Sales usually rise in Southern California between November and December, with an average increase of around 12 percent, so this was clearly a huge aberration. From November to December, sales of new and existing houses and condominiums in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties dropped 8.2 percent. Home sales in the region fell 20.3 percent year over year in December, according to CoreLogic. That is the lowest December sales pace since 2007. "Last month's sharp drop in home sales stands out in several ways," said Andrew LePage, a CoreLogic analyst, noting that it was the slowest pace in 11 years and the largest decline for any month in more than eight years. "This drop in activity reflects a variety of factors. Mortgage rates hit a 2018 high in November, affecting December closings, and stock-market volatility created an additional headwind in high-end markets. Meanwhile, some would-be buyers remain priced out or unwilling to buy amid concerns that prices have overshot a sustainable level." The median price paid for all Southern California homes sold in December was $515,000, up 1.1 percent year over year. When adjusted for inflation, the December 2018 median was still 13.2 percent below its peak in July 2007. "The roughly 1 percent annual increase in Southern California's median sale price last month marked the lowest such gain in the uninterrupted string of year-over-year increases each month that began in April 2012," LePage said. "The median's annual increases have declined over the past year as home sales slowed and inventory rose. The median's tiny annual gain last month also reflects a shift in market mix, where higher-end sales represented a slightly lower share of all activity compared with December 2017." Sales of newly built homes fared particularly badly, down more than 50 percent from their average over the last 30 years. Much of that is because builders are still building far fewer homes since the housing crash, and part is because prices for newly built homes continue to soar. "Half of America can only afford a $230,000 mortgage, and the builders in good locations just can't get down to anywhere near that," said John Burns, CEO of California-based John Burns Real Estate Consulting. "Eleven of the top 19 builders, their average sales price is above 400 grand." WATCH: Affordability affecting the housing market<doc-sep>The housing market’s chill grew colder in December, as sales plunged across Southern California and home prices barely rose. The number of closed deals fell 20.3% compared with a year earlier, hitting the lowest level for a December since the start of the Great Recession and marking the sharpest percentage drop since 2010, according to a report out Wednesday from CoreLogic. The six-county region’s median price, meanwhile, inched up 1.1% from a year earlier, to $515,000. The 12-month price increase is the smallest since prices started their steady upward climb in April 2012, after declining slightly a month earlier. And December’s median price is now $22,000 below June’s all-time high of $537,000. Advertisement Although the median — the point at which half the homes sold for more and half for less — can fluctuate month to month, Wednesday’s report is the latest indication of a substantial market shift as buyers balk at the high cost of housing. “The affordability issue,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, “is finally taking its toll.” The S&P CoreLogic Case-Shiller index, for example, provides a delayed look at home prices but is widely considered to be the gold standard of measurements. On Tuesday, data for November were released, showing prices in Los Angeles and Orange counties rose 4.4% in November — also the lowest rise since 2012. The slowdown has multiple causes, agents and economists say. Some potential buyers can simply no longer afford a home after years of steady price increases. Others can still swing a mortgage at today’s prices but worry about buying at the top. As sales decline, inventory is swelling, further limiting the ability of sellers to command top dollar. Last month in L.A. County, the number of homes for sale rose 22% from a year earlier, while in Orange County, listings surged 30%, according to online brokerage Redfin. Despite the cooling market, economists generally don’t expect a housing market crash coupled with plunging prices, pointing to strong job growth and a rate of home building that’s below historical levels. Some experts, however, do think values could dip under current economic conditions, arguing home prices have simply outpaced incomes for too long. Richard Green, director of the USC Lusk Center for Real Estate, has said prices could fall 5% to 10% over the next two years. The Realtors group predicts prices across the state will be essentially flat this year, falling 0.2% from 2018. “The market is going to settle out,” Appleton-Young said. “You are seeing a big pause.” Advertisement The pause can be seen throughout the region. Sales fell in all six Southern California counties last month compared with a year earlier, ranging from a 13.5% drop in Ventura County to a 26% decline in Orange County. Still, there was enough demand to send prices a bit higher in all counties. The median rose 2% to $581,500 in Los Angeles County; 1.6% to $708,500 in Orange County; 4.1% to $380,000 in Riverside County; 2.1% to $329,750 in San Bernardino County; 1.9% to $550,000 in San Diego County; and 2.1% to $575,000 in Ventura County. Many first-time buyers would be thrilled to see declines, not just slowing price appreciation. But it’s unclear if that will happen. Advertisement CoreLogic analyst Andrew LePage said one reason for the weak December median-price gains was a smaller share of high-end deals, which may indicate a volatile stock market spooked wealthy investors. A clearer picture should emerge in the traditional spring buying season. And some agents say demand is already seeing a bit of a boost after a recent pullback in mortgage rates. December’s report, with its large sales decline and meager price appreciation, reflects sales that closed escrow in December. That means many buyers signed contracts in October and November, when rates for a 30-year fixed mortgage were at recent highs. Since the peak, rates for a 30-year fixed mortgage have fallen by 0.49 percentage point to an average 4.45% last week, according to Freddie Mac. Advertisement Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA, said the Federal Reserve’s announcement Wednesday that it would be “patient” in enacting additional rate increases may help prevent mortgage rates from drifting higher. But at the same time, there are concerns over global growth and the cost of housing is already too high for many. “Where do we go from here?” Gabriel said. “The [spring] selling season will be a very important indication.” Tregg Rustad, a Rodeo Realty agent, said buyers are still willing to pull the trigger if a home isn’t significantly overpriced, at least by Los Angeles standards. For example, in mid-January he listed a five-bedroom house in Mid-City for $1.76 million and said it’s now in escrow for about 3% above that amount. A year ago, he and the seller may have set the list price even higher, knowing there was a good shot home seekers would bite. Advertisement “Buyers are going to be careful” this year, he said. “They are tired of paying for more than a house is worth.” Times staff writer Jim Puzzanghera contributed to this report. andrew.khouri@latimes.com Twitter: @khouriandrew<doc-sep>Bloomberg (Bloomberg) -- Hedge funds often measure their investments in minutes, not decades; but for Anchorage Capital Group, its long-held stake in Metro-Goldwyn-Mayer Studios Inc. is proving that patience can also be profitable.The New York-based money manager stands to make roughly $2 billion on its investment in the film and TV producer, one that began almost 11 years ago with MGM in bankruptcy court. Amazon.com Inc. agreed to buy the company for $8.45 billion Wednesday, a price that includes just under $2 billion in debt.The deal is in many ways a vindication for Kevin Ulrich, the former Goldman Sachs Group Inc. trader who co-founded Anchorage in 2003 and was part of a group of distressed debt investors that took control of MGM as it went through the restructuring process. In recent years the stake looked to be an albatross for the fund, one that came with significant drama in its own right.Ulrich brought in and later fired a high-profile chief executive officer, resisted efforts by activist investor Carl Icahn to take control, and held out for a bigger payday after years of considering various exit strategies. By selling now, as demand for media content from entertainment and technology companies alike is booming, he’s proving his long-held faith in the investment was justified.“There was a lot of maneuvering, a lot of financial engineering,” said Steven Azarbad, chief investment officer at New York’s Maglan Capital, an MGM investor who sold his shares four years ago. “But they’ve done great.”A representative for Anchorage declined to comment.When Ulrich first invested in MGM, he was new to Hollywood. He helped pick Gary Barber, a South African-born producer of films such as “Ace Ventura: Pet Detective” as chief executive officer of the storied but debt-laden studio. Barber brought to the table a shrewd business sense, and connections into a world Ulrich long admired from afar.Barber shepherded MGM’s development of “The Hobbit” franchise, a co-production with Warner Bros., that became a global smash hit. He helmed the release of the James Bond film, “Skyfall,” which generated over $1 billion at the box office, and he revived the studio’s work in television. Barber also brokered a deal to bring on TV super producer Mark Burnett, which gave MGM access to reality show hits like “Survivor” and “The Apprentice,” but would ultimately become personally troublesome.In 2012 the company bought back Icahn’s stock for $590 million. It also filed paperwork for a possible public offering of shares, and considered other options, such as a sale.As Barber boosted MGM’s film and TV pipeline, Ulrich was increasingly entranced by the allure of Hollywood. He became a regular at movie premieres in Los Angeles and New York, and frequented industry parties in the Hamptons and elsewhere. He became active in creative decisions after becoming chair of MGM’s board -- somewhat unusual for a non-executive lacking Hollywood experience -- even getting involved with business granularities like casting.Growing RiftBut over the following years a rift began to open up between Barber and Ulrich. When it was time to renew Barber’s contract in 2017, Ulrich conducted an extensive search for a new CEO. When it ended, he ultimately chose to sign Barber to a new five-year deal. Yet around the same time, the pair split on whether to sell the company, with Ulrich wanting to hang on to the studio and Barber saying it was time to find a buyer.The company would hold buyout talks with Apple Inc. as well as Chinese investors that would ultimately prove fruitless.Only months after renewing Barber’s deal, Ulrich fired him. The shock departure meant the company had to pay Barber for five years of salary and buy out his equity, a package totaling $260 million. In the three years since Barber left, Ulrich hasn’t replaced him, instead operating an “office of the chief executive officer,” comprised of various people that each have their personal vision for MGM.Barber declined to comment via his spokesperson.Bounce BackAfter the initial period of success following the restructuring, the gains became harder to come by, as they did in Anchorage’s overall credit-focused business. Two senior managers left the firm in January 2020, and another in November. Anchorage’s flagship strategy, with about $8.5 billion under management, returned just 0.6% in 2018, 1.5% in 2019 and 4.4% in 2020, according to people familiar with the matter.In December, MGM hired investment bankers for a potential sale.MGM only released one film in theaters in 2020. Its biggest potential hit, the latest Bond film, “No Time to Die,” was pushed from last year to this October as a result of the pandemic.Yet the value of MGM’s library rose as everyone from media companies to technology giants have sought to build video streaming platforms that can compete with industry leader Netflix Inc. Earnings jumped 48% last year, to about $307 million, even as sales declined.Anchorage holds a roughly 30% stake in MGM, worth about $2.5 billion in the sale, said people with knowledge of the matter. Anchorage invested around $500 million in the company more than a decade ago. Including the MGM stake, Anchorage’s flagship fund is up 18% this year, the people added. The fund has gained about 8% in 2021 not counting the studio.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>The numbers: Pending-home sales slid 2.2% in December to a reading of 99, and were 9.8% lower compared to a year ago, marking the 12th straight month of annual declines, the National Association of Realtors said Wednesday. That’s the lowest reading since April 2014. What happened: NAR’s index, which tracks home contract signings, missed the Econoday consensus for a 0.3% monthly increase. Given all the headwinds facing the housing market at the end of last year, that forecast may have been too rosy. In December, the pending home sales index for the Northeast was up 2%. The index for the West were also up moderately, by 1.7%. But pending sales plummeted in the South by 5%, and in the Midwest by 0.6%. See also: Outside-the-box alternatives for home buyers in a tough housing market Big picture: The Realtor group named a litany of culprits for the steep decline in December: the stock market SPX, +0.19% correction, high home prices and mortgage rates, lean inventory, and even the government shutdown. Contract signing usually precede closing by about 45 days, so the pending home sales index is a leading indicator for upcoming existing-home sales reports. Market reaction: The Dow Jones Industrial Average DJIA, +0.03% was little changed after the NAR release. The Dow has climbed over 5% this month. Read:Home price growth skids to a 4-year low, Case-Shiller says<doc-sep>
House hunters signed 2.2 percent fewer contracts to buy existing homes in December, according to the National Association of Realtors. These so-called pending sales are a future indicator of closings in one to two months. The Realtors' pending home sales index was also down a dramatic 9.8 percent compared with December 2017. This marks 12 straight months of annual declines. It is also the lowest December sales reading since 2013. Some observers expected sales to get a boost in December from a drop in interest rates. Mortgage rates moved markedly lower to end 2018, with the average rate on the popular 30-year fixed loan falling from just over 5 percent in mid-November all the way to 4.61 percent by Dec. 31, according to Mortgage News Daily. Buyers had been struggling with high prices and higher rates for most of last year, and home sales declined as a result. "The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December," said the Realtors' chief economist, Lawrence Yun, in a release, suggesting that perhaps buyers were not aware of the lower rates. The partial government shutdown, which concluded last week after a record-long 35 days, would not have figured much into these numbers, as it didn't begin until toward the end of December. "Seventy-five percent of Realtors reported that they haven't yet felt the impact of the government closure. However, if another government shutdown takes place, it will lead to fewer homes sold," Yun added. President Donald Trump and lawmakers agreed to reopen the government until Feb. 15, with the intention of reaching a longer-term funding deal before that deadline. Regionally, pending home sales in the Northeast rose 2.0 percent month to month, and were 2.5 percent below a year ago. In the Midwest, sales fell 0.6 percent monthly and 7.2 percent annually. Sales in the South fell 5 percent monthly and 13.5 percent annually, and in the West sales increased 1.7 percent monthly but were 10.8 percent lower compared with December 2017. Closed sales of existing homes, which represent contracts signed in October and November, were also sharply lower in December, as the median home price hit a new high. The housing market has been plagued by a very tight supply of entry-level homes as well as very low levels of new construction. While the supply of homes for sale is increasing slightly, the growth is mostly at the move-up and luxury levels.