Click here for Dataquick’s latest press release – some excerpts:
La Jolla, CA—Southern California home sales dropped in October to their lowest level in three years amid doubts about the drawn-out market recovery, tight mortgage lending policies and expired government incentives. The median price paid for a home rose on a year-over-year basis for the 11th consecutive month, but at this year’s slowest pace, a real estate information service reported.
“In addition to a lousy economy, the housing market still has a couple of nasty bottlenecks it has to contend with. First, sales of newly-built homes are at a low, mostly because builders can’t build at a low enough price to compete with the inventory of resale homes, many of which are short sales or foreclosures,” said John Walsh, MDA DataQuick president.
“Also, lenders still haven’t opened the mortgage money spigot for buying move-up and prestige properties. These properties have come down in value by about half as much as entry-level homes. But trying to finance a higher-end purchase can be a real grind, even for well-qualified buyers with a 20 percent down payment,” he said.
High-end sales would be stronger if adjustable-rate mortgages (ARMs) and “jumbo” loans were easier to obtain. Both have become much more difficult to get since the the credit crunch hit three years ago.
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Hopefully some day it will occur to these ivory-tower types that the main problem today is that the current home sellers are asking too much – that’s why sales are lagging. As long as you qualify, banks are happy to give you a mortgage, although, yes, they may put you through a bit of a “grind”. But what do you expect? Mortgage underwriters are running scared, and they are double-checking every file.
The banks have money – if the list prices were closer to recent comps, there would be more sales.
The data backs me up, but it’s the numerous stories heard here and elsewhere about how ridiculous elective-sellers are being about their pricing. They insist on tacking on the extra 10% to 20% to their list prices with no justification or comps to back them up – and the listing agents go along.
Today’s data tidbit:
Active SD detached and attached listings: 12,157, with list prices averaging $332/sf.
October SD detached and attached solds: 2,412, averaging $238/sf.
A pricing difference of 39% between actives and solds!
I kills me how these articles always leave out the “other side of the story” like overpricing. Or the fact that most new homes are built in geographically undesirable areas too far away from job centers.
The money spigot line for move up buyers is hilarious. The problem isn’t the money spigot, the problem is lack of equity and pricing in the move-up areas is still too high for most of the current entry-level homeowners.
It’s always some OTHER factor at fault rather than poor pricing, lousy housing stock or lousy location.
The data that trips me out is the “average” price of about $330K for LA and SD homes. Even double that amount would seem low to me.
Not only do the banks have money, they’re lending it at record low rates. So it’s pretty clear the only thing standing in the way of sales is price, which is going to have to come down.
In October 2009, list prices were at least 10% higher than they are now (at least in my area of Mission Hills). Still more houses sold last year than this year and for more money. Prices, both list and sold, are down this year and I think that is an important thing to discuss.
I’m not buying that, not in Mission Hills where every house is very different.
Last year most areas had that spurt in September and October.
MB Mike: That figure is for both detached and attached, which may be why it seems low. Small condos in terrifying areas count the same as big houses in nice areas.
I expected there would be a big difference in pricing between actives and solds, but not THAT much. Wow. Reality check time.
Not much diff between houses and condos though:
Detached:
Active listings: 8,169 – avg $333/sf, and 101 DOM
October Solds: 1,558 – avg $244/sf, and 67 DOM
Attached:
Active listings: 3,992 – avg $330/sf and 97 DOM
October Solds: 854 – avg $226/sf and 79 DOM
Re the lending grind: Was anyone around in the 1970s to buy a home as I recall it was come up will all bank and credit card bills so the loan officer could view them. It would be interesting for a semi-old timer to compare today to the 1970s in terms of the grind. Yes if you compare it to just make up your income in a NINJA loan its a grind, but that was just dumb even then.
JtAR: We were referring to median price, although the similarity in $/sqft is indeed interesting. I didn’t expect the volume of actives to be so much lower than detached either; probably due to living in LA for so long.
Thank you Lyle.
Qualifying for a mortgage today is the same as when I got into the business in 1984, with two exceptions:
1. No more 10% down EZ-qual neg-ams at Great Western/Home Savings.
2. No buy-and bail candidates today.
But as far as the qualifying hoops, they are identical to the 1980s.
@Lyle: I was buying and flipping property here in L.A. between 1974 and 1979. It was very easy to get loans. I didn’t have a great income and the banks required 10-20% down but I could turn right around and get an equity loan for rehabing. Of course home prices were much lower, I was much younger and I had a great realtor who showed me the ropes!
Jim, what did you think of the UT article from yesterday?
http://www.signonsandiego.com/news/2010/nov/15/san-diego-housing-faces-85-price-reduction/
But as far as the qualifying hoops, they are identical to the 1980s.
That’s a GOOD thing!