Mar Vista flipper in a hurry

This 3/2.75 house was just listed at 12566 Woodbine for $1,299K. But it only closed escrow 3/20/07 for $935K (listed for $999K on 11/3/06). And is down the street from 12600 Woodbine, a 3/1 one-story asking $849K (listed 1/16/07).

Beautiful home going through major renovation (2 story). New kitchen, bathrooms, hardwood floors! All new travertine in kitchen and baths. High end vanities in baths. Master is unbelievable, about 650 sq. ft taking up entire 2nd Floor. Huge master bath with spa tub (w/8 jets!). Huge new walk-in with all built-ins! Although not at beach (less than 2 miles), beautiful sunsets! Wonderful neighborhood, you will love it. Available for lease ($5200). 3 wk. listing or will be rented . Offers due May 4...

The second story can't be new, so they expect a line of buyers eager to pay over $350K just for new interior finishes? What's with the lease threat? Could they get $5,200/month? Would they even break even?

Don't you hate it when they flunk basic geography? The nearest beach is at the end of Rose Ave., 2.9 miles by Google maps, a mile more than "less than 2 miles".

"Flat sales and falling prices"

The L.A. Times Real Estate cover story this morning says, "'A bit of a hybrid' situation this spring favors sellers in some price ranges and buyers in the middle sector." Which is what we see on the Westside, inventories up from a year ago and rising, with pickier buyers. Good now to see the Times saying it, especially the last quote.

As the spring buying and selling season hits its stride, the local home market looks like two different places, depending on the price range.

It's a buyer's market in the broadest swath of homes, priced from about $550,000 to $10 million. ...

Already, L.A.-area agents are starting to see the ramifications of tighter lending practices. Escrow companies don't report the number of purchases that fall out, or the reasons, but agents who work with low-income buyers believe they are seeing more deals sour.

"Maybe 15% are falling out," said Solorio, who works with many low- or no-down-payment clients.

"Buyers think they're going to qualify. They have a 'friend' who's going to get them the loan," he said, but then the mortgage doesn't materialize. Others have credit problems, he said, that scuttle the deal. ...

And buyers aren't rushing. Houses, in general, are taking longer to sell. In Los Angeles County, homes stayed on the market an average of 54.6 days in March 2007, up from 36.8 days a year earlier. In March 2004, it was just 20.9 days.

"Buyers think if they wait a little longer, they are going to be able to grab a better price, a lower price," agent Solorio said. ...

There is more to chose from. The California Assn. of Realtors' Unsold Inventory Index in Los Angeles County — a ratio of listings to sales — rose to a 9.6-month supply as of last month from a 5.2-month supply in March 2006, Appleton-Young said. In March 2004, it was at 1.2. ...

Despite the overall uptick in the median price of a home in L.A. County, UCLA economist Ratcliff sees a less rosy picture ahead: "flat sales and falling prices."

Low-end north-of-Montana

After a drought of low-end north-of-Montana listings there's now a spring flood in March and April:

307 Euclid, 3 bed/2.5 bath, asking $2,195K
433 12th, 3/2, $2,240K
211 20th, 2/1.75, $2,295K;
727 12th, 5/3, $2,295K;
427 17th, 4/2, $2,295K (in escrow)
716 11th, 3/3, $2,295K (in escrow)
515 12th, 2/1, $2,299K
363 21st Place, 4/3.75, $2,398K

If tear-downs like 433 12th ("Property sold for land value. House is in rough condition.") and 515 12th ("NOT IN LIVABLE CONDITION PRESENTLY") are worth this much it would be a big leap. But this feels like the over-reaching I saw the last two years, especially with this many on the market.

The photo above is 450 Lincoln, the second-cheapest north-of-Montana sale last year, 2/2, closed 11/9/06 for $1,605, after multiple reductions from $2,195K to $1,749K, and is still standing. Slightly less was 717 7th, 3/1.75, closed 6/8/06 for $1,540, but 7th is really busy. A 2/2 at 717 Euclid was listed for months at $1,895K, but never sold, showing $1.9M was over lot value. Other low-end sales included:

620 17th, 2/2, 11/7/06, $1,860
434 11th, 3/2, 12/15/06, $2,025
416 17th, 3/2, 10/18/06, $2,042K
454 12th, 4/2.5, 11/21/06, $2,085K (cute corner Storybook with master on 2nd floor)
429 21st Pl, 3/1.75, 9/1/06, $2,095K
411 Lincoln, 3/1.75, 5/23/06, $2,095K
716 11th, 3/3, 9/14/06, $2,112K
703 14th, 3/2, 3/2, 12/4/06, $2,150K (big, nice 1-story, but on busy 14th above Peet's Coffee)

Leaving California

The LA Times today had an infobox, based on 2005 tax returns filed, of counties most moved to (dark red on map, click to enlarge) from California, and coming from (black on map) to California.

The net was 71,917 leaving, 274,278 total outgoing to 202,361 incoming. California is special, that's why people are leaving for cheaper places like Nevada, Arizona, Oregon, and Florida!

In a related story and graph, remittances from immigrant workers back to Mexico and other Latin American countries have been falling since last May, matching the US construction slowdown. Calculated Risk touched on this Tuesday.

Bad weather and other links

If you haven't already seen yesterday's news, existing home sales nationally fell 8.4% year-to-year in March, and the national median price fell 0.3% to $217,000. The NAR blamed it on bad weather and subprime loan fallout. See Calculated Risk and Housing Doom for reality.

Here are three YouTube videos of a guest lecture on the housing bubble by Dr. Christopher Thornberg at Humboldt State University last November (via Housing Panic).

It's made the bubble-blog rounds, but be sure to ride the "US Home prices adjusted for inflation plotted as a roller coaster".

One year

It's been one year since I began tracking Santa Monica statistics, inspired by OC Renter's LA County inventory, began posting them as comments there, and now on this blog for two months. I hope this continues to be useful (and entertaining) for those of you who visit regularly!

Where are we now? Santa Monica SFR inventory (<$3M) is up 29% YOY (35 to 45). LA County inventory is up 35% YOY (33,054 to 44,764). We'll see if last year's trend holds, that they both rose steadily through the summer to peak at the end of September.

It's also a good time to recap the houses featured here:

• The Malibu Lautner house is still available for the same $33.5M.
  
• Staged on 17th (3021), originally asking $1.849K, finally sold for $1.6M.
  
• Freeway close (3735 Globe Ave., Mar Vista) is still available for the same $725K.
  
• Freeway close 2 (3736 Tuller Ave, Mar Vista) dropped from the MLS last week. Could it have sold, or is it that zin again?
  
• The north of Montana Storybook (369 22nd) sold fast for $2.25M ($100K over asking).
  
• Warwick (1817) is still available for $865K.
  
• Pacific (728, next to the liquor store on Lincoln Blvd.) seems to have sold at $699K, but no sale price yet.
  
• After months on the market, 528 26th is in escrow.
  
• Flip-flop flip (flop) on 22nd (1036) is in escrow. Reduced it enough to sell (about the $1.78M paid in 6/05), but will eat carrying costs, architect and city permit fees, and selling costs. Flop!
  
• Numerology on 11th (1518), Idaho flip (2320), Pier resale (1721), Ocean Ave. bungalow (2219) and Another flip (flop) on Marine (2202) are still available, prices unchanged.
  

Disappointing for those of us looking for declines, prices have held so far. Houses with the right prices sold fast in this spring's Westside market. But I'm also seeing new unrealistic expectations. More to come on fantasyland prices.

LA Times - Foreclosure pace nears record high

The MSM is finally catching on. Front of today's LA Times Business section was "Foreclosure pace nears decade high". Graph from DataQuick.

Nearly 900 Californians a week are losing their homes because they can't afford to pay the mortgage — up from about 100 a week a year ago — providing fresh evidence that the housing market's troubles are nowhere near over.

The surge is raising concerns that home prices will soon suffer as a result. The 11,033 foreclosures in the first three months of the year represent an 800% increase over the same period a year earlier.

Instead of "concerns ... home prices ... suffer" how about "hopes ... home prices ... fall to more affordable levels"?

So far, the effect on home values has been muted. But as the number of move-outs, evictions and forced sales continue to increase, some economists say they will soon start to push prices down.

First to fall will be the low-income communities where marginal loans proliferated, they say. The trend will spread like a virus to more affluent neighborhoods.

The most pessimistic think a housing bust will wound the economy.

"For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary," said analyst Christopher Thornberg of Beacon Economics.

He predicts foreclosures will top out at four or five times the current level — enough, he says, to either induce a recession or at least bring the economy to the precipice. ...

Most of the loans going into default now were made at the peak of the housing boom in 2005, when some thought the good times would continue forever and lending standards were lax. Nearly 80% of loans made in the state in May 2005 for the purpose of purchasing houses had adjustable rates, a record high.

Many of these mortgages required the borrowers to put little or no money down, and lenders took their word for whatever income they said they made.

Which pushed the bubble up even more.

For a moment, everything was fine. Then housing prices stopped going up — meaning that many of these borrowers did not have enough equity or income to refinance to a new loan. Others in foreclosure may be able to afford the payments, but have chosen not to make them because their homes are worth less than they paid. ...

There's little precedent for the current wave of foreclosures. Traditionally, people lose their jobs, and then they lose their houses. In the early '90s, the aerospace industry's collapse triggered a broad recession.

And no precedent for these loans, either. Gee, do you think there's a connection?

This time, the foreclosures are happening first — and fast.

"It surprises me, the speed at which all this is evolving," said Edward Leamer, director of the UCLA Anderson Forecast.

"Surprised"??

He sees plenty to worry about. For instance, the recent tightening of loan standards is, for better or worse, eliminating a lot of the fuel that powered the bottom of the market. Entry-level buyers are priced out, which means existing owners have a harder time selling their homes to move up. Eventually, everyone is vulnerable. ...

I remember many articles in the early 1990s of how foreclosures were pushing prices down until they finally got worked through.

"The foreclosure fighters"

The LA Times yesterday ran a column on the "how" of proposals for borrowers going under. The most meat was at the end (emphasis added):

One option that is gaining significant attention would work like this: Borrowers in serious default would be refinanced into government-insured or guaranteed fixed-rate programs such as FHA, VA or rural housing. If their loan balances exceeded FHA statutory limits, the refinancings could be provided through Fannie Mae or Freddie Mac.

The initial balances on the new mortgages would be what the borrowers could afford to pay using their current incomes at market rates. Any shortfall between the amount of the new loan and the balances owed on the unaffordable previous loan would be recast into a "soft" second lien — a second mortgage or deed of trust carrying a minimal or zero interest rate and no monthly payments. The second lien would be due and payable in a lump sum at any subsequent sale of the property, or whenever the borrowers could afford to retire the debt.

Credit risks on the soft second mortgage would be shared by Wall Street bond investors, the federal government or other mortgage market players.

The concept wouldn't keep everybody out of foreclosure, nor would it be extended to people who inflated their incomes or bought properties they could never afford.

But it could be one answer for the payment-shocked sub-prime borrowers who simply got in over their heads.

The devil is in the details of who qualifies and at what payment level. It also reminds me of Japanese banks stringing out non-performing loans rather than taking their losses during the 1990s, which only dragged out their decline.

See also Bloomberg's Mortgage Bondholders May Bear Subprime Loan Risk" (via Theroxylandr).

Another flip (flop) on Marine

Must have been reading about 22nd ... A new listing at 2202 Marine, asking $1,495K, "Ready to break ground! Plans and permits in place for a 3,600 square foot house with city and ocean views". Love how the listing describes 5 bedrooms, 4 baths, 3,500 square feet, and year built 2007. But it's not built; the current house has 4 bedrooms and 3 baths.

A little history ... This sold 11/14/05 for $995K. It was listed when I began tracking in April 2006 for $1,325K, reduced to $1,250K in June and gone in August.

The market has been flat since mid-2005. This 7,000 SF lot is a half-block from busy 23rd, under the airport take-off. A half-million for plans and permits in a flat market? When 22nd is hoping to barely break even? I'm not holding my breath. Hey, for only $300K more you could buy 22nd and get a lot and a half, north of Wilshire.

DataQuick March update

Here is DataQuick's March update on southern California counties' median prices and numbers sold (click to enlarge). Overall it's more of the same - prices are a little up or down, not yet reflecting what's happening in loans, while volumes continue to fall. Note this includes their new-methodology revisions to Jan-Mar 2006.

North of Wilshire

Speaking of Frank Gehry's house ... actually, it's just a lead-in to talk about sales over the last three years in this single-family neighborhood between Wilshire, Washington, 26th, and 22nd, the cheapest (if you call over a million cheap) north of Wilshire in Santa Monica.

It's a good location, walking distance to Douglas Park and Whole Foods. North of Washington the lots are deeper (vs. the extra Chelsea St. between 24th and 25th south of Washington) and more expensive.

Address         Bd Ba  LP($K)     SDate SP($K) 
______________  __ __  ______  ________ ______

1022 22nd        3  2           9/28/04  1,100 
1023 22nd        3  2          10/14/04  1,250 
1036 22nd        2  1           6/14/05  1,780 
1028 23rd        2  2            7/7/05  1,295 
1034 24th        3  2   1,695  10/11/06  1,525 
1040 24th        3  2           8/31/05  1,595 
1043 24th        2  1            5/4/05  1,424 
1043 Chelsea     2  2           12/1/04  1,315 
1015 25th        3  1   1,300   1/12/07  1,200 
1020 25th        3  2           7/12/04  1,475 
1025 25th        3  2           9/13/05  1,720 
1038 25th        3  2           7/14/05  1,650 
1039 25th        3  2           9/30/04  1,500 
1043 25th        3  2            6/3/04  1,300 
1048 25th        3  2           10/7/05  1,350 
1122 26th        3  1          11/21/05  1,220 
2307 Washington  4  3           1/28/04  1,550 
2308 Washington  3  2           8/26/05  1,350 
2312 Washington  4  3           8/26/04  1,650 
2321 Washington  2  1   1,350    8/8/06  1,215 
2415 Washington  2  1.5 1,347  11/21/06  1,347 
2418 Washington  3  2           1/13/04  1,204 
2436 Washington  4  3           9/10/04  1,890 
2452 Washington  2  2           5/24/04  1,225 
2512 Washington  3  2            5/7/04  1,590 
2201 California  3  2           7/21/04  1,144 
2308 California  2  2   1,349   4/14/06  1,349 
2312 California  2  1   1,450   7/12/06  1,392 
2421 California  3  3           3/10/06  1,865 
2512 California  3  2           7/23/04  1,250 
2520 California  3  2           4/28/04  1,250 
2526 California  3  2           6/18/04  1,220 
2526 California  3  2            3/7/06  1,366 

Flip-flop flip (flop) on 22nd

This sweet house on 22nd north of Wilshire (down the block from Frank Gehry's house) is the new third place in the Ancient Listings of Santa Monica. A lot and a half (75' wide), 2 bed 1.25 bath, the master bedroom has hinged windows that go nearly to the floor and bring in the feel of this spacious rustic lot. Add on with a new kitchen and a third bedroom and it could be very nice.

Our flipper had bigger ideas. He bought it on 6/14/05 for $1,780K, got plans (boring image below) and permits, but then cold feet. Put it on the market 2/22/06, touting its plans and permits, asking $2,099K - over $300K for his trouble! Nothing happened. Reduced to $1,949K in 5/06. Still nothing. Took it off the market in July. Decided to build after all? Guess not. Back on the market 11/06. Couldn't sell it for $1.95M before, but listed at $2.2M. Dropped to $2.0M 1/07. Off the market. Now back on the market for $1,799K. Flip-flop, flip-flop, flipper is flopping.

Hill Street

This 2 bed 1 bath tear-down at 1408 Hill St. sold 2/20/07 for $896K, just under its $899K asking price. Noteworthy is that there was no bidding war, unlike past low-end sales here, including the auction a year ago of 1514 Hill that went up to $1.25M. The city Demolition Permit application is already posted. It's pretty bad inside, as you can see by its kitchen:


Let's use this as the beginning of a look at Hill Street in general. I find it one of the nicest streets in Sunset Park, a little hilly with some views, but not as under the flight path as Ashland, Pier, Marine, etc. Here are Hill Street sales since the fall of 2004, in address order. I'll visit some in more detail in future posts.

Addr Bd Ba    LP($K)        SD SP($K) 
____ __ ____  ______  ________ ______

1131  3  3     1,582   5/24/06  1,501 
1212  3  2            12/20/05  1,182 
1314  3  2             3/13/06  1,230 
1324  4  3     1,795      
1334  3  2            10/19/04    875 
1352  3  3            11/10/04  1,039 
1408  2  1       899   2/20/07    896 
1502  3  1     1,249   4/18/06  1,265 
1502  3  1             11/3/05  1,150 
1509  3  1.8   1,295  11/20/06  1,261 
1514  2  1   auction   3/24/06  1,250 
1616  2  1       850   8/23/06    928 
1649  4  3.5   1,829   6/16/06  1,880 
1655  3  2     1,328   2/23/07  1,302 
2216  3  1.8   1,595    5/9/06  1,640 
2307  2  2            10/26/04    975 
2308  3  2     1,309   
2315  3  2     1,450    8/4/06  1,400 
2315  3  2     1,475    3/8/07  1,475 
2414  0  0              8/5/05  1,915 
2427  3  2             7/15/05  1,320 

New links

I just ran across and added links for Real Estate Comments, focusing on the South Bay and general economy, and OC Renter's Bubble Markets Inventory Graphs companion to the staple Bubble Markets Inventory Tracking.

I've also added links for Zip Realty (the MLS posts listings faster, but doesn't have Zip's listing dates) and Zillow (more timely sales data than the County Assessor).

Ocean Ave. bungalow

And now for first place in the Ancient Listings of Santa Monica (drumroll, please) ... This 3 bed 3 bath Ocean Park beach bungalow sandwiched between apartments on Ocean Ave., asking $3.3M, has been on the market since September 2005, 560 days. It has an ocean view across the street (although that is the beach parking lot beyond the wall):


Here's the story behind it, from the current Santa Monica Conservancy newsletter:

Coalition Formed to Protect Ocean Avenue Cottage

Residents are working together to save a 109-year-old house in Ocean Park from demolition. Located at 2219 Ocean Avenue, the single-story cottage may be the last beach-facing cottage of its kind in Ocean Park. Residents banded together to save the structure from demolition by sending a petition of nearly 1,600 signatures to City Council. The cottage was deeded over to the University of Illinois Foundation following the previous owner’s death. The Foundation filed a demolition permit in April 2006.

The Landmarks Commission voted to designate the building as a landmark in August 2006. The University Foundation has appealed, asking the City Council to override the landmark designation. The hearing is expected to be on April 24th.