This is the second of 3 articles summarizing data in the MB Market Update spreadsheets for 4/15/08 (click to download), focusing this time on the Sand Section.
As we noted in our first story, with this edition, the Sand Section now spans 3 separate sheets, instead of 2, a change made necessary by growing inventory in the area.
At this time last year, SFR inventory in the Sand Section was less than half the April 15, 2008, figure – 17 last year, versus 35 this year.
Indeed, SFR inventory in the region peaked at 23 in the Summer months, and only hit 27 in mid-December, so it's now up substantially by any measure. (At this writing, SFR inventory is at 39.)
One factor behind ballooning inventory is, obviously, slipping demand. While that's true in all parts of MB, the combination of low demand and booming inventory is becoming acute in the often-hot and always-desirable areas near the beach. Supply is coming on like it's Summer, while demand seems to be stuck in Winter.
Just 10 SFR sales closed in the Sand Section in the first 3 1/2 months of the year (some, obviously, from deals made in late 2007). Our twice-monthly tracking has recorded 19 new escrows in this same 3 1/2 month period, in a period with 36 new listings hitting the market.
The good news is that much, if not all, of the inventory lingering in the Sand Section is pretty decent, occasionally spectacular – just pricey. So you can imagine the equation for fixing that problem.
New this period (as always, click any highlighted address for pics & details via Redfin):
317 5th is a South End walkstreet home on the corner with Crest that offers the max – 4br/5ba and 4150 sq. ft. The early-90s contemporary style is pretty sleek but some details (tile work, kitchen) may strike buyers as dated. The start price seemed a bit aggressive at $3.2m, and that had one apparent effect – a $100k+ cut at nearby 341 10th (to $3.195m).
- 417 28th is a huge newer home with big ocean views from the top floor. Unlike the modern-art feel of 317 5th, this one is warm with nice cabinetry, flooring and other finishes. It offers 5br/6ba and 4600 sq. ft. on a corner lot. Owners paid $2.55m 2 1/2 years ago, and they're thinking the market's booming. The listing starts at $3.495m (+$945k/+37%).
437 1st is a short-term hold that has been rehabbed. (It hit the market 50 weeks after the previous purchase – a private sale off the MLS – had closed at $1.45m.) It's spacious (4br/3ba, 2600 sq. ft.) although peculiar in some ways, and the remodel isn't so high-end.
One of those bedrooms is teeny, while one closet (off the master) is nearly the size of a whole room – a quirk of a prior remodel. This one began at $1.740m and is at $1.680m at this writing.Also, returning to the market after a brief hiatus (and sporting a new MLS #) was 468 33rd, held only a short time (18 months) before it first hit the market near Christmastime. Same price, $3.495m, still +$720k/+26% over the May 2006 purchase price.
The price at 1st pretty clearly undercuts a nearby listing: long-stuck 505 3rd, still holding at $1.899m – but no longer, as the language for 3rd says, "The LOWEST Priced Single Family Home in the South Manhattan Sand Section, West of Valley, on a Full Lot." Nope, not anymore.
There are some terrific homes available in the Sand Section – 26 of them priced above $2m. But in this 2-week period, the only 2 sales (new escrows) were on lower-end, marginal properties:
- 704 Highland, a dated 3br/3ba, 1550 sq. ft. home that defied the usual market wisdom – spruce up the place before trying to sell. The new owner gets peeling paint along with 3br/3ba, 1550 sq. ft. and a close-to-everything location. Last price: $1.279m after 5+ months on market.
- 429 29th Pl., a little Spanish cottage on an alley with an ocean peek and 3br/2ba, 1300 sq. ft. It lasted just 2 months; last at $1.199m.
There were several price reductions, none more significant than that at 408 6th, a mid-block flat walkstreet home that began last November at $2.625m. After the latest $150k cut, it's at $2.099m (-$526k/-20%) and rapidly approaching lot value. (Interested parties are told of an issue that helps to explain the listing's long time on market and price reductions, but we have decided not to cover the details here.)224 31st made its first cut – $200k – after almost 8 months on market. This large (5br/5ba, 4200 sq. ft.), newer, ocean-view walkstreet home west of Highland is now at $4.795m.
Only one sale closed in this period, that of an SFR on about 2/3rds of a lot, 233 20th – on Highland fronting the walkstreet on 20th. This home, with 3br/2ba and 1700 sq. ft., was offered in 2007 along with the back part of the lot, as a separate but simultaneous sale, and the two properties went quickly. But that deal ultimately was scratched and just 233 came back, selling for $1.275m, just $14k off its list price.
79 comments:
The thing that jumps out in this analysis is the sharp distinction in locations between prime sand and not so prime
the strand and the walksreets west of highland seem to be on a different trajectory to the rest of sand
Why do you not discuss townhomes in this blog? My price point is more that arena and though information on single families is interesting, it does not help me with my particular situation.
Townhomes usually don't have the character of SFH's. Sorry, but because they are not custom built or expanded often, it's almost always true.
Also, tracking SFH's in enough work as it is for MBC.
Recently heard of a beautifully remodeled townhome with ocean views close to downtown that might be coming on the market at $1.1m. Where can I find info on whether this is priced right?
To 9:17- Clearly that is a great price for MB. Buy away! That townhouse will be worth 2-3 million in a few years once all the ultra-rich have decided that MB townhouses are the new new thing. You just can't go wrong with MB real estate. It always goes up, is immune from the economy as a whole, and was just promoted on the Pope's visit to be just short of heaven.
9:17,
Just don't pay ~$1.5 million for it like the previous buyer did last year!
Does anyone have a chart of interest rates over the last 2 years for jumbo fixed 30 yr loans?
Or has anyone done the math to show how rising interest rates wipe out lower prices? What is the cross over?
Just curious on how that figures into a buying decision.
Dear Listing Agent @ 9:17:
Please leave the business. If you're this deceitful with your clients, you don't deserve to be selling houses.
The first poster is completely correct. It is bothering me slightly that West of highland walk streets and the strand get lumped in with the garden condos on MB's main drags. It is completely different ballgame near the water, with prices more on par with the the Hills than other sand section home.
OK, here is query.
Check out this link:
http://www.unimayesh.com/agent_listings.php?selection=All
Go a little bit down the page until you see the South end walk street home for 7.5 million when completed.
I really think this when done will set a new price mark in the walk streets. I know someone who lives on the Strand and couldn't get that much for her house (granted, its a tear down LOL).
Never heard of the architect, Larry Peha or the builder, Bill Little, though.
--------------------------------------
Please don't accuse me of being the realtor because I am not. I am just a homeowner who likes the area and is searching for a deal in this section of MB (not gonna find one here).
Thanks all
7 million plus is the norm for new construction on strand or for really nice new construction on south end walk streets west of highland
just do a search
now the bears may be right when they say those numbers will go down but that is where they are now
If you price the construction at $400 a foot (a premium price, just for discussion purpose), you have about $1.8 million for construction and architect, then assume a lot value of about $3,750,000 (most recent sale in that area is 129 6th at just under this, but this lot is closer to the sand),you have a combined total of $5,550,000 as cost (this is surely on the high side but excludes carrying charges, maybe another $700,000?). Brokerage commission? I've been walking by this for a while and can't wait to see the inside. Great location. I'll let others debate the price.
408 6th open house saw a lot more interest Sat and Sun...could it be the price drop??
I agree with MBW, leaves room in the price to fix it the way you want!
For 7.5 million, I would want it be literally a 30 second walk to the beach/strand. People don't seem to understand that their are several walk streets west of highland and a couple are a tad far to walk down there to the water.
The website doesn't say the address, which means I can't debate the price. But, for a 100 block walk street, I would 7.5 million is right on the money.
The house is hideous though. I'm not a huge fan of the new stuff except the strand homes.
Anybody know the exact address??
I believe it's 121 4th street (2nd house east of the alley).
I consider the walk streets West of Manhattan Ave. and south of the pier to be the true "prime" MB blocks.
7.5 million new construx is fair for one of these.
DQnews has the city sales chart up now (zip code chart was last week).
http://www.dqnews.com/Charts/Monthly-Charts/CA-City-Charts/ZIPCAR.aspx
Pretty consistent for MB if you look.
One mystery to me. Beach Cities are UP y-o-Y, but MB, Redondo, Hermosa, El Segudundo are ALL down y-o-y.
Am I missing some cities in the "beach cities". Or did it just work out that way?
Weird.
Fun to go to some of the good neighborhoods in Ventura County (like Thousand Oaks) and look at 2007 median versus 2008 median.....the drop in price is so extreme that I thought the columns were single family homes vs. condos.
Kind of amazing. A buddy of mine bought out there about six months ago and he had a guy on his block stop buy to yell at him for driving down his equity. Wonder how that guy feels now?
i agree
west of manhattan ave and south of pier - those are the best blocks in MB -
empty lots on those blocks haven't sold for less than 3 million each over the past two years and don't seem to be going down - 3 mil is the entry price for a piece of dirt
4:26, the DQ data covers just one month and a grand total of 25 sales of condos and SFRs. You need to look at a broader spectrum of data to see how things are going in Manhattan Beach.
Here are year-to-date median sale price figures, single family homes only, for all of Manhattan Beach:
Jan 1 - April 21
2007 Median - $1,772,500
2008 Median - $1,825,000
If you want to see medians for all residential sales, including condos and townhomes, the figures are:
Jan 1 - April 21
2007 Median - $1,705,000
2008 Median - $1,700,000
These are sales reported on the MLS so would not include off-market sales.
Thanks, Huggy. I feel so much better knowing that I need a better sample set. Now if only the damn buyers would accomadate and buy some damn houses and increase the sample set.
Seriously, last month the volume was >50 houses. March was 25. Where is the volume?
Volume y-o-y is also down 50% for Beach Cities.
Volume anyone?
Volume?
Sorry, if volume is dropping in March, things will get WORSE later on. Don't give me crap about "normalizing"....unless the plane levels off, the end of a "dive" is a "crash". And volume is the leading indicator.
Anyone care to case April closed stats month to date?
South of the Pier is a great location, but there is NO surf! You have to go closer to 22nd and north into NOMB for that.
I think 7.5 for a spec home is ridiculous and greedy. I'd rather buy the new home on the Strand in Hermosa.
Ah, 6:35, spoken like a true clueless cult member. You didn't mention volume when you cited your meager one month stat on median sale price.
This is what I've said all along - the clueless automatons on this blog cherry-pick their stats about Manhattan Beach based on anecdotal evidence or small data sets. As soon as you show them more statistically meaningful data that contradicts their dark cloud of pessimism, they change their tune and tell you median sale prices are meaningless because "it's a lagging indicator" or "volume has dropped." You can't have it both ways, oh clueless wonder.
Yes, I will agree with you and your chicken little cheerleaders that the market has stalled and declining volume can set us up for a more negative tone in the future. So let's see what happens, shall we? I'm betting you will end up disappointed that the local RE market's health is not as deathly ill as you are hoping and you'll end up missing the boat and renting for another 5-10 years.
In tomorrows LA Times (4/23):
California home foreclosures hit a record - Denis Poroy / AP
Default notices in California were up 143% from the same quarter a year ago.
The number rises to 47,171 in the first quarter, more than four times as many as a year earlier.
http://www.latimes.com/business/la-fi-foreclose23apr23,0,2484664.story
Hey 9:08, they were down for MB last month too. So, two out of two. I don't have data for month previous. Buy I'm guessing that if anyone wants to dig it up, the average of the three months will be negative.
Forget it Huggy, might have a few weeks left, but sooner or later, the cult of the realtor (COTR) will have to hand it up and admit failure. MB will follow the rest of the world into housing recession.
What's left, you've given up on month over month. Now quarter over over quater. Next is gonna' be month over two years.
Soon even the greatest fools will figure it out. Hate to tell you Huggy, but living within ones means is the next big thing.
9:09, 9:41, they don't call you all clueless for nothing.
9:09 cites California foreclosures as if that means something here in Manhattan Beach. Fyi, there are virtually no foreclosures in the South Bay (unlike the early '90s, by the way, when foreclosures were far more prevalent). Even 3412 Pacific, which was slated for auction, appears to have been bailed out by a sale (inside info).
9:41 is virtually incoherent (I know, kinda redundant when talking about the COTC). Sorry, 9:41, I'm sure you think you had a point to make somewhere in that garbled comment, other than the usual COTC mantra about housing recessions, greater fools, yadda yadda yadda. All very tiresome.
Well, speaking as a proud member of the COTL (Cult of the landlords), I really hope that the renters on this site, who would otherwise buy but are waiting for the "crash", never wise up because it's keeping rents in MB very strong. Thanks guys!
In truth, there are quite a few foreclosures in MB, let alone the "South Bay":
http://www.foreclosureradar.com/free-foreclosure-search.php?&Location=90266
Expect this list to balloon over the next few years, peaking after 2011.
Have a look at this pay-option disaster heading our way after 2010:
http://tinyurl.com/4nzwb8
Home Equity delinquencies Surge:
http://www.youtube.com/watch?v=3NOHJPxGGlk
Alt-A Disaster Looming:
http://www.youtube.com/watch?v=pmeBSWI9sF8
I am just reading this blog for the first time and I have to know who came up with the Cult of the
Clueless. It has to be a bitter real estate agent. Who else would come up with this crap? I would love to fast forward to a year from now and see who ended up being clueless!
west of manhattan ave and south of pier - those are the best blocks in MB - prices there are holding steady
most of the rest of MB is heading down.
it smells to me like there are plenty of bulls here and plenty of bears, but no one telling the truth which is that we live in a winner take all society and it is quite possible for the prime locations to rise while the less than prime locations fall hard
that is what i predict for next two years in MB -
if you plunk down $7 mil for something today you will do just fine
if you plunk down $2 mil then look out below - you will cry in two years as your equity has disappeared
keep in mind that if you put 20% down all it takes is a 20% fall to wipe out equity
be careful out there if you can't afford to write a 7 million check
11:05 said In truth, there are quite a few foreclosures in MB.
Once again, more disinformation from the Cult of the Clueless. We have a housing stock of roughly 20,000 homes in Manhattan Beach. 11:05 directs us to a rather poorly maintained site called Foreclosureradar that lists 20 homes in various stages of preforeclosure/auction or bank-owned. Of those 20, 5 are duplicate records so now we're down to 15 homes. Furthermore, one of the 4 homes listed for auction just sold recently so now we're down to 14 homes or .07% (7 out of every 10,000). The majority of those are pre-foreclosure (owner can always bring payments current or sell the home and it would drop off the list, as will happen with 3412 Pacific if the sale goes through).
Bottom line: As anyone, except a card-carrying member of the COTC, can readily see, foreclosure activity in Manhattan Beach is practically non-existent. Same is true of the South Bay in general.
Sorry, chicken littles. Facts can be painful.
"Location, Location, Location"
Isn't that the RULE of Real Estate? IF that is so, why did EK choose to live in East MB on Peck? AND, he obviously hasn't read MBC's hilarious articles on the stapled on stone fad.
Another Olive Garden. Hey EK, where's the takeout window?
9:09- Thanks for that valuable data for the entire state of Ca. Totally applicable to the local RE. Stockton vs MB,Hmmmm????
7:42- I really don't think EK is hearing you or wasting his time reading this blog. Maybe he has all his assistants reading it though. Guess he just may be a little more successful than you. But keep posting anyway so he can have his cronies keep up to date on all the blather
Well, maybe it's because his daughter is a superstar basketball player for Costa and he wanted to be closer to the high school for her benefit. That strikes me as a location issue, albeit a personal one. What brought this up?
8:05 is Ed K?
Facts:
- MB Inventory rising
- MB Sales slow = people cant sell to buy
- Credit and Mortg qualifications are tight and getting tighter, and interest rates are higher than months ago making buyers buying power worth less
- Economic pressures hitting MB earners: Wall st, Banking, Mortg, RE
- The bulk of the Mortg issues are ahead of the country -see origination data - including the standard morgt
- Cost of Living rising - Gas $4+
We are seeing and will continue to see home RE prices soften in MB as inventory rise (except for the best of the best).
Manhattan Beach is small and a great place to live - but it will continue to soften and 10% on 2M is still 200k.
7:17am
Are you saying that 15 homes in Manhattan Beach are in some phase of financial stress that can’t be easily solved because that can't easily sell?
15 homes in a foreclose signal status in a place like MB is darn high.
I agree with the poster above:
Many of MB's ultra high end earners rely heavily on the economy for those fat bonuses every year (i.e VC/private equity/hedge funds/i-banks).
This is what pays for these homes around here. These are not just corporate schmoes climbing up the ladder.
As the economy falls, we can see many of the highest earners "suffer" the most. That is, they will only get 10 mil severance packages LOL.
Sold and waiting – brief and on point. No tone, no insults, well done.
6:37 -
$7.5mm for a spec home is only greedy if it doesn't sell. If it sells then it's just expensive.
you are right -
actually the next big thing is developers buying two or three lots and combining them to make s spec home
for example, the walk streets south of the pier and west of manhattan are the nicest walk streets
lots cost 3 and a half million
to buy both lots and put up a spec home means ten million buck price tag
that is a huge risk for a developer to take on - i am betting in the current terrified environment no one does it on spec
however, plenty of wealthy families are looking to do it as a custom home -
so when you see the two and three lot combines my view is you should think custom home, don't think spec home
if there are any developers on this board that would actually do this on spec let me know - i doubt it
I was just about to post about that property on 4th and ask if anyone knew what was happening with it. I walk past it all the time and it has languished for quite a while. I assumed the builder/homeowner ran out of money because I haven't seen any progress made for a long time, and it has taken far too long to get it to the state it's at now. It's probably been under construction for more than 2 years, and it doesn't appear close to completion. Any inside info on this?
MBW - I again want to repeat - keep up the good work on this blog. I truly don't understand the immaturity shown by some of the posters (seriously Huggy - I can tell you're intelligent, but why all the name calling and unnecessary jabs?), but if I ignore the blather the true value of your blog becomes apparent.
The state of the market throughout California completely matters to MB.
1. Lenders operate state- and nationwide. Credit will continue to tighten because lenders are seeing all loans as riskier than over the last 5 years - even for MB.
2. Buyers do buy in communities other than MB. As the relative price difference increases, some people (not the die-hards here) will opt to move for a lower price. Really, it can happen.
3. The foreclosure and credit crisis is dramatically impacting high earning professionals. The California foreclosures are impacting numerous businesses, which all impact the economy as a whole- even in MB. For example, here are not too many $1M+ a year mortgage brokers any more. Even high paid professionals (i-bankers and lawyers) are being hit hard since the credit markets have been slammed.
I absolutely love this blog. The content posted is great MB Watcher. What is more fun is that this is one of the only places to find vocal bubble-deniers. Makes for a lively debate. Sites with only bubble-believers are not nearly as entertaining. Keep it up!
Hmm
who the heck is it that is snapping up properties on the strand ?
Hedge Fund Analysts' Salaries Soar
Mark Malyszko of Institutional Investor says that pay at hedge funds is through the roof:
A senior analyst with three to four years experience at an investment bank can earn an average $1 million - $1.5 million at a hedge fund, compared with an average across various sectors of $800,000-$850,000 at a Wall Street firm...
A senior hedge fund analyst with three to six years of investing experience in the distressed debt sector can receive up to $2 million a year.
Right now, everybody agrees that there are too many hedge funds. As a result, they're all chasing analysts in a desperate search for ideas and alpha.
Would you rather work at a bureaucratic bank with over draconian compliance issues pulling down 800k, or a freewheeling shop where they give you the ball and pay you twice as much?
That is a no-brainer.
Especially if you know you can always return to the bank if and when things don't work out at the fund.
there are way too many hedge funds in nyc. some should move out here and spread the wealth.
all i hear on this board are complaints about how expensive it is to afford homes in MB
why do you want to move to MB a ton more people making over a million a year ?
do you really want all those new folks coming in and pushing up the walk streets even more ?
I know at least 4 MB families that have or are selling to downsize to smaller, less expensive homes.
They overextended themselves, can't match the needed monthly nut, and need to sell their home and need the cash.
Times are a changing.
12:15- Good line Bob Dylan... And I told 2 friends and they told 2 friends so on and so on.
Any good insight you can offer on this website about these changing times?
bill said:
"7:17am
Are you saying that 15 homes in Manhattan Beach are in some phase of financial stress that can’t be easily solved because that can't easily sell?
15 homes in a foreclose signal status in a place like MB is darn high."
Darn high? .07% is darn high? That isn't even foreclosures. Just NOD's.
bill, that isn't high. That is low. That is incredibly low. In fact, that is a downright miracle.
10:44 and 11:47. Maybe you can hook up the hedge fund companies with some of the 35,000 people in the financials sector that have already been laid off. They are already conveniently located in NYC and be happy to have the jobs that you are referring to....before the cummalative 100,000 expected to be laid off by the financials start looking.
Seriously, 2008-2009 will be to financials what 2001-2002 were to techs. Say bye-bye to a lot of the funny money.
Well said, anon 12:34. But I understand where Bill is coming from. Most of the Cult of the Clueless have never owned real estate (they can barely spell real estate if you spot them 'eal estate'), so even a few homes that are in default are magnified in their minds to thousands of times their actual importance to our local RE market.
Kind of like a child staring at a 2-story building and thinking it's the tallest building in the world. I call it a lack of a mature or experienced perspective.
plenty of folks with 100 million in the bank want their kids to live in MB because it is a family friendly spot
doesn't matter if the kids can earn money or not - the money comes from parents
who do you think is buying the prime $4 million plus houses in april 08?
So, 1:04, are the clueless folks you refer to distinct to 90266? Do you consider the people that waited in Sacremento and are now purchasing for 50% off part of the "cult of the clueless"? Or San Diego? Or Florida?
I'm really trying to figure out your nomenclature here....it is just not making sense.
So how does excersizing a bit of self control and common sense make you clueless? And with prices dropping across the entire country (including MB), wouldn't it be "clueless" to listen to you?
1:12 lives in a very special part of LaLa land. I'm sure there are a long line of 100-Millionares lined up to move onto his block.
NEW YORK: James Simons, 69, is a publicity shy math professor who uses complex computer-driven models to make bets on stocks, bonds and commodities, among other things.
His earnings last year? An astounding $1.7 billion.
As one of the leading hedge fund managers, Simon gets a paycheck that dwarfs those of the top chiefs on Wall Street. The highest paid on the Street, Lloyd Blankfein of Goldman Sachs, earned $54.3 million last year.
Simons is not the only member of the hedge fund billionaires club.
Kenneth Griffin and Edward Lampert each took home more than $1 billion last year, with George Soros missing the hurdle by a hair, give or take $50 million, according to an annual ranking of the top 25 hedge fund earners by the Institutional Investor's magazine, Alpha
I'll bite. What does your cut and paste have to do with real estate 1:50?
I almost feel like it's not worth my time to contribute here, since so many are clearly so ignorant, but it's kind of fun so I guess I'll share my two cents.
First, the places that are seeing significant deterioration in value across the country are places where there are either: (a) a lot of foreclosures and scared banks selling as quickly as they can, or (b) an abundance of neighboring open land for development or similar developed homes for sale. The combo of both (a) and (b) is what is driving the largest declines.
Okay, now here's a news alert: they aren't making any more land in MB/HB, and the area is relatively small to begin with and highly desirable. As for the foreclosures, for those of you who think that the financials will be the "dot-coms of 2001-2002", please wake up. The fact is that the financial industry has been around since the dawn of industrialized society, and while it is most definitely cyclical, it is not some new phenomenon like the dot-coms, which received inane valuations based solely upon the blind optimism of human nature. Yes, big investment banks will lay off tens of thousands, just as they did in 2001-2002, and just as they did in 1990-1993. But here's another news flash: LA is not a financial juggernaut! LA has one of the most diversified economies in the nation, between entertainment (non-cyclical), finance, law (non-cyclical), aerospace, medicine (non-cyclical), business services, consumer goods, etc.
I will concede that, yes, there may be a small increase in foreclosures in MB with the economic downturn, but most of us who own properties in MB aren't stupid, and we've actually done something called "risk management", which means ensuring that our financial situation can get us through any tough times ahead, no matter what price we are paying for our real estate assets. Sorry, folks, but I'm not selling my properties at a loss, and I doubt many other people in our town will either. In fact, I'll probably just keep on buying more. When it comes to real estate, the idea is to take a long-term view and pull the trigger at current market values when you find a great property that makes sense for you.
congrats, 2:51pm. you just dashed the hopes of every renter on this blog... they won't get it. they never will.
2:51 can only be a real estate agent.
Okay, now here's a news alert: they aren't making any more land in MB/HB
I read this argument quite often as an explanation as to why MB prices won't drop. While it might be one of the factors putting upward pressure on pricing, it certainly does not mean that prices can't go down.
Prices dropped in the early '90s, and they weren't making more land back then either (there were other factors prevalent on the demand side back then that aren't prevalent today that I think drove the relatively sharp declines). My point is that fixed supply doesn't necessitate upward pricing.
At the margin, people are choosing between many neighborhoods. If MB gets too expensive relative to Hermosa, then people might choose to move there (again, at the margin is the operative phrase). And if HB is likewise too expensive relative to Redondo, people might move to Redondo at the margin. And so on, and so on.
Yes, some wealthy people who have their hearts set on MB will buy at any price. But I think we've seen more of that over the last few years versus what we'll see over the next few. I don't believe we'll truly know how many people stretched to buy until we see the fallout. It sounds like 2:51 PM did the prudent thing and only bought as much house as he/she can afford, taking into account a reasonable worst-case scenario.
But I suspect there are some who didn't.
>be careful out there if you can't afford to write a 7 million check
2 million or 7 million... you better be writing a check.
No matter what level you are buying at, it is not a good environment to be stretching to buy a house. The pilot's credo comes to mind: it is far better to be on the ground wishing dearly you were in the air than to be in the air wishing dearly you were on the ground.
"They aren't making any more land." Why do I have an aversion to that phrase that makes me want to do a FSBO this round?
Neither the cliche "they're not making more land" nor the statement that MB is "highly desirable" is an argument for continuously rising, or even stable, RE prices.
Sure, there will always be some demand (homes still sell in a slump) and some premiums paid.
But take away nearly half the demand – as we've seen in 2008 vs. 2007, and worse over prior years – and what does Econ 101 say will happen?
First you'll see inventory in the beach areas double (see above), with lovely homes west of Highland and on flat walkstreets just sitting. And then... come on, you know.
1:12 - you are funny!!!!!!!
Waiting to Buy a Clue, you are, perhaps, the most mentally dense person to ever post on MBC and that is quite a distinction.
Why did 341 10th St reduce the price by $105k? Because they aren't making any more land in MB!
Why did 473 31st St reduce the price by $100k? Because MB is highly desirable!
Why did 3309 Poinsettia reduce the price by $200k? Because LA has a diversified economy!
Why did 228 29th reduce the price by $130k? Because they did "risk management"!
Why did 534 14th reduce the price by $150k? Because they won't sell their property at a loss!
Why did 1717 Curtis reduce the price by $100k? Because they're probably buying more!
I don't know Wez, but I wish dearly that you were in the air and didn't have access to the internet. Happy landing . . . in a city other than MB. Oh yeah, please take Can't Afford to Buy with you.
4:22 You are completely correct, but that won't the fact the you cannot afford any of these houses and that's why you're so upset.
1:44 Re: interest rate changes vs house prices
I happen to have a little chart just for that discussion:
So, for example, a starting loan value of 1.5mil at 5.2% or so, traced to the right has the same total cost (principal and interest) as a 1.25mil loan if the interest rates rise to 7%.
YMMV. There are a pile of other factors not included in this, obviously, like what inflation/deflation is going to do over the course of the loan.
4:23 Ah, if only wishes were ponies... I'm surprised at the ire generated by my pointing out that a silly soundbite, overused, would start to backfire on those who use it. It was always a silly phrase. Fortunes are always changing. Someone, eventually, will be moving out of the area you would like to move into. And, what's a tear-down except reclaimed land?
Why didn't 4:22pm buy 341 10th? Because he couldn't afford it!
Why didn't 4:22pm buy 473 31st? Because he couldn't afford it!
Why didn't 4:22pm buy 3309 Poinsettia? Because he couldn't afford it!
Why didn't 4:22pm buy 228 29th? Because he couldn't afford it!
Why didn't 4:22pm buy 534 14th? Because he couldn't afford it!
Why didn't 4:22pm buy 1717 Curtis? Because he couldn't afford it!
Darn, 4:54. You beat me to it! But my answer was more creative!
Well Wez, I'm not sure what you mean about wishes and ponies, but if you are personally into ponies I suggest you fly on up to PV and look there. Lots are bigger than in MB, less per square foot and you are allowed to keep ponies at your house, if that's your thing.
Dear MBC, 835 Marine looks nice, do you think a pool could fit on that property?
Thank You!
Might as well get it out now, Robert Shiller is yapping again. And even though he said it's difficult to forecast prices . . . he does it anyway. Have at it COTC.
5:22, with prices dropping, I wouldn't be smug.