Weekend Opens (5/17-5/18)

Lakers are off for the weekend, so do your duty and drop in on a few opens. Who knows when your next break might be?

Click here for the complete list of opens published in the Beach Reporter, or at any time use the link in the right-hand column under "Prop. Search Tools."

As always, click any highlighted address below for more pics & details via Redfin.


Hill Section

Mrs. MBC doesn't pick many Hill Section listings, but an interesting option presents itself this week – 619 9th.

The home is comfortably large at 4br/4ba and about 3800 sq. ft. (BTV – public records say closer to 3400) on a nice, large lot – almost 10,000 sq. ft. It's attractively landscaped (includes a "meditation garden") with a pool. A sweet great room, but you must like brick. And if you find some of the décor a bit frumpy, remember that stuff is easy to change.

619 9th is close to downtown, not a view home. The buzz is that it's high at $4.195m, but the first question is: Could it be a great home? Mrs. MBC thinks it could be. Open Sat. & Sun. 1-4pm.


Sand Section

Folks have been too busy buying and selling in the Sand (7 sales in the first half of May) to open up anything new this week. Retread time.

There's that attractive downtown walkstreet home, 341 10th – a bit of a head-scratcher because a chunk of the living space is tied up in a rental unit. It gets another mention this week because it's now down 10% from its ambitious $3.3m start in March. Can anyone explain why the walkstreet homes aren't moving? Now $2.999m. Open Sun. 1-4pm.

Another walkstreet home not moving yet: 317 5th, still at $3.2m, which seemed pretty aggressive (we mean low, not absurd) when it began. Open Sun. 1-4pm.

There's a contemporary (90s) home in El Norte that's actually located on El Porto St. – they haven't changed that yet? – but hasn't had any takers after a few months. 125 El Porto offers 3br/4ba and 2000 sq. ft. It has squeeked down just a bit to $1.599m. Open Sun. 1-4pm.


Tree Section

721 36th is a newer Cape Cod with 5br/5ba and 3450 sq. ft. It was purchased last year, in March 2007, for $2.327m. The markup after a year: +$172k/+7% to $2.499m.

Did we mention that this is 36th St.? And 2008? Good luck with that. Open Sun. 1-4pm.

Worth another mention this week is 621 Marine, a newer home (2002) that – get this – was also purchased in March 2007 (for $2.436m). The "rustic Spanish" home offers 5br/4ba, 3100 sq. ft., but it is now priced below last year's purchase price. Now $2.419m. Open Sun. 1-4pm.


Looking for something on the more affordable end of the spectrum? Suck up the busy street and you can have 2905 Valley for $1.239m. It's got 3br/2ba and 1500 sq. ft. The listing calls it "sophisticated." Remember, there are no regulations on the use of that word to promote real estate. It's a comfy, clean cottage. Open Sat. 2:30-5pm, Sun. 3-5pm.

2901 Oak is a new home with perhaps the most defensive – no, we'll say "proactive" – listing language we can recall. It begins with:

This property is situated on a very quite [sic] part of oak st. There is no ingress off sepulveda at 30th st.

They're right, it's not a terrible part of Oak. Home is essentially Spanish, 5br/5ba and 3250 sq. ft. Starts a hair below $2m at $1.995m. Open Sun. 1-4pm.

Who's Most Delusional?

If you stop in at MBC from time to time, you might get the impression that the local RE market is softening, and prices gently stepping down. Maybe it's some bias on the part of the author, maybe it's some of the commenters, or maybe it's the data.

But we must remind ourselves, there's a parallel universe out there. In it there live thinking, breathing people. And in that parallel universe, prices are apparently as strong as ever, maybe trending up.

Sure, it sounds silly here, but how else can we explain the pricing decisions of 3 new listings? We'll describe them here (with links to listing pics & details via Redfin) and ask you to vote in our poll for which one is the most out of whack.

• 217 35th Pl. is a small home (3br/2ba, 975 sq. ft.) on a 2/3rds-size lot (1650 sq. ft.) at the corner of 2 alleys (Bayview and 35th Pl.). It's nice enough to "[l]ive in now, build later." For the privilege, the sellers would like $1.5m. They paid $990k about 2 years ago in March 2006 (may have been a private sale).

• 1015 Boundary Pl. offers 3br/3ba and 2400 sq. ft., also on an alley. (What else can we call Boundary?) The listing touts the home's "one-of-a-kind style," but all we see is the 1950s. (The interior is updated.)
  

Keep in mind that down the hill, 811 Boundary – 2004 construction with 1,000 more square feet – went into escrow recently while listed at $2.099m. (Property Shark tells us it has sold for $2.025m, but the MLS doesn't show that yet.) But to move on up to 1015 Boundary, you'll need $2.480m.

• 1705 Pacific is a very nicely remodeled home (4br/4ba, 2650 sq. ft.) whose location near Pacific School is either perfect or a strike. It depends. Though we can't deny the home's family-friendly appeal, its layout is peculiar (downstairs master off the living room). The exterior, while spiffed up, is a mishmash, design-wise.

Compare this to the terrific and well-located home at 738 26th, slightly larger, which just sold for $1.770m ($610/PSF). That would put 1705 Pacific at $1.6m before adjusting for location. Instead, it starts at $1.875m.

Each of these homes, to our eyes, seems to start at least 15% and hundreds of thousands of dollars too high. We just can't figure out which one is off by the most. Please vote in the poll – which seller is most delusional? Poll closes Sunday night at 7pm.

And yes, we know that putting this opinion and poll out there invites a sort of rebuttal from the parallel universe. Sometimes MBC features properties we think are overpriced and they go quickly anyway. So we've added an option to the poll – if you think MBC was wrong to pick these homes as crazily priced, you can say MBC's the most delusional of all.

The 90s: What a Drag

The last big housing slump was in the mid-1990s. Everyone took a hit, but how bad was it in MB?

Data from Dataquick, compiled by MBC, paint the picture.

Our graph here (click to enlarge further) shows the change in median home prices in Manhattan Beach throughout the 1990s. The two separate series here come from the same data, although one series (the top two lines, in blue and red) is adjusted for inflation, showing values in 2007 dollars. The bottom series (green and orange) uses the values reported from each year without any adjustment.

Let's start with that bottom series, since adjusted figures can be confusing. Here, the green, bouncy line shows the median price of all homes (SFRs, THs and condos) sold in a given month. The orange line shows the 12-month moving average – the average of that month plus the 11 months before it. The moving average smooths out seasonal factors and limits the problem of small samples sizes month-by-month. (The data start in 1988, but we start the graph in 1989 to allow that 11-month look back in time.)

You'll see that median prices were on an upward trend by 1989, peaking early in the chart at $506,938 in July 1990. (All dollar figures we cite here come from the 12-month averages.) Then a slower, steady reversal took hold. Four years later, in July 1994, a trough was reached at $366,354. This was slightly below the January 1989 figure.

The drop, peak-to-trough: 27.7%.

The recovery to July 1990 levels took almost 4 more years. The chart notes that a value of $509,506 was reached in March 1998 – 44 months after the trough. That means the pause between the peak and the return to peak was 7 years, 9 months.

Now, anyone knows that the value of a dollar – or 500,000 of them – changes quite a bit over 8 years. So the return to "peak" values in March 1998 is a bit misleading. On paper, it was the same median price, but the real value wasn't the same.

To see how steep the real decline was, and how long the recovery really took, we look again at the data in constant dollars – in this case, using 2007 dollars across the board. (We had a choice here of constant dollars tied to 2000 – the last year in the chart – or 2007, i.e., current dollars. We chose 2007, partly because future graphs in this series will also use 2007 dollars.)

Using 2007 dollars affords us an interesting view of MB home values. When we adjust all the values in the chart, we learn that homes at the median were worth $912,373 in today's dollars at the peak in July 1990. That's almost double the $500k or so we saw in nominal dollars.

Perhaps more interestingly, this chart is implying that you ought to be able to buy a median-priced home today in MB for about $900k – the peak price of 18 years ago. Of course, you can't. Prices have gone far higher than a mere inflation adjustment would account for.

The timing of the drop in values in the early 1990s coincides with that found in the first chart – the drop ran till July 1994, down to $596,782. (Anyone for a $600k MB house?)

The drop, peak-to-trough, in constant dollars: 34.6%.

The recovery of values in real-dollar terms took much longer. It was 68 months (5 yrs., 8 mos.) from the trough until the previous peak value was reached again in March 2000. The total gap between the peak in July 1990 and the return to peak in March 2000 was 9 years, 9 months. That means, in simplest terms, if you bought at the peak, you had to hold the home for nearly 10 years to be able to sell it again for the same real value.

We're also re-publishing our first graph from the DataQuick series here, partly to note that sales totals in MB consistently exceeded 500 per year even in the slumpiest year (1995), while running at a rate near 800 per year for almost 4 years before that real-dollar peak was re-attained in the year 2000.

Those sales figures suggest that, while lower demand briefly followed the price trough, substantially higher demand kicked right back in. And yet, over several years, more sales still did not correspond to much higher prices.

As we've previously noted, the sales pace of 2006 was consistent with cruddy 1995 while 2007 sank below that to a new sub-500 low. The pace in 2008 is even slower. We'll look at the runup of the 2000s shortly and ask when the slower sales pace might begin to affect prices in a significant way. The curious lesson from this 1990s experience is that when the sales pace picks up again some day in MB, higher prices are by no means guaranteed to follow.



Nerdy Notes

Important caveat: The charts are imprecise in one respect – we are using monthly median prices for all of this analysis. Even the 12-month moving average represents a smoothed average of 12 monthly median prices, which is not the same as the "true" median for that particular 12-month period. The "true" median could only be calculated month-by-month by DataQuick using the actual sales records for 243 months that went into this dataset. We believe this representation is accurate and certainly illustrative, but it necessarily falls short of that ultimate precision.

Sources: The figures presented here come from a dataset produced by DataQuick Information Systems. Data for sales of one-family homes (including SFRs, THs and condos) in Manhattan Beach were purchased by an MBC reader and forwarded to us. (Thanks!) We have permission to create and publish charts and analyses using the data, but we cannot provide substantial amounts of the source material, per the agreement with DataQuick. (In other words, they want to keep the raw data private.)

Adjustments for inflation were made using data published by the U.S. Dept. of Commerce, Bureau of Economic Analysis. We used the bureau's implicit price deflator figures for residential investment, the figure most appropriate to home prices. These figures are published for each quarter of each year; therefore, each quarter's worth of median price data has been adjusted separately, rather than using an annual figure for each year's data. Quarter 4 of 2007 is the base figure used for all the adjustments – not only are we using constant 2007 dollars, but Q4 '07 dollars.

How’s Your HELOC?

The national news has carried warnings that several household-name banks have been freezing, reducing or otherwise restricting Home Equity Lines of Credit (HELOCs).

There have been stories about the more hard-charging, riskier lenders (Countrywide, WaMu) cutting back, as well as new limits being imposed by Bank of America and Chase.

This was one of those phenomena that we, frankly, assumed was a bigger problem outside MB than here in town. And then a loyal reader asked for help using MBC data to back up a rough, conservative estimate of his home’s value. Why? To tell the bank how wrong they are about the home’s value, so they’ll unfreeze the HELOC.

That freeze, the bank’s letter said, was allegedly due to a decline in value. However, in that case, the real underlying issue seems to be the bank’s growing problems, and resulting extreme conservatism, not the home’s value or our reader’s LTV ratios.

From that anecdote we spin out to a new MBC poll of a different sort. Tell us: How’s your HELOC? Vote in the poll and tell a part of your story in the comments.

We’re really looking for homeowners with HELOCs to respond, but we’re offering choices for others, too.

No doubt along the way we’ll hear about which banks are cutting back on credit and which might still be offering it to those whose HELOCs are frozen or too restricted with their current banks. We welcome your input, even borderline advertising, as to which local, reputable lenders might be worth considering for those who need a HELOC or want to move theirs.
Poll closes Wednesday night at 8pm.

Warming Trend

A small flurry of sales in May so far should brighten moods a bit.

We know of 9 sales/deals/new escrows in the first 10 days of this month, plus 2 short sales that skipped the "pending" stage and closed this week. (That's going to be common for shorties). What we've got, with the last list price for each:

• 437 1st ($1.650m) – a quickie remodel held about a year, purchased off market last April for $1.45m;
  
• 625 26th ($1.999m) – ca. 1988, on a quiet street, somewhat flat price (sellers paid $1.795m in Aug. 2004);
  
• 408 6th ($2.099m) – South End, mid-block walkstreet home with some challenges; we're hearing it's sold to a builder; a pick on "Mrs. MBC's Xmas List";
  
• 2310 John ($2.099m) – surprising Tree Section contemporary; sellers paid $1.725m in Dec. 2003;
  
• 516 24th ($2.349m) – a crisp, new beachy home, also on Mrs. MBC's Xmas List, that had to hang around a while to find a buyer;
  
• 401 3rd ($2.685m) – a major rebuild in 2006, Mrs. MBC's pick last week;
  
• 125 31st ($3.399m) – a contemporary on a walkstreet at Manhattan Ave.;
  
• 2204 Palm ($3.450m) – once touted as a "Colossal Cape Cod," a new home on a corner with a simply gigantic basement; and
  
• 869 3rd ($3.750m) – an ultramodern home in the Hill Section; sellers paid $2.44m in May 2004.
  

In addition to these, we've heard tell via comments that 452 32nd is in escrow. (It's Saturday night as we write, so we're running with that news before verifying.)

The short sales that posted as sold this week were 3412 Pacific (at list, $1.199m) and 1313 Oak ($1.780m).

In the snapshot we can offer now, SFR inventory west of Sepulveda is at 105, -2 from the month's start, with 9 new listings for the month but the 11 posted sales above coming off the boards.

Weekend Opens (5/10-5/11)

If you want to do right by mom this weekend, you're probably not doing much in the way of open-house visiting. Well, maybe Saturday.

There are fewer "new" opens this weekend than most, reflecting the holiday. But this is one of those weeks where a few of the ads in the Beach Reporter semi-comically strain to draw in a reference to the occasion. (Remember "Hop On Over!" in all the Easter ads?):

• "Give the Gift of Home for Mother's Day!"
• "Gourmet Kitchen for Mom"
• "Remodeled Tree Section Home 4 Mom"

That's right, if you didn't get a card, why not a new mortgage?

Click here for the complete list of opens published in the Beach Reporter, or at any time use the link in the right-hand column under "Prop. Search Tools."

As always, click any highlighted address below for more pics & details via Redfin.


Hill Section

Mom had better not be looking in the Hill Section, for there are but two posted opens:

930 John, a new home we've made mention of several times, priced at $4.995m. Open Sat. & Sun. 1-4pm.

511 N. Dianthus, Kaye Thomas' "entry-level" offering at $1.479m, which we featured last week. Open Sun. 1-4pm.


Sand Section

2319 Grandview is a townhome (detached), we know, but it's one of the classier new opens of the weekend. This one offers 3br/4ba and 2300 sq. ft. and is just a year old. The ad copy notes its "unrivaled, unblockable, panoramic" views of the Tree Section. Not noted: Grandview School across the street. Starts at $1.950m, a tick above its purchase price in Spring 2007. Open Sat. 1-4pm.

448 27th is a fairly nice & different remodel (don't judge a book by its cover) with the surprising feature of just 2 bedrooms spread out among 2650 sq. ft. A former bedroom was converted to a terrific family room in front, over the garage. It would be a crime to convert it back, but it would also be unusual to share your master with the kids. (Question for mom: At what age, again, is "co-sleeping" supposed to end?) Now at $1.899m. Open Sat. & Sun. 1-4pm.


Tree Section

Mrs. MBC is drawn in totally by the promise of 2504 Poinsettia's pitch – "Not your typical cookie-cutter home!" Finally?!?

The profile is typical – 4br/4ba and 3200 sq. ft., but they're promising a "one-of-a-kind design & floor plan," plus all kinds of nice details. (We'll be honest, the listing writeup is one of the most literate and imaginative we've seen in months. Check it out.)

Now, don't disappoint Mrs. MBC on Mother's Day weekend. Starts at $2.499m. Open Sat. 1-4pm.

Also new this week is 769 33rd, a 5000 sq. ft. home (6br/5ba) on a nearly double-size lot. A beauty with a Spanish flair that starts at $4.4m. The listing pitches an 11oo-sq.-ft. master (no "green" home here) and it once pitched the 2500-sq. -ft. yard. Here's hoping this one works out better than 3305 Laurel. Open Sun. 2-4pm.

Now, we're not going to pretend that 1829 Poinsettia is a "new" listing, as the newest agents seem to insist, but it does have a new price, and that's been like pulling teeth over there. The listing began 51 weeks ago at $1.785m, shocking even in those go-go days for a tricked-out cottage with 3br/2ba, 1450 sq. ft. and virtually no yard. Now it's at $1.475m (-$310k/-17%) and perhaps creeping toward reality. Perhaps. Open Sun. 1-4pm.

Nearby, 1821 Walnut isn't new, either, but it's back after a blown escrow with a new price: $2.399m. It began at $2.750m a full 50 weeks ago. Open Sun. 2-4pm.

One Up, One Down

Maybe you overpriced your home. Everyone does it, at least to start. No shame there.

The next move, eventually, is to trim a bit. See if that builds interest. And if not, cut again.

This seems elementary, and it’s the strategy pursued recently by 923 1st (click address for pics & details via Redfin), a Hill Section listing that began in early 2008 at a whopping $8m (-$2k). (See our review in “Unpredictable.”)

By late March, with no takers, the sellers cut $403k (-5%) to $7.595m.

That did not do the trick. The next step was to take another $220k off the top on April 28. Now the listing was down to $7.375m, as we noted in our MB Market Update the other day.

Just a few days later, however, a second listing of 923 1st began on a different MLS (SoCal MLS), and that one began at $7.595m, the old price.

No, they couldn’t be increasing the price, we figured. We chalked it up to some kind of anomaly or clerical error. The local MLS listing (on Mr. MLS) stayed at $7.375m.

And then it got strange. Tuesday, the local listing did, in fact, bump back up to $7.595m. (Graphic via the Redfin listing.) So it appears that the seller had a kind of seller's regret, and potential buyers missed an unannounced 10-day sale.

This is a strategy to sell the home?

We saw a chaotic listing like this last year. In the Tree Section, 579 29th started in December 2006 at $2.575m, dropped to $2.4m, rose to $2.519m, cut again to $2.329m and eventually sold in August 2007 for $2.250m (-$350k/-13% from start). (See stories here and here.)

The bump up did not speed the sale or net the sellers any more money, but for those critical days or weeks when they were driving the pricing, perhaps the move might have helped them dream bigger. Before reality interceded.

Meanwhile, some more conventional pricing behavior is on display over at 225 Homer. That one began at $2.3m in late March.

Last weekend, as we noted in our Weekend Opens column, the price online was still posted as $2.3m – but the open-house listings said it was $2.1m.

We kinda knew that cut was coming for real, so we lightheartedly urged readers to clip the BR listings as a coupon for $200k off last weekend. Alas, discounts usually make their way to the list price of things, no coupons necessary.

We expect the same, one of these days, up at 923 1st.