Off a Cliff in JanuaryPosted on Thursday, February 14th, 2008 at 12:39am.
This story line could get old, but we must report it, particularly when a respected data source calls January 2008 the worst in 20 years. That's what Dataquick said Wednesday (click for the press release). Indeed, for all anyone knows, the truth could be even more grim – Dataquick's numbers simply start in 1988.
And this was not just the slowest January in their system; the "sales total was the lowest for any month in DataQuick's statistics" (emph. added).
Specifically, in LA County, the number of sales (3,398) was down 50.1% compared with January 2007. This time, LA County underperformed for the region – our drop was somewhat worse than the total drop of 44.9% for all 6 counties of Southern California.
Now let's get local. In MB, data from the MLS (via Kaye Thomas) show a 57% drop in sales year-over-year, from 30 SFRs in Jan. 2007 to 13 in Jan. 2008. (That's all of MB, not just west of Sepulveda.) Say what you will about small monthly data sets, but this graph is pretty striking. (Click to enlarge.)
Casting a wider net, tax records show 15 SFR sales in MB, 2 TH's and 1 more residential sale that appears to be a family transfer. We use the MLS-reported sales here to compare apples to apples – our historical data is all from the MLS. As you can see, the MLS will tend to slightly understate the true number of sales.
This slowdown is a continuing trend. As MBC noted in "Slower, Slower, Slower," the 4th Quarter of 2007 was the slowest of the decade. We had 18 SFR sales in October, 13 in November, and 18 again in December, after a year in which the average had been 33 per month for the previous 9 months.
We should remind ourselves that closed sales are a lagging indicator, because the deals were all reached about a month prior to the report of a closed sale. At MBC we record pending sales/new escrows as they happen each month in our subject region west of Sepulveda. This provides more of a real-time measure of market activity. By this measure, MBC saw 9 SFRs go into escrow (and stay) in December – many became a part of those 13 closed sales in January. We recorded 7 new escrows in January and 5 so far in February west of Hwy. 1.
These numbers suggest February sales will also be quite weak. March data (from deals reached in February) could improve – compared to Jan./Feb. – if the market picks up even a little in the second half of this month. (We hear of at least 3 deals that are close or pending, but none has posted yet.)
What's the local read? We see busy open houses, but few sales. Kaye Thomas is blunt in this article:
Just so we are all clear.. real estate sales in Manhattan Beach so far this month are.. dismal.. rotten and just plain lousy.In this LA Times story, Leslie Appleton Young, chief economist for the California Assn. of Realtors, says:
I don't think February will see a dramatic change, but there might be a change in March.She means to say that the next report, on February sales, will bite, too, but she's hopeful that this month's activity will be a spark – in a relative sense.
Another piece of the puzzle: supply of homes for sale.
Inventory has now reached 83 SFRs west of Sepulveda, matching exactly the highest total MBC recorded in 9 months of 2007. We had 83 SFRs at the end of June, too, but sales (new escrows) that month totaled 17, and 24 the next month. In those months, absorption beat out the supply increases.
You don't really need MBC to connect the dots, but we'll do it anyway. Higher supply and lower demand will generally lead to lower prices. You'd want to know that that's the outlook whether you're selling, buying or just observing, right?
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