Rewind: SoCal home prices return to May 2003 levels

More data from today's report on home sales in Southern California, from MDA DataQuick:

-- Median prices in the region, at $308,500, are at their lowest level since May 2003, and are 38.9% below their peak level of $505,000 reached in the spring and summer of 2007.
-- Fifty percent of all homes sold in the region in September had been foreclosed on in the previous year. That's up from 12.6% a year ago.
-- Foreclosure resales are highest in Riverside County (68.9% of all September sales), followed by San Bernardino (63.1%), San Diego (47.3%), Ventura (44.0%), Los Angeles (39.1%) and Orange County (36.8%).

Median price in Los Angeles County since prices peaked:
Aug. '07            $550,000  (up 5.8% y/y)
Sept. '07            $525,000  (up 1.2%)
Oct. '07             $500,000  (down 3.8%)
Nov. '07            $499,000  (down 3.5%)
Dec. '07            $470,000  (down 10.5%)
Jan. '08            $458,000  (down 11.9%)
Feb. '08            $460,000  (down 12.9%)
March '08          $440,000 (down 18.5%)
April '08            $435,000 (down 19.4%)
May '08             $422,000 (down 23.3%)
June '08            $415,000 (down 23.9%)
July '08             $400,000 (down 26.9%)
Aug. '08            $380,000 (down 30.9%)   
Sept. '08           $360,000 (down 31.4%)

-- Peter Viles

Comments

[Tim K.]

Yes, indeed, this is the real story that got displaced by the hyperventilation about the "spike" in home sales. Since only half of those sales were real, person-to-person sales, in fact the real sales rate was LOWER than September 2007.

What's great news about this is it appears banks *finally* have gotten their REO staff and systems up to speed so they can start moving their inventory through rapid discounting and selling.

This frees up their inventory to start foreclosing on more homes.

This is only *good news* for those of us waiting to buy. It means banks can finally start to influence prices downward faster!

[jag]

Pete, I'm confused..........didn't you have a recent posting about the median price for L.A. County homes being flat for over month for about 399K? This post now says the mediam price is 360K! What am I missing?

[peteviles]

jag writes, "Pete, I'm confused..........didn't you have a recent posting about the median price for L.A. County homes being flat for over month for about 399K? This post now says the mediam price is 360K! What am I missing?"

Thanks, jag, don't be confused. The "steady at 399" number you remember is median LISTING price. Today's post is median SALES price. Yes, shockingly, sales prices are below listing prices these days.

I understand that it's confusing, but I'll publish just about any statistic under the sun, provided I think it's accurate. The result is a lot of statistics fighting for recognition.

[PricesStillTooHigh]

Prices are still too high in the nicer areas. After waiting in an apartment for over a year, I decided to lock in a rental house in San Marino for 18 months. I have $200K in cash and am qualified for a $1MM loan through a traditional lender at a decent rate but won't spend more than $850K for a 3 bed 2 bath 1900 sq, ft house with small yard and in dire need of updates. Sellers are still asking for $1.2 - 1.5 for similar houses (and some are selling at the price).

[MyLessThanPrimeBeef]

For those who were scorned at a few years ago, this only proves that, as hard and unpopular as it may be at times, being a contrarian and rooting for the underdog is the way to go.

[Rob]

".......being a contrarian and rooting for the underdog is the way to go."

Boy, it sure has been quite here compared to even just a year ago. Prices are getting closer to the bottom true. But, we still have a way to go.

It looks like some folks patients ran out. The sales prices here are all over the place. Some homes are selling for 100k more or less just blocks from each other. No consistency.

[E]

Just remember how deceptive "median" price statistics can be.

On the low end, we all know it has taken a bath. So much for the "gentrification" of Watts that was touted in 2005.

In the nicer areas, prices may not have "fallen" as much, but if you look closely, you will see that you are now getting *much* more home in some cases vs. what people were paying for junk in 2005. The option-ARM resets will most likely start the crumbling of the mid-higher end (not top shelf) $1-2MM market.

As the upper end market comes down, more houses in that upper 25% will start to sell. They will be selling only because the prices are coming back to reality.

During this time, the "median" sold price will rise as the mix will start to favor some of the higher end properties. Even though the "median" sold price is rising, prices will still be falling for another year or two. You will still have to hunt out the good deals and there is no guarantee that any respective seller will realize that they aren't even close with their pricing. So from here on out...expect to see many overinflated asking prices.

And finally...remember...flippers are still working the $1-2MM market bigtime. Many of the homes that have "sold" recently are up for sale again after the quick buff and shine remodel and are just sitting empty looking for buyers.

Unless of course that flipper is Jad Najjar...his work is impeccable from what I've seen...and his flips sell.

[The Original RZ]

Here's hoping for a return to May 2000 prices and soon. Even if they don't go back to any earlier than that, I'd have to party like it's 1999!

[Drew]

"The sales prices here are all over the place. Some homes are selling for 100k more or less just blocks from each other. No consistency."

A lot of it may have to do with the condition of the house and the property as much as seller motivation.

Two houses that look identical on paper, or even at curbside, may be vastly different when you peek inside.

Over the past several months, I've seen places ranging from the pristine, to the minor fixer, to the gut rehab, to the true teardown.

One should expect the properties in better condition to fetch relatively higher prices.

Even new construction can be solid or shoddy. And sales prices should reflect that as well (though may not if people don't look closely at what they're buying).

[Drew]

"And finally...remember...flippers are still working the $1-2MM market bigtime."

I've seen a bunch at the lower end in OK or better neighborhoods that seem to be doing well.

Buy a rundown REO that has good bones for $400k, put in $50k to fix it up, sell for $500-550k (still below market for the area) and you've made a tidy sum.

And if you're both the general contractor and the selling agent, you make even more.

[latesummer2009]

It appears that the median prics drop has accelerated every month since Novemebr of 07'. This is obviously due to the increasing number of foreclosures. We definitely have a bifurcated market where you have 1) Foreclosures spinking higher and 2) Nonforeclosures still declining. This pattern will continue until foreclosures are clearly dominating the RE landscape. That includes all levels of the market. Buyers become more educated every day about buying foreclosures.

It is just a matter of time before the higher end takes its tumble.

http://www.westsideremeltdown.blogspot.com