Los Angeles Beach Cities Resale Activity for March 2008

Peter Y. Hong continues to report on the county housing situation in the Los Angeles Times April 16 story, "Foreclosure glut further depresses housing prices." He says,

The traditional spring home-buying season is off to its worst start in 20 years.

The one silver lining is that Southern California prices are now plunging at "at an astonishing rate", according to Edward Leamer at UCLA. He's of the camp that the sooner we can get this over with, the better.

Although March sales in the Southland indeed were up over February, it was an anemic +18.8%, and the Feb-Mar change in sales volume typically runs on the average of 38% higher. DataQuick notes that "a lot of people who could be buying or selling right now are opting to sit tight until they sense we've hit bottom."

Realtors are complaining that home sellers are still clinging to fantasy selling prices. David Emerson, a Lakewood broker, says that his work now largely is telling people what they don't want to hear. He notes that the shift in his career is comparable from delivering babies all day long to being an oncologist - "just giving people bad news all day long." He believes there will be much more pain ahead, with "too many foreclosures down the pike."

But Emerson, and Natalie Neith, a Beverly Hills agent, both note that homes priced very realistically sell quickly. Neith convinces sellers to lower their prices because of the tidal wave of foreclosures that are the competition.

Christopher Thornburg of Beacon Economics weighed in and said the housing downturn has gone against historical norms, occurring while the economy remained reasonably healthy - but "that's about to change. With unemployment rising and income growth slowing, we've got the typical drivers of a real estate slump again."

Builders are feeling mighty gloomy these days and don't see any sort of turnaround in new home sales this spring.

Esmael Adibi at Chapman University is forecasting further double-digit declines, noting that the typical Los Angeles County family has to spend 48.6% of its annual income on mortgage payments and property taxes to afford a median priced home. The mean expenditure for a Los Angeles County home has been 35.7% of income. To return to that level of affordability, prices will have to fall at least another 20%. Adibi notes that the gap isn't as severe in Orange County, and the Inland Empire, which has been racing ahead with its declines, is closer to a bottom.

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Here are the March charts. Long-time readers know that with the exception of the charts for all of Los Angeles County, I place little value in the rest of the charts below, due to the low sales volume that generates them. It gives us one snapshot of a handful of existing home sales, that's all, and they say nothing about the backlog of inventory.

Here are the detailed RESALE statistics for the beach cities and some of the surrounding zip codes (prices are in 1000's):

                         SFR   MEDIAN    %YOY    CONDO  MEDIAN   %YOY  
COMMUNITY         ZIP    SALES   SFR      CHG    SALES  CONDO     CHG
LA/Westchester    90045   16    $780     +2.3%     3     $289   -25.9% 
El Segundo        90245    6  $1,090    +26.9%     3     $480   -25.1%
Hawthorne         90250   16    $402    -25.7%   N/A      N/A      N/A  
Hermosa Beach     90254   14  $1,100     -4.1%     1   $1,150   +23.1%  
Lawndale          90260    6    $425    -20.2%     3     $440   +33.3%  
Manhattan Beach   90266   22  $1,375    -15.1%     1   $1,320   +41.9%  
Palos Verdes Pen. 90274   18  $1,775    +15.7%   N/A      N/A      N/A  
Rancho P.V.       90275   21  $1,095     +0.7%     5     $450   -18.2%   
Redondo Beach     90277   11    $816    -34.2%     9     $790    +8.2%   
Redondo Beach     90278    9    $775     -1.5%    11     $763   +17.8%