In 2011 Home Prices are Flat, But Inventory Declined a Dramatic 41% in Hills "West" and "East", Beverly Grove, Hancock Park, Los Feliz, Silver Lake and Echo Park; Price Increases on the Horizon?

2011 Median Home Price in Los Angeles (central) was about $850,000

Median Home Price

In 2011, the median home price in the central part of Los Angeles were essentially flat at around $850,000.  The neighborhoods included are:

• Beverly Center - Miracle Mile
• Hancock Park - Wilshire
• Hollywood Hills East
• Los Feliz
• Silver Lake - Echo Park
• Sunset Strip - Hollywood Hills West
• West Hollywood

What does this mean?

The fact that the median sale price is moving sideways means there is market stability.  Sellers can sell today without the fear they are "leaving money on the table".  Buyers can purchase without the fear that they must "jump in today" or be faced with rising prices tomorrow.  But stable markets don't always remain stable for long...

2011: Months' Supply of Inventory of Los Angeles (central) homes Declined 41%

Months' Supply of Inventory

In 2011, the months' supply of inventory declined steadily from 9.3 months to 5.3 months -- a significant 41%.  (Months' supply of inventory is a measure of how many months it would take to sell all the homes currently on the market.)

What does this mean?

That the market is "tightening up".  Although prices are currently stable, properties are being "absorbed" faster on the market, as buyers chase fewer and fewer properties

What about 2012?  Where are we heading?

Our prediction is that prices will rise in 2012, even if by a small increment.  Our reasoning is that an inevitable result of this decline in the months' supply of inventory is an increase in prices.

This assumes a stable financing environment, but the Fed has given every indication that they will maintain interest rates at current levels.

Other market forces may intervene (increase in short sales / foreclosures as a percentage of overall market, financial crisis #2 spurred by the euro, etc.), but current data supports a modest to partially sunny home market in 2012 this desirable section of Los Angeles.

Los Feliz in 2012 has a Stable Home Market; Median Price Up 20% Since 2009; With Confidence, Relish Griffith Park, Scenic Views and a Classic Vibe

While handicapping price trends across Los Angeles neighborhoods from 2006 - 2011, we thought we'd stop in one of our favorite neighborhoods, Los Feliz.

2630 N Vermont Avenue, Los Feliz

What's not to like here?

Many of original 1920's estates are intact and are unrivaled by anything east of Beverly Hills.

You've got the sights and recreation of Griffith Park, including the awesome, intimate Greek Theater and horseback riding (we highly recommend the "Sunset Ride to Mexican Restaurant", where, half way into a rustic ride, you can slake your ranchhand's thirst with a tangy margarita.)

You've got restaurants galore on Hillhurst and the small-scale, quiet neighborhoods.  It's no wonder generations of families and creative types have flocked to this neighborhood.

One of the earliest land grants in California, Rancho Los Feliz was granted to Jose Vicente Feliz in 1795 and eventually became the neighborhoods of Los Feliz and Silver Lake.

It should also be noted that the Los Feliz includes the lesser-known and more modest neighborhoods of Atwater Village and Franklin Hills, but the "stars" of the area are the homes and estates north of Los Feliz Boulevard.

Los Feliz market stable following "end-of-bubble" 2007

But we digress ... what have sales trends been over the past five years?

After experiencing a "peak to trough" decline in prices of 38% from 2007 - 2009, Los Feliz is back in business, and 2011 prices are 20% off the 2009 low at $839,000.


Prices have essentially been flat for two years.  This is the definition of a stable market.  Buyers and Sellers can confidently transact, without the pressure of a rising, "heating up" market, or the inertia of a declining market.

4053 Woking Way, Los Feliz -- home of Walt Disney

The top sale of 2011 in Los Feliz was 2630 N Vermont Avenue, that sold for $4.55 million.  The "Van Griffith" residence has 6 bedrooms, 4 baths, and is set on a large, 3/4 acre lot.

A notable sale was 4053 Woking Way, the original "Mouse House", the former home of Walt Disney.  This French Norman estate has 4 bedrooms, 5 baths, and 6,388 sq ft of living area and sold for $3.7 million.

Hollywood Hills Smackdown 2012: "Hills West" Catching Its Breath While "Hills East" Gains Footing; "West" Median Price at 6-Year Low at $1.06 million; "East" Median of $828K Up 26% from 2008 Low

Hollywood Hills Smackdown

Now that 2011 is behind use, we thought we'd do a "Hollywood Hills West" vs. "Hollywood Hills East" smackdown, to see how these two adjacent neighborhoods fared in terms of pricing in the 2006 - 2011 period.

Although collectively known as "The Hills" the two neighborhoods are distinct markets divided by the 101 Freeway (or back in the old days, the Cahuenga Pass.)  

Hollywood Hills West

The larger "Hills West" includes the Bird Streets / Doheny Estates, Sunset Strip, Laurel Canyon, Mount Olympus, Nichols Canyon and Outpost Estates.  

Top Sale "Hills West" 2011: 9050 Oriole Way

In the "Hills West", the top sale in 2011 was 9050 Oriole Way in the Bird Streets that sold for $14.5 million.  This renovated 1979 home has 3 bedrooms, 5.5 baths, and is set on a magnificent 3/4 acre.

Median sale price in the "Hills West" reached a 6-year low in 2011, at $1.058 million, down 31% from the high attained the "go-go" year of 2007.

"Hills West" -- Prices in 2011 were down 31% from highs of 2007

Hollywood Hills East

The "Hills East" includes Vine Hills, Beachwood Canyon, Bronson Canyon, Lake Hollywood, the Hollywood Knoll, the Hollywood Dell and the Hollywood Manor.  (I know, that's a lot of Hollywood).

Top Sale "Hills East" 2011: 3235 Durand Drive, $3.2 million

In the "Hills East", the top sale in 2011 was 3235 Durand Drive that sold for $3.235 million.  This sprawling newly-built home has 5 bedrooms, 8 baths, 7,500 sq ft of living area on a 6/10 of an acre lot.

"Hills East" -- Prices in 2011 were down 26% off highs of 2007

The median price of the "Hills East" has actually been rising since a dramatic low of $660,000 in 2008, and now sits at $828,000, 26% off the high attained in 2007.

Analysis of the Smackdown

We think in the "Hills West" and "Hills East", there is a "flight to quality" and that the best properties are selling.  It's the average to below-average properties, and the distressed properties that are putting a dent in the median sale price.  The "mediocre" properties are not attracting buyer interest, and must be discounted to generated a sale.  The short sales and bank-owned properties are sold at a "gray-market" discount of 2 - 10% and are driving down the market.

The steady decline in the "Hills West" median price over the past four years is in part due to the lack of financing for homes in the $1.0 million+ price range.   Many owners who are "upside down" (which includes most people who bought after 2003) and who cannot refinance their onerous loans are electing to sell.  Move-up and first-time buyers cannot obtain loans for homes in this price range.  Both of these forces have an effect of driving down the median price.

The improvement of the "Hills East" median price can be in part attributed to financing.  The maximum Fannie-Freddie backed loan amount in LA County is $729,750.  The median "Hills East" price has been bouncing around this level for the past four years.

What Should Buyers and Sellers Do?

Buying opportunities exist in both of these neighborhoods, and buyers should be "cherry picking" from the best 25% of the market inventory.  Sellers who own the "best quality" homes should not hesitate to sell.  However, Sellers with the average "Hills" home should try to stay put a couple of years while the market in these neighborhoods stabilizes.

What We Do

We represent Buyers and Sellers of home in the Hollywood Hills.  If you have questions about the "Hills", or would like to know more about properties there, please call Adner Realty Group at (310) 845-6810.