Freefall: California median home prices down 35% in May

California's housing market continued its historic decline in May, as a flood of foreclosed homes for sale drove down the median price paid for a single-family home by a stunning 35% from year-earlier levels, the California Assn. of Realtors reported today.

The median price paid for a single-family home in the state dropped by almost $210,000, from $594,530 in May 2007 to $384,840 in May 2008, the association reported. That drop represents a decline of $3,800 per week, or $549 per day, and is the highest ever measured by the association. The price decline appeared to be accelerating from April to May, as median prices dropped by 4.7% in that period.

“The statewide median price declined 35.3% to $384,840 in May, a record for year-to-year percentage decreases in the median, reflecting the effect of large numbers of short sales and foreclosures in the market,” said association Vice President and Chief Economist Leslie Appleton-Young. “With the statewide median in the $585,000- to $595,000-range through August of last year, we expect the market to continue to experience large year-to-year adjustments through the summer, even if the median price holds steady over the next few months.”

There was a glimmer of hope in the report: the number of homes sold in the state rose 18% from year-ago levels, marking the second straight month of year-over-year gains after 30 straight months of decline. The Realtors' group attributed the pickup in sales to a flood of cheaper houses -- many previously foreclosed on -- that has dramatically changed the state's real estate market.  Additionaly, inventory of for-sale homes has decreased when expressed in terms of how long it would take to sell off all the inventory: "C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2008 was 8.4 months, compared with 10.7 months (revised) for the same period a year ago," the association reported.

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

Comments

[jag]

Pete, do you have the numbers for Los Angeles County for the month of May? It will be interesting to see where we at in the downturn. Also, I would love to hear Shockg's and Lefty's come back on this one. Cheers!

[Laker]

from $594,530 to $384,840 is not almost $200,000, but $209,690. That is more than $200,000 or almost $210,000.

I miss left of lefty. If you hear me, the picture of REDC auction reminded me,
Do you remember one of the last auctions that you have attended. You told me that 22950 Burbank Blvd in woodland hills sold for something like $860,000.
Guess what, it is on the market today asking $750,000...
another failed REDC auction sale? What gives?

[Tim K.]

Fantastic news! Affordability is returning, and maybe even sooner than I thought!

[TomServo]

Is there a method for a regular one-time home buyer to get into the auction scene? I've seen a few auction listings, but they have huge entry fees, and I'm completely unfamailiar with the way they work.

[IToldu2CashOut]

I have a new slogan for the NAR:

Sell now or be stuck with your house forever.

Forever is how long its going to take to get a return to current prices adjusted for inflation.

[Nick]

Gonna be tough to get to 50% before the massive, tax-funded, corruption-enabled speculator and lender bailout goes into full effect, but here's hoping. I'm encouraged by the speed of the correction, but I'm just not sure it'll be enough to best the swift and unwavering idiocy of our Congress, especially when the last bastion of sensibility in our government (Bush, in a surprise role) is gone. Go free market correction, make haste while you can, duck and weave!

[bkl]

Jag:

If you follow the link and then go to the DataQuick tables (link about half way down the page), you will see a drop of 23.5% for LA County.

[MyLessThanPrimeBeef]

Regarding the decreasing inventory, here is one question:

If you are at the beach and you see the water receding, do you,

1). assume that it will continue to recede

or

2) realize it's a pending disaster, as the receding is temporary and soon a tsunami will return with many times more H2O to drown you if you stick around?

[Laker]

IToldu2CashOut,
Make it short:

Sell now, or be "stucked" out forever!

RE vocabulary: "stucked" stands for being upside down on the house forever

[Laker]

MyLessThanPrimeBeef,
Where exactly do you have receding inventory???

[Cheri Ratino]

I'm loving all this. I sold a bunch of idiots big, big, ARM's. I knew exactly how to appeal to their big ego's. Got big commissions and have no guilt. Many losers I got loans for are now losing their houses. Ask me baby, do I care! Hey, I just wanna fill my bag, screw you.

[MyLessThanPrimeBeef]

Laker, it was in May 8.4 months vs. 10.7 months a year ago.

[E]

"The Realtors' group attributed the pickup in sales to a flood of cheaper houses -- many previously foreclosed on -- that has dramatically changed the state's real estate market"

Ok...I have to give credit where credit is due. This pretty much hits the nail on the head.

I do have sympathy...well...a little...for how hard it probably is for a Realtor to tell the seller to lower their price (by a significant amount), either because the owner *can't* due to being upside down, or *won't* due to being overly greedy or stubborn.

[yourkillingmelarry]

"Additionaly, inventory of for-sale homes has decreased when expressed in terms of how long it would take to sell off all the inventory: "C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2008 was 8.4 months, compared with 10.7 months (revised) for the same period a year ago," the association reported."

They wish......Check out this youtube video from Mr. Mortgage

"Mr Mortgage-CA Housing Crisis - Currently 4.25 Years Supply!"

http://tinyurl.com/5tvxm5

He backs up his argument with some pretty hard data. It is worth a watch.

[Laker]

Hey GDC,
Funny but i found another one for you: Enjoy.
5317 Vanalden Ave
South of the bl, but walking distance to Ventura shops prime Tarzana, 2200 sf house on 17,000 flat lot.
Just sold for $780,000
such a house was selling for $1.2M-1.5M during 2005-2007

[puckhead]

Laker,

I never understood the facination with the SFV. It's hot, it's flat, it has crappy schools, no interesting neighborhoods, just one big continuous strip mall. The days of the SFV being a desirable place to live is coming to an end.

[eprobert]

puck - you mean there was ever a time that the SFV was a desirable place to live?

I thought that the only reason anyone ever moved there was because it was cheaper than everywhere else in LA county. It's on nobody's short list...

[Truth2Pwr]

All statistics related to existing inventory might as well be tossed in the trash. The "listed" inventory is merely the tip of an iceberg that encompasses every will-be seller who just isn't even bothering to list because they know they can't sell in this market. Once the credit markets return to normal and interest rates begin coming down, sellers will begin emerging like cockroaches from every dark corner. There is going to be a true bottom eventually, but there are going to be several "baby bounces" or false bottoms along the way once we start getting close and tidbits of "good news" begin hitting the media. Any stockmarket investor knows exactly how this game is played. Don't be duped. Sit tight.

[GDC]

Good one Laker. I've actually been looking in that area and Vanalden south of the bl is a great area. Lots of trees and nice houses. I've seen some 3000 sq ft houses in that area being listed for little over $1 mil. Do you think prices are close to bottoming out in that area? $780k for that house seems pretty reasonable.

[JWargo]

Wow.. $549 PER DAY! That's so bad I don't even want to read anymore.

For those of you looking to sell or buy in this horrible, scummy market, check out this commentary by Janet Siderman (she's a big money Realtor in SoCal)-- called "Tips for selling in this market".

Basic points- first impressions, market history doesn't matter, it's going to be a buyer's market for quite some time

I wouldn't want to sell now (or in the next say 5 years but if you have to, it's worth the read)

[campechano]

Remember that Tom Petty song?

...and I am freeeeeee....freeeeee faaaaaalllingggg.....

:)

:)

[Laker]

Truth2Pwr WROTE: "...Once the credit markets return to normal and interest rates begin coming down..."
Truth2Pwr,
I don't know where have you been in the last couple of months, but with the current inflation, interest rate cannot go down, in fact, we are very close to a time when the FED will have no choice but to boost interest rates to 5,6 ot 7 %. Also long term interest rate for 30 yr fixed is pegged to inflation, once true inflation is 15%, and CPI would show 6%, mortgage rates will jump to 8-10%.

GDC,
This area is not even close to bottom. My family bought a house couple of streets from there in 1994 for $200,000. Now, i know we will never see such prices simply because of inflation, but houses like these are $500,000 houses. When this house (Vanalden ) will go for $500,000 you could mark on you calendar BOTTOM.
We are not there yet...However, we are not that far from there...about 30% to go.
It is pretty easy to get that, right now, stated income loans higher than $417,000 are gone. That means people with $100,000 down...could afford these houses for $517,000 That's it. How many people do you know that have $100,000 in their savings account. How many people do you know that rent, want and CAN buy these houses...

[save your ammo]

GDC wrote:
"I've actually been looking in that area and Vanalden south of the bl is a great area. Lots of trees and nice houses. I've seen some 3000 sq ft houses in that area being listed for little over $1 mil. Do you think prices are close to bottoming out in that area? $780k for that house seems pretty reasonable."

Prices are close to bottoming when they hit 2001 levels.
When you see that -- pull the trigger.
Do it now and you have to be prepared to live
with a hole in you wallet for the trip down, the
drag along the price bottom, and the slow rise
back. Ten years, perhaps more, before you're
back to breakeven... if "the big one" doesn't
solve all SoCal land value problems before that.
10 cents on the dollar, anyone.

[shockg]

" I miss left of lefty. If you hear me, the picture of REDC auction reminded me,
Do you remember one of the last auctions that you have attended. You told me that 22950 Burbank Blvd in woodland hills sold for something like $860,000.
Guess what, it is on the market today asking $750,000...
another failed REDC auction sale? What gives?"

Laker, For someone who thinks the housing market is going to be hurting for a long time you sure do spend alot of time looking up listings and obsessing about todays prices. If I didn't know any better I would guess you are visiting open houses on the weekends. Do you have a buying agent? You claim to love living the life of a renter yet your actions say otherwise.

[Creative Offices]

It is a shame that home prices continue to fall in the Los Angeles area as quickly as they have been. There are many peopel who are now in way too deep in their real estate investoments that they may not be able to survive if the fave adjustable rate mortgages. Inflation may be our saving grace.

[Tbone]

I haven't posted in quite a while but figured this was as good a time as any. First, an admission...those of you who called me out as a "troll"(not exactly sure what that meant but the context was clear) or as a perma-bull on the market; well...you were right, sort of. I was, in fact a very nervous home seller. I took a job in Canada in May of last year and put my home on the market just as the market began to stall. Zillow had it at $825K but I listed for $799K. As the months ticked by with no offers and small price reductions I got steadily more and more nervous. It was very difficult paying the astronomically high rents in Vancouver while maintaining my house in the SFV. My mortgage was pretty low because I bought in '99 when prices were still normal. I actually thought I overpaid in '99 at $226K, who knew? Anyway, by December I was in a slight panic at seeing the market continuing to slide. I posted on this blog occasionally trumpeting a bullish opinion, but truth be told not MY opinion. I actually was in total agreement with all the "sky is falling" prognosticators. The posts I made were a lame attempt at trying to stall the overwhelming psychology of the markets direction. Of course, one blog posting fake perma-bull isn't really going to accomplish a damn thing, but I was there watching my paper equity disappear and did whatever I could. If I had sold just 4 months earlier, I would have been a real estate genius. But selling was what I had to do. My real estate agent never pushed price reductions as much as I personally wanted to. I never felt that my home was actually worth $799K but the comps at the time actually pointed to that being a good price. Finally in Feb '08 I told her to drop it to $625 right as the junior jumbos were coming online. I figured a big price drop timed right at that moment was my best shot at selling before the market totally collapsed. I was right. There were some folks circling my house for months but couldn't qualify under the tighter standards. I made sure my price was agressively lower in terms of $/sf with the others in my area. A couple buyers suddenly emerged and I sold to one of them for $600K and I feel very lucky to have done so. The house was an early 1900's style craftsman in Van Nuys, just over 2000sf on a 10,000 sf lot. The exterior was mostly restored and the interior in fair condition, no major problems. Still, one thing I'm certain of....the house shouldn't cost more than $300K period. One thing I argued with folks here on this blog about that I DID believe however is about Van Nuys. Yes, the schools do stink. But the disparaging comments about gangs and crime in Van Nuys are WAY overblown. I lived peacefully there for almost ten years and I can say the neighborhood had very minimal problems. My neighbors were all wonderful people, and I would encourage anyone to live there.

I think the market will continue declining back to 2000 levels. Sellers would be wise to drop their price well below current comps if they want to get out at all. I don't think there will be another boom cycle like this last one in 20 years. Interestingly enough, Vancouver where I'm living currently, is at the zenith of an even larger boom than the one I witnessed in LA. Its funny because everyone here thinks that this market is different and that there won't be a market slide like in the States. People here are still paying $600K and up for 400sf condos on assignment. Crazy! Anyways, you bears all were right.

[Registered Investment Adviser]

Amazing! How could that have happened in one year time.

[Laker]

Tbone, Thank you very much for your great honesty!
Your story could hopefully help many sellers that are in denial. Many that could get a lot more today, than tomorrow. Chasing down the market is for losers.
I hope the best for you and your family. Using your experience and wisdom, you now see the craziness in Canada too, that will help you to maybe come back to US in couple of years and indeed buy a house for 2000-2001 price.
Thanks again for your insight and honesty.

[Cal]

Err, Tbone, by your description 14205 Hamlin was you? If so, I went to its open house once (my wife loves craftsman), I think you we very lucky to get what you got and it was only because the house was extremely unique (if in an incredibly bad area).

[Uncle Billy Beer, Eh]

Tbone! That was the most honest post I've seen on a blog since I visited www.dailyconfession.com

Renewed faith in humanity, etc.

(wasn't Tbone a nickname applied to George Costanza by his real estate co-workers? Totally forgot about that -- George worked as a real estate agent.)

Pete, great to see you back. Check out Diana Olick's post on cnbc. I think she found one of those large "vultures" that will continue to buy up swaths of real estate.

[Traynor]

The stated inventory levels are misleading, if not downright deceitful. Banks are have been taking back properties and stocking them up in the backroom at numbers that dwarfed sales for over a year now. Even with the "worst" of the subprime contagion over, the problems are now spilling over to Alt-A and regular prime loans as more and more people are finding themselves upside down in the Titanic. The cans of corn and peas on the outside store shelves isn't the whole picture. There's a packed stockroom in back with truckloads delivering more each day..

[the problemwithcaring]

Fascinating and scary stuff, T-bone. Thanks for sharing and glad everything turned out ok.

[Jimbo]

Cheri Ratino: I want to have your baby!

[It All Happens on the Margin]

It takes one TBone in every neighborhood that is realistic about what it takes to move a house to set the comps.