Median prices for the last 5 years

Here's the median prices for the last 5 years, starting with 2004 and ending with 2009. You can easily see from this chart that the correction in prices does not happen evenly across the board. Some cities are back to 1998 prices and others are still at 2003 prices. But pretty much every city in the IE is back to at least 2002 pricing.

Riverside Co.	$324,k	$387,000	$420,000	$395,000	$260,000	$187,000
AGUANGA	$373,k	$190,000	$405,250	$200,000	$260,000	$195,000
ANZA	$187,k	$250,000	$309,000	$320,000	$185,000	$167,500
BANNING	$190,k	$260,000	$300,000	$270,000	$167,000	$110,000
BEAUMONT	$260,k	$362,500	$398,000	$362,500	$270,000	$211,250
BLYTHE	$115k	$165,000	$193,000	$223,500	$198,500	$135,500
CABAZON	$145k	$207,000	$260,000	$230,000	$125,000	$58,000
CALIMESA	$258k	$330,000	$337,000	$314,000	$237,500	$158,000
CATHEDRAL CITY	$265k	$340,000	$369,000	$340,000	$218,000	$155,000
COACHELLA	$164k	$298,000	$350,000	$314,000	$202,000	$145,000
CORONA	$435k	$512,000	$578,000	$539,500	$365,000	$315,000
DESERT CENTER	$117k	$123,750	$167,500	$180,000	$105,000	$60,000
DESERT HOT SPRINGS	$175k	$257,250	$299,000	$281,250	$131,750	$89,500
HEMET	$239k	$293,000	$330,000	$300,000	$172,000	$120,000
HOMELAND	$229k	$297,000	$350,000	$387,000	$200,000	$139,500
IDYLLWILD	$252k	$309,750	$320,000	$310,000	$271,000	$195,000
INDIAN WELLS	$560k	$750,000	$840,000	$800,000	$743,409	$502,500
INDIO	$262k	$355,000	$381,500	$355,000	$250,500	$182,000
LA QUINTA	$399k	$500,000	$595,000	$560,000	$425,000	$325,000
LAKE ELSINORE	$330k	$389,250	$423,000	$380,000	$234,500	$180,000
MECCA	$97k	$151,000	$215,000	$59,000	$120,363	$70,000
MENIFEE	$347k	$408,000	$428,500	$389,000	$260,000	$205,000
MIRA LOMA	$394k	$499,000	$565,000	$456,000	$345,000	$280,000
MORENO VALLEY	$275k	$345,000	$385,000	$370,000	$190,000	$140,000
MOUNTAIN CENTER	$279k	$500,000	$440,000	$545,000	$234,000	$217,750
MURRIETA	$410k	$453,500	$473,000	$416,000	$285,000	$235,500
NORCO	$480k	$620,000	$625,000	$605,000	$425,000	$350,000
NORTH PALM SPRINGS	$50k	$82,500	$77,000	$170,200	$50,000	$50,000
NUEVO	$313k	$383,250	$425,000	$466,500	$215,500	$150,000
PALM DESERT	$340k	$400,000	$425,000	$395,000	$352,500	$280,000
PALM SPRINGS	$280k	$349,000	$397,500	$375,000	$285,000	$200,000
PERRIS	$265k	$345,000	$396,000	$358,500	$195,000	$145,000
RANCHO MIRAGE	$460k	$587,750	$660,000	$610,000	$500,000	$425,000
RIVERSIDE	$308k	$385,000	$420,000	$410,000	$256,000	$181,000
SAN JACINTO	$245k	$314,000	$359,000	$340,000	$186,000	$138,000
SUN CITY	$260k	$329,500	$374,000	$338,000	$220,000	$159,000
TEMECULA	$406k	$470,000	$489,000	$439,000	$320,000	$258,000
THERMAL	$240k	$310,000	$372,000	$326,500	$217,500	$153,750
THOUSAND PALMS	$223k	$300,000	$330,750	$285,000	$174,000	$114,000
WHITE WATER	$152k	$263,000	$289,000	$285,000	$165,000	$93,000
WILDOMAR	$364k	$439,000	$480,000	$433,000	$300,000	$235,000
WINCHESTER	$393k	$438,000	$481,500	$420,000	$295,000	$241,000

Jumped in WAY too early

Back in 2007 the real estate market was just starting to crash. There were those that believed the hype spewed out by the NAR and Greenspan about a minor correction. The froth was settling according to Greenspan. So they jumped at the first wave of foreclosures, thinking this was their chance to finally get that house. We know how that worked out......

Here's an example of one of those sales. 17179 Ironridge in Riverside is a home in the Bridle Creek tract up in Woodcrest. This is the smallest home in the tract at just under 3000 s/f. It's a nice floorplan but it is small for the area. This particular home sold new in 2005 for $660k. At the peak in late 06 they were asking close to $800k for this model but no one was buying. This home sold to the current aqua-owner in mid 2007 for $640k. I'm sure he thought he got a steal, after all that was nearly $150k less than the builder was asking. Here we are 2 and a holf years later and the current owner needs out. His current asking price probably qualifies him for a delusional seller award. But hey, might as well try to save your ass, right? His asking price is $599k. He is probably hoping to break even after costs as it says it's a standard sale. His problem of course, is that the house isn't worth any where near that much. Based on sold comps his place is worth $400k tops and I doubt he would get that as most of the homes that sold for $400k had pool and upgraded interiors. He doesn't even have a patio in the back and his counters are white tile. The interior is LOW END and the outside is just grass. There's no hope this home will sell anywhere near $600k or $500k and I think he'd have a hard time getting $400k. Makes you wonder how many more of these there are. How many of those 2007 sales or even early 2008 sales will we see going bad.

Hows this for a typical "builder basic" kitchen. No upgrades here folks!

Get a clue people, prices ain't coming back!

I've had 2 very irritating conversations in the last couple of weeks regarding prices. The first was with a realtor at an open house. He tells me this house was appraised 3 years ago for a million dollars, and now that the recession is over it will be worth that again in 5 to 10 years. Oh really? Tell me more, oh enlightened one..... Of course, this was more than I could take and the fight was on (much to the dismay of my wife).

I asked him if he expected salaries to triple or quintuple over the next 10 years?

He said "well, probably not".

I then asked him, who will be able to afford it then?

He replied, "If the home appraises for a million banks will easily loan $800k"

I ask, who in the IE that can qualify for an $800k loan wants to live in this tract?

He ended the debate with "oh, there's plenty of people out here that can qualify"

I'm sure there are, but how many of them want to live in a KB tract home in Riverside? It just amazes me how many people really do beleive prices are going to shoot right back up again. They are convinced the bubble prices were normal and that the current price point is the aberration.

The second conversation was with a person a friend introduced to me to talk about his loan mod. I'm no financial guru but I still get asked for advice. I tell em my advice is free and worth every penny!

On the surface this loan mod sounded golden. Their current loan was for for roughly $600k, an Option Arm of course. They also had a heloc for $100k that they used to pay bills, buy a car and put a back yard in (so it's all gone). They have not made a payment on the heloc in 2 years. He works in a distribution center driving a forklift, his wife is a admin assist (whatever that is). Together they make$84k (seems like a lot for those jobs but that's what he told me they made). BTW, the house is worth approx $280k, he thinks.

The original loan was a option ARM and of course they are making the min payment of $1800/mo, the payment on the heloc was $1200 but since they are not paying it I guess it doesn't matter. The only other debt payment they have is a $400/mo car payment.

Check out this loan mod offer. He gets a 25yr fixed with a payment roughly equal to his $1800/mo (before taxes). His taxes are $480/mo. So his total nut is $2280/mo or roughly 32% of his gross. Here's the kicker though, in order to make that happen they stuck a $420k forbearance on to the end of the loan (balance of the original loan, plus the reverse arm amount, plus fees and late payments). He's happy as a pig in shit. I've never seen a mod like this one and it's from some lender I've never heard of. I'm wondering if this mod is a one in a million or if they are offering up mods like this on a regular basis. If this is common then this crisis will drag on for decades as these folks default when they need to move.

I asked about what he will do if he needs or wants to move. "Oh, that will not be a problem, prices will have recovered in a few years and we will be fine". WHAT?? Are you freeking kidding me. You think a tract home in So. Corona on a postage stamps sized lot will be worth $700k in a few years. His new total loan amount is for $100k more than peak prices AND he still owes the heloc. He is trapped in a cave of debt and the foreclosure monster is just waiting for him to pop his head out.

I did not know this guy so I didn't want to argue (much), besides he seemed thrilled that he had "saved his house". I simply asked him to think about who would be able to buy a $700k house. How would they get a loan. I asked him to consider the possibility that his house would be worth about the same in 5 or even 10 years and left it at that.

For all those people out there that think prices are coming back I would offer up this nugget. House prices follow incomes. The first 7 years of the century they didn't because banks removed just about every normal requirement for loaning out money. We are back to normal (if you can call this normal). That means homes will only be worth what people can pay for them. And what should people pay? Depending on the interest rates anywhere between 2 and 4 times their gross annual incomes is the normal range.

Stopping the life support

Most bubble heads know the current real estate market is being kept alive through massive amounts of "life support" from the government. Everything from tax credits, to nearly no money FHA loans, and lets not forget that the government is purchasing the MBS's which is keeping interest rates quite a bit lower than they would other wise be.

What happens when these programs end? The first to go will be the MBS purchase program. Will Wall St. start buying these things again? With the interest rates many of these things have it's hard to say. There's also a great deal of risk in these securities. Sure they are better than the junk they were buying a few years ago, but what happens if the prices ratched down again? This program is due to end in March. The current estimates are for the interest rates to go up anywhere from .5% to 1.5% when the gov pulls the plug. When the governments stops buying these the banks have two option's, sell the loans or keep them. They can't really afford to keep them. They would quickly run out of money to lend if they had to keep the loans. But can they sell them?

Problem 2 for the market is the looming end for the Tax Credit. They have already come out and said "this is it, no more extensions to the credit". How many buyers will this kick out of the market. Personally I don't think it will stop anyone from buying that wants to buy, however I do think they are going to be pulling in some buyers that may have waited till next year. Like the cash for clunkers, we may are probably stealing tomorrows buyers. This could mean a drop off in sales as the credit ends. Another consequence is going to be a drop in spending by new buyers. Most new buyers are taking that $8k and buying new stuff for the new house. They are pouring patios, buying furniture etc. That's $8k less they will be spending. What will that mean for the furniture stores and the home improvement stores?

The credit basically ends in April. You have to have a signed contract by the end of April and you need to close by the end of June. By July most of the government support should be gone. That should make for an iteresting fall. Of course should the preverbiale turd hit the fan the government will either reinstate these programs or come up with new ones.

December's numbers. Median down.

We snapped the streak. Median for Rivy and San Berdu fell in December. Riverside's median sales price slipped 2% down to $196k from $200k in Nov. San Berdu slipped about 6% from $160k down to $154k. Sales numbers were decent though. Falling median is quite normal for this time of year so don't read to much into it.

	Sales Volume			Median Price
All homes	Dec-08	Dec-09	%Chng	Dec-08	Dec-09	%Chng
Los Angeles	5,848	7,679	31.3%	$320,000	$339,000	5.9%
Orange	2,580	2,885	11.8%	$397,000	$435,000	9.6%
Riverside	4,435	4,282	-3.4%	$209,000	$196,000	-6.2%
San Bernardino	2,862	2,934	2.5%	$180,000	$154,000	-14.4%
San Diego	3,325	3,652	9.8%	$300,000	$330,000	10.0%
Ventura	876	896	2.3%	$338,000	$360,000	6.5%
SoCal	19,926	22,328	12.1%	$278,000	$289,000	4.0%

Here's the DQ report.

Southern California home sales in December remained above year-ago levels for the 18th consecutive month, bolstered by gains in many mid- to high-end communities. The median sale price rose year-over-year for the first time since summer 2007, reflecting a more normal distribution of sales across all price categories, a real estate information service reported.

A total of 22,328 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.4 percent from November’s 19,181, and up 12.1 percent from 19,926 in December 2008, according to MDA DataQuick of San Diego.

Sales almost always rise from November to December. Last month’s gain was a bit higher than the average increase of 13 percent since 1988, when DataQuick’s statistics begin.

The December sales tally was the highest for that month since 24,209 homes sold in December 2006, but it was still 11.2 percent below the average for a December – 25,143 sales – over the past 22 years.

The sales pattern has changed a lot over the past year, with many mid-to high-end communities now contributing more transactions.

For example, relatively large annual sales gains were recorded last month in many well-known, higher-end markets including Beverly Hills, Santa Monica and Newport Beach – areas that saw very low sales a year ago. Meanwhile, some of the more affordable inland areas that saw robust 2008 sales recorded year-over-year declines last month. Those markets included Moreno Valley, Lake Elsinore and Palmdale.

The percentage of Southland homes sold above $500,000 last month rose to 20.2 percent of all sales, up from 16.5 percent a year earlier and the highest since it was 23.6 percent in August 2008. On average since 2000, $500,000-plus sales have made up 36.5 percent of total sales. Right before the credit crunch hit in August 2007, making larger “jumbo” mortgages more expensive and harder to obtain, $500,000-plus sales made up about 52 percent of Southland transactions.

More sales in once-dormant high-end communities helps explain last month’s year-over-year gain in the median sale price – the point where half of the homes sold for more, half for less.

The median paid for all Southland houses and condos sold in December was $289,000, up 1.4 percent from $285,000 in November and up 4 percent from $278,000 a year earlier. The last time the median increased year-over-year was in August 2007, when it rose 2.7 percent to $500,000, near its peak.

The median has increased or held steady for eight consecutive months, but in December it was still 42.8 percent lower than the peak Southland median of $505,000 reached during several months in early and mid 2007. In late 2008 and early 2009, the monthly declines in the median from a year earlier ranged from 30 to 40 percent.

December’s foreclosure resales remained well below peak levels but were still a large force in the market, edging higher than the prior month for the first time since last February. Foreclosure resales – houses and condos sold in December that had been foreclosed on in the prior 12 months – were 39.6 percent of resales, up from 39.0 percent in November but down from 53.5 percent in December 2008. They hit a high of 56.7 percent last February, then tapered or leveled off month-to-month until last month’s uptick.

I just want the garage

The house is amazing but it's way too amazing for the area it's in. It never ceases to amaze me how people will build million dollars homes in hundred dollar areas. Check out this listing ar 5301 Lochmoor Dr in an unincorporated area of Riverside (near Raceway Ford). The house is incredible but in it's current location I don't see them getting $1.25M or $1.anything for that matter. But the garage......... And I wouldn't mind the cars either!

Banks suck and Bill Maher knows it

Good deals?

I get quite a few emails asking "are we at the bottom", "is it a good time to buy" and so forth. Those are impossible questions to answer with any certainty. We can make educated guesses but my estimation may be no better than the NAR's forecasts (although I think it is). Heck anything could happen in this market. Nothing surprises me anymore. But overall I think we are close to the bottom in the nicer areas and probably there at most of the other areas in the IE. The OC and LA have miles to go.

Personally I feel there are some pretty good deals out there. I'm even seeing great deals in some of the better areas. There have been some closed sales that I look at and kick myself for not making an offer on them. I'm seeing some houses close for $50k under listing price. So the deals are there. Not everyone is getting them. I also still see houses close for prices that make me go HUH??? what the hell were those idiots thinking.

It looks to me like most of Riverside is now very close to the bottom. There are a few tracts that are holding up but for the most part I think Riverside is a buy. Corona on the other hand still seems a little high with the exception of a few areas like Sycamore Creek which is probably close to as low as it will go. But there are still some good deals in Corona as you will see bleow.

The problem for most buyers right now is lack of inventory. The prices are decent but there's not much to buy.

Here's a few of examples of homes that I would probably have bought at the closing prices.


How about this house in Norco Hills. 1456 Morab Way. This monster closed for $97 s/f. Let me tell you that is a SMOKIN" deal. Yes it needed some appliances but for a 4600+ s/f house on a 1/2 acre lot on a hill with a drop dead gorgeous view, $450k is a steal.




290 Wild Horse Ln, also in Norco Hills. I actually almost put an offer in on this one. The only reason I didn't is it's a littls smaller than I'm looking for. But this 2800 s/f one story with nice landscaping on a 1/2 acre and a great looking pool closed for $428k. The price per sq/ft is a little high at $149 but that's primarily because it's a smaller home.



How about this monster up in Woodcrest. 17564 Seven Springs. This 4000+ s/f house on over an acre and a half has a back yard like a resort. It has a totally bitchin pool and some pretty nice landscaping and hardscaping. This thing sold as a short sale for $450k. I would have bought this house in a heart beat. There is no Mello Roos in this tract either!

People are getting some good deals out there.

Median listing price

I have not been paying too much attention to median listing prices lately. But here's last years data from Housingtracker. Much of the increase late in the year can be attributed to the loss in quantity at the low and middle ends of the market. Since the high end isn't really moving but the low end is blistering it is skewing the median upwards.

Month	SFH+Condo Inventory	25th Percentile	Median	75th Percentile
Jan 2010	24,594	$147,000	$228,950	$397,500
Dec 2009	25,435	$149,225	$232,125	$403,737
Nov 2009	26,575	$149,920	$238,400	$420,010
Oct 2009	27,569	$149,175	$236,250	$423,450
Sep 2009	27,493	$149,925	$239,500	$435,988
Aug 2009	28,410	$148,882	$237,880	$431,400
Jul 2009	29,257	$147,313	$235,225	$429,250
Jun 2009	30,584	$144,980	$229,760	$414,790
May 2009	32,614	$143,725	$225,000	$401,973
Apr 2009	35,365	$140,000	$219,850	$387,500
Mar 2009	38,625	$139,960	$217,080	$369,580
Feb 2009	40,003	$143,125	$219,148	$364,750
Jan 2009	41,594	$148,976	$222,615	$364,140

A surge in foreclosures

Apparently there was a surge in foreclosures last month! I musta missed it......

This was in the Press Enterprise,

Real estate brokers who sell bank-owned houses reported an unexpected surge of homes to sell last month.

They are waiting to see if it is a glitch or instead a move by banks to reduce the backlog of pending foreclosures and replenish Inland Southern California's nearly barren real estate market.

"It appears that we are going to start seeing the inventory break loose. But maybe it is an illusion," said Lance Martin, broker-owner of Coldwell Banker Pioneer Realty in Moreno Valley.

Pete Nyiri, owner of Top Producers Realty in Corona, and another major broker of bank-repossessed houses, said the number of new listings he received from banks increased 40 percent last month and surprised him because he was instead expecting a decline in new properties due to various holiday foreclosure moratoriums.

However, the brokers emphasized that the increase in bank-owned properties they have received will not be nearly enough to restore the market for first-time buyers who have been fiercely competing with one another and with cash rich investors for a shrunken inventory of entry-level houses.

The largest foreclosure brokers in Inland Southern California said they believe the banks have been holding back foreclosures, despite growing mortgage delinquencies, because they have been under political pressure to qualify financially troubled homeowners for loan modifications. All of them predicted that homes which banks are unable to save from foreclosure will start coming on the market in the first quarter of this year.

Whether newly foreclosed properties will appear in a deluge or in a steady stream is unknown, although most experts now are anticipating the banks will try to retain control to prevent home prices from plummeting.

"Nobody knows for sure," said Steve McKee, a broker specializing in bank-owned properties at Coldwell Banker Armstrong Properties in Riverside. McKee said he expects a large increase in foreclosed houses. He said he has noticed that banks gearing up by shifting staff from loan modification departments to foreclosure processing.

Foreclosure brokers also anticipate that in 2010 many more foreclosure threatened houses will become available to prospective buyers as short sales, where lenders allow the owner to sell a home for less than the mortgage.

The Obama Administration has adopted new short sale guidelines for banks that will become effective in April and the foreclosure brokers said their bank clients have told them they are preparing to do more short sales.

"Some are ramping up their short sales mitigation departments," said Michael Novak-Smith of ReMax Results in Moreno Valley. Novak-Smith said he believes banks have figured out it is cheaper selling a house when it is occupied, even at a loss, rather than absorbing the expense of maintaining and selling a house they have repossessed.

Winds of change

Anyone else starting to notice a change in the tone of the media regarding the health of the market. For the last few months it's been all about recovery. But the last few weeks there have been more and more reports focusing on more pain ahead, double dips, the failure of HAMP, what happens when... etc. etc.

Today we say headlines of 16% decline in pending sales in Nov (oh my god the sky is falling). Heck it was even down in the West which has been the strongest area for months. Is this really news. I don't think so. It just shows that earlier strong sales were pumped up by the looming end of the tax credit.

Another headline today talks about a 30% to 40% chance of us entering into another recession this year. Does anyone really believe we are out of the recession? Maybe somewhere is but California certainly isn't.

I'm also seeing a lot more articles talking about the impending interest rate increases. These same predictions were made last year too and rates fell to the lowest levels in a 100 years. Personally I do think they will go up once the Fed stops buying the MBSs but if that has a cataclysmic effect on the market I suspect they will start that program back up again before the year is out.

The market this year could very well go something like this. Jan through March is busy as buyers rush to close prior to the end of the MBS program and the impending rate hike. April is busy too as buyers rush to get a deal prior to the end of the tax credit. May hits, the interest rates are up, the tax credit is gone and the market slows. Inventory starts to build as sales slow and foreclosures mount due to the HAMP trial period mods ending. The market starts to sieze up again in a repeat of 2007/2008

Once the prices start to fall again this is where the government will come up with another hail mary plan. Something along the lines of 2% or 3% rate mortgage mods through Fannie and Freddie. Now that the government has removed the debt cap Fannie and Freddie can write as much bad paper as they want. There's really only one reason I can think of for removing the debt cap, and that is to prepare those entities to take on gargantuan amounts of debt.

2010 what next?

Well what do you think 2010 will bring?

Will the government leave the market alone this year? That's probably the biggest question mark looking ahead. We had something of a stabilization last year but nearly all of that was due to massive government intervention in the market. This year much of that intervention is due to end. The MBS purchases by the fed that are keeping the interest rates low is due to end in late March. The tax credit ends in late April. The Tarp program will have run its course for the most part (and a dismal failure it has been so far). So what will happen when all these programs end and the market is left to fend for itself?

I don't want to even throw out a guess after last year. It's just too hard to figure what the government will do next. Personally I think the poo will hit the fan without more intervention. But what they will come up with next is beyond me. Once all the government life support ends the market could do just about anything. My personal feeling is, at this point they have all but assured a Japan style decade of price declines or stagnation at best. We may see some blips of recovery but I feel the overall trend will be negative for many years ahead. The only way around it is to let the free market fix it. Foreclose on the bad loans, book the loss and sell them in a free market. There's more than enough money out there to fix this market quickly if they would only let it happen.