DQNews: Southland home sales plummet - "A lot of potential buyers seem to be waiting this one out.."

Well it took long enough. According to this November 14 story, October 2007 was the first month that Los Angeles County home prices went "negative" by DataQuick measurements, and prices have dropped back to 2005 levels. (But of course you knew that from looking at some of the specific Redondo Beach sales I occasionally show here.)

There were 12,999 October home sales, up 4.5% from September, down 45.3% YOY, and still at near 20 year lows. In fact, DataQuick's stats go back to 1988, so we don't know how low sales are. DataQuick's historical October average runs about 24,725.

According to one analyst, potential buyers are "waiting it out" - they don't want to take out big loans for properties that could still lose value. But DataQuick still claims that demand is accumulating, and when problems sort themselves out buyers will play catch-up.

I can only suggest that during periods of optimistic social mood (group thinking), people think less of taking out loans to buy houses or take on debt. During negative mood periods, people contract. They get more conservative with their money and are hesitant to take on debt. And while DataQuick may be right about accumulating buying demand, why doesn't it mention anything about accumulating selling demand which we know is there?

Here are the Southland numbers:

Southland          Sold     Sold     %YOY    Median $    Median $   %YOY
County             Oct-06   Oct-07   Chg     Oct-06      Oct-07     Chg
Los Angeles        8,451    4,368   -48.3%   $520,000    $500,000   -3.8%
Orange             2,929    1,700   -42.0%   $625,000    $573,750   -8.2%
Riverside          4,408    2,463   -44.1%   $412,136    $350,000  -15.1%
San Bernardino     3,547    1,603   -54.8%   $365,000    $330,000   -9.6%
San Diego          3,449    2,327   -32.5%   $490,000    $460,000   -6.1%
Ventura              961      538   -44.0%   $590,000    $535,000   -9.3%
SOUTHLAND         23,745   12,999   -45.3%   $482,750    $444,000   -8.0%

There you have it - medians down in all six Southland counties in the survey. It's stunning, isn't it, that home sale volume can decline this much and yet prices have barely been dented in terms of affordability. Home prices are STILL goofy.