While the pace of existing U.S. home sales increased 7.3 percent from June to July (the biggest monthly gain “since records began in 1999”) and 5 percent year-over-year, forced sales are driving the activity (31 percent of sales in July were either foreclosures or distressed) and driving the median price down (15 percent on a year-over-year basis).
At the same time, inventory also increased by 7.3 percent, months of unsold inventory remained at 9.4, and U.S. unemployment continued to rise with California hitting 11.9%.
∙ Existing Home Sales in U.S. Jump to Two-Year High [Bloomberg]
∙ Jobless Rates Rise in 26 U.S. States; California’s Hits 11.9% [Bloomberg]
Well good morning.
It blows my mind that people look at rising home sales or rising median home prices as indicative of ANYTHING. Lies, damn lies and statistics. Rising home sales in my neighborhood can be a very bearish signal for the value of my home if those 10 sales are all bank liquidations, etc. If, OTOH, they are robust, above offer organic sales, well, that’s bullish.
As far as rising median prices, there is a lot of noise in those figures — basically, sales mix. Low end homes were the first to fall rapidly…as foreclosures and banks forced the issue. The medium-to-high end, however, fell much less in the same time frame…as sellers declined to sell (they didn’t want to recognize evolving realities). Now, with the low end leveling (for the time being — the value gap between the low end and the medium level has temporarily stabilized the low end…until, that is, the medium level adjusts…), higher value homes are now a bigger part of the current sales mix owing to more forced sales in that category. The result? Higher median home sales prices…meanwhile prices continue to fall.
Any RE experts (local) give me an idea of when we can expect 30% to 40% discounts in the main city neighborhoods (ex. Russian Hill, Marina, Pacific Heights) in the 1 to 1.5 million range ? If not, let me know what is a realistic drop expecatation from the Peak…
i.e. I wonder if I can get a former 1 million victorian for 700K or is that never gonna happen here ?
Thanks folks !
kondratieff,
Yup, mix is a big part of the equation.
Why don’t we use $/sf numbers instead of a very dodgy median? Most countries do that. It’s way more reliable.
About mix and its effect on the dynamics of the market:
The lower and upper segments appeared very different for a while, almost like 2 separate ecosystems.
The current re-alignment of the upper segment shows that both do obey to the same laws of physics: less credit, less bubble cash, slowing economy = the helium balloons have popped one by one and gravity takes over.
Chad,
So you want to see one of those $1M Pac. Heights victorians drop down to $700K? (Where are those right now)
Chad,
If you found a time machine, you could go back to 1998 and buy that prized 1M vic for 400K or 500K pre-bubble price. Certainly not in PH, but probably a decent fixer in Noe.
@sparkyb Well the Pac Heights are already out of reach I guess. Nothing less than 1.5 Million for a small (800 or 900 sq ft) stand alone victorian.
@San FronziScheme. Do you think things will ever get down to the pre-bubble price if the RE continues to be sluggish, or has it reached it’s bottom already in SF even thought rest of the country is still sinking ?
Chad,
I think the market is currently settling to a base camp on the way down from the Himalayas. Everyone’s getting adjusted to the new heights before coming down again.
I am a RE bull for the long run, but a technical bear today, as I look at fundamental instead of emotional values. I see rents coming down and prices still at 250+ rental value due to emotional reaction instead or rational. I see affordability is still abysmal in SF with some segments of the market targeted at outsiders. Bulls are hoping on inflation to prop up prices and destroy their unfortunate debt burden. A market based on hope is a bear signal in my book.
buy and sell market
fall winter solstice before
spring dawns new job homes