Early retirement hasn't come quite soon enough for Joe Lee.
At 58, Lee has been punching a clock for 35 years for the county of Los Angeles, and he's eager to move on to Mississippi, where he has property, family and a fiancee waiting.
But Lee's hopes for a summer departure are diminishing each week -- that is, if he intends to hold out for anywhere near the $700,000 that he's asking for his 2,600-square-foot, three-bedroom-plus-den home in Lynwood.
"I wouldn't say I'm desperate, but anxious, yes, I am feeling anxious," he said.
A year ago, $700,000 wouldn't have been unreasonable for a comparable property in this part of Lynwood, in particular one with the graceful landscaping and custom work that Lee has put into his house during a quarter-century of ownership.
But, oh, what a year it's been.
Real estate tracker DataQuick Information Systems reports that the median price of a single-family, detached home peaked at $599,000 in Los Angeles County in August last year (the median being the point at which there are an equal number of sales above and below). In November, the latest month for which figures are available, the median price had sunk to $529,000 -- a dip of about 11.5%. Meanwhile, market activity has plummeted. There were 5,829 single-family, detached homes sold in Los Angeles County in October and November, down 51% from the same period in 2006.
Only 52 Los Angeles County ZIP Codes registered resales of 35 single-family, detached homes or more in October and November. Of those, 32 had dropped more than 10% from their peak on a price-per-square-foot basis, according to DataQuick. Ten were down more than 20%.
Although the dearth of sales in the last year has made it difficult to pin down these figures with precision, it's clear that Los Angeles County prices held on longer and fared better than those in most Southland counties.
In Orange County, prices peaked in June at a median of $734,000. By November, the median was $655,000 -- a 10.8% drop.
In Riverside County, the peak came a year earlier, in June 2006, at $419,000. That figure had dipped to $340,000 by November, according to DataQuick, for an 18.9% decline.
Blame it on real estate cycles, bad lending practices, unrealistic buyers or the now-befuddling run-up in prices that sent values way beyond the reach of the average family, but there's no doubt that Southern California residential real estate is in the midst of a painful fall. Few expect the soon-to-be-released December sales data to add any sunshine to this gloomy picture.
Lions and tigers and bears, all right. To hear Christopher Thornberg of Los Angeles consulting firm Beacon Economics tell it, home sellers can expect the bad times to get worse, and to stick around for a while.
"There will be close to a 30% decline" from the peak, Thornberg said. "Prices will continue to go down in 2008. I think between 2009 and 2011, we will have what you call a 'bleeding phenomenon' where prices stay flat, which means they lose value in real terms." Losing value in real terms occurs when appreciation fails to keep pace with inflation.
Thornberg's advice for would-be sellers and those struggling to pay readjusted mortgages: Get out now.
"If you sit on the sidelines, it is going to get worse," he said. "And if you want to sell your house now, price it down big time."
Paying the piper
Before launching Beacon, Thornberg wrote reports for the UCLA Anderson Forecast, which warned as early as 2001 that easy credit was propelling home prices to unsustainable levels. Now, he said, homeowners are paying the price.
But not everyone is as bearish as Thornberg.
DataQuick analyst John Karevoll says the uncertain state of the national economy makes forecasting a tricky proposition.
"Jobs, growth in the economy, interest rates -- all of these things are highly volatile," Karevoll said. "It's almost impossible to make a reliable prediction because of the volatility of these numbers."
If the United States manages to avoid a recession, Karevoll said, prices will probably stabilize this summer or autumn -- well short of the 30% decline suggested by Thornberg.
"First, we have to digest this bad apple we ate with these sub-prime mortgages," he said.
But what if there is a recession?
"Things will get much worse," Karevoll said. "There is a high proportion of California homeowners -- not most, but a high proportion -- that are near a financial edge. In a recession, they will get pushed over that edge and things will get downright bloody."
Lee, who listed his home for sale three months ago, doesn't need an economist to know he's missed the boat. He's already reduced the price of his property by $25,000 -- that's just 3.5% from where he started -- and recognizes that he may need to go lower.
"Twelve months, 18 months ago, it would have been much easier. My timing is a little off," he said. "But there's no reason for me to hang around waiting for it to get better, because I don't think it will any time soon."