The Declining Market

Southern California home prices rose last month for the first year-over-year increase since 2007 as sales of foreclosed homes declined and more properties sold in pricier coastal markets.

The median price was $289,000 in December, up 4 percent from a year earlier and 1.4 percent from November, MDA DataQuick said. The rise from a year earlier was the first in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties since August 2007, the San Diego-based research company said today in a statement.

Today’s guest post by Living Off Dividends & Passive Income who shares our views on the US economy and real estate markets.

According to Bloomberg.com;

Billionaire Sam Zell said the housing market could start recovering as early as next year and he’s focusing on investing in debt rather than equity.

“We believe that the opportunities, particularly in difficult situations, are in the debt,” said Zell, who made his fortune building the largest publicly traded office and apartment companies in the U.S. “We have been focused on, not only in real estate but in corporate, identifying debt situations where it is trading at a discount.”

Home prices fall in 100 major metro areas in the first half of 2008.

Median national home prices down 7.7% in Q1 to $196,300.

Biggest Losers:

• Sacramento, CA down 29.2%
• Riverside, CA down 27.7%
• Lansing,MI down 26.9%

Biggest Gainers:

• Binghamton, NY up 11.8%
• Peoria, IL up 10.4%
• Spartanburg, SC up 10.1%

See the full video from CNBC.

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If you are interested in contacting any of our Market Specialists for free counseling, email Customer Support or call at 1-800-881-1479

The Wall Street Jornal posted an article stating that we have hit a point where according to history it is time for the cycle to reverse.   The graph shows housing starts (per thousand) versus time (in years) in correlation to a recession.  Read the full story from the Wall Street Journal. 

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If you are interested in contacting any of our Market Specialists for free counseling, email Customer Support or call at 1-800-881-1479

Some interesting graphs from various sources (referenced on graph).   

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If you are interested in contacting any of our Market Specialists for free counseling, email Customer Support or call at 1-800-881-1479

As stated by MSN Money,

“More than 1% of all households slipped into foreclosure in 2007, as more borrowers failed to keep up on their mortgages. Nevada led the nation with the highest foreclosure rate, while California had the highest total number of foreclosures.”

Read the full story from MSN.com

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If you are interested in contacting any of our Market Specialists for free counseling, email Customer Support or call at 1-800-881-1479

Here are the 10 top cities for decreasing property values (as compared to a year ago):

1. Sacramento, CA (-18.5%)
2. Las Vegas, Nev. (-17.2%)
3. San Diego, Calif. (-17.1%)
4. Tampa, Fla. (-11.7%)
5. Los Angeles, Calif. (-10.7%)
6. Miami, Fla. (-10.6%)
7. Phoenix, Ariz. (-9.5%)
8. Jacksonville, Fla. (-8.7%)
9. Detroit, Mich. (-7.7%)
10. Atlanta, GA (-7.1%)

Click here for the full slideshow from Forbes…

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If you are interested in contacting any of our Market Specialists for free counseling, email Customer Support or call at 1-800-881-1479

As of today, February 16, more are more signs are leading towards a further declining market:

•  U.S import prices went up by 1.7% which was driven by increased prices for oil
• Export prices increased 1.2% which was the largest jump since 1989.
• The Reuters/University of Michigan index of consumer sentiment dropped to 69.6 which was the lowest it has been since 1992.  These numbers are representative of the recessions in the mid 70’s, 80’s, and early 90’s.
• Stock prices fell due to concerns that there was a slowing in consumer spending.  Dow Jones was down 28 points to 12,348.

It was reported that over 17,000 jobs were lost last month. Most of the jobs were lost in construction, the mortgage industry and in real estate (no surprise there!). This doesn’t even include all of the real estate agents who are still technically employed with a broker but are not seeing any income due to the drastic drop in sales.

Bush couldn’t have said it any better in this article, “There’s serious signs that … the economy is weakening”.

Click here for the full story from Yahoo! Finance…

On January 22, the Fed cut the benchmark interest rate by 3/4 of a point (now at 3.5%).  This meeting came a week or so early from the next board meeting on January 29th.  This was partially due to the panic that swept the globe on Monday when all foreign stock markets took a plunge. 

What is most concerning is that this is the largest cut ever.  Typically we have not seen cuts more than .5% (especially in a spontaneous meeting like this one).  I guess desparate times calls for desparate measures.