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February 10, 2008
Did Anyone Notice?
(c) copyright View from Silicon Valley, 2008. All
rights reserved.
People notice. Say what you will about the relevance
of median price statistics, the weekly housing price updates on View from Silicon Valley are very popular. The
histories of this data are consistently among our most heavily visited pages.
Even so, sometimes changes in this data deserve
additional highlighting. Did anyone notice?
Looking back across the last couple months, you find:
Resale houses Price
Volume
11/26/07 $800,000
658
12/07/07 $800,000
786
12/19/07 $775,000
802
12/31/07 $739,000
721
01/07/08 $720,500
684
01/14/08 $703,500
634
01/17/08 $690,000
603
The median price changed -14% in less than 60 days!
Sales volume is down "only' -8% but sits at the lowest reading in our four years of tracking this data. DQ's monthly
"spin" (errr... "press release") concedes sales volume is the lowest since 1995.
Sarcasm alert: Fresh off reading a lot of "Weldon's
Money Monitor," this is the point where Greg Weldon would point out -14% in 53 days projects to... -96% over
year!
On a more serious note, you may recall we recently reported:
"(E)ven we have to admit one month doesn't make a trend. We expect January to also be weak, but this won't prove much
either. We won't know if December's -$60K plunge is really meaningful until we see March or April data."
These seemingly-dramatic changes in the last couple weeks may
set off strong emotions in some folks. Perhaps a more
objective way to judge recent data is to add the context of years of data. Over the years we've accumulated data,
house prices look like this:
 Using percentage change seems to make the data bit more
useful:
Shown this way, you notice this week's report shows prices
are back to 2005 levels. (To be more exact, a $690K median price was last seen for Santa Clara County Single-Family
homes on June 7, 2005.)
Thirty-two-plus months of "resale house" price gains were
eliminated in 53 days!
Maybe expressed as "median dollars" spent on real estate
helps highlight the change represented by this data?:
Or the percent change in "median dollars" spent on resale houses?:
OK, but won't prices just snap back in the spring? Well,
maybe. However, sales volume suggests maybe the widely-anticipated annual snap-back has a long way to snap
this year.
For the Elliot Wavers among us, peak "resale home" volume
was 2,014 (July 12, 2005). The current reading of 603 represents a -70% drop, roughly midway between classic 61.8% and
78.6% Fibonacci targets. If we get to -78.6%, a trough works out to ~431 sales.
A 50% retracement from there would get volume back up to ~1,223
sales. If this is the "bottom" a 50% retracement
works out to 1,309.
Peak "resale home" volume in 2007 was 1,354. Be
prepared for a tremendous hoopla if sales bounce back to anywhere near these levels. Empowered with the above data,
you know, even if sales manage to roughly double, we are still in a declining market.
Conclusion:
We report, you decide. However, we think these changes in
the data deserve to be noticed...
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