Wednesday, June 13, 2007

Slowest May for Southern California home sales in 12 years

News from on the SLOWWWWWWWWWW market. Keep one thing in mind, this is before the recent adjustment in rates, up about 50 bps in the last few weeks, look for June to be much worse.

La Jolla,CA----Last month was the slowest May for Southern California home sales in 12 years, mainly because of sharp declines in lower-cost markets. The Southland's median sales price was unchanged, a real estate information service reported.

"Sales have been dropping now for the last 20 months. The first part of that was just coming off the frenzy of 2004 and 2005 and didn't put that much downward pressure on prices. The sales declines of the last half year, though, will have more of an effect on prices. It's remarkable they haven't come down more than they have," said Marshall Prentice, DataQuick president.


Adam said...

The thing to remember is the history of what happened during the last peak/drop in California in the 1980/90 period. The prices peaked, and sales volume declined: we've seen both of those happen last year.

However, the prices remained 'sticky' for about 12-15 months, and may even have continued to seemingly rise during the slow-down. That's expected, and in our case, is easily explained due to the drop-off of sales in the lower-priced market.

While prices continued to fall during that 12-15 month period, we didn't see the more drastic price declines until later in the process. In this case, I'm amazed we've seen price corrections of 30% this early in the cycle. I still feel we're only getting started here, with lots of more scalping to be done....

FWIW, it could be worse: you could be living in Florida, where the speculative bubble run-up means there's been some dramatic hair-cuts being given.

Here's a video of deep discounts (50% off) given by builders at auction, when nothing was moving on the market so they had to liquidate to save their own assets:

Doncha love the whole, "it's NOT FAIR!" whining of buyers who no doubt over-extended with a dangerous mortgage last year, and apparently paid full price...

Lou Minatti said...

It's gonna be a half-off sale throughout California, Adam. I have never seen anything quite like the mania you saw in your fair state. I can understand a modest premium for California housing, but ya'll don't make THAT much more than the rest of us.

Crispy, nice work.