Thursday, February 25, 2010

Real Time Market Data: Santa Monica and 90402 zip

*Data provided by Altos Research

Real Time Market Data: Mar Vista (90066)

*Data provided by Altos Research

Reat Time Market Data: Pacific Palisades and Brentwood

*Data provided by Altos Research

Chase Bank By Far the Worst at Finalizing Loan Modifications

The nonprofit news group ProPublica reported yesterday that 97,000 homeowners have been stuck in trial loan modifications for more than six months under the government's anti-foreclosure program, which was supposed to generate permanent modifications after three months.

60,000 of those 97,000 borrowers have their mortgages with JPMorgan Chase & Co. . .WOW. . .can you say extend and pretend. . .

Rents down about 9-13% in North Santa Monica Since 2008

With vacancy rates continuing to rise in Santa Moncia, rents in the 90402 and 90403 zip codes are down about 9-13% since 2008. According to Westside Rentals, around 280 1 bedroom apartments are for rent in these high priced zip codes.

After a slow three month period, local landlords have seen activity has pick-up dramatically the last few weeks and rental rates are expected to stabilize at the current rates through the spring and summer months.

Commercial Note: Cali Hotel Market Yet To Hit Bottom

California's hotel market was late showing up to the foreclosure party but their arrival was inevitable. The median price per room is down 30% from 2008 and 38% from 2007. Most hotels presently on the market are still priced too high to sell and Atlas Hospitality Group another 10-20% drop in 2010.

Lenders in 2009 continued to delay processing the foreclosure of distressed hotels, opting instead to extend the forbear in order to defer the reporting of their losses. Although REO hotels made up 73% of the 2009 sales transactions, the majority of distressed hotels have still not been sold.

Foreclosures will dominate the market in 2010 and that is welcome news to developers who turn a profit by converting struggling hotels into condos and/or timeshares. Conversion happens to prime coastal hotels during every recession.

Sources: California Hotel Sales Survey Year-End 2009 and First Tuesday Journal

Monday, February 22, 2010

Westside Neighborhoods Based on Price Per Square Foot Since 2007: Between 15% to 30% in losses

Here's an overall snapshot of Westside neighborhoods based on Single Family Residences and their performance over the last 2 years ranked from highest in decline to lowest decline based on price per square foot. These type of losses help explain why many buyers are out testing the market right now despite the fact that some of the losses are only 1/3 of the average for LA County...Is it too early to buy in some of these neighborhoods? The current activity of buyers would lead us to believe it is not...if only we had a crystal ball.

1) Malibu 90265 ($734/sqft) -29.7% (2008-2009)

2) Marina del Rey 90292 ($506/sqft) -28.9%

3) Pacific Palisades 90272 ($728/sqft) -22.5%

4) Venice 90291 ($712/sqft) -22.4%

5) Beverlywood 90034 ($456/sqft) -21.5%

6) Culver City 90230 ($467/sqft) -20.6%

7) Santa Monica 90405 ($676/sqft) -19.9%

8) Santa Monica 90403 ($811/sqft) -19.4% (2008-2009)

9) Santa Monica 90402 ($876/sqft) -19.3%

10) Westwood 90024 ($616/sqft) -18.8%

11) Brentwood 90049 ($654/sqft) -17.8%

12) Beverly Hills 90211 ($621/sqft) -17.6%

13) Rancho Park 90064 ($547/sqft) -17.2%

14) Mar Vista 90066 ($531/sqft) -16.2%

15) Bel Air 90077 ($572/sqft) -15.5% (2008-2009)

16) West LA 90025 ($599/sqft) -14.8%

Comparatively, the entire County of Los Angeles corrected over 41.3% in Price Per Square Foot since 2007. . .

*Sources: DataQuik, MLS, Westside RE Meltdown

The Reality of the High-End Market...

Below you will find a line to a good article that appeared in the LA Times this past weekend about the high end home market. The reality has definitely hit seller's and buyer's are noticing. Agents are the busiest they have been with buyers in over three years in all price ranges.

Despite the challenges of getting jumbo financing, activity continues to get stronger with a flurry of cash buyers and foreign investors. High-end homes (over 2.5 million) properly priced 15-25% (depending on area) off the highs of 2006 are getting strong offers. However, expect prices to stay flat and trend further down (at a slower rate than 07-08) in this segment of the market for another 3-5 years.

Link: LA Times Article: High End Home Sellers Lower Their Sights

Thursday, February 18, 2010

Real Time Market Activity For Santa Monica 90402

With inventory trending up but days-on-market trending down, conditions do not seem to have strong up or down pull in the 90402 zip. Despite the fact that there is a relatively high amount of available inventory, the Buyer's market is still seeing prices move higher. Given inventory levels, these price conditions are fragile.

Rent Trends As A Housing Price Indicator Back In Vogue...

Rent comparison has long been hailed as a fundamental factor in setting the value of real estate. When it is cheaper or slightly more to purchase a home rather than rent, a purchase of real estate makes sense for a buyer. In recent reports, Deutsche has been using this indicator to try and gauge the future of housing prices.

For example, Deutsche Bank reported that Americans paid about 13% more to own a home in 1999 than to rent a comparable home. Compare that number with Americans paying 66% more to own than to rent during the 2000's which brought the ensuing Great Recession.

Unfortunately the market stabilization would make one think it is a great time to buy but the this indicator does not reflect lender and government intervention. However, it is a great tool along with price per square foot to properly price a home. If a mortgage payment is 25-30% more than what the rent would be, does it make sense to buy?

Recordings of Notice of Defaults Rose 9.5% in January

Recordings of notice of defaults (NOD's) on trust deed loans in January 2010 rose 9.5% on a daily avearge basis from December 2009, according to Foreclosure Radar.

The increase in the number of NOD's recorded in January 2010 is up more than 16% from January 2009. However, real estate owned (REO) properties are down more than 33% January over January, indicating banks are taking longer to complete the foreclosure process. REO's once placed on the market, continue to sell rapidly.

The good news is that brokers with REO properties to sell are seeing them go quickly. The buyers are ready to pounce after the dip of the past two years, especially under a million dollars whree affordability is the best it has been in California in 12 years.

Unfortunately, such listings are scarce despite the number of defaults. Lenders continue to play the delay game to benefit their bottom line as they do not report the market value of their loan portfolio of toxic mortgages until the REO is resold. Unless this changes, look for more of the same kinds of numbers next month.

Never Pay Advanced Fees For A Loan Modification

With 25% of Californian's underwater - around 2,500,000 people- all needing loan modifications, nefarious loan modification facilitators have taken advantage of this increased demand by collecting advanced fees from the homeowner and then (for the most part - it does work out rarely) accomplish little to nothing in negotiations for a loan modification with the lender. In fact, the services performed by the facilitator can easily be obtained by the homeowner directly through the lender or non-profit housing counseling agency.

The California Department of Real Estate revoked a record breaking 672 licenses in relation to loan modification scams, up 50% from 2008. Additionally, 105 licensees have surrendered their licenses to the state are facing disciplinary action for accepting advanced fees.

Effective October 11, 2009, California Business and Profession code 10147.6 prohibits advance fees to be paid for any loan modification or loan forebearance service on a one-to-four unit residential loan even if the licensee received a "no objection" letter from the DRE previously granting them authority.

A list of nonprofit housing counseling agencies approved by the United States Department of Housing and Urban Development (HUD) is available at

*Source: "DRE Licenses Revoked in 2009 hit a reacord" by Connor P. Wallmark

Sales of Million Dollar Plus Homes 1/3 of What They Were in 2005

*Only 18,261 homes sold for over $1 million dollars in 2009, a mere fraction of the 54,773 which were sold during the speculative boom in 2005.

*Approximately 1,900 homes in California that were sold for over $1 million prior to 2009 were sold in 2009 for six digits.

*Cash is king...Of the homes purchased for over $5 million, 66% were paid for in cash, as were 29% of homes purchased for over $1 million.

High-tier properties are first in a recession to slow down in sales volume, but always the last to enter the foreclosure fray- but they will have to hit at some point especially properties that were financed after 2001.

Real Time Market Data For Santa Monica

Each week we will be updating you with Altos Research for Santa Monica, Brentwood, Pacific Palisades and Mar Vista. We hope to be adding Manhattan Beach and Culver City in the near future. The Altos research provides an overview of current real estate market conditions for Single Family Homes, trends in pricing and current levels of supply and demand. The data is gathered on Monday of every week and released to us on Wednesday. Please feel free to call our office whenever you would like more detailed information.

Wednesday, February 17, 2010

Tumbling Down on Corsica Drive

Last year I wrote quite a bit about prices dropping in the Palisades Riviera. Although we have seen some slight stabilization lately, 1136 Corsica Drive shows how far the market for high-end new construction dropped. This 6,800 square foot Mediterranean villa detailed with fine qualities and design, featuring a gourmet kitchen, vaulted ceilings, his and hers baths, and lush landscaping complete with pool, spa and barbeque debuted on the market in January of 2008 for $9,275,000.

After being leased in October 2008 for $35,000 it is now listed for sale at $6,495,000. This is a classic example of what happens when a seller doesn't understand market reality and tries to catch a "falling knife" as opposed to adjusting to the market quickly. The current price properly reflects the market in that area and it should garner serious interest. Please feel free to call my office at 310-255-3447 if you would like further information or want to schedule a tour.