Year-end deals

Suppose you're looking for a year-end deal vs. waiting a couple of years for the market to decline. In tracking past sales I've noticed a range of sold prices for similar properties, and there's some history of closing a good price in the winter. If you can save $100-200K now on a property you like, you may feel less like waiting for a general decline.

One type is a stale listing, perhaps with a history of price reductions, heading toward winter with few buyers still shopping. An example is 1629 Wellesley Dr., 2 bed/2 bath, listed in May '06 for $1,300K, reduced three times, finally to $995K (23%) in October, and closed 11/21/06 for $985K.

Another is 450 Lincoln, 2 bed/2 bath, listed in July '06 for $2,195K, also reduced three times, finally to $1,749K (20%), and closed 11/6/06 for $1,605K.

Another type is a quick-sell listing in the off-season. An example is 1408 Hill St., listed in January '07 for $899K and closed fast on 2/20/07 for $896K. Although since torn down, its price was a big discount off most other sales on Hill Street.

So are there any interesting stale listings as we head toward the holidays?

At the low end of Santa Monica in a reasonable location (but a fixer on a 40-foot lot) there's 2638 32nd St. (photo), 2 bed/1 bath, listed 6/6/07 for $829K, incredibly increased to $865K earlier this month.

For other possibilities I'd look at Zip Realty, which you can sort by listing date. Some of their dates have been relisted, but our past features Biggest price reductions, Not selling north of Montana, Not selling in Sunset Park, and Not selling in Ocean Park have original dates and may be a useful starting point.

Me? There's really nothing out there now that I like, let alone at all close to a price I'd consider, so it looks like I'll keep waiting.

Flopper archives 2

Here's the second edition of Flopper Archives, updates on past acts of attempted flipping documented here.

Let's start with 724 Navy St. (above) from May 22, which has become a poster child here for flopping in Ocean Park.

It is a 2 bed/1.5 bath house on a 2,000 sq.ft. lot, second block west of Lincoln. Originally listed 5/6/07 for $949K, its latest LD is 9/29/07 and price $849K. Over 200 days on market, and managed to fail to sell in an active year.

Even 716 Marine one block over, new 2-story 4 bed/2.75 bath listed 4/20/07 for $1,759K, reduced to $1,589K, went Looking for Backup mid-November and off the market early December. Its neighbor at 718 Marine, 1 bed/1 bath, listed 5/25/07 for $869K, reduced to $799K, and was off the market late November. Did it sell too?

Another in Ocean Park that we featured July 2 is 2614 2nd St., corner of Ocean Park Blvd. It's a 3 bed/1.75 bath, listed August last year for $1,495K, off the market Dec-Feb, now with a listing date of 9/25/07 asking $1,339K. Unsold a year and a quarter.

Two recently covered long-time floppers left the market late November: 1101 Cedar St. (corner of 11th), listed 4/11/07 for $1,475K, last asking $1,399K, and 2320 Idaho Ave. listed 3/22/07 for $2,395K, last asking $2,195K. Did they finally sell (at what discount?) or will they be back in 2008?

And be sure to see SM Distress Monitor's Sunset Park - The Airport Flip **Update 1, NOW AVAILABLE FOR RENT**.

Weekly inventory update

12/7 - Not a lot happening heading into December. SM <$3M is down 4%, PP <$2M is up 4%, and MV is down 5%. No new listings in SM so far this month.

       LA County  Santa Monica  Pacific Palisades  Mar Vista
                <$3M New Tot DOM<$2M New Tot DOM Tot New DOM
       _________ _______________ _______________ ___________

 1/30/06  27,732
 2/28/06  29,420
 3/31/06  31,819
 4/21/06  33,054  35
 5/ 1/06  34,032  38  33
 6/ 2/06  37,847  56  36      38
 6/30/06  42,317  66  40      49
 8/ 4/06  45,315  70  34      50
 9/ 1/06  46,781  71  27      59
10/ 6/06  47,369  83  25  98  71
11/ 3/06  45,780  80  20  91  77
12/ 1/06  43,103  65  18  72  96  39  20
 1/ 5/07  35,646  54   4  60 117  33   6  71  66
 2/ 2/07  36,715  38  15  45 124  29  16  61  71
 3/ 2/07  41,251  42  14  51 114  26  10  68  79  53  25  76
 4/ 6/07  42,857  41  23  49 107  18   8  73 103  52  52  50
 5/ 4/07  45,918  46  28  54  92  19   6  82  79  68  37  52
 6/ 1/07  52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07  52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07  54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07  57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07  58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07  58,731  62  19  81 120  29   7 106  77  98  35  88
11/30/07  59,108  52  14  67 136  24  11  88  94  96  23  96
12/ 7/07          50   0  65 139  25   2  87  97  91   4  99
12/14/07

Bush's plan on Marketplace

Be sure to read or listen to yesterday's Marketplace "Putting a freeze to mortgage meltdown". It covers the issues well. Excerpts:

PRESIDENT BUSH: We should not bail out lenders, real estate speculators, or those who made the reckless decision to buy a home they knew they could never afford.

MOON: "This is a Band-Aid when the patient needs major surgery."

MOON: But [Moody's Economy.com chief economist Mark] Zandi does say that that assumes homeowners will be able to weather a very bad storm that's still ahead. He says he's already factored in the administration's new plan -- and even then, he's predicting a crash in home prices that will add up to more than 30 percent in many parts of the country before this crisis is over.

JOHN TAYLOR: What's been offered, at best, will probably not help more than 300,000 of the borrowers, so maybe 10 or 15 percent. It's simply not enough.

MOON: And there's even a question then, about whether this plan is going to survive in the courts, Kai. If Wall Street can't convince investors who hold all those mortgage-backed securities to go along with it, then it may be dead on arrival.

News items

Tonight (12/6), 6:30-9:00 p.m., City of Santa Monica Transportation Workshop, Civic Auditorium East Wing, 1855 Main St.

Yesterday on public radio's Marketplace, the lead item about the housing bubble mortgage freeze and another on the art bubble. Tulip bulbs, anyone?

"Food bank cupboards are going bare" in Saturday's Daily News. The local economy is tightening.

LA Land blog's "Reader mail: A rate freeze 'rewards bad behavior'" yesterday should be an Op-Ed in the paper.

Biggest price reductions

Not a lot happening at the end of the year. Let's revisit the September 28 list of ten price reductions of at least 15% on the listings I've been tracking. Here are the current 14. Two are left over from the previous list (old%); guess they should have reduced more.

15% - 926 Ozone, SM, 3 bed/2.5 bath, $1,410K to $1,199K, 7/29/07
16% - 2724 6th, SM, 2/1, $1,190K to $999K, 9/4/07 (photo)
17% - 557 12th (16%), SM, 6/5.5, $4,195K to $3,495K, 6/4/07
17% - 3624 Maplewood, MV, 3/2, $1,068K to $890K, 5/31/07
17% - 12217 Palms, MV, 3/1.75, $1,075K to $895K, 3/20/07
18% - 2714 Washington, SM, 6/5, $2,850K to $2,350K, 8/13/07
18% - 3832 McLaughlin, MV, 4/3, $1,100K to $899K, 7/20/07
18% - 11886 Beatrice, CC, 4/4, $1,448K to $1,185K, 6/13/07
19% - 11917 Palms, MV, 5/4.5, $2,288K to $1,849K, 10/11/07
20% - 2613 5th, SM, 3/2, $1,495K to $1,195K, 6/1/07
20% - 11959 Charnock (18%), MV, 3/3, $2,250K to $1,795K, 4/29/07
23% - 4036 Moore, MV, 2/1, $879K to $675K, 8/27/07
24% - 4030 East, MV, 3/4, $2,229K to $1,695K, 8/31/07
31% - 11300 Kingsland, MV, 5/3, $1,300K to $900K, 1/16/07

Rate freeze

Friday's LA Times "Officials act to forestall foreclosures" made me ask the question who would bear the cost of such a rate freeze on negatively-amortizing teaser-rate mortgages. The owner of the mortgage? More negative amortization to the debtor? Taxpayer bailout?

MSNBC's "Banks, U.S. near deal on subprime mortgages" (also here) clarifies it would be investors in these mortgages:

The major thrust of the proposal would be to get lenders to extend for a number of years the low, introductory rates that were offered on subprime mortgages, loans usually offered to borrowers with weak credit histories.

An estimated 2 million of those initial low, teaser rates are scheduled to reset to much higher levels by the end of next year, pushing the payment on a typical mortgage from $1,200 per month to $1,550, an increase of $350. The concern is that many homeowners will not be able to meet the higher payments, triggering hundreds of thousands of defaults.

That would dump even more unsold homes on an already glutted housing market, pushing home prices down further, jolting consumer confidence and raising the risks of a full-blown recession.

By offering a broad approach to extend the teaser rates for a certain period — officials and the industry are debating time periods of two to five years — it would allow between homeowners to keep making payments while the housing industry regains its footing.

Once the industry stabilizes and home prices are no longer falling, it will be easier for homeowners to refinance their adjustable rate loans to more favorable fixed-rate mortgages.

Asked about the proposal on Friday, presidential press secretary Dana Perino said, "The president has been clear that no taxpayer money should be used for any sort of bailout."

The plan under consideration does not include any government funds, but it would mean losses for investors who purchased mortgage-backed securities because they would be getting a lower income stream reflecting the delay in having the introductory interest rates reset. But it would still represent more money than if the mortgage went into default.

But if they can't afford fully-amortizing payments now, how would higher housing prices help? And as if this would end falling prices.

See also Housing Doom's "Most ARMs Not Likely To Be Affected By Reset Freeze":

... at best, this bailout might freeze around one in six ARMs from resetting. The plan, however, will not be able to prevent ANY home values from falling, which means that the risk of loans defaulting remain high.

Added Monday: See Calculated Risk on Secretary Paulson's statement categorizing homeowners, ending with CR's comment:

Whenever the freeze ends, most of the homeowners in the defined group will still face foreclosure. So the purpose of this plan is clear - since the industry lacks the infrastructure to handle the work load, this guideline helps decide which loans to foreclose on now, and which loans to foreclose on later.