Nov. LA home sales down 46%

The DataQuick numbers for November sales are out: sales in L.A. Country dropped 46% from year-ago levels, and median sales prices continued to slip.  I'll run through a bunch of numbers, but I warn you it is a bit confusing because there are so many ways to slice and dice these numbers:

In L.A. County: November sales totaled 4,468, an increase of 2% over October sales levels, but a decline of 46% from year-ago levels. Median sales price was $499,000, a decline of $1,000 from October levels and 3.5% from year-ago levels. The trailing 12-month sales total in L.A. fell to 78,712.

In all of Southern California (These are the numbers highlighted in the LATimes.com's coverage): The trend is very similar -- a total of 13,173 new and existing homes sold, an increase of 2% over October sales levels, but a decline of 43% from year-ago levels. Median sales price for the region was $435,000, a decline of $9,000 from October levels, and 10.5% from year-ago levels.

Could the slight increase in sales from October to November be a sign of a housing bottom? Could be. It could also be a hint of the dead-cat bounce many have predicted in bubble markets this winter as the absolute freeze in mortgage activity during the late summer and early fall gives way to sluggish, but still declining, activity. "DataQuick President Marshall Prentice said the unusual increase could show the market has hit bottom, but he cautioned that the trend would have to continue to confirm that. He noted that in November 1994, sales rose from the previous month, but the market had not hit bottom."

Month    L.A. Median Sales Price       y/y change       12-month L.A. sales total
Jan. 07   $520,000                        6.0%                 108,755
Feb 07    $528,000                        8.0%                 107,966
Mar 07    $540,000                        6.0%                 105,514
Apr 07    $540,000                        6.0%                 103,45
May 07   $550,000                        7.0%                  100,160
Jun 07    $545,000                        5.0%                   96,513
Jul 07    $547,500                        5.0%                    94,478
Aug 07   $550,000                        6.0%                    90,985
Sept 07 $525,000                         1.2%                    86,610
Oct 07  $500,000                         -3.8%                   82,527
Nov 07  $499,000                         -3.5%                   78,712

Thoughts? Comments? Insights? E-mail story tips to peter.viles@latimes.com

Comments

[anon1137]

The 2% monthly increase is the bounce from the August credit crunch. The trend continues and it will take YEARS to reach bottom.

I can't wait until next spring, which in RE circles will become known as Silent Spring.

[National Bubble]

The Federal Reserve unveiled a proposal Tuesday that would give people taking out home mortgages new protections against shady lending practices.

In particular, I care about this proposed rule:
• Barring lenders from making loans when they don’t have proof, or verification, of a borrower’s income.

Well, guess what that is going to do to the SoCal housing market. How is anybody going to qualify for a 800K home in a decent neighborhood.

Lenders on the other hand and tightening their requirements which will put additional pressure on the real estate market

Any way you slice it, the housing market still have a long way to go to correct itself.

http://www.NationalBubble.com

[Toam Sob]

Keep dreaming!! The bottom, I think not. If the market hit the bottom we should see it reflected in holiday shopping. If the market has indeed hit the bottom, please explain to me why many retailers are complaining of low sales, and why credit is still tight. Please explain justify this positive spin that the industry would like us to internalize as a forecast of happier days to come. Yeah, I said it. Have these people gotten so desperate and delusional that they are now using the power of positive-reinforcement to mobilize consumers to the malls or into that 500K home which is still over-priced. Enough is enough, stop the madness. Don’t these people know that their actions in the long run have the potential to destabilize of our democracy!

[El Guapo]

I agree. I'm amused at any bottom calling at this stage. I suspect we'll have another dose of reality in the spring when yet another "hot" selling season doesn't materialize and all of those extra homes come on the market. How can you see housing prices double and triple in a few short years and think that a few percentage points off of the top is the "bottom". Just goes to show we haven't completely left the denial stage.

[Cal]

Bottom is sales or very close to it. I cant imagine sales getting much worse without Fannie/Freddie blowing up or a tremendous economic interruption locally.

Adjusting for population its even worse than sales suggest. It may be slowest in 20 years but population has grown 12% since 1990.

Now we get to see if people can afford their homes or have to lower their price. Prices have been coming down and REO prices have been coming down even faster. How long the stalemate last is up to the prices rationalizing (sellers) or incomes rising (buyers).

[jb]

yawn...... wake me when the median is 350K. Nobody wants to even take a glance at these fraudulently hyperinflated homes. We have a long way to go folks.

[whatiswrongwithyoupeople]

What kind of people use terms like "dead cat bounce".

[Peter I]

It seems premature to declare the beginnings of a bottom. Prices are so divorced from fundamentals (relative to cost of renting, mean family income, and household savings), and the credit picture is so dark, it just sounds like wishful thinking to assert the bottom is near.

[Rich]

I wouldn't count on the "silent Spring" idea. Pent-up demand, huge supply, moderating prices, and improved lending conditions will kick in to make this Spring in most parts of the country reasonably brisk (though in bubble markets like LA the numbers it may still be pretty bad year-over-year). Going forward I think the crisis will manifest itself in the foreclosure figures rather than the sales figures. If you're taking satisfaction from the misery February may be the end of that party...

[yourkillingmelarry]

For all of S. Cal

"Last month's sales were the lowest for any November in DataQuick's statistics, which go back to 1988. The previous low was in November 1992, when 15,446 homes sold."

So in order to get back to the worst and darkest days of the early 90's, which in many camps people feel was worse than this downturn, we would need to have a 15% increase sales. The volume is stunningly low. I guess my question is how much lower can volume go?? If you adjust for population since dataquick has been keeping records it is literally unbelievable. I guess the question is how long do we hover at these levels?? I think Spring will see an uptick in sales volume due to seasonality but still far below the levels of 07. I anticipate the steepest price drops in the later half of 08 through most of 09 and then a leveling off but going down slightly into 2010. The accompanying recession will be deep locally and it will put a great strain the state's resources and budget. The Correction is Here!

[Kathy]

This poor little kitty cat may bounce a couple more times, at least until the Fed's new rules take effect (assuming they are approved, and there's no reason to think they won't be pushed through as a barn door closing effect).

[vultur]

Thanks Pete. Looks like $550k is our high water mark. I'm surprised it stood that high as recently as August. Given a giant data sample I personally believe that the AVERAGE SALES PRICE and the MEDIAN SALES PRICE are very relevant in determining the strength of the market.

Given that the meidan number is still $499,000 from a high of $550,000, that's only a 9.27% drop in prices. Is there a consensus on how low the analysts (not the NAR) believe this number will drop? Will we see $400,000 or a 27.27% drop by the end of 2008?

If that were to occur I think that most could point to it being a decent time to acquire a home with downside protection.

[Tim K.]

I for one, am really excited by all this great news.

Lending standards are returning to normal, housing prices are starting to return to normal. That means in 3 years from now, I might actually have a shot at owning a home without going into horrendous amounts of debt that will eat me alive for the rest of my life.

It's difficult waiting for a financial mania to turn itself around,but it does make the reward that much more enjoyable when it arrives.

This is the best Christmas in many years!

[Uncle Billy]

Time for some new villains (sorry, off topic, but didn't want to go digging through to find an appropriate place to post):

Mozillo and Arnall out, Lippmann, Kamilla, and Kushman in?

http://tinyurl.com/yqezlt

[Martin]

Fortyfive percent? That's all? Only a rare bird would purchase real estate at this time, blindly making a major purchase with no idea of how solid the purchase price is. The math is all askew. Investors and brave souls are, I'm sure, knocking on doors, looking for 60-75 percent discounts.

Two months ago, I called this entire scenario The Great Real Estate Panic of 2007. A few here countered my label, still believing this is a real estate market correction. Do you really still believe that?

Prices will become artificially low, reflecting the complete reversal of out-of-whack, inflated numbers two-plus years ago. Granted, affordability and bad loans got this engine running. But now we can't turn the motor off until there is a crash. It's like a snowball gathering speed down a hill, going faster and faster and faster until ..

P.S. Please excuse the metaphor.

[lefty]

folks, when there's gloom and doom all over the newspapers and the message boards, this is the time to buy metro L.A.!! don't wait until everyone else feels great about the market, or you are going to lose out; just do it!

[Happy Bitter Renter]

My thoughts? Okay, here you go:

Burn baby burn! Oh yeah!

Here's to an avalanche of new inventory in spring 2008 and to prices continuing to plummet!! Woo hoo!

/happydance

[l.a.guy]

I don't think it will take years to reach the bottom, but it will take years for it to recover.

The thing that still puzzles me (and haven't read anything about) is an explanation as to why banks, the Fed, FDIC, GAO, anyone in a position to do something about it, didn't step in a couple of years ago and say "STOP! This is lunacy!" It seems to me the outcome to this was as predictable as a Britney Spears DUI. And right on the heels of the tech bubble too. Amazing.

The other surprising thing is how much damage a few well organized scam artists could wreak on markets.

We may have to rethink Gordon Gekko's immortal words "Greed is good." Maybe sometimes, this time, not so much.

[Pasadena Res.]

Looks Like "Lefty" is trying to rattle the cage.... Best to ignore such people.

[JEremy R]

"I wouldn't count on the "silent Spring" idea. Pent-up demand, huge supply, moderating prices, and improved lending conditions will kick in to make this Spring in most parts of the country reasonably brisk"

It depends. If good credit, a reasonable debt to verifiable income ratio, 10% down, are required to get a loan like they were in 2000, then it will be a very quiet spring.

No one knows how lenders and regulators are reacting to the mortgage meltdown. Almost all bailouts come with massive government regulation. There are too many factors for anyone to know what will happen, but I think MORE things are pointing to a quiet Spring than not.

[JEremy R]

"Two months ago, I called this entire scenario The Great Real Estate Panic of 2007. A few here countered my label, still believing this is a real estate market correction. Do you really still believe that?"

Back in 1997, engineers with PhD's from berkeley making 100k+ a year could barely qualify for a 300k condo in silicon valley. As a result they had to commute over 2 hours a day, even though they made great money for the time.

Just 8 years later a janitor in south central could buy a 450,000 home making 40k per year,with nothing down.

The correction process will remain in effect until the janitor cannot afford a home with nothing down unless it was under 100k.

This isnt hysteria. People are coming back down to reality, and it is a LONG way down. People are realizing that 33% of your income should go to mortgages, not 110%.

I gaurantee you that if prices were such that a single income family could buy a 3/2 home that they like for only 33% of their income, people would buy them in a heart beat.

IF that didn't happen THEN it would be panic, otherwise, it is a correction. People are tired of having to stretch two incomes in order to own a home. People are tired of spending most of their income on housing.

[sfvrealestate]

L.A. Guy, as to why this madness wasn't stopped: The financial conservatives in our government and the people who elect them hate regulation of any kind. Once again on this blog, I ask people to examine this core conservative belief and ask themselves, "Wouldn't an ounce of prevention [regulation] have been much better than this pound of cure?"

[toby]

I think people advising others to buy a house on the down slide is absolutely crazy (you know who you are).

WHEN the market hits the bottom, it will not go from 250,000 500,000 again overnight. Once it hits bottom, it will start to rise at a NORMAL rate. MEANING, income growth mixed with inflation.

People need to stop thinking of homeownership as a "Get rich quick" scheme. At best, they are like Diamonds, they may appreciate, but over time, and it takes a while to unload them.

[Keith]

I'm starting a "Lefty" watch, we'll track it's progress. Who knows, Lefty could be right!

Today is baseline @ $499k, let's see where it goes!

[Cal]

Every day I feel sad, the home I'm living in is declining in value with every passing second.

Then I remember that I am renting and it perks me right up.

w00t!

[enlightenment]

>>What kind of people use terms like "dead cat bounce".
>>whatiswrongwithyoupeople

What kind of people don't look up things on google before making themselves look like an fool...hmmmm. This is a common phrase in finance and stock market. http://en.wikipedia.org/wiki/Dead_cat_bounce

[original thinker]

The Federal Reserve Bank of Minneapolis has a
CPI calculator on its website --" What's a dollar
worth?" I suggest potential home buyers in California
use it to determine the fair market value of homes here.
I plugged in a few numbers and came up with -- "If in
the year 2000, I bought a (house) for $247,000., then in
the year 2007 the same (house) would cost $296,000."

I suggest using this calculator in assigning true
values to properities. Tell the agent/owner/bank the
Fed pre-approved your offer.

[whatiswrongwithyoupeople]

enlightenment,

My point was it's a sickening phrase, Traders use it, and you complain that realtors are scum.

A Fool

[Pete Viles]

Whatiswrongwithyoupeople wrote,

"What kind of people use terms like "dead cat bounce?" and later added, "My point was it's a sickening phrase, Traders use it, and you complain that realtors are scum."

Thanks, Whatis, I take your point -- I like cats, too. I will happily stop using the phrase provided you, or someone else here, can provide a substitute that is equal to the task -- it needs to be pithy, short, and descriptive of the cruelly misleading nature of a false bounce off the bottom. Personally I doubt you can do better, but I invite you to try.

Thanks for reading.

[anon1137]

original thinker - The value of a home is whatever someone will pay for it. If you owned a home, would you price it below market value? I wouldn't, even in this market. If there's a buyer out there who thinks my house that sold for $247K in 2000 is worth $500K today, who am I to argue? (Besides, I probably have a $480K mortgage on it.)

RE agents generally prefer to have sellers price their homes below market value because it makes their job easier. They work on volume and could care less about 3% of a $50K price difference.

You aren't going correct this market by talking sellers into lowering their prices. Sellers should sell for as high a price as they can get; buyers should pay no more than what they think a house is worth.

I've been on both sides of this.

[Joseph]

It's always a good time to buy if you can qualify...
The key word here is qualify...Not pretend to qualify...

There has always been people who don't qualify, even at the bottom of the market....

What are you going to do? Wait 5-7 years for the market to bottom? Do the Math and find out how much you will miss in payments....

[Peter I]

"You aren't going correct this market by talking sellers into lowering their prices. Sellers should sell for as high a price as they can get; buyers should pay no more than what they think a house is worth."

The problem is that in a buyer's market, the buyers are in control. There aren't multiple bidders on a property, allowing sellers to pick and choose among the hoi polloi. In fact there, are few buyers, vastly outnumbered by the volume of sellers. The buyers have their pick of multiple listings, many of them in great shape, packed with upgrades and updates, and if their lowball offers aren't accepted, they can easily move on to an equally outstanding property elsewhere. Sellers can try to list for as high as they think the market will bear, but unfortunately, there isn't much of a market (i.e., buyers) to be had.

[Cal]

I gots to admit, I'm a big fan of lefty, he may not be the best internet troll but his never say die attitude is a model for us all.

[joeinlosangeles]

Personally, I don't think we'll reach bottom before Lefty gets bored of coming here. So I wouldn't think of buying until after you haven't see Lefty's signature on this board for at least a month or two. That isn't the most scientific of the metrics I'd look at, but I have a hazy sense there will be something to it.

--I'm starting a "Lefty" watch, we'll track it's progress. Who knows, Lefty could be right!--

[Hopelessly devoted to Lefty]

I don’t know why you guys keep picking on Lefty. He is the God of economic, financial and real estate investment experts, especially for metro L.A. We should all bow to his sage advice.

And I am willing to put my money where my mouth is. Lefty, I implore you to help me and in so doing, prove to the scofflaws in this blog your benign genius. Lefty, I so believe in you that I desperately want to become your next door neighbor. Please tell me where you are buying your next house. Please call me at 1-800-829-1040 ext. AMT and reveal your divine plan.

[anon1137]

Peter I - Try bidding $300K on a $400K house and you'll see how much buyers are in control. Sellers aren't going to give their houses away. Many of them can't lower their prices even if they wanted to because they have huge mortgages on them. They would go into foreclosure before they could sell for the prices that some buyers expect. Then you'll be arguing with the bank over the true value of the house, and from what I've read, banks are bargaining hard too.

Plus, there are still investors and others around who made big, big bucks during the bubble and are eager to score again and keep the ball rolling. Some of these people think 10% off peak prices is a bargain, so they're buying up this junk at auctions, etc.

It's like Christopher Thornberg said, prices are always stickier on the way down. This market isn't going to correct overnight. We're in for a long ride.

[CD]

I am a Happy Renter, watching the world go up in flames from my lovely rented house, I got cash, I got time, I got peace of mind and I will burn a candle everyday at Patrick.net altar this Christmas thanking him for all his good work. 1998 prices, I will not settle for less, no one should....

[Peter I]

"Peter I - Try bidding $300K on a $400K house and you'll see how much buyers are in control. Sellers aren't going to give their houses away. Many of them can't lower their prices even if they wanted to because they have huge mortgages on them. They would go into foreclosure before they could sell for the prices that some buyers expect. Then you'll be arguing with the bank over the true value of the house, and from what I've read, banks are bargaining hard too."

I don't disagree, but buyers can move on until they find that seller who has to move, and who isn't underwater equity-wise. Such sellers do exist, after all.

[Rob]

Anon - "The value of a home is whatever someone will pay for it"

This is a FALSE statement. It puts 100% responsibility upon the buyer to drive market value. Couldn’t be farther from the truth. Are we forgetting economic and lending factors? Government intervention? If you realize these too affect price, then the buyer is just along for the ride.

[romeisburning]

Why do we have to stop at rooting for '98 prices? Let's push for '96. And no, I'm not kidding. Downward momentum is only starting, the recession, rising mortage rates and solvency have not fully manifested themselves. This will be the biggest fall on record. Stay put til 2012.

[JK]

whatiswrongwithyoutpeople... grow up will ya?

[JK]

Cal, I'm with you. I have to admit that I am enjoying the mortgage meltdown. I'm really tired of earning $80,000/yr and not being able to afford even a starter home!

I have learned a lot from watching the meltdown too. I am not going to pay more than 33% of my income for a mortgage. If that means waiting a few more years (where I'll start to earn more too) then so be it!

...and when I do start making offers, they will all be lowball offers! This should be interesting.

[Peter I]

JK, I agree with your statement. Prices should be in line with whatever the median income is for a given neighborhood, whether factored on the basis of one or two earner incomes.

Going by that rule, it's patently obvious that something like 90% of Southern Californians would not be able to afford the very houses they are living in currently. This situation is untenable in the long run.