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foreclosures now make up 8.3% of SoCal(ZT)

(2007-08-18 09:11:09) 下一个

SoCal home sales now 54% below peak

Many4salereuters_3Southern California home sales continued to slump in July, falling 27% from year-ago levels, and are now running 54% below peak levels reached in July 2003, DataQuick reported today. Some industry experts have warned that August sales may be even weaker,given the widening credit squeeze that has spread to non-subprimemortgages.

The only area of sales growth: foreclosed houses
,which now make up 8.3% of the Southern California home sale market, upfrom 7.7% in June and just 2.0% last July, DataQuick reports.

"The last time we had sales this slow, Southern California had beenin recession for a few years. Jobs were being lost in droves, peoplewere leaving the area and home prices fell significantly. This timearound we haven't seen that, sellers are holding out and we can onlyassume demand is building up," said Marshall Prentice, DataQuickpresident.

For the Southern California region, sales were the slowest sinceJuly of 1995. Sales were particularly weak in the Inland Empire, wheresales are down 42% from year-ago levels.

The DataQuick numbers show continued price increases in parts of theregion -- median selling price in LA, for example, inched up from$545,000 in June to $547,500 in July. But DataQuick has said for sometime now that those numbers are misleading, because lower-priced homesare not selling, creating the illusion that overall prices are rising.

"When adjusted for shifts in market mix (i.e. fewer lower-cost homesselling now), year-over-year price changes went negative in January andare now roughly three percent below year-ago levels. The declines arein the lower half of the market, while prices are flat or evenincreasing in the upper half of the market," DataQuick said.

That said, the DataQuick numbers show declining median sales pricesin the Inland Empire, and many analysts expect further price declinesacross the region: "A decline in prices, like increases, tends to beself-fulling," Michael Carney, head of Cal Poly Pomona's Real EstateResearch Council, tells the LATimes here. "If buyers see prices falling, they hold off and don't buy and cause prices to fall even further. But it takes a while.

 

Photo Credit: Reuters

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Comments

"we can only assume demand is building up"

Or we can look at the migration numbers and realize people areleaving to buy a home elsewhere, thus demand will not be met untilprices become sustainable by income levels.

It is amazing to me that these guys wont call this a bubble orirrational exuberance and say that demand was irrational. Because onceyou start looking at it from that POV your perspective on what ishappening in the market and where the market is going makes a lot moresense than trying to rationalize a slowdown when you believe thefundamentals arent out of whack.

"we can only assume demand is building up"

Yeah -- that is amazing. Especially when all the subprime lendershave dropped out of the market, and many people who could havepreviously purchased now are without loans.

The bust hasn't even begun. IMHO.

Calwrote, "It is amazing to me that these guys wont call this a bubble orirrational exuberance and say that demand was irrational. Because onceyou start looking at it from that POV your perspective on what ishappening in the market and where the market is going makes a lot moresense than trying to rationalize a slowdown when you believe thefundamentals arent out of whack."

Excellent point, and it helps explain buyer behavior during thebubble. Why would someone buy a house that they couldn't afford to payfor? Because they looked around and saw other people doing the samething and getting away with it -- refinancing repeatedly as home pricesrose, making money simply by moving into a house and paying a teaserrate for 12 or 18 months.

Take that mentality a step further, and you can see the problem forthe market right now: the best reason to stretch your finances to buythat $700,000 3-bedroom home was the belief that it would be worth$775,000 in a year, and $850,000 in two years. If you take away thatbelief, what is the point of stretching your finances to get into thehouse? Even at $675,000 or $650,000, if you take away the promise ofappreciation, you are stuck with a very difficult question: is thehouse really worth $650,000?

" . . . sellers are holding out and we can only assume demand is building up."

Sellers are holding out like Davey Crockett in the Alamo, usingcredit cards to make payments, desperately hoping the market will turnenough to allow them to get out without too much of a loss. Ain't gonnahappen. This is the Titanic, heading straight for the bottom. You livefast, you die fast.

Frankly, it serves greedy Americans right because it might forcethem to live within their means and be a little less the consumptiveconsumer. For a long time, people will have to do without the American"necessities" of I-phones, big screens, bottle service and all theother hallmarks of a silly, spoiled and foolish people.

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