DataQuick’s March median numbers: What to expect & what it means
Posted in Market Trends and Projections | By Blair Newman and Dave Emerson | Tags: Business, DataQuick median prices, David Emerson, housing market, Lakewood real estate, Long Beach Real Estate Trends, Orange County Real Estate Projections, Realtor, Southern California Median Price Statistics, Southern California Real Estate Projections, Southern California Real Estate Trends
Update from David Emerson: We wrote the following post early 4/15, in anticipation of DataQuick’s release of their March closing statistics for all of Southern California, including L.A. & Orange Counties, Lakewood, Long Beach, Los Alamitos, and the surrounding area. As we predicted, DQ’s March numbers showed an increase in sales which was quite modest by seasonal standards, and also a modest firming in prices.
We’ll insert excerpts from today’s DQ report at appropriate points through the post below. We’ll indent them & put them in italics. We’re leaving our earlier projections and commentary unchanged, because it’s still applicable:
“DataSlow,” as we like to call them, should be out today with their March closing statistics for Southern California. Here’s our preview & interpretation. We’ll update this as needed once the numbers are out.
Data quick reports Southern California two statistics every week and every month: sales volume and median sales price.
It looks like both will be down from March 2007, which will probably get most of the attention. But the month over month figures should be more hopeful.
We expect sales volume to be up a tad from February,
[Here's what DQ reported:] A total of 12,808 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 18.8 percent from 10,777 the previous month but down 41.4 percent from 21,856 in March 2007.
and median prices to be pretty close to February’s numbers.
The median price paid for a Southland home was $385,000 last month, the lowest since $380,000 in April 2004. Last month’s median was down 5.6 percent from February’s $408,000, and down a record 23.8 percent from $505,000 in February 2007. That peak median of $505,000 was reached several times last spring and summer.
[Dave here. This is still a reduction in the rate of decline, and it was caused by some of the problems with median statistics, details below. When isolated by county, the stabilization is more apparent. For example, Orange County's March median of $506,000 was down less than 3% from February's OC DQ median of $520,000. More significantly, OC's $506k March median was actually up from DQs last 4 week OC reports, which both came in at $500,000. Pretty much what we predicted--but don't read too much into that, bulls (details to follow)
Now a word about what that would mean.
It's important to bear in mind what these numbers actually are. First, in terms of today's rapidly moving market, DQs numbers are ancient history. That's because Data Quick today will report Southern California real estate sales that closed escrow during March.
That means the purchase offer was most likely written 45-60 days earlier: Someplace between January 1 and February 14.
Second, DQ's price numbers are medians. If more homes are selling in stater neighborhoods, the median price will drop even if prices are rising. (For a more detailed discussion of the problems with DataQuick's numbers, see "Two big problems with DataQuick's median prices.")
The sharp and sudden drop of the Southland median price reflects a combination of factors, mainly depreciation, especially in areas hammered by foreclosures, and a big shift in the types of homes selling. Since last August, when the continuing credit crunch hit, sales have plunged for more expensive homes financed with "jumbo" mortgages, which until recently were defined as loans over $417,000.
Sales financed with these larger loans, which the credit crunch made more expensive and harder to get, accounted for just 15 percent of Southland sales last month, down from about 40 percent a year ago.
[This is the problem with medians. DQ explains it, but only in the ninth paragraph of their report.]
Even with their problems, however, DQs numbers can be useful. These should offer something for everyone, but some caution is in order.
Housing bears shouldn’t focus too much on the year over year numbers to the exclusion of some possible modest improvement from February to March.
Likewise, housing bulls should be wary of reading too much into what might just be a normal seasonal increase in activity and prices (see “Southern California’s 2 housing market cycles“).
Over the past 20 years Southland sales have risen by an average of 38 percent between February and March. Last month’s 18.1 percent increase from February was the lowest in DataQuick’s statistics, which go back to 1988.
We don’t think today’s DQ numbers will change our own position on what’s ahead (See “A change in our projections?” for our April 4 projection post, or our “classic” November post on this market, “How low will prices go?“)
DQs report is available here. You might also want to check out Peter Hong’s concise, well-written article on today’s DQ numbers.
For a little longer term perspective, you might want to click back to either of our last two posts, (”A little more perspective”) and (”A little perspective“).
Tags: Business, DataQuick median prices, David Emerson, housing market, Lakewood real estate, Long Beach Real Estate Trends, Orange County Real Estate Projections, Realtor, Southern California Median Price Statistics, Southern California Real Estate Projections, Southern California Real Estate Trends
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April 15th, 2008 at 1:05 pm
What a riot!
Comedy!
“DQ’s March numbers showed an increase in sales which was modest by seasonal standards, and also a modest firming in prices.”
By increase in sales do you mean down 41.4%?
By firming in prices do you mean a drop of 23.8%?
April 15th, 2008 at 2:08 pm
clemente ,
Go directly to the DQ report, the DQ report itself: . “A total of 12,808 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 18.8 percent from 10,777 the previous month but down 41.4 percent from 21,856 in March 2007″
I predicted was that DQ would show that March closings would be up from February closings. Last time I checked, 12,808 was higher than 10,777. Weaker than normal, but up nonetheless.
We also predicted year over year would be down–that one would be hard to miss.
As for firming in price, OC’s $506k March median was actually up from DQs last 4 week OC reports, which both came in at $500,000. Again, I believe $506,000 is up from $500,000.
April 15th, 2008 at 4:08 pm
So you don’t follow industry best practice of comparing sales and prices to year ago figures in order to control for seasonality?
You compare the 28 or 29 days of February to the 31 days of March? You disregard the fact that March home sales are ALWAYS higher than February home sales?
Nice.
Brain power tour de force!
April 15th, 2008 at 4:09 pm
“[T]here are cases where people as early as 18 to 24 months ago had one value on that property, and as they started to sell it or refinance it, they realize that valuation was 40% below what it was 18 to 24 months ago, and they’re walking away from those homes in those markets.”
Dowd Ritter, CEO Regions Financial Corp., April 15, 2008
April 15th, 2008 at 4:09 pm
“With the traditional home buying season now well underway, we have not seen the bump in sales activity that we normally would this time of year.”
Sandy Dunn, NAHB president, April 15, 2008
April 15th, 2008 at 4:32 pm
clemente,
Good quotes, especially that last one from Dunn. (I guess most Home Builders are Dunn about now!)
Seriously, it is slow for spring, but it isn’t dead. When everybody was yelling about the terrible January numbers, I was about the only one out there saying, “Hey, part of this is the time of year. Things will pick up over the next two months.”
We’ve never been shy about this being the normal, seasonal cycle. See “Our 2 real estate market cycles.”
We’re not out of the woods yet. But we may be starting to see the light at the end of the tunnel.
Hopefully it’s not an oncoming train.
April 15th, 2008 at 5:12 pm
“Seriously, it is slow for spring, but it isn’t dead.”
OK, so sales down 41.4% isn’t dead? What would qualify as “dead” for you? Negative 60%? 80%?
Or would it have to be zero sales to be officially dead?
We’re in a housing DEPRESSION. Worst since the 1930’s. So good luck finding the light at the end of the tunnel.
April 15th, 2008 at 6:31 pm
Dead, for me, was 1989, during the build-up to Gulf War 1. No buyers–zip, nada. I had several clients take their homes off the market.
There are plenty of buyers out there right now, actually. Our biggest problem has more to do with the lenders. We sold our last listing in 3 days.
Properly staged, priced, and marketed homes are selling. See”How to Sell Your Southern California home for top dollar in 30 days.“
April 16th, 2008 at 7:17 am
I can understand why Realtors would try to place a positive light on this report. However, I must restate the obvious; when March home sales are adjusted for seasonality, they couldn’t be much worse. In fact, home sales rose in only 2 OC zip codes (92865 & 92805) on a YoY basis in March.
The DQ median indicates that single family homes declined 5k in March … there was no “modest firming” for this class of home.
April 16th, 2008 at 7:46 am
Thanks for the input, lee. Hopefully we can clarify a couple of things.
First, although some Realtors may think they can “jaw” the market up, the reality is market forces are beyond your or my control. As real estate agents, we really need the market to find whatever a normal level would be. The “best” market, from an agent’s viewpoint, is a neutral market where prices are where they should be and there’s about an equal number of sellers and buyers.
Second, we feel that year-over-year and month-over-month statistics are both useful and have their place. You can’t get the big picture without both. Month-over-month is more current, but, as you correctly pointed out, Y-o-Y puts M-o-M in perspective.
Yes, March closings were up from February, but they were up only half as much as they would be in an “average” market.
We’re still in a huge downturn, but we may be nearing the bottom. Or this may just be a typical early spring bump.
We work with both buyers and sellers, and we’re not trying to push the market one way or another. Just trying to give our perspective on what’s going on in Orange County, Los Angeles County, Lakewood, Long Beach, Los Alamitos, Cypress, and throughout Southern California. Even in Irvine.
Feedback like yours helps us clarify things. Thanks, Lee.
Perhaps we’ve overemphasized month-over-month in this post because everyone else was primarily focused on year-over-year.
April 16th, 2008 at 10:27 am
I don’t think it’s wise to embrace increasing March sales as an indicator of possible strength, then discount the FACT that home sales always increase at this time of the year.
Maybe if March sales had come in at the 20 year average or even slightly below the average, but they didn’t. They actually came in 59.2% below the average March since 1988.
This will almost certainly be the worst year for Orange County RE sales, since DataQuick started tracking these numbers 20 years ago. Quite alarming in the face of a once booming economy and population increases.