Thanks- they were definitely way over priced to begin with. And who’d want to live out there anyway???
> See data in tables below, especially the first table with the sales and
> price change data.
> If this was the only factor in the markets’ determination of a bottom we
> would be there.
> What else can the market ask for but a doubling in volume with prices
> down close to 40% in many working class areas?
> Granted, there is a risk of higher unemployment, which might create
> lower incomes and again erode the ability to service the mortgage, but
> it seems to me that we are closer than the market now thinks to real
> estate stabilization, at least in California, which you would agree is not
> insignificant. A major fiscal package could have a surprisingly strong
> impact, given these underlying conditions. Nobody is really talking about
> this, as far as I know.
C.A.R. reports sales increased 117.1 percent in October
C.A.R. reports sales increased 117.1 percent; median home price fell 39.9 percent in October
LOS ANGELES (Nov. 25) ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ Home sales increased 117.1 percent in October in California compared with the same period a year ago, while the median price of an existing home fell 39.9 percent, the CALIFORNIA ASSOCIATION OF REALTORSÃƒâ€šÃ‚Â® (C.A.R.) reported today.
“Statewide sales increased significantly in October to 552,750 homes on an annualized basis, the highest sales level since late 2005,” said C.A.R. President James Liptak. “The record gain stemmed primarily from extremely large increases in regions with a high concentration of distressed sales.
Closed escrow sales of existing, single-family detached homes in California totaled 552,750 in October at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTORÃƒâ€šÃ‚Â® associations statewide. Statewide home resale activity increased 117.1 percent from the revised 254,650 sales pace recorded in October 2007. Sales in October 2008 increased 9.5 percent compared with the previous month.
The median price of an existing, single-family detached home in California during October 2008 was $ 311,060, a 39.9 percent decrease from the revised $517,240 median for October 2007, C.A.R. reported. The October 2008 median price fell 1.9 percent compared with September’s revised $316,960 median price.
“The year-to-year decline in the statewide median home price was smaller in October than the previous month for the first time in 11 months,” said C.A.R Vice President and Chief Economist Leslie Appleton-Young. “However, there is still no conclusive indication that prices have begun to stabilize.”
Highlights of C.A.R.’s resale housing figures for October 2008:
- C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2008 was 5.9 months, compared with 15.2 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.
- The median number of days it took to sell a single-family home was 45 days in October 2008, compared with 58.8 days (revised) for the same period a year ago.
In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 1.6 percent, or 6 out of 37 8 cities and communities, showed an increase in their respective median home prices from a year ago.
Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for September may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/economics/historicalprices/2008medianprices/oct2008medianprices/.
- Statewide, the 10 cities with the highest median home prices in California during October 2008 were: Newport Beach, $1,150,000; Danville $883,250; Mountain View, $860,000; Santa Barbara, $835,000; Los Gatos, $810,000; Cupertino, $804,500; Santa Monica, $744,500; San Mateo, $740,000; Redondo Beach, $727,500; and San Ramon, $710,500.
- Statewide, the cities with the greatest median home price increases in October 2008 compared with the same period a year ago were: Mountain View, 18.6 percent; Alhambra 13.4 percent; Ridgecrest 6.2 percent; and Berkeley, 5.9 percent.
October 2008 Regional Sales And Price Activity
Regional and Condo Sales Data Not Seasonally Adjusted
Median Price Oct. 08 Percent Change in Price from Prior Month Sep. 08 Percent Change in Price from Prior Year Oct. 07 Percent Change in Sales from Prior Month Sep. 08 Percent Change in Sales from Prior Year Oct. 07 Statewide Calif. (sf) $311,060 -1.9% -39.9% 9.5% 117.1% Calif. (condo) $267,700 -8.4% -36.7% 10.3% 63.3% C.A.R Region Central Valley NA NA NA NA NA High Desert $154,660 -3.2% -41.8% 9.0% 269.2% Los Angeles $366,520 -2.6% -32.2% 0.0% 118.9% Monterey Region $336,630 -3.2% -52.7% 7.6% 144.0% Monterey County $285,000 1.8% -54.0% 13.1% 275.8% Santa Cruz County $500,000 5.3% -31.7% -4.8% 25.5% Northern California $310,120 -3.5% -17.0% -4.3% 16.5% Northern Wine Country $369,890 0.2% -30.6% 15.6% 95.4% Orange County $490,360 -1.1% -28.6% 5.3% 108.1% Palm Springs/ Lower Desert $206,050 3.1% -36.3% 6.3% 115.0% Riverside/ San Bernardino $209,990 -3.6% -39.7% 13.5% 254.9% Sacramento $196,920 0.5% -36.3% 4.1% 173.1% San Diego $337,640 -9.6% -37.4% 25.0% 131.6% San Francisco Bay $520,920 -6.1% -35.8% 1.0% 49.1% San Luis Obispo $396,430 5.7% -27.7% 19.6% 57.3% Santa Barbara County $341,300 -4.0% -54.0% 2.7% 83.5% Santa Barbara South Coast $860,000 -9.0% -35.1% -2.7% 18.0%
Same thing is happening on east coast – sales rising over last year, prices falling/leveling off.
I am waiting for someone in congress to take credit for making homes more affordable.
Apparently, market reaction has been muted by the fact that many of the sales are foreclosure sales, so prices are discounted below market and not reflective of true demand. (ps I’m just the messenger).
1. good point!
2. its true demand for the foreclosed properties.
there are a few other anecdotal positives as well. lower gas prices, lower consumer debt ratios, deficit rising countercyclically, etc. but not enough to reverse anything yet
The biggest declines are in the inland empire regions of SoCal. People live out there largely because they can’t afford to live in more coastal areas.
The bubble building frenzy that went on in the inland empire here in SoCal was remarkable right up until last year. In fact, there are still huge developments out there which are unfinished and largely ghost towns now. I used to take regular trips out to areas on the fringes of the LA Metro area just to see what was happening with pricing, sales, and supply. You would have to have been blind not to see the handwriting on the wall years ago, but I suppose you would have had to actually make a trip out there to see it happening; most investors I assume did not do that – it’s the only reason I can think of to explain the irrational building that went on out there. It was clear years ago that there was no way the number of developments happening could ever sell; the capacity that was built out vastly exceeded the employer base of the areas involved, and because these areas are not well served by any major transportation corridors, they were not well suited to service as commuter havens. So, the whole thing was just an obvious melt-down waiting to happen.
With regard to the figures listed, these are heavily skewed to the lower end of the market. $490,000 in Orange County *might* net you a 2 bedroom condo, but certainly would not net you a SFR unless it happened to be in the middle of ‘tha hood’. So, I wouldn’t expect that SoCal real-estate is done dropping in price yet; prices are still way above fundamentals in most areas and the component of distressed sales contributing to these figures is, I would expect, quite high.
San Francisco, Marin, and the Peninsula are still going up. Those are the parts of CA that matter.
“San Francisco, Marin, and the Peninsula are still going up. Those are the parts of CA that matter.”
That’s a typical elitist response. I heard a lot of that from some of the realtors around here too. Except now they are all out of a job and the companies they worked for are (or have already) gone under. So in response to your stunningly thoughtless and flippant remark, I would counter by saying that the parts of California that matter are this: the parts where people live. If you can’t see that, then I suggest you suffer from a grave myopia that will at some point undo you.
There is a tendency on the part of people in the upper brackets of income to think that their concerns are the only ones that matter, as demonstrated by your post. However, the top 1 -2 % of wealth holders, although they may collectively possess a great deal of wealth, do not provide for the basis of a functional economy, a lesson you would do well to learn. The real economy – the economy that brings you iPhones, macs, windows vista, word, facebook, public infrastructure, shopping malls, and most of the goods you depend on to realize your daily “quality of life” – is supported by the collective aggregate demand of the other 98% of the populace.
I’m sure you didn’t pause to think through your response very carefully. Most likely you just thought you were being cute. However, on the off chance that you really do believe what you said, I would suggest to you that your cavalier attitude masks a severe lack of understanding with regard to what makes our economy, which by extension provides for most aspects of what make your life pleasant, function.
Things can be elitist, and also true.
It is simply a fact that the vast majority of Northern California’s real estate wealth is in SF, Marin, and the Peninsula. They have a high density of homes there, and the homes are worth a *lot*. It is also true that prices here have not gone down much, and some continue to appreciate. In addition, this is where the vast majority of Northern California’s population lives. I would estimate that 80% of Northern California’s realestate wealth is in this area. Given that Inland has tanked, this may have gone up to 85% or 90% in the last year.
When thinking about aggregate demand and tracking money, it makes sense to look at where the money and people actually are.
Not many people live in Stockton and Tracy. Those who do do not make much money, or have particularly valuable houses to HELOC. Therefore they cannot impact aggregate demand much.
You are confusing the price of real estate with aggregate demand and the two are not related. That is, the price of the house a person owns has relatively little to do with the contribution of the “owner” to aggregate demand. Aggregate demand encompasses demand for everything produced and consumed in an economy, from Mosler super-cars all the way down to toothpaste and batteries, and kool-aid at your local grocer. Aggregate demand is not “demand for expensive houses”, which is how you seem to be using the term. Even people who make relatively little money contribute to aggregate demand, including people who don’t own houses in Marin county 😉
Let’s look at this numerically, ok? The math will show us the truth or fallacy.
You originally said that these three areas (“San Francisco, Marin, and the Peninsula”) are the only parts of California that matter, and then you went further to suggest that people who don’t have much money don’t contribute very much to aggregate demand. So, let’s examine those assumptions.
First, lets look at population and retail sales. I’m going to include more than just the immediate three areas you mentioned because I want this to be clear, so lets look at the following group of counties put together: San Francisco, Marin, Sonoma, Napa, Solana, Alameda, San Mateo, Santa Clara, Santa Cruz, and Contra Costa. That pretty much is the whole of the bay area metroplex, an area much larger than the one you have focused upon.
According to the US census, the entire bay area metroplex (which includes all 10 of the counties I mention above) represents only 18% of the population of the state of California. The same region accounts for only 22% of state retail sales, which encompasses ALL sales of tangible goods and associated services. This means that your argument collapses right from the start because it is factually not correct; the areas you point out are NOT the most important when it comes to aggregate demand, and I’ve cast a much larger net than you did. To be brutally direct, the counties which make up the three areas you mention together account for only 4% of the state’s population and only 6% of retail sales. I trust you understand what this means, so I won’t belabor the point.
Interestingly, Riverside and San Bernardino Counties account for 11% of the state population and 9% of retail sales. This means that the areas you have written off as unimportant in fact contribute MORE to aggregate demand in California than do the areas you have assumed are of paramount importance.
On one point you are correct; people with more money tend to contribute more to aggregate demand than do those with less money. But on a percentage basis, it is not by very much. Lets again contrast the core areas you mention with the inland empire. Median household income in your “most important” areas is 124% of the state median, and per-capita contribution to retail sales is 128% of the state average. So, the average person living in that area contributes about 4% more to aggregate demand than the median income might suggest. Contrast that with the inland empire. Median household income in the inland empire is 90% of the state median, and per capita retail sales contribution is 93% of the state average. What this means is that while you are correct in your assumption that people who make more money spend more money, their contribution to aggregate demand is not disproportionately higher than anyone else’s. Another way to look at that is simply to say this: a dollar in the pocket of a poor person vs. a dollar in the pocket of a rich person has approximately the same influence on aggregate demand, which should elicit a great big DUH. Greater wealth does not yield a numerically greater effect on aggregate demand; wealth is not a multiplier.
My point in this is not to be unkind, but simply to encourage critical thinking. My original point to you was that aggregate demand is really simple – it is _aggregate_. 2% of the population do not and cannot spend enough money to support our economy, and our economy cannot be supported by catering primarily to their interests. That is absolutely true no matter how you play these numbers.
Have a blessed day!
A cogent and well detailed response. I stand corrected, thank you