Could this be a trend? Home sales up in Riverside County*

A report today by the California Assn. of Realtors says sales of existing homes were up 17.5% statewide in June from a year ago: 420,550 single-family homes were sold in June at a seasonally adjusted rate, versus 357,890 in June 2007. A big reason for the increase: bargain hunting at the lower end of the price range.

"Sales were driven in part by larges shares of deeply discounted distressed sales in many parts of the state," said CAR president William E. Brown.

The counties showing the most sales strength were, not surprisingly, those hardest hit by foreclosures. Sales in Sacramento County nearly doubled, according to CAR's seasonally unadjusted data; in Riverside County, sales jumped 75%.

This is more or less in keeping with data released last week by research firm DataQuick Information Systems. For the month of June, DataQuick reported, sales were in positive territory in the Inland Empire.

Nonetheless, by all measures prices continue to decline -- according to the Realtors, the statewide median home price declined 37.7% to $368,250 -- no doubt because all these resurgent home buyers are driving hard bargains.

*Update and clarification:

The reason the C.A.R. numbers differ from the DataQuick numbers is because C.A.R. uses seasonally adjusted data. From its report today:

The statewide sales figures represents what the total number of homes sold during 2008 would be if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Posted by Annette Haddad

Photo: Associated Press

Question? Comments? Email: annette.haddad@latimes.com

Comments

[It All Happens on the Margin]

Watch the overall vacancy rate. Many of these "buyers" are jumping out of one home (as in ditching / jingle mail / walking away) and getting into another.

A good portion of these sales are non-organic/productive growth.

That means even as sales increase, inventories may plateau, which would support the hypothesis above.

Builders overbuilt, plain and simple.

[Waiting]

Dead cat bounce?

[PotsNPans]

Peter, are we allowed to say anything about Edwards in the comments??

[jaleh]

This is so frustrating. I am in the market to buy a multi-unit property...there are so many properties on the market, and yet seller are not reducing their prices...I just found one that the seller bought it in 2006 for one million and now wants to sell it for 1.3million...see this conversation I had with the broker on zillow...brokers are totally out of touch with the real world....
http://www.zillow.com/HomeQnA.htm?zpid=20451713
have not heard from him since the last comment I made.

[SoCalRealEstateNews.com]

We already passed the bottom for sales volume last winter.

We think there's at least a 30% chance we'll pass the bottom for price this winter in L.A. and Orange Counties. In fact, we now think the odds may be better than that due to some of the positives in the Housing Bill like the first time buyer tax credit.

It also appears that the Inland Empire will lag due to both over building and the impact of high gas prices.

For details check out the 7/24 post on our blog:

http://socalrealestatenews.com

[angryrenter]

uh oh! a glimmer of hope, some good news? better get to discounting this...let's see..start with the fact that all realtors are liars, anybody who buys anything is a fool, the bottom is at least 10 years away, Lancaster/Palmdale/inland empire/ or anything not west of the 101 is a methlab/ghetto/gang infested ghost town. oh yeah, it's the ilegals/terrosists/non-anglo/governements/greedy banks/lenders fualt.

War? What war? Trillions? really?

[MyLessThanPrimeBeef]

I prefer to think it's like the hemline - in spring and summer, it goes up, and in fall and winter, it goes down.

[SoCalRealEstateNews.com]

jahleh,

Unlike the '91-96 downturn, multi family properties aren't nearly as affected this time. Back then Gross Rent Multipliers dropped below 4 in some areas--today they're still around 10.

There is money that's fleeing to multi family proprties for safety with reasonable returns. Whether or not they're right, this is keeping prices where they are. So ultimately your argument isn't just with the seller or the agent, but with the market itself.

However, many agents think they understand units when they don't, so make sure you're working with someone with considerable experience primarily in multi-family.

You're more apt to find below market properties in SFRs in this market. But that doesn't mean the numbers will work as an investment.

[Ace]

I am not too surprised. Many houses in the valley that are priced under $600k are selling within a week of going on the market.

Houses over $600k? Not much chance of selling.

[Fred]

God, all this means is that there are more future victims of this mess. No one should be buying a house right now. Even in Riverside, prices are going to be reduced significantly still. If the government really wanted to help limit the fallout of this disaster, they'd run PSAs warning people not to buy houses until prices come back into line with incomes. I'm serious about this, btw.

[Tom Lindmark]

Any idea why your numbers are so radically different from Data Quick's?

Here is what I pulled off of the Data Quick site:
California June 2008 Home Sales
July 18, 2008
A total of 35,202 new and resale houses and condos were sold statewide last month. That was up 6.6 percent from 33,024 in May and down 8.1 percent from 38,291 for June last year. Last month's total made for the slowest June in DataQuick's statistics, which go back to 1988.

Of the homes sold in June, 41.9 percent were foreclosure resales, up from a revised 40.1 percent in May and 6.6 percent in June a year ago.

The median price paid for a home last month was $328,000, down 3.2 percent from $339,000 for the month before, and down 31.5 percent from $479,000 for June a year ago. Around half the drop in median is due to depreciation, the other half due to shifts in the types of homes selling, and how those homes are financed.

The typical mortgage payment that home buyers committed themselves to paying last month was $1,543. That was down from $1,569 in May, and down from $2,319 for June a year ago. Adjusted for inflation, mortgage payments are back to where they were in mid 2003. They are 25.3 percent below the spring 1989 peak of the prior real estate cycle. They are 39.7 percent below the current cycle's peak in June 2006.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers cover all sales, new and resale, houses and condos.

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is at a six-year low. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is flat, DataQuick reported.

[mike]

jaleh:

you are dealing with investors and not desperate people when you deal in that kind of thing. if you can obtain financing at this point in time why don't you go nail some poor sap who is desperate and needs to unload a house?????

i don't know one multi-family property owner who will negotiate that much...

[IToldu2CashOut]

its not surprising that as prices plunge people will start to buy thinking they are getting a deal. What will be surprising is if prices started going up. This is good to see, because it will create a more orderly decline and will be less likely banks will fail.

[John D.]

It's hard to look at one data point and extrapolate a trend. As I recall, financing was particularly tight a year ago, which may throw the numbers off y/y comparos.

Ultimately, this is just supply/demand, probably. The prices have dropped low enough that significantly more people want to buy, but they haven't dropped low enough (particularly houses prices at or below the median) to forestall the decline in prices. I would look for prices to bottom a 6-12 mos from now.

In outlying areas, I think the bounce back in price will take a lot of time, however. A lot of people out there cannot afford to commute anymore, and -- even if they could -- there appears to have been a lot of overbuilding. In areas closer in, there is much more demand and prices have been more resilient (so far). That is consistent with previous corrections.

[dwr]

"We think there's at least a 30% chance we'll pass the bottom for price this winter in L.A. and Orange Counties. In fact, we now think the odds may be better than that due to some of the positives in the Housing Bill like the first time buyer tax credit."

I believe there's at least a 98% chance you're a real estate agent.

[Cal]

SoCalRealEstateNews.com:

A) The "analysis" presented by Alfalfa was completely shallow and flawed.

The assumption of a 36% front end ratio I won't even go too far into but Fannie/Freddie ratios are different, FHA is 31/43 on manual underwrites (Total scorecard can go higher based on compensating factors) and on top of them is the lenders own standards. But lets just assume a 36% front end is correct.

A 6% interest loan , principal and interest alone of 380k is 2278 not 2178. In reality 2178 @ 6% equates to around 363k.

For front end ratios the 36% front end ratio includes things like property tax, property insurance and mortgage insurance if applicable... Completely ignored in the calculations. The mythical 455k loan has approx .0125 of property tax a year.. ~5680 or $473 a month. Throw in whatever for insurance (lets make it cheap and round off TI to $500). So allowable 2178 for PITI would be 1678 for principal and interest (obviously as the price goes down so do the other factors, but you get the point). You get to conveniently ignore mortgage insurance because everyone has 20% down (if you've ever looked at the public records to see mortgage amounts versus sale price lately you'd know how wrong you are).

This is just a horrible case of Chinese math (common during the Internet boom as well, every company business model assumed they were going to get 1% market share in china and that equated to many billions, of course they all failed).

This analysis is so completely flawed and for you to back it saying :"When I first saw this formula, I thought of several objections, but after a while I realized most of my concerns tended to cancel each other out. Overall, it’s as accurate and logical as anything I’ve seen so far." Brings any real estate knowledge you profess up for question. The flaws are much deeper and I could go on, but you need to seriously question things more and maybe crack open a lending guideline or two.

B) This Royal "we" business is kinda annoying.

[John D.]

Jaleh --- The RE agent is actually not totally full of it about prices in Venice, etc. Only if you can find comps selling for much less would you be able to argue for a much lower price. The market does what it does. Just bc you think something is too expensive, doesn't make it too expensive. Look elsewhere.

[CD]

YOU GUYS AT THE LA TIMES HAVE NO SHAME !!!!!
It's laughable at this point.

[Cal]

Tom Lindmark:

The CAR numbers are a subset of the DQ numbers. CAR only looks at sales through the MLS, DQ looks at all sales (auction, FSBO, etc). Also I think the date ranges are slightly different (the MLS dates versus, settlement or recording dates for example).

DQ actually runs the CAR numbers as far as I can tell (CA City Chart is what gets posted on CAR.org).

Nobody has ever come out and drawn the line as to why DQ and CAR are different but from my few years of watching that is what i have gathered.

[Tom Lindmark]

Cal,
Look at the numbers. CAR says 420,550 homes were sold. Data Quick says 35,202. Someone is screwed up. Also your explanation would imply that DQ should be higher not lower than CAR.
Right now the numbers on this post seem useless.

[Cal]

Tom,

I see your question now, you are talking total number of sales. CAR sales numbers are seasonally adjusted rate not actual number of sales. The rate that sales would be at if they ran at this level for 12 months with some other adjustments thrown in. They do that so people can compare one month to another but you are relying that their seasonal adjusments are correct.

Much better to look at the raw numbers. You can see the CAR raw numbers at Dqnews.com under CA City Charts.

[Tom Lindmark]

Cal,
Oops. Bad mistake on my part. Should have noted the difference.
BUT, I still have a problem with the CAR numbers. I am not inclined to have much faith on numbers realtors are adjusting to begin with. Also, note that the DQ numbers include condos while according to the blog post the CAR numbers are single family homes.
Too much noise here to have much faith in the CAR numbers. Better to rely on the raw DQ data in my opinion.

[Ace]

While were are on the subject of mortgages:

Almost every sale in my area that I have been tracking has one mortgage for $417k and then a large downpayment of $200k+.

I almost never see sales where the mortgage is more than $417k. Two loans is very rare. Although, one person bought a $610k house with two mortgages totaling $608k. I need to get a hold of that mortgage broker!

Once this initial wave of people with large downpayments (I assume they are moving up from condos) passes, I think the sales will slow again unless the loan availability changes.

[Ace]

I meant to post this a while back and forgot.

Be careful if you are planning on renting a house or a condo. A lot of people have aparently been renting houses and then finding a foreclosure notice on their door a few months later.

Just do a quick equity check and make sure the owner has at least 70 percent equity.

I have seen a few listings on craigslist that looked very suspicious.

[sfvrealestate]

I knew this news would rile all of our bubble posters here, and I certainly didn't have to wade too far in to get Cal's statistical take or IAHOTM's two cents (what did you mean by "organic" IAHOTM?). But we're 21 comments in as I write this -- WHERE'S LAKER???