Monthly inventory update

11/30 - The usual end-of-year decline is apparent on the Westside, but only slightly in Mar Vista and hasn't turned down at all for Los Angeles County.

SM inventory <$3M is down 4% for the week and down 16% for the month; PP <$2M is down 12% for the week and down 21% for the month; MV is down 5% for the week but only down 2% for the month. Total Westside inventory is down 7.6% to 1,600.

11/23 - SM <$3M is down 10%, PP <$2M is down 19%, and MV is down 5%, largely from last weekend. Looks like they've all passed mid-November inventory peaks for the year. SM peaked in October last year.

11/16 - SM <$3M is down 6%, but PP <$2M is up 7% and MV is up 8%.

No longer active in SM includes 1108 Maple (Looking for Backup), 2317 California (gone), 1621 Ashland (gone), 716 Marine (Looking for Backup), 2516 Cloverfield (gone), 202 14th (Looking for Backup), and 506 Palisades (gone). Wonder what level of price reductions were in the old listings that finally sold?

Some are still selling fast: A new 11/8-listed 3 bed / 3.5 bath at 502 18th for $2,599K is already Looking for Backup, as is the 10/30-listed 6 bed / 4.5 bath at 425 23rd for $4.5M.

11/9 - Continuing last month's rising trend, SM inventory <$3M and PP <$2M are both up 3% for the week, and MV is flat for the week, all from a surge of new listings this week. Our lot-value 704 15th is back on the market, still asking $1.99M. And there were more price reductions.

       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  58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07  58,731  62  19  81 120  29   7 106  77  98  35  88
11/ 9/07          64   5  86 120  30   5 105  79  98   6  95
11/16/07  58,084  60   7  78 127  32   9 104  74 106  16  91
11/23/07          54   9  71 133  26  10  93  81 101  19  93
11/30/07  59,108  52  14  67 136  23  11  88  94  96  23  96
12/ 7/07

All Westside

             2/9     4/6     6/1     8/3    9/28   11/30 
                 3/1     5/4    6/30    8/31    11/2
Bel Air-H.Hls.86  86  92 100 103  99  86  99 104 104  86
Bev.Ctr.-M.M. 64  57  48  53  54  65  64  67  75  75  73
Beverly Hills 67  70  56  46  53  49  59  61  62  58  65
B.H. P.O.     94  91  92  88  93  95  92  94  90  93  85
B'wood Vic.   35  36  31  39  38  41  42  46  50  59  57
Brentwood     67  71  73  75  72  68  86  77  89  96  90
Chev.-R.Pk.'8'22  20  19  22  23  22  26  20  28  23  27
Culver City   35  25  20  28  33  36  41  48  49  46  39
Malibu       178 181 192 199 206 220 224 216 216 209 209
Malibu Beach  42  44  51  52  56  58  54  45  43  45  43
Marina Del Rey20  20  20  27  29  28  26  27  26  22  19
Pac.Palisades 64  68  73  82  87  92  78  69  90 106  88
Palms-M.Vista 62  53  52  68  77  73  84  90  87  98  96
Playa Del Rey  7   8  17  20  21  20  21  24  29  27  26
Playa Vista    3   2   3   1   3   5   4   9   8  10   7
Santa Monica  50  50  49  53  61  57  68  72  74  81  67
Sunset-Hwd.H.155 178 159 166 180 168 187 184 215 226 214
Topanga       39  41  36  43  45  54  49  54  55  52  49
Venice        64  64  57  68  70  72  69  68  68  84  75
W.H'wood Vic. 23  32  25  36  42  41  40  36  49  52  49
West L.A.     19  21  25  24  25  34  31  36  40  37  30
Westchester   53  46  47  45  53  52  62  72  82  78  73
W'wood-C.City 33  44  37  42  33  34  29  37  42  50  33
            ____ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Total       1282    1274    1457    1522    1671    1600
                1308    1377    1483    1551    1731
Month-month incr. 2% -3%  8%  6%  2%  3%  2%  8%  4% -8%

Notes

LA County inventory via OC Renter. 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. "New" is for previous month, or month-to-date for current partial month.

SELLER IS SERIOUS (?!)

Don't you love these? The updated description for this 4 bed / 4 bath house at 2222 Marine shouts,

"ANOTHER HUGE PRICE REDUCTION... THIS SELLER IS SERIOUS."

Really? Originally listed 5/17/07 for $1,975K, reduced to $1,775K in October, we're to believe a new $50K reduction to $1,725K is HUGE and SERIOUS?

"Great space and value in this Sunset Park home. Set on a large landscaped corner lot with room for a pool. Nature views from most windows. The four level split brings lightness and brightness. Large studio apartment with separate entrance and two car garage. This is a MUST SEE! ..."

Nature views, an implication of tranquility ... NOT! It's the corner of busy 23rd street, at the end of Santa Monica Airport, #6 in the map above (from June). And is that apartment legal in R1 Santa Monica?

It's ba-ack on 6th

Remember this 2 bed / 1 bath 720-square-foot tear-down at 2724 6th St. in Ocean Park from July?

Sold 6/20/06 for $1,089K (financed with a $871.2K fixed first and $108.9K credit line), it was back on the market 9/06, asking $1,190K, reduced 10/06 to $1,095K, and off the market 11/06. Relisted 2/19/07 for $1,125K, it was reduced 4/07 to $1,075K, and finally 7/07 to $999K. It went "Looking for Backup" in early September, never left the listings, and is again active. Wonder what happened?

September Case-Shiller

The September S&P/Case-Shiller data were released today. Los Angeles (includes Orange County) is now down 7.0% from its peak in September 2006 - another 1.2% from August. The national index is down 6.0% from its peak in June 2006 - another .7% from August.

Don't forget, these sales, closed in September, entered escrow July-August, largely before the August credit crunch. That impact will unfold ahead.

There's more. Earlier this month S&P/Case-Shiller filled in data from 1980-86, and added separate Low, Middle, and High price tiers to the earlier Aggregate index. Above are these four indices for Los Angeles.

Significant is that the Low price tier rose more than the High price tier in Los Angeles, and the Low tier has fallen while the High tier has mostly plateaued so far. Like Santa Monica? Yes and no.

Above I fitted the Aggregate and High indices to low-end north-of-Montana sales, scaled the same as I posted last month. See the new problem?

The High index doesn't rise enough to fit recent Santa Monica data, yet is too high to fit the mid-1980s data. It appears Santa Monica prices have risen more than the overall Los Angeles High tier.

Which could correspond to a rise in position of Santa Monica among higher-priced communities. But it doesn't change my expectation of prices falling ahead, as they did 25% 1990-95.

Why Westside prices will fall

The Dow is back to February levels today (MarketWatch chart, above).

Here are some reasons even Westside prices will fall*, despite the desirability of our close-in, nice-climate location, even without distress sales adding to supply:

• Likely recession (Roubini, LA Times on bears) will impact stock values (already) and upper-income compensation used by buyers. And don't forget impacts of the writers strike (thanks, iluvwestsidebubbleguy)!
  
  
• Jumbo loan terms and rates are rising as credit markets tighten. See New York Times (via Calculated Risk). We established that even buyers of >$4M houses financed 50-80%.
  
  
• Prices fell 25% (low-end north of Montana) from 1990-1995.
  
  
• When rent is so much less than a mortgage payment on an equivalent house, there's no financial reason to buy in a flat or falling market.
  
  
• Most existing listings (north of Montana, Sunset Park, Ocean Park) already have a pattern of reducing prices.
  
  
• Flippers and spec builders exit the market during a downturn.
  
  
• Most move-up buyers have another house to sell that is in a weaker market, or are selling to a buyer having to sell in a weaker market.
  
  
• Some buyers will select a near-by bargain over an overpriced prime Westside house.
  
  
• Owners of properties that been held off the market waiting for more appreciation or a recovery will seek to sell quickly when they fear a long downturn, or can't wait any longer.

*With the obligatory disclaimer that what seems pretty likely to me could turn out otherwise. Which some of you will argue in the comments....

Weekly inventory update

11/23 - SM <$3M is down 10%, PP <$2M is down 19%, and MV is down 5%, largely from last weekend. Looks like they've all passed mid-November inventory peaks for the year. SM peaked in October last year.

11/16 - SM <$3M is down 6%, but PP <$2M is up 7% and MV is up 8%.

No longer active in SM includes 1108 Maple (Looking for Backup), 2317 California (gone), 1621 Ashland (gone), 716 Marine (Looking for Backup), 2516 Cloverfield (gone), 202 14th (Looking for Backup), and 506 Palisades (gone). Wonder what level of price reductions were in the old listings that finally sold?

Some are still selling fast: A new 11/8-listed 3 bed / 3.5 bath at 502 18th for $2,599K is already Looking for Backup, as is the 10/30-listed 6 bed / 4.5 bath at 425 23rd for $4.5M.

11/9 - Continuing last month's rising trend, SM inventory <$3M and PP <$2M are both up 3% for the week, and MV is flat for the week, all from a surge of new listings this week. Our lot-value 704 15th is back on the market, still asking $1.99M. And there were more price reductions.

       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  58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07  58,731  62  19  81 120  29   7 106  77  98  35  88
11/ 9/07          64   5  86 120  30   5 105  79  98   6  95
11/16/07  58,084  60   7  78 127  32   9 104  74 106  16  91
11/23/07          54   9  71 133  26  10  93  81 101  19  93
11/30/07

Hype in PP!

There's hype, and there's HYPE!! This 3 bed / 3 bath house at 1588 Chastain Parkway West in Pacific Palisades, asking $1,999K, practically leaped out from the other listings, begging to be blogged.

"Priced to sell immediately!

Or not. Listed 9/20/07, price reduced to $1,999K in October.

Showcase! A fusion of sophistication, vibrancy & warmth,w/exciting contemp. colors, paired w/ rich woods & materials. Light & bright corner prop.

On its corner lot (up in the far reaches of Palisades Highlands), barely bigger than the house, it looks like the OC in PP.

on street w/much more expensive props.

The street to the upper right passes a guard gate to "The Enclave"; guess those are gated and this isn't.

3 lg. BRs + ocean view loft/office (could be 4th BR) upstairs. Fam. rm. & fab. din. rm. dn. Tuscan gourmet kitch. w/top appls. Master w/2 walk-ins, bar, sumptuous bath. High ceilings, cherry finished wd. flrs, xlnt. laund, 3 car att. garage. Lush pvt. yd, charm frt garden. Summit Club..."

Where's that yard? But I won't forget that "fusion of sophistication, vibrancy & warmth"!

Shall we give thanks tomorrow for the (albeit slow) return of economic sanity?

Last weekend

Either house shoppers are buying a house for the holidays, testing their skill at knife catching where prices are lower than others still unsold, or thirsting for Kool Aid, but a number of listings went "Looking for Backup" over the weekend, on the heels of what I reported in the last Weekly inventory update. A few others just left the listings, some I suspect expired.

Santa Monica
651 Navy St., 1 bed/1 bath, LP=$679K, LD=10/25/07 ($120K less than 718 Marine)
664 Marine St. 2/1, $749K, 10/18/07 ($100K less than 724 Navy)
1838 16th St., 5/3, $995K, 10/4/07 (north of Pico)
2404 2nd St., 2/2.75, $1,875K, 6/21/07 (reduced from $2,250K)
424 11th St., 3/1.75, $2,100K, 11/15/07 (lot-value 704 15th still available for $1,990K)
550 15th St., 5/4.5, $3,795K, 11/9/07

Pacific Palisades
16543 Akron St., 2/2, $1,249K, 9/13/07
1464 Paseo de Oro, 4/3.5, $1,825K, 10/8/07
770 Almar Ave., 3/2.5, $1,895K, 7/19/07

Conversely, Palms-Mar Vista listings were up two over the weekend. Crazy market, like the Dow that can be both up and down over 100 points in the same day.

They lie: NAR commercial

YouTube link

Outrageous National Association of Realtors commercial on CBS primetime tonight. Transcript and comments:

Family: When you have a family, it's always a good time to buy.

Blow your nest egg in a falling market, your family will forgive you.

Realtor: It's a great move-up market.

Not if you can't sell your old house.

Man: In this market, there's a lot a options.

That is, a lot of unsold houses at inflated prices.

Woman 1: The Interest rates are low.

Compared to?

Family: Didn't make sense for us for us to spend the same amount of money renting something when we could own it.

As if! And where can you buy for the cost of rent? See the 11/12/07 Fortune article that projects prices will have to fall 28% nationally to return to their historic relationship to rents: "All through the 1990s the multiple of prices to rents nationwide remained between 14 and 15." (page 82)

Woman 2: Working with a Realtor took all the guesswork out.

What did your Realtor tell you about nationally falling prices?

Realtor: This is the best market in years in terms of choice.

Which will get better in prices and selection if you wait.

Narrator: Interest rates are at historic lows, home choices have increased, and prices are favorable. Every market's different. Call a Realtor today.

Lie: interest rates are above their historic lows.

Couple: If we didn't buy now, we would have missed the opportunity on this home. Yeah.

But have had the opportunity of others at better prices. Maybe even this one on a foreclosure.

Weekly inventory update

11/16 - SM <$3M is down 6%, but PP <$2M is up 7% and MV is up 8%.

No longer active in SM includes 1108 Maple (Looking for Backup), 2317 California (gone), 1621 Ashland (gone), 716 Marine (Looking for Backup), 2516 Cloverfield (gone), 202 14th (Looking for Backup), and 506 Palisades (gone). Wonder what level of price reductions were in the old listings that finally sold?

Some are still selling fast: A new 11/8-listed 3 bed / 3.5 bath at 502 18th for $2,599K is already Looking for Backup, as is the 10/30-listed 6 bed / 4.5 bath at 425 23rd for $4.5M.

11/9 - Continuing last month's rising trend, SM inventory <$3M and PP <$2M are both up 3% for the week, and MV is flat for the week, all from a surge of new listings this week. Our lot-value 704 15th is back on the market, still asking $1.99M. And there were more price reductions.

       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  58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07  58,731  62  19  81 120  29   7 106  77  98  35  88
11/ 9/07          64   5  86 120  30   5 105  79  98   6  95
11/16/07  58,084  60   7  78 127  32   9 104  74 106  16  91
11/25/07

DataQuick October

Here are two views of this week's release of DataQuick's October sales statistics. Four southern California counties (above) show Los Angeles prices retraced to early 2006; Ventura and Orange Counties to early 2005; and San Diego County all the way to mid-2004.

The chart below shows detail for Los Angeles County. The median price fell from $550K to $500K in just two months.

New bank owned

Here are two new bank-owned, aka REO, houses listed 11/13. Not exactly 90402, but definitely Westside.

The cheapest listed house in Pacific Palisades, and the only one less than $1M this year, is this 2 bed / 1 bath house at 687 Hampden Place, asking $900K (X marks the spot above; enlarge map). This original 985 SF house on a 2,918 SF lot contrasts with the newer mansions down the hill to the right.

Its description begins, "Reo. Bank owned. Adorable cottage on a quiet street close to the village. ..." I don't have its last sale price, but its County Assessor's valuation of $1,193.4K, recorded 8/16/05, should be close, so a loss of some $300K.

Second is this 2 bed / 1 bath at 4377 Westlawn Ave., in the "Marina Adjacent" part of Mar Vista south of Washington Blvd., asking $737.5K (enlarge map).

"* Lender owned * redone traditional * Granite kitchen * Hardwood floors * great starter home * Great yard with deck + separate guest house for office, rec. room, ETC. Nicely landscaped. All buyers to be pre-qualified by specified loan rep. call for details...."

With the granite, this has gotta be a flip gone bad. It last sold 4/6/06 for $715K. I found it listed 2/26/07 with "Price reduction to $839K!!" Reduced again to $799K in April, it left the market in June. For a buyer now it's like getting free granite. Or catching a falling knife.

Not selling in Ocean Park

To complete the trio, here is the fourth mid-month list of everything in Ocean Park over 30 days on the market (10/15 previous). This one's really stuck: five added, none into escrow, some reduced prices, a couple more in the pipeline.

718 Marine St. (photo, left), 1 bed/1 bath, $799K LP, 5/25/07 LD (red. 8%)
724 Navy St., 2/1.5, $849K, 5/6/07 (red. 11%)
2614 2nd St., 3/1.75, $1,339K, 8/28/06 (red. 10%)
2613 5th St., 3/2, $1,195K, 6/1/07 (red. 20%)
2614 2nd St., 3/1.75, $1,339K, 8/28/06 (red. 10%) back on mkt
2327 5th St., 2/1, $1,499K, 7/13/07 (red. 6%)
213 Pacific, 3/2, $1,524K, 8/1/07 (red. 2%)
716 Marine St. (photo, right), 4/2.75, $1,589K, 4/20/07 (red. 10%)
2912 2nd St., 2/1, $1,600K, 12/29/06 (incr. 10%!)
2629 6th St., 3/2, $1,750K, 10/3/07 (incr. 3%) new
2404 2nd St., 2/2.75, $1,875K, 6/21/07 (red. 17%)
419 Hill St., 4/3, $1,880K, 10/8/07 new
150 Fraser St., 2/2, $2,395K, 10/4/07 new
2806 2nd St., 3/3, $2,695K, 10/3/07 new
2219 Ocean Ave., 3/3, $3,300K, 9/20/05

Removed listings: (none)

Not selling in Sunset Park

Here's our fifth mid-month review of everything R-1 in Sunset Park over 30 days on the market (10/15 previous). Well-priced listings have sold within a few weeks; these haven't. Eight listings joined the list, while four others are no longer available.

2638 32nd St., 2 bed/1 bath, $829K LP, 6/6/07 LD
2338 Pier Ave., 3/2, $898K, 9/16/07 (red. 3%)
1615 Marine St., 3/2, $985, 8/13/07 (red. 14%)
1717 Robson Ave., 2/1, $1,139K, 10/12/07 (red. 5%) new
3118 17th St., 2/2, $1,149K, 9/7/07 (red. 11%)
2432 21st St., 3/2, $1,149K, 10/10/07 new
2224 Navy St., 2/1, $1,150K, 6/5/07 (red. 8%)
2314 Pier Ave., 2/2, $1,195K, 7/9/07 (red. 4%)
926 Ozone St., 3/2.5, $1,199K, 7/29/07 (red. 15%)
2723 11th St., 2/2, $1,299K, 5/2/07 (red. 3%)
2407 31st St., 3/2.5, $1,395K, 7/9/07 (red. 5%)
3041 Paula Dr., 5/4, $1,395K, 10/5/07, (red. 7%) new
1101 Cedar St., 3/2, $1,399K, 4/11/07 (red. 11%)
1702 Ashland Ave., 4/3.5, $1,449K, 10/3/07 new
1640 Bryn Mawr Ave., 3/2, $1,449K, 7/7/07 (red. 5%)
1702 Cedar St., 3/2, $1,475K, 10/8/07 new
1348 Hill St., 3/2, $1,539K, 9/17/07, (red. 4%) new
1320 Pearl St., 2/1.75, $1,570K, 10/7/07 new
1741 Maple St., 3/2, $1,590K, 10/14/07 new
1337 Ashland Ave., 3/2.75, $1,728K, 8/20/07 (red. 4%)
2222 Marine St., 4/4, $1,775K, 5/17/07 (red. 10%)
2343 29th St. (photo), 4/4.5, $1,895K, 8/2/07 (red. 5%)
834 Maple St., 3/2, $1,975K, 8/24/07 (red. 6%)
2516 Cloverfield Blvd., 4/3, $2,395K, 7/15/07 (red. 8%)

Removed listings:
1108 Maple St., 3/1.5, $1,299K, 9/14/07
816 Wilson Pl., 3/2, $1,299K, 1/18/07 (red. 13%)
2005 Ashland Ave., 3/1.75, $1,359K, 8/2/07 (red. 9%)
1621 Ashland Ave., 2/1.5, $1,545K, 8/13/07 (red. 8%)

Not selling north of Montana

If north of Montana is special and everyone wants to live there, why are houses not selling? Not enough buyers, or are even those buyers price-sensitive?

Anyway, here's the fifth mid-month list of everything north of Montana over 30 days on the market (10/15 previous). Three joined the list and seven were removed, but a number of new listings within the last 30 days will likely join this list next month.

704 15th St., 2 bed/1 bath, $1,990K LP, 8/22/07 LD (red. 13%)
754 23rd St., 4/3.5, $2,395K, 9/27/07
710 23rd St., 4/3, $3,150K, 7/13/07 (red. 4%)
557 12th St., 6/5.5, $3,495K, 6/4/07 (red. 17%)
239 14th St., 5/5.5, $3,998K, 5/29/07 (red. 11%) new
333 14th St., 5/6, $4,595K, 6/29/07 (red. 6%)
533 23rd St., 5/6, $4,790K, 9/25/07 new
620 Alta Ave., 4/3.5, $5,395K, 10/11/07 new
1605 San Vicente Blvd. (photo), 6/7, $22,500K, 8/20/07

Removed listings:
611 14th St., 3/1.75, $2,049K, 9/7/07 (red. 7%)
242 25th St., 2/1.5, $2,399K, 7/7/07 (red. 4%)
256 24th St., 3/2, $2,995K, 9/12/07
202 14th St., 6/4, $3,288, 5/24/07 (red 15%)
721 Georgina Ave., 4/5, $3,450K, 8/21/07
421 23rd St., 6/6.5, $5,000K, 5/24/07
1020 Palisades Beach Rd., 6/6, $10,550K, 7/9/07

Flopper on 11th

Let's interrupt updating the archives with this new-to-Westside Bubble attempted flipper not succeeding in Sunset Park. It's a 3 bed / 2 bath at 1101 Cedar St., on the corner of 11th St., asking $1,399K. You can kinda see it behind the trees.

The description includes (another SHOUTER): "STUNNING SUNSET PARK CONTEMPORARY REMODEL. BEAUTIFULLY REDONE W/AN OPEN FLR PLAN THE HOME FEATURES: DARK WALNUT FLRS; REMODELED KIT W/GRANITE, MAPLE CABINETS & STAINLESS APPLIANCES; & REMODELED BATHS W/ LIMESTONE & SLATE SURFACES & FLRS. ... 50' PLASMA TV IN LIV RM IS INCLUDED W/ ALL APPLIANCES...." [Really, a 50-foot TV?!]

It previously sold 12/16/05 for $1,169K, then listed 4/11/07 for $1,580K. Reductions to $1,499K in May, and $1,475K in July, and finally to the current $1,399K haven't moved it. D'ya think all the traffic on 11th has something to do with it?

Flopper archives

Let's revisit some examples of attempted flipping from the Westside Bubble archives, starting with these two from 8-9 months ago.

First is 2320 Idaho Ave., SM that we first visited March 26. Originally for sale in 11/05 at $1,399K (photo above), it finally sold 4/4/06 for $1,335K. Post-flip it was listed 3/22/07 for $2,395K. After price reductions in May and July, it's still unsold at $2,195K.

It's a 3 bed / 3 bath '20s house with a '60s 2-story addition on a tiny lot (4,750 square feet according to Zillow), next to an alley, across Idaho from the Franklin School playground, "Completely remodeled with hardwood floors throughout, new custom baths, kitchen with stone and stainless appliances."

I wrote then, 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? It's been nearly eight months, a market when anything reasonably-priced sold fast but is now looking more grim. Ouch!

Second is this 3 bed /2.75 bath house at 12566 Woodbine St., Mar Vista from April 30. Previously closed for $935K on 3/20/07 (listed for $999K on 11/3/06), the flip was listed 4/27/07 for $1,299K, or lease for $5,200.

They redid the interior with, "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."

And they threatened, "3 wk. listing or will be rented. Offers due May 4." Well, here we are over six months later, with relistings and price reductions to the current $1,199K, or lease for $4,900. So much for that 3-week deadline. Ouch again.

Developer under pressure in Mar Vista

Enough of graphs and predictions, let's get back to houses. How's this for an involved story....

We'll start with the new listing for 3239 Mountain View Ave. on Mar Vista Hill. It's described as a 3 bed / 2 bath for $950K, but:

"Developer opportunity: tear-down on spacious lot with panoramic views from the Hollywood Hills to the Pacific. Also available: plans & construction contract to build a 3,900 sf, 3 bed, 3.5 bath loft-style custom home by Red Barn Prefab, developers of 3675 Wasatch, 3710 Grand View & 12122 Victoria. When complete these homes sell for over $2.1 Million on average. Buy now for an extra $875,000 before construction begins, save over $300,000 and participate in selection of finishes and fixtures...."

Let's look up those three houses ... 3675 Wasatch was listed 3/19/07 for $2,295K, reduced to $2,099K, closed 5/22 for $2,125K. The other two are side-by-side at the corner of Grand View and Victoria, listed 7/30/07 for $2,395K and $2,295K. Both reduced $200K and have not sold. Don't you love the, "these homes sell for over $2.1 Million on average"?! Yes, the average price of the ONE that sold was over $2.1M.

Both also have "For Lease" signs posted; Grand View is on the for-lease MLS asking $8,500 per month. The end of last week 12122 Victoria (photo above) left the MLS. Did someone finally buy or lease it?

So the listing that began this looks like a very leveraged developer who sold one out of four, and is trying to bail now rather than build the fourth. Not a good time to be a developer; I'll catch up with some others this week.

30% in 6 years?

Rosebud suggested using per-capita income instead of median household income for the "30-50% fall in 6-10 years?" model, and provided numbers (thanks!). Here it is. Note that I rescaled the left axis to fit the income line to the left end of the Case-Shiller index.

The big difference is that per-capita income rose more steeply from 2000 to 2005 than median household income did. Projecting per-capita income as an extension of 2000-2005 reduces the price fall, to around 30% in 6 years.

Note that per-capita income rose more steeply 1980-90, flattened 1990-2000 (recession, presumably), and, as noted, rose even more steeply 2000-05. Two possibilities ahead are a recession, perhaps severe, which would flatten the line, or accelerating inflation, which would make it steeper. Also note I've not had prices overshoot below the income line, although they did in the 1990s.

Weekly inventory update

11/9 - Continuing last month's rising trend, SM inventory <$3M and PP <$2M are both up 3% for the week, and MV is flat for the week, all from a surge of new listings this week. Our lot-value 704 15th is back on the market, still asking $1.99M. And there were more price reductions.

       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  58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07  58,731  62  19  81 120  29   7 106  77  98  35  88
11/ 9/07          64   5  86 120  30   5 105  79  98   6  95
11/16/07

30-50% fall in 6-10 years?

Back on September 4th I began a look at housing prices and income trends, seeking an estimate of likely price fall. Then on September 29th I added Santa Monica income levels. Finaly on October 27th I found a good fit between the Los Angeles S&P/Case-Shiller index and north-of-Montana lot value prices.

Here I'll put these all together. Above is the Los Angeles S&P/Case-Shiller index, which we know has closely fit Santa Monica prices as represented by low-end north-of-Montana, combined with a linear extrapolation of Santa Monica median household income. This suggests for prices could fall 40% in 8 years to return to their historic relationship to income. Now let's push the model in both directions. I scaled the income line by eye to the price curve. For a worse case (above), I dropped the income line by 10% and shortened the drop duration to 6 years, resulting in a 50% fall estimate. Going the other direction, I raised the income line 10% and extended the duration to 10 years, more of a "soft landing" but still a 30% fall. So a likely 30-50% fall in 6-10 years, consistent with others' projections.

Heavy week

This is starting as a very heavy week. If even some of this continues to devolve, I can't believe Westside prices could hold. And really, you should be thinking about more than housing prices ahead, and focus on your financial security in hard times. I encourage you to read the whole original posts. Two more added at the bottom.

The Independent's (via Housing Panic) "Markets fear banks have $1 trillion in toxic debt":

A new phase in the credit crunch, one of "$1 trillion losses" seems to be dawning.

Charles Hugh Smith's "Empire of Debt I: The Great Unraveling Begins":

I sense the Great Unraveling of the Empire of Debt is finally upon us, and breathtaking losses could be revealed any day now.

You cannot properly anticipate the coming wealth destruction unless you understand that the entire model rests on financial instruments (derivatives) which mask and distort risk.

Market Ticker's "Mirage Monday":

In short, the entire "Real Estate boom" that "powered our economy" over the last five years is one giant ball of fraud.

A ball of fraud that turns out to have a nuclear core, and it is now starting to "rapidly disassemble."

LA Times's "Record U.S. price for diesel fuel hits trucking companies hard":

"Diesel is 30% of our operating costs, and we don't have any options," she said. "We can't share trucks. The freight has to move, and we have to pass as much of the increase as we can on to our customers."

James Howard Kunstler's "Ignoring the Obvious":

Many Americans will have to start choosing whether to pay their mortgage, fill the tank of the Chevy Suburban, buy that brick of Velveeta, or pay the heating oil guy. It looks like China will be spending more of its accumulated dollars bidding up the price of oil (or making favorable contracts with foreign suppliers) instead of buying Freddie Mac bonds. The USA could not find itself in a less favorable position among all these forces roiling the scene. It certainly can't afford to continue its pathetic pose of cluelessness.

Paul B. Farrell's "What will World War IV cost?":

So what will WWIV cost you and me personally? This is crucial, folks, because every dollar spent on expanding our global "wars on terror" will be one less dollar for your retirement nest egg, your health care, your kids education, your grandkids lifestyle -- all of which are being outsourced to a free market system that's forcing you to take personal responsibility rather than get benefits from government or Corporate America.

LA Times's "Writers work picket lines as TV shows shut down" (not like TV people live in Santa Monica or anything):

the last WGA strike in 1988 lasted 22 weeks and cost the industry an estimated $500 million

LA Times's "Schwarzenegger orders plan for 10% budget cuts" (when most recent new jobs have seemed to be in the government):

Gov. Arnold Schwarzenegger on Monday ordered all state departments to draft plans for deep spending cuts after receiving word that California's budget is plunging further into the red -- largely because of the troubled housing market.

State officials have warned the governor that the likely deficit for next year has jumped from a few billion dollars to as much as $10 billion, threatening to wipe out the progress Schwarzenegger has claimed in getting the state's accounts in order.

High-end financing?

Updated with loan info - thanks, Phillip. From all of our recent conversation about the upper end of 90402, here's a question: Following is a list of all ten properties in 90402 that sold for over $4M so far in 2007, according to the Assessor. They generally sold pretty fast and only one had a price reduction. Sale price varied above and below asking.

My question is, how were they financed (did we touch on this before?)? Were jumbos central, or did they just write checks? For someone with access to loan records, could you post how much was financed, and, if available, what loan type? (For privacy, no owner names, please.)

1221 Georgina, 5 bed/6.5 bath, SP=$5.6M, SD=8/10/07, LP=$5.895M, 70% fixed loan
522 21st Place, 6/5.5, $5.2M, 3/21/07, $4.995M, 48% var.
333 20th, 5/6.5, $5.1M, 6/5/07, $5.095M, 69% var.
524 19th, 5/4.5, $5.058M, 6/29/07, $4.895M, 79% fixed
645 Adelaide, 5/6, $5.0M, 8/14/07, $5.895M, 60% var.
1228 San Vicente, 5/5.5, $4.989M, 5/11/07, $4.989M, 50% var.
235 Georgina, 5/6, $4.95M, 6/12/07, $4.995M (red. from $5.395M), 30% var.
635 20th, 4/5.5, $4.6M, 3/29/07, $4.795M, 65% var.
1107 Carlyle, 7/7, $4.5M, 7/26/07, $4.688M, 75% var.
210 23rd, 6/5.5, $4.35M, 3/21/07, $4.575M, 80% var.

So neither all-cash deals nor zero-down, and mostly variable rates. This says even the high end will be sensitive to loan rates and availability. (Although if pushed, perhaps they could have put in more cash?)

Monthly inventory update

11/2 - SM inventory <$3M is down 2% for the week, but up 5% for the month; PP <$2M is up 16% for the week and up 12% for the month, and MV is down 2% for the week but up 13% for the month. Total Westside inventory is up 3.6% to 1,731, highest this year. This constrasts to last year, when inventory had begun its end-of-year decline in October.

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  58,731  62  19  81 120  29   7 106  77  98  35  88
11/ 9/07

All Westside

              2/9     4/6     6/1     8/3    9/28 
                  3/1     5/4    6/30    8/31    11/2
Bel Air-H.Hls. 86  86  92 100 103  99  86  99 104 104
Bev.Ctr.-M.M.  64  57  48  53  54  65  64  67  75  75
Beverly Hills  67  70  56  46  53  49  59  61  62  58
B.H. P.O.      94  91  92  88  93  95  92  94  90  93
B'wood Vic.    35  36  31  39  38  41  42  46  50  59
Brentwood      67  71  73  75  72  68  86  77  89  96
Chev.-R.Pk.'8' 22  20  19  22  23  22  26  20  28  23
Culver City    35  25  20  28  33  36  41  48  49  46
Malibu        178 181 192 199 206 220 224 216 216 209
Malibu Beach   42  44  51  52  56  58  54  45  43  45
Marina Del Rey 20  20  20  27  29  28  26  27  26  22
Pac.Palisades  64  68  73  82  87  92  78  69  90 106
Palms-M.Vista  62  53  52  68  77  73  84  90  87  98
Playa Del Rey   7   8  17  20  21  20  21  24  29  27
Playa Vista     3   2   3   1   3   5   4   9   8  10
Santa Monica   50  50  49  53  61  57  68  72  74  81
Sunset-Hwd.H. 155 178 159 166 180 168 187 184 215 226
Topanga        39  41  36  43  45  54  49  54  55  52
Venice         64  64  57  68  70  72  69  68  68  84
W.H'wood Vic.  23  32  25  36  42  41  40  36  49  52
West L.A.      19  21  25  24  25  34  31  36  40  37
Westchester    53  46  47  45  53  52  62  72  82  78
W'wood-C.City  33  44  37  42  33  34  29  37  42  50
             ____ ___ ___ ___ ___ ___ ___ ___ ___ ___
Total        1282    1274    1457    1522    1671
                 1308    1377    1483    1551    1731
Month-month incr.  2% -3%  8%  6%  2%  3%  2%  8%  4%

Notes

LA County inventory via OC Renter. 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. "New" is for previous month, or month-to-date for current partial month.