L.A. listing prices dip under $400,000, but barely

Here's a milestone: Median listing prices in Los Angeles County, which peaked at nearly $580,000, have now dipped under $400,000. Listing prices, as tracked by Housing Tracker's analysis of MLS listings, fell by $1 over the past week, to $399,999.

Numbers: Median listing prices, down from $400,000 a week ago, have fallen 3.6% in the past month and 23.1% during the past year. Could the decline be slowing? Might be. Tune in next week.

Inventory of for-sale homes and condos continues to edge lower, dropping by 200-plus units over the week, to 41,803, a decline of 9.9% from year-ago levels.

Pictured: A foreclosed house in Long Beach, listed for sale at $256,499. At peak prices (March 2006), it sold for $518,000.

-- Peter Viles

Your thoughts? Comments? E-mail story tips to Peter Viles.
Photo credit: Leo Nordine Realtors

Comments

[Chris]

Do Not Buy
Do Not Buy
Do Not Buy

[Yearning For Home]

The 75th percentile is finally on the move again! And by a not-insignificant amount.

[IToldu2CashOut]

I fully expect this number to go below $300k (still a large number compared to housing in the rest of the country).

[Ragnar]

$1 may be an insignificant amount of cash these days, but it a significant psychological shift to have the median listing price slip below $400k. The floodgate is now open.

[anthony]

"Could the decline be slowing? Might be."

Let's see. Prices fell by $9,000 for the week ending 9/2/08, i.e., last week (the largest week over week decline I have seen since you've been posting this data). So I think the answer to your question is a resounding hell no.

[Drew]

Interesting to note that the low end (25th percentile has dropped 29.6% yoy, the mid range (50th percentile) has dropped 23.2% yoy, and the high end (75th percentile) has dropped 8.2% yoy.

Of course, these are ASKING prices, not closed sales.

Either the high end will drop or it won't. But it isn't moving down nearly as rapidly as the lower ranges.

And please, if you're going to insist that he higher end will drop rapidly to "catch up" to the decreases seen in the lower ranges, can you provide some reasoning for that? With some proof?

Lotta people on here say stuff but then can't back it up, if ya know what I mean.

[Joseph]

"Could the decline be slowing? Might be."

Pete, sometimes I think you post this stuff to rile the bears and increase your hit/comment count. You seriously can't believe this stuff. Isn't it obvious that summer is sellers' time, and the best they could do this year is slow the rate of price decline? Like every year, fall and winter are the dark days, when sales slow or decline even further. Unlike every year, we will soon be seeing Alt-A resets, and the next wave of foreclosure carnage. From last August to this September: 23.7% drop. From this August to next September? Expect another 20%. Last year, predicting a 23.7% drop from '07 to '08 was called ridiculous by the perma-bulls. And now, on cue, they'll call the prediction of another 20% drop "ridiculous". Who do you trust? Put your money where your mouth is, friends. My money is earning interest, my downpayment is saved, and my calendar is circled for house-buying in late '09. Can't wait!

[Todd]

Could the decline be slowing? No, this is just the lull before the hurricane to come.

[Rational Renter]

Anthony - while $9,000 is a big drop for the 75th percentile, it's not the largest since Peter has been posting data. There was a $12k one in the middle of June, for instance. But the 75th percentile likes to fall in bug chunks for whatever reason.

[JDZ]

I don't think the market is slowing down as much as reflecting the summer season where people feel they MUST buy or sell. School is now back in session, people who believed they needed to move have done so, and now that impetus for buying/selling is gone. The next few months will tell.

[SMRR]

98, 87, 96...

how long til its under 300? anybody question 374 by Christmas? Anyone betting 349 before we sing Auld Lang Synge?

[E]

Sure...it's slowing on the bottom tier houses in Compton & Watts. After all, they're not just going to "give them away".

It will be interesting to see what parts of the market start to deteriorate when the Option-ARMs reset.

The bottom of the barrel will start to come up a bit as the "cheapies" will have been sold while the upper tiers drop some more. How much? Hard to say. But we could still see falling prices even as the "median" starts to rise.

[l.a.guy]

Not directly related to this, but Nouriel Roubini (aka Dr Doom) was part of the panel on Charlie Rose last night. Not surprisingly he wasn't optimistic, but one thing he said confused me; part of his rationale for the continued downturn is that people who have bought second homes, for vacation or whatever, will start walking away from those loans in large numbers. (He had mentioned earlier that mortgages are non-recourse loans) My understanding was that mortgages were only non-recourse for primary residences (and then only if it was the original purchase money, as opposed to a re-fi)

Anyone know what the truth is?

You can buy the Charlie Rose program here:
http://tinyurl.com/RoseGSECrisis

[Wilson]

Somebody please wake me up when we are under $199k...

Which is about right...

[Rational Renter]

By the way, the 75th percentile has now fallen 20.5% from its peak ($805k). That's not as much as the 25th or 50th (36% and 31%), but it's not insignificant.

[TheUrbanHouse]

Unlike the previous downturn, this is a bottom-up downturn as opposed to a top-down. The top has yet to feel the sting that is coming...

[Ace]

Ragner "$1 may be an insignificant amount of cash these days, but it a significant psychological shift to have the median listing price slip below $400k. The floodgate is now open."

Really? I bet if you went outside and asked 100 people, not a single person could guess the median price within 10 percent.

[CompaJD]

399,999! Yahooooooooo time to jump in. Oh wait, I only make 110K a year. Damn it!!!!!!!!!!!!!!!!!!

[Anonymous]

Regarding recourse on mortgages, state law governs. Thus, the rules differ state to state. In California, the state-provided nonrecourse nature is generally limited to primary residences that have not been refinanced (although a borrower could contract for a nonrecourse mortgage on a second home or a refi).

Roubini's point is based on the idea that all mortgages **in practice** are nonrecourse because it is usually not worth the attorneys' fees for a bank to go after a deficiency judgment against a borrower. The bank just forecloses without attempting to get a judgment. So mortgages are often de facto nonrecourse even if they are not "de jure" (by law) nonrecourse.

[Jack]

Try 100k

when the median hits 100k let us know

the crash has not even started yet

[l.a.guy]

"Roubini's point is based on the idea that all mortgages **in practice** are nonrecourse because it is usually not worth the attorneys' fees for a bank to go after a deficiency judgment against a borrower."

Thanks. By the way, Calculated Risk has a link to last nights Charlie Rose show that is free. The first 1/2 hour is about the GSEs.

http://tinyurl.com/CharlieRoseSep082008

[The original RZ]

Didn't someone posing as Pete promise to buy us a round of drinks when prices hit the $300s? :-)

[tew]

Good news! Only about 10 - 20% in real terms left to go! The median probably has another 10 - 15% nominal from here, which should happen in the next year or so. Say 10% nominal down from here into late '09 and then pretty flat for a couple of years. That should about do it for the bottom of this cycle.

The nominal median should be around today's level in 2011. So for folks who can afford a house that they like and want to live in for many years, it's beginning to get reasonable. Still too expensive, but not completely absurd. Of course, anyone that can wait should just hang back for another couple years.

[Laker]

Drew, you want backing of high end areas?
Try Melody Acres in Tarzana.
I have a house that is next to multi million dollar houses sitting on half acres of flat land and many have tennis courts and basketball courts.
5902 Shirley Ave Tarzana 91356
It sold in 2006 for A 1 Million dollars. It was not a fraud. many next door similar place sold for that amount. This was the market price.
Today this place just sold for $480,000.
The area is high end, and the place might be a teardown...but you still should be able to build nice house there...
And bottom line. High end area in SFV is down 50% from peak! Eat this as a proof.

[It All Happens on the Margin]

It is absolutely falling, and fast.

Here's an anecdote: we bid on two places in Mag Park in Burbank (where SFVRE was dancing just a few short weeks ago). We were out bid on one, which since fell out of escrow. The seller came back to us last night and asked us to offer LESS than our offer, which was significantly below Madam Graff's Avon comp.

My wife and I looked at each other, shrugged, called the agent back, who shared the seller is 2 months behind on his payments and the home is on its way back to the bank.

Another factor not often discussed on this blog is the impact of what we call "carry outs." Man-oh-man - there are a lot of estate and trust sellers in Burbank. WIth the oldsters keeling over and the retirees checking out, the asking prices just keep dropping.

We are signing a lease tomorrow in the same area for a comp rental at about 30% less than what that place would cost. We confirmed the rental is financially stable, and the landlord has had the home in the family for 40 years. That gets our kids into the school we want and allows us to perch waiting for the right deal and time.

By the time the lease is up, we estimate we'll have shaved about $100-$150k from a $650k asking price (we're looking at the average principal on the first TD on homes that have equity extracted in the area).

Not to mention savings in property taxes and the interest earned on our down payment...