Who hasn't heard, "I'm waiting for prices to reach bottom."? I hear it all the time, and even if it drives you crazy, you understand what they are saying. Nobody wants to be the home buyer from early 2007 who buys the last bubble-priced house in an already crashing market. Mostly we can talk about how our local areas seem to be picking up steam or how one portion of the market is doing better than expected.
Well, I've been doing some number crunching, and in some areas near me, it's possible to look at the data and conclude that some portions of the market have possibly been at their bottom levels for a few months.
The chart to the right shows median price for the lower two quartiles (bottom 25% and the 25% above that) for the Santa Rosa, CA zip code 95404. I chose the lower quartiles since this is where the primary activity in terms of REO sales is taking place, Anyone selling their home into this market has to price competitively with the Santa Rosa foreclosed homes listings. I am showing both a 7 day average (the spikier orange and black lines) and 90 day averages. Both the blue and green 90 day rolling median price lines show a gradual uptick beginning apparently about March 1 of this year. That would be a gentle indicator that the market bottomed at around that time.
Looking at the chart's more volatile 7 day median prices tells a slightly different story. The block line representing the third quartile clearly is starting to move up beginning in late January. Reading back to earlier times on that line to mid December of 2008 show a few spikes rising above a bottom reached in mid December. The median price (in that quartile) today is close to $40,000 higher than late 2008. If you were looking at the green 90 day rolling average instead, today's prices would look $30,000 less than at that mid December time.
The bottom quartile has a slightly more mixed message. The red arrow points to a recent downturn in the 7 day median price which may turn out to be a longer term downward pressure on prices, or might be an artifact of just a few very inexpensive sales. We'll have to watch carefully to see how that trend plays out. What's clear is that looking at the volatile 7 day numbers can help you see when a trend starts to happen. If you are advising clients who are looking for the bottom, charts like this can help you show them the bottom may have already happened.
The REO market is still very active in the North Bay, just north of San Francisco. The bottom I talked about might be taking place in any of the areas indicated on these foreclosure maps. Let me know if you want to see recent sales information for any of these areas.