Thursday, September 23, 2004

Since I'm on the topic of housing prices today, it's about time I blogged the second quarter data from the National Association of Realtors.

You may recall that I said back in early July that "California is bubblicious", with five of the state's six metro areas experiencing annual median home price inflation of over 20% (and San Francisco just behind at 17.3%). Believe it or not, the state become even more bubblicious in the second quarter. And when I say more, I mean a hell of a lot more. Crazy more. Totally unsustainably more. Quarterly percentage changes are annualized.

Metro area / 2003:IV-2004:I / 2004:I-II

San Diego -- 23.0% -- 63.5%
Orange County -- 34.7% -- 57.9%
Riverside-San Bernardino -- 32.6% -- 55.0%
Los Angeles area -- 11.9% -- 47.3%
Sacramento -- 24.7% -- 43.9%
San Francisco -- 18.2% -- 31.2%

Notably, the relative moderation of the LA and Bay Area markets in the first quarter has been totally swept aside in the second, while the ultra-frothy markets have shot into the stratosphere. And don't forget the Northeast, where housing inflation is returning with a vengeance. Again, these quarterly figures are annualized.

Metro area / 2003:IV-2004:I / 2004:I-II

Baltimore -- 4.2% -- 57.4%
Boston -- -8.2% -- 22.4%
New York/N. New Jersey/Long Island -- 15.8% -- 25.5%
Philadelphia -- -1.2% -- 67.1%
Providence -- -1.3% -- 36.8%
Washington -- 11.8% -- 68.8%

Now all these figures must be taken with a grain of salt since they are not seasonally adjusted. Nonetheless they show some remarkable ballooning price levels. For a broader picture, check out the annual numbers.

Across the United States there are five markets which had annual (2003:II to 2004:II) housing price inflation of over 30%. Four of them are in California: Orange County (38.7%); Riverside/San Bernardino (38.5%); San Diego (37.5%); and Los Angeles (30.4%). The number one slot belongs to next door neighbor Las Vegas, at an unbelievable 52.4%. By comparison, the 20-25% annual increases across Florida and in Baltimore and Washington look tame.

As as I warned back in the early summer, the use of adjustable rate mortgages (ARMs) is fueling this fire. The below list is of the percentage of new conventional home mortgages taken out on adjustable rates by quarter.

Metro area / 2003:IV / 2004:I / 2004:II

Las Vegas -- 26% -- 36% -- 51%
Los Angeles/Long Beach/Riverside -- 44% -- 45% -- 55%
Sacramento -- 50% -- 47% -- 64%
San Diego -- 61% -- 59% -- 67%
San Jose/San Francisco/Oakland -- 57% -- 56% -- 66%

Of course, the bond market is telling us the era of ultra-low interest rates is here to stay. Clearly home-buyers believe it, regardless of what the Fed is doing. Californians had better hope the actions of Greenspan & Co. simply don't mean a thing.


At 12:52 AM, Anonymous hypotheken said...

Hi Blogger! Ik ben op zoek naar hypotheken Zou Afab echt zo goed zijn als iedereen beweert? Of kan ik beter zoiets als Geldshop proberen?

Groetjes Albert


Post a Comment

<< Home