Posts filed under ‘Market Conditions’

Q3 2008 versus Q3 2009 Westside statistics

Number of sales up over all on the Westside (about 15 percent if you exclude Topanga) for the third quarter compared to last year, prices varying from nearly flat for Brentwood single-family homes to down 14 percent in Santa Monica to down 20 percent in Venice.  I’ve said it many times but it bears repeating:  all real estate is local, even among various communities within the Westside.   When it comes to gauging the market in your area of interest, you might as well throw away your newspaper and the overwhelming majority of websites.

Tracking other numbers through this year, the market has definitely hit a plateau, most likely the bottom, in Santa Monica.  Inventory—the number of properties on the market—in Santa Monica has dropped by roughly 25 percent in the last eight months.   Median asking prices in several market niches have actually edged upwards in the past couple of months.

Interest rates continue to be both low and relatively stable.   But with unemployment expected to remain stubbornly high for the coming year, consumer confidence will be the key number to watch.

One of the biggest factors about the Santa Monica market is the number of foreclosures…or rather the lack of them.   Year to date, only 4 single-family homes and 20 condos & townhouses that were foreclosures have sold in Santa Monica, a very small fraction of the overall sales.   Unlike other areas as close as the San Fernando Valley, foreclosure sales have not defined and driven the market in Santa Monica.

I plan to post another market report in January examining year over year statistics as well as looking at the latest trends.

Q3 2009 vs. Q3 2008
Real Estate Activity for the Westside

Q3 2008 Q3 2009
Area
# of sales
median price
# of sales
% change
median price
% change
Single Family
Santa Monica
86
$1,850,000
93
8%
$1,600,000
-14%
Brentwood
58
$2,100,00
90
55%
$2,088,000
-1%
Westwood
57
$1,349,000
66
16%
$1,261,000
-7%
West LA
19
$745,000
28
47%
$714,000
-4%
Palms/Mar Vista
97
$792,000
105
8%
$695,000
-12%
Culver City
65
$670,000
63
-3%
$630,000
-6%
Marina del Rey
5
$1,625,000
9
80%
$1,375,000
-15%
Venice
53
$1,120,000
50
-6.0%
$900,000
-20%
Topanga
34
$888,000
20
-41%
$614,000
-31%
Bel Air
42
$1,728,000
42
0%
$1,300,000
-25%
Total Single Family
516
$1,284,000
566
10%
$1,196,000
-7%
Condo/ Townhouse
Santa Monica
149
$730,000
136
-9%
$630,000
-14%
Brentwood 50
$717,000
51
2%
$620,000
-7%
Westwood
167
$684,000
152
-9%
$621,000
-9%
West LA
45
$635,000
52
16%
$545,000
-14%
Palms/Mar Vista
29
$419,000
48 66%
$439,000
5%
Culver City
76
$397,000
92
21%
$350,000
-12%
Marina del Rey
79
$739,000
99
25%
$550,000
-26%
Venice
6
$1,227,000
18
300.0%
$718,000
-41%
Topanga
0
0
1
N/A
$400,000
N/A
Bel Air
1
$615,000
0
N/A
0
N/A
Total Condo/ Townhouse
602
$658,000
649
8%
$560,000
-15%

November 5, 2009 at 9:13 pm Leave a comment

2009 versus 2008 Westside Market Report

It’s interesting to track real estate sales in 2009 versus 2008.   Following is a chart comparing the number of sales and median sales prices  in several Westside areas.

The first thing to leap out is that not all areas are equal.  Compare the token increase in the price of Westwood single-family homes with the 42.8 percent drop in prices in Brentwood.

The other thing that strikes me is the overall decline in single-family home prices at 20.6 percent for the Westside as a whole versus only 9.0 percent for condos & townhouses.   To a large extent, these numbers reflect the relatively greater difficulty in securing loans in higher price ranges compared to lower and they are skewed accordingly.   However, the implication is that if you can sell your condo/townhouse and you can get the necessary loan, this is actually a *great* time to move up from a condo/townhouse to a single-family home as the gap in prices between them has narrowed overall.

The market shows signs of bottoming on the Westside, particularly in the lower price ranges, as prices begin to firm and multiple offers pop up on well-priced properties.   As one important marker, there are only 7 single-family homes that are foreclosures in these Westside areas combined.   In places where there are many foreclosures, there is still downward pressure on the market.  Buyers expecting to find the same kind of deals on the Westside are going to be disappointed.

I will post another market update in a couple of weeks when comparisons of the first half of both years can be made.

Q 1 2009 vs. Q1 2008
Real Estate Activity for the Westside

2008 2009
Area
# of sales
median price
# of sales
% change
median price
% change
Single Family
Santa Monica
33
$2,134,235
14
-57.6%
$1,539,500
-27.9%
West LA
9
$840,000
9
0.0%
$590,000

-29.8%

Brentwood
37
$3,000,000
27
-27.0%
$1,715,000
-42.8%
Westwood
33
$1,338,000
23
-30.3%
$1,370,000

2.4%

Palms/Mar Vista
52
$762,500
41
-21.2%
$713,000
-6.5%
Culver City
21
$740,000
29
38.1%
$585,000

-20.9%

Marina del Rey
8
$1,650,000
3
-62.5%
$1,300,000
-21.2%
Venice
24
$1,074,500
12
-50.0%
$831,000
-22.7%
Topanga
8
$842,500
9
12.5%
$700,000
-16.9%
Bel Air
23
$1,840,000
12
-47.8%
$2,150,000
16.8%
Total Single Family
248
$1,233,677
179
-27.8%
$979,302
-20.6%
Condo/ Townhouse
Santa Monica
62
$660,000
58
-6.5%
$578,750
-12.3%
West LA
32
$601,500
14
-56.3%
$672,500
11.8%
Brentwood
30
$670,000
19
-36.7%
$699,000
4.3%
Westwood
66
$700,600
50
-24.2%
$667,500

-6.2%

Palms/Mar Vista
30
$440,750
10
-66.7%
$400,000
-9.2%
Culver City
28
$409,900
34
21.4%
$350,000
-14.5%
Marina del Rey
34
$780,000
35
2.9%
$587,000
-24.7%
Venice
2
$865,000
6
200.0%
$702,500
-18.8%
Topanga
0
0
0
N/A
0
N/A
Bel Air
0
0
2
N/A
$647,500
N/A
Total Condo/ Townhouse
284
$631,852
228
-19.7%
$574,971
-9.0%

June 22, 2009 at 9:02 pm Leave a comment

The Santa Monica Market: 2008 vs. 2007

Market Report—January, 2009

It has long been my contention that prices in Santa Monica go up more in an “up” market, down less in a “down” market. The pattern of prices over the last two years would seem to validate that conclusion.

As of January 8, there were 150 condos and 98 single-family homes on the market in Santa Monica.

Median Asking Prices
Single family homes

# bedrooms # on market Median Asking Price
2 BR 23 $1,099,000
3 BR 28 $1,199,000
4 BR 21 $2,375,000
5+ BR 24 $3,922,000

Condos:

# bedrooms # on market Median Asking Price
Studio 5 $399,000
1 BR 32 $458,000
2 BR 85 $764,900
3+ BR 33 $1,349,000

Some interesting numbers are the year to year comparisons for 2007 vs. 2008, both of numbers of units sold and median selling prices.

Single Family homes

Area # sold 2007 Median Selling Price # sold 2008 Median Selling Price
Santa Monica 280 $1,681,750 192 $1,900,000
Brentwood 223 $2,075,000 154 $2,100,000
Westwood 179 $1,351,000 146 $1,338,000
West LA 78 $762,000 45 $745,000
Mar Vista/Palms 310 $861,250 238 $770,000
Culver City 145 $779,000 129 $695,000
Venice 173 $1,170,000 130 $1,150,000

Condo/Townhouse

Area # sold 2007 Median Selling Price # sold 2008 Median Selling Price
Santa Monica 439 $780,000 339 $680,000
Brentwood 250 $714,500 131 $690,000
Westwood 718 $670,000 365 $680,000
West LA 176 $629,500 149 $595,000
Mar Vista/Palms 141 $485,000 107 $419,000
Culver City 202 $440,000 180 $399,500
Venice 38 $925,500 18 $1,112,500

Note that price declines were modest in comparison to what one might expect from reading the newspaper headlines and that for single-family homes prices in Santa Monica and Brentwood actually increased.

Why are prices in the Westside so relatively inelastic in comparison to other areas? In a word, foreclosures. Or, more precisely, the relative lack of them.

Foreclosure sales pattern
Data as of 1/15/09

Single Family homes

Area # sold 2008 # on market now # in escrow now
Santa Monica 0 0 0
Brentwood 4 0 1
Westwood 2 0 1
West LA 2 2 0
Mar Vista/Palms 13 5 0
Culver City 10 2 4
Venice 2 0 2
Bel Air 6 0 1
Topanga 5 2 0

Condo

Area # sold 2008 # on market now # in escrow now
Santa Monica 8 9 6
Brentwood 4 1 2
Westwood 14 4 5
West LA 9 2 1
Mar Vista/Palms 5 0 0
Culver City 15 3 6

More than half of all home sales in December in Southern California were foreclosures and yet very few were in communities on the Westside. One doesn’t have to travel far to find a completely different picture.

Area # sold 2008 # on market now # in escrow now
Sherman Oaks 45 20 8

And this data from Sherman Oaks is incomplete due to overlapping MLS services. The actual foreclosure activity is even higher, I just can’t quickly document it. And as dramatic a contrast is this is from the Westside, areas other than Sherman Oaks are even worse.

Unless the foreclosure pattern changes radically, prices on the Westside in general and Santa Monica in particular will continue to be relatively inelastic compared to prices elsewhere in Southern California.

January 22, 2009 at 6:06 pm Leave a comment

Update on Market Conditions—October, 2008

I’ve recently been working with Buyers who are frustrated with home prices in Santa Monica. “Why aren’t they lower?” they ask. They read the headlines filled with dire financial news and then go out to look at homes and are dismayed that prices aren’t lower.

The answer is location, location, location. Compare the number of sales in Santa Monica from the third quarter of 2007 to the third quarter of 2008.

Q3 2007
Q3 2008
Single Family Home – Number Sold
54
63
Single Family Home – Median Price
$1,179,000
$1,610,000
Condo/Townhouse – Number Sold
96
97
Condo/Townhouse – Median Price
$775,000
$750,000

That’s right…the number of sales went up year over year.

Well, what about median prices?

Prices for single-family homes went up, due in part to higher priced homes making up a higher percentage of sales. Prices of condos edged down, year over year, a little over three percent.

As of October 8, there are 94 single-family homes and 176 condos on the market in Santa Monica. What the immediate future holds with all the financial turmoil and the elections I can’t say. If I could, I’d be in the forecasting business. But based on the 2007/2008 numbers, Santa Monica continues to be an area where property values go up more in an “up” market and down less in a “down” market.

Back in February, I wrote about Market Conditions: “For Buyers, you can get a good deal compared to a year ago or even six months ago. But I sincerely doubt that we’re going to see prices go 20 percent or more below current levels. If you say that you want to pay what prices are going to be in six months, then you need to wait those six months and see what those prices are…and those prices may not be dramatically different from what they are today.” So far, that prediction has held true

If you have a question about how a particular market niche is doing, then drop me an e-mail at jimbrunet@santamonicahomes.net or give me a call at (310) 508-6878.

October 10, 2008 at 1:32 pm 1 comment

Santa Monica rates among lowest for foreclosures

Today’s LA TIMES (June 5) had an article about foreclosures and a feature that allows you to enter a Zip Code in the five-county area  (Los Angeles, Orange, Ventura, San Bernadino, Riverside) and see where your Zip Code stands with respect to foreclosures.

http://www.latimes.com/classified/realestate/la-caspio-foreclosure-search-q12008,0,7122944.htmlstory

Note:  this link will expire in seven days due to how the LA TIMES manages their site.

The survey used a metric of how many households per foreclosure.  The higher the number of households, the better.   One of the Zip Codes in the Palmdale/Lancaster area was absolutely appalling with one foreclosure for every 59 households.

Of the 498 Zip Codes with data, Santa Monica did very well:

90402 (north of Montana)  was ranked 485.

90403 (north of Wilshire) ranked even better…489.

90404 (central Santa Monica) was a still outstanding 475.

90405 (Sunset Park/Ocean Park) was 481.

90401 (downtown area)… one of the top 10!  No foreclosures at all first quarter.

All real estate is local.  As I’ve said before, there is no such thing as the real estate market, there are hundreds of markets defined by narrow geography, property type, and price range.   For all the gloomy newspaper headlines, Santa Monica is holding up very well, supporting my contention that Santa Monica goes up more in an up market, down less in a down market.

Places like Palmdale, Lancaster, parts of the San Fernando Valley, San Bernadino, etc. may be experiencing severe difficulties but the downturn in Santa Monica is very mild.

June 5, 2008 at 9:33 pm 1 comment

When is a Loan Approval not a Loan Approval?

In most real estate transactions, the purchase of the property is contingent upon the Buyer getting a loan at terms specified within the contract and within a specified time, often 17 days per the boilerplate language of the standard contract, though many realtors in the current market with its lending challenges are extending that period to 25 or 28 days. Exceptions are when the Buyer is making an all-cash offer or in a hot market where a Buyer may remove contingencies in their offer up front in order to make their offer more attractive.

In the course of the transaction, the Buyer is expected to remove the loan contingency upon getting loan approval. If the Buyer doesn’t remove the loan contingency, the Seller may require the Buyer to cancel the transaction or Buyer and Seller may negotiate an extension of the loan contingency, sometimes accompanied by the release of a portion of the Buyer’s deposit from escrow as a gesture of good faith.

But what constitutes “Approval”? Loan representatives who take an application enter the data from the application into an automated system and receive an automated Approval (or not). So when that approval comes back, the Buyer can remove their loan contingency, right?

Not so fast. After that automated loan approval, the lender’s rep submits the loan package—application, credit report, pay stubs, copies of bank account statements, and all the myriad other bits of paper comprising an application—to the lender’s underwriting department for review. The underwriter orders the appraisal and reviews all the documents. And here’s where some of the fun can begin. The Buyers’ income may be fine but the underwriter may be concerned about the solidity of an applicant’s job history. Or there may be an item on any of all those pieces of paperwork that cause the underwriter concern. The appraisal, especially in the current market, may come in at a value below the purchase price or the lender may even arbitrarily slash an appraisal by 5-10 percent as a hedge against a declining market. An loan application isn’t approved until the underwriter—and, often, the underwriter’s supervisor—signs off on the application. But at that point, we have approval and the Buyer can remove the loan contingency, right?

Not so fast. When an underwriting department approves a loan, it does so with a number of conditions. Many of them are trivial and many are completely transparent to the Buyer or their agent, information to be furnished by the lender’s rep. Other items are things like the lender being provided with copies of the Buyer’s driver’s license. But then there may be more problematic conditions, such as an appraiser being asked to come up with two or three additional properties, either sold or currently on the market, to validate the appraisal. In some cases, an entirely independent second appraisal is called for. Only when all these conditions, called “pre-document conditions,” are met can the Buyer more or less safely remove the loan contingency.

And, actually, the pre-document conditions are not the end of the line. After loan documents have been issued and signed by the Buyer(s), there are additional pre-funding conditions that have to be met prior to the loan funding. These usually are really trivial, and include such things as the lender calling the Buyer’s place of employment to re-confirm employment status before the loan is funded. For what it’s worth, a Buyer client of mine once changed jobs during escrow just before the loan was due to fund; that provided way too much excitement in the process.

The consequences of removing a loan contingency without prudent diligence can put the Buyer’s entire deposit at risk should the loan fail to be funded. The problems, especially with possibilities such as second appraisals, are even more acute into today’s lending environment. The bottom line is, Buyers and their agents need to be very careful about removing loan contingencies.

April 9, 2008 at 7:20 pm Leave a comment

Finding Value—the tip of the iceberg

The current soft market is illustrating one of my long held principles as a realtor:   value, as indicated by a property that goes up the most in an “up” market and down the least in a “down” market, is not purely a matter of location.

While prices on the Westside in general and Santa Monica in particular are holding up better than other parts of Los Angeles County and the rest of California, it’s instructive to pay attention to details.   The very best properties, the tip of the real estate iceberg, assuming they have credible listing prices, are still selling quickly, some even with multiple offers.

But if that three-bedroom house is on a busy street it will take longer to sell, and at a disproportionately lower price, than its uncompromised neighbor two blocks over.   That two-bedroom condo with less than 900 square feet of living space will be a much more difficult sell than the one in the same neighborhood with more than 1,200 square feet, even though the latter has a higher asking price.

There’s a line of conventional wisdom about real estate that says one should buy the worst property in the best location one can afford.   I disagree.    If you put all the properties in an area on a 1-100 scale, I recommend not buying any home at 25 or below.   Don’t buy on the busy street, don’t buy the excessively small, don’t buy the house across the street from a fire station.   Instead, if building and sustaining value is among your top priorities, find a home that doesn’t have any of these incurable defects.

Contrariwise, if you really need “bang for the buck,” getting some combination of larger/newer/nicer, then these homes with the incurable defects are exactly the properties you should look at.  But remember, the “deal” you get on the front end when you buy is the same deal you will have to give on the back end when you eventually sell.   You’ll be able to meet your daily needs at the cost of reduced appreciation.

As your realtor, I can help you understand and weigh these trade-offs.

March 30, 2008 at 3:44 pm Leave a comment

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