Wednesday, June 3, 2009

Things are not as they Appear: Just Look at the Details

I have been writing for several weeks about real estate trends around the country in different communities and markets. This analysis has been contrary to many reports and sources that have come out talking about national sales averages.

Standard & Poor's/Case-Shiller National Home Price index which was released just about on May 26 was interpreted as showing a decline in home prices.

My Seattle blog I posted on May 27 spoke to the fact that in the current market and with current trends, wide-sweeping analyses are not incredibly accurate. Given that many job losses are local or regional phenomena, sweeping analysis in the current climate reflect pretty much a useless scenario.

Southern California has some very stagnant real estate markets in the higher end communities. But the trends in the low end pricing and in some of the hardest hit areas for pricing have resulted in increased sales, overbidding of listing prices and multiple offers in the same market.

This is not to say that things are rosy all over or we are out of the woods, but there is definitely a positive trend that is defining a market bottom in many communities and starting to show turnaround trends.

This analysis has now been picked up by Associated Press as a quote from the CEO of one of the major home builders in the country: Hovnanian Enterprises. They reported decreased losses for the last quarter, and increases in pricing. Now if you analyze the areas in which Hovnanian has its communities in exactly some of the areas I have been talking about: in California, Riverside County as a whole, Beaumont and Sacramento; in Texas: Houston, Fort Worth; Charlotte, NC and many other areas across the country.

Statistics in this climate require a little deeper digging, scrutiny and careful analysis. As I've said in other blog posts, micro-markets will begin to fuel a turnaround that ultimately will translate to the overall market. However, the pattern will not be something we are used to seeing or be able to identify by looking at large, averaging indexes.

Examine your local markets carefully, even from neighborhood to neighborhood. The combination of incentives and low prices are producing a good climate for buyers who are financially secure and have reliable income. Recovery in the areas with the most job losses will not show a significant change until employment conditions change.

After all, it is still a better deal to pay $800 a month for a mortgage instead of $600 a month for rent.

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Friday, May 15, 2009

In circumnavigating the Southern California Real Estate blogosphere,

(I assume that is the correct term since it is a “sphere” or would “surf” be more apropos? After all, you can't “surf” a net or a web either? Let's stick with the navigation metaphor.)

I have found confirmation of our own experience of the real estate market trends and the statistics as presented by Altos Research.

Alhambra, CA has been exhibiting a lower available property inventory down, and decrease in the number of days on the market per property. The median sale price has increased.

Buena Park, CA has seen a slight positive reversal and stabilization in statistics since May 1.

Burbank, CA since May 1, has exhibited lower house prices along with decreased inventory and an increase in number of days on Market.

The Costa Mesa, CA market has shown a sharp price increase since 3rd week of April; Dom still high. Inventory low.

The coastal community of Palos Verdes Estates experienced a decrease in median sales price, high inventory of houses on the market and high number of days on the market.

Prices have increased since April in Pasadena, CA yet the days on market remain on the high side with a stable inventory of properties for sale.

As you can see, there are significant differences between communities. Although it is difficult to generalize give this kind of data, the higher cost neighborhoods like the coastal communities, tend to have more sluggish real estate markets.

Areas that have had more of a price decline over the past few months and have more entry-level properties are the ones that are stabilizing or sowing signs of recovery.

As the statistics show, trends are different between communities, price ranges, and even between neighborhoods (for instance Southern Pasadena when separated from Pasadena shows a continued decline, where Pasadena as a whole shows a stabilizing trend).

Any conclusions? Well one thing that can be determined is that a market “bottom” will occur at different times and in different places. From the increases in sales, multiple offers and over-bidding going on in some of the communities that have lost the most value, the curve indicates that there is already a bottom forming. Not so in other areas.

If anyone is waiting for a bottom to occur before buying, I would recommend against it. In the first place, you can only identify the bottom once the trend has reversed and prices begin to increase. In the second place, if you get a good deal, have stable income, good financing and incentives, it won't matter in the long run if you saved an additional 10 or 15% on the purchase price. The trick is being conservative with your finances and buying what you can afford...don;t trust the lender to be the judge of that. (We've already seen what THAT leads to!)

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Wednesday, April 8, 2009

Great Park Updates

Quick notes from the recent meeting that took place on March 19, 2009. via press release.

1. Great Park Chief Executive Officer Mike Ellzey and the Great Park Design Studio presented a 36 month Park Development plant to the Great Park Board of Directors on March 10, 2009

2. The proposed Plan covers a first phase of development for approximately 500 acres of the Park

3. Three distinct areas are included in the proposed plan including a recreation district, an agriculture district, and a lake and cultural district

4. The districts include the first eight tournament level soccer fields in the sports park, the completion of the 27.5 acre Preview Park surrounding the Great Park Balloon, a 125 acre "working farm," event lawns, picnic meadows, a cultural terrace site, a performance bowl, a 20 acre lake and 7.3 miles of walking and bicycle paths.

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Friday, April 3, 2009

LA's Largest Private Landowner Readies for Bankruptcy

I've been trying to put together a post talking about the possible resurgence in property development in the LA. Here's an article that wont make it in the report.

Story from Routers and the AP-

The largest private landowner in downtown Los Angeles said it may have to file for bankruptcy protection, the latest sign of how the credit crunch has frozen a multibillion-dollar revitalization of the city's downtown.

Real-estate firm Meruelo Maddux Properties Inc. said Thursday that it was working to reach agreements with four lenders after the developer stopped making interest payments on 26 loans valued at $266 million. Three of those loans are due, and the company hasn't been able to extend them.

"The debt capital markets have totally shut down," Andrew Murray, the company's chief financial officer, said in an interview.

It is the latest shoe to drop for Los Angeles's downtown district, which has been the focus of a decade-long renewal project designed to convert old warehouses and office buildings into lofts, high-rise residential towers and an entertainment and retail district.

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Tuesday, February 10, 2009

Lives Made Disposable

Simply typing in "So Cal Foreclosures" will lead you to hundreds of websites and blogs dedicated to pointing out the decaying state of the industry. Easily lost amid the shouts and screams is what is left in the wake. The shattered dreams and memories that a home holds seem even more desperate when viewed on film, which is exactly what KCET delivers on "So Cal Connected." The show follows "trash out" crews, who are paid by banks to clear out homes of artifacts left behind. In a matter of hours the homes are cleaned out, and you're left with the feeling that nothing, neither the house itself or its contents, were ever there. Is a sobering watch, I promise to make my next post is a happy one.

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Wednesday, February 4, 2009

L. A. Spaces: Medevil Edition

In the land interesting and unique properties, this gem, located in Pasadena manages to stand out. Formally a water tower for the adjacent property,the property was refurbished in 1921 by Architect Frederick Roehrig

From the Listing:

"Tree-top and city views are included in the 360 degree view from the top floor and other floors. Its located on a woodsy lot. Be adventurous, creative, romantic and live in this landmark property. Private patio, two balconies, hardwood floors, arched and oval windows." And it's listed far below previous sale prices. Notably, it sold in 2000 for $444,000. According to an undated LA Times story, the 1891 wood-shingle water tower was built to serve Grace mansion, the adjoining residence.

Listing Info:
Price: $320,000
Beds: 1
Baths: 1
Sq. Ft.: 1,100
$/Sq. Ft.: $291
Lot Size: 4,229 Sq. Ft.
Property Type: Single Family Residential Detached
Style: Other
Year Built: 1891
View: Yes
Area: Southwest Pasadena
County: Los Angeles
MLS#: 12120885
Source: i-Tech MLS
Status: Backup Offer
On Redfin: 5 days

Update: Word on the street is the property has multiple offers. We'll let you know when there's a change in the MLS listing

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