Thursday, June 18, 2009

Southern California Home Prices Rise Slightly in May, First Monthly Increase Since July 2007


LA TIMES (front page of today's Business Section) -- Southern California's median home price rose slightly in May for the first time in nearly two years. But the increase was more reflective of a change in the types of homes sold than an end to falling values, a real estate research firm reported Wednesday. The $249,000 median price in May was up less than 1% from April's $247,000 figure, and marked the fifth-straight month the median has held at roughly $250,000, according to San Diego-based MDA DataQuick.

The modest rise reflects increasing purchases at the high end of the housing market, where sales have been virtually frozen. For much of the last year, most home sales have occurred in the low end of the housing market, with banks unloading foreclosed properties at deep discounts, dragging the median price down. Now, more expensive properties are selling, which raises the median, through a market paradox: many of those homes sold after owners cut prices to lure buyers. Still, stirring sales activity at the high end is a sign that the market is crawling toward equilibrium.


The April-to-May Southern California median price increase was the first month-to-month gain since July 2007, when it moved from $502,000 to $505,000, which was the market's peak.

HT: Benjamin

27 Comments:

At 6/18/2009 10:00 AM, Blogger Benjamin said...

I am red-faced at the rapid response. Who says professors at public-tax supported institutions can't compete with private-sector professors?

 
At 6/18/2009 12:15 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/18/2009 1:06 PM, Blogger Benjamin said...

As a free-marketeer, I say we get rid of the home mortgage interest tax deduction. But wait until I sell my house.

 
At 6/18/2009 1:20 PM, Blogger QT said...

Benjamin,

Agree completely. Interest deductibility creates an incentive for citizens to increase their mortgages or to take on debts that they cannot possibly afford. A better investment would be adding personal finance or econ 101 to the high school curriculum.

Robert,

It is positive to see some action at the high end of the market. It will likely take years for prices to reach their previous levels.

 
At 6/18/2009 1:35 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/18/2009 1:40 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/18/2009 2:44 PM, Blogger QT said...

Robert,

Have to agree that a one month uptick is not a trend and may well reflect the usual seasonal interest.

In the last housing downturn in our area, property sales above the low end virtually ceased. It took about 10 years for the prices to attain their previous highs. While one may not feel sorry for the million dollar homeowner, it would seem notable that there is any movement in this segment of the market.

Would also agree that a home is not a way of making money although one could certainly call it a form of enforced savings. Due to the power of compound interest, one pays for the principle several times over.

Ed Glaeser did an interest paper on housing bubbles . Areas of inelastic supply seemed to be particularly susceptible to bubbles. (ie. places like Boston & California with restrictive zoning)

 
At 6/18/2009 2:54 PM, Blogger Benjamin said...

Dudes! I am the one who says he can abide by a real free-marketeer, libertarian society. I point out the realities of such a world, and I say I can accept those realities, in exchange for lower taxes and a higher standard of living.

Some people are aghast at the true nature of a libertarian-free market society, and then start re-defining "libertarian" to suit their biases and soft spots.

A lib-free market society:

Higher living standards
Much lower taxes

No public schools
No public beaches
No public parks
No welfare
No minimum wage
No sexual harassment or other niggling employment laws..tort only, and then only for contract violations (however, likely employers would draw up contracts as condition of employment)
No rural subsidies (no rural roads except toll roads, electricity phone, medical clinics etc..you will see depopulation of rural areas, now getting by on federal subsidies, and a more urbanized society)
Yes to commercialized sex industries
Yes to commercialized drug industries
Yes to polygamy
Yes to gambling 24/7 everywhere
No to mortgage interest tax deduction, and all tax deductions.
Yes to consumption taxes, no to income taxes
No public health programs
Yes to euthanasia for terminally ill, aged
Yes to fully automatic weapons

And this one will scare our fearless leader Dr. Perry,

No public universities. Dr. Perry would have to survive out in the wild world! And, man, would it be wild. But, I think it would be better,in most regards.

 
At 6/18/2009 3:26 PM, Anonymous Cheech (in) Marin said...

Here's the report from DQNews:

Southland home sales up

 
At 6/18/2009 3:37 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/18/2009 3:54 PM, Anonymous Cheech (in) Marin said...

Benjamin, again you are confused. Libertarians are not against all government. We are for minimal government.

Public goods, natural monopolies, and externalities are well-known forms of market failure in economics. There is a need for some mechanism to address those: decentralized if possible and government only when necessary and only when authorized by Constitutional amendment.

So if you can keep your mind focused on those principles for exactly one minute, we can modify your list:

Fewer, smaller public schools for those who cannot afford a mainly privatized school system

Fewer public beaches, all of which are contracted out to private operators by auction. None will be free.

Fewer public parks
Welfare only for those who cannot work under any circumstances
No minimum wage

Definitely sexual harassment laws to prevent outrages against personal dignity, a violation of individual liberty

Rural subsidies only when free markets and local governments are unwilling or unable to provide basic public goods such as electricity, telephone service, mail, roads, and water.

Yes to regulated, voluntary, commercialized sex industries. Many libertarians would disagree though because the potential spread of infectious disease cannot be detected in time for prevention.

Yes to regulated, commercialized drug industries for proven non-addictive substances.

Yes to polygamy provided all are consenting adults with no evidence of social coercion of young women

Yes to regulated gambling 24/7 everywhere

After lowering taxes, No to mortgage interest tax deduction, and most other tax deductions. Yes to incentives for retirement savings, medical savings, education savings.

There is no economic difference between a consumption tax and income tax. Marginal tax rates should be equal for all citizens. An income tax systems can be made proportional, a consumption tax cannot. So no consumption tax.

Yes, public health programs to provide subsidies for positive externalities such as immunizations, monitoring of infectious diseases, and health education.

Yes to voluntary assisted suicide for terminally ill and aged.

Yes to fully automatic weapons for security cleared, licensed and trained individuals - just like the law allows now.

 
At 6/18/2009 4:02 PM, Blogger John Thacker said...

We have our first year-over-year increase in vehicle miles traveled in quite some time, as even with the season price increases (gas prices up the last 60 days or so), gas is still considerably below last year's level.

Of course, I believe that gas prices are a larger driver of miles traveled than the economy, but some could take it as a sign.

 
At 6/18/2009 4:58 PM, Blogger Benjamin said...

Cheech-

By libertarian, free-marketeer standards, you are a slacker.

You want to regulate "addictive" drugs. Sheesh, by that standard we have government deciding whether I can drink, smoke pot etc. The whole heavy-handed government intrusion into my life. And your life. This is not libertarianism.

Government incentives for savings? R U Kidding? Again, this is social engineering through the tax code.

Sexual harrassment laws? (and that means rules bureaucrats, court hearings etc etc) Again, this is not libertarianism. R U a liberal, or a libertarian? I can't tell. The free-market answer is that a harrassing employer would lose his best workers, and then go out of business. Or people could choose not to patronize his business. The harrassed party can vote with their feet--leave the job. Hire at will, fire at will. That is the only way.

Rural subsidies "only when local government doesn't provide roads" R U Kidding again? You mean I have to pay for roads in the Monana outback, as they don't want to build the roads themselves. Because the use of the road does not warrant its construction, except if subsidized?

Sir, you are a flaming liberal, not a libertarian.

You are "cherry-picking' those elements of a liberal state you want, such as rural subsidies, and then refusing the ones you don't want, such as the minimum wage.

Well, you might be a flaming conservative also.

But you ain't no libertarian, and you do not believe in free markets.

Oh, I forgot, three more elements of the true Libertarian free-marketeer credo:

No FDIC
No SEC
No discrimination laws pertaining to hiring or service. If you want to hire only Asians, and serve only Asians in your restaurant, so be it.

Are there any true libertarians out there?

 
At 6/18/2009 9:41 PM, Anonymous Cheech (in) Marin said...

You want to regulate addictive drugs

Addiction removes volition and that is a reason to regulate it.

government deciding whether I can drink, smoke pot

There's little evidence that alcohol or pot are pysiologically addictive.

The whole heavy-handed government intrusion

What part of "minimal" government did you miss?

Government incentives for savings...is social engineering

Wrong. Exemptions from pre-tax earnings which let people keep more of their own money is not "social engineering".

Sexual harrassment laws...rules bureaucrats, court hearings

Where do you get the insane notion that libertarians want no laws, rules or courts? Libertarianism is NOT anarchy.

a harrassing employer would lose his best workers and then go out of business

Wrong. Harassment is a crime. It is an outrage against personal dignity and a violation of individual liberty.

people could choose not to patronize his business...vote with their feet

Wrong. Harassment is a crime. What do you suppose libertarians think should happen to someone who murdered or molested your child?

Who will investigate? Should the criminal's employer and friends decide on their own whether or not he's guilty and then fire him, refuse to associate with him, or lynch him?

Rural subsidies "only when local government doesn't provide roads"

Roads are both a public good and a natural monopoly, hence a valid purpose for government.

Sir, you are a flaming liberal, not a libertarian.

Sir, you are a flaming lunatic and moron who couldn't keep his brain wrapped around the concept of 'market failure' for one minute.

You are cherry-picking those elements of a liberal state you want

There is nothing inherently liberal or socialist about government. Addressing market failures is a proper function of government when clearly and specifically assigned in the Constitution.

You are conflating "government" with "socialism", a mental illness commonly found among liberals.

such as rural subsidies and refusing...minimum wage

Minimum wages result in suboptimal allocation of resources. Free markets underallocate resources to public goods and hence are also suboptimal. Proper provision of public goods optimizes social welfare.

Again, there is a difference between these two economic concepts which you do not understand.

You mean I have to pay for roads in the Monana outback

As a natural monopoly and public good, the free market would underallocate resources to such roads. Hence, government action is often necessary.

If people want a relatively low-priced steak and a frosty mug of beer made from wheat and barley, all of which are produced in MONTANA, it would be helpful if there are roads which could bring those goods to market.
Otherwise, we would have to pay higher prices for the limited supply of beef and beer produced only near the urban areas where we live.

No FDIC...SEC...discrimination laws

Since I work for a bank regulator, I doubt I'd oppose the existence of the FDIC. Insurance is not socialism and preventing bank runs is a public good.

Using inside information to gain in stock trades at the expense of others is called "asymmetric information", another market failure.

Since I'm Asian, what makes you think I would oppose laws which protect people from arbitrary or capricious hiring or firing decisions? What has ethnicity got to do with job qualifications?

Where do you get the perverted notion that all libertarians (or even most of them) oppose these laws? You're making this up.

Are there any true libertarians out there?

Since you don't know what a libertarian is, you wouldn't know one if you saw one.

 
At 6/18/2009 11:04 PM, Blogger Benjamin said...

Cheech-

I beg to differ. Your definition of libertarianism-free marketeerism is riddled with exceptions, to the point it is nothing more than mainstream Republicanism.

Most people are like that. They say how dreadful market distortions are, then abide by the distortions that benefit them. That is why the R-Party is mute when it comes to the $100 billion-plus of rural subsidies the federal government doles out every year.

Your knowledge of rural road-building, electrification, telephone service, even medical clinics is woefully limited. Most rural roads should have never been built, and in effect subsidize a bucolic lifestyle for people who do not want to pay for the full cost of the road.

Read a little Friedman someday. He thought the FDIC a waste.


But, since you are a government bureaucrat, no doubt doing time under the office lights until retirement, why should anyone expect you strictly adhere to free-market principles?

I put in a stint at the Congressional Budget Office. Enough to make me realize we are never going to pay off our federal debt--thanks largely to constant pressures to socially engineer, tax and regulate desired outcomes--outcomes determined by whichever group is in power.

Homeowners are powerful--hence the homeowners interest tax deduction. It is social engineering.

As a private matter, I find racism or sexual harrassment offensive. For public workers, there definitely should be redress. Since all members of the public pay taxes (including polygamists and gays) then all members are entitled to work in government without discrimination.

That is a far cry from the state intruding on private decisions, regarding business.

If you are going to be a libertarian, then do it, Otherwise, say you are a Republican, and favor using the state to favor R-Party backers and interest, and be done with it.

 
At 6/19/2009 3:02 AM, Anonymous Cheech (in) Marin said...

Stop begging. It makes you sound pathetic.

I am neither a government bureaucrat nor a federal government employee. I'm an analyst for a corporation who is quite familiar with the rural economies of AK, OR, WA, UT, WY, NV, and MT.

You are a coward hiding behind vagaries of "rural subsidies." Which subsidies? If you're talking about public roads to get goods to market, I've already explained that. If you're talking about Robert Byrd's "road to nowhere" with little vehicle traffic or purpose, I'm vehemently opposed. If you're talking about farm subsidies, I am opposed. Does any of that jibe with your notion of Democrat or Republican politics?

There are no exceptions in my philosophy. There is only your warped, absolutist view of libertarianism. I have never met a libertarian who clings so dogmatically to free markets to think they are a panacea for every social ill. We do believe free markets are a good starting point to seek a solution for nearly every problem. More often than not, markets get it right.

If an enemy attacks the United States, I want a dictatorial decision by a President to quickly deploy our military. This is not contradictory to my core beliefs. No viable philosophy contains suicide clauses.

Read a little Friedman someday. He thought the FDIC a waste.

Benjie, you ignorant dolt. Milton Friedman said:

"It took the Great Depression to produce the FDIC, the most important structural change in our monetary institutions since at least 1914, when the Federal Reserve System began operations, and to shift power over monetary policy from the Federal Reserve Banks, especially that in New York, to the Board in Washington. Since then, our monetary institutions have been remarkably stable."

As usual, you are deeply confused. His criticisms have targeted the Federal Reserve, not the FDIC. If you had read Friedman and worked for the CBO, you would know the difference.

I have met Milton and Rose Friedman. I heard him lecture at Stanford. I own autographed copies of Capitalism and Freedom, Free to Choose, and A Monetary History, all of which I've read several times.

I took a seminar class with his son, David, at Santa Clara. Even his brand of anarcho-capitalism doesn't rise to the straw men you create. Within that rubric there are many different flavors and differences of opinion. You consider "libertarian" to be a monolithic and absolutist viewpoint which it is not. There is a broad spectrum of beliefs with many similarities and some glaring differences.

Murray Rothbard's "right to contract" which you desperately contort, abjures any contract which violates rights. This would expressly forbid sexual harassment or discrimination in hiring. Libertarianism intersects with moral and ethical codes. One could summarize it with the aphorism, "No harm, no foul." Too many of your 'killer' examples involve harm.

Rothbard distinguished his political philosophy from anarcho-communists by saying,

"that we are not anarchists, and that those who call us anarchists are not on firm etymological ground, and are being completely unhistorical."

Under his philosophy, no one may even voluntarily surrender their rights. These contracts can be voided at will.

Extreme anarchists shun statutory law, but mainstream libertarians support mutually agreeable codes of laws and ethics which private courts would be required to follow. Private Defense Agencies take the place of police forces, but National Defense is still the purview of national government but has no monopoly on the use of force.

How many times must I explain the concept of market failure to you? With market failures, markets do not allocate resources to maximize social welfare. These markets are BORN distorted.

This should preferably be solved by a decentralized mechanism like Coasian Bargaining, but if transaction costs are too high it requires government action. This is in keeping with the fundamental principles of competition and free markets.

Dude, the more you write the more stupid you sound.

 
At 6/19/2009 7:05 AM, Blogger MovingEast said...

I think it is a bit dodgy that they have different scales for the flat and trending up graphs. There is no reason for that except to make the declines look smaller.

 
At 6/19/2009 12:28 PM, Blogger Benjamin said...

Cheech-

Yes I am against all rural subsidies. This has led to a permanent subsidy class, that cannot survive without continual subsidizing. By one estimate, the federal government pours $100 billion annually into rural areas, and I don't know how much more is done by the states.

If rural roads can brings goods to market, then fine, pay for such roads by tolls. Otherwise, I am just paying some tax money to buy the illusion a rural good is inexpensive.

I met Milton Friedman once too, back in the 1970s. I admired that he held consistent principles, and did not warp them to to match his political biases.

Good luck there in Marin County working for a bank regulator. You economic and political philosophies are a bit jumbled up and inconsistent, and you cave in to your pet biases when convenient, but it doesn't really matter. This country is what it is, and it ain't going to change due to some ranting on Carpe Diem. From you or me.

 
At 6/19/2009 1:53 PM, Anonymous gettingrational said...

RE: Politics and So Cal Home Prices

The conservative counties mentioned in the article are hopefully attracting fiscallly conservative buyers. By this I mean buyers who have large down payments and will occupy these homes thus stablizing the market.

The exchange between Benjamin and Cheech (in) Marin was very interesting. I would not want to debate these guys on liberal v. conservaive v. libertaian. This was so much better then the "who is loudest" arguments of political talk shows. Thanks, you two, for such a concise debate that yet addressed so many points.

 
At 6/19/2009 2:38 PM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/19/2009 2:56 PM, Anonymous gettingrational said...

@ Mr. Miller,

Thanks for the insight on Cheech.

I agree with you on the volition/ addiction argument. Beyond the addiction of the user is the addiction of the babies of female addicts. A couple of weeks ago I challenged anyone supporting the legalization of addictive drugs. The challenge was simply to commit to rocking the newly born and addicted baby while it loses addiction at their local children's hospital. They simply ignored my point and challenge in comments on this blog.

 
At 6/19/2009 4:49 PM, Anonymous Anonymous said...

Gettingrational,

Fair point but what is the scope of the problem?

what is the detox period of an infant?
what percentage / total # of babies is affected?

The argument needs to put some objective measures around the issue raised taking it beyond the emotional level.

 
At 6/19/2009 10:16 PM, Anonymous Anonymous said...

Yes, opposing something is not an obligation to redress all negative consequences which are predicted in the absence of action. The person who caused the infant's drug abuse is still the responsible party, not a distant third party. It is an effective but fallacious pathos argument.

 
At 6/19/2009 10:56 PM, Anonymous gettingrational said...

To the Anons.

The detox period from the drugs that have seeped though the mother's placenta vaires. How does it make any difference in how we quantify the suffering of a newborn, let alone the the residual effects of the drug(s)?
The wisdom of the elders (>30) of a society must overcome pandering for pleasure of dangerous euphoric agents which damage the innocent.

 
At 6/20/2009 12:20 PM, Blogger Nicawawa said...

I aint worried bout no housin prices.

Cuz I know about Jeff's Shortcuts wer ye can make a hunerd thousand dollars a week frum the internet!

Doan need no inventory, customer relations, or nuttin, and the money just goes automatically to yer bank account!

As soon as I can get the money, Ima gonna buy in at $39.95!

I wonder ifin President Obama knows bout Jeff's Shortcuts?

If everybodys started makin 100 grand a week it wud improve the economy rite quick! I reckon housin prices wud go up too.

Them two womens, Stacy and Carmin, splains it all right theer:

http://www.jeffpaul.tv/index.htm

 
At 6/20/2009 4:26 PM, Anonymous Anonymous said...

gettingrational,

Isn't it also a question of how resources are used? The present war on drugs allocates vast resources primarily to interdiction, and encarceration which means that these resources are not used for treatment, education, pre-natal care, etc.

Whether you legalize or not, the problem of infant addiction remains.

The fact that you aren't interested in understanding the extent or the nature of the problem leaves one with the impression that your argument is just an emotional gimmick...seems to be standard fair from the left of centre.

 
At 6/20/2009 4:35 PM, Anonymous Anonymous said...

When is an emotional appeal fallacious in argumentation?.

 

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