Friday, January 8, 2010

Homes Prices in Hollywood Hills at 2004 Levels - But Market Bottom Behind Us - Still Some $10 Million Sales Above Sunset Strip

High above the city, from the Bird Streets to the Hollywood Knoll, lie the fabled Hollywood Hills West. Since the days when Sunset Boulevard was a dirt road heading from the Beach to Hollywood, the Hills have never gone out of style. The Hills proved its eternal draw even in dire times -- in 2009 there were three sales of over $10,000,000.

But like other neighborhoods, the Sunset Strip - Hollywood Hills West has gone through some seismically shifting times during the recent real estate heyday.

From 2004 to the peak of the market in 2007, the median sale price in this area rose 36%, from $1,125,000 to $1,525,000. From 2007 to 2009, the median sale price fell back to earth, dropping 25%, back to 2004 levels.

Sales volume dropped an amazing 60% from 2004 to its low point in 2008. In 2009, there was a 16% increase in sales off the 2008 bottom.

The market bottom in sales activity was in approximately October - December 2008, during the prime of the financial crisis. The percentage of properties under contract lagged at around 3% for months. Sales activity picked up in 2009, and current sales activity is at a level seen in the early days of 2008.

Conclusions:

  • Easy, available money, contributed to the huge run-up in prices from 2004 - 2007
  • The sales activity "bump" in 2009 was due to the large number of well-priced bank-owned properties (REOs) that hit the market
  • An increase in sales activity in 2009 is a sign of a stable market
  • Many buyers who purchased homes from 2003 - 2008 have "negative equity" -- or are "upside down" -- whereby they owe more on the mortgage than the the value of the house
  • Homeowners with negative equity who fail to get loan modifications will "walk away" from their houses, even if they can afford their monthly payment
  • Look for short sales and foreclosures to "make the market" in 2010

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