Los Angeles Housing Inventory’s Scary Outlook

For the best areas of Los Angeles, sales in the 4th Quarter of 2008 plummeted – along with the stock market, consumer confidence, the number of Americans with jobs and the entire global economy.

So the massive oversupply of single-family homes in these areas in Q4 ‘08 probably wasn’t surprising. (See HERE.)

But this year, we’ve got a new administration, the banks have almost-free money and some of them (Wells Fargo) are actually using it to make loans.

But how are things going this year in Beverly Hills, Malibu, Bel-Air, Brentwood and the like?

Not good.

That is, at least from an inventory standpoint, for the most part, the supply of unsold homes has grown.

Malibu continues to have the most number of unsold homes on the market relative to the average number of sales occurring per month. There is 40 months of inventory in Malibu. This kind of massive number (6 months is good) typically suggests two things: 1) Prices are still headed down in Malibu, 2) Recovery is still a ways off.

The same can be said for: Santa Monica (especially North of Montana and between Wilshire and Montana), Venice, Bel-Air, Beverly Hills and West Hollywood.

Here are the areas with the most unsold inventory:

CURRENT INVENTORY

Location	Zip	Active Listings*	Months of Inventory*	Months of Inventory (at the end of January)
Malibu	90265	334	40 months	27 months
Santa Monica (N. of Montana)	90402	57	34 months	7 months
Venice	90272	113	31 months	11 months
Santa Monica (Wilshire to Montana)	90403	20	30 months	14 months
Bel-Air/Holmby Hills	90077	109	30 months	20 months
Beverly Hills	90210	231	26 months	26 months
Beverly Hills SE	90211	23	23 months	25 months
West Hollywood	90069	131	22 months	21 months
Hollywood Hills West	90046	155	21 months	10 months
Santa Monica	90405	49	21 months	8 months
Pacific Palisades	90272	174	20 months	13 months

*Active SFRs as of April 22, 2009
**Single Family Residences
SOURCE: Original Research from CLAW MLS

I'm sorry, but those numbers are downright scary.

However, here's a few points to make.

Santa Monica has been hit really hard with an oversupply of houses relative to very few sales. It went from good to bad quickly. At the same time, 90402 and 90403 are small, desireable areas so it's possible for these small areas to turn around quickly. For now, Santa Monica isn't headed in a good direction.

Venice appears to be rapidly climbing up the oversupply, but in my own opinion, having looked at a number of houses in the area over the past year, I think there's fewer desirable properties compared with a year or even six months ago.

Beverly Hills saw a big increase in sales in March and there's been a few high-dollar sales (including what had been the best house on the market, IMO.) We'll see if the positive news in Beverly Hills becomes a positive trend...

Malibu. Oh, Malibu. Prices will have to come down, down, down there. If anyone has any rational argument as to why Malibu prices are not headed off a cliff, please let me know.

Finally, two truisms:

• There absolutely are some crazy good deals out there.




• There are ways to sell your home even in this market. It just takes some special strategies.