Wednesday, July 16, 2008

DQNews: Southland home sales drag along bottom

DQNews has published Southland home sale numbers for June. June's sales were the highest in 10 months, but the lowest June on record, since DataQuick started keeping track in 1988. 17,424 new and existing SFRs and condos were transacted in June, compared to a historical June average of 28,488, and a maximum of 40,156 sales in June 2005.

The Inland Empire is the only area where sales have increased YOY, and it's easy to see why. That area was the first to melt down and so has experienced a greater overall decline than the other areas, so buyers think they are getting bargains.

The Southland median June home price was down -4.1% from May.

Prior to the credit crunch hitting last August, some 40% of southland sales were financed with jumbo loans. Today the figure is 16.3%, which edged up very slightly from May. And remember that the conforming loan limit has been raised and is no longer $417,000.

In May foreclosures were 39.2% of all sales; in June it was 41.1%. Southland buyers committed themselves to a typical monthly payment of $1,671, down from $1,713 in Ma7, and down from $2,430 YOY. Foreclosures remain pegged at record levels, ARM financing is at a 6 year low, and non-owner occupied buying activity is low, according to DataQuick. Recall that the L.A. Business Journal said that it had been seeing an increase in such activity, so perhaps it is wearing off.

Peter Hong at the L.A. Times reports in this July 17 story (Southern California home sales and prices keep falling) that prices are down to 2004 levels, which pretty much correlates with what I've been seeing in short sales in Redondo Beach.

Somebody thought to ask Chris Thornberg of Beacon Economics his opinion. He says that affordability is not there yet and prices need to drop 40% below the peak before incomes match prices.

Peter Green at USC's Lusk School of Real Estate has decided prices have fallen far enough and he's out shopping for falling Ginzu knives. He figures if prices fall another 10% that's OK with him. I'd love to know how he's so sure it'll stop there. Will he end up like Professor Irving Fisher in 1929, who said that stocks reached a permanently high plateau and then ended up having Yale university buy his house to prevent his homelessness since he lost so much money in the stock market crash?

Perhaps of interest to beach-area residents, prices in these and other affluent areas are showing "sharp declines" and I am in fact seeing substantial markdowns here. But I can tell you they've hit the 40% level and I think there is room for much more in the way of markdowns, beyond what Peter Green or Chris Thornberg are saying.

DataQuick blames the situation on the tight credit conditions, noting that even "well-qualified household" aren't getting mortgage loans.

County           Sales    Sales      %YOY      Median      Median      %YOY
                 June 07  June 08     Chg      June 07     June 08      Chg
Los Angeles      7,580    5,678     -25.1%     $545,000    $415,000   -23.90%
Orange           2,641    1,930     -26.9%     $645,000    $495,000   -23.30%
Riverside        3,359    3,757      11.8%     $400,000    $275,000   -31.30%
San Bernardino   2,190    2,215       1.1%     $365,000    $240,000   -34.20%
San Diego        3,510    3,077     -12.3%     $495,500    $370,000   -25.30%
Ventura            886      767     -13.4%     $582,000    $420,000   -27.80%
SoCal           20,166   17,424     -13.6%     $502,000    $355,000   -29.30%


Blogger mark said...

Thanks again for the hard work!

6:57 PM, July 16, 2008  

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