DQNews: Southland home sales back to record low; median price slips again
Well so much for the "home sales highest in eight months" headline from April. Southern California home sales in May did see a seasonal bounce but it was the worst May in 20 years. The median price on new and existing houses and condos for May was down -27% YOY. And it's clear the falling Ginzu knife shoppers were fueling the May sales.
The L.A. Times' Roger Vincent notes that May sales volume was 36.5% lower than Dataquick's historical May average for sales volume.
Of the May sales, 37.4% were for properties that had been foreclosed upon within the prior year. That compares to a revised 36.2% for April, and compares with 5.5% for May 2007.
A large proportion of properties that sold in May were previously sold in the 2004-2006 timeframe. Of all Southland sales, roughly 42% were short sales, selling for less than their prior sale price. The percent reduction averaged about 34%.
Once again, sales volume gained YOY in Riverside County, where foreclosure activity has been especially heavy and houses are considered more relatively affordable.
Prior to Day of Reckoning in August 2007, jumbo loan financing accounted for almost 40% of So Cal mortgages. For May that number was 15.8%. Southland buyers committed themselves to a typical monthly payment of $1,664, down from $1,716 in March, and down from $2,364 YOY. Foreclosures remain pegged at record levels, ARM financing is at a 6 year low, and non-owner occupied buying activity is increasing.
County May-07 May-08 % Chng May-07 May-08 % Chng Los Angeles 7,426 5,445 -26.7% $550,000 $422,000 -23.30% Orange 2,675 2,266 -15.3% $635,000 $485,000 -23.60% Riverside 3,307 3,444 4.1% $406,000 $290,000 -28.60% San Bernardino 2,220 2,075 -6.5% $361,750 $250,250 -30.80% San Diego 3,385 2,979 -12.0% $492,000 $380,000 -22.80% Ventura 861 708 -17.8% $590,000 $435,000 -26.30% SoCal 19,874 16,917 -14.9% $505,000 $370,000 -26.70%
A June 16 L.A. Times story by Roger Vincent called "Southern California Housing Market Still Under Siege" quotes realtor Lynette Williams who notes that buyers are being much more aggressive with their offers now, knowing that if they wait long enough the seller will very possibly lower the asking price.
posted by bearmaster at 9:18 PM
11 Comments:
This comment has been removed by the author.
I like the phrase "under siege" to describe the market.
What headlines will the L.A. Times print around the time the market finally hits the bottom some years in the future?
Here's a possibility:
"Blood Across the Horizon in the Evisceration of the Southern California Housing Market"
A parody of Edward Munch's "The Scream" will be very fitting.
Definitely check out Roger Vincent's June 17 L.A. Times story, "Gas prices latest worry for real estate market"
One thing I've been curious about is what happens to property taxes on these homes with reduced value? If a home was bought at the peak, and will soon be worth half that, do the owners get a re-assement? Does Prop 13 allow that, or does it lock it at the sale price?
Once a property is sold to a new owner, the tax assessment is redone.
My father bought his house in 1964 and he pays something like $600 a year in property taxes (that's right - 3 digits). He is protected by Prop 13 which limits the rate at which property tax can rise. If he were to sell his house, though, the buyer would get zapped with those years and years of accumulated appreciation, and end up with a much bigger tax bill.
You can go to the property tax assessor link and look up an address. Enter an address and click to submit it. When the property information comes up, look where it says "Property Information" and get the Assessor's ID No. Then under "2007 Roll Values" click where it says "Click here for 2007 Annual Taxes". Enter the ID number you obtained in the Map Book, Page, and Parcel fields and click Search. You will then see the annual tax bill split into 2 biannual installments.
For the townhouse across the street from me, that comes out to a total of $10,238 a year.
Our annual rent comes to $16,800. It blows my mind that somebody would pay in property taxes a figure comparable to our rent.
I've never thought that this was quite fair. Prop 13 was designed to keep people (like senior citizens) from being taxed out of their homes, which is a worthwhile goal, but the recent buyers seem to shoulder a disproportionately large share of the tax burden.
I don't have an easy answers. Maybe there should be a property tax levied when a house is sold, so that the revenue comes out of the gain and not out of a seller's income, which in many cases could be a senior citizen's fixed income.
I think Manhattan Beach is doing something like in a special assessment for undergrounding utilities, though I do take issue with forcing homeowners to incur a debt for that assessment.
For a recent post on the subject of Los Angeles County tax assessment, check here.
Taking the townhouse accross the street from you, if the value drops to, say $400,000, would the owners be able to ask for a re-assessment based on this new vlaue? They might have bought it at $800K, and are paying taxes on an $800K home, but if the value drops, is there any relief for them?
Yes, read the link I posted about L.A. County tax assessment. It's about reassessments. The county assessor is getting flooded with them.
Sorry, didn't read that in your earlier post.
Very interesting. It may be of some help to buyers in the 2004 - 2006 years, but will be devastating for the counties.
Hi Bearmaster,
My wife and I are yet another west-sider looking to move to Redondo Beach.
Firstly, thank you THANK YOU for this obsession you have with all this housing craziness. Your blogs have been extremely insightful, and jammed packed with data to back it up.
Secondly, I'd like to hear your thoughts about the affordability of North Redondo Beach. I still feel every single property we've looked at is overpriced. According to your price reduction charts, my eye'd trend line tells me that Redondo Beach properties should drop another 10% or so by the end of the year.
Yet, in the golden triangle, properties built after late 90s are still sold at $319-$350 / sq ft. Am I wrong to think that prices are going to continue to decline?
I was talking to a builder during my open house hunting this past weekend, and he believes that now is the best time to buy because the government is raising the rates to push buyers into the market. I responded by pointing out that it's not that simple. If the government is trying to push buyers into the market (which I doubt, I think they're trying to prevent inflation), then either buyers need a fat raise, or home prices need to fall.
Are the builders trying to gentrify Redondo Beach so that it's only within reach of families who make $200K per year?
How much longer can builders and owners who purchased/built their homes in 05-07 last it out?
What is your predicted inventory by the end of this year for Redondo Beach?
Thank you in advance!
$200K per year? We make quite a bit more than that and still wouldn't pay $850K+ for our 1st home...particularly one in the Golden Hills/Triangle.
True, it's got a much better mix of people than the rest of Redondo, but the layouts there are a NIGHTMARE for anyone with young kids. Not only are there stairs everywhere, but the entire downstairs is like living in a basement and if anyone breaks in, your kids could be gone before you even woke up 1.5 floors above.
Redondo is easily 2-3 years from resembling anything close to reasonable. Before the latest boom, it was not considered at all desirable to live there (kind of like the Hyundai of the Beach Cities).
Once all of the sub-primes default, I would expect it to return to its stepchild status once again. No way would I consider buying there this year. Prices have only dropped maybe 10% from their peak - we are talking predictions of 40% or more.
JPongin,
I suggest you listen to the videos at the Mr. Mortgage link on the sidebar. Check the one about California inventory. There is a tsunami of inventory bearing down on us, and only the first waves have washed up. There is an excellent chance the people who jumped the gun and bought a "bargain" will be as underwater a few years from now as those who bought in 2004-2006 are now.
The beach cities are not immune to the problems facing the rest of California, despite what you may hear from realtors. Of course they and builders always say it's a great time to buy, when wouldn't they say it's a great time to buy ?? They are salesmen, they are not economic cycle watchers. We will probably see at least one builder in the area get into financial trouble and/or go bust.
I am much more bearish than just about all the predictions you read in the papers, because those predictions don't factor in the socioeconomic impact of a housing wipeout to the area. Search this blog with the keyword UNREST. Also, unlike the early 90's, the job market has been hanging in there. Unemployment has inched up in California by about a full percentage point over last year, last time I checked.
But most people are still working and that has been the one major factor helping to sustain this market. When the job market caves in (and I'm pretty sure it will), there will be NO support left.
Post a Comment
<< Home