Home prices are way down in Southern California. But the real estate information service Zillow.com says the median values in Los Angeles and Orange counties may not have fallen quite as much as is often reported.
That's because the median sale price -- which provides a quick market snapshot and is reported each month in the Los Angeles Times and other media -- can exaggerate the extent of a market downturn, economists say. This can occur when low-priced homes constitute the vast majority of home sales in an area.
Last month, the real estate research firm MDA DataQuick reported that the median price of a home sold in Southern California in December -- $278,000 -- was down 47% from the peak price of $505,000 set in 2007. That month, 56% of homes sold were foreclosures.
Zillow has its own home value index that's based not only on sale prices but also on the size and characteristics of homes in the area -- whether they were sold or not -- and other factors.
Using this proprietary formula, the website says the median value of homes for the fourth quarter of 2008 was $387,021 in Los Angeles County and $474,560 in Orange County.
Both figures are substantially higher than the December median sale prices reported by MDA DataQuick: $320,000 for Los Angeles County and $397,000 for Orange County.
The combined median value for the entire Los Angeles-Orange County area was $410,692 at the end of the year, a 32% drop from the peak, according to Zillow. That's close to another measure, the Case-Shiller index, which uses its own complex formula to gauge area home prices. Case-Shiller, which has data through November, shows Los Angeles and Orange County home prices down 27% from the peak.
Zillow's numbers certainly show that the market is rapidly correcting by pushing home prices down. Additionally, the company reports:
* 94% of homes in Los Angeles and Orange counties lost value in 2008.
* 52% of homes sold last year in L.A. and Orange counties were sold at a loss.
* 21% of homeowners in L.A. and Orange counties owed more on their homes than their market value at the end of 2008.