$700K range holding value better than overall market

Because so many of you are interested in what is happening to housing prices in more established and more expensive neighborhoods, I've been tracking price trends for single family homes in 14 fairly expensive ZIP Codes, where median prices are in the $600,000 to $900,000 range. The data comes from MDA DataQuick.

The headline from the September numbers: Prices in these 14 ZIPs are slipping -- from a "median of medians" of $710,000 in July to $690,000 in September. That is a much better performance, however, than the entire county, where the median fell from $400,000 to $360,000 in that period.

The weakest ZIP, by far, is the one I visited yesterday with Laker -- 91364 in Woodland Hills, where the median price paid for a single family home has slipped almost $200,000 in two months. I wouldn't read too much into that -- the sample of homes sold (24 in September) is pretty small.

In the chart that follows, the bottom line shows a "median of medians," for both prices and percentage change. I'm quite certain this is not a very meaningful statistic, but I enjoy calculating it.

Area/ZIP                     July median     Aug. median       Sept. median/% change from '07

Sherman Oaks/91423      $750,000          $968,000        $807,000  -18.8% 
West Hollywood/90046    $940,000          $765,000       $1.28 m.   +16.6%
Stevenson Ranch/91381  $650,000          $717,000        $726,000  -34.0%
Northridge/91326           $625,000           $566,000       $550,000  -19.7%
La Crescenta/91214        $619,000          $599,000       $555,000  -24.2%
Agoura Hills/91301         $870,000           $735,000       $710,000  -38.3%
Arcadia/91006               $698,000           $775,000       $740,000  -6.9%
Torrance/90503             $693,000           $608,000        $660,000 -14.2%
L.A./Mar Vista/90066    $810,000           $697,000        $745,000  -21.0%
Pasadena/91104            $621,000           $585,000        $498,000  -27.3%
L.A./Westchester/90045 $693,000          $700,000        $670,000  -18.3%
Woodland Hills/91364      $726,000          $593,000        $528,000  -42.3%
Redondo Beach/90278      $755,000          $620,000        $620,000  -14.8%
Arcadia/91007                 $930,000          $848,000        $1.0 M.    -22.4%

Median                    $710,000/-11.1%  $698,000/-17.4%   $690,000/-20.3%

--Peter Viles

Because so many of you are interested in what is happening to housing prices in more established and more expensive neighborhoods, I've been tracking price trends for single family homes in 14 fairly expensive ZIP Codes, where median prices are in the $600,000 to $900,000 range. The data comes from MDA DataQuick.

The headline from the September numbers: Prices in these 14 ZIPs are slipping -- from a "median of medians" of $710,000 in July to $690,000 in September. That is a much better performance, however, than the entire county, where the median fell from $400,000 to $360,000 in that period.

The weakest ZIP, by far, is the one I visited yesterday with Laker -- 91364 in Woodland Hills, where the median price paid for a single family home has slipped almost $200,000 in two months. I wouldn't read too much into that -- the sample of homes sold (24 in September) is pretty small.

In the chart that follows, the bottom line shows a "median of medians," for both prices and percentage change. I'm quite certain this is not a very meaningful statistic, but I enjoy calculating it.

Area/ZIP                     July median     Aug. median       Sept. median/% change from '07

Sherman Oaks/91423      $750,000          $968,000        $807,000  -18.8% 
West Hollywood/90046    $940,000          $765,000       $1.28 m.   +16.6%
Stevenson Ranch/91381  $650,000          $717,000        $726,000  -34.0%
Northridge/91326           $625,000           $566,000       $550,000  -19.7%
La Crescenta/91214        $619,000          $599,000       $555,000  -24.2%
Agoura Hills/91301         $870,000           $735,000       $710,000  -38.3%
Arcadia/91006               $698,000           $775,000       $740,000  -6.9%
Torrance/90503             $693,000           $608,000        $660,000 -14.2%
L.A./Mar Vista/90066    $810,000           $697,000        $745,000  -21.0%
Pasadena/91104            $621,000           $585,000        $498,000  -27.3%
L.A./Westchester/90045 $693,000          $700,000        $670,000  -18.3%
Woodland Hills/91364      $726,000          $593,000        $528,000  -42.3%
Redondo Beach/90278      $755,000          $620,000        $620,000  -14.8%
Arcadia/91007                 $930,000          $848,000        $1.0 M.    -22.4%

Median                    $710,000/-11.1%  $698,000/-17.4%   $690,000/-20.3%

--Peter Viles

Comments

[socalinvestor]

Those of you waiting for a drop in this segment must be very patient. What goes up, must come down. But no one ever said how fast. My guesstimate for the 600 - 900K range is for major reductions in Q1 2010 with stagnant values for 10 years afterwards. Definitely not investment grade stuff. Just a place to live and keep pace with inflation.

[Brad]

Two words:

Option ARM

My money says WeHo is gonna get hit hard...

[Chris Finley]

Thanks for putting this info together Pete. I really like the range of zip codes you've chosen. I've been following homes in that price range myself. It's much more relatable to see actual figures for these specific zip codes, more so than the overall SoCal numbers which factor in San Bernardino and Riverside. When I read the DataQuick median falling to $360K in SoCal, I think to myself there's still no way you can find a nice/OK house for that amount of money and stay close to the greater Los Angeles area. Price declines will eventually increase even in the nicer zip codes. Tracking prices in this $700K range of homes will really be a useful tool -- even if there are statistical anomalies in certain zip codes from time to time.

[jbunniii]

Last time, the high-end areas were the last to fall, but when they fell, they fell hard. By 1993-1994 most of the damage had been done, even in Beverly Hills and Palos Verdes, both down nearly 40% from their peaks. Last time the housing peak was in 1989, so it took 4-5 years for the high-end sections to hit bottom. This time around, the peak was in 2007, so figure 2011-2012 for the bottom.

[D]

Did Stevenson Ranch go up 34% or are the numbers reversed?

Stevenson Ranch/91381 $650,000 $717,000 $726,000 -34.0%

[BungalowGirl]

Interesting. I'm in 91104, and while it's mostly single family houses, it's a pretty economically diverse zip, ranging from a lower income area with some gang problems to the west; to Bungalow Heaven and Historic Highlands which have older houses that range from small and decrepit to large and beautifully restored; to the 1930's/40's-era houses near the end of the Rose Parade route, generally very nice and on generous lots.

We keep an eye on the area real estate listings, and finally, finally reality seems to be setting in. When our little house in BH doubled in value between 2002 and 2006, we just shook our heads and wondered what everyone was smoking. Guess we should have sold instead!

[peteviles]

D asks, "Did Stevenson Ranch go up 34% or are the numbers reversed?

Stevenson Ranch/91381 $650,000 $717,000 $726,000 -34.0%"

D -- Thanks. The percentage change refers to the change from September 07 to September 08. I am 99% certain Stevenson Ranch did in fact drop 34% from September 2007 to September 2008 -- even though September prices were higher than July and August, as you point out.

The 1% uncertainty on my part is that I don't have access to the numbers from home to double-check tonight. I'll check in the morning.

Pete

[BungalowGirl]

@jbunniii:

Indeed. I know some people who used to be in a nice house in Pasadena, also in 91104 (at the parade route end) and they took an absolute bath when they tried to sell that house during the last RE crash. Bought for $300k in 1990, couldn't find a buyer for over a year in the mid-90s and foreclosed; this time around I think it peaked around $800k, now it's probably "worth" $600-650k. We'll see where that price bottoms out.

[firesale]

When San Marino burns to half price, we will be at the bottom. Can you say WeeeeeHoooooo !!!

GOD SPEED THE DAY.

[Crash and Burn]

It sounds like a whole lot of rationalization is going on. Sounds to me like reality will be sweeping to these areas.

Unless you forecast a huge economic turnaround in the next three months, the Economic Foreclosure Bubble Bursting Recession Making Voodoo Economic Federal Deficit Spending Economic Busting forces will soon be marching through the more upscale areas from Pasadena to Santa Monica . The only question is what is the percentage going to be. To answer that just answer, how far have prices over inflated plus how bad is this recession going to be, and you will know.

It seems to me that indexing future housing prices with stock market prices (which corrects much more quickly) would not be a bad estimation. The stock market is at 1998 prices. Why in the world would anyone start negotiations at any other value than this is beyond me. Does anyone disagree with the recent stock market crash that the people in these areas and those that realistically aspire to live there have lost 20-40% of their savings? There aren’t enough suckers in this country with credit who don’t have access to newspapers, TV, or the Internet to keep this ruse up for much longer.

[Tim K.]

I disagree - the problem is, WHAT is a 700K home?

I have definitely seem homes in the last year that were selling for $900K that are now selling for $700K. Are these the 700K homes you refer to? Because I've also seen homes that last year were selling for 700K that are selling this year for 500K. Which is it?

If you're argument is that there appears to be a never ending supply of homes that happen to be priced at 700K that aren't moving, then perhaps it is a revolving door.

The homes I've been watching most definitely have been moving down in price ACROSS THE BOARD. Of course, by the time they actually hit the lowest reasonable price is when they sell in larger numbers.

Maybe the headline should read, "homes that are STILL asking over 700K aren't selling?"

[tonylogan]

Peter -

Great collection of zip codes.

I think these represent LA housing better than the LA overall median price, as it is so influenced by the low-end units that were run-up primarily by fraud, and not many of this blog's readers would ever want to live in.

I think the condition of the financial markets are going to have a huge impact on where home prices end up bottoming. If the FED can manage to print enough money and get the stock market up (dollar terms), we'll have inflation and prices may not get as low as they should.

If the market goes way up, many people will have the money for downpayments. If it crashes down another 20%, you are going to see equivalent inability of people to borrow.

This is the only way out of this "crisis", since deflation is not going to be allowed. The current "deflation" talk is just that. It is just a way to justify the coming rate cuts and massive money printing.

Many people are convinced that cash is the place to be because it has performed well through this recent crash, but it may be better to stay diversified since cash (in dollars) is going to take a big hit soon.

Rant off.

[Jimbo]

I've been using this range for searches for the last 2-3 years, and it is surprsing what you can get in areas like Claremont and Ojai. The biggest surpise has been Santa Barbara where not that long ago, you couldn't find anything in that range expect possibly in Goleta. However, there is no doubt that house in the 75th percentile are still over priced, and I think many are waiting for the effects of Option-ARM, and Alt-A resets in 2009.

[desmo]

Holding value? Here is a piece from one of the top Realtors from the Santa Clarita Valley re $700+

"Because of the lack of “move up” buyer transactions, the $700,000 plus market is slower than I have ever seen it. In our valley today there are about 600 homes in escrow. Of these only 23 are priced over $700,000!! Only THREE are over 1 million!! Even when I sell a property in this range, there are so few “comparables” that appraisal is always a dogfight. So where IS the market?? Under $400,000 we have 376 properties in escrow"

This should put an end that any "Market" is holding value.

[It All Happens on the Margin]

QUESTION: If 250k is considered "rich" and only constitutes 5% of the population (according to one very popular candidate), who is buying these homes?

700k, I suspect, currently is a price point for far more than 5% of the homes...

Can't have it both ways "My Friends!"

[DSL]

Firesale, if and when San Marino drops 50%, I will swoop in like a hawk. I have a feeling that scenario is a foolish pipe dream however. Lots of pent up money always waits on the sidelines, mostly from overseas, so they can get their kids into the schools. So the competition to get in is ridiculous.

[NewtoLA]

IAHOTM wrote: 700k, I suspect, currently is a price point for far more than 5% of the homes...

Not sure what you are arguing but it might help to ask whether the % of 250K plus earners is higher in LA than the national average or whether those upper income earners are attracted to a particular area of LA such as SM. And whether the answers to these two questions has changed dramatically since the 2000 census.

I don't know the answers to these questions--just posing them.

[T. Rogers]

"QUESTION: If 250k is considered "rich" and only constitutes 5% of the population (according to one very popular candidate), who is buying these homes?

700k, I suspect, currently is a price point for far more than 5% of the homes..."

Remember that 5% figure is for the nation as a whole. I think it is fair to say in the Los Angeles area has more $250,000 a year earners per capita than the nationwide average. That is the difference.

[sean in San Marino]

Firesale and DSL -- If San Marino drops by 50% from current price, oh my.... I think San Marino would be filled with my people.... :)

According to Wikipedia, in 2000 Census, San Marino has 49% Whites and 48% Asian (principally Chinese). I think by now, Chinese must be more than 50% just by my count.

Good, let the price drop, and let the remaining old money, tight-xxx WASPs move out. I am fairly sure, based on the amount of Chinees Americans around me salvating at this current decline in RE prices for San Marino properties, that percentage would probably skyrocket, just like what DSL was saying.

And some of the others (non-Chinese Americans) here who have stated their target of buying in San Marino, just might have a chance to outbid one of the Chinese Americans..... might.

Nothing like a good bargain to bring out the rich Chinese shoppers.

hahahahaha.................