Author: Cindy Allen
Recent posts
October 15, 2008
You might question the timing of this flip at 521 N. Poinsettia Ave., in the Beverly Grove area, but you’d be hard-pressed to quibble with the result. The house first surfaced in this post back in May. It had been purchased for $838,000 in January 2008 and was back on the market just a few short months later with an asking price of $1,249,000.
At the time I called it a “daring 2008 flip.” Unfortunately for the flippers, the market had flopped, and the financials didn’t fly. In September, the house came back on the market again, this time at $1,099,000. The price has inched down since, to its current $1,060,000.
The house has four bedrooms, two bathrooms and 2,004 square feet, and although it’s not a teardown, every inch has been redone, according to Adrian Torres, who was manning the open house on Sunday. Adrian said the property has received several offers, but the potential buyers have failed to secure financing – a theme repeated at every open house I visited this weekend.
Photos:
Nearby sales:
503 N. Alta Vista Blvd.
Sold for $800,000 on 5/16/2008
3BR/2B/1,999 square feet
429 N. Poinsettia Place
Sold for $950,000 on 5/20/2008
3BR/2B/2,319 square feet
327 N. Formosa Ave.
Sold for $1,057,000 on 7/8/08
2BR/2B/2,261 square feet
Notes: Once listed for $1,575,000!!
October 14, 2008
Two-bedroom condos priced in the $650,000 range have been selling fairly briskly in Westwood. Maybe that’s why Kris Benveniste, the agent on this newly listed Westwood condo, at 1927 Glendon Ave., #301, is so confident. HIs listing description includes this bold statement: PRICED TO SELL & WILL NOT BE LOOKING AT ANY OFFERS BELOW ASKING UNTIL 11/3/2008 IF STILL AVAILABLE.
The asking price for this spacious (1,500 square feet) 2+2+den unit, in an eight-unit building, is $629,000.
Entry:
Den:
Kitchen:
Turns out Benveniste had a bit of an inside scoop on pricing: He was the agent on a similar condo a couple of doors down — 1917 Glendon Ave., #302 – that closed escrow on Oct. 3 for $639,000.
Other nearby recent sales:
1931 Glendon Ave., #301
Sold for $643,500 on 8/8/08
2BR/3B/1,582 square feet
1944 Glendon Ave., #210
Sold for $575,000 on 7/3/08
2BR/2B/1,470 square feet
1872 Midvale Ave., #105
Sold for $640,000 on 7/24/08
2BR/2B/1,563 square feet
So, what do you think? Will this sell at asking by Nov. 3?
October 13, 2008
To sell in this market, it’s all about the price. This one-bedroom, one-bath, 824-square-foot unit at 12203 Texas Ave., #4, in West L.A. came on the market in August for $459,000. When it didn’t sell, the owner and the agent began slashing the price: first to $429,000, then to $399,000, and again to its current $359,000.
Agent Melyssa Peters reports that there are now five offers on the property, and she was forthright about its status at her open house on Sunday. Credit is so tight these days, she said, that she’s not taking any offer for granted. In fact, she said, the unit recently fell out of escrow.
Melyssa noted that the multiple offers were a reflection of the small number of one-bedrooms on the market in the area — five or six total, she said.
Here’s a look inside:
Sold nearby:
12030 Rochester Ave., #206
Sold for $370,000 on 5/14/08
1BR/1B/702 square feet
1525 S. Saltair Ave., #B
Sold for $386,029 on 8/5/08
2BR/2B/920 square feet
History: The oddball price, plus the fact that someone paid $460,000 for it in 2005, says this is a bank sale.
On the market:
1437 Stanford St., #B
$469,000
1BR/1B/800 square feet
Days on market: 95
11920 Dorothy St., #203
$389,000
1BR/1B/903 square feet
Days on market: 226
October 13, 2008
I was hoping that Columbus Day would mean a stock-market break, but alas, the markets are open, free to continue their assault on my 401(k).
I’ve been doing more than a little thinking about the 401(k) concept lately — mainly about how much of a scam it is. While driving around today, I heard a report on KNX-1070 about how Americans are starting to realize they’ve been duped as far as 401(k)s are concerned:
- Wall Street financiers heavily promoted 401(k)s as a way for people to have control over their financial futures. Just put money in the stock market, they told us, and your retirement will be secure.
- What Wall Street failed to say is that 75% of professional money managers fail to outperform the market. Yet somehow, your average Jane or Joe Employee is supposed to be able to manage a retirement nest egg.
- Financial companies rake in $28 billion a year in 401(k) fees, ensuring that no matter how your 401(k) performs, they will still get paid.
So we all start 401(k)s — what choice did we have?– and guess what: The financial companies take down the entire U.S. economy, and our 401(k)s go along for the ride. Oh, and the financial geniuses weren’t content with the billions they got from our retirement accounts; they went after our homes, too.
So now millions of Americans have no home equity — or, in many cases, negative home equity — and their retirement accounts are in shambles. So what do you suppose the money managers are doing? Standing in unemployment lines? Keeping a low profile? Hanging their heads in shame?
Uh, no. In fact, L.A. Times consumer columnist David Lazarus writes that while Wachovia Corp. was waiting to see how many billions it was going to get from taxpayers, it didn’t see any problem with treating 75 of its employees to an all-expenses-paid trip to the Greek Isles.
And senior executives of bankrupt insurance behemoth AIG, recipient of an $85 billion taxpayer bailout, thought nothing of sending its execs to a $440,000 retreat at St. Regis Resort in Monarch Beach. And AIG has no plans to cancel a three-day get-together for employees at the Ritz-Carlton in Half Moon Bay.
“This is an annual affair,” said AIG’s Joe Norton. “It’s a key meeting.”
Such five-star shindigs have long been a standard practice for the U.S. financial industry. They serve as incentives and rewards for top performers, and as regular get-togethers for senior execs.
Stories like these make you understand why people kept their money under their mattresses following the Great Depression.
Let’s be honest: Employees were way better off with pension plans. But employers didn’t like them; they were expensive. Enter the 401(k), which solved their problem. Who benefits from a 401(k)? Employers and Wall Street, for sure. Employees, not so much.
Recent Redfin posts:
A Few New Listings — On the Market 24 Hours
Not Your Grandfather’s Housing Crisis
Reduce Traffic Through Measure R
Southern California’s Mid-20th Century Architecture: Sunday Driving Tour in Glendale
October 8, 2008
The price has come down on this three-bedroom, two-bath, 1,184-square foot bungalow at 7725 W. Norton Avenue in West Hollywood. Unlike some small homes in the area, this one has a decent-size lot – 5,179 feet, according to Property Shark.
It came on the market in September with an asking price of $799,000, but over the weekend it came down to $745,000. It has a wood-burning fireplace and some nice built-ins. The street dead-ends into Genesee Avenue, so it has no through traffic.
What about comps? Well, the house a few doors down, at 7606 W. Norton Ave., sold for $725,000 in May. It has about the same square footage as its neighbor, but it has only two bedrooms and one bathroom.
Around the corner, the 2+1 at 7526 Hampton Ave. sold in April for $797,500. It has 1,066 square feet, built in 1916. A similar house at 7510 Hampton Ave. sold in May for $757,500.
The 7725 W. Norton house needs some updating, but as a standalone house in West Hollywood, it will probably go fairly quickly. They’re hard to find in the area, and many people prefer homes to condos.
October 8, 2008
The Wall Street Journal reports that 1 out of 6 American homeowners — about 12 million households — owe more on their mortgages than their homes are worth.
The comparable figures were roughly 4% under water in 2006 and 6% last year, says Moody’s Economy’s chief economist, Mark Zandi, who adds that “it is very possible that there will ultimately be more homeowners under water in this period than any time in our history.”
Among people who bought within the past five years, it’s worse: 29% are under water on their mortgages, according to an estimate by real-estate Web site Zillow.com.
The story notes that this statistic makes foreclosures more likely, because underwater homeowners needing money will have few ways to obtain it.
Which brings up another topic: the national Countrywide loan-modification program agreed to this week by Bank of America. The program is designed to modify mortgages so people can stay in their homes, but how many people will it help?
According to this Contra Costa Times story, the program may only postpone the inevitable:
The new efforts could create a fresh round of problem loans and foreclosures a few years from now, warned Sean O’Toole, founder and chief executive with Discovery Bay-based ForeclosureRadar.com. Many of the restructured loans could produce more woes later.
“Maybe the loan won’t blow up now, but it will blow up in five years,” O’Toole said.
That ominous assessment is based on Countrywide’s approach in the voluntary program. In more than a few instances, O’Toole said, Countrywide’s restructured loans featured payments based on super-low interest rates of 2 percent, with payments rising over time. Put another way, the loans bear similarities to the ones at the heart of the current problems.
In other words, these restructured loans only buy homeowners some time to figure out how to make those larger payments.
Bank of America should restructure the loans so that the payments are high enough to pay down the principal on the mortgages, O’Toole said.
If the housing market doesn’t rebound strong, mortgage balances could still burden houses with more debt than the residences are worth, O’Toole said. He cited the restructuring of a mortgage with a $930,000 balance for a house valued at $500,000. Bank of America rewrote the loan with a fixed interest rate of 2 percent that would last five years.
“Bank of America and Countrywide are kidding themselves if they think that house will be back to $930,000 in five years,” O’Toole said.
Are there really homeowners out there who would stick with a mortgage that’s twice the value of their homes? And with a 2% mortgage, no principal is being paid down, so they’re merely treading water instead of improving their financial situation. At some point, wouldn’t most people in that situation just walk away?
Furthermore, the story notes, only people whose debt payments are below 34% of their gross monthly income will be eligible for the B of A program. That’s going to disqualify a ton of people right there.
Recent Redfin posts:
Foreclosure Numbers Keep On Rising
The Q3 Foreclosure Report is In
Debt, the Engine of Prosperity, is Out of Fuel
Chart credit: The Wall Street Journal
October 7, 2008
The one-bedroom condos at the mid-century complex at 525 S. Sycamore Avenue, near Hancock Park, sold for close to $400,000 at the peak of the market, but not anymore. Today, the units are fetching around $300,000, so some owners are facing short sales.
Here’s a unit in the building that came on the market three weeks ago — #333 – for a whopping $415,000. Ten days later, it was reduced to $399,000, and this weekend it was slashed to $349,000. It was purchased in 2005 for $340,000, and the owner must have hoped that the comps and the market downturn didn’t apply to this unit.
Comps:
525 S. Sycamore Ave., #232
Sold for $305,000 on 7/24/08
1BR/1B/622 square feet
525 N. Sycamore Ave., #226
Sold for $280,000 on 7/1/08
1BR/1B/625 square feet
525 N. Sycamore Ave., #227
Sold for $280,000 on 8/14/08
1BR/1B/676 square feet
For sale:
525 N. Sycamore Ave., #210
$275,000
1BR/1B/676 square feet
Days on market: 12
525 N. Sycamore Ave., #231
$310,000
1BR/1B/680 square feet
Days on market: 117
Status: Looking for backup offers
October 6, 2008
Late last night someone posted on the blog, wanting to know the outcome of my small-claims lawsuit against my landlord that I blogged about a couple of months ago.
To recap, we moved from our expensive Beverly Grove apartment in June. 
We were model tenants, and I thought the landlord and I had a decent relationship, so I didn’t do the things you’re supposed to do when you move out, such as invite the landlord over for an inspection and agree on repairs. I fully expected to get back our entire deposit; instead, she took out $600 for “paint touch-up,” cleaning, water spots on the cabinets, and scratches on the wood floor.
According to the civil code pertaining to security deposits, landlords are not allowed to charge tenants for normal wear and tear. I had cleaned the apartment before I left, and as far as the floor and the cabinets, I had no idea what she was talking about. And there was no doubt that she was not allowed to charge for paint touch-up, which is definitely wear and tear.
I sent her a letter demanding my money and didn’t hear back, so I filed a small-claims lawsuit against her and had her served. Apparently you can sue for two or three times the amount due to bad faith, but all I wanted was my money back.
Before my landlord got served, she sent me a certified letter with a check for $100, explaining that she had accidentally charged me for window cleaning. It was clear that she was surprised at being challenged, and she probably hadn’t boned up on tenant law until my letter.
About a week before the case was due to go to court, she called me to negotiate. I didn’t want to talk to her, so my husband did. She told him that she had had to get the curtains cleaned, which I frankly forgot about, and that the trashcan that had been installed on runners under the sink was missing. I think that trashcan was in the storage unit and had been tossed out.
Because of that, my husband agreed to split the difference, so we got another $300. But with the court filing and the service fee, I was out another $85.
I could have refused to settle, but the truth was, I didn’t want to go to court. Not only did the idea of standing in front of a judge make me nervous — I have a pronounced phobia of public speaking — but I wasn’t completely sure I would win.
I know I had a good case, but because I hadn’t done the things you’re supposed to do when you rent, like a walk-through upon move-in and move-out, it might have been a my-word-against-hers situation. But California tenant law definitely favors the tenant. And the fact that she provided no receipts to back up her claims of repairs was in my favor: Landlords have to provide documentation that the repairs they claim were made were actually made.
I think she will think twice about making arbitrary deductions from security deposits from now on. And I will take some lessons from this, too.
My advice to renters: Familiarize yourself with California’s law regarding security deposits. And conduct a move-in and move-out inspection with the landlord using a form like this. There’s almost no chance of surprises that way. No matter how nice your landlord seems — and mine seemed VERY nice — don’t trust; verify.
Recent Redfin posts:
Silver Lake Gets Needed Traffic Light
The Subcompact Hybrid: Good Choice for Parking in Rossmoyne
How to Commit Fraud and Get Loans Approved
October 3, 2008
Republican presidential candidate John McCain is known to have a somewhat caustic relationship with the media. But, to his credit, he doesn’t hold journalists responsible for the uproar in the financial markets.
From the Washington Post’s political blog: At a town hall meeting in Denver on Thursday, a questioner who identified herself as a small-business owner who had been struggling for two years because of economic conditions asked McCain what could be done about the media, whom she blamed for “killing” the car and real estate businesses.
She received a huge ovation, and the audience tittered as McCain seemed to smile and hesitate before answering the question.
“I do believe there are many occasions where the nature of the media is to exaggerate things and perhaps not be as accurate as we would like them to be,” McCain said to laughter. “But let me say, very seriously, I think one of the biggest causes of this problem was not so much the media. In fact, I don’t think that the media was responsible for what happened at Freddie Mac and Fannie Mae.”
He went on to blame the beginnings of the crisis on “such a corrupt system in Washington that Fannie Mae and Freddie Mac basically got completely out of control, their executives got exorbitant, huge amounts of pay packages,” while encouraging “all this risky behavior in the real estate market.”
Meanwhile, he added, lawmakers and lobbyists, and greed on Wall Street, accelerated the problem.”In all due candor, I can’t blame that on the media,” McCain added — though he hastened to add: “I will blame them for a lot of other things.”
I realize it’s comforting to assign blame when things go wrong, but how are the media responsible for all the things that are wrong with our economy?
Last month, National Association of Realtors economist Lawrence Yun blamed the media for creating “unfounded concern” among consumers about the health of the real estate market. (Hmm…I didn’t hear anyone complaining when newspapers were writing story after story about record prices and sales.)
The media’s job is to tell people what’s going on. Are stories about falling housing prices making people skittish about buying houses? Undoubtedly yes, but it’s the data and the statistics that are the problem here, not the media.
Anyone whose livelihood is being hurt by the economic downturn, like real estate agents and auto salespeople, probably wishes the news were better. But facts are facts. To say that the media is the reason people are not buying houses is insulting to the intelligence of the American people, who are smart enough to know figure out what’s really going on.
Personally, I wish journalists had investigated the underpinnings of the housing boom before it went bust. But I can’t blame them for not figuring it out; no one else did either. And if they had questioned the situation while everyone was happily making and spending money, they probably would have been accused of being killjoys.
Journalists aren’t perfect, and they don’t always get it right. But a free press is essential to our democracy. We may not like everything we hear on the news, but the alternative — allowing the government or special-interest groups to influence or control what’s reported — is infinitely worse.
Recent Redfin posts:
Debt, the Engine of Prosperity, is Out of Fuel
Third Quarter Foreclosure Stats By ZIP Code: Glendale and Pasadena
An Explanation of the Financial Crisis That Even I Understand
October 1, 2008
For the past two days, I’ve read more economic news than I’ve ever read in my life. Mostly I’m trying to get a better handle on what is going on with our financial system, so I can decide whether I’m for or against the big government bailout. Of course, in the end it really doesn’t matter what I think; Congress is going to do whatever it does, and I’m guessing the rescue bill is going to pass, because the consensus is that although only a handful of reckless folks caused this mess, everyone will be hurt by it.
Anyway, I came across this New York Times article that references an episode of a Chicago Public Radio show called This American Life that aired back in May. The episode, entitled “A Giant Pool of Money,” is still on the Web, and yesterday I listened to the entire thing. The hosts — Ira Glass, Alex Blumberg and Adam Davidson — present the most comprehensible explanation of the evolution of the housing bubble that I have heard. If, like me, charts and graphs make your eyes water and you really aren’t sure what a mortgage-backed security is, spend an hour and listen to this show. It’s fascinating, forthright, and entertaining, and you’ll come away reasonably learned about how we got into this mess. Here’s my takeaway:
- There is a “giant pool of money” out in the world at any given time — from pension funds, insurance companies, 401(k)s, etc. — that money managers must a) safeguard and b) make grow (i.e., invest).
- In the early 2000s, interest rates were so low that it was impossible for money managers to make any real money on “safe” investments like bonds or CDs.
- Around that time, someone got the bright idea to create “mortgage-backed securities,” created by buying home loans in bulk from lenders and selling them as investment vehicles. The reasoning was that the mortgage-holders, who were paying around 6% interest, would provide a dependable rate of return that was considerably higher than that of bonds or CDs.
- This idea really caught on; the demand for mortgage-backed securities went through the roof. The problem was, by 2003 everyone who could get a mortgage pretty much already had one. How would the demand be met? You guessed it: by lowering lending standards.
- Lending standards kept devolving as demand for mortgage-backed securities continued unabated. As one lender lowered standards, others followed suit to compete. The bottom was the advent of the so-called “NINA” loan — no income, no assets.
- Things started to tank when people stopped making their mortgage payments — in some instances, new homeowners would go immediately into default, not making a single payment. As delinquencies snowballed, lenders finally started to get spooked, and things started to tighten up.
And here we are.
At the end of the episode, which aired nearly five months ago, Blumberg and Davidson conclude that the fallout from this bubble will be “more like the 1970s than the 1930s,” with the economy simply shifting into neutral for awhile. So even though these two men were in front of the curve in seeing that the housing boom was a house of cards, they still underestimated its impact, just like practically everyone else — including our leaders.
When you listen to this report, it seems so patently obvious that the the situation was a disaster in waiting. Yet none of our leaders and money managers saw it coming — or, if they did, they decided to ignore it. I don’t know which is worse.
But if Congress and the Fed didn’t foresee this, how do we know they’re capable of doing the right thing going forward?
Recent Redfin posts:
Ed McMahon, You Need a Kick in the Can!
How to Go Green and Save Some Green
Are Short Sales an Illusion?
WaMu Owns 25% of Current Glendale Defaults
