California's Sinking or Soaring Home Prices
The California Association of Realtors published latest trends in year over year median single family home prices and sales. Although in aggregate, home prices rose 3.2%, the CAR Unsold Inventory Index, which measures the number of months needed to deplete the supply of homes on the market at the current sales rate. rose to 8.7 months from 4.7 months last year, pointing to pricing softness.
However, looking at CAR's localized statistics reveals anomalies galore. The glaring disparities in pricing trends across neighboring communities can only be explained by real estate professionals attuned to their local markets. For example, Burlingame's median price drop of 23% over the past year is based on the small number of transactions concentrated on the lower end of this housing market. The city itself is one California's fifth priciest community with its median price $1.31 million. Its high demand / low supply profile still makes Burlingame one of the hottest markets in the Bay Area according to the Lenore Wilkas at Burlingame based Wilkas Group. Kevin Boer claims bidding 15% over asking in Palo Alto is not enough, yet in the East Bay's Byron about 60 miles east of Palo Alto, houses are being auctioned off because there are few buyers.
Most of the local anomalies can be explained... and yes, we understand that median home price data correlates with but does not indicate whether home prices are actually rising or falling. The larger trend is in noting that the exurban areas with a lot of new development and 2003-5 investor activity were expected to have price drops. In the Central Valley and San Luis Obispo, it's been largely true. The Inland Empire - Riverside and San Bernardino Counties, and in fact all of Los Angeles has been holding up unexpectedly well. Why? Demand for California homes driven by a vibrant economy is the most likely factor.
Technorati Tags: california association of realtors, california home prices, los angeles home prices, car, .org, inland empire, central valley, california real estate
We keep writing article after article to try and keep this point in front of the real estate consumer - local stats are all that matter. The Bay Area has a vast array or real estate micro-climates.
It can be foggy in Antioch and bright and sunny in Danville. It goes deeper than community, it reaches into neighborhoods and even certain housing pockets within neighborhoods.
Getting real estate stats from USA Today or even the SF Chronicle are worthless unless you drill it down to local, local.
It's what we do 24/7.
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I completely agree that markets are hyper-local. In San Francisco, markets are at a street level in many (most?) areas. Of course there are macro-variables that affect everyone like the cost of money (and its cousin, the returns achievable on money), the employment situation, cost of materials, etc.
For me the one thing I have never understood is how a single buyer of seller can affect total housing stock in a neighborhood. One irrational action piled onto another doesn't make sense.
Perhaps what the CAR data is showing is the impact of marginal buyers going away and marginal sellers taking hold - something that can affect any and every neighborhood similarly.
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Pat,
everything I'm hearing about Riverside county is that it's flooded with foreclosures. I'm getting my info from my sister whose an agent in Temecula. My rental has dropped about 16% in value this last year, and i expect it to drop some more.
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No saturation here. The population of the twin cities as of last fall is about 2.8 million. The market area for my blog includes several small towns that are first ring burbs. Each could easily handle a blog of it's own. At last count I found 15 metro area real estate blogs and 11,900 real estate blogs. Most folks just don't stick to it. i understand why. Local blogging is not yet embraced by the real estate blogging community and here in Minnesota blogs are not encouraged in the real estate community.
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