From CNNMoney.com:
There was another tick-up in home prices in July, a further indication that housing markets may be stabilizing, according to a report issued Tuesday.
Prices for the S&P Case-Shiller Home Price index of 20 cities rose 1.6% from a month earlier, the third consecutive month of gains. They went up 1.4% in June.
Prices were still down 13.3% compared with July 2008, but even that performance was better than expected. A panel of industry experts surveyed by Briefing.com had forecast a 14.2% loss.
“The rate of annual decline in home price values continues to decelerate and we now seem to be witnessing some sustained monthly increases across many of the markets” said David Blitzer, chairman of the Index Committee at Standard & Poor’s.
The Case-Shiller index compares the sale price of a home to its price the last time it was sold, then factors in changes in prices over time.
That, ideally, yields a more accurate picture of home price fluctuations than simply calculating the median or average prices of all homes sold during the month. Those averages can be skewed by changes in the mix of homes sold during any one period.
Anyone paying attention will shrug this off for a number of reasons:
1. July closings were buying decisions made 1-3 months earlier, which is old news.
2. Government intervention renders all data suspect.
3. The data is too nebulous – who cares about national stats, or even county stats.
There not much we can do about #2 above, but let’s fine-tune #1 & #3, and look at more revelent data – the 31 detached September sales so far in Carmel Valley, 92130:
Eight of the 31 were previously purchased in the 2003-2009 period, or, in other words, 74% of the sellers had owned since 2002 or longer.Â
Only four sold for less than they paid:Â -2%, -3%, -18%, and -20%.
ONLY 3 BUYERS HAD LESS THAN 20% DOWN PAYMENT.
15 buyers had more than 30% down payment.
One short sale, and no REO sales.
In areas like Carmel Valley, the market seems to be getting stronger the last few months with multiple offers on virtually every well-priced new listing. The $8,000 tax credit and FHA loans aren’t going to be much of a factor when the average sales price is $914,516 – only three FHA loans in September so far.Â
Here are monthly detached stats for 92130:
| Month | # of Sales | Avg. Sales Price | Avg. $/sf | Avg. DOM |
| Jan | $1,191,868 | $351/sf | ||
| Feb | $799,750 | $328/sf | ||
| Mar | $1,010,925 | $343/sf | ||
| Apr | $1,035,074 | $353/sf | ||
| May | $840,567 | $324/sf | ||
| Jun | $1,032,654 | $344/sf | ||
| Jul | $976,281 | $345/sf | ||
| Aug | $981,823 | $326/sf | ||
| Sep | $914,516 | $315/sf |
Pricing appears to be easing, which should continue – as should the demand.
Just wait until this buyers bribe disappears. Temporarily inflated demand, plain and simple. Pull the b.s. plugs out of the market and watch the water come pouring right out of it.
I guess I need to improve my writing skills….
Jim, I’m an “on the fence” buyer and I think your assessment of the current market is exactly correct. Thank you for relaying both the good and the bad. Housing market cheerleaders get really annoying.
I think this data shows a healthy market behaving he way it’s supposed to. CV is an inflated market, so homes that are priced well are selling. Looking at the ppsf (which I think is a good measure in cookie-cutter CV,) you can approximate a 10% decrease in price spurred by good volume and healthy demand. No $8k credit or FHA intervention to distort the market. I think this shows a healthy, natural correction. (I just wish it would correct a little faster:))
Thanks Shadash, and I’ll add that CV is relatively unique in its ability to levitate this long – the demand isn’t blinking at these price points.
CV buyers are shopping smart, but when they see a decent value, boom, there it goes.
Love the first comment and Jim’s response. đ
My conclusion from this, as well as talking to others, is that the underlying “gold rush” mentality hasn’t changed. There are still many people who believe “real estate is the best investment ever!” and “renting is throwing your money away!”
Until that underlying mentality changes, we won’t really see a bottom. Right now, those of us who choose to rent when we have the liquidity to buy a house are still contrarians. When everyone starts agreeing with me that renting is the way to go, that’s when I think we’ll see some good deals to own.
Your statistics show that half of the buyers in the boom years in CV didn’t make it out with any gain when they sold. Word has to get around about that, and then the mentality will change. Also, many with damaged credit will rent and remember why they enjoyed renting — no maintenance hassles!
Still waiting,
-Erica
CV is relatively unique
The biotech industry has not crashed yet, most companies are low on funds and pinchin’ pennies now, but for how long?
Sequenom just crashed though:
http://phx.corporate-ir.net/phoenix.zhtml?c=84955&p=irol-newsArticle&ID=1336063&highlight=
Sequenom just crashed though:
If I remember right Sequenom has a history of having good ideas for medical devices, but never being able to follow those through to market. This tends to make them crash every once in a while when they realize that some part of their product will not withstand a FDA investigation. Since it’s a good idea management changes, they get new investors and it starts all over again.
Jim, I think your assessment of the current market is exactly correct. Thank you for relaying both the good and the bad. Housing market permabears get really annoying.
Anyone else realize that “tick-up in home prices” was actually a slower year-over-year decline? It’s still declining at 13.3% year over year.
Which means, the trend is still not broken. Remember, “The trend is your friend”.
Chuck
Go with those trends Chucky!
Instead of looking at the Nonseasonally adjusted CS (at which point YOY analysis is relevant), why not look at The seasonally adjusted CS index?
http://www2.standardandpoors.com/spf/pdf/index/SA_CSHomePrice_History_092955.xls
In this SA index, MOM analysis is appropriate. Unfortunately, this too shows the prices are rising…
This is a buying opportunity for Sequenom–Just a setback–They have developed a great product that will save much pain and suffering. Once they foliow the appropriate steps, it will go to market and be successful.
Well, it could be argued that the FHA loans and $8k reach-around do feed into the CV prices, assuming that they add money to the move-up buyer pool and cause a trickle up effect. Transactions don’t take place in isolation. Jim’s comment still killed me, and when I laugh out loud it tends to frighten my coworkers.
I still don’t get the CV obsession, but it makes for interesting discussion.
Erica, my take is that CV buyers aren’t in there for the “investment” but for the schools. I’m not sure that CV buyers would be all that fazed to find out that previous buyers haven’t logged any gains in appreciation — as long as those school test scores are at the top of the list.
Actually, buyers are very happy that previous buyers haven’t logged appreciation because they used to be locked out during higher prices.
I have a 5 minute drive to Del Mar and Torrey Pines beach, the temperature hit just 80 during the heat wave that hit 102 inland, and I’m close to work. UTC would have been a good location but it’s mostly apartments for rent and some of those townhouses make CV look cheap.
Federal experts have now issued a tsunami advisory for possible dangerous currents in coastal areas of California and Oregon following a magnitude-8 earthquake in the Pacific Ocean near Samoa.
The National Oceanic and Atmospheric Administration’s West Coast and Alaska Tsunami Warning Center says an advisory means that a tsunami capable of producing strong currents or waves dangerous to persons in or very near the water is imminent or expected.
Once they foliow the appropriate steps, it will go to market and be successful.
I don’t know if this was directed towards me, but I wasn’t trying to pump Sequenom. I was just saying that a problem as Sequenom isn’t necessarily a good barometer for the biotech industry as a whole.
The biggest problem for biotech currently is despite more and more money poured into drug research, it’s resulting in less and less drugs. Is it because we need the next big breakthrough, or is it because we’ve picked the low hanging fruit already?
CV buyers are shopping smart
Jim, That’s the only statement with which I have a problem. đ
Be wary of buying into homeowner association
Lew Sichelman, Special to The Chronicle
Sunday, September 27, 2009
Read more: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2009/09/27/RE6919EO69.DTL#ixzz0SY900MOl
……”Federal experts have now issued a tsunami advisory…..”
No kidding! đ
http://www.google.com/search?q=tsunami+site%3Abubbleinfo.com
seen on redfin:
In August, our agents in Southern California presented 146 bids on homes for sales and 90 of them, or 62%, were on homes with at least one other offer, up from 52% in July.
According to Joyti Goundar, things are crazy on the West Side and in the San Gabriel Valley: there are so many multiple offer situations that sellers are able to dictate terms.
Joyti recently submitted an offer on a home near Marina Del Rey with three beds, two baths and 1,200 square feet that was listed for $675,000. Our client offered:
â˘Full price
â˘~30% down
â˘17-day appraisal contingency
â˘12-day inspection contingency
The listing agent told Joyti there were 14 offers and countered with:
â˘$735,000
â˘No appraisal contingency and the buyer pays the difference if the appraisal comes in low
â˘7-day inspection contingency and the home is sold as-is: the seller wonât make any repairs or give any credits
Thatâs the only statement with which I have a problem
I’ll add that as hot as it is in CV, there were only two of the 31 that paid over list price. One of the FHAs paid $6,000 over, probably for closing costs, and the other paid $20,000 over – both were in the ultra-hot $700,000s.
In areas where investors are competing with owner-occupiers, we’ve seen plenty go for 10%-20% over list price, so for CV September buyers to temper their angst enough to not go crazy over list is smart.
The buyers I have are being very patient – I’ve had people waiting all year that haven’t bought, but the blog may be a contributing factor. Who’s idea was the blog anyway?
I wonder if glenn is discouraged by those redfin stats – they must have only sold 20 homes last month in the entire southland? Klinge Realty has outsold SD Redfin this year by almost 2 to 1.
The State Bar of California, alarmed by the number of lawyers preying on vulnerable homeowners, today identified 16 attorneys who are under investigation for misconduct related to loan modification.
http://calbar.ca.gov/state/calbar/calbar_generic.jsp?BV_SessionID=@@@@2061885880.1254289706@@@@&BV_EngineID=ccccadeiefghemhcfngcfkmdffidfnf.0&n=96395&cid=10144
I am in the camp that believes Carmel Valley prices are not going to drop as fast or as hard as other areas in San Diego. I hope for you buyers I am wrong. Having watched the area for years, I don’t see it happening.
I get why people want to live there. I used to be one of them.
I have come to terms with the fact that there are a group of people in San Diego who actually CAN afford to live there. There is also added competition from renters waiting on the sidelines for years.
ONLY 3 BUYERS HAD LESS THAN 20% DOWN PAYMENT
“Only four sold for less than they bought”
I guess nobody paid any commission to a real estate agent.
How about taking 6% off any price then compare to the original purchase price.
Finally the tsunami has arrived! Seems the local oceanic version was as imperceptible as the real estate version.
“Finally the tsunami has arrived! Seems the local oceanic version was as imperceptible as the real estate version.”
Tell that to the people in Samoa.
Hardly new news right here; loan mod’s aren’t working.
http://www.cnbc.com/id/33093913
Okay Blur, I said “local” and played off of a few other entries above and before the scale of death was widely reported.
If you want to get to the terrible reality of human suffering every day consider there’s another +300 dead in south east asia from a hurricane just today. And +75 more in Indonesia. Also about 115 people die in the US everyday from car crashes. 223 troops have died to date in Afghanistan this year. Last I read 111 dead in Samoa. And let’s not forget 230,000 who died in the Boxing Day Tsunai.
Guess nobody should use “tsunami” in the least for 1/4 million people who died 5 years ago, right?
It was an 8.0 earthquake and several hundred people died. That would be lucky.
How commonly do quakes occur down here, out of curiosity?
Why are you so callous Mozart? Maligning the dead is very poor form.
…and a 7.6 hits Indonesia. Yikes.
Actually I think he’s pointing out that we’re trivializing the deaths of millions when we fixate on the death of hundreds as an anomaly. The same way the media will spend weeks reporting the deaths of a dozen people under special circumstances and lawmakers are up in arms about passing a new law ASAP when they’ve been twiddling their thumbs over bigger things that kill hundreds or thousands every day. It’s a bit hypocritical when you take it to that extreme.
Detroit can’t even bury their dead.