Archive for February, 2008
February 29, 2008
Glendale planners may consider halving new residential units “needed through 2014 if a draft update to the city’s housing plan goes unchanged before June“. With all the mega developments and high rise upgrowth lately in the downtown core, it seemed a city impervious to the housing woes. So despite what one might logically conclude from the swirling doom and glooming, this consideration is not triggered by the housing crisis, but instead attributed to the slowdown to Glendale’s population growth. As always, the Glendale News Press has some illuminating stats on the subject:
Until recently, Glendale had been going through a population boom — having grown about 15% over the past 17 years, from 180,000 in 1990 to slightly more than 207,000 residents last year, according to the state Department of Finance.
That growth rate led state and city planners to forecast a need of nearly 6,100 new residential units in Glendale’s last Housing Element of the General Plan for 1998 through 2005.
But recent growth trends have slowed, prompting housing officials to slash the number of residential units they think would be needed to accommodate revised growth forecasts from 6,099 to 3,131 for inclusion as the most significant update to the housing plan, which must get state approval.
“Clearly, lower targets make it easier for everyone,” said Bill Kane, chairman of the Planning Commission.
Glendale’s growth rate has slowed from 2.5% between 1980 and 1990 to 1.2% now, according to the Southern California Assn. of Governments.
A less active development plan would equate to less of those high rise towers the city’s been so high on lately right? Just what the opposite may be the case, as implied by Planning Commissioner Leonard Manoukian, “Those projects don’t seem to be going away, if they are successful, it will have a cascading effect.”
February 29, 2008
There is talk about how homes in the Westside aren’t as affected by current conditions in the housing market. And I tend to agree. I think many folks do. Well, professor Stephen Cauley, who is the director of research at the Richard S. Ziman Center for Real Estate at the UCLA Anderson School of Management recently spoke about the Westside housing market.
He actually noted that property was too cheap on the Westside because it should be compared to cities around the globe, like London and Paris rather than say, Chicago. (Interesting). But before you get bent out of shape, see what else he had to say. Here’s a bit for you to read:
Los Angeles is being viewed in the wrong frame of reference regarding property values, and rather than comparing it to cities in Ohio or to Chicago, it should be compared with international cities such as London, Paris and Madrid, said Cauley.
The Westside is more insulated from the ups and downs than Orange County, but what happens to the economy does affect us, he said.
Cauley said he sees the long run for Los Angeles and the Westside becoming international over the next ten to 15 years, bringing major change to the Westside.
There will be a feedback effect from high home prices, said Cauley, asking where engineers and scientists will live.
California is becoming like a Third World country, balanced between the well-to-do and the uneducated, low-income individuals, Cauley said.
The state has major fiscal problems with an adverse impact on growth, resulting in the need for public services for an increasing fraction of the population and a decrease in people paying taxes, said Cauley.
Interest rates are key in determining the health of the economy and real estate in the near to medium term, and interest rates are likely to “go up a whole bunch before they go down,” Cauley said.
California sees a bigger financial problem with tax rates going up, and what happens to interest rates determines what happens to the economy and real estate values, according to Cauley.
You can read more in this Argonaut article.
And here are a few new on the market Playa del Rey condos for you.
8600 Tuscany Ave., #404/1 bd, 2 bth/$419,000
7740 Redlands St., #G3095/2 bd, 2 bth/$430,000
8515 Falmouth Ave., #212/2 bd, 1.75 bth/$569,000
February 29, 2008
Better late than never: The New York Times is finally starting to get it with regard to the housing crisis.
On the heels of this week’s story about opposition to government bailouts for people losing their homes comes this story about a company called You Walk Away, which helps people walk away from their upside-down properties. The piece contains some cogent insights, including:
In an era in which new types of loans allowed many home buyers to move in with little or no down payment, and to cash out any equity by refinancing, the meaning of homeownership and foreclosure have changed, economists and housing experts say.
And this:
The value of homeownership, then, has increasingly shifted to the home’s likelihood to rise in value, like any other investment. And when investments go bad, people tend to walk away.
And walk away they will, says Christian Menegatti, lead analyst at RGE Monitor:
When homeowners see houses identical to their own selling for much less than they owe, Mr. Menegatti said, “I wouldn’t be surprised to see five or six million homeowners walk away.”
Among them will be Bay Area resident Raymond Zulueta, who paid San Diego-based You Walk Away $995 to help him through the foreclosure process. The story said he feels guilty, but he’s getting over it.
“I know in a few years my credit’s going to be fine. If I want to get another house, it’s going to be there. I’m not the only one who went through this. I know I’m working the system, but you got to do what you got to do. There’s always loopholes.”
Lenders have nobody but themselves to blame for all the homes they’re going to be saddled with. Giving people like Mr. Zulueta the ability to buy homes with little or nothing down practically guaranteed a slew of bad loans if the market tanked. The homebuyers were dumb, but bankers are professionals — the people we trust to handle our money. Great job!
But kudos to The Times for getting to the real story.
Recent Redfin posts:
Are These People Nuts?
L.A. Area Hit with Steep Price Decline
February 28, 2008
I’m usually the last one to bag on the media. As a former newspaper editor, I think the media often are unfairly maligned. Journalists should do a better job sticking up for themselves and the important watchdog role they play in society.
That said, there are times when journalists don’t question things that they should. An example is this housing mess. When home prices were going crazy and everyone was making money, media stories focused mainly on the prosperity angle. If anyone was questioning the underpinnings of the unprecedented run-up, we didn’t hear about it. (Homeowning journalists were probably just as excited as everyone else about record appreciation.) If they had exposed the rampant subprime lending, might the crisis have been mitigated? Hindsight is 20/20. We’ll never know.
But now, the media has an opportunity to redeem themselves with the fallout story. For months, we’ve been treated to sob stories about people who are losing their homes. For the most part, journalists have not been scratching below the surface and learning, for example, the backstory on folks losing their homes. Such as: They put no money down; they spent their home equity on vacations and cars; they exaggerated their income; they were drowning in credit-card debt; they were only in it to make a quick buck anyway. “People losing their homes” is a sexy headline; why go deeper than that?
Last week I blogged about a New York Times story that reported that Bank of America was proposing that the U.S. government assume responsibility for bad mortgages. The story included a sympathetic portrayal of a Memphis lawyer and his wife who lost money on their last home and were struggling to make ends meet on a $250,000 annual income. I wonder if The Times editors were surprised at the 423 comments the story received, almost all from people outraged that the government would consider bailing out people they considered irresponsible and self-indulgent.
Well, just a few days later, this story appeared in the New York Times, with the headline Foreclosure Aid Rising Locally, Along with Dissent:
As the Bush administration and Congress consider proposals to ease the home foreclosure crisis, local governments across the country have been lending money to imperiled homeowners and confronting some opposition. Some of these municipal and state efforts have met resistance from people who consider the assistance undeserved and adamantly oppose anything that resembles a taxpayer bailout.
Truth be told, it wasn’t like The Times discovered this angle on its own. Consumers got upset about the prospect of a bailout, and The Times pursued that story. Let’s hope journalists learn from this and do a little digging, instead of relying on the quick, easy sound bite.
Recent Redfin posts:
Big Dippers - February
A Fat Price Reduction on Formosa
February 28, 2008
There’s not a full moon — I checked. So what possessed these the owners of these three Hollywood-area homes to RAISE their listing prices?
Maybe they’d like to get more for their houses. Of course they would. We all would. However, if a house has been on the market for a spell and has not sold, the traditional strategy is to REDUCE the price. This approach seems particularly sensible in an environment where prices are falling, inventories are at all-time hights, and buyers are harder to find than sincere politicians.
Let’s take a closer look.
6151 Orange Street, #107, Los Angeles: This one-bedroom, one-bath hit the market in May with a listing price of $375,000. The price was rquickly reduced four times, hitting $275,000 in in August. No bites. The solution is obvious: Raise the price to $300,000. I’m sure it will be sold in no time.
327 N. Vista Street, Los Angeles: Here is a three-bedroom, two-bath home that is so obviously fabulous that the listing agent didn’t even bother to include photos. After a month and a half on the market, everyone involved agreed that the house’s value had increased, so the price was changed from $1,085,000 to $1,095,000.
841 S. Spaulding Ave., Los Angeles: A month ago, this 3+2 came on the market at $1,325,000. Last week, it was reduced to $1,299,000. It didn’t sell at that price, so the owners decided that the original price was the right one and changed it back.
We’ll check back with these homes in a month to see how this radical new strategy is playing out.
February 27, 2008
Reductions, though no less sparse, have been this month more conservative than those seen in past months. As you might expect, a good many of them are coming from foreclosed properties.
450 N Holliston is an REO that saw cuts each consecutive month since it’s been on the market, dropping nearly 10% since listing at $385,000 in December. It’s a tiny property on a tiny lot just off Hill, north of freeway. It’s hard to believe that it sold for $560,000 in its heyday just two years ago. Ride that rollercoaster!
Building on that trend in this neighborhood, 570 Hamilton AVE is a very similar 2bed/1bath bungalow, also bank owned. $90,000 was sliced from its original listing price of $449,900, effectively reducing its asking by 20%.
Other notable price adjustments around Glendale and Pasadena this month:
GLENDALE
612 Lincoln AVE (foreclosure)
Old price: $499,900
Reduced to: $404,910 (18.9% reduction)
Beds: 3 / Baths: 1
SQ.FT.: 1,096
2311 East Chevy Chase DR
Old price: $849,500
Reduced to: $750,000 (11.7% reduction)
Beds: 3 / Baths: 2
SQ.FT.: 1,908
PASADENA
236 Crystal LN (foreclosure)
Old price: $449,900
Reduced to: $404,900 (10% reduction)
Beds: 4 / Baths: 2
SQ.FT.: 1,593
708 Earlham ST
Old price: $488,000
Reduced to: $425,000 (12.9% reduction)
Beds: 3 / Baths: 1
SQ.FT.: 1,080
February 27, 2008
Sure, it was overpriced to begin with. But when someone slashes $225,000 off a $1,575,000 listing, that’s enough to make you take notice.
The house in question is at 327 N. Formosa Ave., Los Angeles, in that lovely little quadrant that some call the Fairfax District and others call Beverly Grove. It’s a four-bedroom, 1.75-bath listed as a “cosmetic fixer,” which means the bathrooms and the kitchen need updating.
If you think $1.35 mil is still a hefty chunk for a house with a 90-year-old kitchen, well, you’re probably right. But it should be noted that homes in this area are selling fairly briskly, compared to many areas. If you click here, you’ll see the area surrounding the home; the little blue icons are sold properties and the green are unsold. These days, it’s unusual to see so much blue in any area.
Some recent comps:
404 N. Detroit St.
Sold for $2,126,000 on 12/14/07
4 BR, 2B, 1,940 square feet
Notes: This was a teardown, a little overdone and out of place for the neighborhood, and perilously close to La Brea Avenue.
516 N. Detroit St.
Sold for $1,061,058 on 1/22/08
4BR, 3B, 2,340 square feet
Notes: A weird, uneven-numbered sales price, like this one, should make you think, “Bank-owned!” And sure enough, the Property Shark listing indicates that the deed is held by a First Franklin Trust. It was last purchased in February 2007 for $1,300,000. Someone could nab a good deal here.
448 N. Fuller Ave.
Sold for $1,350,000 on 1/31/08
3BR, 3B, 2,225 square feet
Notes: This home was last sold in 1988 for $415,000. It ’s nice to find people who exercised restraint during the recent selling frenzy. Of course, they’re probably regretting that now.
February 27, 2008
How many ways can it be said? No matter how the numbers are shuffled, the story is the same: Prices are declining, dropping, plunging, plummeting, going down.
Yesterday was no different. The fourth-quarter Standard and Poor’s/Case-Schiller home price index, which includes existing homes but excludes condos and new homes, showed that Los Angeles and Orange counties experienced one of the steepest price declines in the nation compared to the fourth quarter of 2006 — 13.7% — according to this L.A. Times story:
The L.A. index is now 15% below its peak, which Case-Shiller says occurred in September 2006. Various economists have predicted that area home prices will decline 20% to 30% from their peak level. The decline locally was exceeded only by that in Miami, which saw a 17.5% year-to-year plunge for the quarter, and Las Vegas, Phoenix and San Diego, which all experienced drops of about 15%.
For a particularly gloomy outlook, check out this story from the Wall Street Journal, quoting Karl Case (as in Case-Shiller index) saying that homes in California are still “wildly overvalued” compared to personal incomes.
There is a strong long-term correlation between [home prices and personal incomes]. And in many regions, house prices would still have to fall a very long way to get back into line. How far? Try around a third in Florida and Arizona — and closer to 40% in California. Yes, from here.
Can they really fall that far? No one knows. But one thing’s for sure: Too few Californians can afford to own a home. Until that changes, prices aren’t going anywhere but down.
Recent Redfin posts:
I did it! I listed with Redfin
Where the Foreclosures Are
February 26, 2008
What’s the best way to find foreclosed properties? Plenty of sites charge fees to get you a list of bank-owned homes. You can visit individual banks and lenders to get lists, but that’s time-consuming.
I came across a cool blog that features a list of homes owned by good old Countrywide. Click here for the link.
The blog keeps a running tally of the Countrywide foreclosures in the U.S. At this moment, that total is 15,007, including 4,293 in California. You can click on individual listings that include addresses, pictures and a contact number for more information.
It also includes links to properties owned by about a dozen lenders, including Bank of America and Wells Fargo.
If you plan on buying a bank-owned property, do your homework. One good place to start is this list of tips from AOL. Most important: Don’t commit to anything until you’ve inspected the house thoroughly.
Meanwhile, the National Association of Realtors this week reported that nationwide sales of existing single-family homes and condos fell to a nine-year low in January, while median prices fell for the fifth straight month. In these uncertain times, a bargain-priced bank-owned house could be the way to go.
Recent Redfin posts:
What Not to Do If You’re Losing Your Home
It’s a Bird! It’s a Plane! It’s Sky Garden!
February 26, 2008
Okay. So I am one of those folks who are now joining the ranks of homesellers during the housing downturn. And, I listed with Redfin.
I thought there might be a few interested parties who would like to know about my experience, so I’m planning on posting every few weeks or so. It’ll all depend on what traffic I get (or don’t get).
So far, I can tell you that the listing process was very smooth. I had brief conference calls with the agent and a coordinator. Now I’m off and running. Here’s a synopsis.
- I read and followed the “Seven Tactics For Selling Your Home“.
- I tracked sold homes in the neighborhood, taking note of the condition via photos.
- I then did a little driving to see some properties for myself.
- I filled out the online form.
- I set a price and my agent noted that the home was within the range she would have put it at. (I hope so, since I’ve been tracking the prices here for the last 6 + months!)
- I signed all the paperwork and the coordinator put me up on their system on Friday (they say that’s the best day to list). I’m now also on the MLS and Craigslist.
It’s been a few days now and so far, I’ve had one agent come with clients. A few agents phoned promising to schedule later in the week. A ton of folks have been driving by and picking up the fliers that I printed via Redfin’s PDF. And I just had a family call from in front of my house because they wanted to take a look. I’m lucky because on Sunday, there was an open house down the street and lots of folks were looking in the area. There’s a lot more activity than I thought would happen in this market, but who knows what I’ll be thinking a month from now?
