Details: 4 bed/2 bath 1,860 sq ft house, 6,890 sq ft lot
Description: Beautifully designed 4 bedrooms, 2 bath 1,860 sq. ft. With its great floor plan, this home feels much larger than the actual size, and includes central heating & air conditioning throughout. Spacious kitchen includes upgraded cabinetry, tile counter-tops, built in Sub Zero Refrigerator and elegant garden window. Both the living room and family room are adorned with fireplaces. The formal dining area is attached to the front family room making this home light and bright. The master suite is separated from the other large bedrooms for privacy. The private backyard, with patio and grass, is great for entertaining or children at play! Plus, a separate two-car garage with an extended driveway with room for additional parking. This home is located within the prime Sunset Park location, one of the most desired school districts and only two miles to the beach as well as the shopping and dining on Main Street and 3rd St. Promenade.
Previous Purchase: 7/16/07 - $1,275,000
Listing History: 5/12/10 - $1,195,000
SOLD: 6/3/10 - $1,107,500
I don't quite understand why the MLS is showing the sale date as 6/3/10 because this only recently came across my screen as "sold". Maybe it really did sell on that date but there was some delay in reporting?
This rollback appears surprisingly small. On a dollar basis it is $167,500 but on a percentage basis that is only a touch more than 13%. I looked through both the photos and the description and the upgrades appear to be modest (cabinetry, a fancy fridge, and maybe some new recessed lighting?). I think there is a fair chance they were done after the 2007 purchase, but even still...it doesn't look like some big 6 figure some could have been invested into the house.
I think at very deepest, this could be a late 2005 rollback...but that isn't all that impressive. Unless there is some other angle that I am missing (speak up readers!), this seller looks to have been pretty fortunate to escape with this small 13% loss.
The "angle" you think you're missing is simply that Santa Monica is very much still in the Bubble, and up for the biggest downward correction. From top to bottom prices have only gone down some 15%, so this is very representative actually.
ReplyDeleteAfter going up 120% from 1999 to 2007, prices in Santa Monica are going to go down at least another 15% from here before there is price support. No amount of government manipulation is going to stop that. It took 8 years for prices to more than double, and it's going to take some time for prices to settle back down.
I'd say we're halfway there, we have another two years to go before we're done going down.
It's so hard to predict what will happen with Santa Monica and the nicer areas of LA more generally. If you look at past bubble corrections, at the bottom, prices usually dip significantly below the long-term trend line. That would suggest Santa Monica (and the whole westside) still has a 50% fall ahead of it. Seems implausible... but if we really want to play the prediction game, I think we have to say it's more like 2015, and it's more like 50% down from here.
ReplyDeleteAnd yes, it feels crazy saying that, but that's what deflation could mean. More unemployment, brutal and slow wage cuts, higher taxes, a state in crisis... I think we're in for a lot more pain.
The other bit of confirmation... there are still so many places where you see "last sale" 2004 at $800k or $900k, and it looks like you're in the ballpark. You're at least doing so much better than the 2007 $1.4M height-of-the-bubble prices. Then you see a little more digging, see a 1998 price of $400k, and start to think, "WTF?," and you remember just how bad this bubble was.
Hold on for 2015. Maybe later. In Tokyo you can still buy 1988 rollbacks.
"After going up 120% from 1999 to 2007"
ReplyDeleteA couple months ago you said it was 200% from 2000 to 2006. I guess the bubble wasn't so big after all.
"I think we have to say it's more like 2015, and it's more like 50% down from here."
ReplyDeleteYou're going to be renting for a very long time.
I know you demand proof every time anyone says SM is different than it was a decade ago, so why don't you explain why SM is exactly the same as it was in 1998, and why prices should therefore only be up 3% per year compounded from then.
If this problem was just Santa Monica, I'd be in full agreement that I need to meet those terms of the debate. The problem is, it's still true of almost all of Los Angeles.
ReplyDeleteFor instance, just to pick somewhere random: Los Feliz, Redfin, first result that popped up:
http://www.redfin.com/CA/Los-Angeles/2219-Lyric-Ave-90027/home/7061026/
This took less than 10 seconds to find. $800,000k now. But it was $500k in 2002. And $350k in December 2000.
This is the story all over Los Angeles. Try for yourself: check the Pico corridor, or Culver City, or downtown, or Koreatown, or Eagle Rock, or Pasadena. Are all these places completely different from 1998 too? I gave up just looking at SM years ago; this just happens to be a lively blog.
Please, also, feel free to put your money where your mouth is. I'd be happy to negotiate a derivative contract on the future of Santa Monica housing prices. I've offered this to bulls before, but never found a taker.
ReplyDeleteFascinating stats suggesting Santa Monica might be different, although also very strange.
ReplyDeleteMedian income stats, per household, for Santa Monica from the census bureau:
1999: $50,714
2005: $55,274 (in line with inflation)
2007: $71,796 (wow)
2008: $70,084
http://quickfacts.census.gov/qfd/states/06/0670000.html
http://factfinder.census.gov/servlet/STTable?_bm=y&-context=st&-qr_name=ACS_2007_1YR_G00_S1901&-ds_name=ACS_2007_1YR_G00_&-CONTEXT=st&-tree_id=307&-redoLog=false&-geo_id=16000US0670000&-format=&-_lang=en
Very strange spike from 2005 - 2007. LA County more generally shows about a 3% annual rise in income over the past decade, in line with inflation, without any similar spikes.
Sure I'd make a wager, although I'm not a bull on real estate, but things aren't dropping 50% from here. And most of LA is down 30+%. So if you're willing to come close to backing your 50% prediction, we could work something out.
ReplyDelete"This took less than 10 seconds to find. $800,000k now. But it was $500k in 2002. And $350k in December 2000."
ReplyDeleteAnd I'm sure the house is exactly as it was in 2000? That's the problem with looking at sales price, you don't know what the house looked like in 2000. The dirt could've been worth 90% of the value in 2000, and only 50% today.
I knew I should've checked the link first. You're comparing prior sales to an asking price now? Great analysis.
ReplyDeletethe spike in average income from 05-07 is probably due to Real Estate Agents income
ReplyDeleteKeen debate skills, bringing absolutely no data of your own, or even attempting to find any, but thinking you've scored a point by criticizing what was presented, openly, as 10 seconds of research. Also really stepping out on a limb saying you'll only bet on the 50% drop I specifically characterized as "implausible." You have the reading comprehension of a kindergarten student. Which almost certainly means you're just a troll.
ReplyDeleteI'm going to stop feeding the trolls.
"Seems implausible... but if we really want to play the prediction game, I think we have to say it's more like 2015, and it's more like 50% down from here."
ReplyDeleteSo by this statement you meant "We won't see a 50% drop"? You're right, I can't comprehend your writing.
And I said "come close" to 50%, not "only bet on the 50% drop" as you said. If you're going to criticize someone's comprehension skills, at least try to get yours right.