California Shows Slow Sales in January 2007, Pricing Holds Flat
Sales volume in California was down in January 2007 12.6 percent while home prices rose 1.9 percent. These numbers may sound dry, but they tell one hell of a story. Prognosticators have been expecting housing prices to drop significantly in the state as the speculators left the market.
Instead what we see is pricing holding firm while volume remains tepid. That is allowing the market to move sideways while income catches up to housing prices and not the wholesale slaughter for those who bought in the past 2 years.
The median price of a home in the state rose just 1.9 percent to $559,640 in January from $549,460 in January 2006, according to the California Association of Realtors. Sales volume fell 12.6 percent.
Prices in the Bay Area mirrored the statewide trend, creeping up 1.7 percent to $719,320 for an existing, single-family home, the group found. That result differs from those in a report released earlier this month by DataQuick Information Systems, which found the median price of an Bay Area existing, single-family home unchanged at $640,000.
The association, the industry’s trade group, excludes data from Sonoma and Napa counties when calculating the region’s median home price, while DataQuick’s analysis includes all nine Bay Area counties. DataQuick also calculates its data by analyzing information on sales from county records while the Realtor group looks only at sales reported by members of its association. via insideBayArea.com
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Comment by steve p. on 28 February 2007:
The market is going to need to move sideways for about ten years to let income catch up to housing in California…
I also wonder about the median’s tell. If volume has fallen off a cliff, and subprime is getting shaken out, couldn’t that indicate that lower priced properties (typically bought by subprime borrowers) are not selling at all, which would actually skew the median higher?
Comment by Tom on 28 February 2007:
Steve
It very well could, but if that is the case and the subprime market is in default to the degree people were expecting, then we could also be seeing strong downward pressure on pricing in the low end market and the high end market is going strong.
You raise a great question. I wonder if there is any segmentation data on the different levels of the market in California?
Comment by calidude on 1 March 2007:
“I also wonder about the median’s tell. If volume has fallen off a cliff, and subprime is getting shaken out, couldn’t that indicate that lower priced properties (typically bought by subprime borrowers) are not selling at all, which would actually skew the median higher?”
That is correct, simple math.
Blogwriter, you’re an asswipe if you think wages are going to catch up to the current bubble pricing.