Home sales rose slightly and prices slid in October compared with the prior month as the Los Angeles real estate market searched for a bottom now that federal home buying tax credits have expired.
The median price fell 3.6 percent versus September to $346,000. It was the first drop on a month-to-month basis since the credits expired in April.
At the same time, sales rose 1.6 percent to 3,760 homes.
However, Paul Habibi, a professor of real estate at the UCLA Anderson School of Management, considers the market to be still artificially stimulated by the government, including higher Federal Housing Administration mortgage loan guarantees.
“The government stimuluses, in a sense, have created this artificial bridge under housing prices so that they can’t reach their equilibrium,” said Habibi. “A lot of what we’re seeing is bouncing along the bottom.”
Year over year, the median home price countywide was up 2 percent, while sales were off 14 percent.
As indication that the market has yet to reach an equilibrium, the supply in Los Angeles County rose to 6.2 months, a significant jump from the 4.3 months of inventory tallied in August. The number has now slightly crept ahead of the five- to six-month level considered healthy.
A quick look at sales prices vs. original list prices shows that Westside properties are selling around 90-93% of their list price which is still below the typical 95 to 97% range.
Sources: MLS Data and Los Angeles Business Journal