The following chart is from my friend “TC” who has been monitoring California Association of Realtors (C.A.R.) and DQNews data. C.A.R. data contains resale single family residences and new homes. DQNews data contains resale single family residences and new homes.
click on chart for sharper image
Median nominal prices in CA are now down 59% according to CAR and 54% according to DQNews – and those declines are in 21-22 months!
The Feb 2009 CAR data continues to show increasing price declines. I want to once again remind your readers that this data does not use the Repeated Sales Methodology (as Case-Shiller does) and consequently can be biased based upon the sales pool. Also of note, the DQNews data includes the sale of new homes and resales; whereas the CAR data only includes resales. Lastly, readers should keep in mind that Feb 2009 data reflects Feb 2009 closings and consequently many of these sales entered into escrow in Dec ’08 and Jan ’09 (some 90 days ago).
Taking these factors into mind, the statewide median price declines of resold homes per CAR is now over $350,000 or 55.6% in less than 2 years! These lower prices came despite mid-month data that indicated that Feb 2009 would maybe show slight price increases compared to Jan 2009 (which would be typical due to seasonality), however, instead we moved even lower. One bit of good news to report is that CA price declines are at least half way through their decline (mathematical humor as prices can’t move down by more than 100%). Of note, Santa Barbara South Coast is now probably just 1 month away from experiencing a $1 million median price decline from peak to trough – AMAZING!
Also of minor note, CA home prices in most cities have now experienced real price declines within 10% of my forecasted bottom three years ago. However, those three year old Bubble Buster Housing Forecasts were based upon higher median incomes than is now actually the case. On the bright side, they also assumed a higher mortgage rate than today’s current record lows.
My take remains the same. Unemployment is going to soar in 2009 along with foreclosures, credit card writeoffs, and bankruptcies. That will add to the inventory problems. Thus it is extremely unlikely that housing bottoms soon. I am still looking for housing prices to bottom in 2012.
Mike “Mish” Shedlock
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