California Ground Zero in Upcoming Real Estate Bust

Looking for a severe real estate bust? Try Australia or California. Both represent ground zero.

The California Association or Realtors (CAR) just posted some Dismal Statistics.

  • The California housing market posted its largest year-over-year sales decline since March 2014 and remained below the 400,000-level sales benchmark for the second consecutive month in September, indicating that the market is slowing as many potential buyers put their homeownership plans on hold.
  • Existing, single-family home sales totaled 382,550 in September on a seasonally adjusted annualized rate, down 4.3 percent from August and down 12.4 percent from September 2017.
  • September's statewide median home price was $578,850, down 2.9 percent from August but up 4.2 percent from September 2017.
  • Statewide active listings rose for the sixth consecutive month, increasing 20.4 percent from the previous year.
  • Inventory reached the highest level in 31 months, with the Unsold Inventory Index reaching 4.2 months in September.
  • September year-to-date sales were down 3.3 percent.
  • Tax reform, which increases the cost of homeownership, also is contributing to the decline, especially in high-cost areas such as the San Francisco Bay Area and Orange County.

Inventory Rising Fast

That image thanks to Calculated Risk.

Inventory up 20%. What's the problem?

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Sky-high housing prices in the Golden State bring an echo boom—and new neighbors—to other Western states.

Affordable Migration

Even liberals have finally had enough of California, Illinois, and New York.

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Mike "Mish" Shedlock

Comments
No. 1-10
Ted R
Ted R

Booms always turn into busts. Housing prices never go up forever and factor into the equation record mortgage debt and you have a recipe for disaster. The ghosts of 2008 are beginning to show themselves.

Snake
Snake

Please stay OUT of RENO,NV. It's already starting to get "Californicated".

WCVarones
WCVarones

In addition to high price/income and rising mortgage rates, tax reform added significantly to the monthly cost of home ownership. Check the numbers!

KidHorn
KidHorn

Housing prices will come down to more affordable levels and this will stoke demand. I don't see this as apocalyptic. Just a normal correction. As long as high paying jobs exist in Ca, there will be demand for housing.

Casual_Observer
Casual_Observer

Texas is becoming what California use to be. Give it another election cycle or two and the rampant growth Texas is experiencing will be unmanageable. The reason booms dont go on forever is because there is an upper bound on growth that crimps the quality of life. I'm happy people are leaving California as it will only help the state manage its growth better. Texas and other growth heavy states will soon realize the limits and side effects of rampant growth. When this boom goes bust real estate across the country will go back to 2% growth in value per year. The bigger problems around the country will manifest themselves at state and local governments.

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