Moments ago we showed that despite the rosy headline data reported by the NAR in tabulating its existing home sales, things below the surface for the US housing market were far worse than the soundbites indicate, as the only "stable" segment when it comes to existing home sales is that capturing transactions in the $1 million+ price bucket which corresponds to just 2.4% of all transactions.
Then, we decided to drill down a little more, because while the average number is certainly jarring, when it comes to housing, the US is hardly a homogeneous market, and where every region has its own supply and demand issues. And by and far, the one region that has always stood out the most when it comes to abnormalities in US housing was the "West", largely a name for the state of California: the same place where the housing bubble was spawned back in the early 2000s, and where it first popped some time around 2006.
What we found when looking at just the "West" was that the distribution of sales by price bucket is beyond ridiculous in this state. The table (from the NAR) below summarizes the results:
What stands out is that while California is by far the most vibrant market when it comes to the most expensive segment (at +6%, the highest in the nation), it is shambles when it also comes to the two lowest price buckets, both of which blow out any myth of a recovery for the "non-1%" out of the water, with a collapse of 40% in sales in the $0-100K range, and a 20% plunge in the prime $100-$250K market (the Median existing home price across the US in May was $213,400).
As usual the best way to get a sense of the surprising divergence in the Western housing market is visually. The following chart, shows the sales by bucket in the West, as well as across the US.
Clearly, something very disturbing is happening in the California housing market: on one hand the latest housing bubble for the bulk of the market has clearly burst, on the other, the bubble for the ultra-luxury segment keep soaring to new highs.
Sustainable? Or just more "noise?"