The median price of homes sold in Los Angeles County crashed through the $400,000 level in September and landed at $380,000, according to sale data supplied to the Business Journal.
Home prices here have not been that low since early 2004 about the time the dramatic run-up in home prices was gaining steam.
The number surprised even some veteran real estate experts.
"I didn't think that there was going to be a significant downturn in values, certainly not this quickly," said Harvey Mark, a real estate agent with Long Beach brokerage Coldwell Banker Coastal Alliance.
By any measure, the drop in home prices was dramatic. The median price in September 2007 was $580,000. That means the price sunk $200,000, or 35 percent, in one year, according to data supplied by Hicksville, N.Y.-based HomeData Corp.
The drop was sharp even from the previous month. In August, the median price was $404,000, which means the price dropped $24,000, or 6 percent, in one month.
Experts said the cause of the dramatic slide was clear: a rising tide of distressed and cut-rate properties. Many of the bargains are being snatched up despite the credit crunch.
The buyers? They were said to be investors flush with cash, sometimes buying several homes at once, as well as first-time homeowners who qualify for federal programs aimed at propping up the housing market.
"This morning, we had an office meeting and one of my agents told me that 30 percent of our inventory is in escrow," said Chris Boumann, a broker owner at Red Carpet Heritage Realty in Downey.
Indeed, the number of homes that changed hands went up sharply. There were 4,769 homes sold in the county in September. That was up 22 percent from August and up 18 percent compared with September 2007. By comparison, even during the height of the boom, volumes typically fell in September after the strong summer sales season.
(All comparisons are adjusted to reflect inconsistencies in HomeData's monthly reporting period.)
Many of the sellers were banks, which are starting to slash prices on foreclosed properties they have sometimes held for months. The failed IndyMac Bank, taken over by the Federal Deposit Insurance Corp. in July, had 46 foreclosed homes for sale in L.A. city alone recently, according to the bank's Web site.
"We are seeing these low prices in the market because right now quite a few foreclosures are up for sale by the banks," said Delores Conway, director of the Casden Forecast at the USC Lusk Center for Real Estate. "People are buying the foreclosures, and many are investors who want vacation homes or see it as an investment to rent."
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