2008: The Year in Los Angeles Condos

2008 was not a pretty year for condos in Los Angeles.

It wasn't a pretty year for real estate in Los Angeles in general. But condos were hit especially hard. Among the many reasons for this, two loomed large. One, recent years saw a boom in condo building, many which were just coming available in 2007 and 2008. Two, the ideal buyers for many of these condos would have been buyers with lesser incomes and lesser downpayments -- a market which evaporated when the credit crisis hit in late 2007.

In many prime areas of Los Angeles, condo prices were still holding relatively strong in the early part of 2007, but then dropped once the loan problems hit. Those drops in prices continued throughout 2008, and took another big hit at the end of this year when the rest of the U.S. economy collapsed.

Overall, condos in prime Los Angeles areas* were selling on average at $583 per square foot in the second quarter of 2007. But that number has fallen to $485 per square foot in the fourth quarter of 2008, according to sales reported in the MLS.**

This pattern was true for most neighborhoods. But some neighborhoods were hit harder than others.

I analyzed condo sale prices per square foot in some of Los Angeles' best neighborhoods. I looked at them on a quarterly basis because I think it makes no sense to look at monthly pricing trends. It's too short of a time period to gauge any meaningful changes when the average escrow lasts a month.

The areas that held their prices the best were 90048 (Beverly Grove), 90067 (Century City), 90404 (Santa Monica), and 90064 (Cheviot Hills/Rancho Park).

The areas that were hit the hardest: Downtown and Beverly Hills.

You could read either end of this chart in completely opposite ways. Perhaps, the ones that have fallen furthest are the ones you want to buy in 2009. Or perhaps, the ones that have held their value best are the ones to bet on long-term.

By looking at additional figures to these sales trends -- rate of sales in a given neighborhood, available inventory and the number of foreclosures -- I have my own opinion about which condo markets you might want to consider buying in 2009, and which you might want to wait. But I certainly could be wrong.

Truthfully, nobody knows for sure what's going to happen to condo sales in 2009.

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* For this report, prime Los Angeles areas included: Beverly Hills, Sunset Strip, Bel Air, Westwood, Century City, Brentwood, West L.A., Cheviot Hills/Rancho Park, West Hollywood, Venice, Marina Del Rey, Santa Monica, Pacific Palisades, Beverly Grove, Miracle Mile, Hollywood, Silver Lake, Echo Park, Los Feliz, Hollywood Hills, Malibu and Downtown.

**The numbers come from the MLS. This means some new condo sales are excluded as many builders don't list all their condos in the MLS. But I think relying on MLS data gives a good indication of the overall condo market, as it includes both new condos and re-sales.