Chuck Ponzi September 14th, 2007

My apologies for recent times in not posting.  As I have mentioned before, I have had to take time off for personal, family, and work pressures.  Running a blog is almost a full-time gig outside of all of these things.

The article that all of my readers should have focused on recently was the LA Business Journal’s report of August sales.  Sales volume stepped off of a cliff in late 1995 and hasn’t hit the ground yet.

Some choice quotes from the article:

“These numbers are the first to show the beginning of the impact of the credit crunch that materialized in the last couple months,” said Robert Kleinhenz, deputy chief economist with the California Association of Realtors.

The others are not as nice

“We had a dramatic slowdown in activity in August. When the credit crunch hit, people didn’t know what to do and they just froze. It was like the Sept. 11 aftermath all over again,” said Gregory Holmes, associate manager with Coldwell Banker residential brokerage in Studio City.

Holmes said that “shock to the system” washed out almost all the buyers with less than prime credit or those who were unable to come up with 20 percent down payments.

Oh My, 20% down?  Where will the insanity end?

Not here, it seems:

Some homeowners who have decided to move and are not getting sufficient offers on their homes have chosen to rent out their homes on a temporary basis until the market begins to recover, according to Harvey Mark, a Long Beach area Realtor with Coldwell Banker.

Those sellers may again be surprised.  It is unlikely that we are going to work off the current 12 months of inventory we have if we have substantial shadow inventory, just waiting for a rebound (that will not come for several more years).  More likely, we will have even more forced sales.  Some areas already have over 2 years’ inventory in select price ranges.

However, like I called it, the bubble implodes outward-in (if it were inward-out, it would be an explosion).

It’s quite a different story in lower-priced exurbs like the Antelope Valley or lower-income inner cities communities like Compton and Lennox. Besides the national credit crunch, these regions have been hit particularly hard by foreclosures stemming from the subprime lending crisis.

For example, the HomeData figures show that the four Palmdale ZIP codes experienced a whopping 70 percent decline in home sales last month from August 2006 levels. Prices were off 6 percent to almost 15 percent.

In three Compton ZIP codes, volume was off 62 percent to 75 percent, with price declines reaching almost 14 percent.

And we’re just beginning.  In one year, it’ll be much, much worse.

Share your exurb indications here.

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