Ebb and flow highlighted in headlines SOCAL REAL ESTATE SALES SLOW FOR SIXTH MONTH IN MAY Steepest drop in activity reported in Orange County STEEP DROP IN CALIFORNIA ARM USE HOME SALES PLUNGE 21 PERCENT IN CALIFORNIA Median prices climbs 8 percent in May Tuesday, June 27, 2006 — Inman News REAL ESTATE CONSTRUCTION PLUMMETS IN CALIFORNIA Trade group reports 25 percent drop in permits from a year ago Wednesday, May 31, 2006 — Inman News SOUTHERN CALIFORNIA REAL ESTATE FORECLOSURES ESCALATE “Real estate bubble continues to deflate,” says research company CEO Thursday, June 8, 2006 — Inman News
By JODI SUMMERS
As we were preparing the second quarter real estate wrap up, we were amazed by some of the news headlines and statistics that have emerged regarding the ebb and flow of the Southern California real estate market.
We'd like to share some of the most interesting headines with you: Tuesday, June 20, 2006 — Inman News Southern California slowed for the sixth month in a row in May, falling 11.7 percent compared to May 2005. It was the region’s lowest sales total for the month since May 1999, according to DataQuick Information Systems, a real estate information service.
Also, home-price appreciation in May fell to the slowest pace in the past six years.
Sales dropped 31.6 percent in Orange County; 24.3 percent in Ventura County; 18 percent in San Diego County; 8.6 percent in Riverside County; and 4.7 percent in Los Angeles County, while rising 2.6 percent in San Bernardino County from May 2005 to May 2006.
Meanwhile, median prices increased 17.2 percent in San Bernardino County; 10.9 percent in Los Angeles County; 9.4 percent in Riverside County; 7.6 percent in Orange County; 3 percent in Ventura County and 0.4 percent in San Diego County during that period.
The median price paid for a home in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties was $485,000 last month. That was the same as April, and up 6.4 percent from $456,000 for May last year.
March 23, 2006 The use of adjustable-rate mortgages for home purchases has declined significantly in California during the past three months, the result of more caution among buyers and lenders in a market that is seeing slowing increases in home values, a real estate information service reported.
In February, 51.9 percent of all home buyers financed their purchases with an ARM, down from 63.7 percent in January, 68.7 percent in December and 70.9 percent in November, according to DataQuick Information Systems.
The use of ARMs, which are easier to get and are considered by many to be an indication that buyers are stretching their finances, peaked in May last year at 73.7 percent. Peak usage during the prior real estate cycle was in September 1988, when ARMs accounted for 66.1 percent of all home purchase loans.
Sales of existing homes in California dropped 21.1 percent in May, while the median price increased 8 percent, according to an industry report.
The median price of an existing, single-family detached home in California during May 2006 was $564,430, an 8 percent increase over the revised $522,530 median for May 2005, the California Association of Realtors (CAR) reported. The May 2006 median price increased 0.5 percent compared with April’s revised $561,750 median price.
It was the first time since November 2001 that the median price did not increase by double digits, said CAR President Vince Malta.
So far this year, home sales are down 19.5 percent, according to CAR Chief Economist Leslie Appleton-Young. This is in line with the association’s forecast, which projected a 16.8 percent decrease in sales for the year. “We expect the rate of home price appreciation to increase 8 percent to $565,900 for the year as a whole, compared with the impressive double-digit gains we’ve witnessed over the past four years,” she said.
Unsold inventory in May was 5.9 months, compared with 2.7 months for the same period a year ago. The number indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Total building permits issued for single-family homes in California were down about 25 percent in April compared to April 2005, while total permits for the first four months of the year were down about 18 percent compared to the first four months of 2005, the California Building Industry Association (CBIA) announced.
CBIA, a statewide trade association, represents about 6,600 businesses, including home builders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals.
The number of building permits issued for multi-family projects was down 3.4 percent in April 2006 compared to April 2005, though the number of multi-family permits issued for the first four months of 2006 was up 12.2 percent compared to the first four months of 2005.
The number of foreclosures have jumped 29 percent in Southern California since January 2006, according to Default Research, a real estate research company based in Pennsylvania.
Riverside had the highest increase of 56.5 percent, followed by San Diego County at 49 percent and Los Angeles at 16.2 percent.
“The real estate bubble continues to deflate in Southern California," said Serdar Bankaci, president and CEO of Default Research Inc., in a statement. “This is not surprising at all because home prices are leveling off.”
About 76 percent of the foreclosure activity involved single-family homes, while 12 percent were condominiums and 4 percent were duplexes and triplexes, the company reported.
Job growth in May was the lowest it had been since October 2005, Bankaci also noted.
“Combine that statistic with the rising interest rates, and you see that the average family suffered financially two times, putting a tremendous strain on families already stretched to the max,” he said.
For information on Southern investment commercial properties there is a great information blog at www.socalindustrial-realestateblog.com. (Jodi Summers is director of the investment division at Boardwalk Realty. For your real estate needs, , or call (310) 309-4219, or visit her Web site at www.santamonicalandmarks.com.)
Originally published in the Santa Monica Daily Press print edition on July 19, 2006. Read the original PDF.