Friday, January 22, 2010

Real Estate Recovery Continues in California

DQNews -- "An estimated 41,837 new and resale houses and condos were sold statewide last month. That was up 16.7% from 35,860 in November, and up 10.6% from 37,836 for December 2008 (see chart above). An increase in sales from November to December is normal for the season.

The median price paid for a home last month was $264,000, up 1.1% from $261,000 in November, and up 6.0% from $249,000 for December a year ago. The year-over-year increase was the second in a row, following 27 months of year-over-year decline. The median peaked at $484,000 in early 2007 and hit a low of $221,000 last April.

Of the existing homes sold last month, 41% were properties that had been foreclosed on during the past year. That was up from a revised 40.1% in November and down from 55.2% in December a year ago. It peaked at 58.8% last February."

Regional reports for California:

La Jolla, CA---"Southern California home sales in December remained above year-ago levels for the 18th consecutive month, bolstered by gains in many mid- to high-end communities. The median sale price rose year-over-year for the first time since summer 2007, reflecting a more normal distribution of sales across all price categories, a real estate information service reported.

The median paid for all Southland houses and condos sold in December was $289,000, up 1.4 percent from $285,000 in November and up 4 percent from $278,000 a year earlier. The last time the median increased year-over-year was in August 2007, when it rose 2.7 percent to $500,000, near its peak."

La Jolla, CA.----"The Bay Area housing market last month continued its step-by-step climb up from the bottom with upticks in sales as well as prices. Many of the underlying trends are shifting slowly, if at all, indicating sluggish change in market fundamentals, a real estate information service reported.

The median price paid for a Bay Area home was $380,000 in December. That was down 1.8 percent from $387,000 for the month before, and up 15.2 percent from $330,000 for December 2008. Last month was the third in a row with a year-over-year gain, after 22 months of decline. The median hit bottom at $290,000 last March, well off the $665,000 peak reached in June and July of 2007."


At 1/23/2010 8:44 AM, Anonymous Moorestown Homes said...

I'm glad to California real estate starting to recover. I think its a good sign for other areas. As CA was one of the most damaged states in last recession one would think there could be sizable appreciation in the future.

At 1/23/2010 11:46 AM, Anonymous morganovich said...

this spring/summer is going to be very telling.

the the feds QE program that has been buying all the mortgage origination ends in march, rates are going up and lending is going to get much tougher.

tack another 150 bp onto mortgages and this real estate recovery will run into some serious headwinds.

i fear most of this bounce has been due to cheap money, not a recovering economy.

At 1/23/2010 12:56 PM, Blogger Cabodog said...

Real estate hasn't been this affordable in the last twenty years.

Once jobs come back and inflation kicks in, hold on...

If you have the money, buying a rental makes great sense if you can find solid tenants.

At 1/23/2010 3:22 PM, Blogger OA said...

Also note that November was down from the 41,280 in October. The price is up, but volume is flatter for the 3 months.

The November volume drop is blamed on the impending end of the original tax credit. Come late summer, it wouldn't be surprising to see the volume drop again. Something like 1/3 of purchasers have been eligible for that. When it goes away, there's no more urgency in buying now.

At 1/23/2010 7:41 PM, Anonymous Benny "Tell It LIke It Is Man" Cole said...


Bring on the cheap money then. Print money until the plates melt.
There is no inflation. We are dancing on the edge of deflation.
We actually need several years of moderate inflation to "pay down" debt.
I think Bernanke knows all this. I hope he keeps his job.
Keep interest rates at zero, for two-three more years.

At 1/23/2010 8:20 PM, Blogger happyjuggler0 said...

December vs November vs December? WTF?

Maybe I didn't read your post well enough (I skimmed it looking for an explanation of the graph months), but why aren't all three years the same month?

At 1/24/2010 8:56 AM, Blogger Mark J. Perry said...

The graph is showing December 2009 sales compared to the previous month of Nov. 2009, and compared to the same month in the previous year, Dec. 2008.

That's how many/most monthly time series data are reported (CPI, PPI, Industrial Production, personal income, etc.): month-to-month percent changes, and year-over-year percent changes.

At 1/24/2010 10:45 AM, Blogger happyjuggler0 said...

Thank you Mark for clearing that up. All I can say now is, "Doh"!

At 1/24/2010 1:02 PM, Anonymous Reaper said...

Median home prices are a piss poor way to analyse home prices.

They do not hold quality constant and they are sensitive to the mix of homes and the location of homes being sold in a metropolitan area.

With respect to California, a median priced home will be a roach infested shack in a high crime area. Note that the median is below the conforming loan limit - those homes are being bought by low to moderate income people with FHA loans that are insured with taxpayer dollars. HUD is already in deficit from rising defaults of previous FHA loans. Most of the remainder are foreclosures being scooped up by speculators paying cash. Mortgage rates are being driven down by Fed purchases of MBS and GSE purchases of mortgages.

This is Bubble II, brought to you by your friendly neighborhood federal government.

How can a libertarian economist celebrate a "recovery" in the so-called free market with the filthy hands of government all over it?

If you lived in California, you'd know there is nothing "recovering" here yet except semiconductor sales and port traffic (mostly imports).


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