Mandate for Low Income Units: Helpful or Hurtful?

LA is a constantly growing city–so much so that city official estimate that we will need 110,000 new housing units over the next eight years just to keep pace with demand. And not all of those can be in expensive Westside highrises. The LA Times reported recently on the City Council’s proposal to mandate that new developments include units for low-income residents:

The plan, which is nonbinding, calls for the City Council to introduce a proposed law by the end of the year to mandate that developers build units for poor people…New condominium and apartment projects in neighborhoods such as Brentwood, Studio City and other affluent parts of Los Angeles could be required to include units for very poor people…

But critics of the plan worry that putting restraints on developers in a crunch market could halt development altogether:

Carol Schatz, chief executive of the Central City Assn. and an opponent of past inclusionary zoning proposals, said any rules that required developers to provide too many apartments to very poor people could “create another nail in the coffin of the housing market at the worst possible time.”

The Daily News also reported on the mandate where critics pointed out that the language the council used sounds like they are opening to allowing bigger developments that would change the face of the neighborhoods they are in—possibly overtaxing existing resources like parks and schools:

“The message I take away is that the goal of the city of Los Angeles is growth, almost to the point of uncontrolled growth,” said Rita Villa of the Studio City Neighborhood Council. “They’re not planning the infrastructure to support it.”

So what do you think? Is it a good idea to saddle developers with this type of restriction in a bad market? Or is it necessary to keep LA a livable city for the average and below-average income earner?

The Hidden Foreclosure Market

Back in May, I blogged about the significant number of homes in the Redfin database that were clearly bank-owned, yet had not been put back on the market by the lenders. Now, according to this post from the Sacramento Real Estate Statistics blog, based on research from Deutsche Bank, this practice could be widespread.

[B]ank-owned homes frequently do not show up in resale inventory, or MLS listings. The extent to which bank-owned homes do not appear in MLS listings is difficult to quantify because it depends on each bank or servicer’s timeline and approach in handling foreclosed properties.

The research estimates that there could be as many as 88,843 foreclosed homes in Los Angeles County, although only 62,379 have actually been listed for resale on the MLS.  In San Diego, there could be more than 12,000 foreclosures that haven’t hit the MLS — a significant percentage more than the 18,000 listed now.

It’s easy to find hidden foreclosures on Redfin.  Go to any neighborhood or ZIP and do a search that includes recent sales for the last six months or so.  You can tell which homes are foreclosures by the oddball sales prices, like, say, $761,405 – it’s rarely a round number. 

Here are some random ones I found just now on Redfin:

8961 Tree Farm Lane, Riverside
Sold for $263,891 on 4/30/08

2018 Lemnos Drive, Costa Mesa
Sold for $805,454 on 6/11/08

1785 Deavers Drive, San Marcos
Sold for $432,808 on 5/21/08

So why are lenders holding on to these properties?  According to a report included in the May post, some aren’t quite prepared to swallow the huge losses, so they’re holding on, hoping for a market rebound.  In cases where mortgages are held by multiple companies, all parties must agree on the best course of action, which snarls progress. Lastly, lenders are so overwhelmed by the volume of distressed properties that they don’t have time to deal with them.

Once these foreclosures finally land in the MLS, it’s hard to imagine them not depressing prices even further.  In the meantime, who’s taking care of these vacant, languishing homes?  Lenders would be wise to hire some people to process these properties; not doing so is just delaying the inevitable.

Recent Redfin posts:
Mandate for Low-Income Units:  Harmful or Helpful?
Why My Sale Price Wasn’t Really My Sale Price
Southern California Water-Saving Tip: Block New Development

Why My Sale Price Wasn’t Really My Sale Price

Last time I wrote about my home sale, I mentioned a few scenarios that could have cost me thousands and thousands of dollars if I had done things differently.

Well, this time around, I’m going to wrap things up with why my sale price wasn’t really my sales price. There are two main reasons why my sales price doesn’t really reflect the true amount of money that exchanged hands. (You can guess how much, but I won’t tell.)

1. The buyers sweetened the deal with a cash sum on top of the sales price that went into escrow. Why did they do this? The only explanation that I got was that one of the buyers (out of the couple) wanted to spend more than the other buyer. Regardless, the commission paid out to the buyer’s agent was slightly less, so who was I to complain?

2. The buyer’s agent only charged a commission of 1.5% and not 3%. Somehow, during the course of the negotiations, the agent dropped his commission from 3% to 1.5% in order to get the deal to happen. That’s quite a drop. Incidentally, the realty company has a mortgage company component to it and I wonder if somehow he got some kickbacks.

If anyone has any theories on why he was able to conduct business with such a low commission (other than desperation), feel free to drop a line.

Gwyn Paltrow’s Cousin Hillary Danner Selling Historic Home

Actress Hillary Danner (cousin to Gwyneth Paltrow and niece of Blythe Danner) and husband Jason Renfro are selling their extremely beautiful Highland Park Craftsman home—to move a few doors down to an even larger extremely beautiful historic home. (The couple has already vacated, according to their agent).

The house is listed at $695,000 and is a 4/2 with 2,317 square feet—it’s also a registered Historic Monument. Although the couple never applied for the Mills Act, listing agent Robert Alan Hanson of Keller Williams Pasadena says he thinks it would be a “shoo in” for the tax break.

The house is on Professor Row in Highland Park – near the corner of Ave. 50 and Figueroa, where the original Occidental College once stood. In fact, the listing says it was built by Elizabeth Young Gordon, the wife of Occidental College’s Vice President in the late 1800′s. The street is a long block of historic Craftsman homes, in an area that Hanson says “has been in rapid transition for the past five years” with lots of trendy new shops and restaurants opening up.

The place will be open Sunday 2-5 pm and next Thursday from 10-2. It’s also featured in the the book Inside the Bungalow: America’s Arts and Crafts Interior. If you’re into Craftsmans, it’s a great chance to peek inside a bit of LA history.

Where the Housing is Almost as Cheap as the Ribs…

OK, I might be exaggerating, but loft prices downtown do seem to be in a free fall – it’s one of the few places in LA where you can easily find under-$300,000 properties that aren’t fixers. You can also find lots of places that, no matter how nice they are, have been sitting on the market while potential buyers wait to see just how low desperate developers will go to move their brand-new vacant units. That’s rough for private owners who need to sell. When it comes to areas in LA-proper (excluding those far-flung spots like Palmdale), downtown seems to be one of the areas hardest hit by the current market.

But that’s not really my point today. My point is barbeque. Ever since the giant Orsini complex started gobbling up the corners of Cesar Chavez and Figueroa, I’ve been wondering what happened to BBQ King – the little joint that was displaced by this development. Oh, how I’ve missed meat cooked in an empty oil drum. Can you imagine my excitement, then, when I saw angelenic.com’s blog about BBQ King’s new 7th Street location, where it’s joined by Showbiz Ribs? No, you probably can’t—which says only good things about your eating habits.

But back to real estate: Downtown is hurting. No shocking news there. But like everything in real estate, it’s all about location, even within this one neighborhood. Because as anyone living downtown will tell you, it’s really multiple neighborhoods with very different feels. For example, The Arts District is only a few city blocks from the Staples Center area, but they attract different types of people and businesses. I think a savvy buyer who understands the lay of the land could pick up a great deal right now, if you’re willing to buy and hold for a few years—but there are a lot of lofts in the less-developed and/or less desirable areas of downtown that I would steer clear of. I think some of the complexes that are in, shall we say, “pioneering” areas are going to see even greater price drops. Here are a few that have been on the market more than 50 days:

• $525,000 in the Toy Factory Lofts. One the market 204 days. There are about a 1/2 dozen lofts for sale at the Toy Factory right now, ranging in price from about $359,000 to $$700,000.
• The Little Tokyo Lofts also have a lot of units for sale (some are short sales), including this bare-bones listing for $299,000 that’s been on the market for 57 days. To get a better sense of what this building looks like, here’s a 1/1 unit listed for $390,000 that’s been on the market for 237 days!
• You can also have your choice over at the Higgins building, but this one looks interesting. It’s a lender-approved short-sale for $275,000 and it’s been on the market for 296 days.

Southern California Water Saving Tip: Block New Developments

I just read Glendale Water and Power’s Water Supply Alert, another in a series of pleas to residents to conserve water “or face mandatory water use restrictions.” The Glendale News Press July 10 article quoted GWP Commissioner Patrick Foley complaining that voluntary conservation hasn’t worked.

The article prompted this spirited response from Selina and Arden Daniels:

Why is it that the City Council gave approval of a 72-unit apartment on San Fernando Road (“Housing project gets city approval,” July 9); adjacent 68-unit Glendale City LIghts affordable rental housing project, which is already under development (“Housing project gets city approval,” July 9); a 65-unit affordable housing project on 1955 S. Brand Blvd. (“Housing project gets city approval,” July 9); 44-unit affordable housing project, called Metro Loma, at 328 Mira Loma Ave. (“Area awaits housing project,” July 7); a 94-year-old Craftsman-style home to be converted to a five-unit apartment complex (“Owners pitch apartment plan to residents,” Monday): and a proposed 11-story Hyatt hotel for downtown (“Hyatt plan on its way,” Wednesday).

Why should we, the single-family dwellers, be criticized by Glendale Water & Power Commissioner Patrick Foley for not conserving water (“City’s water supply tight,” July 10)?

Foley stated this week, “Homeowners have all but erased gains earlier this year” in conserving water.

Why should we conserve water? Especially when the city fathers cannot say “no” to any land developer?

How many gallons of water can you imagine more than 500 new residents will be using in the bathtubs, showers, dishwashers, water heaters, laundry washers, not to mention the use in a hotel?

How much more energy can you imagine will be used?

We all well know why we should conserve, but why do our leaders lack this knowledge?

These are tough economic times — so let the land developers suffer along with the rest of us.

They should go back to the Midwest, where restoration of damaged homes must be a high priority due to the tornado destruction.

For goodness sakes, members of the Glendale City Council as well as Los Angeles County Zoning and Planning Commission need to be reasonable.

They should place a moratorium on recently approved and future multifamily dwellings.

Water conservation is not for just a select few – every one of us will pay the price for the overdevelopment in our city and valley.

Thank you, Selina and Arden! I hope your letter gets copied and quoted at every municipal meeting in Southern California.

Local governments aren’t looking out for existing homeowners and renters if they enact mandatory water use prohibitions while continuing to approve new developments. Individual residents taking postive steps are even being harassed. Orange County is going after a homeowner who installed fake grass to reduce costs and conserve water. Here in Glendale, a renter was just cited for reducing green space by converting a front lawn to a water-conserving California native plant garden.

On the lighter side, LA Observed wondered who was policing LA County when its sprinklers were on during the middle of the day.

An LA Times opinion piece recently predicted, in a fearful tone, that the era of growth in California may be over due to persistent water shortages. It cited a state law that now requires documenting water supplies for very large new developments. Apparently it must not apply to the size of developments recently approved in Glendale.

What’s wrong with growth being over for Southern California? I believe most current homeowners and renters (who elect municipal government representatives, by the way), share my own opposition to any more large multifamily dwellings bringing more traffic and crowding to our community. To developers: go where the water is!

My Home Sale: Let’s Play “What If”

Looking back at the sales process of my home, I started to think about some of the “what if” situations. For instance, I thought about what would have happened if I went for the first bid on my house to come along or if I had decided to go with the first termite inspection report that I got. No, I won’t tell you exactly how much I got for the home. (You can still do the math based on hints below.) But I’ll give a little teaser as to how much money I “saved” by making certain decisions along the way as I sold my home. Here are four of them.

1. What if I had taken the first bid that came along?

I would have sold the house for about $39,000 less than I ended up selling it for.

2. What if I hadn’t called the buyer’s bluff on canceling the deal over flashing?

I would have paid out about $200 more in repairs.

3. What if I had taken the first bid on a termite inspection report?

I would have paid at least $500 more in termite fees.

4. What if I had used an agent who charged me 3% commission versus using Redfin?

I wouldn’t have had the benefit of meeting Redfin’s average savings of over $14,000 .

Total potential “savings” based on these four scenarios: $53,700

Here’s a song by Cold Play that ponders the question of “what if”.

Look for an upcoming post about why my sales price wasn’t really my sales price.

Pasadena 91104: Better Walking Streets Further from Downtown

Walking around Pasadena is easier if you are further from the center of town. That’s my conclusion from the Walkabout wrap-up covered in this Sunday’s LA Times.

Deborah Murphy, one of 120 walkers, wrote a report for Streetsblog LA on the Pasadena event back in March. I agree wholeheartedly with her finding that traffic near construction projects presents added danger for pedestrians. She also had this to say about making transit stops easier to get to:

Southern California has invested billions of dollars in our transit system, yet has not done a good enough job of creating a safe, comfortable and pleasant environment on our city streets for people to get to the stations or signage for people to orient themselves when they arrive there and find their way to their destination.

At the end of July, Under the Dome covered a recent city finding that 78 percent of the downtown workforce uses cars to commute, and among those who also live in the same area as they work, the number is still 58 percent. Blogger Dan Abendschein commented:

So most workers are commuting far to get to downtown Pasadena and those that live close are generally set on using their cars to drive short distances.

The point of all these studies is to direct how to plan for the city’s future. But, also, as Sid Tyler pointed out in Monday’s meetings, they perhaps show that the city’s vision for developing itself to become a biking/walking/public transportation mecca has not happened.

Positive ideas and strong direction eventually produce results. Pasadena should continue to pursue its vision despite these interim findings. Addressing safety issues, the city has a helpful pedestrian safety page on its website here. In case you want to take a test walk and don’t know the best route, Foothill Cities Blog just reviewed Google’s new walking directions tool here.

North of downtown, the neighborhood bounded by Hill and Altadena features tree-lined residential streets, without or without sidewalks, close to major arteries with storefronts. Here is a walkable neighborhood away from downtown traffic, Gold Line stops, and major construction.

Many of the lowest priced listings on Redfin in this neighborhood are distress sales. Three under $500,000:

1496 Paloma Street
$495,000
2 bed/1.75 bath
1,038 sq.ft.
$477 per sq.ft.
On Redfin 25 days
A bank-owned REO, this sold in December 2005 for $630,000, and in April 2008 for $459,000.

2455 Casa Grande Street
$499,000 (originally $699,000)
3 bed/2 bath
1,642 sq.ft.
$304 per sq.ft.
On Redfin 52 days
Property to be sold as is; last sold May 2006 for $670,000.

1460 Whitefield Road
$499,000 (originally $599,000)
4 bed/2 bath
1,260 sq.ft.
$396 per sq.ft.
On Redfin 54 days
Listed as a fixer. There are two separate 2 bed/1 bath structures on this lot and the listing advertises its rental possibilities. Last sold August 2006 for $765,000. This is either bank-owned or a short sale.

Some recent sales in this price range:

1128 North Hill Avenue
$412,500 (6/27/08)
2 bed/1 bath
1,470 sq.ft.
$281 per sq.ft.
Last sold March 2004 for $453,000.

2325 Cooley Place
$455,000 (6/19/08 – listing price was $510,000)
3 bed/2 bath
1,680 sq.ft.
$271 per sq.ft.
This sold August 2004 for $650,000 and January 2008 for $295,250.

1956 Galbreth Road
$550,000 (7/7/08 – listing price was $669,000)
3 bed/2 bath
1,675 sq.ft.
$328 per sq.ft.

Amid 91201 Foreclosures, Public Storage Inc. Reports Strong Gains

Public Storage Inc., based in Glendale 91201, just reported a 500% increase in quarterly net income from one year ago (40 cents per share, vs. 8 cents per share last year). The stock climbed $4.53, or 5.7%, in morning trading yesterday, according to this AP report.

Located in an equestrian area of smaller homes (some of which I featured on this blog two days ago), the corporate headquarters of Public Storage sits on a corner with a view of Griffith Park.

While foreclosures mount and homeowners lose their homes, self-storage facilities are seeing a boom in many distressed areas. This ABC story filed Friday from the San Jose area quotes a storage facility owner who claims he no longer goes looking for business–it is coming to him.

Calculated Risk mentioned some of the sadder details of this increase in self-storage demand back in May of this year, quoting a NY Times article, which elicited quite a few comments. And Guz’s World published a post titled Downturn Stocks just last week, naming several stocks that should go up during the recent downturn, with Public Storage number two on the list.

Just a few blocks from Public Storage, here are three more homes listed on Redfin:

1604 Garden Street
$469,000
2 bed/1 bath
912 sq.ft.
$514 per sq.ft.
On Redfin 31 days

225 Winchester Ave
$619,000 (originally $659,000)
2 bed/1 bath
1,258 sq.ft.
$492 per sq.ft.
On Redfin 87 days

1519 Randall Street
$756,000 (originally $837,000)
4 bed/2 bath
2,182 sq.ft.
$346 per sq.ft.
On Redfin 105 days

Aging on the Eastside—45+ days on Market, $450 or Less

I was going to do a post on Eastside listings that had been on the market for more than 45 days, but that search brought up well over 200 properties, so I narrowed it down to the lower end of the market, houses only (no condos). That still brought up a fair number of properties, but here’s a sample of what is in the neighborhood at that price point…checking out the pictures might give you a clue as to why these properties aren’t selling so quickly.

• This 2/1 is listed for $431,00. It’s been on the market 69 days. Fixer is a kind description.
• In Echo Park, this 824-square foot 2/1 was built in 1948 and has been on the market for 65 days. Currently listed at $412,000, it has a sale history of $478,000 in June of 2008.
• On Fountain, more towards Hollywood, is this “bank-owned fixer” that actually doesn’t look that bad. It’s got 1,440 square feet and has a 2/2008 sale price of $681, 139 listed. Before that, it sold for $352,000 in 2002.
• This last one on Clayton is actually in a good neighborhood, but definitely in need of lots of work if not a rebuild. It’s been on the market for more than 200 days – and last sold in 1969 for $2,000! It’s currently listed at $385,000.