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Was Armstrong right? Southern California home sales crash


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#1 Rogerdodger

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Posted 24 July 2018 - 10:38 PM

Posted Feb 17, 2018 by Martin Armstrong:  "This disparity among regions is tax-driven with a mass exodus beginning from California, New York, New Jersey, and Illinois to mention just a few."

See his 78 year real estate chart:  https://www.armstrongeconomics.com/real-estate/real-estate-v-quantitative-easing/

 

 

Southern California home sales crash, a warning sign to the nation

CNBC: 

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 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic. 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 going higher again this week, pointing to even further weakness in affordability.

 

Add the new tax mortgage laws to the mix of rising state taxes and rising interest rates:

 

800,000 people will leave New York and California over the next three years due to the new tax bill, 

 

Prop. 30 raised the state’s top income tax rate by more than 29%, increasing it three percentage points from 10.3% to 13.3%, which is now the highest state income tax rate in the nation

 


Edited by Rogerdodger, 24 July 2018 - 10:53 PM.


#2 NAV

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Posted 24 July 2018 - 11:01 PM

What crash ?

 

  • Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic.
  • 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.

A 11% drop in sales is not a crash. And the home prices hit a new record high.

 

It's like saying the DOW CRASHED as it's volume dropped and the DOW made a new high.


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#3 trioderob

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Posted 24 July 2018 - 11:27 PM

NAV-

 

I have been thru this before - my 800 square foot home in Southern Cal  is worth half a million.

there is a limit to how high it can go - this is exactly what happened in 2006

it some point it WILL crash and take the market with it



#4 SemiBizz

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Posted 25 July 2018 - 07:40 AM

Chinese Reversing Big U.S. Real Estate Buying Spree That Had Helped Boost Prices

 

It is WAR !!


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#5 Data

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Posted 25 July 2018 - 08:48 AM

I don't know why Corelogic combines both new and existing sales.   They typically use different criteria for counting sales.   New homes sales are based on contracts, while sales of existing homes use closings.  The two types of sales peak at different times of the year because the lead time from contracted sale to a closing is often two calendar months.

 

“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.”

 

It doesn't appear to have anything to do with the tax law.  The median price has surpassed the cutoff level.   There are a lot of condos below 500K which will distort the change in sales volume because they outnumber detached homes.



#6 12SPX

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Posted 25 July 2018 - 09:08 AM

Does anyone have a long term price of real estate compared to wages chart?  Thought I saw one a long time ago.  That alone indicates it can't keep going up forever even with low interest rates!



#7 Data

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Posted 25 July 2018 - 09:27 AM

If you're interested in California, the California Association of Realtors maintains the affordability index for the state and each locality.   Typically, the market peaks when the index falls below 20.



#8 12SPX

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Posted 25 July 2018 - 09:31 AM

If you're interested in California, the California Association of Realtors maintains the affordability index for the state and each locality.   Typically, the market peaks when the index falls below 20.

Sure thanks similar to where I live, do you have a chart?


Edited by 12SPX, 25 July 2018 - 09:31 AM.


#9 qqqqtrdr

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Posted 25 July 2018 - 11:42 AM

There is just less homes on the market that are able to sell so of course Sales are down.   The Millenials are the one's buying homes on creative financing...   As interest rates rise the ability to get creative with financing cannot be done, so we are at a standstill until home values drop...   What to buy?  Condos have become ridiculously expensive across the US, and have been over built because the profit on condos for builders are great... 

 

Barry