The median prices for January are out and all over California the median is falling. But are prices in the IE falling? If they are it's certainly not in the areas I track. Prices are pretty much the same as they've been for a couple of years now. I see a few homes sell for less than I thought and then a few sell for more but overall the average has been remarkably stable for quite a long time. The reported median price is, and has always been a poor indicator of actual prices. In 2007 when the market was falling apart at the seams the median was climbing to record highs. But that was because all the low end sales went away, not because values were going up. I think we are seeing a similar thing right now. With the end of the tax credits and tight financing the high end is getting pummeled while the low end is still busy with investors and first time buyers. The mix is moving towards the low end.
This is gonna be an interesting year. The government seems to have had enough and seems to be losing interest in saving the underwater homeowners. They seem to want out of the mortgage business based on their latest reports on fannie and freddy. Who know what the banks will do next. Will they fire up the foreclosure engine, or continue to let people live rent free for years on end. Will inflation take off? What are interest rates gonna do? Either way I think the IE is pretty well scraping the bottom. We are back to rental equilibrium, and nearly back to income equilibrium. So by most tradition measures home prices are back to where they should be in the IE. If the employment numbers ever get back to a reasonable level we might come out of this mess sooner than most areas.
4 comments:
Any more softness in IE home prices will be tied to more softness in the economy. Otherwise, I think the IE home price correction is now in the rear view mirror.
Your right, median is very misleading!
I have over 15 short sale files with the oldest I have been working since 2009. We don't move on the short sale until we get an NOD, until mid December I had clients that had not paid as long as 18 months without having received a NOD. Since then every file has received paper and is in the active foreclosure process.
Since QE2 did nothing for the banks the banks started unloading.
I expect this to be the foreclosure bubble we have been waiting for. That is until the government sees the impact to the economy and housing prices, then they will manipulate the market further and delay the inevitable.
Take care!
RJH
Short sales....don't get me started. We were in a deal early last year for a short sale. We got jerked around for a while but everything seemed to be moving along just fine. Then one day my agent calls and says the lender has decided to foreclose! WTF??? So they foreclose about a month later and were willing to take $60k less than the short sale deal on the courthouse steps. Where is the sense in that?
I still don't think the banks will unload in bulk. They have to trickle them out there's just not enough qualified buyers out there to absorb a large amount of inventory.
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