Friday, February 27, 2009

California Home Sales Double as Prices Plummet

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I am always on the search for any shard of good economic news - I've turned over old tires, looked under sofa cushions... I continue to look. Here is a promising sign in California that letting markets work, creates conditions that the old Economics textbook say will work. Lower prices will spur demand. It's an out of world concept. So what is the Federal government doing about it? Trying to stop this process from happening at all costs - lower prices can not be allowed.

Ugh.

When I saw in the Case Schiller index that even San Francisco homes had dropped 30%+ year over year you know supply/demand dynamics are finally working. I expect New York to be San Francisco-ish in about 6-9 months.

Via Bloomberg
  • California home sales doubled in January from a year earlier as buyers took advantage of an almost 41 percent decline in the median price of an existing home, the California Association of Realtors said.
  • The number of existing, single-family detached homes sold jumped to 624,940 on an annualized basis, up from 311,160 a year earlier, the Los Angeles-based group said in a statement today. The median price dropped to $254,350 from $427,200.
  • The drop in prices and rise in sales come amid an increase in foreclosure sales in the most populous U.S. state. More than half of all existing-home sales in both Southern California and the San Francisco Bay Area were foreclosure sales in January.
  • January was the first month since October 2005 that the seasonally adjusted, annualized sales rate passed 600,000 in the state, the California Association of Realtors said today.
  • The time needed to deplete the supply of homes on the market at the current sales pace dropped to 6.7 months from 16.6 months a year earlier. (that is actually a very good thing) The median number of days it took to sell a single-family home in California was 49.9 last month, down from 70.8 a year ago, the association said.
Remember our thesis behind First National Financial (FNF) [a title company] - we will see a surge in houses changing hands (if Big Brother allows); they will move from weak hands to strong hands. It does not matter if its a foreclosure or not. This type of story further convinces this thesis is valid and not one made up by a TV pundit to talk his book.

Long First National Financial in fund; no personal position

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