Wednesday, May 6, 2009

So Cal Housing: What Does the Bottom of the Market Look Like?

Nielsen "Blogpulse" for term "bottom of the market"

What does the bottom of the real estate market look like? Huge declines in real estate prices. (Check) Perception that it’s 100% a “buyer’s market”. (Check) Increased sales activity and multiple offers on the lower end. (Check) And finally, increased chatter speculating whether the real estate bottom has been reached. (Check)

The New York Times ran an article about the bellwether of the boom-to-bust real estate market: Sacramento, California. Entitled, “Where Home Prices Crashed Early, Signs of a Rebound,” the article recounts that prices are 50% lower than their mid-2005 peak, sales are up 45% over last year, and two-thirds of recent sales are foreclosures. Entering the fray are investors and first-time buyers for whom the “rent vs. own” equation pencils out in favor of “own”.

In "House Hunting, It’s Not a Buyer’s Market Everywhere" the Los Angeles Times chronicles how homehunting in certain neighborhoods is reminiscent of the over-heated market of 2003 – 2007: hordes of buyers at open houses, bidding wars, offer prices far above asking. This frenzied sales activity is limited to lower-priced properties, but some buyers are dumbfounded by how the media's negativity about the battered housing market conflicts with their experience of losing out on ten homes in multiple offers.

The stabilization of the housing market seems to be nationwide...

National Assn. of Realtors' index shows purchases rose 3% in March from February and 1% from a year earlier. "It's consistent with the other recent evidence of stabilization at the low end of the housing market," said UCLA finance professor Stuart Gabriel. In Southern California, the median home sale price has held steady at $250,000 from January through March -- less than half the peak median price set in 2007. [Los Angeles Times]

…Across California …

The unsold inventory index for existing, single-family detached homes in March was 5 months, less than half the 12.2 months for the same period a year ago, according to a report Monday from the California Association of Realtors. [Daily News]

…And in Los Angeles County …

Sales in Los Angeles County increased 66 percent. The median of $295,100 was 32percent below the comparable figure in March 2008 and 4percent below February's median of $308,540. [Los Angeles Business Journal]

This is not to say that we are out of the woods. If data on mortgage defaults are correct, there are certain to be many more bank-owned properties in the pipeline. Compounding the challenging environment, the commercial real estate market, which has lost 30 percent of its value since peaking in 2007, leaving many owners with no equity or facing foreclosure. But consensus is building that the base for a recovery is being laid.


Vidhya said...

This LA Times article really speaks to me! My husband and I have looked at home after home, and none of them seem to be the "deals" we are hearing so much about. Is it better to just keep renting? :(