L.A.. Times: Home prices up 4.5% as sales fall in L.A. County last month

Here is the housing market bounce that Alan Greenspan and David Lereah were talking about. According to this November 14, 2006 L.A. Times story by Martin Zimmerman, the housing market showed "signs of life" in October. So what is all the excitement about?

September had 3% YOY price appreciation but October's YOY appreciation was 4.5% to a median price of $514,000. There was also a month to month gain, reversing the month to month August and September declines. The L.A. County median home prices peaked in July at $520,000.

For the state, October sales of all new and existing homes fell 21.8% YOY, but this was at a slower pace than September's 28% drop, so this is being trotted out as one piece of evidence that the market is "stabilizing." According to one analyst, buyers who thought they could get bigger price reductions are "throwing in the towel", and open houses have been "busy."

At least DataQuick's analyst is still suggesting that price appreciation could turn negative by the end of this year, stating that "It might be uncomfortable for those who bought at the peak if they have to sell, but for the vast majority of homeowners out there, it isn't going to mean much."

Here is a table of the breakdown in sales and prices:

Prices

                 Median Oct 05 (1000's)      Median Oct 06 (1000's)    % Chg
Resale houses    $520.0                      $540.0                    +3.8%
Resale condos    $405.0                      $410.0                    +1.2%
New homes        $450.0                      $507.5                    +12.8%
All combined     $492.0                      $514.0                    +4.5%

Sales

                 Oct 05       Oct 06      %Chg
Resale houses    6,998        5,489       -21.6%
Resale condos    1,774        1,336       -24.7%
New homes        1,020          837       -17.9%
All combined     9.792        7,662       -21.8%

So far, November beach city sales here in the South Bay have not suggested any kind of recovery. For today, November 14, nearly halfway through the month, I have TRIPLED what Melissa Data is showing in sales to date for each zip code to allow some leeway for numbers being published later this week. Then to continue the fantasy, let's just multiply that number by 2 to get a full November 06 estimate and compare it to column 4, which is the number of sales from November 2005.

           Nov triple        2x       Nov 05   %Chg
90245      12                24       19       +26.3%
90254      6                 12       33       -63.6%            
90266      15                30       51       -41.1%           
90277      24                48       57       -15.8%     
90278      24                48       79       -39.2%      

When I do all that, only El Segundo (90245) looks good, and so far this is a product of my fantasy, I have no hard evidence yet.

Does this look like a market bottom? Does this look like buyers are capitulating? So how many buyers showed up at your local open houses last weekend? I didn't see much traffic in my neighborhood!

My conclusion: These markets briefly stepped on the brake to enjoy the view while they continue their journey down the cliff. I know the Federal Reserve and Treasury are throwing everything they've got into our financial markets to cushion the slide in our national housing markets, but I doubt they'll be able to halt it.