For the first time since house prices began plummeting nearly two years ago, the median sale price of Los Angeles County homes has gone up from the previous month.
Granted, the increase was small. The median price of homes that sold in May was $305,000, up from $303,000 in April, according to data supplied to the Business Journal. Still, prices have been firming up lately; month-to-month declines have been small this year leading up to May’s modest increase. That’s dramatically different from last year when prices swooned month to month.
The latest numbers are “consistent with what we’ve seen since the beginning of the year,” said Delores Conway, a real estate economist and director of the Casdan Forecast at USC’s Lusk Center for Real Estate. “We are in a bottoming process.”
Home prices in the county peaked at $585,000 in May 2007 and again two months later. They crashed into the $400,000s at the beginning of 2008 and then into the $300,000s in September.
The May median is 30 percent lower than the $435,000 median of one year earlier.
Condominium prices, meanwhile, have already increased. They went up 2.8 percent in March to $297,000, stayed at that level in April, then declined modestly to $295,000 in May. The median price of a condo in Los Angeles County is now 25 percent lower than a year ago.
The home price information is supplied to the Business Journal by HomeData Corp. in Hicksville, N.Y.
Of course, no one can say that prices have hit bottom yet in the L.A. area. Paul Habibi, a developer and lecturer at the UCLA Ziman Center for Real Estate, said more months of data would be needed to “establish that the bottom is behind us.”
What’s more, Habibi suggested the median price increase could be more reflective of a change in market sales from lower-end distressed properties to higher-priced homes than an indication that the values of individual properties have gone up.
“It’s basically a shift in the mix,” he said, noting a buying surge in recent months is depleting the inventory of rock bottom-priced foreclosed properties. “A lot of the subprime stuff has worked its way through the system.”
In fact, the 3,866 homes sold in May countywide was 7.6 percent off from April. Home sales had been fairly high for almost a year because of the thousands of foreclosed homes dumped on the market.
“For a while we’re going to have volumes pretty flat,” said Habibi, who predicts it will be six to nine months before sales pick up again.
Neighborhood sales
Indeed, sales volume in several low-price markets reflected a slowdown.
The number of homes sold in Compton’s 90220 ZIP code, for example, decreased from 30 in April to 19 in May, as the median price fell 16 percent to $142,000.
The Watts area of Los Angeles showed a more modest decrease in month-to-month sales, which fell from 30 in April to 28 in May. The median price declined 19 percent to $130,000 over the period.
Meanwhile, some middle-class neighborhoods showed declines in volume but increased prices. For example, in Van Nuys’ 91401 ZIP code near Los Angeles Valley College, there were 15 homes sold in April, but just 11 in May; prices rose 22 percent to $525,000.
And in the more expensive markets, some brokers reported a sharp rise in sales volume even as some prices remained soft.
Stephen Shapiro, owner of Westside Estates, which has offices in Beverly Hills and Malibu, said his company has closed more sales in March, April and May than the prior nine months combined.
“My theory is that, for the high-end person, things kind of reached a plateau where they felt insulated from losing more of their net worth,” said Shapiro, who thinks luxury home buyers are now out looking for discounts.
In Westwood, for example, no homes were sold in April, but four were sold in May at the median price of $1.2 million. In Calabasas, there were three homes sold in April and five in May, with the median price declining about 3 percent to $875,000.
Betty Graham, president of Coldwell Banker residential brokerage in Los Angeles, said that her company recently closed a $10 million property in Brentwood Park and opened two more priced at around $8 million.
“These are very informed people whose tolerance for being out of the game is starting to show its limitations,” she said of upper-end buyers.
One big question is how future foreclosures will play out. California and three other states led the nation in foreclosures in the first quarter. While 1.37 percent of all home loans started the foreclosure process nationally, the rate in California was 5.2 percent.
Habibi, for one, thinks the worst is over in California. “The big news is that foreclosures definitely spiked in the first quarter. I wouldn’t expect the data on that front to look much worse for this quarter,” he said.
