Tuesday's August 2009 S&P/Case-Shiller update continued its uptick, although less steeply. Overall Los Angeles (including Orange County) was up 1.6% from July (compared with 1.8% from June), and is now down 39.2% from its September 2006 peak, although still at September 2003 levels. The national (orange line, their original 10-city Composite) index is down 30.2% from its peak in June 2006.
Besides the original city index they have each city broken into Low, Middle, and High tiers (Under $287,661, $287,661 - $474,760, and Over $474,760; updated for August).
As I wrote last month, I don't see this indicating a bottom on the Westside, which appears lagging the Case-Shiller for Los Angeles. My updated North of Montana Index has another year to go to hit my projection of 2003 prices in 2010, but is consistent with Case-Shiller's reversion to 2003 prices.
Finally, here is the Los Angeles Case-Shiller index scaled with the Los Angeles DataQuick median price history (normalized Case-Shiller's January 2000 = 100).
Thursday, October 29, 2009
August S&P/Case-Shiller
Thursday, October 22, 2009
"$15,000 Home Buyers Credit Costs $292,000/home"
I have long argued that home prices are elevated, and until they normalize, the economy will be stuck in the doldrums. I even wrote a chapter of Bailout Nation, titled “The Virtue of Foreclosure.” I make a basic economic argument that the excess credit of the 2001-07 era is unwinding, and foreclosures are part of that process.He concludes:
The simple premise is that the abdication of lending standards by both bank and nonbank lenders created an enormous credit bubble. Easy money drove home prices to unsustainable and unaffordable levels. People bought homes far more expensive than they could reasonably afford. Many assumed they would be able to refinance, paying for the excess costs by cashing out the price appreciation everyone knew was sure to follow.
Of course, we know what happened next. Prices rose unsustainably, credit tightened up, and the supply of greater fools abated. So much for the real estate perpetual motion machine.
Its one thing to argue as to whether the government should be so brazenly intervening into the housing market, and I can understand reasonable people disagreeing. But the subsidy — whether its $133,000 or $292,000 — is absurd.
Tuesday, October 20, 2009
"Million Dollar Listing"
Any of you watch the Bravo reality show "Million Dollar Listing", featuring three young real estate agents Josh Flagg, Madison Hildebrand, and Chad Rogers?
A major theme of its new season 3 has been how even our Westside market has tanked as these agents "struggle to ink their million dollar deals during this economic downturn" "in the most exclusive neighborhoods – Hollywood, Malibu and Beverly Hills."
Episode 2 last night featured the sale of a Malibu house at 32% off original asking price; a Marina del Rey house with no buyer interest, and a listing cancelled by a flipper/seller who didn't want to reduce her price.
Like some specifics about these properties? They weren't hard to find, between the show, the agents' websites (linked above), and Google.
Madison's "Hamptons in Malibu" house at 6311 Gayton Place (top photo; click any to enlarge) was listed 8/25/08 for $4,400K. It's a 6 bed / 7.5 bath, 6,053 SF house on a 60,548 SF lot less than a mile northwest of PCH and Kanan Dume road.
Its original listing price got no interest. We saw it reduced 14% last night to $3,795K and the seller then accept an offer of $3M even without even a counter-offer (32% off). It closed 2/11/09.
Which also brackets the shooting period of the show and the real estate downturn it describes as beginning in the summer of 2008.
Second is this Marina del Rey "Golden Triangle" (southwest of Lincoln and Washington) 3 bed / 2.5 bath 2,304 SF house on a small 4,922 SF lot at 819 Dickson St. co-listed by Chad on 3/18/09 for $1,739K.
Where we watched the two co-listing agents sit with no visitors during their first public open house. But the seller expressed that she couldn't reduce the price. From the MLS we find (spoiler alert?) that this listing expired 182 days later, but was relisted 10/11/09 as a Short Sale for $1,350K. 
Finally was Madison's 3 bed / 3 bath 2,269 SF flip on a 7,187 SF lot at 18436 Wakecrest Dr. in Malibu (the area on the hill above PCH just west of Pacific Palisades and the Getty Villa). It was listed 8/4/08 for $2,996K, priced as the seller's numerologist advised.
Continuing the theme, its flipper-owner didn't want to reduce the price to match other comps - because of all she'd put into it - and we saw her last night take it off the market rather than reduce it to $2,150K as Madison advised.
We find from the MLS that it was reduced (in a future episode?) to $2,150K, but still expired after 253 DOM (last April). It was also offered for lease at $8,500/month.
Added: See also Curbed LA's episode summary.
Friday, October 16, 2009
"Too many palatial homes"
Last week there were 14 houses in Santa Monica over $3M, not that those are all recently-built. See also the Calculated Risk quote at the bottom, which matches my expectations.
Too many palatial homes, too few princely buyersAnd don't miss Calculated Risk's "The Uncertain Housing Outlook" yesterday, that concluded,
By Peter Y. Hong
October 4, 2009
Two years ago, Larry Igarashi bet he could build a sprawling house in Orange County's foothills that would sell for at least $10 million. These days, you can easily guess how that turned out.
On Saturday he put the eight-bedroom house in the gated Coto de Caza community on the auction block and got a high bid of $6.6 million -- less than he was willing to accept.
Igarashi had gone all-out when he built the "Santa Barbara ranch" house: The master bedroom suite alone is 3,200 square feet, a bit smaller than the 10-car, climate-controlled garage, which measures 4,000 square feet. The driveway is long enough for a firetruck to turn around, and there's a wine storage enclave with room for 1,400 bottles.
The 16,500-square-foot hilltop house -- in the community that was the setting for "The Real Housewives of Orange County" television show -- is just one of dozens of unsold mega-mansions across Southern California conceived during the real estate bubble, when builders waged an ill-timed arms race to ever-increasing extravagance.
Comparably deluxe houses now lie vacant in droves along the coasts and hillsides of Southern California, from Manhattan Beach to Irvine. Their owners could afford to keep them on the market for months, sometimes years, hoping to find buyers who would pay their asking prices.
That holding pattern has kept the most expensive segment of the home market from posting the kinds of sharp price drops seen just about everywhere else. But it's now clear that there are too many palatial properties and too few princely buyers.
As more sellers like Igarashi decide to cut their losses and move on -- or are compelled to do so by their lenders -- the most expensive homes could slip from their perch at the top rung of the market.
"Sellers there now have to unload, and in order to do so, they must reduce their prices," said Chapman University economist Esmael Adibi.
Spec mansions are now amassed in some areas like rising floodwater behind a dam. A search of homes for sale built since 2007 and priced above $3 million shows 39 such properties in Newport Beach and Newport Coast, 27 in Laguna Beach, 19 in Manhattan Beach, 18 in Irvine and 11 on the Palos Verdes Peninsula.
There are also hundreds of other multimillion-dollar homes for sale in Southern California that were not recently built, but sellers who live in homes they bought before the housing bubble are less likely to be under the same pressure to sell as speculators stuck with vacant properties and construction loans coming due.
As speculators and recent purchasers who must get out of mortgages that exceed their home values slash prices to find buyers, other sellers will have to lower their prices to compete.
In much the same way that foreclosures pulled down market prices for lower-priced homes, stressed sellers could deflate the high end by unloading luxury homes at bargain prices.
But even at cut-rate prices, few multimillion-dollar homes are selling. With so many to choose from, even those with enough money are taking their time.
"There's no sense of urgency among buyers," Igarashi said. He had hoped that the prospect of snaring a good deal through Saturday's auction would motivate those who have been delaying a purchase to get off the fence. But it turned out to be a double disappointment.
Igarashi had two houses at auction. The other was a six-bedroom Tuscan-style house he had once listed for $5.75 million. He finished the 10,500-square-foot house in 2007; it sat unsold as the even grander second house was built. It drew a top bid of $3.1 million, below Igarashi's undisclosed minimum. After the auction, Igarashi began negotiating with the high bidder on each property, and was still talking with them at the end of the day.
Near his houses, another six-bedroom home is being auctioned later this month with a starting bid of $3.9 million. It had failed to sell when listed at $9 million.
Auctions can backfire. In December, five new homes in Manhattan Beach were auctioned with opening bids of more than $1 million -- none were sold.
Buyers will eventually emerge as prices fall, Adibi said. Still, it's hard to know how much real demand there is for super-sized homes, even among the very wealthy.
Spec home builders were motivated to ramp up square footage to justify higher prices on their projects. But buyers today who are more likely be looking for a long-term home than a place to flip may not want the trouble of maintaining such large houses.
A bigger question also remains: What if the giant spec homes just never sell?
Stefanos Polyzoides, a Pasadena architect who is an advocate of more dense, compact residences, said sometimes economies change in ways that make the original uses of buildings obsolete. The grand mansions of Newport, R.I., for example, have been converted to condominium buildings or inns, he notes.
Polyzoides doubts such reinventions could work for many of the latest spec mansions. "Some of these are huge albatrosses in exurbia surrounded by nothing. Many of these could face a very hard ending," he said.
Igarashi acknowledged that he miscalculated the market. As he showed a reporter around his Coto de Caza project -- a sprawling tile-roofed building measuring 218 feet across -- Igarashi said it was easy to do in the go-go years.
Though he made a fortune as a titanium golf club manufacturer, Igarashi had been building spec homes as a kind of working hobby since 1980 -- turning profits on all six homes he built in Orange County before his two latest.
"I just didn't expect this would happen," Igarashi said of the housing crash. "I don't think Wall Street or even the president of the United States believed this could happen."
He now hopes to get what he can for the houses and move on. He'd like to pick up land at today's fire-sale prices and build more homes. But Igarashi said he'll take a different approach next time. He plans to build apartments.
Copyright © 2009, The Los Angeles Times
So my guess is another down turn in the housing market in 2010 (existing home sales and prices), although prices have probably already bottomed in many low end areas.
September DataQuick
Catching up department: Tuesday's DataQuick numbers for September seem more to have plateaued, not to indicate a continued rise. In our Westside areas even that is more typical of the low-end frenzy in Mar Vista, not the stuck higher-priced market.
Los Angeles County's median was flat month-to-month at $330K, now down 40.0% for Los Angeles County from its peak in August 2007. Volumes were up 14% year-to-year from September 2008. (July DataQuick post)
That left Los Angeles County prices at July 2003, Orange County also at July 2003, Ventura County at April 2003, and San Diego County at June 2002.
Saturday, October 10, 2009
Palisades rollback
Back on February 11 this Pacific Palisades El Medio Bluffs house was an example of 2003 prices, when this 3 bed / 2 bath 1,765 SF house on a small 4,225 SF corner lot sold 12/5/03 for $860K.
Now 601 Erskine Drive is back on the market. Originally listed 3/20/08 for $1,650K, it was withdrawn 5/20/08, and is now relisted 10/5/09 for $1,095K.
It's heading toward its 2003 price, and if its expansion and remodel was after the 2003 sale it is even closer.
"No expense spared, no detail overlooked, in renovation & remodeling of this turnkey, move-in condition Pacific Palisades Bluffs beauty. Prime sun-kissed corner. Ideal scale & flow for entertaining & play. Spectacular contemporary country kitchen w/every amazing bell & whistle. 2 bedrooms, 1.75 baths & bonus, all bathed in natural light. "Dressed up” garage for versatile use; room above garage is ideal study or studio. Magical gardens."
Sunday, October 4, 2009
New north of Montana sales
Here are two three newly-sold low-end north of Montana houses above $1.6M but below $2M (click photos to enlarge). These are all 60-foot lots (although two are near Montana or San Vicente) and reinforce the new low-end north of Montana is below $2M.
First is 747 23rd Street, a 3 bed / 2 bath 1,216 SF house on an 8,700 SF lot (60' x 145'), the second lot north of Montana Ave.
It was listed 7/15/09 for $1,799K, reduced to $1,749K mid-August, went Pending 8/28/09, and closed 9/29/09 for $1,645K.
"A bright & sunny traditional (2 bdrms + den/possible 3rd) with an open floorplan & hrdwd flrs throughout. Very livable for now --then perfect for expansion/redoing later. Featuring an updated kitchen with newer stainless appliances opening onto the living/dining areas & perfect for entertaining. Beautiful frontyard and backyard both lushly landscaped. Situated on a great street in the Franklin School district & an easy stroll from all the Montana Ave shops and the Brentwood Country Mart"
Second is 231 18th Street, a 3 bed / 1.75 bath 1,829 SF Cecil Gale house on an 8,940 SF (60' x 149') lot.
Listed 8/20/09 for $1,994K, it went into escrow three days later and closed 9/23/09 for $1,968K.
"Romantic 1935 Cecil A. Gale Spanish Colonial on larger lot, in Gillet Regent Sq. Decorat. wrought iron gate opens to Pvt front patio courtyd. Gracious step-down living rm has beautifully designed beamed ceiling & Span. tiled fireplace. Rich architectural detail, hardwood floors, archways, vintage tile, signature stained glass skylight & abundant closet space. Dining rm features cust. coffered ceiling. Master French drs open to Pvt backyd,outdr fire/p, pool,lush landsc.avail 2nd time in 50yrs."
So exclusive, available for only the "2nd time in 50 years". But the last time was listed 1/11/08 for $2,349K and sold 2/8/08 for $2,325K. That's a 15% drop in 1.5 years.
Added: Finally is 340 21st Place, a 3 bed / 1 bath 1,728 SF house on a 9,000 SF lot. Listed 7/22/09 for $2,095K, it was reduced to $1,995K and closed 9/29/09 for $1,810K.
"1920s Spanish on 60x150 lot in Gillette Regent Square. Private backyard with mature hedges. Existing home being sold “AS-IS”. 3bd+1ba, living room w/brick fireplace opens to large formal dining room. Family room leads to kitchen. Ready for remodel or build your dream house! Ideally located on quiet 21st Place in the Franklin School District. Close to all Montana Avenue’s boutiques, cafes and restaurants."
Saturday, October 3, 2009
New, Sold, and Withdrawn/Expired listings
There were NO new Santa Monica listings over $3M in September. Combined with record Withdrawn/Expired listings, that inventory is down (inventory charts).
Santa Monica sales below $3M were higher than the previous two years. Palms-Mar Vista sales lagged 2008 despite the conforming loan frenzy.
September inventory charts
Inventory is generally up from 2008, except for Palms-Mar Vista after its conforming loan buying frenzy and Santa Monica over $3M which had NO new listings in September.
Considering that inventory levels a year ago (along with the recession, which is not ending in a significant way anytime soon) drove subsequent price reductions of over 20%, I expect another price drop ahead.
September monthly inventory report
Although down from August, inventory is generally still higher than a year ago, giving every reason to expect further price declines on the Westside. Charts to follow.
LA County Santa Monica Pacific Palisades Mar Vista
<$3M New Tot DOM<$2M New Tot DOM Tot New DOM
- -------- ------ -------------- -------------- ----------
J 1/30/06 27,732
F 2/28/06 29,420
M 3/31/06 31,819
A 5/ 1/06 34,032 38 33
M 6/ 2/06 37,847 56 36 38
J 6/30/06 42,317 66 40 49
J 8/ 4/06 45,315 70 34 50
A 9/ 1/06 46,781 71 27 59
S 10/ 6/06 47,369 83 25 98 71
O 11/ 3/06 45,780 80 20 91 77
N 12/ 1/06 43,103 65 18 72 96 39 20
D 1/ 5/07 35,646 54 4 60 117 33 6 71 66
- -------- ------ -------------- -------------- ----------
J 2/ 2/07 36,715 38 15 45 124 29 16 61 71 70
F 3/ 2/07 41,251 42 14 51 114 26 10 68 79 55 25 76
M 4/ 6/07 42,857 41 23 49 107 18 8 73 103 54 52 50
A 5/ 4/07 45,918 46 28 54 92 19 6 82 79 71 37 52
M 6/ 1/07 52,198 50 25 61 78 17 15 87 78 77 39 53
J 6/30/07 52,769 42 18 56 81 17 11 92 77 74 33 61
J 8/ 3/07 54,166 53 28 68 86 23 12 78 76 84 39 68
A 8/31/07 57,432 57 21 72 98 18 7 69 75 90 40 79
S 9/28/07 58,973 59 17 74 103 26 9 90 81 87 20 87
O 11/ 2/07 58,731 62 19 81 120 29 7 106 77 98 35 88
N 11/30/07 59,108 52 14 67 136 23 11 88 94 96 23 96
D 12/31/07 53,475 42 5 53 148 19 2 73 119 79 13 116
- -------- ------ -------------- -------------- ----------
J 2/ 1/08 53,722 54 16 67 157 26 16 101 118 89 36 96
F 2/29/08 53,520 50 10 68 178 29 8 108 108 88 21 103
M 3/28/08 53,566 57 17 81 171 32 14 122 92 82 22 105
A 5/ 2/08 54,098 59 14 83 159 35 7 136 93 90 33 96
M 5/30/08 53,216 56 23 79 147 34 9 142 106 91 29 89
J 6/27/08 53,058 74 28 98 131 30 6 129 107 96 26 95
J 8/ 2/08 51,906 66 14 89 125 34 8 120 136 99 35 101
A 8/29/08 50,124 62 9 79 122 29 5 108 156 91 25 104
S 10/ 3/08 48,113 58 14 82 145 41 15 128 132 84 24 109
O 10/31/08 47,017 64 22 90 131 55 18 159 126 83 21 103
N 11/28/08 45,216 64 12 91 141 54 7 151 124 73 9 130
D 12/31/08 40,810 52 3 80 171 47 5 130 134 63 10 144
- -------- ------ -------------- -------------- ----------
J 1/30/09 38,486 67 16 94 181 59 15 157 145 66 15 157
F 2/27/09 37,647 73 14 98 164 73 17 181 148 75 19 131
M 4/ 3/09 84 25 108 155 73 11 187 150 74 24 128
A 5/ 1/09 89 23 115 163 72 11 188 155 73 22 127
M 5/29/09 80 15 107 175 67 14 176 142 70 28 117
J 7/ 3/09 85 21 110 142 63 16 167 164 75 19 157
J 7/31/09 83 20 105 163 62 8 164 171 71 22 152
A 8/28/09 73 14 94 204 64 11 164 170 74 21 145
S 10/ 2/09 68 21 81 194 56 6 161 176 61 20 127
All Westside 1/30 4/3 5/29 7/31 10/2 11/27
2/27 5/1 7/3 8/28 10/30 12/31
Bel Air-Holmby H. 101 106 120 137 147 152 160 150 136
Beverly Ctr.-M.M. 58 65 78 83 72 58 73 78 73
Beverly Hills 109 123 134 114 107 120 135 127 112
B.Hills P.O. 127 147 162 153 152 159 160 160 154
Beverlywood Vic. 47 54 62 60 48 42 51 45 51
Brentwood 146 162 157 167 155 155 146 128 136
Cheviot-R.Park '8' 31 38 33 39 31 31 39 33 32
Culver City 52 44 36 33 34 41 39 26 27
Malibu 254 267 288 290 281 280 274 263 260
Malibu Beach 63 70 70 70 69 65 62 67 70
Marina Del Rey 32 32 28 34 34 35 30 25 25
Pacific Palisades 157 181 187 188 176 167 164 164 161
Palms-Mar Vista 66 75 74 73 70 75 71 74 61
Playa Del Rey 24 24 20 21 27 22 22 19 24
Playa Vista 6 6 5 3 5 4 5 6 9
Santa Monica 94 98 108 115 107 110 105 94 81
Sunset-Hwd.Hills 285 299 312 293 294 288 305 306 292
Topanga 70 73 71 73 77 75 83 77 76
Venice 104 121 119 115 111 102 110 101 83
W.Hollywood Vic. 61 58 50 56 51 48 50 58 56
West L.A. 20 30 32 25 23 17 22 27 21
Westchester 53 60 57 42 43 47 56 46 47
Westwood-Cent.City 67 72 78 78 82 67 71 59 47
___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
2009 Total 2027 2281 2196 2233 2034
2205 2262 2160 2133
2008 Total 1509 1694 1917 2019 2006 2128
1524 1846 1974 1942 2085 1822
2007 Total 1282 1274 1457 1522 1671 1600
1308 1377 1483 1551 1731 1329
Notes
See here for 2007 monthly totals. LA County inventory via OC Renter. Santa Monica Days on Market (DOM) is for <$3M, and omits Santa Monica Canyon (in City of Los Angeles but S.M. Post Office). Pacific Palisades DOM is for <$2M and count omits mobile homes. "New" is for previous month, or month-to-date for current partial month.