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?