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Housing rebound expected to take time
Economist predicts more of same for at least a year; county median price, sales fall in June
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More from BusinessIt will take at least a year before the housing market rebounds, and sales and price growth will be in the single percentage digits when it does, an economist said Tuesday.
The days of double-digit price and sales increases are gone, said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.
The housing market probably won't recover until 2008 or early 2009, he said.
"We've had the bubble, and now the bubble has slowly deflated," Kyser said.
In June, Ventura County's median sales price for new and existing homes and condominiums was $582,000 in June, down 6.9 percent from $625,000 the previous year, DataQuick Information Systems, a La Jolla-based real estate information service, reported Tuesday.
Ventura County posted the largest percentage drop in median price among six Southern California counties surveyed by DataQuick.
"You have certain areas that are really feeling the pain," Kyser said.
Sales in Ventura County fell by 27.8 percent, from 1,227 a year ago to 886 in June.
Monthly sales have not topped 1,000 since December 2006. In contrast, sales during the peak year of 2005 exceeded 1,000 every month, hitting a high of 1,913 in June — typically a busy time.
The median over the past two years, beginning in June 2005, has fluctuated from an all-time high of $630,000 in December 2005 to a low of $565,000 in January 2007. Prices basically have been flat or declining since the market peaked.
Sales have fallen more than predicted, said Mats Olson, an economist with the UC Santa Barbara Economic Forecast Project. In February, he projected about a 15 percent increase to existing home sales in Ventura County, based on historical housing cycles. Instead, sales have declined even further.
In the late '80s and early '90s, there was a sharp decline in sales and then a bounce, but there hasn't been a rebound this year.
Still, there is no reason to be alarmed, Olson said.
"Granted, prices are down 6.9 percent from a year ago, but the month over month numbers are generally flat," he said.
The June median was down 1.4 percent from $590,000 in May. The median is the midpoint, where half the sales are higher and half are lower. Tighter lending standards, increasing interest rates and hesitation from prospective buyers have contributed to declining sales and prices from a year ago.
Fallout could hurt
It's going to be painful for the real estate sector and people who sell furniture, appliances and building materials, Kyser said.
The Conejo Valley has already recovered in terms of sales volume, said Glen Scalise, broker-owner at Century 21 Rolling Oaks. As of Tuesday, there were 306 pending sales — low compared with activity in the past four years, but average for a normal market, Scalise said.
There are 1,200 listings for Conejo Valley, about a four- to- five month supply of homes based on pending sales compared with the amount of inventory, he said.
At Aviara Real Estate in Westlake Village, dollar volume of June sales was up about 10 percent from last year, said Connie Reed, corporate broker. June was a good month, but May was much better, she said. The company has about 10 percent more inventory than it did a year ago.
News is better for some
For Troop Real Estate, the median sales price in June was about $640,000, up about 5 percent from the previous year, because the company is selling higher-priced property, President Brian Troop said.
The upper end is moving considerably more than the lower end as first-time homebuyers are steering clear of the market because of tighter restrictions on subprime lending. That might change if Congress passes legislation that could increase Federal Housing Administration loan limits in excess of $600,000 for some California residents, Troop said.
"We're hoping that will come through fairly soon," he said. "If that happens, that will be a huge impact for the first-time homebuyer."
The company recorded about 340 sales last month, compared to about 380 in June 2006, he said.
Agents get part-time jobs
Though they're clearly taking a hit, most Troop agents have "hung in there," he said. Some have taken part-time jobs to fill the income gap.
In the current transitional market, the company is spending more on marketing and advertising, while other companies have cut back, Troop said.
Home sales in Southern California last month were the slowest for any June since 1993, according to DataQuick. There were 20,166 sales in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up 1.5 percent from the month before, but down 36.2 percent from 31,602 the previous year.
Most sales are out of need, not because buyers want a guest room or bigger yard, with the exception of high-end markets that are doing well, DataQuick President Marshall Prentice said.
Activity not discretionary
"We're probably pretty close to the floor' level of buying and selling, meaning that most of the activity is basic and not discretionary," he said in a statement.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,430 last month, up from $2,364 the previous month and $2,422 a year ago, according to Dataquick.
The median price paid for a Southland home was $502,000 last month, down 0.6 percent from $505,000 in May. The median is up 2.4 percent from $490,000 from June 2006.
"When people ask, when are we going to be off to the races again?' you have to say, the races have shut down,'" Kyser said.
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Posted by SmashyCrashy on July 18, 2007 at 1:19 a.m. (Suggest removal)
We are either going to have a very long period of low transactional volume and stable prices. Or a fast sharp downturn in prices with transactional volume increasing. Either people can afford their fancy mortgage or they cant, now is the time we see if they can or not.
If you look at the population growth in Ventura and consider that tremendous growth to this historic low volume in sales, you will realize that on a per capita basis things have never been this bad. Check out the number of vacants units on the market, check out the number of short sales, NOD, and lender approved sellers in the inventory (especially Oxnard, yikes). There isnt going to be some nice clean happy ending to this for Ventura. Either the housing industry (agents, loan officers, title reps, etc) gets creamed or the homeowners do. Either way it doesnt promise to be over soon.
It simply doesnt matter if we are in a time of "historic low interest rates" if the prices are at historic highs. Also, relative to the "boom" years, interest rates have increased significantly. Those people needing to refinance out of a "bad" loan do so in a much tighter and more expensive lending enviroment.
But ask a RE agent if now is the time to buy and they will always tell you "Yes!". Be smart and do your own research.
Posted by ed.fitzhenry on July 18, 2007 at 7:12 a.m. (Suggest removal)
In the past month, I have seen numerous signs in front of houses saying "For Sale By Owner." It seems even sellers are wary of realtors these days. Maybe they feel if they cut the broker commission out of the picture, maybe they will sell their homes in a rapidly declining market.
I think one or two years' time for a recovery is very, very optimistic. Buyers are wise to what happened in 2004-05, and I believe that they will wait it out until houses reach mid-1990's price levels.
"Though they're clearly taking a hit, most Troop agents have "hung in there," he said. Some have taken part-time jobs to fill the income gap."
I'm glad some of his agents have found work; having no real job skills, it must be difficult.
Posted by Jarhead on July 18, 2007 at 5 p.m. (Suggest removal)
Actually population growth in Ventura County is less than one might think, from 2000 to 2006 VC population went from 756,673 to 799,720, up 5.4% or about 0.9% per year.
Meanwhile, home prices went from $248,700 in 2000 to $582,000 today, up 132%. I for one think we have a quite a long way to go before we hit the bottom of the housing market.
You can think your friendly neighborhood disreputable realtors, assesors, shady lenders and stupid homebuyers for the runup. Maybe all the out of work realtors should check out Starbucks and McDonalds, I hear they are hiring.
Posted by AnnaWhaat on July 19, 2007 at 7:03 p.m. (Suggest removal)
Homes are not going back to the 90's prices.
It would hit the economy too hard. Would you keep paying on a mortgage for 600,000 when your home is now worth say 350,000? Heck no ! People would be going into foreclosures or letting the bank take the house back. Only to repurchase another home.
Its not going to happen. I think they have pretty much fallen as much as they are going to. Interest rates just went up again. Not good for someone that wants to wait. The only way houses will start selling again is for a drastic interest rate drop.
Posted by ed.fitzhenry on July 20, 2007 at 7:25 a.m. (Suggest removal)
"Homes are not going back to the 90's prices.
It would hit the economy too hard. Would you keep paying on a mortgage for 600,000 when your home is now worth say 350,000? Heck no ! People would be going into foreclosures or letting the bank take the house back. Only to repurchase another home.
Its not going to happen. I think they have pretty much fallen as much as they are going to. Interest rates just went up again. Not good for someone that wants to wait. The only way houses will start selling again is for a drastic interest rate drop."
Hello, Anna, foreclosures are up over 200% in Ventura from last year, and on the rise. There would be little economic impact on the economy if prices continue to fall as they are currently doing, other than for those poor fools who bought their homes in the end of 2004 to the end of 2005.
You are very hopeful in your assessment that housing prices have falllen as low as they will go. Are you a realtor?
Houses will start selling again when the market feels that the prices have reached an acceptable level. That is, when they reach mid-90's levels.
Interest rates are still historically low, with no indication that they will increase! I don't think this is playing any part in the housing market decline. People are simply wising up as to what a house is really worth. A 2 bed, 1 bath home built in 1953 is not worth $700K!!!!
Posted by ecarson1958 on July 21, 2007 at 7:46 a.m. (Suggest removal)
A person shouldn't ask advice from a Realtor for a home, a mortgage broker for a loan, or a used car salesman for a used car. They will say anything to get the uneducated person to buy their product. My brother moved to a nicer area of Texas and bought a brand new 3500 sq ft. home in a master planned community for 350K. The home would sell for 1.5 mil here. He doesn't even have a mortgage because he made so much money from his last house that doubled in 5 years. We are only beginning the long and steep decline in the gradient of the Real Estate Hill. The top was a couple of years ago. Now the bottom has a long way to go to reach. That home that sold for 250K in 2000 will reach it's actual value when it declines back to 315K this year. Maybe a little more. But the average inflationary rate of principle of all economic goods and services is the overriding value of todays house. The wages of an individuals worth and the interest rate he can get for a loan is the predicating factor for the value of the house he can afford. Not some crazy 1% loan for 3 years, interest only so he can qualify for a half million dollar loan. Get real. The average person in Ventura County realistically can only afford of loan of 150K. The rest of the money for the house used to come from savings. Good luck to all of the Brokers and Mortgage Bankers. The best is yet to come.
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