Preliminary look at May 2008 Redondo Beach housing market data

My working set of data is pulled mostly out of Manhattan Beach Reporter, with a few out of Zillow. I have 61 records, which exceeds Melissa Data's count for May, so I may be overlapping slightly with April or June.

Sale Price

Sales have been picking up a bit, which is good, as we need to continue realizing the price cutting that has been happening over the past year. In May 2007 I calculated statistics with 71 records. Median sale price was $778,500, and average was $846,226. May 2008 median sale price is down from a year ago by about 4.7% So I think there is again a good chance we will see YOY declines in the DataQuick numbers when we obtain those later this month.

STAT      NOV  2007   DEC 2007   JAN 2008   FEB 2008   MAR 2008   APR 2008   MAY 2008
records         37         26         25         25         35         40         61
MEDIAN    $832,500   $782,500   $795,000   $755,000   $789,000   $756,000   $742,000
AVERAGE   $933,956   $832,827   $932,117   $831,500   $961,714   $833,000   $775,589
MIN       $379,000   $486,500   $449,900   $520,000   $585,000   $420,000   $269,900
MAX     $2,500,000 $1,500,000 $2,130,000 $1,590,000 $2,100,000 $2,425,000 $1,430,000

Sales By Square Footage

In May 2007 I calculated the median square footage of a sold property at 1806 and the average at 1911.

Here are May 2008 sales broken out by square footage. This time median square footage is 1824 and average is 1803. Average is falling, so I might take that as a sign that sales of high-end luxury homes may not be the sure thing they were a year ago.

DOM (Time on Market)

My May 2007 calculation estimated median DOM at 88 days (nearly 3 months) and average DOM at 122 days (just over 4 months). For May 2008 I calculated a median DOM of 122 days (just over 4 months) and an average DOM of 173 days (just short of 6 months). Last year's DOM distribution was not the two-headed distribution that we have now, in which one group of sellers manages to get their homes sold in, say, 80 days, and another group of sellers get their properties sold in something close to a year. Last year that latter group was not nearly as big as it is now, and this group is increasingly weighing on DOM and lengthening it.

It would probably be accurate to say that if somebody wants to sell their home now and prices their new listing extremely competitively, they stand a decent chance of selling the property within 80 days. But I think it is going to get tougher as more short sales - and eventually foreclosures - hit the market. There may come a day when price cutting becomes "a way of life" as it did in the early 90's downturn - and homes don't get sold.

Some sellers have been trying to sell their homes for about 2 years, though you won't read that in any of the local realty press. There are a number of sellers who listed 2 years ago, couldn't get their price, gave up for a while, then tried again. I count that as one attempt to sell. Builders of new construction are about as guilty of this as existing home owners. You would think that builders would be more practical about things, lower prices, clear away their inventory, and move on, instead of hanging on to a piece of property for 2 years, but I guess not.

Percent Reductions

And how much did sellers have to lower their asking prices in order to make their sales? For May 2007, I calculated a median reduction of 2.13% and an average reduction of 3.71%. For May 2008, I have calculated a median reduction of 7.24% and an average reduction of 8.25%. Reduction percentages are moving back toward their January highs, which I would think is abnormal for the spring selling season. Unfortunately I don't have a history of asking price and sale price comparisons going back several years, so I can only guess that "percent reduction" would have been hovering at or below 0% during the bubble boom!

Current Asking Prices, By Month

I modified my query for generating an asking price history, by month, so it looks different from the chart I published in May. What I said last month about the data getting more accurate as time progresses remains true, however I am still not sure about the *accuracy* of my query so I may adjust it again.

May Short Sales

Sale Date         Prior Sale     % Decline      Property
2008-05-12       2006-11-15          -8.0      2916  Gibson Place        
2008-05-12       2005-09-15          -6.0      1617  Wollacott Street    
2008-05-08       2004-08-20         -19.0       212  Avenue A             
2008-05-14       2006-11-15         -10.0       234 S. Guadalupe Avenue A 
2008-05-05       2006-06-30          -1.0       320 S. Broadway  B       

Just over 8% of sales in May were short sales. This may not seem like much, but this is the beach cities after all, which according to conventional folklore is *immune* to the market problems the rest of California is experiencing. It is practically heresy to even consider the possibility that the beach cities could experience foreclosures. But time has proven to be definitely on the side of the housing bears.

According to Scott Gold at the L.A. Times, in Temecula, it is estimated that as much as 15% of sales are foreclosures, and neighbors of foreclosed homes are spray-painting the dried burnt lawns of these homes green to make them look like they are cared for. I'm not making that up! If the economy continues spiraling down, we may start seeing more actual foreclosures with spray-painted lawns in the beach cities in another year to two years.