June 2008 Archives

Greetings -

Take a look at this recent article about our California market. Not that it is one market, but many different markets from the mountains to the sea and as diverse as the landscape is in between.

This guy is way ahead of the curve. My guess is that the mainstream media will be reporting a miraculous national recovery somewhere between 7 and 12 days after our elections in November. Take a look -

California Home Market Shows First Recovery Signs, Report Says

By Daniel Taub

June 18 (Bloomberg) -- The California housing market may be showing the first signs of a recovery after three years of declining sales and two years of rising foreclosures, the UCLA Anderson Forecast said today.

While home prices in the most populous U.S. state are still weak, the number of houses and condominiums trading hands in California is rising, according to the Anderson Forecast at the University of California, Los Angeles, which released its 127-page forecast for both the state and the U.S. today.

``The combination of steep price declines, lower interest rates, and an easing of the credit crunch may now be bringing bargain hunting buyers back into the market,'' for California homes, Ryan Ratcliff, an Anderson Forecast economist, wrote in the report. Riverside County posted a year-on-year increase in the number of homes sold, he wrote.

The collapse of the subprime-mortgage market contributed to a rise in foreclosures as well as drops in home prices and sales in California. In the first quarter, mortgage defaults in the state rose 143 percent to the highest level in 15 years according to La Jolla, California-based DataQuick Information Systems.

Foreclosures likely will continue to hurt California's housing market for the rest of this year and then start to moderate in 2009, the Anderson Forecast said. While a ``normal'' housing market ``is still a long way off,'' according to the report, the increase in home sales in some parts of the state is a positive sign.

`Dim Flicker'  - ``This is the very dim flicker of the light at the end of the tunnel,'' Ratcliff said in an interview. ``I can't say that I see an unambiguous sign of a turnaround, because by the time it's unambiguous, it's already been happening three or four months.''

Southern California house and condominium sales dropped 15 percent last month to the lowest level for a May in two decades as prices plunged 27 percent, DataQuick said earlier this week. The median home price in the region was $370,000 last month. The last time it was lower was in March 2004. DataQuick is scheduled to release home-sales data for the San Francisco Bay Area today.

In Southern California, the number of homes sold dropped in every county tracked by DataQuick but Riverside, where home sales increased 4.1 percent. Foreclosure sales accounted for 57 percent of Riverside's May sales, more than any other county, DataQuick said.

In California, the ``unprecedented speed of the price adjustment means that instead of several years of slow bleeding (like the 1990s), we have compressed the necessary adjustment into two years of intense housing pain,'' Ratcliff wrote in today's report. ``Mom always said it's better to just rip the Band-Aid off.''

To contact the reporter on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net.