Saturday, May 24, 2008

Daily Breeze: South Bay home prices still sliding

There isn't much additional new information here that you don't already know about, if you've been regularly reading the Los Angeles regional housing bubble blogs. But it does mention screwy statistics, it's a good supplement to my CAR/DQNews post for April and I want to capture it for posterity.

You can find the original story here - but the link may expire.

South Bay home prices still sliding
HOUSING: Carson dropped 25.9 percent since April '07. MB is 25.8 percent lower.
By Muhammed El-Hasan, Staff Writer
Article Launched: 05/23/2008 11:53:20 PM PDT

Home prices across the South Bay continued to slide in April, with every community 
cited in a report released Friday posting double-digit declines.

Carson was the area's biggest year-over-year loser, with a 25.9 percent drop in 
median home price to $389,000, according to a report by the Los Angeles-based 
California Association of Realtors.

Manhattan Beach experienced the second worst drop, of 25.8 percent, to $1,372,500.

The median price refers to the middle point where half of homes sold for more and 
half for less.

The South Bay, excluding the Palos Verdes Peninsula, saw a 12.8 percent drop last 
month, compared to a year earlier. That was still better than Los Angeles County, 
which suffered a home price decline of 19.6 percent to $435,000.

Redondo Beach had the area's mildest decline with an 11.9 percent drop to $695,000.

The South Bay is caught in a nationwide housing downturn that has hit California 
especially hard amid a severe credit crunch caused by lenders having issued mortgages 
to people who could not afford them. Lenders have since tightened their lending 
standards, which has led to limited credit available to home buyers and other 

"Part of the problem is that the lenders are sitting on some really tight approval 
criteria," said Realtor John Parsons, a Redondo Beach planning commissioner and 
former councilman. "Now they've gone too far the other way. It's hurting everyone, 
including lenders. Lenders don't make any money if they're not making loans."

The Palos Verdes Peninsula as a whole saw its median home price drop 8.5 percent to 
$1,075,000. However, individual cities on the Hill were not cited in the report 
because none reached a threshold of at least 30 sales for the month.

Other cities such as Lawndale, Lomita and Hermosa Beach also were not cited.

However, excluded cities' home sales are included in the regional median figures, 
such as those for the county, South Bay or Palos Verdes Peninsula.

In a statistical oddity, the South Bay's beach cities as a whole posted a home price 
gain of 2.5 percent to $1,025,000. The rise is attributed to a concentration of homes 
at the high end of the market being sold in a specific month to skew the median 

Statewide, Manhattan Beach was the second highest priced community in the CAR survey 
for April. Saratoga took the top spot.

April was the first time this year Manhattan Beach was even directly cited in the 
report because the city continually sold less than 30 homes a month.

Manhattan Beach's previous absence from the list is due to the slowdown in home sales 
and the beach city's relatively small size.

"Obviously, the smaller the population, the less properties you potentially have for 
sale, and that could create the scenario where you may not have enough sales taking 
place," said Parsons, of Horrell Realtors in Redondo Beach.

When the housing market finally recovers, Manhattan Beach will likely remain one of 
the state's highest-priced communities, Parsons said.

"It's still near the beach. It's still near LAX," Parsons said. "It still has all the 
things that made it attractive before." 

Speaking of everyone - including lenders - getting hurt by this downturn, check out this Suze Orman show with a very cash-strapped realtor. I posted this because she is a Los Angeles area realtor. From $130K annual income to about $40K annual income, underwater by $50K, on some $600K of loans. This was uploaded November 2007 so can you imagine where things are at now?


Blogger Mike D. said...

Wow, that Suze Orman clip was brutal. I just wonder how many people are out there barely hanging on to their property like that lady. I imagine that it's not just realtors, but a lot of people who bought into the RE magic. I mean 3k a month in mortgage payments alone on $40k/year (and likely falling). And that's w/ the minimum payment on the option ARM. When that thing recasts she wouldn't be able to handle it even if she still made $130k.

If I were Suze I would have just told her to stop paying the mortgage and live in the house for free until she's finally kicked out, because she's going to lose it anyway.

The more stories like this I hear the more I feel like there's a lot more room for prices to fall, especially when there are all of these rotten option ARMs still hiding out there for another year or two before they implode.

8:27 AM, May 25, 2008  

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