Rough landing expected for market

first_imgIt looks like this unwinding real-estate market is going to make more of a mess than expected.How big remains to be seen, but it will be noticeable. “I don’t think there is any doubt it’s going to be a harder landing than was originally forecast,” said Greg McBride, senior financial analyst at “The forecasts were made with the rose-colored glasses still firmly in place.”Support for that opinion can be found in all the housing-market reports for June that showed sales levels well under last year’s, the number of properties for sale mushrooming and prices starting to stabilize, although some records were set, including in the San Fernando Valley and Los Angeles County.And in some places prices in June did something not seen in a long time — fall under year-ago levels. AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREWhy these photogenic dumplings are popping up in Los AngelesOf the 101 markets in Los Angeles County, the median price in 16 fell under the year-ago level, including Tarzana ($567,000, down 27.2 percent) and Calabasas ($1.1 million, down 17 percent), according to DataQuick Information Systems.(DataQuick’s count includes new and previously owned houses and condominiums. Large changes in local median home prices typically indicate both local home-price appreciation, and often, large shifts in the composition of housing-market activity.)The June report from the California Association of Realtors showed that five major markets saw a year-over-year price drop.Sales are now in a nine-month slump and prices, though still climbing to record levels, show signs of running out of steam.A tipping point may be fast approaching here in the Valley, too. June’s record $625,000 median is just $25,000, or 4.2 percent, above where it was in July 2005. That $600,000 price was a record then, too. Even if prices do flatten, it won’t be much help for anyone trying to get into the market for the first time.That’s more support for a harder-than-expected landing.“The fact is appreciation has pushed affordability beyond the bounds of many buyers and that, coupled with a rising interest-rate environment is bound to have an effect on people,” McBride said.Ryan Ratcliff, an economist at the UCLA Anderson Forecast, believes that a worst-case scenario of the early 1990s all over again for California is unlikely.“That’s just rare in the historical record. You only see it in severe recessions,” he said.And a recession is not on the event horizon for the state or Southern California over the next several years. So far.Nevertheless, this housing market will make its presence known.“It’s not going to be a total collapse of the market but it’s not going to be so soft that you won’t know it,” Ratcliff said.There is no doubt that sales took a sharper turn than the California Association of Realtors expected.Last November, the Los Angeles-based group forecast a 2 percent sales dip this year. But in June it was revised down to a 16.8 percent decline, the biggest since a 30.2 percent plunge 24 years ago.Some areas of the state will do better than others.Leslie Appleton-Young, the association’s vice president and chief economist, attended a conference in Northern California on Friday. She heard that San Francisco still has low inventory and sellers are getting multiple offers. Locales that could get stressed include those that have seen a lot of building or condominium construction.“It’s more like a return to normal with a bumpier landing in some areas than others,” she said. “It’s not a replay of the mid-1990s. The economy is growing. We’re seeing not spectacular but certainly solid job growth.” 713-3743160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img

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