Another Look at September Sales

    Yesterday's DataQuick report showed Southern California home sales up 65% from a year ago, but the total 20, 497 homes sold was still --apart from last September's record low-- the worst September since 1996.

That month, 17,443 homes were sold in Los Angeles, Orange, San Diego, Ventura, San Bernardino and Riverside counties. Prices were firming in that fall of 1996, according to a Times story. But the article quoted a real estate agent saying many who wanted to sell their homes then weren't doing so because they felt they could not get prices that would cover their outstanding mortgages.

     The median sales price that month was $152,000, according to DataQuick.  DataQuick's records show median sales prices went up and down slightly each month after that, until 1999, when they began an eight-year climb.

Peter Y. Hong

Comments

[Steve]

This is the bottom, watch the Feds will make banks reduce mortgage rates as a trade off to get cash. Within 2 months mortgage rates will be in the low 5s, maybe below 5.

[Rational Renter]

Steve, will they force them to hand larger mortgages out than people can afford? If not, interest rate cuts will be nothing but a blip on the radar. There is no stopping this train, short of straight-up price fixing or government-mandated lending quotas. But I could see the latter actually happening.

[24larry]

The depression is hereto stay,
The BUSH group saying the problem with consumer spending being down to Zero, that the problem is the consumer cannot get loans. Because banks are over loaded with debt...NOT TRUE
This is not the way to solve a problem just a way to show loyality to business in a backwards way.
If you have a store any kind of store and BUSH says I will loan you ,give you all the money you need. this will NEVER make this store a BUSINESS. THE only thing that shows weither the store is a business is sales ,sales and real profits over and above expences.. the BUSH method to ignore consumer spending ,the root cause of no spending is the complete down fall of this escapade.
If mass jobs works had been implemented, spending would have increased. fewer home forclosers , more auto sales etc. HOW DO YOU RUN an economy without very strong consumer sales, and THESE MUST include lower half to make it work..JOBS work programs is the answer the only answer

[srla]

It always amazes me how people will thoroughly research a $1,000 stock trade and have the discipline to avoid buys where the P/E ratio is out of whack, yet when it comes to housing, these same people seem utterly unable to apply the same market analysis and become strictly emotional buyers.

Why on Earth would this be the bottom? Interest rates have remained at near historic lows for the last few years, and despite this, prices have been plummeting. The mechanism behind this price decline is easy to understand - once double-digit price escalations subsided, people lost the incentive to take extreme measures to buy into an inflated market, and prices began their free fall.

Prices will only stop their decline when either they again become truly affordable (and we have over 100 years of data to give us an idea of what the market considers affordable) or when the government steps in with price controls. The latter scenario is a bit draconian and seems unlikely at this point.

Currently, supply far outstrips demand, and it is still far more expensive to buy than to rent. Logic (and basic economics) therefore dictates that we are a long way from a bottom.

Of course, if you choose to make your housing decisions based on "gut instinct" or emotion rather than actual economic analysis, best of luck to you.

[srla]

I forgot to mention Peter Hong somehow missed the true headline of the Dataquick story - that the average price plunged to $308,500, down a staggering 33% decline from just one year ago. This is far bigger news than a rather inconsequential rise is the number of sales, wouldn't you say?