According to the latest data from Hanley Wood (and included in my presentation at the BIS '09 "Town Square", which you can find here), new home sales in the L.A/Ventura region are definitely seeming to stabilize, rising by 1.3% between Jan-Sep 2008 and the same period of 2009. For September alone, net sales rose by nearly 19% over the same time of 2008, although that bump could also be due to buyers trying to nab tax credits they thought were expiring at the end of November.
Buyers today are also more serious, as evidenced by the sharp drop in cancellation rates to the low double digits versus 26% in Sep. of 2008 and just 9% for the first 9 months of 2009.
Overall new home prices continue to drop, with a median of $421,000 in Sep. 2009, or $332 per square foot. For single-family homes alone, however, prices actually rose by 15% to $614,000 during Sept. 2009, although YTD they're still down by nearly 11% to the low $400,000s.
Although total new home inventory -- those units currently available for sale as well as those planned in future phases -- would still take 3 years to absorb at current sales rates, completed inventory, although rising by 18% over the past year, stands at just 6.51 months, which is very close to market equilibrium.
For more information on current conditions for other counties of Southern California, click here for the entire presentation. A summary table is included below:
| Category | 9/09 | % YOY | 2009 YTD | % YOY |
| Net Sales | 282 | 18.5% | 3,362 | 1.3% |
| Absorption | 1.44 | 46.3% | 1.77 | 22.4% |
| Can. Rate | 11.3% | D-26.1% | 9.0% | D-20.9% |
| Median Price | $421k | -6.8% | $420k | -10.7% |
| SFD Price | $614k | 14.9% | $423k | -10.7% |
| Median $/SF | $332 | 22.8% | $320 | 11.9% |
| SFD $/SF | $234 | 12.2% | $178 | -12.4% |
| Inventory | 10,212 | -20% | - | - |
| Months Inv. | 36.21 | D-53.60 | - | - |
| Standing Inv. | 1,836 | 17.8% | - | - |
| Months SI | 6.51 | D-6.55 | - | - |
Looking ahead to 2010 and according to the LAEDC, although population in L.A. County will continue to increase given its enormous base, the employment picture is a bit different. During 2009 the county will lose 4.1% of its non-farm jobs base, and although the pain will continue in 2010, it will be half as bad, or 2.0%. This, of course, will continue to be a drag on housing demand until at least 2012 as the unemployment rate rises to approach 13% in 2010.
Inflation, which is now under control due to temporary deflationary influences in the marketplace, will re-emerge to 1.6% in 2010 but certainly be kept under control by stagnant demand for all but the necessities of life.
Housing permits are estimated to total 6,465 units in 2009 and rise slightly to 6,855 in 2010, but the commercial sector will be under great pressure, with non-residential permits falling below $2.4 billion.
According to projections I just completed for Hanley Wood's latest LA/Ventura Market Monitor, annual new home sales will total 4,000 units in 2009 and rise by about 15% in 2010 to 4,500 homes. Prices, which seem to have bottomed out this year, will end at $420,000 and rise by 5% next year to $440,000. See table below for summaries on these forecasts, and for the complete presentation, click here.
| Category | 2009 | 2010 |
| Population | 0.8% | 0.7% |
| Non-Farm Employment | 3,902m | 3,823m |
| Annual Change NFE | -4.1% | -2.0% |
| Unemployment Rate | 11.7% | 12.8% |
| Personal Income | -1.6% | 1.0% |
| CPI Change | -0.7% | 1.6% |
| Housing Permits | 6,465 | 6,855 |
| Non-Res. Permits | $2,470m | $2,370m |
| Ann. New Home Sales | 4,000 | 4,600 |
| New SF Home Price | $420k | $440k |
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