Reader feedback: L.A. price declines are actually easing

A couple of readers argue this morning -- pretty convincingly -- that today's Case-Shiller report on home prices shows that the steepest declines in prices in Los Angeles are behind us. In other words, they argue I was incorrect to state, as I did, that price declines in Los Angeles "have accelerated dramatically in recent months." (I cited statistics showing the annual price decline in Los Angeles increasing from 16.5% in January to 24.5% in May.)

Then came this e-mail:

In the local angle, you noted accelerating declines in Los Angeles using year-over-year change.

Here is the actual Case-Shiller data for LA, with the month-to-month declines to the right:

May 2007	263.19	-0.06%
June 2007	262.12	-0.41%
July 2007	260.84	-0.49%
August 2007	258.07	-1.06%
September 2007	254.79	-1.27%
October 2007	249.50	-2.08%
November 2007	240.43	-3.64%
December 2007	233.03	-3.08%
January 2008	224.41	-3.70%
February 2008	214.83	-4.27%
March 2008	207.11	-3.59%
April 2008	202.52	-2.22%
May 2008	198.59	-1.94%

   

While the year-over-year declines will continue to grow for a few more months (assuming next month is a bigger decline than .41%, the next month .49%, etc.), you can see that the monthly rate of change is actually decelerating after peaking this winter.  The national rate is decelerating as well.

With funny money mortgages out of the system, and home sales picking up nicely in the harder hit areas (Sacto, the IE, low-income parts of OC), I'd guess the deceleration trend will continue, and eventually turn positive sometime in '09.  The year-over-year data won't likely turn positive until 6 months or so after that. 

A second e-mailer made the same points, writing, "It could therefore be argued that the decline has flattened, which could be indicative of the market bottoming out."

-- Peter Viles

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

L.A. home prices falling at 24.5% annual rate

Home prices in Los Angeles continued their historic decline in May, falling 24.5% from year-earlier levels, according to the widely watched Case-Shiller index of home values.

National headline: Standard & Poor's economist David Blitzer is talking this morning (CNBC) about an increasingly clear "regional divide" in home prices, with Sun Belt cities showing severe declines while other cities show signs of a turnaround.

Overall, prices in 20 large cities continued to decline at the highest levels ever measured by Case-Shiller.  From Bloomberg: "Home prices in 20 U.S. metropolitan areas fell at a faster pace in May, indicating the three-year housing slump has not stabilized, a private survey showed today." The rate of decline on those 20 large cities was 15.8% for the year ending in May.

More on the numbers: The biggest annual price declines remain concentrated in Sun Belt cities that experienced housing bubbles. These are the cities with the largest annual declines in prices:
Las Vegas  -28.4%
Miami       -28.3%
Phoenix    -26.5%
L.A.         -24.5%
San Diego -23.2%

Ray of hope: Seven cities experienced slight increases in prices from April to May, though Case-Shiller numbers are not seasonally adjusted, which makes monthly fluctuations somewhat suspect. These are the gainers: Atlanta; Boston; Charlotte, N.C.; Dallas; Denver; Minneapolis; and Portland, Ore.

Local angle: Case-Shiller data show home price declines in Los Angeles have accelerated dramatically in recent months. (Update: A number of readers complained about the previous sentence, arguing that price declines are not accelerating at all, but actually decelerating. Read their arguments here.)

Month         Annual decline in Los Angeles         
Sept. 07      7.0%
Oct. 07       8.8%
Nov. 07       11.9%
Dec. 07       13.7%
Jan. 08       16.5%
Feb. 08       19.4%
March 08     21.7%
April 08      23.1%
May 08       24.5%

Note: The Case-Shiller report is an index, and does not translate into a dollar value for home prices, which is why this report does not mention the average, or median price for a home in Los Angeles.

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

Listing prices now down 159K from bubble peak

Median listing prices in Los Angeles County slipped another $4,000 over the past week, falling to $420,000 -- a decline of $159,000 since asking prices peaked in April of 2006, according to Housing Tracker's weekly analysis of MLS listings.

Inventory of houses and condos for sale continued to decline, and is now trailing year-ago levels by 1.4%.

Numbers: At $420,000, median listing prices are down 20.8% from year-ago levels -- the steepest decline yet measured in this slump -- and are 27.6% below their peak level of $579,666. The inventory of homes and condos for sale dropped by nearly 500 units, to 43,086.

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%)
6/08               $440,000 (down 18.5%)                42,398 (up 4.0%)
7/7/08           $425,000 (down 20.6%)                44,726 (up 5.2%)
7/14/08         $425,000 (down 20.6%)                44,636 (up 4.6%)
7/21/08         $424,000 (down 20.7%)                43,584 (up 0.8%)
7/28/08         $420,000 (down 20.8%)                43,086 (down 1.4%)

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

Housing rescue bill, part II

Over the weekend, Congress approved the housing rescue bill -- which was designed to help thousands of homeowners avert foreclosure and extend a lifeline to Fannie Mae and Freddie Mac if they need it.

Today, Treasury Secretary Henry Paulson unveiled another piece of the government's plan to help shore up the housing market: greenlighting banks' use of so-called covered bonds to pump more money into the U.S. mortgage market.

"I believe covered bonds have the potential to increase mortgage financing, improve underwriting standards and strengthen U.S. financial institutions by providing a new funding source that will diversify their overall portfolio," Paulson said in a statement.

Maybe. Wall Street was less-than-enamored with the idea, as markets columnist Tom Petruno explains on his blog Money & Co. He also explains how these bonds work, noting that they are big in Europe.

In a commentary today entitled "Will the 2008 housing bill save the housing market?," William Wheaton, (registration required) a MIT economics professor and a principal at Torto Wheaton Research, sees the Fannie and Freddie safety net as the key -- and perhaps only -- worthwhile provision of the housing bill. He sums up the situation thusly:

"What the current housing market needs is more sales, more transactions and a return to liquidity with normal moving/mobility. This, coupled with continued low new construction, will reduce the inventory of unsold units and allow prices to stabilize and then recover."

-- Annette Haddad

Photo: Treasury Secretary Henry Paulson, center, gestures during a news conference today, flanked by FDIC Chair Shelia Bair, left, and Federal Reserve Gov. Kevin Warsh.

Credit: Associated Press

Questions? Comments? Email: annette.haddad@latimes.com 

Is the high-end immune? Maybe, maybe not

     Whether expensive homes in prestigious areas will escape the housing crash remains a hotly debated topic. I hear from many readers (and see some examples where I live) of houses still selling, sometimes quickly, and sometimes for prices higher than the owners paid just a couple of years ago.

      Yet economists I interview contend prices at the high end are just sticky -- they take longer to fall, but do so eventually. Holdout sellers at some point cave in, raising supply, and trade-up buyers from other areas don't have as much money to buy in the pricier neighborhoods, squeezing demand.

     John Karevoll at DataQuick Information Systems has provided a breakdown of Southern California June home sales that shows the top end is falling as well.

   The median price for the top tenth of homes sold in June was $900,000, down from $1,129,500 the same month a year ago. That's a 20% drop. Last June was the price peak for that market segment, according to DataQuick.

   The bottom tenth of homes sold fared worse, with a 41% drop in the median sales price. 

  But the June decline in the top tenth shows a reversal from last summer. In June 2007, the median sales price for that tier was UP 3%. Last June, prices in the bottom tenth had fallen 11% from the previous year.

   So the top is sliding. Or is it ? The June median sales price was actually UP from the May median for the tier of $875,000, with roughly the same number of transactions. A one-month bump may not mean much, of course. A few more months of data will give us a better picture.

--Peter Y. Hong, Times staff writer

Photo: Bob Grieser / Los Angeles Times

Comments? Questions? Email peter.hong@latimes.com

From seven to six figures

What's worth a million? The market seems to be struggling now with that question. A few listings:

South Pasadena: 1908 Mission St. Listed at $899,000, sold in 2005 for $1.2 million.

Irvine: 5 Villager. Listed at $999,888, sold in 2007 for $1.15 million.

Laguna Niguel: 28791 Riki Ct. Listed at $990,000, sold in 2005 for $1.125 million.

Long Beach: 4141 Pine Ave. Listed at $865,000, sold in 2005 for $1 million.

Pasadena: 1930 Kaweah Drive. Listed at $939,000, sold in 2007 for $1.04 million.

Are these properties quirks, or signs of more price cuts to come in the upper end?

--Peter Y. Hong, Times staff writer

Photo: Associated Press

Comments? Questions? Email peter.hong@latimes.com

Let them buy dream homes

Bali, or horse country? Dubai, or Park Avenue?

While many Americans are chewing over how to make their mortgage payments, 305 high-end owners (their primary residences and investment assets are each worth at least $1 million, except Californians, whose homes must be worth $2 million-plus) recently ruminated over where they'd like to land their dream homes.

The 2008 Coldwell Banker Previews International Luxury Survey reported last week that 27% of those surveyed named as their top location an island; 22% said they want a country home; and 18% prefer an international destination. There are plenty -- 17% -- who want a dream house based on a particular address or ZIP Code; 13% want a high-rise with amenities (can't live without a doorman); and 8% confessed to picking a location based simply on keeping up with their friends....wherever the Joneses are living these days.

And what do the well-heeled want inside these must-have mansions? Designer kitchens, customized home entertainment centers, indoor gyms and wine cellars. Outdoors: formal landscaping, water view, pool, hot tub (of course), boat dock, golf course, tennis court and that must-have --- a basketball court.

--Diane Wedner, Times staff writer

Photo: Associated Press

Questions? Comments? Email diane.wedner@latimes.com

'A Good Steady Market'

In case you missed the announcement today in Real Estate, because of reductions in staff and space, the Sunday Real Estate section has printed its final edition.

Real estate coverage will continue to appear online throughout the week. Hot Property, Neighborly Advice and the occasional Pardon Our Dust remodeling tale will appear in print as part of the new Saturday Home section. Home of the Week, Southland home-price charts and other features will appear in Sunday Business. Real estate articles will appear in both sections.

There's a journalism term for finishing an edition's work: You put the section to bed. When I started as a part-timer in this department 28 1/2 years ago under then-editor Dick Turpin, I never dreamed that one day I'd be putting the section to bed for good.

It has been an honor and a joy to serve readers for the last eight years as editor of a section that started in 1901, according to The Times official chronology. Under the headline, "A Good Steady Market," the tone then was optimistic:

"While there is nothing that could even by courtesy be called a boom in real estate just now, yet 10 years ago we should certainly have characterized the present condition of the market by that name."

Ah, for a good, steady market.

If you'd like to share your views, contact readers.rep@latimes.com; call (877) 554-4000 or fax (213) 237-3535.

-- Lauren Beale, Real Estate editor

Photo: Real Estate editor Dick Turpin oversees fledgling reporter Lauren Beale, the current Times Real Estate editor, in 1982. At right, the late Lou Desser, news and makeup editor.

Tree of the Week: The mayten

Good morning. It's a bright, clear and cool one in Bend, Ore., where I'm vacationing and sneaking in 15 minutes of blogging. Pieter Severynen's "Tree of the Week" is back, celebrating the unique urban forest of Los Angeles.

The mayten tree -– Maytenus boaria

Sometimes a garden design calls for a certain experience, such as the green curtains of hanging branches that come with a weeping willow, but the garden just isn’t big enough to accommodate a full-size willow. Luckily we have so many trees at our disposal here in the Southland that we can find smaller-scale substitutes to create the desired look of relaxation and informality. The mayten tree is one of them.

The mayten tree grows at a medium pace until it becomes an attractive round-headed to spreading tree. It easily reaches 30 feet tall by 15 feet wide or more. It looks like a dainty weeping willow, but unlike the willow, it is evergreen (a rare cold snap in the 20s would make it lose its leaves). The small, elliptical, 1- to 2-inch-long light green leaves have serrated edges and sit close together along the long pendulous branchlets that hang down from the branches. The tiny yellow green flowers are inconspicuous; seeds are small. Bark is dark gray and finely textured; the trunk does not become stout till the tree is middle aged. The roots are not invasive, but will sucker if damaged; it is best not to plant anything else close by. Deep and infrequent irrigation will encourage the roots to go deep and stay there. The Mayten tree produces a lot of (unwanted) side growth, especially when young, but this is easy to remove. "Green Showers" is a selected variety of uniform, cutting grown plants.

The name "mayten" comes from its Mapuche Indian name "mantun," while "boaria" refers to cattle, which seem to like the leaves for forage. The tree is native to waterways in arid regions of Chile, Argentina and Peru.

Thanks, Pieter.

Posted by Peter Viles

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

Photo Credit: Pieter Severynen

Could this be a trend? Home sales up in Riverside County*

A report today by the California Assn. of Realtors says sales of existing homes were up 17.5% statewide in June from a year ago: 420,550 single-family homes were sold in June at a seasonally adjusted rate, versus 357,890 in June 2007. A big reason for the increase: bargain hunting at the lower end of the price range.

"Sales were driven in part by larges shares of deeply discounted distressed sales in many parts of the state," said CAR president William E. Brown.

The counties showing the most sales strength were, not surprisingly, those hardest hit by foreclosures. Sales in Sacramento County nearly doubled, according to CAR's seasonally unadjusted data; in Riverside County, sales jumped 75%.

This is more or less in keeping with data released last week by research firm DataQuick Information Systems. For the month of June, DataQuick reported, sales were in positive territory in the Inland Empire.

Nonetheless, by all measures prices continue to decline -- according to the Realtors, the statewide median home price declined 37.7% to $368,250 -- no doubt because all these resurgent home buyers are driving hard bargains.

*Update and clarification:

The reason the C.A.R. numbers differ from the DataQuick numbers is because C.A.R. uses seasonally adjusted data. From its report today:

The statewide sales figures represents what the total number of homes sold during 2008 would be if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

Posted by Annette Haddad

Photo: Associated Press

Question? Comments? Email: annette.haddad@latimes.com