Archive for the ‘San Fernando, Santa Clarita’ Category
May 21, 2008
I clicked on an old Redfin post of mine yesterday (well, from last week - even a week ago can be ancient history in the free-falling real estate market these days) and discovered that the asking price of a featured property had been reduced since the blog post eight days before.
No big surprise there. But it made me wonder how many other homes that I’d mentioned in recent posts have had price reductions as well. So without further fanfare, here’s a look back into the not-too-distant past to see how some featured properties have fared.
15536 Briarwood Dr
Sherman Oaks, CA 91403
Price: $764,750
A rare south-of-Boulevard hillside Sherman Oaks REO that was initially offered at $805,000 post-foreclosure. A week later, it’s down $40,250. (Redfin post Foreclosure Creep Comes to Prime Valley Housing: May 12)
3416 Dorothy Rd.
Topanga, CA 90290
Price: $688,000
This bank-owned property deserved a full blog post on April 22 because of the lessons in its fascinating 20-year sales price history, reflecting past and present housing cycles. When I wrote the original post it was listed at $723,500. Now reduced to $688,000 it’s down $51,500 from the initial asking price.
18350 Hatteras St.
Tarzana, CA 91356
168 units
When I profiled this troubled condominium mega-complex in Tarzana on April 18, about 16 units - 10% of the total number - were listed on Redfin. Now, a month later, at least 20 are on the market - a 25% increase. Most of them appear to be underwater and distressed - short sales or foreclosures. Surprisingly, though, many are fresh listings. I expected to see the same listings lingering on and on, but most of the older ones are no longer listed. Sold? Gone to foreclosure? Simply taken off the market for want of buyers? It’s unclear, but the high churn at this complex is still unsettling.
In early April I featured three properties in North Hills, two long-on-market bank-owned REO’s and a fresh short sale. Both REO’s are now off the market, one of them presumably in escrow.
Since my post, the bank made two more price cuts totaling $70,000 down to $289,900 on this house on Lassen Street. That’s $230,000 off their original listing price of $519,900. Apparently, the ”price discovery” point was reached and attracted a buyer. But with about a third of all sales in the region falling out of escrow for credit and lending problems, it’s not over ’til the fat banker sings.
The other foreclosed North Hills home from that post, now delisted, shows a byzantine sales record that would take Sherlock Holmes to untangle. It appears to be in the hands of a corporate entity, not an owner-occupant.
The short sale, characteristically, has changed neither price nor hands, languishing in short sale limbo.
Looking back at the properties in those posts, there’s one recurring theme: gravity sucks.
May 20, 2008
Designated simply as West Van Nuys until it was formally recognized by the city of Los Angeles last year, the namesake of the area known as Lake Balboa is an artificial lake in a sprawling, scenic recreational park that attracts residents to picnic and play, stroll and relax. The lake itself was created from farmland during the last real estate bust in the early ’90s, when land values had bottomed out. Then the area was lifted along with the rest of the region as prices rose dramatically through the first half of this decade.
Now Lake Balboa housing values are seeing the same declines as surrounding Valley areas. But while prices are down - about 25% year over year - sales activity has been remarkably robust: in the last three months there have been close to 120 sales recorded, all but two of them single-family residences (it’s likely a lot of these sales are on the backs of foreclosures).
Just as remarkable, sellers’ median asking prices are less than 2% higher than actual median sales prices in the last 90 days. It would seem that Lake Balboa sellers are more realistic and less inflexible on price than sellers in other parts of the region, which is what makes home sales possible. This is a model for accelerating the recovery of the entire housing market.
6901 Louise Ave.
Lake Balboa, CA 91406
Price: $539,900
A bank-owned REO with only one day on the market. This big, appealing four-bedroom, three-bath ranch home has close to 2,500 sq. ft. on a quarter-acre lot, and a lovely pool and patio. Needs plenty of fix-up and updating, but at just $217 sq. ft., this may be worth a look.
6442 Whitman Ave.
Van Nuys - West, CA 91406
Price: $469,000
A charming and updated 3 + 2 traditional; just five days on the market. The listing agent acknowledges the owners will be taking a loss since the purchase price in 2006 was $560,000, but claims it’s NOT a short sale. Still, at $431 sq. ft., I’d say there’s room for negotiation.
7042 Louise Ave
Van Nuys - West, CA 91406
Price: $399,900
Bank-owned and broker-listed 24 days. Nice curb appeal; this is a traditional 3 + 2 with hardwood floors and 1,800 sq. ft. interior on a spacious 7,200 sq. ft. lot. At $220 sq. ft. it may be nearing an attractive price: recent nearby sales comps average $316 sq. ft.
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 13, 2008
Thanks go to keen-eyed Kate of the indispensable south Valley real estate blog May 5th and Everything After (so named because she launched it on Cinco de Mayo in 2006 and just celebrated her second anniversary blogging there - Congratulations, Kate!) for this “price discovery” she posted little more than a week ago:
3540 Coldwater Canyon Ave.
Studio City, CA 91604
$699,000
Kate notes that this gated 3 + 3 Coldwater Canyon home with good bones was reduced within a span of 50 days from $1.3 million to $699K. In a word: Wow!
But wait … hold that offer … what’s this?? Rub your eyes and look at the listing price again - suddenly, as of today, it’s $1,199,000!
Huh?
A call to listing agent Burt Bakman of Re/Max On the Boulevard Estates hasn’t been returned.
We don’t think the market has made a turnaround in the last 10 days. So, absent an explanation from listing agent Bakman, we’ll venture a scenario as to what may have happened.
We’re guessing the truly remarkable price point of $699K (in relation to the listing prices of comparable housing stock) generated a tsunami of interest and offers. One or two offers, from especially savvy buyers - possibly investors - were marginally above the asking price. This flood of attention triggered flashbacks of bidding wars from the golden days of real estate yore - circa 2005 or so.
Flush with the excitement and heat of the moment, it’s easy to imagine our sellers and their agent leaping to drop the I-bomb - a price increase. And not just a modest one. One with conviction and courage.
Oops!! Seems I may have overtaxed my imagination. I made contact with Burt Bakman and when asked to comment, his explanation was simple, easy and credible: the property was headed toward a short sale, thus the very aggressive asking price (although it likely was never approved by the lender). Bakman said it then “made a U-turn and went the traditional way,” suggesting to me that the lender has given the seller some breathing room to market the home conventionally and thus maximize the price to the benefit of all parties. That way, Bakman says, “the bank could be paid off, commissions could be paid.”
And, I would add, the market could maintain some semblance, some appearance of normalcy.
May 12, 2008
Inevitably, foreclosure creep is happening in the San Fernando Valley.
What I mean by that is the beginnings of foreclosure activity in areas that until recently have been considered safe from its ravages, untouchable. The concentric ring theory of the housing bust is well-known. One housing blogger calls it “The Reverse Ripple Theory of Metropolitan Home Price Corrections” and defines it this way:
… home prices in the outlying areas with a lot of new construction will tend to fall most and first (the splash), as it moves toward the center of the metro area, the ripple weakens and the fall in home prices is progressively less and later.
The New York Times saw it happening in February and noted: “Within the region, the closer to Manhattan, the better the situation looks.” The Times went on to quote a housing valuation expert who said that “homes in suburbs within a one-hour commute have not lost value as fast as those in the outer suburbs … and forecasted that the closer suburbs would suffer only half of the decline of the outer suburbs by the time the market hit bottom early next year.”
I call it foreclosure creep, and it applies to Los Angeles and its Valleys: the farthest outlying areas like Palmdale and Lancaster bore the brunt of the crash earliest and hardest, with foreclosures recorded in the thousands so far. Areas closer in, but still considered less than prime real estate, such as Reseda, Van Nuys and Canoga Park, have seen massive price cuts and hundreds of foreclosures. But the priciest and most gentrified prime quality areas such as Studio City, Sherman Oaks and Encino, particularly the hillside areas south of Ventura Boulevard bordering Bel Air and Beverly Hills, have been regarded by many as all but immune to the foreclosure plague and price erosion.
No more.
On this balmy Mothers Day afternoon, realtors’ open house signs crop up along Sepulveda Blvd. near the Whole Foods market in Sherman Oaks. They wouldn’t disturb the halcyon mood - except for one with a jarring rider in red letters: Foreclosure. I make a U-turn and follow the arrow directing me up Valley Vista Blvd.
The signs lead to the top of Briarwood Drive on a bluff overlooking the 405 freeway. Another red Foreclosure sign on the house must have the same effect on the neighbors as a red cape has on a bull.
The handsome Spanish-style home was proud, but had seen better days. It sold in March 2006 for $1,450,000. Now with gaping holes where appliances used to be, it’s listed as-is for $805,000, 45% off the peak.
I asked the showing agent to confirm the 15,000 sq. ft. lot indicated on the setup sheet; the back yard was very compact - where was the rest of it? Then I realized it was mostly on the hillside below leading to the 405 freeway. “There’s some trouble,” he said vaguely. “The bank will give the buyer credits, or they will take care of it themselves.” He mentioned the cracked retaining wall, and the need for caissons to shore up the foundation of the house, perched high above the 405.
I began to get the picture as it formed in my head, and I started edging quietly out of the house. A metaphor for high-end Valley housing, this one was showing disconcerting signs of crumbling below.
May 7, 2008
PROLOGUE
Two households, both alike in dignity,
In fair … Van Nuys, where we lay our scene…
OK, with apologies to Shakespeare - and Verona - I wanted to play up how alike I found two attractive corner homes listed for sale directly across the street from one another in a quiet, pleasant neigborhood bordering Sherman Oaks. 
And yet how different their fates are. One, on the northwest corner of Noble Ave. and Hatteras St., listed only 18 days, is showered with multiple offers, with a request for final sealed bids to have come in at 10 am yesterday morning. The other, on the southwest corner, a well-cared-for pool home, has languished on the market nearly six months, endured several rounds of price cuts, and is still star-crossed with no apparent offers.
Does looking to the list prices help us fathom the difference? The white-picket-fenced home on the south corner entered the market at $749,000 last November and was ratcheted down to $639,000 since then. The smaller but somewhat more updated house on the north corner hit the market running last month at $499,900.
At first it seems obvious: the bottom-hunting market responded to the magical price that snuck in under $500,000.
But now let’s make a closer, more detailed comparison. The higher-priced home, with four bedrooms and two baths, has one more bed and bath than its competition. At 1,581 sq. ft. it’s 40% larger too. And it has a pool - a feature with a subjective value that may make the deal for some, sweeten it for others, and break it for a few. Finally, on a cost-per-sq. ft. basis, it seems like a better value at $404/sq. ft. vs. $453/sq. ft.
Yet the smaller, higher-priced home per square foot is the one that generated more heat.
When it comes to why people buy homes, you just can’t explain everything with numbers.
Could it be the recently perceived beginning of a shift in preferences for smaller homes but more features?
There are still mysteries, as the Bard reminds us in another play:
There are more things in heaven and earth, Horatio,
than are dreamt of in your philosophy.
May 5, 2008
First, the basics, which few who’ve been in earshot of a radio or eyeline of a TV or web browser in the last few days could have avoided: Jose Canseco, the notorious retired major league baseball MVP, went public with the fact that he stopped making mortgage payments on a home he owned in Encino and the bank has foreclosed on it.
The Wall Street Journal on Friday flexed its legendary investigative muscle to burrow deeper into the Canseco foreclosure story. The summary of facts below was generously borrowed from the WSJ story.
Canseco purchased the 7,344-square-foot house on Karen Drive in Encino for about $2.8 million in 2005. Built in 2001, the house has four bedrooms, six baths and a pool, according to public records.
He transferred partial ownership to a trust last year, which defaulted on mortgage payments in October. Foreclosure was recorded in February, public records show.
“He made a mathematical decision and just let it go,” Canseco’s lawyer Gregory Emerson said. “Given that there were liens on the house and the market had gone down, he made the decision to let it go.” The decline in property value, he said, meant Canseco’s equity in the house had fallen by about $1 million.
Peter Viles, in his real estate blog L.A. Land for The Los Angeles Times, had a field day collecting the most entertaining quips and comments from his readers and other blogs inspired by the story, mostly along the lines of: ”Canseco gets called out trying to steal home.”
But I’d say there’s a little more to the story of Canseco’s foreclosed house than just celebrity sizzle and gossip, or the torrent of moral indignation directed at the already tarnished sports figure for walking - many would say waltzing - away from his mortgage. As different as Canseco’s circumstances may seem from the run-of-the-mill home foreclosure, in one respect it may be more typical than commonly acknowledged.
The popular view of the housing bubble is that falling home prices have victimized homebuyers who purchased near the top of the market with “time bomb” loans that exploded, crushing buyers with unaffordable payments and no possibility of refinancing. No doubt this has happened to more than a few buyers. (We leave aside the questions of their judgment in committing to such loans and their honesty in representing their qualifications for them.)
But Canseco’s case demonstrates the other part of the dynamic: that upside-down homeowners, seeing no benefit in continuing to make payments on overvalued properties, choose to stop making payments, even though they could afford to. (The case of the controversial L.A. buyer known as Condoblue has been discussed in Redfin’s blog more than once.)
There is no doubt that foreclosures, whether forced or freely chosen, lower the value of all properties in a neighborhood. Housing economists sometimes cite the rule of thumb that each foreclosure within a block of a home lowers the property’s value about 1%.
I don’t know if there are any credible statistics on the share of foreclosures that are elective, but my gut feeling is it’s substantial - and growing. And it contributes to the downward cycle of price declines.
April 30, 2008
Imagine Tony Montana from Scarface as a real estate investor: “This town is like a great big … piñata - just waiting to get … busted,” he would roar.
Indeed.
Standard & Poor’s/Case-Shiller home price index released yesterday and reported in The Los Angeles Times shows February prices in L.A. down nearly 20% from the same time a year ago. “There is no sign of a bottom in the numbers,” the chairman of Standard & Poor’s index committee said.
The nationwide vacancy rate is the highest since the U.S. Census Bureau first started keeping track back in 1956. A record 18.6 million homes across the country, almost 3% of the total, sat empty in the first quarter of 2008 (Bloomberg.com). That’s a million more than a year ago. The Bureau claims only 2.3 million of them are for sale, but you have to wonder how many are not on the market because the owners know they don’t have a snowball’s chance in the San Fernando Valley of getting the prices they dream of.
Bank foreclosures have doubled and are accelerating (CNNMoney.com), adding to the record-setting numbers of vacant homes - candies in the piñata - while buyers are busy swinging and battering the piñata, waiting for it to split wide open. When it gets whacked enough, sometime in the next two or three years, the sweets will begin spilling out and buyers will scramble like mad children to gather the spoils.
The part of the piñata, of course, is being played by homeowners and sellers, this year and the next and probably the next. The scenario is as predictable as the climax of any birthday piñata party, but no less enjoyable for being inevitable - if you’re a buyer.
With inventory growing and prices plunging, investors like Tony, and ordinary family home buyers like the rest of us, are watching the piñata swell and sweeten, and taking our turn swinging the stick.
April 28, 2008
I took my camera along yesterday when a friend who’s in the market to buy a condo asked me to look at a listing with her in Van Nuys; I thought I might be able to find a blog post in it, and snapping a few photos would get me the “art” to go with the text.
But #16, the townhouse on Saticoy Street overlooking the concrete channel known as the L.A. River, was so dispiriting, both inside and, in particular, the common areas outside, that I didn’t even have the heart to take a picture. I don’t even care to publish a link to Redfin’s listing. Still, there is a post in it.
It was a medium-sized, tri-level townhouse: a two-car garage at ground level; kitchen, living and dining areas above; and two vaulted-ceiling bedrooms each with its own bath on the third level. The kitchen had been nicely updated with granite counters and greenhouse bay windows. There was more than a little to like. Or, rather, there must have been once.
Initially pleasant to encounter, the gated complex of 17 units showed more flaws with each blink of the eye: deep gouges in the paneling of the buildings spoke of long-ignored termite invasions; decorative frames were loosened and pulling away from their windows; an unseasonal scattering of dead leaves littered the grounds. A damaged pool filter pump growled and thumped just outside the unit throughout our visit. Inside, the condo was in need of cosmetic help - paint and plaster and elbow grease.
After the tour, my friend’s buying agent revealed that it was a short sale, a fact that didn’t appear in the MLS listing. The repeated price reductions from $295,000 to $219,000 did. But the generally sad condition of the condominium and surrounding complex dampened any excitement that the price might otherwise have raised.
As we approached the gate to leave, we noticed inconspicuous For Sale signs taped to the windows of two other units, #7 and #8, and a letter from the homeowner’s association posted above the mailboxes. One of the condo owners was passing by at the same time, and we caught her attention. She nodded toward #7 saying, “She just walked away and left it to the bank.”
And the letter? “It’s a notice of special assessment to the owners for $175 each, to repair termite damage.” She went on to say she’s a long-term owner, and has seen the decline since the complex was built in 1982. “Each time a new owner came in, they did something worse, tearing out greenery and trees. The pool equipment is broken because someone went in the spa with their clothes on. The fabric got shredded in the pump.”
After I went home, I looked up unit #7 on Redfin. A recent foreclosure, it’s listed at $199,900. I called my friend to tell her that if she’s still interested in #16, then she should look at #7.
She wasn’t. She plans to start looking for rentals today.
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.
