L.A. listing prices now down $150K from peak

Median listing prices in Los Angeles County dropped by another $990 over the past week, according to Housing Tracker's weekly analysis of MLS listings, and have now fallen $150,000, or 26%, from their April 2006 peak.

Numbers: Housing tracker reports median listing prices fell to $429,000 from $429,990, marking a decline of 20.4% over the past year. That 20.4% rate of annual decline marks the highest rate of decline in this housing cycle. Inventory of homes and condos for sale dropped by more than 300 units, to 45,164, and is pacing 7.4% ahead of year-ago levels.

Analysis: A decline in the median sales, or listing, price doesn't necessarily mean the value of a typical home has declined by the same amount. It suggests some decline in overall values, but also that the market of listings and sales is increasingly dominated by cheaper homes. This is the foreclosure factor: More and more homes on the market are cheaper, foreclosed homes.

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%)
5/08               $449,900 (down 17.4%)            42,532 (up 11.1%)
6/02/08         $446,500 (down 17.3%)            42,458 (up 4.9%)
6/09/08         $440,000 (down 18.5%)            42,398 (up 4.0%)
6/23/08         $429,990 (down 20.2%)            45,493 (up 8.2%)
6/30/08         $429,000 (down 20.4%)            45,164 (up 7.4%)

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

Comments

[helpless renter looking for home in OC]

I donot know what it translates into,But I know I have not seen home prices down in many parts of orange county.
People are still buying and my hope of any correction in OC are doomed. Is it really time to buy or have to wait?

[Fred]

Median price now has only (!) about 30% to correct. $429,000 will go to $300,000 in order to support the historical, 5x price-to-income ratio last seen in 2001.

Hold on to your hats.

[Fred]

Also, Peter, your analysis on these things continues to be erroneous. Prices are falling across the board. The cheaper properties get grouped into the 25% bracket. The number you report each week is the 50% bracket. The 75% bracket is falling as well, although not as quickly as the other two - yet.

[keith]

I do not know what it translates into,But I know I have not seen home prices down in many parts of orange county.
People are still buying and my hope of any correction in OC are doomed. Is it really time to buy or have to wait?

Posted by: helpless renter looking for home in OC | June 30, 2008 at 09:36 PM

Really? What part of Orange County are you looking at? Here on the HB coast prices have fallen in my neighborhood a good bit. You are still not gonna waltz in and grab a 3/2 SFR with a pool for $300k, but still down. What was $500k 2 br townhouse is now about $350k, that older SFR 3/2 was about $850k, now about $650k, the new McMansions were listed at $1.8m or north, now about $1.3m or so. Nobody said a miracle was going to happen, you gotta wait another couple of years for that, unfortunately that "miracle" will ride on the wings of an economic meltdown for CA, so maybe not so good unless you are one of the survivors.

[Laker]

I claim that current decline in median asking price is really understated. There are tons of listings with wishing price that simply have 0, ZERO, Zilch, NADA, Gurnisht, chance of selling. These are propping up the median and sure the 75% price level.
The good news is that many are starting to capitulate somewhat and are reducing the asking price quite dramatically.
Here is another good example (For GDC)
19440 Shirley Ct Tarzana, CA 91356
Prime south of the bl in Tarzana,
Sold Sep 11, 1997 $590,000
Sold Apr 11, 2000 $700,000
Sold Sep 01, 2005 $1,350,000
(Fraudulently) Sold Sep 29, 2006 $1,700,000

Now offered at $900,000........that is almost 50% off.
Look at this the other way, if you add 2.5% of inlfation from 2000 price, you will get about $900,000...and market still heading down....
Did i hear overshoot????

GDC, a 2nd one for specially for you,
21800 Lopez St Woodland Hills, CA 91364
Sold in 1971 for $100,000
Now asking $695,000.
I compared the price in 1971 to be about 2702 Oz of gold at that time.
Today, this same house cost 755 Oz of gold.....
So this house is cheaper today by about 4 times....
Look at this another way, the house should have cost about $2,400,000 to be matched to gold....

Now two thing, either gold is in a crazy state of a bubble, and is actually only need to be about $250 per oz, Or housing in general is a terrible investment. Had that owner invested $100,000 in gold at 1971, he could have sold today the 2700 oz of gold for a mere $2,400,000 .....
So please rise you hand if you think housing is the best investment tool????

[bkl]

There are two influences on the listing median. First, consider a static market with 99 homes for sale. The median is number 50 in price order (49 less, 49 more). If there are no sales and no new listings, the median will be unchanged even if all 49 of the low price sellers lower their price even more. Only if number 50 or 51 (if he drops below 50) drop their prices will the median fall.

Now suppose that no one changes their price, but there are sales and new listings. A sale of a low price home raises the listing median of the homes that are still on the market while a sale of a high price home lowers the median. On the other hand, a new listing at a low price lowers the median and a new listing at the high end raises the median.

My guess is that the second effect is dominating the first. The lower median is the result of a greater difference between new listings and sales at the low end than the same difference at the high end. For example, with ten new listings and five sales at the low end and six new listings and three sales at the high end, the total homes for sale is now 107, with an increase of five at the low end and three at the high end. The median is now number 54 out of the 107, but the old number 50 is now number 55 (five new low end homes were added). This reduces the median to the home that was number 49 in the original market.

[Scott McIntosh]

Im glad Peter that you pointed out that just because the median has dropped by that much, that home values have dropped that low. In this case, a compositional change in what price range is selling has effected the median price dropping that low. I read on arctical recently that pointed out 75% of the greater Los Angeles sales were below $500,000 because of all the foreclosures in the outerlining areas. This has definitley helped drag down the overall median price. Don't get me wrong, there are neighborhoods and cities that have come down at least 20% with their values. But at least until this point, areas like Westwood, Cheviot HIlls, Brentwood, etc. seem to be staying very resilient with moderate softness. The foreclosure bug hasn't effected too much in those areas. One pops up here and there, but the inventory levels aren't very high were its deeply effecting the comparible sales.

http://www.thewestwoodblog.com

[jbunniii]

This is a nice decline, but realistically another 50% drop is needed from the current level in order to restore prices to their normal (non-bubble) relationship with incomes and rents. $429k is still a LOT of money, far more than the vast majority of Angelenos can legitimately afford without the sort of funny financing that got us into this mess.

[shockg]

"So please rise you hand if you think housing is the best investment tool????"

Laker, Housing probably isnt the best investment but you sure spend alot of time trying to convince everyone of this. Your motives are very suspect.

[shockg]

"So please rise you hand if you think housing is the best investment tool????"

Laker, Housing probably isnt the best investment but you sure spend alot of time trying to convince everyone of this. Your motives are very suspect.

[Luka]

I want the average joe to be able to afford a home as well but for those of us that are hard working, responsible people who did not take exotic loans but did buy in the 2005 - 2007 period this hurts a lot. I read these blogs and it feels as though the readers would like to tear those of us who purchased in those years limb from limb but there are a lot of us who didn't take out funny money loans and are now underwater through no fault of our own. Should we all just pick up and walk away from our homes en masse? The crash is great for renters who wants to jump in and buy (and if I was still a renter I'd be thrilled right now) but it doesn't just hurt irresponsible people as you'd think reading these tirades.

[yourkillingmelarry]

"helpless renter looking for home in OC"

I think your handle should be "helpless realtor posing as helpless renter looking for home in OC"

or

"helpless realtor looking for buyers"

LOL

[dwr]

"I read on arctical"

Do we really need to read any more of that post?

[yourkillingmelarry]

Scott McIntosh,

You have a good point but I don't think these areas will hold for much longer. There are way too many headwinds. And if I am not mistaken the sales volumes of the higher end areas are critically low.

The second wave of these Alt-A option arm resets are going to hurt. It may not impact Westwood as much directly but it is going to hit that move up buyer very hard. The purchasing power of the area is literally melting away right now. We are just now entering what looks to be a long recession, the energy crisis is like the cherry on top for the bears. It was going to be bad anyway but $140 oil is making this historic. California is going into a "Japanese style property deflation". I have a feeling these are the last semi-positive reports we are going to see in Westwood for a long long time.

[Fred]

Even more people in this thread are not looking at the data. It's not only the drag of cheap foreclosures that is bringing down the median. This data is divided into three tiers (25th, 50th, 75th percentiles). All the real cheapies are accounted for in the 25th percentile. It's the more expensive houses that are lowering their asking prices as well.

And Laker makes a really good point above - these are all listing prices. And we KNOW that hardly any houses out there are selling. The real values of these homes are much lower than what they're asking.

[IToldu2CashOut]

Its only a matter of time before we are down over 50% from April 2006 peak and the only question will be...is it enough of a correction for our weak economy?

[sheila]

Peter, where is your link to the article showing that many of the "Friends of Mozilo" actually never knew he was intervening in their loans? It's in your paper:

http://www.latimes.com/business/la-fi-moziloside1-2008
jul01,0,7735609.story

So, hey, that might mean that all the Democrats you swift-boated in this blog might not be completely corrupt after all. Maybe this personal touch was just a marketing tool - the kind that made Countrywide HUGE. Maybe the Fox-News-owned rag you pulled the story from conveniently forgot to do their due diligence and you slurped it up and vomited it back at us like Jim Jones Kool-aid?

Stick to real estate, man - your political reporting sucks.

[tealeaf]

helpless renter:

Spend some time here:

http://www.irvinehousingblog.com

[el_guapo]

This debate will be over when the Option ARMs start to explode all over the westside. Either the bears are right and Santa Monica, Manhattan Beach, etc. demonstrate that they're just as over leveraged as everyone else or they continue to hold up. We shall see. Personally, I'm betting on the former.

And for those who opine that the foreclosures are obscuring the numbers, I submit that foreclosures ARE the market. 40% and growing. I also anticipate worse economic news, more layoffs, more inflation, higher interest rates and a traditionally slower selling season in the fall/ winter all the while banks are building up a shadow inventory that they are having a hard time processing. I predict a major increase in inventory in the more affluent areas starting in the fall and lasting years.

[tealeaf]

bkl:

Your logic is simply, well, inconceivable...

Watch this.
http://www.youtube.com/watch?v=3EkBuKQEkio

[Tim K.]

One thing that surprises me in the comments regarding the median: that somehow the REOs are "dragging down" the average. The implication that foreclosures "don't count".

They do count. They are exactly the price that home will fetch when you have to sell it NOW, which is what the banks are doing. Sure, they are often neglected by their owners, but they are still cheaper homes. If they could be sold at a higher price by improving them, investors would be snapping them up in a hurry and improving them! But they aren't.

The real story here is that the median home listing price is still so high - that's because delusional sellers are biasing the median higher by putting outrageous asking prices on homes that won't sell, week after week. If anything, those homes are "distorting the median" because they aren't selling.

[Bob Warren]

Median list price plotted against days since Jan 1, 2007 still yields a good linear fit (>98% of variance accounted for). Predicted price by year's end is $383,159.60.

[peteviles]

Sheila writes, "Peter, where is your link to the article showing that many of the "Friends of Mozilo" actually never knew he was intervening in their loans? ... So, hey, that might mean that all the Democrats you swift-boated in this blog might not be completely corrupt after all.

Thanks, Sheila. I'll leave it to others to decide who is corrupt. But swift-boated? Get real. Kent Conrad got on the phone with one of the most connected people on the planet (Jim Johnson) and then Johnson handed the phone to the single most powerful person in the mortgage industry in America (Angelo Mozilo). A United States senator got on the freaking phone with Mozilo to talk about a loan. Not just any loan, HIS loan. Are you saying Conrad is so stupid he did not understand the purpose of such a conversation? Let me ask you: do you call up Ken Lewis to get a new checking account at Bank of America? Do you call up Bog Iger to get tickets to Disneyland?

Oh, right the link. I'll post something on it later today.

[Nick]

To helpless renter:

You probably want to wait. The high end will take longer to correct than the low end due to buyer resources and loan terms, but if left alone it too will correct. The only time to buy before the natural bottom is after whatever massive bailout program gets enacted by Obama, and this is still at least six months away (and hopefully will never happen, but odds favor it at the moment).

It will likely take substantially more reckless spending by Congress than Bush would pass to pay off enough speculators and lenders to inflate the housing market enough to retard its natural and beneficial correction. We are unlikely to see that level of reckless and stupid deficit government spending and blatant bailout while Bush is in office, but Obama is planning to and probably will spend that much and far more without a second thought.

[Eric Bass]

Honestly, it boggles the mind that anyone is buying property in CA right now. If you put 10% down on a property, at the current rate of depreciation, you'd have lost your entire dp in 6 months.

Who are these people that are buying today?! Going to your bank, taking out $49,000 in singles, making a big pile, frolicking around in it for awhile, and then lighting the whole pile on fire just to watch it burn would seem like so much more fun to me.