Home sales in Southland plunge 43%
If you’re a renter looking to join the homeowner club, the cost of admission keeps getting lower.
Home sale prices in six Southland counties tumbled 10% last month compared with November 2006 -- the sharpest year-to-year decline in at least 20 years, a real estate information service reported Tuesday.
Sales volume dropped even more sharply, plummeting 43% from a year earlier, according to DataQuick Information Systems.
For homeowners, falling values mean less equity. For real estate agents, the decline in sales means fewer commissions.
But for renter J. Nathaniel Berke, it’s putting his goal of becoming a homeowner again that much closer.
“I do not want to be happy about somebody else’s misfortune,” said Berke, 41, but “this is a correction. Houses are getting closer to what they should be selling for.”
According to DataQuick, the median price for a home in Southern California fell to $435,000, down 14% from a peak of $505,000 earlier this year. Prices are now on par with what they were selling for in early 2005.
Values eroded the most in Riverside County, sinking 16.5% from November 2006 to $356,500.
Orange County saw a more modest 6.5% year-over-year drop to $582,750. Los Angeles County posted the smallest decline: 3.5%, to $499,000.
The sluggish market is no surprise to real estate agents stuck between skittish buyers and sellers who are hesitant to cut prices.
Cerritos broker Ken Law said he had given up on holding open houses this year. The last one he did, two weeks ago, drew only three people.
A year ago, Law said, he was holding open houses every weekend.
Now, he said, buyers are waiting for prices to hit bottom, and sellers are unwilling to accept the fact that their homes have declined in value.
“I tell sellers they need to price their homes 10% less than previous comparable sales. They don’t want to hear it,” Law said.
With little buying and selling, Law now spends his days writing to people who bought homes in the last two years, asking whether they now need to sell their houses. Law believes that many recent home buyer overextended themselves with mortgages they can no longer afford as lower introductory rates reset to higher levels.
“How many people can really afford a $500,000 mortgage?” Law asked. “Not many.”
Law said he had seen prices fall 20% in some of the neighborhoods in which he works, which straddle Los Angeles and Orange counties. He said he thought prices would fall 10% more before hitting bottom.
His view from the field matches that of economist Christopher Thornberg, principal of Beacon Economics in L.A. Thornberg, who had predicted that home prices in Southern California would fall 20% from their peak, now thinks they will drop 30%.
“There has been tremendous acceleration” in the housing downturn, he said. Thornberg believes the market won’t recover until prices more closely match the income levels of area residents.
Thornberg thinks that most of the price decline will occur in the next two years, but that home prices will fall through 2011. “There will be no bounce. It took years for the market to go up to the top. It will take years for it to go down to the bottom.”
There was a potential bright spot for the real estate industry in the latest numbers: November sales climbed slightly from October, by 2%. November sales historically fall from October levels, a decline averaging 7.4% over the last 20 years, DataQuick said.
DataQuick President Marshall Prentice said the unusual increase could show that the market had hit bottom, but he cautioned that the trend would have to continue to confirm that. He noted that in November 1994, sales rose from the previous month. But the rebound was short-lived, and in the months that followed the price declines continued.
Berke, an independent filmmaker, shares a rental house in Pasadena with his wife and their 8-year-old daughter.
He owns investment property out of state and says he will now begin looking for houses to buy locally.
But he’s not in any rush.
“I certainly don’t think it has hit bottom,” he said.
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