Wednesday, March 18, 2009

SoCal Housing Market Stabilizes

Los Angeles Southwest Sales Rise

# of Sales, Los Angeles Southwest, Metropolitan Southwest Neighborhoods

(click chart for more detail)

Home prices in Southern California held steady in February for the first time in nearly a year, figures released Tuesday show, as low prices brought buyers back into the market.

Experts say it's not clear whether prices have hit bottom, but they are now low enough that thousands of buyers are emerging as the traditional spring home-buying season begins.

Prices fell so far that median-priced houses in Southern California are selling for half of what buyers were paying at the market's peak in 2007. Those low prices, along with low interest rates, have boosted sales. [Source]

Droves of buyers are celebrating the low-price, low-interest rate environment by purchasing homes on the best terms in years. Finally, affordability has returned (in some areas), and the rent vs. own equation falls into balance.

The example above is the aggregated Los Angeles Southwest and Metropolitan South areas, where median sale price has fallen (an unfathomable) 62% in the past two years, from $430,000 to $167,000. Not surprisingly, sales activity is way up as these foreclosed homes change hands.

A note of caution should be given -- the high-end Westside market is still slow.

Home sales are still frozen in high-priced areas. Beverly Hills, Santa Monica, Brentwood, La CaƱada Flintridge, Rancho Palos Verdes and Redondo Beach were among the areas posting far-below-average home sales totals in February. [Source]

Westside Los Angeles Sales Decline

# of Sales, Westside Neighborhoods

(click chart for more detail)

The vaporization of salaries of some high-end earners and the lack of availability of jumbo loans have put tremendous downward pricing pressure on high-end Los Angeles markets.

This chart illustrates how the combined sales in seven high-end markets (Beverly Hills, Beverly Hills Post Office, Brentwood, West Hollywood, Santa Monica, Beverly Center Area, Sunset Strip/Hollywood Hills West and Pacific Palisades) have trended down for two years.

It is noteworthy that in these markets there was a 17% uptick in sales in February 2009 vs. Janaury 2009. Perhaps the "capitulation" that is taking place on the low end will also spill over to Los Angeles' Westside.