Here Comes the Inventory

It's not a flood, yet, but January has seen some very significant new levels of inventory come onto the local market.

With 23 new SFRs hitting the market this month (west of Sepulveda), we had the highest number of new additions since July 2007.

And keep in mind, we truly mean "new" listings – not comebackers, listings that took a couple weeks off the MLS for the holidays and returned.

As supply grew in this noteworthy fashion, demand appeared to be low. As we write, at the 23rd hour of Jan. 31, total sales (new escrows) this month in our subject region totaled just 8.

Most of the new listings came on in the latter half of the month, many just this week, so we shouldn't make too much – yet – of the great imbalance between new supply and sales. Many of these new listings haven't even been seen by anyone yet.

But buyers who have been scanning the available inventory and finding it lacking, or trying out low-ball tactics, will probably feel refreshed to see that there is more to choose from.

Naturally, we'll cover this ground in more detail in the next MB Market Update, but for now we just wanted to convey the extent of the new listing activity.

The graph above may need some tinkering after we really close out the January data (we prefer to wait a couple of weeks to account for failed escrows, etc.), but we thought that, for now, it was important to offer our up-to-the-minute tracking info with the context that this graph provides. (Note: If you're doing the math, please be aware that the graph doesn't show cancellations, though we track them, too.)

Maybe the conclusion is obvious – we could be just weeks away from seeing local inventory at the highest level MBC has recorded (since March 2007). And this would be at a time when demand has been tepid for a while. These cross-currents could matter.

Another Look at Sales Rates in MB

It's not big news to regular readers of MBC that 2007 saw the lowest number of MLS-reported sales of SFRs in Manhattan Beach this decade. We covered that ground pretty well 2 weeks ago in "Slower, Slower, Slower."

Here is a new look at the data which we're sure you'll find interesting, nonetheless.

Please note, the data presented here cover all of Manhattan Beach, not just our usual west-of-Sepulveda territory. Also, the monthly figures reflect sales that closed in a given month – a slightly lagging indicator because escrows run 30+ days from the time a deal is made. Source for this data is the MLS by way of Kaye Thomas' blog; if we can get data going back further in time, we'll re-do the graph, as it's unfortunate to be looking only at boom years and the immediate post-boom period (i.e., now).

Our main graph (click to enlarge) presents the number of sales monthly from 2001-2007, using a 12-month moving average. That means each month's figure is the average of that month plus the 11 months preceding. Presenting the data in this way dampens or removes seasonal effects, which are prominent in RE sales, to show clearer trend lines.

As we began 2001, the local RE market was busy, with a 12-month average of 49 SFR sales monthly. Impressive. But this trend drooped steadily until bottoming in November 2001, at an average of 40 sales/mo. The sales rate climbed sharply for the next 10 months, peaking in September 2002 at 52 sales/mo.

What were the external conditions in 2001? The Fed, sensing recession, undertook a dramatic easing of rates early in the year (click graph to enlarge). They were right about the recession (grey bar), and the 9/11 attacks only added urgency to the rate-cutting. Those actions, plus a DC-initiated taxpayer rebate, fed a burst of economic activity, including home-buying. (We recognize that the Fed rates are just part of the picture.)

By mid-year 2004, the SFR sales rate in MB was back to the low 40s. Our most recent peak was August 2004, at a 12-month average of 42 sales/month.

The trend has been downward since then toward 30 sales/month. That means our monthly sales rate (12-month moving average) is down 25% or more from two recent points of apparent stabilization, and down 44% from the peak.

When we focus on more recent times, what looks like a "springtime rally" in 2007 is actually a result of 2 months' worth of activity that was notably above trend. In March and April 2007, we saw actual (not average) monthly SFR sales of 50 and 44, respectively. Before and after, sales were: January (30), February (29), May (33), June (30) and July (23). Those were 2 great months, but they were surrounded by months in the 30-ish region.

Of course, once the credit earthquake hit in August 2007, sales were affected. MB's 4th-quarter sales were below trend: October (18), November (13) and December (18). (See "Slower, Slower, Slower" for comparative 4th-quarter data from 2000-2007.)

Looking at 2008, as we've noted already, we'll need a monthly sales rate of 28 to reach the same number of annual sales (344) that we saw in 2007.

By MBC's tracking, we saw 10 new escrows open in December 2007 on SFRs west of Sepulveda. That number's just a portion (perhaps 2/3rds) of the total that we might see close in January '08, but it was low for our subject region. Our January SFR sales to date total 6, west of Hwy. 1.

Now, it says here that the Fed, sensing recession, undertook a dramatic easing of rates over the last few weeks and months. And there's a stimulus package, taxpayer rebates, raising of the GSE maximums...

Could it soon be 2001 again? Or not?

Britney, Bargain Hunter?

If you believe the gossip rags (is it even a rag, if it's online?), Britney Spears is officially our new neighbor. And she supposedly drove an impressively hard bargain, too.

Initially, we thought she'd be in that gated estate up in the Hermosa Beach part of the hill section near Gould. (See "What Britney Saw.") Now, we're told that's not so. Whom to believe in the world of gossip? Not our game.

These two reports (see here and here) contain the same basic information, that Britney paid about $6m and saved $2.5m on a Hermosa home. That basic description matched the known facts about the home she toured up on the hill, listed for several months at $8.58m. Even if it's not the singer's new place, we'll always remember the marketing on that one, with full-page color ads running week after week touting the fact that the home was "priced to sell at $8.58m." Once that property got linked to the singer it fell off the MLS and those ads stopped running – a warning… don't show Britney your house, ever.

Assume she really has bought a house around here... If this deal had been cut in MB, we'd award Britney the 2008 award for bargaining right now: 30% off, -$2.5m, wow.

As to having this troubled paparazzi magnet joining our community, we're finished with denial and argument. What's the next stage, exactly?

Wait, can we go back to denial? Our thanks to all who are helping.

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UPDATE: This story has been changed from its original version.

There's Nothing Like a Deadline

As MBC reported just 10 days ago (hat tip, Kaye Thomas), the merger of the local MLS into a larger one with stricter rules is just around the corner.

That means that, by Feb. 4 – when the merger takes effect – if you haven't pulled a bogus re-list on your longtime listings, it will difficult to refresh the DOM clock again. Agents can't cancel and re-list alone; they'll need broker approval. Experience, we're told, suggests this could mean the end of bogus re-lists.

Just think: Listings will be stuck with their current DOM, plus all the new days the listings accrue in the future.

Despite the imminence of the Feb. 4 deadline, surprisingly few listing agents have taken action in January. Quite a few homes took a week or two off for the holidays and came back "fresh," but almost all holdover listings from before the holiday season have stayed where they were.

But not everyone's missing the deadline. In a flash Tuesday, the new home at 516 24th was re-listed. Out went MLS # S955977, and here came the all-new # S961440. (Click address above for home details via Redfin.)

Now, perhaps this was one of those "new product" re-lists we were reading about the other day in the Daily Breeze. Let's recap the words of a local pro:

"My contention is that when you have a piece of property, and you change it $100,000 in price, it's a new piece of property. It shouldn't be penalized by the number of days on the market that it was at another number. It's a new product."

It seems like the only test proposed here is: Did the price change? By $100k or so?

We might add, as a corollary, did something else change to make it a "a new piece of property" or a "new product?" (Remember, twice we've seen listings literally change their addresses after coming on the market – now that's a change.)

We've got a printout of the old listing for 516 24th. Checking...

Nope, same address, same description and same price ($2.495m) in the new entry. Same listing agent, too. Only difference now is the new DOM (0), replacing 118 DOM, by our count. (The listing started Oct. 4, 2007.) Must be bogus, unless we're missing something.

Now, faithful readers know that MBC is not criticizing the home here, just the re-list. We literally labeled 516 24th as our favorite new home in a Christmastime post (see "Mrs. MBC's Xmas List") and in a follow-on article with photo in the Easy Reader. The style is crisp and beachy, and we were able to see past the lack of a yard and proximity to the school. It seems that the market has rejected the price so far, but someone will be glad to grab this home for the right price later.

As to the 4-5 dozen SFRs west of Sepulveda with ever-higher DOM counts, there's less than a week now to follow the lead of 516 24th, and re-list ASAP. C'mon, folks, deadlines are a time to focus.

Unless you know that it just ain't right.

3 More Held for Just 2 Years

It will be time soon for MBC to formally update our "two-year itch" tracking, watching the fate of home sellers who have held their homes just 2 years and now have seen fit to put them back on the market. (Click the "label" of "two-year itch" in the lower left-hand column for our stories to date.)

There was a time, dear readers – some would say last summer, even – when you could get out of a Manhattan Beach home you'd lived in for 2 years and walk with some tidy, tax-free profits, a few hundred k or so in many cases. (Tax-free because the U.S. tax code allows home sale profits of up to $500k to escape taxation, provided that a home was the taxpayer's primary residence for 2 years.)

Two of the 3 new listings, however – all new in 2005-06 – show reduced ambitions. They are priced now just a click above their purchase prices, and it's not hard to imagine them selling lower. Time will tell.

701 N Dianthus (click this, or any address, for details via Redfin) is a Hill Section home that will transport you to the Tree Section. That is to say: this is no ocean-view estate, just a very decent family home (5br/5ba, 3600 sq. ft.) whose layout you'll more or less recognize if you know the Trees.

The lot size (5200 sq. ft.) affords an actual yard in back, good for dogs or kids to do dog and kid stuff, although it's not landscaped beyond simple sod. We like tucking the garage below, but we don't like dragging groceries up the stairs (how soon will the kids grow up and pitch in!?!).

The owners paid $2.530m two years ago, in Feb. 2006. They're now asking $2.775m (+245k/+10%). Of course, they lose half that markup to sales commissions, so the potential profit margin is down to about $120k/+5%. Uh-0h, the listing touts "over $150k in custom designer upgrades," including flooring, special plastering and custom paint. It would appear that, even at list price, the sellers lose money.

2901 Blanche is, first of all, on Blanche. It's not the busiest street in the Tree Section, but it's no asset. Happily, the home (5br/5ba, 3350 sq.ft.) is mostly oriented away from the traffic, with just the mother-in-law's quarters downstairs and one kid's bedroom upstairs facing Blanche. The layout has a good flow and, while it hits all the familiar notes, feels just a little different. It's bright, but the fussy décor had us pleading for, maybe, a little more beige.

This home was purchased new for $2.295m in Sept. 2005. Starting price now is $2.395m (+$100k/+4%). Before we prophesy the sellers' certainty of losing money on the home, we should note that a relative is the listing agent, so there ought to be some savings on commissions. And yet, buyers willing to lay out $2.4m or so have options – including new homes on Elm, Walnut and Palm (not Blanche) and a new one nearby at 644 35th (click for details) which is larger (3650 sq. ft.) but starts just $65k higher.

At some point, the owners of 2901 Blanche posted their home on Zillow.com with a "Make Me Move" price of $2.850m. That was a delusion. How about $2.395m?


2312 Poinsettia was custom-designed and built for the owner by two big local names. It's the most expensive of this group, owing to its much larger size.

You will not recognize the layout, exactly – it's got nice twists, and its quality shows throughout. A big "wow" factor: the fully appointed basement rec room with gym, pool table, 14 TV's (give or take) and massage room. (Yes, you do need a massage room.)

Unfortunately, there's no yard to go with the extra-large interior square footage (5br/6ba, 4175 sq. ft.), and, for all the big name-ness, the curb is nothing special.

We don't have data yet on the cost to the seller of this 2006 build. (The county assesses it at $1.5m or so.) But it's on offer now for $2.95m. That's a fairly modest $717/PSF, but some of that square footage is wasted if you don't make the basement your fully functioning gym/pub/office/massage-therapy-space. It's a bargain in the low-to-mid-$2m's.

MBC doesn't (yet) know all the reasons these sellers are getting out, but we're intrigued by the apparent fact that 2 out of 3 could lose money, even if the sale prices bump up a bit from their purchase prices. Same-house sales are a good way to track the local market. Netting less than you paid, however, is not a very good experience of the local market.

Unpredictable

It's not every day that they let the plebes, the riff-raff, you know, John Q. Public, waltz through an $8m house. Sunday was one of those days, though, with an open house at 923 1st in the Hill Section, and we just had to drop in. (Click the address for details via Redfin.)

Here's a tip for you if they offer the same opportunity again: Take dramamine first, for your head shall get to spinning after a short while touring through this 8,000-sq.ft. home. We've not seen such a peculiar layout in recent memory. There are head-scratchers around every corner and bend.

For instance, in a home that is "contemporary" in style – roughly speaking, that means it looks modern but has no actual style – one of the first rooms you'll see is a kind of throwback: a dark, wood-paneled office, with built-in bookcases and, lo, a bar. One whole curving wall is made of windows looking back into the house.

Follow the first-floor hallway in its winding curves and you'll spy two bedrooms, partly separated by glass doors (!?!), then another, quite cozy, and, er, we're sure there was a fourth, but we were starting to feel like we were lost in a maze.

Suddenly, we popped out into an extremely cool exterior living room – a high-end pool cabana (pictured). One whole wall, and half of another, have folding, windowed accordion doors that can be stashed away, leaving a large living room with a big-screen, sofas, a bar and 100% fresh air. Steps to the pool, of course.

Back to the maze, and we found our way upstairs. The vast master has tons of floor-to-ceiling windows, ocean views and, as you might expect, a bathroom the size of a small garage.

We found the walk-in closet, and here's part of the answer to how you can use 8,000 sq. ft. in a house: Make your closet the size of a locker room, with lots of seating. Appropriately, off one door is the gym. (In the closet, the lack of a woman's touch everywhere was partly explained – no women's clothes cluttering up the great expanses or built-ins.)

All those various peripherals are great, but you won't need a master that can entertain 50 comfortably, and you won't always have pool parties on Game Day, but you will use the giant upstairs living spaces – all of which have panoramic ocean/PV/Catalina views. We'd guess that 2,000 sq. ft. are devoted to the great room space here.

Perhaps our favorite (non-cabana) feature: The service side of the built-in bar positioned at the windows steps down, so that a server can prepare beverages without blocking the panoramic ocean views of any guests. (Pictured here, if hard to discern.)

2nd, 3rd and 4th-favorite features: The other bars that we're aware of. We'll update the story if we missed a bar somewhere.

Art appreciation: The entire home is filled with paintings by a single artist, unknown to MBC before this particular museum tour. Included are two rather large depictions of partially naked women in harems. Granted, this was all much more interesting to see than multiple shades of beige.

923 1st was built in 1991, and places its 8,000 sq. ft. on a nearly 11,000-sq.-ft. lot. The current owner paid $3.3m in 2003 – which must have seemed like a lot, way back then – and took to remodeling the house in 2006.

The recent vintage of the remodel is evident – materials are mostly slick and modern and reminiscent of high-end hotels and spas. You'll find spots where original (ca. 1991) details were left in place, looking perfectly nice but not 100% modern. And there are places, like the wood trim on windows outside, where it seems that the wood was stripped and refinished, because it just isn't slick. Small parts of the remodel aren't complete yet, so it's an A-/B+.

With all of that said, it's impossible to see 923 1st as an $8m house. It's too strange and wild and custom, it seems, to draw top dollar. The price is $1,000/PSF, well above the range of $760-$915/PSF we've seen in recent high-dollar sales. And in this house, it's not like square footage is in short supply, which limits the import of the PPSF gauge.

Oh, they'll tell you that the real comp is 863 6th, a "smaller" home (5400 sq. ft.) on a similarly sized 11,000+ sq. ft. lot, which sold off the MLS last August for $8.325m. But that sale remains a huge outlier, and we're guessing that 6th St. just made more sense. In reality, 923 1st is not a family home, it's an entertaining home that coddles the master of the house.

Since we're in the pricing stratosphere here, what of 230 Anderson, a huge (6200 sq. ft.) and newer family home with exquisite finishes everywhere, which couldn't draw $7m after 6 months of trying? A brand-new home at 2nd/Dianthus sold mid-construction for $7.2m recently.

Those homes tell us this one is probably high by well over a million bucks, and the lack of anything comparable makes it hard to get a fix on what price is right. We might not be shocked at a sale close to $6m, but much about 923 1st is simply unpredictable.

Forklift Moved!

We could hardly believe our bloggin' eyes this morn, but, yes, the rusted-out old forklift over on 30th St. – next to the new home at 757 30th – has actually moved.

In our story Monday (see "The Wreck Next Door") we led with a pic of the forklift that has always been in this particular driveway, at least 5 years by our count. A commenter said it was more like 25 years.

So, is the owner running around doing some Sunday morning forklift errands, did the listing agent on the new home next door buy it and dump it, or what?

Poll Results re: 742 27th

On Friday, MBC described a Tree Section home we found pretty charming, which the listing called "Better Than New," and asked you to vote on how much it would sell for. (See the discussion of the home and comments by readers in "Pricing Poll: 742 27th.")

It turns out quite a few readers have seen the home at 742 27th. (Click address to see details via Redfin.)

In contrast to some of MBC's mostly positive comments, many found the living spaces dark with short ceilings, the crown molding detail imposing and, mostly, found the exterior to be an even bigger strike than MBC had let on.

We also learned – presumably from a trustworthy report – that the back yard wall will have to be moved in 2 feet by the new owner due to a property line encroachment. Yikes.

That said, a healthy 37% believed that the property will sell for $1.9m or more. Just 16% (part of that 37%) found the property's very new price of $2.1m compelling, however.

The favorite choice of a price range, garnering 42%, was $1.75m-$1.9m, with several people offering their idea of the sale price right in the middle of that range. Combine that result with the additional 17% who thought the home would close below $1.75m, and a large majority of 59% believed the final sale price would be below $1.9m.

This was the third of our 3 price polls so far, and it will be interesting when one of the featured homes actually goes into escrow to see how right this crowd has been. Our readership at MBC consists of realtors, active buyers, homeowners and lots of others with an interest in our local RE market. As a group, how wise are we? Time will tell.

Two End the Suffering

True story: Your humble correspondent drove by the longtime listing at 232 30th Pl Friday morning, gave it a quick glance, and a little voice said, "It's time." As in – this one has suffered enough, it's time for a sale.

Imagine our surprise – well, maybe not surprise – to learn later in the day that 232 30th Pl is actually now in escrow, after almost 10 months on offer. Whoa.

Now, it's a contingent sale, so let's not jinx it, but it seems it might be time to say goodbye to another old friend.

MBC first featured the home in late April when it had a different address, 3009 Highland (see "Decelerating Returns.") We noted that the home had been sold frequently in the boom years, rising from $510k in 1999 to the $1.225m that the current owners paid in July 2005. When they listed for a modest markup at $1.369m, MBC viewed that as nearly flat pricing, and said:

"Here is a case of fairly realistic sellers. They don't expect a pot of gold for the trouble of living in the house for < 2 yrs. They're just ready to move on. They have room to offer price reductions without selling for less than they paid."

The sellers later changed the home's address, which confused us a bit (see "Changing Address Midstream.") They took modest cuts from time to time, and lingered at $1.289m for many months.

So let's do the math – if they pay out commissions at the near-bottom level of 4.5% in total at that price, they earn $5k. A sale price below $1.289m, or commissions above 4.5%, means a net loss. As charter members of the two-year-itchers club in 2007, the sellers here provide a warning – you may not get what you paid at the peak anymore.

At this point, regardless, the sellers have just got to be happy to be moving on.

On the same day, the longest-running listing west of Sepulveda also went into escrow.

Frankly, it ain't the same kind of story as 3009 Highland/232 30th Pl, but the new construction at 2709 Oak is in escrow now, last listed at $2.049m.

If anything, 2709 Oak was a warning flare showing that the Tree Section's $2m+ segment had stalled out, and that buyers would be insisting on quality and location henceforth. This newbie was first offered in August 2006, more than 520 days ago, at $2.395m, which must have seemed reasonable at the time, including a location discount.

MBC has mildly raved about this house before (5br/5ba, 3600 sq. ft.), and lots of readers have said here and privately that they liked the build, the brightness, the size, and, really, everything but the location and maybe the curb.

Not long ago the builder set an absolute minimum of $2.050m, perhaps reflecting a break-even price. Once list came down recently to that level, though, you had to figure it'd sell somewhat below. (The lot was purchased for $920k in April 2005.)

Botttom line: It's likely we've got another case of new construction selling for a loss in the Tree Section.

These two sales dredge up a thought about one more – the new home at 911 Duncan in the Hill Section was on the market more than 7 months when it went into escrow earlier this month, at a new list price down $470k from start.

Could it be that buyers here in January are bona fide bargain hunters?

Pricing Poll: 742 27th

It's time for another MBC pricing poll. We're aware that this makes 3 out of 3 in the Tree Section, so we'll diversify next time. We think you'll agree this one poses a nice challenge.

Please read through the story and vote, supporting your vote in the comments as you like. The window on this one is 2 days instead of 3 – closing Sat. nite at 9pm.

'Better Than New'

The slick, stylish ads for the large remodeled Tree Section home at 742 27th have always pitched it as "better than new." (Click address for details via Redfin.)

When the home (with 4br/4ba and 3550 sq. ft.) came on the market in early October, at $2.4m, it was priced higher than 6 brand-new homes, and $1k above 3 more new homes. So they had to say it was "better than new."

As of this week, 742 27th is at $2.1m (-$300k/-12%) after 3 1/2 months. Now there are 4 new homes priced lower.

This one will sell. The owners have purchased a new home in MB – so this one goes when the price is right.

OK, so, is it "better than new?"

Yes, the home is more appealing than the standard-issue new construction in the Trees. It's got very up-to-date features and details from a recent, complete remodel that put the home on a par with any modern home. That's an achievement because the house was a speckie built in 1991, a blank slate for the remodel. The owners showed a lot of taste and attention to detail.

Thankfully, the floorplan is terrific. You might miss the otherwise now-standard 1st floor guest room you would find in new homes, but, without it, the living spaces are bigger and hang together nicely.

The main beneficiary, spacewise, is probably the family room off the kitchen, which feels larger than some new-home executions of this "great room" concept. Those living spaces open onto a tidy, tastefully landscaped yard that steps up a bit from the house, adding privacy and a feeling of quiet isolation.

The 4 bedrooms upstairs are all spacious – none of those kid-closets you'll see in the newbies as builders try to squeeze too much into too little space. As it stands now, one b/r is outfitted with a built-in desk as well as a bed (sort of an office/bedroom) while the master also offers a separate office with built-ins, in addition to a walk-in-closet. The master bath easily holds its own against the offerings in the finer new homes.

The main negatives besides the "missing" 5th bedroom are really exterior issues – the curb isn't great, just acceptable, therefore a bit misleading as to what's inside. Similarly, your first impressions could be skewed by the brick entryway, which just feels dated. (In the same way, mind you, that stapled-on stone details are going to feel dated in a few years.)

At $2.1m, 742 27th is now at $592/PSF. We count 4 listings in all of the Trees with a lower PPSF. So the recent cut (-$199k) has made the listing look competitive by this measure. This PPSF is at the low end of all $2m+ sales over the last 6 months.

Intriguingly, the current price and PPSF are identical to a recent sale of new construction (2807 Elm) – same size, bigger lot, lesser location.

The issue continues to be how this home compares to new stuff. If you're going to spend $2m, you've probably got your pick of 7-8 new homes, so why take a remodel?

And yet, someone will fall in love with 742 27th, perhaps soon. The question is what kind of deal they'll strike.

Voting here closes Saturday at 9pm.

Great Streets

We're pinched for time today, so we'll make this a fully participatory entry.

For some time MBC's been mulling a short series on "Great Streets" in MB. We've written a lot about that little block of Poinsettia between Valley and 31st. We love 18th St. west of Highland, and several others scattered around.

But what are your favorite streets? It could be a block or two or a whole street.

Let us know in comments here – with your reasons – and we'll use the feedback here as we begin the series soon. Thanks!

Who's Melting Down?

It can't be fun to be bearish all the time, but if you are feeling that way now, 2008 is looking like your year.

The Fed's emergency rate cut Tuesday smacked of panic, even as they were trying to prevent panic.

The US president and his congressional counterparts are quickly getting over their issues to squirt out some kind of "stimulus" ASAP. (A stimulus package? Isn't that soooo early-90s?)

We're told the next big wave of bad news will follow from adjustments to the ratings of bond insurers, a concept which might put us to sleep for the night but for the $2.3 trillion (TR, trillion) size of the biz, plus the ripple effect (tsunami effect?) of the possible downgrades across banks, financials and even municipal bonds.

"Subprime" was just voted "word of the year" for 2007 – any chance it's "bond insurer" in 2008? We keed.

The conventional wisdom used to be that housing cannot cause a recession; it's a lagging effect of recession. That CW is getting a rewrite, and of course it's all about the who, why and how of the housing bubble.

Foreclosures are the leading-edge indicator of the housing bubble's collapse. Their dramatic rise in the past year, during a period of decent economic conditions, resulted from the first downturns in home values after years of double-digit growth. Here's a vital detail about foreclosures statewide in California, from DataQuick's recent press release:

Most of the loans that went into default last quarter [Q4 2007] were originated between August 2005 and October 2006. The median age was 22 months, up from 15 a year earlier, indicating that the pool of at-risk home loans is getting larger.

So, get that – "most" defaults come from folks who bought at the peak. Now, try restating that: Prices got so high, buyers couldn't really afford the homes they were purchasing, and within months of realizing that fact, they stopped paying their mortgages. Often, they stopped because the price they paid no longer made sense if they were holding a depreciating asset.

Here's how that bad attitude translated to data in Q4 2007:

• Last quarter's numbers of default notices sent out were a record in 42 of [California's] 58 counties, more than double the Q4 2006 numbers statewide. (DataQuick)

• The number of homes in LA County proceeding, for the first time, to a trustee's sale (foreclosure auction) rose 235% in Q4 2007, vs. Q4 2006. (PropertyShark.com; click here for PDF)

• Trustee deeds recorded, meaning the actual loss of a home to foreclosure, surged 421% in Q4 2007 over Q4 2006, from 6,000+ to almost 32,000 in LA County. (DataQuick)
  

Remember, Q4 in its entirety followed the official onset of the mortgage meltdown in August. But the trend had already been upward before that.

In LA County, of course, things are worst now in far-flung places like Palmdale, or in hard-knocks districts like Compton. (See the PropertyShark PDF for the top 10 zip codes in LA.)

There remain comparatively few foreclosures in MB, though we've got our radar trained on at least 2 active listings west of Sepulveda that are freshly in default, and we're intrigued by some purchases over the last year on which the loans are already going bad. Among the 2 actives, one was purchased in 2005 at a fairly high LTV, while the other doesn't fit the profile, as best we can tell. More on those – and any others – soon.

The Wreck Next Door

As new construction has churned through Manhattan Beach, one small, dilapidated cottage after another has been scraped and replaced with Tuscan villas and the like.

Problem: Some of those dilapidated cottages, and other worn-out old buildings, haven't been torn down yet. In fact, they surround, and detract from, some of the pricier new homes currently on the market.

(As always, click any highlighted address for home details via Redfin.)

CASE STUDY #1: 757 30th St.

Over on 30th St., a quiet side street just off of storied 31st, a new "Spanish Mediterranean charmer" (listing) sprouted over the last 2 years. It's nice, but two neighbors are not.

Just to the east of the property line lies this beaten-up garage with rusted-out accessories. Truly, we don't think that forklift has moved in 5 years. It always seems to be there. Buy 757 30th St., and you could see it every night as you park at your $2.7-million-dollar home.

A double-whammy – the home just to the north, with an address on 31st, is pretty shabby, too. Second-floor bedrooms of the new home, including the master, look out at the neighboring homes – and they look back – and frankly it's all a bummer.

Now, if you take the long view, you have to know that, some day, your neighbor on 30th will be a spankin' new Cape Cod, sans forklift, and some day your view from the master will be of a gorgeous Caliterranean. That could be just a few years – and lots of construction noise – in your future. For now, $2.7m doesn't buy you great neighbors.


CASE STUDY #2: 2100 Flournoy

Speaking of neighbors looking in on your master, the new home at 2100 Flournoy offers a similar view to that over at 757 30th.

Here, two homes off the back yard, to the east, look directly down at the master bedroom. They're on a slight incline up from 2100 Flournoy, so they've got a pretty good view.

But you don't. The blue home, off to the right, is just a bit dated, not a complete eyesore. And if you're ever wondering what they're up to in their back yard, you'll be able to check.

The yellow house, er, building, is some kind of stapled-together addition that must have been nicer when it was newer. Or not. Up close, it appears as if someone slapped siding on a kids' playhouse. Quickly.

Take Flournoy for $2.9 million or so, but be sure to save a bit of money for curtains to block out your views.


CASE STUDY #3: 644 33rd

There are a lot of things to recommend the large new home at 644 33rd.

At $3.25 million, you almost expect perfection, but prepare yourself, because yes, there are flaws. The back yard is small and weirdly L-shaped, not all the materials and finishes match stylistically and the master bath is shockingly cramped for a 4200 sq. ft. home.

The basement media room + bath + extra bedroom is a super feature, nicely executed. And that's great, because going downstairs is much better than going up the stairs. Going up, you see the tattered, mossy shingles of your neighbor's, achem, uniquely styled home. It's a downer, though you'll surely get used to it.

Also upstairs: the front-most bedroom features treetop views, and also, shall we say, a "refined" view – prominent on the horizon are pipes, smokestacks and other structures from the nearby Chevron refinery.

Gosh, we wish we didn't have to be reminded about the refinery.

Of course, almost all of these unsightly neighbors are destined to vanish. Our kids will never know an MB with 900-sq.-ft. homes, heavy machinery parked in clear view – heck, in a low-carbon economy, we might some day ditch the refinery, or replace it with a hydrogen plant.

If you take the long view, you'll see right past what you get for about $3m these days.

Just 2 Weeks Left to Re-list!

We believe it, and we don't believe it.

Kaye Thomas reports that, in the imminent merger between our local MLS and a bigger one in SoCal, the practice of bogus re-lists will end.

And the end is near: February 4.

That means that if you didn't already pull a re-list to celebrate the holiday season, you've got just 2 weeks to cancel and restart with a fresh DOM count.

After the merger, individual agents will no longer be able to change a listing's status to "canceled," typically the immediate prelude to a re-list. (The practice is actually called "churning" by the pros. Like many euphemisms, this one hides the meaning a bit too well.)

Only a broker will be able to cancel a listing. Kaye quotes from a memo sent to local MLS members saying that, in other jurisdictions, putting the onus on brokers to take key steps in the "deceptive business practice" of "churning" has "virtually eliminated the practice."

So MBC can (maybe) finally stop writing about DOM and focus on the positives for a while.

'How we cashed in before the crash'

There's an interesting piece in the Sunday LAT by one of their reporters, who sold his Pasadena condo in 2005 and continues to rent while waiting for a housing market correction. Reporter Peter Hong says his condo had nearly tripled in value from the time he bought it and then sold it. Ka-ching!

The story (see "How we cashed in before the crash") also features another, somewhat more sophisticated, market timer – Pimco exec Mark Kiesel, who cashed out of his Newport Beach home after just 2 years (2004-2006) at a tidy 20% profit. Kiesel, however, doesn't suggest that others follow his lead:

"I wouldn't advise it at all," he said. "We were willing to sacrifice our living standards to make some money; not everyone should do that."

Meanwhile, Hong is still waiting, as the bubble's burst has, perhaps, just begun:

We do plan to buy again someday, on honest terms with a loan we can afford. We didn't expect to rent this long; our girl is 8, and we'd like to get into a house soon that she will truly feel is hers.

Well, that's the report from Pasadena and Newport. But this sort of thing doesn't happen in MB, does it?

Poll Results re: 1413 Pine

This past week MBC ran its second pricing poll, this time on a new listing, 1413 Pine (click address for details via Redfin).

The results are in, and they show that a 40% plurality thinks the property is priced well and will sell within 10% of its start price – here we're combining the 7% who chose $1.759m (+/-5%) and the 33% who chose $1.5m-$1.65m. However, a nearly equal number (39%) think the home will fall more than 10%, as low as 25% off its start, selling between $1.3m-$1.5m. Another 12% thought the prop would slip below $1.3m.

We wrote in our original story that, from March 2007-Jan. 2008, only 2 listings had so