The Refinancing Disease *Update 1*

Way back in mid-2008, I featured 1921 17th Street #1 - 90404 as a property where it appeared someone had refinanced themselves into a corner. This 3 bed/2.5 bath 2,219 sq ft condo (1991 construction) was then listed as a short sale.

Listing History: 5/17/08 - $575,000

From what I can see, it looks like the short sale failed and the property was subsequently taken back by the bank/lender on 7/8/08 and the amount of total unpaid debt and fees totaled a whopping $728,057

I do not have info on the listing which presumably took place thereafter, but it appears this property was then purchased by a flipper on 3/23/09 for $550,000. The flipper then "remodeled" the unit and it was then put on the market. Let's check in and see how the flipper is doing.

Description: Completely remodeled 3 bedroom front-facing architectural townhome. Tri-level unit features private entry and garden, dramatic soaring celings, bamboo hardwood floors, lots of natural light! Beautiful kitchen with silestone counters and stainless appliances. Custom mosaic tiled bathrooms w/designer fixtures. Large master with walk-in closet. Spacious loft overlooks living room w/marble fireplace. 3 balconies and enclosed patio. 3-car side-by-side parking.

Listing History: 6/3/09 - $749,000
Reduced: 08/01/09 - to $739,000

So our flipper is currently sitting at 89 days on market and they have only cut the price $10,000? That is a reduction of less than 1.5%. Wow, we haven't seen this level of delusion in quite a while!

But WarChest, this is a remodeled, 3 bedroom townhouse asking only $333/sq ft!! What a bargain!

Well, there are two thing I have learned in my short lifespan. First, if something looks too good to be true, there very likely is a catch. Second, in real estate the name of the game is location, location, location.

I believe this property is not in a stellar location (to speak kindly). The perception of the location is what is going to drive the value of this property. I believe the market is speaking loudly in the sense that this has not been able to sell during a very seasonably strong period for these types of properties. We'll check back in when this either gets sold or pulled from the market and we'll see how this intrepid flipper fared in their venture. I believe the results will not be favorable because poor locations are not yet being overlooked by buyers (as opposed to when the bubble was in full swing).

Short Sale Completed -- Stripper Pole Included?

Address: 1541 Centinela #104 - 90404

Details: 2 bed/2.5 bath 1,508 sq ft townhouse, 1991 construction, $250/month HOA, Short sale

Description: Hip, modern 2 bedroom, 2.5 bathroom townhome with a huge loft in Santa Monica with all the amenities of 5 Star living! Living room features cherry hardwood floors and black marble fireplace with mantle. Soaring ceilings in the living room as well with 20ft windows bringing in an ample supply of natural light! The dining area features cherry hardwood floors and located near breakfast bar for easy access to kitchen. Stainless steal appliances throughout the kitchen. Seller motivated. Short Sale.

Purchase History:
4/19/05 - $660,000
4/12/02 - $378,000

Listing History: 3/27/09 - $639,900

SOLD: 8/27/09 - $590,000 ($391/sq ft)

It looks like the short sale required a 3 month escrow, but its nice to see that this made it through. In my mind, short sales are good things for pretty much all parties. Maybe the price would be a bit lower if this went through foreclosure, but then you just have yet another delay in the cleansing of the market.

When I searched this blog for previous references to this property, I found a comment from lap2 which was made all the way back in October 2007.

1541 Centinela, unit 104 built in '91 - purchased on 4/12/05 @ $660M and previous sale 4/02 @378M. It was leased on 6/2/06 at $3450/month.

So was this property originally purchased with the intent to rent it out as an investment? Or were they just renting it long enough to hopefully be able to flip it for a profit in a few years? Or did they run into money problems shortly after buying it and then resort to renting it out? Property Shark shows that the owners had another address...so I'm guessing they never lived in this unit.

Whatever the answer, I would be willing to guess that you could not get a rental rate very close to $3,450/month on this anymore. We all know rents have been under a lot of pressure recently...

Finally, while looking through the photos which accompanied this listing, I thought it was odd that they didn't really make an effort to clean up the place...then I stumbled upon a photo of what appears to be a stripper pole. Awesome.

The price for this short sale probably represents something like an early 2004 rollback. Looking at the previous purchase before the one in 2005 seems to indicate that this unit still has a fair amount of depreciating left though. Maybe we don't get into the $300s, but I have no problem seeing this in the low $400s.

Moving a Few Blocks West on Washington...

Address: 2112 Washington - 90403

Details: 2 bed/1 bath 910 sq ft house, 1 bed/1 bath detached guest house, 4,147 sq ft lot, "meticulously remodeled"

Description: One-of-a-kind Santa Monica vintage home full of exquisite character! Meticulously remodeled throughout w/ superior quality finishes & fixtures. 3 br/2 ba including stunning GH. Kitchen w/ state of the art appliances, Viking, Sub-Zero & Miele. Beautifully landscaped outdoor oasis ideal of entertaining with built in BBQ, wine cooler & wired for surround sound. One of Santa Monica’s most desirable tree-lined neighborhoods, Franklin School, Montana shopping & Whole Foods! An extremely special home!

Previous Purchase: 1/3/03 - $686,000

Listing History: 7/18/09 - $1,395,000

SOLD: 8/25/09 - $1,375,000

I am not 100% sure but it appears the 910 sq ft number is for the main house and the guest house square footage would be on top of that. From the photos, it looks like the "remodel" was done nicely in terms of surfaces -- but I am struggling to figure out why or how a buyer could have thought paying nearly $1.4mm for this makes any sense.

The lot is very small, there is a very minimal yard in back, the 910 sq ft main house has got to feel pretty small inside, there is a big speed bump nearby and this is on the at times busy Washington...

The property was on the market for just 2 days before going into escrow, so apparently someone liked it and pounced quickly, but jeez -- paying nearly $700k more than the 2003 price just for these cosmetic upgrades seems to me to suggest that this buyer did not receive much value for their buck.

Spec House on Washington

Address: 2222 Washington - 90403

Details: 4 bed/3 bath 2,630 sq ft house, 5,060 sq ft lot, 2009 construction

Description: Enjoy rich, warm elegance in this newly constructed spanish colonial revival home. Aesthetics and function combine seamlessly with ultra-fabulous finishes. Finely custom-crafted gourmet kitchen with viking & miele appliances. Unsurpassed, luxurious 1000+sqft master suite w/personal retreat, gorgeous his & hers walk-in closets, exquisitely luxurious master bath. Hi tech a/v features throughout. Two gas/wood burning fireplaces. 400 sq ft fully finished detached garage. Franklin elementary.

Previous (lot) Purchase: 3/29/07 - $1,010,000

Listing History: 6/4/09 - $2,595,000
Reduced: 06/30/09 - to $2,395,000

This property is on the south side of Washington, near the corner of 23rd Street. If you were to go about half way down on 23rd, you would find another spec house which was previously featured on this blog multiple times and which I will use as somewhat of a comp for this property.

1024 23rd was originally featured on this blog in this post and was featured five months later when it finally sold for on 5/22/09 for $2,425,000.

The details for 1024 23rd are as follows: 4 bed/4.5 bath 3,500 sq ft house, 6,118 sq ft lot

So as we stand here right now, 2222 Washington is asking just a touch less than what 1024 23rd sold for. To see how fair that might be, let's compare the stats.

23rd's lot is bigger by over 1,000 sq ft, the house is bigger by nearly 900 sq ft, and 23rd has an extra bathroom and a half. How about location? Well, I think both properties suffer from location discounts. 23rd has a speed bump in front of the house and the street has a light on the end of it at Wilshire, thus generating a bit more traffic. However, Washington is also used as a cut through street and also has speed bumps...but I think 23rd deserves a bigger location discount.

Finally, how about the market over the past 3 months? If we were talking entry level stuff I would say the SM market is roughly flat as increased activity has (in my opinion) temporarily stalled the decline in prices. However, the upper end stuff (think big jumbos) has not seen a spike in activity and prices appear to have continued to be under pressure. So maybe shave off a few percentage points for this aspect of the comparison.

I have not been inside Washington so maybe there is another factor I'm missing, but given the above comparison, I think Washington needs to get down closer to $2mm and they will find a buyer.

Reduced Price Generates Sale

Address: 620 22nd - 90402

Details: 3 bed/2 bath 1,741 sq ft house, 7,550 sq ft lot, "remodeled", "move-in condition"

Description: Beautiful,bright,remodeled home w/open floor plan & high ceilings on a tree-lined street in Franklin School District. This home features large living and dining areas, gourmet kitchen w/stainless appliances that opens to family room w/access to lush private backyard. Lovely master suite opens to backyard. Other 2 bedrooms are good size w/ ample closets, 2 car garage & more! Property is in move-in condition. Don't judge property from the curb.

Listing History: Listed in 2008 at $2,395,000
Re-Listed: $2,249,000
Reduced to $2,099,000

Re-Listed Again: 6/2/09 - $1,795,000

SOLD: 8/19/09 - $1,625,000

Obviously my listing history isn't totally complete, but the point is that this thing has been on and off the market several times and has been chasing the market down for a while. They kept reducing the price and eventually got a buyer -- shocker! Yes, folks this is how markets work.

This is an updated property with decent square footage and it is located on a non-location discount lot in GRS. Dare I suggest that this buyer got a decent, at least market level deal? (i.e. I don't think they overpaid for where we currently are in the cycle). Sure, this probably has some downside left, but they paid only $300k more than what the buyer of the last townhouse I featured paid and I think this property is far superior.

For those who want to criticize this property, I admit that it isn't a flawless house or anything. The back looks awkward and I'm sure there are more flaws I am leaving out -- but still, solid location, updated kitchen, 3 bedroom house. Not even close to being a "lot value" situation.

Thoughts?

2004 Rollback - Down 22% From Mid-2007 Price

Address: 401 California #2 - 90403

Details: 3 bed/2.75 bath 2,022 sq ft townhouse, 1991 construction, $535/month HOA

Description: BEST LOCATION- Townhome3 bed + 2.75 bath, plus Office (2,022 sqft). Walk to beach, 3rd St. Promenade, Montana restaurants & shops. The best of Santa Monica/SoCal living can be conveniently yours... This two-story, ground-floor townhome is flooded with light & air through a wall of windows & French doors. Large patios in front & rear are perfect for entertaining, gardening, and relaxing in the Hot Tub. Freshly painted & move-in ready. This jewel is waiting to be yours...

Previous Purchase: 6/7/04 - $1,325,000

Listing History: 6/17/09 - $1,329,000

SOLD: 8/4/09 - $1,329,000

This townhouse was officially "active" for only one day. This makes me think that there is a good chance it was marketed before officially going on the market. Either that, or the seller got really lucky and went into escrow on the very first day it was listed and got full price...you pick which one is more likely.

But all that aside, this is a real sale and it is a very good apples to apples mid-2004 rollback on what appears to be a very nice, high-end, well located townhouse. Now what is all this about being down 22% from the mid 2007 price, you ask?

Well, one of the first things I like to do when composing a new post is use the search bar on my blog to see if the property has been featured or discussed previously. In this case, someone had left a comment on a post I did back in October 2007 which mentioned a different unit in this same building. Funny thing was, the comment said that the people trying to sell their unit in the post had just bought unit #8 at 401 California. So that's what we are going to use to get our 2007 valuation since it is almost identical in terms of square footage and has the same bed/bath numbers.

401 California #8 Mid-2007 Purchase: 8/10/07 - $1,698,500

So with #2 which just sold for $1.329mm, we have a decline of $369,500 (22%) over the last two years...and I don't see why we aren't in for at least another 20% or so off of today's price level.

2003 Rollback Auction Price Set In 90402 *Update 1*

A little over a month ago, I did a post about the upcoming auction for 740 21st Place. At the time of my last post, the auction was scheduled to take place on July 27th and had an opening bid of $1,950,000.

Well, shocker, the auction has been postponed and is now scheduled for August 27th but the opening bid amount is the same.

Does anyone have any additional info on this property or the situation? Brown lawn, any signs of distress?


In case you think this auction ordeal is an isolated case...Another property in the nearby area (just one block east and several blocks north) is also set to go to auction soon.

310 22nd Street is a 5 bed/6 bath 6,505 sq ft house built in 1989. It was last purchased on 8/19/03 for $2,650,000

Per a reader comment back in early 2008, this house was on the market for $4.395mm or for rent at $16,500/month. Redfin shows it was listed once in November 2007 and again in June 2009...

According to RealtyTrac, it is scheduled to go to auction on 9/14/09 and will have an opening bid amount of $3,750,000. If that amount is indeed correct, it will almost certainly go right back to the bank/lender and show up as a REO because the house is not worth that much. Owners/debtors must have re-fied bigtime to get the balance up near that amount of money.

I will reiterate what I have said about these situations before. They aren't really that useful in the sense of presenting opportunity to actually buy a property at the auction -- but they are instructional in showing us that the high end foreclosures that we have been anticipating are only just beginning (in fact, many like these are still working their way into the pipeline). I anticipate that most of these properties that make it to auction will end up going back to the lenders and be marketed shortly thereafter as REOs. This should put additional pressure on prices across the board and help restore some equilibrium in the market as prices fall to rational, sustainable levels. As you can see already, this process can (and I believe will continue to) take a long time to complete.

This whole process ultimately helps the market get healthy again; but I believe we are still quite a ways away from such a prognosis.

Advertise Your Rollback

Address: 2021 California #10 - 90403

Details: 3 bed/2 bath 1,460 sq ft condo, 1958 building, "completely remodeled", $537/month HOA

Description: Now priced at 2003 levels. Rare bright & breezy, single level, 3br/2ba, corner unit. Largest open flr plan in complex w/ lrg pvt patio. Completely remodeled & feels like a home. Distressed oak flrs. Kitchen has granite counter tops, viking appliances. Crown molding, in-ceiling lighting, finished closets throughout. Gas fireplace & built-ins in living rm. Custom window treatments, alarm system. Sunny pool, gym, bike storage. Douglas park & franklin school district, near whole foods. Make offer!

Purchase History:
6/25/02 - $479,000
8/31/05 - $830,000

Listing History: 6/18/09 - $799,000
Reduced: 07/08/09 - to $769,000
Reduced: 07/21/09 - to $749,000
Reduced: 08/07/09 - to $699,000

In my last post yesterday, I joked that pretty soon there would be the advertisement of rollback pricing in listing descriptions...well looks like I wasn't describing the future. I was describing the present.

At the current asking price, this 3 bed/2 bath condo is at $479/sq ft. This thing doesn't have a major location discount and is north of Wilshire in the Franklin district. Why does it appear relatively cheap? (no, I'm not necessarily saying it is or that it won't go down more).

Well, let's start with the fact that this is an old building (1958) which looks a bit dated. I'm not putting in the time to research this, but it looks like this is an old apartment building which was converted to condos at some point in the past. So this is really just a glorified apartment. Additionally, The HOA dues seem a little high (or at least more than I would want to pay)...But you gotta build reserves to repair the old building, so hey.

Based simply on the previous sale history for this unit, I think it is a little hard to claim this is really a 2003 rollback. Maybe the advertisement of the 2003 rollback is taking into account the upgrades to the unit as it is described as being "completely remodeled". Maybe there are additional comps which are more supportive (again, I'm trying to be quick so due your own due diligence on that). Regardless, I personally don't give a ton of value to upgrades in a situation like this (certainly nowhere near 100% of cost).

This isn't being advertised as a short sale (yet), so someone must be able to absorb this large loss (dollar value + upgrades presumably). Even though I have sort of dumped on this listing, I think the seller is doing the right things. They are cutting quickly and are showing they are in touch with the harsh realities of this market. If they keep it up, I think they will get a sale done sooner rather than later. Thanks to the reader who tipped me off to this.

90405 - Townhouse Rollbacks **Update 3**

I've featured 2615 6th #L a few times before. The last time I featured it was in May.

Previous Purchase: 6/2/05 - $791,000

Listing History: 8/22/07 - $799,000

Re-Listed: 1/15/09 - $781,250
Reduced: 03/05/09 - to $739,000

Re-Listed: 8/16/09 - $699,000



This time, the listing description for this 2 bedroom townhouse says:
"Value- listed 92k below 2005 sales price"

Pretty soon, they will start saying things like "early 2004 rollback"...

What Is This Thing? *Update 2*

I last featured 2009 Montana back in June when I said another price cut was overdue.

(lot) Purchase: 10/6/06 - $969,500

Listing History: 3/4/09 - $2,798,000
Reduced: 04/01/09 - to $2,598,000
Reduced: 05/02/09 - to $2,498,000
Reduced: 07/30/09 - to $2,198,000
Reduced: 08/11/09 - to $2,098,000

The developer has to be really hurting now and from the pricing, it looks like they are ready to make a deal. I think this has a good chance of selling somewhat soon if the developer maintains a realistic attitude.

"Adorable Starter Home" In 90405

Address: 2329 32nd - 90405

Details: 2 bed/1 bath 884 sq ft house, 7,200 sq ft lot

Description: HUGE REDUCTION! Adorable starter home. Move in condition in Sunset Park area of Santa Monica. Light, bright & airy, two bedrm, one bath home on a 7200 sq. ft. lot Well cared for, freshly painted, new window coverings, dining rm, fireplace in living rm. Large entertaining sized deck leads to ginormous, well manicured back yard. Newer roof, copper plumbing, upgraded bathrm. Hardwd flrs. Newer sewer line. Great Sunset Park neighborhood. Minutes from Trader Joe's. Wonderful Grant elem.

Listing History: 11/7/08 - $899,000
Reduced at some point to - $819,000

SOLD: 7/8/09 - $785,000

From the pictures (as well as the fact that this is a good sized lot with a tiny house on it), there is a big backyard. 884 sq ft house makes you think this is likely a near lot value type situation -- but the description boasts of a newer roof, updated bath, etc and calls it "move in condition". Maybe buy it with a conforming mortgage, live in it for a few years and save more $$ and then do a remodel to expand eventually.

I know a lot of you are interested in this segment of the 90405 market so that is why I present this. I haven't been following things as closely down there so it would be interesting to see what you guys think of this place. Knock about a third off of this price and we get to the $500k price point that some have discussed for little houses like this. I don't know if it gets there or not.

Unhealthy Market Signs *Update 1*

I last featured 838 16th #5 back in mid-June. This townhouse is a 2 bed/2.5 bath 1,576 sq ft unit in a 2006 building.

Previous Purchase: 5/24/07 - $1,385,000

Listing History: 4/9/09 - $1,219,000
Reduced: 07/07/09 - to $1,150,000

So have they cut enough??...

Well, another unit in the same building with the same exact specs just sold.


838 16th #6 Previous Purchase: 5/4/07 - $1,425,000

Listing History: 7/6/09 - $1,099,900

SOLD: 7/30/09 - $1,070,616

Unit #6 went into escrow after being on the market for just 4 days. So what they did was come to market at $120,000 LESS than unit #5. Unit #5 then was forced to cut their price THE VERY NEXT DAY but they were too foolish not to cut it down to a level at least in line with the new competitor. Instead, they cut it to $1,150,000...

Four days later, unit #6 (the new competitor) is in escrow and ends up closing at the end of the month. Meanwhile, unit #5 is still on the market and has now been active for 123 days. They need to cut down to a level near the closing price of #6.

Finally, on an unrelated note, I think some of you may find the following post from Piggington of interest. It touches on various aspects of current market conditions -- one of which is the lack of ability for sellers to cut down to market (zombie listings), and the ensuing lack of real supply on the market. I think the only solution to many of the issues mucking up the market in many areas is time...so sit back and be patient.

2002 Construction In 90405

Address: 2414 Hill - 90405

Details: 4 bed/4.5 bath 3,300 sq ft house, 7,000 sq ft lot, 2002 construction

Description: Stunning Traditional w/ modern aesthetics. 4 bedrooms, 4.5 baths plus an office on a wonderful tree lined street in the heart of Santa Monica. Clean lines, volume & light define the living spaces and create a seemless flow between the interior and exterior. Master suite with fireplace and balcony, living room, wood floors, Viking appliances and granite counters, gourmet kitchen/family room opens onto beautifully landscaped grassy yard w/ herb garden and built-in fire pit.

Previous Purchase: 8/5/05 - $1,915,000

Listing History: 5/11/09 - $1,925,000
Reduced at some point to - $1,879,000

SOLD: 8/5/09 - $1,795,000

Looks like a nice house. Thoughts?

25th Street Auction Date Rapidly Approaching *Update 2*

I first started covering the upcoming auctions on 25th Street in June.

I started out with 805 25th which was a 2/2.5 condo on 25th and Montana. The update today is that it indeed sold at the auction...to the bank which "bought it back". So this is now a REO property which will likely be on the market shortly.

Previous Purchase: 6/25/04 - $639,000

Listing History: 8/7/08 - $899,000
Reduced at some point - to $889,000
EXPIRED: after 185 days on market

Auction Date: 6/22/09
Auction Amount: $762,000

SOLD (at auction to bank): 7/1/09 - $578,378 (Onewest Bk FSB now the owner)

I'm not familiar enough with the whole auction process to say with great certainty, but I'm guessing that "sold" amount is the amount that was owed to the first lien holder. The number is not a market comp or anything.


The second property I featured in this 25th Street auction post is on the corner of 25th and Idaho. I did an update post in late June when RealtyTrac showed that the auction date was pushed back. So where do we stand now?

Previous Purchase: 11/14/01 - $950,000

Auction Date: 6/22/09
Auction Amount: $1,880,000

6/26/09 Update: auction pushed back to 7/30/09

Current Update: auction pushed back to 8/31/09

So this house remains stuck in the foreclosure process. I have no idea why it isn't being pushed through the auction process (although there are many possibilities). Property taxes very delinquent, re-fi to nearly $1.9mm with WaMu killing them...The market won't be healthy or near a bottom until all these situations get cleared up.

Another 90403 (location discount) SFR

Address: 1129 Yale - 90403

Details: 2 bed/1 bath 1,154 sq ft house, 8,500 sq ft lot

Description: Trust property Priced to Sell. Well maintained, bright & sunny, vintage Santa Monica, clean as a whistle 2BR 1B. Franklin/Lincoln schools. Enjoy fabulous, HUGE back yard + beautiful front yard. Or, add on, build up or start anew on this 8,500 (AS) sq. ft. parcel. Copper plumbing. Hardwood under carpet. Super location with access to all. Easy to show.

Listing History: 4/8/09 - $1,195,000

SOLD: 7/13/09 - $1,027,125

I wasn't originally planning on featuring this property, but since there was some discussion about lot value, etc on the last post, I figured this data point might help a bit. This house does not appear to be nearly as nice, charming, or have the good stats that the one on 26th had. An original Spanish with 3 beds vs a dumpy looking box with only 2 beds and hardly over 1,100 sq ft? Clearly the property on 26th is a winner when looking at the structure.

However, this property on Yale is superior in terms of location in my opinion. That being said, both of these properties have major location issues. The 26th street issues were discussed on the last post so I won't repeat myself. The problem with the Yale location is that it is only a few properties north of Wilshire where there is a stoplight. This portion of the street doesn't get nearly the traffic of 26th, but still I think there should be a noticeable location discount (but again, not as big as the one for 26th in my opinion).

Those who want to argue that properties with location discounts are completely irrelevant in terms of pricing for non-discount properties are missing something in my opinion. I think you can use properties such as these to try and help estimate other values, but you must keep two things in mind -- first, you have to estimate the location discount (not always easy). Second, you have to remember that different segments of the market may be rolling back at different speeds and be at different points in the cycle. There aren't really any totally useless data points in my opinion, but you need to keep in mind various caveats; something which can muddy the waters significantly at times.

Original Spanish On 26th

Address: 954 26th - 90403

Details: 3 bed/2 bath 1,563 sq ft house, 8,350 sq ft lot, remodeled kitchen

Description: Reduced!! Lovely Spanish style house w/ beaut orig detailing & character. Courtyard in frnt. Open, light/bright flr plan. Remod granite kitchen w/ stainless steel appliances. 3 bedrms, 2 bathrms, wd flrs throughout, arches, wd burn firepl in living rm. Long driveway with detachd garage & custom wd drs. Covered outdr patio for entertaining. Huge, priv lush landscaped grassy yrd w/ fruit trees! Great Schools Prime Santa Monica location close to Whole Foods, Albertsons, Starbucks, Montana Shopping!

Previous Purchase: 6/24/93 - $302,000

Listing History: 3/5/09 - $1,399,000
Reduced at some point to - $1,349,000

SOLD: 7/31/09 - $1,300,000

This is more than I thought they would get, but congrats to the seller for pricing rationally and getting the deal done. This house looked like a nice, original Spanish house in good shape with a redone kitchen (which I'm assuming was done by the sellers). Good stats on the house, good lot size, etc...except major location discount because it is on busy 26th AND near the traffic circle (which due to deceleration and acceleration should increase noise). Anyone see this house in person? Comments?

"The 90402" - Part 3 *Update 3*

324 Euclid is a 2003 construction house which we have been featuring for quite a while now. The last post was done in June 2009.

Previous Purchase: 4/14/06 - $3,895,000

Listing History: 12/1/07 - $4,250,000

Re-Listed: 10/16/08 - $3,998,000

Re-Listed x2: 4/6/09 - $3,785,000
Reduced: 06/19/09 - to $3,685,000
Reduced: 07/31/09 - to $3,595,000

This is another example which should show you the area of the market which is NOT seeing the bounce/pickup in activity which I talked about several posts ago. Funny how this seller cut the price $100k at the end of July -- just like the seller of the last post. Again, another big cut and I think we will be into market clearing territory.

Another 2004 Rollback In 90402 *Update 1*

I last featured 209 Euclid in July. This 2004 construction home has already rolled back beyond the original purchase price when it was brand new in 2004.

Previous Purchase: 8/13/04 - $3,950,000

Listing History: 2/5/09 - $4,400,000
Reduced: 04/02/09 - to $3,999,000
Reduced: 06/11/09 - to $3,899,000
Reduced: 07/31/09 - to $3,800,000

One more good price cut (>$100k) and I think they have a shot at getting this sold, as the seller in this situation appears to be pretty rational (although still chasing the market down), and as this gets closer to 2003 pricing they will be closer to a stand-out price leader (the best type of seller to buy from).

These are the types of properties which I mentioned in my last post from a few days ago where I am not seeing a great bounce or surge of activity. The hotter areas have been in or within striking distance (with a healthy sized DP) of conforming loan limit territory.

Many Positives Buoy (parts of) The Market

822 19th #C is a 2 bed/2.5 bath 1,786 sq ft townhouse in a 1974 building

Purchase History:
11/14/03 - $680,000
2/1/05 - $845,000

Listing History: 6/16/09 - $899,000

SOLD: 7/28/09 - $915,000 ($512/sq ft)

This was only active for 8 days before going into escrow.



1010 California #3 is a 2 bed/2 bath 1,426 sq ft townhouse in a 1988 building

Purchase History:
7/27/00 - $425,000
2/27/04 - $680,000

Listing History: 6/5/09 - $794,000

SOLD: 7/30/09 - $779,000 ($546/sq ft)

This was only active for 7 days before going into escrow.

There are parts of the market which remain very depressed right now. The higher priced 90402 homes (and spec homes everywhere) are having a hard time selling and continue to roll back into 2004 territory, with additional price cuts and high DOMs being par for the course. I will have some updates on a few houses which fall into this category soon.

Now, as shown by these two townhouse sales above, there are other parts of the market that are doing much better than they have for quite some time. The spring/summer selling season failed to materialize last year (or at least I don't remember seeing such seasonal strength). This year, for segments of the market, there is clearly a nice bounce going on (in terms of transactions, fewer DOMs, more price stability, multiple offers, etc).

So what's going on? Have we hit some type of bottom and will prices stop declining for these better performing market segments? Unfortunately (for the bulls), I think not. I think that the seasonal strength is being enhanced by the fact that people are feeling a little more confident (see consumer confidence numbers), the stock market is up significantly, mortgage markets have stabilized (along with all credit markets which are faring VERY well this year), conforming limits are high enough to get into many condos/townhouses and rates are still very low, etc, etc.

It doesn't really seem like prices are rising by any level of significance during this bounce, but they are certainly stabilizing. Looking at the first townhouse above, I see no reason why this doesn't have a good shot at getting back to that late 2003 price. For the second townhouse, I think it is very likely it gets back to the early 2004 price...

So to conclude, I think it is important to acknowledge the strength that has been occurring in segments of the market. I believe this will turn out to be a mid 2009 phenomenon which will give way to further downward pressure on prices as we go into the fall/winter period. I have always advised that buyers seek to avoid competing when the market gets hotter (better to buy in fall/winter), and that the real estate bust would be something which would take many years to play out.

I think many (non- westside) areas which were hit hard by the bubble are in the process of bottoming as transactions have picked up massively and prices are at pre-bubble levels (40%, 50%, 60% off being common). I think the economy is in the process of stabilizing (at a much lower level than before with a lower growth profile likely in the near/mid term...See Calculated Risk for more as I agree with his views on the economy for the most part) and I think there is a very good shot that the stock market has put in the bottom -- but I think the bubble will continue to deflate in Santa Monica and that buying during temporary blips such as the current one will prove to be costly mistakes. At some point in the future, prices will have dropped enough that it may be beneficial to buy before the ultimate bottom (due to having to spend money on rent while waiting a potentially long time for the last few % of the decline) -- but we aren't there yet in my view.

EDIT: Just after I posted this, I went over to Calculated Risk and found this post which I think helps illustrate some of my points in here with respect to the low end bottom vs the high end decline still to come.