patrick.net

The question on my mind always is are they planning on trying to sell next year?

Yeah, during the alleged spring buying "frenzy".

Well, I've pinpointed where I would like to buy, but prices need to drop by 30% (would be stretched if they only drop by 20%) if I'm going to be able to buy. Luckily I am not ready to buy just yet, so I'll just have to hope the market drops by the middle of next year!

In South Marin the inventory is starting to rise again, after a short plateau. Interestingly, there has been nearly complete turnover in inventory, with almost everything we were tracking that didn't sell taken off the market.

Having driven past a few of these it seems as many are empty as are rented now. I admit I am surprised at owners being willing to leave +$1M homes completely empty, some for many months now. I'm guessing -- just guessing as I have little data -- that most of these are 100% owned by absent owners, or maybe family estates where the last parent has passed on and the kids aren't around here anymore. Zillowing a couple of these I usually get "No Sales Data Available", which usually means "last sale was a long time ago".

Prices are erratic, insane, unmanageable. I literally saw a 3/2 + an office the size of a closet with a $2.2M asking and then a 4/3 + 1/1 rented + 1/1 in-law for $1.9, and even a little land. Both in the same school districts, neighborhood, and with comparable upgrades.

We actually bailed out early on open houses because the "searching" has become too hard. Too much sporadically priced inventory, and not enough time to go to every one to figure out what's obscenely mispriced and what's just grossly overpriced.

If the prices do drop by 30%, I wonder how many other people will jump in, making it harder for me to get the deal and creating bidding wars again :-(

I admit I am surprised at owners being willing to leave +$1M homes completely empty, some for many months now.

I am not surprised. People do all kinds of framing/mental-accounting to derive utility from bad situations. This is why we have trends.

If the prices do drop by 30%, I wonder how many other people will jump in, making it harder for me to get the deal and creating bidding wars again

I am just going to avoid Palo Alto, Los Altos, and Mountain View. There are other acceptable areas.

We actually bailed out early on open houses because the “searching” has become too hard.

Be careful Randy, other people may think that you have to rent. :)

Astrid sez:

"It is sold as-is....."

I do love to see that in a listing because it's another indicator how scared the seller is.

It tells us:
a) I'm trying to circumvent disclosure
b) I'm hoping you are stupid enough to waive inspection
c) I can't spell "screwed", as in "I am"
d) All of the above

It's a great "tell" for the poker table

Okay... I pounded the pavement for the people and toured some open houses in my burg this past Sunday. I am using the classic 2/1 bungalow for my metric. Unfortunately, they seem to be holding fast at $600+k. (Well, that is asking price -- checking the sales prices of homes that closed from the newspaper also seems to indcate that $600+k is the going rate). Sigh... I guess these are the "starter" homes in my neighborhood so they may have more "price pressure" than the larger homes. I also observed there seemed to be a lot of open houses when I drove around later in the day, so maybe inventory will finally do some of the sellers in... And to further add insult to injury, someone moved into an overpriced rental around the corner. (I hope this isn't a case of rental rights on an upward trend chasing after the home price.) Still waiting for the 2/1 bungalows to dip below $600k to declare an signs of the BA bubble deflating.
Enjoyed a couple of acts at the free "Hardly Strictly Bluegrass Festival" this weekend in SF with 100k other folks -- yes, we are different out here (hows that for an intangible).

OK - I've been keeping a spreadsheet on the places I'm interested in here in Los Angeles, and here are some averages....

...all 103 properties are:

- 2+ Beds, 1+ baths
-Older (pre-2006)
-SFRs
-Have a ratio of more than 5:1 of house:lot size (ie 5x yard to house)
-Less than 1 miilion Zestimate as of 9/15/06
-Geographically bounded (E - topanga canyon blvd (N27); N - the 101, W - the 101, S - LAX and/or the 10).
- Less than 15 miles away from the husbands workplace in Santa Monica (90404)

Although sorted by Zipcode, I've glommed some together to get a better sample size - some have single zips.
All data is taken from ZipRealty and Zillow searches, so I have no idea if they are accurate.
These are means, not medians - ie a simple @SUM calculation, divided by the sample size.

West: western/coastalMalibu, Topanga, south Calabasas, Pacific Palisades:
Freq - Av list price - Av sq ft - Av Price cut (%) - Av DOM
19......$1,258,184.....$894.39..10.19...................142

South San Fernando Valley: west Tarzana, Encino, Sherman Oaks, east Studio City:
Freq - Av list price - Av sq ft - Av Price cut (%) - Av DOM
44.......$1,115,294...$631.09....4.33....................85

Westside: Santa Monica, Beverly Hills, Hollywood, Culver City, Palms/Del Mar, etc..
Freq - Av list price - Av sq ft - Av Price cut (%) - Av DOM
40.......$948.947......$821.43....1.34....................69

Total:
Freq - Av list price - Av sq ft - Av Price cut (%) - Av DOM
103....$1,107,475....$782.30....5.29....................99

Unsurprisingly, it appears that the higher the List Price and DOM, the bigger the reductions.
Still at an overall price reduction of just over 5% it appears that, scientifically ain't nothing goin' on but the rent....here in LaLaLand ;-)

Again, spurious data with a small and eccentrically chosen population, but sort of fun to see nonetheless.

On the other hand, if some people find they can't sell, maybe they will decide to rent, so I could just rent a house in the area I like instead:-) Although the dog is a handicap....

And the rent prices are higher in the area I want to be in!

Claire sez:
"If the prices do drop by 30%, I wonder how many other people will jump in, making it harder for me to get the deal and creating bidding wars again "

If the market as a whole is down 30%, then it's the new "norm". If it's a particular listing then other buyers might be ready to move on it. To increase your odds on getting your offer accepted, say the magic words...."Cash Now". Position your offer to meet the sellers needs and you get a "move to the front of the line" card.......

If anyone doubts the power of cash, just mention the word to a motivated seller and watch them slobber all over themselves. Who was the dude with the dogs and a bell.....Pavlov (sp)?

Okay, but I need a mortgage - so how do I get to "cash now"? Just get everything set up so that it'll be a quick sale?

Valet Parking and Ventless Dryers. This is funny!

http://www.socketsite.com/archives/2006/10/one_rincon_hills_fall_newsletter_and_update.html#comments

Claire:

Here's the link to the FDIC report.

http://www.fdic.gov/bank/analytical/stateprofile/index.html

Well, I’ve pinpointed where I would like to buy, but prices need to drop by 30% (would be stretched if they only drop by 20%) if I’m going to be able to buy. Luckily I am not ready to buy just yet, so I’ll just have to hope the market drops by the middle of next year!

Crud, I guess we're not competing since I need prices to drop by 50% and return to 2000 levels to buy.

You win Claire!

What I really wish I could do is lock in a 30 yr fixed mortgage right now. Today's low rates, with tomorrow's low prices. That'd be a real win-win.

Any ideas on how to do that?

"Prices are erratic, insane, unmanageable"

"That will crater sales and make things worse next spring"

"Momentarily ignoring the very real possibilty of defective craftsmanship"

Ahhh Monday, and those cards and letters keep coming in! Here in Oregon, a very sloppy (and slippery) market. I was talking with a builder over in Bend and his take on that market is........is....... not good. No one that posts here is THAT young that they can't remember when "mansions" were rare indeed. In fact even larger towns (Seattle, Portland) may have had (up until recently) but a handful of them and pretty much everyone knew where they were, who owned them and a little bit of the history behind them.

Well that is sooooo FIVE years ago! If volumes (or lack thereof) continue at this pace, McAlbatross sellers should be in full panic mode by March. My take is that builders are now retreating at such a brisk pace that it's not hard for me to visualize partially completed subdivisions at all! I'm not just talking about abandoning "Phase II" I'm talking about house, vacant lot, vacant lot, house, vacant lot etc.

If the conversation has turned to a "tightening" of lending standards for consumers, it has to be doubly so for the builders. It just hasn't reached our ears yet.

MtViewRenter - thanks for the link

eburbed - if prices dropped by 30% I could probably just about squeeze into the area I want, but no the most ideal houses, but I would probably be stupid for doing so.

A 50% drop would be heaven, but I think a lot of other people will be jumping on those prices too, so it will become a bidding war scenario again.

Plus I wonder how many people will just decide to rent their houses, rather than sell, in the expectation that prices will rise again and of course, they don't want to give away their house - right?

What I really wish I could do is lock in a 30 yr fixed mortgage right now. Today’s low rates, with tomorrow’s low prices. That’d be a real win-win.

Rate may still be falling. Tomorrow's low prices and tomorrow's low rates are a perfect combination.

Any ideas on how to do that?

It *may* be possible to hedge fixed rate with bond futures. However, this operation can be extremely dangerous. You may bankrupt yourself trying to lock-in the interest rate.

You may also be able to pay points to get a long-term lock on the interest rate. It will cost you many thousands. If interest rate goes down, you are paying thousands for nothing.

Not investment advice.

Plus I wonder how many people will just decide to rent their houses, rather than sell, in the expectation that prices will rise again and of course, they don’t want to give away their house - right?

Most people will break, given the right conditions. When they finally do give up, prices will head up again. (No more greatest seller fools)

Not investment advice.

Im in the “drop by 50% and then we can talk” group also … here in the Central Valley 953XX area.

No soft-landing for Central Valley. :)

Okay, so I was trying to work out what I could really afford, and of course you have the mortgage calculators, but how much do you need to have left to close the deal - i.e. what other expenses are there that will need to be covered on top of the offer price....

SFWoman Says:

> There seem to be more houses and condos
> for sale in Pacific Heights, asking prices are
> high, they seem to stay on the market forever.

A friend bought a fixer upper in Lower Pacific Heights (Washington between Baker & Broderick) for $1.7mm in 1998 (after cashing in on the stock options she got back in ’96 fresh out of HBS) and sold (after a lot of renovation) in 2003 for $2.7mm. I was walking back from watching the Blue Angles at a roof deck party on Saturday and saw that the (similar looking) home next door has a for sale sign with a bunch of color flyers asking $3.5mm. In other notes from SF the $4mm TIC duplex on Euclid in Jordan Heights has had the price reduced again and is now under $4mm for both units (what a deal). I can’t imagine anyone buying the place unless they lower the price by another couple million…

Peter P Says:

> Inventory should be shrinking as we speak
> as people pull listings for the winter.

An old Realtor once said "Homes don't sell in December because no one wants to move the tree"...

OT, but I am very worried about the veal industry. Alleged animal right activists seem to be particularly hostile to this fine food. :(

Claire Says:

> I wonder how many people will just decide to
> rent their houses, rather than sell, in the
> expectation that prices will rise again and
> of course, they don’t want to give away their
> house - right?

Most million dollar homes are dumps in Marin SF, and the Peninsula and you will be lucky to rent most of these places for $3,000 a month. Very few homedebtors can handle the negative cash flow of renting a home for very long.

If you have a home worth about a million and a loan around a million you will average negative cash flow of about $6,000 per month over the year (after the mortgage, taxes, insurance, vacancy, repairs and maint. and other expenses.

Haven't been to any open houses in a while as I've been far too busy, but based on the "wishing prices" I've observed in the local papers and RE flyers (Pasadena area), they seem to be down about 10-15% from peak (same time last year). A drop nonetheless, but certainly not drastic.

You will not find much habitable around here @1200sft+ for less than $750K. However, you can easily rent a nice SFR (as we are) for about 30-40% of the monthly cost of PITI + maintenance on a real/non-NAAVLP loan.

Sorry I missed the whole SUV owner = narcisstic Boomer reptilian mindset debate from the last thread. I must confess: I too am an evil SUV driver ('98 Toyota 4Runner).

In my defense, I did not buy it to look "sporty"/attract the babes/run other drivers off the road. Rather, I got it because (at the time), I did quite a lot of PC/monitor/printer break-fix for my then-current job, and you really can't haul too many CRTs in a Civic. Since I have moved on to far less HW-intensive occupations, but I have found it also has tremendous utility for moving furniture, hauling groceries & even doubling as a sleeper in a pinch (Surfer-X can back me up here). I also opted for the 4-cylinder/2WD/no towing hitch to improve mileage (21/23), which approaches that of many full-size sedans.

And far from being overly aggressive/insensitive to other drivers, I am usually polite to a fault --to the extent my wife criticizes me. So there!

Google aquires YouTube for $1.65 billion.

There goes home prices in San Mateo (where YouTube) and Mountain View again. :(

Chicago Near North - "Sporadic" is the word that comes to mind.

Some properties sit and sit while taking price reduction after price reduction and nothing.

Meanwhile, something comes on at a very high price given what else is out there and it goes pending in under two weeks. There is usually some very positive aspect to the property like being a corner lot or something.

I guess it speaks to the wide range of buyers and properties. The multi million dollar buyer in the market just wants what they consider to be the best and will overpay if that's what it takes. Meanwhile, something needing a bit of work or whatever will just sit. That probably indicates the improve and flip investor has left the market for the most part.

That's my take anyway.

Paul

1.65 billion over 67 people is still more than I can afford to compete with.

Here's what's happening on the Uber high end!

http://tinyurl.com/lffok

Agree with HARM. SFH's that actually sell are down around 10-15% y-o-y.

Asking prices are all over the map. A lot of places are initially listed at an agressively low price. If they don't sell, the asking prices is regularly and meaningfully reduced -- and they still don't sell. I've seen this happen several times.

Lots of other places are listed at outrageous asking prices, apparently without regard to comps. Some 3/2 tract house will be listed for $650k, and an identical place one right next door will be listed for $900k. If this is what people have been referring to as "wishing" prices, there is a fair amount of wishing going on around here.

But here is the best part: the "price of admission" to the neighborhoods with good public schools keeps getting pushed lower and lower. For example, in South Pasadena, the cheapest SFH was around 850k a year and a half or so ago. Today it's 625k! In San Marino, I don't think it has been possible to get anything for less than 900 for the past two years. Well, recently a house was listed at 699 -- and it didn't sell! It was taken off the market! (I myself actually put in an offer on that place -- 300k :)

One of the most interesting things is that houses that are priced right -- well below comps, CLEARLY the best deal in town -- STILL DON'T SELL. Obviously, only the most experienced, professional realtors are smart enough to price houses in this way -- and they are FREAKED OUT when the places still don't sell. These are the agents who understand the market and are doing everything right -- and it's not working!

My wife went to see one place last week. Listed at at 868k, it was completely out of our reach, but I'm always willing to make another 300k lowball if I see something I like, so...:) In relative terms, 868 was a screaming bargain. It was one of the cheapest houses in the neighborhood, and everything else at that price was around 1,000 feet smaller with fewer bedrooms. All of the other hosues on the market comparable to this one were priced at around 1.1-1.2mm. So in bubble terms, this place was a really good deal. The RE agent handling the sale was excellent. It was an estate sale, and she had the house cleaned, staged, etc. You could tell that she'd invested just enough to make the place presentable, and not one penny too much -- she was smooth.

After my wife went to see the place, the realtor called us every day for almost two weeks. Since the sale required probate court approval, the realtor even assembled all of the paperwork necessary for us to make a bid and put them all into a neat packet for my wife. When my wife told her that we probably weren't going to bid, that if we did it would be very low, and that we beleive the market will decline further, etc. (she diplomtically left out the fact that we cannot possibly afford to pay 868k) the realtor's face fell -- and this is a very professional, savy lady. Something tells me that no one is going to bid on that place.

It is also interesting to note that realtors are suddenly interested in buyers again. We now have at least three that regularly call and email us. This would not have happened a year ago.

@ Alien - re: the lovely leafy Topanga

Any idea what is going on with 109 Muerdago Rd?

It looks like a great house, with a decent lot size, but its had 5 MLS#, a List Price from 899K to this morning's whopping $2.8 million, and 350+ DOM...

Does it have cooties?
Is it haunted?
Does anyone actually own it anymore?
Enquiring minds need to know....

“If the prices do drop by 30%, I wonder how many other people will jump in, making it harder for me to get the deal and creating bidding wars again ”

If your gonna jump at 30%, then it's true that their are still some sheep left.

70% loss in Mountain View/Los Altos would be absolute heaven for me (hell for homeowners), but I'm not sure it will happen here. I'm really hoping though :-)

allah - I didn't say I was going to jump, but several people have argued here that if anywhere is going to have a soft landing it is likely to be Mountain View/ Los Altos/Palo Alto - and there are enough renters in this area on good enough salaries that if they see prices drop by 30% - they will jump and think they've got a bargain, and because of the mentality in this area they will start bidding wars again :-(

okay so maybe I did imply I'd jump(didn't mean to), but I have to line everything up first before I can buy a house, so that's going to delay me until easily middle of next year and the picture will be a lot clearer then - about whether we buy or pack up and move to the East Coast - even Boston seems cheap compared to here!

and there are enough renters in this area on good enough salaries that if they see prices drop by 30% - they will jump and think they’ve got a bargain

When prices are 30% down you will have a whole new mind set. :)

Fear is my favorite emotion.