Southern California home sales crash - Corelogic

30 Replies

Southern California home sales crash - Corelogic (Nothing to see here, move along) ;-)

Are we at the tipping Point . . . ????

"Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years. Sales of both new and existing houses and condominiums dropped by 11.8 percent year over year as prices shot up to a record high, according to CoreLogic. The report covers Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange Counties.

Fewer affordable homes

The median price paid for all Southern California homes sold in June was a record $536,250, according to CoreLogic, a 7.3 percent increase compared to June of 2017. While part of that is due to a mix shift, since there are fewer lower-priced homes for sale, it is becoming increasingly clear that fewer buyers are able to play in the higher price ranges.

“Sales below $500,000 dropped 21 percent on a year-over-year basis, while deals of $500,000 or more fell about 3 percent, marking the first annual decline for that price category in nearly two years,” said LePage. “Home sales of $1 million or more last month rose just a tad – less than 1 percent – from a year earlier following annual gains of between 5 percent and 21 percent over the prior year.”


LePage points to the rise in mortgage rates over the past six months, increasing significantly a borrower’s monthly payment. Rates haven’t moved much in the past month, but are suddenly moving higher again this week, pointing to even further weakness in affordability.

In the past, California, one of the largest housing markets in the nation, has been a predictor for the rest of the country. Home prices have been rising everywhere, amid a critical housing shortage. Prices usually lag sales by several months, and sales are beginning to crumble, even as more inventory comes on the market. The supply of homes for sale increased annually in June for the first time in 3 years, according to the National Association of Realtors, but sales fell for the third straight month."

I don’t expect a crash. I expect the market to taper off though. Jobs and wages are still rising. The market is frothy, but there are strong fundamentals holding up the market. Compared to 2007-08 people have more equity and better jobs. I think we will start to see the market of large metropolitan areas and the surrounding cities to transition more and more to a rental market. Single family homes will still be built, but it will move further and further out.

Also yuge factor is the elimination by the Feds of the State property tax deduction, combined with many of those states completely screwing the people that are trying to flee by raising those taxes, and demanding to show where they lived every single day to show they actually left the state (hint, the blood sucking tax collectors in NY). 

Now that that is back firing, sales are down in CA, NY, IL, and the other States that have high property taxes. Texas should be next, BTW. Now State Citizens have to deal with the realities of massive property taxes they have to pay because of their voting socialists to office for decades, who have levied the very taxes they are now trying to escape.

Originally posted by @Christopher Winkler :

Also yuge factor is the elimination by the Feds of the State property tax deduction, combined with many of those states completely screwing the people that are trying to flee by raising those taxes, and demanding to show where they lived every single day to show they actually left the state (hint, the blood sucking tax collectors in NY). 

Now that that is back firing, sales are down in CA, NY, IL, and the other States that have high property taxes. Texas should be next, BTW. Now State Citizens have to deal with the realities of massive property taxes they have to pay because of their voting socialists to office for decades, who have levied the very taxes they are now trying to escape.

And do all of us Red State Citizens a big favor, don't come here & duplicate your progressive, commie voting records and destroy our state like you destroyed your state. If you are a Liberal Locust, you are not wanted in a Red State, unless YOU change you liberal ways!

Otherwise have a nice day!

 CA's property tax rate is 1%, Texas' is nearly 2%.

Originally posted by @Eric Adobo:

Also it doesn't have to be RE that is the trigger.

Combine student debt, ez car loans, and credit 💳 S. Could be an issue.

Auto debt is definitely an issue, but as long as unemployment stays low there shouldn't be a huge wave of defaults, merely a slow down in new car purchasing and leasing. Student debt gets all the headlines but it's a long term issues and one mostly restricted to people who borrowed six figures for graduate degrees. CC debt is at OK levels.

If a housing crash is coming you would think it would start at the top end of the market. Instead it's starter home sales that has fallen dramatically while every other category basically held steady. Looks like the drop is mostly due to low inventory continuing to push up the price of starter homes.

Originally posted by @Nancy Zhao :
Originally posted by @Christopher Winkler:

Also yuge factor is the elimination by the Feds of the State property tax deduction, combined with many of those states completely screwing the people that are trying to flee by raising those taxes, and demanding to show where they lived every single day to show they actually left the state (hint, the blood sucking tax collectors in NY). 

 CA's property tax rate is 1%, Texas' is nearly 2%. Don't let reality hit your *** on the way out.

And while some parts of DFW are over 3%, like a duplex up the road I WAS thinking of house hacking, but the $9k plus taxes turned me off.  My @$$ left almost 3 years ago...

Also, we have NO 9% plus income tax, and all the other commie taxes your legislature imposes, gas, air, carbon, plastic bag, cow farts, etc, as well as giving every dime you give to them in taxes to SJW programs, I hope you enjoy writing your actual property tax checks next year. Please don't move to a red state until you are ready to renounce any liberal voting habits...

Just a general note here - disagree respectfully, please. Name calling, political attacks and use of profanity will get this thread shut down.

The market has to tapper off. Buyer will only tolerate prices to go so high before the high price mixed with higher interest rates makes homes completely not affordable. The use of "crash" in the title of the article is just click bait in my opinion. They could of just titled it "California Home Sales dropped 11.7% YOY and while home prices go to an all time high"  

But using "crash" gets us to click on their link and their advertisers get paid. 

the 1% or so of our taxes in Ca is only a drop in the bucket.  Due to Prop 13, the afore mentioned commies have pounded us with taxes and fees on everything. sky high car registration, energy and gas taxes... etc... AND they usual MO now is to get the lemmings to pass bonds etc.. that are tacked onto your property taxes to make it WAY more than 1% overall.  This will definitely affect higher end homes in Ca going forward.

ITs an inventory issue as much as anything.. also raw materials and wages have increased build costs..

Originally posted by @Christopher Winkler :
Originally posted by @Nancy Zhao:
Originally posted by @Christopher Winkler:

Also yuge factor is the elimination by the Feds of the State property tax deduction, combined with many of those states completely screwing the people that are trying to flee by raising those taxes, and demanding to show where they lived every single day to show they actually left the state (hint, the blood sucking tax collectors in NY). 

 CA's property tax rate is 1%, Texas' is nearly 2%. Don't let reality hit your *** on the way out.

And while some parts of DFW are over 3%, like a duplex up the road I WAS thinking of house hacking, but the $9k plus taxes turned me off.  My @$$ left almost 3 years ago...

Also, we have NO 9% plus income tax, and all the other commie taxes your legislature imposes, gas, air, carbon, plastic bag, cow farts, etc, as well as giving every dime you give to them in taxes to SJW programs, I hope you enjoy writing your actual property tax checks next year. Please don't move to a red state until you are ready to renounce any liberal voting habits...

 savage... I take my OK salary and triple adjust it for CA. Still won't be able to afford crap there...

you should hear the libs screaming to repeal prop 13... then when you say oh... we should tax old people and the poor out of their homes...?  Cool...  they go err uhhh errr...

The parent to child tax exemption is on the chopping block I bet... we will see..

Originally posted by @Carson Wilcox :

you should hear the libs screaming to repeal prop 13... then when you say oh... we should tax old people and the poor out of their homes...?  Cool...  they go err uhhh errr...

The parent to child tax exemption is on the chopping block I bet... we will see..

It feels disingenuous to place such a broad statement on a measure that has many different positives and negatives to it. There are features to prop 13 that make sense and those that don't. 

Prop 13 in regards to owner occupied properties does serve a purpose to assist those who cannot keep up with rising property values, that seems very reasonable and its something most voters seem to support based on polling. 

Prop 13 also applies to rental property owners (I am one of them) and commercial buildings, it would be hard to argue against the fact it is effectively rent control for property taxes. We are locked in at a number and it can only go up a small percentage a year. That is the same idea as rent control. If someone doesn't occupy their property and rents it for income, their tax bill is being subsidized by their neighbors for the profit of their business. That does not align with free market principles or in my opinion the best interests of the community. 

If you don't believe in free markets then I can entirely understand your position and respect our differences.

We saw buyer fatigue in Nor Cal in June and July. Put this on top of all other articles that include a slowdown in SoCal, London, NYC, Vancouver, Toronto. We might just be hitting the breaks on the euphoric appreciation we saw in housing over the past 5-7 years. No crash yet.
Here is the artIcle on silIcon valley buyer fatIgue. https://www.forbes.com/sites/ellenparis/2018/07/25/buyer-fatigue-setting-into-silicon-valley-real-estate-markets/
Originally posted by @Christopher Winkler :
Originally posted by @Nancy Zhao:
Originally posted by @Christopher Winkler:

Also yuge factor is the elimination by the Feds of the State property tax deduction, combined with many of those states completely screwing the people that are trying to flee by raising those taxes, and demanding to show where they lived every single day to show they actually left the state (hint, the blood sucking tax collectors in NY). 

 CA's property tax rate is 1%, Texas' is nearly 2%. Don't let reality hit your *** on the way out.

And while some parts of DFW are over 3%, like a duplex up the road I WAS thinking of house hacking, but the $9k plus taxes turned me off.  My @$$ left almost 3 years ago...

Also, we have NO 9% plus income tax, and all the other commie taxes your legislature imposes, gas, air, carbon, plastic bag, cow farts, etc, as well as giving every dime you give to them in taxes to SJW programs, I hope you enjoy writing your actual property tax checks next year. Please don't move to a red state until you are ready to renounce any liberal voting habits...

 Roger that, "Please don't move to a red state until you are ready to renounce any liberal voting habits..."

It depends on the location and sub 500k sales are probably down due to lack of inventory in some areas, In my area values up 10% ish and preditions are for another 10% coming 12 months. Sales will be way down still for sub 500k because there are very few left in the sub 500k inventory as corelogic pointed out. We could still see some flatter values just depends on location when accounting for 30 million residents and all the different zips within. In the past though if socal gets a cold, Phoenix gets chronic pneumonia. 

I dont disagree that on commercial and rentals the straight up freeze in taxes should not exist a la your personal home under prop 13.  I think there is some room to do small incremental raises in property tax for income props....  but that isnt really what they are targeting... because these same people know if they bang your taxes up by 200% you will just pass it on to their rent paying constituents.

Originally posted by @Tim G. :
Originally posted by @Carson Wilcox:

you should hear the libs screaming to repeal prop 13... then when you say oh... we should tax old people and the poor out of their homes...?  Cool...  they go err uhhh errr...

The parent to child tax exemption is on the chopping block I bet... we will see..

It feels disingenuous to place such a broad statement on a measure that has many different positives and negatives to it. There are features to prop 13 that make sense and those that don't. 

Prop 13 in regards to owner occupied properties does serve a purpose to assist those who cannot keep up with rising property values, that seems very reasonable and its something most voters seem to support based on polling. 

Prop 13 also applies to rental property owners (I am one of them) and commercial buildings, it would be hard to argue against the fact it is effectively rent control for property taxes. We are locked in at a number and it can only go up a small percentage a year. That is the same idea as rent control. If someone doesn't occupy their property and rents it for income, their tax bill is being subsidized by their neighbors for the profit of their business. That does not align with free market principles or in my opinion the best interests of the community. 

If you don't believe in free markets then I can entirely understand your position and respect our differences.

Volume decline is different than Price decline. 

With the tax law changes, I don't blame people for weighing their options before entering into a situation where they are unable to deduct their CA state income tax + CA property tax in full. 

Another way I like to think of Prop 13 is that it is a tax on new residents. Protectionism that is similar to a tariff.

Originally posted by @Carson Wilcox :
I dont disagree that on commercial and rentals the straight up freeze in taxes should not exist a la your personal home under prop 13.  I think there is some room to do small incremental raises in property tax for income props....  but that isnt really what they are targeting... because these same people know if they bang your taxes up by 200% you will just pass it on to their rent paying constituents.

Originally posted by @Tim Gordon:
Originally posted by @Carson Wilcox:

you should hear the libs screaming to repeal prop 13... then when you say oh... we should tax old people and the poor out of their homes...?  Cool...  they go err uhhh errr...

The parent to child tax exemption is on the chopping block I bet... we will see..

It feels disingenuous to place such a broad statement on a measure that has many different positives and negatives to it. There are features to prop 13 that make sense and those that don't. 

Prop 13 in regards to owner occupied properties does serve a purpose to assist those who cannot keep up with rising property values, that seems very reasonable and its something most voters seem to support based on polling. 

Prop 13 also applies to rental property owners (I am one of them) and commercial buildings, it would be hard to argue against the fact it is effectively rent control for property taxes. We are locked in at a number and it can only go up a small percentage a year. That is the same idea as rent control. If someone doesn't occupy their property and rents it for income, their tax bill is being subsidized by their neighbors for the profit of their business. That does not align with free market principles or in my opinion the best interests of the community. 

If you don't believe in free markets then I can entirely understand your position and respect our differences.

Who are they and who are they targeting? Rental and commercial property owners fall under prop 13 so I'm not sure how it could be said they aren't one of the parties involved. I am a landlord in this market, my competition would eat me alive if I tried to raise my rent a huge amount to cover a tax increase. Free markets don't work like that, we have competition to keep us in check. Any competitor who has owned their property a shorter amount of time will have less impact to any changes to prop 13. It would simply level the playing field. 

@Carson Wilcox , I am on the ‘receiving end’ of the parent > child exemption.  My father passed away in 2015.

And I can honestly say that IF I wasn’t a real estate investor, I would have sold.  I just went thru a major renovation, renovation of a property my parents owned for 45 years.  Probably one of the hardest things I have ever done, outside of burying my parents.  The difference is that as a rental, it is always on your mind.

My point is I believe that most ppl don’t use the parent > child exemption unless they live in the property.  At least that it is my experience.  I’m a ‘unicorn’.  ;-)

And despite my ‘low’ property taxes, my taxes have increased over 25% over the last 5 years due to ‘fees’.  :-(

For those who don’t know, prop 13 caps your property tax at 1.25% of original purchase price plus an increase of 1-2%.

AG