Key Factors Keeping California in Housing Slump
What is keeping the California market from returning to normal? Five key financial trends seem to be the culprits: rising MLS inventory, falling rents, lack of good paying jobs, FHA defaults rising and no mortgage payments. My friends on Dr. Housing Bubble present a very compelling case. Enjoy the article and please sign up for my newsletter for additional info. Peace, Megan.
For the first time in nearly three years since I’ve been tracking MLS data for Southern California, the public inventory number has increased. The low was reached in October of 2009 and this was when across the six Southern California counties 64,000 properties showed up on the MLS. Today that number is now over 70,000 (an increase of 9.3% in 6 months). I’ll include a graph later in this article showing the trend. The L.A. Times ran a couple of articles discussing option ARMs and additional defaults coming down the pipeline. Now whether this happens in mass or slowly will be something we will find out soon enough. With high unemployment and a fragile market, housing prices will remain stagnant in lower priced areas for years to come but in more select neighborhoods, we will see prices adjust.
Let us now look at 5 major trends hitting the market today.
- Housing Sales Slump After Tax Credit Expires (npr.org)
- Housing market’s winter slump (lv.com)
- Analysis: Mortgage rule could exacerbate housing slump (reuters.com)
- Mortgage Rule Could Exacerbate Housing Slump (huffingtonpost.com)