L.A. Business Journal: March home sales slow, median price drops

The Los Angeles Business Journal's monthly Home Data report is out early!

According to this story by Mitch Deacon in the April 7 edition of the Los Angeles Business Journal, the median price of a SFR is now down to a three-year low in March. Sales of Los Angeles SFRs, both new and existing, fell -52% in March YOY. The median price is -17% now down to $465,000, and -21% off the May and July 2007 peaks.

The conventional bullish line of thinking has been that the affluent areas will be immune to a downturn in housing prices, but Madison Hildebrand, a Coldwell Banker broker for Malibu, notes that even though prices are still rising on what is sold, sales are down. Lynn Borland, the president of Wilshire Realty, which specializes in Westside luxury condos and townhomes, getting maybe "one sale for every 100 visitors", whereas in a "balanced market", a sale could be made to perhaps five or six people for every 100 visitors. While luxury home buyers have the cash to buy, they are "sitting back waiting for additional price drops."

Steve Johnson of Metrostudy states that we are scraping along a bottom in terms of sales volume, and believes that "activity will probably stay flat through 2009." Johnson also notes that transactions are primarily taking place among people who are forced to enter or leave the market for imperative reasons such as divorce and job transfer.

Nobody interviewed offered an opinion on where or when prices would bottom. The story notes the recent actions by the government to bail out the market. Congress is close to giving state and local governments $10 billion in bond funds to refinance subprime mortgages. Fannie Mae and Freddie Mac are allowed to purchase home loans as high as $729,000. According to the story, these actions "should" boost the market, but nobody offered an opinion as to how much.

In other gauges of market health, the Journal reports that building permits for SFRs in Los Angeles County were -62% YOY in January, according to the California Building Industry Association. In the Econowatch column, the Journal notes that residential building permits for February (and I assume this means both SFRs and condos) for February is -7.2% YOY, so this gauge may show less deterioration now.

For the state of California, for February, there were 53,629 notices of default filings, auction filings, and bank repossessions, up +131% YOY. One out of every 242 homes in the state filed for foreclosure.

The California Association of Realtors tabulates an index score of unsold homes. This more than doubled in February to 21.1 from 10.6 in February 2007.

-------------------------- SFR ----------------------------------
COMMUNITY          ZIP    Mar     %YOY        Mar    %YOY
                          Sales   Change      Price   Change
L.A County              2,532       -52%    $465,000  -17% 
El Segundo       90245      3       -75%    $830,000   -7%
Hermosa Beach    90254     11       -54%  $1,449,000  +12%  
Manhattan Beach  90266     12       -74%  $1,858,000  +16%  
Redondo Beach    90277     10       -17%    $912,000  -22%
Redondo Beach    90278      7       -81%    $705,000  -11%

------------------------ CONDO ----------------------------------
COMMUNITY          ZIP    Mar     %YOY       Mar       %YOY
                          Sales   Change    Price     Change
L.A. County              1,538     -56%    $411,000    -9%
El Segundo       90245       7       0%    $529,000   -15%
Hermosa Beach    90254       3     -40%    $655,000   -24%
Manhattan Beach  90266       0     N/A         N/A     N/A 
Redondo Beach    90277       5     -69%    $700,000   +10%
Redondo Beach    90278      10     -76%    $590,000   -13%

The most expensive homes (SFRs) in March were in Beverly Hills 90210 (+10% YOY), Bel-Air 90077 (+62%), Windsor Square 90020 (+44%), Malibu 90265 (-12%), Manhattan Beach (+16%), Marina Del Rey 90292 (+8%), Pacific Palisades 90272 (+7%), West Hollywood 90069 (+11%), Hermosa Beach (+12%), and Brentwood (-13%).

The most expensive condos were in Santa Monica 90402 (+47%), 90403 (+1%), and 90404 (-2%), Pasadena 91105 (+5%), Redondo Beach 90277 (-10%), Marina del Rey 90292 (-8%), Westwood 90024 (+24%), Brentwood 90049 (-2%), Hermosa Beach (-24%), and Playa Vista (YOY N/A).

The areas with the greatest SFR price losses in March were Long Beach 90813 (-45%), La Puente (-41%), Northridge (-38%), Belmont Shore 90803 (-37%), West Adams (-37%), Palmdale 93550 (-37%), Paramount 90723 (-36%), Chatsworth 91311 (-36%), San Gabriel 91775 (-36%), and Inglewood 90303 (-36%).

The areas with the greatest condo price losses in March were Paramount 90723 (-39%), Panorama City 91402 (-39%), Santa Clarita 91350 (-39%), Long Beach 90804 (-37%), Hawthorne 90250 (-34%), North Hollywood 91601 (-34%), Glendale 91205 (-32%), Reseda 91335 (-31%), Palms 90034 (-31%), and Glendale 91206 (-30%).

The article notes that peripheral areas have been particularly hard hit, though middle income neighborhoods closer to urban cores are faring somewhat better. Keep in mind that these sales occurred on such low sales volume that they don't tell us enough about valuations.

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Given that sales have almost no place to go but up, I believe that some fish will take the bait from the government stimulus package and go shopping for falling knives. It's probably too soon to predict if the bong hit from the government will provide any boost at all, and even if it does, how far it could go. If the bong hit isn't of sufficient magnitude, Metrostudy may be proven to be right, in terms of the market just limping along a sales volume bottom through 2009.