Home prices in Los Angeles County rose last month even as sales volume fell to its lowest level for a January in three years, continuing a trend that started in the middle of 2006.
The $549,000 median price for an existing home was 6 percent higher than January 2006, though it was off $1,000 from December, according to HomeData Corp., a Mellville, N.Y. company that tracks housing prices nationally.
January is typically a time of slow sales, and that was particularly true this time around. Only 5,418 homes sold in January, about 26 percent fewer than a year ago and 13 percent less than December.
Home prices in upscale suburbs such as Calabasas were holding up the best, with the January median of $1.29 million rising more than 17 percent even as the number of sales dropped more than 26 percent.
But some high-end markets saw not only sales but prices decline. In Beverly Hills’ famed 90210 ZIP code, sales were off a whopping 50 percent and the median fell under the $2 million mark to $1.8 million. Brentwood saw its median slip by nearly 1 percent to $1.7 million, with sales down 25 percent.
Leslie Appleton-Young, chief economist for the California Association of Realtors, said that while sales may be lagging, it appears some buyers are finally giving in to the demands of sellers who reasonably price their house.
“We’ve had this stand-off between buyers who were waiting for the fire sale, and sellers who were expecting to get 20 percent above a year ago, and it seems to be ending,” said Appleton-Young, who expects the statewide median price to decline 2 percent this year, compared to 7 percent appreciation last year.
Indeed, a few high-end markets bucked the county trend and saw rising sales and lower prices a trend toward a more reasonable equilibrium.
Pacific Palisades saw its median price fall more than 23 percent to $1.3 million as sales volume rose nearly 12 percent with 19 deals. Rancho Palos Verdes, a haven for South Bay executives, dropped out of the $1 million club as its median fell more than $21 percent to $898 million, as sales rose 8 percent.
And the realtors’ association Unsold Inventory Index in December showed it would have taken 6.8 months to deplete the supply of homes on the market at the current sales rate, compared to 8.9 months in November. A figure of six months generally indicates a balanced market. (By comparison in December of 2005 when the market was still hot the index sat at 3.5 months.)
Still, other figures provided by the association show that homes were staying on the market a median 73 days in December compared with 43 days a year earlier. And some market observers contend the past three months have set up a pattern likely to continue for much of this year, with the region’s record high prices smacking into the ceiling of potential buyers’ ability to afford them.
One indicator is a new study by the realtors’ association indicating that first-time buyers as a percentage of all buyers declined to 27.1 percent in 2006 from 30.5 percent in 2005. The association also estimates that only 19 percent of first-time buyers were able to afford a median-price home in Los Angeles County in the third quarter of last year, the most recent figure available.
Worrisome overhang
On top of that, recently released national census data from the first quarter of last year indicates an alarming rise in vacant homes nationwide, creating an overhang of vacant housing many believe will eventually drive down prices.
The U.S. Census Bureau said there were about 2.1 million vacant homes for sale in the first quarter of last year, the highest level since the bureau began tracking such data four decades ago.
That brought the national homeowner vacancy rate to 2.7 percent, up from 2.0 percent a year earlier, with the rate in the West at 2.4 percent.
However, some real estate professionals are expecting sales volume in desirable markets to pick up as more sellers price homes more reasonably to attract buyers to hop off the fence.
Early January sales figures at Shorewood Realtors in Manhattan Beach are in line with HomeData numbers, with average sale prices up slightly from a year ago, though total sales were off 13 percent.
“With a November and December better than 2005, I was looking at that as being a great sling-shot into 2007,” said general manager Mike Collins, who was taking comfort in the data.
The realtors’ association, whose own January data will be released toward the end of this month, expects to see below-average sales volume continue in the first half of this year, but then pick up slightly. Appleton-Young said she expects the drop in volume to narrow of just 7 percent in 2007, after surpassing 20 percent last year.
Meanwhile, in the county the most affordable markets continued to be far flung neighborhoods such as inner city Compton, where the median was up 3 percent to $358,000 and rural Lancaster, where the median was up 3 percent at $315,000. Sales in Compton were down 47 percent from a year go, and Lancaster down 25 percent.
Among other markets, Hollywood Hills’ 90068 ZIP code saw its median drop almost 4.5 percent to $1.17 million, with sales volume down 10 percent.
In Hermosa Beach’s 90254 ZIP code the median price rose 20 percent to $1.35 million, while Manhattan Beach’s 90266 ZIP code median rose 11.6 percent to $1.3 million. Volume was down more than 29 percent in Hermosa, and 6.5 percent in Manhattan.
