In tracking SFR inventory west of Sepulveda this past year, MBC has broken up the Tree Section into two market segments. Homes offered for less than $2m made up one segment, and homes starting above $2m made up the other.
This dividing line roughly corresponded to resales and smaller homes, at the lower end, versus new and newer homes in the upper segment.
MBC also declared that the market above $2m was glutted, particularly with new construction, several months ago – before it was hip or obvious to say so.
For almost all of this time, the majority of Tree Section inventory was in the $2m+ segment. As this graph shows (click to enlarge),
there were even times when 2/3rds of inventory was in the upper segment. Demand was fairly constant through the Spring and Summer of 2007 for homes priced below $2m.
But in 2008, that has changed. We now have slightly more homes on offer in the sub-$2m range (25 versus 24). As the graphic shows, the lines have crossed.
We saw 5 sales of homes priced under $2m in the first 6 weeks of 2008, but 2 of those were new construction on which the prices began over $2m and dropped below. Meanwhile, the inventory in this segment has more than doubled from 11 at year end.
Of the 25 actives on Feb. 15, 10 were priced below $1.3m, and 3 were actually below $1m. It's been a while since we saw so many offerings at those levels. Of course, as inventory grows, there should be more deals at the lower price points.