California Homes Sales Report - October 2008

As reported by DQNews.com - "California October 2008 Home Sales":

An estimated 42,293 new and resale houses and condos were sold statewide last month. That was up 4.9 percent from 40,371 in September and up 63.7 percent from 25,832 for October last year. It was the strongest month since December 2006 when 43,431 homes were sold. California sales for the month of October have varied from last year's low to a peak of 70,152 in 2003, the average is 44,602. MDA DataQuick's statistics go back to 1988.

The median price paid for a home last month was $278,000, down 1.8 percent from $283,000 for the month before, and down 34.4 percent from $424,000 for October a year ago. Around half the drop in median is due to depreciation, the other half due to shifts in the types of homes selling, and how those homes are financed.

Mortgage payments - good news, bad news:

The typical mortgage payment that home buyers committed themselves to paying last month was $1,310. That was down from $1,337 in September, and down from $2,016 for October a year ago. Adjusted for inflation, mortgage payments are back to where they were in early 2001. They are 36.5 percent below the spring 1989 peak of the prior real estate cycle. They are 48.7 percent below the current cycle's peak in June 2006.

Concluding CA housing tidbits:

Indicators of market distress continue to move in different directions. Foreclosure activity is at or near record levels, financing with adjustable-rate mortgages is near the all-time low, as is financing with multiple mortgages. Down payment sizes and flipping rates are stable, non-owner occupied buying activity appears flat but might be emerging, MDA DataQuick reported.

We believe the housing market is ready to turn. Unfortunately, there's not much room to do so in consideration of the extenuating economic conditions (aka - the brick wall). People are losing their jobs and that trend looks to continue into the Holiday season.

On the bright side, the cost of living is beginning to adjust favorably as far as pricing pressure on daily staples. In fact, at one of our local Chevron stations, gas has fallen to $1.99 for a gallon of 87 octane (the cheap stuff). At it's most inflated point this year, the same gallon of gas, at the same Chevron station, was $4.59 a gallon!

Inflation, deflation, what's next?