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"N. Calif home sales drop 23 percent in July"


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2010 Aug 19, 3:17am   12,831 views  68 comments

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http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/08/19/financial/f093706D36.DTL&tsp=1

Home sales in the San Francisco Bay Area plummeted 22.8 percent last month from the previous year to reach their lowest level in 15 years, a tracking firm reported Thursday.

San Diego-based MDA DataQuick said the drop from 8,771 homes in July 2009 to 6,773 homes last month came as the market adjusted to the end of federal tax credits for first-time buyers.

Last month was the slowest July since 1995, when just under 6,666 homes were sold in the nine-county region, the firm said. Sales were also down 19.1 percent from around 8,373 in June.

"There was more to last month's sales drop than expiring federal home buyer tax credits, but we think they were the main reason the decline was so sharp," DataQuick president John Walsh said. "As the boost from the credits waned, low mortgage rates just weren't enough to outweigh the weak economic recovery and low consumer confidence."

The median home price in the region declined 2 percent to $402,000 last month from $410,000 in June.

However, the median price last month was up 1.8 percent from $395,000 in July 2009.

#housing

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2   Lectrician   2010 Aug 19, 3:26am  

Yeah, well be sure and run the numbers (taxes, insurance, upgrades, upkeep) before you sign yourself up for the next 30 yrs on a property that you may not be able to unload when you need to.

3   schmitz_kris   2010 Aug 19, 3:34am  

Well, duh.

You're still doing better than the exurbs of Minneapolis - our sales are down much more significantly m-o-m. Then again, the moral fabric of California being what it is, your real estate officials are probably just lying.

4   vain   2010 Aug 19, 3:34am  

The lowest in 15 years? My realtor tool that shows how many homes have sold via property tax records shows me this year, at its pace, will be the lowest ever since they've tracked. It goes back to 1982.

Theo, which area are you looking in?

5   Cautious1   2010 Aug 19, 3:43am  

schmitz_kris says

the moral fabric of California being what it is, your real estate officials are probably just lying.

Our fabric is a loose-weave breezy summer knit and all the officials are just the optimistic types keeping hope alive. Like pointing out that the median price is UP 1.8% over last year! --but not pointing out that it's because more costly homes are going into foreclosure or being short-saled and dumped.

6   pkowen   2010 Aug 19, 3:57am  

Enjoyed this posted comment on the article:

"Sell now or be priced in forever."

7   bubblesitter   2010 Aug 20, 4:31am  

Theo says

The Job news today along with all these makes me think this winter is going to be a great time for prospective buyers like me :).

Have thought of winter 2015? :)

8   Common Sense   2010 Aug 20, 4:44am  

I believe there's a lot more to this collapse than anticipating a bottom based on the "last 15 years". Which I think is BS anyway. Lectrician is correct...the odds of capital appreciation outpacing his noted expenses, as well as, commissions and selling costs, are very bad.

9   Common Sense   2010 Aug 20, 5:28am  

Determine when the new buyer pool, controlled and limited now by sensible risk-based qualifiers, grows to equal an inevitable and exploding housing surplus. That's the strike-point.

Or...the day they announce the shipment of bulldozers to every city in America.

Disregarding Obama/GSE's deceptive holding back of shadow inventory, true equalibrium is my indicator. Yet, at 49, I hardly think real estate will hold up as a viable "investment" for the rest of my earning years. But, I hope I'm wrong.

10   CrazyMan   2010 Aug 20, 5:28am  

Theo says

The Job news today along with all these makes me think this winter is going to be a great time for prospective buyers like me :).

This winter will be the next round of knife catchers.

I think 2013/14 may be a reasonable time.

11   thomas.wong1986   2010 Aug 20, 5:33am  

dadab says

Theo says
The Job news today along with all these makes me think this winter is going to be a great time for prospective buyers like me :).

Home prices will continue to correct for some time to come. We have nearly 12 years of bubble prices to burn off. $600K may seem better today than $750K two years ago, but $400K in the future will be far better than $600K today. The magnitude of the housing bubble in the BA is often overlooked by many.

Jobless rate drops in 18 states, rises in 14
Unemployment declines in 18 states, fewer than in previous months, as job creation slows

http://finance.yahoo.com/news/Jobless-rate-drops-in-18-apf-2789684685.html?x=0

Nevada posted the nation's highest unemployment rate for the third straight month, at 14.3 percent. It took the top spot from Michigan, which held it for four years, in May. Michigan's rate, the second highest, fell slightly to 13.1 percent from 13.2 percent in June. California posted the third-highest rate, at 12.3 percent, the same as the previous month.

12   thomas.wong1986   2010 Aug 20, 5:42am  

However, the median price last month was up 1.8 percent from $395,000 in July 2009.

It will look like a hiccup when we all look back a few years from now.

13   Common Sense   2010 Aug 20, 5:51am  

Excellent graph, Thomas.Wong...given a time w/o "market manipulation" by Barney Frank, Chris Dodd and FNMA, cap appreciation held somewhat tightly to inflation. 1980 to 1995 is a good range of normalcy. Making an assumption (incorrectly) that prices have settle as of 2010, and then running the inflation line up to meet the high prices of 2006/2007, just about anyone upside down right now can expect to wait about 35 years before their asset's value once again equals the current balance of their mortgage debt.

14   Common Sense   2010 Aug 20, 6:01am  

However, due to PTSD by many who have, and soon will, endured foreclosure, bankruptcy, short-sale, and worse yet, carrying the negative equity forward themselves w/o shoving it back to the banks before the "music stops"...I don't think there will be enough buyers to keep home prices in pace with inflation. 35 years may be understating things given all the unknown human variables which don't fit in an Excel spreadsheet.

15   elliemae   2010 Aug 20, 1:37pm  

APOCALYPSEFUCK says

Bottom line: DEAD MEAT. Anyone buying a house in the next 20 years is committing suicide.

I don't believe it's that way everywhere. There are some places that are more than affordable. Just not California. People forget that there's a bit of space between California & Florida.

16   Bap33   2010 Aug 20, 2:23pm  

lol

17   Common Sense   2010 Aug 21, 12:25am  

Actually, affordability is relative. And buying a property in Woodstock, GA or Gallatin, TN (both nice areas w/quality living) may not offer much of a future return. Off the beaten path towns like these also realized over-building. Many have higher-than-average unemployment rates, and lost industry, possibly making recovery more difficult than the BA.

18   RayAmerica   2010 Aug 21, 1:56am  

Not to worry. Real estate agents are working hard to help the situation by stabilizing prices through the implementation of highly skilled and professional sales techniques. Occasionally, buyers need a slight "push" in order to get them to make a decision that is in their best interests. This little "push" helps everyone, including sellers. In the end, we all win.

http://www.youtube.com/watch?v=_tnDdCWusOU

19   onthefence5141   2010 Aug 21, 2:01am  

Just wait a couple of months - here are some spots where you can buy at:

http://finance.yahoo.com/family-home/article/110374/22-cities-in-danger-of-a-double-dip-recession

Realtors must be salivating at all those "buyers markets" being created, just keep pushing.

20   mark1inla   2010 Aug 21, 6:36am  

Sales may be down, but inventory is still trickling out. With their hands in the taxpayer's pockets, the big banks can wait a lot long than the rest of us. Count on supply being restricted for the forseeable future.

Why do you think we just experienced a mini-bubble, but none of the banks took the opportunity to dump all their properties? It would have been in any one banks interest to take advantage of the last selling opportunity likely to come in 5-10 years, wouldn't it? They're working together. Count on total frustration until something changes in Washington, where the big banks are being protected.

21   Common Sense   2010 Aug 21, 6:49am  

"It would have been in any one banks interest to take advantage of the last selling opportunity likely to come in 5-10 years, wouldn’t it?"

While the banks are stuck with growing inventories of distress and strategic foreclosures and bad loan buy-backs, they are also tightening loan qualifications on already uninterested buyers. They didn't release them because there are no buyers and no advantage gained from diluting performing home mortgages. BofA plops a foreclosure on my street at $50 less a sqft than mine...I'm quickly refinancing with anyone but them.

22   Common Sense   2010 Aug 21, 7:12am  

The banks are in pure shock. Any home "occupant" with a mortgage lein can hand the asset back to them. The banks own 100% of this mess and they're doing anything they can before the public wises up and bolts from a dead investment. Putting the homes back on the market will just decrease the values of "their" homes more. Yes, even your home is their home until it's paid off....and they don't trust that you'll put them above your kid's college fund.

23   Common Sense   2010 Aug 21, 8:57am  

If you bought a rock for $30 cash and its value plummets to $12, you're screwed.

If you financed a home for $500,000 and its value plummets to $225,000, given no lender recourse for deficiency judgments or tax consequences, the bank is screwed. Happy Birthday!

24   tatupu70   2010 Aug 21, 9:13am  

Common Sense says

If you bought a rock for $30 cash and its value plummets to $12, you’re screwed.
If you financed a home for $500,000 and its value plummets to $225,000, given no lender recourse for deficiency judgments or tax consequences, the bank is screwed. Happy Birthday!

that's a poor analogy. Better is to say if you borrowed $500k and bought stock. Then if it dropped by 50%, you can declare bankruptcy.

25   Common Sense   2010 Aug 21, 9:28am  

Unless I had taken a short-position on that stock. But wait...I was talking about our little housing problem?

26   Common Sense   2010 Aug 21, 9:34am  

But don't think there's not a huge wave of bankruptcies coming down the pike in recourse states. Let's see...carry this $200,000 in negative equity and write a check for it when I must sell or flush it without being fearful of the Jr lein coming after me later on. HAMP, HAFA, Mortgagee Letter...it's a way to divert owner's attention away from their losses while the administration and the banks try to figure how you can be both upside down and happy at the same time.

27   Common Sense   2010 Aug 21, 9:41am  

The sun is hot, Megan is a Foxx and someone is going to taking the ocean of lost value. It's either going to be the homeowner, the bank, or God forbid..the taxpayer.

28   tatupu70   2010 Aug 21, 9:42am  

Common Sense says

Unless I had taken a short-position on that stock. But wait…I was talking about our little housing problem?

exactly--just wanted to show the error in your thinking...

29   tatupu70   2010 Aug 21, 9:45am  

Common Sense says

But don’t think there’s not a huge wave of bankruptcies coming down the pike in recourse states. Let’s see…carry this $200,000 in negative equity and write a check for it when I must sell or flush it without being fearful of the Jr lein coming after me later on. HAMP, HAFA, Mortgagee Letter…it’s a way to divert owner’s attention away from their losses while the administration and the banks try to figure how you can be both upside down and happy at the same time.

keep in mind that the vast majority of largely upside down homeowners are in 4 states--florida, Nevada, California, and Arizona. Not sure if any of those are recourse...

30   Common Sense   2010 Aug 21, 9:53am  

tatupu...I love feedback. And where is the error in my thinking? I simply offered an example of what many homeowners are doing relative to being upside down in a non-recourse state and having tax relief if they lose their primary home to foreclosure. The bank takes it and they are clean.

Yet, your introduction of an off-topic stock purchase exposed an error in my thinking?

31   Common Sense   2010 Aug 21, 10:04am  

"keep in mind that the vast majority of largely upside down homeowners are in 4 states–florida, Nevada, California, and Arizona."

Yep, those were the problem children but all are also ghosts of Christmas future. If you think appraisers across this great land aren't scrambling daily with comps to support a contract's sale price, you're hugely mistaken. Short-sales are the comps with foreclosures coming soon. It's a national problem.

32   Common Sense   2010 Aug 21, 10:14am  

Like a Bowery bum when he finally understands, the bottle's empty and there's nothing left - Your Latest Trick, Dire Straits

33   tatupu70   2010 Aug 21, 10:58am  

Common Sense says

tatupu…I love feedback. And where is the error in my thinking? I simply offered an example of what many homeowners are doing relative to being upside down in a non-recourse state and having tax relief if they lose their primary home to foreclosure. The bank takes it and they are clean.
Yet, your introduction of an off-topic stock purchase exposed an error in my thinking?

Sorry--I read your post talking about a buying a rock and thought it said stock. I was just trying to illustrate that it wasn't an apples to apples comparison because one asset was purchased with cash and one with borrowed money.

34   tatupu70   2010 Aug 21, 11:01am  

Common Sense says

Yep, those were the problem children but all are also ghosts of Christmas future. If you think appraisers across this great land aren’t scrambling daily with comps to support a contract’s sale price, you’re hugely mistaken. Short-sales are the comps with foreclosures coming soon. It’s a national problem

I'm not so sure. All real estate is local as they say. There are many, many places where the bubble didn't really inflate very much and option ARMS or neg. amortization loans weren't used.

35   Common Sense   2010 Aug 21, 11:02am  

Ah, that makes sense. :) I used rock relative to housing values because they just both seem to sink at the same speed nowadays, don't ya know.

36   Common Sense   2010 Aug 21, 11:12am  

True, all realm estate is local. The temperature of the ocean off the coast of Florida isn't going to be the same as off the coast of Ireland. However...you currently have more factors than just supply/demand at work here. Sanding a few slightly oversupplied areas with a wrecking ball would be easy. But overall, there's no confidence in this administration and the threat to people's future discretionary income. We also have unemployment numbers that will most certainly remain high as long as the aforementioned threat occupies the White House. Corporations are hoarding their cash as not only a safety measure but also revenge for the voter's anti-Capitalist choice. You also have more and more people with damaged credit and those who simply are scared to get into the same problem they just emerged from. These are all national, not local. And these are most certainly going to continue chipping away at home values given inversely related supply-up/demand-down.

37   tatupu70   2010 Aug 21, 11:45am  

Common Sense says

True, all realm estate is local. The temperature of the ocean off the coast of Florida isn’t going to be the same as off the coast of Ireland. However…you currently have more factors than just supply/demand at work here. Sanding a few slightly oversupplied areas with a wrecking ball would be easy. But overall, there’s no confidence in this administration and the threat to people’s future discretionary income. We also have unemployment numbers that will most certainly remain high as long as the aforementioned threat occupies the White House. Corporations are hoarding their cash as not only a safety measure but also revenge for the voter’s anti-Capitalist choice. You also have more and more people with damaged credit and those who simply are scared to get into the same problem they just emerged from. These are all national, not local. And these are most certainly going to continue chipping away at home values given inversely related supply-up/demand-down.

I agree that unemployment is high and that has a negative effect on home prices. Not sure how you blame that on the current administration, however. Clearly it is a product of the previous one. And corporations don't make decisions to get back at voters--hopefully you were kidding there.

And keep in mind that home prices ultimately depend on supply and demand. People who were foreclosed will now rent the houses instead of owning them. It's a no net change in the supply and demand equation. Areas that were overbuilt will see price drops. But, like I said earlier, those areas are highly concentrated in Arizona, Florida, Nevada, and inland empire of California. So, I don't agree that those issues are national.

38   schmitz_kris   2010 Aug 21, 12:12pm  

tatupu70 says

There are many, many places where the bubble didn’t really inflate very much

Where? There are towns in far, outstate Minnesota with fewer than 1,000 people that had a housing bubble.

Find Avon, MN on a map, for example. The little hamlet of like 1100 or so had developers come in and build neighborhoods designed for 600+ HOMES.

Those developments are completely empty - some of them have one completed house in them! It looks hilarious.

Detroit metro area - it's DETROIT for goodness sake - place is a CRAPHOLE, yet the metro area in the early 2000s was actually sprawling/booming because of all the easy-money crapola loans - IN DETROIT!

There is this ridiculous notion that the coasts experienced a housing bubble while the fly-over states did not. DREAM ON!

39   Common Sense   2010 Aug 21, 12:13pm  

I blamed confidence, threat and revenge, not the administration directly. Reactions are sometimes far more damaging than initial actions. With 60% to 70% of the country firmly against just about everything coming out of Washington right now, The Law of Unintended Consequences is surely going to affect us all. Regarding the rentals creating equilibrium...who will be the owners/landlords? Right now there's 7 million, and growing, orphaned homes that the owners don't want and the banks won't put on the market. Some estimate this number to top 20 million if values continue to decrease while, of course, stategic foreclosures increase. I know the rest of the country...values are regressing everywhere. Trust me.

40   tatupu70   2010 Aug 21, 12:30pm  

schmitz_kris says

There is this ridiculous notion that the coasts experienced a housing bubble while the fly-over states did not. DREAM ON!

No need to dream. There are readily available statistics to demonstrate it. Certainly there are areas outside of those four states where prices went up too high, but in general, it wasn't like on the coasts.

Sorry to burst your bubble (no pun intended) but one anecdotal example of Fort Avon, MN doesn't prove your point...

41   tatupu70   2010 Aug 21, 12:31pm  

Common Sense says

Trust me.

I'm sure you're a very trustworthy fellow, but I tend to follow numbers and statistics over opinions.

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