LOS ANGELES (Nov. 28) – Home sales decreased 40.2 percent in October in California compared with the same period a year ago, while the median price of an existing home fell 9.9 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.
“Financing issues have dogged entry-level buyers since early 2007, but they spilled over into the middle and upper-tier markets in the last few months,” said C.A.R. President William E. Brown. “The decline in sales at the upper end of the market contributed to a significant decline in the statewide median price as even well-qualified borrowers had difficulty securing financing.”
Closed escrow sales of existing, single-family detached homes in California totaled 265,030 in October at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 40.2 percent from the 443,320 sales pace recorded in October 2006.
The statewide sales figure represents what the total number of homes sold during 2007 would be if sales maintained the October pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during October 2007 was $497,110, a 9.9 percent decrease from the revised $552,020 median for October 2006, C.A.R. reported. The October 2007 median price fell 6.4 percent compared with September’s $530,830 median price.
“We expect further weakness in sales over the next few months as the liquidity crisis plays out,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Both the state and national economies remain fundamentally sound at this time, despite recent developments in the housing market. While there have been mixed signals in recent months, economic growth is expected to continue into 2008.”
Highlights of C.A.R.’s resale housing figures for October 2007:
- C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in October 2007 was 16.3 months, compared with 6.4 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
- Thirty-year fixed-mortgage interest rates averaged 6.38 percent during October 2007, compared with 6.36 percent in October 2006, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.68 percent in October 2007 compared with 5.56 percent in October 2006.
- The median number of days it took to sell a single-family home was 59.3 days in October 2007, compared with 56.5 days for the same period a year ago.
Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.
In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 13.9 percent, or 41 out of 296 cities and communities, showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)
Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for October may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online .
- Statewide, the 10 cities and communities with the highest median home prices in California during October 2007 were: Newport Beach, $1,575,000; Santa Barbara, $1,275,000; Cupertino, $1,033,000; Danville, $1,017,500; Los Gatos, $1,005,000; San Carlos, $927,500; Redwood City, $912,000; San Ramon, $835,000; San Clemente, $832,500; and San Mateo, $829,500.
- Statewide, the 10 cities and communities with the greatest median home price increases in October 2007 compared with the same period a year ago were: Santa Barbara, 24.4 percent; Arcadia, 21.3 percent; Redwood City, 20.6 percent; Newport Beach, 18.4 percent; San Ramon, 14.4 percent; Cupertino, 11.7 percent; San Carlos, 9.5 percent; Redlands, 8.8 percent; Redondo Beach, 8.7 percent; and Sunnyvale, 7.6 percent.
Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with about 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
October 2007 Regional Sales and Price Activity*
Regional and Condo Sales Data Not Seasonally Adjusted
October-07
Median Price
Percent Change in Price from Prior Month
Percent Change in Price from Prior Year
Percent Change in Sales from Prior Month
Percent Change in Sales from Prior Year
Oct-07
Sep-07
Oct-06
Sep-07
Oct-06
Statewide
Calif. (sf)
$497,110
-6.4%
-9.9%
-2.4%
-40.2%
Calif. (condo)
$416,210
2.7%
-2.1%
-4.6%
-31.9%
Region
Central Valley
NA
NA
NA
NA
NA
High Desert
$265,880
-2.2%
-19.1%
1.9%
-56.9%
Los Angeles
$533,070
-6.4%
-8.6%
-20.0%
-42.0%
Monterey Region
$714,550
-1.1%
1.7%
15.6%
-35.1%
Monterey County
$620,000
-10.1%
-5.3%
7.7%
-43.7%
Santa Cruz County
$735,000
3.2%
-2.5%
23.9%
-24.8%
Northern California
$373,790
-2.5%
-3.6%
20.5%
-16.8%
Northern Wine Country
$532,900
-3.4%
-9.4%
8.0%
-37.8%
Orange County
$673,770
0.0%
-1.1%
-11.3%
-41.7%
Palm Springs/Lower Desert
$323,440
-6.5%
-5.1%
16.4%
-30.1%
Riverside/San Bernardino
$344,370
-3.4%
-15.6%
15.6%
-34.4%
Sacramento
$309,360
-5.0%
-15.7%
9.1%
-30.5%
San Diego
$539,060
-3.9%
-6.2%
0.8%
-37.1%
San Francisco Bay
$810,490
3.3%
8.9%
9.0%
-41.5%
San Luis Obispo
$548,610
5.6%
-2.2%
-6.1%
1.6%
Santa Barbara County
$742,190
9.4%
-12.4%
1.0%
-29.5%
Santa Barbara South Coast
$1,325,000
-15.3%
18.8%
22.0%
-33.0%
North Santa Barbara County
$360,870
-1.9%
-18.5%
-22.2%
-23.6%
Santa Clara
$860,500
1.4%
11.0%
7.6%
-35.1%
Ventura
$650,570
-4.6%
-3.1%
-3.5%
-52.6%
na – not available
*Based on closed escrow sales of single‑family, detached homes only (no condos). Reported month‑to‑month changes in sales activity in October overstate actual changes because of the small size of individual regional samples. Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home. Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.
sf = single‑family, detached home
Source: CALIFORNIA ASSOCIATION OF REALTORS®Median Prices By Region – Current Month vs. Year Ago
Oct-07
Sep-07
Oct-06
Statewide
Calif. (sf)
$497,110
$530,830
$552,020
r
Calif. (condo)
$416,210
$405,360
$425,180
r
Region
Central Valley
NA
NA
$345,070
r
High Desert
$265,880
$271,940
$328,650
Los Angeles
$533,070
$569,390
$583,160
Monterey Region
$714,550
$722,500
$702,680
Monterey County
$620,000
$690,000
$655,000
Santa Cruz County
$735,000
$712,500
$754,000
Northern California
$373,790
$383,330
$387,560
Northern Wine Country
$532,900
$551,680
$588,330
Orange County
$673,770
$673,770
$681,340
Palm Springs/Lower Desert
$323,440
$346,080
$340,830
Riverside/San Bernardino
$344,370
$356,510
$408,170
Sacramento
$309,360
$325,550
$366,940
r
San Diego
$539,060
$560,840
$574,530
San Francisco Bay
$810,490
$784,220
r
$744,300
r
San Luis Obispo
$548,610
$519,740
$560,980
Santa Barbara County
$742,190
$678,570
$847,220
r
Santa Barbara South Coast
$1,325,000
$1,564,000
r
$1,115,000
North Santa Barbara County
$360,870
$367,860
$442,590
Santa Clara
$860,500
$848,950
$775,000
Ventura
$650,570
$681,820
$671,330
na - not available
r - revised
Source: CALIFORNIA ASSOCIATION OF REALTORS®
Wednesday, November 28, 2007
The Black Hole On The West Coast
California Association of Realtors (CAR) came out with the most recent sales numbers for the 3Q of 2007 and in case you didn't hear (or notice), sales are off 40% from a year ago. The media might portray a downturn of 5-7% as a big deal, but try 40% from last October. Most developers and public builders (in this market) are scrambling for anyone to qualify, and then they'll see which house they can afford to lose the least on, with the 'one buyer in tow'.
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Historical Real Estate Trends-Impacts and Implications
Presented by
Dr. Joseph Aluya, D.B.A.
To
Kaplan University
December 3, 2007
Historical Real Estate Trends-Impacts and Implications.
Real estate is inextricably intertwined with a nation’s socioeconomic and infrastructure development. Historically, in the United States, “Terminating” Building Society (TBS) granted the first real estate loan in 1835 (Cho, 2007). Cho stated that granting loans to individuals for home purchases originated from England in 1775 through communal solution. Individuals pooled savings or funds to purchase homes for one family, one at a time. Once, everyone within the pool buys his or her house, the pool ceased to exist. In the 1900s, exploration of real estate and the awareness of property ownership became significant to leadership in the United States.
In the United States, individual’s ownership of real estate properties peaked in the early 1920s, however, in 1929, defaults and foreclosures in real estate cascades into “Black Tuesday, October, 1929” that consequently led to recession (Cho, 2007, p.174). Explicitly, First Building Society made the first mortgage loan to Oxford Provident and Oxford Provident defaulted on the loan. Eventually, Oxford Provident negotiated a transfer of the property to another member who repaid the loan (Lea, 1994). In the 1930s to 1950s, loan-granting agencies were institutionalized and sanitized in the United States. In the 1960s, 1970s and 1980s financial innovative methodology of granting loans in conjunction with the Savings and Loans (S&L) was introduced to the real estate industry (Greenspan & Kennedy, 2005). From 1990s to present, technological situational happenstances led to virtualness, the internet, intranet, and extranet that revolutionized the real estate industry. Result of the electronic revolution and innovation led to a paradigm shift in real estate transactions. Embedded in the real estate of today, or the twenty-first century are innovative communications and electronic marketing platforms that now usurps the traditional method of conducting real estate transactions. Information technological becomes pivotal in the dissemination of housing informative materials (Drucker & Peters 2002). Drucker and Peters, succinctly proffered that in the global turbulence of the twenty-first century electronic village, no business can survive without information technology. Survivability and longevity of any business or implementation of any social program is symmetrically dependent on information technology. As a result of the significant technology changes, real estate landscape in the United States has changed forever. Real estate, however, remained core to a nation’s infrastructure and economic development (Aluya, 2007).
Real estate impacts and implications
According to Desoto (2000), why capitalistic countries in the [West] triumphed and other nations’ failed is due to mortgage loans granted to individuals for housing. In the United States, for example, real estate loans make up over 70% of the total Gross Domestic Product (GDP)-economy with nine trillion dollars worth mortgage loans infused and circulated throughout the economy (Lea, 1994). The middle income populations are substantially granted with these loans. Real estate impacts the economic infrastructures, macroeconomic and microeconomic activities of a nation. Nations’ were loans are not easily accessible to middle income populations remained underdeveloped (Nutt, 2004). Despite the present hinge on housing foreclosures in California, for example, the robustness of the United States economy remained the envy of the entire world. Extrapolating from the historical trends, the present California real estate slowdown will rebound. In California, loans are granted to middle-income earners with credit idiosyncratic risks that could fall between one to nine percentages (see Figure 1). Low interest rate loans granted to middle-income earners in California remained the encouraging elixir for real estate rebounding.
Figure 1. General assessment test.
Globally, nation’s where privatization of real estate are successfully integrated into the system are capitalistic and prosperous. Canada, France, Great Britain, West Germany, other European countries, privatization of real estate and easy access to real estate loans to middle-income earners have resulted in infrastructure development and economic prosperity. Middle-income earners or the small business owners are the engines that oil the wheels of capitalistic economy (Wolverton, 2003). Privatization and easily accessible loans to middle-income earners is not, however, the panacea for a nation’s prosperity. In a sharp contrast to the conceptualization of privatization and easily accessible loans to middle income populations, a nation’s prosperity could be construed to mean using eminent domain not to privatize properties. Take Cuba, China, and Russia, for example, social programs of governmental agencies using eminent domain to providing housing for the middle-income earners could be regarded as economic prosperity. According to Beauchamp and Bowie (2004), Milton Friedman strongly disagrees with this notion. Milton Friedman theorized that at the nucleus of stakeholders advocating social programs from proposal to fruition, profit maximization is ingrained in the system.
Conclusion
The presentation of this paper does not any way suggest that privatization of real estate and easily accessible loans to middle-income earners leads to economic prosperity of a nation. Real estate in correlation with other macro and micro socioeconomic variables contributes to a nation’s prosperity. From the 1920s, the United States noticed an economic boom due to real estate ownership which peaked; steel production and other economic activities resulted in the economic prosperities. Simply stated, the standard of living of the middle-income earners in the United States improved tremendously. Ironically, real estate foreclosures, and the aforementioned economic factotums led to recession and depression of the 1929, 1960s and the early 1990s. From the late 1990s to present, technological innovation and financial reengineering transformed real estate landscape forever (Greenspan & Kennedy, 2005).
References
Aluya, J. (2007). Housing in sub-Saharan African Cities. Bloomington, IN.
Beauchamp, T. L., & Bowie, N. (2004). Ethical theory and business (7th ed). Upper
Saddle River, NJ: Pearson Prentice-Hall.
Cho, M (2007). 180 Years’ evolution of the United States mortgage banking system:
lessons for emerging mortgage markets. International Real Estate Review 10(1) 171-212.
DeSoto, H. (2000). The mystery of capital: Why capitalism triumphs in the west and fails everywhere else. New York: Basic Books.
Drucker, F., & Peters, T. (2002). Information technology. Information Today, 19, 1-3.
Greenspan, A. and J. Kennedy (2005). Estimates of home mortgage originations,
repayments, and debt on one-to-four family residences, Fed Financial and Economics Discussion Series 2005-41.
Lea, M. (1994). Innovation and the cost of mortgage credit: A historical
perspective. Presented in the Fannie Mae Conference on Affordable Housing.
Nutt, P. C. (2004). Expanding the search for alternatives during strategic decision-
making. Academy of Management Executive, 18(4), 13-28.
Wolverton, M. L. (2003). The mystery of capital: Why capitalism triumphs in the west
and fails everywhere else. Appraisal Journal, 71, 272-274.
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