Tuesday, May 18, 2010

Prime Santa Monica Neighborhood Sliding About 10% A Year

Santa Monica 90402, North of Montana, is on the down hill slide. Case in point is:


627 Euclid Street
Santa Monica 90402
2+2+den, 1244 sqft, pool
Remodelled Craftsman
Built in 1922, 7500 sqft lot
(Click on photo to enlarge)


Since the end of 2007 this entry level home has seen steady price erosion at 9.7% per year, a total of $549,000. Throw in sales commission and it is well over 10% (11.2%). Now lets look at a historical perspective on this house, since it has been sold 7 times since 1994:

SOLD 9/26/94
$524,000

SOLD 3/1/96
$541,000

SOLD 8/29/97
$736,000

SOLD 3/9/00
$932,000

SOLD 7/2/03
$1,401,000

SOLD 10/23/07
$2,298,000

SOLD 4/9/10
$1,749,000

This is a perfect Case/Schiller Type of Comparable, being the same house sold over and over again. If we use 3.5% as the standard rate of inflation, we arrive at a historical perspective of the price this house should be worth, in any given year. At the current rate of decline, the price of this house will intersect the historical inflation line (standard appreciation) in 2014 at approximately $900,000 (early 2000 year pricing). Rarely do we see prices drop in a straight line. Normally, they will begin to flatten, after an intial steep decline, before leveling off. If this happens, we miay not see any appreciation, until the end of the decade.

51 comments:

Anonymous said...

Can anyone comment on whether this is teardown pricing or above tear down pricing?

Anonymous said...

Another solid indicator prices are falling and continue to fall. Any idea what the place would rent for? I'll bet the break even on the buy versus rent equation is about $900,000 today.

Anonymous said...

I think break even on rent vs buy is the wrong calculation for NoM.

The better calculation which basically reflects the same facts but in a different way is the price/rent ratio. For NoM/wealthier buyers it should be higher than lower priced areas since wealthier buyers overwhelmingly prefer to buy generally. Also, CA is higher given the premium for land. I think we are currently in a 25 or so P/R ratio which is high. That is the best reason in my mind why home prices should fall.

On the other hand, the market doesn't seem so as there are a lot of buyers out there who have substantial amounts of cash who think otherwise.

Anonymous said...

4:28pm, it's basically tear down pricing. Why would anyone who can afford to pay $1.75m live in a crappy 2bd, 1244sqft house built in 1922? If they do it's only because they think they will tear down and build some day...or sell to someone who will if/when it appreciates. If someone were looking to maximize lifestyle/comfort for $1.75m they would buy South of Montana and get the same schools and better home. Buying a crappy home North of Montana to be NoM is stupid...so it's a tear down.

My read of the market is that the 7500sqft lot tear downs are about $1.7m and the 8700-9000sqft lots are about $1.9m-$2m

Anonymous said...

yes

Latesummer2009 said...

That house is not a teardown. It actually appears to be in move-in condition with a pool. If the remodelling was done after 2007 than 1749K for this home on a prime street is at a new low. 1.5 million would be the new lot value for 7500 sqft in a good location such as this. Seller also ate about $636,000 after commissions over a 29.5 months. That's a loss of over $250,000 per year! Must have wanted out before anymore losses...

Anonymous said...

ANYONE SEE THE INSIDE? WAS THIS REALLY MINT MOVE IN CONDITION ?

Anonymous said...

How can a 1244sqft home for $1.75m not be a tear down?

Why would anyone paying $1.75m for real estate live in a 1244sqft home? Who cares what condition it is in. The value of the property is obviously the land.

Anonymous said...

I looked at this house twice over the years (not this go-round). The place was fish nor fowl; the footprint was too small for a good remodel, the price too high for a below market teardown. The first block off-Montana is not exactly a prime location either; very busy parking area.

I don't think this comp is any big shakes. The prior sale prices were at the top of each period's range; maybe the $1.7M sales price is finally closer to market.

Anonymous said...

Something is really fishy here.

Sub par location, small house and just look at those horribly placed skylights...really? On the front of the house? This is when you say 'no thanks' to the solar salesman.

$2.3 at the top of the market? $1800/square foot?
What was that buyer smoking? That seller is still heard laughing all the way from Washington State....

Anonymous said...

Look at all the fighting trying to deny the decline in prices, debating whether it is a tear down or not. Who cares. This is pure evidence prices have declined. I guess we just deny the 26% decline over the past two years too? The trend is down and there's no good reason why prices won't continue following that trend.

Anonymous said...

...Look at all the fighting trying to deny the decline in prices, debating whether it is a tear down or not. Who cares. This is pure evidence prices have declined.

It is pure evidence about one property that changed hands 7x in 16 years, including an outlandish $2.3M in 2007. FYI, please let me know where I can find a $1.5M 90402 tear-down (on a quiet street, not next to Montana). Not out there, $1.7M is still the market price.

Latesummer2009 said...

This house was move-in condition. Take a look at ALL the pictures on Redfin.

Definitely not a teardown.
Definitely not next to Montana.
Definitely not a busy street.
Definitely not a bad location.

Prices ARE headed down.

Sure you COULD tear it down, but you would be overpaying for the lot, after the demolition etc., given today's trend.

How much more EVIDENCE do you need?

Anonymous said...

"Look at all the fighting trying to deny the decline in prices, debating whether it is a tear down or not. Who cares. This is pure evidence prices have declined."

More evidence of future price declines out this morning: Foreclosures reach an all time high, as do delinquent mortgages, in the first quarter of 2010.

blahblahblah said...

Sorry, LateSummer, you got it all wrong.

Prices in Santa Monica never go down. There was no housing bubble. It is different here.

Prices in Santa Monica never go down. There was no housing bubble. It is different here. Prices in Santa Monica never go down. There was no housing bubble. It is different here. Prices in Santa Monica never go down. There was no housing bubble. It is different here. Prices in Santa Monica never go down. There was no housing bubble. It is different here.

Anonymous said...

I am a bear. Prices have come down. I can now afford 90402 since prices are down 30 pct on the houses I like. I laugh at people who bought in 07

Anonymous said...

How about giving some credit where credit is due. Realtors are scum. They spouted off nonsense and enticed idiots to buy in 2007. The people that read this blog and laughed and laughed at Latesummer listened to their realtors and bought in 2007.

The people that bought 90402 houses in 2007 for $4.0 million are looking at a house worth only $3.0 million today.

With job transfers etc, they are taking a $1.0 million dollar hit.

On the other hand, the people that chose to ignore the realtor chorus and instead listen to Latesummer avoided buying for $4.0 million and can now buy the same house for only $3.0 million.

Bottom line, people that allowed realtors to manipulate them and abuse them in 2007 have lost $1.0 million. People that listened to Latesummer have done well.

Anonymous said...

In light of all the data pointing to downward trend, all the agents and property owners just point to a smaller area and saying there is no decline there. Why don't you just point to one house and say that's my market and there are no inventory, and no price decline.

Anonymous said...

Thanks for saving me a million dollars LateSummer!!

Anonymous said...

And people should continue listening. The other shoe is dropping now. Over the few years, the 3 million dollar house is only going to be 2 million. This real estate market is a joke and anyone that doesn't see that is fooling themselves.

Anonymous said...

All we know is that Latesummer saved us a ton of money between 2007 and 2010.

No one can know for sure whether he will repeat the performance from 2010 to 2013 or not.

Anonymous said...

No one can know for sure whether he will repeat the performance from 2010 to 2013 or not.

Most permabears dont. Something tells me his longterm trac record is something like this.

1996 - these prices arent sustainable...another -20% to go!!!

1997 - these prices arent sustainable...another -20% to go!!!

1998 - these prices arent sustainable...another -20% to go!!!

1999 - these prices arent sustainable...another -25% to go!!!

2000 - these prices arent sustainable...another -30% to go!!!

2001 - these prices arent sustainable...another -35% to go!!!

2002 - these prices arent sustainable...another -40% to go!!!

2003 - these prices arent sustainable...another -40% to go!!!

2004 - these prices arent sustainable...another -40% to go!!!

2005 - these prices arent sustainable...another -40% to go!!!

2006 - these prices arent sustainable...another -40% to go!!!

2007 - these prices arent sustainable...another -30% to go!!!

2008 - these prices arent sustainable...another -20% to go!!!

2009 - these prices arent sustainable...another -20% to go!!!

2010 - these prices arent sustainable...another -20% to go!!!

So far, he has been right 3 out of 15 years. Still, had he only bought in 1996 when prices had another -20% to go, he could be pretty much done with paying his house off by now, and be here pointing out how we renters are priced out forever.

Anonymous said...

I think you are wrong. Latesummer never said not to buy in 1996. He said not to buy in 2006 and 2007.

Like many people on this blog, I have a spouse that is obsessed with North of Montana. The incessant blather about North of Montana from everyone on the West Side was almost too much to bear. Thank god for LateSummer for saving me from buying at the very very top. In 1996 small houses cost $600k North of Montana. Latesummer never said not to pull the trigger for $600k

Anonymous said...

Yes, no one can know for sure, but the recent past is a good indicator of the near future, and there are many other indicators pointing to a continued decline. On the other hand, there is no indicator is pointing to either a leveling off, much less an increase in prices.

Anonymous said...

"On the other hand, there is no indicator is pointing to either a leveling off, much less an increase in prices."

You mean other than case shiller which is pointing to leveling or even increasing prices right???

Anonymous said...

Also, other than median prices in 90402 which, after 3 years of declining are now rising again

http://www.dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx

Exclude these right???

blahblahblah said...

Mortgage apps at a 13-year low. Foreclosures/delinquencies at an all-time high. Prime mortgages are at an all-time high delinquency.

This may be the bottom, or the beginning of armageddon. Nobody knows for sure.

We do know, however, that until data points like improve, there is no logical case for a bottom in housing. If you are calling a bottom, you really aren't doing it by looking at the data.

Anonymous said...

The problem I think is there are about 50-100 datapoints that people think could "affect" housing. Some are leading indicators, some, (like employment and particularly tax reciepts) are lagging.

Moreover, some of these are essentially useless. Take vacancy rates for example. Census reports vacancy rates have been rising (more or less) for 40 years now. Prices have not fallen for 40 years now, yet some people still cite vacancy rates as "proof" of impending home price declines, when there is little evidence to expect they do anything.

In any event, there was a time, about 9-12 months ago, when all of them were pointing down. Now, some of them are pointing down and some of them are pointing up. And dont think "all" of them need to point up to say we have bottomed. The last time all of them pointed up was 2005, right at the peak of the market.

latesummer2009 said...

This home has retreated back to the beginning of 2005 pricing. After sales commission, maintenance and taxes, those who bought in 2005, 2006, 2007 and part of 2008, have now seen their home value drop below, what they paid for it.

If this trend continues, that's a 14.8% loss on this house at:

$258,000 per year
$21,500 per month
$700 per day

You can do the math on other homes in Santa Monica 90402. (-14.8% clip per year)

Anonymous said...

Add to that the unfortunate placement of those solar panels...why???????

Anonymous said...

Case Shiller for these markets is irrelevant, as has been pointed out numerous times before on this blog. There the high end starts at 500k. And down, down, down, down, down, down, up, down, down, down, up, down, down is still down. Your realtor drivel doesn't fly.

Latesummer2009 said...

Looks like we are rolling back back even further now into EARLY 2004 pricing:

209 Euclid
Brand New Construction (2004)
2 houses from Georgina
Pictures and details on Refin

SOLD $3,950,000
8/13/04

SOLD $3,598,000
4/21/10

If we look at 627 Euclid as an early 2005 price, than the loss on this house in 6 months after commission, maintenance and taxes, was at least:

$370,000 per 6 months
$61,000 per 1 month
$2,000 per day

or

18.7% annual decline
1.5% monthly decline
.05% daily decline


It's happening folks....

Anonymous said...

"Anonymous said...
Case Shiller for these markets is irrelevant, as has been pointed out numerous times before on this blog. There the high end starts at 500k. And down, down, down, down, down, down, up, down, down, down, up, down, down is still down. Your realtor drivel doesn't fly."

Yes thats it. Fight that data - show it whose boss. Fight fight fight!

Youpermaidiots crack me up. On the way down, someone would point out Case Shiller plunging, and the permabulls said,

Not in LA!
Not in Westside!
Not in SM!
Not in 90402
Not N of Montana!

Now prices are going up, and so is Case Shiller, and now the same people who ridiculed the permabulls for denying it on the way down are saying

Not in LA!
Not in Westside!
Not in SM!
Not in 90402
Not N of Montana!

Pathetic. Just pathetic...

Anonymous said...

The person that's pathetic is you. Get a clue. Quit with your realtor drivel. Perhaps you're an underwater homedebtor praying the market doesn't continue to crater. Either way, everyone is laughing at you.

Anonymous said...

Does anyone want to talk about those two lots (17,500ft of land) on 24/25th streets for $5.7mil? How can that make sense to anyone? Isn't lot value $2mil for a 9000st ft teardown? If so, even paying a premium for lots back to back, what are they worth?

Anonymous said...

Now prices are going up, and so is Case Shiller, and now the same people who ridiculed the permabulls for denying it on the way down are saying

Not in LA!
Not in Westside!
Not in SM!
Not in 90402
Not N of Montana!


Quite true. I need to be mindful of that as I muddle through this and decide whether it is yet ok to buy or not...

Anonymous said...

Case Shiller Numbers are irrelevant in the 90402 Market, REALTURD. The higher-end tier starts at $500,000. That's a mere 1 year price drop in 90402.

Perhaps you can't read.

But, go ahead, jump in and muddle...

Anonymous said...

Not in LA!
Not in Westside!
Not in SM!
Not in 90402
Not N of Montana!

Pathetic. Just pathetic...

Perhaps you can't read.

But, go ahead, jump in and muddle...


I feel like this is the same person writing pathetic statements, then responding to them. Seems like every time someone has a valid point it is responded to with personal attack instead of equally valid counter point. Get a clue you "realtard," people are not dumb and don't fall for stupidity. Seems like you have to face financial reality. Good luck to you since we are only at the beginning of this cycle.

speedingpullet said...

Wait... this place sold in' 94 for $524K and its a screaming deal 16 years later at $1,749K?

Am I missing something - other than the almost sexual attention being payed to a few blocks north of montana in the fabled land of "nineohfourohtwo" ?
Really?
This house must be a teardown because it sold for less than two meeeeellion dollars!

Coz, you know, historical appreciation runs at about 2.9% pa over the last 50 years or so. Which means your Screaming Deal should really be going for $870K - being generous and allowing a 3% appreciation for the Sunshine Tax ;-)

So, as far as I"m concerned, if its not under $1 million then I'm not interested.

I'm surprised, latesummer, that you're posting this as a victory.

IMHO its just another sign that Westside L.A is completely detached from the rest of the country

Oh, and before you all start crowing about how I'll never be able to afford to live in "The 90402" - be advised - I don't want to :-)

Anonymous said...

except the sunshine tax is like....50%

Anonymous said...

I agree with Speeding Pullet. All of you people who talk about the 90402 are just not being honest.

The chatter on this blog is all about how 90402 is the only neighborhood in Santa Monica - presumably all neighborhoods south of Montana are dangerous.

Well the truth is that my neighborhood, the 90403 is every bit as safe as the 90402. People don't need to feel bullied in to buying in the 90402.

When you read about the gang bangers in santa Monica it is always people who live south of the 10.

Bottom line, as long as you buy North of the 10 you are relatively safe.

The most recent shooting was of a cop in the Sunset Park neighoborhood (lincoln and Bay) Once again, South of the 10.

If you want to talk about violent gun crime, you are talking south of the 10.

You can get a house in a very safe neighborhood and save $500,000 by buying in my neighoborhood instead of the 90402

Anonymous said...

I don't know what you're thinking. Do you ever spend any time in SM? I was down on third street recently, and a bunch of hoodlums were flashing their automatic weapons. Not to scare anybody, but that is the absolute truth. SM is not safe, anywhere.

Anonymous said...

9:12 is a troll.

Troll, go back to the Manhattan Beach Confidential site where you belong.

Leave us alone.

No one has been shot on the 3rd street promenade.

Anonymous said...

This blog is deteriorating...nonsense comments. Please try to keep the discussion level at least somewhat productive and intelligent. We are trying to debate whether the Westside RE market is going down, stabilizing, or slowly recovering.

My view is in the short term it goes down, stabilizes medium term and then when the Fed starts printing money prices nominally rise.

The question in my mind is can one expect to time all of that perfectly? Obviously the answer is no so when does one buy in then? My decision is to wait out the next quarter or two while watching carefully to see how the removal of government intervention plays out and also the risk of a double dip. However, I will probably jump in sometime later this year in a house that is at a price where I'm not stretching just in case. Prices are down 15-20% from peak at this point (on a nominal basis) and I think if they are 20-25% on a nominal basis (meaning a little more on a real basis...but not much given inflation has been non existent basically the last year and a half) it is getting close to enough to a bottom (if not the ultimate bottom) to risk calling it. Besides the risk of calling the bottom by waiting you also run the risk of continued lowered inventory as the bottom gets closer fewer choice properties will be available. Since a home is also where you live, choice matters as you may have to live there for 10 yrs or more!

Anonymous said...

What does 3rd Street have to do with Santa Monica 90402? It's about the same distance to Brentwood. Pico-Robertson isn't that far from Beverly Hills. We all remembered what happened to Hancock Park real estate after the riots. Go east about 10 min from Manhattan Beach...

That's the problem inherently in living in a big urban area like Los Angeles County...if you don't like it then either commute from further away or move?

Besides, my office is in downtown SM and spend a lot of time down there as a result....have never ever felt it was in any way unsafe. Your comment is totally sensationalistic and only must come from a hater.

Anonymous said...

According to Dr Housing Bubble, there are currently 493,000 agents and brokers in California, and only 219,000 listings on the MLS. So 2.5 agents to sell one house on average. I wonder how many agents it takes to sell a house in 90402.

Anonymous said...

Only a troll would talk about violence on the third street promenade.

I want to hear more from Speeding Pullet. I feel like every single day I am in Santa Monica I hear people with a british accent here - are all of them tourists or do we have that many british people living here?

Anonymous said...

Ohmigod....there are more Brits living in Santa Monica than any place else in L.A...except for maybe Hollywood?

Its crazy....but they love the cosmopolitan atmosphere...who can blame them???

Anonymous said...

If you rent your house out in the summer, you will find a line of British and French looking to 'Holiday' here...They all love Santa Monica.

Where else can you find all the amenities SM has to offer....and the best widest sandiest beach in the US...ever been to European beaches? All rocks....

Anonymous said...

Lots of Londoners live full time in Santa Monica now. Have you spoken to the Londoners in the 90402? They sort of socialize together sometimes

Anonymous said...

From a basic, human point of view, would you really want to live in this house? For that much $$$? Sure, Santa Monica is "nice" but I couldn't see myself being happy in such a small place, and even when remodeled, older structures always have issues. For your money, wouldn't you rather live somewhere else on WS, save money, put this kids in private school, and actually enjoy your home?
If it is a teardown, I wish the owners the best of luck on the demolition and construction - permits, dealing with contractors, delays, waiting, waiting, more waiting. Dollars and cents aside, how would buying this place add to your overall happiness? Just to have a place in Santa Monica you would be going through considerable hassle. Life is short, an expensive address doesn't buy happiness.