So Cal Real Estate News

This one seemed to fly under the radar of most media, but C.A.R’s Chief Economist recently revised her 2008 projections from the figures released in Anaheim last October.

Total sales statewide were revised down a modest half a percent to 332,100, but her projected CA decline in the median price for a single family home was increased a whopping 50%, to a 9%! Leslie Appleton-Young also now projects that units sold will bottom this year, but with only modest improvement in 2009. Apparently her jury’s still out on when prices will hit bottom.

We like Leslie & have followed her reports for years, but you have to remember who pays her salary. Last October we indicated that it would most likely be worse than she predicted. Unfortunately, we were right then, & she’s still probably still a bit too optimistic.

Click here for The Register’s summary of Leslie’s recent remarks, and
here for a PDF version of the original, October report. Our most recent projections are here, and our thoughts on who should be buying or selling now haven’t changed from what we wrote in December, a classic piece on balancing market timing with your personal situation, even if we do say so ourselves.

Update added 4/7: Lots has happened since we wrote this post about two weeks ago, but it hasn’t resulted in any major changes to our projections. We did, however, release an updated projections post over the weekend: “A Change in Our Projections?”

The roller-coaster ride continues with this morning’s news:

1. Nationwide February resale closing numbers from the National Association of Realtors mirror DataQuick’s So Cal Numbers from last week: Sales up, prices down.

Why the sales increase “caught economists by surprise” is completely beyond us. January closings were the lowest on record, homes that went into escrow during the Thanksgiving to Christmas slowdown in a terrible year. They had nowhere to go but up as we move into spring.

We’ve been predicting the increase since we saw sales picking up in our market in January, & we also think March will reflect an additional increase in sales and possibly at least some firming of prices, maybe increases.

You read it here first–which is our goal, bringing you Los Angeles and Orange County real estate news from the front lines– not the ivory towers! Click for Blomberg’s reporting of NAR’s data.

2. Bear Stearns’ bad loans apparently weren’t as bad as originally thought, since Morgan-Chase this morning quintupled their bid from $2 per share to $10. Maybe things aren’t as bad as they seem? (Click here for our take on how we got into this mortgage mess & on Bear Stearns’ culpability.)

3. Stocks are up. But so are foreclosures. (For some insights into buying foreclosures, click here for our initial “Foreclosure Tips” post.)

This is just more evidence to us that we were right when we said last November that this downturn was wildly unpredictable. But we also told you What to do When Nobody Knows What’s Next.

Sellers, you may also want to review our summary of our workshop on “How to Sell Your So Cal Home for Top Dollar in 30 Days.”

That said, if you’re still intent on market timing to the exclusion of all else (that is, you don’t have a life?) we continue to expect a window of opportunity for sellers for the next several months, followed by opportunities for buyers through this winter. We still think there’s a significant chance (20%?) of a major price collapse of an additional 15 – 25% , but there’s also a possibility that the worst is behind us.

Sorry the picture isn’t clearer, but we’d rather tell you the truth than make something up. Feel free to post your comments, thoughts or questions, we try to respond to every one. Or call us if you want to talk further (562.430.0262).

Added 4/3: If you want to read excerpts from Ben Bernanke’s April 2 testimony to Congress about where he thinks we’re at and where we’re headed, check out “Bernanke Predicts Bottom Later this Year?!“

We even translated some of his remarks into English, for those of us who don’t speak economist. He pretty much agrees with us, except he’s a little more optimistic. But we think that’s part of his job. Being moderately optimistic, that is, not agreeing with us.

4/7: For our updated projections post, check out “A Change in Our Projections?

The federal government today took another step to help ease the housing requirement, reducing required cash cushions Fannie Mae and Freddie Mac by a third. That frees up over six billion dollars for them to make additional mortgages, which obviously helps real estate nationwide. Unfortunately, it also reduces the cushion they have when they might need it most (click for brief summary).

If it works, however, the need for that cushion might be reduced. To us, it’s more evidence that the decision makers in Washington are doing all they can to stabilize the real estate market. It may extend the spring mini-boom we’ve speculated about here in Southern California. It also might make this spring a good time for refinancing. Every little bit helps!

Today’s Los Angeles Times has DataQuick’s February closing statistics for the 7 county Southern California Region, & it’s exactly what we predicted: Sales up from January, prices down.

Unfortunately, what writer Peter Hong never seems to mention in the article is that this is old news, for 3 reasons: First, today’s March 14, & DataQuick’s reporting average closings during February, making the average sale date a month ago today. Second, that’s the date the sale closed, so those homes mostly went into escrow in late December and early January! Third, lots has happened just this week to address the underlying problems, most notably the Fed’s new program to increase liquidity.

The article does have a fair amount of quotes from a variety of experts, most saying this means things are a bit worse than they thought. Well, things were pretty bad in December, but they did pick up in January and especially February, so we still expect better news a month from now, when DataQuick reports March closings–which mostly opened escrow in January. And we’ll guarantee sales volume will be up. It’s really not that hard to predict what’s coming in on this month’s freighter if you talk to the guy who loaded it up!

We still think there’ll be a significant increase in closings through this spring, and quite possibly a modest increase in prices, but we also anticipate continued price declines as we move through fall and winter. The real bottom may still be a couple years away, but, as we pointed out here in our November piece, “How Low Will Prices Go?”, this is the most unpredictable downturn we’ve seen, and nobody really knows where it will end.

As Hong’s article eventually points out, DataQuick’s numbers are overly negative due to the preponderance of low end sales, where most of the foreclosures are. We’ve got lots more to say about this, and hopefully we’ll get more posted tonight. For now, I’ve got to get on the road and check on some units that burned last night. Now that’s a real “overnight” decline in value!