According to many Real Estate Experts, what happened to the Real Estate Market across the state of California foretold the downward spiral of home prices, and overall home sales, across the country.
Now, however, California Home Sales appear to have turned a corner. In May, the Median Sales Price of a CA home increased to $267,570 - up over 4% from April, according to the California Association of Realtors, as reported in today's Wall Street Journal by Reporter Stu Woo.
The California Inventory of Unsold Homes also continues to fall. Today, experts calculate a 4.2 month supply of homes unsold, versus 5.6 months supply in April, and 8.7 months of supply in May, 2008. However, the Realtor Association calculates median home prices are still 30.4% lower than they were this time last year.
Will this CA turnaround predict a similar turnaround in the Chicago Real Estate Market?
Here in Chicago, in the North and Northwest Side Neighborhoods our Team serves frequently, average home prices have see-sawed the last few months between $250,000 and $295,000 - considerably below the mid-$300's average of mid-2006. Inventory levels of homes for sale still stands at over 15 months in these same neighborhoods - although it pushed the scary 19+ month level as recently as six months ago - and, at 15 months, is still, by any reasonable assessment - very high!
Track Chicago Real Estate Trends and Stats via our Chicago IL Stats Pack Archives. You'll find it at BlogChicagoHomes.com.
Back to the California numbers, some feel that one of the reasons for the turnaround in median prices is the fewer foreclosed properties, with their heavily-discounted market prices, currently headed to market. But CA prognosticators are wary, as the state has a very-high 11.5% Statewide Unemployment Rate (IL, by comparison, had an Unemployment Rate of a still high 10.1% in May). The state may need to trim up to $10 Billion of state spending, and the resultant loss in jobs, to partially close a massive, $24 Billion budget shortfall.
Across California, over 556,500 homes were sold in May - up 35.2% from May of last year. Sales in many Chicago Neighborhoods, especially those closer to Downtown Chicago and The Loop, is also surging - especially in areas with high concentrations of young professionals, many of whom do not need to sell their current home or condo in order to buy a new one.
The decision to buy - a smart one right now? Perhaps, if, as many feel, median prices are nearing a possible bottom.
Please see our post today via BlogChicagoHomes.com.
DEAN & DEAN'S TEAM CHICAGO
The news from CA is great. May not presage a national upsurge. Interest rates may be the issue.
But then again, CA can certainly be a leading indicator.
Being a Los Angeles agent myself, I know that the market has turned.
I'm seeing it everyday in the form of multiple offers and over-asking accepted offers now.
I can remember other good things that came from West to East, Buyers Brokerage for one.
Let's hope this is another good news that spreads from West to East.
Dean, thanks for the good news. Similar reports here in Florida. I'm hoping it's not just seasonal.
I have read about the California market statistics . This is good news .
Prices are starting to increase in certain parts of Phoenix. Getting some great deals at Trustee Sales.
Sometimes the market has to be regulated to prevent fraud and insure fair housing values. Other times, the market solves it's own problems. In this case Adam Smith is smiling. When you get to affordability which the market didn't have for most of this century in California, you needed specialized loans that we now know was subprime lending. The price stabilization coupled with incentives, and backed by standard loans now rules the market, and inventory which can be a drag is reduced. In Oklahoma our state song talks about the wind that comes sweeping down the plain. Let's hope affordability and smart buying does the same across the country. Let's throw in a bonus of new jobs so that places like Michigan can join the party.
Good news from CA ! Hoping it will take it's usual course and head eastward !
Thanks so much for your comments, folks!
In my opinion, folks - basic supply and demand! No government intervention necessary!
Prices get attractive enough, buyers will jump into the pool. Moving cross-country - simply a matter of time.
That's the way it worked in the mid-80's, and early 90's, in far shallower market swoons!
Keep those fingers crossed, and that level of patience and persistence high!
Enjoy the weekend!
DEAN & DEAN'S TEAM CHICAGO
As a California agent, I concur, the market, at least in the Antelope Valley area is and has been booming. Now most people do not know where the Antelope Valley is, so, just think Space Shuttle, alternate landing site and Edwards Air Force Base. You know, that place where the Space Shuttle goes when they can't land at Florida. Now you know.
Are average selling price is $120,000, our current inventory is about 1,700 homes (down from over 5,000) and about 40-45 closed transactions a day! With prices like this we get people from all over the State buying homes, sight unseen, over the phone! I track stats on market activity on my web site, www.gockelgroup.com/charts and saw this coming a year ago.
Dean: I THINK we (CA) have turned a corner...slowly maybe, but turned all the same. THANKS for this. I've re-blogged it.
I'm hoping it's not the dead cat bounce! Check out the link below to Mark Hanson's reasearch on the California market. He's been pretty accurate so far and he gets really granular with his data.
http://www.fieldcheckgroup.com/2009/06/04/6-5-beware-real-estate-false-bottoms/
I think the other side of the coin that has to be asked is what is the 'backlog' look like for California and Chicago. MLS inventory is certainly different than actual number of houses that are either vacant or soon to be foreclosed. It seems like we have been hearing for 9 months now about an impending flood of foreclosed homes to hit the market. I wonder if there is any difference between these markets in this respect?
We are seeing the same trends here in the greater Phoenix area, and since the California market is seen as a leading indicator for the rest of the country, I would agree that this should be viewed as an overall improvement in the market for all of us!
Wow, that's wonderful news in CA...if they're seeing a turn-around in their market, other areas in the US are certain to follow.
One bad winter, and everyone wants to flock to Cali! Here in (soggy) Portland, OR I'm always California Dreamin' -- I'm a Valley Girl by birth.
I hope the California 'disease' strikes Florida.
Dean,
That's good news.
In Toronto, the prices in the downtown core and the Greater Toronto Area have never been higher. New records were achieved in the first two weeks of June.
Volumes were down substantially in the Spring, but that means a lot of pent-up demand.
Low interest rates appear to be the key.
Brian Madigan