Which Area of the Westside will be Affected Most, by the Declining Market?
Each area on the Westside has now begun showing cracks in reported sales prices. 10 - 15% declines, are becoming evident in many marginal areas of the Westside. The question is, WHICH AREA would be MOST AFFECTED, by a SUDDEN DECLINE in VALUE? Listed below are the major areas that have had significant price declines, listed in this blog. Choose which one you think could suffer most, and explain why?
1) Santa Monica
2) Pacific Palisades
3) Malibu
4) Venice
5) Brentwood
6) Beverly Hills
7) Westwood
8) Mar Vista
9) Culver City
10) West Hollywood
11) Rancho Park / West LA
12) Beverlywood
13) Bel Air
14) Century City
15) Marina del Rey /Playa Vista
You can CLICK on the "MELTDOWNS" link of any of these areas to the RIGHT, and see some of the PRICE DECLINES SO FAR. Also, feel free to post any meltdowns you find in these areas, as well.
It's going to be an interesting summer.....
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58 comments:
VENICE is my choice. It has enjoyed the greatest appreciation ($/sqft) than any other area. And, many of the LOTS are small (3300 sqft). Overbuilt on tiny lots, totally riding the trend of "bigger is better", often times with NO PARKING.
You would think a garage would be nice, for $2,000,000.....
Venice is going to suffer, but I'm a little more bearish on Mar Vista and Culver City. They are the more "irregular" types of neighborhoods where people started moving because they could not afford the pricier, more reliably "nice" parts. Personally, I know I only started to look at Mar Vista because I knew I could not affort to buy where I rent in Westwood. If prices begin to soften, those are the first places that are going to drop from my list of "possible areas". As for Venice, you are right about lot size, etc, and Venice is also very irregular. But there is that "funky" element and the proximity to the sea that make it truly "different". Some people are always going to want to live in Venice, and that is going to prop it up a little more than the others, IMHO.
Cassiopeia
I think the "FUNKY" premium in Venice is way overpriced, especially if we get more into a declining market. When people start looking at fundamental values, Venice will get hit hard, IMHO.
It's all over priced! And most of the housing stock is old and not maintained well for the asking prices.
Yes, Many of the houses date back to the 20s, 30s or even 40s and are actually worth about nothing, after depreciation. It is the LAND, that is valuable. Thats why, we should be looking at LOT SIZES here, when we value property.
latesummer, are you going to be buying in Venice some days when things go back to normal? Cassiopeia
No, I won't be buying in Venice. I prefer Santa Monica. At the price of Venice, you can get a better house, bigger lot, better parking, less crime and not have to deal with LA City for services.
Although, I do like Mar Vista Hill also. Bigger Lots......
I have recently added the DataQuick Real Estate News Link in the "Helpful Links" Section in the right side column of this blog. It gives monthly information for each area by zip code, that includes:
1) # of sales of SFRs
2) Median Price of SFRs
3) % Change of Median Price of SFRs (Year over Year)
4) # of sales of Condos
5) Median Price of Condos
6)% Change of Median Price of Condos (Year over Year)
7) Average $ per square foot of Home
Some of the best information out there, and it contains every county in California.
If you look at the Dataquick information, Condos appear to be getting beat up badly. In addition, the number of sales of SFRs seems to be dropping more and more, even while inventory is ballooning.
Higher End areas are beginning to show the biggest declines across San Diego, Orange and LA County. I suspect they will be hit the hardest, as they have enjoyed the greatest appreciation, during the Real Estate Bubble. In addition, the NUMBER of purchases will steadily decline.
Generally speaking, larger purchases will become more scarce as it becomes evident, the market is falling.
"Bubble Market Graphs" is new in the Helpful Links section of this blog. It makes it very clear where prices are headed. It shows:
1) Total # of Inventory
2) Total # of REOs
3) Total # of Sales
THIS IS THE REAL STORY.....
Take a look.
Sweet site. It'll be added to my bookmarks. I hope he starts adding REOs to the LA graph like he's done with a few others. The 10,000 jump in LA inventory in March seems surreal. Is that a typo? Thanks.
This comment is an addendum to the comments posted to the original blog entry from March which now seems moribund.
There was some discussion of possible foreign domiciles. I was born on the Westside (St John's!) but am now expat with property in Germany, Thailand and South Africa.
I would be especially happy to give information on South Africa where I spend most of my time and correct common misconceptions but also try to be candid about how things really are here.
I found an awesome new site for seeing Average Sales Data by zip code, on a monthly basis. It gives you monthly prices going back 6 years!
Track your favorite zip code !
Melissa Data. The link is to the right, under my "Helpful Links" section.
boughtmypoints, how are things in South Africa? I would love to know. Cassiopeia
May sales will be coming out soon. Any guesses on, which area will be the biggest loser?
I'll go with:
Bel Air 90077
After checking Melissa Data for sales reported so far in June, things look BAAAAAADDDD.
Take a look at just about any area...in regards to # of sales..
Venice (90291), is in the toilet as I suspected..
Hold on, here we go.....
latesummer, hang in there, I wont be here for much of the summer, but will be checking in regularly because the news is going to start coming in any time.
Dataquick came out this week with the numbers for May. The result was a bit alarming.
-34.4% drop in volume for So.Cal. from May of 2006.
If you go back to May of 2005 (The last year of the boom) it is down nearly 45%. I would say, that is a significant trend.
What seems to happening now is, the bottom 20% of the market is almost gone, due to subprime issues. The top portion of the market has been able to hold on. But, how much longer, remains to be seen.
As I suspected, Venice is the "Biggest Loser" according to the LA Times June 17th Southland Sales Report for the months of January - April 2007.
Venice 90291
# of sales -27.9% (68 to 49)
$/sqft -13.6% ($940 - $812)
No real surprise. Small lots & funk factor are overpriced...
Latesummer, I have a question. Someone recommended the site Redfin over Zillow for doing searches. It is good, but some recent sales are coming up which make no sense such as
1969 Thayer Ave
Sold 1/12/07 410K
1508 Glendon Ave
Sold 7/10/06 393K
Is this kind of thing a mistake or a refi or what?
cassiopeia
Those sales could be inter-family transactions. I would ignore them as they are not "arms length transactions".
I haven't used Redfin much yet, but will try and let you know.
Yeah, that's what I thought. I'm still trying to work out how Redfin works. It seems interesting.
cassiopeia
Thanks to Cass, I have just added REDFIN to the "Helpful Links" section. It displays a nice chart showing sales that can be manipulated by Price, Sqft, $/Sqft, DOM etc..etc..
Check it out !
Sales seem to have slowed to a crawl on Zillow lately. Not a good sign. I am curious at how many homes are NOT selling, as opposed to the ones that are.
Latesummer, it's hard to say in my area in Westwood, because it takes some time for houses to appear as sold in Zillow. The one think I'm sure of is houses are taking much longer to sell. A little house on Gilmerton that I was following sold after about four months on the market, but it went for close to the asking price (after one big reduction). I hear many people talking about "halloween" spook. They all seem to think October will be the month when things will really sink in. Oh, well, I have waited so long that I can wait some more...
cassiopeia
Perhaps, Halloween and spooks could come early this year.
The LA Times Southland Home Prices in todays' real estate section (6/24/07) reported some hits being taken by:
Marina del Rey
Westwood
Venice
Malibu
Santa Monica
Culver City
Bel Air
Beverly Hills
and
Beverlywood
Click on the specific area meltdowns to the right of this blog and see..
Also, NAR reports Existing Home Sales tomorrow. They will try to spin if possible, but I would imagine it will be bad (YoY) Year over Year...
I have just added ZIP Realty to the RE TOOLS/DATA section of this blog. It is useful to see current listings and price reductions in your favorite areas.
I have added another valuable RE/DATA Tool called HARDTACK HOUSING INVENTORY. It shows you changes in available inventory for areas all across the country. It could be very useful as supply affects demand and pricing.
It also breaks it down by neighborhoods as well.
In today's LA Times Real Estate Section (7/8/07) there were some interesting May (Y.O.Y) numbers on Single Family Residences, for some of the high end markets in San Diego :
La Jolla 92037
33 Sales, Median Price $1550K (-34.2%)
Del Mar 92014
17 Sales, Median Price $1483K
(-26.4%)
San Diego was the market leader and now?
Perhaps, it is a preview of things coming here, to The Westside.
Dataquick released sales numbers for the month of June in Orange County today. The results were pretty alarming.
Total Sales 2,641 -31.6% (YOY)
The worst sales total in the 20 years since Dataquick has been reporting. Before this June, about 3300 was the lowest sales total ever recorded (1995).
Yet the median hit a record of $645,000....
Do you think the LA numbers will be similar?
More bad Orange County Numbers in. Building permits dropped a whopping 85% last month! Dead in the Water...
Speculators, including builders are gone. Now all we have left is HIGH PRICES and SWELLING INVENTORY..
My latest prediction is the "Biggest Loser" or the "Worst of the Worst" will be the Marina Del Rey condo market. Massive overbuilding that will be sold cheap or turn to rentals.
I can't believe they are still breaking ground on Redwood Avenue (MDR adjacent - Mar Vista)
Playa Vista may get hit hard also..
August Numbers for So.Cal are pretty sobering:
-36.3% drop in sales from last year
27,857 to 17,755.
and
Los Angeles County :
-34.4% drop in sales from last year
10,140 to 6,647.
Wait until the full effects of the credit crunch and foreclosures hit the market in the next 2-3 months. By Thanksgiving, there will be no more denial of how bad the entire real estate market is in So.Cal
Hi, this is my first visit to your blog, I like facing the pain head on.
I pick Culver City and Santa Monica as the big winners. SM because of it's strong schools, high asian/indian immigration population (they tend to borrow less and thus have less financial strain) and the lack of over development during the boom. Culver City because they were much less overpriced than other westside neighborhoods (I think because of historically low inventory) and also strong schools.
The biggest loosers....
Palms/Mar Vista/West LA(90043, 90066, 90064, 90025). This will be mostly because of poor schooling, even the MV hills school is poor in relation to it's SM and Brentwood counterparts.
Honorable mention for least meltdown after SM and CC is Brentwood, Malibu, PacPalisades. The property here was already quite expensive before the boom and the residents who could live there before already needed to be wealthy enough to not have to pay bills with home equity. By limiting CONDO development (especially N of Sunset), they have limited renters, which can depress schools and as such, the top notch public (and private) schools easily rival Santa Monica USD. Homes for sale in these areas will sit on the market longer as sellers can afford to wait for the right offer without fear of foreclosure, so number of sales will be hit, but much less so on average prices.
Sorry, that last post should be 90034, not 90043.
Schools is an interesting point. I wonder how many people living on the Westside have kids or are sending them to public schools? I suspect not many. But the point is well taken and could be a factor.
I think we have to look at the run-ups in appreciation to see which areas have had the biggest increases. It would make sense to me, that they are the most overpriced and will take some of the biggest hits, as prices fall on the Westside. I will stick with Venice as being one of the Biggest Losers. Small lots, no parking, crime problem and weak schools. Way overpriced in my book
MALIBU is the biggest loser for the last 2 months according to Melissa Data:
(Aug & Sept 2006) 33 sales x $1635.3K = $53,966K
(Aug & Sept 2007) 13 sales x $1242.8K = $16,157K
-60.1% in Sales
-24.1% in Average Sales Price
-70.1% in Total Volume
By far, the worst showing of any area on the Westside.
A great new RE Blog has been added to the site. Manhattan Beach Confidential gives great insight to the RE Market in the South Bay. Check it out in the RE/Economic Blog Section to the right.
I have added a new website to the RE/Economic Tools Section. Realty Trac lists all properties in some stage of foreclosure. After entering the Santa Monica zip code 90405 today, a total of 896 property listings came up under Preforeclosure, Auction or Bank-Owned, on the Westside. October is the month where some of the first 2/28 Arms resetting in April are reverting back to the Banks.
We could have quite a different real estate landscape, here on Westside, come the holidays.
September Comes in with a BANG !!! According to Dataquick today:
September Southland Home Sales Lowest in More than 20 Years.
Only 12,455 new and resale houses and condos sold in LA, Riverside, San Diego, San Bernadino, Ventura and Orange County. That's DOWN 48.5% from last September (2006). And DOWN 29.9% in 1 month from August (2007).
Houses using Jumbo Mortgage Financing were DOWN 50.0% from 5,359 to 2,681 over 1 month! August (2007).
Even the median home price went DOWN 7.6% from $500,000 to $462,000 since last August (2007).
I'm afraid this marks the beginning of the big decline... Areas with the biggest increases will suffer the worst, as the market adjusts to hyper-inflated prices..
I'm afraid this marks the beginning of the big decline...
It should mark the beginning of the end, but we still don't know what the government may do to try to stop this trainwreck. Some banks have set up a fund to buy these junk loans off from each other and try to dump them on to greater fools. I don't think it will even make a dent on this mess, but I would not put it past the government to try to at least postpone what's coming. Got inflation?
The median price for Southern CA keeps dropping. According to Dataquick it dropped another 3.9% from September to October!
(September 2007) $462,000
(October 2007) $444,000
Jumbo Mortgages over $417,000 seem to be taking their toll. Down 60% since summer, if we adjust for market mix the median is actually $440,000. That is the lowest since April of 2005.
How low can it go?
Sorry - the Westside LA posting is listed on this link. Thank you.
http://losangeles.craigslist.org/wst/wri/484932102.html
Not good? I personally think it's great. LA's housing market has been extremely overinflated for a long time.
Market psychology has changed as well. Instead of housing being the super safe investment that always makes money and "OMG you have to buy now or be priced out forever" It has turned into a wait and see game. Nobody wants to buy an investment that doesn't make money, and people won't want to buy a house that has a good chance of losing money in the future. Again, nobody will be buying up the excess inventory, which leads to a continued decline in house prices.
Construction will continue to suffer due to the glut of houses, and homebuilders that could have weathered a 2 year downturn, will be unable to survive the lengthened decline.
Housing prices will not go up again until they are in line with historical, adjusted for inflation, averages. Houses need to be affordable with a 30 year fixed mortgage with a 10% down payment before they can go back up. And even when they start to go back up, they will most likely keep pace with inflation and wage increases. It will take a damn long time before we see housing values that match the peak.
If you bought a house thinking you 'could flip it' since this market is just 'money town' then you deserve it.
California home sales in October dropped 40.2% in October from a year earlier! Just the next month in line of many more disappointing sales figures. Jumbo Loans are being blamed now for the precipitous decline.
Malibu SFRs along with Condos in Marina Del Rey, Pacific Palisades and Santa Monica 90405 were the hardest hit during October, accoding to the LA Times RE Section 11/18/07.
Check out each of those meltdown sections for details.
California Foreclosures hit a record according to Dataquick last quarter (July-Sept)measured year over year (YOY). Here are the sobering numbers:
Notice Of Defaults (NODs)
Calif.
27,218(2006)
72,571(2007) Highest ever recorded
+45353(+167%)
L.A. County
5,565 (2006)
13,583 (2007)
+8018 (+144%)
Trust Deeds Recorded (Actual Loss)
Calif.
3,435 (2006)
24,209 (2007) highest ever recorded
+20774 (+605%)
L.A. County
535 (2006)
3,627 (2007)
+3092 (+578%)
These seem to be the only numbers going up these days as EVERYTHING else is going down. Today, New Home Sales annualized, nationwide plunged from September to October:
711,000 (September 2007)
647,000 (October 2007)
(-64,000)
(-9%) in only 1 month !!!
Some economists, like Mark Zandi of Moody's Economy are now calling these "Crash Numbers" for real estate.
Just wait until the year-end numbers come out....
Marina del Rey because of the loft district. It is getting killed.
I think that Marina Del Rey will go down the most. Have you seen how many condo developments they have that are just sitting around, yet to be finished? They don't have the community attractions like Santa Monica (3rd Street Promenade, Main Street, reworked Santa Monica Place, etc.) and the price per square foot is not sustainable b/c nobody is buying it.
I have to agree that Marina del Rey is incredibly overbuilt. Once more houses are foreclosed on, who would buy a condo?
I see rentals.... and lots of em. I believe they used to call them apartments..
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