After looking at prices then we have to look at the other variable which was the number of houses that were sold. The number of closed transactions decreased in 2008. Herein lies the conundrum. How does the price of homes increase when there is less demand in the market and selling times are increasing? If you sell less of something, shouldn’t Econ 101 mandate the price should fall?

I surmised that it was due to a market shift. A market in which homes that were selling tended to be geared towards the higher end of the market. You can still sell less of something but if its at a higher price, it will appear the market is progressing upward and that area prices remain on the increase. If there was any vulnerability at all in this market I was determined to find out where it was.

Top 50 Home Sales in South Pasadena

I pulled a list of all home sales in South Pasadena and sorted it beginning with the lowest price in ascending order. I tried to equalize the results by comparing 50 transactions in ’07 vs 50 transactions in 2008. With only 80 single family sales in 2008, I was looking to exclude the higher end transactions. The sales results were not very revealing. A median price of $766,000 in ’07 against $770,500 in ’08, still a slight increase.

Top 25 Sales

Comparing half the number this time produced no change either. The price in 2007 was $659,000 compared to 2008 of $667,000.

Top 10 Sales

Lastly, I looked at the 10 lowest priced transactions. The numbers for 2008 indicated a marked change. The median price in ’07 of $595,000 was much higher than the sales price in ’08 of $539,000. A decline of 10%. I know you statistician’s out there might have a real problem with a sample of only 10 units and it may not be appropriate to call it conclusive. Breaking a market down to one -eighth of its size may exceed GAAP standards; however we are only looking for comparisons, not the standard deviation and mean of the South Pasadena housing market.

List Price vs. Sell Price

One other item that was interesting concerned the price of a “sold” home compared to the price when it was first listed. In 2008, Seller’s were more negotiable. Home prices were only fetching 97.5% of the original asking price. In 2007, Buyers were willing to pay more as evidenced by homes selling for 99.6% of their asking prices.

Buyers were making lower offers and Sellers were more willing to put their property into escrow than were willing to worry about the uncertainties of the market. Sellers were pricing to 2007 levels but were selling to 2008 economic news.

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.

Contributing to the division in South Pasadena is the widening gap between single family units and condo’s / townhomes. Sales of condos and townhomes are just slow. Just like we have seen in the Pasadena real estate market, there is declining demand. Maybe the limited numbers of home buyers in the market are opting instead to purchase single family homes. If you price it right, they will come! Is this heaven? No, it’s South Pasadena.

South Pasadena Single Family

If you are selling a home in South Pasadena above $850,000 the odds are in your favor that you will do well. Due to the limited number of home sales each month, I went back and looked at the last three months to get a better idea of the activity and hopefully avoid any monthly momentum swings. Although the unit volume declined 26% in the last three months, the median price is up about $350,000. Of the 30 homes that were sold, 19 of these were over $1MM. Of the 50 + homes that are for sale, homes priced over $1MM represent about 40% of those listings.

Source: i-Tech MLS

South Pasadena Condo’s and Townhomes

Gains in the single family market were offset by losses in condo’s and townhomes. Unit sales declined more than 50%, while the median price fell $182,000 or 30%. There are about 27 units currently on the market that are in the “active” or “pending” stages. Only 2 units sold in the month of July.

Source: i-Tech MLS

Summary

Before calling your friends in Riverside County and telling them that the price of your house increased by 40%, understand that this is just a snapshot of a particular point in time. It could easily be an anomaly due to the pricing mix assortment that happened in this period. We’ll take a look in another 3 months and see what has transpired.

Other topics of interest:

Receive Free Weekly Real Estate Reports for South Pasadena
Pasadena Median Home Price History