Thursday, February 21, 2008

Other measures of Los Angeles beach cities market activity, January 2008

Shorewood has published January statistics.

According to Shorewood, January average DOM for the four beach cities was 77 days, up from 65 in January 2007. My preliminary calculation for January reported a median Redondo Beach DOM of 107 days and an average DOM of 140 days. Although we can quibble over what time on market really means in terms of how a property is listed in the MLS, all measures of DOM appear to have risen for January YOY.

That looks like quite a leap up, though IF seasonality comes into play, I suppose we can expect DOM to dip as spring selling season heats up.

Supply Strength (Demand Weakness) took a spike up in January. This chart compares inventory to sales. According to Shorewood, there were 58 homes sold in the four beach cities in January, compared to 105 the year before. There were 539 homes for sale in January, compared to 510 the year before. So there was a slight increase in inventory YOY, but sales dropped considerably - by not quite 50%.

If you are new to this blog, know that I consider the top of the beach cities market, in terms of this measure, around May or June 2005, when inventory to sales was very tight.

In terms of technical/numeric indicators, I probably place more importance on this chart, on affordability measures (home prices in terms of homeowners' income), and on simply listing Zip Realty listings by asking price in ascending order, more than just about any other indicators, for evaluating market health.

The January median was $1,080,000, up 31.7% from $820,000 in January 2007.

Wow, get a load of that spike in median price. It almost looks like a double top forming, in stock market TA parlance. Or devil horns. Shorewood sounds a very hopeful note in their notes about how "inquiries" are picking up at their lending unit, and the firm believes that the increase in the conforming loan limit will "energize sales activity in the weeks and months ahead."

The $500,000+ market has particularly been hurting. If we see buyers flood back in to that market level, because now the properties are more "affordable" due to the increase in the conforming loan limit, then I would expect the resultant increase in sales to pull down the median price, as properties get marked to market on an increase in sales volume. We shall see.

The California Association of Realtors (CAR) and the L.A. Times (which depends on real estate advertising) are pulling out all the stops to boost the spring market. They are offering a free Home Buyers Fair in April, which might be amusing to attend, though I don't know yet if I can or will. They haven't yet stopped repeating the non-truth that buying a home "makes sense." They aren't anywhere close to losing hope. That tells me - we still have a LONG way to go...


Blogger bearmaster said...

Another number I like to look at is how many unresolved inventory records I have in my own database, since they clearly show a desire on the part of homeowners to sell their homes.

Some homeowners successfully sell.

Some keep relisting.

Some homeowners, having been on "fishing expeditions", let the listings expire, and then they live with that nagging thought they didn't get their asking price...

At that point some may try to evade reality further and try renting the place out "until the market recovers."

9:02 AM, February 22, 2008  
Blogger bearmaster said...

Affordability measures, as published by CAR, are rather laughable. CAR considers a $433,000 home affordable for a household making about $85,000.

I guess I am too old-fashioned - I figure the max a household making $85K ought to be able to buy is something around $255K.

And if I were lending that money I'd really want it qualified on one salary, not the whole household's salary - so that if one household member loses a job it's not a catastrophe.

So sunny So Cal deserves a premium - instead of 3X income, maybe 4X income? I'll have more to say about So Cal's "premium" in another post.

12:04 PM, February 22, 2008  

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