In the bellwether region of Southern California, home prices just keep on dropping:
In September, the typical home price for the six-county region dropped 0.6% from August to $817,316, marking the fourth consecutive month that prices declined from the prior month.
....Other measures of home prices, including data from mortgage services firm Black Knight and John Burns Real Estate Consulting, show similar or even greater declines from peak prices, providing further evidence the recorded drops aren’t a data anomaly.
And yet, here's the official measure of housing inflation for the Los Angeles region:
This is a good example of how far behind the official measure of CPI is. In reality, home prices dropped about 7% last month (on an annualized basis) but the official measure says prices are up by 10%. It will probably be 6-12 months before it catches up.
Great. So that little $1.5 million-dollar, two bedroom starter home on the Westside is now just $1.4 million. Yippee!
and does the Fed realize that there is a delay?
But the stats can be misleading. Usually the better homes are for sale in the spring/summer and now through February (Northern VA) it's the I have to sell NOW homes along with fewer buyers. Some sellers give up and pull their houses off the market until the spring if they can. There were a few listings in my neighborhood "testing the market" and now they are left holding the bag as cheaper listings will attract the buyers first (houses are very similar in condition).
Where I live, the real estate market is pretty much dead in winter; people just don't like to move through snow. I wouldn't expect that to be a consideration in Southern California.
Education considerations also drive part of this dynamic. People with children often prefer to put their homes on the market in the spring and move during the summer so that their kids can start fresh in September.
Kevin talks about numbers for September.
Shows BLS figures for August.
Claims it will be 6 to 12 months before the latter catches up.
??
It seems as though the BLS figures lag by a month. Not 6 to 12.
*Once again*, a decline of 0.6% is hardly a decline at all. It may as well just be noise. This is effing meaningless and "continue to fall" is extremely misleading. For as much shit as Kevin gives to other publications about misleading and bullshit headlines, it sure would be nice if he'd follow his own advice.
The sentence in the story before the one Kevin quoted:
"The typical Southern California home price is now nearly 6% below the all-time high reached in May, according to data released Wednesday by Zillow."
The last month was a continuation of the decline.
For some reason the story is not blocked to non-subscribers.
It’s unlikely to be meaningless given the fact that this is the fourth month in a row we have seen this. Did you miss that part? It’s roughly twice as expensive to finance a home purchase now than it was eight months ago. It would be surprising indeed if such a sharp rise in borrowing costs *didn’t* have an effect on the real estate market.
I didn't miss that part (I'm also currently in the housing finance process myself, for 3 different properties, due to life circumstance changes, so I'm in tune with prices and financial costs in addition to working in affordable housing) - but I also don't think a decline of 6% (over the course of four months, and after the well-known peak selling season) from the all-time high counts as "continues to fall."
What it highlights to me is just how little the increase in cost to finance has impacted housing prices, which further highlights just how fucked our zoning/construction regime has been for the last 50 years. Generation Me is doing just fine, but everybody who came after them (or even their cohort-mates who lost their homeownership) is getting shafted if they don't already have their life- and retirement-defining asset.
Good to know that a government measure of cost in one particular sector in one particular region in the United States is sufficient evidence for discounting national cost measurements.