Still falling: L.A. asking prices down $111K from peak

Still falling: Median asking prices in greater L.A. fell another $900 over the past week and have now declined $111,000, or 19%, from their peak in April 2006, according to Housing Tracker's analysis of homes and condos for sale on the MLS.

Details:
--Median listing prices fell to $469,000, a decline of 14.7% from year-ago levels.
--Inventory of for-sale homes and condos spiked to 42,356, a gain of 35% over year-ago levels.

Analysis: Both main trends are intact: prices are falling at an accelerating level from year-ago levels, and inventory is rising at an accelerating level from year-ago levels. My hunch, and many of you have commented the same, is that we're due for some signs of life in the housing market this spring, although that's not the same as a bottom or a recovery. Just signs of life.

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)
2/4/08           $475,000 (down 13.5%)            41,653 (Up 36.7%)
2/11/08         $475,000 (down 13.5%)            43,625 (Up 38.3%)
2/18/08         $470,000 (down 14.5%)         41,830 (Up 32.3%)
3/3/08          $469,000 (down 14.7%)            42,356 (Up 35.0%) 

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

Comments

[John]

Signs of life in the housing market this Spring?

Not likely. The number of serious potential homebuyers is probably going to be outweighed by the number of distressed homeowners, distressed rental property owners, and retirees and middle class homeowners who want to cash out some equity and move out of state to live a more affordable life.

Remember, all the stupid sheep that respond to marketing instead of thinking for themselves have already purchased a home. The remaining pool of buyers is going to wait until things bottom out or until they can afford the house they want on a traditional mortgage.

It's going to be a rough spring for Realtors.

[Laker]

Peter, you can call those signs of life the know "Bull trap".
It has to happen. There was never a bubble without showing such a behavior. We all know that there was a bubble, (even LEFTY) so let's wait, see the people that will buy now just to get burned in a year or so...We are simply seeing another fresh supply of "fools" that will provide a new wave of foreclosures into 2010,2011 an on. That will sure guarantee a nice damping effect on home price appreciation here in LA for the next 10 years minimum.

Also, peter, there is this new subject of "short sale fraud" that been growing like fire in the mountains of San Diego. It is worth discussing it.
Secondly, Bernanke gave a speech in Florida saying that housing prices are falling and that is not a good thing...the government should actively do something to stop it...did he just said A BAILOUT?
Uncle Ben is heading to lower the Feds funds rate again, can somebody tell him that gas price is now $4.00!!!! Milk, eggs, cream cheese is up 20-30% from last year???

[American]

Still too expensive. You still can't get a decent place for less than $600k. And most of us still can't afford that unless they still give out Bizarro loan such as 0% down and 4% interest only Negative Amort. loan....which ain't never coming back.

So that means we'll going to see a big crash.

[jonah]

Peter,

I think any signs of life on the housing market is going to depend on our economy. If by spring we're in a full blown recession I wouldn't expect to see much signs of life in the housing market. If that's the case we might be looking at spring of '09 before any true movement starts.

[brad]

"distressed rental property owner"? John, my rents have been going up steadily over the past 18 months. Apartment buildings (especially well located and well built/designed) will continue to hold and increase in value because of the aversion to ownership and the 2 and sometimes 3 to 1 ratio of owning to renting the same product. These A/B rentals have huge upsides at the same time that the SFR market is dying.

[Kate]

American, I guess that depends on your definition of a "decent place."

[jason]

i would have to agree that there may be an uptick in sales this spring. prices have fallen plus the new conforming rates may allow more buyers. but, i do believe prices will continue to fall throughout the year.

[mbob]

Just a dead realtor bounce.
Or a dead appraiser bounce.
Or a dead mortgage broker bounce.
Or a dead lending officer bounce.
Or a dead title insurance underwriter bounce.
Or a dead escrow officer bounce.

Cats land on their feet.
Rats exit quietly under cover of night.
Dogs? They're always glad to see 'ya, don't borrow money, loot the liquor cabinet, bring home meth-cooking pals, argue sports, set the couch on fire, wreck the car or swipe your credit cards. Can't vouch for the first bunch on this list, though.

Moral: forget about moving any time soon, go adopt a mutt, walk it around your neighborhood and get to know your fellow residents. Plan a block party.

[JonM]

I'll see sign of life when my wage is doubled. It's almost impossible to afford a 400k home with an income of 60k-70k, especially when inflation is about to run out of control. Yet, the decent homes are still listed for above 500k.

[Chris]

HEY HEY HEY we are HALF WAY THERE!!!!!!
Another 111K drop in the average will make us all happy and Peter will have to find another thing to blog about. Hopefully super efficient energy technology being the next stock market bubble.....that sounds nice! Air quality eventually improves and LA home prices rise!!!

DOING THE MATH of RESPONSIBLE HOME BUYIN'
479K requires income of 138K to afford payments!

A great article on how the free market, foreclosures, and personal responsibility all work together to eventually vindicate smart people is here.......
http://www.slate.com/id/2185303/nav/tap3/

[amir]

Hey Brad,
The 18 month upside you saw in rents is over. Rents have begun to drop in SFV and will eventually drop in the city as well. More and more I see houses that were up for sale now up for rent. Meanwhile, large new condo complexes are not selling units and more condo construction is on the way. Some of these buildings will be bought eventually by investors for 25-50 cents on the dollar and turned into rental units. A flood of rental properties is coming to the market at the same time as a recession is starting. Rents will drop.

[brad]

Amir, I said well designed/located rental properties not SFV and not mega condo complexes. That's the difference. I just re-rented a luxury ocean front loft yesterday for 12% more than it was rented for last year.

[Jonathan]

"my rents have been going up steadily over the past 18 months"

Thats funny. For the past 3 years, the property company i rent from has been saying that they had to raise rates to "keep up with market value". Now that prices are falling, they need to raise rates because of an increase of demand. Being a landlord must be nice.

[Laker]

Amir, You are correct. As said before, investor look to match rents with mortgage to see whether buying a house for investment is a good deal. The problem is that rents are heading down especially for house for rent, and therefore will screw the equation. Rents are one of the support levels for housing bottom prices. When they fall, the house price loses its foundation, and basically starts to slide under ground...you can couple that with the market undershooting (to the areas less than mean) and you get really low median prices.While BH, or Westside will always be much more expensive than pacoima or van nuys...all areas will see 40-50% decline...

[Laker]

brad, how many of those ocean lofts are there relative to average joe six pack apartment / 3 bedroom house?
1% of the population can afford that ocean loft to cost 5 times as much.
How about the average joe?

[brad]

Laker, are you serious? You think Venice rentals will decline by 50% When a comparable ocean front condo that last sold for $1.3MIL can now be rented for $5,000 that illustrates the incredible upside in Class A well located (finite product) rentals. That represents a 3 to 1 cost ratio when factoring downpayment. Again, (Amir, you too) I am referring to specific well designed finite products that will always be in demand because of the lack of well designed and built rentals in LA

[Uncle Billy]

Speaking of condo conversion reversions... what in the world are all those Israeli construction people doing to put food on the table lately? During the boom, they were everywhere... from roofing to painting to plumbing to $100M shopping mall development. Couldn't go into a home depot anywhere in L.A. County without hearing Hebrew. (No aspersions here. Genuine question.)

[ajax]

"$900 over the past week and have now declined $111,000"

you are missing the "to"

it should read "$900 over the past week and have now declined to $111,000"

when that happens I am ready to buy........

[Ace]

Amir 'Meanwhile, large new condo complexes are not selling units and more condo construction is on the way. Some of these buildings will be bought eventually by investors for 25-50 cents on the dollar and turned into rental units.'

I just saw another condo complex here in NoHo put up their sign 'new condos from $600k, reserve today and pick out your colors'.

There are already a hundred other units within a few blocks that are priced $100k or $200k lower and still have not sold. These builders must know something that we don't if they think they can sell a condo in North Hollywood for $600k.... maybe the subprime loans are coming back soon?!?!?!

[CD]

A house sitting empty is a plight for an entire neighborhood , that is why my Landlord loves me and keeps on lowering my rent. I keep his house heated and clean and he gets some money in return. The mortgage on the house I rent would have been 8K/month plus property tax, plus gardner and pool man,plus maintenance. That is of course if he had sold it at asking price.I am paying now less than half of that. It was listed for rent way up at start, but the owner saw the light when the house got trashed by kids within the first two months while it was sitting here empty in the SF Valley. So I guess his house is now worth what he paid for in 2001: 700K , he wanted 1.8K. in august 07. That is it in a nutshell no????

[Mike G]

Median household income in LA County in 2005 was $48,200 [1]. So the median listing price to median income ratio has changed from 12.0 to 9.7.

There are two hard floors to the housing prices: at about $250k it is cheaper to buy than rent, and at about $190k the median household could qualify for a loan for the median house even under 4.0 price/income ratio rules.

But those numbers don't really tell the true story. The chance that the property values will dump that low is very low because of the massive income equality in LA. For example, according to the SCAG State of the Region 2006 report, the top 10% of households makes 11x as much income as the bottom 10%.[2]

Even so, we will not have hit the bottom until starter homes are about $190k.

[1] http://www.labor.ca.gov/cedp/pdf/LosAngeles.pdf
[2] http://www.scag.ca.gov/publications/pdf/2006/
SOTR06/SOTR06_FullReport_lores.pdf

[Victor the Predictor]

Brad, how long was it vacant? What is the term of the lease? Are the tenants Canadian or Russian, or going to be using the space to shoot pornographic videos?

If you procured the tenant through the laland you have a moral obligation to provide the space one day a year for the blog-party. It's usually pretty intense: Everyone stands around drinking kool-aid while My Less Than Sub-Prime Beef recites german apocalyptic poetry. Hula Girl and Ann do the Souldja-Boy dance in the middle of the room and occassionaly kick each other in the shins.

Lefty swings in on a vine once an hour and blasts his jungle cry: "Metro El Ay - ay yay yah -- oh - oh -oh!" Pete and Michael Snyder engage others in polite conversation over finger sandwiches and kreplach while Uncle Billy sulks in the corner with his margarita, hurling out the occassional insult.

[mike]

housing crisis
note from wisconsin former LA native ~
I think many S. California residents should look for property in the midwest. The quality of life in my town in NW Wisc, the value of housing, schools and beauty of nature is second to none. If you can handle a mortgage of $900 a month you will find a nice place to call home.

Hang in there LA you will get through this.

mike

[mbob]

Yo Senor Mike

You are on to the core problem: gap-osis between the rich and everyone else.

During Bushco's regime, the gap between have's and have not's has reached gulf-like proportions.

Where housing's going to fit into this Republican dreamtime is beyond me.

Hey, at least a lot of the population's incarcerated. Keeps labor wage demands down when inmates get out.

[brad]

victor the predictor: it was vacant 45 days, no they are not foreign nationals shooting porno and you sure provide some laughs around here, have you thought about pornographic comedy?

[Ragnar]

Sure the cost of a house in NW WI is way less than in CA, but you get brutalized with nearly six months of winter every year and high property taxes in WI. It's green with some rivers and lakes, but no real mountains to speak of unless you count the western bluffs near the Mississippi river. It's overcast half of the year and sometimes you barely see the sun for nearly two weeks straight. I've lived in Wisconsin's capitol city, Madison, for the past nine years. Even though it's about as culturally diverse and open as it gets in WI, after 90+ inches of snow already this winter, I am so ready to get out. By the time we finish our degrees and are ready to move in 3 years, hopefully LA housing prices will be at a more reasonable level than they are now. I suppose WI is interesting in places (and we have made some good friends here), but we're ready to live in a place that is more more active, interesting, sunny and fun.

Many people who move from LA to most anywhere in WI will be bored in WI, especially if you do not live in Madison or Milwaukee.

[toby]

Laker, are you serious? You think Venice rentals will decline by 50% When a comparable ocean front condo that last sold for $1.3MIL can now be rented for $5,000 that illustrates the incredible upside in Class A well located (finite product) rentals. That represents a 3 to 1 cost ratio when factoring downpayment. Again, (Amir, you too) I am referring to specific well designed finite products that will always be in demand because of the lack of well designed and built rentals in LA

Posted by: brad

Sorry but I'm going to have to call Bullsh*t on this one.

I was told the same tripe in 1993.

Beach communities are limited. Beach Communities are finite. A beautifully redesigned 1935 Spanish Enclave WILL NEVER LOSE VALUE, NEVER.

The worst that you can expect is to run flat for a few years.

I sat upside down on that house for 9 years!!!!! At one point I was almost 75% below water.

So please, stop spreading delusional nonsense. When a market crashes, every niche market goes with it.

[JohnnyB]

I hear the old coot Bob Barker shouting...

"COME ON DOWN!...

You're the next contenstant on the Price Is Right!"

Of course, they still have a ways to come on down.

[MyLessThanPrimeBeef]

Brad, what's wrong with pornographic comedy?

When you look at the pornography that is the housing market, laughing is the best coping mechanism.

But I don't recommend staring at it too long, because..well, Nietzsche, probably speaking from experience, advised: Don't stare into abyss too long, or the abyss will stare back at you, or something like that. Instead, I suggest people take up the hobby of cowrie shells collection. It COULD be as good as gold. And if you are really good, you might try to monopolize the supply, corner the cowrie shell market, especially the AAA rated,prime cowrie shells, like any smart, greedy manipulator would do.

[puckehad]

Sorry Toby, I call BS on your post. 75% underwater on a 93 purchase? What did you pay for your beach house in 93? $300K? You telling me that at some point your beach house post 1993 was worth $75K? Oh, how much is your beach house worth today even with a collapsing RE market? Dude, anyone who bought in a nice beach community prior to 1993 and held on, they’ve done very well for themselves.

[Victor the Predictor]

Brad, more. 45 days ok. And the term of the new lease? How many days, weeks, or months? More importantly, can we have the party there when current lease is up? Could have some great marketing potential -- broadcast on youtube.

I did think about blue comedy, but the 'sc grads have a monopoly on that one, so I'm s.o.l.

MLTPB makes a good point. Not a lot left to do but laugh at this point and stay smart enough and greedproof enough to avoid being taken again. Dunno bout the Cowrie shells though -- they would remind me too much of an abandoned home.

[shockg]

Peter, Inventories are excellerating if you reach back 12 months but inventory is down from last summer. Nice try.

[brad]

Toby , what are you smoking? No southern California beach property went down 75% after 1993. I know because I have owned and sold many beach front properties since 1989 and I challenge you to provide an address. We both know you are full of it

[Laker]

Shockg wrote: "...but inventory is down from last summer. Nice try..."
Wow, your simple statistics and calculation ability couple with market knowledge is approaching zero.
Have you ever heard about RE season effect? You know way more people move in summer than in February...so that many pull their listings in the winter or simply list them in spring/summer.
Now, i know you are RE agent and way full of it. Previously i had 10% trust in your opinions, now i have 0.

[Takeit]

I've been reading this blog for the last few days, and wanted some feed back on my situation. I just bought a duplex with a friend of mine in a pretty decent area near Loz Feliz. The property used to be owned by someone obviously renting it for income purposes and is in really good condition with pretty much every detail new or redone. I bought it at auction for well under 350K. Would waiting have been better, I think my friend and I did OK.

[donna]

>

Is this really true? I only make $85,000 and have $100,000 to put down on a home. Are you saying I can only prudently affort a home costing around $295,000?

I was planning on buying soon with a fixed 30 year. I'm looking at houses around $500,000 or less. Meanwhile my realtor is putting pressure on me saying it is not true houses will keep coming down.

Sigh. I feel very stupid right now.
Donna

[Geek Seek]

Donna,

If you can wait, hang on for 6 mos. to a year or so until housing gets back to something approaching normalcy. You'll probably be able to buy much more home in a nicer area at that point, foreclosure or not.

Currently, and assuming good credit, etc, a rate of 6% * on a standard 30 year fixed with 20% down, you should have no problem getting qualified for $325,000 home / $260,000 loan. There are still lenders out there that would be happy to get you into a much more expensive place, but don't bite on it! Wait it out.

Your mileage may vary, of course. Monthly housing expense for above scenario would be about $1,559 (principal & interest) + $430 (Taxes & Ins.) + HOA if any = about $2,000 / mo.

[donna]

>

I think $325,000 is too conservative. Firstly there's no such thing as a house at that price that won't fall down during a rain storm, and secondly, I think I can afford more than that. I have $100,000 specifically designated for a down payment. This doesn't empty my savings.

Most people are spending close to half of their income on a mortgage true?

Does everyone here pretty much concur that now is not the time to buy and that waiting is better?

Thanks!
Donna

[kint]

Maybe Toby mean by 75% underwater that his equity was 75% under. Say, if the house was 300k, and he put down 50k. If the house went to $263k, then he would've lost 75%. If the house went to $213k, then he would've been -75% under - meaning, he would owe $37k if he sold his home. I know people who bought homes at $320k in '90 which were worth $220 in '96, so it's not implausible.. although the specifics of Toby may be suspect (esp. since the last housing peak was probably around 1990), but his point is well taken.