Valley so low: Median prices down 34% from '07 levels

News item from the Daily News via LA Biz Observed: "The median price of a San Fernando Valley home in June fell 34 percent from a year earlier, which was the record-high ($655,000). The price dropped 4 percent from May, and is now nearing 2004 levels."

More data, from the Southland Regional Assn. of Realtors:

--In the San Fernando Valley, sales of existing homes fell 3.6% from June 2007 levels, and remain at the lowest levels for June in 24 years of SRAR statistics.  Pending escrows are running 20.6% ahead of year-ago levels. Inventory -- 6,935 properties for sale at the end of June -- is up 1.6% from year-ago levels.

--In the Santa Clarita Valley, sales of existing single-family homes in June paced 11.2% ahead of year-ago levels, while the median price fell 25.6%, to $450,000. That's a decline of $193,000, or 30%, from the record level of $643,000 in April 2006. Inventory -- 1,940 active listings -- is down 16.4% from June 2007 levels.

Worth noting: Citing dropping inventory, SRAR officials say they believe "further steep price discounts are unlikely" in the Santa Clarita Valley: "Real estate is extremely local, with the Santa Clarita Valley far better off than other, harder-hit areas of the state, especially those that had large numbers of new home tracts aimed primarily at first-time home buyers," said Jim Link, chief executive officer of the SRAR.

Doreen Chastain-Shine, president of the SRAR's Santa Clarita Valley division, added, "No doubt that foreclosures and short sales are up and there are still current homeowners at risk of losing the property. But the pressure on prices is not nearly as great as buyers assume simply because there are not nearly enough active listings to force sellers or banks to accept steep discounts."

--Peter Viles
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Ventura Boulevard in Sherman Oaks, via L.A. Times.

Comments

[Rational Renter]

Laughable spin from those realtors and realtor-mouths. They wish 2004 prices were the bottom. Fundamentals won't be hit until 2001 prices, and nothing can stop that from happening.

http://findingbottom.blogspot.com

[D]

Rational Renter wrote:

"Fundamentals won't be hit until 2001 prices"

2001 prices adjusted for inflation

[Laker]

Posted by: D: "2001 prices adjusted for inflation...."

What inflation should i use? government CPI? of about 3% per year or actual inflation of about 5-10% annual ?

[Ace]

The SFV market is really odd right now. There actually isn't a ton of inventory... only 10,255 active listings. Over 1000 listings are selling each month so there really is only a 8 to 10 month supply. However, every month another 1000 listings drop off the MLS and expire. Not a good sign when as many listings expire as actually sell.

[Cal]

Mary Funk & Jim Link of the SRAR have been saying there is no way there can be significant price drops in the mature economy of the San Fernando Valley.

Of course after each month showing successive price drops and still ultra low sales they are calling bottom with each new low saying things won't get worse and now is the time to buy.

The local realtor associations should work on building credibility instead of attempting to talk up the markets. Being an honest broker of information will mean people will come to rely on you. Being people who just try to put a positive spin on the market means people will tune you out and look for other people to give the straight scoop.

On the pending escrow front, they have remained elevated for some time. It is clear there is a large drop out in pending transactions in the new tighter lending enviroment and escrows running longer due to not only financing but getting approvals for items on purchases for short sales and REOs. Everything is taking longer which inflates the pending count. While I believe that the year over year sales numbers in the SFV will be positive for the rest of the year it is only because the last July-February was so horrific and unprecedented I don't think it could be matched ever again.

On the inventory issue, as prices come down so should inventory. This is simple economics, as prices fall demand rises and supply falls. With housing there are large lags in the system. The SCV started down before the SFV and so it is further ahead in the process. We should see SFV inventory match the SCV drop eventually, it is just a matter of time. The inventory drops combined with ultra low sales are just confirming that significant price drops are happening.

Even with sales being so historic low (it's even worse than people tell you if you consider the population growth since 80's when they started keeping count) I am amazed at the number of transactions. People have an amazing capacity for rationalizing large financial decisions. I think it is a reflection on just how emotional a home purchase is for most that they can't put it in its proper perspective.

[Lou]

I've in the SFV and the same houses have been on sale for over a year on my commute to work.

[Ace]

Cal,

I wouldn't be too suprised by the number of transactions. There are a lot of people still trading up. A lot of people still have a lot of equity (well, 34 percent less) and are selling their condos or starter homes and moving up.

Now, if you see a first time buyer, send them my way. I haven't seen one of those in a long time.

[anonymous]

I'm looking at two houses - one in Las Vegas (mirrors LA) and one in a vacation community in WA state. Las Vegas is not so bad, I made a small profit over 2001, when I sold it this year (I lived there). WA state? Loss of 30-50 grand.

The stats aren't there. I made a sad house into a happy house and employed small town people for a year. No sense crying in my beer.

The only reason we took the WA house in was it was owned by elderly sick friends of ours and I really think it would have killed her to go into bankruptcy.

No regrets. She is still alive. Don't assume stupidity or motives for all of us.

Don'y misplace our anger either.

[Jim Johnson CRS]

I enjoy following your blog! The Bend Oregon real estate market continues to slow. It looks like a good time to buy in your market.

[E]

Posted by: D: "2001 prices adjusted for inflation...."

Laker replied: "What inflation should i use? government CPI? of about 3% per year or actual inflation of about 5-10% annual ?"

How about wage inflation? And what if wages go down? Do we adjust for wage deflation?

[shockg]

Jim, You must be new to this blog. Your not allowed to express differing opinions here. This is an angry renters and speculators blog. You will be attacked for saying the B-word (Buy)

[John T Watts]

That is a wonderful photograph posted with this story. It tells another story. It shows how development is lining up along transportation corridors. Businesses where the jobs are end up along the main drag or highway with homes lined up behind them. Will we see more and more of this with the passage of time along the interstates across the nation? We see this along interstate highways 35 and 75 north of Dallas and probably in many other parts of the country.

[Keith]

Hey ShockG,

Give us some good news. Tell us some specific homes on the market that are good buys. Or tell us some specific neighborhoods that are a steal so we can tell if you have a clue or are just a real estate agent/investor trying to find the greater fool.

[Laker]

Ace wrote: "...There are a lot of people still trading up.... and are selling their condos or starter homes and moving up...."

Ace,
You mention there are hardly 1st time buyers (that qualify), Who is buying the houses from your move up sellers? In order to move up today, you need a down payment/equity. For this you need to sell the existing house and buy the new one. Most can't keep the old place, and buy the new place...unless they pulled all the equity from it and plan on dumping it to foreclosure....

Shock,
Have you heard the S word? (as in Speculator, Specuvestor, Stupid.)

[desmo]

The REO's in SCV are just sitting and not being listed and I am seeing drastic cuts in prices by desparate home owners trying to sell. You are right Cal, Funk & LInk are a complete joke.