Westside pending sales 7-13-09 thru 7-17-09
Notes on a Purchase Contract Part II
*Due to foreclosure activity and the overall economy, I predict that Westside/South Bay prices will start to bottom out in mid 2010 with sales activity getting very strong in the spring of 2010. If things stay status quo, 2011-2012 will be the beginning of a fairly long period of flat growth and low sales activity with homeowners handcuffed to interest rates we may never see again.
*With the Condo market off as much as 30% in some Westside areas it is not a bad time to start thinking about purchasing a condo to live-in and eventually become a long-term investment play. . .4th quarter of this year and 1st quarter of 2010 could be the time to strike. . .
*Notable Sale: A few weeks ago I wrote about the new construction “green” house located at 133 17th Street finally being in escrow. The 5 bed/6 bath 4,690 sq. ft home on a 8,900 lot officially sold a few days ago for $3,498,000. A pretty substantial drop from the original $4,800,000 list price.
*Talk about paying for a view: 859 Woodacres, a 1 acre flat lot overlooking Riviera Country Club hit the market last week for 13 million. The lot has sat empty for several years and projects that were supposed to start never got off the ground. It will be interesting to see what it sells for. My guess is around 8.5 to 9.0 million.
*Food for thought: There are 77 million Americans born between 1946-1964. One-third have zero retirement savings. The oldest are 62. How many must sell to retire effectively?
Notes on a Purchase Contract Part I
*The best house I have seen the past two weeks on the Broker Caravan was 16104 Northfield Street in the Palisades with a list price of $2.875 million. The 2005 construction home has great curb appeal, a very functional floor plan and does an excellent job of capturing natural light. One of the only negative things about the home is the lack of back-yard space which could turn off a family with young children. I still expect this home to sell fairly fast above 2.75 million. The home is over 4,000 sq. ft. and boasts 5 bedrooms.
Runner-up: 1208 Pacific Street in South Santa Monica. The 3 bed/2 bath 1,660 sq. ft. home on a 7,200 lot commanded multiple offers and went into escrow within 6 days of being on the market. The list price was $1,429,000
*The mood of most sales agents has improved dramatically with sales activity picking up tremendously over the past two months. In February you would have thought the grim reaper was taking hold of most real estate offices but things have definitely changed with the arrival of the spring/summer selling season and more realistic seller’s. Quality homes that only require a conventional or FHA loan (homes under a million dollars) have been seeing multiple offers. I expect activity to stay strong through the rest of the summer selling season before fading again as October approaches.
Foreclosures and the Westside
Pre-foreclosure data seems to suggest the Westside is going to get hit with a wave of foreclosures in 2010. Currently in Mar
I already know of 2 examples in Santa Monica where the banks have agreed to lowering interest rates on mortgages to 3% for the next 3 to 5 years and then fixing them around the 5% mark. In one case the person’s monthly mortgage payment was cut in half!
Inevitably, the foreclosures will continue to increase on Westside especially with the foreclosure moratorium period now passed. However, I don’t believe we will see the tidal wave of foreclosures that some housing bloggers are predicting. The banks will do what they can to avoid that.
Condo Sales Statistics for June in select Westside areas
Westside Single Family Sales above $5 million in June
According to the Multiple Listing Service “MLS”, seven sales above five million closed escrow in June. The two highest sales were in the Malibu Beach area and they both were in the ten-million range.
A quick recap of five of the sales:
23330 Malibu Colony Road: 3,355 sq. ft./8,708 Lot 5 bed/5 bath plus 1bed/1bath guest house. The house is right on the sand. It was Originally listed for $14.5 in 2007, $12.995 in 2008 and sold for its 2009 list price of $10.950. Sold 6/17/09
25030 Malibu Road: 4,200 sq. ft./7,888 Lot 4 bed/5.5 bath. Just completed remodel in 2008. Located on “Old Malibu Road” with 3 levels and a rooftop deck. Originally listed for $16.950 and was on the market for 408 days. Sold for $10.6 on 6/2/09.
480 Homewood Road (Brentwood- North of Sunset): 9,210 sq. ft./20,710 Lot 6 bed/7 bath + Guest house and pool. New construction with East Coast traditional feel. Originally listed for $9.350 and sold for $8.350 on 6/10/09. It was on the market for 97 days.
1121 Shadow Hill Way (Beverly Hills Post Office): 11,679 sq. ft./44,800 Lot 6 bed/8 bath + Guest house, pool, putting green and gym. Originally listed late last year for $10.685 and and sold for $7.80 on 6/3/09. Built within the last 10 years.
*Quick sale: 375 North Saltair Avenue (Brentwood- North of Sunset): 6,700 sq. ft./27,755 Lot 6 bed/6.5 bath. Mediterranean style estate with 4 seasons feel. Excellent condition. Listed for $5.995 and sold for $5.677 and was only on the market for 29 days.
Commercial Real Estate Update. . .
U.S. apartment vacancies near historic high: Highest in 20 years
The vacancy rate for U.S. apartments reached its highest level in more than 20 years. The national vacancy rate rose to 7.5 percent. The record high was 7.8 percent in 1986.
Effective rent was down 1.9 percent from the prior year and 0.9 percent from the first quarter to $975, Reis said.
Article: Vacancies near historic high
US office market continues to spiral down
The U.S. office market vacancy rate reached 15.9 percent in the second quarter, the highest in four years and rent fell by the largest amount in more than seven years as demand from companies and other office renters remained weak, real estate research firm Reis said Inc.
The Reis forecast is for the U.S. office vacancy rate to top out at 18.2 percent in 2010 and for rent to continue to fall through 2011.
Article: US office market continues to spiral down
Strip Mall Vacancy Rate Hits 10%, Highest Since 1992
Reis reports the strip mall vacancy rate hit 10% in Q2 2009, the highest vacancy rate since 1992. Effective rent declined 3.2 percent year-over-year to $17.01 per square foot.
About 7.9 million square feet of space was returned to the market during the quarter. The amount was second only to the 8.1 million square feet in the first quarter. In U.S. regional malls, vacancy rate rose to 8.4 percent, the highest vacancy level since Reis began tracking regional malls in 2000.
“Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest.”
Most home buyers expect to put 10% or less down
Isn’t this the same mentality that helped create all of the current housing troubles?
Zillow’s Amy Bohutinsky said of the nearly one-fifth of buyers who plan to put no money down, “Given the fact that home values are still declining in most markets, this surprises us.”
(Source: LA Times)
L.A. County’s May default rate almost double of last year
The percentage of Los Angeles County mortgages delinquent by 90 days or more in May was nearly double the rate last year, First American CoreLogic reported this week.
May’s 9.5% delinquency rate for L.A. County was up from 5% of mortgages late by 90 days or more in May 2008. First American bases its foreclosure analyses on public records.
(Source: LA Times)
West Manhattan Beach Analysis
The median price for Single Family Residence’s “SFRs” west of Sepulveda was down 22.4% ($1.980m to $1.535m), comparing the first half of 2007 with the first half of 2009.
There are two major factors with the median price drop. Obviously, due to the economy and less demand, the same properties are trading for less money. For example, a standard Tree Section new construction home built on speck might have gotten $2.1m-$2.4m in 2007, will now go for between $1.6m to $1.8m.
The other and more significant change, which is the case in all coastal communities, is the amount of sales in specific price ranges.
In 2009, the bulk of sales are at the lower end for the area West of Sepulveda (under $1m), pulling the median price down while sales at the higher end ($2m-$3m) are stagnant with the super high end (above $3m) staying fairly steady over the past 3 years.
About half of the Jan.-June sales in both 2007 and 2008 occurred below $2m. In 2009, fully 75% of sales were in that range. That’s a significant, 50% increase!
Another number that really stands out is the share of sales priced below $1m. Accounting for only 2-5% of all sales in 2007-08, low-end sales hit 21% of all sales in 2009.
The biggest drop in sales happened between $2.5m-$3.0m, which have accounted for 1% this year, in 2007 and 2008 it was at 12% and 15%. If you look at the range of sales between $2.0m-$3.0m, it shrank from 30% in 2007-08 to around 13% this year.
Here are the numbers of sales in the 2 categories with the greatest change:
Sales Priced At $1m or Below
Sales Priced Above $2.51m, up to $3.0m
Please note, this is from MLS data and excludes off-market sales.
The sales pace for the area is off 41% from the first half of 2007 (129 closed sales vs. 76). The scary thing is the first half of 2007 from an historical perspective was one of the worst performing periods compared to the prior 20 years.
Due to lower interest rates, higher inventory and the over 20% price adjustment in the market, I predict sales volume in West Manhattan Beach to pick up throughout the rest of 2009 and into 2010 while the median sales price continues to decrease at a slower, steadier pace.
(*Sources: The MLS, Manhattan Beach Confidential)