The size-adjusted condo median rebounded a bit from October’s freefall, but this month it was single family homes’ turn to get whacked. The single family median price per square foot was down a gruesome 6.1% between October and November:
It’s pretty clear that actual home prices aren’t falling that fast… at least part of the drop is surely caused by the previously discussed shift of buyer preference towards cheaper properties. Adjusting the median price to account for square footage helps to filter some of this type of distortion out, but certainly not all. I assume that the Case-Shiller data for November will show that prices did indeed drop, but not so precipitously as seen above.
On that note, my Case-Shiller proxy is probably a bit on the dire side due to the above, but here it is for kicks:
The plain-vanilla median behaved similarly to the size-adjusted version:
Note how the median condo price has dropped in half from the peak. Pretty incredible.
Moving on, volume was interesting. Sales had been quite robust in recent months, but they really took a hit in November. The graph shows that a drop of this magnitude is not a seasonal thing because nothing like this happened in the prior two years.
Inventory was down again…
…but the drop in sales led to a higher months-of-inventory figure:
October was the month that people truly began to panic about the economy. Many people have lost jobs, but many more are worried about potentially losing their job. This can’t possibly be a positive for housing, as most people wouldn’t commit to buying a house if they thought they might imminently lose their job. People getting spooked in October could have had an effect on closed sales as early as November.
People certainly haven’t stopped worrying as of yet, so if buyers are pulling in their horns due to economic uncertainty we could see lower sales numbers for a while yet. (Wacky government schemes notwithstanding). Meanwhile, increased job loss could lead to even more must-sell supply, including in the higher-end areas that escaped relatively unscathed from the subprime implosion.