Wednesday, December 16, 2009

Los Angeles Housing Market: November Median Price up 1.8% - Foreclosure Sales Decline - But Repossessions Indicate Bank-Owned Inventory Grows

Today the Los Angeles Times reported some good news about the Southern California housing market in November:

  • The median sale price increased 1.8% from October to $285,000 (but note in Los Angeles County, the median sale price declined 3.2% to $329,000)
  • Prices have increased (or held steady) for seven consecutive months
  • The percentage of foreclosures as part of the overall resale market continued to decline
  • Sales of new construction units reached a yearly high
Lots of positive news that supports the consensus that we are in a housing recovery. But there are some negative indicators as well:
  • The number of homes repossessed in November increased 2.4% over the previous month
  • The residential construction industry continues to shed jobs -- in LA County 18,700 are employed vs 21,400 in October 2008
  • Government-incentives -- generational-low interest rates spurred by the Fed's purchase of mortgage backed-securities and the $8,000/$6,500 buyer credit -- will come to an end this spring
Our opinion is that in central Los Angeles, the under +/- $800,000 market will hold firm in 2010 while the higher-end market will be under pressure from short sales-foreclosures precipitated by job losses and resets of Option-ARMs and other "Alt-A" loans. This applies to "riskier" sub-markets ("B" neighborhoods in Hollywood Hills, e.g.). But in the best sub-markets -- Beverly Hills, Los Feliz and Venice, for instance -- we believe the worst is already behind us.

LA Times: Rebound in Home Prices Continues