move to Santa Clara (would rent). Anyway, for a family of 4 like mine you can apply for public housing assistance with an annual income of ~$86,000. — That’s considered the 80% of medium income for a family of 4.
When I read that I was blown away. The amount of wealth created in the last 15 years in the Bay area is amazing.
I recently left santa clara county and would never go back. There is something in the water there that makes you think this is the good life. I was recently back and (I kid you not) two people commented to me on different occasions, “You have central air?”. Like it was some sort of magical amenity that only the super wealthy have. Then they rationalized it with, well you don’t need it here, the weather is so great. The weather isn’t that great. Maybe SD, but not the Bay Area.
Nuts I tell you. Plain crazy.
I live in Bay Area, I drink only bottled water, and I see that it sucks here. The weather is cold, windy, and wet most of the year.
The bay area is becoming increasingly hotter, only someone who lives close to San Francisco can get away without air conditioning these days. I swear it’s starting to feel like Pheonix in San Jose this summer and last.
The bay area is a really slimy sucky place crawling with snakes and devil worshippers. When the rapture comes, even the righteous in its midst will be passed over for salvation. I urge all of you to save yourselves. Alas, I wish someone could stop me before I sin again. I am so tired of all the killing and wealth creation. Its too late for me, but please save yourselves an others.
It even crept into the 80s one day in San Francisco a week or two ago! Global warming sucks.
““You have central air?”. Like it was some sort of magical amenity that only the super wealthy have”
LOL! I’ve heard the very same thing, and got the amazed stare along with it. And they instantly assume that actually running A/C is like comitting financial suicide.
Bay area weather stinks IMO. Misty / cloudy & cold most of the time. Everything is wet and smells moldy. That doesn’t begin to address the rest of the quality-of-life issues bay area residents contend with. Couldn’t get me to live there if housing were 1/10 what it is today…
SD with some substantial RE price declines, if it wasn’t in TAX-HEAVY CA, would be on my list…
I’ve lived around the CA Bay Area all my life, and I’m not biased. I think this area has always been slummy (horrid roads for starts) and the only perk is that the weather is fair (not great).
I plan to get out of CA completely in the future unless CA prices come down to slummy levels.
BTW: I’ve never had central air either.
American Crackpots.
And the worst thing is that the virus is global.
It’s a cancer that is spreading worldwide.
It’s absolutely the same thing in in Canada, the UK, Europe and the rest of the world.
Check out Mountain View - .1% YOY. But I thought MV was prime? Isn’t it Google money land?
Google - the OTHER monster bubble. Don’t even get me started off on that one!!
LOL!
SD County YOY price appreciation = 0.00%. We must have passed the flat spot on top of the parabolic arc about six months or so ago…
Yea but…I thought everybody wants to live in San Diego!?
They may want to, but almost nobody can afford to do so…
How true!
La Jolla down 30.3%…wow.
UTC Condos for everyone!
And now Encinitas and Poway are more valuable than La Jolla!
See permanently high plateau reached…
Please just keep your housing news positive.
http://tinyurl.com/oehdd
No earthquakes.
No hurricanes.
No snow.
And too many other positives to list!
Um, the elephant in the bedroom that nobody is talking about… 110 degree weather half the year??? The place is uninhabitable.
That is sad and scary and funny, all at the same time. I’m wagering that this lady was not sending in letters to the editor in 2002 saying, “Let’s have some balanced commentary on RE and how we may be in a bubble”, etc.
Santa Barbara County down 12.2% MOM — watch out below!
If Montecito, Big Sur or some other like area goes down 50%, would someone please let me know? I could put up w/quakes an tsumamis and mud slides and wildfires if dirt cheap!!!!
From the footnote:
“Due to the low sales volume in some cities or areas, median price changes may exhibit unusual fluctuation.”
Yeah, right. The median price in my area is jerking around like a seismograph needle during a 7.5 earthquake. Perhaps this is due to the fact that sales have fallen to the lowest rate in seven years.
http://www.dqnews.com/RRSCA0606.shtm
Median prices still climbing? Amazing. Things do not look as good for Arizona. “Phoenix, AZ median price down 6.7%
and inventory up 188% in 9 months”
http://www.realestatedecline.com
Gee, maybe it’s time for a checkup w/Nina at Sitting Pretty, the master of the RE universe. Wonder if she’s still looking for a “tidy profit” as she was in November or maybe to just jettison the POS for whatever she can get.
Yeah, she’s sitting pretty in a large pile of her own human excrement. I love when you remind us of the smug, genius housing investors that jumped on this can’t lose proposition late in the game, as they rubbed our noses in it with their new found “wealth.” I hope she gets to keep her laptop after the foreclosure, so that she can blog from skid row.
TXchick,
Is that house in Palm Springs still on the market? I know there were a few drops in price from 695K to 629K, but I don’t know if it ever sold. There was an article in the LA-Times about it, but that was several weeks ago: http://tinyurl.com/f6the
Hahahah. PMI Group says no price decline likely in DFW. PMS Group (my company - ha!) says 100% likelihood of significant price decline.
Report: Home price decline unlikely
12:25 PM CDT on Tuesday, June 27, 2006
By STEVE BROWN / The Dallas Morning News
It’s getting less and less likely that Dallas will see a home price decline.
That’s what the folks at PMI Group - one of the country’s largest mortgage insurance firms - are predicting in their latest report on home price decline risks.
The California-based insurance company tracks home market conditions in the nation’s 50 biggest housing markets.
The Dallas area ranks among the 10 U.S. cities with the least chance of a home price plunge, according to PMI Group’s researchers. That means that there is only about a 7 percent risk of widespread home price declines in the Dallas area. And Dallas’ risk numbers have declined slightly since earlier in the year when the company made the same comparisons.
Among the cities PMI Group surveys, the average risk of home prices declining is more than 25 percent.
Many of the country’s overheated housing markets on the West and East Coasts and in the Southwest are cooling, PMI analysts said in their report released Tuesday.
“This quarter’s data signals that in many areas the expansion of the housing balloon has slowed substantially,” Mark Milner, PMI’s chief risk officer, said in a statement. With the economy still strong in most areas, Mr. Milner said, “this makes a gradual cooling of the market the most likely outcome.”
The cities PMI Group highlighted as having the greatest risk of a home price shakeout include San Diego; Nassau-Suffolk, N.Y., and Boston.
All five major Texas cities were ranked among the markets with the lowest chance of a home price drop.
PMI Group is among several firms that have recently issued forecasts that say North Texas is unlikely to see a sharp decline in home prices.
E-mail stevebrown@dallasnews.com
WHERE’S THE HOUSING BUBBLE?
PMI Group, one of the country’s largest mortgage insurance firms, estimates there is about a 28 percent chance of home prices declining nationwide in its latest survey. A score of 100 means there is a 10 percent chance home prices will drop during the next two years.
Riskiest markets:
San Diego - 599
Nassau-Suffolk, N.Y. - 589
Boston - 588
Santa Ana-Anaheim - 588
Sacramento - 585
Riverside - 583
Oakland - 582
Los Angeles - 575
Providence - 568
San Francisco - 560
Least risky:
Pittsburgh - 57
Indianapolis - 57
Memphis - 58
Cincinnati - 61
San Antonio - 64
Columbus - 65
Cleveland - 65
Fort Worth - 68
Nashville - 69
Dallas - 71
Source: PMI Group
Yeah, Steve Brown has been a housing cheerleader for as long as I’ve seen his columns. He’s the antithesis to DiMartino, who at least writes objective stories about how incredibly screwed this area is. I can’t wait to email Steve when the shiite really hits the fan around here. We’ve still got a boat load of condos and McMansions that will be completed between now and the end of 2007. Dallas, IMHO is set for a meltdown that will make the late 80s look tame. There are more McMansions going up off of lower Greenville Ave at this moment than I can remember for the past couple of years, and the market has just begun to hit the wall. Keep building suckers.
“PMS Group” - LOL.
PMI report is out:
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-publications
San Diego: 60% risk
That’s it. I’m moving to West Virginia!
Seriously though I have to send this to a realtor I was talking to today about a cute house in Kennebunkport, Maine. It’s really cute but I flat out told her that I can’t buy until I get a job, first of all, but that I’m concerned RE is going down the toilet.
She said…….
I know you all know what she said….
“It’s different here.”
I replied, “That’s what everyone says.”
Granted, the Maine seacoast is very beautiful, but I don’t think any areas are going to be immune from what is about to happen. Maybe I’m wrong.
I don’t think she liked our initial conversation.
Novasold — that was pretty smooth, all right. Make sure she doesn’t leave the passenger seat heater on, if you see her this summer!
Funny they only predict 60% risk for SD, when statistical evidence suggests prices are already falling (0% YOY change in the median price with large inventory accumulation = drop in market prices). Kinda like the weatherman who predicts 60% chance of rain, while failing to look out the window to notice that it is currently raining (100% chance!).
Watch actual people lose money on their San Diego “investment” properties here: http://sandiegomarketmonitor.blogspot.com/
Hahahaha great site!! I wouldn’t be surprised if whoever hosts it is receiving death threats from San Diego “investors”!
Awesome find!
This is a seat at the front row of the local SD meltdown. Amazing.
On another note, I am saddend. My Fiancee’s Father is still convinced SD RE is going nowhere but up. However, in the exact same breath he admits to all the flawed fundamentals and market meltdown. He even told of us other family members leveraged to the hilt with the Housing ATM. Cash out refi’s, HELOCs, etc. As he left he kept reiterating, “Housing just keeps going up!, San Diego is different, blah blah”.
It’s a classic case of Denial and it scares the living crap outta me. I am hearing stories like these everywhere.
Remember this guy?
777 Lofts at 6th Avenue - “For my age group, there’s no way I can lose”
This post doesn’t examine a specific unit that is listed or has already sold for a loss, rather this is an entire project that appears to be in serious trouble.
The 777 Lofts at 6th Avenue is an apartment conversion located in the Gaslamp Quarter. San Diego County records as of May show that only nine out of 103 condos have been sold. The project has been for sale for close to a year. The project website is noting that a “MAJOR PRICE REDUCTION” has taken place.
The San Diego Union Tribune published a story with the below:
“Kristian Cabuago, a 27-year-old dentist in Tierrasanta, hopes to spend his first night in the first home of his own, a 950-square-foot top-floor condo at 777 Sixth Ave. in the Gaslamp Quarter. It cost him $550,000 and he thinks he timed his purchase just right when he signed a sales contract earlier this year.
“At that time the news was forecasting condos in downtown and everywhere were suffering,” Cabuago said. “I thought that was a perfect time to buy.”
He negotiated the price down from $591,000 and considered it a bonus that his homeowner association fees will be $250. And he’s happy to be moving with his girlfriend from a Rancho Peñasquitos apartment to the lively night life downtown.
“For my age group, there’s no way I can lose,” he said. “You can’t ask for more.”
I, Operation, heretofore nominate Kristian Cabuago to the list of top 10 FB’ers.
Can you imagine how owned this guy will feel when he has to kick the bums out of the way just to enter his “Can’t lose” repartment.
nice. i’ve got the new site bookmarked
wow,a drop from700k to 530k is substantial this early in the game.more to come,and gallagher is right about it taking years before prices are real
tom stone,
Agreed that is a substantial price drop! Much of what has transpired has already exceeded my expectations considering we just threw out the first pitch! Who is this Gallagher you refer to?
The guy that smashes the watermelons with a sledgehammer.
Did Gallagher die, or just his career?
Here’s the stats on EXISTING HOMES for the San Fernando Valley from our board of realtors.
The SRAR numbers show a price increase y/y of only 5.7% overall ($520k in ‘05 to $550k in ‘06). For single family the SRAR numbers show an increase of 4.3% y/y ($575k to $600k).
Sales volume is off about 19% overall. 26% for single family.
I have a hard time believing that we have enough new home sales in the Valley to push our y/y appreciation up to almost 12% as cited in the CAR stats.
So when are the decreases coming?? I hear 7% is the “magic” number? This fall, year-end? Soon - hopefully!
Yes please! Price declines for the San Fernando Valley now!
So, how is Leslie Appleton - Young going to spin this a few months down the road when it is BEAR all the way. What a lying SOB. Where is the the big windbag, Gary “Its in the Bag” Watts on this subject? Are you folks reading Ben’s Bodacious and Truthful Blog?
Lying SOB? Are talking about Alan Greenspan or George W. Bush. Both? OK. I recently read “Empire of debt.” This was refreshing. All these market values are just plain bull. Remove the leverage with two or three other interest rates increases, the house of cards will come crashing down in a micro second. Look where the crack up is happening first, the long term debt market. As for the lying SOB, strart with bassstardssss at the FED and at the White House.
We will also use that lying sack of s–t Algore and his phony global warming B.S. ?
No matter what she says or how she spins it, everything she says from now until eternity will end with the words; “so now is a good time to buy”.
I LOVE hearing BEAR news out of California. It really makes my day, for the folks that thought I was nuts when saying this was a bubble and didn’t make any sense.
Your nuts thinking that people will admit that they were nuts.
They won’t even remenber that you them so. Hope they suffer.
I soo sick and tired about this crazy nation. Too many Prozac users.
Marc — thought you were a Canadien???
Getstucco — is that true? It would throw a lot different light on the comment, for sure.
Lets all move to Sydney!
You obviously haven’t been keeping up with the Sydney RE statistics :D.
While certain areas are showing strength, the overall prediction is for a 3rd straight year of declines.
I am in CA and even last weekend it was amazing to see the denial in people who have skin in the game…(RE speculators)…
Can we start a support group for anyone in CA whose been saying it’s a bubble for more than a year?
We can all sit in a circle and chant “It’s all true and we’re not crazy. The prices made no sense.” Then we can drink wine, talk about cash and gold, and dream about our beach front homes which are only 5 years away. (OK, for some of us our nice east county homes
)
You’re only as nuts as I am need to leave. Although I’m not sure that’s much of an endorsement!
San Diego RE Bear, - Ben’s blog is our support group! I have found great solace (and wasted lots of time) in this web site. I disrupted my family’s life by selling in July 04 in San Diego and have rented since, but have no regrets. I really thought the bubble was getting ridiculous by the end of 2003. When I decided to sell in mid 04 it had turned insane. Luckily my wife was on my side. If prices go down, we will buy again in Carlsbad. If it takes longer for prices to drop than I am willing to wait, then we are off to a new state.
$700K to $530K for Palm Springs area. NICE. Nina, where are you? Report on your BIG profit. She has probably joined the Witness Protection Program from any sheeple that may have followed her advice, and managed to collectively lose their A$$es. LOL
The median price of an existing, single-family detached home in California during May 2006 was $564,430, an 8 percent increase over the revised $522,530 median for May 2005, C.A.R. reported. The May 2006 median price increased 0.5 percent compared with April’s revised $561,750 median price.
“Year-to-date sales are down 19.5 percent, in line with our recently revised 2006 California Housing Market Forecast, which projected a 16.8 percent decrease in sales for this year to 520,000 units compared with 2005,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “We expect the rate of home price appreciation to increase 8 percent to $565,900 for the year as a whole, compared with the impressive double-digit gains we’ve witnessed over the past four years.”
C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2006 was 5.9 months, compared with 2.7 months (revised) for the same period a year ago.
The median number of days it took to sell a single-family home was 44 days in May 2006, compared with 27 days (revised) for the same period a year ago.”
Every sixth word is “revised”.
Congratulations, you just found Leslie’s new moniker - a “revising market”.
Congratulations, you just found Leslie’s new moniker - a “revising market”.
damn…I clicked twice. Now I know how this happens.
“The median price of an existing, single-family detached home in California during May 2006 was $564,430, an 8 percent increase over the revised $522,530 median for May 2005, C.A.R. reported.”
Why are they revising the May 2005 median numbers? This could be fraud. What were the originial numbers.
hahahhahahahah
Interesting to see that the price appreciation will barely cover the interest payment. Looks like that game is about over.
The statistic for market time of houses that sell makes the market look better than it is. Actually it doesn’t factor in all the time on the market for lisitngs that eventually get cancelled and withdrawn listings that get relisted later or homes that people have decided to rent out or give back to the bank etc. The 44 days on market just means that the realitivly good deals go to escrow in a modest period of time. I have real time access to the MLS in San Diego because…yep …I have RE license. There is a ton of distress to be read in the “Confidential Remarks” area of the listings or by comparing asking price to the tax roles for recent sales or by comparing listing prices to HIGHER recent comps.Many listings offer super incentives to the selling agent(buyers agent), “Its like hey lead your lamb to slaughter here and we will pay you a premium.” About 1 of every 2 listings has some desperation factor written in somewhere.
The new spin term winner “REVISED” they will revise everything until they will try to get us to believe that no light comes out of the sun.
“The median price of a home continued to increase in May, but at a more sustainable 8 percent rate”
I wonder how many people will misread that as 8% YoY appreciation is a “sustainable” gain? How cheery. Keep buying homes, because appreciation will cover your long-term interest costs.
Three years ago, Manhattan Beach real estate broker Jim Gallagher was predicting that California’s booming housing market would lose momentum. Now Gallagher predicts a leveling off that could last years. “I’ve been through a few of these cycles and I would expect this adjustment to last for a while, until prices get real again — however long that takes. I’m thinking years,”
So prices will be “leveling off” for years until they “get real” again? Why do they continue to use the term “leveling off” when describing prices returning to normal, sustainable levels? It’s called “falling”…not “leveling off”.
The May CAR/Dataquick median price appreciation data for Mr Gallagher’s own area:
Manhattan Beach -8.9%
Beach Cities -4.9%
Redondo Beach -0.8%
Torrance -2.9%
Feels like more than a “leveling off” if it keeps going.
funny that the high-end communities of the south bay(Manhattan beach,torrance,redondo, el segundo(6 % yoy) are down while the rather dismal mid-cities cluster of belflower, hunt park, lynwood, southgate all went up average 25%. These areas heavily Hispanic immigrant: are they being deluded by the RE Bubble?
Compton, the incubator of crips and bloods, is up 25%.
Some other LA undesirable communities with astonishing YOY; Pomona 15.1, pacoima 18.6, sylmar 18.8, San fernando 17.6
Surprize: Santa Clarita +3.9 yoy. Or maybe not.
Santa monica 60% YOY is a statistical anomaly. A few 3-4 million dollar Mcmansions must have sold : Some super rich jet setters putting up palatial estates in the former “socialist republic of Santa Monica”.
It has been my observation over the last couple of years, that if you plot a scattergram of the appreciation vs median price by zip code that dataquick publishes for L.A. county, there is a very strong correlation. The higher the price, the lower the appreciation. It doesn’t seem like it can do that forever because eventually the lower priced zip codes would cost as much as the high priced zip codes.
I think it’s like a ripple effect. You start with the extraordinary appreciation that occurred along the coast (i.e., beach, Santa Monica, Westwood), and once you’ve maxed out the available suckers, then it moves inland to the less desirable areas. Sort of like an ever expanding Ponzi scheme, until it all collapses of its own weight.
My guess is the tipping point for Pomona, Fontana, San Berdo, Riverside etc., will be with the high energy costs needed to maintain a desert lifestyle (i.e., air conditioning and long commutes to work).
agree. perusing the CAR figures for La County what pops out is that the lower-end areas median are catching up to the higher end area medians.
Low-end areas high end areas
LA Puente $453,000 playa del rey 542,000
Hawthorne 500,000 santa clarita 530,000
pacoima 498,000 diamond bar 576,000
bellflower 497,000 encino 597,000
Gardena 507,000 chatsworth 545,000
These are just a few side-by side comparisons between( IMHO ) the low-end(working class burgs) and the high-end desirable communities( My info on Santa clarita based soley on numerous visits to valencia business park and immediate area).
When you have only a $30,000 differential between hawthorne(crime rate equal to Scentral LA) and Santa Clarita, there must be a hugh oversupply or other situation in SC.
Only a $100, 000 differential between Playa and La puente? Have you seen La puente? It is the hell-hole of the city of industry. Playa is a spanking brand-new community raised up from the ballona Marshes:looks like it is all condos for av median to be 542,000. Must be very Small condos, for the area is a highly desirable prime community(just a stones throw from Marina del rey and the beach).
This happens because the lower-income want to get in on the boom even as the high end stalls.
Thus condos continue to appreciate relative to houses until the (bitter) end.
Of course the prices appear ‘level’ when you’re in the taco neck position at Taco Bell enjoying the only meal you can now afford.
The only leveling off we had was AFTER prices went down 35-40% in California. The leveling off was from the bottom to around 1999. Shot! they dont talk about the drop first fast then go side-ways slow and long…
Just did some quick empirical analysis of these DataQuack numbers. Here are the take-home conclusions:
1) No county with a median May 2005 over $500K saw a double-digit price increase YOY to May 2006.
2) The counties with the lowest median May 2005 prices tended to show the largest YOY increases (e.g. Tulare & Kern Counties both over 20%).
3) Of the three largest counties by population (LA, SF, SD), only LA had double-digit YOY gains (12.2%) while SF was barely positive (2%) and SD was flat (0%).
4) The May 2005 price is a fairly strong predictor of the YOY appreciation to May 2006, suggesting that the priciest areas already topped out some time over the past year, while the bubble spread inland to more remote locales.
SF isn’t one of the three largest counties by population. It only has about 750k residents. OC, for one, is much larger than that.
Thanks for the correction. Ideally there would be aggregate statistics for the three largest population centers, but as you suggest, political boundaries make comparing SD, LA, and SF rather like comparing avacados to oranges to grapes.
IN LA County, It seems that yes indeed the real expensive communities (south bay, Marina del rey, westside LA, ect are seeing downward shift while the crap areas(mid-cities, compton, Sylmar, pomona, ad nauseum), are getting the tail end of the bubble increases.
It looks as if the areas which were real low to start with have registered the large percentage increases. This is noticeable in the Kern County listings, most of which are out of the way Desert communities(E.G, ridgecrest, Rosamond)which were dirt cheap to begin with( and will become dirt cheap again in just a few years).
Same in inner city neighborhoods, too. East and NE LA neighborhoods have gone up the most, Atwater village (90039) went from 300k in 04 to 600k in 06.
now your talking about some real tough innor city areas right around the La Downtown( the inner ring). Boyle heights, el sereno, Rampart, westlake/macarther park, jefferson park, lincoln heights, ad nauseum.
several months ago I actally saw a very old restored victorian for sale(a duplex) for $800,000 on union street off pico. This area just west of LA Downtown is bad even by inner ring standards.
“I think that we’re definitely transitioning from a seller’s market to a buyer’s market,” said Mike Collins, Shorewood’s general manager. “We’re not there yet.”
You have to give this guy credit for admitting it’s not a buyer’s market yet.
What does Suzanne think of all this?
Sorry, but we’re not speaking anymore.
I wish the Suzanne link still worked. Slate has removed the file.
I vote “Suzanne’s ex” as the best name on this blog.
MoM is flat to Down…
http://www.car.org/index.php?id=MzY0MDA
6-May Percent Change in Price from Prior Month Percent Change in Price from Prior Year
6-Apr 5-May
Statewide
Calif. (sf) 0.50% 8.00%
Calif. (condo) -0.20% 2.70%
C.A.R. Region
Central Valley 1.30% 3.40%
High Desert -0.80% 17.50%
Los Angeles 0.20% 13.50%
Monterey Region 2.90% 5.00%
Monterey County 1.00% 7.20%
Santa Cruz County 1.50% -0.30%
Northern California 1.20% 2.90%
Northern Wine Country -0.80% 1.80%
Orange County -0.70% 2.90%
Palm Sprs/Lwr Desert -2.60% -3.50%
Riverside/S. Bernardino 0.40% 8.80%
Sacramento 2.20% 0.70%
San Diego 3.50% 2.30%
San Francisco Bay 1.20% 4.30%
San Luis Obispo -7.10% 4.20%
Santa Barbara County -12.20% -9.30%
S. Barbara S. Coast -2.70% 0.10%
No. S. Barbara County -0.50% -3.20%
Santa Clara 3.20% 6.80%
Ventura 1.10% 3.20%
What’s up in Santa Barbara County — it looks like the first serious casualty of the bubble, at least on the face of these numbers…
Santa Barbara County -12.20% -9.30%
I imagine those numbers are masking the full impact of declines in prices because they probably do not subtract out costs for incentives that have been included since the slow down.
And from reports I have received, in los angeles, people are putting 5-10% in direct incentives.
And I am recieving reports that sellers are having higher costs to sell, including hiring consultants to stage their homes, and the cost to rent staging props. And in some cases the cost of hiring actors to act like the family of the house or to act like interested buyers at open houses. In La La land, what do you expect? (smile)
The outer fringe boonie areas of Riverside and SanBernardino(lower deserts included) should be leveling off(as your excellent stats show)as the more expensive areas near the coast start to decline). These outer fringe areas( also known as the inland empire) have seen tremendous growth in new home tracts and this should be putting downward price pressures on all sales throughout this region( not to mention all of the other negatives of residing in the Inland Empire: long traffic commutes, hot stifling smoggy weather, high crime rate in San bernardino area, rapid haphazard urban overdevelopment and ugly sprawl patterns, ect.
It happened this way last time (priciest areas were the first to fall) and history does have a way of at least approximately repeating itself…
(CAUTION: PDF FILE)
http://www.firstamres.com/pdf/Cagan_FireBurn_1104.pdf
According to a Santa Barbara realtor (below), we should all buy now. She is the expert, so I am headed out to buy. I/O Option ARMS, here I come!
For those who have been taking a “wait and see” approach to purchasing real estate I would highly recommend not waiting any longer. The real estate market has experienced the predicted soft landing and we are back to a “normal” market.
At this time, there is a very large selection of property currently on the market. This is good for buyers who no longer have to choose something they might not be really excited about just to get into the market.
Prices have flattened and in some areas, have dropped slightly. Also good for buyers. However, I do not believe buyers should expect prices to fall very far. Our beautiful area is a bit more insulated than other parts of the country therefore, prices are far less apt to become depressed.
While interest rates have risen a bit, there are still many excellent programs out there which will allow entry into the housing market.
Over all, I would say that this is an excellent time to buy with lots of inventory, lower prices and good interest rates still available. The time to “wait and see” is over. Do it now!
“Prices have flattened and in some areas, have dropped slightly.”
12.2% off the SB median of $515K would set you back $62,830 — right around the San Diego median household income, and in one month’s time!
Thanks, but no thanks…
Oops — wrong median! I should have used
12.2% X $677,630 = $82,671 — more like losing the SF median household income in 1-month’s time!
Too bad she was dropped on her head when she was a baby! ! !
Mr. Subliminal dub-over:
For those who have been taking a “wait and see” approach to purchasing real estate I would highly recommend not waiting any longer.
I want to eat, and my Benz isn’t paid for.
The real estate market has experienced the predicted soft landing and we are back to a “normal” market.
The landing, which appears more and more like a hard one, was completely unexpected and caught us with our pants down. Only some blogger cranks warned the public.
At this time, there is a very large selection of property currently on the market.
I’m tired of listing new crap, I just want to sell something.
Prices have flattened and in some areas, have dropped slightly. Also good for buyers.
I’m trying really hard here to maneuver out of the “rising prices make you rich” meme of the last year to the new “falling prices are also good for you”. Give me some credit for trying.
However, I do not believe buyers should expect prices to fall very far.
I will adjust the meaning of “far” as I go.
Our beautiful area is a bit more insulated than other parts of the country therefore, prices are far less apt to become depressed.
I know the contradiction between the already biggest drop in prices in all CA and the above statement is obvious, but some always fall for this line.
While interest rates have risen a bit, there are still many excellent programs out there which will allow entry into the housing market.
I wouldn’t personally wish such loans/program to my worst enemy, only to my clients.
The time to “wait and see” is over. Do it now!
I want to eat, and my Benz isn’t paid for.
LOL!
“The landing, which appears more and more like a hard one, was completely unexpected and caught us with our pants down.”
Great! That will prepare you for your next profession.
Great!! Funny!!
Rotten CAR bastards didnt publish MoM by Zip data…
I bet we would see declines in several zips…
I’m sure it will come as a great comfort to the tens of thousands of CA homedebtors who are forced into foreclosure this summer that the median price in CA was up 8% yoy in May ‘06.
Everyone said the South Bay (beach cities S of LA - Hermosa, Manhattan, & Redondo) would be last in line, but it seems to be tanking here before some other LA areas.
I believe that the South Bay of LA is ground zero of the bubble - because the quality of life (for the average middle-class person) is less desirable in LA than SF. SF was historically more expensive than LA - but post-bubble they are neck and neck. Within greater LA the South Bay was historically less expensive than the desirable areas of West LA…. Probably due to the fact that it is damn inconvenient to live in the South Bay when you must commute into the city (I live in Redondo and it takes me 2 hours to get into Beverly Hills during rush hour - although it’s only 18 miles away). Post-bubble, the South Bay and West LA are neck and neck in price.
So the prices in the South Bay have escalated even more wildly than W LA or SF. The South Bay is due for a swift and hard landing.
I wonder how much the land fill and the oil refineries play into keeping the prices lower on the south bay.
Beverly hills is a tough place to get to from ANY DIRECTION. It And Hollywood area. I have tried to get around the 405/ Santa Monica Blvd insane route to BH’s by two ways:
1 if coming from south bay i would take aviation up to 105, then go west on 105 to pershing drive, go north thru westchester to connection to jefferson/culver blvd, use culver blvd going eastbound all way to(several choices here)A.centinela then north which will get you to Santa Monica/westside LA. B. for beverly hills, take sawtelle north off of Culver blvd all way to olympic blvd, then east on olympic to Bev hills area.
The advantage is you can avoid the frequent traffic stalls on the 405 going thru culver/inglewood/west LA Area. And avoid the Santa Monica blvd route which is really insane.
The second way is to take LA Cienega (off of 105/405) all way to olympic, then turn left and go west on olympic to either a. roxbury, bedford,camden,beverly drive, or doheny . Turn right and go north along any of these residential side streets and you can get into the heart of Beverly hills.
Note :La Cienega can get slow at times but at least you won’t be stalled at a standstill(unless there is an accident along La Cienega.
Olympic Blvd is the fastest, easiest east-west route thru west LA/mid-cities/wilshire district.
Hers another variation. Tale CULVER BLVD all way to OVERLAND, turn left, go north to WASHINGTON BLVD, turn right and go short ways to MOTOR AVE, turn left and follow Motor northbound all way to CENTURY CITY at PICO. Right on PICO eastbound to CENTURY PARK EAST, go north(LEFT) all way to SANTA MONICA BLVD. Bev hills is to your right, CENTURY CITY TO YOUR LEFT.
Hard to believe some of these areas appreciated so much. I wouldn’t drive into many of these places.
The mania is ending and people are waking up with properties in the ghettos.
The numbers for Fresno and Tulare county aren’t surprising since there is still a lot of speculation around here. They are lower than they have been.
It is worth mentioning that all these flat numbers we are discussing on this thread do not reflect much of the big crash in global financial markets that took place over the month of May, not to mention the recent selloff in long-term Treasuries (nine-days straight of increasing interest rates through yesterday). Long-term mortgage rates are correlated almost 100% with Treasury yields, and the short end of the curve (related to the 1-year ARM) has corrected by even more than the long end as of late, suggesting 1-year ARM rates are also headed higher.
Used home sales prices are a lagging indicator, but the fundamentals are similar for housing and other risky assets — higher interest rates and volatility imply lower valuations. The bad news is not nearly priced in at this point, despite the confident statements from some realtors that the soft landing has already taken place…
Excellent point Stucco, this is a lagging indicator and there has been a lot going on since then.
Anyone who thinks this is going slow… think again. I still think it will take awhile to complete, but we are now moving faster than I ever thought possible.
I’ve been reading this blog nearly everyday since this past fall and have found it incredibly useful in educating myself in regards to finance and RE. One thing I’ve learned for certain; now is not the time to buy - especially in West Los Angeles, where I live. I do, however, wonder if anyone can give any insight as to how to invest the down-payment money I’ve been saving for the past few years. I’d like to see it do something rather than just wallow in the low-yeild wonderland of my savings account.
I’m quite the newbie in this realm, which at 28 - I probably shouldn’t be… none the less, I’d like to stay cautious, however, keeping a substantial amount of money in savings doesn’t seem all that wise either. Any thoughts and advice would be more than appreciated!
Hey WestLA_Newbie - yeah, the market sucks right now. As far as short term investments, may I suggest Emigrant-Direct.com or Vanguard Prime Money Market? Vanguard is paying 4.8% and Emigrant is constantly edging up close to that. Emigrant is FDIC insured to $100K. I know other people would suggest other investments, but my theory is that this market will correct within 3 years and anything else is too risky/volatile for a downpayment. I’m pretty sure 5% will be on the offering soon and that’s plenty of upside for me.
I prefer Vanguard Treasury MM, as opposed to Vanguard Prime MM. Main reason being that their Prime fund is heavily stacked with mortgage debt. Treasury has a slightly lower rate, but it’s 100% treasuries which strikes me as a safer deal given current FNM scariness. (Nothing to stop you from opening both accounts–low minimums.) Love the free check-writing, too.
Citibank has a new e-Savings account which is returning about 4.8%. It appears to be thier competition to Ings 4.5% savings account. However, the citi account pays 4.8% only up to 100k. Ing pays 4.5 up to 1 million.
One interesting thing about Ing, is they do not allow people to have accounts totaling more than 1 million. It is a way to protect their institution from have a large depositor withdraw sums of money they could cripple the bank. And it is my impression that it also protects them from being pressured by large investors, whom could, by withdrawing mulit millions into a financial crisis, which could harm smaller depositors.
Citibank just announced a 5% online e savings. Go to CITI dot com .
Sign up for a leveraged broker account and buy as much sub-prime mortgage backed securities & derivatives as you can. Just kidding. How about a nice CD or some T-bills?
On that note, does anyone know of a T-Bill mutual fund? I don’t want the hassle of buying T-bills. There are short bond funds, but those are 2 year treasure notes.
Vanguard Short-term Treasury Fund
vanguard.com
Oops — maybe not short-term enough for you. But why not go for 2-years? The two-year bond cannot correct much more than it already has (can it???!).
I read someone say that you can take 1/4 of your T-bill money and buy 2 year notes quarterly, that way you spread out the risk of interest rate fluctuations and eventually one is always reaching maturity. Money market account currently pays 4.29% and rising, not bad, and convenient.
Mort –
That is a good strategy — one self-insures against increasing rates, and gets the added benefit of a higher return for the longer portfolio duration (the 2-year yield is currently much higher than 3-mos).
“On that note, does anyone know of a T-Bill mutual fund? I don’t want the hassle of buying T-bills. There are short bond funds, but those are 2 year treasure notes.”
I’m new to buying T-Bills. I just ordered my first a week ago on http://www.treasurydirect.gov - I’m puzzled as to what the hassle is? I skip the bids and just buy at the market price. Why quibble over 0.2% difference? I already bought a Treasury note at Treasury direct. What’s more, if you buy a mutual fund in T-Bills, you have to pay the expense fee yearly. I think you get the better deal in 2 year or 3 year Treasury notes.
emigrantdirect.com or hsbc.com both pay 4.80% on their savings accounts. No fee’s, no minimum balance
…and no risk. I agree this is a good place to hold the savings you will need in a few years for a down-payment.
No risk? What about inflation? Devaluation?
I think those along with Citi Bank’s eSavings accounts and Ing Direct’s Savings accounts have virtual full liquidity. Although they do not guarantee long term interest, it seems we are in the uptick for several months.
I used to live in the South Bay area of LA. 2 hrs from Redondo to WLA - I couldn’t even imagine it that bad (10 yrs ago - was like 45 min on ave). I will be cheering the prices down in that area. Couldn’t pay me to live there anymore. I would like the beach. Only thing nice there.
It can be quite a bit faster on a motorcycle on side streets.
Centex is hiring actors to pretend to live in homes to make the dwellings more ‘palatable’ to propective home buyers:
http://tinyurl.com/jjayx
B-Rate TV nobodies for B-Rate Craptastic homes. Bay Watch? WTF?!? Are they trying to sell to Germans?
These are the shouts from the first cars of the rollercoaster. Hang on!
*prospective.
Gah. Where are the edits when you need them?
Actors??? What the hell??? http://video.msn.com/v/us/v.htm?g=659338f2-45bc-41a7-8c8f-13072fdd007f,6ddbeed2-246b-45da-9702-99ad0c5502d0,f6c6e792-adbb-4c7b-81a4-4aca98b9e72d&t=m11&f=06/64&p=>1=8211
We are going to have a hell of a downer!!
I’m putting together a cast of characters to install in the house next to Centex’s Potemkin Village production. I need folks in here to audition for the following roles:
1. Sheriff who presides over eviction of FB family.
2. Mortage broker who tells them, “You should’ve read the fine print.”
3. FB Father whose harpy of a wife trusted Suzanne’s “research” and nagged her cringing wimp of a husband into making the worst financial mistake of his life.
4. FB Wife who, in typical female fashion, assigns her husband the full blame for not making enough money to pay for her tastes and “needs.” She no doubt drives a Suburban or Hummer.
5. FB-spawn - These pear-shaped, dull-eyed slugs remain glued to their TVs, computers, or Gameboys, oblivious and indifferent to anything remotely resembling real life.
6. The clever renter who is biding his time, who sees clearly what’s coming down the pike and positions himself/herself accordingly.
1. getstucco (surfer-X or Joe Schmoe would be waaaaaaay better, but they don’t come here)
2. mrincomestream
3. Gary Watts
4. Nina
5. David Lareah and Leslie Appleton-young
6. txchick57
Sammy,
You forgot the Repoman who takes the Hummer, Boat and RV.
I would gladly audition for this role.
Ah yes, the Repo man. The role is yours, Operation! And I might do a cameo as the guy who buys the FB’s assets (well, not the Hummer or RV) for pennies on the dollar.
Folsom has shown the first YOY decline (1.1% @ 478k) The peak of this craziness was August 2005 when the median was at 520k so we are already down 8% from peak. The interesting thing to watch is the brutalness of decline from now on when the sellers are desperately lowering the price, Intel has been thinking about streamlining operations, buyer don’t want to catch the knife. When the August numbers are out, I believe we will see the median to drop to 440k and the YOY comparision would look like 17% down !!!!!!!!!!!!!!!!!! This is not bad for just the beginning of bubble popping. What would be the number when we will be clearing the pieces after the BIRTH DAY PARTY, can I say median at 310k?
I am very +ve about this number and hope it will get their.
Slightly OT, but in California another casualty of the housing bubble pop with be the cosmetic surgery industry, which would include the surgeons and their surgery teams, their office space, suppliers for their practice. And then they will need to deal with a paying for all their real estate, toys, and trips with a declining income. The same for all the support staff for their practice.
Ewwwe… and the people of Socal may not look so pretty.. hehehe