What a Difference 3 Years Makes....
Since the market peaked in 2006, we have witnessed a steady decline in sales volume and and increase in housing inventory. Let's take a look at 5 entry level areas on the Westside and see exactly how much business has dropped in May (YOY) since 2006. The following data is available on Melissa Data and compiles the number of sales and sales averages by zip code.
Mar Vista 90066
(2006) 49 sales x $782K = $38,318K
(2007) 34 sales x $824K = $28, 016K (-26.9%)
(2008) 13 sales x $843K = $10,959K (-71.4%)
(2009) 11 sales x $569K = $6,259K (-83.7%)
Beverlywood 90034
(2006) 37 sales x $792K = $29,304K
(2007) 34 sales x $697K = $23,698K (-19.1%)
(2008) 12 sales x $830K = $9,960K (-65.%)
(2009) 4 sales x $507K = $2,028K (-93.1%)
Culver City 90232
(2006) 14 sales x $795K = $11,305K
(2007) 4 sales x $676K = $2,704K (-75.7%)
(2008) 5 sales x $805K = $4,025K (-63.9%)
(2009) 1 sale x $675K = $675K (-93.9%)
Marina del Rey 90292
(2006) 36 sales x $830K = $29,880K
(2007) 14 sales x $1,293K = $18,102K (-39.4%)
(2008) 8 sales x $886K = $7,088K (-76.3%)
(2009) 6 sales x $569K = $3,414K (-88.6%)
Santa Monica 90405
(2006) 26 sales x $1,178K = $30,628K
(2007) 17 sales x $1,020K = $17,340K (-43.4%)
(2008) 15 sales x $789K = $11,835K (-61.4%)
(2009) 8 sales x $734K = $5,872K (-81.8%)
As you can see, sales volume has literally dropped off a cliff in the last 3 years. Financial problems first began showing up in 2007 and have continued getting worse in 2008 and 2009. The trend is clear with prices dropping, inventory swelling, credit tightening and foreclosures creeping in. With the last real estate recession continuing for 7 years, you can see we have a ways to go.
Don't buy the hype and your patience will be rewarded.
Posts
59 comments:
You blog gives us hope!
Hope is good. I hope for a nice price in Santa Monica 90405. But, if the price for a SFR, let's say, drops to $500,000 (from the current $800,000 or so in that area), won't there suddenly be a lot of us chasing after a relative few of these bargains? Timing, timing, timing.
Anon 9:08 AM,
There was such a stampede in the 90066 and surrounding areas, such as Western Culver City, when the bottom-market homes dropped to 550K. I was told, albeit by a realestate agent, that multiple offers were taking place for the low priced properties.
Unfortunately, the other thing that occurred on two properties, one on Panama St, 90066, and the other I don't remember the street, was full cash offers. It still amazes me, but when homes are in the 500K level, some people can make full cash offers. The Panama St. house was bought by Korean nationals, most likely for an investment.
isnt it a bit early to be counting all the may sales? theres many that havent even been recorded yet in my area.
Nate,
How do you know there are "many" that have not been recorded in your area?
f you can afford to lose 10-20% (50-100K) on what u pay now, then buy now. if can wait 2 more yrs, wait and see how the market plays out.
based on gut feeling and current prices vs historical prices, i predict that the culver city/mar vista starter 3/2 (small) will be at around 450-475k, middle of the road 3/2 will be 500-575k and nicer remodeled 3/2 will be 600k+ by 2011. Avg joes (like myself who work their asses off to earn a household income of 100k-150k) who want to live on the westside will have to pay at least 40-50% of gross pay for mortgage. 30% rule ain't going to cut it. These prices sound high, but that's the westside. 500k is reasonable for proximity to beach, quality of air compared to valley and further out east, moderate temperature, close proximity to getty, rancho and penmar golf courses, jobs in century city and water gardens, and most important of all, not being stuck on the 405 or 10 for 3-4 hrs a day. Plus 500k for a 3/2 SFR is a good deal for folks from cities such as SF, honolulu and int'l cities such as seoul, london, hong kong, etc.
I think the prices suck, but what can we do.
Good luck finding a bank that will loan you more than 30% of gross income. With unemployment sharply increasing, for rent signs popping up everywhere, Alt-A and option Arm implosion late this year through 2011, home prices will take a beating on the westside. Westside will be down to 2000 level home prices by 2011.
"sales volume has *literally* dropped off a cliff in the last 3 years"
Literally??!!! Do you really mean to say that houses fell off the Santa Monica bluffs this last three years???
my buddy told me that there will be A LOT of cash deals as wealthy individual investors in Asia are be blasting by US real estate agents with "deal of a lifetime" invest opps in US real estate esp in CA. It sucks that middle of the road folks, like my family, have to compete with investors who don't even plan to live in the house they buy. It is just a place where they can diversify their assets. And then of course you got the UCLA and Santa Monica college kids splashing loan money and parents' savings on $2500/month rent in the area which will make it a nice investment for those investors.
I have trouble believing any sane investor would buy a home that the rent did not return a decent amount on the investment whether they pay cash or not. I have been sitting on enough to pay cash for 3 years and rented rather than lose my shirt buying. Why would other people with assets be more foolish? I am also in an area that rents to UCLA students and rents are dropping, plus the restaurants along Wilshire that used to be packed with college students are not as much now and a couple places have gone out of business. I live right by Brentwood place and there are plenty of students down here, in fact the place I am renting was bought by the parents of a former UCLA student to live in until she graduated. She finished and they are hanging on to it for their kids and renting out to us. They have no intention of making money on this place and do not see it as an investment. Meanwhile resales in our building have dropped 25% from their original sales prices.
Those numbers are rather shocking - and telling. Why won't the MSM report this?
my buddy told me that there will be A LOT of cash deals as wealthy individual investors in Asia are be blasting by US real estate agents with "deal of a lifetime" invest opps in US real estate esp in CA. It sucks that middle of the road folks, like my family, have to compete with investors who don't even plan to live in the house they buy. It is just a place where they can diversify their assets. And then of course you got the UCLA and Santa Monica college kids splashing loan money and parents' savings on $2500/month rent in the area which will make it a nice investment for those investors.
SOUNDS like something I hear on CNBC I hear all the time. "Foreigners will come to save us" and "lots of money on the sideline". Good luck w/ that. I make my decisions based on fact and not hope, and I hope all of you do too.
Unfortunately the MSM protects the real estate industry due to the amount of advertising they do. Ever see the size of the Real Estate Rag they publish on Sundays? It's bloggers that must get the truth out. Otherwise you will just get spin from the real estate industry and "Headline Reporting" that is incomplete from the MSM. They will do anything get people reading and keep the advertisers paying. Record bad numbers are just old news now.
Most important is how many houses are on the market / how many sales are being made. The basic supply and demand principle from Ecvonomics 101. Anything more than 5-7 months of inventory shows weak demand and the prices will drop. If you have over 10, 20, 30 or 40 months, it gets exponentially worse, in that seller's needing to sell will begin undercutting prices. I think we are at that point on the Westside. If they don't sell this summer, they could be foreclosed upon before the next summer selling season.
Last call....
$500,000+ for a 3/2 1950s tract home in Culver City, Mar Vista or West L.A. is insane. Why?
Look around you and tell me what you see. We're in freefall after the most outrageous bubble in modern history.
And yet there are people who still believe that my old family house in 90066 is worth half a million dollars.
Incredible.
Why has our country's future destroyed? Go look in the mirror.
$500,000+ for a 3/2 1950s tract home in Culver City, Mar Vista or West L.A. is insane. Why?
...and on a 5000 square foot lot, one car garage, house needs a lot of work, very small bedrooms, hardly any closet or storage space, and the streets have not be resurfaced in 30 years. These same houses were going for $200K+ in 1998 just before the largest asset bubble in USA history started.
Yawn - sustainable housing prices are 3x household income, not 7-11X. Wake me when the prices get to a sane level in a few years - in the meantime I'll just watch them drop.
"sustainable housing prices are 3x household income" does not hold in desirable areas like the westide. the secret is out on the westside. life is good here, and there is no more land left to develop on for SFR. savings (or money from parents) will just have to make up for the outdated 3x household income formula.
You should go tell the Nobel prize winning economists about how you've noticed that housing is "special" on the Westside, and doesn't follow well known, and observed facts. Bubble do occur, and if outdated means somehow temporarily deviating from a curve that's been accurate since 1900 in the USA, and 1600's in Amsterdam, then they would like to know
francis. how do you explain median housing prices in NYC and SF being more than 3x the median income? that has been the case for yrs and will continue to be. your 3x income model might hold up in the midwest, but definitely not prime coastal areas such as the westside.
fyi, i am not a home owner or a real estate agent. I am just being realistic. of course, your theory does make me feel better and hopeful about being able to afford a starter home on the westside. but, the reality is that I will need a 30-40 % down payment bc the bank will only lend 30% of my gross pay. I am working and saving my ass off to do this.
pls let me know if there are alternatives to achieving the american dream.
Anon, June 8, 12:06AM,
NYC went through a bubble too, and it is correcting. People moved out of NYC, people are moving out of the Westside (or renting, which is also a widely used option in NYC).
You are wrong about it being the case "for years;" sure, in the bubble this has been the case. But people who cannot afford to live in either of these areas bought with the belief that their home (condo/co-op) would continue to appreciate at insane rates. In other words, they bought into neighborhoods they couldn't afford (i.e. more than 3x's their income) based on a faulty assumption that they would be able to pull money out of the house (sell, etc.) to afford living above their means. These behaviors were part of what lead to the first wave bubble (sub-prime) and the soon to come second wave.
If you are looking to buy in an area that costs more than you can afford, then you have not learned anything from this bubble and resultant financial ruin it brought to many.
Sustainable housing prices ARE 3x household income, but, unlike Francis, I do not believe this means that the Westside will drop to 3 times the median income of current residents. I believe that prices will certainly drop, but people who make a much higher yearly income than those currently living in Mar Vista and associated areas (blue collar families, grand kids living in parents homes) will be priced out.
In other words, the "3x's rule" can be corrected top-down (lower home prices) or bottom-up (families making more money moving into neighborhoods). Either way, it is a solid maxim.
Finally, you need to look in other areas- you cannot afford the Westside if, as you indicated, Banks will not lend you the necessary mortgage amount based on you salary. Sure, putting down 30-40% will reduce the loan amount, but why would you want to put yourself in that position.
This so called "American dream" (as you titled it) has many options, and they are east of the Westside..
7:28am: "This so called "American dream" (as you titled it) has many options, and they are east of the Westside.."
LOL! You are saying that the bubble prices of the Westside are going to be sustained.
You are a fool or a troll.
The vast majority of homes on the Westside (e.g., 90066 and Culver City) were nothing more than modest tract homes for working class people. They are STILL just modest homes on small lots.
They are NOT WORTH half a million dollars!
I should know, I spent 40 years of my life living in 90066. The fools that brought us this disasterous bubble and who bought these homes in the recent past will soon find out what kind of dumb decision they made.
Besides, what is so "special" about anything in 90066?
"sustainable housing prices are 3x household income" does not hold in desirable areas like the westide. the secret is out on the westside. life is good here, and there is no more land left to develop on for SFR. savings (or money from parents) will just have to make up for the outdated 3x household income formula."
Yep,
"they're not making anymore land",
"its different here"
"3 x income is the old paradigm"
Numbers 2, 5 and 7 of "10 reasons why housing prices will never fall"
Keep on drinking the Koolaid, hon.
Its people like you that keep hope alive to would-be Westside sellers
Yes, Santa Monica is a nice place to live, and will always attract a premium - but anything other than a 10-acre estate in Malibu has no business costing more than half a million dollars, even if the 2b/2b in question is covered in gold leaf....
To Anon 7:28 AM-
It is about time we call it like it is. The Westside will always be worth more, not "bubble" more, but MORE. People who cannot afford it should look elsewhere and quite whining about the prices.
Btw, I THINK that prices on the Westside will drop, but they will not drop enough for some dope making 50K a year to buy.
You need money to live in prized neighborhoods, a fact which many posters hear seem to ignore. Just because we all agree that the housing bubble is correcting doesn't mean we all can live where we pick and choose.
Also, stating that a place isn't worth "half a million dollars" shows a fundamental lack of understanding of market dynamics. A home is worth what the market will offer... And for people who love to live in SM, with their much better schools, or in Culver City, where they can easily walk to the hip downtown, they value those homes/areas much higher than other areas.
Income, people, determines where you can live, not wishful thinking about what something is "worth."
Right now nothing is selling on the Westside so it is premature to proclaim what the real "worth" is of this bubble real estate.
"Irrational Exuberance" caused these insane prices and lots of people still are in denial.
Considering that no one (except bloggers) even believed that the bubble existed in 2006, I don't think that anyone with half a brain will look at a 3/2 in 90066 and say, "Yeah, that's worth $600,000 (even though it was going for $175,000 a decade ago)".
"It is about time we call it like it is. The Westside will always be worth more, not "bubble" more, but MORE. People who cannot afford it should look elsewhere and quite whining about the prices."
Not whining at all, simply not playing the game.
And I'm not alone, judging by the abysmal sales/inventory numbers in the lovely 90201 to 5
So, what is your definition of 'MORE'?
Care to put a numerical value on what you'd consider a fair 'premium' for living there?
Can you tell me how much more you would pay for a Renoir vs. a Monet? It depends how much you want either, and how many paintings are available. Supply and demand.
If you cannot afford either, you buy a reproduction, or find other artists you can afford.
If the "game" is supply and demand, you are playing it, albeit you are playing it smarter than some others by waiting for the prices to drop more. Others are too, however, as evidenced by the lack of sales in the zips you cited.
My definition of MORE depends on the area you want to compare SM to: a house in SM should be a LOT MORE than an equivalent Rancho Cucamonga or Temecula.
If someone's income is not sufficient for the Westside, there are plenty of venues for home buying which, on average, cost LESS than the Westside. Some are close (i.e. Mid-Wilshire is close to Culver City) some require a commute.
Mid-Wilshire all the way out to Rancho Cucamonga is the prescription for those unwilling to play the (Westside) supply and demand game.
Hey 6:14PM, quit being a troll.
The entire world economy is in freefall because of the irrational behavior of people. The Westside will not come out of this untouched.
How much is Westside property worth? Try 1996 prices.
As of now, nothing is selling so your opinion is worth about as much as my "genuine" Renoir hanging in my garage.
Impressionists are SO yesterday.
The 'supply and demand game' only works upwards when demand outstrips supply.
As the thread here shows, there's a lot more supply than demand going on at the moment.
And, 'more' and 'lot more' are qualitative measurements, not quantitative ones.
For the record, I can 'afford' to pay - in cash mind - for a lot of these places, but I choose not to.
Because a) for middle-income tract homes, which the vast majority of these are, the prices are delusional.
And b) if the attitude shown by yourself is the norm in the Westsdie, I'd rather live someplace where my neighbours don't look down their noses at people who make less than 250K a year - the kind of income you'd need to afford a).
PS": Andy Goldsworthy and Jamie Hewlett are much more my cup of tea.
Hey 6:14 -
Well said! I love Patrick.net, and spend most of my time there, but LateSummer has some great posts and great informaton.
The people who post on this board such as speedingpullet are very smug and are obsessed with wishing that the Westside will be the same price as South Central.
They suffer from the same kind of delusions that people suffered from when they bought on the uptick, only those people thought they would get rich from a house whereas these people's thought disorder leads them to the conclusion that prices will go down to 300K in the Westside (just look at their other posts).
Just look at Anonymous 6:44- such an aggressive post with so little evidence and so much fantasy. 1996 prices. They need some psychiatric help.
this is great. a real discussion. 500k is probably the equilibrium price for an acceptable 3/2 starter home on the westside. hope house prices will hover around 500k for a few more yrs so that i can have enough of down payment as well as a cash cushion.
1996 prices, yeah that's delusional.
What's more delusional is the Democrats and Obama hitting America with a 2 Trillion Dollar deficit for this fiscal year.
Added to that the 24 Billion Dollar state deficit and we're talking hardly any money at all!
In fact, none of this is going to cause prices in the Westside to go down. Prices are going down everywhere else in the world, but they won't go down in the Westside.
That 3/2 1950s tract home on a 5000 sq foot lot is really worth $550,000.
no one is saying that it won't go down, just not down to 300k for 3/2 starters.
I beg to differ. $300K - $400K for starters in Mar Vista, Culver City, Beverlywood area. $400K - $500K for Santa Monica, Venice, Westwood, Brentwood etc...
Next leg of foreclosures (ALT-A and Prime) knocks off a nice chunk on the Westside. 2015 before we see any hint of appreciation..
why cant prices drop to 1999 price levels? Have incomes really increased that much in the past ten years? The houses have all just gotten a decade older and more worn out.... Shacks are shacks no matter what zipcode they are in....
It's simple, people. Look at median incomes of the zip codes in question and multiply by 3-5x. If $500K in Culver City is a pipe dream, you have to ask yourself what the likelihood is of median income in Culver City being $100-150K. Hint: not bloody likely.
In a "normal" market, that should be your bogey. In the aftermath of this historic bubble, prices, as after most bubbles, are quite likely to overshoot on the downside.
It's different here. Isn't it always?
Hi Latesummer,
The facts you provide on your blog are very helpful for reviewing the downward trend in housing prices, and I really appreciative your work aggregating the information for us. The problem is, with all the facts you also interject a heavy dose of speculation about bottom pricing.
The fact that Westside housing prices are dropping indicates a downward trend, but NO ONE knows where it will end up. Your suggestion that it will end up at 300K-400K (MV/CC/BevW) is speculation at best. Other blog viewers/posters seemingly cannot help themselves from speculating either.
Other posters, such as Anon 6:44 PM and speedingpullet, also post speculative and baseless opinions about what an area is "worth", yet they fail to grasp that the Westside, while also subject to price decreases brought about by the myriad of financial and psychological forces, is a different market than other areas. The Westside will continue to be bought and sold at a premium over other inland areas, and that will not change. IIRC, one of the previous posters indicated, perhaps Ranch Cucamonga is a better area for their fantasy home pricing visions.
Finally, Bernie made a good post, as did a couple others above, using the old home pricing formulae, 3-5x income. This formula doesn't take into account gentrification, which is a major force on the Westside. The 3-5x rule may work in Watts, but not in Culver City as Bernie wishfully suggests. Bernie discounts the notion that their are enough people making 150K, but I think that there are more than enough people making that salary (combined incomes especially) who are moving into CC. I live in CC and I'm meeting them every day (more slowly this year!).
The bulk of families making little money, which in turn feeds into median income statistics, and being priced out of CC. The have handed their homes down for several generations and, as of the last bubble, sucked a lot of equity out of their houses. They are now at a loss about what to do: they have little to no equity left, have higher property taxes and they are looking at being underwater soon. The 40-60K income families who didn't refi, cannot keep up their properties. You see them all over the neighborhoods (i.e. Vets Park, Helms district). They keep handing their homes down to family members, but these people make little money (compared to rising median incomes) and are hard pressed to live in this area. Eventually they will move, and, as it has been doing for over 15 years now (I've lived here for 20) the median income will rise.
Do not get me wrong, I am convinced that home prices on the Westside will fall- and it is about time! The idea that Culver City will be affordable to a person making 50K a year, however, is a pipe dream. Those days are gone and, for better or worse, people making such income need to look in other areas.
"Other posters, such as Anon 6:44 PM and speedingpullet, also post speculative and baseless opinions about what an area is "worth", yet they fail to grasp that the Westside, while also subject to price decreases brought about by the myriad of financial and psychological forces, is a different market than other areas"
In what way is Westside different?
Are people immune from losing jobs?
Are people's wages increasing in line with the apreciation of their houses?
Did they all pay for their houses in cash, rather than taking out loans?
Other than scale, is there any reason why people on the Westside are any less b0rked than their counterparts in places like Rancho Cucamonga or Temecula?
"This formula doesn't take into account gentrification, which is a major force on the Westside. The 3-5x rule may work in Watts, but not in Culver City as Bernie wishfully suggests."
The 'rule' is actually 2.5-3x income, not 3x to 5x. And whether its Watts or Bel Air, it applies across the board - anyone sinking more than 30% of thier income into a mortgage is asking for trouble - whether they're paying off a $150K mortgage in Watts or a $1.5 million one on Roscomare. Again the scale is different, but not the fundamental principle.
In fact, I'd argue that the mortgage in Bel Air is in more difficulty now than the one in Watts: the subprime wave has pretty much crested, people in Watts who bought more than they could afford have either lost thier places, or found some way of paying the monthly nut.
However, the people on Roscomare are waiting till later this year for the Alt-A resets. And if you think that 'rich' people didn't indulge in creative financing to get into property, then I have a bridge in Havasu City to sell you ;-)
And, you accuse me of saying 'speculative and baseless things' and then go on to point out your 'belief' that's there's a lot of people making over $150k a year. Even if it were true - and you give me no data - it still means that Latesummer2009 is spot on with the projection that prices will level out around $400 - $500K.
Look, I understand that you believe that anything over 3x income is 'the new paradigm' - its not. Before bank's heads exploded, it was rare to be able to secure a loan for more than 30% of your income, and that's been true for about 100 years. The fact that people are stretched to 4, 5, 6 x income is the problem, not the new paradigm.
I understand that you honestly believe that 'its different here'. Its not. Unless you can decouple the whole of Westside and sail it out to sea to create your own Magic Kingdom, the Westside will be affected in the same way that the rest of L.A/LA County/SoCal/CA is - lower wages, higher unemploment, rising inventory, lower sales prices.
I understand you honestly believe that 'rich/foreign people will flood the area and save house prices'. They won't. There's far fewer of them than you realize, and they're hurting as bad as anyone else. If you mean really really stinking rich - there's even fewer of them, and what makes you think that they'll come and settle in a 3b/2b on a 7000 sq ft lot in Culver City with their massive wealth? They're all looking for estate foreclosures in Monte Nido, not starter homes in Mar Vista.
Yes, there's been apocryphal stories all over the country about bus-loads of Foreigners coming and buying up properties. Again, there's not nearly as many of them as you'd think, hardly enough to pay top money for all the properties on the Westside. And if they're buying for speculative purposes, they've missed the boat by about 30 months.
I'm not saying that I'm right - no one really knows what's going to happen, and I could be completely wrong.
But conversely, I'd like someone to prove to me that the whole thing isn't going to come crashing down. Vague hopes that somehow its different, or someone will save us doesn't really cut it with me.
So, if you think I'm wrong - show me how I'm wrong.
This is fascinating, and I've been following the debate closely. Thanks to all the posters! Interestingly, aside from the facts that prices are dropping, this is all opinion.
Pullet- you keep asking the other people to show you evidence, yet you have shown none yourself, and actually you are just voicing you opinion. Why not follow your own advice?
It looks like you have ignored the above posters comments about the income to debt multiplier rule. If I read it correctly, they are stating that the incomes are increasing in these areas, but, and I may be wrong, you are saying that they are not. In one scenario, as median incomes rise, your use of the multiplier formula supports 500K homes. If, OTOH, the median incomes are stagnant, then the neighborhoods are, by your estimation, unfordable and they will crumble into low prices, yada, yada.
So, for example using your formula, a couple making 200K, which is NOT an uncommon scenario on the Westside, can easily afford a 600K home. More and more people making money necessary to buy in the 500K's are moving to the Westside. They are leaving the Hollywood hills, leaving Silver Lake, Pasadena, etc. The professionals keep coming to Mar Vista and the mechanics, etc., are moving East.
The reason neighborhoods incomes are rising is NOT because blue collar workers are being paid more, or, for that matter, others such as teachers, infrastructure related jobs, etc.- in fact these professions have seen relatively stagnant increases in wages (certainly when you compare their earning to the cost of living).
The desirable Westside neighborhood family incomes ARE rising because professionals are moving in and the old guard is moving out.
Median incomes for neighborhoods are based on people who have lived in these neighborhoods for 30 years along with those new people moving into the area. The incomes of those moving in are higher, and thus the median income would be higher. A better descriptive statistic would be a 10% trimmed mean, which would show you a higher per family income. The trends are obvious and undeniable: median incomes for Santa Monica have been rising.
Now, are they rising at a rate that will support a million dollar home (SM; 700K in CC), NO! But there are plenty of DINKs who are moving from other areas who make enough money to afford premium prices (note: premium as in costs more to live on the Westside, which it should).
I really agree with what most people are saying here, and, interestingly, from a distance it looks like everyone is agreeing on everything but how low the home prices will go. This is anyone's guess.
Best,
Gary
Fascinating.
The houses we've looked at in CC/90232 and MV, if desirable in any respect, are disappearing from market within 10 days, at prices anywhere from 650 to 800K. Vets Park is becoming highly sought after property, 50s tract houses or no.
I lived in New York a long time -- through at least one recession and one boom -- and am long used to hyper-inflated prices that seem absurd. Why? Because people are willing to pay a premium to live on Manhattan Island. The prices rise and fall with the times -- but they remain absurd. If you want to live there, you suck it up, lie back and think of England.
It seems the Westside is becoming no different. I know plenty of people who want to live there, only want to live there, and won't hear of living anywhere else. They have plenty of money in savings and are willing to wait for even the hint of a bargain. If prices drop out west, people will buy. But the idea of westside pricing dropping to pre-1996 levels, from this admittedly unscientific perspective, seems about as likely as Manhattan apartments dropping to 1996 levels. Which ain't gonna happen. Would that it might...
"The houses we've looked at in CC/90232 and MV, if desirable in any respect, are disappearing from market within 10 days, at prices anywhere from 650 to 800K."
References, please. Or I'll save you a lot of trouble and just say, B.S.
I lived for over 40 years on the westside and know 90066 and 90232 like the back of my hand. There are very few homes in either of these zipcodes that are really worth $800,000.
Pure fantasy. I got it, you must be a REAL-TOR.
--"It seems the Westside is becoming no different. I know plenty of people who want to live there, only want to live there, and won't hear of living anywhere else."--
Utter nonsense. 10 years ago no one wanted to live in 90066. There was (and is) nothing "special" about 90066 or 90232. That Culver City got 2 blocks redeveloped hardly qualifies "downtown" Culver City to send its zipcode RE prices through the stratosphere.
The rise in prices on the Westside parallel the bubble prices of Lancaster and Palmdale. That is, they went up for exactly the same reasons and it had nothing to do with the intrinsic value or desirability of the area and homes.
Just a few years ago you could buy a home in PV (90274) for what homes were going for in the better parts of Mar Vista. My brother lives in Rolling Hills Estates with a million dollar view of L.A.
90274 "feels" and is infinitely better than 90066 or 90232. The PV school district is no comparison to the crappy schools in 90066/90232. The homes and neighborhoods of PV are much nicer and crime, well there is no crime in PV.
There are lots of better and more desirable neighborhoods than 90066 and 90232. Mar Vista and Culver City are wannabee zips. It's like having a Toyota Corolla trying to pass as a Lexus LS.
Hi Taylor,
You are dead on. As you can see, the fantasy of cheap Westside homes drives others to ignore facts, and react smugly to your observations. They are predicting 1996 prices in Culver City, which they also consider to be an undesirable area. What a load of hoey!
Your post, and others above, have tried to point out that people are willing to pay a premium to live in CC.
Even our gracious host Latesummer2009 has predicted a 50% drop below the market high (or, as he says, "(50% below the peak) seems to be what buyers are willing to pay." I'm sorry, but I tried to bid 20% under asking price for TWO homes close by (one in 90066, and one in 90232) and the homes both sold within 1 week of being on the market. AFAIK, they both sold at or near asking price.
Latesummer2009 and others have some facts correct and they have done us all a service by bringing the evidence to light: home prices will continue to drop due to another wave of loan issues. Their idea of a bottom, however, seems highly unrealistic, given the desirability of CC/Mar Vista/SM.
To point this out, you must threaten their fantasy that the Westside isn't being bought by people with (relatively) more money than who used to live in these neighborhoods. The fantasizers come back with a comment about "tract homes" or "these neighborhoods are trash" etc.). Indeed, once they were but now they are undergoing a process that has spread throughout the entire Westside: out with the old, in with the new. And it just so happens that the "new" has the money to afford a 600K home.
As I said, unrealistic and a fantasy based on a desire to have the Westside magically become affordable for those who are not making a high enough wage.
Has anyone driven down Centinela between Venice and the Marina Freeway? What do you see?
Lots of really old and cheap apartments that are filled with poor Latinos. Take a left on Culver and head east--what do you see? Lots of cheap apartments filled full of poor people.
Go into the neighborhood bordered by Culver, Centinela, Venice and Lincoln. What do you see? Lots of small cheap houses with half of them still occupied by the original owners.
It must make you feel real special when you pay $650,000 for a 1955 3/1 tract home that is next door to the same house inhabited by a retired gardener who paid $12,000.
On the block where we sold our family home back in 2003 for $575,000, there were several homes bought by young couples with kids. To see someone fork out over HALF A MILLION dollars for a cheap, small, 3 bedroom one bath house that used to be owned by a Japanese American gardener who never made more than $40,000/yr was just a sight.
And the new "hip" neighbors were always the pits--their attitude was that they just spent over half a million dollars on their home and they expected the neighbors to treat them like upper-class folks.
Once one of the old neighbors parked a boat on a trailer on the street in front of the new young couple. The husband just threw a FIT! He got all pissed off because he didn't like a boat parked in front of his house!
The problem was that there were lots of boats in the neighborhood. And there were lots of people working on their cars in the neighborhood. 90066 is a lower middle-class neighborhood.
It isn't 90274.
I grew up in 90066 and I loved it but it's being ruined by a bunch of over-leveraged wannabee snobs who drive leased BMWs and who are barely able to afford their mortgages.
The prices are falling--it's just a matter of time for these Johnny come latelys.
"I grew up in 90066 and I loved it but it's being ruined by a bunch of over-leveraged wannabee snobs who drive leased BMWs and who are barely able to afford their mortgages."
You are dead on with respect to those "over-leveraged wannabee snobs who drive leased BMWs and who are barely able to afford their mortgages."
The people with money (either earned or from parents) choose to live in Brentwood, SM or other places bc those places are nicer, cleaner, better schools, closer to work and have yuppy strips. Plus, they are not too comfortable living next to too many ethnic folks. I am not talking about color. I am talking about folks who are bilingual and enjoy life the same way in their home country as in the US.
Prices will fall. Even prices in places like San Francisco (in the city) have fallen. CC will go to about 500k for the places that are selling for 650k now. Give it a couple of years.
Prices on the Westside went up in parallel to prices in Palmdale and Lancaster. There's a story today on how prices in the Antelope Valley are now back to 1989 values.
Remember, the bubble was fueled from the bottom.
The bottom has disappeared and it is only a matter of time when the "good" neighborhoods are hit.
In other words, no one is trading up by using the leverage from their current home. Can you say "POP"?
I live in 90024 (Westwood) and have lived here for most of my life. For as long as I can remember, housing in Westwood has stayed pretty close to the 3x yearly income... until this bubble.
The current median income in Westwood (through Redfin) is $75,479.
There are simply no homes or condos in Westwood going for $226K. Even doubling the median (for say, a well paid couple) just barely makes a few old condos "affordable".
Incomes have absolutely not kept up with the RE bubble prices, and the makeup of the community really hasn't changed much. So talk that the Westside is "special" or somehow immune from returning back to historically normal prices is just not backed by past history.
Frank
75k median income in westwood does not sound accurate at all. after taxes, that's barely enough to pay for the basics: rent, food, car (Honda accord not BMW), car insurance, student loans etc. There are a lot of renters in westwood so i think that must bring down the median income quite a bit. Knowing the median income of home owners (not condos) in westwood would be more informative. my guess is that the median household income for a westwood homeowner (who did not buy their homes 30 yrs ago or inherited the home) is at least 250k and more. We are talking about successful doctors and corporate lawyers and full professors in the higher paying fields that are really the ones who can afford those beautiful houses in westwood.
According to the 2000 Census the median household income for 90024 was $47,573. The median family income was $89,960.
Out of 16,763 households, there were:
$100,000-124,999: 1,027
$125,000-149,000: 548
$150,000-199,999: 809
$200,000+: 1,962
Out of 5,480 families:
$100,000-124,000: 396
$125,000-149,999: 325
$150,000-199,999: 563
$200,000+: 1,365
So 45% made> $100,000. Only 23% more than $200,000.
Now you can adjust this for inflation, but even then most households did not have an income that would sustain a high six figure median house price.
i think the inheritance and sold to child at significant discount needs to come into place as well.
23% in westwood are homeowners and the rest are renters. that sounds about right. 200+ could be mean anywhere from 200k to millions as well.
There are more than 1400 SFH in 90024, though.
You have not interpreted the data correctly. Right now EVERY SFH in 90024 is in the high six figure range--there are thousands of homes. Most condos also cost more than $500,000.
So the income distribution of the residents of 90042 don't support the current prices.
so u have $200,000+: 1,365 (again 200+ could be 500k easy in westwood)
currently 1400 SFR in the high six figures (i think it is more like 1mm to 1.25mm)
you add in the the folks with family down payment gifts and the numbers add up quite nice. probably more people with enough money to buy 1400 SFR.
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