A tale of two markets: High end holding steady

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This is a trend that has been with us for a while, and a couple of you reminded me in comments to revisit it. The trend is this: even as foreclosures pile up and prices collapse in less desirable neighborhoods of Los Angeles, prices continue to hold steady -- or even rise -- in higher-priced neighborhoods.

I’m not talking about luxury neighborhoods like Beverly Hills or Malibu, where entertainment money and foreign buyers are big factors. I’m talking about the $700,000 to $900,000 price range. Here are five sub-million-dollar neighborhoods where median sales prices held steady or rose from January 2007 to January 2008:

Neighborhood/ZIP # of sales in Jan. 08/Median sales price % change yoy
Woodland Hills 91364 15 / $875,000 5.7%
Arcadia 91006 20 / $761,000 6.8%
Torrance 90505 15 / $794,000 2.8%
LA/Westchester 90045 15 / $772,000 13.0%
LA/Mar Vista 90066 24 / $743,000 -2.3%
Source: DataQuick/DQNews.com

DSL wrote in comments, ‘The homes in my target market of South Pasadena, Arcadia, Pasadena, San Marino rectangle have not come down one iota in terms of listing prices. Why is this ‘bubble bursting’ as you all put it seemingly only confined to areas no one with a decent income would ever dream of living?’

Just Call Me Maria added, ‘Good homes in good areas are still selling for ridiculously high prices...’

From here we venture into the unknown: Will prices inevitably fall in the higher-priced areas, or will they hold their value? The short answer is, I don’t know. My gut is that prices will eventually decline in pricier neighborhoods, but won’t fall anywhere near as far as they will in cheaper areas. But I haven’t seen this movie before.

Before you trot out the recent history, and quote the price declines suffered in ‘trophy neighborhoods’ in the early and mid-1990s, I would say this: this cycle is different. History may not be our guide.

I‘d really like to hear your thoughts on this one -- why do we have two extremes in the market, and will they converge or not?
Photo Credit: The Sunset Strip home purchased recently by Mix Master Mike, resident DJ with the Beastie Boys, for $990,000, by Michael McCreary, via L.A. Times.