Median Officially 7% off the peak

[sdrealtor]

I just read an article on the UT online version with August DataQuick numbers that said the median for Aug 2006 was $482,000. The article also stated the peak median came in Nov 2005 at $518,000. Forget about the YOY numbers! This equates to a $36,000 decline off the peak median which is roughly 7%. I didnt notice them reporting that in the article.

[sdrealtor]

What do you think about that Steve “Prices will drop no more than 15%, and possibly by only 10%” Beebo?

[waiting hawk]

So it will be close to -8% to -10% yoy in November? Isnt that to fast (like depression fast). Almost like -1% per month?

My website tracking Temecula and South Riverside County

[Steve Beebo]

sdrealtor –

What I read is that overall home prices are off by 2.5% in the past 12 months. The Dataquick sales data shows East County median prices up slightly, Central SD down slightly, and North County prices flat since last year.

Month to month sales can vary a lot – but if you want to measure everything in the future off of one month, (11-05) go ahead, but it’s not going to be terribly accurate. In my opinion, the best way to measure the overall market is to report the median price of all of the SFR sales in a calendar year, and compare against the median price of all sales from another calendar year.

Also, when the UT lumps condos in with SFRs as they did in their on-line article, I would guess that all of the condo coversions are depressing the median price slightly when comparing against prior years.

[PerryChase]

sdrealtor, what do you think the median for all housing will settle at the low of the market? When do you think that might be? I think 350k but I’m not a real estate professional.

[sdrealtor]

PC,
I think 350K sounds about right. I dont know how fast it will happen but expect it to be there by the end of 2008. It could come sooner.
SDR

[an]

sdr, I agree with you. At this point, if you still don’t get it, then, good luck to yah. I don’t need to be a professional to see that everywhere is less than last year. It also seem that the rate of decline is accelerating, not decelerating. We’re only 3 months away to truly know if we’ll see a double digit y-o-y decline or not. At this point & pace, y-o-y will get there. I hoping that 350k will come sooner rather than later, but I can wait. $350k sounds about right to me. That’s another 25-30% more to drop from current level.

[sdrealtor]

SB,
It’s time to get your head out of the sand. If we are going to talk about a median peak then it is exactly that, the point in time when the median hits its highest level which was 11-05. There is and can be no arguement about that. August was 7% off that number plain and simple. Prices are dropping everyday and when the August escrows close they will be even lower. I have no doubt that the median YOY change for November 2006 will be in double digits.

As for being accurate, we all know the median is very very skewed by lots of issues. However, I find it hard to believe that someone who is out there doing any reasonable amount of appraisal work isnt seeing 10% price drops just about everywhere. Every Realtor I talk to (and there are many) thinks we are down 10 to 15%. You were correct in another thread to surmise that individual ZIP code medians from month to month relie on too small sample sizes to have any meaning. However, a countywide monthly median based upon a few thousand sales each month does not qualify as a small sample size. Its time to stop dancing as you’ve got 2 left feet. Suggesting we use an annual median is truly laughable. Why not use a median for the decade?

[powayseller]

Steve, when you use year over year measurements, you have to wait for one entire year to see the trend. Unlike inventory, median price does not have a seasonal component, so there is no reason to look at it year over year. I really think we should look at median prices month over month.

If you graph median prices, wouldn’t you see a downward trend for 8 consecutive months, since November 05? Isn’t that proof enough that the median is going down?

You are an appraiser – what are you seeing? Have you seen homes in Del Mar fall 30%, or do you think the 30% drop is due to fewer high end homes selling?

[Daniel]

“You are an appraiser – what are you seeing? Have you seen homes in Del Mar fall 30%, or do you think the 30% drop is due to fewer high end homes selling?”

I’m going to chime in on this: the areas that show wild swings (30% or so) are mostly areas with just a handful of sales (Rancho Santa Fe, Del Mar). When the sample is small, the median bounces all over the place. Based on same home sales, net of incentives, I’d say that we’re 5-10% off the peak in most areas. Steve and others, feel free to correct me if I’m wrong.

[an]

I would say it’s more like 5-20%. One example to the extreme is Airoso townhouses. Last year, they were listing @ 560-580ish for plan 2&3. This year, I know someone who bought plan 2 for $465k with $30k in upgrade and $5k in closing cost. That brings it down to more like $430k. Even if it was $560k last year, that’s still 23% drop. If it’s 580k, which I’m sure it was after the upgrades, it is more like 26% drop. Mira Mesa drops about 10-15%.

[Daniel]

You’re right, some areas are worse off. Condos and new construction have taken a bigger hit than the rest. And stuff that’s both new construction and condos (such as Airoso) has probably been hit the most.

[an]

I think new construction might be a better gage on how much price has fallen than resale price since builder are much more realistic in term of what price they can get right now. While resale price, seller might be stubborn and not sell it to the best current offer, holding out and hoping a better one will come in the future. Also, a lot of the new houses/condo tend to be much more uniform in term of content than resale, so it reduce some of the effect of upgrades in resale.

[PerryChase]

I agree with your asianautica. Builders know exactly what they can get right now for a completed product they need to unload. I use new construction pricing to gauge what the market will bear.

Also, new houses are better products in terms of technology (but not location, charm and uniqueness). Price per square foot wise, new houses are better deals.

[an]

PerryChase, true, sometimes, older homes have better location, charm, uniqueness, but a lot of times, older homes are cookie cutters too, just one from the past.

[Author]

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