Pier resale

Now back to Santa Monica (requests noted!). This fixed-up 2 bed 1 bath house on Pier could be a market indicator. It sold under two years ago (7/29/05) for $1,208K, the house and yard already fixed up. It's now asking $1,395K.

To me the peak of the Santa Monica market was early fall 2005, and it's been flat to a little down since then. This house is cute, fixed up, and on a good-sized lot. But it's under the airport take-off, only two bedrooms, and I don't think changed by the current owner. Let's see if it finally sells for more or less than $1.2M.

Update (4/2): Reduced already to $1,360K(3%).
Update (4/3): Reduced again (!) to $1,348K. What's happening here?

"Sweeping bailout unlikely"

Be sure to read yesterday's LA Times front page article, Sweeping mortgage bailout unlikely. This is relieving news. Beginning and a highlight:

Borrowers, don't hold your breath for a bailout.

As mortgage delinquencies soar, many consumer advocates and political leaders are calling on government to help what may ultimately be millions of homeowners facing foreclosure.

But the modest federal and state aid proposals advanced so far suggest that most people struggling with onerous loan payments are unlikely to get government assistance. ...

One problem with even suggesting a broad-based rescue plan for homeowners who are underwater is that any bailout of borrowers also would be viewed as a bailout of their lenders — potentially including some lenders that allegedly preyed on home buyers during the housing boom.

Record LA County Inventory

In the last month Los Angeles County inventory jumped from 41,251 (2/28/07) to 43,761 (03/20) to a record 50,730 (03/31) in OC Renter's stats from Zip Realty (also below)! This surpasses the record high last fall of 47,369 (09/30/06). Other counties haven't passed last fall's peak yet. Very interesting .... We haven't seen it yet on the Westside, but last week rose in Santa Monica and Mar Vista (below).

Weekly Inventory Update

Active SFR Inventory

3/24: Adding OC Renter's Los Angeles County month-end inventory stats for comparison, and moving my 2/07 weekly detail to History. Both LA County and Santa Monica inventory peaked last October.

And adding New listings for previous month. March is MTD. Notice how many new listings in Mar Vista.

3/17: Drop in SM. Churn in MV.
2/23: Most striking is the continuing stalemate, shown by rising DOM. Well-priced new listings and a few older listings sell, and rest just sit and sit.

       LA County  Santa Monica  Pacific Palisades  Mar Vista
                <$3M New Tot DOM<$2M New Tot DOM Tot New DOM
       _________ _______________ _______________ ___________


 1/30/06  27,732 
 2/28/06  29,420 
 3/31/06  31,819 
 5/ 1/06  34,032  38  33
 6/ 2/06  37,847  56  36      38
 6/30/06  42,317  66  39      49
 8/ 4/06  45,315  70  35      50
 9/ 1/06  46,781  71  27      59
10/ 6/06  47,369  83  25  98  71
11/ 3/06  45,780  80  20  91  77
12/ 1/06  43,103  65  18  72  96  39  20
 1/ 5/07  35,646  54   4  60 117  33   6  71  66
 2/ 2/07  36,715  38  15  45 124  29  16  61  71
 3/ 2/07  41,251  42  14  51 114  26  10  68  79  53  25  76
 3/10/07  42,031  45      53 110  22      70  86  53      72
 3/17/07          40      45 113  23      69  86  51      71
 3/23/07  43,761  37  16  44 112  22   6  73  93  56  38  46
 3/30/07  50,730  42  23  51 104  17   8  71  94  60  50  40
 4/ 6/07

All Westside (updated 1st Fri. of mo.)

                   2/9  3/1
Bel Air-Holmby Hls. 86   86
Beverly Center-M.M. 64   57
Beverly Hills       67   70
B.H. Post Office    94   91
Beverlywood Vic.    35   36
Brentwood           67   71
Cheviot Hills-R.Pk. 22   20
Culver City         35   25
Malibu             178  181
Malibu Beach        42   44
Marina Del Rey      20   20
Pacific Palisades   64   68
Palms-Mar Vista     62   53
Playa Del Rey        7    8
Playa Vista          3    2
Santa Monica        50   50
Sunset Stp.-Hwd.H. 155  178
Topanga             39   41
Venice              64   64
West Hollywood      23   32
West L.A.           19   21
Westchester         53   46
Westwood-Cent.City  33   44
                  ____ ____
Total             1282 1308

Notes

Santa Monica Days on Market (DOM) is for <$3M, and omits Santa Monica Canyon (in City of Los Angeles but S.M. Post Office). Pacific Palisades DOM is for <$2M and count omits mobile homes.

On "Marketplace" today

Lot of MSM attention now. The lead story on NPR's "Marketplace" radio show today is "Bigger hit expected from housing market woes".

Some analysts are now saying publicly what others have been thinking: There's got to be a wider economic impact before the housing slump is over. ...

Economist Joel Naroff says prices need to drop more. He says many builders have brought their prices down, but owners of existing homes are still holding out for more than they can get.

JOEL NAROFF: "I call this the "seller's denial" segment of the housing cycle. Where sellers do see that they're having trouble selling their homes, but they're just not willing to drop the price enough where those homes will actually be bid on."

Subprime buyers helped inflate home prices. With access to cheap loans, borrowers could buy at prices they otherwise couldn't afford. With those buyers out of the picture, Naroff says affordability is much more important. ...

Idaho flip

Here's a classic flip. For sale in 11/05 at $1,399K, this finally sold 4/4/06 for $1,335K. It's now on the market asking $2,395K, over a million dollars more! That's the original photo above, which hasn't changed much except the bushes are gone and new paint and roofing.

I recall it being a little '20s house on a tiny lot (4,750 square feet according to Zillow), next to an alley, across Idaho from the Franklin School playground. There was a '60s 2-story flat-roofed addition on the left-rear side, leaving little yard. It was truthfully described as "NEEDS FIXING & TLC ... SOLD in 'AS IS' condition".

It's still 3 bed 3 bath, now claiming "Completely remodeled with hardwood floors throughout, new custom baths, kitchen with stone and stainless appliances."

Ok, so someone redid the interior. But is that worth $1M in a flat market, for only 2,080 square feet of house on a tiny lot south of Montana?? I predict this one will sit for quite awhile at that price. What's financing plus property taxes on $1.5M costing this flipper per month?

Numerology on 11th

Second place in the Ancient Listings of Santa Monica is this small craftsman bungalow on 11th Street, now at 535 days.

There must be numerology in the price. Originally it asked $1,498,640. It raised to $1,502,640 last June, and the current $1,505,820 in September.

The condos under construction to the left replace another bungalow like this. I imagine an aging hippie, who bought both back when they were cheap, now cashing out for retirement.

Likely why so long on the market is Santa Monica's "Construction Rate Program", which limits construction to one at a time within a 500-foot radius. It'll probably sell after next door is done. Sad, losing the cute little bungalows that give Santa Monica character for more boring big condo boxes.

"Probably rebounded" - NOT!

This is hilarious! Bloomberg reported yesterday (via Housing Doom, emphasis by me):

Sales of New Homes Rebounded in February: U.S. Economy Preview

By Vince Golle

March 25 (Bloomberg) -- Sales of new homes in the U.S. probably rebounded last month from a three-year low, a sign the worst of the real estate rout has passed.

Purchases rose to an annual pace of 990,000, up 5.7 percent from January, according to the median estimate of economists surveyed by Bloomberg News ahead of a Commerce Department report tomorrow. The National Association of Realtors last week said sales of previously owned homes rose by the most in three years. ...

The housing market is "fairly well along in the process of rebalancing," said Richard DeKaser, chief economist at National City Corp. in Cleveland. Subprime-mortgage defaults don't "have the heft to bring the entire market down."

Economists say that while the biggest declines in residential construction have already occurred, the housing will continue to restrain economic growth for at least the first half of the year.

OOPS. So much for "probably rebounded". Bloomberg today:

U.S. Economy: Home Sales Drop to Lowest Level Since June 2000

By Joe Richter

March 26 (Bloomberg) -- New-home sales in the U.S. unexpectedly fell in February to the lowest level in almost seven years, dimming prospects for a quick revival in housing.

The supply of unsold homes climbed to the highest in 16 years, the Commerce Department said in Washington today. Purchases dropped 3.9 percent to an annual pace of 848,000 last month. Economists had forecast they would rise to a 985,000 rate, based on the median forecast in a Bloomberg News survey. ...

"We're probably not going to see the pickup in housing by the end of the year that we were looking for," said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. "Housing imbalances will take longer to correct because inventories aren't declining very fast."

The report points to more declines in home construction that will further weigh on the economy as a wave of mortgage foreclosures adds to the woes of builders including KB Home. The February pace of new-home sales was the slowest since June 2000.

"As ugly as these numbers are, they don't reflect the tightening of lending standards, which means sales are going to get worse," said Christopher Low, chief economist at FTN Financial in New York. "The longer it takes for housing to recover, the more the risk it could spill over to other parts of the economy." ...

Marin Real Estate Bubble Wiki

Marinite is back online, with a strong proposal for action against Congressional bailouts:

"... I am absolutely furious about these potential bail-outs. ... All we can do is write to our elected representatives and express our objection to this proposed bail-out. Since so many people these days don't bother with writing letters to their representatives, I created a wiki ... for this blog where we can collaborate on a letter of opposition; I've already written the bare-bones first draft that I hope people will edit into a killer letter. ..."

Read the full posting for more. And be sure to visit the Marin PoS Blog while you're there.

Las Vegas

This photo of Las Vegas flippers in trouble from La Vida Vegas is too awesome to miss. Click to enlarge. See the original for more, including a really big photo "for full grokness".

26th

With Pacific amazingly in escrow, we have a new third place Ancient Listing of Santa Monica. Listed in May '06, off the market November-February, it's back. It's a typical north-of-Montana McMansion, only on 26th street, the loud and busy street that is the eastern border of Santa Monica north of Montana.

"Best Value! Stunning Mediterranean w/5BD, 4.5BA boasts grand entryway, hdwd & marble flrs, archways & recessed lighting. Bright formal dining w/custom crown moldings & spacious living rm w/marble FP opens to lush backyard w/tile patio. Great for entertaining! Open kit w/granite countertops & Sub-Zero, breakfast area & fam rm. ..."

Gotta razz this a little. "Best Value", really, after 310 days unsold? "Recessed lighting" is a top feature? Anyone have a copy of the secret NAR phrasebook? "Great for entertaining" must be in the top 10. Oh, yeah, the obligatory granite and Sub-Zero. Sub-Zeros fell over a lot in the earthquake, unlike refrigerators the rest of us owned.

Oops, omitted the price. Originally $2,995K, it was reduced to the current $2,850 last October. Address is 528 26th.

WestsideREMeltdown blog

Another blog joined the Westside bubble party at westsideremeltdown.blogspot.com. Welcome! (Thanks, Craig)

Falling 2

Westside prices have been pretty flat the last two years. I've called it a stalemate. For his Carlsbad area Jim the Realtor calls it:

"The Big Freeze-Up is what's happening now. Elements include: 1. Sellers are holding back. ... 2. Buyers are holding back - waiting for lower prices. ..."

We bubble watchers see it as teetering, with demand tapped out, waiting to tip down. Now we're watching it happen.

The demand side is falling from the implosion of subprime lenders. Expansion to Alt-A and prime and a stalling larger economy are next.

Bill Fleckenstein's current summary is subtitled, "As a result of the collapse of the subprime mortgage market, lenders will -- gasp! -- once again require down payments, filling the market with unsold homes and driving down prices."

Lack of first-time buyers then hits the mostly move-up Westside market. Calculated Risk's The Subprime Chain Reaction is an apt illustration.

So far on the supply side inventory has risen, but not on the Westside like unsold builder inventory elsewhere. Rising foreclosures are the other shoe to drop, as happened in 1990-94.

Which is why we need to watch and weigh in on Senator Christoper Dodd's potential legislation: is it really a bailout of lenders at taxpayer expense that would slow the market from returning to normal?

Marketplace gave a good summary Wednesday:

"Dodd, who is seeking his party's 2008 nomination for the White House, said in a statement on Tuesday that he was mulling legislation and other options that would protect consumers from abusive lending practices and allow them to keep their homes."

Bearmaster is very concerned:

"A massive Socialist bailout for subprime borrowers is being cooked up in Congress right now. The very thought of it makes me sick. Now is the time to let Congress know exactly what you think."
________________

More from the LA Times this morning, "Clinton: Industry 'clearly broken'". A key quote:

"As this crisis worsens, mortgage tsunamis will ravage working-class neighborhoods across the country," warned John Taylor, president of the National Community Reinvestment Coalition. "Sheriffs will be knocking on people's doors only to find keys and furniture left behind."

Taylor called for legislation to create a national rescue fund to support beleaguered borrowers and stricter standards to eliminate predatory lending.

Allowing borrowers to refinance under easier terms "is the most sensible way for Congress and the administration to deal with this problem," ....

What would those "easier terms" be, if borrowers can't afford anything but below market rates and/or negative amortization?

Pacific

Here begins a new series - The Ancient Listings of Santa Monica.

This is the third-oldest, 324 days. OC Renter highlighted its 3-flip history last November 28. Originally listed for $819K, this 2 bedroom, 1.75 bath on Pacific is also the cheapest house in Santa Monica, asking $699K.

It claims "Lovely move in condition Bungalow, west of Lincoln. Hardwood floors, Ceasarstone countertops, copper plumbing, updated electrical. Zoned C4! Excellent investment opportunity or great for first time buyers. Close to beach and shopping..."

Yup, it's one whole lot west of Lincoln, bumping against the corner liquor store and its sidewalk dumpsters. Certainly is close to shopping, if you need a 6-pack! But no first-time buyers have found it great so far.

Traffic

Traffic gridlock probably supports Westside house prices: pay to live here or suffer the horror of commuting to Santa Monica or West L.A.

If you want to rant or do something about it, here are two resources:

** The LA Times Bottleneck Blog.

** The planned Expo Line light rail line from downtown to Santa Monica is holding its last "scoping" meeting tomorrow evening. See its supporters' website at friends4expo.org for more info.

Warwick

[See updates at bottom]

Our first Spotlight shines on 18x7 Warwick Ave., Santa Monica. Listed in 8/06, it was slightly reduced in November to its current $869,000.

Let's savor parts of its MLS description:

"The Best Deal in Santa Monica!"

Local comps in the last year sold for about $100,000 less (3344 Delaware Ave., 3008 Delaware Ave., and 1912 Warwick Ave.) per the L.A. County Assessor's Office.

"Wonderful 3br 1ba Home on a quiet, tree-lined street."

It's one block from the Santa Monica Freeway (to the right). Enough said about the "quiet".

"The home is in move-in condition and is just waiting for your personal touches."

You've got a lot of "personal touches" ahead of you, beginning with replacing that security screen door.

"Open Every Sunday 2-5!"

For many weeks to come, at that price. Why do they write stuff that someone visiting quickly finds otherwise? It just wastes everyone's time.
___________________

This is off the MLS as of today (3/2), and the sign is gone. Relisting soon?

Meanwhile, two neighboring houses are new on the market, on 34th for $899K and Virginia for $849K. The latter's description - "Must see!" - somehow doesn't mention its backyard is just across the alley from the Santa Monica Freeway offramp at Centinela. Must be that zin again. We know the comps are $100K less.
___________________

It's baaack! Now (3/6) asking $865K (a whole $4K less), claiming "Extra bonus/media room." [Felt like an old covered patio. Remember those?] "Gorgeous gardens, tons of plants & trees." [The photo doesn't lie.] "Huge lot ready for lucrative expansion project." [Huge compared to what?!]

North of Montana Storybook

"North of Montana" on the Westside doesn't mean somewhere in Canada, it means the richy part of Santa Monica, north of Montana Ave.

This $2.15M 3 bed 2 bath house on 22nd St. is the first low-end house on the market there this year. As in, the agent during a busy open house yesterday said there were already 3 offers to tear it down to build a new "monster mansion." Which would be a real shame, as this 1927 house is really cute and in good condition, an opportunity to fix up in place or keep the front and add on behind. Expect the city Landmarks Commission to weigh in if a demolition permit is requested.

(The listing was confused what style to call it, first Spanish, then Tudor. I'd call it "Storybook," like the witch's house in Beverly Hills.)

Last year saw low-end houses north of Montana falling to $1.6M for 450 Lincoln and $1.86M for 620 17th, both closed in November. A high block of a higher-numbered street is considered more prestigeous, though, and this is a larger and nicer house. A new big 2-story house here would sell for over $3M or $4M.

Back in the crash of the early 1990s, "lot value" (tear-down) houses north of Montana fell from over $900K in 1989 to below $600K in 1994, over 1/3.

Effect of subprime meltdown?

Duckweed has a very relevant question, worth a new blog post: "Anyone has any comment on the effect of the new subprime lending guideline on LA RE? What's the exposure of this town?"

Calculated Risk's "Subprime: The impact on Existing Home Sales in 2007" is a good start - worth reading in full - although based on national statistics:

This is 2005 data, and other sources (and here) suggest non-prime (subprime and Alt-A) mortgage lending was about one third of all originations in 2005 and 2006.
...
And, according to this note perhaps 25% of subprime borrowers will be unable to obtain loans in 2007:
...
So if one fourth of potential subprime borrowers are unable to purchase homes in 2007, as compared to 2005 and 2006, then 25% of 20%, equals 5% of the total market. In 2006, there were 6.48 million existing homes sold, so 5% would be just over 300K homes.

The implosion of subprime lenders probably will have more effect than the guidelines. If there are few lenders left, and the market has finally made them afraid of risk, loans have got to dry up that have been propping up lower-end L.A. real estate. Which cascades onto demand for move-up properties. And then there are the Option-ARM resets coming this year.

I'm really angry about those easy lending standards, because they provided the money that drove up prices and essentially forced buyers to play by those rules to compete. Lack of regulation is the big villain behind the coming defaults and property value losses.

Let's keep this open for updates, especially on specific numbers about southern California.
_________________

Jim the Realtor just posted (3/5) that 26% in Carlsbad and 40% in Oceanside used 100% financing of sales closed in February. A comment by oc_fliptrack said Countrywide just dropped stated-income 100% loans, that 100% is still possible down to FICO 620 but now requires full documentation.