Tuesday, January 15, 2008

DataQuick December plummet

DataQuick's December statistics show a continuing plummet. Los Angeles County (above) volume for December was down 48% from December 2006 (and lowest they've ever recorded, since 1988). Median price was down 10.5% from December 2006 (suggesting the distortion to the median from higher-priced sales is ending?). Note the graph above highlights in yellow the second quarter of each year, historically the highest volume and largest price rise.

From LA County's peak, DataQuick for December shows a 14.5% decline and S&P/Case-Shiller for October shows an 8.9% decline. Pretty consistent. What was that about a "soft landing"?!

Below are median prices for four southern California counties. Los Angeles prices have now retraced to mid 2006; Orange County to early 2005; Ventura County to late 2004, and San Diego County all the way to early 2004.

19 comments:

Anonymous said...

What I can't understand is how come the prices are plummeting most places, but in Brentwood, Beverly Hills and the 90402 it's been rock solid? There's a small flow of anecdotes on SM Distress Monitor about the 90402, but it's mostly not real decreases, just if you factor in holding costs, etc. (irrelevant because the list price is still at an all time high there).

Price Stout said...

Rock Solid?

Prices dropped 29% yr over yr per Dataquick in Santa Monica. Yes, mix probably played a huge role, but I'm sure doesn't account for all.

Mike S said...

redfin makes it pretty clear things are sliding in SM. If you can wait 2 years there will be some real bargains.

Look back to the 93-95 timeframe. The low- to mid-market died by 93 and when the fall finally hit the high end it was incredibly fast and deep.

Mike S.

WarChestSM said...

I think another thing that people often overlook is the fact that many properties in the "stable" areas (90402, etc) are on the market with many upgrades. So when I feature homes that were purchased a year or two ago and are now on the market for slightly more but are significantly upgraded, it means real price declines are happening. A lot of the decline is masked by the upgrade factor though so be careful.

This is why people look at the Case Shiller index...its all about looking at the same properties trading hands (and I believe a highly upgraded property would be excluded).

Anonymous said...

"Prices dropped 29% yr "

Raed the stats correctly - price is UP not down 29% in SM YOY.

Here is the link:

http://www.dqnews.com/ZIPCAR.shtm

price stout, you are an idiot, can't even read. You shouldn't be posting - 3 years and older, please.

Price Stout said...

price is UP not down 29%

You're right, I misread it.

you are an idiot,

Is that really called for? I'm a semi-regular here, and at least post under an established bubble blog handle (used here and elsewhere). I have a long track record and never resort to ad hominems. You are both "anonymous" and lacking in the ability to debate/discuss without resorting to insult.

Is there a moderator in the house?

Anonymous said...

"Is that really called for?"

No, it is not called for, I am sorry.

Anonymous said...

I'm the original poster above . . . my question still stands. As warchest correctly points out, factoring in imporvements and holding costs, flippers in the good areas may be losing money, but it doesn't change the fact that LIST prices are dropping everywhere but NOT in the high end or desirable areas like Beverly Hills, Brentwood or the 90402.

The big question is will those prices finally start dropping too, and if so, will they drop much more modestly. It seems to defy logic that they are holding up so well, when they benefitted from the mania as much if not more than the crappy areas like duarte or palmdale or valencia, wherever those places are.

Anonymous said...

I am equally curious about high-end zips. We are looking to buy in 90402. Inventories have remained fairly tight and prices remain at consistent levels. My sense is that there are enough people with considerable capital to keep this market in tact. A long tough recession or protracted writers strike may make a dent, but the amount of inventory over $2.5m remains fairly low and there are LOTS of people with more than enough cash to pay these prices. To get a sense of the swell of wealth people, check out the book "Richistan". Looking at the growth of people with $5m+ of capital, it makes some sense that the high-end may be tougher to deflate.

Anonymous said...

Anon

thanks for your post.

My observations about 90402 are as follows

(1) There are really two separate single family home markets - the canyon and the walking streets

(2) The canyon offers more privacy, but lacks sidewalks.

(3) the walking streets have sidewalks and as a result folks there get to know their neighbors more.

(4) There is no standard lot size in the canyon so it is hard to get a read on prices

(5) the walking streets between lincoln and 17th have basically the same size lot : 7500 sq feet so it is very easy to compare apples to apples

(6) Today, a decrepit teardown that can not be inhabited on a standard 7500 square foot lot would sell for 1.8 million

(7) Today, a very tastefully done 5 bedroom house newly built on this lot would sell for above $4 million

(8) There are many people smarter than me on this blog who can predict what will happen in the future, but i think that describes what is happening today


Now that you got my 2 cents, can you elaborate - are you looking to buy a teardown, a brand new 5 bedroom place, or something in between ?

allsouledout said...

My $0.02 ... with the caveat that I care more about the 90403 than the 90402 since I don't have kids, prefer the condo/townhouse lifestyle, blah blah blah. Also (although without any hint of bitterness, truly), I don't make enough to afford the 90402, so I really don't care if a house there goes from $4mm to $3mm ...

However, the "cascade" effect has already begun, as it does with all bubble bursts/deflates, and specific to Santa Monica:

1. Places in "marginal areas" - like those with a freeway ramp right near your door, Michigan Ave, etc are the first to get hit big time - and have been.

2. I'm seeing a bunch of condos in the 90404 with big price reductions, REO status, or languishing on the market from delusional sellers. These are those between SMB and Wilshire where I think most buyers at the time thought (or were told) "don't worry, it's Santa Monica, the value will hold". Really? With the back entrance to St. John's right outside your door?

3. Pockets of the 90403 are coming in significantly, particularly (surprise, surprise) the high-end newly-built townhomes. I just don't see many people paying $1.5mm for a townhouse anymore, even if you're on 15th and Idaho with kryptonite countertops and a refrigerator that knows what you want before you open the door.

4. As for everyone's favorite, the 90402 ... I have no idea, but common sense would say that there will be some additional pain here. Sure, not as much as the other areas due to supply/demand metrics, but I have to believe that even the "rich" stretched a bit.

Wake me up when I can buy a decent home in the 90402 for around $1mm and then maybe I'll be interested - but my sense is I'll be sleeping forever. Guess I should stop posting to blogs and figure out how to make the $500K annual income needed to buy a place ...

Anonymous said...

Anecdotally, list prices for low-end condos in SM appear to be dropping. I think this is the bellweather indicator for the high-end SM homes.

DLP said...

As I mentioned in a previous post, high end retailers who were holding up consumer spending took a big hit this year. That means the high end is finally starting to respond. My bet is that we will see it happen here in a couple of years. Do not forgot that BH (which was much more sought after than SM in 1992) dropped 50%...

joe contractor said...

Anybody able to get sales price stats for 90402? It might be useful to plot the last 6 months on a graph (adjusting for spec homes, of course) and see if there is a trend.

some thoughts said...

Subprime mess started last summer and lower prices markets started to collapse. Then the mortgage lenders started getting hit hard. Now the major investment banks are getting nailed by this. It seems like credit/economy problem has finally made it's way from the people initially victimized (and I know, no one forced those people to buy) to the people who were trading securities backed by these shady loans (read, upper income people). So it stands to reason that now that financial giants like Citigroup, etc are taking the fall that more affluent homeowners will feel some pain as well. The market is not doing well right now, and the people with the most to lose are the people with the most money. Furthermore, a lot of people over-stretched when the credit was easy. Besides lower income people stretching for their first homes there were higher income people buying above their means. So someone who should have bought a 3 million dollar house spent 5 million. And those rates are re-setting just like Mr. Zero Down's in Palmdale. More affluent buyers can probably float the payments a bit longer and stave off the day of reckoning, but if the fundementals are out of whack that day will eventually come...it will just come a bit later. Unless of course our government bails them out.

tommy 2tone said...

I find an interesting aspect of the graph is that in about the Spring of '06, San Diego and LA switched places from what looked to be a very steady gap tracking. SD once had parallel prices; then fell farther sooner, and now rides along parallel again, but below LA. How far back, I wonder, did the SD parallel over LA line trend? Is there a cross-back somewhere out ahead, where SD trends over LA again?

Anonymous said...

You folks are all kidding, right? S.M. and the rest of the westside will collapse into freefall. Better areas always go first. When the bottom row of the house of cards collapses, what happens to the top of the house?

Because of timing or re-sets in this area, things will not bottom until 2011. forget about writers strike, we are looking at California recession already underway and severe nationwide recession a foot with possible failure of our banking system/ fire sale to "sovereign-wealth funds." Some respeted economists are even starting to use the "D word."

We will back track all the way to 1999/2000 prices. If you can remember back to then, people already were saying there was a real estate bubble. We have only scratched the surface this year. Only sub-prime has collapsed. Alt-A coming soon and then A. I live in Westwood. A realtor here told me that '04 to '06, more than 75 percent of the sales in the neighborhood were IO no money down. These people knew they could not pay the re-sets but thought they'd just refi. Ha! Now they are aleady underwater and/or disqualified, will only get worse each year for the next five years.

For those of you who already own, enjoy those summer '05 prices -- YOU WILL NOT SEE THEM AGAIN IN YOUR LIFETIME.

Remember, real estate in Japan fell 50 percent and stayed down 50 percent FOR TWENTY YEARS.

And are you ready: OUR BUBBLE WAS BIGGER.

This was the biggest real estate bubble in the history fo the U.S. In 2001 to 02, the Nasdaq fell EIGHTY PERCENT. That should be a starting place for you all to consider what is coming. That means a house that went for a million at the top could over-correct all the way down to $200,000. This is not just possible, it is likely.

For those of you who have not bought yet, have the patience to hold on for a few more years. This will go on a long long time.

Good luck to all!

Anonymous said...

There is a good argument that the previous poster is right

Let's look at the facts. California government has decided to invite millions and millions of people to move to the state due to generous welfare policies.

This doesn't just include good folks from other countries but disabled and other welfare cases from all over the USA.

It is very kind and generous of them to offer such benefits, but someone has to pay for them

It is pretty clear that with the massive deficit, California will be enacting a massive income tax hike.

Stupid policies like this could make California un inhabitable, like some third world country that drove the economy in to the ground by taxing the productive elements of society to death in order to pay for the unproductive ones.

Anonymous said...

"That means a house that went for a million at the top could over-correct all the way down to $200,000."

Cool. I'll be able to buy my neighbors $5,000,000 for that $1,000,000 I've got sitting around in the bank collecting dust.

I can't help but feel that posts like the last two are driven more by pure slavering fantasy than reality.