Listing prices down $130K from peak

Median listing prices in Greater Los Angeles fell another $5,000 in the past week, and have now declined $130,000 from their bubble peak, according to Housing Tracker's analysis of MLS listings. Highlights:

--Median listing price fell to $450,000, a decline of 17.4% over the past year and 22.4% from the April 2006 peak of $579,666.
--The inventory of unsold houses and condos dipped to 42,428, which is 19.6% ahead of last year's levels. This is a trend worth noting: Inventory has declined slightly since mid-February. It could be that the weak market is discouraging would-be sellers from listing their properties.

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%)
3/08               $464,900 (down 15.5%)               42,098 (Up 31.4%)
3/31/08         $459,900 (down 16.2%)               42,038 (Up 27.6%)
4/7/08           $455,000 (down 16.7%)                42,482 (Up 23.3%)
4/14/08         $450,000 (down 17.4%)                42,428 (Up 19.6%)

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

Comments

[shockg]

Someone let me know when inventory is going to go through the roof like so many had planned/hoped. Its been flat all year.

[Fred]

Pop!

[keith]

Who cares about inventory? Prices are what matter!

[tflg]

I have noticed the inventory dip and I think you are right on about the reason. It's not sales. I track about 20 to 30 houses that I like. In the last month or two at least 1/2 of those have been pulled. Only a couple of them sold. The rest of them gave up. I'm wondering how many of those will be back as REO's in a few months. I've even seen a few bank owned homes drop off. They did not go pending, I checked. What's the deal with that??

[IToldu2CashOut]

Not only are people holding off selling and delisting property, but also people are giving rediculously high asking prices. I think in some cases so they can accept a lowball offer making buyers think they are getting a deal. Ultimately these strategy's will not work, and neither will denial.

All you have to do is take in some of the houses you see on your commute. I drive down Crenshaw near Wilshire, and I ask myself are these million dollar houses? Of course they aren't. I'm not even sure there worth 300k most of them. Reality will eventually have to take over. With no more bubble action people are going to want to get something nice for an investment they will be paying off for the next 30 years. Either that or get it so cheap it will leave them with enough money to fix the place up. Thats going to mean 150k-200k for a house that needs work, not 1.3 million.

[GDC]

I noticed the same thing in the SFV. About 1/3rd of the listings just disappeared. When I checked Zillow, it didn't have them as sold. The sellers have given up. The ones that don't need to sell are staying put.

[Joseph...The Real Estate Guy]

Peter,

Some Sellers are on-hold listing their properties and lots of buyers have come out of the woods.

It's amazing how the Westside, Culver City, Westchester, South Bay is holding it's value.

[pugtv]

Hey shockg,

Just curious, why do you read and post on this blog often. You've made it clear what you think of the people on this blog. Doesn't it annoy you to read their repeated comments over and over?

Imho, I agree with you to some extent. There are a lot of angry, self serving people on this blog who want the real estate market to drop, in order to benefit (nothing wrong with that). Some of their comments are brainless and can get annoying. But, there's also a few tidbits of good analysis here which I appreciate (thanks Cal).

Now getting back to you ... so what's your deal? Are you a real estate agent trying to offer a varying opinion to the moderate readers?

[Hugh Jorgan]

The decline in prices is accelerating.
2nd Qtr 07 $ 5,000 decline
3rd Qtr 07 $20,000
4th Qtr 07 $25,000
1st Qtr 08 $30,100
2nd Qtr 08 $14,900 so far this month!

That's $95000 off the avg price from less than 12 months ago. A lot of pain is being felt across the Southland, and it will increase until the prices become attractive again. If you're a buyer, stay on the sidelines because this has not come close to reaching bottom.

[Laker]

Peter wrote: ..."It could be that the weak market is discouraging would-be sellers from listing their properties...."

Could be, but those that need to sell are making huge mistake. Selling today by lowering the asking price enough is a winner for sellers as prices drop, and today low ball acceptance is tomorrow "wish i accepted that offer" price.

Remember, the last to leave the room, please turn off the lights!

[sandiegan]

According to housingtracker, in the last month:

SDO up .5%
SFO up 1.7%
Las Vegas up 3.3%

and.....

DETROIT UP 3.8%!!!

Who could have guessed that?

[Bill]

I've heard the same from a number of my wife's patients in the last few months. They've decided to pull their listing because prices have gone down.

Personally, this reminds me of when I lost money in the internet bubble. The first leg down on my stocks I lost 20%. I was pissed and thought about selling BUT I'd be selling at 20% less than what I bought it for! I deserved to sell at the top!

Eight months later I was sitting on a 40% loss. Damn was I fuming! But the market must be at the bottom, so I'll hold on just a little bit longer just to get some of that back.

At the peak, my stocks lost 60%. At that point I was so pissed I didn't care any more. Darn, just take it all!! There's not much left. So by the time I sold, my actual loss was @50% because the market did bounce back over the next year.

So where are we? We are at that first 20% just the timeframe is different. Two years from now, the same people that pulled listings will be screaming they should have sold when the could get it sold at 20% of peak instead of 30% to 40%, IMO.

[left of lefty]

like tflg, i've also seen some reos taken off the market. if i put myself in the lender's shoes, this might be what i'm thinking...

if i, as the lender, dumps my reos right now, i will actually hurt myself. dumping lowers the property value of the neighborhood, which will affect other loans i have in the area. those loans may become upside down. so if i dump my reos, i'll just turn my current good loans into more bad loans.

on the other hand, if i were to hold on to the reo, what is my cost? assuming the property is last assessed at 800k, it costs me less than 20k a year for taxes, insurance, and the occasional repair and upkeep. why should i dump the 800k property at a 100k discount (or worse) if it costs less than 20k a year to hold? it will take me 5 years to 'use up' that 100k. and in 5 years, the market may have recovered. even the bearish of bears say housing will recover by 2013.

hmmm. but if someone offers me $780k, then it would make sense to sell.

in the mean time, as long as i hold on to that 800k reo, it's an 800k asset on my books. if i sell it for 700k, i will have to immediately recognize a 100k loss. that can't be good for my stock price. besides, i don't need to sell these properties to get cash to meet my daily operating expenses. even though i can no longer borrow from other banks, i can still borrow from the fed.

finally, it appears that the fed will continue to lower rates, and congress is talking about some type of bailout package. so why not just pay a few more months (or even years) of taxes and insurance and see where things go from here?

now, i have no idea if the lenders think like this. but if i were the bank, i would hold. it just makes sense.

[Bill]

Peter, I'm not so convinced by your belief that the top end of the market will fare noticeably better than the bottom end.

Yes, the subprime crisis hit first, but that's because subprime rates started to reset first. All those option ARMS are just starting to reset en masse.

AND remember this. When a poor person doesn't pay their mortgage, the bank forecloses on them in 3 to maybe 5 months. When a wealthy, and usually more educated person, doesn't pay their mortgage, they hire a lawyer and figure out how to live in the house without paying the mortgage for at least 12 to 15 months by tying it up in bankruptcy court.

That said the top end will start to feel it shortly and possibly even worse because it is more leveraged.

The rate of price decline has slowed lately but historical figures show that prices resume their decline by mid July. Hence we have 3 months before we start to see the beginning of what will certainly be a historic plunge in prices.

[sb10]

I question the assumption whether the South Bay is holding its value. In Redondo Beach, for instance, there are too few sales to do any decent analysis, and the composition of sales has definitely changed. To compare sales now to those of a year ago is comparing apples to oranges. Short sales have been going for 2004 and 2005 prices.

In late 2006 you could check Redondo Beach in Zip Realty and there would be no listings less than $600,000. Today you'll get several pages worth.

[John T Watts]

It looks like in about July we may begin to see the word "down" in the year on year for inventory.

[Anonymous]

Nothing against home owners that want to maintain high prices, but it sure would be nice if we could attract new business to Southern California again.

[Ragnar]

Keep them coming. We may see a slow in the acceleration of declining home prices this summer, but once fall hits, look out!

At least Wisconsin is sort of warm for some of the summer...but, we'll have to deal with a couple more winters while my wife and I finish school. LaLa Land 2011 here we come!

[tealeaf]

now, i have no idea if the lenders think like this. but if i were the bank, i would hold. it just makes sense.

Posted by: left of lefty

Left: the loss is greater than the figures you are quoting. Reason? Capital is tied up on a non-performing asset. If that same principal went to work on 2 performing assets, there would be a profit. So the actual "loss" is much greater. Banks are in the business of making money, not speculating.

[keith]

Left of Lefty

No, banks don't think like that. Holding too much real estate impairs their ability to borrow more money to lend to others because their balance sheet gets too junked up with non-liquid assets. Stock price suffers a hit anyway because investors factor in where they think that bundle of homes on asset side of balance sheet will sell for. Banks might hold for a year or two, but then they gotta convert to cash. Like Laker said, once the cycle gets going it'll be a rush to the door to get out.

[brettdl]

Peter, do the inventory numbers include foreclosures and REOs? Seems like it's hard to get a handle on true inventory if those numbers are not included.

[tew]

Hugh - sometimes the simplest observations right in front of us are most telling. Good post.

[tew]

It's a grind. 22% off peak two years ago. Add in around 6% of inflation and you're now down nearly 30% real. If you take another 20% off nominal from here in 2010 and give inflation another 3%/yr you'll get that real decline of about 50% peak-trough 2006-2010. That'll about do it as prices were about 2x too high at the peak of the bubble.

However between government action, dollar decline foreign bargain hunting, and structural buying in general we may only have another 10% down nominal if the recession is only a mild post-1993 style. If the economic contraction is more ordinary (not as mild as the past two very mild recessions) 50% real will look like a best case scenario.

[desmo]

I sold my Valencia house (10/2005) in the Northbridge community for $397/sq. ft. Homes in that same community are now "asking" $245/sq. ft. That is 40% off the peak.

[jake]

Listing prices in Hancock Park / Larchmont Village have continued to move up, even from the 2005 levels. Though not huge increases, 3-5% is not uncommon.

On top of that, the homes are selling. We've had 9 homes sell in the last 2 months, all for close to asking. 3 of them had multiple offers.

I'm still waiting for this big bust...and NO, I'm not a realtor and have no affliation with one. I'm simply a buyer waiting for the bargains to happen in an area that I can't find a deal in!