Sunday, July 26, 2009

Mar Vista Meltdown Back to 2002 Prices

Mar Vista which lies in the 90066 zip code, has a wide variety of homes ranging from high end oceanview properties in the North, to entry level homes in the South. Let's see what's happening to the entry level homes in this Westside market. The home we'll look at is:


112460 Aneta Street, 90066
3+2, 1413 sqft, Lot size 5800 sqft
Built in 1953
SOLD on 12/23/ 2003 for $550,000
SOLD on 7/16/ 2009 for $450,000


Thats a steep drop (-44%) from it's peak pricing of $800,000 in 2006 and puts us into 2002 pricing territory. Granted, this is the low end of Mar Vista, yet these are the types of transactions occurring now. Not having to get Jumbo financing is a huge advantage. Rolling back to 1999, when the housing bubble really started taking off, this house drops even more, to $200,000. If we consider that we are halfway through this cycle, by adding another 3 years of declines to 2012, this property still has a ways to go.

What implications could this have for the high end on Mar Vista Hill?

36 comments:

Anonymous said...

There's a great example of how to lose a $100,000 down payment. I wonder how many more will fall into the same trap now?

Anonymous said...

I can't but help think that you are really grasping at straws to support your housing market predictions on the Westside.

You chose a house sitting opposite a (very ugly) commercial structure, that is a stone's throw to Jefferson Blvd.

Most importantly, you use one home to discuss a trend?

Anonymous said...

Realturd Alert... Entry level homes on the margin are usualy the canary in the coalmine. $100,000 is alot to lose anywhere.

Anonymous said...

latesummer2009,

Would greatly appreciate it if you could provide some household income data from IRS filings for last 3 yrs based on zip codes. That would be very helpful to see who is living in CC/Mar Vista and whether the prices are really out of control.

Anonymous said...

I use redfin for income listings. If you click on a specific listing and scroll to the bottom there is a link to a website that publishes income distributions in any given neighborhood.

As for the property example, I suspect that when it sold at peak pricing it had a commercial building in front of it as well. How anyone can see the same property dropping 44% in value as not an indicator is beyond me.

Interestingly I just had a conversation about housing prices with my husband yesterday. He asked if the market could be bottoming just because so many people believe it so much. The answer was no, you cannot charge more than people have for long, prices have to drop. People who are out of work or earning less cannot spend as much. Prices that are 10 and 12 times annual incomes are not sustainable. How anyone could call a bottom now is beyond reason.

Anonymous said...

One house is not a trend. It is just one house.

Get some real data showing 44% price drops across sale prices on the Westisde, and then you can talk all about leading indicators and impending wide-scale price drops.

Otherwise you are the real turd who is smothering the canary.

Anonymous said...

There was a time when nothing sold for 40% less than the last time it sold, now there is at least one. Trends start somewhere, it is valid data, and is appreciated.

Anonymous said...

OMG- look(!):

10923 Barman Ave, Culver City 90230
Recently Sold: $707,000
Sale History
04/29/2009: $707,000
07/26/2002: $325,000

OMG- The market is back! The market is BACK!!

Oh yeah, I found ONE HOUSE that actually sold form MORE in April than it was its Jan 1, 2009 value!

OMG- It sold for a HEFTY profit over the 2002 sale price.

OMG! The Market is back!!!

(Oh wait..this is only one house..)

Anonymous said...

I have said this more than once, ppl have money out here. They can't afford the 1mm home, but with mommy and daddy's down payment, they can afford 700k with ease. children of 50-60 something successful professionals.

My Indian Name: "Laughs At Knife-Catchers" said...

Good to see there are still Kool-Aid-drinking knife-catchers out there.

Home prices are still way out of line with incomes. Credit is tighter than ever. People, even professionals, are losing jobs like hell. I see it in my community.

THERE WILL BE BLOOD.

Anonymous said...

I have heard this hooey forf 45 years living in SM and Venice. People always run around crying "who has money to afford this area?" In all that time I have seen some ups and downs in the price of houses, but NEVER has there been a shortage of people who want to and can afford to live here. NEVER.

Anonymous said...

The LA Times said prices of houses are UP!

How does this reconcile with your ideas about continual decreases in prices????

Latesummer2009 said...

We have never seen a housing bubble to this extreme before. With banks policing themselves and going nuts handing out loans to anyone that could sign on the dotted line, we are in unchartered territory. Coming price declines on the Westside will be a wakeup call as underwater mortgages begin defaulting later this year due to loan recasts. God forbid if they have to raise interest rates, which should already be flooding the market with transactions.

Anonymous said...

See you later suckers. I am moving to Kansas for a tenured spot and finally leaving LA. 300k will go along ways there and give me enough space for indoor/outdoor putting green and driving space like the one at Roger Dunn, and 3000 more sf ft of quality living space.

Anonymous said...

but then you'll be in Kansas...

Anonymous said...

i'm a very active realtor. i study WS property sales every day. i think there is still room for prices to come down. financing is not TOO difficult to get now. you just have to have a job!! and be willing to show proof thereof. i'm seeing 2-7 offers on well (reasonable/low) priced homes. I'm working with many young (employed) buyers that have been waiting and are eager to buy a home. WS values have not dropped 40% on an aggregate basis and one-off examples are not good indicators of the broader market. i anticipate continued (moderate)decreases in prices for 8-10 months followed by stagnation of Aggregate pricing for several years.

Anonymous said...

Get out Troll! Great advice to a young inexperienced buyer to trap them in a house. And exactly what kind of offers are those houses getting? Absolute low ball I can imagine. Seller hoping for a dumb buyer or better yet, a desperate agent. 8-10 months is pretty exact. Perhaps at the start of next summer when MSM hype as at it's greatest?

May be you should find a job!! and proof thereof....

JBR said...

I don't think anon@10:13 is a troll at all. I think he/she is optimistic, but based on what's happening in the market *right now*, it's not an unreasonable opinion.

My belief, and my $$ is where my mouth is, is that waiting another 12-18 months to buy is gonna get you a lot more house for the same money you would spend today. We'll see. There sure is a lot of inventory that will *never* sell at list price though... :-)

Anonymous said...

Anon @10:13PM,

Thanks for participating in this discussion. You seem to be presenting a reasonable p.o.v.

Do not let the negativity drag you down- many hear are frothing for a total collapse of house prices on the Westside, so that they can afford to move here.

I'm afraid it is a case of envy that prompts them ignore anyone suggesting that the Westside may not drop to 1999 prices.

Anonymous said...

It's not surprising there is an uptick in sales, for the following reasons:

1. Fed suppressing interest rates

2. Buyers rushing to take advantage of home buyer credit, which expires this fall.

3. End of fear that he financial system might collapse and the demand that built up for 8 months while the fear existed.

4. Buyers that think the market has fallen enough to be safe on a 5-10 year hold and impatient to get into a house.

The big question is, how sustainable is this demand. If unemployment stays at its current level or worse, look for the demand to subside late in the fall.

Anonymous said...

" many hear are frothing for a total collapse of house prices on the Westside, so that they can afford to move here."

What the hell kind of an idiotic statement is that? You think everyone that wants to buy at lower prices can't currently afford the current prices? That's moronic.

Anonymous said...

It's not realistic that westside prices are going to fall to 1999 levels.

They're going to fall to 1989 levels!

This blog is one of the funniest on the net with its housing bulls.

"It's different on the Westside."

Anonymous said...

This blog attracts morons like SM attracts homeless people. These morons come here to keep hope alive that their meager salaries will be sufficient to buy property on the Westside. They rage against the economic machinery. They need to move to Downey with all the other blue collar, disenfranchised people.

Anonymous said...

"move to Downey" LOL!!!!!

I have enough money in the bank to buy a $4,000,000 home right now. The snobs on this site really makes for some entertaining reading!

Quit giving westsiders a bad name.

Of course, I could be lying about the $4,000,000--it might be $4,000,000,000 or $400. What's a couple of zeros....

Our present leader doesn't seem to mind!

Anonymous said...

There's really only one bitter westsider, who obviously bought at the top, who comes here to sneer at the people waiting to buy. Sucks that they were all smarter than you and will get the same home for 60-70% of what you paid, doesn't it 7:20? But hey, you win some and you lose some. And you lose bigtime. Better luck next bubble.

Jeff said...

So, I'm kind of new to looking at housing and been looking at some Westside listings. Seems to me stuff isnt selling at the bubble price, but the second it get reduced maybe 10% or is 10% under comps it get multiple offers. Whats peoples thoughts on this. Are there that many people lined up to buy here?

Anonymous said...

Poverty always brings out the worst in people. They are clawing over one another trying desperately to make 60/70% decreases appear.

IT AIN'T GONNA HAPPEN.

You will be lucky to see another 10% drop on the Westside over the next two years.

Goodbye, good luck, don't let the door hit your %#% on the way out, and enjoy your SFR in Ingelewood. It is in your price range.

Anonymous said...

Denial is not a river in Egypt.

Anonymous said...

Hi Jeff,

The rule of thumb in a dropping market is to list 5% below the last comp that sold. There are always buyers at an appropriate price and most people take a short-term horizon. Some people will buy no matter what because they hate renting and it is a lifestyle choice. I personally believe prices will go down much further, but as you can see from reading these blogs not all agree. The bottom line for me is that prices come in line with rents on the long term. They are still too high. In addition prices should be in proportion to local incomes. As incomes drop and people lose jobs, prices drop. This process can take a long time because homes are not very liquid. Less desireable areas will drop faster than more desireable, but all will drop.

There are those who believe that some of these areas will be immune because they are such phenomenal places to live and the owners are so rich they don't care about money and never take losses on investments or lose jobs. You can decide what makes the most sense to you.

Jon H said...

Anon July 30 @9:37

Thanks for the information. I always wondered what the approach for listing price was (in a market like this). After looking at property sale prices over the last 6 months, and new listings, it looks like many sellers do not follow that rule ;-)

It is only a matter of time before sellers have to give up the market psychology of 2004, where every home was a goldmine of wealth appreciation and every buyer a prince-to-be. Every week I go to open houses hoping to get back to the business of buying a home for family and quality of life, and, secondarily, a reasonable long-term investment.

Unfortunately I am still hearing the hype- "there is gold in them there hills" from RE agents eager to move homes by using the Siren's call of a market rebound. **sigh**

The market needs to move from the fictions and mythology and come back to rationality. This means, too, that SFR speculators back away. These "flippers" are helping to keep up the lower end, entry Westside homes. Admittedly, it is nowhere near the activity of 2002-2007, but people are still buying old 2+1, throwing paint on the walls, (cheap) carpet on the floor, a few new plumbing fixtures and some sod in the yard and calling it "upgraded" for a solid 50-75K more than it would be as a "fixer upper." This is eating into the entry home inventory.

(Sorry for my rant; thanks for your info)

Jon

Jon

Anonymous said...

Thanks Jon,

I'd like to buy too and certainly more than qualify, but I don't want to flush away my money on overvalued property. I have owned in 4 places I have lived and rented in about the same. A yard is a nice thing, but not as nice as keeping my expenses low. My husband's job has never been stable enough for me to not care about resale.

I had no idea there were still flippers out there. I prefer to buy a well cared for home in original condition and fix it up the way I like. I have done 4 remodels so far. I finally learned to fix the place up as soon as I move in, then live in it nice before selling instead of fixing up for the next owner. I have no desire to overpay for a totally generic look. I have seen so may granite countertops and stainless aplliances with poor quality underneath that I am getting sick of it. The condo I am renting how put in improper subfloor in the bathrooms and the tile is already popping up a bit. My last house had the same poor quality under linoleum, but that house cost me $265k, someone paid $800k for this piece of junk. Some of the plumbing was designed poorly and the wood floors are not site finished. The surface looks great, but the substance is not there. I would nto be surprised if the developer gets slapped with a class action lawsuit some day.

Anonymous said...

Hello 9:02 a.m.

You said "I have seen so many granite countertops and stainless steel appliances with poor quality underneath that I am getting sick of it."

By "poor quality underneath," do you mean the cabinets?

Jon H said...

Anon 7-31, 9:02AM

I couldn't have said it better myself! The areas we're looking in, Culver City, Del Rey and some other areas, are testament to the generic look.

I'm not sure their are a lot of property flippers, but several of lower priced home open houses we have been too, particularly the first weekend out, we see the same thing over and over: a guy with a couple of his "crew" running through the house taking measurements.

I shouldn't assume they, the speculators, are buying, but boy are they looking!

Let's keep the generic out of the Westside! ;-)

Jon

Anonymous said...

Poor quality underneath means htings like electrical problems, poorly designed plumbing and putting in the wrong kind of subfloor so the floor needs to be replaced. They put in expensive locks that look great and don't work properly so most owners are replacing them. The cabinets look fancy, but are particle board. By underneath I mean in areas that are not obvious to someone looking.

Anonymous said...

Jobs is a big issue! I know a lot of LA'ers are trust-funded but a big source of jobs is the entertainment industry. Not just actors, directors, and writers but the rank and file studio employees, production crews and staff of post-houses, production rental companies and the like. These jobs are a big source of middle class home buyers in LA.
Does anyone remember what happened when the aerospace industry left LA? Huge price drops because good jobs dried up overnight. Same thing is happening again in the ent. industry. With the studios focusing on fewer tentpole movies and studio staffing decreasing due to the move to digital distribution, ent. biz jobs are drying up. It's like Runaway Production Part II with shows being produced in NM, Connecticut, Chicago, and Canada. A HUGE source of jobs is leaving LA along with the business owners who serve these people.

latesummer2009 said...

The results from our reader poll are in:

Price of a Mar Vista Starter at the bottom:

$200-$250K (31%)
$251-$300K (14%)
$301-$349K (26%)
$350-$400K (14%)
$401K+ (15%)

That's 85% that believe the price of a starter home in Mar Vista will land somewhere in the $200Ks or $300Ks. That's quite different from today, which is somewhere around $600K. If this becomes true, you could lose your down payment (20%) and still end up underwater for a long time.