SoCal home prices down 27% from '07 levels

Housing prices in Southern California continued their record-setting decline in May, falling 27% from year-ago levels, as lenders continued to depress median prices by dumping foreclosed homes in rising numbers, according to DataQuick Information Systems. Housing prices have now rolled back to early 2004 levels, DataQuick reports.

Highlights of DataQuick's report on May sales in the region: Overall home sales for the region fell 14.9% from year-earlier levels and fell 26.7% in Los Angeles County. The overall level of sales in May was the lowest ever measured by DataQuick, which has tracked the regional market for 20 years.

The L.A. Times' Roger Vincent reports potential homebuyers are "doing their best to beat down prices, even if it means delaying the purchase of homes they truly want, agents said."

"Buyers are being very aggressive in the offers they are writing," said Lynette Williams of Re/Max in Pasadena. "They are hearing about foreclosures, hearing prices are dropping and feeling that if they wait long enough the seller is going to come down in price."

Numbers: Median price pad for the Southern California region in May was $370,000, down from $385,000 in April and down 26.7% from the peak median of $505,000 reached in May 2007. The last time prices were that low was March 2004. In Los Angeles, the median price paid fell to $422,000, down $13,000 from April levels, and down 23.3% from the year-ago peak of $550,000, DataQuick reported.

Foreclosed houses made up 37.4% of the region's home sales in May, a dramatic increase from 5.5% a year ago. In hard-hit Riverside County, 56.6% of the homes sold in May had previously been foreclosed on.  “What horsepower this market can generate right now is mainly fueled by bargain shopping, especially by first-time buyers and investors in inland areas,” said Andrew LePage, an analyst for DataQuick. “Meanwhile, sales remain especially slow in most higher-end markets, with jumbo mortgages (over $417,000) making up only a slightly higher percentage of all purchase loans in May than in April. That doesn’t bode well for the high-end, where so far prices have come off their peaks but have generally held up best.”

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

Comments

[david wolf]

cal-

The interest rate is fixed for 5 years, and yes Im doing the IO because it is more affordable. I could afford principle and interest over 30 years but barely. My family of four needs a bigger space and the rent for an equivalent place is about 1400/month more than buying. I figure the only bet Im making is that the home will be worth as much or more in 5 years.

[dougmc]

Prices in West LA have certainly held up better than the California average. However, the spread between the better properties and the weaker properties in West LA is widening. This phenomina always indicates a weaker market, just as a narrowing spread indicates a strong market. My reading of the Manhattan Beach blog, MBConfidential. com, suggests something similar is happening there. I wouldn't be surprised if Pasadena is experiencing the same thing too.

[Mary Richards]

Wow. It really is impressive how much things are dropping. I feel like things have to go back up at some point. If you need to find a place though, now is a good time for it. I have been looking at places in the area and have been really surprised at what I have found. I found a website that has really helped me find everything there is out there. It shows me all California homes and I have really found a lot.

[I'm not buying it]

David Wolf...

show me a 699k house that rents for $4100/mo as you claim.

$2700 (your claimed toxic mortgage amount)

$1400 (your claimed increase to rent same house)

$4100 total...show me the comps.

Put up or shut up fool.

[Reality]

Bottom is far off. We have another 20+% to go. I see it everyday – average middle/upper class families with 100+k income are having big problems. The story is the same – we feel so strapped, and our payment just jumped. How are we going to afford everything? Answer: you can’t. They try to sell the house since it is such a burden and they finally realize they overpaid in a bubble, and are now underwater and will take a loss. Can’t refinance. Can’t afford new payments. They drop their asking price little by little, going below previous offers. (Quite intelligent…, but greed will take you to financial ruin). Not everybody can have the nice house, BMW, and kid hauling, gas guzzling SUV in the driveway. But then again, we live in a “me too / entitlement” society, especially in CA (no offense intended, I've lived here forever, but it is what it is), and people are now getting what they are entitled to – a hard lesson in finance. The math is simple. Assume 150k income (yes, much higher than the “median” income in most areas, but just as an example assuming two semi-professional / professional incomes, or one professional income and stay at home mom for the kid(s)), fed/CA taxes of 35%, leaves about 97k in the piggy. Assume ambitious family bought a house for 750k back in the “bubble” (a basic 1600 sq ft place in Pasadena) and had 160k for 20% down and closing costs (again, very “optimistic”). Gross house payment is about 4,700 per month, leaving about 41k in the bank (conservative estimate, assuming FIXED loan, payment may be higher if adjustable, and higher payment if less down). If HOA / repairs / maintenance, take out another 5-6k (again, just for basic / things), leaving 35k. They may be subject to AMT, so forget about that 8k property tax deduction – tax benefits of home ownership are way overstated. Assume family has one car paid off and is leasing / paying on one car for $500 per month, leaving 29k. I don’t know about you, but I spend $50 minimum a week in gas, so that leaves about 27k in the piggy. Of course, we have not considered interest / investments, but at 1.5% interest and a falling stock market, assume family is not that happy about shrinking investments (assuming they have some), and there may be a "tax return" but we are talking about out of pocket costs to get by. So we have 27k left of our 150k annual salary after these basic expenses. We have not even touched medical costs, health insurance (not cheap), car insurance / repairs / maintenance, kids, food, school / tuition (if private, but forget about that, how can you afford 20-25k/yr for private school?), credit card payments (just love paying all that interest…), utilities, remodeling, payments on HELOC, something of a vacation / entertainment, etc., etc. Now you can see why this “middle/upper” family is in trouble. They may get by month to month, but barely, and they have no or very little cash reserve and cannot even save for retirement. Reality hits like a brick, and there is nothing in those little LV or Coach purses that can solve the problem… only lipstick for the pig, and the pig is laughing to the bank…

[ben]

“Meanwhile, sales remain especially slow in most higher-end markets, with jumbo mortgages (over $417,000) making up only a slightly higher percentage of all purchase loans in May than in April. That doesn’t bode well for the high-end, where so far prices have come off their peaks but have generally held up best.”

With all of the discouraging numbers, doom, gloom and hyperbole present, I decided to buy a home, and to do it before I sold my current one. My experience was better than expected. Keeping it concise, I bought a home in Moorpark (Ventura County) for $730,000 and sold mine for $591,900. My home sold within 10 days of listing. Why? It was clean, and walked well, but I'd done my research and knew what my model was selling for and what features those comps had. We priced the house at $15,000 more than what we'd accept, so it was priced to sell, not based on some fantasy figure we thought it was worth once. I owned the house 20 years -- I made lots of profit. For 24% more cost, I got: 67% more land, 15% more square footage, 14 years newer, 3 car garage not 2, 3 full bath not 2-1/2, huge granite kitchen and huge master bath, and a lot of little things that come with newer construction. Why the better value? The home I sold was close to the median for the area, the one I bought was in a price range where there are fewer buyers presently, whether for credit considerations or people waiting for a bottom. I think in 5-10 years we will be very happy with this choice. The point of this is respect the market, but don't fear it. Look at actual sales and activity, ignore headlines and don't get influenced too much by listing prices, some folks just don't get it. And the blogs? They were so much more interesting before the bubble burst. Now it is a pretty pathetic bunch that gloats over the misery of others.

[Uncle Billy Blah Blah Blah]

ben: how much did you put down? what sort of loan did you do? how long have you been reading the blog.

we have a crystal ball. it says that values are going to be dropping horrendously over the next couple of years. I'm thinking that the place you bought -- you'd be able to pick up for $150k-$350k if you had sold your place, rented for a while and then purchased. the bottom, by all accounts, will be very calleable... we'll be there for quite a while. this is not the stock market. you're a victim of the same "gotta have it" mentality that drove the whole disgusting bubble.

Ben, Milla, Milla, Ben.

[Worthless Loser]

I'm struggling to pay off this car payment and mortgage. Something told me I didn't need a Bentley, I could have purchased a regular car like a regular person. The investment properties made me feel rich, now I'm going to loose all three places plus the Bentley.

I feel like crying a whole damn river to the shelter. Which will be my new home :((((((( Can I come live with someone? I'm clean, and will chip in on the electric bill and snacks, maybe.

[Jon from Ventura]

MY God,

Who in their right mind pays $730,000 for a house in Moorpark? The bubble mentallity clings with a ferocity. Well written, he seems to make sense but $730,000 for a house in Moorpark. Amazing. That price is guaranteed to fall off a cliff. People somehow need to take a step back and get some perspective.

[larry wasserman]

What should really slap these entitled empty vessel homogonized Day of the Locust LA home buyers is when that much anticipated earthquake puts its Katrina effect into the mix. Yea, it's a good idea to pay way over the national average to live on the largest concentration of fault lines in the country. And why? Because you get the full cultural benefit of living the E Channel experience featuring the unfolding psychosis of Britney Spears.