Different this time?

So what's ahead for Westside prices? We know the arguments for the housing bubble, see the bears were right in general, and prices are falling in many places. We know prices fell in Santa Monica some 25% in the 1990s.

But there is the nagging question: Westside prices so far have only plateaued, listings are limited, foreclosures are rare, we don't see seller distress. Is a fall just a matter of time now, or is something different here, this time?

I'd like to summarize and revisit two good arguments for why prices won't fall from the comments on the "LA Times lead" Oct. 17 post. But first I'll divide Westside buyers into two types:

1. The money-is-no-object wealthy can write a check if they really like something. They choose between 90402, Pacific Palisades, Brentwood, Malibu, Bel Air, Beverly Hills, Manhattan Beach, Palos Verdes, etc. Some move from one house north of Montana to a bigger one a few blocks away. There aren't very many of them, though, else why so many unsold multi-million-dollar houses? And I expect them to be impacted by a stock market fall.

2. High-income professionals who still need a jumbo loan and must sell their existing house to move up. Maybe they can afford low-end north of Montana, but more likely they're shopping Sunset Park or Ocean Park if in Santa Monica. They're already unwilling or unable to buy many listings at current prices, and will be impacted by a faltering economy (overdue for a recession from housing falling and less consumer ability to spend), tighter credit, and falling demand for the houses they're selling.

As Newbie (10/28) commented, "The realtor - happily - told me that more than 75 percent of the homes she was selling were being purchased with no money down, IO or similar." These move-up buyers must be impacted on one or both sides by tighter credit. Now on to Rosebud (10/18-19) and Anonymous (10/20).

Rosebud:

So how does it happen? What's going to make more people need to leave? How many homeowners in SM would be subject to the risky loans of the past few years if sales volume is so low?

Yeah, a natural disaster could do it... but is there anything else that you think will cause people to put their homes on the market here? With the lower volumes this year in Northern SM, it seems people are consciously not putting their homes up. If you're so certain of the impending doom, why don't we see it yet? and when precisely, will we?

To answer, supply is down this year and last, and down 'dramatically' since '01. (Dramatically in quotes because the volume would be considered low in '01 as well). Total units are the same (9400), but units for sale is down.

SM has seen an 8% population increase since 2000, an unemployment rate go from 7.4% to 4.2%, and aggregate business receipts go from $7.7B in '02 to over $9B in '05 (they're even higher now, though not reported). The office vacancy rate has gone from over 12% in '01 to under 7% in '06. SM's schools' API's are now through the roof, with the 2 Northern SM elementary schools some of the best in the state.

But that brings up the last and most interesting point, changing demographics. More than 60% of SM's workforce are in executive, management, or professional jobs... And this rate has been increasing at more than 10% per decade since 1980. Couple that with the huge influx of software and technology companies over the last 6 years, and you have some decent demand indicators on top of the hard facts from above.

Anonymous:

that said, no matter what i see in this and warchestsm's blog, i can't see how that is going to happen. sm just isn't part of the same calculation as the rest of los angeles county. santa monica is ... a prestige community with some of the best public schools in the country ....

there are other, less tangible, incentives, like always driving against the flow of traffic ... better comminity support institutions, ... a community forest program with a ambitious vision for a green city, solar conversion support, and so on... this is just a better place to live.

selling real estate in california has always been wrapped up with "the dream of endless oranges." there's always an air of fantasy involved with buying a house here. for people with resources sm has become the place to throw that money around.

I'd summarize that Santa Monica is becoming more upscale, led by 90402, driven by job growth and quality of life, while housing supply is constrained. But wasn't that largely true two decades ago? Roosevelt and Franklin were top-ranked elementary schools then, especially compared with LAUSD across the city line. To pay $300K for a tear-down north of Montana in the mid-1980s was absurdly expensive, but supply was tight.

True, traffic is worse now, houses are grander, and SM is more upscale. I'm not expecting a lot of existing owners to sell in distress, but there appear solid reasons demand (as in ability to spend) will fall for move-up buyers. Prices overreached and fell back 25% in the 1990s, and this time their run has been longer and higher. (Rebuttals welcome!)

Case-Shiller update

Here's the latest S&P/Case-Shiller monthly index for Los Angeles, and their original ten-city composite, just released for August. (I also updated Saturday's "SM vs. Case-Shiller, revisited" post with it.)

Los Angeles is now down 5.8% from the peak in September 2006 - another 1% from July. The national index is down 5.3% from its peak in June 2006 - another .7% from July. In contrast, Los Angeles fell 27% from the last peak in June 1990 to the low in March 1996.

For more and bigger Case-Shiller graphs see Paper Economy.

1980s specs

The big push up in "lot value" prices north of Montana in the latter 1980s was from spec builders. Paul Zahler was especially well known for these. Their new houses sold for $1.5-1.7M, for 2 stories, ~4,000 SF, but not the opulence of new houses of the last decade. Ballpark price of these houses from the 1980s now would be over $3M, as opposed to $4-5M for current new houses.

A good example, and one of the last of that cycle, is 330 10th. It's tear-down sold in 8/88 for $785K. The new house (photo), is 4,558 SF, 4 bed / 5 bath, sold 8/90 for $1,572K as the market had already turned down.

It all came to a halt in the 1990s. Jeff Mandel, developer of 330 10th, was too leveraged at the wrong time and reportedly went broke. With no new-construction demand, prices of tear-downs fell 25%, and didn't recover for a decade.

Nothing sold - the sequel

Back on September 24 it was a big deal: No houses sold that weekend in Santa Monica ... or <$2M in Pacific Palisades ... or in Palms-Mar Vista. None. It just happened again this weekend (yawn). Along with a few price reductions, a house back on the market, and new attempted flip.

"Beautiful white iron gate"

For some cheap entertainment while I contemplate the BIG question of whither Westside property values, here's something that really belongs in Dr. Housing Bubble's "Real Homes of Genius." From Panorama City, a 2 bed / 2 bath house at 15213 Lorne St., asking $510K (reduced from $535K), its flier states:

"Beautiful home with a beautiful white iron gate, paved driveway [!] with R.V. access. The home is neat as a pin, with copper plumbing, a large bright living room, a lovely updated kitchen with a large breakfast area above a spacious family room with brick backed wood stove, fabulous entertainer's bar, and space for a home office. Shows like a model home. There is a 2 car attached garage [not what I see]. The yard features a covered patio with Italian tiles and lots of room for entertaining!!!"

As they say, beauty is in the eye of the beholder. This can be yours if you're willing to leave the Westside! It's a quiet street ... except for the railroad tracks three blocks south. Or there are a number of other houses in the vicinity asking in the $400s.

SM vs. Case-Shiller, revisited

Remember last month I tried fitting the LA Case-Shiller index to low-end north-of-Montana prices, specifically 9th, 10th, 12th, and Euclid? (As I noted before, I scaled the Case-Shiller curve to fit the north-of-Montana data, which doesn't matter in terms of percentage changes. Updated with for August, released 10/30.)

I found more sales data from 1989-92 (the last peak) and 2002-4, which I've added to refine a new graph (above). There were lower prices than my recollection of the last peak being over $900K. The lowest recorded prices appear to be:

$295K - 550 10th - 3/85?
$316K - 527 Euclid - 12/85
$450K - 545 12th - 11/86
$470K - 347 12th - 9/87
$605K - 348 12th - 1/88
$725K - 615 Euclid - 7/88
$712K - 560 9th - 8/89
$725K - 323 10th - 2/90 - Up ~150% from 1985
$735K - 326 9th - 11/90
$690K - 628 12th - 2/91
$600K - 438 12th - 11/92
$541K - 627 Euclid - 5/96 - Down ~25% from 2000

There appears a divergence this year, where north-of-Montana tear-down prices took one more jump up. Although $2,050K for 307 Euclid in 6/07 is pretty consistent (up ~275% from 1996), as is the apparent sale last week of tear-down 704 15th, last listing price $1,990K (not on graph).

I tried this again (graph above) with Sunset Park, specifically Hill and Ashland east of 11th. (Also see recent Hill St. sales from last April.)

This one's harder, perhaps because Sunset Park has less clear "tear-down" activity than north of Montana. In the last year there were two really low-end sales (the low points on the graph), $896K for 1408 Hill in 2/07, now demolished, and $928K for 1616 Hill, now rehabbed, but the rest were a step up in price and livability.

Weekly inventory update

10/26 - SM inventory <$3M is down 5% and PP <$2M is down 4%, due to few new listings, but MV is up another 3%. "Freeway Close" dropped its price another $60K.

10/19 - SM inventory <$3M is down 4%, PP <$2M is down 13%, but MV is up 9%. No longer listed include 611 14th ($2.049M), 2158 La Mesa ($5.5M), and 1020 Palisades Beach Road ($10.55M) in SM, and 3653 Mountain View ($3.395M) in MV.

10/12 - SM inventory <$3M is up 5% for the week, PP <$2M is up 11% and MV is up 2%, with more price reductions. (Corrected - thanks, Dan; pesky Excel formula didn't survive inserting columns.)

10/5 - SM inventory <$3M is up 10% for the week, and the highest this year; PP <$2M is up 4%; MV is down 1%.

       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
 4/21/06  33,054  35
 5/ 1/06  34,032  38  33
 6/ 2/06  37,847  56  36      38
 6/30/06  42,317  66  40      49
 8/ 4/06  45,315  70  34      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
 4/ 6/07  42,857  41  23  49 107  18   8  73 103  52  52  50
 5/ 4/07  45,918  46  28  54  92  19   6  82  79  68  37  52
 6/ 1/07  52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07  52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07  54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07  57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07          59  17  74 103  26   9  90  81  87  20  87
10/ 5/07  58,973  65   8  81  98  27   2  95  85  86   6  87
10/12/07  58,918  69  13  85 102  30   5 103  64  88  13  87
10/19/07  59,029  66  16  81 105  26   6  96  70  96  21  87
10/26/07          63  18  80 105  25   6  97  76 100  29  87
11/ 2/07

Bookmarks

This new chart of coming mortgage resets has been covered well at Calculated Risk, Dr. Housing Bubble, and The Great Loan Blog, but I wanted to bookmark it here too.

Second is this YouTube video of Fox News with Peter Schiff vs. guys who predicted 10% gains last year, from Housing Panic yesterday. Quotes:

"Will homes be worth more or less in 2007?"

"Today's home prices are completely unsustainable. They were bid up to these artificial heights by a combination of temporarily-low adjustable-rate mortgage payments, a complete absence of lending standards and by speculative buying."

"These sky-high real estate prices are going to come crashing back to earth. There's no way to stop it other than the Federal Reserve creating so much inflation...."

Citizens for Financial Responsibility

Be sure to see the Market Ticker's online petition, Citizens for Financial Responsibility. It's a strong message to Congress, well delivered: you provide your name and address, your member of Congress and Senators will receive individual faxed letters.

Updated: See also today's LA Times editorial "A subpar sub-prime plan?" on Countrywide. And the fact that 65% polled think it likely "the nation could face an economic recession sometime in the next year".

Fire Devil vs. housing bubble?

Only a bubble blogger would think of this, but ... how do homes lost compare with current inventory of houses for sale and the monthly sales rate? Has the fire Devil solved California's housing bubble? Doesn't look like it.

Adding up the counties' numbers of houses destroyed from today's LA Times, compared with SFR-condo inventory and July sales from BMIT, we find:

Los Angeles - 24 destroyed - 59,029 inventory - 4,361 sales
Orange - 9 destroyed - 19,782 inventory - 1,643 sales
San Bernardino - 313 destroyed - 23,216 inventory - 1,509 sales
San Diego - 1,261 destroyed - 23,166 inventory - 2,152 sales

Again, our best to the firefighters and homeowners on the fire lines.

More Westside transit meetings

Hope you saw S M Distress Monitor's Traffic Jam on Oct. 15. Here are three Westside transit meetings you could attend, from Friends 4 Expo:

Tonight, is the City of Santa Monica Industrial Lands workshop, including the Bergamot Station and Mid-City Expo Line station locations, part of its Land Use and Circulation Element update. It will be at 6:30 (6:00 registration), Lincoln Middle School cafeteria, 1501 California Ave. See the City's website for details and RSVP.

Or see how many Cheviot Hills homeowners get heated at the Expo Line Phase 2 Initial Screening Results third meeting, also 6:30 tonight, at Vista Del Mar Child and Family Services Gymnasium, 3200 Motor Ave., LA.

And Metro added a sixth Westside Extension (aka Wilshire "Subway to the Sea") Alternatives Analysis public meeting in West Hollywood, Mon., Oct. 29, 6:00 p.m., Plummer Park, 7377 Santa Monica Blvd.

East of the 405, north of Pico

Suppose we venture east of the 405 to see what another part of the Westside has to offer? Specifically, the area north of Pico, south of Santa Monica Blvd., and west of Century City. The MLS includes it in Westwood-Century City.

The photo above is of 2357 Kelton Ave., just north of Pico and west of Westwood. It's a fixed-up 2 bed / 1 bath house now asking $999K, originally listed for $1,039K on 9/28/07.

Across the street is 2360 Kelton, also a fixed-up 2 bed / 1 bath, asking $1,099K, listed 7/26/07 for $1,149K.

The good news is a neighborhood with prices beginning below $1M, not as mansionized as parts of Santa Monica or Palisades, walking distance to local shops, architectural character from the 1920s, and big street trees. The bad news is you're sandwiched by traffic on the boulevards and freeway.

Two other recent listings appear to have sold within a week earlier this month: 2300 Manning, a fixed-up 3 bed / 1.75 bath corner Spanish house that asked $1,275K, and 2030 Kelton, a 3 bed / 1.5 bath fixer Spanish that asked $849K.

Malibu fire

Malibu fire from PCH, Sunday afternoon. A recurring reality of certain Westside neighborhoods. Our condolences to those affected.

Weekly inventory update

10/19 - SM inventory <$3M is down 4%, PP <$2M is down 13%, but MV is up 9%. No longer listed include 611 14th ($2.049M), 2158 La Mesa ($5.5M), and 1020 Palisades Beach Road ($10.55M) in SM, and 3653 Mountain View ($3.395M) in MV.

10/12 - SM inventory <$3M is up 5% for the week, PP <$2M is up 11% and MV is up 2%, with more price reductions. (Corrected - thanks, Dan; pesky Excel formula didn't survive inserting columns.)

10/5 - SM inventory <$3M is up 10% for the week, and the highest this year; PP <$2M is up 4%; MV is down 1%.

       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
 4/21/06  33,054  35
 5/ 1/06  34,032  38  33
 6/ 2/06  37,847  56  36      38
 6/30/06  42,317  66  40      49
 8/ 4/06  45,315  70  34      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
 4/ 6/07  42,857  41  23  49 107  18   8  73 103  52  52  50
 5/ 4/07  45,918  46  28  54  92  19   6  82  79  68  37  52
 6/ 1/07  52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07  52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07  54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07  57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07          59  17  74 103  26   9  90  81  87  20  87
10/ 5/07  58,973  65   8  81  98  27   2  95  85  86   6  87
10/12/07  58,918  69  13  85 102  30   5 103  64  88  13  87
10/19/07  59,029  66  16  81 105  26   6  96  70  96  21  87
10/26/07

Esta en forclosure?

For something different ... I and everyone else parked at Home Depot in Panorama City got this 4" x 6" card stuck under the windshield wiper earlier this week. Ironic that on one side they're offering to buy, the other to sell. Anyone know more about this? (I take no credit or blame for the translation, and have not called the numbers.)

ARE YOU IN FORECLOSURE?
Short Sale?
Behind on your payments?
Can’t pay for your house?
I can buy your house from you today!
FREE YOURSELF!
Listen to recorded information completely free

IMPORTANT NOTICE!
Do you want to buy a house?
Would you like to be given the down payment?
We have owner/sellers of homes prepared to give you this big gift!
Listen to recorded information completely free

LA Times lead today

Hope you saw the lead story in today's LA Times: "Home salesdive; outlook dim into '09". They have been covering this story well, not just blaming it on the summer's subprime meltdown, not just quoting the NAR.

Deja vu from c.1990, here is its beginning and other strong quotes (emphasis added):

Home sales in Southern California plummeted in September to a two-decade low, and a rash of grim housing-market assessments Tuesday suggested the worst is yet to come.

"We're on our way down and still picking up speed," said Christopher Thornberg, a Los Angeles-based economist who four years ago warned that the pace of housing price gains in the region couldn't be sustained.
...

Garden Grove real estate broker Patrick Schwier ... said he saw two more years of falling sales and prices.

"Prices were too inflated when credit was easier," he said, and now home prices, though they've been slipping, still "don't make sense. And they will drop until they make sense."
...

Thornberg discounted the overall credit squeeze's effect on the housing market. He said housing prices, pumped up for years by questionable mortgages, had to drop considerably.

The median income of L.A. County homeowners, he said, is at 60% of what's required to buy a median-priced home in the county, assuming a housing budget of 35% of gross income.

Many people have mortgages they can't afford, such as those that start with a very low "teaser" interest rate that rises dramatically over time. When those loans reset at higher rates -- as many are scheduled to next year -- the market could be in for another shock as more over-extended homeowners go into foreclosure.

"This thing's going to get worse when the peak of resets occur next year," Thornberg, the L.A. economist, said. His prediction: Southern California sales and prices will decline into 2009.
...

"When investors are relieved of the cost of bad decisions, they are more likely to repeat their mistakes," [Treasury secretary] Paulson said in a speech at Georgetown University Law Center. "I have no interest in bailing out lenders or property speculators."
...

September DQ plunge

DataQuick's September southern California sales numbers are out today. Volume plunged and median prices fell across the board.

...
A total of 12,455 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in September. That was down 29.9 percent from 17,755 for the previous month, and down 48.5 percent from 24,195 for September last year, according to DataQuick Information Systems.

Last month's sales were the slowest for any month in DataQuick's statistics, which go back to 1988. The previous low was in February 1995 when 12,459 homes sold. The September sales average is 25,258.

"Some of last month's drop was part of the longer-term slowing trend, but most of it was due to mortgage market turbulence and difficulties in getting jumbo financing. There's a good chance there will be some "catch-up" sales activity between now and the end of the year as jumbo loans become more available. Still, we can't expect the market to re-balance itself until sometime in 2008," said Marshall Prentice, DataQuick president. ... [emphasis added]

The drop in jumbo loans is finally having an effect on median prices. In LA County (graph above, with 2nd quarters highlighted yellow), the median fell 4.5% to $525K, last January's level. Orange County's median fell 11% to $570K, not seen since March 2005. San Diego County's $470K goes back to June 2004, and Ventura County's 20% drop to $462K was last seen in March 2004.

Recovery "sometime in 2008" seems to be the new spin. Although does "re-balance" actually mean anything? At least they acknowledge the "longer-term slowing trend" which was very visible before last summer's mortgage meltdown.

We're already at record-low sales volume, but only at the beginning of this downturn. Which, from Case-Shiller perspective may take another five years to bottom out.

Not selling north of Montana

Here's the fourth mid-month everything north of Montana over 30 days on the market (9/15 previous). Five joined the list and three were removed. These reflect MLS updates for the weekend through today.

704 15th St., 2 bed/1 bath, $1,990K LP, 8/22/07 LD (red. 13%) new
611 14th St., 3/1.75, $2,049K, 9/7/07 (red. 7%) new
242 25th St., 2/1.5, $2,399K, 7/7/07 (red. 4%)
256 24th St., 3/2, $2,995K, 9/12/07 new
710 23rd St., 4/3, $3,150K, 7/13/07 (red. 4%)
202 14th St. (photo), 6/4, $3,288, 5/24/07 (red 15%)
721 Georgina Ave., 4/5, $3,450K, 8/21/07 new
557 12th St., 6/5.5, $3,538K, 6/4/07 (red. 16%)
333 14th St., 5/6, $4,725K, 6/29/07 (red. 3%)
421 23rd St., 6/6.5, $5,000K, 5/24/07
1020 Palisades Beach Rd., 6/6, $10,550K, 7/9/07
1605 San Vicente Blvd., 6/7, $22,500K, 8/20/07 new

Removed listings:
446 23rd St., 5/4, $3,498K, 6/22/07
713 22nd St., 6/5.5, $3,750K, 6/7/07 (red. 6%)
239 14th St., 5/5.5, $3,998, 5/29/07 (red. 11%)

Not selling in Sunset Park

Here's our fourth mid-month review of everything R-1 in Sunset Park over 30 days on the market (9/13 previous). Well-priced listings have sold within a few weeks; these haven't. Six listings joined the list, while three others are no longer available. Expect more next month.

2638 32nd St., 2 bed/1 bath, $829K LP, 6/6/07 LD back on market
2338 Pier Ave., 3/2, $928K, 9/16/07 new
2224 Navy St., 2/1, $1,150K, 6/5/07 (red. 8%)
1615 Marine St., 3/2, $1,150K, 8/13/07
2314 Pier Ave., 2/2, $1,195K, 7/9/07 (red. 4%)
3118 17th St., 2/2, $1,195K, 9/7/07 new
2723 11th St., 2/2, $1,299K, 5/2/07 (red. 3%)
816 Wilson Pl., 3/2, $1,299K, 1/18/07 (red. 13%)
1108 Maple St., 3/1.5, $1,299K, 9/14/07 new
2005 Ashland Ave., 3/1.75, $1,359K, 8/2/07 (red. 9%)
2407 31st St., 3/2.5, $1,395K, 7/9/07 (red. 5%)
1101 Cedar St., 3/2, $1,399K, 4/11/07 (red. 11%)
1640 Bryn Mawr Ave., 3/2, $1,449K, 7/7/07 (red. 5%)
1621 Ashland Ave., 2/1.5, $1,610K, 8/13/07 (red. 4%)
1337 Ashland Ave., 3/2.75, $1,728K, 8/20/07 (red. 4%) new
2222 Marine St., 4/4, $1,975K, 5/17/07
834 Maple St., 3/2, $1,975K, 8/24/07 (red. 6%) new
2343 29th St. (photo), 4/4.5, $1,995K, 8/2/07
2516 Cloverfield Blvd., 4/3, $2,395K, 7/15/07 (red. 8%)

Removed listings:
1032 Maple St., 3/2, $1,149K, 8/10/07
1826 Pearl St., 4/1.75, $1,475K, 7/27/07 (red. 2%)
1327 Pacific St., 3/2, $1,600K, 7/11/07

Not selling in Ocean Park

To complete the trio, here is the third mid-month list of everything in Ocean Park over 30 days on the market (9/15 previous). None added, none into escrow, most reduced prices a little, it's a really stuck market here. Expect more next month.

718 Marine St. (photo, left), 1 bed/1 bath, $799K LP, 5/25/07 LD (red. 8%)
724 Navy St., 2/1.5, $879K, 5/6/07 (red. 7%)
2614 2nd St., 3/1.75, $1,339K, 8/28/06 (red. 10%)
2613 5th St., 3/2, $1,395K, 6/1/07 (red. 7%)
2327 5th St., 2/1, $1,499K, 7/13/07 (red. 6%)
213 Pacific, 3/2, $1,549K, 8/1/07
716 Marine St. (photo, right), 4/2.75, $1,599K, 4/20/07 (red. 9%)
2912 2nd St., 2/1, $1,600K, 12/29/06 (incr. 10%!)
2404 2nd St., 2/2.75, $1,999K, 6/21/07 (red. 11%)
2219 Ocean Ave., 3/3, $3,300K, 9/20/05

Removed listings: (none)

Weekly inventory update

10/12 - SM inventory <$3M is up 5% for the week, PP <$2M is up 11% and MV is up 2%, with more price reductions. (Corrected - thanks, Dan; pesky Excel formula didn't survive inserting columns.)

10/5 - SM inventory <$3M is up 10% for the week, and the highest this year; PP <$2M is up 4%; MV is down 1%.

       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
 4/21/06  33,054  35
 5/ 1/06  34,032  38  33
 6/ 2/06  37,847  56  36      38
 6/30/06  42,317  66  40      49
 8/ 4/06  45,315  70  34      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
 4/ 6/07  42,857  41  23  49 107  18   8  73 103  52  52  50
 5/ 4/07  45,918  46  28  54  92  19   6  82  79  68  37  52
 6/ 1/07  52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07  52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07  54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07  57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07          59  17  74 103  26   9  90  81  87  20  87
10/ 5/07  58,973  65   8  81  98  27   2  95  85  86   6  87
10/12/07  58,918  68  13  84 102  30   5 103  64  88  13  87
10/19/07

They're ba-ack!

Remember 2638 32nd, the 2 bed / 1 bath house asking $829K in June? I wondered why it stayed as "Looking for Backup" over three months. It's available again:

"BACK ON MARKET - BUYER COULDN'T CLOSE. CALL LISTING AGENT FOR SHOWING INSTRUCTIONS". LAND VALUE, REMODEL, OR FIXER. NO SIGN ON PROPERTY. DO NOT DISTURB OCCUPANT. AS IS. SELLER MAKES NO WARRANTIES AND WILL PERFORM NO INSPECTIONS OR REPAIRS. MOTIVATED SELLER. INSIDE W/ACCEPTED OFFER ONLY...."

Another back-on-market is 2162 San Vicente, listed 9/7 for $1,895K, and went to "Looking for Backup" status really fast on 9/11. Off the market about 9/13, it was back as "Looking for Backup" on 9/29, had a price increase to $1,980K posted on 10/9, and returned to Active 10/10.

My guess is it went to escrow above the original asking price ($1,980K?), but the escrow got shaky (didn't resolve contingencies) and they're back looking for another offer at the higher price. They may not get one, though. (Thanks, Frank.)

Sales tax down = CA recession?

Calculated Risk just reported, "Based on sales tax revenue, it now appears that the California economy is in recession. ... September sales tax revenue was off 7% compared with last year." See his original for details and graph (of course!).

This on the heels of the decline in port traffic.

Not selling on Mar Vista Hill

Let's wrap up this week's series on Mar Vista with a list of everything over 30 days on the market on Mar Vista Hill. (Which is not as clear-cut a location as, say, north of Montana. I'm including east of Centinela, north of Venice, south of National, and west of where it gets flat and cheaper.) There are some really stale listings up there.

3046 Mountain View Ave., 3 bed/1.75 bath, $925K, <1/30/07 (red. 16%)
12217 Palms Blvd, 3/1.75, $939K, 3/20/07 (red. 13%)
12113 Navy St., 2/1.75, $949K, 8/20/07
3754 Mountain View Ave., 3/1.75, $1,199K, 6/14/07 (red. 14%)
11959 Charnock Rd., 3/3, $1,845K, 4/29/07 (red. 18%)
3413 Inglewood Blvd. (photo), 4/5, $1,899K, 3/23/07 (red. 5%)
12122 Victoria Ave., 3/3.5, $2,095K, 7/30/07 (red. 9%)
3710 Grand View Blvd., 3/3.5, $2,195K, 7/30/07 (red. 8%)
3653 Mountain View Ave., 4/4, $3,295K, 7/12/07
3343 Mountain View Ave., 4/4.5, $3,495K, 8/2/07

"NARcasting The Future"

Be sure to see the great recap of the National Association of Realtor's monthly failed predictions this year at Paper Economy. The timeline begins,

12/11/2006 Prediction: 6.40 million units.
Lereah "Most of the correction in home prices is behind us."

And Calculated Risk's "Another Month, Another NAR Revision" begins,

The comedians at the National Association of Realtors (NAR) revised down their forecast today for existing home sales in 2007 again.

Mar Vista west of Centinela

Here's the west-of-Centinela sequel to Monday's post. Suppose you were shopping houses in Mar Vista under $1 million. And you want to be north of Venice Blvd., not on a busy street with traffic noise, which rules out Walgrove, Beethoven, Palms, etc. What would your choices be right now?

Lowest priced is 12916 McCune Ave. (photo above), 2 bed / 1 bath, asking $775K. It's described as, "Adorable Spanish style home in prime location of Mar Vista. Pride ownership shows updated electric, remodeled kitchen and baths, lots of original details, front patio fruit trees, large private backyard with lots of room to expand, 1/2 of the garage is used as a dark room for photography,long driveway to fit many cars.don't miss this one! ..." Funny how the MLS photo doesn't show the apartment building on Venice Blvd. behind it. What else is there to look at? Just southeast of Walgrove and Palms is 3532 Redwood Ave., 4 bed / 3 bath, asking $879K. Its description includes, "Light & Bright Traditional 4 bd + 3 bth home in Mar Vista. Spacious living room with crown moldings, fresh paint, and flat screen TV [included?]. ... Beautifully landscaped front yard surrounded by a custom modern wooden fence. Remodeled master bath w/ custom glass sinks held by nickel metal. Huge walk-in glass shower w/ a separate spa tub....."

Close by is the similar 3624 Maplewood Ave., 3 bed / 2 bath, asking $949K, described as, "Very open floor plan with high ceilings, stained hardwood floors, exposed custom wood beams and fireplace, granite countertops, travertine flooring in kitchen and bathrooms, stainless steel appliances, skylights, beautiful garden/backyard with custom stamped concrete patio ideal for entertaining...." Then there's 12437 Woodgreen St. (above), 3 bed / 1.75 bath, asking $949.5K. "Traditional home in good Mar Vista neighborhood on a Huge street-to-street lot. Large park-like rear yard with lots of room for add-on, guest house, pool, etc. Room to park an RV. Updated home including den, enclosed patio used as family room, storage. Built-in kitchen, private spa, newer double pane windows, Copper plumbing, newer central heat, updated electric...." Park an RV in your park[ing lot]-like yard? It's just west of Centinela and the back yard backs up to Palms Blvd., so maybe rule this one out for traffic noise. Two others would have made the list but changed to "Looking for Backup" status Monday, showing that well-priced properties continue to sell. First is 3357 Moore St. (above), 3 bed / 2 bath, asked $869K, "Beautiful Mar Vista Home with Views! ... second story sun room where you can enjoy vistas to the ocean. There is so much potential with what you can do here or just keep it the way it is and enjoy its original charm...."

Close by and similar from the front is 3423 Wade St., 3 bed / 1.75 bath, at $899K, now also in escrow. I wonder about airport noise for both; you really hear jets taking off in Mar Vista south of Santa Monica Airport.

Anything appeal? Or wait for prices to fall?

Cargo decline

Today's LA Times article, "Cargo decline is another sign of slowing economy" (including this great photo) begins:

Cargo containers crammed with foreign-made goods that were supposed to set a record in August at major U.S. ports took an unexpected turn, with imports sinking 1.4% in another sign of the slowing of the economy.

This is more evidence the end of the credit-induced housing bubble is spilling into the larger economy. Coming full-circle, I've been expecting a falling economy to be what finally deflates the Westside housing market.

Mar Vista Hill below $1M?

Suppose you were shopping houses in Mar Vista under $1 million. And you want to be north of Venice Blvd., not on a busy street with traffic noise, which rules out Walgrove, Beethoven, Palms, etc. What would your choices be right now?

Let's start with Mar Vista Hill, which offers views like above to the east. Look to the left from the view and you see this 2 bed / 1.75 bath house at 12113 Navy St., asking $949K, listed 8/20/07, description shouting, "...ENDLESS VIEWS FROM CENTURY CITY TO THE HOLLYWOOD SIGN...". Around the corner and a block north is this 3 bed / 2 bath house at 3046 Mountain View Ave, asking $925K (originally listed before 1/30/07 at $1,099K, off the market Feb.-June). "Original Family Owned Home is now available for a new owner. Home has Views of the City. ... Newer double pane windows on most windows, may be hardwood floors under carpet. ..." [They don't know?!]

Excited or depressed so far? With high-end houses on Mar Vista Hill not selling, lot-value demand must be hurting too.

This series will continue, next time west of Centinela.

October Westside transit meetings

For those of us who care about Westside traffic as well as housing, this October is a big month for public transit meetings (from Curbed LA / LA Visions). The first subway meeting is tomorrow.

1. Metro Westside Extension (aka Wilshire "Subway to the Sea") Alternatives Analysis public meetings. "Please join Metro at one of five upcoming community meetings where you can comment on what you want Metro to study." All meetings are 6:00-8:00 p.m. (same content at each). More info.

Westwood/Century City - Tues., Oct. 9 - Emerson Middle School, 1650 Selby Ave., LA
Hollywood/West Hollywood - Thurs., Oct. 11 - Pan Pacific Recreation Center, 7600 Beverly Blvd., LA
Mid-Wilshire/Koreatown - Tues., Oct. 16 - LA Wilshire United Methodist Church, 4350 Wilshire Blvd., LA
Beverly Hills - Wed., Oct. 17 - Beverly Hills Public Library Auditorium, 444 North Rexford Dr., BH
Santa Monica - Thurs., Oct. 18 - Santa Monica Public Library, 601 Santa Monica Blvd., SM

2. Expo Line Phase 2 Initial Screening Results. All meetings are 6:30-8:30 p.m. Announcement flier (1.5 M PDF); Expo Construction Authority; Friends 4 Expo Transit.

Mon., Oct. 22 - Santa Monica Civic Auditorium East Wing Meeting Room, 1855 Main St., SM
Wed., Oct. 24 - Venice High School Auditorium, 13000 Venice Blvd., LA 90066
Thurs., Oct. 25 - (Cheviot Hills) Vista Del Mar Child and Family Services Gymnasium, 3200 Motor Ave., LA 90034

Low-end Sunset Park?

What is low-end Sunset Park worth? This 2 bed / 1 bath tenant-occupied fixer with guest house at 1032 Maple St. is asking $1,149K. We already saw it as one of Four on Maple St last month.
This 2 bed / 1 bath house with guest house (unpermitted shower) and converted garage (unpermitted) at 1428 Oak St. is asking $1,295K.

Although its decor is fixed up, its kitchen and bathroom are original 1937, spun as, "Hard-to-find Vintage Calif jewel! Hip habitat for today’s multi-purpose lifestyle: Bright/spacious house+2 det’d studio/office/guest structures. RenovatedRetro: StreamlineModerne/PanPacific." Original now equals "hip" and "retro" at a price premium?

Recent nearby comps include 1505 Oak, 3 bed / 2 bath, sold 8/22/07 for $1,050K; 1126 Maple, 3 bed / 1 bath, sold 8/8/07 for $1,075K.

September Melissa data

Remember last month I did this chart of weighted-average sales for Santa Monica zip codes 90402 and 90405, and Mar Vista 90066, from Melissa Data? Above it's updated with September sales, and taken back to the beginning of 2002 for a longer trend. Number sold rebounded some to 48 from the August depths of 34, but is still well below 2006's 67. As before, I highlighted in yellow the 2nd Quarter of each year, typically the peak.

Below I've separated sales and average prices for the three zip codes. Note the very small number of sales (2 and 1) and average price ($1,275K and $1,713K) for August and September in 90402. Apparently including condos, it implies no high-end houses sold for two months. (A note on the graph format: I try to make these legible without needing to be enlarged, to keep the image file sizes as small as possible for faster downloads.)

Weekly inventory update

9/7 - SM inventory <$3M is up 10% for the week, and the highest this year; PP <$2M is up 4%; MV is down 1%.

       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
 4/21/06  33,054  35
 5/ 1/06  34,032  38  33
 6/ 2/06  37,847  56  36      38
 6/30/06  42,317  66  40      49
 8/ 4/06  45,315  70  34      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
 4/ 6/07  42,857  41  23  49 107  18   8  73 103  52  52  50
 5/ 4/07  45,918  46  28  54  92  19   6  82  79  68  37  52
 6/ 1/07  52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07  52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07  54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07  57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07          59  17  74 103  26   9  90  81  87  20  87
10/ 5/07  58,973  65   8  81  98  27   2  95  85  86   6  87
10/12/07

"Philanthropist Landlords"

Hope you all caught Bubble Markets Inventory Tracking's hilarious "Philanthropist Landlords" post yesterday, featuring two of Santa Monica Distress Monitor's recent SM buyers renting at big losses.

Realtor.com survey

Last night I got a pop-up survey at the Realtor.com website. Go there to see if you get it too; if it doesn't come up, here's the direct survey link. Here are its questions (emphasis added). (Answering No to #1, I didn't see the conditional questions, but still got them copying the survey text. Hmmm.)

1. Do you expect to purchase a home in the next six months?
_ Yes
_ No

2. How do you expect home prices in the area in which you are searching to change over the next 12 months? {Please select one response}
_ Rise rapidly
_ Rise slowly
_ Stay the same
_ Fall slowly
_ Fall rapidly

[If rise on #2] 3. By what percent do you expect home prices to rise, on average, in the next 12 months? {Please insert a whole percent} _____

[If fall on #2] 3. By what percent do you expect home prices to fall, on average, in the next 12 months? {Please insert a whole percent.} _____

4. Do you currently own a home?
_ Yes
_ No

[If Yes to #1] 6. What sort of home are you looking to buy? {Please select one response}
_ A home to live in as a primary residence
_ A second home for seasonal/occasional use
_ A home to rent out year round or for another investment purpose
_ A home for a child or other relative
_ Other

[If Yes to #1] 7. What is the price range on which you are focusing your home search? {Please select one response}
_ Under $100,000
_ $100,000 - $200,000
_ $200,000 - $300,000
_ $300,000 - $400,000
_ $500,000 - $750,000
_ $750,000 - $1 million
_ Over $1 million

[If Yes to #1] 8. Have you made an offer on a home during this current search?
_ Yes
_ No

[If Yes to #8] 9. Was your offer higher, lower, or the same as the asking price? {Please select one response}
_ Higher
_ Lower
_ Same as asking price

[If Yes to #?] 10. Have you placed your current home on the market? {Please select one response}
_ Yes, with an agent
_ Yes, for-sale-by-owner
_ No, not yet
_ No, don't intend to sell current home
_ Under contract or already sold

[If Yes to #?] 11. Have you lowered your asking price of your current home since you first placed it on the market?
_ Yes
_ No

[If Yes to #?] 12. Which of the following work have you done or do you intend to do in order to prepare your current home for sale? {Please check all that apply}
_ Interior re-paint or re-paper
_ Interior alterations or remodeling
_ Exterior repainting
_ Other work on the exterior of the home
_ Addition to the home
_ Electrical, plumbing, heating, or air conditioning upgrades
_ Landscaping or other improvements to grounds
_ No projects to prepare the home for sale
_ Other minor projects (Please specify:)
_ Other major projects (Please specify:)

[If Yes to #?] 13. Approximately how much have you spent or do you intend to spend in order to prepare your home for sale? {Please select one response}
_ None
_ Less than $100
_ $100 - $500
_ $501 - $1000
_ $1,001 - $5,000
_ More than $5,000

5. You are almost done. The next couple questions are just to categorize your responses with other survey participants.

What is your age? {Please select one response}
_ Under 25
_ 25 - 34
_ 35 - 44
_ 45 - 54
_ 55 - 64
_ 65 or older

6. What is your approximate annual household income? {Please select one response} [not required]
_ Less than $25,000
_ $25,000 - $50,000
_ $50,000 - $75,000
_ $75,000 - $100,000
_ More than $100,000

7. What is the zip code of your current residence? {Please insert your zip code} _____

Thank you for taking our survey. Your opinions are very important to us.

"Are we at the bottom yet?"

(I intended some comments, but didn't want the photo to wait...)

For everyone claiming the bottom is in sight, that the downturn was just about sub-prime turmoil the last couple of months, remember how we got here. Rising prices created an expectation of easy profits, which created more speculative fervor. No-down, no-doc, teaser-rate loans fueled the last push upward.

Finally the bubble stalled, from nothing left to inflate it further. Overbuilt and inner-city markets began falling. Our part of the Westside mostly plateaued on price, with a lot of impasse on overpriced inventory.

But the expectations and loan standards that got us here are gone. Our sales depend on assets, not just income and loans. But both houses sold to move up and stock prices based on an economy based heavily on housing and consumer spending become shaky too.

Will prices fall? Some owners have to sell, and will reduce prices if that's what it takes. High-end specs not selling will reduce demand for low-end tear-downs and fixers.

Last time prices fell 27%, mostly over three years from 1990 to 1994. If this year is 1990, we'll be nearing the Colorado River at the bottom of the Grand Canyon around 2011, give or take. We're only a little way down the trail.

"Large corner lot" north of Montana

How about this recent 4 bed / 3.50 bath listing at 754 23rd St., asking $2,395K? "WOW! Large 2-story Tudor on large corner lot in great Gillette Regent Square area and priced to sell. Clean move-in condition with large formal entry, the home with its large living room and open cathedral ceiling, large formal dining room and spacious family room is ideal for large gatherings and perfect for entertaining. 4th bedroom downstairs has its own bath. Private landscaped yard has porch and covered patio. There are beautiful hardwood floors, new caperting, new roof, W/B f/p and more...."

Except the lot is on the corner of Montana Ave., catty-corner from Franklin School, with apartments to the south and west. (enlarge photo)

In other Santa Monica news over the weekend, 1028 Maple is in escrow, and 1100-1108 Ocean Park and 239 14th appear to have expired after four months on the market. And 724 Navy St., unsold since 5/6/07, suddenly has a new listing date of 9/29/07, price unchanged at $899K.