Monday, June 16, 2008

May DataQuick

The May DataQuick numbers show (drum roll please) ... median prices are down yet again (-23.3% for Los Angeles County from its last-August peak). Volumes, although generally up a little from April, typical for spring, are well down from May 2007 (-26.7% for LA County). (April DataQuick post).


35 comments:

Anonymous said...

rosebud wrote -


The problem with bidding $1.3M for this asset is that 40 other people would as well


i agree with rosebud 100%

there are buyers today, June 2008 who are putting in offers for the low end homes north of montana

seems to be a number of people who will put in a bid of 1.8 or 1.9 on any teardown north of montana

i know that it is a head scratcher but the number of such buyers is big enough that i just don't see any houses selling for below that level in next month

90402 is staying expensive - sorry bears

Anonymous said...

"i know that it is a head scratcher but the number of such buyers is big enough that i just don't see any houses selling for below that level in next month"

Most of us are expecting to wait a tad longer than a month before buying in the 90402.

Anonymous said...

Go 90402! You are expensive that's awesome! Stay that way, please.

Price me out 'cause I don't want to leave south Santa Monica to go and live among a bunch of douchebags. I'll stay down here with the average westside snobs.

Anonymous said...

"Price me out 'cause I don't want to leave south Santa Monica to go and live among a bunch of douchebags. I'll stay down here with the average westside snobs."

But don't forget about the schools, e.g. the one that's had a lockdown for a bomb threat and a teacher busted for groping all the female students within the last few months. How can a parent deny their kids the privilege of attending such a "safe" institution!?

Anonymous said...

I'm going to go out on a limb here and say that the bids will be there for two months rather than one. Wow, I feel tingly all over making such a bold prediction. Of course, after that, everything is going down 50%, as we all know.

Anonymous said...

I think the automatic bids for teardowns are being put in for more than 1.9. The anomaly was 219 23rd. But most teardowns or marginal houses get drive by bids at 2.2 or a bit more for a big (8940 sq ft) lot. When and if those drive by bids dry up, we might see some weakness in lower end SFRs north of Montana. No indication that's going to happen any time soon.

Anonymous said...

"I feel tingly all over making such a bold prediction."

Hell, I'd go two years... or two decades on that prediction. I don't think anybody is saying we're going to see 50%.

20% would be huge.

Anonymous said...

2511 25th street sold for 1.490....$1500/square foot???

Anonymous said...

Hey, remember that thread about use of copyrighted material from the MLS, blah, blah, blah, well, get a load of this:

"Associated Press Going After Blogger for Posting Story Snippets"

;-)

Anonymous said...

are you saying that people bid 2.2 without even going inside the house

they are eager to pay 2.2 for the land ?

Anonymous said...

Yes, some buyers bid 2.2 for land and do not care to see the house. These buyers might be few in number and will fall away as their bids get accepted. But there seem to be at least some that are active bidders at this time.

Anonymous said...

I'm saying we'll see 50%. If it can go up 100%, it can go down 50. And it went up well more than 100% in the last ~4-7 years so it can go down 50% and still be WELL ahead of historical norms for growth.

dwr said...

"I don't think anybody is saying we're going to see 50%."

Agreed, I think it'll be only 48% (give or take a point or two).

Headline from June 2008- McDonald's worker got 500K loan

Headline from June 2009- Now- unemployed mortgage broker who made 300K at the peak got 3MM loan.

Not much difference, especially when the mortgage broker had to buy a Porsche and enjoy all the finer things in life.

Anonymous said...

"I'm saying we'll see 50%. If it can go up 100%, it can go down 50. And it went up well more than 100% in the last ~4-7 years so it can go down 50% and still be WELL ahead of historical norms for growth."

As a matter of math, going up 100% is the same as dropping 50%.

A 100k house going up 100% turns into a 200k house.

A 200k house dropping 50% turns into a 100k house.

So 100% increase on the way up is the same amount as a 50% drop on the way down.

rosebud said...

I guess I don't understand where these percentage drops are coming from... last anon is talking about historical norms of housing price gains... what does that mean? If houses have gone up in value 4% per year across the country, that's what every neighborhood should even out to? Seems like the most critical historical norm is the ratio of home price to income; it tells us if the people that live in an area can afford it, or if they're going to run into distress and be forced to sell at some point. I don't think we look at historical norms of income growth for a region and say that "those residents are a bubble and surely their income is about to drop," just because they are outpacing the rest of the country, right?

The notable thing about this zip is that the average Adjusted Gross Income has skyrocketed with the house prices. This is phenomenal considering 6000 returns are filed here every year, but only 120 homes are sold. That means that either everyone is moving up, or that the newcomers make a lot (to affect the average so significantly). The reality is that it's a little of both.

dwr said...

Rosebud,
aren't you the poster who claimed that sales volume in SM in Q1'08 was double that of Q1'07?

Anonymous said...

"So 100% increase on the way up is the same amount as a 50% drop on the way down."

Exactly. And since we peaked more than 18 months ago, that's the point to calculate your 50% drop from. Back then 90402 tear downs were going for about 1.8 (not the 2.2 that they're going for today, well after the peak).

So, I'm calling tear downs in 90402 on January 15th 2011 going for 900k. That should push 90403 down to the 500K that it was commanding in 1995, and 90404 and 90405 to roughly 150k.

Tea leaves are for gypsies.

Anonymous said...

can you tell me where you got agi income for 90402
i want to see that data

remember that it just takes a few massive earners to skew the numbers so even if i see them i might not believe them

Anonymous said...

The reason I picked 100% up and 50% down is that leaves you right where you started. I didn't really appreciate that needed to be clarified but I think this points out the biggest problem and maybe one of the biggest reasons behind the bubble ... people can't do basic math. Even in Santa Monica.

Anonymous said...

talk to some people about the buyers in the 90402

lahde influence is there

and they can afford the prices since they were smart enough to bet on the sub prime crash (rather than just talk about it )

Record profits for fund shorting subprime
January 14, 2008 By James Mackintosh
...return characteristics are far less attractive than in the past," says Andrew Lahde in a recent monthly report for his Lahde Capital. Lahde's short residential property fund was up 1,000 per cent at one point in November, before ending the year up...

Anonymous said...

"So, I'm calling tear downs in 90402 on January 15th 2011 going for 900k. That should push 90403 down to the 500K that it was commanding in 1995, and 90404 and 90405 to roughly 150k."

Hmm you won't see a rollback to 1995 prices, that was the year the real estate market finally bottomed after a long correction in So Cal. 2000 is a better baseline, especially since the income/rents vs median prices didn't go haywire in 2001. Then, you must account for normal increases in line with historical averages (i.e. close to the inflation line).

So for any given house, this VERY rough rule of thumb says that once the dust settles, say 2012, it will then be worth what it was worth in 2000 plus 2% a year compounded to 2012, or 2000 prices plus about 25%.

It can be a little higher than that too if you factor in the fact that many of the homes were upgraded as there was also a home remodel craze for the past half dozen years.

So all in all, yes to declines of 20-25% from here, but it's not likely that we'll see 50% declines from here. Not in Santa Monica; as a desirable area, it will not "over" correct and the market will efficiently put a floor on prices when the fundamentals make sense again (20-25% lower than the prices today).

Arti

Anonymous said...

It's usually harder to find out about the failures because the sheep like you don't like to read about them...

Fremont Files For Chapter 11 Protection

Fremont General Corp., once one of the largest subprime mortgage lenders in the country, filed for Chapter 11 bankruptcy protection Wednesday.

Fremont asked a bankruptcy court's permission to sell a “substantial portion” of its assets to CapitalSource Inc. Last week, California regulators gave approval to Chevy Chase, Md.-based CapitalSource to buy Fremont’s retail banking operation. Fremont said in May that it might be forced to file for bankruptcy in order to help the deal go through.

Fremont agreed in April to sell its retail assets to CapitalSource for $58 million in cash plus a 2 percent premium for CapitalSource to get $5.6 billion in deposits. CapitalSource also agreed to loan Fremont as much as $200 million to help insure the transaction was approved.

When the deal is completed, CapitalSource will take over all 22 of Fremont’s retail bank locations in Southern California and will name them CapitalSource Bank.

In its Chapter 11 filing, Fremont, formerly based in Santa Monica and now in Brea, listed $321 million in debts, $643 million in assets and up to 999 creditors.

Last year, Fremont was hit by rising loan delinquencies and was forced by the FDIC to stop making subprime loans.

Fremont’s subsidiary, Fremont Investment & Loan, has not filed for bankruptcy and will continue to operate, the company said.

Shares in Fremont closed down 11 percent to 6 cents per share in trading Wednesday.

Anonymous said...

ohhhh, where's all the deals then? I'm sharpening my pencil.....2011 is only 3 years off, then i'll be busy picking up SFR for $150K in Sunset Park.....

yeah, right!

Anonymous said...

"ohhhh, where's all the deals then? I'm sharpening my pencil.....2011 is only 3 years off, then i'll be busy picking up SFR for $150K in Sunset Park.....

yeah, right!"


LOL... this is actually getting funny. Look, if all you seek out is doom and gloom, the future looks really bleak. If all you seek out is happy it's different here BS, big price drops seem ludicrous. If you look at actual economic facts and trends... well... it ain't gonna be the end of the world, but it ain't gonna be pretty either. Uberbears may not get their depression and 200k beach houses. And uberbulls are gonna have their worlds rocked to the core.

Anonymous said...

No really....where are the deals for SFR in SM???????

Anonymous said...

This is extremely amusing. The FBI is arresting dozens of people in a mortgage related fraud case including executives at a major investment firm and the news from the financial world is only getting worse. And this is happening around the world.

Here is LA-LA Land people are arguing whether a couple of Zipcodes will experience a fall from their historic highs--WTF?!

Man this is really like watching an argument over deck chairs on the Titanic AFTER it hit the iceberg.

Anonymous said...

Has this not sold for 1.9 with multiple offers yet? WTH?

jBR said...

Here is LA-LA Land people are arguing whether a couple of Zipcodes will experience a fall from their historic highs--WTF?!

Man this is really like watching an argument over deck chairs on the Titanic AFTER it hit the iceberg.


LOL. It really is a global mess we're in. It's astounding how few people seem to know what's really coming down the pike, what with the interwebs and all. Oh well... :-)

rosebud said...

Hey dwr, yes, I claim that Q1 sales volume in 90402 (counting sfr's and condos) was 22 in 2008, and 8 in 2007. I don't have MLS access, so feel free to point out other sources, or provide the breakdown of sfr's and condos in this math if you have it-

This data is just from Melissa Data...(the AGI is from the IRS).

As for the deck chairs, you're absolutely right... but if we didn't discuss the only areas that are showing resiliency, what would we debate? Westside's fun site would be a complete echo chamber, right?

Anonymous said...

right

even today june 08 there are people who bid 2.0 for empty lots in the 90402

the debate here isn't about whether it is happening right now

the debate is whether those people are smart or dumb

Anonymous said...

"the debate here isn't about whether it is happening right now

the debate is whether those people are smart or dumb"

Not really. The debate is whether or not there are enough dumb people to support and freeze the market at this level in a small highly desireable residental community.

The bulls say, "There's one born every minute."

The bears say, "Not with four million bucks to blow there isn't."

The bears then point at the macro-economic forces driving the national and international marketplace.

The bulls don't much care about macro-anything... because all politics are local, and the local market isn't falling.

In the end you've got yourself a stand off. Only time will tell.

Anonymous said...

--"the debate here isn't about whether it is happening right now

the debate is whether those people are smart or dumb"--

Were the people rearranging the deck chairs on the Titanic smart?

The answer to this question is so obvious that many people can't see it.

But that is to be expected since there are so many not-smart people. That should be obvious as well.

Anonymous said...

"Man this is really like watching an argument over deck chairs on the Titanic AFTER it hit the iceberg."

No it's not, you don't know anything. Those deck chairs were NOT north of Montana. The90402 is north of Montana you see, and that's where all mammals want to live, and it is therefore immune.

Anonymous said...

I like the term "drive by offers"

is this a common term used in sm?

it seems to capture perfectly the mindset of someone buying a house just for the land underneath it without any care for the condition of the house itself

on realtor dot com it seems like all the houses between montana and san vicente in the 90402 on full lots sell for 2.0 or more - many of them selling pretty quickly at 2.0

is this due to drive bys

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