For this real estate bubble watch, the statistics and figures noted in this article were obtained through the MLS and AccuFlip.com, and are for Los Angeles single family residences.

Over the last several months I been writing about a boring real estate market and have been happy to write about the boring market. Boring markets are stable markets. I’ve enjoyed watching the numbers flatten out, which has been allowing for incomes to catch up to prices. I would really like to continue writing about flat numbers for this year too, but unfortunately, it’s not up to me. March is the month where we usually the numbers turnaround from the winter lull and a pretty good spike in volume. This March did not let us down. There was the large jump in volume and a clear change in the direction of the year over year price change. The sales data itself is not shocking, it’s actually on par for the last few years for March, but the ratios of how the numbers relate to each other, particularly the Active and Pending counts are telling us some big news. According to these signs, my hopes for a boring 2016 have been shot down. But then again, things may change over the next few months. Let’s take a look…

Sale Price

The median sales price for Los Angeles County single family residence came in at $570,000. A 4.6% jump from February, which is big but not abnormal. Year over year prices are up 8.6%. Over the last several months we’ve seen the year over year change declining, which is good. We need a prolonged time of appreciation between 3% and %5. This would keep us out of a significant bubble. Although the 4.6% and 8.6% increases are not abnormal, it would’ve been nice to see the flattening out continue through March. Meaning that these changes being more like 2% and 5.5%. It would be positive change and relatively sustainable. Of course all property owners get excited about high appreciation, but too much growth too fast will come back and bite you.

On a more positive note, distressed sales dropped to 8%. Down from 11% in February and basically for every month in 2015. With the prices going up the way they are the distressed market will continue to decline as less people are forced into a short sale and more have equity to sell to avoid foreclosure. Also, downward price changes were at 8%. In 2015 downward price changes bounced between 20% and 30%. So, less and less people are having to drop their prices in order to sell, what’s that starting to tell you?

Volume

Sales volume had a nice jump from 2,780 sales in February to 3,750 in March, a 34.8% gain. Again, as we come out of the winter lull, sales volume is expected to increase 20 plus percent. There’s nothing bad I can say about large jumps in volume, we need it. We also need a big jump in inventory though too, in order to balance it out and keep prices from shooting through the roof. Let’s also keep in mind that the 3,750 sales is nothing significant, 0% change from March 2015.

Actives and Pendings

There are still only 8,821 single family homes for sale, still low and sticking with trend as of late. The big news (for me) is that there are 8,077 currently in escrow. More on why this is the news later, but think supply and demand. Distressed Active listings and Pending properties continue to decline too, 7% and 18%.

Ratios and Comments

Let’s talk about the sustainability index briefly. It is currently at 8.97. New income data came out recently; I’ve adjusted the estimated median income up 4%, which in turn drops the S.I. This is great news, but it’s not enough. The ratios of Sales to Actives and Pendings to Actives are the stars of the stats. These ratios are the leading indicators of where prices are going. Sales to Actives are at 31%, jumping up from the