Two indicators of the California real estate market that we’re tracking are the median price of existing detached homes and the violations of California regulations for real estate licensees, agents, brokers and non-licensed individual/firms involved in real estate transactions*. Below we have the monthly and 12-month moving average data for these two series from 1990 to the present.
Based on the last cycle, 1990 to 2008, once the median price recovered from the 1997 low to above the 1991 high, the 12-month moving average of violations bottomed in December 2000. It was at this point that the real estate market experienced accelerated growth in prices.
Our take on this data series is that the same scenario will be displayed in the current run. We will see the median price exceed the prior peak followed by a low and reversal to the upside of the 12-month moving average in the violations data.
*violations data is based on the 12-month moving average