Saturday, August 12, 2006

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?

5 Comments:

Blogger mike said...

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.

8:55 PM, August 12, 2006  
Blogger banned_on_the_run said...

Downtown LA is a beast of a place to live. It's totally child/young family unfriendly. With all the condo developments and turning every old building/factory into lofts, there have been no schools, playgrounds, or parks built. Downtown is geared towards 1) young, single professionals who don't want to commute, 2) Asian retirees who've flocked to the new Little Tokyo condos and 3) homeless people. The homeless who've overflowed the Mission and spilled out into a 10 square block area around Little Tokyo and the Toy, Flower and Fashion Districts will be getting the best deal. Sterling is building a new $20M homeless center. So don't look for Yuppies and Asian Senior Citizens to keep flowing in and making downtown LA the primo place to live. It's just never going to be.

1:42 PM, August 13, 2006  
Blogger bearmaster said...

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

4:41 PM, August 13, 2006  
Blogger Wannabuy said...

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

6:40 PM, August 14, 2006  
Blogger judicious1 said...

"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.

9:43 PM, August 14, 2006  

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