Buy A House, Throw The Dice
Today it was the L.A. Times' turn to tell the story of the housing market slowdown.
What was most telling in this report is the number of months it is taking homes to sell — three months, or three times longer than it did a year ago.
The story also explained how it's become a buyers market, with sellers lowering prices to please the buyer, rather than what we saw a year ago, with sellers kicking back and watching the buyers bid above the asking price.
This is how the bubble will pop — slowly. Over the next year it will take more and more time to sell a home. The inventories will grow. Speculators will panic when they can't find renters to cover the whole mortgage. If mortgage interest rates go up, all of this will be exascerbated.
Time for me to go take some pictures of for-sale signs.
Here's an excerpt from the LA Times story:
Southern California home prices rose last month at their lowest rate in nearly four years while the pace of appreciation for all of 2005 slowed for the first time since 1999, providing the latest evidence that the region's once-sizzling real estate market is cooling off.Read the remainder of the story at this link
The statistics, released Wednesday by DataQuick Information Systems, a La Jolla-based real estate research firm, suggest that Southland homeowners might have to settle for more moderate price increases after a six-year run of extraordinary gains, analysts said.
That boom bolstered the local economy by generating thousands of jobs and adding billions of dollars in equity for homeowners. But it also made homes too pricey for many residents.
Now there are signs that the market might favor buyers over sellers. Many homes are taking longer to sell, with the average duration on the market about three months compared with one month a year ago, real estate agents say.
A more drawn-out sales process is often leading sellers to reduce their asking prices or accept offers below the listed price. By contrast, buyers early last year sometimes resorted to bidding wars for homes in many neighborhoods, forcing prices above the asking prices.
Also, the inventory of homes on the market has grown. It would take 19 weeks for the current inventory of homes to be sold, versus 14 weeks a year ago, said Patrick Veling, a Brea-based industry consultant and president of RealData Strategies.
Southern California's median home price in December was 13% higher than in December 2004, the smallest such year-to-year gain since a 12.7% increase in March 2002, according to DataQuick figures released Wednesday. On a month-to-month basis, Southern California's median price of $479,000 has barely budged, up less than 1% since August.
— The Boy in the Big Housing Bubble