This Los Angeles Daily News article profiles four San Fernando Valley buyers who recently closed escrows on properties in Chatsworth, Winnetka, Van Nuys and Woodland Hills, and a fifth in the Antelope Valley.
The story is a revealing snapshot of the housing market in the Valley today: four of the five new owners are first-time buyers; four of the five homes were foreclosures or short sales. The four SF Valley sales averaged under $400,000.
Depending on the eye of the beholder, these stories cast either a promising light, or a chilling gloom, on the state of the market. Those with a positive spin, which include the buyers themselves, see their stories as emblematic of opportunity realized. Many of them might have been shut out of buying their own home in a market which, even after seven months of declining prices, posted a median price of $525,000 in February.
But a closer look at these sales suggests a less sanguine view of the market overall.
One of the profiled buyers prevailed in a multiple-offer situation by making an all-cash offer on a foreclosed Ventura Boulevard-area home listed at just $329,000, more than $500,000 less – that’s right, half a million dollars less- than it had been refinanced for in May 2007. A savvy strategist, he bid about 2% above the asking price. That premium, along with the all-cash offer, won him the deal.
A great story, and a great coup for this buyer. But … how many of us have $300,000-plus in cash sitting around to make an offer like that? The upshot: this story is neither typical nor promising for the vast majority of homebuyers.
The young buyers of the foreclosed house in Van Nuys call it the Disneyland house – but not because it’s their “magic kingdom.” Rather, says the owner, “Everything is Mickey Mouse.” Squatters and vandals had all but gutted it, even stealing the copper pipes out of the house along with several air conditioners. (Reuters reports how some houses in places like Detroit are worth less than the copper plumbing in them, owing to a 400% rise in coppper prices in three years.) Central heating and A/C had to be installed. After six weeks of hard labor, the couple still have to keep a nearby apartment to sleep and shower in. Although I credit their grit, it’s not exactly my vision of the American Dream.
The other buyers’ stories, nearly all involving distressed sales, are less extreme – but no more typical of a healthy market. In the Valley, asking prices fell another $5,000 just this week, and up to half of all listings here are foreclosures. Despite the occasional and exceptional good fortune of a few who find their way, it’s still a market that’s deep in the wilderness.