Home Values Still Climbing Despite Fears of Slowdown

Despite fears of a downturn in L.A.’s housing market, the median price of existing homes broke a record last month, hitting $536,000.
By: DEBORAH CROWE: Los Angeles Business Journal
The median was 15 percent higher than a year ago and 2 percent higher than February, continuing gains made after a dip in December that had wiped out six months of appreciation, according to data provided to the Business Journal by HomeData Corp., a Mellville, N.Y. company that tracks housing prices nationwide.

While the sales volume was well off the record pace of the last several years, the region’s still-robust economy is continuing to fuel demand for housing and prop up pricing, even as other markets across the nation falter, analysts said.

“The reality of the Southern California market is that demand still exceeds supply,” said Leslie Appleton-Young, chief economist for the California Association of Realtors. “Once people work out the psychology of the current market we’re going to be at a reasonable clip this year, though of course not as high as last year.”

There were 6,864 homes sold last month, down 25 percent from a year ago but up 29 percent from February – an expected seasonal boost since sales tend to drop off over the holidays but then recover as the year progresses.

That drop in sales contributed to a rise in market inventory. The Realtors association estimates there was 7.2 months of inventory on the market in February, the most recent period available, compared to 2.7 months a year earlier. In the San Fernando Valley portion of the market, inventory was at 5.3 months

Steve White, president of the Southland Regional Association of Realtors, said inventory in his region, which includes the San Fernando and Santa Clarita valleys, was too tight last year and the local market has benefited from the increase in inventory.

“When you consider that six months of inventory is considered a balanced market, what we’re seeing is a good market for both buyers and sellers,” said White. “Last year, in many cases, was just out of control, so when you compare that to a more balanced market it makes it look slow, when in fact it’s not.”

Market cooling
Still, industry experts are now reporting that buyers are taking more time before making a bid on a property, and sellers are still struggling to moderate their expectations.

“Buyers and sellers are on either side of the line waiting to see who crosses first,” Appleton-Young said. “Buyers don’t want to overpay and sellers don’t want to give up more than they have to.”

That attitude is reflected in the median number of days that homes are staying on the market. That figure reached 42.4 days in February, the latest available number, versus 37 days for the same month a year ago.

Even in desirable seaside communities such as Pacific Palisades, owners are learning to moderate their expectations.

One three-bedroom 1950s-era home designed by a noted architect in the Palisades Riviera that went into escrow last month sold for just under its $3.35 million asking price – but only after the seller lowered the price twice from the original $3.95 million in September.

“If a home doesn’t have a very general appeal or is unique architecturally it may be a harder sell,” said Coldwell Banker agent Wendy Kirshner, who notes that the Peter Choate-designed home had an unusual configuration and was last extensively renovated 17 years ago.
Even so, the 19 homes that sold last month in Pacific Palisades had a $1.8 million median price, up 37 percent from a year ago.

The highest median price in the county was in Santa Monica’s 90402 ZIP code, where the median of eight homes sold in March jumped 12 percent from a year ago to $2.12 million. The median price for 16 homes sold in Malibu was $1.91 million, with the median for 18 homes sold in Brentwood up 1.5 percent to $1.78 million. In Westwood, the median actually dropped 8 percent to $1.51 million based on nine sales.

Some of the biggest gains were recorded in neighborhoods north of downtown Los Angeles, including several that came later to the real estate boom.

Los Feliz’s median jumped 40 percent to $1.15 million based on 20 sales, with Silver Lake up 21 percent to $670,000 based on 14 sales. East of the Golden State (5) Freeway, in communities where prices are closer to the countywide median, Eagle Rock rose 26 percent to a $640,000 median, with Mt. Washington up 40 percent to $600,000.

“I’d say Los Feliz and Silver Lake are at the top of their game, but I see that moving east as people who want to get into Silver Lake and find they can’t afford it start to look at Eagle Rock, Mt. Washington and Glendale,” said Steve Clark, an agent with Sotheby’s International Realty. “I just got a client a house in Eagle Rock for $500,000 and that same house on the same piece of land in Silver Lake would have been $900,000.”

And with single-family home prices remaining high on a historic basis, buyers continue to snap up less-expensive condominiums though at lower levels than a year ago.

Last month there were 1,511 condo sales in the county, down 12 percent from a year ago. But the median price rose 16 percent to $418,000, higher than the March single-family median two years ago.

Valley sales dip
However, in the Long Beach area, which had been holding steady through the end of last year, a fall in prices is starting to accompany the drop in volume.

Overall, sales volume in the city fell by double digits, down 34 percent from a year ago. And median prices in the city’s 11 ZIP codes ranged from $465,000 in a more affordable neighborhood to $848,000 in the toney Belmont Shores beach community. Six of the ZIP codes saw just single digit growth or even negative appreciation last month, unlike February when only two ZIP codes failed to see double-digit appreciation.

In nearby El Segundo, sales volume fell 36 percent with the $805,000 median price just 8 percent higher than a year ago. However, Hermosa Beach saw its median rise 12 percent to $1.16 million, and pricey Manhattan Beach saw its sale volume remain steady as its median rose 24 percent to $1.72 million.

Michael Collins, general manager of Shorewood Realtors in the South Bay, said the area saw a rush of new listings from owners who had pulled off the market but were now coming back – unlike other areas where there was a slowdown in sales.

“We had the group that had been waiting for the top, especially investors, and now all of a sudden they realize, ‘Oh my God, maybe the top has come and gone and we better get our house out there,’” he said. “You add those two groups to the regular stuff from people who need to sell for any number of reasons, like a job relocation, and we have a lot to sell out there.

“If there’s going to be any bubble or anything less than a soft landing we haven’t experienced it,” he said. “We’re still in a very active marketplace here now, though that’s always likely to change.”