DataQuick: November median home sales price down 35%

The median price for Southern California homes is now $285,000, falling below $300,000 for the first time since 2003, reports San Diego-based MDA DataQuick. Here's the Times story.

That's down 34.5% from last November, and a 43.6% drop from the 2007 peak. 

The trend of the last few months continued in November, with low prices driving an increase in sales. As has been the case for the downturn so far, the Inland Empire posted the sharpest price declines as well as the largest sales increases as buyers took advantage of low prices.

-- Peter Y. Hong

   

Comments

[MyLessThanPrimeBeef]

I know people compalin about median prices, but averages aren't much better.

Take for example this year. Earlier, we had raging inflation in the first half. Now, we're experiencing the Great Deflation.

Averaging the two, lots of inflation and lots of deflation offseting each other, you might say it' hasn't been too bad. In fact, Goldilocks year.

Yeah right.

[CompaJD]

That's good if you want to live in the desert or be shot. The descent areas are holding up pretty good. I predict in 2009-2011 we will see the steep declines in the desireable zip codes that we are currently seeing the subprime zones.

[Jeff Lebowski]

I love it. CompaJD probably equates all areas that are not on the Westside as the "desert" or places where he will get "shot," but he can't even spell "decent." Maybe you are the riff raff that you are trying to avoid....

[Nick]

I wouldn't predict nearly as steep of declines for the higher-end areas, for whatever my opinion is worth. The subprime mortgage failures got in on the front-end of the government-prolonged depression, when there was still mostly a free market, and thus were allowed to correct the most naturally. By the time the higher-end properties are in default, the socialist administration will be in full force, complete with "homeowner assistance" programs, foreclosure "prevention" laws and regulations, and more Newer Deal anti-business laws than we can even fathom currently. The government will do everything in its power to stretch what could have been a few-year painful correction and subsequent recovery into a 15+ year Depression with no end in sight.

Of course, it's not all bad news. With the way the Fed/Treasury is printing money these days and ignoring the consequences, we may well have a total currency collapse before we even to the mid-game of the Depression we're creating. If that happens, the "create inflation to solve the recession" plan will have worked, just leaving the "no more currency" plan for the policy makers to tackle. As they say, one problem at a time. :)

[jbunniii]

CompaJD is exactly right. 2007-2008 were primarily subprime mortgage resets/defaults. 2009-2011 will be dominated by the resetting of Alt-A and Option-ARM mortgages.

The most recent "60 Minutes" had a story on this second wave. They interviewed an expert who predicts that at least 70% of the resetting Alt-A's and Option-ARMs will default.

Subprime defaults covered approximately $1 trillion worth of mortgages (so far). According to "60 Minutes," the likely defaults among Alt-A's will be another $1 trillion, and the likely defaults among Option-ARMs will be another $500 million, at least.

So we're not even halfway through this yet.

Alt-A and Option ARM mortgages were much more prevalent in "desirable" parts of California, whereas subprime largely affected the less affluent regions.

Here is an updated version of the famous Credit Suisse chart that shows the schedule of mortgage rate resets over the next few years:

http://www.businessweek.com/the_thread/hotproperty/archives/imf3.jpg

What it shows is that 2009-2011 are going to be even bloodier for real estate defaults than 2007-2008 were.

It also shows that those of us waiting on the sidelines for the best prices on "desirable" real estate will be well served by waiting until 2012. Meanwhile, keep your powder dry! This promises to be the buying opportunity of a generation, if not a lifetime.

[pr]

What was missing from the story about Alt-A resets was any discussion of what the rates will reset to. Alt-A borrowers were generally decent credit quality borrowers (or else they would have been shunted into the subprime department) and with the Fed cutting rates to rock bottom the reset rates may not be that high (these aren't subprime loans resetting to 11%!). I know that mine may actually be lower than the initial 5-year rate on my loan, which itself was low because it was from 2004, before rates began to rise. It resets to 1yr CMT plus 2.75 - currently around 3.4%!!! Sure I'm at risk of rates rising in the medium term, but that's not what this story was talking about.

Option ARMs are another story, of course - heavily biased to speculators who never expected to be stuck in their flip properties for this long. Default rates will be much higher there.

[E]

"Alt-A borrowers were generally decent credit quality borrowers"

Alt-A is also where the majority of the inflated income...I mean "stated income" liars loans are hiding.

It doesn't matter what your fico score is if you lied about your income.

[E]

"Alt-A borrowers were generally decent credit quality borrowers"

that was a quote from pr @ 2:56

[la tool rental]

call me when santa monica goes down 35%

[srla]

Does anyone actually do any fact checking before posting in the "Westside holding up", etc?

L.A. County is now down 31% year on year (compared to 38% for Riverside County). This is a huge plunge that is broad-based, and prices are in free fall everywhere in the region. Have you seen just how many signs for open houses are up Brentwood, SM, and Pac Palisades lately? They smack of desperation, not of market stability.

Those of us that predicted this precise type of rapid price decline (I predicted a 60-70% decline from peak in 2006) know that the Westside will actually decline MORE on a percentage basis than the I.E., when all is said and done. Why? Because this decline was caused not by a "credit crunch" or by foreclosures, but by historic overvaluations during the bubble hysteria. Prices are in the process of reverting to historic trend levels and below (as they will overshoot due to the same type of hysteria that caused the prices to go so high in the first place).

If you are still clinging to the notion that the Westside is a magical area that will (for yet to be stated reasons) not decline like everywhere else, best of luck to you. You might want to ask yourself how such an area, which saw 200-400% increases curing the bubble, could possibly maintain these historically unjustified prices in the face of a regional and nationwide price collapse. If you can't provide and answer to this, then you might want to reconsider your blind faith that the past decade somehow represented reality in West L.A.

[SoCalJim]

Unfortunately, we have more to go to unwind the overvaluation. The westside is no exception. I know quite a few professional types who do pretty well financially and live in that area, but financial stress is starting to hit them. They held up OK w/reserves, but now with the stock market crash, a job loss here and there, and all of a sudden, the income isn't what it used to be, there is no home equity loan available b/c property values have plummeted, and savings are being depleted. Just a matter of time until they have to adjust, and until the RE market adjusts along with them and others like them. I can't understand personal consumption habits that reslt in financial ruin, but that is what is happening. A slow and painful process to repay greed that spans years.

[Nelcisco]

la tool rental says to call him when Santa Monica goes down 35%. Hell.....call me when Beverly Hills goes down 35% I'll move back to the south land.