L A South Bay Real Estate

Examining The Torrance Home Price Bubble

Posted on 10. Dec, 2009 by admin in Market Forecasts, Uncategorized

Was there a price bubble in the the city of Torrance?

Here is a little study made in an attempt to answer that question, you decide. Please place your comments on the

Blog Site . See the Charts below.

While national median home prices may have dropped approximately 30 % since the housing peak, conditions locally have not been quite severe. As mentioned in our previous reports the LA South Bay has performed much better than the nation. Lets look at the full picture for results of the Torrance home price bubble of 2005-2009.

First the entire South Bay was considered because of its large sample of sold homes.

The peaks in the South median home prices occurred in June 2005, and October 2007. The peak of 2005 was what I consider the real peak because it was supported with lower sales volume, lower buyer sentiment, higher unsold index and other indicators. The second peak occurred in October 2007, but this point was unsupported because prices while were going up and all the indicators had already been going down since the first peak Readers of our newsletter were well aware of that situation.

Individual city prices have high monthly price fluctuations. The Torrance maximum price peak occurred in June 2005 and agrees with the South Bay home price confirmed peak. The unsupported South Bay home price peak is not noticed in the Torrance city chart. Monthly city home prices fluctuate greatly, we use a trend line to measure the price drop. From the peak to the present time median home prices went down 15.5% compared to 30% nationwide. The chart below shows the corresponding median home sizes sold during the same period.

If the trend line was flat for the sold median home sizes it would be safe to say the 15.5 %  number accurately reflects the home median home price change. Since the the comparison of the two chart indicates people are buying slightly smaller homes it is safe to conclude that the price drop was somewhat less than the 15,5 %. I am not considering the effects of inflation here , however inflation has been small roughly 3% during the time period and is not included in the national price numbers that we are comparing to. The price trend at this point in time is still down, monthly price changes for Torrance have been up over the past 12 months. The actual bottom of the trend curve has not yet been defined. If the short term prices continue to go up we will be able to look back and determine the bottom or turning point of the trend line.

Again let me know what you think, place you comments on the Blog Site .