L.A.'s coal-hot housing market continued to show signs of cooling in November, with an ongoing decline in the number of homes sold even as home prices recovered from a fall the prior month.
The mixed message is in line with expectations that the residential market is finally peaking in advance of what analysts expect to be a modest price decline in 2006.
"There certainly are signs days on market and inventory that we have a market that's starting to plateau and will get into this soft landing we've been talking about," said Leslie Appleton-Young, chief economist of the California Association of Realtors. She noted that the region's housing market historically tends to pull back in the fall, so more months of data are necessary to confirm any downward trend.
The November median price for an existing home in L.A. County was $525,000, up from $520,000 the previous month, according to data provided to the Business Journal by HomeData Corp., a Melville, N.Y. firm that tracks home sales nationwide.
Year-over-year appreciation was 21 percent for November, continuing the pattern of growth rates in the low 20 percent range that has punctuated the stunning run-up in prices. Still, sales volume was down more than 4 percent compared with the like period a year earlier.
The slowdown in sales also was reflected in CAR's steady rise of unsold inventory index, which measures the number of months needed to sell the current supply of homes on the market. As of October, the index stood at 4.3 months, compared with 2.1 months in June.
Moreover, the National Association of Realtors last week reported that its October Pending Home Sales Index, a leading indicator for the U.S. housing market, hit the lowest level since March. The index is based on contracts signed on existing homes expected to close within one or two months.
On the ground
Michael Collins, general manager with Shorewood Realtors in Manahattan Beach, believes that in addition to properties at the high end of the market, a large proportion of the accumulating inventory is made up of properties in less desirable neighborhoods. These properties are often on unusually shaped lots or second-tier streets.
"A lot of people a year ago would have bought anything anywhere in ZIP code 90260," said Collins, referring to the South Bay community of Lawndale, where the median price rose to $550,000 last month, a 9.6 percent rise over last year. "But now that inventory is beginning to accumulate, they are telling their agent, 'Well, let's see what happens this week.'"
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