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Realtors think ‘08 is bottom for Calif. sales
March 24th, 2008, 12:00 pm · 56 Comments · posted by Jeff Collins
The California Association of Realtors is now projecting that 332,100 homes will sell this year, revised downward by just over 2,000 sales from the association’s prediction in October. The revised forecast also projects that the median price of a single-family house in the state will drop 9% this year, as opposed to a 6% drop expected in October.
CAR Chief Economist Leslie Appleton-Young delivered those revised numbers at a Newport Beach Association of Realtors meeting on Wednesday, saying that this latest forecast takes into account the full impact that the credit crunch is having on the state’s real estate market.
Under the revised forecast, the median single-family house price is expected to drop to $505,100 this year, compared to a 2007 median house price of $558,100.
The sales total is down from a peak of 625,000 homes sold in 2005. Appleton-Young said she believes that sales likely have hit bottom this year, but how long they will stay at these levels is anyone’s guess. While CAR is projecting “a little bit of growth in 2009,” Appleton-Young said she doesn’t expect to see significant increases in home sales.
“But looking at 2008 as a whole, I think it’s going to be the bottom,” she said.
March 24th, 2008 at 12:17 pm
Sigh…
Caught your post from Steve Thomas. Not sure why that was moderated. Anyways, his statements coincide with the February housing numbers which were released to today on existing home sales. Yep, up nearly 3% for February. Money is starting to come in from the sidelines just like you and I have been speaking about. Most people have short memories…today’s market is nothing like the last housing crash that hit the nation, and OC in the early 90’s. Not even remotely close regarding interest rates, loan products, etc. Just a different ballgame today.
March 24th, 2008 at 12:27 pm
That’s not my only post being monitored - I had a more extensive one about National resale price being UP in February - but when I push the submit button ( on about 5 different applicable threads - it doesn’t appear. Guess big brother is slapping my wrists - for being too positive?
March 24th, 2008 at 12:34 pm
If only realtors actually knew what they were talking about……………
March 24th, 2008 at 12:35 pm
The only reason it volume corrected so violently as it did was because of the realtors denial of the bubble.
Instead of realtors worrying about when and where the bottom is they should just worry about getting homes sold. If the home isn’t selling, cut the price until it does or until the sellers says uncle and pulls it off the market. This ain’t brain surgery.
I’m also waiting for the light bulb to go off in realtors heads that the comparable sales method of valuing property doesn’t work during periods of low volumes. Once they realize that they are fundamentally flawed in their valuation of properties then they can adjust and get prices right so inventory starts moving.
March 24th, 2008 at 12:46 pm
“Realtors”? Are people supposed to keep trusting these guys?
If they think it is near bottom, how about put money where their mouth is and buy, buy, buy for themselves?
Here is my prediction, the bottom should be somewhere around 2012 +/- 1 year.
March 24th, 2008 at 12:54 pm
Yo Blacky…
I know this is tough to understand, but you know that the listing agent is HIRED by the seller to sell the home AT THE BEST PRICE POSSIBLE, which for a seller means the HIGHEST. Now, stay with me here, the buyer’s agent wants to pay THE LOWEST price possible for their client. What happened during the boom years of a seller’s market you ask? The convo pretty much went like this:
Seller Agent: “We will price your home about 5% above the last comp in your area of similar product and s.f. range. This way, you will be able to negotiate if you need to. However, nice properties are receiving multiple offers these days so hang on, this is going to be fun!”
Buyer’s Agent: “It is a seller’s market today, so if you find a home and you really want it, you will not be able to lowball them…you can try and I will do that for you if you wish, but lately, seller’s are able to wait it out as there are more buyers than nice homes to choose from and time is on their side. I would recommend offering about 5% below their asking price to get the ball rolling, otherwise you run the risk of the offer being rejected altogether.”
Viola, offer comes in, seller counters, they settle around a 2-3% discount and another home was sold during the boom.
That was the reality of the lending boom years. It went down like that pretty much every time.
The unjust jealousy of what some realtors earn is comical. I wonder if the public hates the owners and players of the Angels for the salaries they pull down. Personally, I do not care. The market bears what it bears. Period. I wish you all great personal success and financial success this year…it is a much happier world when people are making money.
I hope all you bears out there are basking in the glory of increased exisiting home sales for February of nearly 3%. That is a big number in this market.
March 24th, 2008 at 12:55 pm
Lets all go down to the used car lot and ask the salesman if now is a good time to buy a car…………I wonder what the answer would be?
March 24th, 2008 at 12:58 pm
- A couple years ago the Realtors thought that home prices could never go down in California…
- Then they thought that home prices would only level off before we continue the next phase of appreciation….
- Then the Realtors called Spring 2007 as the bottom of the housing…
- Once that didn’t happen they called Summer 2007 the turning point in the housing market….
- Realtors then wrongfully predicted Fall 2007…
- Realtors then predicted Spring 2008…
- Now Realtors predict the Year 2008 is the bottom for the housing market….
Realtors are very consistent. Always bullish and they always ignore key statistics that would give them a clue as to where the housing market is going. 99.999% of all Realtors are a joke.
March 24th, 2008 at 12:58 pm
How many times did the CAR and NAR revise their forecasts last year? LAY professed that the California market would see a soft landing and it was a souffle; prices would not decline in California. They have lost all credibility. They are nothing more than cheerleaders.
March 24th, 2008 at 1:04 pm
the bottom is still 30 years away.
KEEP ON RENTING!
March 24th, 2008 at 1:07 pm
Just curious: Any bear in here sell a home between 2004-2007 besides Rants? Any other hypocrites in here?
March 24th, 2008 at 1:16 pm
ranting renter the hypocrite the sky is falling is here.
March 24th, 2008 at 1:19 pm
I bought our home in 2001 and sold in 2005 at the peak of the market. I thought Id be happying renting and watching the market crash, but in truth, its really, really sad. Its sad to see all these people who trusted the realtors and apprasiers now are losing their homes. Never fear though, a government bailout is all but guaranteed at this point, which means no matter who you are ( renters and buyers) we will all be paying for it.
March 24th, 2008 at 1:21 pm
rants+
Housing in Orange County will NEVER recover. Never. The price will continue to fall until we reach a median price of $95K - $100K. You will be able to buy a 7 bedroom fat pad on the sand in Newport for $250K. Price will never ever ever be $600K again. Ever. For anything built in Orange County.
Might as well keep renting. We will reach the $5K median price in 2150. Might as well never buy a home. It’s a waste of money and you’d hate living in home to call your own anyway. Even after it’s paid off the bank will come to you to pay them still since the prices are falling. Prop 13 will be revoked and you’ll pay $4000000000 a year in property taxes.
Renting is awesome!
March 24th, 2008 at 1:21 pm
Mulli,
I sold my house in 2005………my ex and I split the 500K profit. I am betting the price of houses goes down for the next 4 years.
Does this make me a hypocrite ?
March 24th, 2008 at 1:27 pm
i can see 2008 being a bottom for home sales.
but what about home prices?
March 24th, 2008 at 1:31 pm
Money is NOT starting to come in from the sidelines when 35%+ of sales are TO THE BANK.
Other sources revealed that the peak of foreclosures hasn’t nearly started hit the market yet.
The majority of foreclosures now are buyers who either couldn’t even afford the teaser payments, or the neg-am payments got adjusted.
The banks are going to be hit with a huge increase in defaults (sales) when notes become due which is still mostly later this year and next year. Tapering off is foreseen in 2010.
Technically you can call this uptick “sales” if you want. You would want to see it that way if you were a an agent that got stuck with a flip that flopped.
Next year 2007 sellers are going to be remembered as extremely lucky, because they got out not too far after the peak.
March 24th, 2008 at 1:50 pm
Nano…I will take that bet…4 years of depreciation in the OC housing market? Now that is the boldest statement I have ever heard on this blog.
March 24th, 2008 at 1:56 pm
And nano,
it would only be hypocritical if you were to blast people for buying in the boom years…as you helped set the comps…which was a good thing for you, right?
March 24th, 2008 at 1:57 pm
I’ve been a Home Inspector in Orange County for 12 years and I can tell you business began to pick up mid January, was busier in February and you’re going to see even better numbers when they come out for March as my phone is ringing. Many first time buyer’s entering the market purchasing foreclosures instead of the condo they would have had to purchase the last few years. Decreases in values have begun to slow down but still dropping.
March 24th, 2008 at 1:58 pm
Home sales up 3%? How many homes is that? less than 50 homes? That’s a sign of bottom?
How much more money is flowing in and from where? Any data on that? I see lots of speculative comments from both directions.
Money aside from Fed money -that is. I want to see signs that investors, specifically from overseas - are now reconsidering that the value of our local RE is correctly valued and are now buying securities backed by products originating from this region. Any numbers on that? Info I’m getting from NY is still not very pretty - but I hate to draw conclusions from a single report that has been wrong in the past.
How about those new products to use the new limits - any words on that? (I don’t know - I’m truly asking.)
My point: I am VERY VERY open to considering we’ve hit bottom right now (not at the end of ‘08 but now as many claim) and have yet to see any numbers that show it. And you know what I’m looking for. And its not an extra 50 homes being sold. I wouldn’t bet more than a lunch on hitting bottom based on something like that. Hell - not even a lunch.
As far as hitting bottom on home sales - I sure hope we’ve hit bottom. Less than 2K homes being sold in a month is bad. 1500 is hideous.
Let’s be objective - besides - I want to buy (as an investor) - convince me as you would to a board room. At least a little bit of info.
Mulli- I’m still bearish on OC RE - but I own here and in two other states. As a matter of fact - I bought two properties last year - just not anywhere close to the OC - renting them out and cash positive. Does that make me a hypocrit?
What value do you get out of knowing other people’s intentions and actions? Do you not have an intention? Do I not? Is there anyone here not simply wasting time or does everyone have some motive?
There are folks here that would love to see the value of their home go to new highs - others couldn’t care less. All depends on your persepctive and what you value. Does it change the effectiveness of a debate? Is the information not the same?
That’s what I don’t get - because someone posts an article that is bearish - does identifying their motive for posting change the validiity of the article?
Logic has it….
March 24th, 2008 at 2:00 pm
Mulliganville,
Yep. Sales UP 3% in February…everywhere except the west, which was down 1.1%…I’m no genius but I think that might be due to the fact that AFFORDABILITY IS DARN CLOSE TO 0 HERE.
We will have depreciation until affordibility is no longer an issue…that’s how long it will last. Period. When the average income family (average I believe is about 80K now) can afford a starter home somewhere that it is safe for them to live then, and only then, will house prices begin to rise.
Prices will stop falling with single family median under 250 a square foot and condo median under 120. You can quote me on it and bring it back up in my face if it doesn’t happen but it will be at least 2 years yet and maybe more if the geniuses in Washington can’t keep their fingers out of the stew.
March 24th, 2008 at 2:07 pm
What happened to the 109% increase in pending sales? It seems to have been misplaced. Where did I put those damn things?
March 24th, 2008 at 2:09 pm
Not sure if I agree with you creative. In OC, 25% of all home purchases are cash. That is an astounding number. There is more money to buy homes here than in Topeka, KS. There are far more speculators who will enter the marketplace here. Everything is relative. If the 1.1% figure you posted is accurate, and I have no reason to believe it is not, I would bet that is a nice improvement from months past. But I do not know off the top of my head. I do like Steve Thomas’ figures as he has proven to be the most accurate in my opinion. The bottom line is activity is up which is good for the local economy. Let’s hope the trend continues.
March 24th, 2008 at 2:10 pm
Hey Mulligan, Sounds like you bought into the cheerleading at the office meeting this morning. How were those title company bagels? How did the open house go this weekend? Did you spend all day sitting in an empty house instead of spending Easter with the family?
The NAR & CAR have only proven that their market projections are a joke. As far as RE agents go, the overwhelming majority are clueless, just parroting the idiotic rhetoric of their office managers!
March 24th, 2008 at 2:10 pm
Sorry…caveat…just glanced at the name.
March 24th, 2008 at 2:15 pm
Interesting that housing is the only asset class that is subject to mob interference. Name me another investment where people who don’t put up any capital can participate in setting prices. That’s right, you can’t. Don’t like that someone makes 6% over inflation on the capital they deployed? Start a blog!
March 24th, 2008 at 2:16 pm
BTD…sorry to nix the painted picture of your mind…but I have said this so many times before and I will do so once more for your benefit. I hold licenses in several states. I do not practice general RE in the OC. My focus is on luxury 2nd homes in high demand markets, usually international in flavor and branded to boot. So you can assume all you wish…and besides, everyone knows realtor meetings are on Tues or Wed depending upon the office. Geez…at least get the facts straight and educate yourself before you come in and spout off like you know what you are talking about.
And one more thing: the fact that you took some joy in assuming I was not able to be with my family while sitting at an open house tells me a good bit about your character. Enjoy your day…if you can.
March 24th, 2008 at 2:18 pm
Mulli, don’t sweat the BTD harassment. That’s what they pull out when they’re out of ammo.
March 24th, 2008 at 2:18 pm
25% of home purchases in the OC are cash? That is a bold statement. What is your source for that figure? Please share with us the documentation to back that up.
March 24th, 2008 at 2:20 pm
Home sales are seasonal. They bottom out in Jan and go up from Feb to Jul/Aug and then come down again.
Feb is 23.8% below last Feb. This is awful. Its not good. NAR has rotted too many brains here.
March 24th, 2008 at 2:22 pm
25% in cash? Now I have got see numbers to back that one up - just asking nicely -please.
A number like that would have to be published somewhere - it would just have to be.
March 24th, 2008 at 2:24 pm
nbi,
you caused sindude so much distress he is no longer here anymore.
March 24th, 2008 at 2:25 pm
nbi,
besides cash flow, you need to understand the concept of return on investment.
i looked at over 50 properties last year and bought 1.
March 24th, 2008 at 2:30 pm
Nano…I will also take that bet…
I bet it is not the next 4 years. It is the next 7 years.
March 24th, 2008 at 2:31 pm
Mulli,
OK,,,,,,,,,,I’ll take the bet…..we will see 4 more years of price value declines before we see an up tick……hundred bucks……
Personally, I think that anyone purchasing after 2003 was taking a risk…….more of a risk than they thought. The risk is that they would have to hold the home for 10 to 15 years before they could sell it above what they paid.
March 24th, 2008 at 2:36 pm
NBI…I will find it for you and post it…been awhile since I saw it…but I will look.
March 24th, 2008 at 3:00 pm
Housing is seasonal; it always ticks up in Feb through the early summer. We’re still down 25% YoY, and prices fell through the floor to achieve 3% sales growth. Why is this a bottom again?
Wait till the alt-a/jumbos and negam resets start kicking in. Not to mention unemployment.
March 24th, 2008 at 6:23 pm
Mull: You mean that the 25% being all cash sales was from a time when sales were over 3K per month? What do you mean by “its been a while?”
That would be frickin’ amazing!!! Not to mention a new world record.
March 24th, 2008 at 6:38 pm
well there was 1 extra day in feb. lets see 1/28=.035 or 3.5%….amazing how that works.
March 24th, 2008 at 6:58 pm
The “bottom” only refers to volume, I don’t believe she attempted to predic the bottom of the median price. Smart woman - she can use the word bottom without having to hold herself to any price.
Ultimately, I believe she is right in terms of volume - it’s probably not going to get much slower than the current volume of sales. But as far as median price is concerned, I believe the bottom is at least another 20% away. Yep those homes selling for $450,000 right now will more likely move at $380,000. Sadly, even that is too high, but buyers making $130,000 can now afford to move into a middle class neighborhood in Fountain Valley for around $380,000 by next year.
March 24th, 2008 at 7:07 pm
NBI…I saw it within the last several months…but I do not recall the date on the article…I am looking diligently for it. I am hoping I am not confusing it with 22% of OC homeowners who own their home outright…that stat is from the US Census bureau. Give me a bit and I will get it to you…
March 24th, 2008 at 9:35 pm
NB I consider the situation pretty simple: Markets like the OC experienced much greater price inflation than other parts of the country, so we have more of a bubble to work off than the rest of the country. Therefore, our declines, as a percentage, have to be greater to return the market to a semblance of equilibrium with respect to the costs of ownership vs. the benefits of ownership, family incomes, etc.
And no, I am NOT Steve Thomas, much to the chagrin of nvest and others here who roundly thrashed my statements regarding a bottom.
A year ago and more I was on the field proclaiming the coming bear market for anyone that wanted to listen. Now I am saying we have hit a point where we are either at bottom or we are nearing it. We may see modest slides continuing for several quarters, but I really seriously doubt we will see a total decline of more than about 25%.
The key to all of this is being realistic about what the data is saying. Housing doesn’t appreciate OR depreciate just because we want it to - that is the single biggest complaint I have about permaBulls and permaBears alike: both are equally wrong because what they have to say is not driven by logic but by passion. That’s a mistake, because it keeps you from understanding the market forces that are at work. These trends are driven by market forces and affordability is relative. That is, affordability is an aggregate factor; there is no single component that drives affordability. Affordability can change even if actual housing prices do not; and that is what we are seeing now. There are multipl factors at play that will now begin to equalize the affordability equation for a given price point and associated sales levels.
As I said earlier, I see it like this: We will proably bottom in the near future if we have not already. After that, we may see modest recoveries in volume, with little change in price. Appreciation may take a 2 - 3 years to return. People may disagree with that if we wish; it is just my read of the data. However, I have been right pretty much all along.
Have a great day!
March 25th, 2008 at 12:52 am
Just met with my tax guy today. He is actually new to me this year.
To my pleasant surprise when he found out I was renting and waiting to buy, his advice to me was “DON’T BUY NOW, whatever you do, don’t buy now!”.
Apparently he is almost a bigger RE bear than I am. His prediction is 50% from the peak price to bottom out in 2010, then with flat prices for some years after this.
These market cycles do not turn around as quickly as the NAR would have you believe.
I mentioned how much propaganda you hear in the news from places like the NAR to buy now, and his answer was pretty funny — “All of those people who are giving you this advice have something to gain in this. They’re like predators - if they don’t kill, they don’t eat!”
March 25th, 2008 at 7:31 am
Anecdotally, a friend has been biding his time, waiting to help a daughter buy her first home, probably a condo. They are getting excited, as prices have fallen enough that they are seeing single family detached homes come into range. At some point they will buy because they NEED to, and the numbers are starting to look good. Re affordability, she couldn’t do it on her own, but because the parents are good savers, and have made money in the past on real estate, the down payment will be there. Matbe that’s the real OC.
March 25th, 2008 at 9:23 am
Snacker, I agree with your tax man about the market taking a couple of years to turn around and even if the median price does not go down 50% some overpriced properties will.
March 25th, 2008 at 11:20 am
I see a lot of opinions and generalizations, but not a lot of details on this blog. I have been monitoring the market in the greater MV area since October because I am an active buyer. Over this time I have tracked the sales of about 150 sf homes greater than 1700 sq ft. What I have seen is that once the $/sq ft gets below $300 the house sells (have a realtor friend that is able to get me sales prices after escrow closes). In the past 4-weeks I have seen a significant spike in sales with an avg. pricing of $290/sq ft. Note that I am not tracking 1970’s time capsules with popcorn ceiling, because that is not what I want to buy. If the house was not moderately updated it does not make my list.
My point – at least in the area of OC where I want to live I think the bottom with respect to price is currently being defined. How long it takes to see a profit I am not too concerned about since providing a stable home for my family over the next 10-15 years is my objective.
March 25th, 2008 at 11:27 am
Even if this is the bottom, as many are claiming (yet there have been claims of a bottom on this blog for a couple years), there is still historically a period of flatness. Things do not start skyrocketing back up, especially now with tighter lending standards.
March 25th, 2008 at 12:44 pm
Was that 3% increase in February YoY? If it was, 2008 was leap year, which means February 2008 has 3.5% more days in the month over February 2007……Hmmmm, could this account for the 3% increase???
We’re along way from the bottom. I’m a bear and I own my Anaheim house outright.
March 25th, 2008 at 1:24 pm
This is fascinating reading but has my head spinning. I am first time buyer looking to purchase in North Orange County. I have many realtor friends and friends who work in the financial sector. The Finance people tell me to sit still. The realtors want to send me foreclosure listings and roll their eyes if I tell them I’m not quite ready.
Whats a person to do in a market like this? Who do I listen to? Any advice?