L.A. listing prices tick lower by $1,000

Median listing prices in L.A. County dipped by $1,000 during the last week to $398,000, continuing a pattern of relatively flat listing prices over the last six weeks. Inventory also dipped and is now running 14% below year-ago levels, according to Housing Tracker's weekly analysis of MLS listings.

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%)
7/08               $425,000 (down 20.6%)                44,636 (up 4.6%)
8/08              $410,000 (down 22.3%)                 42,279 (down 5.1%)
9/08              $399,900 (down 23.1%)                 42,553 (down 7.9%)
10/6/08         $399,000 (down 22.5%)                  40,137 (down 13.2%)
10/13/08       $398,000 (down 22.0%)                  40,093 (down 14.0%)

-- Peter Viles

Your thoughts? Comments? E-mail story tips to Peter Viles.

Comments

[anthony]

The slowdown in price drops is probably related to the new CA foreclosure law. I bet they'll keep dropping at least $1,000/week (on average) for the next year or year and a half, then start to level out.

[RB]

watching these number is LESS exciting than watching paint dry. now what would be fun is to see some DOW-like swings: DOWN 18.5% in Sept., UP 11.1% in Oct. come on buyers and sellers, we can do this!

[tew]

The pros and especially cons of using median prices for a heterogeneous mix have been discussed here before.

When the composition of the mix is constant then tracking median over time is quite useful and provides meaningful information. When we go through periods of mix change, the median becomes misleading.

As foreclosures and the low end in general came to dominate sales, the median went down quickly. However, we'll now see stress move to the mid-high end and as those transactions increase their share of mix the median price will get support. In other words, median prices will show greater strength that really exists. That is baked into the market mix.

[Jeremy]

Finally a drop in the median listing price. I may be assuming here but I think people were crossing their fingers on this bailout thing. After the worst week ever on Wall St. maybe reality set in?

[CompaJD]

Whoopeeeee. Time to jump in. Oh wait there's still too many sharks in the water. Never mind.

[TomServo]

I have to move in six months... given the flatness of the market recently ($2k median drop in six weeks), I'm offering $60k below asking, calculating based on the $10k per month drop that happened prior to the recent slowdown.

With any luck, they'll take the offer, and I'll get the benefit of the lower interest rate, less financing fees (this is my second home, but will become primary in six months), and the market won't drop greater than that $60k in the time frame. Since I have to move, it doesn't seem like a ridiculous move... and it saves the bank foreclosure legal fees and lost financing in the meantime, as well as potential losses at auction (it's a short sale). Can anyone tell me this is a mistake? If so... why? I've been waiting patiently to time this.

[MyLessThanPrimeBeef]

There is a bank's public balance sheet and then there is its real balancee sheet.

Similarly, there is a seller's asking price and then there is the real price he will let that albatross go.

[Todd in WeHo]

I feel like this is the eye of the hurricane. The first wave began in 2006, now the unpleasant calm soon to be followed by the next wave that will take us through 2010.

[GDC]

I think the low end in SoCal (100k - 300k) is close to bottom. The mid end (300k - 700k) has about 20% to fall. The high end (700k-1.2m) has about 30% to fall. The ultra high end (2m and over) may fall another 50%.

Just my humble opinion.

[Corntrollio]

How is the 75th percentile price doing?

[Drew]

TomServo asks: "I'm offering $60k below asking, calculating based on the $10k per month drop that happened prior to the recent slowdown. Can anyone tell me this is a mistake? If so... why? I've been waiting patiently to time this."

My take on it is: Sellers are still not looking to sell at a significant discount from their asking price. We've made a few offers significantly below ask and were rebuffed at every turn. And these properties are still on the market, they aren't moving, but sellers are not budging. A few have even been taken off the market entirely.

Sellers especially aren't willing to discount down to meet a hypothetical future drop inthe market. If the market does drop, they'll reprice accordingly when that time comes. Or not.

Your best bet is to look at properties that have already been discounted, and that are priced appropriately for the market -- and bid accordingly.

Or buy an REO, which has already been discounted down. But chances are you'll need to make a bid close to full ask. We lost one recently even with a bid above ask because someone outbid us by another $11k.

[Drew]

Oh, one more comment to TomServo:

Banks are still being incredibly naive with regard to what they expect to recoup from short sales. And it's still taking them months just to let you know if your offer is accepted.

So if you need to move within 6 months, don't plan on a short sale coming through in that time frame.

[John]

Now is not a good time to buy anything. It's good that you realize prices will fall approximately $60k by the time you move in, but have you thought about how much further they are going to fall after that? Prices still have over 30% to fall in L.A. to match fundamentally supportable levels. If you buy you are just buying into a bubble, one that's only halfway deflated.

[Drew]

"Now is not a good time to buy anything."

Keep on thinking that -- just that much less competition for the properties that are realistically priced to reflect current values and a still declining market.

Maybe 1 in 10 properties on the market meet these criteria -- but they are out there, and those that are sell quickly.

Real example -- two basically identical houses have been on the market for about a year, one priced at $849k (marked down from $869k) and one priced at $639k (marked down from $835k). Guess which one sold?

[Drew]

"Prices still have over 30% to fall in L.A. to match fundamentally supportable levels."

Maybe that's true for the LA market in aggregate -- and that's if you also include Palmdale and other such outlying areas -- but does not necessarily hold true on a property-by-property basis.

[eprobert]

Tom - There are good deals out there - we just closed on one a good 20% below asking and cheaper/the same as reasonable rent for the same place. That was always my trigger - when renting and buying is approximately (within 5-10%) of the same price it's hard to argue for waiting even if prices keep going down. Of course this does not apply on the westside - it's still way out of whack there. But if you're willing to settle for east of the LA river or north of the 134/101 you'll do OK.

Also, if you have to move anyway, it's probably not really a bad time to buy. And if you already have a house it doesn't matter what future values do assuming that your current house and the one you want to buy move more or less similarly.

[Texas Underwriter]

Everyone asks me in Texas, "when is this credit crisis going to end?" I always respond to them, "wherever southern California real estate goes..so goes the rest of the United States. Florida real estate is import but the center of the earth in real estate is southern California. People in California, as a whole, make no more family income than the rest of the country, but their home expenses are 3 times as much. Now with almost all lenders requiring documentation of income on home loans, borrower's will have to show what they really make on a loan application. If $65k is the medium family income in LA Country, then look for borrowers to qualify for a $275,000 home. So...LA County has at least another $100,000 to fall."

[SJ]

Still got a long way to drop. It's still too early to buy a home. Buy a home now and one year from now you could have had the same one for tens of thousands of dollars less.

Don't trust the "rosy" talk from Realtors

[Drew]

SJ warns: "Don't trust the "rosy" talk from Realtors"

How about the "rosy" talk from people who are finding well-priced properties to buy and hold as primary residences?

Where PITI is a just couple hundred bucks more a month than equivalent rent -- and that's before taking income tax deductions for mortgage interest and property tax?

Looks a little "rosier" from that vantage point.