Are You Really Surprised?
"Sonoma County home prices fell in July for the first time in more than four years, the latest sign that the once-booming housing market continues to slow."
"July's median resale price was $595,000, down 3.3 percent from the same month a year ago, when the median stood at $615,000. It was the first year-over-year decline since February 2002."
'"It will be a little bumpy," said Karl Bundesen, owner of Century 21 Bundesen realty in Petaluma. Home sales have come down sharply across California and the nation."
"In Sonoma County, home sales hit an 11-year low for the month of July and have dropped for 10 consecutive months in year-over-year comparisons."
"While the slowdown was anticipated since the market peaked a year ago, longtime brokers were surprised by the price drop."
What? Real Estate doesn't always go up? How could a Realtor be wrong? This is a new paradigm. We are at a permanently high plateau. This is the new Sausalito. Everyone wants to live here. It's different here. It's different this time. You can't lose. You will be priced out. They aren't making any more land. The realtors said this all was true. How could prices drop?
'"It was much softer quicker than any of us expected," said Tom Lawrence, broker-manager for Frank Howard Allen Realtors' office in Windsor."
It was "much softer quicker" than any of them expected?
Sales have been dropping for 10 months.
In the last three years the number of creative loans to purchase over-priced houses has increased drastically. That was not because housing was getting more affordable, it was because they were less affordable. Who can't add up that equation and see the bottom falling out of a phony market built on the a foundation of lies, deceptions and magical thinking?
"There are so many listings on the market that are taking so much longer to sell. Price reductions have set in."With the average home taking more than two months to sell, the supply of homes on the market has swollen to its highest level in a decade.
Actually according to Rereport.com the average time to sell is well above 90 days for most cities in the county.
"Buyers are out there cherry-picking," said Rick Laws, Coldwell Banker manager for Santa Rosa, which prepares the monthly Press Democrat home sales report. "There are homes that have been on the market since spring that are not selling. That means they are not priced right for what they are."
That is correct. They have been priced based on make believe appreciation fueled by speculation and hype. None of that appreciation is real, and more buyers should keep that in mind.
'"I didn't think it would go down as quickly this soon. I don't think it's hit bottom," said Beth Robertson, a broker for Century 21 Classic Properties in Rohnert Park."
By golly, I think she is right.
Quote from a previous article:
"experts have a warning for today's home shoppers: It often takes a year or two for prices to adjust downward in a slowdown.
"In Petaluma, for example, one seller cut the price twice in two months, lowering the listing more than 4 percent to $545,000 to get the home sold. And even then, the buyer waited 12 days before making an offer and still negotiated credits for repairs, said Luis Nanez, the buyer's agent."That's basically what's going on in this market," said Nanez, a Century 21 Bundesen agent."
'"That's the reason people do open houses and nobody shows up, because they're way overpriced," he said."
I repeat... "...experts have a warning for today's home shoppers: It often takes a year or two for prices to adjust downward in a slowdown."
"Buyers haven't faced such an advantageous market in a decade. Sellers still are adjusting after enjoying a run of strong sales and often soaring prices."It's really back to a normal market. It's a correction that was needed," Bundesen said.
No...this is not a normal market. It will be a normal market when once again fundamentals are present. Fundamentals such as: price to own vs. price to rent are more in balance. While owning is still 2-3 times more expensive than renting a comparable property it is still a fool's market, and there will be fools buying all the way to the bottom. They will be the ones screwing the comps up for the rest of the bagholders trying to unload the debtbox they thought was a sure thing.
"I think it's taking some sellers a little longer to get with the program and realize the market has changed. There's still sellers coming on the market unrealistically."
"Housing began to turn downward last summer. The combination of rising rates and high prices made more buyers cautious about paying too much, while others could no longer afford to buy homes."
Buyers should still be cautious about paying too much. Prices are still extremely overpriced. 20% increases for 5 years is too much. There was no value increase, there was no economy to support such a rise in price. These prices were inflated due to the pyramid scheme of fools and greater fools selling houses back and forth to one another.
"A sense of urgency drove people into the market. Now what we have is the opposite of that," Laws said.
Right. Now the bagholders are running for the exits, and hoping there are still greatest fools out there willing to buy their maxed out debtbox.
"And now the herding instinct is to wait and see if prices soften further."
Again... "experts have a warning for today's home shoppers: It often takes a year or two for prices to adjust downward in a slowdown."
"Slowing sales have dramatically driven up the supply of homes for sale. The 2,571 homes for sale in the county at the end of July represented a seven-month supply based on the current sales pace, the highest inventory since June 1996."
2,571 = Lie
seven-month supply = Lie
Sonoma County MLS: 4318
At the current rate of sales this translates into a 12.77 month supply of homes for sale. This number only represents existing homes on the market, and does not include newly built homes.
# on Price Reduced List: 1519
Sonoma County listings progression
3/20/06 = 1742
3/26/06 = 1766
4/03/06 = 1888
4/19/06 = 2828
4/25/06 = 2868
4/30/06 = 2898
8/10/06 = 4072
8/16/06 = 4298
8/18/06 = 4318
'"We're getting right to a point where a lot of people would say we're moving into a buyer's market," Laws said."
As long as houses are still over-priced and the cost of ownership is double and triple the cost of renting, it is a fool's market not a buyer's market.
"Sellers with homes still on the market this fall could decide to make them rentals if they don't have to sell."
Good luck with that.