Smells like a dead cat to me

[sdduuuude]

Told ya it was a dead cat bounce.

SD Median Price Up

[Bugs]

Not so fast – you’d have to compare the datasets and adjust for their differences.

Think about this: when we’re talking about this few sales, the activity occurring in the higher price ranges has an outsized effect on the overall average.

A $900k price range can actually be dropping faster than the $600k price range and those sellers can be losing more, but because more of them are closing at these losing prices the average would still go up. Does that mean prices are increasing or even stabilizing? Of course not.

The same thing can happen in reverse. An average could decline even while prices are increasing depending on the volumes at the diferent price ranges.

[powayseller]

We’re at 10 months supply, and the prices are continuing to drop, according to the realtors I talk with. The median is useless. I wish the reporters would explain the limitation of the median every time they mention it. Bob Casagrand didn’t even put the median in his last report, because it’s a useless number. The only thing that matters, he says, is months supply. Anything over 8 means prices are falling.

[BobbyD]

History Repeats Itself, especially in San Diego Real Estate. The following is from the DataQuick 1995 archives. This was nine years ago, it will happen again, it is the natural order of the RE cycle. Be patient.

DQNews Archived Article

California Homes Being Sold at a Loss
by Real Estate Analyst John Karevoll
June, 1995
La Jolla, CA.— Fewer California homes are being sold for less than they were bought for, indicating that many potential sellers have decided to stay where they are, a real estate information service reported.

In 30.7 percent of all May home sales, sellers ended up getting less for the home than what they had purchased it for. That loss percentage was down from 32.4 in April and down from 35.4 in May last year, DataQuick Information Systems reported.

Loss sales accounted for a steadily increasing portion of the market from early 1991 until a peak of 42.7 percent was reached in September 1993.

Large newly-built homes that were bought during the 1989 to 1991 sales surge have been particularly exposed, but the problem has spread into other categories as well, said Donald L. Cohn, DataQuick CEO.

” A lot of homeowners have put off selling during the past few years because of declining prices. So a higher percentage of those homes that were put on the market, were put there because the owner was under the gun to sell for one reason or another “. Many of these ‘have-to-sell’ situations result in a loss.

” We may find it shocking that three of ten sellers lose money, but we need to remember that it still means most people are making money, ” Cohn said.

DataQuick monitors all real estate purchasing, financing and foreclosure activity in California and other states and provides information to lending institutions, title companies and industry analysts. The numbers include all ” arms-length ” resale condo and resale house transactions where current and prior sales prices were available.

The median loss was $23,500 on a house sold for $203,000, originally purchased for $226,500.

Hardest hit were homes in areas that experienced the fastest run-up in prices in the late 1980s. In Orange County, loss sales accounted for 45.3 percent of the last three month’s sales (see chart), in Ventura County it was 38.0 percent.

Resale houses
Sales counts & loss percentages
March-May 1994 and 1995
Mar-May Loss Loss
County All Sales# Pct. 95 Pct. 94
Los Angeles 18,217 31.8 pct. 38.2 pct.
Orange County 5,705 45.3 pct. 49.9 pct.
San Diego 5,803 42.6 pct. 44.9 pct.
Riverside 4,208 35.6 pct. 32.1 pct.
San Bernardino 4,266 35.5 pct. 30.8 pct.
Ventura 1,945 38.0 pct. 58.4 pct.
So.Calif. Total 40,144 37.0 pct. 40.9 pct.

San Francisco 1,026 16.2 pct. 24.0 pct.
Alameda 2,828 27.0 pct. 24.4 pct.
Contra Costa 2,486 32.4 pct. 34.5 pct.
Santa Clara 3,650 22.0 pct. 28.9 pct.
San Mateo 1,353 19.8 pct. 30.0 pct.
Marin 526 13.5 pct. 15.3 pct.
Solano 769 31.1 pct. 35.6 pct.
Sonoma 1,099 26.7 pct. 26.2 pct.
Napa 209 9.5 pct. 22.3 pct.
Bay Area Total 13,946 25.0 pct. 28.5 pct.

Santa Cruz 298 12.6 pct. 19.6 pct.
Santa Barbara 440 20.1 pct. 30.9 pct.
San Luis Obispo 393 12.9 pct. 28.6 pct.
Monterey 391 14.9 pct. 21.8 pct.
Coast Total 1,522 16.0 pct. 24.8 pct.

Sacramento 2,357 35.7 pct. 37.3 pct.
San Joaquin 931 38.8 pct. 31.9 pct.
Placer 562 36.2 pct. 37.3 pct.
Kern 1,142 26.7 pct. 14.3 pct.
Fresno 1,154 14.9 pct. 15.9 pct.
Madera 152 5.0 pct. 8.8 pct.
Merced 259 17.3 pct. 22.1 pct.
Tulare 563 15.0 pct. 11.7 pct.
Yolo 226 38.2 pct. 23.9 pct.
El Dorado 301 12.6 pct. 20.7 pct.
Inland Total 7,647 27.9 pct. 26.0 pct.

All California 63,259 32.2 pct. 35.3 pct.

Source: DataQuick Information Systems

For more information call John Karevoll (909)867-9534

Copyright © 1995 DataQuick Information Systems.
All rights reserved.
——————————————————————————–

[sdduuuude]

Of course you are right, Bugs and PS, about the data – but I think the effect of this median going up will have the effect of a dead cat bounce – a little positive sentiment to fool the masses into thinking the worst is over just before the fecal matter collides with the air circulator.

I think alot of people are going to catch that falling knife in early 2007.

I know so many people who want to buy, have been waiting to buy, and think the bottom has hit. This median price uptick makes it impossible for me to talk them out of it.

[noone]

I like the line in that article

Almost no one is going through with a purchase without having sold their previous home, she said.

Wasn’t it just a few years ago that the sellers were stipulating that the sale would not go through unless they were successful at buying another property?

[Author]

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