West Hollywood Market: 2009 $835,000 Median Price off 22% from 2007 Peak, Sales Decline 62% from 2004
It's a new year and a new decade and a great time to take stock of what has happened over the past few dizzying, topsy-turvy years in real estate. We're first going to look at what has unfolded in our home turf of West Hollywood.
Single Family Market. The charts above and below provide a snapshot of how the wave of liberal lending led to a boom in prices that peaked in 2007 -- and then a subsequent crash when lending was tightened.
From 2004 - 2007, the median home sale in West Hollywood rose 34% from $795,000 to $1,065,000. This was the time of "stated income", "no documentation" loans, and "100% financing."
That era ended in August 2007, when the banks started to turn off the lending spigot (since some of their "liar loans" started to turn sour.) From 2007 - 2009, the median home sale declined 22% to $835,000.
We can see the same trend in the number of sales $1 million and higher. There were 65 of these in 2007, 39 in 2008, and 17 in 2009.
Sales show a different trajectory. The number of home sales in West Hollywood declined 38% from 2004 - 2007 and then declined 39% from 2007 - 2009. In fact, the number of home sales in West Hollywood in 2009 is down an incredible 62% from the number of sales in 2004.
Condo Market. The trends for the condo market in West Hollywood mirror the single family market.
From 2004 - 2007, the median condo sale in West Hollywood rose 35% from $450,000 to $609,000. From 2007 - 2009, the median condo sale in West Hollywood declined 20% to $485,000.
Sales have also been battered during this time. The number of condo sales in 2009 was down 55% from peak sales in 2004.
Conclusions. The single family and condo markets in West Hollywood have a similar profile, and we can draw similar conclusions from the data:
- Current prices are at 2004 levels
- The West Hollywood market peaked in 2007
- The 2009 median home sale price of $835,000 is just above the $729,750 "jumbo" conforming loan limit for Los Angeles County. Financing dictates pricing.
- The 2009 median condo price of $485,000 is just above the $417,000 conforming loan limit for Los Angeles County. Financing dictates pricing.
- The greatest number of sales took place in 2004 with a rising market and liberal lending.
- The fewest number of sales took place in 2009 with a declining market and tight lending.
And what can we extrapolate for 2010 and beyond? If the economy doesn't "lose the other shoe", we are expecting a stabilizing market. Big price declines -- and job losses, and stock portfolio losses -- have already taken place. The economic outlook is dour, but West Hollywood still remains a central, highly-sought after neighborhood in the US's second largest city. We expect 2010 to look and feel a lot like 2009.