Los Angeles County South Bay Beach Cities Real Estate $$$ Transacted for July 2007
Despite what you heard in Jim Cramer's histrionics on CNBC on Friday, August 2, mortgage credit is still being issued in abundance and the housing market continues to bumble along. Yes, there are areas in Los Angeles County that show the impact of tightening mortgage lending standards, but the contagion from this tightening has not substantially impacted the beach cities and upscale areas. HELOC problems might be there but they aren't out in front of our faces. Not yet.
As long-time readers know, we've been tracking real estate dollars transacted in most zip codes in the area west of the 110 and south of the 10 freeways as a measure of real estate activity. This is an experimental measure, to see if it is representative of the health of the market in general. It is not the same as tracking median or average price, although as the markets continue along the path of a particular trend I would roughly expect dollars transacted and median price to move in the same direction. To gain a better understanding of the data that is charted here, visit our housing tracker page.
In many areas dollar volume and sales volume exceed the July 2006 amounts, but we must remember that in July 2006 we were coming off of a drug-like high from speculation and the belief that housing prices would go up more than 10% a year forever. 2006 was an after-party hangover year, and we were in quite a slump to match. So quite a few places show $$$ volume as exceeding July 2006.
A few places are hitting new highs in terms of $$$ transacted, even exceeding 2005.
In a few places, such as 90305 (Inglewood) and 90293 (Playa Vista), sales volume is UP over July 2005. Sales volume numbers must be handled with care, because volume is so small in many zip codes that the numbers become meaningless. As you can see from the more meaningful (i.e., larger numbers) charts below, sales volumes for Redondo Beach (90277 and 90278 combined), and for the beach cities (90245, 90254, 90266, 90277, 90278), have been gradually edging down for a number of years. The expectation is that the high-end market will continue to be the salvation of our local housing markets and the median prices here can remain levitated thanks to more sales of high-end homes. But based on history, I have my doubts that this trick will work.
Dollar volumes exceeded that for July 2005 in 90035 (Park La Brea); 90064 (Rancho Park/Cheviot Hills); 90094 (Playa Vista); 90254 (Hermosa Beach - also exceeded July 2004 dollar volume); 90277 (South Redondo); 90291 (Venice); 90293 (Playa del Rey); 90305 (part of Inglewood); and a few other areas.
90245 (El Segundo) is down compared to July 2006; 90254 (Hermosa Beach) is booming; Manhattan Beach (90266) is down; 90277 (South Redondo Beach) is booming; and 90278 (North Redondo Beach) is what I'd consider flat to down. A well-mixed bag.
MONTHLY (IMMEDIATE) PAIN Realtors fat and happy, partying like it's 1999... 90094 54.4% 4.4 Playa Vista 90277 39.1% 0.2 Redondo Beach (south) 90064 30.8% 0.4 Rancho Park/Cheviot Hills 90254 26.2% 0.4 Hermosa Beach 90293 17.6% 0.6 Playa del Rey Doing well 90503 16.8% 0.7 Torrance 90277-90278 14.3% 0.3 Redondo Beach combined 90266 12.1% 0.3 Manhattan Beach 90036 11.5% 0.5 Park La Brea beach cities 7.7% 0.3 4 Beach Cities combined Doing OK 90732 6.0% 0.8 San Pedro/Rancho PV Hanging in there 90066 0.1% 0.5 Mar Vista 90278 -0.1% 0.5 Redondo Beach (north) 90034 -0.5% 1.9 Palms 90291 -4.5% 0.5 Venice Slip sliding away 90501 -7.7% 0.8 Torrance 90304 -9.2% 1.3 Lennox 90275 -12.5% 0.1 Palos Verdes Estates 90505 -13.0% 0.3 Torrance SW county -16.8% 0.6 Southwest L.A. County 90501-90505 -17.1% 0.6 Torrance Combined 90230 -20.2% 0.7 Culver City 90045 -20.5% 0.5 Westchester 90250 -20.7% 1.1 Hawthorne 90401-90405 -21.0% 0.3 Santa Monica combined 90245 -23.2% 0.6 El Segundo 90249 -25.8% 0.9 Gardena 90292 -28.3% 1.6 Marina del Rey 90043 -28.5% 1.0 Hyde Park, Windsor Hills 90717 -29.1% 0.4 Lomita About to head off a cliff 90008 -30.0% 0.7 Baldwin Hills / Leimart Park 90044 -31.2% 2.2 Athens 90018 -31.6% 1.3 Jefferson Park 90056 -33.3% 0.5 Ladera Heights 90007 -34.6% 1.2 South Central 90019 -35.5% 0.8 Country Club Park/Mid City 90035 -37.2% 0.4 West Fairfax 90047 -37.4% 1.5 South Central 90504 -37.8% 0.4 Torrance 90062 -38.9% 1.4 South Central 90016 -40.3% 1.2 West Adams 90260 -41.6% 0.8 Lawndale 90745 -45.2% 1.2 Carson 90232 -45.9% 0.6 Culver City 90037 -46.8% 1.1 South Central Heading off the cliff, Thelma and Louise - style 90746 -50.8% 1.9 Carson 90744 -51.0% 0.5 Wilmington 90303 -56.0% 1.2 Inglewood 90301 -57.6% 1.2 Inglewood 90502 -58.0% 1.4 Torrance 90301-90305 -63.1% 1.4 Inglewood/Lennox combined 90302 -70.2% 1.2 Inglewood 90305 -76.6% 3.3 Inglewood
From looking at these numbers, I suspect the subprime implosion has hit areas like Carson (90746), which has a chronic pain ranking of 1.9 (little long-term pain), but has an immediate pain value of -50.8%. Places like Playa Vista (90094) have felt almost no pain, either chronic or recent. Other areas that have held up better than most include Park La Brea (90036). This month's chronic pain range is 0.1 - 4.4:
LONG TERM (CHRONIC) PAIN 90094 54.4% 4.4 Playa Vista 90305 -76.6% 3.3 Inglewood 90044 -31.2% 2.2 Athens 90746 -50.8% 1.9 Carson 90034 -0.5% 1.9 Palms 90292 -28.3% 1.6 Marina del Rey 90047 -37.4% 1.5 South Central 90301-90305 -63.1% 1.4 Inglewood/Lennox combined 90062 -38.9% 1.4 South Central 90502 -58.0% 1.4 Torrance 90304 -9.2% 1.3 Lennox 90018 -31.6% 1.3 Jefferson Park 90303 -56.0% 1.2 Inglewood 90007 -34.6% 1.2 South Central 90745 -45.2% 1.2 Carson 90302 -70.2% 1.2 Inglewood 90301 -57.6% 1.2 Inglewood 90016 -40.3% 1.2 West Adams 90037 -46.8% 1.1 South Central 90250 -20.7% 1.1 Hawthorne 90043 -28.5% 1.0 Hyde Park, Windsor Hills 90249 -25.8% 0.9 Gardena 90501 -7.7% 0.8 Torrance 90019 -35.5% 0.8 Country Club Park/Mid City 90260 -41.6% 0.8 Lawndale 90732 6.0% 0.8 San Pedro/Rancho PV 90230 -20.2% 0.7 Culver City 90008 -30.0% 0.7 Baldwin Hills / Leimart Park 90503 16.8% 0.7 Torrance 90293 17.6% 0.6 Playa del Rey 90501-90505 -17.1% 0.6 Torrance Combined SW county -16.8% 0.6 Southwest L.A. County 90245 -23.2% 0.6 El Segundo 90232 -45.9% 0.6 Culver City 90744 -51.0% 0.5 Wilmington 90036 11.5% 0.5 Park La Brea 90045 -20.5% 0.5 Westchester 90291 -4.5% 0.5 Venice 90056 -33.3% 0.5 Ladera Heights 90278 -0.1% 0.5 Redondo Beach (north) 90066 0.1% 0.5 Mar Vista 90035 -37.2% 0.4 West Fairfax 90717 -29.1% 0.4 Lomita 90064 30.8% 0.4 Rancho Park/Cheviot Hills 90504 -37.8% 0.4 Torrance 90254 26.2% 0.4 Hermosa Beach 90401-90405 -21.0% 0.3 Santa Monica combined 90505 -13.0% 0.3 Torrance 90277-90278 14.3% 0.3 Redondo Beach combined 90266 12.1% 0.3 Manhattan Beach beach cities 7.7% 0.3 4 Beach Cities combined 90277 39.1% 0.2 Redondo Beach (south) 90275 -12.5% 0.1 Palos Verdes Estates
In summary, this is taking a long time to play out, but as one realtor said in the early 90's, when you have to sell, it will "force the issue." More than ever, I believe that extreme patience will be rewarded.
Visit the regional real estate $$$ tracker for details on a zip code.
posted by bearmaster at 5:47 AM
8 Comments:
Never written before, but have been faithfully reading your blog for about 8 months or so. I agree with you that the downturn in housing prices will eventually reach the beach cities. Wells Fargo's decision to increase the interest rate to 8% on jumbo loans (I would think that a sizable majority of all mortgages in the beach cities would be jumbo loans) is a significant one. An increase from 6.875% to 8%, in addition to stricter lending standards, should really put a damper on beach cities prices. It is only a matter of time before the downturn comes to the beach cities. You may be the first to report on it, girded with your statistics. Thanks for all you do.
Hi,
You're the second person I've seen make mention that Wells Fargo has raised interest rates for jumbo loads to 8% but each time I check the Well's Fargo website (https://www.wellsfargo.com/mortgage/rates/) I only see 7%. Can you publish the source for this increase?
Thanks
OK--For broker originating loans it 8% for direct Well's Fargo it's lower. Source: http://online.wsj.com/article/SB118609866621886776.html?mod=yahoo_hs&ru=yahoo
Online WSJ discusses Wells Fargo's rate change in an August 3 story by James R. Hagerty and Ruth Simon:
Lenders Broaden Clampdown on Risky Mortgages
Thats what I thought - just a bunch of empty talk about various loans becoming unavailable. Then the end of last week happened! I don't know if it will stick, but loans are being pulled off the shelf! I was in the loan business years ago and I have never seen anything like this. Read it from the horse's mouth: http://piggington.com/broker_outpost
Imagine CA real estate without these loan options. Coming to a "special" neighborhood near you.
Yes, I got the impression that earlier this year, tougher lending "guidelines" were just that - guidelines, with no enforcement teeth in them. A lot of lenders ignored the initial concerns, assumed all the damage was contained, and continued on like nothing happened.
I suppose even now there are lenders still issuing idiot loans, but now at least we're hearing about how some of the big players are taking steps to tighten their standards.
Bearmaster,
What is the mathematics of "Chronic pain?" I understand that a high number is no pain, but is there a way to quantify the difference? Has a 0.1 seen 10X the price drop of a 1.0? I assume its an integral of price drop and time... Would taking the natural log of it be more accurate? (4*ln(chronic pain) creates a nice -10 to +10 range...) ;)
A link to an old article would be great. Longtime reader... I just never delved into your calculations and now I'm getting very curious.
Got popcorn?
Neil
Chronic pain (maybe a better term might be "long-term gain"), is just a cumulative sum of the YOY change since the YOY figures start in 2003. It's my crude way of measuring the area underneath the YOY line. If the number is high, it means the YOY line has spent a lot of time above 0% (such as Playa Vista). If it's low, the YOY line has spent enough time below 0% to chip away the positive gains made above 0%. The range can slide. Not a perfect measure, but it reflects better what's been going on historically than the more short term YOY ranking.
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