The Housing Chronicles Blog: Update on Los Angeles/Ventura County new home market

Friday, March 20, 2009

Update on Los Angeles/Ventura County new home market

I recently finished updating a Los Angeles/Ventura County Market Monitor for Hanley Wood Market Intelligence, which is now available online here or by emailing

Want to see an entire sample of a Market Monitor report? Click here.

Following is an abridged summary from the beginning of the updated report:

With consumer confidence tanking, credit tight for all but those with the highest credit scores and foreclosures continuing to dominate home sales, the Los Angeles-Ventura County experienced a decline of 43% in its rate of annualized new home sales during the fourth quarter of 2008. In fact, the 4,157 sales reported represent yet another new trough over the last 20+ years.

In Los Angeles County alone, new home sales fell to 443 units during the fourth quarter, or down by 51% versus the same quarter of 2007. For all of 2008, new home sales in Los Angeles County fell by 43%, while per-project absorption rates declined to just 1.3 units per month. In Ventura County, quarterly sales fell by an even sharper 76% to 38 homes, while annual sales fell by 46% to 526 units and an average absorption rate of 1.4 sales per month.

As noted last quarter, attached home sales are now performing better, although ‘better’ is relative considering declines of 63% from last year in Ventura County and by 46% in Los Angeles. In both counties and both sectors, builders are looking at average absorption rates of about .5 units per month...

For existing homes, declining prices and more foreclosures helped send sales figures up by nearly 14% from last quarter to 63,447 homes, although that level is still down by about 3% from a year ago. With foreclosures up by 23% between the second and third quarters of 2008, there remains considerable pressure on median prices, which fell by 10% during the quarter to $340,000.

The good news for buyers is that affordability ratios are back up to 36%, or even higher than the average noted over the last 20 years.
At the same time, affordability ratios for new homes are about ten percentage points lower. Given the sharp drop in sales and absorption, builders continue to struggle against tight credit and heavily discounted foreclosures. Even with new home building at a virtual standstill, although the 14,848 units reported as unsold inventory has declined from last quarter – both released to the marketplace and in future phases – the inventory timeline has increased to 43 due to the continued decline in sales rates.

Fortunately, the level of standing inventory includes just 2,111 units and a timeline of 6.1 months.
For the end of 2009, we are projecting the combined Los Angeles-Ventura median detached sales price to approach $400,000, with median value ratios at $130 per square foot. Total new home sales volume will fall to 3,050 units as builders continue to compete against rising foreclosures.

Want to buy the entire 132-page report? Click here to order or contact local Regional Director Greg Doyle at

I'll also be at the University of Redlands on May19th for the next Beacon Economics Inland Empire Forecast Conference, for which Hanley Wood is a sponsor. Want to register for that or find out more? Click here.

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