Biggest Discounts (Belated) August Update

I apologize for the tardiness of this post. Unfortunately I did not receive the data until almost the end of the month.

Let’s check in on our stats once again and find out where buyers are currently getting the biggest discounts off asking price. If you are a potential buyer, this will help you to know which neighborhoods may be softer in terms of sale price discounts off list price, and help you know where to look for potential bargains.

In the charts below, we have taken all sales data from last month in the Los Angeles area and sorted it by city. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any areas with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel format (xls).

Here are the top ten areas with the largest overall discount:

The overall discount rate increased slightly from June to July, moving from 3.2% to 3.3%.

Here are the ten areas with the smallest discounts:

In the 108 areas we ranked, the median discount was 1.2%. 35 areas had an average sale price above the average list price.

Here’s the bonus graph, showing the discout off the original list price:

The overall discount off the original list price decreased from June’s 9.0% to 8.5% in July.

Is the area you’re shopping not on either the top 10 or bottom 10? No problem, just download the full rankings in Excel format and hit the “FullSummary” sheet.

Of the 5,874 sales we tracked in the 1-month period, 1,361 homes sold for 5% or more off the asking price, while 955 homes sold for 5% or more above the asking price.

Case-Shiller: Nationwide Markets Simultaneously Bouncing Up

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, plus seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website. For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – June data is released in August).

Here are the basic Case-Shiller stats for the Los Angeles area (which Case-Shiller defines as LA and Orange Counties) as of June:

Sixteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between May and June. Only Las Vegas, Detroit, Seattle, and Charlotte still saw seasonally-adjusted drops month-to-month.

Los Angeles seemed to be approaching a bottom somewhat naturally since late last year, however I was not expecting to see prices actually reach that bottom until later this year or early next year. Given the fact that nearly every city in the country seems to be simultaneously bouncing this spring, I’d say something external to the local area may be behind the recent move.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

It’s quite noticeable in both of the above charts that almost every city we’re tracking seems to have taken a sudden upward turn with the most recent few months of data. Despite the fact that there was a nearly two year spread in when the various markets hit their peak (Boston in September 2005, Seattle in July 2007), nearly every market appears to have turned a sharp corner to the positive after “bottoming” in March or April.

A commenter on my Seattle site made an astute observation about this phenomenon this morning:

Since it is still essentially true that “real estate is local”, what could cause every city to suddenly and simultaneously reach an equilibrium point where prices reversed course?

Answer: it just so happens that the home buyers’ tax credit was enacted with the American Reinvestment act (stimulus package) effective February 17, 2009. March 2009 was the first full month that American home buyers had the tax credit as an incentive. It changed their behavior and made them buy homes. It also expires on December 1, 2009 unless it is extended.

Once again, government policy is impacting asset valuations. Either we’re seeing a lasting nationwide housing bottom marked by an extraordinarily well-timed tax incentive, or a new “bubblet.” Case Shiller won’t tell us which until 2010.

It remains to be seen whether the NAR’s lobbying efforts to get the $8,000 tax credit extended beyond November will be successful. And even if they do convince Congress to extend it, the effect may be largely diminished. The program may have already pulled forward as many sales as it can during its spring and summer run.

Signed, Sealed And Delivered in North Los Angeles

Listing agents in North Los Angeles are using a new tactic to sell homes. Joyti Goundar, our agent who covers North Los Angeles, has seen a lot of competitively priced homes come on the market with agent-only remarks saying they’ll review all offers on some day in future, usually 10-14 days after the listing date.
Here’s how things work according to Joyti:

Interested buyers have to deliver their offer in a sealed envelope to the listing agent. Buyers often have to include a pre-approval letter and their FICO score as well. On judgment day, the listing agent will open the offers; sometimes they counter the top few, but often they’ll counter all offers. In the counter offers, buyers are told to come back with their best and final offer. The listing agent will ask for no appraisal contingency, a shortened inspection period (7 – 10 days rather than the standard 17) and says the seller selects escrow.

Joyti’s Four Tips

If you’re buying in Pasadena, South Pasadena, La Cañada, San Marino or Arcadia you’re more than likely going to run into this kind of listing. If you do, take a look at Joyti’s four tips:

1. Have your agent check the agent only remarks. These deadlines are generally not made public, but your agent can look to see if the listing agent is doing this.
2. Know what are you comfortable paying. If you get beat out by $5K, would you be o.k. with that?
3. Submit offer at the last minute. Have you agent call to find out how many sealed envelopes are in so you have an idea of the competition.
4. Be patient. 2-3 day response time and it’s hard to predict what will happen, there’s no negotiation.

Have you dealt with any situations like this?

The Market Wrap-Up For July

Let’s take at look at some July numbers for Los Angeles County and see how they compare to a year ago.

Single-Family Homes

• 5,810 houses sold in July
• The median sales price was $319,000, down 22% from July 2008

Condos

• 1,670 condos sold in July
• The median sales price was $306,000, down 14% from July 2008

We got these numbers from DQNews.

Dig Deeper Into the Trends

These numbers are for Los Angeles County. To see what’s happening in your neighborhood, check out our stats & trends pages.

This is our first monthly report on the inventory trends in Los Angeles. What numbers would you like to see in our August wrap-up?

Redfin Partner Agents Arrive in Santa Clarita!

Great news for folks in Santa Clarita: Redfin just partnered with four local agents to help our customers buy and sell homes. Check out our coverage area below.

In areas beyond the reach of Redfin agents in Southern California, Redfin partners with experienced, local agents whom we have carefully chosen to uphold our standards of customer service, transparency and experience. If you buy or sell a home with a Redfin partner, he or she will provide you with a 15% commission credit at closing, usually worth $1,000.

Meet Our Santa Clarita Partner Agents

We put our partner agent applicants through the ringer to ensure that our customers will get great service:

• Interviewed in-person by a Redfin market manager
• Completed at least 15 transactions as an agent
• Offered at least three customer references
• Agreed to survey every new client and publish every review
• Paid based on customer satisfaction; removed from the program for bad reviews

	Dee Dee Hubbard Serving Santa Clarita, East Ventura Homes Closed: 87+
	Mike Tagliere Serving Santa Clarita Homes Closed: 25+
	Christine Kulka Serving Santa Clarita Homes Closed: 31+
	Ken Grech Serving Santa Clarita, East Ventura Homes Closed: 300+

Apply to be a Redfin Partner

Are you a real estate agent with a commitment to customer service and transparency? We’d love to meet you. Become a Redfin partner.

South Bay Sale to List Ratios

Last week we held our monthly home buying class in Torrance with a focus on what’s going on in the South Bay. I had written this post then and totally spaced on posting it. Here it is!

You can find the slides online. But some of the highlights include…

The most recent Case-Shiller data for LA.

Which we recently blogged about, Case-Shiller: Los Angeles Price Drops Continue Moderation.

Sale versus list data for single family homes.

The sale to list for LA county SFH is 99%.

Data range: 90-days from July-24. Source: SoCalMLS

Sale versus list data for single family real estate owned (REO) homes.

The sale to list for LA county for SFH REOs is 102%.

Data range: 90-days from July-24. Source: SoCalMLS

Torrance

• Median price is up 25.9% year over year to $749,000
• Number of homes for sale is down 48.4% year over year
• June ‘09 inventory would take 3 months to sell if there were no new listings. This is down from 13 months in June ‘08.

Long Beach

• Median price is down 14.7% year over year to $363,450
• Number of homes for sale is down 40.5% year over year
• June ‘09 inventory would take 2 months to sell if there were no new listings. This is down from 6 months in June ‘08.

Carson

• Median price is down -27.4% year over year to $277,000
• Number of homes for sale is down -59.9% year over year
• June ‘09 inventory would take 2 months to sell if there were no new listings. This is down from 12 months in June ‘08.

Case-Shiller: Los Angeles Price Drops Continue Moderation

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, plus seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website. For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – May data is released in July).

Before we dig into the data, I’d like to make a brief mention of an excellent post over at the economics website Calculated Risk: A Few Comments on Housing Reports. Quoting from his post:

…the Case-Shiller report today really bothered me. To be more accurate, the reporting on the Case-Shiller report bothers me. As I mentioned earlier today, there is a strong seasonal component to house prices, and although the seasonally adjusted Case-Shiller index was down (Case-Shiller was reported as up by the media) – I don’t think the seasonal factor accurately captures the recent swings in the NSA data.

Keep in mind that the Case-Shiller data that most of the media (including this blog) are reporting on is usually the raw index data. As CR mentioned, the housing market is a very seasonal beast, so it’s difficult to draw any meaningful conclusions from month-to-month changes, unless they are far outside the norm for that time of year. This is why we consistently report the year-to-year change in our summary.

Now that we’ve got that out of the way, here are the basic Case-Shiller stats for the Los Angeles area (which Case-Shiller defines as LA and Orange Counties) as of May:

May 2009
Month to Month: Down 0.1% (raw)
Month to Month Down 0.9% (seasonally adjusted)
Year to Year: Down 19.8%
Change from Peak: Down 41.9% in 32 months

The following chart shows the Los Angeles HPI scaled such that the September 2006 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Los Angeles HPI was at or lower than it was in the latest data (July 2003).

(All of the charts below are based on the non-seasonally-adjusted Case-Shiller HPI data.)

Home prices in Los Angeles continued to decrease in May, just barely. Of course, spring is usually a period of relatively strong home price gains. That said, the rate of YOY declines has been dropping since November’s data, so we’re definitely continuing on a trend of moderating declines.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare Los Angeles’ performance to other areas across the country:

And here’s our final chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

It’s also worth keeping in mind that in addition to being from a usually-strong time of year, these numbers represent home sales that closed during the frenzy of interest rates in the fours and the debut of the $8,000 first-time homebuyer tax credit. In my opinion, we won’t really know if home price declines are mostly over until we see the data from October / November. And that advice is worth exactly what you paid for it ;^)

Biggest Discounts July Update

Let’s check in on our stats once again and find out where buyers are currently getting the biggest discounts off asking price. If you are a potential buyer, this will help you to know which neighborhoods may be softer in terms of sale price discounts off list price, and help you know where to look for potential bargains.

In the charts below, we have taken all sales data from last month in Los Angeles County and sorted it by city/town. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any areas with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel format (xls).

Here are the top ten areas with the largest overall discount:

The overall discount rate dipped slightly from May to June, moving from 3.6% to 3.2%. Beverly Hills moved up from #2 to #1 this month, while last month’s #1-ranked Malibu dropped to #3.

Here are the ten areas with the smallest discounts:

Of the 110 areas we ranked, thirty-three came in in with an average sale price above the average list price.

Here’s an added bonus. The following chart shows the top ten areas with the largest overall discount from the original list price, instead of the final list price:

Beverly Hills and Malibu switch places in discounts off the original list price. Across the entire LA area, buyers are getting a 9% discount on average off the original list price.

Is the area you’re shopping not on either the top 10 or bottom 10? No problem, just download the full rankings in Excel format and hit the “FullSummary” sheet.

Of the 5,360 sales we tracked in the 1-month period, 434 homes (8%) sold for 10% or more off the asking price, while 835 homes sold for 5% or more above the asking price.

Redfin Partner Agents Arrive in the Coachella Valley!

Great news for folks in the great Palm Desert area: Redfin just partnered with local agents in East Coachella Valley and West Coachella Valley to help our customers buy and sell homes. Check out our coverage area below. West Coachella is in yellow, East Coachella in blue.

In areas beyond the reach of Redfin agents in Southern California, Redfin partners with experienced, local agents whom we have carefully chosen to uphold our standards of customer service, transparency and experience. If you buy or sell a home with a Redfin partner, he or she will provide you with a 15% commission credit at closing, usually worth $1,000.

Meet Our Coachella Valley Agents

We put our partner agent applicants through the ringer to ensure that our customers will get great service:

• Interviewed in-person by a Redfin market manager
• Completed at least 15 transactions as an agent
• Offered at least three customer references
• Agreed to survey every new client and publish every review
• Paid based on customer satisfaction; removed from the program for bad reviews

	Jeff Blacker Serving Palm Springs Area Homes Closed: 50+
	Ron Jesser Serving Palm Springs Area Homes Closed: 200+
	TJ McCaa Serving La Quinta, Palm Desert, Rancho Mirage, Indio Homes Closed: 75+
	Leonardo Montenegro Serving Coachella Valley Homes Closed: 32+
	Mark Weissmann Serving Coachella Valley Homes Closed: 35+

Apply to be a Redfin Partner

Are you a real estate agent with a commitment to customer service and transparency? We’d love to meet you. Become a Redfin partner.

57% Of Offers Are On Homes With Multiple Bids

In June, our Southern California agents presented 140 offers to listing agents and 80 of those, or 57%, were on homes with at least one other offer, down from 65% in May.

Joyti Goundar, one of our all-star agents in Southern California worked on 39 offers in June and 30 of them were on listings with multiple offers. “Things are so competitive right now, many listings are getting 5 – 10 offers so you have to put your best foot forward and make a strong offer,” says Joyti.

One of Joyti’s clients recently bought a home in Pasadena that had 16 other offers. To show they were serious about buying the home, her clients’ offer included a 40% down payment, 3% earnest money, no appraisal contingency and an inspection contingency reduced from 17 to 10 days.

However, sometimes putting their best foot forward isn’t enough. Another one of Joyti’s clients made an offer over listing price, with a 25% down payment and an inspection contingency reduced from 17 to 10 days. The sellers rejected the offer. There were 18 offers and the sellers were countering with the top nine.

A lot of this competition is due to families with school-aged kids trying to buy in between school years. “The summer market is always busy because parents want to buy and get settled before the school year begins,” says Joyti.

Where are you seeing listings with multiple offers?