The LA Times reports on CoreLogic's latest report on Southern California housing prices:
The region’s six-county median sale price was $750,000, down from $760,000 in May....Although median prices tend to peak in the summer, the average increase from May to June was 1.78% over the last decade....The last time prices fell from May to June was in 2010.
This is an interesting statistic. The average May-June increase is 1.8% but this year it was -1.3%. That's a pretty substantial difference: about $23,000 less for the average home seller. Adjusted for inflation, my horseback guess is that it's more like $32,000.
On the other hand, we just sold a house out in San Bernardino, and it got an offer $30,000 above our asking price within three days. So who are you going to believe: CoreLogic or your own eyes? Data or anecdata?
Anyway, I'd love to see this May-June statistic for the the past decade, and for various metro areas. I'd also like to see it adjusted for inflation. As usual, though, since I'm not a subscriber to any of these services I don't have any way of getting it.
But this is still interesting as the first statistic I've seen that suggests an absolute decline in housing prices. It was bound to come.
But this is still interesting as the first statistic I've seen that suggests an absolute decline in housing prices. It was bound to come.
Bound to come, sure. And I wouldn't be surprised if SoCal (and other, similar high priced coastal markets) are coal mine canaries given the nose-bleed heights of un-affordability they've reached.
Ultra-high priced housing markets aren't immune from corrections. In the slightest. But it seems to me their corrections tend to either A) not go very far or last very long, presumably due among other reasons to a lot of pent-up demand, and B) once the next upward cycle begins, they eventually reach ever more startling heights of costliness (going well beyond the previous cycle's peak, which scarcely seemed possible at the time).
So yes, I hope the good peeps out there enjoy the next eighteen months when they can buy a home for under a million dollars that doesn't require the plumbing and electric to be replaced. Because by 2033 or so, the median SoCal house will be going for about a million seven.
It might all depend on whether California’s population continues decline.
Does the average home seller sell her house at the median price?
Probably not, but the median home seller does.
And no, that's not a snark. It's likely that the median is more representative of the price *trend*, since the curve is skewed by the long tail on the right, and thus is not nearly symmetric around the average.
There is a CRITICALLY important piece missing for this picture. We need to see a month-by-month chart of the datum over the past couple of years.
Here in the East where I live, house prices have shot up recently, all out of proportion to any long-term bubble I can remember in my almost 80 years. I suspect that's true nation-wide. So before we try to interpret what's happening as a trend (or not), we need to see if it looks like a correction, not to a long term trend gone too high, but rather as a correction to a short-term spike in the chart.
There's been no sign of the housing market leveling off in my neck of the woods. Sure the crazy don't buy THAT house listings are sitting but everything else from teardowns, fixer uppers and turnkey are getting snapped up with a week of their appearance in the listing service.
The drought in the West may lead to migration out of that area.
How do ordinary humans live somewhere where the median home price is $750,000? I genuinely don't understand how this works. I'm pretty solidly lower-upper-middle-class and I cannot imagine having to pay that for a home. Where do your auto mechanics and school teachers and state workers live?
That's a damned good question, realrobmac. This year I moved with my wife from Southern California to a small town in the south. We did not own our home in SoCal, and the owner had raised our rent 50% over the past couple of years, and presented us with a rent increase timetable guaranteed to render us homeless within the next couple of years. And the thing is, based on prevailing real estate "values," he was doing the right and appropriate thing. The house we lived in had more than doubled in value since we'd originally moved in. We searched all of California for a place we could afford, and found nothing. So we left.
In our new home, our housing costs are less than half of what they were in CA, and we own a house that would easily have cost a million dollars in our old neighborhood. I have wondered -- like you -- how "ordinary humans" can live in California, given how much it costs. I just assumed over the years that everyone was making (a lot) more money than me, but as home values continue to rise I just don't see how the regular folks of California can do it. They must be working two or three jobs, driving 20-year-old cars, running big credit card balances and -- if they can -- drawing money out of their homes for living expenses. It makes me wonder if these economic pressures will lead to a massive breakdown in society. When people feel they have nothing to lose, why not rob banks? Or burn them?
I suspect that a big part of the answer is by staying put, possibly generation to generation. I have friend in California who works for the county, and her husband for the state. They bought their house thirty--or is it closer to forty?--years ago. I'm sure they couldn't buy it today on their income. They don't have kids, so I assume that the plan is to eventually retire and sell the house, moving to some place vastly cheaper. Had they offspring who wanted to stay in the area, the house would pass down a generation. But as it is, when they sell, that will take one more house out of the pool of housing for middle class workers, making the situation that little bit worse.
How do ordinary humans live somewhere where the median home price is $750,000?
Many rent. Many stay with parents or family into their 30s and 40s. Many bought five years ago. And many bought ten or twenty or thirty years ago. And yes, many leave. Blue states appear to have been exporting a lot of young people recently.
And some are house-poor, and save little and have financially stressed lives. And more than a few are unhoused or precariously housed.
Since I'm now living in such an area -- I could afford it by stretching to buy the house nearly 20 years ago when it was under $500,000, now fixed up houses are going for over 800,000 and over 900,000 if they are the larger five bedroom models with 2 car garages. The split foyer around the corner from my sold in a week with an asking price of 850,000.
"Housing prices drop in Southern California for the first time in a decade."
It is possible your conclusion is not supported by the data. An approximate 1% change, over a short period of time, MIGHT just reflect a change in the mix of housing being sold: for example, perhaps more transactions in a less costly part of Southern CA calumniated during the period. To be clear, I am just saying it is POSSIBLE.
My point, a small change over a short period of time is likely not adequate to make a broader conclusion....
It's also such a small change that, TBH, it could just be noise. Basically for reasons you stated but also just normal variation in what is being sold.
It could be noise. But it seems plausible there has been an actual dip given the fact that mortgage borrowing is 50% more expensive than just a short time ago. To me the more interesting question is: will the correction be substantial and long-lasting, or not much to write home about and probably pretty brief?
I'm going with the latter.
Same. It's a temporary hiccup while buyers realign their search with the new financial parameters. It's just going to shift people down the price spectrum. It won't lead to a long-term housing decline, but will probably slow the rise in prices...
Although if landlords in the housing-crunched areas keep jacking up the rent by double-digit percentages every year for the next few years, that might put more upward price pressure back on the bottom/middle of the house-buying market.
"On the other hand, we just sold a house out in San Bernardino, and it got an offer $30,000 above our asking price within three days."
Hmm, do you guys do a lot of that? Must be a pretty source of income if you flip real-estate.
Apropos of nothing, gas prices here are down to $3.89.9.
Think of the poor mom and pop gas station owners! How are they supposed to navigate this precipitous drop in prices?
Mortgage demand continues to fall: https://www.cnbc.com/amp/2022/07/20/mortgage-demand-drops-to-lowest-level-in-22-years.html
Doesn’t mention rates for jumbo loans but the conforming is still just shy of where it was when I bought in ‘05
https://www.sfgate.com/realestate/article/california-home-sales-drop-17314566.php Sales dropping, presumably that should also affect prices. After a lag I assume.