You may have seen some chatter recently about a new dataset MBC's working with.
Thanks to a loyal reader, we now have 20+ years' worth of data on MB home sales via DataQuick Information Systems, plus permission to publish the information in certain forms. ("Thanks" is an understatement, dear reader.)
There's a lot of work to be done to present this data in a useful fashion, and to offer some analysis. The price data is particularly valuable, but we're taking our time to get it right.
For now we present one of the simplest, and yet, most eye-opening facts gleaned from the DQ numbers: MB home sales in 2007 were the lowest in 20 years – the entire period for which DataQuick has collected figures.
Please note, DataQuick reports on sales of all kinds of homes – including SFRs, condos and townhomes. These data exclude only multi-family units. Also, DataQuick says they capture all sales, not just those reported on the MLS, by searching tax records. Therefore, this ought to be the most complete picture possible of home sales in MB.
Worth noting – the 2007 sales figure we published previously was 344. That covered only SFRs, no THs or condos, and was limited to MLS-reported transactions, although it did cover all areas of MB, not just our customary west-of-Sepulveda region. The new 2007 figure of 471 sales (+127/+37%) indicates how much we missed by using narrower data before.
The new data add better context to a fact MBC has reported previously. Using the MLS as the source, we showed that MB had the worst year of the decade in 2007. (See "Slower, Slower, Slower.") Now, with the DQ data, we add another decade and find 2007 was still the worst.
With this 2007 slowdown, MB is like LA and like SoCal and like most of the rest of the nation. Things are slow all over.
It's striking that we have already fallen below the sales rates seen in the 1990s housing slump.
The previous low was in 1995, with 513 sales. The 2006 sales barely topped that at 514, but 2007 fell a bit further.
It's almost enough to make you say "it can't get worse."
Past performance is no predictor of the future, however. Sales are anemic now compared to 2007 – 61 for Q1 2008 against 140 sales in Q1 2007, according to DataQuick. So this year certainly seems to be shaping up to be slower than last.
Maybe it can't get worse. Maybe it can.
How Far Up or Down Will the MB Median Price Be in 3 yrs.?
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163 comments:
the rational explanation supported by this dataset is that mb has simply become more desirable and exclusive giving homeowners little reason to sell.
in addition with the lower sales rates and ever increasing demand from outsiders to call mb home, real estate values will continue to appreciate despite any downturns in the outlying areas.
this is a micro market plain and simple.
I do believe we are slowing dramatically due to economic reasons. However, with the price appreciation that we've seen over the last decade, I have to think there are fewer and fewer buyers that can afford multi-million dollar homes. I know if I sold now, I'd have to move somewhere else....just lucky to have purchased when I did.
the rational explanation supported by this dataset is that mb has simply become vastly overpriced due to the unprecedented run-up over the last few years giving buyers little reason to buy.
in addition with the lower sales rates and ever increasing demand from sellers to sell for twice or three times what they paid for their home, real estate values will continue to be propped up despite obvious signs they need to be lowered.
this is a stubborn market plain and simple.
It's too bad we will never be able to construct the supply side of this equation. It has been asked many times on this blog to get the historical number of SFR's that have been on the market.
Until I can understand or get a feel for that relative number I won't draw any conclusions.
2007 may be slow, but potentially relative in consideration of how many SFR choices there are in the market.
Fewer homes on the market can mean fewer sales.
I can't wait for the bashing.
Could be stubborn because many of the sellers aren't desparate.
I think the important take away here is that sales volume actually has little correlation to prices. If I take the average number of annual home sales over the past 20 years (interpolating for the years where no number is given on the graph above), I get 673 per year (MBW, please refine that number if you feel the need). Then, if I take the average number of home sales for the post-recession period of 2003-2007, which everyone keeps claiming to be the steepest run-up in prices in history, I get 582. Even if I throw in 2002, which had the second highest level of sales in the past 20 years at 819, I still get an average of 621. Finally, if I take out 2007, since prices didn't appreciate, AND leave in 2002 (certainly the most conservative way possible of calculating this number), I get 651. Importantly, all three of these numbers are below the average annual number of home sales over the past two decades. So we have the steepest price run-up in history occuring at the same time as lower than average home sales.
Clearly a "slow" market doesn't mean declining prices. You just can't time a market, whether it's real estate or anything else, no matter how much you analyze it. This has been proven over time as stock pickers never fare better than the "dart board" approach if enough years pass. I do look forward to seeing all the price data that MBW is crunching, but I doubt it will help anyone buy a house cheaper in the end. If you find a house you like and can afford, now is as good a time as any to buy.
It can get worse and most likely will until a point at where prices and mortgage standards find a meeting place. That happy place appears to be a ways off. I'm told that more and more previously (as in pre credit crisis) qualified buyers are being turned down for loans unless they meet newer, much stricter standards. Those "new" standards are mostly nothing more than a return to traditional LTV's and debt to income ratios. So unless the often stated median home price in Manhattan Beach drops significantly, the income needed to qualify for the previously quoted $1,682,000 home needs to be at least $400,000 a year with about $350,000 cash in hand to close the deal. I'm guessing most people in that category (not me, I'm in the 250-300 area) are pretty smart and realize this market is way out of hand.
10:59
Nice try friend, but no cigar. As much as we would like to think that MB is completely unique and an inelastic market, it is most definitely not. All you need to do is look at the vast amount of desirable and very high priced coastline property that starts in Santa Barbara and goes all the way to San Diego, with very few pockets of lower income housing interspersed between. Alternatives abound my friend. Additionally, historical downturns in high-end homes have typically lagged the median priced housing downturns and show higher volatility. The run-up in pricing is higher, but so is the downturn. Vacation and second home properties show even more volatility than the high-end stuff. 11:52 is right in his assertion that this is a stubborn market. Seller expectations haven't fully come in to line with reality yet. But with historical downturns that are as long four year (why would this one be different?), there will be plenty of time for them to adjust since this one basically started last August. Look out below.
12:09 - those of us who are buying homes in MB/HB are making much more than $400K per year. This is Los Angeles, people make real money here. I think this is what people don't understand on this site.
I think this point needs said again and again and again...maybe then sellers will get a little more realistic with their asking $!
Sales are anemic now compared to 2007 – 61 for Q1 2008 against 140 sales in Q1 2007, according to DataQuick. So this year certainly seems to be shaping up to be slower than last.
Maybe it can't get worse. Maybe it can.
Oh, it can.
1:01pm, having "real" money has nothing to do with it. there are lots of us who can afford to buy but have chosen not to because of what's happening in the market.
the way that one accumulates wealth is by making prudent financial decisions. buying residential real estate in MB at a sub 3% cap rate is a terrible use of capital. until that dynamic changes, there's no reason to buy. it's catching a falling knife.
inelastic supply is great during period of high demand driven by excess liquidity. it's a huge problem during periods of low demand and high illiquidity.
i wouldn't touch high end real estate right now, whether it's MB, Atherton, NYC, Shanghai or Sao Paulo. the rent to buy equation in most major cities around the world is completely out of whack. and demand is in the early innings of contracting.
bottoms only form when all hope is lost. we're a long way from that.
This is fascinating, but not surprising. What does surprise me is the number of new construction.
Hey MBW, would you consider printing how many SFR are currently being constructed and how many new permits are being applied for?
10:59
mb has simply become more desirable and exclusive giving homeowners little reason to sell
....if I was strapped to a loan the way you are right now and I was staring down negative equity like you are right now...I'd totally be in your camp. But I'm not so sorry, but thanks for coming out.
11:30
I do believe we are slowing dramatically due to economic reasons.
DING DING DING, WE HAVE A WINNER!
11:52
real estate values will continue to be propped up despite obvious signs they need to be lowered.
...sorry, wrong assumption. You see, even if there is demand to live in our fair city, which there is, people still have to qualify financially to enter our little heaven on earth and THAT is the kicker. We know a couple, closing in a couple of days, told me that the notary was rather bitter. She said a couple of years ago she was doing three signings a day, now 3 A MONTH! She was amazed my friends could get a loan...not because they didn't qualify surely mind you.
11:59
You just can't time a market...
Uh, yes you can Mr. or Mrs. Realtor. Please visit http://www.xyber9.com
ANYTHING mathematically based can be timed because the simpliest laws of mathematics dictate it.
1:01
...people make real money here.
? As opposed to fake money? Hmm, are the rest of us criminal counterfeiters? 101 please go back to the sand box with your other like minded brethren and leave us little people to our miserable fake selves.
Great write up MBW, would also love to see inventory figures if some of the bigger brains around here have the time for it...oh wait, maybe we should just have one of the local realtors do that, not big brains but I hear they have plenty of time!
Cheers
MB Reality
1:01pm I think you are missing the point of 12:09's post. Plus you're full of it if you think most people in MB make over $400k.
People making over $400k probably aren't looking at the homes between $1.6M and $2M. So if you make around $400k and want to buy the $1.6M to $2M house, it is now much harder to get the loan and you have to have a lot of liquidity on top of it.
As a result, the less expensive/less desirable homes will suffer. Didn't we just start seeing new construction fall below the $2M mark?
MBW, I was actually thinking of the same idea as 2:10. It would be interesting to see how much more pressure is coming by way of new construction.
1:01, We have lived here in the Trees for 12 years and know many, many of the local families. To argue that "those of us who are buying homes in MB/HB are making much more than $400K per year" is simply not true. Certainly there are plenty of couples that make as you would call it "real money" but we know many more in the $150 - $200 range. If you look at the median incomes for MB you'll realize that's the ballpark income for a majority of residents in MB.
MBLover - how can a family making $150K/year be buying in the trees right now? i need an explanation on this cause it doesn't add up.
3:52,
I highly doubt anyone making 150K is buying in the Trees now. However, it might be surprising to you that most MB residents have been here for more than four years.
One explanation to the income vs. purchase power could be: sold in 2007 made 600,000.00 and sunk that into something bright and shinny + 325,000.00 a year total income, little debit, and nice 401ks. Or maybe that is just dumb luck.
61 people still bought in MB this year so far.
I'm guessing there will be more.
Too bad they don't read this Blog, otherwise they would realize how much trouble they are getting into.
Bottom line:
If you find a house you like and can afford it and finance it and plan on staying for 5-7 years - BUY IT!
Anybody else whining about the market on this Blog can't do it. If they could, they would.
mookie sees a support level at 471 using bollinger band analysis.
What is this nonsense about "planning on staying for 5 - 7 years?" It is such an outdated argument. If you can afford to buy in MB at current prices, then you should. However, if you need to count on some magic that in 5- 7years your house will be some kind of cash machine, think again. Truthfully, the only people who should be buying in MB currently are those that are financially secure enough to not worry about what may or may not happen with the economy. All others, please move back to Kansas.
4:32 is not saying anything about a cash machine. Where did you see that? All he's saying is that if you are buying for the long term, then who cares what the market does in the next 2-3 years? You will get your money back eventually and you will gain all the pride and joy of home ownership in a great community in the meantime. Houses should not be thought of primarily as investments. If people want to wait until 2010 to buy b/c they think there is a CHANCE they could buy cheaper, fine for them, but I chose to buy recently in this market b/c I place a high value on quality of life over the next few years. Life is short, so you might as well go live it to the fullest while you can. There is a lot of joy and security in home ownership that isn't captured in a simple economic analysis.
5:48 You are completely correct, but the majority view on this site is often that of financial people (e.g) Mookie, Bond Investor, Waiting to Buy and the relentlessly combative JR. They often use investment terms like "selling short" as it relates to RE. I have a warm spot for renters. We rented for a very long time. We feel in love with our house and honestly could care less what it's worth. We now double pay our monthly mortgage and we're nearly paid off. Look, I know I will be throttled for this heresy that I speak, but I say to all, if it makes sense financially and you really fall in love, do it . If you're looking to find and flip, wait. Sorry JR, I know you'll loose it and write some terrible things, but it's not personal. Calm down my friend.
Anon 10:59 said - "in addition with the lower sales rates and ever increasing demand from outsiders to call mb home, real estate values will continue to appreciate despite any downturns in the outlying areas." Hmmmm - I don't think a year over year increase in supply of 65% and a year over year decrease in sales of 50% is consistent with what you wrote and consistent with econ 101. Do us a favor... do your homework before you spout off about how homes will appreciate in the domestic/global RE downturn.
11:56 said - "2007 may be slow, but potentially relative in consideration of how many SFR choices there are in the market." I agree, it would be nice to see the supply side of the equation to judge agains previous years. But read above, in this case, the trend is not your friend.
11:59 said - "I do look forward to seeing all the price data that MBW is crunching, but I doubt it will help anyone buy a house cheaper in the end." Your right, I've been on this blog for 6 months now and have seen numerous data as to how MB RE is being impacted. If I was to pull the trigger today I'd probably save at least 10% on any home that has been listed. But that hasn't helped me buy a house cheaper. Ugh... where have you been the last 6 months, Mars?
4:32 said - "If you find a house you like and can afford it and finance it and plan on staying for 5-7 years - BUY IT! Anybody else whining about the market on this Blog can't do it. If they could, they would." Wow, that is really insightful. Way to challenge us renters. Remember, we can be overly sensitive.
5:48 said - " but I chose to buy recently in this market b/c I place a high value on quality of life over the next few years. Life is short, so you might as well go live it to the fullest while you can. There is a lot of joy and security in home ownership that isn't captured in a simple economic analysis." I appreciate you telling me and my fellow renters that we don't place a high value on quality of live and that we don't live life to the fullest and that we don't have joy and security bc we rent. Since when do those characteristics only apply to homeowners?
As I used to say back in my days at Polk High, look at the scoreboard. Prices creep lower, supply drifts higher, the number of sales slides lower. The bears have been right for the last 6 months and we'll continue to watch prices decline.
Right mookie. The bears and the technical analysts were both right! Is your comment based on about 30% analysis of charts, support and resistance levels? That's always the best thing to do when buying RE!!!
All I have to say, is things look BAD for re.
Things I heard over the last week:
"baby boomers following previous trends, selling homes to downsize"
"lowest sales on record" (of course NAR predicting second half rebound)
"Alt-A loan problems exploding"
"Affluent baby-boomers turn fearful for there retirements"
"Mortgage broker index overestimates applications, real loan appications down 7% from previous week"
And now on MBC, sales lowest in 20 years.
Boy, the bulls sure are hiding. Nothing to chortle about.
Things look BAD.
I am adjusting my bearish stance significantly lower.
"this is a micro market plain and simple." Hmmmm, yeah right...
I would be interested if the dataset includes the year the house was built. My contention is that the MB prices have appreciated partially because of the "tailwind" provided by the old home-new home divide. Each year something like 300 old homes are demolished with new homes built (and sold) in their place. This effect has got to count for some of the price appreciation we've seen in MB prices. It also means that MB prices may not drop as much as other areas because of the intrinsic value of the newer homes versus the old homes. Should be easy to pull out of the data if it's in there...
That is somewhat optimistic. It is traditional wisdom that a new house is like a new car....you pay for the "new". And the "new" is gone for the next owner. So a new house immediately depriciates by a chunk. It continues to depreciate from there. Ultimately, the residual value of a home is the lot value.
So it is true that a newer mcmansion is worth more than a 50's teardown. But you may be surprised by the difference in value 50 years from now.
I would also add that you should take a driver through pretty much any of the other LA neighborhoods so that you can gawk at all the new houses. It is not unique to MB.
Many, many thanks to MBW for graphing the data (and to the Anon who helped him access DataQuick). This is helpful. There is no substitute for hard data. What would be great to graph along with sales numbers would be average inventory and median price for each year.
2007 being the lowest sales volume in 20 years is pretty ominous. The only thing scarier is the fact that Q1 is down 56% y/y. That is pretty bleak. While I am somewhat sympathetic to the argument that RE is a "different" investment, it ain't that much different. At the current run rate, sales for 2008 would be down to almost 200 for the year. Imagine the graph above with 2008 at 205 sales. Believe me, if that happens, in December we won't be debating whether or not we should have waited to buy back in May.
11:59am said:
Clearly a "slow" market doesn't mean declining prices.
Maybe not in some of the previous years, but at current levels, it will. Such a slow sales rate signifies a huge divide between sellers' expectations and what buyers thing property is worth. Given the balance sheets of many homeowners today and the relative few that can afford to buy in this credit environment, I know where I'm putting my money on who's going to win that standoff.
11:59pm also said:
You just can't time a market, whether it's real estate or anything else, no matter how much you analyze it. This has been proven over time as stock pickers never fare better than the "dart board" approach if enough years pass
I'd cite a pretty good investor, named Warren Buffett, who eloquently states that just because markets are often efficient doesn't mean they are always efficient. There are a group of long-term investors who consistently beat the market over longer periods. So don't say it can't be done. And further, when it comes to timing markets, it is far, far easier to time real estate.
4:32pm said:
Bottom line:
If you find a house you like and can afford it and finance it and plan on staying for 5-7 years - BUY IT!
Ah, no thanks. I bet you would have said that two years ago. And I'll bet that three years from now, that poor sap who listened to you and had to sell in your five year time frame would be feeling the pain.
4:32pm also said:
Anybody else whining about the market on this Blog can't do it. If they could, they would.
I know plenty of people who are happily renting nice places while waiting for this market to come down.
Finally, while I have a ton of respect for Mookie, I think the idea of using technical analysis to figure out when it's time to buy RE in MB is a bit of a stretch (I actually don't believe in technical analysis at all, but hey, that's just me). But enough with the Fibonacci jokes. They're played (but they were funny the first couple of times).
waiting to buy is consistently dumber than a stick.
Wow, I get extra adjectives! In accepting the award for "most combative," apparently none of the realtors on this board were nominated, I'd like to credit my narcisissm and contempt for bullies as my most endearing qualities.
ps
Why does everyone on the Internet spell "lose" as "loose?" If I'm going to "loose it," should I hurry up and find a bathroom?
JR, your daily invective would validity if you were not the bully in the mirror.
It is 10:30 and time for another JR drunken tirade.
waiting to buy is consistently dumber than a stick.
-Just tell that to the guy who bought a house in LA in 1987, when the U.S. Economy was booming much like today. How dumb did he feel in 1993? Dumber than a stick?
9:09pm said:
"Boy, the bulls sure are hiding."
No. I would imagine some of us are busy getting our rentals ready for the poor saps that can't buy. This type of market drives up rents, and I love it. I am all about current income, and the renters are making my day.
6:59, truer words were never spoken. Rents are climbing, much to the chagrin of the hand-wringing, "the end is near" crowd on this board. May not be a problem for most of them as they've never owned so they aren't used to a different, more upscale lifestyle.
But I'm betting Mookie and a few others who have owned homes at one time are secretly getting tired of arguing with the landlord about who's going to fix their toilet.
With regard to the sales data, lower demand is one side of the equation. Remember, it's supply and demand. A slow real estate market can impact the demand side but so can affordability and as Manhattan Beach has become a highly desirable upscale neighborhood, there were bound to be fewer sales going forward.
The other half of the equation, supply, is still not there as inventory was higher in October, 2006. Again, for the clueless, I am not saying this is a bull market or that I expect any appreciation between now and the end of the year; however, the sales volume data alone does not make a case for the view that real estate prices are in free fall. Wait until MB inventory hits 300-400 SFRs (currently 157), with a good dose of foreclosures thrown in, before you start making that claim.
To help settle one of the questions raised above, let's ask the DQ dataset:
What was the magnitude of the drop during the last cycle?
Median home prices in MB peaked in January 1990 (45 sales) at $570,000. The trough was reached 49 months later in February 1994 (43 sales) to a low of $336,250. A nominal drop of 41% -- that's correct, a forty one percent drop in monthly medians in just over 4 years. Neither of these data points are outliers within the preceding or succeeding months with numerous months adding support to both the peak and trough, as such, they are a "real" peak and trough. There is an interesting gross trend of tighter bounds to the medians home price values during the last cycle with far less inter-data-point variance compared to this cycle and may have something to do with far looser credit standards, generally lower sales volumes and Manhattanization this time around (we'll expore this later).
Inflation adjusted, $570,000 (from 1990) was worth $681,405 in 1994, resulting in a real drop from monthly peak to trough of 50.7%, in Manhattan Beach.
http://www.westegg.com/inflation/
To state it again, MB had a real dollar drop of just over 50% in median home price from the January 1990 peak to the February 1994 trough during the last cycle.
These facts are not consistent with much of what has been writ on this blog about what occurred to prices during the last cycle and lays to rest (amongst rationalists) the surreal notion that Manhattan Beach is immune to dramatic price fluctuations; quite simply, it is not!
To quote my favorite blogger:
"Maybe it can't get worse. Maybe it can."
In the past, it most definitely got much worse.
The past as Twain memorably reminds us, doesn't repeat itself, but it does rhyme.
Res ipse loquitur!
Agreed Huggy. I asked for the inventory data concurrently with the data offered here. It got lost in the back and forths once mookie declared that technical analysis was a good tool to determine when to buy or sell RE.
Rents are not rising, but rentals available are. Some people still do not get that our economies including national, regional, state, county, local and even school district are hurting and may have a long downturn before the bills due are paid. Every facet of government is upside down and somebody has to pay. The methods used for coming up with economic indicator numbers (PPI, CPI, Unemployment, GDP, RGDP, etc.) have been "adjusted" about as far as they can be to make things appear better than they actually are.
Lookout, cuz the Democrats are coming! The Democrats are coming!
7:42, Don't blame Huggy for thinking the last bubble bursting was "15%-20% at most", he might have, in the past, worked at the US Government Council of Economic Advisors. These are the people that publish the numbers that currently say our economy is not in recession, wages are rising and inflation is running at roughly 4%. Talk about FantasyLand...and taxpayers actually pay for this garbage.
PROPAGANDA ALERT!!!! The COTC and 7:42 are spreading misinformation again about Manhattan Beach home prices.
I just checked our MLS, which has home sale data going back to 1995. The median sale price for all units, condos and SFRs, sold in MB in 1995 was $440,000, according to published MLS data (anyone with access to MRMLS can verify). But 7:42 is claiming that the year before, median home prices bottomed at $336,250. If MRMLS data is correct, then that would mean that from the very bottom to the following year, our home prices here in Manhattan Beach jumped 31%!!! That, as any sentient person knows, did not happen.
What's going on here? 7:42, being a card-carrying member of the Cult of the Clueless, wants to focus on the highly unreliable monthly sales figures, which, because they are such small data sets, tend to jump around like crazy (I'm assuming he's not just simply lying but that's always a possibility with the COTC as well when we're talking about data that the rest of us can't verify). I just gave you the yearly figure for 1995 (MRMLS doesn't have 1994 sales data so I'm hampered in that respect). My guess is tha the 1994 full year figure was somewhere above $400,000. Similarly, 1990 may have been a peak year but I guarantee you the full-year median price in MB that year was nowhere near $570,000.
Nice try, oh chief propagandist.
Chicken littles, don't buy the COTC argument that we can rely on small data sets like monthly sales figures. I've said this over and over and will keep repeating it. A broader picture tells a much different (and much less frightening) story.
Btw, for those interested, the median for 1996 was around $460,000 (can't get a precise number because MRMLS only aggregates 500 sales at a time but the median for condos and THs that year was $430,000 (100 sales) and SFRs was $473,000 (488 sales).
Nice try Huggy. Read 7:42's post a couple more times or maybe have someone more literate explain it to you. His assetion that prices in MB dropped 50%, peek to trough is well documented with both anecdotal and statistical evidence.
Your "15%-20%" price drop assertion continues to eat away at what little credibility you have after readers wade through your insult laced drivel.
Huggy: "If MRMLS data is correct"
MRMLS is not correct. County tax records are correct.
His crediblilty was long gone after he tried to compare paychecks with someone on the blog. A sad sign of significant insecurity. Can't help but feel sorry for him.
Huggy is very important. I bet he has many leather-bound books and his apartment smells of rich mahogany.
Huggy- While I side with you many times. I would bet that the median in 1989/1990 was close to $570k. I know quite a few people that bought the newer tree section homes in 1989 (3,300+sf) for $700k or more. Couple that with the Hill section and coveted sand section sales, my guess would be that it was close to $570k. While I disagree with 7:42 about a 41% price drop, I do believe it was close to 30%.
Anyone with this type of info would be very helpful. It's great to track prices of the same house. Take a look at 605 36th Street that recently sold for $1,355k, it sold for $480,500 in June 1995. So for a 1950's home 2,000 sf, that price would be above the median for 1995. So I really believe the median in 1990 could have been $570k.
fact of the matter is that 99.9% of the people on this board are ill qualified to comment on this market.
given the fact that Huggy is a real estate professional and a long time resident his observations and opinions hold much more weight than the johnny come latelys that are trying to ruin the sense of community in our town with all of the doomsday predictions.
he has consistently backed up his positions with FACTS and we should take them as such.
if you read the wsj this week several experts have already stated that we have reached the bottom of the housing market decline.
on the local level I'm 100% on board with Huggy calling the bottom of the mb market now.
Snippets of data from Mr. MLS will fade into obscurity when I finish up w/ the DQ numbers. The dataset is bigger and more reliable, not to mention deeper (back to 1988).
I'll present the monthly figures on median prices that 7:42 did as well as multimonth moving averages (could be 6- or 12-month avgs.) and I'll offer inflation-adjusted figures as part of the presentation.
You might imagine this is a lot of work. I also want it to be transparent, so we can discuss where the presentation is right or wrong. Look for it next week some time.
What is this nonsense about "planning on staying for 5 - 7 years?"
Seems pretty straightforward to me, but it depends on one's situation. Given the costs of buying and selling for most people (loan closing costs, fees, realtor commissions...) some feel that eating those costs for just a short stint in a house doesn't pay back. Over 2-3 years you don't reach the point of paying any serious principal on the loan each payment, so you are essentially paying rent to the bank anyway. If you assume rising prices, then at least you can build equity, but that may not be an assumption everyone is willing to make short term. Now, if you don't need a loan, and you don't need a realtor, then the sunk costs aren't high enough to need spreading out over multiple years to make it palatable.
Just my take. YMMV.
9:44- Do a little research on the link below and tell me where you think we are in the cycle. There were plenty of articles pointing to a recovery and bottom in 1992... And well, for those of us here, we all know what happened after that... Not to say that MB lost 50% as did the Westside, but it did lose 30%+. I know I was here and have as much knowledge as Huggy. While he has the data at his fingertips, and I don't, one can believe you are wrong in predicting the bottom is here. In fact, I don't even think Huggy ever said that, so those must be your words. Maybe we are at the bottom, but really doubt it when we have only lost about 8-10% so far on some homes. Take a read through all the archives, there is your research..... Hope you can make sense of it.
http://www.rntl.net/history_of_a_housing_bubble.htm
9:44 -- The wsj article looked only at new housing starts and tried to extrapolate to all of housing from it, a dubious leap, really. Especially given the overproduction of new houses leading up to the current drop in starts. At best, what the drop in starts demonstrates is that builders have finally gained their senses, or lost their financing (or the first as a result of the second).
Take a gander at the inventory graph here...
I left MB a few months ago because I thought that it was way too insular. I now live in Santa Monica and have enjoyed getting out of the Southbay and seeing what else LA has to offer. Admit it folks, you rarely leave MB unless it's for work. Anyway, it's funny to see the commenters on this blog who have probably been in the Southbay too long and have decided that MB is immune from the steep price declines that are trickling west day by day. I just want to let you know that you are not, but rather you are victim to the nature of MB. It sucks you in, doesn't let you out, and eventually closes out most of the rest of the world. Wake up. Take a drive to Hancock Park or something. Meet some new people then go back home and rethink the invisibility of your city.
Fewer transactions in housing certainly hurts businesses that rely on transaction volume for their livelihood: R.E. Agents, Mortgage Brokers, Escrow Cos., Appraisers, Title Insurers, Home Inspectors, etc.
HOWEVER, transaction volume does not necesssarily reflect downward pressure on prices UNLESS the supply of houses offered for sale remains the same as in previous years.
In other words, this data does not differentiate between decreased demand and decreased supply.
Perhaps many who would otherwise sell are sitting out.
Frankly, I still don't see that many "GREAT" houses out there in MB to buy. Just a lot of over-priced cookie-cutter McMansions on busy streets.
PROPAGANDA ALERT!!! Cult of the Clueless continues to spread misinformation on this board about MB home prices!!
9:02 - Maybe you need someone to explain 7:42's post. You said "His assetion that prices in MB dropped 50%, peek (sic) to trough is well documented with both anecdotal and statistical evidence." Wrong - the only thing the COTC has is a comparison of one month's sales in 1990 to one month's sales in 1994. I'm certain if I picked one month from the first four months of this year and compared it to the month of my choosng from last year, I could show a 20% increase in home prices. That fact (and your comment) are what constitute insult-laced drivel as they insult people of normal intelligence (a rare commodity amongst the COTC, I realize).
The next COTC "genius" says MRMLS is not correct. Where's the evidence? I know it's not as complete as tax records since not every sale is reported on the MLS but do you have anything to indicate that this admittedly incomplete data is incorrect? I'll answer the question for you - no.
9:09 - more projection, no content.
9:18 - I own in MB. My library/den smells of rich mahogany (I'll have you over some time so you can get your first and last whiff).
For you COTC who are so scared of facts, I'll give you a Dataquick number for the entire 6-county area of SoCal, as recently reported in the LA Times. 19%. That is the total decline in real estate prices from peak to trough through the last down cycle in southern Cal. That covers places like Palmdale, Lancaster, Santa Clarita, Inland Empire - all places that I'm sure did so much better during that time while it was Manhattan Beach that was undoubtedly dragging the median down to this alleged 40-50% decline figure. Ridiculous!!!! This is why the COTC will be renting forever unless their favorite rich uncle dies and they fall into an inheritance.
Speaking of Manhattan Beach's insularity, I always get a kick out of my local friends reactions when I mention a great restaurant my wife and I had been at that weekend in West Hollywood, or downtown, or...god forbid!...the valley. They always look at me funny and say something like "you went where?" or the occasional "maybe I should try one of those places sometime".
In the restaurant/gourmet foods business, the South Bay has long been considered a wasteland, even inspiring nicknames like "where the sewer meets the sea" and "hamburger hill" (PV). The fact that RE prices have climbed so high here is a pretty common source of amusement among long time residents of other high priced areas.
Geez Huggy, give it up. You look more and more ridiculous with each post. You're only consistency is your inaccuracy. What a pathetic putz.
Huggy or whomever you are;
If you think everyone here is part of(as you put it) the "COTC" and are "idiots" and so on and so on, then why do you care so much to post your screaming rants? Why do you care what they say?
If all of these people are so bad, then others won't listen to them, correct?
If all of these people are idiots, why do you fight them? Why give them the time of day, no one will listen to them, right?
You are so damn defensive that it makes me start to wonder why?
I am a homeowner, so step away from your keyboard and drop your COTC and "renter" rant for a moment.
I love the content that MBC puts in the blog but Gee-Zus you get old!
Check out the following link. It's a blog post on cnbc by Diana Olick. She thought the community profiled immune to the housing crisis...ahem...downward price adjustment.
http://www.cnbc.com/id/24522674
11:17, you'll be a homeowner the day pigs fly. I defend homeowners and homesellers (I'm one of the former) so logic would dictate that, if you were truly a homeowner, you'd be offended by misleading comments about the local RE market and misinformation about various homesellers (all greedy flippers who have to sell because of their ARM resets, according to the clueless losers).
As long as the COTC continues to spread propaganda and misinformation, you can rest assured that I will be here to call them on it. If you're truly a homeowner here, no need to thank me. Your kind words were thanks enough.
High home prices are not necessarily good for a community. When houses are selling, they are good for realtors who get paid a commission.
Homesellers only benefit if they downsize or move to another market. For buyers, it is better to have lower prices, right?
If prices in a community get too high, I believe the turnover of houses will lessen because most people cannot afford to move-up. With Prop 13, those who bought in have lower tax costs. Ultimately, this leads to an aging community, fewer younger families, and (in my opinion) a less diverse and interesting place to live.
It is not in the best interests of all residents of MB (or any other community) to have stratospheric house prices. Prices should be (and ultimately will be) connected to the incomes of the residents.
Huggy-
You do realize that the NAR has been spouting true propaganda for years, don't you?
-"House prices always go up..."
-"Now is a great time to buy"
Try asking someone 30% under water on a house in a San Diego suburb...
Are you offended by the NAR's propaganda? Should they be inducted into your COTC?
Huggy, from now on I dub thee KOTA or King of the Acronyms. That's about all you have going for you, as your arguments lack any semblance logic. The data presented by 7:49 are correct and once MBwatcher posts it you will see. News flash: posting the median home price decline of 19% countywide is irrelevant. Why? because as you have pointed out on numerous occasions, MB is a high end neighborhood. As has been mentioned previously, wealthy neighborhoods exhibit higher volatility; the run up in pricing is higher as is the correction, relative to median priced 'joe-lunchbox' housing. A 40% decline is roughly the drop that happened in some of the best SoCal addresses during the last cycle. Vacation and second home locales were hit even harder (up to 90% off the peak). Please stop trying to spin things and do you homework before you post.
Oh Good Lord "Huggy",
This is 11:17 here. Yes, I am a homeowner but go right ahead and launch your comments on how that couldn't be so.
What was your brilliance "when pigs fly"? That's really clever.
My comments center around the fact that one man (I'm only assuming that mind you) could spend so much of his time screaming and yelling via a computer, at people he thinks are clueless.
Who do think needs defending? Which homeowner requested that you take on your plight?
I've got to go for a run, exercise is good for stress, you should try it.
Actually, you should just get out of your house dear man. (I know, this is when you insert that your house is paid off, is an estate of some sort, etc., etc...yes, yes, I know). Thou doth protest too much..
Have fun and blast away...I know the joy it brings you.
11:17/12:35, I don't think the COTC are clueless, I know they are - their posts speak for themselves. By the way, lots of substance in your comment - typical of the COTC.
Who needs defending? Most recent example is evident on another thread where one of your fellow idiots posted that 316 10th Street is in foreclosure. Untrue. There was a notice of default but the homeowner borrower has plenty of time to cure the default (at least 90 days) - even then, the lender may not proceed with an auction sale - recent example is 3412 Pacific which was sold pursuant to a short sale and had 5 offers.
Even when I provide data, the COTC, like 12:22, can't grasp it. But I'll continue to provide info for the few readers who are "real" homeowners, who want to become homeowners and those whose bias against homeowners and home ownership is not already cemented in their thick skulls.
Cheers.