That being said, the South Pasadena real estate market turned in an excellent performance in 2008 compared to Pasadena, Altadena, and Los Angeles. I could go on and on. The median price of a South Pasadena property including single family, townhomes and condo’s declined a measly 5% from $815,000 in 2007 to $773,500 this year. Basically a rounding error.

Single family homes were the blue ribbon award winner. The median price actually increased (that’s a word we have not seen much this year) from $920,000 last year to $935,000 this year. An increase of 1.6%. Cue the music!

Despite the increase in the median price of a single family home, South Pasadena does exhibit many of the characteristics of other real estate markets, both locally and nationally. Condominiums and townhomes for example have shown greater declines in median prices and also increased selling times in all areas. Unit sales this year were just a little better than half of what they were last year and prices declined about 10% overall.

As noticed in other markets, the sales activity on homes over $1 million has been pretty consistent. On of the reasons South Pas has performed so well this year is that the market for high priced properties is disproportionate to entry level or first time buyer price points. Of the 80 homes sold in ’08, 34 of them were sold over $1 million, while only 4 were sold for less than $500K.

The median price of a South Pasadena condo / townhome is almost the same price as a Pasadena single family home. In all real estate market ups and downs, therein lies a lesson. The education learned here is how to avoid a real estate market decline. Evidently the key is to look for a small homogenous community with less than 5000 households and a highly regarded school district.

In real estate the old adage was to buy the least expensive home on the best street. Most home buyers have a particular budget in mind when they shop for a home and what they can qualify for in terms of a loan and house payment. At least these days they do, the banks are seeing to that.

Neighborhood Value Considerations

Why does South Pasadena real estate seem to hold its value better than Pasadena?

1. Number of households -with So Pas having approximately 1/5 the number of housing units there is less diversity and much more homogeneity. Pasadena had better opportunities for entry level home buyers due to its history of lower median prices, while South Pasadena has been more of a move up market.
2. Distressed Properties – more housing units in Pasadena and lower entry prices have resulted in more properties in the foreclosure process, depressing home prices in the area.
3. More Equity, Less Leverage -when home buyers move up, they typically put more of their own money into the transaction meaning less volatility in market ups and downs.
4. Public Schools – schools in So Pas enjoy a very good reputation. Does a correlation exist between high home prices and good public schools? A recent comment by one of our readers made an excellent point about public schools. It would be interesting to see the effect on Pasadena home prices if the public schools had the same reputation as South Pasadena.
5. Other factors – neighborhood amenities, (retail, worship, topography, traffic, local services) and crime statistics can also have a role in the overall purchase decision, however these things may be more subjective to a large degree with the exception of crime in an area. If a home buyer is concerned about neighborhood crime, it is always a good idea to talk with the local police department.

When markets are bullish, we see prices rise across the board with no real concern of quality or value. The tech bubble comes to mind, followed by the real estate bubble. However when prices begin to fall, neighborhoods or cities that successfully address the above criteria will be less susceptible to market gyrations.