Saturday, September 27, 2008

Westside of Los Angeles posts a 36% drop in 1 year.

The Westside posted a 36.0 % drop in median price measured year over year (YOY) in August, according to Dataquick's latest report. It is apparent the credit crunch is taking it's toll on some of the most afluent areas in Los Angeles. Beverly Hills, Brentwood, Mar Vista and West Hollywood all showed significant declines.

The Beach Cities area of Playa del Rey, El Segundo, Manhattan Beach, Hermosa Beach, Redondo Beach and Rancho Palos Verdes in the South Bay also dropped considerably. The Dataquick link to the right of this blog, has these cities and others in the CA City Chart of their report.

With Jumbo rates over 9% now, credit getting more difficult and foreclosures making up over 45% of sales in California, prices have nowhere to go but down.

Here are the latest numbers according to Dataquick for August:

Westside
(2007) $1195K
(2008) $765 on (55) Total Sales
(-36.0%)

Beverly Hills
(2007) $2150K
(2008) $1429.5K on (10) Total Sales
(-33.5%)

West Hollywood
(2007) $960K
(2008) $675K on (23) Total Sales
(-29.7%)

Brentwood
(2007) $1045K
(2008) $894K on (25) Total Sales
(-14.5%)

Mar Vista
(2007) $807.5K
(2008) $620K on (21) Total Sales
(-23.2%)


Beach Cities
(2007) $1150K
(2008) $875K on (111) Total Sales
(-23.9%)

El Segundo
(2007) $850K
(2008) $515K on (10) Total Sales
(-39.4%)

Manhattan Beach
(2007) $1695K
(2008) $1190K on (43) Total Sales
(-29.8%)

Hermosa Beach
(2007) $1245K
(2008) $1007K on (16) Total Sales
(-19.1%)

Redondo Beach
(2007) $820K
(2008) $665K on (80) Total Sales
(-18.9%)

Playa del Rey
(2007) $548K
(2008) $450K on (15) Total Sales
(-17.9%)

Rancho Palos Verdes
(2007) $1027.5K
(2008) $851K on (24) Total Sales
(-17.1%)

Most of these transactions probably opened escrow in June. You can imagine what the numbers will look like in September and October once the credit squeeze really started tightening.

34 comments:

Anonymous said...

Thank you - this data is much appreciated -

are you familiar with the North of Montana neighborhood in Santa Monica - just in the past few weeks teardown lots have sold for 2 million - these lots are one sixth of an acre, which puts the sale price per acre at 12 million dollars for land there

can you give any insight in why we have seen almost no teardown price declines in that neighborhood - ie prices today still at the same level as 2006 and 2007 there?

and are there any other micro markets anywhere in southern california that are still today trading at the peak prices

latesummer2009 said...

Prices peaked in 2007 in "The 90402". If you are seeing pricing from 2006, that is a decline. Many believe this area is immune to the downturn affecting all areas of the market. We need to be aware of several TRENDS:

1) Number of Sales
2) Total Sales Volume
3) Price per Square Foot of Housing
4) Price per Square Foot of Land
5) TOTAL MONTHS of INVENTORY
6) Foreclosures

Remember, we are talking about the top of RE Food Chain here. As the credit crunch works its way up the lower levels it will reduce the number of "move-up" buyers. Things get very interesting in 2009.

I still say a 50% drop from peak pricing all across the Westside and, possibly more.

Anonymous said...

Again, your post and statistics are incorrect. You are taking a number for the entire southern california and saying its the Westside stats. Read Dataquick again. The 30+% decline in stats are for all of california and southern california.

For the Westside stats through August 2007-2008..the stats are as follows;

MEDIAN Price 2007 YTD $1,209,000
MEDIAN Price 2008 YTD $1,200,000

Down .7% Year to Date

MEDIAN PRICE AUG 2007 $1,200,000
MEDIAN PRICE AUG 2008 $1,059,000

Down 11.8% Year over Year

The data used for these statistics is real time. It will take a few seconds to generate the report and graphs. Statistical Parameters Used for reports All information is based on data supplied by the Combined Los Angeles Westside Multiple Listing Service. Data accuracy cannot be guaranteed and may not reflect all real estate activity in the market. Source of Information : Combined Los Angeles Westside MLS. Information deemed reliable but not guaranteed.

latesummer2009 said...

Anon 1:08 you are either confused or a threatened realtor. My guess is both. Try looking at the data posted in Dataquick. I will spell it out for you:

1)CA City Charts
2)Los Angeles County (All Cities in LA County)
3)Los Angeles Selected Areas (Westside -35.98%)
4)Los Angeles Southwest Selected Areas (Beach Cities -23.91%, Mar Vista -23.22%)

I happened to put more stock in Dataquick numbers than the MLS. Obviously you don't.

By the way, why do you post anonymously all the time?

Anonymous said...

Let's put aside the discussion of the west side as a whole and focus for a minute on the micro markets that are doing the best

let's say for the moment that Santa Monica 90402 is only down 10%

what OTHER micro markets are there that are down that little

i personally think Manhattan beach West of highland is also a micro market that is down less than 10% but i want to hear from other people about other micro markets

Anonymous said...

Well where I live in a very desirable westside area, things are down to about 2004ish pricing which is about 15-20% from the 2006 peak. This isn't shown in the median because houses that would have sold for 3.9 in 2006 are now selling for 3.0 and that number still raises the median. (yet another reason it's a bad measure)

Also, those houses that would have been 2.5 aren't selling because it'll put the 10% down huge first and a second geniuses underwater. They won't be holding out much longer.

And there's so little selling, the few teardowns that move (also priced lower) don't affect the median.

Anonymous said...

From these 15 cities/neighborhoods (listed below) alone there was 346 sales in the month of August 2008.The supposed "westside" area that your pointing at on Dataquick says 55 total sales. You mean to tell me from the ocean to downtown there was 55 total sales on the Westside for the whole month? Even for a bear like yourself, you truly believe that? Hmmmmm sounds a little off to me. I don't know what westside they are referring too, but it isn't correct. I can paste the addresses and sales if you like. Its black and white proof buddy.Unless you think the MLS makes up fake listings and sales information..lol.

Areas:
(1) Beverly Hills
(2) Beverly Hills Post Office
(3) Sunset Strip - Hollywood Hills West
(4) Bel Air - Holmby Hills
(5) Westwood - Century City
(6) Brentwood
(7) West L.A.
(8) Cheviot Hills - Rancho Park
(9) Beverlywood Vicinity
(10) West Hollywood Vicinity
(11) Venice
(12) Marina Del Rey
(13) Palms - Mar Vista
(14) Santa Monica
(15) Pacific Palisades

Anonymous said...

So what is this Westside your referring to that is down 36%? What cities or neighborhoods does it represent?

By the way, in the same dataquick numbers it has West LA down 9%. Why don't you post that information? Just curious why you leave out stats like that.

Anonymous said...

Please refer to it as a price correction, not a decline. Using that term makes it like its a bad thing that they're falling. The toxic loan business is over, its time for reality to set in in all these areas. These areas were never this outrageous in the first place, thanks to our countries greed thrown in with these crappy loans we've seen human stupidity at its finest. People who are insulted by this data, obviously think devoting 60% of your income to a home is "normal". Quite pathetic, and from the looks of it we're headed towards a severe recession or even worse a depression. You can thank these morons for that.

Anonymous said...

i agree completely
the stats just don't tell the whole story since the mix is shifting in many neighborhoods

what i am saying is , apples to apples, a raw piece of land in the 90402 sold for 2.2 million at the peak (implying 13 million an acre land value)
and today seems to be selling for 2.0 million

ok so raw land apples to apples, honest direct comparison is down 10% in 90402

where else in LA is land down only 10% does anyone know of any other micro market where raw land is down only 10% ?

Latesummer2009 said...

Higher end markets have yet to take the "Big Hit". I have noticed in 90402 for example, that total number of sales have increased as of late, but prices have begun "correcting". I believe the smart money is realizing time is running out.

As for raw land, most of the value here in So Cal is in the land. Really, almost all the property here is raw land with old and tired houses on it, worth very little.

And now, with speculation gone, prices will drop considerably, even in the most desirable areas.

Anonymous said...

The California real estate market, is controlled by Financing. You take away the toxic mortgages that enabled people to buy homes at these ridiculous prices/inflate them in the first place and what happens? Prices go down, to what people can afford. In the end everything is based upon affordibility.

latesummer2009 said...

The "Westside" area Dataquick refers to in its' selected Los Angeles Area, covers 4 zip codes:

1)90024 (Westwood)
2)90212 (Beverly Hills)
3)90077 (Bel Air)
4)90049 (Brentwood)

This data is given to Dataquick by CAR. (California Association of Realtors)

Even though the sample is relatively small, it does compare median sales prices in 4 affluent areas YOY (year over year). It is also indicative of the deals that are able to get financing.

Especially important here are, TRENDS. Prices are correcting now at a faster pace.

SevenHundredBillion.com said...

Hi LateSummer2009 - thanks for taking time to summarize this. The numbers I see here are a bit different from what I've seen on onther blogs (e.g., mbcon and smdistress) - it'd be great if you can explain your methodology and post links to sources. Thanks in advance and keep up the good work...

Anonymous said...

we can all agree that lancaster and palmdale are down 60% from the peak. no need to talk about the crummy areas.

so far 90402 is only down 10% - any other areas still at the peak or only down 10%?

Anonymous said...

Looking at Trulia, Realtor and so on, the westside appears to be completely unaffected by the financial turmoil, and seemingly sheltered from the national decline/price correction phase. Could this be because most owners in the affluent areas have little to no debt (i.e they paid in cash or more than a 60% down-payment?)? I would assume most people who buy million dollar++ houses in L.A opt for very large down payments, leaving them much better equipped to pull through in the event of a financial downturn. The entertainment industry is, as we all know, doing quite well through these troubled times, and people in that industry make up the majority of owners of expensive/desirable homes on the westside. I believe there's still high demand and purchasing power in this line of work but nobody wants to overpay so they're on the fence with everyone else, trying to time the bottom. I'm in this industry myself and am doing very well for myself. I am NOT alone. There are plenty of people with cash. They're all hoping for the Westside to come down, which is why sales are obviously grinding to a halt. I think the purchasing power in this sector is much higher than people on this blog seem to think. In the most expensive parts of town you're paying an extreme premium simply to "not have to mingle" with the upper middle class, thus forcing people in that income bracket to turn to the surrounding areas instead. The same is true for the upper middle class. They don't want to make their neighborhoods accessible to the lower social classes, which is why prices in areas such as the beach cities are and will remain artificially high through the recession. People in these areas are people who are generally not affected too heavily by a change in the economic climate. Regardless of what happens, the really sought after areas will always be relatively expensive, and priced to be inaccessible to the average Joe (less than $300K/yr).

Anonymous said...

The Westside, has just started its price correction. Now that the toxic loans are gone that helped keep prices at these retarded levels, prices can only go down to what people can afford. NO AREA IS IMMUNE TO THIS. Just a few years ago the majority of Westside homes were half the price, theres no excuse why they should stay this way. These prices reflect the speculative attitude of people bidding up the higher end areas, thinking they're immune to price declines. What will really kick the Westside, is the reset of the pay option arms. The majority of these toxic loans being in the Westside, if you haven't read Latesummer's previous post they are set to explode later this year. In the end all areas will be affordable to peoples relative incomes, as in each area reaches an equilibrium between rents incomes and home prices. Of course coastal areas will alway be more expensive, so don't complain that you can't afford a home in the Westside if you make 100k a year. Its kind of like any other city don't expect to be able to afford everything.

Anonymous said...

Anonymouse September 30, 2008 4:22 PM,

That's probably the single most retarded post ever!

Have you looked at foreclosure dot com? There are 79 listings in 90402, with the majority there for tax liens.

The sh*t is just starting to hit the fan, or haven't you picked up a newspaper lately?!?

Anonymous said...

Agreed, Anonymous oct. 1 11:14 Some people are just dumb haha, like my 936AM post said "All areas are affected and all areas will be affordable to realitve incomes in each of these areas" That guy probably didn't see the LATIMES post "singing the 250k a year blues" Upper middle class people were the predominant buyers in the Westside before this bullshit bubble, now they can't even afford to live there anymore."unless its a piece of crap shack" How sickening is that?

Anonymous said...

I did in fact read that article (singing the 250k/yr blues) and I found it equally disturbing. I think westside prices are as outrageously inflated as the next guy. Regardless, (and I may be out of touch with reality myself but) many of my peers in the ent. industry are making a lot more than 250K/yr. My impression is that there's a lot of people in L.A with money who can afford the 2M+ homes in Santa Monica, Beverly Hills, P.Palisades etc. without getting a significantly sized loan. I may be completely mistaken, and I have no data to back up this claim, but it is nevertheless my observation from the perspective of this industry that the westside is made up of wealthy people with high paying jobs and plenty of cash for rainy days. I honestly don't know how many westside home owners are in this mire, but I would be surprised if it turned out to be as many as you seem to believe.
This blog has been running now for what, 1.5 years, religiously preaching the fall of westside property prices from the get-go. So far the average listing prices have remained quite firm. I'm not arguing against a market decline and I certainly don't think the westside is sheltered in any way, but how long is it going to be until we start seeing significant drops in list prices in the westside? In my opinion the shit is taking a very long time to hit this proverbial fan of yours. I guess that can be attributed to a certain extent to the realtors out there who seem completely out of touch with reality. How long can they sustain these artificially high prices anyway? This seems true for pretty much every decent area in L.A btw. Houses listed at 1 million 6 months ago are still listed at 1 million today. Some homes have been reduced 25K and some even 50K but by and large they are still untouched. Delaying the inevitable? Holding on to the past for dear life? Whatever the reasons the westside market sure seems in complete denial to me.

Anonymous said...

If I plug some numbers into an on-line mortgage calculator, here's what I get.

Home Value = $2,500,000
Loan Amount = $2,000,000
Interest Rate = 6.5%
Loan Term = 30 years
Property Tax = 1.25%
Monthly Payment = 14,724.69
Annual Mortgage = 176,696.28

That would be 45% of a gross family income of $400k/year.

That would be 70% of a gross family income of $250k/year.

I work in the entertainment industry, and I see a lot of stressed out people. I'm sure there are a few at the top that are doing well with their reality shows, because they can keep costs down. However, the rest of network TV is continuing its declines. There used to be a lot more skilled jobs in the entertainment industry, but technology has been replacing a lot of the skilled workforce and more and more jobs have even been outsourced to other countries lately. I see those trends continuing.

Can anyone shed more light on those numbers and tell me if I'm missing anything?

Thanks.

latesummer2009 said...

Yes it's true there are many wealthy people here. I guess two questions we need to ask is, are they equity rich, or do they have big incomes? And, to what extent can they support these price levels?

Everyone obviously is aware of the bursting RE Bubble, due to the Credit Crunch. Here are some other factors to think about. Why would ANYONE buy when we have:

1) Sales prices extremely high in relation to historical norms
2) Price/Rent ratios extremely high compared to historical norms
3) Price/Income ratios extremely high compared to historical norms
4) Employment picture weakenig considerably.
5) Record unsold inventory
6) Record foreclosure activity
7) Bank Shadow REOs (Unreported)
8) Upcoming Alt-A, I/O, ARM and Prime loan resets starting in 2009
9) Historical overshooting of RE markets to the downside during past RE busts
10) Renting being cheaper than a mortgage

And the list goes on and on..

Lastly, why would someone risk losing 20% down on an investment, when you could buy it for less in the future?

Anonymous said...

There are not enough wealthy people to keep prices at these outrageous levels. Like I keep preaching "how can a westside home double in value in 4 years". Example: home in Santa Monica bought in 04 for 800k today its listed for 1.8 absurd and sickening Like I said before these toxic loans that inflated these areas, and enabled greedy affluent people to buy these overpriced homes are gone. Like Latesummer and I have said, the resets of these loans will be coming shortly. Therefore causing prices to correct, by kicking all those greedy assholes who overbought OUT! In a real estate bubble, the high end is always the last to crash be patient people.

Anonymous said...

Hey Latesummer, I think about 80% of the bubble buyers in the Wetside are Equity rich haha. ex 'Someone buys home 4 years ago price doubles today". Kind of sad when you think about it the person living in that stupidly overvauled home, probably makes less money than people who should be buying in this area right now"upper middle class"

latesummer2009 said...

It won't be that funny when prices roll back to the early 2000s in prime areas on the Westside.

The question is not if? but when?
It could happen faster than most people think.

Anonymous said...

i agree 100%
but take a look at Manhattan beach hill section - a house just sold for 7 million all cash there last week

take a look at SM north of San Vicente - another house just sold for 7 million in that neighborhood a few weeks ago

the point is that in SOME of the nicest neighborhoods prices are rock solid

can someone else give other examples of micro neighborhoods where prices are still turgid

Anonymous said...

You have pockets of ultra wealthy areas everywhere, but there are not enough of these people to keep prices at these stupid levels. For example, in Houston Texas theres a part of town called River Oaks. The neighborhood consists of 1-2 million dollar homes and theres an area that consists of 7 million dollar 10k sqft estates. Do you really think people buying ultra high end homes effects the price of upper middle class homes, no. You have to take in the fact that the Westside has its ultra wealthy people, but the majority of people on the Westside are upper middle class. Also, an ultra wealthy person isn't going to buy an overpriced worn down shack of a home they're going to go into Beverly hills or Malibu and buy something extravagant.

Anonymous said...

Latesummer, it is going to be funny when prices roll back to 2000 levels because the idiots who thought this area was immune are going to get burned.

Anonymous said...

I don't know if its me but it seems like many of these posts sound like the same person, maybe even the blog author? Similar writing style and language. Trying to puff up your blog maybe? Just seems weird that a blog with so little content has this many comments.

Anonymous said...

if your wondering where all the comments are coming from well its me haha. I AM NOT LATESUMMER, I'm just a person who happens to know a lot about this current situation, and I want people to understand the facts. I'm here to correct people who post the most absurd and ridiculous comments. People need to come back down into reality=)

latesummer2009 said...

I have no need to puff up my blog. I am just desiminating information. You may do what you want with it.

I look at it as a public service to those who would like to "LIVE" in a house here, instead of some type of casino bet for gamblers.

Anonymous said...

Thats why i've stumbled upon this website, to enforce your views Late=D

Anonymous said...

Ever wonder why Santa Monica collects such massive massive school taxes and yet Santa Monica High still stinks ?

Anonymous said...

The trifecta...

"The episodes of credit crunches and housing busts are often long and deep. For example, a credit crunch episode typically lasts two and a half years and is associated with nearly a 20 percent decline in real credit. A housing bust tend to last even longer: four and a half years with a 30 percent fall in real house prices. And an equity price bust lasts some 10 quarters and when it is over, the real value of equities has dropped to half."

http://www.nakedcapitalism.com/2008/10/lessons-from-modern-economic-crises-not.html