Los Angeles South Bay Beach Cities Housing Bubble

Hello! I've lived continuously in Redondo Beach (the beach cities of Los Angeles) since 1995, and briefly in 1989-1990. During that time I watched a lot of old homes get torn down and Taj Mahalominiums get built in the area, with bubble prices to match. I actually started collecting housing price data in 2001-2002 but it wasn't until late 2005 I started blogging about this area. I'm doing my best to capture the local real estate bubble and ensuing fizzle.

Thursday, November 29, 2007

Los Angeles County South Bay Beach Cities Real Estate $$$ Transacted for November 2007

When I started recording monthly real estate $$$ volume for selected Los Angeles County zip codes on this blog, I was hoping that the trends would serve as a decent predictor of home prices. I have come to believe that $$$ volume overall is a very good predictor. November is the sickest looking month I've seen yet in two years of blogging.

I realize November is not quite over in terms of sales reporting, but I will assume that Melissa Data starts reporting December next week. If my charts are too early, it is highly doubtful there will be that many extra sales added on and I will just correct the charts when I do the December charts.

Dollar volume in many zip codes isn't just heading over a cliff; dollar volume is headed into the abyss. Parts of Los Angeles are in freefall, in terms of real estate $$$ transacted. Beach cities are weakening. This is not just normal seasonal slowdown. The housepocalypse is creeping ever closer.

OFHEO has announced that the conforming loan limit will stay for the 3rd year in a row at $417,000, so there will be no increase that would allow Californians to get any more in over their heads. Of course CAR is upset about this. According to CAR's PR blather, the refusal to raise the conforming loan limit denies Californians the opportunity of homeownership. My suggestion to CAR would be to ensure that buyers buy within their means and not "qualify" with stupid loans. The way I interpret CAR's PR is that what will actually be denied are opportunities for real estate commissions should sales continue to deteriorate. CAR would rather blame OFHEO than admit that people have been paying too much for housing. Overpaying is as true here as in much of the rest of California.

Now on to this month's results. The only zip codes that show substantial sales volume increases YOY are: 90094 (Playa Vista); 90401, 90402, and 90405 (Santa Monica); and 90501 (Torrance). Volume is too small to be measured statistically well for one month, particularly in Santa Monica. The only zip codes that show noticeable $$$ volume increases YOY are: 90036 (Park La Brea); 90045 (Westchester); 90094 (Playa Vista); 90254 (Hermosa Beach); 90401 and 90402 (Santa Monica); and 90501 (Torrance). Mighty 90064 (Rancho Park), which has been running on steroids this year, has taken quite a hit this month.

Until I see what next spring delivers I don't want to say the housepocalypse has landed on our doorsteps. As I write this, federal and state officials are furiously at work to stem the tsunami of foreclosures. Although I don't believe it will ultimately work, the politicians just may succeed in kicking the can down the road and delay the inevitable a while longer. In the meantime, take a look at the data.

My data measurements in the lists below are experimental and can be hard to interpret. For example, both the YOY comparisons and the "Relative Strength" lists show the beach cities as having suffered both recent and long-term pain in terms of dollar volume, but we know that prices appear to be more resilient than, say, prices in South Central Los Angeles. Yet some zip codes of South Central show that they've suffered much less in terms of chronic pain. So why does 90047 show more Relative Stength than the beach cities? If you look at the charts for 90047, you'll see a relatively recent steep plunge in the dollar volume chart, with lots of fat area well above 0% on the YOY chart, with not a whole lot of area yet below 0%. But if you look at the beach cities charts below, you'll see some thinner spiky areas above 0% on the YOY chart, and a few places the YOY line actually touched 0% before things started to fall apart. And, even though there have been insane appreciation rates in the beach cities in recent years, the truth is that sales volume has been declining for years, even before the housing bust, whereas sales volumes were increasing in places like South Central. These factors make for somewhat different outcomes in measuring that Relative Strength.

By the time this debacle is over, little of this will make much difference. Does it matter much if you die by a million paper cuts or by 2 million paper cuts?

YOY comparisons

Remember, the YOY numbers are not taken on the raw numbers, they are taken on the doubly smooth 3 month moving average. They lag the raw data somewhat.

Realtors fat and happy...
90094         66.0% Playa Vista
90293         24.5% Playa del Rey
90064         20.0% Rancho Park/Cheviot Hills
90254         15.0% Hermosa Beach

Not to shabby, considering...
90291          3.4% Venice
90277          3.0% Redondo Beach (south)
90045          2.8% Westchester

Hanging in there...
90505          0.5% Torrance

Losing a grip...
90275         -4.6% Palos Verdes Estates
90277-90278   -6.2% Redondo Beach combined
90008         -7.1% Baldwin Hills / Leimart Park

Slip sliding away...
beach cities -10.2% 4 Beach Cities combined
90278        -12.7% Redondo Beach (north)
90732        -17.6% San Pedro/Rancho PV
90266        -17.6% Manhattan Beach
90401-90405  -19.6% Santa Monica combined
90066        -19.8% Mar Vista
90503        -23.7% Torrance
SW county    -25.2% Southwest L.A. County
90035        -25.6% West Fairfax
90036        -25.8% Park La Brea
90019        -25.8% Country Club Park/Mid City
90230        -26.7% Culver City
90501        -29.8% Torrance

Sliding over a cliff...
90501-90505  -31.6% Torrance Combined
90034        -32.7% Palms
90292        -33.3% Marina del Rey
90232        -33.7% Culver City
90717        -36.5% Lomita
90245        -37.3% El Segundo
90056        -39.0% Ladera Heights
90007        -39.1% South Central
90250        -39.8% Hawthorne
90504        -41.9% Torrance

Off the cliff, Thelma and Louise style...
90016        -55.2% West Adams
90304        -57.2% Lennox
90301        -58.2% Inglewood
90047        -59.2% South Central
90745        -60.2% Carson
90302        -63.8% Inglewood
90043        -64.3% Hyde Park, Windsor Hills
90062        -64.5% South Central
90044        -65.4% Athens
90260        -66.0% Lawndale
90301-90305  -66.5% Inglewood/Lennox combined
90746        -66.9% Carson
90502        -67.0% Torrance
90303        -68.9% Inglewood
90249        -71.1% Gardena
90018        -72.1% Jefferson Park
90305        -74.0% Inglewood
90037        -76.9% South Central
90744       -224.1% Wilmington

"Relative Strength"

This is a longer-term view of the strength of dollar volume, for this month with 4.7 being the strongest (suffering the least amount of chronic pain) and 0.0 being the weakest (suffering the most chronic pain). Think of it is as the area above 0 on the YOY graph with the area below 0 of the YOY graph subtracted out.

90094           4.7 Playa Vista
90305           3.0 Inglewood
90044           2.0 Athens
90034           1.8 Palms
90746           1.7 Carson
90292           1.6 Marina del Rey
90047           1.3 South Central
90062           1.2 South Central
90301-90305     1.2 Inglewood/Lennox combined
90502           1.1 Torrance
90304           1.1 Lennox
90018           1.1 Jefferson Park
90007           1.1 South Central
90303           1.0 Inglewood
90745           1.0 Carson
90016           1.0 West Adams
90302           1.0 Inglewood
90301           1.0 Inglewood
90250           0.9 Hawthorne
90037           0.9 South Central
90732           0.8 San Pedro/Rancho PV
90043           0.8 Hyde Park, Windsor Hills
90293           0.8 Playa del Rey
90019           0.7 Country Club Park/Mid City
90501           0.7 Torrance
90249           0.7 Gardena
90008           0.6 Baldwin Hills / Leimart Park
90230           0.6 Culver City
SW county       0.6 Southwest L.A. County
90503           0.6 Torrance
90260           0.6 Lawndale
90064           0.6 Rancho Park/Cheviot Hills
90291           0.6 Venice
90254           0.5 Hermosa Beach
90036           0.5 Park La Brea
90501-90505     0.5 Torrance Combined
90045           0.5 Westchester
90278           0.4 Redondo Beach (north)
90232           0.4 Culver City
90245           0.4 El Segundo
90066           0.4 Mar Vista
90035           0.3 West Fairfax
90277-90278     0.3 Redondo Beach combined
90056           0.3 Ladera Heights
90505           0.3 Torrance
90401-90405     0.3 Santa Monica combined
90717           0.3 Lomita
beach cities    0.3 4 Beach Cities combined
90266           0.2 Manhattan Beach
90277           0.2 Redondo Beach (south)
90504           0.2 Torrance
90275           0.1 Palos Verdes Estates
90744           0.0 Wilmington

For details on individual zip codes, visit my regional tracker, or my Google map tool of most of the same data. I cover most zip codes south of the 10 freeway and west of the 10. For zip code comparisons (the two lists above), I include some surrounding areas such as Carson, Park La Brea, Fairfax district, etc.

Tuesday, November 27, 2007

L.A. Times: How low will housing market go?

This November 27 story by Peter Y. Hong, and the related story "How low will they go?" are encouraging because the opinion in these stories has shifted dramatically to expecting further price erosion, and not some happy talk of a recovery. And if you want a chance to vote your guesstimate on how low prices will go, follow the link and get your chance!

So, how far will we limbo rock? How low will we go? And for how long? Sticking one's neck out with a market forecast is not something many academic market watchers are willing to do at this point, but a few souls have ventured opinions:

Starting with the biggest bear of the bunch, Christopher Thornburg of Beacon Economics, he estimates a 25% decline, and all areas will be affected. Take heed of his advice: "If you sit around and pretend you will be immune from the downfall, you're fooling yourself."

Edward E. Leamer of UCLA Anderson School of Business estimates a 20-25% drop, bottoming 2009-2010 timeframe.

Michael Carney at Cal Poly Pomona estimates a minimum 15% drop, bottoming at the end of 2009. He doesn't rule out a turnaround but he just doesn't see that happening now, citing buyers' reticence.

There were a few forecasts in a "it's neighborhood-specific" or "it's house-specific" style of argument.

Kenneth Rosen at UC Berkeley estimates an 8-15% decline, bottoming in mid-2009, and he thinks the affluent areas of Orange and Los Angeles counties will hold up well relative to other areas. He points out that each location is different and each house is different, and feels a very strong neighborhood might not see any decline.

Dolores Conway at Casden Real Estate Economics Forecast at USC estimates a 5-10% in tight areas of Orange and Los Angeles counties, 5-15% in those counties where supply is not so tight, and 10-20% out in Riverside and San Bernardino counties.

Of course Leslie Appleton-Young of CAR piped up, saying how difficult it was to gauge this downturn because it was "different" from the last downturn. She did not get the last downturn right either.

As encouraging as it is to see more realistic estimates of where we are going, I question whether they go far enough. Not one of these forecasters has addressed affordability, and only one has suggested that things will get back to normal when people buy homes to live in them, not flip them. When forecasters in a downturn keep trying to pinpoint the time of a bottom, that time almost invariably gets drawn out. Another problem with forecasting this trend is that although the forecasters acknowledge the economy will affect the trend, they are still making assumptions largely based on how the economy is right now - it is difficult to build a worsening economy scenario into the forecast. In a housing downturn that really pulls the economy down with it, how will some of those more downturn-resistant areas hold up? Just as home sellers keep slashing prices and chase a market down, forecasters are also typically behind the trend - and they'll keep revising their forecasts. It'll be interesting to see what evolves over the next year of this debacle.

Macromarkets: Los Angeles area median housing price down -7.0% YOY for September 2007

The Case-Shiller index was released for September 2007.

According to the index, Los Angeles area median home price was down -7.0% from September 2006, and down -1.3% from August 2007. To learn more about the Case-Shiller methodology, visit Macromarkets.

Wednesday, November 21, 2007

CAR October 2007 report for Redondo Beach

The following figures are from the California Association of Realtors (CAR) for October. CAR gets its figures from Dataquick.

The median price for a Redondo Beach home (new or existing, SFR or condo) is now $825,000, up 8.7% YOY. Unfortunately, my calculation came in lower. 62 sales are reported, but I have only 48 sale records and 2 of those records are wacky low-end outliers. That leaves 46 sales in my SALE records. Were there some high-end sales that just haven't been recorded in Zillow?

For the beach cities, which to the best of my knowledge encompasses what Shorewood encompasses - El Segundo, Manhattan Beach, Hermosa Beach, Redondo Beach - the median price is $877,500, down -2.7% YOY from October 2006. That's down quite a bit from September.

For the South Bay area, the median price is $617,250, up 2.9% YOY.

The Westside is up +65.2%, while West L.A. is down nearly -5.3%. This is still a very mixed bag.

Tuesday, November 20, 2007

Other measures of Los Angeles beach cities market activity, October 2007

Shorewood has published October housing market statistics.

According to Shorewood, DOM has come down to 52, down from 57 in October 2006. There is no resemblance whatsoever between their official beach city DOM statistic and what I calculate. My last calculation for October for just Redondo Beach was a median DOM of 107 days.

Now on to Supply Stength (Demand Weakness). This is a measure of my own making. Notice that it bottomed around the late spring of 2005, when this market was probably at its peak of optimism, and life just couldn't get any better. This ratio is now hitting new highs. Whether it will continue to surge higher over the next few months, or whether the beach cities will instead work off some inventory over the winter, remains to be seen.

Median price for the beach cities was $895,000, up 2.9% from October 2006. There was a surge to new highs this past summer, and the median price has come down from there. Prices are volatile. It's difficult to say from this limited set of historical data what the relationship of October prices has been to, say, February-March prices. Prices do swing up and down, as evident from that 2004 plunge , a time when the market was still booming, relatively speaking. In the meantime, we'll have to just wait and see if the summer surge was the final blowoff, prior to the mortgage lender bomb dropping.

Monday, November 19, 2007

Second look at Redondo Beach October 2007 sales

I went ahead and tried updating my SUPPLY and SALE records with more October 2007 sales data that has come online for Redondo Beach. Unfortunately, the data is still questionable, but since there is now more of it I can at least assume my data comes a little bit closer to the truth. I have thrown out 2 extreme outliers.

STAT     APR 2007   MAY 2007   JUN 2007   JUL 2007   AUG 2007   SEP 2007   OCT 2007      
records       114         91         62         78         51         68         44
MEDIAN   $799,000   $777,000   $764,500   $860,000   $850,000   $857,000   $755,000
AVERAGE  $884,271   $855,228   $830,711   $880,279   $867,925   $935,506   $770,416
MIN      $470,000   $453,000   $485,000   $359,000   $365,000   $369,900   $369,900  
MAX    $1,750,000 $1,640,000 $1,565,000 $2,299,000 $1,510,000 $2,400,000 $2,560,000

Prices still show a large dip in October. So the well-heeled check-writing high-end buyers could be holding back, waiting for better opportunities, or the wannabe high-end buyers are thwarted because they cannot get financing, or perhaps the high-end buyers are packing their bags and leaving in a huff looking to buy elsewhere. I just don't know.

I confess I was a bit stunned by that "max" sale. That property was built in 2001 and sold new in 2001 for $1,485,000. It has 4,698 square feet, 5 bedrooms, 5 baths. Has it really appreciated up to $2,560,000, or is there some kind of weird "cash back" deal going on?!?

DOM appears to be edging up. Some properties truly have been on the market for outrageously long periods of time. One brand new property on Anita Street that sold in October was actually on the market for over 500 days, although I seriously doubt a realtor would state that. Anyway, median time on market is roughly 3.5 months, and average time has moved up to 6 months! Some listings are sitting there and rotting. Remember, I start counting days from when a property is FIRST listed, I don't count days from the first day of the last listing before it is sold.

How much did October sellers reduce their asking prices to make their sale?

This chart is a bit awkward to read. Anything that is less than 0% means the sale price was GREATER than the original asking price. Also, in reading the labels at the bottom of the chart, the number on the right of the label is INCLUDED in the range. For example, -5-0% shows that there were 3 properties in which there was a price difference greater than -5% up to and including 0%.

So for this data, there are 4 properties (out of 35) that sold with no reduction in price or a price increase from the original asking price. For the remaining 31 properties in this dataset, there was some price reduction. The median reduction was 5.2% and the average was 6.7%. These numbers have edged up, at least for October.

Remember, for outstanding inventory, the median percent reduction is ZERO, and the average reduction was about 2.7%. A realtor was recently quoted as saying that buyers will know who the serious sellers are by those who seriously cut their asking prices. That difference between ZERO and 5.2% could mean the difference between a rotting listing and a successful sale.

Earlier this year I was assuming that the PCTRED numbers would shrink, as sellers "got wise" and started pricing their properties more realistically. At this point, I don't think most sellers have "gotten wise" yet. If the bottom were to fall out, sellers could end up chasing the bottom down. The mechanisms just aren't in place to show price reductions in "real time." Remember all the stories you read about the 1929 stock market crash, and how the ticker tape was delayed for hours? That's very much like the situation we could be about to face now.

Sunday, November 18, 2007

Los Angeles Beach Cities Resale Activity for October 2007

I've already posted the L.A. Times/DataQuick existing home statistics for the Southland for October. By these measures, median RESALE values for SFRs and condos in the beach cities continue with no clear trend - the price gain momentum of just a few short years back is absent, but neither is anything plunging, by median price standards. Sales volume is weak, and no conclusions can be drawn from so few sales in any particular zip code. If anything, the weakening sales volume continues to render these charts rather useless. What they may tell us is that thing are rather chaotic right now. But I continue to post the charts.

Here are the detailed RESALE statistics for the beach cities and some of the surrounding zip codes:

                          SFR   MEDIAN   %YOY    CONDO  MEDIAN   %YOY  
COMMUNITY         ZIP    SALES   SFR      CHG    SALES  CONDO    CHG
LA/Westchester    90045   20    $720     -3.5%     0     N/A      N/A  
El Segundo        90245    1    $780     -6.6%     5     $500   -11.0%
Hawthorne         90250   17    $528     -4.3%     1     $417    -3.0%  
Hermosa Beach     90254    7  $1,253    +44.8%     6   $1,165    82.0%  
Lawndale          90260    5    $521     +4.2%     4     $238   -25.6%  
Manhattan Beach   90266   14  $1,665    +16.4%     3     $970   -35.9%  
Palos Verdes Pen. 90274   19  $1,500    +24.8%     3     $303   -54.8%  
Rancho P.V.       90275   23  $1,016     +0.0%     6     $408   -18.3%   
Redondo Beach     90277   10  $1,200     -8.4%    19     $787   +10.1%   
Redondo Beach     90278   17    $806     +8.9%    14     $655    -9.0%

Saturday, November 17, 2007

L.A. Times: Southland home prices drop to 2005 levels

The data in this November 15 story by Peter Y. Hong and Annette Haddad pretty much repeats the data in my earlier DQNews post, but I thought I would mention it because the story contains a few graphs you might like to see, and, more importantly, it clearly reflects that industry watchers still have not capitulated.

For example, an IHP Capital Partners economist in Irvine believes that the dismal market conditions are partly because of mortgage meltdown problems caused by rising defaults, making it harder for people to get jumbo loans. Prices need to fall within conventional loan limits so people can qualify for them.

This may be splitting hairs, but the article makes it sound like buyers still want jumbo loans en masse. Of course, a lot of them do. But maybe, just maybe, some buyers are looking at the market and thinking that taking on such a big loan would not be a good idea anyway. Maybe these same buyers are starting to think that prices are still at stupid levels, and they are thinking "The hell with it!" Maybe they really are packing up and moving someplace where prices are more rational.

The economist points out that Riverside and San Bernardino are there in terms of prices being within conventional loan limits. So if that is the case, shouldn't sales volume now be more encouraging? So maybe smething else has to happen besides prices dropping below conventional loan limits before a lasting recovery ensues.

Of course, DataQuick still tries finding gems in piles of horse manure. Even though foreclosures are at record levels, the number of new risky mortgages relative to the total mortgage market has been dropping. Bargain-hunters seem to be heading back in to the market, with an increase in non-resident ownership. DataQuick analysts take this as a sign the buyers think the bottom is near.

So the flipping dream is still alive. It is apparent to me that not enough market participants have been scalded by this calamity yet. A few hardy people can hang on and weather a downturn, but they will be the exception, not the rule. We have not seen the real blood spilled on the pages of the newspapers on the same level as the last downturn. We've got a long way to go yet.

L.A. Business Journal: L.A. County's Median Home Price Finally Falls

I actually drove in to work (in Westwood) on Friday, and was able to pick up the hard copy L.A. Business Journal while there. This story, by Daniel Miller, is in the November 12-18 issue. According to the journal, the median price dropped to $525,000, -3.7% YOY, and it's down -9.5% from September. Median price is now at February 2006 levels. Sales at the high-end were not enough to keep the price high. Remember when I cracked jokes about the high end buyers packing up and moving away from Redondo in October? Well, maybe some of them are at least held back during October.

By Home Data's calculations, 3,269 homes were sold during October, -57% YOY. The affect of the credit crunch is now spreading. Sales volume dropped everywhere. Leslie Appleton-Young of CAR reports that what we are seeing now far exceeds what we would expect seasonally.

High end areas have been getting hit, though the effects have been mixed. Indeed, in the beach cities, most medians are UP on very low sales volumes, so the effect of high-end sales holding up the market persists. One realtor for Beverly Hills noted that multiple offers start coming in when asking prices are reduced 10 or 15 percent. The realtor notes that when sellers cut their prices by that much that buyers are dealing with "a real seller."

A year ago there was a 7.8 month supply of inventory on the market and now it is almost 19 months worth. During our last great L.A. County slump, inventory backlog peaked at 15 months in 1993, according to this article.

Remember how late last year and early this year the industry was confident that inventory was getting mopped up? Well it wasn't, and now there's more of it.

Another realtor reports "The market just stopped," after watching one Burbank home fall out of escrow because the buyers' buyers couldn't get a loan to purchase the buyers' prior home. The Burbank home went back into escrow at 10% less.

The Burbank realtor reports that October was a decent selling month but agents are working much harder to sell homes. But "sellers that have a real motivation to sell will sell."

Now what are the experts saying about the future? Economist Ryan Ratcliff at UCLA Anderson School of Business expects a lot of sideway motion over the next two years, "but I don't think L.A. has the fundamentals to see the same sort of declines other parts of the state have seen." He thinks once "all the nonsense is out of the way afte the first of the year" the market could surge in early 2008 and "you will see a decent recovery."

Apparently, the experts persist in holding on to their fantasy that things will bounce back. Yes, there could be a bounce, but since prices and affordability are still stupid, what will be sustainable about it? Experts were predicting a surge early this year too, and look where we are now. The experts still haven't really caved in, in my opinion. When they do, it will be a psychological milestone. From the point where they almost uniformly cave in, and they are wary of any pickup in activity, calling it a false dawn, we'll know a market bottom is much closer. Right now, that is just not the case.

-------------------------- SFR ----------------------------------
COMMUNITY          ZIP    Oct     %YOY        Sept    %YOY
                          Sales   Change      Price   Change
El Segundo       90245      2     -81.8%  $1,312,000   71.5%
Hermosa Beach    90254     11     -15.4%  $1,400,000  +44.3%  
Manhattan Beach  90266     19     -26.9%  $1,540,000  +10.8%  
Redondo Beach    90277     10     -50.0%    $935,000   +5.3%
Redondo Beach    90278     10     -64.3%    $700,000   -4.1%

------------------------ CONDO ----------------------------------
COMMUNITY          ZIP    Sept    %YOY        Sept    %YOY
                          Sales   Change      Price   Change
El Segundo       90245       3      0.0%    $769,000  +45.1%
Hermosa Beach    90254       3    +50.0%    $749,000  +33.8%
Manhattan Beach  90266       3    +50.0%    $675,000  -35.5% 
Redondo Beach    90277      21    +31.3%    $795,000   -5.4%
Redondo Beach    90278      23    -30.3%    $773,000   +3.1%

The most expensive SFRs in October were in Beverly Hills 90210 (+76.0% YOY); Santa Monica 90402 (+34.2%); Westwood 90024 (+59.3%); Brentwood 90049 (+7.7%); Bel-Air 90077 (+79.0%); La Canada-Flintridge 91011 (+32.8%); Manhattan Beach 90266 (+10.8%); Pasadena 91106 (+57.9%); Pacific Palisades 90272 (-26.7%); and Laurel Canyon 90046 (+21.7%).

The most expensive condos in October were in Malibu 90265 (-26.5%); Beverly Hills 90210 (+9.4%); Redondo Beach 90277 (-5.4%); Redondo Beach 90278 (+3.1%); Brentwood 90049 (+2.9%); Santa Monica 90405 (+25.3%); Playa Vista 90094 (no YOY comp); Marina Del Rey (-7.7%); West Hollywood 90069 (+34.5%); and Koreatown 90005 (+6.1%).

The areas with the greatest SFR price losses in October were in Long Beach 90802 (-48.2%); Mission Hills 91345 (-44.3%); Northridge 91325 (-37.2%); Downey 90240 (-34.7%); Tujunga 91042 (-32.5%); Malibu 90265 (-30.6%); Lincoln Heights 90031 (-30.4%); Pacific Palisades 90272 (-26.7%); Van Nuys 91401 (-25.3%); and West Hollywood -25.0%).

The areas with the great condo price losses were Canyon Country 91387 (-37.5%); Monterey Park 91754 (-35.0%); North Hollywood 91602 (-31.8%); West Hollywood 90048 (-29.2%); Studio City 91604 (-25.0%); Signal Hill 90755 (-23.3%); Laurel Canyon 90046 (-22.0%); Long Beach 90804 (-20.6%); Mar Vista 90066 (-19.0%); and Torrance 90503 (-18.9%).

Remember this only says something about the relatively few homes sold, compared to the volume of what's on the market.

Wednesday, November 14, 2007

DQNews: Southland home sales plummet - "A lot of potential buyers seem to be waiting this one out.."

Well it took long enough. According to this November 14 story, October 2007 was the first month that Los Angeles County home prices went "negative" by DataQuick measurements, and prices have dropped back to 2005 levels. (But of course you knew that from looking at some of the specific Redondo Beach sales I occasionally show here.)

There were 12,999 October home sales, up 4.5% from September, down 45.3% YOY, and still at near 20 year lows. In fact, DataQuick's stats go back to 1988, so we don't know how low sales are. DataQuick's historical October average runs about 24,725.

According to one analyst, potential buyers are "waiting it out" - they don't want to take out big loans for properties that could still lose value. But DataQuick still claims that demand is accumulating, and when problems sort themselves out buyers will play catch-up.

I can only suggest that during periods of optimistic social mood (group thinking), people think less of taking out loans to buy houses or take on debt. During negative mood periods, people contract. They get more conservative with their money and are hesitant to take on debt. And while DataQuick may be right about accumulating buying demand, why doesn't it mention anything about accumulating selling demand which we know is there?

Here are the Southland numbers:

Southland          Sold     Sold     %YOY    Median $    Median $   %YOY
County             Oct-06   Oct-07   Chg     Oct-06      Oct-07     Chg
Los Angeles        8,451    4,368   -48.3%   $520,000    $500,000   -3.8%
Orange             2,929    1,700   -42.0%   $625,000    $573,750   -8.2%
Riverside          4,408    2,463   -44.1%   $412,136    $350,000  -15.1%
San Bernardino     3,547    1,603   -54.8%   $365,000    $330,000   -9.6%
San Diego          3,449    2,327   -32.5%   $490,000    $460,000   -6.1%
Ventura              961      538   -44.0%   $590,000    $535,000   -9.3%
SOUTHLAND         23,745   12,999   -45.3%   $482,750    $444,000   -8.0%

There you have it - medians down in all six Southland counties in the survey. It's stunning, isn't it, that home sale volume can decline this much and yet prices have barely been dented in terms of affordability. Home prices are STILL goofy.

Daily Breeze: Are housing projects crowding Torrance?

One of the issues I've been harping about on this blog for the past 2 years is the building of the high-density, sardine-can style housing we've seen in places like Centex Fusion, Village on Oak, and 360 at South Bay. People's perceptions of what makes good value in housing will change as social mood changes.

The November 14 Daily Breeze story by Nick Green appears to be a definite example of these changes happening. The story is about the increased gridlock that Village on Oak has brought to the Carson-Crenshaw area of Torrance. It was blatantly obvious to me 2 years ago when there was nothing but a hole in the ground on Oak Street that traffic would get unbearably dense, but somehow the politicians who approved the project just didn't see it that way. Now at least one politician regrets his approval on the project.

The sad thing is that of the 3 major high-density projects I've looked at, either in visiting or passing by - Centex Fusion, Standard Pacific's Village on Oak, and William Lyon's 360 at South Bay - the Village on Oak strikes me as the nicest looking - the least bad of the the three.

You can see some old photos of Village on Oak (and Parkview) under construction by querying this blog with "Oak".

The link may expire, so the story is reproduced here.

Today is Wednesday, November 14, 2007
Originally published Tuesday, November 13, 2007
Updated Wednesday, November 14, 2007
Are housing projects crowding Torrance?
Locals fear that high-density residential units may bring even more traffic congestion to an already busy area.
By Nick Green
Staff Writer

An imposing 3 1/2 story edifice containing 59 pastel-colored condominiums aimed at
seniors called Parkview Court is rising on just 1.15 acres in Torrance at the corner
of Oak and Jefferson streets.

Immediately next door on Jefferson, a crane looms over the wood frames of what city
officials describe as one of the densest developments in the city in the past decade.
Named The Foundry Lofts, the project will boast 86 four-story condominiums on just
1.9 acres.

And next door on Oak, residents already are moving into the largest of the trio of
housing developments that occupies a 13-acre site.

The Village on Oak is a 198-unit town house project that also has a second phase of
33 town houses that will be built next year on the present site of the Rolling Hills
Prep Gym.

The 376 homes jammed into just over more than 16 acres of former industrial land
opposite Wilson Park is unusually dense by Torrance standards, generating calls to
the city from startled residents as construction progresses.

Todd Hayes, co-president of the Old Torrance Neighborhood Association, describes the
development as the “poster child” for precisely the type of housing subdivisions many
residents don’t want to see.

“I think, like most people, it just seems like a big development behemoth,” he said.

“It may be it got out of control,” he added. “What started as a ‘let’s clean up the
neighborhood’ idea morphed into what we’ve been railing against ever since.”

The first 276 homes were approved in 2003, years before political sentiment turned
against rezoning industrial and commercial land for housing. The remainder were added
two years later when the scope of the project was enlarged.

Four years ago, city officials were eager to embrace transforming an eyesore of heavy
manufacturing plants into tidy suburbia.

“This area is really ripe for transition,” Councilwoman Hope Witkowsky said when the
City Council approved the project in October 2003. “I think this sleepy little area
lends itself to this kind of project.”

Except that critics point out there’s nothing “sleepy” about the neighborhood. The
park and its array of recreational facilities across Jefferson is one of Torrance’s
busiest, home to the annual Independence Day celebration that leaves vehicles parked
on streets for blocks in every direction.

In addition, thousands of shoppers come to the farmers market on Tuesdays and
Saturdays, jamming surrounding streets with cars, especially on weekends.

Across Oak Street is Torrance First Presbyterian Church, a so-called megachurch that
is one of the South Bay’s largest, where more than 5,000 worshippers attend Sunday
services.

And the almost 400 homes are being plopped down into an area with limited vehicle
access.

Jefferson dead-ends at Wilson Park, although it’s possible to weave through the
park’s parking lot to reach Plaza del Amo.

There is no traffic signal where Oak intersects with busy Carson Street, a major
commuter artery that makes left turns from Oak virtually impossible.

And the signal at Jefferson and Crenshaw Boulevard, a few yards from another traffic
light where Plaza del Amo meets Crenshaw, is a notoriously familiar bottleneck to
Torrance motorists.

“You’ve just created a nightmare — and they’re still building,” said Councilman Bill
Sutherland, who was elected last year on a platform of stopping what he perceived as
rampant residential construction.

“There’s only two ways in and out (of the area),” he added. “That’s going to be the
biggest downfall.”

So dense are The Foundry Lofts, the crane is needed to move materials around because
of the lack of space on the building site. That’s a common sight in densely populated
Europe, but not so in the U.S.

The development of 86 one-and-two bedroom condominiums is “more urban, something
you’d see in the city,” conceded an employee with developer Standard Pacific, who
asked not to be identified in accordance with company policy.

While those 86 units are crammed onto a lot of under two acres, the entire tract
averages out to 23.5 units to the acre.

“It isn’t as dense as people think it is,” said former Torrance Councilman Don Lee,
who served as a consultant on the project and was elected to the Torrance school
board last week.

Still, for some, the trio of housing developments is too much for suburban Torrance.

“It’s not too dense for everywhere; it’s too dense for Torrance,” Sutherland said.
“We want single-family homes.”

Of course, not everyone can afford a single-family home in a city where the median
price of one is north of more than $675,000, according to Altos Research, which
provides analyses of real estate markets.

“The density and the three-story height is the reason we can offer prices in the
$300,000 range,” said John Mavar, project manager for West Millennium Homes’ Parkview
Court.

About one-third of the one-bedroom homes for seniors that start at $319,000 are
already reserved, he said.

Prices are not yet set for The Foundry Lofts and sales won’t start until next year.

Prices of the town homes at The Village on Oak start at $547,000. “Price was a big
selling point,” said Greg Wong, 35, a graphic designer who recently moved into a
two-bedroom condo in the subdivision. “It didn’t really click it was going to be so
dense.”

Wong, who grew up in Rolling Hills, said he likes his new home, but is already
experiencing problems critics say will only get worse as more residents move in.

Traffic congestion on Saturday and Sunday morning is severe.

It’s a good thing he customarily turns right onto Carson Street to head to the
freeway because turning left is “ugly,” Wong said.

And guest parking is extremely limited.

With six homes sharing a common driveway inside the development, neighborly relations
are a must, he said.

“I’ve met almost everybody,” Wong said. “You have to get along with everybody. It’s
almost mandatory.”

Wong’s neighbor, Mike Martinet, 60, moved with his wife to the development from an
older condo they owned in the Hollywood Riviera section of Torrance.

He, too, simply accepts the density as an inescapable reality.

“Everything is dense, but it’s well-planned,” he said. “It’s the wave of the future.
There is no land left, especially in densely populated areas like the South Bay.”

Still, he also wonders what the traffic will be like in the area once the development
is fully occupied.

But some residents — especially in the senior project — will undoubtedly be like the
75-year-old mother of Torrance resident Esther Kimm.

“It’s very convenient for my mom because her church is right next door and the
farmers market is right there,” Kimm said. “She doesn’t have a car and those are the
two places she goes to the most.”

Sean Doyle, project manager of The Village on Oak, said many of the buyers are from
the South Bay, where smaller, new homes are difficult to find. Mavar agreed.

“I’m finding most (buyers) are local residents who have been watching the
construction as it progressed,” he said. “I’m specifically looking at empty nesters
downsizing.”

Former Councilman Mike Mauno originally voted against approving the residential
development, but not because of its density. He didn’t like the proximity to
industrial uses.

By the time that was removed in 2005 and the 86 units of The Foundry Lofts and the
second phase of The Village on Oak was added, he voted in favor of it.

“There’s a big need for senior units,” he said. “Many parents, like my father, now
are empty nesters and they have these three- and four-bedroom homes and they’d like
to stay in the area.”

Like Mauno, Mayor Frank Scotto also changed his vote on the project — but in the
opposite direction.

In 2003, he voted in favor of the residential development. Two years later, as the
project grew — and the mayoral campaign neared — he switched his vote to a no.

“It’s one of those ones you wish you had back or wish you could do over again,” he
said. “(Initially,) it seemed like it was a good project. The second time around it
was obvious it was too large. … The end result is, it’s going to create an enormous
amount of traffic.”

nick.green@dailybreeze.com
USER COMMENTS ( 5 of 38 total | view all )

"This is ridiculous"
I always avoid driving on Crenshaw between Sepulveda and Carson on Farmer's Market
days because of the gridlock. Once these condos on Jefferson and Oak are at capacity,
you can expect the gridlock to be a daily occurence. It seems to me as an East
Torrance resident, that certain parts of Torrance are excessively over-developed. My
parents live in the Southwood area and their neighborhood succesfully prevented
condos from going up behind the Union Bank buliding. It seems like the city council
values some residents of Torrance more than others.
posted: Wednesday, November 14th at 17:11 PM

"TORRANCE CITY COUNCIL SUCKS"
WHAT A BUNCH OF LOOSERS ALL OF YOU ARE, SHAME ON ALL OF YOU, YOUR TURNING TORRANCE
INTO ANOTHER GHETTO, HOPE ALL TORRANCE POLITICIANS BURN FOREVER IN THE BOTTOMLESS
PIT.

- SHIRLEY
posted: Wednesday, November 14th at 16:40 PM

"Passing Blame"
So easy to blame the past officials. Lets stand up and be counted. Lets vote on a new
General Plan that reflects the wishes of the voters in the last election. We have new
people in office..lets see if they follow through with campaign promises..and the
clock is ticking.....Frankie
- Frankie Lane
posted: Wednesday, November 14th at 16:35 PM

"love all the comments"
torrance is looking pretty shabby and a cramped sardine can.. i agree with the word
disgrace
posted: Wednesday, November 14th at 15:52 PM

"How are the schools affected?"
What about the impact this over development is going to have on Torrance schools! Our
schools where not zone to hold so many people. They are old and in need of repair
already. Just think of the impact the over population will have on the old school
buildings. The traffic around Wilson park is already insane on weekends - sometimes
it takes 30 minutes to get down Crenshaw from Torrance Blvd. to Lomita Blvd. on a
Saturday. This overpopulation will ruin Torrance's appeal and the property values
will go down...way down.
- Torrance Mom
posted: Wednesday, November 14th at 15:37 PM

Sunday, November 11, 2007

Preliminary look at October Redondo Beach sales, and sales and inventory snapshot for the year

Where are the high-end sales?

October 2007 sale records are in a dismal state, and I have low confidence in my numbers for this month. As the data is now, sale prices show a big decline, as do the median and average square footage. Given the rather chaotic nature of this market at the moment, I guess it's possible that prices really have undergone a dramatic decline, but my theory is that the sales data that has been initially reported for October is for the lower-end sales that have been clogged up in the sale pipeline due to mortgage acquisition problems and which are now completed, and that October sales reporting for the more problem-free escrows (high end) will come later. With sales so suddenly heavily weighted toward the low end I can't help but suspect there is either missing data, or the high end buyers have suddenly decided to pack up and leave town. So keep that in mind as you view these PRELIMINARY numbers (with extreme financial-stress outliers thrown out):

STAT     APR 2007   MAY 2007   JUN 2007   JUL 2007   AUG 2007   SEP 2007   OCT 2007      
records       114         91         62         78         51         68         37
MEDIAN   $799,000   $777,000   $764,500   $860,000   $850,000   $857,000   $730,000
AVERAGE  $884,271   $855,228   $830,711   $880,279   $867,925   $935,506   $716,062
MIN      $470,000   $453,000   $485,000   $359,000   $365,000   $369,900   $369,900  
MAX    $1,750,000 $1,640,000 $1,565,000 $2,299,000 $1,510,000 $2,400,000 $1,242,000

So far I only have about 30 good sales in my SUPPLY records for October, so I won't put up charts for that data. However, median DOM for sales from these SUPPLY records is 95, average is 156, minimum is 33, and maximum is 525 days. Median seems quite consistent with what I've calculated for prior months (time on market = 3 months), but average has shot up, so we'll have to wait for more October data before we really know what's going on.

Remember my neighbors across the street? They have finally sold their townhouse for $890,000, which is down $9,000 paid for the place in late 2004, and down 25.8% from their original asking price of $1.2 million in August 2006. The place was tented for a day and somebody has moved in.

Now on to the outstanding inventory and sales for the year.

Before I give these figures, I should mention that over the past month I have made a concerted effort to resolve some of the outstanding inventory in my records, and I was able to. Thanks to the L.A. County tax assessor website, I resolved a lot of records, but the job is unfinished. In spite of that effort, I show the percentage of properties on the market for more than 240 days creeping up relative to percentages for shorter timeframes, so I still have some work to do. Also, remember that negative PCTRED means that occasionally houses are repriced higher than their original asking price, which still happens on occasion.

The following statistics are out of 810 unresolved inventory records (the August snapshot had 792 unresolved inventory records):

           Orig      Curr     Sqft   PCTRED     DOM    
           Ask $     Ask $
MEDIAN    859000    839000    1816     0.0      157
AVERAGE  1013708    981042    1935     2.9      190
MIN       373000    373000     410   -10.5        2
MAX      4990000   4990000    5100    28.8      679

For the 703 good sales from my SUPPLY records, through October so far (the August snapshot had 446 sale records):

           Sqft    Sale $     PCTRED    DOM
MEDIAN     1787    789000       3.4     100
AVERAGE    1837    846752       4.7     127
MIN         410    342500     -14.6      10
MAX        4700   2400000      33.1     573

Overall for 2007, median time on market is about 3.3 months, and average time on market is just over 4 months. Notice that for sales, which are successful transactions, there was a median percent reduction to asking price of 3.4% and an average reduction of 4.7%. For outstanding inventory, the median is NO reduction to asking price, with an average of 2.7%.

I was thinking of publishing charts of my August snapshot versus this November snapshot, but they can be misleading because I have taken steps to resolve some of the questionable inventory in my database since August, so the August data is biased that way. In the meantime, we'll just have to wait and see when more October sale data rolls in.

I will probably discontinue publishing data out of the L.A. Business Journal, for the reason that I now telecommute a lot, and the hard copy of the journal isn't as conveniently available from home.

New inventory is currently rolling in at the rate of about 2.4 properties a day.

Saturday, November 03, 2007

Los Angeles County South Bay Beach Cities Real Estate $$$ Transacted for October 2007

Local realtors can say all they want about how the pricey beach areas and the westside are immune to a real estate slump, but that was certainly not the case in October, which turned out to be the sickest looking month in quite a while.

Of all the zip codes I cover in southwest Los Angeles County west of the 110 freeway and south of the 10 freeway, the following areas roughly match their dollar volumes from October 2006: 90034 - Palms; 90066 - Mar Vista; 90404 - Santa Monica, and the following areas comfortably exceed their dollar volumes from October 2006: 90045 - Westchester; 90094 - Playa Vista; 90254 - Hermosa Beach; 90402 - Santa Monica; and 90501 - Torrance. Everywhere else, October 2007's dollar volume was noticeably down from October 2006. 90064 - Rancho Park, has been on steroids this year but even that area is starting to turn down.

A lot of realtors must be doing something besides selling real estate in order to make ends meet. In my household we have joked for years about how the beach cities economy relies on people selling each other real estate and teaching each other yoga, but there is an element of truth to it.

It is probably safe to say that the affluent are still affluent, and their sources of mortgage funding, should they want it, are still around. If that is true, and they haven't lost a significant portion of their net worth in some hedge fund or private equity blowup, and they still have the bucks, then maybe some of the affluent areas slumped in October for some reason besides lack of funds. Could it be that a deflationary psychological mindset about the housing market is starting to spread, like a virus?

October looked so bad that I think we're due to see full page NAR ads again about what a great time it is to buy a house. I'm also wondering if more credit will imminently materialize out of thin air to pump some oomph back into this market - after all that seems to have been our solution over recent decades, to throw more credit at whatever financial problem roils the country and the world. And with an election year coming, I'm just going to have to get some barf bags and brace myself for what I expect to hear being spewed out of Washington.

In the charts below, notice the YOY line for the beach cities has now gone negative again. Redondo Beach YOY is still above 0% but pointing down. The entire southwest L.A. County area in general remains sick.

105 beach cities properties were sold in October versus 154 October 2006. 64 Redondo Beach properties were recorded by Melissa Data as sold in October versus 97 October 2006. As for new inventory, I managed to find 82 new properties listed in Redondo Beach for October, which obviously has not done anything to erase any "psychological overhang" of unsold properties, even if they are not still listed. I suppose we'll be hearing about a great spring 2008, with lots of "pent-up buying demand", but so far they haven't talked about "pent-up selling demand."

It's hard to believe that the end of this month will mark the 2 year anniversary of this blog. And it's even harder to believe that I got so fed up with what I was seeing in my neighborhood that I started collecting housing sale data - back in early 2002!

YOY Comparisons

Compares a moving average of $$$ volume to the prior year - a measure of Acute Pain.

Realtors fat and happy...
90094         53.2% Playa Vista
90064         43.6% Rancho Park/Cheviot Hills
90293         37.9% Playa del Rey
90254         23.5% Hermosa Beach
90291         19.2% Venice
90275          8.6% Palos Verdes Estates

Not too shabby...
90505          6.8% Torrance
90277          6.3% Redondo Beach (south)

Hanging in there...
90277-90278    1.4% Redondo Beach combined
90732          0.6% San Pedro/Rancho PV

Losing a grip...
90278         -2.3% Redondo Beach (north)
90008         -5.9% Baldwin Hills / Leimart Park
beach cities  -7.6% 4 Beach Cities combined
90292         -9.4% Marina del Rey

Slip sliding away...
90045        -12.6% Westchester
90034        -13.0% Palms
90503        -15.3% Torrance
90066        -17.4% Mar Vista
90036        -18.3% Park La Brea
SW county    -18.3% Southwest L.A. County
90266        -18.5% Manhattan Beach
90035        -19.8% West Fairfax
90401-90405  -20.7% Santa Monica combined
90230        -21.2% Culver City
90019        -23.1% Country Club Park/Mid City
90232        -27.0% Culver City
90717        -28.5% Lomita
90250        -29.2% Hawthorne

Sliding over a cliff...
90501-90505  -32.1% Torrance Combined
90007        -33.6% South Central
90504        -41.4% Torrance
90056        -42.0% Ladera Heights
90245        -43.2% El Segundo
90016        -43.4% West Adams
90501        -47.5% Torrance

Off the cliff, Thelma and Louise style...
90047        -51.8% South Central
90745        -52.1% Carson
90302        -53.0% Inglewood
90044        -56.4% Athens
90260        -58.5% Lawndale
90304        -58.6% Lennox
90249        -58.7% Gardena
90303        -59.6% Inglewood
90062        -61.4% South Central
90301        -62.5% Inglewood
90746        -62.5% Carson
90043        -63.8% Hyde Park, Windsor Hills
90018        -66.0% Jefferson Park
90301-90305  -66.1% Inglewood/Lennox combined
90502        -67.5% Torrance
90037        -70.5% South Central
90305        -78.5% Inglewood
90744       -160.8% Wilmington