ABC News / Forbes.com highlighted Santa Monica (Thanks, Anon 7/4!) in their article today. It begins,
America's Most Troubled Luxury Neighborhoods
The Collapse in Prices Has Finally Come Home to the Rich
Has the housing market scraped bottom? Not in some of the wealthier neighborhoods -- places like New York City's Greenwich Village, Santa Monica, Calif. and Chicago's Lincoln Park. They held up nicely while the rest of the country slumped last year. This year such Tiffany zip codes are on track to fall 15 percent to 25 percent.
Why haven't you heard about this? Statistics lag. With relatively low unemployment, high-end addresses don't have foreclosures to hasten capitulation. ...
There is a still-growing supply of wildly overpriced, unsold homes--60,000 U.S. properties priced above $2 million listed on Realtor.com. Experts get these gloomy vibes by dividing inventory by the current monthly rate of purchases.
"Any result over seven months generally means falling prices," says David Stiff, chief economist at Fiserv in Brookfield, Wis. In some tony neighborhoods the level of glut is higher than the national average of ten months.
Let's see: 110 house listings in Santa Monica, divided by average monthly sales of 8-12 (depending on whether we average the last 3, 6 or 12 months) = 9-14 months supply. And we've already seen around a 25% low-end north of Montana price fall.
ABC's section about Santa Monica cites,
In Santa Monica's coveted "north of Montana" area overlooking the Pacific, listings are up 60% since last year and the number of days on the market for those listings has doubled to 140. Homes once sold in as little as a week here. Closer to Main Street, Bill H. Meyers has struggled for more than a year to sell his condo.
In April 2008 L.A. was hurting, but Santa Monica values hovered around their peaks. So Meyers tried to unload his property for $850,000, roughly in line with what another unit in his building sold for. He turned down bids near $800,000 after he found a renter at $3,500 a month.
Now that his tenant is gone, Meyers hasn't found a replacement at that price, and getting another $800,000 bid is impossible. The data still say Santa Monica is stronger than other nearby markets. It's just 14 percent off peak prices, versus Los Angeles, down 38%. But the beach city's inventory of unsold homes has just crossed the 15-month level, as high as Los Angeles' were last year. By that grim logic, Santa Monica's values are likely to tumble as far as those in Los Angeles did last year, 27 percent.
Like Meyers, anyone who can afford to will hang on as long as possible, banking on the faith, he says, that "the market is going to come back." Meantime, excess supply is piling up.
Our graphs have been telling the same story.
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