Monday, September 7, 2009

Westside Area Sales Drop 93% from it's August 2005 Peak

Bel Air, where the "Prince" lives, has dropped a jaw-dropping 93.3% in sales volume from August of 2005. Other areas such as Beverly Hills, Santa Monica (North of Montana), (Ocean Park/Sunset Park) and Brentwood are all off at least 80.0%. It seems the "housing market recovery" isn't here, as the high end is getting worse.
According to Melissa Data, here are the August numbers ranked by biggest Sales Volume declines, from their 2005 peaks.

1) Bel Air 90077
(2005) 29 sales, $2,435K avg = $70,615K
(2008) 7 sales, $1,779K avg = $12,453K (-82.4%)
(2009) 3 sales, $1,587K avg = $4,761K (-93.3%)

2) Beverly Hills 90210
(2005) 54 sales, $2,315K avg = $125,010K
(2008) 8 sales, $1,627K avg = $13,016K (-89.6%)
(2009) 9 sales $1,802K avg = $16,218K (87.1%)

3) Santa Monica 90402 (North of Montana)
(2005) 26 sales, $2165K avg = $56,290K
(2008) 13 sales, $2,344K avg = $30,472K (-45.9%)
(2009) 4 sales, $2,056K avg = $8,224K (-85.4%)

4) Brentwood 90049
(2005) 69 sales, $1,434K avg = $98,946K
(2008) 26 sales, $1,419K avg = $36,894K (-62.7%)
(2009) 17 sales, $1,154K avg = $19,618K (-80.2%)

5) Santa Monica 90405 (Ocean /Sunset Park)
(2005) 39 sales, $892K avg = $34,788K
(2008) 11 sales, $812K avg = $8,932K (-74.4%)
(2009) 9 sales, $776K avg = $6,984K (-80.0%)

6) West Hollywood 90048
(2005) 33 sales, $1,120K avg = $36,960K
(2008) 14 sales, $1,061K avg = $14,854K (-59.8%)
(2009) 8 sales, $941K avg = $7,528K (-79.6%)

7) Century City 90067
(2005) 11 sales, $1,167K avg = $12,837K
(2008) 3 sales, $1,010K avg = $3,030K (-76.4%)
(2009) 3 sales, $918K avg = $2,754K (-78.5%)

8) Culver City 90232 (Carlson Park)
(2005) 25 sales, $765K avg = $16,830K
(2008) 2 sales, $847K avg = $1,694K (-89.9%)
(2009) 5 sales, $788K avg = $3,940K (-76.6%)

9) Santa Monica 90403 (North of Wilshire)
(2005) 46 sales, $938K avg = $43,148K
(2008) 12 sales, $1,041K avg = $12,492K (-71.1%)
(2009) 13 sales, $782K avg = $10,166K (-76.4%)

10) Malibu 90265
(2005) 45 sales, $1,521K avg = $68,445K
(2008) 9 sales, $1,032K avg = $9,288K (-85.4%)
(2009) 13 sales, $1,352K avg = $17,576K (-74.4%)

11) Venice 90291
(2005) 37 sales, $1,184K avg = $43,808K
(2008) 12 sales, $1,167K avg = $14,004K (-68.1%)
(2009) 13 sales, $882K avg = $11,466K (-73.9%)

12) West LA 90025
(2005) 64 sales, $885K avg = $56,640K
(2008) 20 sales, $775K avg = $15,500K (-72.2%)
(2009) 24 sales, $658K avg = $15,792K (-71.1%) Tie

12) Westwood 90024
(2005) 42 sales, $1,127K avg = $47,334K
(2008) 15 sales, $764K avg = $11,460K (-75.8%)
(2009) 19 sales, $720K avg = $13,680K (-71.1%) Tie

14) Beverlywood 90034
(2005) 53 sales, $781K avg = $41,393K
(2008) 14 sales, $699K avg = $9,786K (-76.4%)
(2009) 22 sales, $601K avg = $13,222K (-68.1%)

15) Marina del Rey 90292
(2005) 41 sales, $1,027K avg = $42,107K
(2008) 8 sales, $866K avg = $6,928K (-85.6%)
(2009) 21 sales, $659K avg = $13,839K (-67.2%)

16) Pacific Palisades 90272
(2005) 46 sales, $1,640K = $75,440K
(2008) 16 sales, $1,342K = $21,472K (-71.6%)
(2009) 16 sales, $1,840K avg = $29,440K (-61.0%)

17) Culver City 90230
(2005) 65 sales, $533K avg = $34,645K
(2008) 25 sales, $528K avg = $13,200K (-61.9%)
(2009) 38 sales, $442K avg = $16,796K (-51.6%)

18) Mar Vista 90066
(2005) 44 sales, $800K avg = $35,200K
(2008) 24 sales, $784K avg = $18,816K (-46.6%)
(2009) 26 sales, $693K avg = $18,018K (-48.8%)

19) West LA 90064 (Rancho Pk/Cheviot Hills)
(2005) 27 sales, $1,049K avg = $28,323K
(2008) 21 sales, $769K avg = $16,149K (-43.0%)
(2009) 21 sales, $902K avg = $18,942K (-32.2%)


In most cases, sales volume is dropping along with average sales prices. Keep in mind, the price per square foot is dropping as well. Even when the average selling price and/or sales volume went up from 2008, houses are selling for less per sqft. Those who bought from 2005 - 2007, while home prices were still increasing, are most likely underwater now.

Realtors are also under pressure, as their commissions have been cut drastically.

35 comments:

Anonymous said...

but so far the high-end sellers are "holding on" and either withdrawing listings or leasing rather than meeting the market price necessary to get a reasonably quick sale..

when and where will this end?

Anonymous said...

All you need is one or two foreclosures to bring the comps down. There are many "owners" of high end properties who are leveraged to the hilt. I suspect that the large amount of mortgages that are scheduled to reset the mortgage rates in 4Q2009 will be a catalyst for quite a few foreclosures. Also layoffs have subsided but not stopped. Foreclosure rates are increasing and nobody will be spared.

Anonymous said...

I agree, but it would be really nice to SEE some foreclosures North of Montana -

in other words, to have a post on this blog saying - property x was foreclosed on by the bank.

The bank is sitting with it. The bank MUST sell it for any price in the next few months- put in a low ball offer - this is a forced seller (bank)

I mean all over Palmdale and Lancaster you see this, and as a result people I know have been able to buy investment properties there for 80% off (in temecula also)

But so far I haven't seen a single property in 90402 where this is the story

I know they are coming but let's have discussion here when they hit

JBR said...

"in other words, to have a post on this blog saying - property x was foreclosed on by the bank."

OK... property x was foreclosed on by the bank. :-) 4 REO's in the canyon, and a few soon to be REO's in the # streets. It's coming...

Bank Owned-386 ENTRADA DR SANTA MONICA
Bank Owned-415 UPPER MESA RD SANTA MONICA
Bank Owned-511 W RUSTIC RD SANTA MONICA
Bank Owned-455 UPPER MESA RD SANTA MONICA
Auction-734 12TH ST SANTA MONICA
Auction-222 AMALFI DR SANTA MONICA
Auction-740 21ST PL SANTA MONICA
Auction-340 11TH ST SANTA MONICA
Auction-723 10TH ST SANTA MONICA

Anonymous said...

Auction-734 12TH ST SANTA MONICA
Auction-222 AMALFI DR SANTA MONICA
Auction-740 21ST PL SANTA MONICA
Auction-340 11TH ST SANTA MONICA
Auction-723 10TH ST SANTA MONICA

Does it make sense for me to go to some of these auctions ? I mean will the banks let some of them sell for less than the outstanding mortgage balance - just to get rid of them ?

JBR said...

At this point probably not... banks will bid the default amount, then try to sell them at "market" prices... I guess you could try though. :-)

Anonymous said...

Fantastic data- right on!!

It is very encouraging to see the market statistics- thanks for sharing.

Jon

Anonymous said...

Thank you
I was planning to go to the auctions to bid but now I realize it is a waste of my time

So I will skip it

Jon H said...

I regularly read the RedFin.com Los Angeles forum, and several posters have recently commented that homes on the Westside in the 600K range are seeing multiple offers. That these homes, if in decent locations, are being sold within a matter of days.

Now I also see many homes on the market for over 50 days in the 90066 (MV), 90230 (CC) etc., so I am wondering if it is just an issue of zealous buyers seeing a sweet spot (i.e. 600K)? Or what? Green shoots? Dead cats? Some speculate that it is due to the tax incentive (8K) but I really do not see how people buying a 600K house will get the credit. We are looking for a 500Kish house, and we make over 200K income and we do not qualify for the Obama tax credit for home buyers.

Each month I am more and more guarded about seeing prices in MV/CC start to crack in the low 500K's, but it isn't happening yet.

Any ideas about why things seem to be selling (if you believe the Redfin forums....)?

Anonymous said...

I believe things are selling due to impatient buyers who just want to get in to a house and the 600 range is where they exist. Many people I know think prices will bounce back in a year or two and want to buy now or forever be priced out. The delusion is astonishing. I know two families who had to move out of Brentwood and are renting their places for below their payment because they think prices will come back and save them. One is rented, but the other is even having problems finding a renter. They just keep hanging on and would rather bleed slowly than take a lump loss.

At some point people will lose hope and things will move, but we are at a stand off.

Anonymous said...

Can you give us some detail on the Brentwood house that is empty - how big is it and how much are they asking?

Reason is, all of us agree that it is dumb to buy now so for that reason I am looking to rent a big house for my family until prices hit bottom

Anonymous said...

Yes
Let's have more discussion of rental prices for nice three and four bedroom condos and houses here

dafox said...

JonH, you can get a $730k house using FHA only making $150k/yr (and qualify for the $8k credit). FHA will lend up to 43% DTI.

How unbelievably stretched, and how you're putting everything else on CCs just to make your house payment is another argument.

Anonymous said...

The Brentwood house is renting for $5,500/month I believe. It is up Kenter and totally pristine. It is not too far from the top of Kenter. It is listed both for sale and rent, they recently dropped the price. You can find it on Refin.

Anonymous said...

Jon H, good for you for living within your means. 200k income, 500k house. That's how all LA ppl should be living. the extra disposable cash should be saved and invested in productive ways such as education and medium risk LONG TERM (10-20 yrs) investments securities/bonds, etc.

Anonymous said...

I agree - people have to get back to buying a house for no more than 3x income.

Prices got crazy here in Santa Monica NOT because people started making more money but because everyone decided to buy a house at 8x income

Anonymous said...

I see our host is an educator. I was wondering if he would teach us a few more things.
1)What is the best way to find lot value?
2)Historical price per sq ft? Both lot and structure.
3)Replacement cost? Where do I find that out?
I never see these 'deals' before they are listed here or else where. Maybe I would be a knife catcher if I saw them ;)

Anonymous said...

Living within your means does not mean prices on the westside should drop to X price or 3x income (which I believe that has never been the case in desirable places on westide. Sure, back in the 90s CC homes were going for 250k, but, income was at 30-50k. To buy a house on starter end of the westside without overstretching your income is for folks who make 200k or more (which I am not one of) and anything less would mean the Valley or eastbound. Unless, downpayment is 30% or more. So ppl, save or have parents with $$$

Anonymous said...

Anon 4:40PM
I've lived in Westwood almost all of my life and I've owned here as well. Until 2002 or so, housing has *always* been within 3 - 4x gross income. Going all the way back to the 70s, at least.
8x or 10x median income(that's what it's in Westwood now, at least) is just not rational or sustainable in the long run. It's a pretty simple formula, based on reality, that has worked for centuries. No magical thinking or rich parents is going to change that any time soon.
I bet that a lot of the

FrankH

Anonymous said...

My friend's house is off redfin, they may have rented it or it could be under contract since the dropped the price some. I'll have to e-mail her at some point and find out.

Anonymous said...

Anon 4:40pm

I am someone who has more than $200k per year income -- in fact, my income is over $500k. But housing in truly prime Westside RE is not 3-4x even that figure. Beyond what surely must be a passed mania, how can such pricing be explained or expected to continue on?

Anonymous said...

Ahem....just checked the calendar...2009 is NOT over...you need to 'gross up' 2009 by 25% to 40% depending on how many months of data you have...amateurish analysis.

Anonymous said...

Anon, 7:36 you ask a perceptive question

Let's assume that you take home $600 thousand a year - there are certain neighborhoods that you can't buy in - For example, the Mapleton neighborhood just East of Westwood has houses that average $9 million each right now.

Beverly Park is another neighborhood you can't buy in - houses there, post crash, average $16 million

So you ask how is it possible for houses to cost this much.

Well, The first answer is that the rule of thumb is NOT that your house should be 3 times your income. Rather it is that your mortgage should be 3 times your income.

So there are plenty of peopele just like you, with $600 thousand income but who ALSO have a few million to put down.

Look up the rate of wealth transfer - the generation dying right now is the wealthiest in history and plenty of money is being handed down via inheritance.

Another source of wealth is the sale of businesses. You will see a number of doctors moving in to these neighborhoods and you will wonder how they do it - as you know general doctors and pediatricians make very little money on the West Side -

well, if you are a heart surgeon or brain surgeon, you can build up a practice, sell it, cash out a few million and then after selling it still make $600 thousand in income

Assume that a surgeon sold his practice for $8 million and paid capital gains and other taxes. He still has 6 million to put down. He buys a house for 8 million puts 6 down and borrows only 2

His 600 thousand a year income supports the 2 million mortgage quite nicely

My point is, Mr 600 thousand a year that you will see many people with the same income as you buying houses that are 10x their income - that does not indicate excess leverage it just indicates that they are putting a lot down

By the way, the above only applies to today's situation - today no one can get crazy loans of 12 x income.

Back during the bubble you saw people getting loans of 12x income and what I say did not apply

Today, prices in the really nice parts of Los Angeles are way down - so my above comments refer to a person buying today, Sep 2009 not someone that bought during the bubble

By the way, I don't defend the people buying today. I think they are stupid. Most likely their scummy realtors are tricking them in to something dumb. But I am simply trying to explain how they easily afford a 8 million dollar house on a 600k salary

Anonymous said...

FrankH:

Can you please tell which areas in Westwood (houses) were at the 3-4x income? Are you trying to tell me that HOUSES were going for 150k-200k? even if you take today's median income around 80k in Westwood, there is no way in hell anyone could buy a house for 240k in Westwood 10 yrs ago. You are so full of it.

Anonymous said...

Anon 10:16

Average income in Westwood hasn't changed much in 10 years. Let's say it's what it is now - about $80K/year. Let's assume that the median is higher (which it is) and set it at $120K/year (it's close to that). Lets also assume that a couple makes $160K/year - a single person making $80K would probably buy a condo, not a 3 bedroom house.

An example house is 1515 Kelton, in 90024. It sold recently for $1Mil, but back in 1997 it sold for $447K. Let's round that up to $500K.

20% down: 100K
Mortgage: 400K

ratio of income to mortgage payment: 2.5x
Hell, even if they put no money down the ratio is 3.1x

Just down the street, a similar house - 1545 Kelton - $500K in 2001

Another home - 10857 Wilkins Ave, 90024. Sold for $405K in 1996. It's next to an alley and across the street from a 7-11.

The average small 3 bedroom house in Westwood (particularly in the "slums" south of Wilshire) was between $450K - $550K 7-10 years ago. Comfortably affordable for a couple making $120K - $150K.

There are many more examples if you look. If you're willing to live in a large condo, there were many two bedroom units for well under $250K 8 years ago.

FrankH

Anonymous said...

Frank H,

120-150k 10 yrs ago is equivalent to at least 200-250k now in real terms. 3-4 time of 200-250k is approximately 800-1mm which is just where houses are at right now in the area you described. So, they are not really overvalued based on your numbers.

Anonymous said...

Right - most young couples that today move to Westwood are thinking that the husband and wife will both work and together make 200k

They pay 5x that 200k and think they are reasonable for buying a house at 1.0 million

Anonymous said...

Anonymous said...

Anon 6:13pm -- you are on crack if you think nice houses south of wilshire (north of sm blvd, presumably) go for $800k to $1mm. Try $1.3 and up, and nothing decent really until $1.5 and up.

THEREFORE - overpriced, look out below!!

******************
Frank H,

120-150k 10 yrs ago is equivalent to at least 200-250k now in real terms. 3-4 time of 200-250k is approximately 800-1mm which is just where houses are at right now in the area you described. So, they are not really overvalued based on your numbers.

September 14, 2009 6:13 PM

Anonymous said...

Guys, the median family income in Westwood in 2000 was 89,960. It's probably very close to that now, or lower.
There are a lot of students in Westwood, so just for grins, let's say that the average household in Westwood makes $150K-$200K year (around 2x the average or median).
At 3x income, their mortgage would have to be in the 450K - 600K range and houses (assuming a 20% down) would be around $550K-$750K. You will not find any homes in Westwood for that amount. Zip. The cheapest will be the ones I showed above - no less than $1M. That is just insane, since those houses are well beyond the means of our hypothetical couple making about 2x the median income in Westwood.
Incomes have not gone up by much in the area (mine have, but I know some of my neighbors have been stagnant or have been "downgraded") so there's no way that houses valued at 8-10x (or more)the median income for a neighborhood are sustainable or "reasonable". It's not rocket science.

FrankH

Anonymous said...

Anon September 15, 2009 1:00 AM:

Frank indicated the "slums" of Westwood is going for 800k-1mm not North of Wilshire. He was talking about the block of 1500 Kelton.

You're such a jackass for not reading carefully.

Anonymous said...

12:56pm

you know zero about the neighborhood between SMBLVD and Wilshire. That is clear. And please get a career -- I am working and busy in the middle of the day. I suppose you get on the net and surf on lunch-break at your jobbie-job? Show me a house below $1mm that you have not defiled.

Anonymous said...

Look, no one can buy in Westwood using income from a job. Either own a successful business, inherit some money, or move to the Valley

Not everyone that wants to live in Westwood will be able to. Houses have to be rationed some how and this is how they are rationed - by pricing out most of those that are hungry to live in Westwood

Anonymous said...

Most of the Westwood home buyers I know are 1) foreigners, 2) trust fund kids, 3) entertainment biz people (executives; smallest category). There are, of course, others, but these three groups dominate. None of these groups tracks well, b/c foreigners have money in areas not recorded in census data, trust fund kids have parents money (again not tracked by census data) and the executives are newer to the area (i.e. past 10 years).

Anonymous said...

Cheapest house in Westwood sold for $725K in June: 10669 Wellworth. Two blocks South of Wilshire, corner lot, 1778 sq. ft and it looks like a pretty nice house. This will lower the prices for comps in the immediate area.

Anonymous said...

10669 Wellworth was not a public sale. Could be family member or friend. Not good data.