West L.A. home prices finally succumbing to market pressures

L.A. Times reporter Peter Hong reports that West Los Angeles (i.e., Beverly Hills, Santa Monica, Brentwood, etc.) has finally succumbed to larger market pressures, with home prices falling by 30% in 2008. Thought that area was immune? Think again. From the story:

Home prices in Beverly Hills, Santa Monica and Malibu -- which continued to soar well into 2008 -- finally tanked at the end of the year, losing between 26% and 30% of their value in just a few months, the latest data show...

The median price of a single-family home in Beverly Hills was $2.1 million in the fourth quarter of 2008, down from $3 million in the second quarter, according to data prepared for The Times by research firm MDA DataQuick. Pacific Palisades closed the year with a median price of $2.2 million, down from a high of $2.6 million during the second quarter, and Santa Monica's median was $1.6 million, down from $2.1 million last winter.

Even among the merely well-off in Culver City, prices have come down, to $647,500, 17% below the peak. In ZIP Code 90035, just south of Beverly Hills, the median sale price had been more than $1 million for most of 2007 but fell in the fourth quarter of 2008 to $800,000.

Brentwood's fourth-quarter median of $2.3 million was down 11% from its peak...

The downward trend is no surprise to economist Christopher Thornberg, principal of the Los Angeles consulting firm Beacon Economics, who for years angered many real estate agents by repeatedly saying the Westside would eventually see price declines just like the rest of Southern California.

"It was never a function of if," Thornberg said. "It was always when."

When people in entry-level homes can't sell their properties to move up, there is less demand in the middle tier and eventually at the high end, he said.

"It takes a while, but the markets are all linked," Thornberg said...

Click here for full story.