Thursday, June 4, 2009

Falling benchmarks (1)

I'll call 307 Euclid the peak of my north of Montana index, low-end / lot-value sales on 9th, 10th, 12th, and Euclid (the magenta dots plotted above). It was the lowest-priced sale there in 2007, closed 6/13/07 for $2,050K.

Although 3 bedrooms and 2.5 baths it was torn down; here is the new spec being built there (next photo). (The other candidate is the 5/2 house at 517 Euclid, sold 8/8/08 for $2,079, slightly more but not torn down.)

Our most recent data point is 320 9th, closed 5/20/09 for $1,600K, down 22% from 307 Euclid. And (hopefully) not a tear-down.

My projection was some 33% below peak, to early-2003 pricing. An example was the 4 bed / 3 bath, 1,867 SF house on a regular 7,500 SF lot at 229 12th Street, that sold 4/10/03 for $1,375K.

21 comments:

Anonymous said...

I agree with your benchmarks

Agree 100%

let's say that there is a slight premium for 7500 sq foot lots in Franklin - that is 15th and 16th streets would sell at a slight premium since they are in Franklin

this premium might be small or very small - not enough data points on those streets


Since there are quite a few obvious tear downs on the market it would be helpful to have more discussion of what the cost to build a house on one of those lots is today

has the recession knocked down the cost per sq foot to build

Anonymous said...

still 300-350 sq. ft. to build.

Anonymous said...

This is a good post but there is a problem

Not one of the houses discussed here is in Franklin

most people on this blog are hungry and desperate to talk about Franklin

So let us have more posts on that please

Meanwhile I will keep talking up a Franklin premium in the comments to every post whether it is related or not

Anonymous said...

hey troll - go somewhere else. Crawl under a rock

The premium for franklin is just 50 or 100 thousand - CHUMP change on a 1.7 million piece of land

Eat shit and die. Franklin premium is real but small

Anonymous said...

i hate the franklin area of SM. what is the attraction? i am not a troll either.

WarChestSM said...

There is one guy who tends to use the phrase "hungry and desperate" in every post.

Just as we know that "stainless steel and granite" is code for "overpriced flip attempt", we know that "hungry and desperate" is...well, you get the picture.

I went to Franklin. Great school. Roosevelt is just as good though AND it is actually NORTH of Montana (ohhhh). Seriously, they both are top notch schools and I think everyone is tired of talking about these two schools. We know they are great...move on.

Much of the 90402 Franklin premium comes from the fact that GRS lots are bigger (almost 9,000 sq ft), vs many of the 7,500 sq ft lots in the 90402 Roosevelt area.

I think we should get back on topic. 2003 rollbacks seem likely. Also just for kicks, note that 229 12th which is in this post selling for $1.375 in 2003 sold for $959 in 1999. I don't think we will get close to that (at least nominally), but it shows the large run-up that occurred even BEFORE 2003.

Anonymous said...

Right -
starting now the terms hungry and desperate are both banned from this site

EOD

Anonymous said...

'eat shit and die? '

What are you? An 8th grader with a chip on his shoulder?????

Is that really appropriate for a RE blog???

Anonymous said...

Hey Warchest, where do you get the SM HH income figures?

Anonymous said...

Oops i mean WB

Anonymous said...

Franklin vs every other school is not appropriate on every thread either...

Anonymous said...

Forget Franklin

did you see a teardown South of Montana just sold for 1.4 million?

Wasssssup? how can south of montana be that expensive

Anonymous said...

I found income statistics on Redfin. On each individual listing if you scroll down there is a neighborhood demographics link where you can find incomes.

Francis said...

That straight line looks pretty arbitrary - my estimate has it on the right side of the graph around 100, which is significantly less than yours. The Case-Shiller official data also suggests that your line looks quite a bit high.

Westside Bubble said...

where do you get the SM HH income figures?

From the Santa Monica main library reference desk. It's Census date, excerpted in reports for the city.

Westside Bubble said...

That straight line looks pretty arbitrary

See my original 1/28/09 Projection post for more detail. It is actual Santa Monica Household income through 2006, normalized to match the Case-Shiller data.

Case-Shiller official data

It is, their overall and High Tier for LA-OC.

Anonymous said...

How come you don't have a profile Westside Bubble? Are you currently active in the real estate field?

Westside Bubble said...

How come you don't have a profile Westside Bubble? Are you currently active in the real estate field?

Let's see ... I've never had a job in real estate (agent, finance, etc.). I've been a homeowner, including experiencing buying and selling, but am not now as I wait for prices to fall.

Anonymous said...

I'd say a rollback to just 2003 seems highly optimistic, given that even in the last downturn we overshot the trend level by quite a bit. It's looking more and more like a large overshoot this time, given that defaults are starting to spread to prime (no longer being limited to option-arms and alt-a loans).

Hard to see what will lead L.A. out of this recession, since it was housing itself that lead SoCal out of the least downturn. Film and TV are hemorrhaging, and the state is facing financial ruin. Looks like the only way out for the government will be to hit up the wealthiest, and this will in turn lead many more to flee the state.

All this adds up to a rather drastic downturn, especially in the higher priced areas. I really don't think the paradigm shift has sunk in for most of us yet - the bubble is over, and there is no reason for its effects to linger.

Anonymous said...

"I've been a homeowner, including experiencing buying and selling, but am not now as I wait for prices to fall."

At what point in the cycle did you sell? Was your original property on the Westside?

Westside Bubble said...

At what point in the cycle did you sell? Was your original property on the Westside?

That's a story that deserves a longer essay, which I don't know if I'm ready to write. Yes.