iceman writes:
In other news, the Washington Generals have had an infinite increase in their winning percentage with their recent victory over the Globetrotters. A spokesman said, "This is clearly a franchise on the rise."

The Washington Generals have a 1-58 record for 2008.
iceman | 05.20.08 - 2:23 pm | #

MouseJunior writes:
Prices around here still need to go down before they hit anything approaching affordable for the vast majority of the people who live here, at least if they don't want crushing commutes or communities that have serious crime issues.
MouseJunior | 05.20.08 - 2:24 pm | #

Shnaps writes:
bacon dreamz, you better buy now or be priced out forever...
Shnaps | Homepage | 05.20.08 - 2:26 pm | #

iceman writes:
I mean, seriously, ... its good to see that the staff from Pravda found jobs in the West.
iceman | 05.20.08 - 2:28 pm | #

Parity writes:
The Dow down over 200 for the first time in weeks and only 122 visitors online? Something is wrong, I tells ya, very very wrong.
Parity | 05.20.08 - 2:28 pm | #

ShortCourage writes:
I thought the Bay Area was supposed to be a leader. In the housing bust, we're way behind the rest of the country.
ShortCourage | 05.20.08 - 2:42 pm | #

Bob Dobbs writes:
Or does this simply mean that the banks have gotten serious about moving REO property?

And will it lead to further foreclosures as property values for nearby homeowners in Solano and Contra Costa as their home values continue to drop and their mortgates reset?

This answers no questions for me.
Bob Dobbs | Homepage | 05.20.08 - 2:42 pm | #

Bob Dobbs writes:
should have read:

"And will it lead to further foreclosures for nearby homeowners in Solano and Contra Costa as their home values continue to drop and their mortgates reset?"

This morning, even coffee didn't help.
Bob Dobbs | Homepage | 05.20.08 - 2:44 pm | #

jim a writes:
Isn't this just a normal seasonal change? I mean has there EVER been a year when April sales were lower than Februrary?
jim a | 05.20.08 - 2:45 pm | #

SS writes:
The low end inventory has dried up in the Santa Cruz mountains and buyers are beginning to sniff around as the rent vs own equation comes back into line. I'd figure there's another 10% or so that could come off but it will probably take some additional exogenous event -- Silicon Valley layoffs en masse -- to push things further.

Just me $.02...
SS | 05.20.08 - 2:48 pm | #

Rob Dawg writes:
...indicating that mortgage availability is improving and that an increasing number of fence sitters have decided they like today's lower prices, a real estate information service reported.
And in other news the barnyard crow issued a press release claiming not only credit for the sun rising but for the increasing length of daylight as well.
Rob Dawg | Homepage | 05.20.08 - 2:51 pm | #

Alec writes:
This report is odd, Bay area is down 15% YoY and they tout that sales finally went up sequentially at the start of selling season?? Really??

Much like in Phoenix, the question is more a matter of whether this is the start of a trend or a one off due to fence sitters.

This also illustrates that the problems are now moving towards higher end locations where both volume & median prices are dropping in a hurry.
Alec | 05.20.08 - 2:53 pm | #

jg writes:
SS, those layoffs will be coming later this year, as credit continues to dry up, the market tanks and takes with it appetite for IPOs and secondaries, and as venture capital investing continues to move down (as it did in Q1).
jg | 05.20.08 - 2:53 pm | #

barely writes:
EVERYONE - please forward these statistics to your elected representatives, so there's little tiny bit of data to dispute Dodd & Frank when they press for anti-market based legislation force fed by the lending cabal lobby. When markets are allowed to work they will, eventually.

We are close. Distressed sales will supply a real floor.
barely | 05.20.08 - 2:55 pm | #

Cal writes:
I think the volumes increasing in the cheaper areas are a very positive sign. Prices are falling enough to become affordable to regular people under (although still loose) regular lending guidelines.

Will prices fall further? Absolutely. But the increase in sales volume means that the market is finally starting to accept reality and that is a huge change from the previous 5 years.
Cal | 05.20.08 - 2:57 pm | #

Anonymous writes:
Anyone know of a good suave for an itching cod sack?
Anonymous | 05.20.08 - 3:06 pm | #

Cal writes:
The pending sales for the SRAR (local realtors group of the San Fernando Valley) indicate that May should "probably" beat last years sales by a bit. It already beat Aprils sales YoY, but the SFV was very hard hit last April by the subprime explosion and it took them a month to adjust (i.e. find new lenders).

What was 450-500k (the low end for the SFV) can now be had for 275-340k and foreclosure are mounting. People really seem to like foreclosures, they aren't afraid to low ball a foreclosure versus being much more reluctant to do the same thing to a homeowner.
Cal | 05.20.08 - 3:10 pm | #

John W writes:
I'm in the OC and we keep hearing the same story - how sales are up. That said, take sales and subtract REOs and short sales, and sales are way down. OC had 2150 sales (headline) in April, net sales 1,400 (not reported). Hardly impressive at all for a County of 3million people. Also, these stats don't take into account if a bank auction fails, the bank has to record it as a "sales" since they ultimately bought the home.

The truth shall set you free.
John W | 05.20.08 - 3:10 pm | #

Cal writes:
John W.

DQnews stats and CAR stats do not include trustee sales (the bank taking possession of the home) in their statistics.

There are a lot of foreclosures and that represents motivated inventory going to come on the market soon. But the uptick in sales is real, it doesn't mean prices have stopped falling. People seem really disconcerted by the uptick in sales, however mild it and localized to the bad areas it might be.

Sales don't go to zero and we could have very well seen the bottom in sales this last winter. I take it as positive signs for those waiting to buy that the pricing correction has begun in earnest.
Cal | 05.20.08 - 3:14 pm | #

John W writes:
Thanks Cal for the clarification.

There really isnt an uptick in true sales though. There are buyers purchasing distressed properties, which is not a "normal" market. A "normal" market for OC is roughly 3,000 units per month average, year over year, since the late 1980's. There are REALTORS who tout a 2100 unit sales increase as the new bottom of the market. My point is that x REO's, the true market sales are about 1400 homes this month. It may be numerically higher, but it is not a return to affordable prices and a balanced market. There still remains a great number of WTF priced sellers and unreasonable banks who will not bring their prices down to where the average income can support making a payment on these homes. I've recently spoken with $130k to $180kpy incomes who cannot afford either the 10% down bank loans, or 5% down High Cost Area FHA loans due to the high priced properties. That income is extraordinarily high relative to the general California population base who remain no closer to becoming home owners with a $500k median price. The sub $400k price point is really selling well because that's all people can afford with a fixed rate loan in the 5's. Once the median drops and remains in the mid $400k range will we return to a normal, non REO boosted sales pace.
John W | 05.20.08 - 3:25 pm | #

Topher writes:
It will be interesting to see how much more it will cost to cool/heat these homes in the future. I locked in last September at 1.049 a therm for natural gas. I just checked and the cheapest one year fixed is 1.499 a therm. Nothing like a 45% increase to heat my home this coming winter. Also, that’s a 150% increase from 2003.

Nothing to worry about, is there?
Topher | 05.20.08 - 3:34 pm | #

Anonymous writes:
Sales won't go to zero, but no way do I believe it's a bottom!
"Originally the Senate plan was to raise the limit to $625,000, but now it appears that number is down to $550,000. Also, the GSE’s would not be allowed to buy jumbo mortgages and hold them in portfolio." http://www.cnbc.com/id/24729626
Anonymous | 05.20.08 - 3:39 pm | #

barely writes:
"There really isnt an uptick in true sales though"

Of course it is. These are arms length transactions, and it shows that falling prices will drive sales activity. This is precisely why we don't need any further government meddling. It does much more harm than good.

Contact your elected representative and ask them if they think the government knows better than willing buyers how much the buyer can afford to spend. This is a healthy correction, and prices will fall further once the price discovery can get underway unimpeded by the threat of more bailout confusion by the boneheads in DC.
barely | 05.20.08 - 3:41 pm | #

salve@biteus.com writes:
hey, anounymous with the itch.
your symptoms indicate that you have scatchus-amongus disease, always fatal. your posts so far show your case is well progressed.
you might have something useful to do with your remaining time - than post on this board.

* i know,* don't feed the trolls...
salve@biteus.com | 05.20.08 - 3:46 pm | #

Cal writes:
Realtors care about volume more than prices and Buyers and Sellers care about prices more than volume.

I think we probably have seen a bottom as far as volume because pricing is adjusting. The volume got so low because of complete denial by those involved in the RE market as to the conditions. They believed (and needed to believe) that RE could only go up.

Pricing is clearly going to continue to drop. As you point out the foreclosure issue is very large and removing homeowners from the market and adding distressed sales. This process started earlier in the lower end communities and that is why they are seeing the volume increase at a time where the middle and higher end communities see volume dropping. The higher end is in denial because they can afford to be (or they believe they can afford it, they are just losing money but think the market will come back).

It is very possible we have seen sales volume bottom in So. Cal. because the cheaper areas have started adjusting sooner. The higher end will continue to slow while they stay in denial. But the adjustment is underway and that isn't a bad thing.
Cal | 05.20.08 - 3:48 pm | #

barely writes:
CAL - "The higher end will continue to slow while they stay in denial"

Once the bailouts fade early this summer Alt-A lenders will kick occupants out and that will drive prices lower, as the distressed sales accelerate in the higher priced areas. You won't be waiting long.
barely | 05.20.08 - 3:52 pm | #

Cal writes:
Barely.

I checked out the NTS for LA county this week, what stood out to me was the number of more expensive homes going into default.
Cal | 05.20.08 - 4:00 pm | #

Optimistic-Joe writes:
Sounds like it's soon a good time to buy RE again just as it has been a very good time buying the stock market for months now. (While the latter needs some rest now.)

O-Joe
Optimistic-Joe | 05.20.08 - 4:00 pm | #

barely writes:
o-joe, I think it's a good time for you to see a shrink.
barely | 05.20.08 - 4:25 pm | #

linear algebra writes:
I don't accept the assumption that an increase in sales volumes necessarily means that a market is approaching a bottom. Technical analysts of the stock market will talk in terms of bottoms, capitulations, market breadth, etc., and measuring trading volumes is part (but hardly the sum) of their analyses. Those guys are weird and I don't buy into their approach, but I respect the discipline with which they pursue it.
Here, you've got shills looking for anything to peg a story line. And even these shills acknowledge that seasonality may have something to do with it.
Cutting through the 'analysis' my takeaway on the story is that in the Bay Area you've got a 15% y-on-y decline in volumes and a 22-23% y-on-y decline in prices. That sounds about right.
You also have a valid question about the importance of monthly numbers at all (too much noise) and no basis for seeing any end in sight . . .
linear algebra | 05.20.08 - 4:46 pm | #

No Frog Speak writes:
The Bay Area is paying $11,750 a month to stay out of its market on an annual basis. From the June/July '07 peak, that market is paying $13,363 a month to stay out.
No Frog Speak | 05.20.08 - 4:48 pm | #

No Frog Speak writes:
So, will the median be $357,636 next year? Or less?
No Frog Speak | 05.20.08 - 4:51 pm | #

kis writes:
I just got a rental in a nice San Ramon neighborhood, and there are half a dozen houses for sale by the same realtor. They are all priced 20% ABOVE their 2005 WTF prices. We are talking $1.6-$1.9MM for ~4500 sqft homes. Some are vacant, and have been sitting on the market awhile. One is already in preforeclosure, with over $2MM owed (they bought at peak in 2006).

People in the nicer areas are still in denial. It is a game of chicken until a few REO/foreclosure prices set the new reality.
kis | 05.20.08 - 4:55 pm | #

El Goyo writes:
Things are looking great in Sacramento too!
http://www.sacbee.com/103/story/...ory/ 951469.html

"There are people with a lot of money who didn't buy houses two and three years ago," said Carlos Kozlowski, a Sacramento-based Coldwell Banker real estate agent. "Now prices are back to 2003 and 2004 levels. (It's) irresistible."

The bottom is in, time to buy, contact your local relitter!
El Goyo | 05.20.08 - 5:18 pm | #

barely writes:
linear algebra - I don't think anyone is calling a market bottom, especially in prices. I do think we've seen the low in terms of resale transactions. The numbers are noisy so there very well could be lower m/m numbers sometime this summer, but the trend in volume might be up. Prices have a long way to go as distressed sales upscale increase. It might even headfake the price decline readings...
barely | 05.20.08 - 5:47 pm | #

j campano writes:
This is akin to a bear market rally in the stock market. There are good number of people who think the real estate market will turn soon. They buy for a song, tell everyone what a great deal they got and then when this group gets their head handed to them we will get to the capitulation stage. It normally takes 6 years for a real estate crash to gotten.
j campano | 05.20.08 - 6:57 pm | #

mossypete writes:
I don't think the dynamics of the inner bay area are comparable to the (up until recently) fast growing areas that have sprung up like weeds in eastern Alameda and Contra Costa counties and the Central Valley. There isn't nearly the same fraction of new home construction in these communities and there are many more long time residents that are paid off or bought well within the price range that their income allows. I'm not saying the Bay Area is different - it's just further inland from where the foreclosure tidal wave hit landfall and the wave will be attenuated somewhat by the time it gets here.
mossypete | 05.20.08 - 7:25 pm | #

KnotRP writes:
I've been watching my prior Bay Area house languish on the market for what...two years now, maybe more? Bought it in 1994/5 for $275K, which I could barely afford. Sold in 2000 for $475K (already thinking, WTF, I couldn't afford to buy this...). Next owner sold in 2004 to the current owner for $675K. Current owner listed it at $839K in 2006, then dropped the price a couple times, pulled it temporarily last Xmas season, but relisted at $725K. Better house with better location on same street is listed at $625K (has been for more than 6 months), but I suspect the current owner is mentally unwilling to drop into
net loss (bring money to closing) range.
Current owner *is* a realtor; they
bought a new home to move up
to in 2006 (did a walk though, chatted with the current owner, without mentioning I was a former owner)...not sure what happened to that second house. This house isn't worth $475K even with devalued dollars....I'd sooner rent, than contemplate what it'd take to
buy it at that price.

And yet I posted previously about the family friend who bid 20% below asking and got a home in Pleasanton. I think even 20% off list is knife catching at
this point, relative to Bay Area incomes,
but some people are apparently motivated to jump in.

I think the others are right -- sales volume may have hit a local bottom, but I seriously doubt prices are near bottom yet. But this may just be like hitting the flag pole while falling back to steet level..
KnotRP | 05.20.08 - 7:56 pm | #

KnotRP writes:
Sorry - $625K should be $675K for the listing down the street....typo.
KnotRP | 05.20.08 - 7:59 pm | #

Dave writes:
Prices keep going up in desirable areas of the peninsula.

Zero foreclosures in desirable neighborhoods (Castro, Noe Valley, etc.).

Personally, with the new Google campus opening up, I don't think the prices are going to go down on the peninsula, in SF proper. Too many DINKS willing to go very high DTI.

Sucks for me.

But that's the way it is.
Dave | 05.20.08 - 8:16 pm | #

George writes:
Bay Area is VERY different.
There are problematic areas (generally crappy areas close to freeway 101, or with very problematic commute like South San Jose), and there are good areas. While the prices in crappy areas seems to fall, and we do see a lot of foreclosures there, the prices in good areas did not change much. I believe there are following reasons:

- People can afford it. There is no recession in IT in Bay Area, a lot of companies are hiring right now. People have money to pay their mortgages, and most people who buy in good areas didn't get subprimes.

- The rent went up/the interest rate is down. It costs about $3,200 a month to rent a 3br/2bath house in a decent area, while the same house, when bought, would cost you about $5,000 a month with mortgage. However since most of those $5,000 are tax-deductible (all of it if you get interest-only loan), and with typical Bay Area homeowners household income over 120K, it basically ends down the same.

- There is no space to build more inventory. Unlike Phoenix, Bay Area has already expanded to "over-an-hour-commute" borders. Further expansion does not make sense, and there is no room to build anything inside due to open space preservation laws.

- Different areas affected differently. VERY differently. The global Bay Area price condition report, which includes Peninsula, South Bay, North Bay and East Bay is as informative as median temperature in hospital. zillow.com has nice-looking reports, which are more specific.

Just my 2 cents. BTW, we recently bought a house there :)
George | 05.21.08 - 3:54 am | #

Easyenough writes:
Any chance we can switch from last year this time to "since peak"? Year over year just isn't as exciting as the old since peak. In DC that would be around July 2006 according to Case Shiller.
Easyenough | 05.21.08 - 11:53 am | #

Dave writes:
The infuriating thing about SF proper is buying into riskier neighborhoods... is risky because of the city's attitude towards "endangered minorities," "gentrification," "white privilege" and affirmative action.

Yeah, I could go in to Hunters Point, Bayview, Tenderloin, etc. but I am more worried about the city and zoning than I am the gangs!
Dave | 05.21.08 - 1:15 pm | #

Curious writes:
George,

Household incomes in the Bay Area today are lower than they were in 2000. The area's population is also lower now than at that point. Yet, home prices are three times what they were then. To me, this adds up to a bubble (since the fundamentals of supply and demand haven't shifted).
Curious | 05.21.08 - 10:35 pm | #

Dave writes:
George,

You may have a point with respect to all the condo towers they are building SOMA.

For SFH in Castro, Diamond Heights, Noe Valley, Maternal ah er Bernal Heights, I don't think so. Demographics can permanently shift, and I think they probably have in this case.

Also in Berkeley Hills. Hang around North Berkeley, notice the teeming au pairs pushing strollers around. Given zoning and seismic restrictions in Berkeley, that runup is very likely permanent. It may flatten for 10 years... but it will take a lot longer than that for wages to catch up.

I would be delighted to be completely off base. I'm usually the bear in the bull crowd.
Dave | 05.22.08 - 12:07 am | #

George writes:
Dave, I deliberately excluded SF, since I have no idea about the RE market there. We only checked South Bay, East Bay and Peninsula regions.

Curious: that's why I'm talking about _homeowners_ household incomes. It's easy to get a huge income once when the company you work for goes public, but it's generally not enough to own a home.
George | 05.22.08 - 2:12 am | #