Homes sold–up 25.5%. Homes sold–up 17.1 % Homes sold–up 48.6%. Is this happening on Mars? In Russian invaded Georgia? In the Arctic? Would you believe this is happening in, of all places, Southern California!
Well, the figures, as they say, speak for themselves. Apparently, falling home prices over the past year are bringing about a pretty hefty increase in sales for most areas of SoCal, other than Los Angeles itself.
The number of homes sold in Riverside County this July compared with the year before jumped 48.6%;in Orange County, sales rose 17.1% and in San Diego County, the increase came in at 10.5 percent. In LA County, sales continued their downward slide–negative 3.2 %.
Starting to work?
Of course, in some ways, this should be expected. Lower home prices should bring more buyers into the marketplace. But this housing crisis is coupled with a severe credit crunch. So, the prices may be down, but fewer people can get a mortgage to take advantage of the situation.
And yet, some folks clearly are abe to take advantage of the lower prices–the median home price in Southern California last month was $348,000, down from $505,000 just one year ago–more than a 30% drop!
So, it’s over. Right?
Not so fast. The temptation might be to look at what is happening in California and conclude the housing crisis is now finally drawing to a close.
Don’t go there just yet,though.
The mortgage giants Fannie Mae and Freddie Mac are far from robust. To the contrary, an article in Barrons last weekend suggesting the government will have to bail out Mae and Mac after all –which would not go over well with the shareholder crowd–or the taxpayer–caused a dramatic reaction.
Fannie nosedived to a 19 year low and Freddie dropped to its lowest price in 17 years because of the report.
The health of both Fannie and Freddie —directly related to whether this housing crisis will end sooner or later. And, that is still up in the air.
Taking just one part of the country and trying to draw conclusions about the rest of the country would be an enormous mistake it seems to me. We need to see further evidence of increased housing sales, from different regions of the nation, before proclaiming victory.
Didn’t Bush do something like that a few years back with Iraq?