L.A. Times: Home Price Gains Keep Shrinking - in downtown LA, "it's glut city"
In an August 12 story by Los Angeles Times bubble watcher Annette Haddad, L.A. County's home prices rose at their slowest pace in six years.
The median price of a sold home in Los Angeles County in July reached $520,000, up 6.6% YOY, and up just $3000 from June. This is a huge change in a market that has been enjoying annual gains of 20%. The number of home sales is down 25% YOY, and some analysts still insist on talking of a "soft landing" in spite of that figure. One DataQuick analyst admits that the real estate market is "slowing more rapidly than we've seen in a long time." This same analyst then attempts to rewrite history by claiming that "everybody" has always said a "soft landing could include minor price declines."
Median prices have started to fall in over a dozen zip codes, including here in the south bay area. In fact this article states that the Torrance (90501) median price for SFRs has fallen -7.4%, the most of any Los Angeles County zip code. However, the article does go on to say that such declines are not yet "widespread". Median prices are still gaining at "nearly half double digit rates" in the "more affordable" areas.
In downtown L.A., the ratio of condos for sale to every one sold this time in 2005 was 1 to 1. Now it is 7 to 1. One realtor says "it's glut city".
Mortgage brokers are blaming interest rates, noting that the monthly payment on a $300,000 mortgage loan today is 15% higher than in August 2005.
The article gave the May-July sales figures for existing SFR sales along with July YOY price changes, for the top 10 and bottom 10 Los Angeles County zip codes.
% change Median % change
Number of from price from
Area ZIP Code homes sold year ago (thousands) year ago
L.A. 90061 63 +1.6% $407 +31.3%
L.A. 90003 135 -10.6 420 +31.3
Compton 90222 108 +13.7 385 +28.3
L.A. 90011 105 +9.4 410 +28.1
Compton 90220 144 +21.0 400 +26.8
L.A. 90037 60 +5.3 445 +26.2
L.A. 90063 51 -10.5 395 +25.8
L.A. 90018 54 -19.4 525 +25.0
L.A./View Park/ 90043 122 +1.7 550 +25.0
Windsor Hills
L.A./Watts 90002 143 -0.7 385 +25.0
-------------------------------------------------------------------
Woodland Hills 91364 120 -13.7 787 -0.1
Claremont 91711 108 -12.2 583 -0.4
West Hollywood 90046 64 -28.9 1,095 -0.5
Arcadia 91006 85 -19.8 714 -2.6
Glendale 91208 57 -9.5 815 -2.7
Manhattan Beach 90266 108 -19.4 1,450 -3.3
Agoura Hills 91301 65 -47.2 820 -4.1
Palos Verdes Pen 90274 74 -32.1 1,400 -4.9
L.A./Rancho Park 90064 51 -34.6 895 -6.6
Torrance 90501 69 -5.5 560 -7.4
Question for blog visitors - why do you suppose the article is showing "May through July" sales instead sales only for the month of July? Are the July-only numbers so terrible they don't want to put them in print? And do you think downtown L.A. is starting to sound like downtown San Diego about seven months ago?
posted by bearmaster at 5:51 PM
4 Comments:
there will definitely be some shakeout in the condo market downtown. they're building like crazy and trying to charge westside prices while the ammenities downtown just aren't anywhere near where they should be in order to justify the prices.
not sure why they used may-july numbers, but your theory sounds reasonable.
btw, i was down in your neck of the woods in redondo today and saw quite a few for sale signs more than the last time.
mike,
Yeah, I think the slowdown is continuing to grind this market down. A small older house on Robinson I thought had sold I noticed got relisted recently, but the owner really hasn't marked it down much. An enormous new house on Robinson has been on the market at least since last October - again with an unimpressive markdown. A place on Mathews has been on the market since before Christmas and has been marked down 16%.
I was tootling through El Segundo today and noticed new condos on Grand that aren't yet finished. Lots of open house signs in Manhattan Beach, on that stretch of Manhattan Beach Blvd between Sepulveda and Aviation, which I don't think is "normal" for this time of year.
Things are starting to look different around here.
banned,
Funny that you should mention Little Tokyo. I took the train up there Saturday for the Tofu Festival. It had been a while since I had been in downtown L.A. and the first thing I noticed was the proliferation of homeless people now sleeping in the parks in the area.
I saw condos being advertised there and I noticed that K. Hovnanian Homes appeared to be one of the "sponsors" of the festival. It was the first time I had seen real estate being advertised at a food festival.
I'm starting to think we're going to be seeing A LOT more builder advertising in the coming months in all kinds of (unlikely) places.
There is an article in today's L.A. Times called "Seller as Suitor" which talks about the measures that sellers (builders and homeowners) will need to stoop to in order to convince a buyer to make an offer. Everybody, brace yourselves.
Here is a link to the article (free registration required). I'm not blogging it because it talks about seller behavior in a way that is not necessarily specific to L.A. or the south bay.
Seller as Suitor
My one thought...
How many "sales" are falling through? I cannot help but notice that the realtors (tm) always post pending sales (which are declining) but not closing (often due to inability to sell their previous property, fiance the loan, whatever).
What is the "fall through" number now? I've heard near 30%! (Is that true, note I'm asking.)
So if pending sales are at 70% of last year but only ~50% are actually closing... Yikes!
And we're past the summer selling season.
All that matters now is can flippers HELOC until next summer?!? I don't think standards have tightened enough to stop them in mass... yet. Thus why next year is going to be such a fast train wreck on a scale not seen in our parents lifetime. :(
Neil
"Mortgage brokers are blaming interest rates, noting that the monthly payment on a $300,000 mortgage loan today is 15% higher than in August 2005."
Price has more to do with this than interest rates. Easy financing (no doc, low doc, I/O, neg-am, etc.) is history and this house of cards is being blown over as an unprecedented amount of ARMs reset. Greed is being replaced by fear, speculation is a thing of the past, and the smart ones have already unloaded their ticking time bomb to a greater fool. 2007 will be ugly and 2008 even worse as recession grabs hold and reversion to the mean gains steam. But who knows, I could be wrong.
Post a Comment
<< Home