Wednesday, December 30, 2009

October S&P/Case-Shiller

Yeah, I know, pretty little posting here lately because I've been way busy. But after 2009 ends tomorrow I'll do year-end charts and sales detail to bring things up to date.

In yesterday's October 2009 S&P/Case-Shiller the uptick flattened even more. Overall Los Angeles (including Orange County) was up only 0.30% from September (compared with 0.85% from August and 1.6% from July), now down 38.5% from its September 2006 peak, at October 2003 levels. The national (orange line, their original 10-city Composite) index is down 29.8% from its peak in June 2006.

As I noted last month, the Low, Middle, and High tiers are no longer available without registration and were last reported here with the August update. The left column on the chart is peak to bottom; the right is peak to current month.

Finally, here is the updated Los Angeles Case-Shiller index scaled with the Los Angeles DataQuick median price history (normalized Case-Shiller's January 2000 = 100).


Anonymous said...

Thanks for this data. Very helpful.

Picking up on the last thread, we all know that the FHA allows people who make $100k to borrow $700k from the FHA. So those that want a mortgage of 7x their income can get it if they want to buy at that level.

But what about the $3 million plus home buyers? How big a mortgage can they get today? What multiple of income are they paying

Robert said...

You gotta be a buyer.
Mortgage rates are already starting up.
For those who believe that higher rates will kill the market, just remind yourself of the booming real estate markets of decades past....even when rates were in the double digits.
"Pigs get slaughtered" Don't wait for THER bottom, because even if you hit it exacty, you may not find that one house you might fall in love with.
My advice, for what it is worth, is to look now, close your eyes, know that you are taking a risk, but buy.
Decent houses are being bought every day on the westside. Take a look at the sales in 90402 etc in Nov and Dec.
And with rates at around 5%....that's a sale on money. Perhaps you might think about your purchase in that way. At %% one might borrow even if he/she does not need it.

Anonymous said...

Read the la times today...Case Shiller guy talks about how to buy in the downturn (which is now) if you are a speculator...

Is it 'Buy now or be priced out forever'....again?

Anonymous said...

What percentage of prime loans are seriously delinquent? 5%

Historically, what percentage of prime loans are seriously delinquent? About 0.5%.

I'll wait.

Anonymous said...

Robert, you have got to be kidding.

There are three dozen homes in pre foreclosure in the 90402

That is a huge load of houses that will hit the market, distressed, must be sold at any price.

Buy now, before that dump lands? No way no how

Anonymous said...

How do you know homes are in pre-forclosure in 90402?

Anonymous said...

Go to the foreclosure tracking web sites - they all list 35-38 pre foreclosure houses in the 90402

That means people that have stopped paying their mortgages -

basically houses in line for the banks to foreclose and boot out the occupants

Anonymous said...

Something tells me Robert missed the whole bubble and has no idea what he's talking about...either that, or he's a realtor.

Anonymous said...

Robert honestly did not know about the wave of foreclosures in the pipe line for 90402

Cut him some slack will ya

Anonymous said...

Robert is a $%#@! realtor. Come on, wake up and smell the coffee folks. I guess there are still some suckers out there.

Anonymous said...

Well, about the highest income levels, my boss takes home about $4 million a year on top of over $100 million in single owner assets. B of A, Citi, and a few other large banks wouldn't participate in any refi above FHA limits. They simply are not lending no matter what the income. Insane because his home in Dume is probably still worth $8 million. Oh well.

Wooster said...

I disregarded Robert's post simply because he said "close your eyes" in relation to buying a home.

Anonymous said...

What we see are a few (FEW) houses in the 90402 closing escrow over 3 mil
Let's assume the buyers put 600k down and are borrowing 2.4 mil. What kind of income do the banks require in order to borrow 2.4 mil right now today

Anonymous said...

Robert - you need to go back and read some of the earlier threads from this site. The 9042 is a special place, but it is NOT a place for those who have to stretch to get in to it. It is only for those who can easily and comfortably get in to it

post #1

to all those that remember back when 90402 was a place where doctors and non partner lawyers could live, you have my sympathy.

The 90402 was solidly upper middle class for a long time.

if you are in the upper middle class and feel entitled to live in the 90402 i feel your pain, i really do. You played by the rules and worked hard. You deserve it.

but it just isn't going to happen. Just go hang around with the new homeowners North of Montana - talk to the people who bought new houses north of montana in the first half or 2008. These are not subprime folks stretching - many of them have built up family wealth that is far in excess of the cost of the houses in 90402

they are a mixed lot of people - some of them have substantial wealth from inheritance some from businesses some from private equity some from VC.

the only thing they have in common is the wealth.

They like the fact that the new people in the 90402 are wealthy people who have deliberately chosen a neighborhood with a low key vibe. They like that the neighborhood doesnt feel "rich" but has a solid middle class vibe. They like that many of their neighbors drive a prius. They like how casual it is.

many many people with great wealth don't want to live in a neighborhood that screams WEALTH they want to live in a low key neighborhood. You see the same thing in manhattan - many people with huge wealth who can afford park avenue are buying in the east village instead of park avenue

i am a bear - a strong bear - i see everything in west LA coming down including the 90402

but the 90402 will never again be a place for the upper middle class. wealthy people want the 90402 - they LIKE the fact that only wealthy people are moving in

it is fun to live among winners who like a low key casual non-showy prius driving vibe.

Anonymous said...

post #2
"They like the fact that the new people in the 90402 are wealthy people who have deliberately chosen a neighborhood with a low key vibe. They like that the neighborhood doesnt feel "rich" but has a solid middle class vibe."

Very true. There is a reason so many agents, directors, and other heavy-hitting industry types live on certain (no names, please) east/west streets near the ocean.

It is because their financial advisors tell them to forget about the $10M Malibu beach house or $12M spread in Bel Air. Their advice is buy a simple $4-5 million house in Santa Monica and keep a low profile. These aren't people at the top of their personal housing ladder tapped-out to make a monthly nut, just well-advised (and smart) folks taking a few steps down and living low-key.

post #3.
i agree that people that can afford 10 million in malibu or holmby hills will sometimes choose the 4 million dollar home in 90402

it MAY be as you say that their business manager advises them to do it but among the ones i know there is a different motivation

they don't want to raise their kids among the obvious showy wealth of holmby or malibu

holmby and malibu are all about $100,000 cars and showy stuff.

90402 is down to earth - just walk around the 90402 sidewalks - most of the women walking around don't even wear makeup. pleny of people put swings out on the trees by the sidewalk and invite kids from the neighborhood to play on the swings. Other kids set up lemonade stands and sell lemonade made with fresh lemons from the backyard for 25 cents

it is an aggressively middle class vibe. kids raised in the 90402 have better values than their peers in malibu or holmby

and when their friends from other places visit they see that the neighborhood doesn't look fancy or showy

so there is both the appearance and the fact of better values in the 90402

also - if you have kids aged 13-15 and live in the 90402 they can walk with their friends to all sorts of interesting stuff on montana

if you live in holmby or malibu you have to drive your kids everywhere as there are no sidewalks that let them walk to interesting places

so 90402 is for the wealthy who only want to live among wealthy but who want to have a NON wealthy vibe.

if you want a showy flashy ferrari and rolls royce type neighborhood you are not wanted in the 90402. the 90402 is only for low key modest down to earth wealthy types

Robert said...

No, guys and gals, I am not a realtor, just a 67 year old living on a pension and social security. But years ago I was as stockbroker and was one of the top brokers of the largest firm in the world) and know all too well when everyone is leaning one way as you all seem to be, the market goes the other way. If you are looking for blood in the streets, there is plenty to be had right now.
The other thing I learned there was quite simple....those with money at the bottom will make the most in the future. Please tell me that this is not the bottom or very near to it. Mortgage rates are up from around 4.75% to about 5.25% That means that the monthly cost of owning a home for those who need or want a mortgage is up 10% already. Add that increase up over 15 or 30 year term, and you have an enormous cost by being late...late on buying and late on the cost of money.
As to those who keep pointing to 35 houses in what? LA is a major city....if you are considering buying, isn't this the best time to buy when there is so much supply? Aren't there are other equally nice places to buy a house? I myself had my heart set on 90402 when I moved here from S Florida, but found a wonderful home in the best area of Brentwood. I paid less than I would have in Santa Monica, got a 5% interest rate on the mortgage and am done looking for the "bottom." Believe me, when you all get the word that the bottom is in, the rates will be 6% or higher and the availability of fine homes will be negligible. All of a sudden those 35 homes will disappear in a flash and the other sellers will be raising their prices...just like the old days, so they tell me. Buying a home or picking a stock is not a science, but a feel, an art. You will not get the buy signal form this blog, your friends , Jim Cramer or a realtor. It is up to you individually.
I truly suggest you get serious about buying right
now as we are coming out of this recession...slowly, but we are coming out. Who would have believed that the Standeard and Poors 500 stock average for the year 2009 was up 23%. Real estate will not be far behind. Many many people made some serious money in 2009 while the economic conditions were horrendous.
Don't wait for the bell to ring, folks. It has already rung and you did not hear it.

Anonymous said...

Robert, I don't agree with you but I respect very much the fact that you are here stating your case.

We don't need more group think we need interesting and creative ideas to be aired here

Anonymous said...

"when everyone is leaning one way as you all seem to be"

Four anons and Wooster constitute "everyone". Thanks Robert...for the laughs.

PS- What stockbroker spells out the S&P 500? And misspells it for good measure?

Anonymous said...

And if you want to look at the contrarian indicator, "everyone" seems to think the worst is behind us, as the stock market shows. I was short the market in 2007 and I will be again very soon, cos the ship is still sinking.

Anonymous said...

"Please tell me that this is not the bottom or very near to it."

This is not the bottom or very near to it.

Anonymous said...

You said you were shopping in the 90402. There are three separate nice neighborhoods in the 90402 - west of 7th, GRS, and 7th to 17th. Which neighborhood in the 90402 did you think was best
? Can you tell us about your home search - did you put in any bids

I want to hear the perspective of a serious buyer that was shopping recently - I am sick of hearing from all the haters on this blog I want a fresh perspective

Anonymous said...

What's GRS? I apparently grew up there, but have never heard the term before. Thanks!

Facts and Feelings said...

GRS stands for Gillette Regent Square, an area between 17th St. and 21st Place developed North of Montana by the razor blade honcho.

As for Robert, I do think he makes some valid points. Exactly how are all those lusting for NOM -- with a good-sized stash available -- going to purchase even when the prices go down further?

Looks like the cheapest fixers anywhere NOM have been hovering around $1.3 million. This is down from the $1.5 million or so in the past year or two. If they get to $1 million -- we shall see -- how are the apparently hundreds, perhaps 1000s of those lusting for NOM going to get into what is ultimately a limited supply of available homes? Will a hundred, 200 be for sale soon?

By the way, appears that NOM monstrosity 734 12th St. , a one bedroom/one bath 720 sqft home on a 4,796 sq. ft smaller than usual lot for the area, just fell out of escrow and is now still asking $949K. It's an example of a bank-owned REO that is not being advertised as such. If you want to live next to a Montana Ave. store with a parking lot across from you and one directly behind (on 11th St.), I guess this is the place for you.

Happy New Year, and thanks Westside Bubble for your informative posts.

Anonymous said...

Until we have a Republican administration and congress the markets will keep falling. The last year was a blip. Things are heading down to the basement for the next few years at least.

Anonymous said...

NOM is three totally separate neighborhoods each with their own vibe. GRS, West of 7th, and between 7th and 17th.

I hear a lot of people on this blog talking about how they will buy if x y or z happens. That is fine. But Robert actually opened up his wallet and bought. He has a unique perspective. He needs to talk more about his evaluation process and the relative value of those three neighborhoods

Anonymous said...

What 67 year old wants to move to 90402?

Anonymous said...

Anon 7:43

If you ask about how much it is to build new in NOM...I am gonna barf.

Anonymous said...

When you gave up on N of Montana where in Brentwood did you buy ?

I assume at 67 years old you didn't care about school district