Mar Vista flipper in a hurry

This 3/2.75 house was just listed at 12566 Woodbine for $1,299K. But it only closed escrow 3/20/07 for $935K (listed for $999K on 11/3/06). And is down the street from 12600 Woodbine, a 3/1 one-story asking $849K (listed 1/16/07).

Beautiful home going through major renovation (2 story). New kitchen, bathrooms, hardwood floors! All new travertine in kitchen and baths. High end vanities in baths. Master is unbelievable, about 650 sq. ft taking up entire 2nd Floor. Huge master bath with spa tub (w/8 jets!). Huge new walk-in with all built-ins! Although not at beach (less than 2 miles), beautiful sunsets! Wonderful neighborhood, you will love it. Available for lease ($5200). 3 wk. listing or will be rented . Offers due May 4...

The second story can't be new, so they expect a line of buyers eager to pay over $350K just for new interior finishes? What's with the lease threat? Could they get $5,200/month? Would they even break even?

Don't you hate it when they flunk basic geography? The nearest beach is at the end of Rose Ave., 2.9 miles by Google maps, a mile more than "less than 2 miles".

"Flat sales and falling prices"

The L.A. Times Real Estate cover story this morning says, "'A bit of a hybrid' situation this spring favors sellers in some price ranges and buyers in the middle sector." Which is what we see on the Westside, inventories up from a year ago and rising, with pickier buyers. Good now to see the Times saying it, especially the last quote.

As the spring buying and selling season hits its stride, the local home market looks like two different places, depending on the price range.

It's a buyer's market in the broadest swath of homes, priced from about $550,000 to $10 million. ...

Already, L.A.-area agents are starting to see the ramifications of tighter lending practices. Escrow companies don't report the number of purchases that fall out, or the reasons, but agents who work with low-income buyers believe they are seeing more deals sour.

"Maybe 15% are falling out," said Solorio, who works with many low- or no-down-payment clients.

"Buyers think they're going to qualify. They have a 'friend' who's going to get them the loan," he said, but then the mortgage doesn't materialize. Others have credit problems, he said, that scuttle the deal. ...

And buyers aren't rushing. Houses, in general, are taking longer to sell. In Los Angeles County, homes stayed on the market an average of 54.6 days in March 2007, up from 36.8 days a year earlier. In March 2004, it was just 20.9 days.

"Buyers think if they wait a little longer, they are going to be able to grab a better price, a lower price," agent Solorio said. ...

There is more to chose from. The California Assn. of Realtors' Unsold Inventory Index in Los Angeles County — a ratio of listings to sales — rose to a 9.6-month supply as of last month from a 5.2-month supply in March 2006, Appleton-Young said. In March 2004, it was at 1.2. ...

Despite the overall uptick in the median price of a home in L.A. County, UCLA economist Ratcliff sees a less rosy picture ahead: "flat sales and falling prices."

Low-end north-of-Montana

After a drought of low-end north-of-Montana listings there's now a spring flood in March and April:

307 Euclid, 3 bed/2.5 bath, asking $2,195K
433 12th, 3/2, $2,240K
211 20th, 2/1.75, $2,295K;
727 12th, 5/3, $2,295K;
427 17th, 4/2, $2,295K (in escrow)
716 11th, 3/3, $2,295K (in escrow)
515 12th, 2/1, $2,299K
363 21st Place, 4/3.75, $2,398K

If tear-downs like 433 12th ("Property sold for land value. House is in rough condition.") and 515 12th ("NOT IN LIVABLE CONDITION PRESENTLY") are worth this much it would be a big leap. But this feels like the over-reaching I saw the last two years, especially with this many on the market.

The photo above is 450 Lincoln, the second-cheapest north-of-Montana sale last year, 2/2, closed 11/9/06 for $1,605, after multiple reductions from $2,195K to $1,749K, and is still standing. Slightly less was 717 7th, 3/1.75, closed 6/8/06 for $1,540, but 7th is really busy. A 2/2 at 717 Euclid was listed for months at $1,895K, but never sold, showing $1.9M was over lot value. Other low-end sales included:

620 17th, 2/2, 11/7/06, $1,860
434 11th, 3/2, 12/15/06, $2,025
416 17th, 3/2, 10/18/06, $2,042K
454 12th, 4/2.5, 11/21/06, $2,085K (cute corner Storybook with master on 2nd floor)
429 21st Pl, 3/1.75, 9/1/06, $2,095K
411 Lincoln, 3/1.75, 5/23/06, $2,095K
716 11th, 3/3, 9/14/06, $2,112K
703 14th, 3/2, 3/2, 12/4/06, $2,150K (big, nice 1-story, but on busy 14th above Peet's Coffee)

Leaving California

The LA Times today had an infobox, based on 2005 tax returns filed, of counties most moved to (dark red on map, click to enlarge) from California, and coming from (black on map) to California.

The net was 71,917 leaving, 274,278 total outgoing to 202,361 incoming. California is special, that's why people are leaving for cheaper places like Nevada, Arizona, Oregon, and Florida!

In a related story and graph, remittances from immigrant workers back to Mexico and other Latin American countries have been falling since last May, matching the US construction slowdown. Calculated Risk touched on this Tuesday.

Bad weather and other links

If you haven't already seen yesterday's news, existing home sales nationally fell 8.4% year-to-year in March, and the national median price fell 0.3% to $217,000. The NAR blamed it on bad weather and subprime loan fallout. See Calculated Risk and Housing Doom for reality.

Here are three YouTube videos of a guest lecture on the housing bubble by Dr. Christopher Thornberg at Humboldt State University last November (via Housing Panic).

It's made the bubble-blog rounds, but be sure to ride the "US Home prices adjusted for inflation plotted as a roller coaster".

One year

It's been one year since I began tracking Santa Monica statistics, inspired by OC Renter's LA County inventory, began posting them as comments there, and now on this blog for two months. I hope this continues to be useful (and entertaining) for those of you who visit regularly!

Where are we now? Santa Monica SFR inventory (<$3M) is up 29% YOY (35 to 45). LA County inventory is up 35% YOY (33,054 to 44,764). We'll see if last year's trend holds, that they both rose steadily through the summer to peak at the end of September.

It's also a good time to recap the houses featured here:

• The Malibu Lautner house is still available for the same $33.5M.
  
• Staged on 17th (3021), originally asking $1.849K, finally sold for $1.6M.
  
• Freeway close (3735 Globe Ave., Mar Vista) is still available for the same $725K.
  
• Freeway close 2 (3736 Tuller Ave, Mar Vista) dropped from the MLS last week. Could it have sold, or is it that zin again?
  
• The north of Montana Storybook (369 22nd) sold fast for $2.25M ($100K over asking).
  
• Warwick (1817) is still available for $865K.
  
• Pacific (728, next to the liquor store on Lincoln Blvd.) seems to have sold at $699K, but no sale price yet.
  
• After months on the market, 528 26th is in escrow.
  
• Flip-flop flip (flop) on 22nd (1036) is in escrow. Reduced it enough to sell (about the $1.78M paid in 6/05), but will eat carrying costs, architect and city permit fees, and selling costs. Flop!
  
• Numerology on 11th (1518), Idaho flip (2320), Pier resale (1721), Ocean Ave. bungalow (2219) and Another flip (flop) on Marine (2202) are still available, prices unchanged.
  

Disappointing for those of us looking for declines, prices have held so far. Houses with the right prices sold fast in this spring's Westside market. But I'm also seeing new unrealistic expectations. More to come on fantasyland prices.

LA Times - Foreclosure pace nears record high

The MSM is finally catching on. Front of today's LA Times Business section was "Foreclosure pace nears decade high". Graph from DataQuick.

Nearly 900 Californians a week are losing their homes because they can't afford to pay the mortgage — up from about 100 a week a year ago — providing fresh evidence that the housing market's troubles are nowhere near over.

The surge is raising concerns that home prices will soon suffer as a result. The 11,033 foreclosures in the first three months of the year represent an 800% increase over the same period a year earlier.

Instead of "concerns ... home prices ... suffer" how about "hopes ... home prices ... fall to more affordable levels"?

So far, the effect on home values has been muted. But as the number of move-outs, evictions and forced sales continue to increase, some economists say they will soon start to push prices down.

First to fall will be the low-income communities where marginal loans proliferated, they say. The trend will spread like a virus to more affluent neighborhoods.

The most pessimistic think a housing bust will wound the economy.

"For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary," said analyst Christopher Thornberg of Beacon Economics.

He predicts foreclosures will top out at four or five times the current level — enough, he says, to either induce a recession or at least bring the economy to the precipice. ...

Most of the loans going into default now were made at the peak of the housing boom in 2005, when some thought the good times would continue forever and lending standards were lax. Nearly 80% of loans made in the state in May 2005 for the purpose of purchasing houses had adjustable rates, a record high.

Many of these mortgages required the borrowers to put little or no money down, and lenders took their word for whatever income they said they made.

Which pushed the bubble up even more.

For a moment, everything was fine. Then housing prices stopped going up — meaning that many of these borrowers did not have enough equity or income to refinance to a new loan. Others in foreclosure may be able to afford the payments, but have chosen not to make them because their homes are worth less than they paid. ...

There's little precedent for the current wave of foreclosures. Traditionally, people lose their jobs, and then they lose their houses. In the early '90s, the aerospace industry's collapse triggered a broad recession.

And no precedent for these loans, either. Gee, do you think there's a connection?

This time, the foreclosures are happening first — and fast.

"It surprises me, the speed at which all this is evolving," said Edward Leamer, director of the UCLA Anderson Forecast.

"Surprised"??

He sees plenty to worry about. For instance, the recent tightening of loan standards is, for better or worse, eliminating a lot of the fuel that powered the bottom of the market. Entry-level buyers are priced out, which means existing owners have a harder time selling their homes to move up. Eventually, everyone is vulnerable. ...

I remember many articles in the early 1990s of how foreclosures were pushing prices down until they finally got worked through.