Flat, flat, flat, flat: Listing prices unchanged, again

No names will be mentioned, Keith, but a certain commenter (Keith) mocked and ridiculed me a week ago for suggesting that the decline in listing prices may have stalled.

Update: Median listing prices were flat again in greater L.A. over the last week, holding steady at $450,000 for the fourth week in a row, according to Housing Tracker's analysis of MLS listings. Inventory of unsold houses and condos was also essentially flat.

Regardless of whether prices have reached a bottom, a temporary bottom, or none of the above, there is a clear trend here: inventory is not building.  I'd love to hear your interpretations of that trend.

The numbers:
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%)
4/21/08         $450,000 (down 17.4%)                42,430 (up 16.7%)
4/28/08         $450,000 (down 17.4%)                42,728 (up 14.4%)
5/5/08           $450,000 (down 17.4%)              42,647 (up 13.7%)

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Getty Images

Comments

[Jason]

There's also a growing disparity between prices for the 25th and 75th percentile homes.

[Jonah LaFollette]

Inventory is still high...if that number were dropping I would agree with you Peter. But this is spring, which is supposed to be the best time to buy. With these numbers being flat I believe we'll see the prices begin to slide after people realize that their best oppurtunity to sell their homes has passed them by. Fall and winter won't be kind to the southern california housing market.

[marvabhor]

more and more people are buying homes. they are using FHA loans that allow up to 97% LTV financing. there are still a lot of people willing to buy. the would be sub-prime borrowers are now FHA borrowers.

[Robert]

Still overpriced. Because of the overall economy and tighter lendng standards, nominal (not adjusted for inflation) prices will stay level or decline for over 5 years. Inflation will return due to rising oil and food prices plus the Fed's unwillingness to raise interest rates.
Buy a house now only if you plan to stay there long term, not as an investment.

[Fred]

Blah blah blah...spring bounce doing its best to keep the sky from falling.

[TakeFive]

I've been watching Countrywide's Trustee Sales page on their loan servicing website for several months. The number of properties scheduled for sale has been continually increasing. Today is the first time I've seen it exceed 8000 properties just in California.

I suspect the system is constipated at the moment. Look for a big movement soon.

http://www.recontrustco.com/#props

[John]

You know that bit where the roller coaster slows down and flattens out for a few seconds, before plummetting downward again at a heart-stopping rate?

That's where we are right now. The psychological resistance to admitting that the home which you had planned on selling for huge profits is not only not worth $500k, but may not even be worth $450k, can be pretty tough to swallow.

But since there are 42,000 homes on the market, and we haven't even begun the major wave of Alt-A / Option ARM resets, the housing roller coaster will begin hurtling downward again pretty shortly.

Plus, in times of panic, markets frequently over-correct, so we could be headed below the 2000-2001 prices people have been using as a baseline.

This will be especially true if public schools don't improve and the LAPD doesn't continue it's spectacular improvements in effectiveness.

[Kate]

It's May and the market bell has barely rung. Everybody is holding their breath to see if we can run on fumes for just one more season or if this caravan will finally break down on the side of the road.

Watch for a full blown freefall in the SFV in November/December. Once the "high season" is over, and people see all the blood on the streets, panic will ensue.

[Rob]

*YAWN*

Can we call this a bounce? It seems that there was such a rapid decline, that there may not be a true bounce. Summer sales push aside, inventory is still high and general consensuses is prices have a way to go...

[JW]

Peter: Please read this article:
http://www.newsweek.com/id/135724

[IToldu2CashOut]

As someone watching MLS listings frequently I feel strongly that inventory isn't building because people are taking property that does not sell off the market rather than reduce the price. I often ask my agent what happened to a property I was watching and he tells me it was taken off the market. This just means these sellers will have to reduce the price even more later. Also I think sellers ask ridiculous asking prices thinking that they then can then accept lowball offers and get what they wanted originally. What they really are getting most likely is the sound of crickets chirping in the night. I don't think MLS asking prices are a very good indicator right now of what is happening in the market. This will need more time to play out. Still a lot of denial and games going on out there. This is not a healthy market out there for anyone.

[Edgar]

Where is lefty when you need him/her? Come on, restore our faith in the market! Tell us how this is the bottom and, thus, a great time to buy.

[Cal]

Look how far Kate has come, from potential bubble buyer one year ago to a modern day bubble blogger and prognosticator.

I think inventory peaking and sales bottoming are all positive signs. The sellers and their realtors have finally (!) come to the realization that they have to drop price . As they drop price, fewer want to sell and more want to buy. Econ 101. I think more high end homes come on during the spring time which is compensating for some of the price drop. It is part market mix and part sellers hoping for the spring market to save them. Smart sellers get ahead of the market with pricing, it is all they have left at this point.

[Lander]

Peter-

The original Housing Tracker gives a little perspective on the week-to-week changes.

http://tinyurl.com/6cwrw3
LA Median List Price:

05/21/2007: $579,000
05/14/2007: $579,000
05/07/2007: $579,800
05/01/2007: $579,000
04/28/2007: $579,800
04/21/2007: $579,950
04/14/2007: $580,000
04/07/2007: $579,000

06/28/2006: $625,000
06/21/2006: $624,900
06/14/2006: $625,000
06/07/2006: $625,000
06/01/2006: $625,000
05/28/2006: $624,900
05/21/2006: $625,000
05/14/2006: $625,000
05/07/2006: $625,000
05/01/2006: $625,000
04/28/2006: $624,500
04/21/2006: $624,950
04/14/2006: $624,999

[MyLessThanPrimeBeef]

There is an article in the International Harold Tribune today about creaking sounds at Fannie Mae and Freddie Mac.

Apparently, they used to record as loss when a loan is 120 days delinquent. Now, they wait 2 years. TWO YEARS! This sets up 2010 as the year of reckoning...for subprime, at least.

As for Alt-A and other Kamikaze loans, these geniuses have a little more breathing room with this new, self-adopted change...they will probably have until late 2010 and beyond to face the consequences.

I also find this quote very interesting: "We've taken tremendous risks by loosening these companies' purse strings," said Senator Mel Martinez, Republican of Florida and a former secretary of housing and urban development. "They could cause an economywide meltdown if they got into real trouble and leave the public on the hook for billions."

[matt h]

Outside of this reported data where in this market is there any positive information to support a steadying (bottom) for listing prices? Just like baseball players batting averages, Real Estate activity warms up with the weather. However, activity doesn't necessarily translate into increased (improved) pricing.

With few exceptions, anybody listing their home in this market is in distress...and buyers & investors know it! These potential buyers aren't going to lose anything by waiting out this market. I recommend to my friends and clients alike to keep looking because a better deal will come along. It looks like things will really get ugly following Labor Day- sellers (including banks) need to consider reductions to sell today rather than in July/Aug.

[normanpheeny]

Pete, the data that you posted is no doubt showing us what you are stating - a decline in listing price and inventory. It will be interesting if the Case-Schiller agrees with your number a few months from now.

But, do you really believe what you seem to be conveying to your readers?

[left of lefty]

450k is a magic number. a well-qualified, two-income family can put down 10% and get a conforming loan with low rates. that's why the price drop hits a floor at this number. after years of madness, responsible buyers can finally get a mortgage they can truly afford.

there are now many buyers holding off for the 'expected' year-end price drop. however, when something is 'expected', the market moves to close that expectation. for example, when everyone waits to buy in november, that drives up the demand in november and prices may actually go back up. that's why it doesn't pay to try to outsmart the market.

[Thiswillbefun]

Peter,

My $.02 on the matter is listing prices reflect what? For some sellers it's more of a 'wishing price' where they hoping to find a greater fool to bail them out of a bad mistake. I think the median listing price is a good indicator of the direction of local RE trends but by no means is it an indicator of what price it takes to actually sell. There is nothing to stop a seller of a home who paid $600K in 2006 from listing that home at $599K today when in reality to actually sell it the price should be closer to $450K. How does this affect the median listing price, it drives it up when in reality that has no reflection on what the homes true value is and it won't sell at that price for 10 years.

As far as inventory, I think the issue is there is a lot of "phantom" inventory out there, homes where people are in the foreclosure process, NOD's have been filed or are on the way but the homes aren't on the market. Listings are down but these homes are just ticking time bombs waiting to explode. Every month we see the number of NOD's climb, Bank foreclosures climb, how many home owners are just sitting tight waiting for foreclosure because they know there is little to no chance for a short sale and they are just waiting for the sheriff to come kick them out? How many bank owned empty properties are sitting out there that haven't hit the market yet?

[peteviles]

normanpheeny wrote, "But, do you really believe what you seem to be conveying to your readers?"

Thanks, norman. Here's what I believe:
We're not near the bottom in prices, but the decline in listing prices appears to have stalled. Why? I don't claim to know the answer, so I'm interested in your thoughts.
Same thing with inventory -- the flatness of inventory is a real thing, worthy of discussion/interpretation.

[Doug]

Just an unproved theory, but a rise in short sales may be helping sell non-short sale properties. As would-be buyers learn that short sales involve long waits for a very uncertain lender approval, some will focus exclusively on non-short sale properties. For these buyers, the number of properties for sale is less than the listed inventory, putting supply and demand a little closer to each other and giving some support to the prices of non-short sale properties.

[shockg]

The bottom appears to be here. all the doomie gloomie fear mongers will deny it of course. The bottom won't be here until they get a nice house for free.

[Cal]

shockg:"The bottom appears to be here."

I agree this is the bottom, I didn't think you could sink any lower but it appears you found a new bottom.

[MB]

It's not only the # of listings...it's 'how many were sold' and 'how many were put up for sale'. If lots went up for sale, and lots were sold....that bodes well for price stability....if few sold, but many were just taken off the market....that is not good for sellers.

Also...the increase in conforming loan levels to $750k instantly made it possible for new buyers to afford about $50k more 'house'....that may have affected the pause in price declines.

[fd in to]

In attending what few open houses there are in my area, I am seeing some price reductions but most are still unrealistically high. There are many games being played by sellers and realtors such as: taking down the sign but the house is still on the market then putting the sign back up as if it's a new listing, putting a "sale pending" sign up even if the potential buyer isn't serious or has too many unrealistic contingencies, etc. The mantra seems to be--"We are getting multiple offers!!" Of course that would really depend on the quality of those offers and they are never specific.