Sunday, March 22, 2009

Westside RE Market Slowly Grinding to a Halt

The numbers have just been released form Dataquick for February, 2009. Needless to say, they are dismal. What really jumps out is, the number of SFR sales. They have been on a steady decline for months and what we see now is single digits in most areas, with very few deals being transacted. There seems to be a variey of reasons for this:

1) Credit tightening
2) Job loss concerns
3) Lack of qualified buyers
4) Increased downside risk
5) Upside down sellers
6) Accelerating NODs and Foreclosures

These are just a few of the factors affecting the Westside right now. Sure, there are a few buyers that may not be income dependent, but in reality, how many are in that category? 10-15%? Certainly not enough to stem the price declines.

Let's take a look at some Westside areas and see how many houses sold last month.

Culver City 90230 (2)
Culver City 90232 (2)

LA Bel Air 90077 (4)
LA Brentwood 90049 (9)
LA Rancho Park 90064 (9)
LA West LA 90025 (3)
LA Westwood 90024 (4)

Marina del Rey 90292 (2)

Santa Monica 90403 (0)
Santa Monica 90404 (0)
Santa Monica 90405 (1)
Santa Monica 90402 (4)

Venice 90291 (7)

West Hollywood 90048 (5)
West Hollywood 90069 (8)

5 sales in all of Santa Monica!

The Southbay hasn't fared much better either:

El Segundo 90245 (4)
Hermosa Beach 90254 (3)
Redondo Beach 90277 (3)
Palos Verdes 90274 (7)

One bright spot has been Manhattan Beach 90266 (21), but only because median prices fell to $1215K or -29.5% compared YOY.

Other outlying areas are showing impressive sales, combined with lower prices (around 50% off). It's clear, time is on the buyer's side, as they wait until prices drop. What is the magic discount number on the Westside, before people begin purchasing again?

12 comments:

Dan said...

If I lived in Santa Monica, Malibu or Pacific Palisades & was trying to sell my home right now, I think I'd go to bed every night in the fetal position, sobbing uncontrollably.

It's gonna be a bloodbath folks. Buckle up.

Anonymous said...

Bottom line. If you don't have to sell. hang on to the house. Wait til credit markets pick up. I was at an open house today in SM and there was a lot on foot traffic....

Doesn't mean much, but I think the market is loosening up a bit. Did you see the article about jumbo loan financing today in the LAT? Good news for So. Cal.

Anonymous said...

FYI - Venice 90292 is only a small part of Venice, mostly the Marina Peninsula and Oxford Triangle. I'd be curious how the the 90291 did. 90291 includes the Oakwood neighborhood which experienced much speculation and flipping.

Latesummer2009 said...

Thanks, I meant 90291. I'll correct it.

Anonymous said...

Hey, 9:33, can you leave your realtor card at the door?

I, too, went to some open houses yesterday and the only foot traffic was bored realtors coming to say "hi" to their friends, neighbors and dreamers. Credit is not loosening, if you want to sell your house, lower it to 50% off the peak, it's that simple.

Anonymous said...

Anon 8:05...Sell my house for 50% off, really? That doesn't seem smart.. can I take a hit offa what you are smoking?

Anonymous said...

I (still) argue that some areas will stop selling and prices won't continue to fall.

The Federal government is rushing around attempting to keep asset prices from falling regardless of the unintended consequences of doing so.

The Fed will be buying Treasuries with one of the effects being keeping the alt-a and other ARM-like loans status quo.

Don't get me wrong, I'd love to own a duplex in my neighborhood. Either the price won't fall that far or there won't be any on the market.

Anonymous said...

What about 90066? That's "Westside".

Bubblewatcher said...

In answer to your question, we're looking to buy in Venice next year and are looking forward to another 30% price decrease off of current prices.
As for that article on the "return of easy jumbos"...try reading more closely. Yes, interest rates will be lower, but the requirements are harsh -- 20% down and 6 months in reserve.

Susan said...

Let's really think about the "hold onto your house" issue.
Sure there's some folks who can afford to hold and not sell, but that's not everyone.
People change jobs, lose a spouse, lose a job, need to downsize, etc. and find that renting out the home is not a viable option.
There will be homes on the market as the prices adjust.
Prices are adjusting and the smart folk are waiting for it to happen.

jeffLev said...

12;25. The fed govt is trying to prop up home prices, yes. Their attempts, however, are to prop up home prices that correspond to the conforming loan market. No help for the Westside. You will see the national RE market flatten. High priced areas will continue to plummet. They will fall the same % amount as the rest of the country has. It just takes time.

Latesummer2009 said...

The problem boils down to inventory and ability to qualify for loans. Now that a minimum of 20% down, FICO scores over 700, 6 months of cash reserves, AND documented income are required for transactions, the pool of buyers is quite small for the amount of houses for sale. Simply oversupply and very little demand at Westside prices. We are headed for a big fall, until incomes are more in line with standard mortgages.

3-4 times annual salary is the mortgage amount one can afford. That leaves most people out at current prices.