Los Angeles' residential market took another tumble in May, as sales slowed and the county's median home price fell to its lowest level in three and a half years.
The median dropped to $435,000, with 2,556 new and existing homes sold, according to data provided to the Business Journal by Melville, N.Y.-based HomeData Corp. The price was down 26 percent from a year ago and 5 percent from April.
Sales were off an adjusted 12 percent from the prior month and an adjusted 44 percent from a year ago, bucking the usual gradual rise in sales leading into the peak summer selling season. (The Business Journal adjusts the percentage change in sales volume to reflect differences in the number of monthly selling days as compiled by HomeData.)
Economist Chris Thornberg of Beacon Economics said the data show that slower sales and lower prices have finally hit wealthy neighborhoods unlike May 2007 when continued strong sales of higher-priced properties drove up the county median to an all-time high of $585,000 even as middle- and working-class neighborhoods were hit by the credit crunch.
"Last year, the first cracks in the housing market showed up at the low end. Now fast-forward to this year: Sales have slowed across the board," said Thornberg, a former UCLA Anderson Forecast economist.
Countywide, 37 ZIP codes had a median home sale price of more than $1 million a year ago. That's now down to 29 neighborhoods. Even in million-dollar neighborhoods, the weakness was apparent.
In Calabasas' upscale suburban 91302 ZIP code, there were just six homes sold 58 percent fewer on an adjusted basis than a year ago when 18 sold with a median price of just $1.1 million, down 28 percent.
Thornberg, who was predicting in late 2005 that residential property in California was overvalued by as much as 45 percent, now says it wouldn't surprise him to see the L.A. County median approach $300,000 before prices balance out.
"While it's painful in the short run for people who thought we were home rich, it's a necessary thing because prices are simply too high. It ultimately will improve the ability for businesses to operate in Los Angeles because people can afford to live here," said Thornberg, noting the median income of county homeowners is just $74,000.
"There's no way you can justify a $585,000 house median in Los Angeles given the incomes here. To service the cost of homes like that would take two-thirds of that family's income."
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Local Home Sales, Median Price Drop in May
- UNDER $400,000
- Home Prices Fall, Buyers Moving In
- House Prices Rise as Volume Slows
- L.A. Home Prices Stay Flat as Sales Inch Up in July
- Real Estate Market Continued Its Cooling Trend in August
- L.A.'s Housing Market Surges, Ignores Gloom
- Median Home Prices Persist in Steady Decline