'Prices Are Falling Because They Were... Ridiculously High'

Updated 05-29-2008, see below.

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The latest Case-Shiller Index; perhaps the best authoritative measure of the housing markets (PDF can be obtained here):

SFGate.com had this to say:

In the San Francisco area, which Case-Shiller defines as the counties of San Francisco, Alameda, Contra Costa, Marin, San Francisco and San Mateo, the one-year price decline from March 2007 stood at 20.2 percent. The decline from February to March was 3.5 percent.

The Bay Area’s year-over-year price slump was the sixth steepest of 20 major metropolitan areas tracked by the index.

"Prices are falling because they were too high - ridiculously high," said Christopher Thornberg, principal of Beacon Economics in San Francisco. "They’re now in the process of going back to a more normal level. Frankly, that’s a good thing."

Thornberg said he thinks prices could return to year 2000 levels.

Here's what the Economist had to say (emphasis mine):

AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year.

DataQuick Results for April, 2008

Here are the April, 2008 results from DataQuick:

The median price in Marin is down -13.5% year-over-year. Last month it was -4.5%, before that about -6.5%, and before that -5.5%. Marin is currently down about -29% from the peak.

I don't know about you, but I hope Leslie Appleton-Young is making regular trips to her doctor at least judging by this quote she made back in April, 2007:

"It's God's country, what can I say," Leslie Appleton-Young, chief economist for the California Association of Realtors, told an audience of agents Tuesday in Terra Linda. "When is the 30 percent decline in Marin County's market going to happen? Not in my lifetime."

And I can't let this, from the Marin IJ the other day, pass without some comment (emphasis mine; the graphic is from foreclosure.com -- this time last year the "preforeclosure" number for Marin was 168 compared to the 478 of today, and this time 2006 it was a paltry 35):

A crumbling Marin housing market is booming business for Coldwell Banker broker George DeSalvo. The veteran agent deals in real estate owned, or REO, properties that have gone through foreclosure and into bank ownership. DeSalvo described today’s market as the worst he’s seen. "I think this has close enough parity to foreclosures that took place during the Depression," said DeSalvo, a Novato resident who works out of Greenbrae.

Edward Segal, CEO of the Marin Association of Realtors, said he has seen "a big spike" in member requests for workshops on foreclosures, short sales and REOs over the past six months. One such session last month was standing-room only.

Realtor Vince Gramalia in San Rafael, has practiced real estate in Marin for more than 30 years but spends about 75 percent of his time dealing with REO properties these days.

"Being in the business for a while, I was aware of it since the early '70s," he said. "We went through a couple phases like this, and we saw this coming."

"Saw this coming"? What the...!? Not likely; this blog is testament to that. Your industry time and time again refused to deal honestly with the public. Your industry, and yes, I am also most certainly including the real estate industry in Marin, did nothing but engage in disinformation, overt manipulation, and general fear mongering to prop up buying activity and to line your own pockets with ever larger commissions. Need I remind you of incessant talk about how we are immune, we're "special", about how prices can only go up, about how Marin real estate will never lose value, "buy now or be priced out forever", distorted statistics, egregious propaganda sponsored by your industry in our local media? The list goes on and on and is documented to some extent here on this blog. Don't you dare now say "you saw this coming". Yes, we (the readers of this blog) saw this coming but probably not you and certainly not your industry. But if you did happen to foresee this, were you out actively warning your clients that they might be making the biggest financial mistake of their lives; that perhaps they would be better off postponing a purchase? I didn't think so.

Marin March Prices Off -23.33% from Peak

While poking around the SFGate.com database, I ran across this:

When You're Hot, You're Hot...

And when you're not, you're... 0.42 it seems: