Archive for April, 2008
April 25, 2008
Even before April swings into May, it’s abundantly clear the arrival of Spring has failed to thaw out the housing market, or even wake it from hibernation.
Sellers in North Hollywood’s 91605 zip code feel it as much as buyers, and some are taking steps necessary to defrost the market, or at least their piece of it.
The working class 91605 zip is bisected by the Hollywood freeway north of Vanowen St. The homes here and their prices are the most modest of the four zip codes that comprise NoHo, and they are taking the worst battering from the housing storm. March sales figures from DataQuick show a 34% year-over-year median price loss, down to $355,000.
But a few sellers whose properties have been on the market at least 90 days are facing reality and making serious cuts to their asking prices.
11559 Cantlay St.
North Hollywood, CA 91605
$339,000
3 + 2 in 1,545 sq. ft. Needs TLC, but the asking price leaves some money left over for several shopping trips to Home Depot. On the market since last October, when it went on the boards at $499,000. Will there be a taker?
12032 Lorne St.
North Hollywood, CA 91605
$350,000
A cute, clean 3 + 2 bungalow with upgrades on a cul-de-sac. But its short sale status turns on a “Warning: Slow Ahead” caution light.
12251 Lull St.
North Hollywood, CA 91605
$498,999
Five bedrooms, two baths, almost 1,900 sq. ft. Not a short sale, this has been on the market since the first of the year; the owner has marked the price down from $565,000.
It could be a long winter in North Hollywood.
April 25, 2008
The L.A. Times on Thursday carried this story about the government’s stalled efforts to intervene in the housing crisis. 
Nine months into the worst housing crisis in a generation, Congress this week took up the most aggressive government plan so far to break spiraling home foreclosures and tumbling house prices that threaten to pull the economy down. But even as a key House committee began to mark up the bill Wednesday, there were signs that the measure could be caught up in a crippling political crossfire. Mortgage industry intransigence, voter anger over possible government aid for speculators and economists’ fear that thousands of homeowners might just walk away from troubled loans are contributing to a potential stalemate.
So people’s outrage over possible federal help for reckles borrowers has reached Congress’ ears. That’s good news. Why should the government — or anyone, for that matter — agree to guarantee mortgages for people who have already proven themselves fiscally unwise?
The heart of the House plan is a proposal to require both lenders and mortgage holders to accept significant losses — about 15 cents on the dollar — in exchange for federal guarantees that the reduced loans would be repaid.
The same logic goes for lenders. Why should lenders receive any assistance from the government? I’d rather see Congress penalize lenders for their lax lending standards than rescue them. As it turns out, lenders have shown no interest in participating in a solution.
Any action by the government is not likely to go over well.
“There is no sympathy for anything that smacks of bailout,” said Allen Sinai, chief economist of Decision Economics Inc., who recently testified in favor of the Frank bill. “The outrage has shown up very quickly, and means that at this point the government can only go so far.”
The story also notes that by next year, 1 in 5 American homeowners — 12 million people — will be “underwater” on their homes, meaning they owe more than their property is worth. Some lawmakers say the government reduce the amount owed on mortgages so people will be less likely to abandon their homes.
Why now? For much of the 1990s, plenty of California homeowners were underwater, too, and there was no talk of a bailout. Plenty of people walked, but some opted to wait it out. We got through that without government help.
Congress should let things work themselves out and focus its efforts on people who truly need it.
Recent Redfin posts:
A Doll House With a Not-S0-Cute History
Some Homeowners are Stressed to the Max
April 24, 2008
Glendale is all abuzz these days with the Americana at Brand and its imminent May 2 debut. Now that the beans have been spilled on Americana’s pricing– from the $700’s to $2 Million+ for one of the 100 Excelsior condominiums, the city has an entirely new top market condo category entirely stemming from the Caruso development. To better put things in perspective, Americana’s bottom offerings in the range of $700,000’s used to be the absolute top end of the market. I don’t think there’s anyone out there who doesn’t thinks this all sounds a little crazy. But it’s crazy that’s marketable. I think that’s part of Caruso’s genius. One can only imagine how traffic will permanently be affected in the city as Brand and surrounds were already certified nightmares on the last few of my visits, before Americana and its projected 20 million annual influx have descended upon (the project is expected to be even more popular than The Grove, so they say) the streets. Back to the condos, here’s Rick Caruso’s take on living at the Americana in this News-Press article, “Americana condos aiming high”:
It’s a different world now out there because there is nothing like the Americana or the Excelsior to compare it against, not only the quality of the units and the way they’re fitted out, but also to be in the environment where you’ve got the restaurants, you’ve got a park to be at, and it’s all in this beautifully landscaped, safe environment
The piece briefly mentions the fact that the same $2-million investment for one of the top end properties “could fetch some of the most luxurious single-family residences, equipped with pools, private yards and up to five bedrooms in the Glendale hills“, which is both completely true (some of them are listed below for your comparison) and perhaps irrelevant all at once.
Chances are, serious applicants for residency have long since come to terms with the fact that they find appeal in life above a shopping mall; a fabricated main street; a place that the New York Times (describing The Grove) describes as “everything that is horrible and spectacular about our brand-saturated American lives.”
By the Numbers
Americana at Brand “Excelsior Home” largest floorplans
Beds: 2 - 3 / Baths: 2.5 (dependent on floorplan)
Year Built: 2008
SQ.FT.: 2,500 - 2,600+ (dependent on floorplan)
$2-million range residences in Glendale currently on market:
1562 Arundle PL
$1,945,000
Beds: 4 / Baths: 3.5
Year Built: 2005
SQ.FT.: 3,779
$/SQ.FT.: $515
1255 Swarthmore DR
$1,999,000
Beds: 5 / Baths: 5.5
Year Built: 2008
SQ.FT.: 4,705
$/SQ.FT.: $425
1330 Balmoral DR
$2,049,000
Beds: 5 / Baths: 5.5
Year Built: 2000
SQ.FT.: 4,679
$/SQ.FT.: $438
photo credit: ryan cole
April 24, 2008
Here’s a house near West Hollywood, at 7531 Fountain Avenue, that’s fallen on hard times. It’s a two-bedroom, one-bath, built in 1920, with 877 square feet on a 1,954-foot lot. And only a thin sliver of sidewalk separates it from the traffic whizzing by on busy Fountain Ave.
On March 1, 2006, the house sold for $620,000. That owner apparently put it right back on the market; it sold again on May 31 for $810,000.
Well, you can guess what happened next. In October 2007, the bank took possession of this house, paying $694,542. In November, it was back on the market, with an asking price of $619,900. Since then, it’s been reduced four more times. The latest reduction happened within the last week. It’s now listed at $499,000 — nearly 40 percent less than it went for two years ago.
How low can it go? The listing description urges wannabe buyers to “Submit!!! Submit!!!! Submit !!!!!” Sounds like someone could come in with a pretty low offer and get this thing.
There are a few properties that have sold nearby, but the only one that’s truly comparable, because it’s on the same street, is 7612 Fountain Ave., which sold in November for $745,000. But it’s a three-bedroom, two-bath, with nearly 1,500 square feet.
April 24, 2008
What’s it like to be facing foreclosure? The news this week that foreclosures in California are at record levels means that some households are facing unmanageable levels of stress.
An article on MSN Money asserts that the housing crisis is causing an increase in divorces. It’s understandable: When two incomes are required to meet the monthly mortgage, there’s no margin for error. If one thing goes wrong — a job loss, an illness — the whole house of cards comes tumbling down.
A survey from AOL Real Estate and Zogby International released this week revealed that 43 percent of Americans spend more than 30 percent of their budget on housing expenses, which means they’re “cost-burdened,” according to standards established by the U.S. Department of Housing and Urban Development (HUD). The same survey found that 22 percent of Americans are a job loss away from losing their home or apartment, and 30 percent are working paycheck to paycheck to cover their housing costs.
But that doesn’t mean Americans are giving up on home ownership; quite the contrary. Nearly 7 of 10 respondents felt that real estate was still a viable investment. And more than half of homeowners surveyed said that if they were forced from their homes, they’d buy another one instead of rent. More than half also said they thought their homes would be worth more in five years.
It’s obvious that Americans have a strong desire to own homes. Our parents and grandparents did; it’s the “American dream.” Unfortunately, the dream can become a nightmare when people stretch themselves to the limits of their finances and physical and psychological limits, as many are now learning the hard way. (My parents’ home cost $11,000, and it was paid off within three years.)
Homeowning should not be this stressful. It should make sense financially. It should not take a toll on your marriage or your psyche. I hope that in the future, people think long and hard before committing themselves to a mortgage that obligates both members of the household to work heavy-duty full-time jobs for 30 years.
If you can’t stay under that 30 percent number that HUD recommends, maybe you shouldn’t be owning a house.
Recent Redfin posts:
Belated Tough Talk from BofA and Fannie Mae
Is Anyone Foreclosing in the LAX Area?
April 24, 2008
Everywhere you look, there’s another news report about the dreaded “F” word. You know. Foreclosures.
Take this recent KNBC article that tells about the tale of doom and gloom in Los Angeles county.
The number of Los Angeles County homes slipping toward foreclosure jumped by 130 percent in the first quarter of the year, compared to the same period last year, while statewide loan-default numbers reached their highest levels in at least 16 years, a real estate information service reported Tuesday.
Lenders sent default notices a total of 20,339 homeowners in Los Angeles County in the first three months of the year, up from last year’s first- quarter total of 8,843, according to La Jolla-based DataQuick Information Systems.
And Peter Viles, of L.A. Land reports this:
The number of California homes lost to foreclosure in the first quarter surged 327% from year-ago levels — reaching an average of more than 500 foreclosures per day — DataQuick said in a report, warning that the widening foreclosure problem could “spread beyond the current categories of dicey mortgages, and into mainstream home loans.”
I’ve covered the overall market changes in the LAX area, taken a look at renting versus buying in area, and even looked into what construction is popping up around town. But I’ve never really investigated how many foreclosures are happening around the LAX area. So let’s have a look-see, shall we? After all, the number of foreclosures is certainly an indicator of just how dire a market really is.
In Westchester, there were seven foreclosures in the fourth quarter of 2007. In Playa del Rey there were - (gasp!) none in the last quarter of 2007! And in Playa Vista, there were just two in the last quarter of 2007. So while there are those in the LAX area who went into default on their payments, the numbers are low compared to say, the 91367 area of Woodland Hills, which had 25 foreclosures during the last quarter 0f 2007. Is it any wonder that Playa del Rey median prices actually went up from 2007 to 2008? Enough said.
If you’re curious about your own LA neighborhood, you can plug into this foreclosure tracker I found off of Terra Firma LA’s site. You can see more on foreclosures in a recent post from their site here.
April 23, 2008
Ah. To live near ocean breezes and within easy walking distance to the sand. Doesn’t sound like a bad place to live, does it? That’s what the folks who purchased 8163 Billowvista Dr. thought. The three-bedroom, two-bathroom home sold on March 5, 2008 for $874,000. And the original owners didn’t do too bad with the timing of the sale of this 1,760 square foot home, all things considered. (The current average days on the market for Playa del Rey is 129 days.)
Here’s a little history. The home first came on the market on December 1, 2007. They listed it for $899,000. It seems they were in a hurry to sell because just over two weeks later, they dropped the price to $879,000. And you know the rest, as they say.
Unfortunately, the original owners didn’t do so well in the profit arena. In 2004, they bought the house for $816,000. That’s just under a 7% return on investment - that’s if you don’t count the cost of realtor fees.
I wrote back in March about the homes that were selling for under a million in the area. Now, there are just two. 7618 W. 83rd St., a three-bedroom, two-bathroom home is still on the market for (a drop to) $959,000. Newer on the market is 8250 W. 83rd St., another three-bedroom, two-bathroom home going for $749,900.
April 23, 2008
Everyone agrees that the loose lending practices of the past few years are largely responsible for the current housing slump. People with lousy credit and/or low income were given ticking-time-bomb mortgages that were dependent on home prices continuing to skyrocket. When prices leveled off, the mortgages began to blow up, and up, and no one could afford their monthly payments. The avalanche of foreclosures is just beginning.
So it’s a bit ironic that now, with practically no one buying homes, lenders have decided to get tough. Bank of America, which is in the process of buying Countrywide Financial, an epicenter of irresponsible lending during the run-up, has announced that it and Countrywide will quit offering “riskier” mortgage loans, such as option-ARMs, which let borrowers pay less than their monthly payment.
BofA also said, according to Reuters, that it will “significantly curtail” other “nontraditional” mortgages, such as “no-doc” loans that allow borrowers to skip that pesky step of proving their income.
“We recognize this tightening, by definition, restricts the availability of credit to some borrowers,” said Bruce Hammonds, Bank of America’s global consumer credit executive. “However, this will help ensure that those who get loans can afford to repay them.”
Wow, what a concept: giving people loans they can afford to repay. Where were people like Bruce a couple of years ago? Why, they were writing designer loans for anyone who could fog a mirror, faster than you could say “subprime.”
Easy to trot out the tough talk now, when no one’s making any money and Congress is watching every move you make.
Meanwhile, Fannie Mae, the nation’s largest mortgage lender, is taking steps to thwart people who plan to walk away from their old homes as soon as they buy another one. (This is in addition to Fannie’s announcement a couple of weeks ago that it would prohibit foreclosed borrowers from getting another mortgage from it for five years.) From Bloomberg News:
Borrowers who say they intend to convert their present home into a rental or investment property while applying for a loan for a new home may be excluded from Fannie Mae financing, said Marianne Sullivan, a senior risk management executive at the company. Often, they’ve been lying about their plans, she said.
Once again I’m reminded of Condoblue, a poster on the L.A. Times’ L.A. Land blog who was planning to walk away from her upside-down O.C. condo, but not before she closed escrow on another property she liked better. Condoblue said her lender didn’t even blink an eye about the first property, but of course Condo didn’t disclose that she was planning to walk away from it. Condo hasn’t posted in a while. Busted?
Recent Redfin posts:
Every Listing Tells a Story… But This One is an Epic
Sold on Billowvista Drive in Playa Del Rey
April 23, 2008
If you want to see how out of hand things got during the buying frenzy, look no further than this listing at Westview Towers, a 45-year-old high-rise condo complex at 1155 La Cienega Boulevard, Los Angeles.
The listing, Unit 312, is a two-bedroom, two-bath. Square footage isn’t listed, but from simiilar sales we know it’s probably around 1,150 square feet. The listing description says it’s “beautifully remodeled” with bamboo flooring and stainless-steel appliances.
Well, someone must have fallen hard for the remodel, because just 15 months ago, in January 2007, a buyer shelled out $950,000 for this place.
Fast-forward to December, when the lender was forced to buy back the property for $803,137. Did the new owner even make a single payment?
The condo came back on the market in January, priced at $589,000 — about 40 percent less than it sold for 15 months ago. In March, the price was lowered to $560,000. Today, it came across as “contingent,” meaning there’s been an offer on the property.
If the sale goes through, and the new owner doesn’t conceal the sales price, it will be interesting to see what it went for.
A look at the comps reveals that in March, someone just bought Unit 1205 in Westview Towers — another two-bedroom, two-bath – for $835,000. Yikes. The seller of that unit is probably in Vegas right now, trying to hit another jackpot. I hope the buyer isn’t standing on that 12th-floor balcony when he reads this.
April 22, 2008
Whether or not Ernest Hemingway actually wrote the six-word short story attributed to him in literary lore - “For sale: Baby shoes. Never used.” - the point is clear: you can fold a lot of backstory into very few words.
The lesson is delivered with a devastating kick in this listing for a Topanga Canyon bank-owned home.
Only this time the story is told in numbers.
3416 Dorothy Road
Topanga, CA 90290
Price: $723,500
Sales History
Date Price Appreciation
March 12, 1990 $425,000 -
November 30, 1995 $310,550 -5.3%/yr
June 3, 1996 $222,000 -48.3%/yr
August 26, 1999 $340,330 14.2%/yr
October 27, 2000 $325,000 -3.9%/yr
July 27, 2006 $1,100,000 23.6%/yr
October 25, 2007 $940,374 -11.8%/yr
The house was built in 1988, toward the end of a period of spiking price appreciation. In the last gasp of the ’80s boom, it sold nearly-new for $425K in 1990. Five years later, more than halfway through the slump that followed, it changed hands for only $325K. Six months later, confidence in housing shaken to the foundation, it sold again for only $222K. (click chart to expand)
By 1999, the housing market was making a tentative recovery at last. The house on Dorothy Road sold for $30K more than it had in 1995: $340,000. But a year later an unaccountable blip sees a $15,000 price drop when it’s sold once more.
Enter the dragon market of the 2000’s, breathing fire, scorching earth. Dorothy Road rides the rocket for six blazing years until, in July 2006, a new owner signs a note for a dizzying one point one million dollars! (Dr. Evil coyly sucks on his little finger here.) The warning signs were already in the air - or in its absence - but the intoxicating smell of money was an anesthetic. Already poised to plunge, the price fell to $940K when it was sold little more than a year later in 2007. Now bank-owned, it is listed for $723.5K after a price cut in March.
It’s interesting to see how closely the sales history of this house tracks the Case-Shiller Housing Index for the L.A. region (courtesy www.Patrick.net) over the same period of time. But it’s even more fascinating to me that despite its overall appreciation, of the home’s six resales up to now, four of them registered negative appreciation - as the next one certainly will too.
The message I take away is that just because a market has fallen dramatically, it doesn’t mean it won’t slide even further. When it sells again, five of this home’s eight owners - including at least one bank - will have learned that the hard way. It’s a lesson today’s would-be buyers should pay close attention to.
