Thursday, July 10, 2008

Preliminary look at June 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 50 records for June, which comes up a bit short, so let's hope I have a good representative set of data.

Sales volume is continuing to climb, which is good as the volume will mark to market all these price cuts I've been recording for so many months. When I calculated median and average Redondo Beach sale price for June 2007 I also had 50 records and I came up with $782,500 and $833,090, respectively. My June 2008 median sale price is down -10% YOY. I think there is a good chance we will continue to see prices slide when the official numbers come out later this month from DataQuick.

Sale Price

STAT      DEC 2007   JAN 2008   FEB 2008   MAR 2008   APR 2008   MAY 2008    JUN 2008
records         26         25         25         35         40         61          50
MEDIAN    $782,500   $795,000   $755,000   $789,000   $756,000   $742,000    $704,000
AVERAGE   $832,827   $932,117   $831,500   $961,714   $833,000   $775,589    $754,000
MIN       $486,500   $449,900   $520,000   $585,000   $420,000   $269,900    $420,000
MAX     $1,500,000 $2,130,000 $1,590,000 $2,100,000 $2,425,000 $1,430,000  $1,351,000

Sales by Square Footage

For June 2007 I calculated the median square footage of a sold property at 1762 and the average at 1838. For June 2008 my calculations came in at 1752 and 1787, respectively. Median square footage is very nearly the same, while average square footage has been pulling back, which might be an indication of big high-end luxury properties hitting a slump, so more smaller low-end homes are being sold relative to high-end homes than a year ago.

DOM (Time on Market)

My June 2007 calculation of time on market was a median 90 days and an average 117 days. For June 2008 I come up with 127 and 182, respectively. This is up just very slightly from my prior month calculations. The "tale of two markets" continues, with literally two axes in the graph - one for the home sellers who sold relatively quickly, and one axis for those whose properties have been sitting on the market for literally years now.

Percent Reductions

And how much did sellers have to lower their asking prices in order to make their sales? For June 2007, I calculated a median reduction of 3.40% and an average reduction of 3.89%. For June 2008, I have calculated a median reduction of 7.47% and an average reduction of 8.65% for sold properties.

I am really seeing some quick and substantial markdowns on new properties in south Redondo. In spite of the fire sale that's been going on down there, there is still a glut of properties, obviously. Some of these markdowns are in the neighborhood of nearly 40%. And you know what? The prices are STILL high.

Some listings are coming on aggressively priced so as to outrun any price decline. Therefore I wouldn't be surprised if we see a few more properties sell OVER their original asking prices.

Current Asking Prices, by Month

I am not sure I should keep publishing this chart, because I found some flaws in how I calculate it. The problem is the way I store the price reductions. Unfortunately, old price changes that are stored in number fields get overwritten as I update these number fields with new price changes. The old price changes get preserved in a text field, but I would have to literally process through my database and parse out these text fields in order to record each and every price change for this trend graph. For now, let's hope that I at least have the general trend right.

June Short Sales

Out of 50 records that I recorded, 20% of them were short sales. I don't know if they were all plain vanilla short sales or there was something wacky going on that wouldn't ordinarily be recorded as a normal, arm's length transaction. But here they are. The properties at 1709 Perkins, on Mansel, and on North Lucia look especially suspicious. If anybody knows anything in particular about these properties, feel free to post a comment!

If I throw out those three records as wacky outliers and take an average of the six remaining records, the average short sale I recorded is 7.5%. Keep in mind this is on a very small data set. I would be curious to know if anyone is aware of short sales in Manhattan Beach, Hermosa Beach, and El Segundo, or is it just Redondo that is buckling under here.

I have not yet discovered a short sale from a prior sale in 2003.

SALE      PRIOR SALE       %      ADDRESS
DATE          DATE       RED

2008-06-03 2004-11-15   -9.0   2207 Perkins Lane B
2008-06-12 2007-03-07  -47.0   1709 Perkins Lane 2 
2008-06-16 2005-05-12   -8.0   1509 Stanford Avenue
2008-06-16 2006-04-15  -44.0   807 N. Lucia Avenue 2
2008-06-16 2006-07-15  -11.0   2120 Dufour Street 2
2008-06-16 2007-01-03   -2.0   2512 Vanderbilt Lane C 
2008-06-19 2006-09-15  -42.0   18403 Mansel Avenue 2
2008-06-23 2006-08-15  -14.0   112 Via El Chico
2008-06-23 2007-03-14    0.0   1709 Goodman Avenue
2008-06-30 2005-11-15  -15.0   1219 Ynez Avenue


Blogger bearmaster said...

There's been some press about foreclosures "decreasing" nationally by 3% in June. And California foreclosures "decreasing" by 5%.

Those are from May. On a YOY basis, California foreclosure filings are up 77%.

The press is too quick to take any deceleration of a destructive trend and declare the worst is over. It ain't over.

5:13 AM, July 11, 2008  
Blogger bearmaster said...

It is highly unusual to be comparing the same number of records and to so closely match the median square footage on a YOY basis.

Take a look at the posting for June 2007 and compare the graphs. You'll notice that by square footage, the general shape is roughly the same though perhaps just a very slight shifting to the left (toward lower square footage).

For DOM, you'll see the two-market effect is much more pronounced now. Unfortunately, I haven't been keeping track of sales long enough to know what I would have calculated for DOM during the bubble boom years, so I can only guess that time on market wasn't an issue.

8:08 AM, July 11, 2008  
Blogger mark said...

Thanks for doing all of this hard work!

Just an off topic question: Do you think the local Southbay Realtors collude to any degree when establishing the Sale Price? By collude, I mean go beyond the advise of in house advisors and share information across agencies? If you have an unbiased point of view on the process, I'd appreciate any feedback.

Thanks again for all of the effort you put into this.


8:13 AM, July 11, 2008  
Blogger bearmaster said...

Hi Mark, welcome and thanks for your comments.

I am not in the industry and have absolutely NO first-hand insight into what the local realtors might be doing. I might be able to speculate about what has been happening psychologically, though.

The markets first turned on the basis of overall dollar volume and sales volume. Typically the industry participants think it's just temporary and stick it out while waiting for the market to recover. Realtors were probably telling sellers to stick it out or maybe sliver $5K off a price (which is an absolute joke of a reduction). So in that sense there may have been a "united front."

Sales then continued to plummet. Now price cuts started to increase. But without more sales volume to confirm this it was difficult to see what asking prices really were.

Volumes have now bounced a bit and price cuts are getting realized in the market.

Now that there is some confirmation prices are down it was inevitable that some sellers would eventually "break ranks" and cut prices even more aggressively. I wonder if some sellers are downright panicky.

There may not have been any orchestrated business collusion, but perhaps there was a psychological collusion that could now be breaking down.

8:33 AM, July 11, 2008  
Blogger bearmaster said...

Just got a foreclosure property alert for Perkins Lane, but it is for 2207 Perkins Lane with the -9% short sale, not the other one with the -47% short sale, LOL.

11:18 AM, July 11, 2008  
Blogger bearmaster said...

Some of that new construction I've mentioned in south Redondo that is marked down in the neighborhood of 40% is going to auction. I don't think it was "straight to auction" as this article implies, otherwise I might not have had this listing in my database for several months.

8:03 AM, July 13, 2008  

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