We've said here before that median price is just one of many awful measures of real estate prices and activity. Still, it's a common measure and most people can wrap their minds around it. (It never hurts to remind folks that a median is not an "average" [mean], but the one price at which half of all sales recorded are above that number, and half are below.)
In comments here at MBC, someone posted the following median price stats for Q1 2006-2008, drawn from the MLS:
2006 - $1,625,000These statistics were said to reflect all sales in MB in these 3 comparative periods – which means some sales we don't cover here, i.e., THs/condos and sales East of Sepulveda. And, obviously, Q1 2008 hasn't quite finished yet, so there's some chance for that number to change.
2007 - $1,655,000
2008 - $1,832,000
We were inspired to check on the number of sales in our subject region, and the median price for those, so we compiled the sales to date in a one-page spreadsheet. (Click to download the PDF.) It will be little work to re-publish that once the quarter's over, so we'll let you know when that's up and ready.
What did we find?
There were 29 sales in our subject region in this period. (We're dealing with closed sales; these were deals made in December 2007-Feb. 2008, mostly.) That's a pretty small sample, so we should be careful what kinds of conclusions we draw.
The sales prices went from a low of $772k to a high of $5.6m – quite a range. The median for this sample is pretty solid at $1.950m – solid, because the next sale below it was also $1.950m and the next above was $1.999m. You wouldn't expect too much movement with 5 more days' worth of sales coming in.
There's more to look at here than just median prices drawn from small samples.
Look at the price ranges of these sales, and they fall this way:
- 8 sales below $1.5m
- 12 sales between $1.5m-$2.5m
- 9 sales above $2.5m
Alas, no. Take this small sample of 29 sales and compare it to a somewhat larger sample of 91 current active SFR listings in our subject region, and the numbers match up:
- 26% of inventory is priced below $1.5m; 28% of sales were in that range;
- 40% of inventory is priced between $1.5m-$2.5m; 41% of sales were in that range; and
- 34% of inventory is priced above $2.5m; 31% of sales were in that range.
We have the general sense from tracking market activity over the past year that inventory below $1.5m is starting to bloat for the first time in a while – mostly in the Tree Section. And we, like many, have seen the proliferation of sales at the high end as a sign of a significant bifurcation in the local market – luxury homes just keep selling, while more modest (and marginal) offerings are stalling out.
We think both trends are real, but at the same time we'll concede that this data snapshot doesn't support either claim. We're eager to hear your thoughts on what this quarter's sales (to date) say to you.
47 comments:
The quarterly numbers for Jan1 til now include sales of condominums and townhomes (40 total so far in 2008) - only those reported on the MLS, all 6 areas of MB. Still a small number but significantly better than any single month's data.
11:28 - Thanks for mentioning that the total was 40 sales.
I did try to highlight the fact that the median reported in comments was broader than the 29 sales I was accounting for...
We're eager to hear your thoughts on what this quarter's sales (to date) say to you.
To me they say prices seem to be holding pretty steady in MB; they are at least not dropping like the predicted (for over a year now) rock.
At any rate, I foresee prevarication and equivocation in the comments, and heads exploding all around-- and poor huggy, not here to appreciate it.
The death of Manhattan Beach real estate has been greatly exagerated. Why am I not surprised.
opps, I mean "exaggerated", where's my editor when I need her.
Declaring the relative strength of any asset these days, let alone one that has appreciated an unusually large percentage under the financial conditions that prevailed from 2001-2006, is probably a dangerous thing to do.
Financial conditions have changed greatly and as many economists have said recently, both bears and bulls alike, our overall economy is in the 3 inning of some very significant events and there will be a pitching change very shortly.
Looks to me like prices are going up? It's not worth spending time discussing since this is a small sample and there are so many ways to slice and dice the RE data.
It is interesting though that this small set of data (Q1 median for the last 3 years) shows prices going up.
MB did a nice job with the analytics and assesment of data. I would be interested in the category breakdown that was performed on the sales (< 1.5, 1.5-2.5, >2.5) for the past 2 years to see how that measures up and if indeed this is an apples to apples YOY look.
I make the nomination that our energetic editor recruits ad revenue and hires a statitician to crunch some numbers for us!
MB Watcher - how od the numbers paly out when you push the top band to start at $3M or $4M or $5M. We have seen the best of the best sales quickly and because of scarcity and big money (huge) is not effected by anything. I think the see the effect of highest end homes pulling up the data we need to look at the top end being higher than $2.5M.
Also - we know there are plently mark downs for original listing price and down from the past year, that should show in the data ?
923 1st is a bogus re-list (canceled just the other day at the same price) and 869 3rd took lots of time off before coming back now. That one started at $3.995m last year and is now at $3.750m.
OK _ sorry for the above (9:28a)– no more typing from my not so smart type cell phone… Retyped:
MB Watcher - how do the numbers play out when you push the top price band to start at $3M or $4M or $5M. We have seen the best of the best properties sell quickly - because they are scarce and big money (huge) is not affected by anything. I would like to see the effect of highest end homes on the data, that is we need to look at the top end being higher than $2.5M.
Also - we KNOW there are plenty mark downs from original listing price and homes selling less than prior years, so to believe in the data there should be indications of reality?
With small sets of data like this you have to come up with an equation that accounts for (at least) the difference in square feet and lot sizes. It must be brought down to average (not median) $/sf at the very minimum. Without that, the numbers mean nothing because there is just too much noise in such small datasets.
Price per square foot means next to nothing when evaluated across the entire inventory. A 2008 home will not be in line with one built in 1950, or even one from 1980. Price per square foot is most relevant in tract homes where the houses AND lot characteristics are the same. We don't have that here.
Question for our source for the 40 sales and 2006-08 medians – how many of those 40 were SFRs? You had said those were all sales; so we just need to deduct condos/THs. Thanks.
Also, I will try to re-count the numbers at different price ranges as suggested, a bit later.
Overall I recognize that this median doesn't say too much standing alone, and we don't have our own trend data to compare against (as the original source provided for all sales). I was struck by the fact that sales match inventory, at least by those first #'s I used.
New sales keep posting daily - now up to 45 for the quarter, 43 single family and 2 TH. Median is now $1,840,000 for all 45, according to MLS.
Sales volume is down over 50% from prior 2 years.
12:48pm - Give it a rest. All you are going to do is force anon7 and rookie al bundy hobbs to cut and paste some bloomberg or nyt article to justify their inactions!!! Hoot hoot!!! Damn, there goes that boat again!
MBW you are 100% right - the high end homes are moving up in price and the low end homes moving down
i would say that the walk streets west of highland and near the pier keep moving up - even in first quarter of 08
do you agree with the below post ?
______
people seem to forget that there is a huge valuation gap between the pier area and the rest of the west of highland walk streets
i would put the following on the table - west of highland walk streets 20 blocks north of the pier cost $700 a square foot for land value.
west of highland walk streets within four blocks of the pier cost $1200 a square foot for land value
west of highland is not a neighborhood - you have to know WHERE west of highland you are talking.
The pain in the economy is not yet being felt in MB. It will be. (Unless MB residents are privy to some magic investment and business secret unavailable to others than homeowners in MB).
Who is going to be left to buy when the music stops? Anyone who bought in the last 5 years and is not intending to settle in MB should sell while the market is still holding up.
I am neither a bull nor a bear,
i respect all the posters here.
my gut tells me that if you are an investor that bought in MB as an investment and you can cash out now without paying taxes, now is a good time to do so. i personally would not roll the dice on the next five years. But caveat emptor i guess.
if your kids are enrolled in the schools here, selling is just not an option no matter what you think will happen with prices.
But come on, who on this board thinks the current 1200 a square foot for land near the pier is sustainable ?
I'm going off MBW's 3/15 update as the focal point of this post:
Since Jan 1, 2008, closed sales:
Hill Section -
4 sales, 2 were brand new homes.
Sand Section -
7 sales, 1 new home, 5 remodels.
Tree Section -
12 sales, 3 new, 6 remodels, 3 dated.
So, out of 23 sales from Jan 1 to March 15, 6 were brand new and 11 were remodels. It should be pretty easy to understand where I'm going... REMODELS COST MONEY and as a result, are typically worth more when they sell. NEW HOMES ARE BOUGHT AS TEAR DOWNS AND SIGNIFICANTLY MARKED UP WHEN THEY SELL. That is the primary driver as to why median sales prices have increased in MB. It simply means that a more affluent person is buying these homes and that homes are less affordable. It doesn't mean that people are making money.
For example, 2612 Poinsetta. Builder paid $1.2mm for lot in 05, built an entirely new home, and sold for $2.2mm. 911 Duncan - Builder paid $950k in 05, sold for $3.2mm. 648 35th - Builder paid $1.33 in 06, sold for close to $2.1mm. Ugh, do you think this has an impact on median stats? Duncan's sale price more than tripled and that impacts median stats. However, all it means is a more wealthy person moved into the home but in reality, that particular sale doesn't necessarily tell anybody about the profit that somebody made. How about the various remodels. If you buy something for $2mm, put $200k into it and it sells later for $2.2mm, does that really demonstrate that the seller is making money? I don't think so, but it certainly impacts median stats.
Let's take the extreme measure. Pick a street or section. If all the homes in the tree section that were older than 30 years were bought as lot sales at $1mm each, torn down, rebuilt as brand new homes, and sold for $2mm, the median sales price would jump by $1mm. It doesn't say that the owners of those homes made $1mm, it simply says they sold for $1mm more than where the lot was purchased. Some of the builders would make money, some would not. Bottom line, it simply tells you that people with more money moved in.
Many, not all, bulls will argue that the median stats mean something. I disagree. Clearly, with the amount of new homes and remodels that dominate the closed sales, this obviously impacts median prices. Let's ignore this stat once and for all.
Then why do the bears rush in and post a median sale statistic like Feb sale prices in MB are 7% lower than last year (based on 13 sales, no less)? You bears are clueless, bundy. You only cite data that supports your cause and as soon as someone cites the same metric to debunk your bearishness, you cry foul.
You're a joke, the lot of you. And, fyi, the number of SFR sales between 1/1 and 3/15 was 37 (I just checked the MLS 2 minutes ago). But, of course, since you're relying on this blog for your RE info, I would expect your data (and your knowledge of realestate) to be woefully incomplete.
bears - why do you think that walk streets near the pier sell for 1200 dollars a square foot for lot value -
just explain why, today, people come in and buy that land for 1200 a square foot
what is going on - how does this fit with your pessimistic world view ?
People who live in the south end know that you don't want to be near the pier because of noise and congestion. The best walk streets west of highland start at 9th, then skip 8th because of the outhouse on the beach, then 7th through 2nd. I think 3rd, 4th, 6th and 7th are the best. 5th and 9th are walkstreets only in the 100 block west of Highland. Having lived in the area for 15 or so years I have only seen interest in the area and prices per sq ft increase, especially over the last 3 years. Unless someone figures out how to make more land down here, there's a tsumami, or some other catastrophe, I don't see interest in the area or prices declining.
2:28--As they say at UCLA right now, stuff it.
Hey 6:22 - Sounds like they didn't teach debate at that trade school you went to. What was the name of it again, Meatpacker U?
You said I only post data that supports my cause? Duh... that's how a debate works. I try to persuade people that I'm right. If I post data that supports your cause, it does me no good. You have to be a realtor(sorry, that was cheap).
By the way, I noticed you didn't try to poke holes in my theory, which I guess means you agree with it, or was it just easier for that meatpacker brain of yours to say all of the bears are jokes.
As for the number of home sales between Jan and 3/15 - If that is all you have to come back to me on, well, they teach debate at MBMS right now and you'd fit right in with the 7th and 8th graders.
I think the reality is that there are a lot of people with a ton of money that are moving to the South Bay. I have been looking to buy in MB for 8 months, The prices have finally come down but most of the inventory is crap. The only house I thought was built well was 2100 Flournoy and it never came down to the 2.4 this blogs readers were predicting (and yes the neighbor house had quite a view). Face it schools suck in LA and your choices for good schools and the coast are Malibu or MB. Big $$$$ either way.
And as much as I wish the prices down some rich SOB keeps gobbling them up. So unless you really think the world is going to end, the next 6 months are probably the best window for decent mortgage rates and depressed pricing.
Let's concede your point - the best walk streets are the ones south of the pier and west of highland
i still want to hear from the bears - there are people coming in and plunking down 1200 bucks a square foot for land on those streets
that is 3.6 million bucks for a 3000 square foot piece of land
when someone plunks that kind of money down, q one 08, how does that square with the bear argument on the high end ?
I will grant the bears that they are right and many parts of MB away from the ocean have come down, but when the bears claim that the high end has come down, where the heck is the evidence -
seems like the land is still moving at 1200 per
2:28- Who is going to be left to buy when the music stops? Anyone who bought in the last 5 years and is not intending to settle in MB should sell while the market is still holding up.
What an idiot comment. I don't even think the bears believe prices will drop below 2003 levels. That would be a 45+% drop from the peak. Granted some homes are down 5% over the last year or so.
Hoot hoot!!! What's that sound? Oh yea, it's bundy natural rookie hobbs missing the boat (again)!
natural said:
"Sounds like they didn't teach debate at that trade school you went to. What was the name of it again, Meatpacker U?"
sounds like MU is a pretty good school. somehow, he managed to buy a house here. maybe worthless u should have focused less on debate school and more on making money so you wouldn't have to rent.
6:22 here. Wow, you really got me, bundy/natural. I am covered in shame after your incisive retort. Woe is me. I guess I'll just have to retire in disgrace to my master suite WHICH I OWN, by the way.
Since you appear to have failed Logic 101, I'll just point out that since there were significantly more sales than you are aware of, how does that square with your view of the proportion of new home/remodel sales? And since every year in MB there are sales of remodels and new homes that were once teardowns, how does that advance your argument that somehow the median sale price is skewed this year and this year alone because of those sales? Rhetorical questions, the answer is the same - it doesn't (I knew you'd need help so I answered them for you).
Median sale price is a somewhat useful tool for showing relative strength of a particular micro-market but only if you have enough data. We're up to 45 sales this quarter (43 SFRs) - that may or may not be statistically significant but it's a damn sight better than the bears who flock here with their monthly sales stats whenever those stats show a dip in median sale price.
Now go back to your Bloomberg and cut-and-paste an article on CDOs - I can use it as a sleep-aid.
MBC,
I think that you should run a contest for the most silly real estate flyer. Here, and I thought that the slow market had eliminated that genre (My favorites used to read "I have a buyer for your lot, no commission, no inspections; this is not a solicitation if the property is already listed" - not an solicitation, eh?
However, today, I received a good one from some kid from one of the big brokers in town who looked all of about 12. He addressed it to "Dear Future Homeowner" - Oh, really? - I was a homeowner when you were in diapers. It goes on to state something like "Houses are not for sale - they are on sale". - Wow, I bet you will score high on the reading comprehension section when you take your SATs. And, you read the newspapers.
Who writes this drivel for these sales agents?
8:10pm; look at it his way. if you couldnt buy here, youd hope for a price decrease (or do everything in your power to convince your spouse youre not as dumb as she thinks!). show pity on him. give him credit, however, for his ctrl c, ctrl p capabilities. that was year 2 at worthless u!
Justme said, "I was a homeowner when you were in diapers." And, now, to complete the circle, I'm guessing you're in diapers again.
To Justme; I know who you're talking about and his father makes him do it. Couldn't hack it on his own so he came home to daddy.
Hey JustMe (dumbass):
"this is not a solicitation if the property is already listed" is a required disclosure. Get back to cleaning your dentures.
Oh no, JustMe and 8:33, you're not talking about... one of two brothers? Recently profiled in the BR?
No, I'm thinking a father/son combo here.
(Unless MB residents are privy to some magic investment and business secret unavailable to others than homeowners in MB).
Psst - MB residents are privy to a business secret. However, it is available to non-homeowners who care to listen. It's been repeated many, many times on this board. I actually believe Huggy was being altruistic in his own way by trying to educate the COTC'ers. So in his honor I will share the secret with all who will listen. Ready? Here goes - "low supply and high demand drives prices up." (I feel like a magician that just showed the world how to saw a lady in half.)
The bears were giddy when supply 'skyrocketed' to 84 homes. Many, many times that number of families would love to live in MB - many living in neighboring cities.
Renters new to MB (welcome) would benefit from the perspective of some long time residents and, god forbid, an experienced realtor and less from fear mongering, cut and pasters.
bundy, regarding your median theory...I don't really agree with your analysis, but I am not going to waste anyone's time arguing your whole breakdown. I just want to point out that most lot sales do not hit the MLS and most of the median statistics posted here come from the MLS so they aren't accounting for the first sale, only the 2nd.
9:15 - Excellent point. I can't name a single new Tree section home where the original lot sale was posted on the MLS. But don't worry. Bundy's been here renting for nine months so, like all MB homeowner wannabes, he's got it all figured out. Brace yourself for the next round of cut-and-paste.
blah blah blah
you are in idiot if you think MB is not going to take solid hits in value
and...you are an idiot if you think the qualities of MB won't prevent or lessen inland empire-like deep price cuts.
It's coming down some, but not as much as it will in the valley. Probably in line with SM.
Bye, I'm done with this blog. There's nothing new to discuss. The frequency of posts from MB Watcher don't really shed new light and the comments section has become painful to read. Bye. Bash me all you want because I won't see it, so my feelings won't be hurt.
Gee, I don't want to do anything wrong here, but is it ok to wish 9:56 "Goodbye and good riddance"?
Wow, "anonymous" is now gone, never to return again. Wait a minute, I am called "anonymous" too. How did he get my handle? Oh, I get it, nobody is identifiable, or more importantly, accountable here. Not even the blogger can be truly confronted when an error is made, which is all too often. And don't give me some bull shit about being able to send an e-mail. When you hang a Realtor out to dry, the last thing he is going to do to get you to correct it is send an e-mail to your anonymous address. You'll probably post THAT! Of course, for all I know, you are one of the Realtors you criticize. You'll say it isn't true, but how will we know. Meanwhile, some schmuck will come here begging for important advice about the biggest and most significant decision of his life, and get scores of opinions from some poster called, "anonymous" or "mookie."
It's time to remove the anonymity from this blog. Its creditbility would sky rocket, but as of now, it's just an 8th grade gossip column.
Or in your case, 6th grade.
In diapers again? Hardly. I just started out buying while really young. Still, it was a funny retort.
Actually, I did not mean to single out "baby broker" (notice, I neither mentioned his name nor his company) because his was only one of the many stupid flyers that litter my mailbox and lawn every week. Why do people send out this junk. It does not work. Anyone sufficiently successful to live here (owner or "renter") can figure out where to find the best help when it comes time to buy or sell. The last people we would ever consider would be these mass marketing bozos.
Next Poll...
What level of anonymity should be allowed in comments?
Currently, these comments are doomed to be retarded...
- Controversial topic which involves money and politics.
- No comment threading
- Lots of anonymity ( http://www.penny-arcade.com/docs/internetdickwad.jpg )
- Finally, there's this effect ( http://xkcd.com/386/ )
Here is a plausible explanation for the bifurcation of prices mentioned by MBW -- a coupling of two trends; a lag and a drop:
The "lag" here refers to the lag in building out a property -- which is generally 12+ months.
There is clearly a "drop" in the housing market already underway in MB -- lots are selling for substantially less today then they were two years ago. That is a documentable trend -- the low end is without question dropping.
Couple the "lag" with this "drop" and one has a reasonable explanation for the current market bifurcation.
High end homes not coming down in prices because they were built on more expensive lots bought over an year ago -- and price flexibility is severely curtailed at least in part by the cost of the lot.
Remember that Steve Legare ad:
http://mbcon.blogspot.com/2008/01/builders-take.html
A corollary of this observation is this: builders who don't sell their ware will start feeling the pressure of newer homes coming to market shortly which were built on lots bought at lower prices -- which will likely be priced more competitively.
As such, the drop and lag explanation can account for the bifurcation as well as enabling a prediction; that the newer homes will start coming down in price, reflecting the dropping lot values, albeit with a lag.
Give it an year for these drops at the high end to start manifesting.
Anonymous 11:04 said:
It's time to remove the anonymity from this blog. Its creditbility would sky rocket, but as of now, it's just an 8th grade gossip column.
Ok - you first. Put your money where your mouth is. Don't bring it up unless you're willing to do it yourself. jack ass.
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