Tuesday, December 18, 2007

DQNews: Southland prices fall again; sales perk up

Well, I guess it depends on what "perk up" means. According to this December 18 story by DQNews, home sales rose slightly over October, during a time of year when sales normally decline. But October was truly awful in terms of home sales, so a leveling off here, if that's what is happening, certainly doesn't mean the worst is over.

It was still a bad month. Total So Cal home sales of 13,173 units were up by about 2% over October, but down -42.7% from November 2006. This is the worst November since DataQuick started keeping track back in 1988. The prior low for November was in 1992 at 15,446 homes. The average for the last 20 years has been 22,749 sales.

It was new homes that grabbed most of the sales in November. Sales of existing SFRs was flat and sales of existing condos was down -6% compared to October. New home sales rose 11.5% over October.

DataQuick notes that some people say the market is bottoming now, but the firm wants to see a more sustained trend. Sales financed with conforming loans have been increasing since September, actually up 3.5% between October and November. Mortgages exceeding the conforming loan limit of $417,000 were practically flat month-to-month, declining just 0.1%. At least the jumbo loan problem is not getting worse - so DQ News says.

The price decline for a Southern California home from October to November was from $445,000 to $435,000, down -2.2% month to month, and -10.3% from November 2006. The YOY decline is largest DataQuick has ever seen for the region. Median price is now back to the March 2005 level.

Here is an interesting statistic, and it helps answer a question as to how much the mortgage crunch has affected So Cal. Jumbo financings accounted for 40% of sales up to the August credit crunch, but in November accounted for 22% of sales. The number of loans within conforming loan limits has doubled.

This last statistic is telling me that there aren't a whole lot of wealthy people out there right now whipping out their checkbooks and plunking down cash on high-end properties. At least, not enough of them to hold up the market. That statistic is also telling me that there are plenty of fools still waiting on the sidelines to get their heads handed to them on granite slabs.

DQNews notes that market indicators "continue to move in different directions." Foreclosure activity is at record levels, while multiple-mortgage financing and ARM financing has declined. Non-owner occupied buying activity (flippers) have risen slightly. See what I mean about plenty of flippers on the sidelines wanting to take their swings with the speculative bat?

Southland          Sold     Sold     %YOY    Median $    Median $   %YOY
County             Nov-06   Nov-07   Chg     Nov-06      Nov-07     Chg
Los Angeles        8,274    4,468   -46.0%   $517,000    $499,000   -3.5%
Orange             2,867    1,567   -45.3%   $623,000    $582,750   -6.5%
Riverside          4,406    2,503   -43.2%   $427,000    $356,500  -16.5%
San Bernardino     3,309    1,719   -48.1%   $380,000    $330,000  -13.2%
San Diego          3,248    2,400   -26.1%   $487,000    $440,000   -9.7%
Ventura              901      516   -42.7%   $577,500    $521,250   -9.7%
SOUTHLAND         23,005   13,173   -42.7%   $485,000    $435,000  -10.3%

During this decline I expect to see mini-bursts of buying activity as prices hit certain levels. I don't expect a real recovery for several years, and not until we see major improvements in affordability.


Blogger bearmaster said...

Whether a loan is within conforming loan limits or a jumbo doesn't really matter at this point, because there are plenty of housing units out there priced under the conforming loan limit that are still grossly bloated in price and are crappy deals.

4:26 PM, December 18, 2007  

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