Thursday, April 27, 2006

Shorewood Realtor reports: number of homes for sale up sharply in March

According to Shorewood Realtors, the number of homes for sale in the cities of El Segundo, Manhattan Beach, Hermosa Beach, and Redondo Beach was up 128% YOY in March, to 502 from the 220 homes the previous March. In nearby Hawthorne, inventory jumped 295% and Palos Verdes saw a 113% jump.

The number of sales were generally lower, though neighboring city Torrance saw sales increase by 5.1%, and Inglewood jumped by 84.6%. (Just keep in mind if there were few sales to begin with, any increase is going to look like a big percentage.)

Days on market in the four beach cities increased to 39 days from 33. (DOM can be misleading if homes are delisted then relisted, but around here that seems to be just a handful of homes, so far...)

Sunday, April 23, 2006

DQNews South Bay Resale Activity for March

According to DQ News, the March Monthly resale activity showed the following:

Zip     # SFR   Median   %Chg   # Condo  Median    %Chg 
        Sales   $SFR      YOY    Sales   $Condo     YOY
90045    33     795,000  12.0      6     443,000   19.6
90245     9     867,000   3.2      8     584,000   14.5      
90254    15   1,130,000  35.3     15   1,150,000  -19.5   
90260    16     500,000   8.8      8     328,000  -12.7       
90266    50   1,668,000  23.2      9   1,438,000   -4.1
90277    29   1,000,000   7.2     19     702,000   11.1     
90278    27     780,000  -1.2     21     670,000    1.7

Conventional wisdom says condos don't hold their value as well as SFRs, and if that is the case, condos would be the first casualties of a serious South Bay real estate bubble that may well implode later this year. Notice the condo $$$ decline in Hermosa (90254), Lawndale (90260) and even the mighty Manhattan Beach (90266). Early Gusts of a Storm Warning?

Wednesday, April 19, 2006

Number of home sales declining in So Cal, median prices up YOY

Housing market watcher Annette Haddad of the LA Times, in an April 19 story, reports that the median price for home in LA, Orange, Riverside, San Diego, San Bernadino, and Ventura rose to $501,000, up 14% YOY and up 4.4% from February.

However the number of homes sold has fallen 9.7%, the fourth consecutive month that volume has fallen.

Analysts at DataQuick are calling the current real estate market a "normal real estate cycle". However, they are also saying that the rate of price increases is not sustainable, and are looking to single-digit increases by year's end.

"Anytime you see a volume drop, the price will be impacted two or three months from now", said Michael Davin, executive vice president of Catalist Homes, a Hermosa Beach-based real estate brokerage that serves the region..."Inventory is going up but not at alarming levels."

There are about 50% more homes on the market than a year ago, and the average days on market has increased from 27 to 48.

San Diego is being viewed as the barometer. The median price in San Diego has risen 5.7% to $504,000, and sales fell 17.4%, though the median is slightly down over 6 months.

Riverside county was the only county to show an increase in number of sales, up 6%.

DataQuick analysts believe that demand will have to wane much further for prices to start declining.

Monday, April 17, 2006

Los Angeles - not down and out yet

According to housing market watcher Annette Haddad at the LA Times, Los Angeles has yet to pop in an April 13 story. In March, the median home price in LA County hit $506,000, up 15% YOY and 3% above February. To buy that house, a household needs an annual income of $120,000 to get conventional financing (with a 20% down payment, equalling $101,200). The county's current median household income is $47,000.

Economists claim that since the housing busts of earlier times, the region is no longer dependent on any single industry (e.g., aerospace), mortgage rates are lower, and people aren't being panicked into selling at lower prices. But others say that sales volume is slowing, more homes are coming on the market, and the rate of price appreciation has slowed. One UCLA economist says that the deceleration in prices, a smaller volume of sales, and growing supply are the typical signs of a slowdown's first stage, and that it can take the better part of a year to really see lower prices.

In places like Lancaster, the housing market is still hot, in part because of the region's general affordability problems.

Tuesday, April 11, 2006

Well here's a partial explanation for the Q1 slump in 90278...

90260 is Lawndale. It is directly east of north Redondo Beach, across Inglewood Blvd. In recent years it has been transformed into a Redondo Beach wannabe. But parts of it are very slummy. Property values have risen through the roof, probably because desperate buyers so badly want something more "affordable" that they will bid up slums or the better properties next to the slums. Q1 2006 was particularly strong in Lawndale. Maybe that's where the fickle buyers of Redondo have been going.

Saturday, April 08, 2006

Real Estate $$$ Transacted through March 2006, Beach Cities

March showed some weakness in the South Bay in total real estate $$$ transacted. This number is taken by multiplying the number of sales for each month by the average sales price for that month. Because the data is so choppy, I take a doubly smooth moving average to "spread the wealth", so to speak. The very early data for 2002 contains a slight correction from the last time I posted these charts.

Anecdotally, I can tell you in the 11 years we've rented on this north Redondo street, this is the first year that realtors have left calendars, business cards, and brochures on our doorstep. Twice. If real estate $$$ are down, realtors are likely to feel the decline even before the homesellers, who, if they've held the property for several years, can still sell at an excellent profit. The realtor, though, must make a living off of commissions, which decrease as transaction $$$ shrink. So I think the realtor visits indicate that they are looking for buyers.

Manhattan Beach in particular showed continuing strength, in spite of reports of a big jump in average days on market. However, April is off to a blazing start in just about all the Beach Cities - home sales have surged (not yet shown in this data). If this holds up throughout April, real estate activity, measured in $$$, will exceed last April's activity. Will this new spring momentum develop legs? Although there seems to be quite a bit of building activity, this area is not plagued by the excess of new inventory in places like Arizona and Florida where they just haven't stopped building! There are no announcements of major job losses in the area. So maybe that new momentum will develop some legs - then again, maybe not. In the meantime, do not be surprised to see talk in the local beach papers about how the market has recovered. Now, back to March:

For March, 90245 (El Segundo) is barely over last's years activity. El Segundo is somewhat problematic, as it is such a small town that any construction project is bound to make the data extremely lopsided.

Both the raw and the doubly smoothed moving average of 90254 (Hermosa Beach) continue to show a deterioration in real estate activity.

90266 (Manhattan Beach) continues to show strength, as mentioned. By the way, this city has become a two-class town. Currently there is a furious debate raging over the undergrounding issue. When first proposed a number of years ago, the estimate of the assessment per home was fairly low - I heard it was as low as $8000. Now it is $40,000. Senior citizens who have lived in their homes for 30, 40, even 50 years are screaming bloody murder. The city is trying to strong-arm them into borrowing against the equity in their homes in order to pay for the undergrounding, and they (very sensibly) don't want to borrow money. This is the poor side of town. The wealthy side of town is comprised (in part) of young rich sports stars in multi-million dollar mansions, who can easily plunk down $40K for undergrounding. It's a sad state of affairs when city politicians can pressure you into going into debt. A sign of these bubble times.

90277 (south Redondo Beach) also continues to show some strength, though the raw data shows the first YOY dip since October.

90278 (north Redondo Beach) still remains the weakest zip code, with the third consecutive month of declines both in the raw and the doubly smoothed moving average.

We have combined real estate $$$ transacted for 90245, 90254, 90266, 90277, and 90278 into one Beach Cities chart that shows an ever-so-slight YOY loss of momentum in January, a slight flattening in February, and a small dip in March.

What is the one thing that you notice practically leaping out of these charts? Notice how the sky blue bars tend to form an arc pattern somewhere in the second half of 2005? For 90254, the arc peaks in early autumn; for 90277, the arc peaks in the summer months; in 90278, the arc is notably flatter; 90245 actually had a better year in 2004 so the 2005 arc is not as meaningful. What we'll be looking for later this year is how far we fall short of that arc (or IF we fall short of that arc). That arc looks like a market peak.

We are featuring a "guest" zip code, 90064 (a part of west LA), that shows YOY weakness for the first time since April 2005.

Friday, April 07, 2006

Realtor Current Market Conditions, early April 2006

The Realty Times current market conditions reports rank Current Market on a scale of 1 to 5 (1=buyer's market, 5=seller's market), and Current Price Trend on a scale of 1 to 5 (1=falling, 5 = rising). It's a very mixed bag out there, with data being selectively reported. That there are conflicting reports suggests that the South Bay market area is not the powerhouse it used to be.

Don Tambini's April 4, 2006 report for Redondo Beach single family residences (SFRS) ranks Current Market = 3 and Current Price Trend = 4.

               Mar 2006       Mar 2005
Average DOM          56             36
Average Price  $895,000       $974,000        
Number Sold          33             32

Townhouses and condos both decreased in number of sales but average price is still going up.

Note: average price is particularly misleading, but it's notable that even average price is down for SFR in Redondo, suggesting perhaps that the higher end homes are not exactly selling like gangbusters the way they have been in, say, Manhattan Beach.

Realtor Kay Grundhaus, who ranks Current Market = 4 and Current Price Trend = 3, reports:

You can get more for your money in this area...South Redondo continues to grow in pricing...the climate has changed a little this year...sellers are still trying to get last year's prices and buyers are waiting for the market to drop...houses are staying on the market longer and some really wanting to sell are lowering their prices, but not much...

That sounds about right. On Zip Realty I've seen a number of price reductions in 90278 but nothing major. I've seen a small handful of properties sneak back in as relistings at reduced prices, but even those reductions are still less than 10%.

Manhattan Beach. Realtor Don Tambini ranks Current Market = 3 and Current Price Trend = 3, and reports on Manhattan Beach SFRs:

                Mar 2006       Mar 2005
Average DOM           74             29
Average Price $2,045,000     $1,636,000
Number Sold           34             40

Overall, SFR sales still look fairly strong, even though average DOM now is sharply up in March. The number of sales for townhouses and condos in March, and their sale prices, were about the same as a year ago.

For Manhattan Beach, Realtor Robert Kissig ranks Current Market = 5 and Current Price Trend = 5 (I am not sure how he comes up with those numbers.) He reports:

SFR median price (for February? unclear) is $1,950,000, +23.8% from February 2005, while townhouse/condo median price is $850,000, -35.7% from February's becoming a buyer's market.

For Hermosa Beach, realtor Don Tambini ranks Current Market = 3 and Current Price Trend = 3. For March 2006 SFRs, he reports:

                Mar 2006     Mar 2005
Average DOM           73           30
Average Price $1,539,000   $1,180,000
Number Sold            9           12

The number of sales and prices for townhouses and condos were similar to last year.

Overall, no signs of panicky sellers yet, though the long reaching tentacles of the slowdown seem to have reached this area and buyers appear willing to wait. On a side note, this is the first year, in almost 11 years renting where I do, that realtors have been leaving calendars, business cards, and literature on our doorstep. Real estate transaction dollars are down and it's the commission-earning realtors who are feeling the financial pain first, not the homesellers who are still selling their homes at greatly appreciated prices.

Tuesday, April 04, 2006

Easy Reader Posts February Shorewood Report

Here is the February Shorewood Report for the South Bay cities as posted in the Easy Reader, but there is probably nothing new here. Number of homes for sale, homes sold, and sales pending are clearly down YOY, while average price, median price, and average price sold per square foot are still clearly up. Even average number of days on market is down slightly. From looking at data for March (hopefully graphs to be posted this weekend), I'd say that Manhattan Beach is still propping up much of this. 90278 and 90254 are weakening, 90245 I'm still undecided on, 90277 is flattening, and the higher end properties in 90266 are holding everything up. That's my take on things for now.