L.A. Business Journal: L.A. County's Median Home Price Finally Falls

I actually drove in to work (in Westwood) on Friday, and was able to pick up the hard copy L.A. Business Journal while there. This story, by Daniel Miller, is in the November 12-18 issue. According to the journal, the median price dropped to $525,000, -3.7% YOY, and it's down -9.5% from September. Median price is now at February 2006 levels. Sales at the high-end were not enough to keep the price high. Remember when I cracked jokes about the high end buyers packing up and moving away from Redondo in October? Well, maybe some of them are at least held back during October.

By Home Data's calculations, 3,269 homes were sold during October, -57% YOY. The affect of the credit crunch is now spreading. Sales volume dropped everywhere. Leslie Appleton-Young of CAR reports that what we are seeing now far exceeds what we would expect seasonally.

High end areas have been getting hit, though the effects have been mixed. Indeed, in the beach cities, most medians are UP on very low sales volumes, so the effect of high-end sales holding up the market persists. One realtor for Beverly Hills noted that multiple offers start coming in when asking prices are reduced 10 or 15 percent. The realtor notes that when sellers cut their prices by that much that buyers are dealing with "a real seller."

A year ago there was a 7.8 month supply of inventory on the market and now it is almost 19 months worth. During our last great L.A. County slump, inventory backlog peaked at 15 months in 1993, according to this article.

Remember how late last year and early this year the industry was confident that inventory was getting mopped up? Well it wasn't, and now there's more of it.

Another realtor reports "The market just stopped," after watching one Burbank home fall out of escrow because the buyers' buyers couldn't get a loan to purchase the buyers' prior home. The Burbank home went back into escrow at 10% less.

The Burbank realtor reports that October was a decent selling month but agents are working much harder to sell homes. But "sellers that have a real motivation to sell will sell."

Now what are the experts saying about the future? Economist Ryan Ratcliff at UCLA Anderson School of Business expects a lot of sideway motion over the next two years, "but I don't think L.A. has the fundamentals to see the same sort of declines other parts of the state have seen." He thinks once "all the nonsense is out of the way afte the first of the year" the market could surge in early 2008 and "you will see a decent recovery."

Apparently, the experts persist in holding on to their fantasy that things will bounce back. Yes, there could be a bounce, but since prices and affordability are still stupid, what will be sustainable about it? Experts were predicting a surge early this year too, and look where we are now. The experts still haven't really caved in, in my opinion. When they do, it will be a psychological milestone. From the point where they almost uniformly cave in, and they are wary of any pickup in activity, calling it a false dawn, we'll know a market bottom is much closer. Right now, that is just not the case.

-------------------------- SFR ----------------------------------
COMMUNITY          ZIP    Oct     %YOY        Sept    %YOY
                          Sales   Change      Price   Change
El Segundo       90245      2     -81.8%  $1,312,000   71.5%
Hermosa Beach    90254     11     -15.4%  $1,400,000  +44.3%  
Manhattan Beach  90266     19     -26.9%  $1,540,000  +10.8%  
Redondo Beach    90277     10     -50.0%    $935,000   +5.3%
Redondo Beach    90278     10     -64.3%    $700,000   -4.1%

------------------------ CONDO ----------------------------------
COMMUNITY          ZIP    Sept    %YOY        Sept    %YOY
                          Sales   Change      Price   Change
El Segundo       90245       3      0.0%    $769,000  +45.1%
Hermosa Beach    90254       3    +50.0%    $749,000  +33.8%
Manhattan Beach  90266       3    +50.0%    $675,000  -35.5% 
Redondo Beach    90277      21    +31.3%    $795,000   -5.4%
Redondo Beach    90278      23    -30.3%    $773,000   +3.1%

The most expensive SFRs in October were in Beverly Hills 90210 (+76.0% YOY); Santa Monica 90402 (+34.2%); Westwood 90024 (+59.3%); Brentwood 90049 (+7.7%); Bel-Air 90077 (+79.0%); La Canada-Flintridge 91011 (+32.8%); Manhattan Beach 90266 (+10.8%); Pasadena 91106 (+57.9%); Pacific Palisades 90272 (-26.7%); and Laurel Canyon 90046 (+21.7%).

The most expensive condos in October were in Malibu 90265 (-26.5%); Beverly Hills 90210 (+9.4%); Redondo Beach 90277 (-5.4%); Redondo Beach 90278 (+3.1%); Brentwood 90049 (+2.9%); Santa Monica 90405 (+25.3%); Playa Vista 90094 (no YOY comp); Marina Del Rey (-7.7%); West Hollywood 90069 (+34.5%); and Koreatown 90005 (+6.1%).

The areas with the greatest SFR price losses in October were in Long Beach 90802 (-48.2%); Mission Hills 91345 (-44.3%); Northridge 91325 (-37.2%); Downey 90240 (-34.7%); Tujunga 91042 (-32.5%); Malibu 90265 (-30.6%); Lincoln Heights 90031 (-30.4%); Pacific Palisades 90272 (-26.7%); Van Nuys 91401 (-25.3%); and West Hollywood -25.0%).

The areas with the great condo price losses were Canyon Country 91387 (-37.5%); Monterey Park 91754 (-35.0%); North Hollywood 91602 (-31.8%); West Hollywood 90048 (-29.2%); Studio City 91604 (-25.0%); Signal Hill 90755 (-23.3%); Laurel Canyon 90046 (-22.0%); Long Beach 90804 (-20.6%); Mar Vista 90066 (-19.0%); and Torrance 90503 (-18.9%).

Remember this only says something about the relatively few homes sold, compared to the volume of what's on the market.