Thursday, July 31, 2008

Recession & price cuts

More reasons to be bearish, even on Santa Monica real estate (not to mention the bizarre zig-zags of the stock market over the last week):

"U.S. Recession May Have Begun in Last Quarter of 2007", Bloomberg reported today (via Mish and CR).

Neil's analysis of the latest Case-Shiller data at Real Estate Comments notes (but read the full version!):

Despite how weak this spring/summer selling season was, price declines slowed. However, do not forget, we are exiting the best time of the year for SELLERS! The traditional time of the year for price corrections is October through February. With the integral of price declines to date, I think the market is close to breaking.

I see this fall as the transition to the real-estate emotion of Panic. I see the spring being a switch to Capitulation. Capitulation is the time of the greatest price drops. ... My final conclusion is to note that a 4% per YEAR drop is the equivalent of free rent.
Closer to home, price decreases this week - 6 in Santa Monica and 1 in Pacific Palisades - seemed especially prominent in cumulative effects.

They didn't exaggerate when they wrote, "UNBELIEVABLE NEW PRICE!!" for the 3 bed/2 bath house up a hill at 16463 Akron in PP. It's now been reduced 50% from its initial $3,200K to $1,595K in a little over a year (and thanks, Anon(s))!

The 6/8 at 411 Lincoln in SM came to market at the incredible $5,795K, but in 3 steps in 2 months has cut 22% to $4,495K.

Marble and Gatedness at 212 24th cut another $100K, to $2,895K.

An interesting indicator of lower-end north of Montana, the 3/2.75 at 517 14th cut another $99K to $2,250K.

And the 4/3 at 1135 Berkeley is now down 20% in over a year, from $2,388K to $1,899K.


Just call me Maria said...

1135 Berkeley is a mess and is still not worth what they are asking. How they call that at 4/3 is beyond me. There is a powder room in a closet of the "master bedroom", an old (but redone in cheap marble) full bath at the top of the stairs and a tiny (converted from a powder room to a 3/4 bath then to a full bath) downstairs. There is a "kitchen upgrade" of nice mismatched stainless appliances and more stone but no thought of actual kitchen design.

Westside Bubble said...

What a description - thanks!

How goes your search?

Anonymous said...

Cover story for LA Weekly features a disturbing story of elderly twins harboring thousands of rats in their Pacific Palisades house and how the city failed to fix the situation over the years.

I wonder how real estate agents will explain this one at the open houses this weekend in the Palisades....

WarChestSM said...

Saw the thing on the rats. Recommendation for the neighbors: Go adopt a bunch of the meanest cats you can find at the animal shelter. What an "all natural" way to go...

Just call me Maria said...

The search is on hiatus. We've written the checks for tuition and sent the exchange student home.

Anonymous said...

For what its worth....

This weekend had an insight into a North of Montana developer, high-end stuff, and he appeared 'very intense'...

It seems that he is "all-in" on 90402 and rushing to finish, but the word on the market is that it is caving.

He seemed borderline 'wild in the eyes...'

Anecdotal of course, but real. I would be wary. Imagine tying to deal before or after purchase, at least before initiating the constructive defect litigation. Yikes.

Anonymous said...

i would like to buy one of these north of montana homes that is close to completing construction but not completely finished -

or finished with construction but not completing the landscaping or something

bottom line is i want to buy at a discount and think the biggest discount will be gotten on a partially completed site

pls post any leads you have on situations like this

i dont want to pay full price

Westside Bubble said...

pls post any leads you have on situations like this

I don't have any, but readers may.

Or cruise construction sites, find the owner's contact info, and see if any are interested.

Anonymous said...

Candy Spelling, Aaron's widow, has quietly put the Spellings' legendary mansion on the market for $150 million.

Sources in the real estate industry say Westside Estate Agency (WEA) has a pocket listing on the 56,000 square foot estate, meaning it is quietly being shopped among realtors and select buyers. The mansion, located in the exclusive Holmby Hills area of L.A., was completed in 1991 for around $47 million, which includes $10 million for the land.

Candy sets the tone in Holmby and Bel Air - houses in those neighborhoods are showy and people strive for privacy.

it is the opposite here in SM - houses are not meant to show off and there is little privacy - rather people walk the sidewalks - more interaction with the neighbors

in so many ways SM< is better than Holmby and Bel Air

if you want snobby place and privacy don't live in SM -- go live east of the 405

Anonymous said...

yes -

no $150 million dollar homes in sm

Anonymous said...

Anon 12:47

I would guess that if the developer/owner/builder is close to finishing the house....he'll go the extra mile and $60K-100Kish to complete the house and/or landscaping....if we are talking a done-up killer spec home worth $3-4m.

I think your best bet would be for the house to hit the market and pray its overpriced and doesn't sell....then the carrying costs really start adding up so there is a greater need to dump it for less.

Don't bet on anything until they list it...then sit back and wait!

Anonymous said...

well i am following the spec house on 14th - the one a few houses away from montana -

builder has not yet been able to sell and is starting to get desperate

anyone think that an offer of 2.9 would snag this in a few months

Anonymous said...

Can we get some mar vista info? There is a new construction asking $1.6 on the corner of Palms. I think 3x2. Any thoughts?