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Realtors report 5.4% drop in November house prices
December 28th, 2007, 7:09 pm · 20 Comments · posted by Jeff Collins
The California Association of Realtors’ latest price report shows local house prices fell 5.4% in November from the year before.
That’s a bigger price decline than the 0.7 percent reported for November by DataQuick, although both indexes reflect similar trends.
CAR pegged the median price of an existing single-family home in Orange County at $661,580, down from $699,200 in November 2006. On Dec. 18, DataQuick reported a median of $655,000 last month for existing single-family homes, down from $659,750 a year earlier.
Both indexes reported sales volume declines from the year before. CAR reported that house sales fell 36.8% in November; DataQuick reported a decrease of 49.1%.
More recent figures from DataQuick showed a slight uptick in house sales during a four-week period that includes the first 10 days of December. See that post HERE.
Here are single-family home median prices for the past 13 months from CAR and from DataQuick:
| Month | CAR | DQ |
|---|---|---|
| Nov-06 | $699,200 | $659,750 |
| Dec-06 | $692,980 | $665,000 |
| Jan-07 | $688,610 | $675,000 |
| Feb-07 | $692,820 | $675,000 |
| Mar-07 | $706,650 | $695,000 |
| Apr-07 | $747,260 | $720,000 |
| May-07 | $714,130 | $695,000 |
| Jun-07 | $723,860 | $734,000 |
| Jul-07 | $709,720 | $718,000 |
| Aug-07 | $710,380 | $710,000 |
| Sep-07 | $673,770 | $655,000 |
| Oct-07 | $673,770 | $650,000 |
| Nov-07 | $661,580 | $655,000 |
December 28th, 2007 at 7:58 pm
My prediction…..
April 08′ will show a 20% decline YOY…perhaps more…due to the comparison with the peak in 07. This is the problem with YOY comparisons on monthly data which has a lot of variance.
December 28th, 2007 at 10:04 pm
29 months of inventory… but prices only came down 5% yeah
and shockg is really donald trump llooll @ribsplitter
December 29th, 2007 at 7:31 am
What is the total number of units selling by area per month, by type? Is there a link for that? I’ve been watching some areas and see very little actual sales. So if a million dollar house sells it skews the numbers?
December 29th, 2007 at 7:37 am
By CHRISTOPHER THORNBERG
December 28, 2007
In 2002, the median price of a single-family home in Los Angeles was $270,000 and the median homeowner’s income was $65,000. With a $50,000 down payment, the annual cost of that house (taxes, insurance and payment on a 30-year fixed-rate conventional mortgage) would add up to about 33% of the median household’s income — just under the 35% mark that the Federal Housing Administration calls the upper limit of “affordable.”
By 2006, the cost of that same house doubled, to $540,000 — pushed by unbridled speculation fueled by unparalleled access to mortgage capital. But median income rose a paltry 15%. So today that same set of costs come to 60% of gross income.
That might be a manageable burden when home prices are rising at double-digit rates, creating new equity that can be accessed to support spending — but not when prices are flat and the home-equity ATM is closed.
There are “experts” out there who once preached that there was no bubble; they now preach that all real estate is local and that prices in your neighborhood won’t be affected by foreclosures and price declines elsewhere.
The cold, hard truth is that foreclosures are serving only to hasten the painful process of shifting housing prices back to a level the market can sustain. Prices must and will fall. Everywhere. Probably 25% to 30% from their peak.
2008 is the year when gravity will reassert itself. You should be adjusting your expectations of your home’s value so that it’s correctly aligned with market realities. And when making important financial decisions today, be realistic and factor those declines in.
Christopher Thornberg is a founding partner with Beacon Economics.
December 29th, 2007 at 8:43 am
Although it seems like a negative prices are still holding steady. It is great time to be looking to buy. With credit getting tighter and the speculators getting kicked out it can’t get any better if you are in a position to buy
December 29th, 2007 at 8:48 am
This guy nailed it, although you don’t have to be an economist to figure it out - I’m certainly not. I’m a renter (shame) and make 6 figures and if I want to buy a stucco box for $650K I just can’t do it even with 30% down. The property taxes, insurance and maintenance just kill the deal. However, at $400K it’s do-able. I know people will say that I’m dreaming if I think that 30 year old stucco box will ever come back to that price - I personally think they are still over-valued at that - but I am a potential buyer and I just won’t / can’t enter the market until then.
Just one persons situation.
December 29th, 2007 at 9:51 am
I like Mr. Thornbergs use of “expert”. With a couple of notable exceptions, everytime I listen to an “expert”, I lose money.
December 29th, 2007 at 9:55 am
the home as an “ATM Equity Machine” is another goofball story. fact: the total equity available to the american homeowner is close to a record. the “ATM Equity Machine” is another joke story. and, LA income is up much more than 15% over the last six years. the source of that number should be questioned. most of the real estate price run on orange county is real and will hold. some groups praying for a crash are US treasury investors, renters, and near socialist political office campaigns. but, it will not happen.
December 29th, 2007 at 10:03 am
http://www.doctorhousingbubble.com/special-edition-real-state-of-genius-today-we-salute-you-california-with-our-real-home-of-genius-award-10-homes-throughout-the-golden-bubble-state/?ref=patrick.net
December 29th, 2007 at 10:18 am
trs read this then ponder the ramifications if you can that is
http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
December 29th, 2007 at 10:51 am
Trs (truthi),
Thornberg’s percent income ratio (60% of gross income) is actually less then HousingTrackers ratio (63.5%)
http://www.housingtracker.net/affordability/california/los-angeles
It seems like your disputing facts not by any contradictory data, but your usual never ending denial.
Once you realize that nothing will keep housing prices at their current levels, your cloudy thinking will clear up and reality can/will finally set in.
December 29th, 2007 at 11:00 am
Thornberg and some others have been dead on and now the MSM is all over it, re-setting expectations of sellers and giving buyers every reason to think twice before they become a bag holder.
A couple years of really bad sales and now 5%-8% declines even with a skewed median that mask much larger declines that sellers see, make it much worse that reported.
As expected prices are sticky until everyone smells smoke and rushes for the door, 08 will be the year to get out while you can, if you can.
December 29th, 2007 at 11:07 am
Trs (truthi),
As far as the “ATM Equity Machine” is concerned, it is true that there is more home equity now then previous years mainly due to the current bubble, but it’s also true that more people have tapped out that equity then any other previous time in our history.
It’s also true that home equity is evaporating faster then anytime in our history.
It is wise not count equity from a housing bubble because it is artificial and it will always disappear.
December 29th, 2007 at 12:19 pm
It amazes me to see that there are still people out there delusional enough to think that there was no housing bubble in CA.Guys wake up and smell the roses.This round of hype created by the flow of free money made possible by the super smart guys on the wall Street is finished,and so is a good percentage of paper wealth people were counting on.Let me make it real simple,if you bought your house or investment property before 2002 write down your equity by 20% to 40% depending on the locaton of your property.If you bought your property in 2005 or 2006 and paid market value or even got too excited and paid 5% to 10% over the market value of those years and could keep paying your mortgage,write it off as the life style expense unless you are living in a real dump which in that case use the jingle mail process and add a few hundred thousand dollars to the billions of dollars being written off by the financial institutions.It will be another drop in the bucket and don’t feel really bad about it because this is the way free capitalism works.Those super smart guys made their hundreds of millions of dollars.The decently smart guys who realized in time what was happening made hundreds of thousands and the rest of suckers who realy believed that a 700 sqf shack falling off its foundation in Santa Monica or HB where the median HH income is less than $80000 was really worth $1000000.are going to hold the bag or are going to become the proud contributers of extra drops to the bucket and will spread the loss to the higher tier of the risk takers who bought the garbage of CDO s.But after all don’t despair ,give it another 7 to 10 years and the whole thing is going to repeat again.Well,you know this is CA and a few degrees warmer temp during the winter would justify the 6 hours daily drive in the traffic and spending close to 60% of your hard earned money to provide a roof over your family’ head.
December 29th, 2007 at 12:22 pm
trs said: “most of the real estate price run on orange county is real and will hold.”
Based on what facts? Why is inventory so high?
“some groups praying for a crash are US treasury investors, renters, and near socialist political office campaigns. but, it will not happen.”
I gather that you oppose any type of intervention from the federal government and the Fed? Or are you another political nutjob who doesn’t realize that the economy is depedent on the goodwill of Communist China?
December 29th, 2007 at 12:28 pm
trs said: “some groups praying for a crash are US treasury investors, renters”
BTW, without first time buyers, there can be no move up buyers. And first time buyers were once upon a time renters. Cut the low end of the food chain, and the whole cycle will die. Only elitist myopists would fail to realize that.
December 29th, 2007 at 3:49 pm
New home builders will continue to build new homes, and the remarkable gap between new home prices and existing homes will have to close. That means continued downward pressure on existing home prices to close the gap with new homes, which have already been stiffly discounted.
We have a situation now where sellers are trying to move their 900 Square foot cracker boxes for the same price that someone can buy a new 1300 sqft townhome. There is a lot of delusion in the market right now, mostly among home owners and the realtors servicing them.
We won’t see home prices remain sticky on the upside unless cheap and loose lending returns. Using conservative lending practices and conservative down payments, most homes in SoCal are still too expensive for all but the most affluent buyers.
Try KB homes “how much home can you buy” calculator: http://www.countrywidekb.com/calculators/kbcalcs.aspx?calctype=HowMuchCanIAfford
What you will find with this is enlightening. I used figures for a yearly income of $100,000, with $20000 down, and a monthly debt burden of $1500. Try that and see how short the “affordable” home price falls from the median home price in SoCal.
We are still very far off of affordable in SoCal and the market will continue to dail until some factor is changed to alter the affordability equation. That will have to be either reduced prices or remarkably lower interest rates.
December 29th, 2007 at 9:23 pm
I posted this on another blog, but I thought it was interesting to post it here too.
Marcia,
So I did a little math for you. I removed 9 zip codes from the median. They include CDM, Both Dana Points, Laguna Beach, Both Newport Beaches, Newport Coast, Coto, and Villa Park.
Without those zips the median drops from 580K to 480K. In those zip codes there where 149 sales which is equal to 8.6% of the total homes sold. Interestingly the total sales (245,262,000) is 24.4% of all the homes sold.
So it seems obvious to me that the homes at the top end of the market are having an upward pull on what the median is for the entire county.
Ok so I did the quick math myself from this link.
http://www.ocregister.com/ocregister/money/housing/article_1381807.php
So I removed the same zips and without those zips the median went from 616K to 575K. There where 158 sales in those zips which is 6.4% of all the sales (2,475 sales) That being said the total amount for all of those sales (192,315,000) was only 12.6% of all homes sold.
So for Nov 2006 to Nov 2007, with the removal of all of those zips the median went from 575K in 2006 to 480K in 2007. So the change in median excluding those zips is roughly 17%.
That seems fairly realistic with the prices I see in the market place.
December 29th, 2007 at 11:25 pm
Good call Bill - - - - - re:Truthiness.
You beat me to it
She brings to life the saying…..”Who you are speaks so loudly I can’t hear what you say.”
December 30th, 2007 at 7:57 pm
Samson good point that shows exacty why they hide behind the median.
I did the pretty much the same thing a few months back when I noticed most of the areas I follow were in fact down 15%, it looked pretty bad. I wonder why simple things like this can’t be done in the reporting, or at least questioned, never mind, I know why.