Month: March 2009

Home market under $850,000 springs into action

The number of homes and condos sold and in escrow throughout March is higher than January and February combined. . FHA financing helps buyers get off the sidelines. .

After a brutal start to 2009, the housing market has finally sprung into action, especially in the home and condo market under $850,000. Besides the typical spring time activity surge, the market has been aided by record low interest rates and the availability of FHA financing (up to $729,000 in California) requiring borrowers to only put 3 to 5% down for a purchase. FHA loans also allow buyers without superior credit to still qualify for competitive mortgage rates.

I have represented clients in five deals in over the past three weeks. Each property ended up getting multiple offers and they were located in Mar Vista, Culver City and Westchester. All of these situations involved a seller that priced the home at or below the true market value. Buyers in this market must perceive a good value in the property for them to write an offer within the first two weeks.

The majority of the offers being submitted are through FHA financing. In fact, the deal in Westchester initially wanted to only accept offers from buyers qualified with conforming loans. They did not receive any offers. Once they lifted that requirement they promptly received three offers and are in escrow at very close to the asking price.

Overall activity has picked up substantially in March compared to the previous four months. However, it is still below normal volume levels.

Please see the statistics of single family residences (SFR) and condos (CC) for selected areas below from March 1st thru March 26th. This information was gathered from the Multiple Listing Service (MLS)

Pacific Palisades: 20 In Escrow; 11 Sold (25 SFR and 6 CC)
Manhattan Beach: 27 In Escrow; 16 Sold (34 SFR and 9 CC)
Santa Monica: 42 In Escrow; 22 Sold (15 SFR and 49 CC)
Mar Vista: 16 In Escrow; 20 Sold (24 SFR and 12 CC)
West Hollywood Hills/Sunset Strip: 30 In Escrow: 10 Sold (38 SFR and 2 CC)
Brentwood: 25 In Escrow: 14 Sold (20 SFR and 19 CC)
Culver City: 30 In Escrow: 18 Sold (26 SFR and 22 CC)
Westchester: 19 In Escrow: 12 Sold (26 SFR and 5 CC)
Marina Del Rey: 18 In Escrow: 13 Sold (2 SFR and 29 CC)
Beverly Hills: 13 In Escrow: 7 Sold (13 SFR and 7 CC)
Beverly Hills Post Office: 5 In Escrow: 10 Sold (15 SFR)
Playa Vista: 5 In Escrow: 3 Sold (8 CC)
Hermosa Beach: 13 In Escrow: 6 Sold (13 SFR and 6 CC)
North Redondo: 22 In Escrow: 26 Sold (11 SFR and 37 CC)

* One glaring exception is Malibu Beach. According to the MLS the area has only 1 deal in escrow and zero sales for March!

New construction plagues Palisades Riviera

After shrugging off the real estate downturn and showing appreciation when the market as a whole was down, the Palisades Riviera is headed towards a significant downturn in 2009.

Sitting on the mesas above the famed Riviera Country Club, The Palisades Riviera is a neighborhood of homes with gracious lot sizes, wide streets and a climate that has attracted the wealthy and famous for over 75 years. Most home sales in the Riviera are above 4 million and can be 20 million plus.

The tough economic times and lack of jumbo financing is obviously the main cause for a stagnant market. However, adding further downward pressure is 6 newly built homes that are on the market from $6,495,000 to $11,850,000.

In the past few weeks, 981 Napoli was reduced to $6,995,000 from an original asking price of $8,600,000. The same developer just finished the house next door and that debut this week at $6,495,000 (1,000 sq. ft. smaller 981 Napoli). According to sources, 981 Napoli has received offers but not at a price and terms the developer is comfortable with. After closing costs, it looks like both of these properties could sell at a loss.

532 Spoleto Drive (over 10K square feet) has been reduced within 70 days from an initial asking price of $13,850,000 to $11,850,000. This property could easily see a further reduction into the low $10,000,000 range before they start getting serious interest.

The cause for the Spoleto and Napoli properties is further hindered by two newly built homes hitting the market within the past three weeks priced at $8,995,000 and $9,495,000.

With developers having equity tied up in these homes and construction financing being extremely difficult to find, the tear down lots available in the Riviera are also stagnant and seeing price reductions. Currently, the Riviera has eight tear down lots available with half of them providing views. Slightly over a year ago most of these lots would be sold before they even hit the market.

According to the MLS, only 1 home in the Riviera is in escrow. 3 sales have closed in the area (1 off market) this year.

The good news for the Riviera residents is that buyers are out looking. The broker caravan this week was the busiest it has been all year with people touring properties with realtors.

The high end is starting to pick-up with a flow of jumbo money becoming available in the next few weeks. A few Westside properties priced over $4,00,000 went into escrow this past week.

The bad news for the neighborhood is that buyers have plenty of options, leaving the developers to continue to drop their prices at an accelerated pace if they want to get out of this market anytime soon.

New restaurant coming to Santa Monica

Chef Jean Francois Meteigner, who owns and operates La Cachette in Century City, has leased a space in Santa Monica where he plans to open a bistro version of his popular French restaurant this summer.

La Cachette, which is known for being stylish but not snooty, will operate in more than 4,000 square feet indoors and also serve food on a 1,500-square-foot patio.

The restaurant will be located at 1733 Ocean Ave. just north of the Viceroy Hotel and across the street from the Loews Santa Monica Beach Hotel.

Mortgage rates hit record lows

The average rate on 30-year fixed-rate mortgages hit a record low this week, after the Federal Reserve announced it would purchase Treasury securities over the next six months, Freddie Mac’s chief economist said on Thursday.

The 30-year mortgage averaged 4.85% for the week ending March 26, the lowest point since Freddie Mac’s weekly survey began in 1971. Last week, the mortgage averaged 4.98%; the mortgage averaged 5.85% a year ago.

It is a good time to contact your lender if you need to refinance!

Please contact me if you would like to discuss the market and potentially take advantage of these rates in a down market.

Article on Mortgage Rates: Mortgage Rates Hit Record Low

Jumbo financing in the pipeline

New money is about to flow into an area of the real estate market that has been hardest squeezed by the credit crisis: mortgages too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration.

Bank of America, the country’s largest mortgage lender, is rolling out a large program to finance loans between about $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5% range. The loans will be available through the bank’s retail network and through its Countrywide Home Loans subsidiary.

If you’ve been postponing a purchase, sale or refi because the loan amount you need is too big for Fannie, Freddie or FHA, check out the new, non-Wall Street sources of jumbos.

Full Article by Kenneth Harney of the LA Times: New supply of ‘jumbo’ financing in pipeline

Small lot in 90404 zip under $400K

Yes, you read that right, a very small (1,400 sq. ft.) lot with a house in a great location, just south of Wilshire and near Centinela with an asking price of around $400K.

The lot currently houses a 700 sq. ft. 1+1 house which isn’t very functional. This is a classic case of a flip gone wrong. The lot and house was bought for $490,000 in 2005 and the “flipper” had plans to add a second story master bedroom and reconfigure the 1st story. The only progress they made was to put a few upgrades into the 1st story before pulling the plug. With the second story addition, this can actually become a great condo alternative home with views. Perfect for a young couple or a bachelor.

This is a “short sale” which are difficult and can really test your patience. However, I see upside with this project over time, especially if you can pick it up for under $400K. Please contact me if you would like more information and possibly see the property.

The New Black Mold. . .Stinking Drywall?

In Florida, a handful of lawsuits have been filed against the manufacturers of a sulfur-tainted drywall manufactured in China and the builders that installed it during the housing boom.

The building product was distributed in many states, including California, and may have been installed in tens of thousands of homes, sickening residents and causing structural damage. They have likened the problem to the wave of construction-defect litigation over mold, which peaked earlier this decade.

Article: Lawsuits filed over Chinese-made drywall

West Hollywood and Venice take a big hit

The sales figures for West Hollywood and Venice (90291) mirror those I reported last week concerning other Westside cities. It is brutal out there.

Melissa Data, which lumps Single Family Residence’s and Condos together, gives an average selling price which is a great overall indicator of what is selling and what is not. We can clearly see from the data below the recent dismal sales activity is happening at lower price points.

West Hollywood 90069

Total Sales Volume – (2/2008) $22,865,000, (2/2009) $5,430,000 (-77.3%)

Average Sales Price – (2/2008) $1,345,000, (2/2009) $543,000 (-59.6%)

Venice 90291

Total Sales Volume – (2/2008) $10,087,000, (2/2009) $6,592,000 (-35.6%)

Average Sales Price – (2/2008) $1,441,000, (2/2009) $824,000 (-42.8%)

Startling Westside Sales Statistics

The Westside has seen sales decline steadily since mid 2007 with sale prices staying fairly steady compared to most of Southern California. Unfortunately, sales activity since the beginning of the 4th quarter of 2008 is at historically low levels and a strong price drop will not be adverted, especially in areas priced well above conforming loan limits. The sales for the first two months of 2007 and 2008 are included to provide the contrast in markets. If you would like more detailed information, please contact me.

Thru March 1, 2009:

Santa Monica:
Single Family Residences (SFR): 111 Active; 12 In Escrow; Sold= 9 (Down 79.6% from 2007 )
*Highest Sale: 3.7 million and the only sale over 3 million!
Number of Sales in the first 2 months of 2008: 33
Number of Sales in the first 2 months of 2007: 44

Beverly Hills:
SFR: 121 Active; 8 In Escrow; Sold=7 (Down 80.6% from 2007)
*Highest Sale: 8 million with 2 other over 3 million.
Number of Sales in the first 2 months of 2008: 23
Number of Sales in the first 2 months of 2007: 36

Pacific Palisades:
SFR: 193 Active; 14 In Escrow; Sold= 14 (Down 70.9% from 2007)
*Highest Sale: 14.5 million w/ 4 other sales over 3 million.
Number of Sales in the first 2 months of 2008: 45
Number of Sales in the first 2 months of 2007: 48

Malibu Beach:
SFR: 70 Active; 1 In Escrow; Sold=6 (Down 77% from 2007)
*Highest Sale: 14.6 million; next highest 4.6 with three over 3 million.
Number of Sales in the first 2 months of 2008: 5
Number of Sales in the first 2 months of 2007: 26

SFR: 160 Active; 17 In Escrow; Sold=16 (Down 55% from 2007)
*Highest Sale: 13.5 million w/ 7 selling for more than 3million.
Number of Sales in the first 2 months of 2008: 32
Number of Sales in the first 2 months of 2007: 35

Beverly Hills Post Office:
SFR: 146 Active; 13 In Escrow; Sold= 6 (Down 66.6% from 2007)
*Highest Sale: 3.7 million w/ 1 other over 3 million.
Number of Sales in the first 2 months of 2008: 16
Number of Sales in the first 2 months of 2007: 18

SFR: 271 Active; 24 In Escrow: Sold= 8 (Down 70% from 2007)
*3 sales in the 3 million in range. Lowest was 1.6 million
Number of Sales in the first 2 months of 2008: 15
Number of Sales in the first 2 months of 2007: 26
Less pricier areas of the Westside:

Mar Vista:
SFR: 80 Active; 26 In Escrow; Sold= 21 (Down 59% from 2007)
*Highest sale 1.7 million w/ 3 over 1 million and one over 750K.
Number of Sales in the first 2 months of 2008: 43
Number of Sales in the first 2 months of 2007: 51

Culver City:
SFR: 46 Active; 25 In Escrow; Sold= 14 (Down 50% from 2007)
*3 sales over 750 K w/ highest at 850K.
Number of Sales in the first 2 months of 2008: 27
Number of Sales in the first 2 months of 2007: 28

SFR: 62 Active; 23 In Escrow; Sold= 20 (Down 52.4% from 2007)
*3 sales over 750K w/ over 1 million.
Number of Sales in the first 2 months of 2008: 30
Number of Sales in the first 2 months of 2007: 42

California won’t get much housing relief

The Obama administration’s plan to stave off foreclosures could fall flat in California, where nearly one-third of mortgage holders are underwater on their loans — many of them by amounts that would disqualify them for government-sponsored refinancing.

Earlier this week, Zillow was projecting only 9% of California mortgages met the parameters for assistance.

Hmm, maybe we should let the market naturally find the bottom. The near term will be tough but I bet we would recover faster.

LA Times Article: Obama plan won’t help many California homeowners

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