CA Real Estate Recovery: 10th Consecutive Month of Sales Gains, Fourth Month of Rising Prices
LOS ANGELES (July 27) -- June home sales increased 20.1% in California compared with the same period a year ago, while the median price of an existing home declined 26.4%, the California Association of Realtors (C.A.R.) reported today.
“Many first-time buyers, especially those who were previously priced out of certain areas, are realizing that tax credits from both the state and federal governments, increased affordability, and low interest rates are creating a prime time to purchase a home,” said C.A.R. President James Liptak. “June marked the 10th consecutive month of positive sales gains, and the fourth month of rising median home prices (MP: both compared to the previous month)."
Other highlights of the June report include:
- Sales have increased year-over-year for 15 consecutive months (my calcuation).
- C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in June 2009 was 4.1 months, compared with 7.6 months for the same period a year ago (see chart below). The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
- The median number of days it took to sell a single-family home was 44.3 days in June 2009, compared with 49 days (revised) for the same period a year ago.
13 Comments:
Could it be the creation of a new mini-bubble given the tax rebates? If, without "regulation", would the homes be selling as fast as they are?
Median price of an existing home declined 26.4% ...
MP: Rising median prices for the last four months ...
Something doesn't match up?
--Best wishes from Kansas
Kansas - Year over year and last four months are very different.
First off, I wouldn't trust any data coming from the National Association of Realtors. NAR is nothing but a cheerleader for the housing sector. Much like Professor Perry always points to a recovery, NAR always says it's a great time to buy.
I have a theory. A year ago, there was virtually no sales activity amongst higher priced homes. This year, people owning these more expensive homes (and many mid-level homes) have no choice but to sell, walk away, etc. as they can no longer "wait it out." As a result, median home prices rise. And yes, I do know the difference between mean and median. In either case, median prices would rise.
I'm also skeptical of the 4.1 months of inventory. Head out to Riverside County and there's at least 4 months of inventory for the whole state sitting out there, not to mention areas such as Sacramento, San Bernardino, and the Central Valley that are overflowing with inventory. I don't buy it.
It makes me wonder if these numbers include homes owned by banks or builder that are not up for sale. That's the only way I can reconcile the disparity from reality. For instance, there is a 1,380 unit Lennar development in Newport Beach that is completely vacant, but none of the homes are for sale as Lennar is trying to wait out the downturn.
Interesting phenomenon in Michigan that may be unnoticed, but 2nd homes... lake/vacation... are becoming extremely affordable, especially if you find those in foreclosure.
One home in the Lake Orion/Oxford area listed for $469K in 2007 and sold for $192K in 2009... 2,600 sf on 100+ ft of private, all-sports, spring fed lake. Another has been reduced from $330K to $170K and will probably sell for less. Remodels become tear downs. People with cash are looking for bargains; people looking to sell/move are staying put.
LOVE THE BLOG
An interesting California factoid. There were 122,829 notices of default (the first stage of the foreclosure process called a NOD) issued in the second quarter of 2009 which is more than total sales of 121,185. (summation of here and here.)
When sales are equal to NODs, that is not indicative of a healthy housing market.
The bottom has been passed in the California housing market. It is always like this, though never before so exaggerated. Booms, then bust, foreclosures etc. Then bargain-hunting, long sustained rally, then boom, then bust.
I am not a realtor, but I will quote one: Now is the time to buy (actually two motnhs ago was better).
No recession last forever, though it seems like it when they are happening.
Consumer confidence is still falling, Notice of Defaults = Number of home sales, median home prices being touted as though there really could be a "median home" at all.
No the recession is still on and prices are going to continue falling for a while.
Did I mention that there is no such thing as a median house?
Hmmm, I wonder how much the following Tax Credit for New Home Purchase impacted those new & improved housing numbers?
Benny was obviously on drugs when California house prices had an eight year slump from 1991 through 1999. That was no "cycle" and neither is this. California is prone to overbuilding and this is the worst episode ever. Our unemployment rate is in double digits and rising.
To realtors it is always a time to buy (or sell). California house prices aren't done falling yet. Did you miss the poin on notices of default? Those are even lower than they would be because our legislature passed a new law delaying foreclosures. We're definitely in for a multi-year slump.
Anon:
I wish I was on drugs now.
You are correct about the long slough in California house prices in the 1990s (roughly). Back then, prices were about cut in half, pek to trough.
But we had a rapid price correction this time. We are already off nearly 50 percent from the peak.
Already, in OC and LA counties, home sales and prices are blipping up month-to-month. I agree the Inland Empire could stay ugly for a while. I don't really know the northern half of the state, and they are not really part of California anyway.
On overbuilding, that problem disappeared a generation ago. Apartment construction has been crimped for years and years, and single-family production limited too, usually by space and cost. Barriers to entry etc.
Sheesh, in Republican-dominated Newport Beach, you cannot put up a condo tower, or in hardly any other coastal city.
It is a good time to buy. Hey, at half off, it can't be the worst time to buy.
I think you will also see the recovery in prices tends to take a while, drifting up slowly usually, then more rapidly, then a boom.
Happens everytime.
In 2015, people start forgetting about 2009, by 2020 they will be dancing naked in the streets. Sell then.
Yeah, prices "blipped up month to month". You know that summer is prime time for house buying. Retail sales were up from November to December 2008 but that didn't mean the recession was over and retail prices had bottomed.
I'd bet my bottom dollar house prices in California are falling again by September.
Yes it can be a bad time to buy, even at half off. These houses are not mansions people will enjoy living in. General property values in California are inflated by limited building space in the cities. There was overbuilding in the outlying areas where people commuted long distances. Inland Empire is one place. Tracy, Stockton, Brentwood and Antioch are others. Look what happened to Oakland prices and they are urban. That there is your model for Lost Angeles.
If we go eight years with no house price growth like we did in the lost decade under Clinton, a house bought now will be a crappy investment as opposed to renting even in 2020. Think of all the interest and taxes you threw down a hole and all the interest money you could get by investing in stocks or bonds instead.
If house prices continue falling as I think they will then buyers are not buying at a trough.
Use some common sense dude. You sound like a woman who buys something just cuz it's on sale. The red signs and balloons got you all hot and bothered over houses.
Don't confuse discounts from inflated prices with actual value.
You just say same stuff, different decade. That's BS. We don't have to do the same stupidity over and over again. Other states don't have these booms and busts. Our legislature gets greedy for more property taxes and gives out too many permits. That's what's happening here. We now got a busted budget and nobody in Sacramental saved a penny when revenues were pouring in. Hell, they didn't even save money for the unemployment fund. It all got pissed away to the public unions, and universal health care for the poor and AIDS programs which didn't teach gays to bag their bone. Education got tons of money and the schools still stink.
What do we have to show for all those tax dollars wasted? We could of had a monorail system from Eureka to San Diego and gold-plated manhole covers in every city for what they spent.
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