Region Sees More Homes on the Market
If the profusion of “for sale” signs dotting Southern California isn’t enough proof, the latest data should do the trick: There are a lot more houses on the market today than there were a year ago.
The supply of homes for sale between Los Angeles and San Diego had more than doubled to 22 weeks at the end of August, compared with nine weeks in 2003, according to an analysis of the region’s proprietary multiple-listing services.
That means it would take a little more than five months to work through the stock of available housing, versus only 2.3 months a year earlier, said Patrick Veling, president of Real Data Strategies in Brea, a consulting firm that conducted the review.
Other measures also show mounting inventories.
The California Assn. of Realtors’ unsold inventory index for July was 3.4 months in Los Angeles County, up from 1.7 months a year earlier; and 7.5 months in Orange County, up from 1.2. Riverside and San Bernardino counties had a 2.6-month supply, compared with 1.4 months last year. Ventura County’s supply rose to 3.3 months from 1.1.
“It’s a big increase over last year, but it’s a big increase from almost nothing,” said Leslie Appleton-Young, the association’s chief economist. The association’s index, which is not seasonally adjusted, measures the time needed to deplete the available housing at the current rate of sales.
A year ago, the region’s housing market was in the midst of a sellers’ supernova, a trend that extended into the spring of this year. Inventories dipped to historic lows as homes that had just landed on a listing service attracted multiple offers, usually above the asking price.
The flurry of activity, spurred by low mortgage rates and high demand, turned 2003 into one of the best years ever for Southern California’s housing market, pushing the region’s median home price to a record $326,000, up 19% from the year before, according to DataQuick Information Systems, a La Jolla-based research firm.
During the first six months of this year, home prices continued to log double-digit percentage gains. In the second quarter, Southern California home prices grew 21.9% from a year earlier, according to the Office of Federal Housing Enterprise Oversight.
The price appreciation is one reason the inventory for homes priced at less than $500,000 was only 12 weeks, according to Veling’s analysis. Since the start of summer, though, the market has cooled somewhat.
Brian Chen sees the changes occurring in real time. About 21,000 licensed real estate agents and brokers use his Multi- Regional Multiple Listing Service Inc. to list properties in northeast Los Angeles County and Riverside and San Bernardino counties.
A gradual uptick, Chen said, began in March, when 6,866 new listings were posted in his database. In April, there were 7,523 new listings; May, 9,077; June, 10,543; July, 11,183; and August, 13,269. A year ago in August, there were 9,805 new listings.
“Sellers are realizing that we’ve reached the high mark of the market cycle,” he said.
Real estate agent Nanci Edwards said that as recently as two months ago, she would price a house in the Westchester neighborhood of Los Angeles, where she has worked for 21 years, “knowing it would have multiple offers.”
Yet “almost overnight,” she said, Westchester went from having 28 homes on the market to about 60.
“Now I’m letting sellers know that their home will probably sell for $10,000 to $15,000 below list price,” Edwards said. And it may take two weeks to 30 days before an acceptable offer is made.
In other words, she said, “things are normalizing.”
But defining what’s normal for Southern California’s housing market is more of an art than a science.
In late 1995, as the last bear housing market was inching its way to the bottom, Veling said, “most believed prices would level off and begin to appreciate when a 10-month supply was reached.”
However, the inventory had to fall to only a 6 1/2 -month supply before prices began their recovery, which was the start of the current up cycle that has yet to reverse course.
