Today I’ll be blogging about the home trend in the City of Torrance which is about 10 miles south of Los Angeles International Airport. It is the biggest city in the South Bay area and about the only city large enough to have adequate sample size to do any charting. You can probably say that looking at Torrance’s trend will give you an idea of the surrounding cities of Palos Verdes (RPV/RHE/RH/PVE/PVP) and Beach Cities (Redondo/Hermosa/Manhattan).
For those of you who don’t know Torrance, it is a nice neighborhood with good safety and good school systems. The surrounding cities to the south and west tend to have slightly better school system, slightly better safety, and higher priced homes. Torrance is a good middle class neighborhood. There are areas with "Torrance Address" which are actually part of Los Angeles City Strip and thus the children who live there go to the Los Angeles Unified School Systems (and much lower house price) instead of the better Torrance Unified School District (TUSD), but we’ll focus today on Torrance within TUSD system. Single family homes in this TUSD part of Torrance runs from around $500,000 to about a $1,000,000.
Let’s first look at Single Family Home price trend (excludes Condominiums and Townhouses):
There are a few spikes in the data, but you can see that median home prices seemed to bottom out during December 2008 and April 2009 and start increasing in May 2009. We use "median price" in the real estate industry to talk about the price of the region. Median price means the price of the home that is in the middle–so if nine homes were sold in a particular month, it would be the price of the house that was the fifth one from the bottom and the fifth one from the top.
Now, median price doesn’t just get influenced by the general home price change, but also the mix of the prices of the homes that are sold. So, you need to understand that the median home price is just one data point to analyze which way the house price is moving. In any case, the house price of Torrance seems to have bottomed out from around Dec 2008 to May 2009 and may be showing a rising trend.
Next we look at the charts of Sold Homes and Homes in Escrow (Under contract):
Typically, more real estate change hands over the summer, so the increase during the summer months are typical. However, you can see that the Closed Sale during the summer of 2009 is much more active than summer of 2008 and summer of 2007 (which was the price peak). But wait, what is that dip in the Closed Sale in Aug 09? You need to look at Under Contract (which preceeds the Closed Sale roughly by a month) and you can see that July 09 dip but came right back up in Aug–so you’d expect Closed Sales to make a strong showing in September 2009.
Another indicator to look at is inventory:
At the inventory peak in Dec 07, there was almost nine months worth of home inventory on the market–houses just weren’t selling back then. But if you look at Aug 09, you can see that there are less than two months of inventories which is 1/4 of the peak. There are many reasons inventory goes down but it generally means more people are buying a house than the number of people trying to sell a house.
Looking at houses currently for sale, you can see that the number of houses on sale has shrunk considerably from the previous year (by about -50 to -40%):
And the average days a house is on sale in the market has fallen to the level last seen in Aug 07:
When you take all of this data together, it does look like the housing market–at least in Torrance–has made it’s bottom and has started a gradual price accent.
So, how does the Condominiums and Townhouses price look like in Torrance? The data for those is not clear. Compared to Single Family Homes, there are a lot less Condo and Townhouse sales in Torrance so the data is not too reliable. However, looking at data that is available, it looks like Condos and Townhouses sale are still continuing their long creep sideways and haven’t really broken out upwards like Single Family Homes.
As the saying goes Single Family Home prices start rising first, then Townhouses and finally Condos (and fall from Condos first, then Townhouse, and Single Family Homes) so it may not be much longer for the Condos and Townhouse price to start rising in Torrance.