Median Home Price Falls 35 Percent in January

February 2, 2009

Los Angeles Business Journal Staff
The median price of homes that sold in Los Angeles County took a jaw-dropping 35 percent drop in January compared with the previous year.

According to figures reported by Hicksville, N.Y.-based HomeData Corp., the median price in the county was $320,000, a stunning contrast against mid-2007, when prices peaked at $585,000. Median condo prices fell 26 percent to $310,000 compared with January 2008, in contrast with the peak of $460,000 in August 2007.

The number of homes sold in January was 3,108, which is fairly consistent with the recent past. In the first part of last year, between 2,000 and 3,000 homes traded hands in most months. In the last part of the year, between 3,000 and 4,000 traded hands in most months. The relatively higher sales activity is a result of the lower prices, especially for homes in more affordable areas, which have drawn investors. (Still, those numbers are well below the peaks of 8,000 to 11,000 sales a month that were fairly common in 2004 and 2005 in Los Angeles County.)

January’s figures show that the price downturn is spanning the region, and is now felt in top markets such as the Westside and Malibu.

“In the days after the stock market got hit on Sept. 29, we lost about six homes in escrow in prices ranging from $1 million to $5 million,” said Michael Nourmand, a real estate agent with Nourmand & Associates Realtors in Beverly Hills. “Nothing and no one is untouchable in this economic climate.”

The median price for homes in parts of Santa Monica dropped from $2.3 million to $1.7 million in January compared with the same month last year, a 24 percent decline. In one ZIP code in Malibu, prices declined 19 percent, from $2.2 million to $1.8 million compared with January 2008.

“It’s hard to nail down a figure but you are seeing about 15 percent softness in the Westside housing market,” Nourmand said.

P rices have been slashed in middle-class neighborhoods under continuing pressure of increasing foreclosures.

Bill Toth, owner of Burbank-based Windermere Bill Toth and Associates Real Estate, sells homes in the North Hollywood area. The region has been transformed with the creation of the NoHo Arts District and transit-oriented development that sprung up around the Red Line subway station and the Orange Line busway.

Toth said that drew in a lot of people who eventually couldn’t handle the mortgage payments and ended up in foreclosure. In one area of North Hollywood, the median home price plunged 62 percent within the last 12 months, from $1.7 million in January 2008 down to $654,000 last month.

However, Toth and other brokers regionwide contend that sales volume remains strong and plunging prices are bringing people into the market.

Toth said his company last month sold 16 homes in North Hollywood, Burbank and Toluca Lake, compared with seven in January 2008. The homes ranged in price $400,000-$700,000.

The Antelope Valley holds the county’s lowest median home prices. In one area of Palmdale, prices dropped to as low as $85,000, 64 percent lower than a year ago.

Bob Stickney, general manager of Century 21/Doug Anderson & Associates in Lancaster, said sales have been the best in 35 years, setting a company record with 119 homes sold in December. Last month, they sold 68, more than double the 32 they sold in January 2008.

Mea nwhile, prices may be lower, but lending terms are stricter.

“It’s not that they have bad credit, it’s that there are less places granting credit,” Stickney said.

Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate, stressed that January is a slow month and might not give an accurate picture of the market. Additionally, the market has not stabilized yet.

“I think the Westside will continue to see more pressure with unemployment rising in the financial services industry,” Conway said. “We’ve already corrected a lot in the housing market last year, but now we have the recession and unemployment putting pressure on the market. What’s certain is the uncertainty.”