Record Home Price Drop In Southern California
DataQuick is reporting Southland home sales log tepid gain; record price drop.
A total of 12,808 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 18.8 percent from 10,777 the previous month but down 41.4 percent from 21,856 in March 2007, according to DataQuick Information Systems.NAHB: Nation in "Mild Recession"
March was the seventh consecutive month in which sales have fallen to the lowest level on record for that particular month. On average, March sales have been about twice as high - 25,407 - as last month.
Foreclosure resales - houses sold after being foreclosed on continue to dominate many inland neighborhoods. More than one out of three Southland homes that resold last month, nearly 38 percent, had been foreclosed on at some point in the prior year.
The sharp and sudden drop of the Southland median price reflects a combination of factors, mainly depreciation, especially in areas hammered by foreclosures, and a big shift in the types of homes selling. Since last August, when the continuing credit crunch hit, sales have plunged for more expensive homes financed with "jumbo" mortgages, which until recently were defined as loans over $417,000.
The National Association of Home Builders says Nation in "Mild Recession"
“The worse-than-anticipated housing downturn, combined with systematic weakening of the labor market and rapidly rising energy and food prices, has taken a heavy toll on American consumers,” said NAHB’s David Seiders. “It’s now clear that we have entered what we anticipate will be a mild recession, running through the first half of this year, and there are substantial downside risks to this economic scenario.”
To guard against a longer and deeper downturn, Seiders said that Congress should take immediate steps to stimulate the economy through actions specifically targeted at improving the ailing housing market -- such as a temporary home buyer tax credit, modernization of the Federal Housing Administration and oversight reform for the housing-related government sponsored enterprises.
“Stimulus bills recently passed in the Senate and the House Ways and Means Committee are welcome steps in the right direction. This is one instance where prompt and appropriate efforts by the nation’s lawmakers could make a significant difference in limiting the depth and duration of the economic downturn.”
To guard against a weakening US dollar, Congress should tell David Seiders and the NAHB where to go.
Neither the NAHB nor the NAR saw these housing declines coming, but somehow they know what the answer is. The answer is always the same: more handouts to the NAHB and the NAR. Unfortunately political pandering won the day, as it typically does.
But hold on to your hats because this recession has no chance of staying mild regardless of what Congress does. See Case for an "L" Shaped Recession for a discussion of how mild this recession is likely to be.
Those thinking of buying a house now, especially in California, may want to rethink their plans. I see no reason to change the dates I set last October in When Will Housing Bottom? and Housing - The Worst Is Yet To Come. Start looking for a bottom, or at least more reasonable prices in 2011-2012.
Mike "Mish" Shedlock