L.A. listing prices slip another $900

Listing prices in greater L.A. slipped by $900 over the past week as inventory held steady, as the housing market showing signs of possible stabilization, according to Housing Tracker's weekly analysis of MLS listings.

Numbers: Median listing prices slipped from $449,900 to $449,000. That's a decline of 17.6% over the past year. Inventory of for-sale homes and condos held steady at 42,532, and is now trending just 8.8% ahead of year-ago levels.

Signs of stabilization? Possibly. Does that mean we're near a bottom? Not necessarily. This is an unusual market, with foreclosure sales taking a greater market share each month, now closing in on 40% of the California market, according to DataQuick's report on April sales. There's no sign the wave of foreclosures has crested.  We haven't seen a market like this before. Uncharted territory.

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%)
4/08               $450,000 (down 17.4%)               42,430 (up 16.7%)
5/5/08           $450,000 (down 17.4%)                42,647 (up 13.7%)
5/12/08         $449,900 (down 17.4%)                42,532 (up 11.1%)
5/19/08         $449,000 (down 17.6%)                 42,532 (up 8.8%)

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

Comments

[tew]

We're not at the bottom - we haven't even had a head fake / DCB yet. We need to see Y/Y inventory shrink for a month or two and mo/mo prices increase at the same time. That will be "big news" and will induce buying, which will fade as latent supply comes on and the next leg down proceeds. There has been nothing like capituation yet.

[Inland Empire]

High desert list price have official fallen low enough to attracted some first time buyers. Housing is starting to become affordable for your average two wage earners household. I say this house is closer to 1999 prices. I give you 15500 Jojoba Ln Victorville Ca. last sold on 4/27/2007 for $349k this a nice area, and the home is 4/2 1648 sqft…Drum roll please and I’m adding the link for your verification

http://vvmls.rapmls.com/scripts/mgrqispi.dll?
APPNAME=Victorvalley&PRGNAME=MLSPropertyDetail&
ARGUMENTS=-N691854782,-N147123,-N,-A,-N0

When they get down to this price it is getting close to post time. Matter fact I think I hear Trevor Denman “They’re off and running”!!!!!!

[pugtv]

ShockG,

We're still waiting for you to show a little courage. Give us your estimate on where the bottom is. What is your estimated bottom price? Use Dataquick, Case Schiller or whatever index you prefer ... just spell it out.

I hope you're not all talk. I actually took you seriously for a few days. Unfortunately, you haven't backed up what you've said. All I've heard from you so far is used car salesman talk.

If you're not willing to commit to a number, then please stop knocking other people like Laker. At least they have the courage to make public where they stand.

[tggr]

Well, remember this folks. The Fed is all but done lowering rates and they only have one direction to go come next year. We are at a "bottom" in terms of interest rates - no doubt about that....

[no importa]

A typical 4-bedroom house in Victorville went for $150K AT MOST in 1999, certainly not over $200K.

[huh?]

How is a bottom even conceivable when foreclosures are accelerating and seasonally high rates of purchases are only high enough to keep inventory at a standstill?

What happens when summer ends and people who can't pay the bills are still losing their houses?

[Fred]

The bottom is a mathematically-solvable number. It is not subject to whims and fancies of individual buyers. We are talking macroeconomics here, people. There is only a small subset of "fence-sitters" who are waiting to jump in. Everyone else is not being invited to the fence, because they don't have the requisite 20% down payment. They won't until median prices fall in line with median incomes. This will happen when the market hits roughly 2001 prices. The only variable here is if banks suddenly decide to start whoring out credit to anyone and everyone again. This seems monumentally financially unsound for any institution, and I just can't see it happening.

[Laker]

pugtv,
Shockg is not only all talk, but constantly using attacks to defend himself. He is truly acting as a used house sales person working on commission only, and with times like these wishes he could have gotten a minimum wage.
I'm also waiting for his numbers are examples to justify his stand. For the last couple of weeks he claimed we indeed reached the bottom...as the listing price was stuck at $450,000.

And Peter, i think you should add some footnotes on the bottom of your tables that will explain to those mathematically challenged that if YoY is +0.0001% it means that inventory is rising...slow but rising....+8.8% is rising! (If your paycheck is 8.8% higher than last year, it means you are getting paid more than last year...)

Inland Empire,
The house in victorville selling for $92,000 and last sold for $349k which was obviously included some appraisal fraud..but still 74% hair cut (more like lipo suction surgery). The asking price is $55 per square foot...for new construction....WOW. I guess there are plenty of empty houses there so there is no rental market. Essentially, you can buy it, but could only find a renter willing to pay you peanuts, as they can just squatter in next door house for free....This house could rent for $300 per month...the ,mortgage would be about $600 for fixed rate add taxes and insurance to be about $700. Amazing that it still does not pencil out....but pretty close...

[Laker]

Inland Empire,
i forgot to mention, that if you look at the listing picture, you see a huge high voltage transmission line stand. I'm not sure if it is a good idea to pay $55 per square foot and get cancer...

[realist]

The Fed rate is not your loan rate....unless you are still doing that ARM stuff....It is tied to the Treasury rates....

Just keep on letting the market fall, that ll kill the economy via lack of consumer spending and we ll be all out of jobs renting like the 67 percent that do so in L.A. historically. Then interest goes up and you wont be able to qualify for a loan due to your job loss....Either way, just get it over with and buy while your credit is OK.

[Arti]

All this talk about bottoms and the crashing of listing prices everywhere in LA . . . except in West LA/Santa Monica, where list prices for detached homes are as high as they were in 2005 at the height of the bubble. The discussion needs to turn to those areas now.

[Nelcisco]

On the code and ethics section of the Ca RE exams its is said that realtors are required to sell a home no more than 3x the household income or they're acting in an unethical manner.

Lets see...$449,000 median price, that means median household incomes ought to be @ $149,666. Back in January the data showed the median income in L.A. was about $62k or $63k, can someone clearify that please!

In any event lets say 65k, based on that house prices need to come down to $195k.... gee, I don't know, does anyone think it can ever get that low or will average household income ever come up to $149k anytime soon? with lay-offs and the outsourcing of jobs out of the country.

[E]

Oh yeah...we have a way to go. I pay little attention to listing prices however...or medians. It's really just a case of simple math.

Wait for the Alt-A and Prime ARM's of all flavors to reset.

A whole pile-o-dung is going to be dumped on the next administrations laps...and it wouldn't matter if it was a Republican, Democrat, Libertarian, Green or Alien leadership. I don't know who it will be and don't know what their "actions" will be...but if they start throwing money at the situation hand over fist it certainly won't make me wan't to buy a house. It will make me want to buy gold.

[IToldu2CashOut]

We are just in the eye of the storm.

[Garrett]

Okay, this one's a no-brainer. Its spring and look at the fantastic stabilization last spring (between 4/07-5/07) and then, booyah, the bottom fell out. It should do the same or worse this year. If we're stabilizing it will hold through September.

[mbob]

The Hilo Hawaii tsunami back around '60 or so had a sad episode: all the locals watched the fast receding ocean strand many sizeable fish. They rushed out to pick them up. Then the water came back in much faster than a person could run. Many perished.

Analogy? Listen to lefty -- buy now.

[Cal]

Starting to see more chatter on the broker boards about Indymac. No idea if true, but usually when there is smoke there is fire. Might be an interesting couple of weeks. They are also one of the higher CD rate banks, usually a sign of stress.

[nic]

Look at the 25th percentile numbers!

329,900 -> 325,000 a $4,900 drop!

We've seen 5k drops before but the percentage change increases.

[Semphris]

Its just a bear point in the market. The prices simply declined enought to catch the interest of some of the buyers. Once that well drys up there will be a bit of a shock as it starts to dip again. HPI comes out in 2 days. Lest see how that looks.

By the way. Even at the bottom, the market will be bleak and the mechanics try to fix themselves. The last time it took 5 years to recover.

[Greg]

Does anyone remember the 'buy low, sell high' maxim? The real estate market seems to follow an alternate logic - at least for the majority. The smart rich people I know are buying now. This may not be the bottom of the market but 'timing the market' is a sure way to lose out. If it is not the bottom, it is surely far from the top and that is a good time to buy for a long term investment. Those hoping to 'time the market' will be buying in droves once everyone acknowleges the bottom of the market was reached last week, last month or last year. Of course they will actually not be buying anywhere close to the bottom of the market. They will just be buying from those smarter and braver than them: smart, rich people.

[Bob Warren]

If you plot median sales price by the number of days since January 1 2007, the result looks pretty linear. The best fitting straight line to the data points accounts for over 98% of the variability, indicating that the trend is indeed linear. If one assumes that the linear trend will continue until the end of the year, a median list price of $383,958 is predicted.

[caliguy2699]

You gotta give shockg a break. Dude bought at the peak and is wishing for bubble days again.

[loveMEsomeME]

Greg many smart rich people lose money. Recessions don't happen when poor people lose money, they happen when "smart" rich people lose money. In this case it is even worse because the middle class got greedy and has joined the "smart" rich and thought property always goes up even though that has never EVER been the case. Us "poor" people suffer from a recession (ie: lose job, higher gas and food prices, etc....) but it happens when "smart" rich people go Lucile Ball on us and think they have a way to make money easier and faster than before (ie: real estate bubble, internet bubble, etc....). So forgive me Greg if I don't jump in with your "smart" rich friends and buy now. Maybe a "dumb" poor rube like me will take his chances and listen to history and fundamentals to decide when to buy. While none of us nows when or where the bottom is, none of us have to miss it. Once it is there it will be relatively flat. We are not watching the price of the iphone. When those are gone they are gone but housing inventory is going no where. When it hits normal we then can start to look for a bottom and then us "dumb" poor people can join your "smart" rich friends and buy the same house they bought but for at least 10-15% discount from today, if not more. So Greg, quit pretending you have "friends" and just tell me what you think. And finally Greg, I had these same type of friends over the last couple of years and most of them are involved in a short sale now so now they are not quite as "smart" as they once were.

[tealeaf]

Does anyone remember the 'buy low, sell high' maxim? The real estate market seems to follow an alternate logic - at least for the majority. The smart rich people I know are buying now. This may not be the bottom of the market but 'timing the market' is a sure way to lose out. If it is not the bottom, it is surely far from the top and that is a good time to buy for a long term investment. Those hoping to 'time the market' will be buying in droves once everyone acknowleges the bottom of the market was reached last week, last month or last year. Of course they will actually not be buying anywhere close to the bottom of the market. They will just be buying from those smarter and braver than them: smart, rich people.

Posted by: Greg | May 20, 2008 at 08:52 AM

Greg: Go to the Manhattan Beach confidential blog and read what "smart rich people" are doing in that zip code. They sold, rented, and are waiting.

http://www.shortenurl.com/5zolb

A fool and his money soon part - looks like your friends are not as smart as you/they think they are.

[puckhead]

The listing price trend has been the same for a few months now. 75% percentile you’re holding steady. 50% percentile you’re seeing slight drops. 25% percentile, drop your pants and hold still…………

[El Guapo]

I may be mistaken, but I believe that when a bank buys back a house at auction, it shows up as a sale. This would account for the uptick in sales (particularly in areas that see a lot of foreclosures). Conversely, these "sales" do not show up in the inventory numbers until the bank releases them on the open market. So we have a over reporting of sales and an under reporting of inventory. In April, more than 1000 houses went to auction per business day in the Golden State. According to Mr. Mortgage, 97.5% go back to the bank. So, from this you can deduce that roughly 20,000 homes went back to the bank and showed up as sales, but are really just shadow inventory.

[Not Tom Vu]

I agree that prices will/need to fall quite a bit more in LA before we reach a point of stabilization, but it won't get to the point where a household earning a median income can afford a median-priced home. Home ownership in areas were supply of homes/land is limited in relation to the population has historically been a privilege of the upper-middle class. (I mean that in the statistical sense of those earning greater than the median, not in the "upper-middle class" versus "middle class" distinction as we tend to define them in political discussions). Lower-than-median income households have historically rented rather than owned their dwellings. And arguably, the housing bubble was partially created by people who would not historicaly been able to own homes, but had the opportunity to do so (at least, temporarily) with the lax lending policies of the past few years. I am not arguing social policy; just making the point that median housing prices in LA is unlikely to align with median income any time soon.

[Lillian]

Well, what about Santa Monica and the canyon? How about North of Montana? Are sellers getting at all realistic about prices? How do we know when there is a bottom?

[RZ]

When will home prices drop $90,000? That's what I'm looking forward to...

[Cal]

El guapo,

You are mistaken. DQ and CAR numbers do not include trustee sales.

Puckhead,

I think the data (both listing and sales) isn't showing the high end "holding up" as much as plain not selling. Not selling isn't holding up, it is the absence of the knowledge of market value.

[El Guapo]

Well, there you have it. Thanks, Cal.

[Eddie of Long Beach]

Fred hit the nail on the head.

The truth is that now that sanity in lending has been forcibly returned, only a few have the 20% downpayment need to buy. Unless the easy money returns or new source of cash (foreign money for the high priced stuff), prices will have to return in line with incomes.

[Jeremy R]

"Lets see...$449,000 median price, that means median household incomes ought to be @ $149,666. Back in January the data showed the median income in L.A. was about $62k or $63k, can someone clearify that please!"

Only 1/3 of LA has been owners historically. The Median Angeleno is a renter, not an owner. Always have been always will be. Very sad, but true.

What it the top 33 percentile income? My guess is that it is 100k, if the 50 percentile mark is 64k. THat means median should be 300k. In south central and east LA, it would be around 170-200k range, depending on current crime rates, unemployment, and schools. Historically, low income folks spend over 40% of their income on housing.

I think prices will come down, but I think we need to all do a little analysis.

A large single family home in Santa Monica might drop to 800k, while a condo in silverlake or hollywood might fall to 200k. It is too hard to tell. LA isn't one large market, but 40 different submarkets.

Also, all cities have gotten better since the dreaded early 90s. Manhattan fell 40% from 1987 to 1993. Crack was a serious problem. SF was gripped in suburban flight, unemployment, crime, and homelessness. LA, was also quite a bit worse during those times. I think the desireability of LA, SF, NYC, and other major cities increased dramatically over the last decade because all of them suffered from the early 90's melt down. SF and NYC are now iconic again, while LA is simply better than before.

Can you honestly say that Venice, Santa Monica, Silverlake, Culver City, Hollywood, and Downtown LA are the same in 2007 as they were in 1992?!

Prices will fall, but not down to crack epidemic levels.

[Jeremy R]

"Does anyone remember the 'buy low, sell high' maxim? The real estate market seems to follow an alternate logic - at least for the majority. The smart rich people I know are buying now. This may not be the bottom of the market but 'timing the market' is a sure way to lose out. If it is not the bottom, it is surely far from the top and that is a good time to buy for a long term investment. Those hoping to 'time the market' will be buying in droves once everyone acknowleges the bottom of the market was reached last week, last month or last year. Of course they will actually not be buying anywhere close to the bottom of the market. They will just be buying from those smarter and braver than them: smart, rich people."

That doesnt make since. Houses dont ripple like stocks. Stocks and rise and fall to 100 peaks over a year's time. Housing is far more monotonic. It drops for a time, it rises for a time. Homes in LA wont be 360k today, 270k tomorrow, then 380k again. Timing the bottom is easy. Just wait until prices go up for three straight months. It isnt like they will go up 3 months, go down 2, up 5, down 4, etc. They follow macroeconomic forces. Paulson or NAR can send out a forecast today, and that wont effect prices one bit. IF a commodities trader read a bad report, prices could fall 30% in one day.

You cant time the housing market on the way up, but you can certainly time it on the way down!

[puckhead]

Jeremy,

I think you are wrong about SoCal being a better place now vs the 90’s, especially for a middle class family that wants a safe home and good schools. Thanks to our open border policy, SoCal has become a 3rd world country where if you have the money, you can live well with the protection of the local police department. But if you don’t have money, you’ll live in a middle class slum. Silver Lake is great if you are single, but I don’t want to raise a family there.

[shockg]

Phucktv, No one can call the exact bottom unless you have a crystal ball. The best we can do is look at the latest data and make an informed decision. Based on the Monthly sales/price and Inventory trends since the credit crunch, you can see that the bleeding is subsiding. Price drops are less severe, inventory is flat and sales bottomed out early this year. Many bears will ignore the trends over the past 8 months and strictly quote YOY trends because the LATEST numbers no longer support their cause (Laker, E, ETC). They can paint an even gloomier picture if we compare the 08 data to 05 but it doesn't make sense to. Times have changed from even a year ago and some of the trends are now turning positive. We still have more foreclosures to work through so that will put additional pressure on prices but not a whole lot as we can see the bleeding is slowing. Man bears like Laker will quote Neg am loans and ARMS that are going to reset but many of those people have already foreclosed and thats already been priced into the market. And lets not forget that some troubled owners will have their loans modified or will refinance when the new bill takes affect. This won't be the cure all like im sure many will try to misquote me, but it will help some. It will help stop the bleeding.

The median has never been a good measure of values as its just the mid-point of whats selling at the moment. Many here dismissed the median when it didn't portray the picture they wanted but those same people now embrace the median even though it is skewed by the lower priced foreclosures selling in the not so great areas. In my opinion we might see an additional 5% drop to the median at most. The better areas will see less. The better areas will not drop like the IE because risky loans were not as widespread like Laker would like everyone to believe.