Notes on a realtors scorecard

Notes on a Realtors Scorecard- The buzz from the street and networking meetings…

*New Construction continues to be in high-demand all over the Westside/South Bay and with that, tear-down lots are selling at strong premiums provided sellers have solid representation and don’t sell directly to a builder.

*In the past seven years, the value of land has exploded on the Westside. Lot values have grown 75-120% (depending on the area) while the average sales price has only gone up 45%-65%. A gap between new construction and tear-downs has opened up to the point that homes that were once considered livable while making a few upgrades, is now being scraped.

*Marina Del Rey might be the hottest market over the past 90 days, as entry level townhouses seem to be up about 10% in just three months. At one point the Marina was flying under the radar while areas like Playa Vista were on fire.  Properties that were selling for around $800K three months ago are going for closer to $900K now…

*Entry-level price points across Los Angeles continue to rise at a very strong pace, especially under the $2M mark. They type of multiple offer activity we are seeing from inner-city areas like Leimert Park, Jefferson Park, West Adams to the entry level condo in Culver City and Santa Monica is crazy. We were just involved in a multiple-offer situation for a condo on Girard Avenue in Culver City. The 1,200 sq. ft. 2+2 townhouse with a generous outdoor space had over 200 people at the first open house and attracted 15 offers at the $779K list price. Despite being across from a school and about a mile from the popular downtown Culver City area, the unit is in escrow for around $860K! Three years ago it sold just under the asking price for $615K. At the higher-end entry level points, we are seeing the same thing. It is almost impossible to get a house North of Montana in Santa Monica that is not a tear-down for less than $4M and small South Santa Monica homes in decent shape are trading for $1.750M+.

*Wealthy families and individuals are getting very aggressive when it comes monopolizing properties on the Westside/South Bay. They are buying properties, especially single family homes, at a quicker pace then we have ever seen before. Whether they are buying for their children or just investment purposes, these buyers are aggressive and feel the best long-term leveraged investment is real estate. A few principles have clearly stated to their agents that in the long run, the best financial investment they have ever made is Westside/South Bay real estate.

*Despite rates being about 15% higher than at this time last year, we are still seeing solid price appreciation. 

*The higher-end price point in each micro market is the only area that is somewhat struggling yet even then the choice properties are still moving quickly.

*The historic rains we received earlier in the year has led to a back-log of construction and some developers are hiring any subs they can to finish jobs which means the quality on some projects will be sub-standard.

*Speaking of historic rains, those of that live in the hills/fire hazard zones, should take note that officials are expecting this to be one of the worst fire seasons in years. The extra plant and grass growth will die during the summer months creating extra fuel for wildfires and the Los Angeles Fire Department wants to make sure everyone living in hillside areas is properly clearing brush near their homes. California also has a massive amount of dead trees from the recent drought so this combination is extremely combustible…

*Pricing your property for sale correctly at the outset is the key.  We can’t over-emphasize this enough.  Proper marketing and pricing within the first 10-14 days can be the difference in $100K’s of thousands of dollars to the seller depending on price point. If a property doesn’t sell in the first few weeks in this fast moving world, the first question a buyer asks is “what is wrong with the property?”…not the thinking you want from a perspective buyer. 

Notes on a Realtor’s Scorecard

I hope you are enjoying the summer that has finally arrived in Southern California. This has to be one of the cloudiest and dreariest summers in the past quarter century. With the sun finally coming out, people are out taking advantage of it and the real estate news cycle is fairly slow but as you will see below, we have a few interesting items to alert you to.

Mortgage Delinquencies Up Nationally: One in 10 American households with a home loan was behind on payments by at least one month this summer, the Associated Press reported. Mortgage Bankers Assn. report on second-quarter delinquencies as saying that 9.9% of borrowers fell into that category as of June 30. In a worrisome sign, the number of homeowners starting to have problems paying their home loans rose after trending downward last year. But the number of homes in the actual foreclosure process fell slightly, the first drop in four years, according to the Mortgage Bankers Assn. quarterly report.

New Homes Sales Reach Record Low:
With the expiration this spring of federal tax credit, sales of new homes were at their lowest point since the government began keeping records in 1963…California even has a $10,000 tax credit in place for buying new construction but it doesn’t seem to be helping.

Sign of the Times:
Sales of previously occupied homes plunged last month to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas. July’s sales fell by more than 27 percent, the largest monthly drop on records dating back to 1968, and sharp declines were recorded in all regions of the country.

Another example of 2004 pricing… A look at the 90401 zip (Santa Monica): This area is bordered by 11th Street to the East, The Pacific Ocean to the West, Wilshire Boulevard to the North and Pico Boulevard to the South and considered a starter area for Santa Monica, is within walking distance to Downtown and the Santa Monica shopping center. A few notable sales show prices trending toward 2003 levels…

1252 11th Street
# 304 90401; 2+2, 1,142 sq. ft. YB:1973
Sold on 5/27/04 for $500,000
Sold on 5/6/10 for $450,000
Note: REO, Tenant Occupied

1239 9th Stree
t # 7 90401 1+1, 598 sq. ft. YB:1987
Sold on 10/28/05 for $440,000
Sold on 4/27/10 for $385,000

Notes on a Realtor’s Scorecard

The Santa Monica 90404 zip code: bordered by Wilshire Blvd. to the North, Pico Blvd. to the South, 11th street to the West and Centinela to the East functions as an entry level market for the area and in examining sales in 2010, both condo and single family home values have dropped back to 2004 levels and seem to be trending toward 2003 levels… starting to be a good time to buy with record low interest rates?

Check out these price reductions:
12624 Brooklake:
This 4-bed, 6-bath, home in Mar Vista is newly relisted at $1,679,000 after substantial time on the market between $2,199,000 and $1,749,000. The new listing price is a 24% reduction from the January 2010 list price. This is further evidence that the high end market in Mar Vista is struggling.

1925 Mandeville Canyon:
This 3-bed, 3-bath Cape Cod style home situated on a half acre lot in North Brentwood is currently listed at $1,849,000. The property’s list price has taken almost a $1M hit since its listing in September 2009 at $2,795,000… a 34% reduction in asking price. Despite the septic tank issues on Mandeville, this home should sell fairly soon now that it is priced as it is.

408 17th Street sells for 16% less than list price:
This 5-bed, 4.5-bath, 3,522 ft2 home on a 7,500 ft2 lot sold on 8/2/2010 for $3.15M, about $600K, and 16% below its May list price. This is a sign that realistic sellers are definitely willing to work with buyers in high priced neighborhoods.

… Are these signs that the next 12 months will be a great time to buy?

Wells Fargo owned Malibu beach house sells: The 3,800 sq. ft. Malibu beach house that was at the center of a Wells Fargo public relations storm last year finally sold after nearly 11 months on the market. The house was surrendered to Wells Fargo in May 2009 after the Madoff fraud exposure, and was first listed at $21.5M. It was then reduced to $18M and sold this week for $14.95M.

Smoking Ban on the Santa Monica Pier: This ban is soon soon to go into effect. Smoking on the Pier, a 100yr. old landmark, has been confined to designated areas and will soon be outright banned.

Century Plaza Plan for Two Tall Towers Released: A new plan for the Century Plaza was released this week by Next Century developer Michael Rosenfeld. This project plans for two 46-story skyscrapers to go up behind the Century Plaza Hotel. This is an attempt to “strengthen the identity of Century Plaza” while adding 290 condos and 190,000 square feet of offices/retail.

LA Times Article: New plan for Century Plaza hotel adds two 46-story towers

Notes on a Realtor’s Scorecard

– Mortgage Rates: The typical rate being offered this week for a 30-year fixed-rate home loan was unchanged at 5.07%, with borrowers paying 0.6% of the loan balance in upfront lender fees, Freddie Mac said Thursday.

– Existing-home sales (National), which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009.Total housing inventory at the end of March rose 1.5 percent to 3.58 million existing homes available for sale, which represents an 8.0-month supply at the current sales pace, down from an 8.5-month supply in February. A normal market has under 6 months of supply and excludes some substantial shadow inventory.

– Playa Vista: Steve Soboroff is stepping as chairman and chief executive of Playa Capital Co. LLC, the developer of the 1,000-acre Playa Vista community near Marina del Rey.

Management responsibilities now fall in the hands of Patti Sinclair and Randy Johnson. His decision follows the Los Angeles City Council’s April 6 approval of the second and final phase of the development. A legal challenge from project opponents is expected.

Sinclair and Johnson both said their focus will be on selling the land for the final phase to developers. The 111-acre site is entitled for 2,800 homes, a shopping center and office buildings.

Playa Capital is in talks with potential developers of the property, including Rick Caruso, developer of the Grove and other Los Angeles-area retail centers. Caruso was slated to build a shopping center at the site before a delay in the entitlement process killed the deal.

– Commercial Note: As expected, Westside vacancies are up and Class A asking rents are down to $3.81, off from $4.21 from a year ago. Rates for Class B space actually increased six cents to $3.06, but were off more than 15 percent from 2009’s first quarter. The bright spot is that at a 10.5% vacancy rate, West Los Angeles has the lowest vacancy rate in the country.
In comparison, Downtown’s Class A asking rent is about $3.27.

– SM Foreclosures: According to Foreclosure Radar, there are 211 properties in some stage of foreclosure in Santa Monica. The breakdown by zip code is as follows: 90401 (8), 90402 (26),90403 (52),90404 (61), 90405 (64)
**For the foreclosure numbers for your specific area, please e-mail us.

– A measure (SB 401) signed last week by Gov. Arnold Schwarzenegger waives state taxes on mortgage debt forgiven in a foreclosure or short sale

Borrowers are required to be owner-occupants of the principal residence, show financial hardship and have a first lien mortgage originated on or before Jan. 1, 2009 with a principal balance that does not exceed $729,750. In addition, the borrower’s total monthly mortgage payment must be greater than 31% of his or her monthly gross income.

Notes on a Realtor’s Scorecard

(i.e.- weekly neighborhood notes, school info, random real estate news, etc):

*In the ritzy 90402 Santa Monica zip code, the cost of buying a home (based on a 20% downpayment and 5.5% interest rate) is about double the cost of renting. . .

*The Santa Monica City Council unanimously approved St. Monica’s development plan which includes adding a new 27,500 sq. ft. community center, 7,700 sq. ft. of new classrooms, three levels of subterranean parking and renovating the auditorium and athletic facilities. They hope to begin the project sometime next year and should take three to four years to complete. Please read more at . This will be great for the community and help St. Monica’s schools continue to improve their academic reputation. However, this project combined with the California Incline project means serious traffic issues for North of Wilshire residents.

*Manhattan Beach’s sand dune hill (extremely popular with fitness enthusiasts and sports teams) will finally re-open but with restrictions requiring people to reserve online and expected to pay a $3-5 usage fee. The fee will be used to help maintain the area and it will also cut down on usage by 70% to appease the neighbors…don’t be surprised if a similar fee is enacted at the Santa Monica stairs in the next few years…fitness enthusiasts beware.

*Prudential Southern California had 1700 transactions in March which is the best March the company has had since 2005. In fact, the company is already profitable for the year, two months earlier than last year.

* Foreclosure Radar reports that notices of default (NODs) recorded in California for February amounted to 31,004, a jump of 20% from the 25,904 in January. Notice of trustee’s sales (NOTS) filed in February increased by 4% to 28,195, from 27,220 in January. Both the increases in NODs and NOTS reverse the three-month trend of decreases seen since the November cyclical slowdown in foreclosures at the end of each year.

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