San Diego County home prices, which were falling at double-digit rates a year ago, are now rising rapidly as investors grab the last remaining bargains and upper-end buyers find deals to their liking.
It makes you wonder a bit about their chart below, until you look at the new homes for May 2009 and compare them with new homes for May 2010. [double click for a clearer image]
Looking at it realistically, the buyer lost $77,000 if they bought a new home last May (highlighted in yellow). And now there are a lot of 600K "used" homes that are now selling for 400K. The condo sales don't make much sense unless the new units in downtown San Diego (previously selling at 600K) have been reduced to move at 250K. Just try and find a banker that will finance a condo.
The other thing to realize is that used home totals are actual, new home sales are usually 2/3's of those listed; they are counted the minute the contract is signed and a lot fail to close. Another item to take into account, the tax incentive just expired so the totals for May stole from June.
You can't fault the newspaper for printing "Good News."
11 comments:
New homes (and builders) are going to die off for many years. How can they compete with all the existing inventory and the inventory to come. There is a significant amount of foreclosures being held back by banks as it is right now. We have 5M+ more of foreclosures to come (unless the government can figure out a way to stop them). With unemployment and wages continuing to go sidewards, or further down, there is no help there for new housing.
I believe home prices will continue to sink slowly or in up and down spurts for many years to come. The new home building industry is toast.
Sad state of affairs.
Hi AIM
I agree, but I have to chuckle, whose going to believe us? No-one.
It is as you suggest, a "Sad state of affairs."
Take care
What California needs is a jolly good earthquake.
A friend of ours, who bought in 2006, is overjoyed that her property tax bill is now half of what it was.
When I asked her, "Doesn't that mean that you lost a lot of money?", I just got a blank stare.
Price don't have to rise for the median sale price to rise.
They just have to sell slightly more expensive houses, or fewer cheap houses.
Similarly, it's easy to raise the median hourly wage without giving anyone a raise: just shoot everyone who makes a very low wage. Done!
Jim
Was talking to my sister tonight about my niece and her problems with Math. Here in Novs Scotia students are required to write provincial exams at end of year and schools are ranked based on results. To get higher scores for their classes the teachers "encourage" the students who are weaker in Math to drop back to a lower level General Math. Problem is that if you want to go to university those credits are no good. However score for school goes up and problem is solved (sort of)at least for the school and teacher concerned. I wonder if there is a little of this going on here with these numbers seeing as realtors and banks need to keep pumping the market as their livelihoods depend on it. Anyway you know the old saying 63% of statistics are made up on spot.
Cheers
Hi Dearieme
We had two 5+ quakes last week--the big one could be coming, we are overdue(by 500 years).
I think a good definition of "a jolly good earthquake" is one that happens someplace else. Your in NY, so I guess it would be a jolly good one if it hit here.
Take care
Hi Anon 7:54
She's probably thinking that prices will go up again and they will, just not in her life time.
Hi Patrick
You raise an interesting point that I should have covered and didn't.
Many times I have explained just as you did in your analogy, the false assumptions related to rising median prices. Only to face their next statement, "Jim they wouldn't have printed it if it wasn't true." (do you laugh or cry)
I think that the average Joe thinks that the housing profile of sales is constant, small homes, medium homes and large homes. Right now, the small homes are not selling, and the large homes have become bargains. From this mix as you suggest, prices are up, and the chant is "It's time to buy."
A thing not given much consideration, is the fact that most wives have a nesting instinct, and want their own home. "If that no good SOB husband of mine can't give me one, I'll cut him off or divorce him." The couple will end up buying a home, hell or high water.
Thank you for your comments.
Take care.
Hi Rob
As Patrick suggests, getting rid of the low scores, brings up your averages.
We all did it in High School. The teacher would give 4 tests and let you drop the low one.
I do think that everyone desperately wants good news that this mess is all over, but that is just not the case.
To quote Mark Twain "There are three kinds of lies: lies, damned lies and statistics."
Here is hoping we can make the right decisions.
Take care.
Yes Jim as soon as you see the word "median" being used for statistical purposes you know that it is reality aversion in full swing:)
We had the American guy from GMO in Australia last week cautioning real estate investors that the market was 42% over priced. The reaction to this was fierce!!
Everyone it seemed used the term "median" to mount a defense for prices.
We will all using the word soon to express our "median" wait time in the soup kitchen line ...
cheers
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