L.A. listing prices down another $600

Median listing prices in greater Los Angeles slipped by $600 over the past week, dropping to $464,900, according to Housing Tracker's analysis of MLS listings.

Highlights: Median listing prices have fallen 15.5% over the past year, and 20% from their peak of just under $580,000 in April 2006.

The inventory of unsold homes and condos rose slightly over the past week, to 42,098. Inventory is still pacing 31.4% ahead of year-ago levels.

Date               Median listing price                   Inventory

4/06               $579,666                                     27,251
4/07               $545,000                                     35,489
5/07               $545,000                                     38,297
6/07               $540,000                                     40,766 (up 20.4% y/y)
7/07               $535,000                                     42,685 (up 14.5% y/y)
8/07               $529,000                                     44,483 (up 13.6% y/y)
9/07               $520,000                                     46,414 (up 16.9% y/y)
10/07             $510,000                                     46,603 (up 15.6% y/y)
11/07             $499,900                                     46,503 (up 19.0% y/y)
12/07             $495,000 (down 10.0% y/y)     43,174 (up 28.2% y/y)
1/08               $479,900 (down 12.6%)           40,850 (up 33.3% y/y)
2/08               $475,000 (down 13.5%)           43,625 (Up 38.3%)
3/3/08            $469,000 (down 14.7%)           42,356 (Up 35.0%)
3/10/08         $465,500 (down 15.4%)            41,838 (Up 32.3%)
3/17/08         $464,900 (down 15.5%)            42,098 (Up 31.4%)

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

Comments

[Chris Camp]

Real numbers - we're starting to get far enough away from the peak that inflation matters. By my calculations the inflation adjusted peak (using your April 2006 number) is 609,339.65 in Feb 2008 dollars. In real dollars we're 24% under the peak. As inflation picks up this calculation will increase in importance... Anyway - just wanted to throw that into the mix.

[Raul]

It is not even fun anymore... I wish Lefty was right, the houses loose 15% and unemployment goes up, inflation is eating our wages, financial institutions are going down, our State Goverment can not pay the bills, teachers are being lay-off. Where is the money? who is hiding it?..... Every one is having a hard time paying the bills, not only the Dead Beats, that Kat mention so often... Yes i wish Kat was right.... Please every one buy real state... Oh i forgot most of us can not afford to buy a house..... I wish every one was rich and inteligent like puck head....

[andree]

lets look at the bright side of equation. if less money is tied to housing, more will be available for spending. This will keep the malls busy, restaurants busy and mom and pop stores rolling.
Why tie all money to housing sector. Free fall in housing will free up the money. Even in housing you build equity and use your own money and pay interest over it. All takes long and it is dead money to me,money not in circulation or used for creating jobs. So tying up money in housing is foolish.

[JK]

unemployment goes up, inflation is eating our wages, financial institutions are going down, our State Goverment can not pay the bills, teachers are being lay-off. Where is the money?

Raul,

It's with the corporate elites who outsourced middle class jobs, brought in illegal labor to do the jobs that were left and thumbed their nose at people that dare needed help after all that. Disgusting...

[srla]

That housing prices are falling is a good thing. A very good thing. This decline was inevitable, and it will hurt in the short term, but such a decline is the only possible outcome of a bubble. Honestly, what was the alternative? That prices kept rising when, even using the most creative financing, real estate was beyond most everyone's reach?

Recession is an inevitable and necessary part of the business cycle. A downturn could not be forestalled indefinitely by increased productivity and imaginary real estate wealth. So sit back, belt up, and hold on. It's going to get bumpier, but we'll survive.

[Martin]

A year ago I said on this blog that some people here should be careful what they wish for. They may just get it. And so it's happening. Real estate prices are down nearly 25% already. Statistics aside, in some areas I think it's a higher number.

Of course, I also said that if this happens -- and continues -- we might as well kiss our econoomy goodbye for awhile. Just look at today's headlines. Thanks to Peter's input, we learned a pertinent lesson. A major financial institution, Bear Stearns, is now worth less than David Beckham's salary.

I hope the critics hurry up and buy a condo now. Oh wait. The banks are failing. You probably can't get a loan. Only longer term homeowners with lots of pre-bubble equity or the wealthy with good credit can easily qualify now.

But the wishes a year ago have come true.

Whoopdeedoo.

[IToldu2CashOut]

After reading an interview with Paul Krugman, I'm starting to understand why interest rates are going up even though the fed has been lowering the rate. It actually has to do with risk assessment. The banks finally realize that houses are still way way overvalued and thus still very risky to lend on, so they are making them harder to afford even as prices are going down (seemingly in no ones best interest). Once prices drop to their real levels the banks will lower their lending rates to us because it won't be so risky for them. Then it becomes a win-win for banks and buyers but a big loser to sellers. The message to sellers I think is to slash now so maybe you can sell before everyone else slashes perpetuating the feedback loop. Of course prices will eventually hit a bottom but thats a long way coming. Just like the boom overinflated prices high the bust will likely drop prices lower than they should be. When that happens us patiantly waiting will get a great price and a great rate. Could be a few years though. Sellers are pretty dense and will be the last to catch on and will waste a lot of money on taxes and HOA dues in the process.

[JW]

By the time summer arrives, the inventory of "for sale" houses will be at an all time high and a much stronger dose of reality will have set in with the sellers. THAT is when you will start to see some very aggressive pricing. Buy now and lose big $$$$$$. Rent, wait and watch the prices fall.

[John T Watts]

You would think that prices would continue to drop to the point of affordability for individual homeowners. They might. But an unknown factor is the point in time when investors might once again become interested in real estate as hedge against inflation. The price of gold has gone up recently. In order to escape the affects of inflation it becomes necessary to invest in something that also inflates in value. Investors are probably keeping a close eye on real estate waiting for the bottom.

[bob]

Im sure glad that I sold my house last year and moved to Austin TX. where I got the same house I sold but payed free and clear! No house payment....thats nice. I feel bad for the person who got my house. Sorry to say this, Cali is over rated and over priced.

[econo]

get real andree...

with inflation adjusted wages declining and a national negative savings rate just what exactly do you think HAS been "keeping the malls busy"... perhaps paper profits tied to housing?

[Jack]

>Where is the money?
>who is hiding it?

Overall value and money in the market are never equal. XYZ stock might be trading today at $100 a share, and with a million shares outstanding, that values the stock at $100 million. But people who own XYZ stock may have only invested $25 million in total. Hence, if the price of XYZ falls to $60 a share, that doesn't mean a concurrent $40 million flow of cash.

The same for the housing market. If you paid $200K for your house and the value went to $600K in 2006 but dropped to $400K this year, as long as you continue to hold the house, you have not actually lost any money. None of your money in that house has really moved.

A lot of people (including me) who took money out of the market in 2006 and 2007 are simply sitting on it now in liquid, very safe investments, i.e. CDs, MMs, TBs, etc. I'm not putting any money back into the market until it has hit bottom. You will know when it hits bottom because prices will be flat, not declining.

[peter m]

here is the Feb LA datquick zip chart for feb 2008.

http://www.dqnews.com/Charts/Monthly-Charts/
LA-Times-Charts/ZIPLAT0802.aspx

Pasadena 91101 1 n/a n/a 6 $450 -22.9% n/a
Pasadena 91103 7 $470 -26.6% 1 $603 60.7% $370
Pasadena 91104 12 $635 -6.7% n/a n/a n/a $452
Pasadena 91105 4 $914 0.3% 1 $1,050 30.0% $474
Pasadena 91106 7 $788 -29.2% 15 $427 -4.0% $683

Pasadena is not immune from the collapsing SCal RE bubble. Before this thing hits bottom in 2-5 yrs(?) every community in LA will be hit hard by the RE collapsing bubble. You may get 100-200 hi-end million$ homes sold each month in a few h-end zips but that means zilch. LA has 10 million pop, 2 mil households ,100,000 +current for sale or forsclosure homes,( soon to go up to 150,000). Sales of hi-end LA homes acct for .002 % or 2 sales out of every 1000 listed or foreclosed homes in LA county.

So monthly sales of hi-end homes involving maybe 1000 individuals/wealthy foreigners, out of LA county 10,000,000+ population, means nothing statistically.

[zenlolly]

if less money is tied to housing, more will be available for spending. This will keep the malls busy, restaurants busy and mom and pop stores rolling.

I totally agree, but I think the money has already been tied and got burnt up, and there's not much left to spend in malls anymore.

The Internet bubble was short lived, but that's because the housing bubble is left holding the baton.

Bailing out Bear Stearns is seen by some as interference in the markets, but does the Federal government have a fiscal duty to restore or ensure order in the markets. I would advocate "ensure", as restore is post event. That means tighter regulation, and let markets correct themselves, punishing those who acted either irresponsibly or illegally to compensate those who were innocent victims.

[amir]

The decline is too slow. Really.

Prices are very sticky. Capitulation has not occurred yet.

If prices keep falling at this pace, we'll have long years of decline and years of local recession. It's better to have a steep decline, then a recovery.

[Frank]

The government is about to step in and arrange a buyout of the subprime mess which will put an end, hopefully, to the gleeful and greedy bloggers who somehow think a housing depression won't effect us all. A pox on all those who somehow think bailing out a bank like Bear Stearns is OK but it's not OK to bailout a neighbor who is being evicted from his house due to mortgage company smoke and mirrors.

[Inland Empire]

By the time summer arrives, the inventory of "for sale" houses will be at an all time high and a much stronger dose of reality will have set in with the sellers.

To some degree, yes. But I think that anyone who does not "have to" sell in this market is waiting it out. I am also noticing a lot of funny business in the market. Short sales are like the wild west shows - pretty much anyone's guess how they end up. Auctions that might have shill buyers. "Wrong" combinations on lock boxes so your agent can't show a house. Repo houses that seem to have relatives of the old owners buying them. Lots of horse manure out there.

[Cal]

http://www.reuters.com/article/
reutersEdge/idUSN1765097420080318?sp=true

"Federal bailout of US housing gaining momentum"

Everyone in the article thinks the new Barney Frank bill will pass.. imho it certainly has the highest chance of any bill yet to pass.

[Roger Moore]

@peter m

That's an interesting table, but I think this one is even more interesting.

Zip
Woodland Hills 91364 -21.6%
Arcadia 91006 -29.7%
Torrance 90505 -10.3%
LA/Westchester 90045 -4.3%
LA/Mar Vista 90066 0.8%

Those are the same zip codes Peter Viles mentioned as showing that some expensive but not super-rich neighborhoods were still holding their value. Guess what; they're not. It's just that there aren't enough sales to get a reasonable value from one month's sales in one zip code. What looked good last month looks pretty bad this month.

[CD]

AMIR wrote a note yesterday, in the Bear Stearn bail out section, that is worth repeating again and again :

-"The Fed's actions are debasing the dollar in an attempt to save the financial system, because of it, we are facing a tremendous rise in energy and food prices, by double digit percentage points.
This is effectively a tax on the poor.
And to a lesser extent, a tax on the middle class."-

Wall street is expecting another point down on the interest rate today. What gives?

[Truth2Pwr]

I think at this point we can retire the concept of "waiting it out". Unless you mean it as in, "I know that dotbomb stock I bought back in 1998 has dropped from $50 when I bought it down to $5 today, but I'm not gonna sell now. I'm waiting it out"

The next time that the median home price in SoCal tops $579K, we'll all be pushing up daisies...or earning a median income of $130K. My bet is on the former.

[Jack]

>Bailing out Bear Stearns

Curious how people are calling this a "bail out." Bear stock was trading over $100 less than four months ago. The JP Morgan Chase buyout is $2 a share, for which the Fed is providing some financing assistance, as it regularly does to large banks -- and not using tax dollars -- plus earning interest on the deal to boot. The Fed will make money on this deal, and it will not cost taxpayers a dime. The only losers on this deal are Bear stockholders.

That's a far cry from *directly funding* a buy out of a subprime mortgage, where Fred and Mary Reckless -- and possibly their lender -- get tax dollars to write down a imprudent home purchase. That's money taken out of responsible taxpayers' pockets and giving it to those who are potentially irresponsible.

[GDC]

Has anyone been paying attention to the 1 year T bill rate? It's plummeted to almost 1.5%. From 03-06, the majority of the mortgages in CA (esp. in high priced areas) were the 3 and 5 yr ARMS. Guess what? These ARMs are now resetting at slightly above 4%. For these buyers, they can comfortably afford to stay put. Once the T bill rate goes up (it was around 5% last year), these people will be in panic mode and many will be forced to sell. However, that may take 2 years to happen.

[LeavinLA]

roger moore: did you read your own post? 90066 IS holding. you claim it is not. oops.

[shockg]

It's Interesting that inventory is down from last when when the credit crunch 1st hit. Also, a funny thing is happening in OC and I suspect the same is happening in LA. The dumpy foreclosure infested areas such as Santa Ana and Garden grove are moving more distressed properties while the nicer more expensive areas have no sales and prices aren't crashing like many here have hoped. This explains the falling median that so many of you want to attribute or extrapolate to the entire market.

[Derrick]

Re: The next time that the median home price in SoCal tops $579K, we'll all be pushing up daisies...or earning a median income of $130K. My bet is on the former. Posted by: Truth2Pwr

My bet is on the latter. The Fed is pumping so much cash into the economy that Nazi-Germany-style inflation can't be far behind. Nobody will want USDs by the time this is over.

[Geek Seek]

That reminds me...

Anyone know of a resource where we can actually find out how much money is actually being created by the Fed? Can we go and see: "$20B was created with the push of a button today", and "$10B was printed in crisp new $20 bills"? We all know that printing, or creating new digital money, creates inflation, but where do we find out how much is actually coming to life?