Friday, March 7, 2008

Weekly inventory update

3/7 - Santa Monica is up; Pacific Palisades <$2M is down, but up overall; Mar Vista is down. Amazing that people are committing to house purchases (including 4140 Sunnyside, below) just as the economy appears headed off the cliff.

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

-------- ------ -------------- -------------- ----------
1/30/06 27,732
2/28/06 29,420
3/31/06 31,819
5/ 1/06 34,032 38 33
6/ 2/06 37,847 56 36 38
6/30/06 42,317 66 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 70
3/ 2/07 41,251 42 14 51 114 26 10 68 79 55 25 76
4/ 6/07 42,857 41 23 49 107 18 8 73 103 54 52 50
5/ 4/07 45,918 46 28 54 92 19 6 82 79 71 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
11/30/07 59,108 52 14 67 136 23 11 88 94 96 23 96
12/31/07 53,475 42 5 53 148 19 2 73 119 79 13 116
-------- ------ -------------- -------------- ----------
2/ 1/08 53,722 54 16 67 157 26 16 101 118 89 36 96
2/29/08 53,520 50 10 68 178 29 8 108 108 88 21 103
3/ 7/08 52 4 71 187 27 4 91 116 79 5 99


JBR said...

Amazing that people are committing to house purchases. . . just as the economy appears headed off the cliff.

It's because people don't really know, or believe, that it is headed off the cliff. If you get your info from TV news and your realtor, there's really no reason to worry! :-)

People who read things like this:

Lay readers may not know this, but Geithner, as the president of the New York Fed, is at the center of the hurricane: when markets go blooey, it’s generally the New York Fed — which is where the markets are — rather than officials in DC that’s trying to manage the chaos.

Geithner talks in central bankerese, so you have to do some translation, but it’s really quite frightening:

The current episode has a basic dynamic in common with all past crises. As market participants have moved to reduce exposure to further losses, to step on the brake, the brake became the accelerator, amplifying the shock. Measured risk has increased more quickly than many institutions have been able reduce it, and attempts to reduce it have added to volatility and downward pressure on prices, further increasing measured exposure to risk … The rational actions taken by even the strongest financial institutions to reduce exposure to future losses have caused significant collateral damage to market functioning. This, in turn, has intensified the liquidity problems for a wide range of bank and nonbank financial institutions.

That’s pretty close to saying that the financial markets are melting down.

Tend to be a bit more nervous, with very good reason.

Price Stout said...

DOM crosses 6 months... and remember that's for listings not sales!!!

jbr said...

Those who are expecting the new "Conforming Jumbo" loans to "save" the market may want to umm, re-think that position. Here are the guidelines:

(commentary from CR)

FNMA documentation:

1. Fixed rates can be sold to Fannie on or after April 1; ARMs on or after May 1. The loan has to be closed on or after March 1 to be subject to the following rules; inventory loans (closed from last July to March) have to be subject to a "negotiated commitment."

2. No AUS approvals. It seems they plan to update Desktop Underwriter (their automated underwriting system) before the year is out, but they haven't done so yet and they're rollin' without it.

3. For principal residences, fixed-rate loans are limited to 90% LTV/CLTV for a purchase, and 75% LTV/95% CLTV for a no-cash-out refi. ARMs are limited to 80%/80% on a purchase and 75%/90% on a no-cash-out refi. CASH OUT REFIS ARE NOT ALLOWED.

4. For second homes and investment properties, the maximum LTV/CLTV is 60% in all cases for purchases and no-cash-out refis.

5. Minimum FICO for any loan is 660, with a minimum of 700 for LTVs greater than 80%.

6. One-unit properties only.

7. On a primary residence, existing subordinate liens must be resubordinated. The new loan cannot "cash out" an existing subordinate lien.

8. No late mortgage payments in the preceding 12 months.

9. 45% maximum DTI, with ARMs qualified at fully-amortizing fully-indexed rate.

10. Full doc only.

11. For purchases, the borrower must make at least 5% of the down payment from his or her own funds.

12. A full appraisal with interior inspection is required on all loans; if the property value is more than $1 million, a field review appraisal is also required.

13. Loans are subject to all current pricing adjustments, plus another .25 for FRMs and .75 for ARMs.

jbr said...

Sorry... try this for FNMA docs:

WarChestSM said...

I read the new jumbo guidelines on Calculated Risk...and the only people they seem to really be able to "help" are those who were prudent and stayed on the sidelines...those who refuse to stretch to a crazy DTI and who have actually saved money for down payments.

So basically this helps many of those on blogs like this. Think of it as another ploy to wear down your patience. I can picture it now..."these new jumbos expire at the end of the year, you better buy in 2008 so you can take advantage..."

Anonymous said...

So basically this helps many of those on blogs like this.

Well, hopefully people are smart enough not be enticed to catch knives. :-) The bottom line though is price. Just because I can get a slightly cheaper loan, it doesn't entice me to spend over a million dollars for a little pre/post-war cottage. When I can find something I like for a price I'm comfortable with, i'll buy.

Until then. . . I hope people still buy, and drive hard bargains. Someone has to drive down the comps! ;-)

Epsilon said...

I love that Warren Buffet, who invests based solely on fundamentals, is now the world's richest man.

I also love his comment about when a shoe drops, you don't know if it's attached to a man or a centipede...

I need to hear from some bulls again, though. I haven't had a good laugh in a while. The bulls seem to have all fled to MB Confidential, where they talk about about calling the city to complain when people park on the streets in front of their houses, and like to criticize "renters," and insist that (much like the 90402 here), MB is "different," and will come through this unscathed...

Anonymous said...

"So basically this helps many of those on blogs like this."

I'd love to hear from all of the frequent posters on this blog and warchest's blog as to just how big their "war chests" are. Something tells me most of you are sitting on $20-30K and are talking about SFRs in "marginal" areas like 90405 for which you're about 5 years away from having a suitable DP for.

Anonymous said...

Hello guys... I am not a poster but a daily reader and in sympathy with the general themes here. per the request of March 10, 2008 8:06 AM the wife and I have ~500K in liquid assets and our combined income is ~500K. We are renting now for ~$4K per month, and like the place where we are. We are ogling the 90402 and 90272, but the places we are drawn to seem to begin at about $2.5M+. We could afford it now we're not stretchers, so we're going to stay on the sidelines for a while and see what happens. The typical "house story" is that the price is down 10% or so from original asking (hoo-ray), but it sold for half the current price in 2001-2002 (scary). Not enough to get us off the fence, for now at least...

Anonymous said...

"Something tells me most of you are sitting on $20-30K and are talking about SFRs in "marginal" areas like 90405 for which you're about 5 years away from having a suitable DP for."

Add an extra zero to those figures and you might be in the ballpark. Your ASSumption that people who are on the sidelines are broke and bitter is way off base.

Anonymous said...

First of all, I wouldn't consider 90405 a marginal area. That's ludicrous. My war chest? About $500k. Add my fiance's and we are looking at $850-900k. Given that I work in RE development, my income will take a hit for a few years, but our combined income will still be about $375k trending toward $500ish. I'll probably target a home in the $1MM range and put the rest into an income property once the cap rates trend up some more.

Anonymous said...

I'm not saying that there isn't anyone who reads this blog that isn't sitting on tons of cash, but I would guarantee that some of the frequent posters (neophyte lawyers like epsilon, e.g.) and bubble bloggers like young warchestsm are sitting on next to nothing. I find it comical for posters such as them to trash areas that they most likely couldn't qualify for, even pre-bubble.

Anonymous said...

There are probably a lot of unercapitalized posters, but what's it to you? Blog police? Epsilon is just starting out and if my girlfriend's trajectory as a lawyer is an indication he will be able to buy a home shortly. You can't discount the renter as they are likely the next wave of buyers and will be instrumental in determining exactly what pricing level is going fly in the market. So, rather than whining that renters' comments don't count, you can offer something new to counter the argument that housing is coming down farther.

Here's what I'm seeing: a well-located infill development site in the westside with permits for ~80 units in a soft loft format being offered at 35% the price of the previous escrow, but still unable to pencil as a condo or apartment. Their getting my LOI at 20% their cost. It's ugly out there folks.

Stanford Guy said...

Completely agree with Anon 8:50- thank you for disclosing.

I was beginning to think that we were stupid or nuts to still be on the fence. We've been very prudent in the game (at the expense of our lifestyle, I'll admit and more than one argument) and are looking at the $2.5M range thinking they could still go down quite a bit to those 2001 levels. I think there are more readers/bloggers out there in your asset/income level than people think.

Oh yeah, us? We got "caught inside" in 2003 in a 3 bedroom rent controlled apartment in Santa Monica- still on the fence with $2.8M in cash and combined income of $500K. Just read too much Schiller, Soros, and "Extraordinary Popular Delusions...." to buy a bubble!

Anonymous said...

Stanford guy.....please vacate the rent control apartment so a teacher, police officer or other lowly paid public servants can work and LIVE in Santa Monica.....Isn't that why we have rent control in the first place? I am disgusted by the number of high income individuals who snag a place that was meant to keep a diverse, mixed income (read: lower income) population....then crow to all their fraternity bros that they 'scored'....yeah, you scored displacing a deserving family....

Anonymous said...

I thought rent control was abolished about 6-8 years ago for new tenants in SM?

Anonymous said...

stanford is hurting no one. what he is referring to is this:

"Beginning January 1, 1999, following most vacancies, the landlord may set the rent for a new tenant at an amount the landlord and tenant negotiate. The new rent will be re-controlled and future rent increases during the tenancy will be determined by the Rent Control Board."

See complete here:

So, basically, what he's saying is that since 2003 the rent market has generally increased, but the landlord can't raise the rent much.

I know some folks paying $400 for an ocean view along main, but these don't date from 2003, mostly a couple of decades earlier.

Anonymous said...

oh okay, Stanford I stand corrected.....but I am still pissed about about all those folks with 6 figure incomes living in rent control.....pre 1999....There must be a way to verify income so they can boot them out when they reach the maximum allowable household income.....don't you think????

Anonymous said...

I have about 1.2M in cash, currently renting for 4.5K. I'll rent for enother 3-4 years. I moved to LA from East Coast in 2003, and was not comforatlbe buying even than. In 1990 Palisades inventory hit 300, I will not buy until this happens.