May 16, 2008
With all the down news about home sales, I thought I’d look on the bright side for a moment and spotlight some of the places that have sold recently. There are actually 39 recorded sales in the 90039 zip code in the past 3 months, not too bad. For those of you out there looking, here’s a few of the ones that have been snapped up, for comparision’s sake.
- 2662 Lake View Avenue, sold for $805,000 in late April.
- 1881 Lucile, a 2/1 with 960 square feet that sold for $415,000 in March.
- 2207 West Silver Lake, a 3/2 facing the reservoir that sold for $1.12 in March. Before that, it sold for $1 million even in 2006, so the sellers did OK for themselves.
- 2844 Angus, a 2/1 built in 1928 that went for $649,000 in late April. Again, the sellers did OK - they purchased it in in 2002 for $489,000.
So not everything out there is a foreclosure or a short sale. It’s quite obvious at this point that real estate isn’t always a winning game, but smart, careful buyers can become happy sellers, even in a bad market. How’s that for optimism?
May 16, 2008
At the very bottom of the mountain of loan docs, deeds, contracts, disclosures and other paperwork that you initial and sign but try not to read when purchasing a condominium, there’s what you might consider the least of these: the bylaws of the condo homeowners association. I don’t have any hard facts here, but I’d have to guess not too many owners read them very carefully, and fewer still attend the association meetings - I know I didn’t.
But they should. Because the bylaws spell out what the association’s responsibilities are in return for the hundreds of dollars a month in dues that you have committed to paying for maintenance, repairs and upkeep.
In normal times, condo owners have the luxury of paying little attention to any of this, and things generally get taken care of anyway. But in times like these when some condo buildings and complexes are riddled with multiple foreclosures, it’s critical to stay alert and try to learn what you’re getting into before it’s too late.
Earlier this week The Wall Street Journal looked into the impact of the housing crash on homeowners associations, and the properties and owners they serve. It’s a serious wake-up call that anyone considering buying a condo should heed. The Journal says that many of the 300,000 neighborhood associations across the country are struggling with dwindling budgets, and that one estimate figures five per cent of owners are now delinquent on dues - up from a baseline of two per cent in better times.
But those are averages; some associations suffer far higher delinquency rates. At one development in Stockton some 25% of the owners are behind in paying their dues. That leaves the rest of the owners holding the bag to pay for roof, siding and roadway repairs, painting and other routine maintenance. In some cases essential services such as common area electric lights and trash pickup have been interrupted.
It’s no surprise that owners who can’t make their mortgage payments are also delinquent on HOA dues. But here’s a shocker: many banks which have foreclosed on units and are expected to assume payment of homeowner fees have been deadbeats, and refused to pay. One Florida association has filed half a dozen lawsuits against the banks, but so far has recovered no fees. So the costs that responsible individual owners are forced to bear mount higher and higher, in the form of dues increases and special assessments.
At the extreme the situation can result in a complete breakdown, and is disastrous for the remaining owners. This listing for a REO condo in Panorama City, reduced to the asking price of $95,000 for obvious reasons, highlights the danger in its MLS description, which is hysterical veering on comical:
… HOA has essentially stopped operating. Building needs new roof. There is no money and no reserves. Utilities and insurance are being shut off. Cash offers only. Amazing value!
Let the buyer beware.
May 16, 2008
From everything I hear, everyone is against a federal bailout of distressed homeowners: taxpayers, Republicans, the White House. Heck, the distressed owners themselves aren’t even asking for one, from what I can see.
So why are our lawmakers still trying to come up with a bailout plan? Reuters broke this story late yesterday about Senate Democrats coming up with a proposal that might satisfy Republicans:
Leaders of the U.S. Senate Banking Committee said on Thursday they have agreed to the underpinnings of a housing rescue plan that will create a federal backstop for failing loans. “We feel very optimistic we can have a very significant bill, a bipartisan bill, to present to the rest of our colleagues on the floor of the United States Senate,” committee Chairman Christopher Dodd told reporters Thursday evening after a full day of negotiations.
WTH is going on here? Is the banking lobby pouring huge donations into lawmakers’ coffers to make this happen? Because that’s the only reason I can think of that the banking committee is persisting in this endeavor in the face of voters’ vehement opposition.
The plan would create a $300 billion mortgage insurance fund administered by the Federal Housing Administration and a new regulator for Fannie Mae and Freddie Mac, the two largest U.S. sources of mortgage finance. Under a deal hammered out on Thursday, Fannie Mae and Freddie Mac will partly finance the mortgage insurance program through contributions to a new affordable housing fund, industry sources close to the talks said.
Can’t our lawmakers spend time on issues that really matter, like universal health insurance, for instance, instead of trying to “bail out” people who stupidly obligated themselves to fat mortgages they couldn’t afford and the unscrupulous, greedy lenders who enabled them? How about holding congressional hearings and making some people pay — for abusing our trust, for wreaking havoc on our economy?
Instead, we’re rewarding the irresponsible, reckless, selfish behavior that led to this mess.
The only upside to all this is how few people will actually take advantage of a federal bailout if it’s offered. That’s because most people whose mortgages have become unmanageable were never in it for the long haul; they were in it to make a quick buck. Now that they know that’s not going to happen anytime soon, they’ve lost interest.
In the meantime, I’m going to contact my congressperson to express opposition to a bailout of any kind. If you’d like to do the same, click here to find out how.
Recent Redfin posts:
Buying a Condo: Dues and Don’ts
What’s the Word on Condos in Playa del Rey?
May 16, 2008
I found a few updates in my inbox for condos in Playa del Rey. For anyone shopping for one out here, you might be interested in what’s going on with these.
First on my list is 8601 Falmouth Ave. #215. This one is a just-listed FSBO that’s going for $579,000. You get two bedrooms, two bathrooms, and 1,143 square feet of space. The new beige paint dresses up the place a bit and for dog lovers, you get a built-in doggy door from the bedroom to the patio. (It’s a nice sized 40′x17′.)
Just around the bend is another just-listed FSBO. This one is on 8180 Manitoba, D128. It’s another two-bedroom, two-bathroom condo with slightly more square footage - 1,390. This one has a price tag of $597,654. Sounds like they put in some nice finishes - granite countertops, cherry wood cabinets, and new wood floors. The paint looks snazzy, but that warm yellow tone may not for everyone.
And then, I have another property that’s also got the 8180 Manitoba address. This one is #303 and it has just dropped down from $590,000 to $575,000. Just like the others, it has two bedrooms and two bathrooms. You get more square footage here - 1,684, according to the listing. This one has two levels, so it’s more of a townhome. If you look at the pics, you’ll see this property has got a lot of marble and a whole lot of crown molding detail.
Playa del Rey is a little short on similar sales, but 8160 Manitoba, #111 sold for $424,000 in April of this year. It’s another two-bedroom, two-bathroom condo with 1,197 square feet. From a purely price per square footage point of view, it looks like #303 is more right on in terms of pricing than either of the FSBO’s.
May 15, 2008
Once, not so long ago, before squeezing out a baby, I was a jogger. I’d sometimes do the loop around the Silverlake Reservoir, which as locals know, only has a pedestrian path for three-quarters of the way. The remaining portion is what I like to call the death loop, a few hundred yards where excercisers go head-on with fast-moving traffic coming around blind corners-a great way to make sure your heart rate stays up.
It’s really no joke, though, since there have been fatal accidents along this stretch. As part of the Master Plan for the area, a pedestrian path is being built and was scheduled to open this summer.Well, that long-awaited walking path has been delayed, giving me an excellent excuse to remain indoors.
In the meantime, many of you have probably noticed that the resevoir itself is filling back up - what suprised me was that the water is being brought in from the Eastern Sierras, making it some of the cleanest water in the city (for the moment, give it a few days and I’m sure it will take on the local flavor).
But for those of you looking for a house with a safer jogging environment, here are 3 places near Griffith Park, where coyotes are a bigger problem than cars.
- Here’s a big-spender kind of place in one of my favorite neighborhoods-the Oaks, just west of the main entrance to Griffith Park. It’s a 3/3.5 with a guest house. It’s been on the market 122 days, but hasn’t lowered its $1.749 price tag once, so doesn’t look like the sellers are in a rush.
- This 3/3 on Ames has been creeping down in price slowly, and is now $1.25 after 115 days on the market. It started out at $1.349.
- Last up is this 4/2.5 with a pool, that is listed at a more-reasonable sounding $950,000. That might be because it doesn’t have the same kind of curb appeal as many places in the area, but the inside looks nicely redone. It’s only been on the market 37 days.
May 15, 2008
A friend of mine is in a serious housing dilemma.
In June 2005 (pretty much on the precise day the market peaked), following the advice of a financial professional who told her she needed a tax write-off, she purchased a three-bedroom, two-bath condo in a gated community in east Carlsbad for $630,000 (using an agent recommended by the financial adviser).
She used two mortgages, including an interest-only loan, to obtain 100 percent financing on the property. Her monthly payment, including taxes, insurance, and homeowners’ association dues: $3,700.
A year later, her job went away. Six months later, she took another job back East. Unable to sell the condo, she rented it for $2,200 per month, and pays the $1,500 difference out of her pocket, which she can afford to do — for now.
The renter has expressed interest in buying the property, but for $550,000. Similar units in the complex have sold in the low $500s.
Here are the options she is considering:
- Selling the property and paying the $80,000 difference in cash. She is extremely reluctant to do this because she is only about three years away from retirement and is trying to sock away as much cash as possible.
- Trying to arrange a short sale, which will be difficult considering that she is not behind on payments and technically can afford to pay the mortgage. Plus, she will wreck her credit.
- Let the renters move out and give the house back to the bank, which will ruin her credit.
- Hang on to the house, even though: 1) the interest-only part of the loan expires in two years; 2) she hopes to retire to Florida in three years and will have a much tougher time making up the difference in the mortgage payment; and 3) she has no idea how long it will take for the market to rebound.
There are many people advising her, and it’s hard to know what the right thing to do is. If anyone out there has any insights, or any other ideas, we’d love to hear them.
Recent Redfin posts:
Sold for Over a Million in Playa Vista
Westwood Condo Market Getting Softer
May 15, 2008
The sellers of this house at 327 N. Formosa Ave., in the Beverly Grove neighborhood of Los Angeles, must have been dreaming when they put it on the market in January for $1,575,000. Or maybe they hadn’t heard that the market had turned on them. Or perhaps they had heard, but didn’t want to believe it.
Whatever the reason, the sellers quickly woke up to reality and began reducing the price. In February, they slashed it to $1,350,000; in March, to $1,299,000; and this month to its current $1,175,000. That’s around a 25 percent drop in four months.
The house, incidentally, is listed as a cosmetic fixer-upper, a trust sale, and to be sold “as-is.” It’s a four-bedroom, 1.75-bath home on a large lot on a lovely, tree-lined street, just off Beverly Boulevard.
Will this price reduction be enough to lure buyers? Here are some active listings and recent sales for comparison:
For sale:
320 N. Martel Ave.
$1,425,000
4BR/2B/2,585 square feet
Notes: This place is gorgeous; check out the pictures. It has been reduced from its original $1,489,000.
535 N. Formosa Ave.
$995,000
3Br/2B/2,031 square feet
Notes: Described as a “tremendous opportunity to remodel” and “priced at land value,” this fixer was originally priced at $1,050,000.
521 N. Poinsettia Ave.
$1,249,000
4BR/2B/2,119 square feet
Notes: A daring 2008 flip! It was purchased in January for $838,000 and is described as “extensively remodeled.”
Sold:
321 N. Formosa Ave.
Sold for $1,025,000 on 3/28/08
4BR/4B/2,341 square feet
410 N. Detroit St.
Sold on 2/29/08 for $1.094,000
5BR/3B/2,334 square feet
404 N. Detroit St.
Sold for $2,126,000 on 12/14/07
4BR/2B/1,940 square feet
Notes: No idea what possessed someone to pay so much for this house — on a corner lot a short block off busy La Brea – but you can bet it’s the comp that every agent points to and gives every seller hope.
May 14, 2008
It seems like it’s been a while since I’ve taken a look at the real estate in Playa Vista. So for today’s post, I thought we could see what higher end property has sold in the area. 6632 Para Way, #25 sold for $1,130,000 in February of this year. It’s hard to tell by the aerial map, exactly where the home is located.
So, I thought I’d check with the Playa Vista Guest House to see which development this one belongs to. Apparently, it’s a Matisse, which starts in the low million-dollar range. This Para Way property (newly built in 2006) is middle of the road in terms of square footage among its counterparts. This one has 2,310 square feet of space with two bedrooms and four bathrooms. The Matisse homes range from 2,100 to 2,700 square feet. They also have floor plans with up to four bedrooms.
Incidentally, the rest of Playa Vista hasn’t seen much action in terms of sales since my April 10th post. I found just one property has sold in the last month. (It’s 5800 Sea Walk Drive, #8 and it sold for $658,750, in case you were wondering.) The current average days on the market is 69. Redfin currently shows 14 properties listed for sale in Playa Vista.
May 14, 2008
This week’s Redfin update included a slew of price reductions on condos in Westwood. A couple of months ago we reported that the condo market in Westwood was a bit soft, and that trend appears to be continuing.
The 90024 ZIP code shows 191 condos for sale, and only 21 condos sold in the last three months. That’s considerably worse than in March, when 158 condos were on the market, with 42 having sold in the last three months.
There’s also a huge disconnect between asking prices and selling prices. The average listing price of condos for sale is $949,000, while the average price of sold condos is $635,000.
In 90025, which includes parts of Westwood, there are 115 condos on the market, with 39 sales in the last three months – better than 90024, but still not great. The bulk of the sales, however, are west of the 405, which is not Westwood.
So condo prices are headed down, but judging from recent sales, they still have farther to go. Here are some reductions:
1430 S. Beverly Glen Blvd., #202
Was: $760,000 Now: $735,000
2BR/2.5B/1,520 square feet
Notes: The price has been reduced several times from its original $799,000. The unit was built in 2006, so everything is brand-new. The listing says the owners have moved out of the country and “must sell.” This doesn’t say that it’s a short sale, but just about everyone who purchased in 2006 is upside-down.
1551 Greenfield Ave., #102
Was: $795,000 Now: $765,000
2BR/3B/2,015 square feet
Notes: This is a big unit in an older building. It came on the market in January with an asking price of $850,000.
10775 Wilkins Ave., #102
Was: $725,000 Now: $699,000
3BR/2.5B/1,806 square feet
Notes: This is a townhouse in a small building.
11033 Massachusetts Ave., #14
Was: $675,000 Now: $649,000
2BR/2.5B/1,519 square feet
Notes: This condo, in an attractively remodeled building, last changed hands in 2001 for $334,000, so as long as its owner didn’t continually pull cash out, there might be some price flexibility.
May 14, 2008
If yesterday’s post was Part 1 of People Who Have No Self-Control When It Comes to Money (And the Lenders Who Love Them), this is Part 2.
The Wall Street Journal published a story on Monday about a Vallejo, California, couple’s descent into bankruptcy — a descent facilitated, ironically, by the rising equity in their home.
The Borrowers: Sherrie Floyd, 44, a clerical assistant at the Kaiser Foundation, and her husband, Kevin Floyd, 45, a truck driver in Vallejo, Calif.
The House: In June 1995, the Floyds bought a four bedroom, 2,100 square foot home in Vallejo at auction for $170,000. After cashing out of Mr. Floyd’s retirement fund, they put $11,000 down and financed the rest with a 30-year, fixed-rate mortgage from Countrywide. Their monthly payment was $1,500; the rate slightly under 9%.
Sounds reasonable, right? Fast-forward 13 years:
Current Status: After refinancing several times, their monthly payments reached an unaffordable $5,600. They stopped paying in April 2007 and filed for bankruptcy in December 2007. A hearing in bankruptcy court is scheduled for Monday.
The Debt: The Floyds owe $670,000 in credit card, mortgage and auto-loan debts, according to the claim estimate from bankruptcy court. Since 1995, Mrs. Floyd estimates that they pulled roughly $100,000 out of their mortgage to pay off credit-card bills, broker fees and penalties.
Apparently many folks find it impossible to leave their home equity untouched. To them, it looks like free money. But of course it’s not, because when you refinance and take out home equity lines of credit, you have to pay it back.
The Floyds took only $100,000 out of their mortgage to pay off bills? No way. They pulled out a lot more than that, because in 2005, when they refinanced for more than $500,000, they already owed $452,000 on their mortgage.
Of course, it should be noted that the Floyds always managed to find an unscrupulous lender willing to finance and refinance their rising debt. But the responsibility ultimately lies with the Floyds.
The saddest part: The family of seven can’t find a landlord willing to rent to them with their credit history, so they’re going to have to split up among friends’ homes until they figure something out.
If they had paid down their mortgage instead of adding to it, they’d be halfway to owning their home outright. Instead, they’re 20 years away from retirement with less than nothing to their names.
Recent Redfin posts:
Throwing Cold Water on a Hot Listing in Coldwater Canyon
Tough Time for Sellers at 525 North Sycamore
