Los Angeles Area home prices continue down in May 2007 according to S&P/Case-Shiller Home Price Index

S&P/Case-Shiller is the only home valuation methodology I am aware of that is widely published and shows Los Angeles area home prices actually trending DOWN. Conveniently, the Los Angeles Times publishes DataQuick and Los Angeles Business Journal publish HomeData numbers. Case-Shiller avoids many of the problems that these latter two companies wade into with each report they issue.

By Case-Shiller, Los Angeles area May 2007 home prices are down -3.3% YOY. For the MOM change from April to May, it is down -0.1%, the lightest such decline in a while. The MOM March/April change was -0.5%.

You can view the press release at MacroMarkets (PDF file).

Other measures of Los Angeles beach cities market activity, June 2007

Shorewood has graciously published June numbers.

For the beach cities (El Segundo; Manhattan, Redondo, and Hermosa Beach), average days on market (DOM) has edged down to 40.

If you read this blog, you'll know that I recently calculated a Redondo Beach median time on market at 3 months and average time on market as almost 4 months (117 days). My average DOM for Redondo Beach is almost 3X what Shorewood calculates for the beach cities for June.

Supply strength (AKA demand weakness) continues to crawl back up. Shorewood reports inventory at 582 and sales at 181.

And finally, median price, though off from its $1 million record high from the prior month, remains very high. It is the upscale homes that are propping up median prices in this market. Shorewood even says in its report that the higher-end homes are propping up the Southland sales market in general.

Having just written my 3-part article about the last great historical housing slump in this area, I was very amused to find this quote in Shorewood's press release:

“We continue to be optimistic that South Bay home prices – particularly in the more affluent beach communities – will remain strong, and that buyers waiting for major price declines may be disappointed. It all comes down to continued strong demand, limited supply and the overall desirability of these markets."

Let's make a note of the date: July 24, 2007.

Now, let's see what Shorewood said on the brink of the last major downturn (circa 1990):

"If [buyers] are waiting for the bottom to fall out, they are waiting in the wrong neighborhood. There just has never been any evidence of that in the South Bay.”

Maybe the guys who issued the July 24, 2007 press release ought to have checked with the guy who said that in 1990, ya think?

Los Angeles Beach Cities Resale Activity for June 2007

For Los Angeles County, median prices of resale SFRs and condos continue to rise for the month of June, at least according to DataQuick, as reported in the Los Angeles Times.

Long-time blog readers know by now that I am not a fan of DataQuick (or HomeData) sales statistics because they don't factor out remodels and quirky sales that may have been involved in some kind of financial distress or sweet deal for industry insiders. In terms of figuring out what is going on in your particular neighborhood, these numbers can be unreliable due to the statistics of very small numbers. Nevertheless, I will keep posting these charts as we have very little to go on.

                          SFR   MEDIAN   %YOY    CONDO  MEDIAN   %YOY  
COMMUNITY         ZIP    SALES   SFR      CHG    SALES  CONDO    CHG
LA/Westchester    90045   27    $763     -4.7%    n/a     n/a     n/a  
El Segundo        90245   10  $1,050     19.3%     3     $558   -14.0% 
Hawthorne         90250   30    $520     -7.1%     5     $417     0.8%  
Hermosa Beach     90254   24  $1,284     22.3%    12   $1,125   -16.4%  
Lawndale          90260    9    $535     -4.6%     6     $337     8.7%  
Manhattan Beach   90266   39  $1,300    -18.0%     4   $2,350   124.9%  
Palos Verdes Pen. 90274   37  $1,549      6.1%     1     $290   -32.9%  
Rancho P.V.       90275   42  $1,065    -11.3%     7     $636    -0.6%   
Redondo Beach     90277   20    $960    -14.4%    20     $800    16.1%   
Redondo Beach     90278   25    $742     -6.0%    19     $701    -8.9%

The Case-Shiller Index for Los Angeles is not yet published for June.

Part 3: The Last Great Southern California Housing Slump

Hello blog readers. I am still on my driving vacation of the West, and I think I can tell you that all the west's a bubble. I've accumulated a stack of real estate and property literature more than a foot high. Some places are more bubbly than Southern California, some are much more subdued. As far as I can tell, just about everything is overpriced.

In spite of a megadrought here in the West eight years and counting, almost nobody is taking water conservation seriously. Except for the Mojave, I've seen almost nothing serious in the way of wind turbines to produce electricity, and solar panels seem as uncommon in northern and eastern Nevada, southwest Utah, and north central Arizona as they are in Southern California. However these issues will be topics for future postings.

The third part of The Last Great Southern California Housing Slump has been published. Here it is.

Redondo Beach Sales Stats through June 2007 (sneak preview)

The following numbers are taken from the SALE records in my database. If these records are of any value, they tell us that home prices have made little directional progress since I've started tracking them in this fashion. Any gain made in the median price this spring appears to be eroding. (Next month I'll start lopping off the oldest month here.)

STAT     DEC 2006   JAN 2007    FEB 2007    MAR 2007    APR 2007    MAY 2007   JUN 2007
records        50         48          64         105         114          91         62
MEDIAN   $737,000   $724,500    $745,358    $755,000    $799,000    $777,000   $764,500
AVERAGE  $769,170   $762,005    $787,799    $813,252    $884,271    $855,228   $830,711
MIN      $400,000   $389,000    $387,500    $370,000    $470,000    $453,000   $485,000   
MAX    $1,400,000 $2,100,000  $1,878,000  $2,027,000  $1,750,000  $1,640,000 $1,565,000

My SUPPLY records which have recorded sales for May 2007 number about 50. According to my SUPPLY records, original asking price, sale price, sqft, DOM, and PCTRED (percent reduction in price) are as follows:

          ORIGINAL     SALE     SQFT    DOM    PCTRED
           ASKING      PRICE
MEDIAN     794000     782500    1762     90      2.8
AVERAGE    864950     833090    1838    117      3.3
MIN        495000     485000     878     35     -6.4
MAX       1470000    1420000    3363    338     16.8

(Remember that if PCTRED is negative, that means that final sale price was increased over original asking price.)

The gap between original asking price and final sale price has narrowed considerably, which suggests to me that maybe sellers are smartening up about how to price their properties. Since median price progress is eroding, I'll venture an opinion that buyers are starting to prevail.

This chart is from my SUPPLY records. The reason I choose to publish SQFT charts from my SUPPLY, rather than SALE records, is because when sales are recorded the square footage can easily be wrong if the home was remodeled and the remodel was not recorded, or if the property is new construction. The same chart from SALE records show a few more sales recorded in the 1750 and 2000 columns, but it otherwise looks very much the same.

DOM has held quite steady. The median time on market is 3 months, and the average time on market is very nearly 4. The average figure is easily double what Shorewood reports, but as you well know, I count the number of days on market from when a property is first listed. Still, 3-4 months on market is not a bad thing at all, compared to other parts of the country. Unless you are a spoiled Southern Californian who has gotten used to 20% a year gains in the value of your house and you have gotten used to listings getting sold within a few days.

Part II: The Last Great Southern California Housing Slump

Hello blog readers. This is part II of my 3 part review of the Los Angeles Times archives during our last great downturn. If you missed Part I, find it here.

I love examining words. The reason I went through those archives was to look at the words used to describe the mindset of the market participants back then. Words are terribly important because they give you a context in which to interpret what you see and hear, including data and charts. You will find, to your amazement, that what we are experiencing right now is a somewhat slower remake of a movie that ran from the late 80's to about 1996 or 1997.

HERE IT IS: The Last Great Southern California Housing Slump - Part II

---

I noticed in the news today that Lawrence Yun, the talking head of NAR, is starting to sound a bit more sober about the national housing markets prospects overall. This is a milestone. The contrarian in me thus thinks that the national housing statistics overall could be due for a feeble rebound. This sounds very much like the multi-year timeline by Clif Droke that I've mentioned in this blog a few times. At this point in time I expect a rebound to be a false dawn. We are going to have to be extremely patient before the true opportunities present themselves.

Part 1: The Last Great Southern California Housing Slump

Hello blog readers. I wrote a multi-part article for another website. It lays out in a rough timeline the overall prevailing mood that I found in the Los Angeles Times between 1988 and 1996. The last part will compare the mood at the beginning of the debacle (1988) and at the end (circa 1996).

If you want to buy and sell real estate in the future and you want to sell somewhere near the tops and buy somewhere near the bottoms, you may appreciate what the newspapers were saying at the key turning points. I believe it is terribly important to pay close attention to the language. I was an eyewitness to that last debacle and I can tell you that I had forgotten much of what had happened. And if a bear like me can forget most of the painful past, then it's virtually certain that the bulls are clueless.

HERE IT IS: The Last Great Southern California Housing Slump - Part I

Los Angeles County South Bay Beach Cities Real Estate $$$ Transacted for June 2007

I am going ahead and publishing June data early. If I have to make corrections to it, I will do so when I publish July charts.

Over the past month we've been hearing a great deal about slowing sales. Some parts of the area I cover (south of the 10 freeway, west of the 110) are indeed getting hit, in terms of sales volume and real estate $$$ transacted. But some areas haven't been paying attention to the headlines and are struggling to continue along the path of the spring bounce.

I have to agree with observers who say this market is very lopsided. Most of the upper-end areas are hanging in there and their markets are doing relatively well compared to mid and lower tier market areas. That's not to say that they are blasting to new highs - nope, not at all. Only Playa Vista (90094) is one area I would say is showing renewed enthusiasm. There must be a new development on line and up for sale.

If the party is over in the beach cities, some guests are still lingering to sip the dregs of the punch bowl and turn off the lights. At least that's what it looks like on the surface. It's very difficult at this stage to determine what portion of the sales listed are due to some kind of financial distress. Right now I show two June Redondo Beach sales that were definitively some kind of distress sale, as they were due to be auctioned in July. I have six June sales (including the two mentioned) marked as "suspicious". Some are because of the proximity of recent transactions on that same property. Out of these six, one is marked a short sale. That's out of 46 actual sales that I've managed to record for June thus far, but Melissa Data says there are 88 sales for Redondo Beach for June, so there is much that remains unknown.

Another problem making it difficult to track what's going on is the way that Zillow shifts sales dates. When a sale is first recorded in Zillow, sometimes the date gets shifted later on. I've seen late May sales get shifted into June, for instance. Sometimes records just disappear altogether. And if you've looked at Zip Realty lately, it's a mess. I've lost count of the number of Redondo Beach properties for which it has double entries. I have no perspective from the inside, but as an observer, I'd say the bookkeeping aspects of this housing market are in chaos. Time will tell if that signifies that the underlying markets are also in a chaotic condition.

Anyway, back to the June sales. Of the four beach cities, only Hermosa Beach (90254) appears to have taken anything like a good leap upward in June. El Segundo, Manhattan Beach, and Redondo Beach have not turned downward, but don't appear to be energetically climbing upwards either. Palos Verdes Estates (90275) looks quite weak this month.

Perhaps the best area that reflects what's going on in the upper westside areas is Rancho Park (90064). Take a look at its graph. Notice how long the %YOY trendline remained below 0% and how deeply it cut below 0%, then notice the sharp quick recovery bounce, and how the YOY trendline is starting to turn down again.

Many of the areas you would expect to get hit are indeed getting hit. Inglewood has slumped bigtime. (The Wikipedia page for Inglewood Renaissance no longer exists.) Areas of south central are slumping.

Here are the charts for Redondo Beach, the beach cities, and the area of southwest Los Angeles County that I cover.

Here are the %YOY rankings. As a reminder, the numbers are on the 3 month doubly smooth moving average of the %YOY change in dollars transacted. This number is a more "immediate" measure of what is happening. If you look up the individual zip codes in our tracker, you'll see the trendline of this number.

MONTHLY PAIN

Realtors currently fat and happy
90064         28.9%   0.3   Rancho Park/Cheviot Hills  
90277         23.4%   0.1   Redondo Beach (south)  
90503         16.7%   0.6   Torrance  
90094         15.8%   4.3   Playa Vista

Doing well
90277-90278   12.0%   0.3   Redondo Beach combined  
90293          9.4%   0.6   Playa del Rey  
90066          6.1%   0.4   Mar Vista  
90732          5.4%   0.8   San Pedro/Rancho PV
beach cities   5.1%   0.3   4 Beach Cities combined  

Doing OK
90278          4.8%   0.5   Redondo Beach (north)  
90266          2.2%   0.3   Manhattan Beach  
90304          1.6%   1.3   Lennox  
90254          1.4%   0.3   Hermosa Beach  
90505          0.0%   0.3   Torrance  

Hanging in there
90034         -0.5%   1.9   Palms  
90501         -1.4%   0.9   Torrance  
90036         -3.0%   0.5   Park La Brea  
90275         -3.4%   0.1   Palos Verdes Estates

Slip sliding away
90250         -7.5%   1.1   Hawthorne  
90230         -8.6%   0.8   Culver City  
90245         -9.6%   0.6   El Segundo  
90501-90505  -11.6%   0.6   Torrance Combined  
90291        -15.5%   0.5   Venice  
90045        -16.3%   0.5   Westchester  
SW county    -16.8%   0.6   Southwest L.A. County  
90717        -17.7%   0.5   Lomita  
90249        -19.7%   0.9   Gardena  
90401-90405  -23.2%   0.4   Santa Monica combined  
90056        -23.6%   0.6   Ladera Heights  
90043        -24.3%   1.1   Hyde Park, Windsor Hills

About to head off a cliff
90018        -31.6%   1.4   Jefferson Park  
90007        -31.9%   1.3   South Central  
90504        -33.3%   0.4   Torrance  
90044        -33.5%   2.2   Athens  
90062        -36.1%   1.5   South Central  
90035        -36.2%   0.5   West Fairfax  
90047        -37.1%   1.5   South Central  
90008        -38.0%   0.7   Baldwin Hills / Leimart Park  
90019        -38.3%   0.9   Country Club Park/Mid City  
90260        -38.9%   0.9   Lawndale  
90292        -39.3%   1.7   Marina del Rey  
90016        -39.7%   1.2   West Adams  
90232        -43.3%   0.6   Culver City  
90746        -46.2%   2.0   Carson  
90037        -46.3%   1.2   South Central  
90745        -47.5%   1.3   Carson  
90301        -49.8%   1.3   Inglewood

Down the cliff, Thelma and Louise style?  
90303        -53.0%   1.3   Inglewood  
90744        -55.0%   0.6   Wilmington  
90502        -55.6%   1.5   Torrance  
90301-90305  -61.1%   1.6   Inglewood/Lennox combined  
90302        -70.0%   1.3   Inglewood  
90305        -77.5%   3.5   Inglewood 

And here are the zip codes sorted according to the more chronic pain they feel. Remember that the higher this number, the less chronic pain the zip code feels. The closer to 0, the more chronic pain this zip code feels. At the top is Playa Vista, which hasn't felt much pain from any downturn. Inglewood is near the top. Despite its sharp slump, that slump is relatively recent. The beach cities are near the bottom, which, despite their relatively recent bounces, have felt some pain from the slump.

LONG TERM PAIN
90094         15.8%   4.3   Playa Vista  
90305        -77.5%   3.5   Inglewood  
90044        -33.5%   2.2   Athens  
90746        -46.2%   2.0   Carson  
90034         -0.5%   1.9   Palms  
90292        -39.3%   1.7   Marina del Rey  
90301-90305  -61.1%   1.6   Inglewood/Lennox combined  
90047        -37.1%   1.5   South Central  
90502        -55.6%   1.5   Torrance  
90062        -36.1%   1.5   South Central  
90018        -31.6%   1.4   Jefferson Park  
90303        -53.0%   1.3   Inglewood  
90302        -70.0%   1.3   Inglewood  
90304          1.6%   1.3   Lennox  
90301        -49.8%   1.3   Inglewood  
90745        -47.5%   1.3   Carson  
90007        -31.9%   1.3   South Central  
90016        -39.7%   1.2   West Adams  
90037        -46.3%   1.2   South Central  
90250         -7.5%   1.1   Hawthorne  
90043        -24.3%   1.1   Hyde Park, Windsor Hills  
90249        -19.7%   0.9   Gardena  
90019        -38.3%   0.9   Country Club Park/Mid City  
90260        -38.9%   0.9   Lawndale  
90501         -1.4%   0.9   Torrance  
90732          5.4%   0.8   San Pedro/Rancho PV  
90230         -8.6%   0.8   Culver City  
90008        -38.0%   0.7   Baldwin Hills / Leimart Park  
90232        -43.3%   0.6   Culver City  
90501-90505  -11.6%   0.6   Torrance Combined  
90744        -55.0%   0.6   Wilmington  
90503         16.7%   0.6   Torrance  
90245         -9.6%   0.6   El Segundo  
SW county    -16.8%   0.6   Southwest L.A. County  
90293          9.4%   0.6   Playa del Rey  
90056        -23.6%   0.6   Ladera Heights  
90045        -16.3%   0.5   Westchester  
90291        -15.5%   0.5   Venice  
90036         -3.0%   0.5   Park La Brea  
90035        -36.2%   0.5   West Fairfax  
90278          4.8%   0.5   Redondo Beach (north)  
90717        -17.7%   0.5   Lomita  
90066          6.1%   0.4   Mar Vista  
90504        -33.3%   0.4   Torrance  
90401-90405  -23.2%   0.4   Santa Monica combined  
90064         28.9%   0.3   Rancho Park/Cheviot Hills  
90505          0.0%   0.3   Torrance  
90254          1.4%   0.3   Hermosa Beach  
90266          2.2%   0.3   Manhattan Beach  
90277-90278   12.0%   0.3   Redondo Beach combined  
beach cities   5.1%   0.3   4 Beach Cities combined  
90277         23.4%   0.1   Redondo Beach (south)  
90275         -3.4%   0.1   Palos Verdes Estates 

Our regional real estate $$$ tracker is here.

The Google map interactive version of the regional real estate $$$ tracker is here.