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This is what many economists had been dreading - the end of federal homebuyer tax credits made mincemeat of the housing market in July. L.A. County sales fell 19.4 percent from a year earlier, according to Dataquick, and 17 percent from the previous month. It's a little like what happened to car sales immediately after end of the Cash for Clunkers program. The message is loud and clear: Given the unsettled economy, American consumers are unlikely to make any large purchases without some sort of government help. The good news is that L.A.'s median price of $339,000 was up 5.6 percent from a year earlier - and a little over one percent from June. But overall it was the slowest July in Southern California in three years, which is saying a lot.
"It appears some of the sales that normally would have occurred in July were instead tugged into June or even May as buyers tried to take advantage of the expiring tax credits. Some of last month's underlying technical numbers were largely flat, indicating that the market is treading water," said John Walsh, MDA DataQuick president. "We do expect some sideways buying and selling to kick in, especially among homeowners who have owned for more than seven years and didn't take out equity during the frenzy. You may have to 'discount' your self-perceived home value, but if the person you're buying from has to do the same thing, it doesn't matter. And you may get a spectacularly low mortgage rate."
The obvious question is what happens this month and next? There is certainly no sign that consumers are in any mood to start buying homes. That could mean a drop in prices, which isn't great because it would lower the value of all properties and leave more folks with mortgages that are higher than the value of their homes.
JULY HOME SALES (% change from July 2009)
Los Angeles 6,515 -19.4%
Orange 2,527 -19.2%
Riverside 3,529 -24.9%
San Bernardino 2,556 -28.0%
Ventura 749 -10.5%
JULY MEDIAN HOME PRICES (% change from July 2009)
Los Angeles $339,000 5.6%
Orange $450,000 7.1%
Riverside $200,000 8.1%
San Bernardino $155,000 10.7%
Ventura $370,000 -1.3%
Source: MDA DataQuick, DQNews.com
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.