Home sales volume and price peaks

This article comes from First Tuesday Journal Online

This article looks at home sales volume, and discusses California trends in homebuying and selling.

Chart Last Updated 8/20/11

July 2011 June 2011 July 2010
Southern CA
18,090
20,532
18,946
Northern CA
16,605
18,443
16,256

CA Total

34,695
38,975
35,202

Chart Last Updated 8/7/11

2012* 2011* 2010 2009 2008 2005
NorCal 190,000 189,330 192,979 219,460 191,809 398,174
SoCal 217,000 216,851 228,655 245,331 201,894 355,698
Total 407,000 406,181 421,634 465,654 404,820 753,876

Data courtesy of MDA Dataquick

All forecasts are made by first tuesday based on current data, influential factors and market trends.

For a recent analysis of the current month’s sales numbers, click here!

The above charts track the home sales volume of single family residences (SFRs) on a month-to-month and annual basis. This includes all resales and new homes in California, including new homes sold directly by the builder.

Recent sales numbers suggest the upcoming years through 2016 will be characterized by a bumpy plateau in home sales volume. Volume and prices slipped slightly during the first half of 2011, and are expected to continue falling through the remainder of the year, with a (short-lived) rise going into 2012 due to historically low prices and interest rates. [For more on the influence of interest rates on home sales, see the first tuesday Market Chart, Buyer Purchasing Power]

Little overall change from 2010’s numbers will occur until California employment growth and homebuyer confidence show consistent improvement over a substantial period of time. For example, in 1994, when the economy began to rise from the recession of 1991, it took 24 consecutive months of improved job numbers for the housing market to respond with increased sales volume.

Current trends in jobs and consumer confidence do not suggest any equivalent improvement in sales volume is imminent. At the time of this writing, 30% of all homeowners cannot sell and relocate because their homes are worth significantly less than the debt encumbering them. Worse, lenders are reluctant to consent to any discounts on short sale payoffs when sellers are even remotely capable of paying on the loan. [For a discussion of the challenges facing current job seekers, see the August 2011 first tuesday article, Jobs are scarce whether or not you can sell your home.]

first tuesday forecasts home sales volume will return to the 2006 levels around 2017-2018. The peak sales volume last seen in 2005, inflated by speculator acquisitions, may never return at all.

Relocating Baby Boomers going into retirement later this decade will be the primary propelling force in both selling homes and buying replacements. Their Generation Y (Gen Y) children will add to the sales volume as they become first-time homebuyers whose influence will peak at the end of this decade.

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