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Post by unlawflcombatnt on Feb 19, 2006 13:50:58 GMT -6
Southland's Home Sales Cool Further" Southland's Home Sales Cool Further The median price for the six-county region drops to $469,000, the lowest level since last July. By Annette Haddad Times Staff Writer
February 16, 2006
Six months of gains in Southern California's median home price were wiped out in January while sales activity dropped sharply, further signs that the region's once-hot real estate market continues to lose steam.
The statistics, released Wednesday by DataQuick Information Systems, a La Jolla-based real estate research firm, suggest that the market is making a "soft landing" of flattening prices and fewer sales after sizzling gains during the six-year boom, analysts said." Below is a chart of Southern California price changes over the last 6 months. According to the LA Times article, there has been a major slowdown in the number of homes changing hands, as well as a 2.1% decline in prices since December 2005. " Only 20,085 homes changed hands last month, down 30.6% from December and off 7.4% from January 2005, according to DataQuick. It was the lowest level of sales for any January since 2001, when the market was still heating up.
The median price for the six-county region fell to $469,000, down 2.1% from December and the lowest since July...." " The median prices in every county — Los Angeles, Orange, Ventura, Riverside, San Bernardino and San Diego — declined in January from December even though they rose from year-ago levels."
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Post by lc on Feb 19, 2006 21:59:24 GMT -6
Unlawful, since your self and myself have very diufferent ideas about how far the markets will collapse (neither of us disputes a collapse is emminent), how far do you think housing prices will fall before they bottom out?
I am predicting no more than 15%, which is very conservative as housing prices fell 50% in one year in CA back in 88' or 89'.
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Post by unlawflcombatnt on Feb 20, 2006 21:48:47 GMT -6
Loosecannon,
I'm guessing more, since prices are already down 5-6% in some Southern California areas. The previous decline you mentioned is noteworthy. At the present time I don't see any reason that won't happen again, especially if the economy sinks like we both think it will. There'll simply be less money available to purchase homes. If enough home speculator money can be channeled into housing, and the economy unexpectedly picks up, the decline might be less. But I don't think the current excessive speculative/investment buying is going to continue. In fact, I think the speculators will be the first to pull out. (I think many are pulling out already.)
Estimates vary as to how much buying is speculative/investment related. But the most believable information I've seen puts it at 35-40%. (This includes 2nd home purchases and vacation home purchases.)
It's especially noteworthy that housing starts increased by a huge amount last month. This happened when inventories were already rising, and prices were already declining. The actions of builders may be another example of "irrational exuberance" causing its own demise. Prices will go down if the supply goes up, and prices go down if consumer buying power declines.
It's difficult to say how much prices will go down. A lot depends on how much the government intervenes to prevent a collapse. But California home prices have risen 132% since Bush took office. Government calculated inflation has been 12-15% over the same time period. This means real "inflation-adjusted" home prices are 117-120% above their real value from 5 years ago. Unless there are new, unique demand factors that did not exist in the past, then homes are more than 60% overvalued.
Having read Dean Baker's assessment of the factors contributing to this price appreciation, I see no new demand factors justifying this increase. Home prices have risen above anything the so-called "fundamentals" would justify. I think a 50% correction is a definite possibility. But it's hard to believe either Ben Bernanke or the Bush buffoonocracy won't try to stick their finger in the d i k e.
(The internet Gestapo won't let me put the letters d-i-k-e together. It's nice to know the world has no greater problems than the internet usage of such a vulgar word.)
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