Sunday, May 24, 2009

Which Westside Areas Have Bloated Inventories?

As we head into the summer selling season, it's important to know which areas have the most housing inventory. This is easily calculated by taking the number of homes for sale and dividing it by the number of homes sold in a month. The resulting number, gives you the total number of months it would take, to clear the housing inventory at the current sales rate. A housing market at equilibrium generally has 5 - 7 months of housing inventory. Anything over 5-7 months, is considered excessive and causes price declines due to over supply. Looking at the current number of homes listed for sale by Redfin, dividing them by the total number of April sales released by Dataquick, results in the number months of housing inventory. Below, are the areas having the greatest imbalance and are ripe for price declines.

Looking at Houses first we find:


Culver City 90232
(12) for sale / (0) sold = (??) months of inventory

Santa Monica 90404
(8) for sale / (0) sold = (??) months of inventory

Malibu 90265
(342) for sale / (9) sales = (38.0) months of inventory

Westwood 90024
(49) for sale / (2) sales = (24.5) months of inventory

Beverly Hills 90210
(296) for sale / (15) sales = (19.7) months of inventory

Bel Air 90067
(106) for sale / (5) sales = (21.2) months of inventory

Venice 90291
(124) for sale / (7) sales = (17.7) months of inventory

West Hollywood 90069
(144) for sale / (9) sales = (16.0) months of inventory

Brentwood 90049
(261) for sale / (18) sales = (14.5) months of inventory

Santa Monica 90405
(56) for sale / (4) sales = (14.0) months of inventory

Pacific Palisades 90272
(192) for sale / (14) sales = (13.7) months of inventory

Marina del Rey 90292
(44) for sale / (4) sales = (11) months of inventory


Now let's look at Condos:


Santa Monica 90402
(33) for sale / (0) sold = (??) months of inventory

Culver City 90232
(13) for sale / (0) sold = (??) months of inventory

Century City 90077
(83) for sale / (2) sales = (41.5) months of inventory

Beverly Hills 90210
(64) for sale / (2) sales = (32.0) months of inventory

West Hollywood 90069
(167) for sale / (8) sales = (20.9) months of inventory

Marina del Rey 90292
(172) for sale / (10) sales = (17.2) months of inventory

Venice 90291
(34) for sale / (2) sales = (17.0) months of inventory

Mar Vista 90066
(79) for sale / (5) sales = (15.8) months of inventory

Westwood 90024
(202) for sale / (14) for sales = (14.4) months of inventory

Santa Monica 90405
(42) for sale / (3) sales = (14.0) months of inventory


And just for good measure, some Houses in the Southbay:


Playa del Rey 90293
(30) for sale / (1) sale = (30.0) months of inventory

Hermosa Beach 90245
(76) for sale / (4) sales = (19.0) months of inventory

Rancho Palos Verdes 90274
(243) for sale / (20) sales = (12.1) months of inventory

Manhattan Beach 90266
(206) for sale / (23) sales = (9.0) months of inventory


With more homes bound to hit the market during summer, how many sellers will need to sell? With many homeowners underwater and Alt-A/Option ARMs looming, the end of summer should be the beginning of major price cuts.

10 comments:

Anonymous said...

A lot of your sales numbers do not match up with melissadata, and in each case where they do not match, yours are lower. Is this a failing of dataquick or a bias towards showing inventories to be higher than they really are?

latesummer2009 said...

Melissa Data lumps house and condo sales together, whereas Dataquick does not. In this case it's best to split them out when figuring market inventory.

It's not necessary to be biased, the numbers speak for themselves. Unlike being a REALTOR.....

Anonymous said...

i have been watching/looking at homes in 90291 - venice at the $750,000 - 800,000 range, and 5 of 6 have gone Inactive in the last week...i don't think they're taken off the market, i think we're seeing a little sales spike.

Anonymous said...

I was keeping an eye on a house in Westwood; not to buy, just to see who would pay the ridiculous asking price - a little over $1Mil for an 1800 or so sq ft house built in 1932, south of Wilshire. Last sale was under $450K in 1997... and that was probably a bit overpriced.
The realtor sign has been showing a "sold" shingle for the last 2 weeks, but the latest sale (if there has been one)doesn't show in any of the usual places.
I don't know if this is a real sale or if the realtor is trying to save face after failing to sell the place in over 90 days, but I do know that homes and condos in the 90024 zip are selling at a glacial pace.

-Frank

Anonymous said...

Westwood is super cheap compared to some other neighborhoods

1800 sq foot houses North of Montana sell for 1.8 million

1800 sq foot houses in Westwood south of Wilshire sell for half as much - 900 thousand

clearly people value the two neighborhoods differently

Anonymous said...

We are waiting and hoping that prices come down more on the westside...would love to buy when/if homes are affordable, but affordable homes in santa monica and venice are snapped right up. and unfortunately, articles like this come out and get us back in the mentality of "got to buy now before I'm priced out"

http://www.reuters.com/article/email/idUSN2754905920090527

latesummer2009 said...

It's a tale of two cities now. Foreclosure areas such as the Inland Empire are fueling the market, whereas the Westside is stagnating due to higher prices. Foreclosures often are all cash deals, where buying on the Westside includes a loan. That's a huge difference today, as opposed to before, when anyone with a pulse could get a loan.

Increasing inventory is the key to pricing. Especially in the Jumbo Arena over $750,000.

Anonymous said...

All of this is true
but it doesn't change the fact that willing buyers today are willing to buy north of montana for TWICE the price they are willing to buy in westwood

let's say we agree with the bears and see prices falling 50% from here -

will the two to one price gap between the two neighborhoods be maintained

Anonymous said...

I live in the 90277 and have seen a couple attempts to flip. 208 S Juanita Ave, 90277 was sold a month back for 650K and they put it back on the market for 739K. 911 Emerald st, 90277 was sold several months back for 431K and now is on the market for 569K.
Anything in the 500K ~ 650K area seems to be selling with the current low rates. I have watched all this priced inventory get sold in the South Bay with in the past few months (90503, 90505, 90277, 90278)

Anonymous said...
This comment has been removed by a blog administrator.