SoCa Home Sales Rise 65% in September

triciaeOctober 21, 2008

This report is overall very good news. September closings probably represent contracts written in late July through August.

It doesn't pick-up the last 3 weeks of wealth destruction and/or TARP. I imagine the December numbers won't be nearly as positive. I also expect to see another significant price drop reflecting October's consumer sentiment numbers which were dismal.

In any event, September chewed up some inventory & that can only be a good thing.

"LOS ANGELES Â Southern California home sales jumped 65 percent in September from a year ago, as plummeting prices fueled by foreclosures lured more buyers, a real estate tracking firm said Monday.

Last month's median home price in the six-county region fell 33.2 percent to $308,500, compared to $462,000 in September 2007, according to San Diego-based MDA DataQuick.

The September median price was 38.9 percent below the peak $505,000 median posted in spring and summer of last year."

I'll take this opportunity to note that I was mocked quite severely around here for suggesting 18-24 months ago that prices would drop overall 25-40% & condos maybe 50%. I can't help but think of all the selling posters we had who reported feeling "insulted" when they received offers of 85-90% of their asking prices. I also remember patty_cakes who hung in, negotiated hard, & sold much less than she wanted; but still $15K-$20K more than I expected.

It's been very quiet around here for the past 90-120 days. I could explain that from the lowered sales in general but it seems to be across GardenWeb in general. Other forums I visit regularily have also dropped off to practically nothing...much more than a normal seasonal summer slow-down. Are people cancelling Internet service to make ends meet? Anybody else noticed the overall slow down around here?


Here is a link that might be useful: September SoCa Home Sales

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I haven't noticed much of slow down but then I mostly hang out in my states garden forum and in the "hot topics" forum which is mostly political so it is pretty busy this time of year.

I have noticed that all the sellers that I low-balled, that acted insulted, have now come back to see if I was still interested in their property with newly lowered prices.

Something is worth only what people are willing to pay for it.

    Bookmark   October 21, 2008 at 4:42PM
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I have noticed it's slower on this forum...I've also noticed that a lot of sellers in my area have taken their homes off the market for now. In Sept in my zip code and price range there were over 300 homes for sale. Now in my zip code and price range there are only 160 homes. I know a few of the homes sold, but don't believe all of them did. Maybe sellers are just going to try to sit this out til they see what shakes out of this whole TARP thingy.

    Bookmark   October 21, 2008 at 5:56PM
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Absolutely, there is less traffic here on THS. manyhosta and I were recently commenting on the difference between the housing boom years and now. *Everybody* was buying a new home! *Everybody* was building a new home! *Everybody* thought his own house would keep appreciating forever.

We knew a down market was arriving when we decided in late 2006/early 2007 to hang on to our Maui condo. Glad we bought both there and here in Illinoiis before the boom started. (2001)

I added to a post on the 'Building' forum, reminding that people there are building into a down market. No replies. Seems to me the value of everything bought or built now will fall some more before it starts to rise again. I sure wouldn't be building in a development now. Who knows when/whether it will be built out?

    Bookmark   October 21, 2008 at 6:04PM
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All real estate is local. In my zip, prices are up 7% y-on-y but sales are down 30%. But I live in an affordable market - not as affordable as it used to be. We have about a $75k income and $300 median - so 4 to 1 but just a few years ago it was 3 to 1.

So what do I do - build. As the economy contracts, real estate may get worse. But as the SoCA market shows - an equilbrium is reached.

Building costs may go down over the next year but they may go up. The relative stability of building costs also puts a limit on real estate values - at least around here where land is still available.

    Bookmark   October 22, 2008 at 5:24AM
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*sigh* I live in SoCal, and I choose to just not watch the market. I have the misfortune to have bought at the very top of the market (about 3 years ago), and my house is worth about $150k less than what I bought for.

And yes, I'm one of those stupid losers y'all keep railing against that has an ARM -- but I don't consider it a "sub-prime" mortgage, because my husband and I can afford the payments, even after the 5 year non-adjustable period. We had planned on refinancing sometime within the first 5 years, although that's not really a viable solution right now -- from what we hear, it's nearly impossible to get a loan, and we're not even sure we could get one for what we owe at this point. So we're in this for the long haul, it would seem...thankfully, we both make very good salaries, have stable jobs, and we're not particularly worried. Someday, the market will turn around.

    Bookmark   October 22, 2008 at 12:22PM
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Sorry about your situation. I could imagine it would be very frustrating. I'm glad to hear you have the financial ability to survive being upside down.

On the postive note, if other owners share your apathy, the bottom is near. Apathy is the last sign for capitulation in a market.

I wouldn't kick yourself over the ARM, unless it was an option ARM (and you chose interest only or negative amortization). Three years ago, It would have been difficult to predict the current difficulty in refinancing.

    Bookmark   October 22, 2008 at 4:23PM
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An ARM is not an ARM. A 5/1 ARM is not a bad idea if the spread is right and you are not overextending yourself. I've had a 3/1 - sold after 3 years and a 7/1 that I sold after 3 years. In both these cases a 30 year would have been a waste

You may not be able to sell or refinance at 5 years but probably soon after that.

    Bookmark   October 24, 2008 at 6:04AM
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I think looking at the SoCal market is a great barometer of the direction of things...when it turns around, you'll know we're headed back in the right direction.

It needed a huge correction - the growth numbers in the area for 2003 & 4 were crazy and it didn't really slow until the end of 06. We waited until '04 to buy and were shocked at the change in prices in just a year. We sold just about a year ago, and the house we sold has lost at least another 100k in value from our sale price. I really wanted out of the market and was very worried we wouldn't sell at all...we were also very open to negotiation (we took an offer $100k below our first offer price and still came out winners.)

There is an emotional connection to homes that make it difficult to negotiate. People just can't seem to separate from their houses - witness the number of people that visit houses they haven't lived in for 20+ years.

And yes...traffic on all the boards I watch has fallen off. I think people are doing less - selling, buying, etc. Probably a good thing...


    Bookmark   October 24, 2008 at 9:42AM
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Home Resales Rise on Falling Prices
OCTOBER 24, 2008 WSJournal

WASHINGTON -- Although prices continued to fall, existing-home sales climbed more than expected during September, marking the highest level of home sales activity in more than a year.

Home resales rose to a 5.18 million annual rate, a 5.5% increase from August's unrevised 4.91 million annual pace, the National Association of Realtors said Friday.

At the same time, the median home price was $191,600 in September, down 9.0% from $210,500 one year ago. That $191,600 median price is the lowest since April 2004. The median price in August this year was $203,100.

The home sales increase represents "a nice jump," said NAR economist Lawrence Yun. "Hopefully, this trend can continue."

Lenders have tightened their standards on home loans, contributing to the credit crunch that is restraining the U.S. economy. Those tighter standards have priced marginal buyers out of the market and made purchasing more difficult and costly for prime borrowers.

The September resales level was higher than Wall Street expectations of 4.97 million sales rate for previously owned homes. The drop in mortgage rates, after the government takeover of Fannie Mae and Freddie Mac, likely brought more buyers into the market in September.

The average 30-year mortgage rate fell to 6.04% in September from 6.48% in August, according to Freddie Mac.

Inventories of homes fell 1.6% at the end of September to 4.27 million available for sale, which represented a 9.9-month supply at the current sales pace. There was a 10.6-month supply at the end of August. This marks two consecutive monthly declines since inventories peaked in July.

Regionally, existing-home sales in September were mixed.

Sales rose 2.2% in the South, and fell 1.2% in the Northeast. Meanwhile, sales increased 4.4% in the Midwest and jumped 16.8% in the West.

    Bookmark   October 24, 2008 at 1:12PM
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IMO..perhaps some light at the end of the tunnel.

    Bookmark   October 24, 2008 at 3:23PM
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Home sales in my part of the country (Chicagoland) have fallen even further, not improved. Prices have also dropped.

NAR says as much as 40% of sales involve short sales and foreclosed properties.

Got a ways to go, IMO, more so after the October DOW dips and increasing layoffs everywhere. I don't see contracts being written a fast pace in this financial climate.

    Bookmark   October 25, 2008 at 11:22AM
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One of the important turn-around indicators some analysts have been looking for, finally seems to have appeared. Will it continue? Who knows?

September New-Home Sales Jumped 2.7%, Prices Fell
October 27, 2008 WSJournal

WASHINGTON -- New-home sales increased by 2.7% last month as inventories declined and builders slashed prices to their lowest level in four years, a government report said Monday.

Sales of single-family homes increased by 2.7% last month to a seasonally adjusted annual rate of 464,000 from August's revised rate of 452,000, the Commerce Department said Monday. July sales rose 3.6% to 517,000; earlier, Commerce estimated July rose 4% to 520,000. Economists had forecast a September sales rate of 455,000.

Year over year, new-home sales were 33.1% lower than the level in September 2007. Mortgage credit has tightened. High inventory of unsold homes are hurting the housing market -- and the rest of the economy. The surplus is driving prices down.

Falling prices, in turn, are keeping would-be buyers from signing on the dotted line as they wait for a better deal. Builders are breaking new ground at a declining rate, discouraged by excess supply and declining sales. The housing slump has detracted from economic growth as measured by gross domestic product for two-and-a-half years.

The median price of a new home decreased by 9.1% to $218,400 in September from $240,300 in September 2007. The average price tumbled 5.7% from $292,200 in September 2007 to $275,500 last month. In August, the median price was $220,400 and the average was $264,100.

The median sales price was the lowest since the $211,600 level reached in September 2004.

Inventories fell 7.3% to an estimated 394,000 homes for sale at the end of September from August's 425,000.

Regionally last month, new-home sales were up 22.7% in the West, down 21.4% in the Northeast, down 5.8% in the Midwest and up 0.7% in the South.

    Bookmark   October 27, 2008 at 12:45PM
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We're going to have to wait another couple months to evaluate the data.

I don't think the wealth destruction on Main Street is reflected in these numbers. I expect contract fall-out rates to increase significantly due both to buyer's remorse & failure of the purchasers to qualify for mortgage loans.

Were it not for the credit crisis & wealth destruction of the past few weeks I'd say we'd hit, I'm just not sure.

When do the next retail sales come out? That should give us a hint at how people are behaving.


    Bookmark   October 27, 2008 at 1:02PM
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t, i was at a fairly expensive restaurant saturday night , and the place was PACKED..I commented to my wife and friends doesn't look like a recession here,lol...I honestly believe those who have yet to be affected in someway have yet to change their spending habits dramatically...

    Bookmark   October 27, 2008 at 1:12PM
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The numbers in this report will start showing up in fewer retail sales, recently signed real estate contracts falling out, fewer people looking for houses, & probably holiday travel cancellations.

America has been on a spending spree for many years. I honestly believe many don't know how to live on a budget. They'll continue to spend & purchase on whim until harsh reality knocks on their door. Bankruptcies have been climbing all year...that'll get worse.

Not everybody, of course, is going to lose their job(s). But the consumer confidence numbers in this report certainly suggest concern across the country. Historically, consumer confidence & actual spending haven't been aligned...Americans keep on spending. This time, I'm going with a major slowdown. DH is telling me it's so quiet at the bank the darn phones aren't even ringing anymore...staff is standing around like they're in a library...whispering to each other. If somebody speaks in a normal voice it echoes around the bank...

Qdog, our restaurants are also still packed. It's still the end of peeper season so we'll see if it drops off dramatically in the next couple weeks.


Here is a link that might be useful: Consumer Sentiment

    Bookmark   October 28, 2008 at 11:26AM
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Actually, I've always considered it a good sign when the consumer confidence falls. Most consumers get their news from sensationalist media headlines, so they're always either too late or completely unaware of the real party, LOL.

I remember during the recession of the late '70's, when I was a supervisor with a single clerk. We spent most of the day playing Scrabble, waiting for the phones to ring. Got to be really stupendous Scrabble players, too, after a few months!

The slow times ended, and these will too. When? Who knows? But if it teaches people to stop living paycheck to paycheck - which is really hard, it's happened to us quite a few times in our lives - it will be a good lesson, in the end.

    Bookmark   October 28, 2008 at 11:56AM
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