Prices of homes sold in Los Angeles continue to decline.
In February, the median price of a home in the county stood at $310,000, down 3 percent from the previous month, but lower by a whopping 33.8 percent from February 2008, according to figures from HomeData Corp. in Hicksville, N.Y.
In terms of volume, 3,000 homes changed owners in February, a slight drop from the previous month but up 47 percent compared with February 2008.
“The attitude is gone that people can buy a home, stay two years and sell it for a $50,000 profit,” said John White, broker-owner of White House Real Estate in Glendora. “I have a lot of first time buyers with household incomes between $25,000 and $50,000. They’re looking for a place where they will live for years.”
A study by the California Association of Realtors released in late February showed dramatic increases in the “affordability index,” or the percentage of households that can afford to buy a home. In the fourth quarter of 2008, about 46 percent of L.A. County households could afford a home, compared with only 27 percent in late 2007.
The study showed the average price for an entry-level home was $301,000, with a required minimum household income of $59,100.
While brokers agree that home prices on average have dropped about 35 percent in the last year, the falling prices are still location-sensitive. Lee Fruchter, owner of Pinnacle Estate Properties in Northridge, said middle-class neighborhoods such as Reseda and Northridge have seen declines of about 37 percent, but upscale addresses in Studio City and Encino have fallen only 10 to 15 percent.
Also, new residential developments have more foreclosures and larger price drops than established neighborhoods. Price information from HomeData sorted by ZIP code shows that in general the steepest price decreases are in new tracts in areas such as Lancaster and San Fernando, or low-income areas such as Compton and Hawaiian Gardens.
“I don’t see homes going into foreclosure in established neighborhoods,” White said.
Fruchter sees many buyers waiting on the sidelines for prices to drop further. And he predicts another wave of foreclosures will send prices lower.
Between November 2008 and mid-February, the nation’s large banks and mortgage lenders declared moratoriums on foreclosures until the federal government worked out a rescue package. But as the moratoriums end and more foreclosures reach the market, inventory will climb.
“In the next couple of months there will be more prices declines in the Westside and the San Fernando Valley,” Fruchter said.
As for the long-awaited rescue package, Fruchter believes most of the loan modifications designed to keep people in their homes will fail, either because the people simply don’t have sufficient income or are in the process of losing their jobs.
But White thinks the new rules will help keep homes off the market. One of his clients is $200,000 under water, meaning they owe that amount above its current value.
“They’re the ones I hope the stimulus package can help,” he said. “Not a house flipper, just a family that tried to do the right thing at the wrong time.”
