Los Angeles Business Journal: Median Price Falls to $310,000 for L.A. Home Sales
The Los Angeles housing market continues to be mired in this downturn. According to a March 9 story by Joel Russell in the Los Angeles Business Journal, the median price of a single family residence (SFR) in Los Angeles was down in February -33.8% YOY. Condo prices fell -28%. That puts the median SFR price at $310,000, down from the $585,000 peak in mid-2007 and the median condo price at $289,000, down from the peak of $460,000 in August 2007.
John White, broker-owner of White House Real Estate in Glendora, in effect declared that flipping is dead when he stated, "The attitude is gone that people can buy a home, stay two years and sell it for a $50,000 profit."
Unfortunately, there is much in this article that convinces me we still have a long way to go. White reports having a lot of first-time buyers with incomes between $25,000 and $50,000. At a median home price of around $300,000 and an income of around $50,000, that puts the house at 6X income. It's better than 10X income, but still unaffordable and risky in my opinion, especially when you consider the economic landscape.
Some are claiming that the price drops are "location-sensitive" and they cite drops of "only" 10-15% in well-to-do neighborhoods compared to many times that in lesser neighborhoods. This reminds me of the old Wall Street folklore about how the easy-target dumb money was wiped out in 1929, the smart money was wiped out in 1930 and 1931, and the really smart money was wiped out in 1932. In other words, the effect on the well-to-do areas might not be real obvious yet, but as this economic maelstrom grinds on...
A few people quoted in the article warned that more foreclosures will be coming on the market (something Mr. Mortgage has warned about for quite a while). Realtor Lee Fruchter of Pinnacle Estate Properties in Northridge also weighed in on the porkulus rescue package, stating he thinks it will fail because people don't have sufficient income to qualify or because they are in the process of losing their jobs.
-------------------------- SFR -------------------------------- COMMUNITY ZIP Feb %YOY Feb %YOY Sales Change Price Change L.A County 3,000 +47% $310,000 -34% El Segundo 90245 1 -80% $693,000 -42% Hermosa Beach 90254 1 -86% $2,380,000 +110% Manhattan Beach 90266 9 0% $1,350,000 -14% Redondo Beach 90277 6 +50% $912,000 -9% Redondo Beach 90278 7 -30% $595,000 -18% ------------------------ CONDO -------------------------------- COMMUNITY ZIP Feb %YOY Feb %YOY Sales Change Price Change L.A. County 939 +92% $289,000 -28% El Segundo 90245 6 N/A $460,000 N/A Hermosa Beach 90254 6 +500% $975,000 +1% Manhattan Beach 90266 0 N/A N/A N/A Redondo Beach 90277 8 +167% $599,000 -25% Redondo Beach 90278 14 +40% $690,000 +15%
This price data for individual unit type per zip code is normally too sparse to draw meaningful conclusions about the valuation of your particular housing unit in your zip code, if your home happens to fall into one of the categories listed above. It is better to look at aggregated data IMO.
The most expensive SFRs in February were in Malibu 90265 (-42% YOY); Beverly Hills 90210 (-4%) and 90211 (last year data not available for comparison); Brentwood 90049 (-10%); San Marino 91108 (+55%); Pacific Palisades 90272 (-28%); Los Feliz 90027 (+78%); Manhattan Beach 90266 (-14%); La Canada Flintridge 91011 (0%); and Calabasas 91302 (+19%).
The most expensive condos in February were in Venice 90291 (last year's data not available for comparison); Hermosa Beach 90254 (-3%); Brentwood 90049 (+5%); Redondo Beach 90277 (-25%) and 90278 (+15%); West L.A. 90025 (+18%); Hollywood Hills 90068 (+62%); Arcadia 91006 (+34%); Santa Monica 90405 (-28%); and West Hollywood (-22%).
The areas with the greatest SFR price losses in February were in Palmdale 93591 (-76% YOY); Watts 90002 (-64%); Los Angeles 90011 (-63%); Long Beach 90804 (-63%); Compton 90222 (-62%); West Hollywood 90046 (-61%); Lancaster 93535 (-59%) and 93534 (-57%); Exposition Park 90037 (-58%); Glendale 91206 (-57%).
The areas with the greatest condo price losses in February were in Long Beach 90813 (-68%); Van Nuys 91405 (-65%); Long Beach 90802 (-61%); Paramount 90723 (-53%); Pacoima 91331 (-44%); Panorama City 91402 (-44%); Gardena 90247 (-43%); Encino 91316 (-42%); Reseda 91335 (-39%); Winnetka 91306 (-38%).
Just a few observations.
The median SFR price for Los Angeles County is now down -47% from its peak, and the median condo price is now down nearly -28% from its peak. Just a few short years ago, many market watchers were fairly confident that there wouldn't be much more than a slight hiccup here. I still believe we're going to have to see home prices back in the five digit range again before we see anything near a bottom.
Nationally, we're losing over 600,000 jobs a month. County unemployment is over 10%. The porkulus bill out of Washington may manifest itself into some sort of bear market rebound this year, but it will only temporarily delay a final bottom, which I still believe is years away.
I expect rents to start weakening, if motel room prices stay competitive. Check out this article in International Herald Tribune "Hidden Homeless: U.S. families living in hotel rooms." Note also that the article considers you homeless if you are doubled up in an apartment or another sort of single family dwelling with another household.
3 Comments:
I expect rents to start weakening, if motel room prices stay competitive.
Already happening. There has been a sea change in the rental market over the past three months or so in West LA/South Bay.
The biggest change I've noticed is a major increase of SFR's in decent neighborhoods at rents much more reasonable than in the past few years. There are a ton of 2 bedroom houses for rent in places like El Segundo, Culver, Westchester, Mar Vista, MDR, etc., in the $2000-2500 range, which was all but impossible to find previously.
We're actually looking to rent one in the next few months. It sure makes the rent vs buy decision a lot easier, and doesn't bode well for those hoping for prices to rebound so they can sell.
Interesting observation Mike, thanks for posting it!
It so happens that right now our landlady has an apartment for rent in our 4 unit building. Her brother lived in the unit for over 2 decades and last year he moved to Palm Springs, so she did major work on the unit before she rented it out last year, I think for $1800. This is just a 2 bed 1+ bath apartment. The couple that rented it stayed for only 6 months and just moved out. The place is for rent now for $1750.
Good luck with your rental hunting Mike!
The housing price is still very high and still in a buble status. The price has just backed to 2005 level if you check the sothern bay erea of CA. Market force is the only way to get a recover. Governmet control like socialism doesn't work.
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