Monday, October 16, 2006

L.A. Times: Tepid home market still cooling

This news is a few days old, but I'll post it anyway for a more complete record. According to an October 12, 2006 short piece by L.A. Times writer Jesus Sanchez, September 2006 home prices for the six-county area of Southern California were as follows (data is from DataQuick):

County            Median Price    YOY Change    YOY Sales Volume Change
Los Angeles        $509,000       3.0%          -27.9%
Orange             $626,000       2.6%          -34.6%
Riverside          $423,000       8.2%          -24.5%
San Bernadino      $365,000       3.7%          -25.8%
San Diego          $476,000       -4.4%         -35%
Ventura            $584,000       -3.3%         -20.5%

Entire Region      $484,000       1.9%          -28.6%

Home sales volume is down over 28% and prices are rising at their slowest pace in over 9 1/2 years. As we've already noted, Ventura home prices have now joined San Diego on the depreciating side.

As I've been saying now in a few posts, Federal Reserve officials have been flapping their lips about the possibility of a bottom in the housing market decline, and point to at least three sets of data to support their statements. Yes, I know, it's laughable, as the downhill roll has barely even started here. For now I am assuming that bear markets don't always plunge straight down - sometimes they pause or bounce back a little along the way down. From the dollar volume charts we've seen here we know that our local markets have incurred substantial technical damage - damage that won't magically repair itself overnight.

Still, I am bracing myself for the possibility of a mild rebound in the sales numbers, which is fine, but more annoyingly, lots of press and hype in the media trumpeting a successful soft landing. It will take some fortitude to resist the siren calls and social pressure of family, friends, neighbors, acquaintances telling you that now is the time to buy, after having thought that you are nuts because you were in such a hurry to get out of this bubble and actually dumped your house to do so.


Blogger dagooroo said...

All bubble watchers of the former Nasdaq follies can remember the last gasp push of the latest and greatest fools who took prices up to the final "permanent plateau" on fast declining volume. It wasn't a pretty sight then, and it won't be this time.

2:52 PM, October 16, 2006  
Blogger LAMoneyGuy said...

Every time the dead cat bounces, the masses are fooled into believing the myth of the cat's nine lives.

3:40 PM, October 17, 2006  
Blogger bearmaster said...

After sinking for nine straight months it was announced today that the NASB Homebuilders Index rose one point this month to 31. One point. And the financial media are taking that as a sign that homebuilder attitudes are "stabilizing" and so implying that the housing market will recover.

4:37 PM, October 17, 2006  
Blogger bearmaster said...

Don't look now but the San Francisco Bay area has now gone negative YOY:,1,4788665.story
Home Prices Drop in Bay Area
From Bloomberg News

October 18, 2006

San Francisco Bay Area home prices last month dropped for the first time in 4 1/2 years as a larger inventory of houses and condominiums for sale gave buyers the upper hand in negotiations, according to data released Tuesday.

The median price in San Francisco, Santa Clara, Marin and six other Northern California counties was $611,000 last month, down 0.8% from a year earlier and down 1.5% from August, La Jolla-based DataQuick Information Systems said. The year-over-year decline was the first in the Bay Area since March 2002, when the median price fell 1.3%.

"Buyers just have more time now," DataQuick analyst John Karevoll said. "They're not under the gun now to buy. During the surge a year ago or two years ago, there weren't any homes for sale. People had to pull the trigger fast to get anything."

U.S. new-home prices will decline this year for the first time since 1991 and prices for existing homes will have their smallest increase ever as larger inventories force sellers to accept lower offers, the National Assn. of Realtors said last week.

The last time prices dropped in the Bay Area was in the wake of the technology industry's bust. At the time, there were year-over-year declines in the median price of 1% to 3% for six straight months, DataQuick said. During this cycle, prices are likely to fall on a year-over-year basis for four to five months before they level off, Karevoll said.

In Southern California, home prices rose 1.9% last month, the smallest year-over-year increase in almost a decade, DataQuick said last week. Last month's sales in Southern California were the lowest for any September since 1997.

9:13 AM, October 18, 2006  
Blogger Sylvia Welman said...

I sure hope you are right. This past week Wall street has been doing the "sunshine and roses" dance after they hit 12K highs on the Dow. Yeah the media is doing a soft landing hoorah! I moved out of the IE in Jan 06 to the southeast and if the market corrects significantly I'm coming back. I've been watching California market since Feb 06.

11:24 AM, October 19, 2006  

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