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May 17, 2006
The housing slowdown that's already begun in other parts of the country is catching up to the Golden State. Home sales in Southern California fell 16% in April, their steepest decline since 1995, according real estate market researcher DataQuick. Prices, meanwhile, while still up 9% year-over-year, fell .2% from March to an average of $485,000. “March and April have shown us that the boom phase of this cycle is behind us," said DataQuick president Marshall Prentice. "Now it’s just a question of how the cycle ends. Right now it looks like changes in the real estate market are happening gradually. But there’s a lot of uncertainty among analysts regarding the effect of higher interest rates and how fast the economy is generating demand in regional markets.”
The DataQuick data illustrates the delicate psychology in place in housing markets. "Right now sellers are sticking to their price," Los Angeles Realtor Brock Harris says. "We’re seeing a lot of over-optimistic sellers and increasingly cautious buyers. That’s keeping a lot of inventory on the market." How might that change? "At some point someone’s going to drop their price. People will see that as the new comp and it’ll be a domino effect."
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Don't even THINK of buying Real Estate until 2008 - when distressed ARM borrowers will capitulate en mass!
Posted by: Sam at May 18, 2006 12:58 PM
Increasing inventory without sellers refusing to drop prices so nothing moves is the first part of a class bubble implosion per Case and Schiller. This is what happened in 1989 too. Since nearly 20% of homes in the US were purchased for speculation last year, if prices fall, even a little bit that portion will likely go back on the market very quickly. And if foreclosures rise, say due to ARMs resetting by the millions in 2007-8, that inventory will go on the market. And foreclosures are rising very quickly now and prices are falling. It won't be in the US noosepapers until it's absurdly obvious, because the bulk of their ad revenue comes from the real estate industrial complex, but fun facts do appear in other English language newspapers:
I urge interested parties to go check UK or Australian media online every time they read the line "soft landing" being parroted by US media!
Posted by: Dave at May 19, 2006 02:29 AM