Friday, November 29, 2013

Bubbles, Booms and Busts

The latest real estate bubble in California is getting long in the tooth. Not much more room for speculation as values have just about topped. Hot money is already flowing out as cash investors are becoming less and less of the market. Once they leave what will be left? A few homeowners soon to be underwater again. Sound familiar? It's really a shame that all that is left of the housing market is nothing more than Banks, Hedge Funds and Foreign Money playing a casino game. And we can thank Big Ben and the government charades for all this.

This will still end ugly, once all is said and done. The downside risk keeps growing for those entering the market now. Still totally unsustainable. 

Monday, July 29, 2013

Market Has Peaked!

The summer of 2013 is here and like clockwork, it has peaked again exactly like it did  6 years ago. On the Westside in 2007, it happened almost overnight during the last week of July. If escrows weren't closed immediately they began blowing up. Perception of the market can change that fast, and as soon as the urgency to buy is gone, the market will react. Inventory starts to climb, bidding wars begin to subside, more properties come "back on the market", Wall Street is in full exit mode, loans begin opening up to marginal buyers, building starts come to a screeching halt, mortgage applications dry up and all of a sudden, greed is replaced by fear. Sound familiar? It should, all of the signs are here. Those jumping into the market now, better plan on staying at least for 10 years, have stable jobs, not be concerned with rising interest rates and love their new  neighborhood. Unfortunately that is not the norm for most. Putting your money into housing right now has much more downside risk than upside. Renting and putting your capital elsewhere is probably a better idea.
Obviously, I do not have a crystal ball and every one's situation is different, but I will go on the record saying that housing will flatten or decline from today forward over the next couple years. Looking at all the factors including lost opportunity cost, your housing investment dollars will be better spent in other segments of the financial arena.
For example, I believe investing in precious metals such as silver over the next 2 years, opposed to buying a home today. Here is a home picked at random that just closed escrow in West LA at 2108 Balsam Avenue on July 23, 2013 for $930,000. Click the link for all the details. Let's see how the numbers pencil out on buying versus renting this home.


PURCHASE
Down Payment : $200,000

Monthly Nut:
Principal & Interest :$3,869
Property Taxes : $969
Insurance : $167
Maintenance $2,325
Income Tax Savings -$1,119

Total = $6,211 x 12(months) = $74,532(year) x 2 = $149,064
(not including closing costs)


RENTAL
Silver Investment: $200,000
(9,478 ounces x $21.10)

Monthly Nut:
Rent : $3,500
Insurance $50

Total = $3,550 x 12(months) = $42,600(year) x 2 = $85,200

2 year savings in living expenses
$149,064 - $85,200 = $63,864


So, that's almost  $64,000 saved in 2 years of housing payments, but the big wild card is what your $200,000 will do over the next 2 years. Will your equity position in your home be better than if you invested your money somewhere else? I guess time will tell.



Monday, June 3, 2013

Hot Money Heading For The Exits in Real Estate

Ther has been a number of stories lately commenting on how hedge funds, private equity companies and Wall Street are already taking profits and getting out of the real estate game. Sound familiar? The model of buying homes and renting them out a profit appears to be failing. Getting a 3% return after expenses, given vacancies and other unexpected problems isn't very attractive. Any appreciation to be had, has already occurred and the smart money is looking to dump after the pump. This article about the Smart Money Exiting the Real Estate Market by Dr.Housing Bubble tells the inside story of the kind of market we really have.

 It's easy to get lost in all the media hype and talking heads, that is how they make their money. Don't take the bait. In the words of one of the most famous rock bands of all time, The Who, "We don't get fooled again!" 

Friday, May 10, 2013

Can You Feel The Top?

Bidding wars, quick flips, magazine covers, Wall Street, cocktail party topics, TV shows and "Flipping Los Angeles"  seminars. When everybody knows, the music will stop soon. Smart investors are all ready bailing out and price resistance is beginning to show. It will be interesting to see what the market looks like after summer when the typical selling season is over. You can almost sense that our most recent bubble has just about run it's course. Not much upside as prices peak and the quick buck is gone.  Then what? Who is going to fill that void, taking into consideration the housing fundamentals are terrible. We have an unsustainable bubble that is ready to pop. Only this time, banks have a free ride, so prices can stagnate for the next 10 years. Unfortunately, energy, food and other household items continue to inflate and eat into housing budgets.  Without liar and sub prime loans, the entry level buyers are almost non-existent.

So where do we go from here, now that homes have been re-inflated close to peak prices? With the cost of buying, selling, maintenance, taxes and insurance, renting and investing the excess housing dollars is a viable option. Throw in the need to be mobile for work prospects and many are now choosing apartments over buying a house .

Very interesting reading on "Why America Fell So Far..... So Fast." by Washington's Blog. History repeats, nothing really new.

Tuesday, April 23, 2013

Bubbles Bubbles In The Air, Bubbles, Bubbles Everywhere

Welcome to the New US Economy. Bubble in housing, bubble in bonds, bubble in treasuries and a bubble in the stock market. This is what happens when government and business work hand in hand to manipulate finances in a last ditch effort before an economy collapses. Every ancient empire in history has followed the same path,. What make us any different? Nothing. One precipitous event in any of these markets and you could see major declines.

I'm truly amazed that only 6 years ago, we had a bubble market in housing and people are buying again in fear of being "left out".  According to the government, inflation is mild ( have you been to the grocery store or tried to get gasoline lately?), so interest rates are being kept at record lows and it doesn't appear that the Fed wants to raise them anytime soon. Now that the banks aren't foreclosing (no mark to market), bidding wars have erupted over available inventory which has dropped some 80% over the last year. If you see a house you love, plan to live there and have a guarenteed reliable income stream for the next 10 years, go for it. It is a good time to buy, if you don't mind overpaying.

It saddens me to see Wall Street, who precipitated the financial crisis 5 years ago, is now in the driver seat again behind housing. They are pooling money, converting homes to rentals and hoping to securitze rental income streams. Wash, rinse and repeat, without any reprisal or risk involved. Once again, they are in unchartered territory by jumping into the rental market. If you take into consideration that few good jobs are being created, vacancy factors, maintenance and taxes, they could be in for a big suprise. If they are successful in becoming the new landbarrons, more and more people will be robbed of retirement, which in large has been equity in their homes. Great, now people can work into their seventies and eighties just trying to make ends meet.

Sure the media, government and all those who have purchased in this market will tell you the "recovery" is gaining traction. It's just too bad that the only recovery is on Wall Street and with the banks. They are taking more and more money from Uncle Ben and driving all the markets into bubbles. Unfortunately, the middle class has all but disappeared and the pool of consumers purchasing goods continues shrinking. Our 2 basic needs, food and shelter are getting harder and harder to come by. It's no wonder why close to 50 million Americans are now on food stamps. If it wasn't for food stamps, we would be seeing soup lines longer than in the Great Depression.

Saturday, February 23, 2013

Investors, Artificial Interest Rates And Inventory Skews The Market.

Bubblemania again! Isn't California grand! Not if you are wanting to buy a home at a "real" price. Anything to re inflate the market according to Ben Bernanke. Banks and corporations above all, just like before. And just like before, it will end badly. It is UNSUSTAINABLE. Check out what The RPX Monthly Housing Report has to say. Once again people are getting lulled into the market and it is being manipulated by hedge funds, investor groups, flippers and sub prime loans (FHA). The idea is to rent out all these homes at a profit, or flip them at a later date. The problem is, as prices rise, others wanting to get out of their ball and chain house will flood the market. The investors will be long gone and who is going to pay those outrageous rents to cover the mortgages? God forbid mortgages rates ever rise.

Most good paying jobs are on the decline and the stock market is now teetering on a precipice. Don't be fooled by the cheap government tricks to get you to bite. This ain't over yet folks. Not by a longshot.

Wednesday, February 13, 2013

The Last Westside Housing Bubble Never Completely Popped

Institutional investors, flippers, multiple offers, restricted inventory, tight credit, few first time buyers and a dead move-up market. Not a picture of a health for real estate. Just a reinflated bubble that only deflated half way. Unsustainable in the long run. Here is an article by Barron's Magazine The Great Mania that sums up the true nature of a reinflated housing bubble. Take 5 minutes out of your day to read this. It could save you alot of stress and heartache down the road.

Sunday, February 3, 2013

2003 -2004 prices still to be found on The Westside

Not everything is going out at multiple offers these days. Restricted inventory by banks has created an artificial market in many areas, but some homes are still being sold at 2003 - 2004 prices. Here they are for the month of January. Feel free to comment on any of these sales.


BEVERLY HILLS
234 S. Gale Dr. #109
Sold on 4/27/05 for $700,000
Sold on 1/15/13 for $650,000

CULVER CITY
6000 Canterbury Dr. #D313
Sold on 7/2/04 for $385,000
Sold on 1/15/13 for $375,000

10850 Fairbaks Way
Sold on 8/27/04 for $675,000
Sold on 1/7/13 for $650,000

4927 Indian Wood Rd. #372
Sold on 6/26/04 for $329,000
Sold on 1/24/13 for $325,000

5600 Kensington Way #102
Sold on 11/5/03 for $335,000
Sold on 1/16/13 for $321,000

11124 Orville St.
Sold on 11/22/04 for $660,000
Sold on 1/14/13 for $530,000

9103 Summertime Ln #14
Sold on 3/27/09 for $320,000
Sold on 1/7/13 for $245,000

11044 Lindblade St.
Sold on 1/10/13 for $715,000

WEST LA
1246 Armacost Ave. #102
Sold on 12/9/05 for $785,000
Sold on 1/24/13 for $625,500

1605 Armacost Ave. #111
Sold on 9/13/05 for $526,000
Sold on 1/17/13 for $335,000

1258 Barry Ave. #1
Sold on 12/1/98 for $426,000
Sold on 1/25/13 for $580,000

1835 Pandora Ave. #101
Sold on 2/21/06 for $1,200,000
Sold on 7/24/13 for $705,000

1925 Beverly Glen Blvd. #43
Sold on 1/7/13 for $580,000

1312 Centinela Ave. #103
Sold on 1/16/13 for $260,000

RANCHO PARK/CHEVIOT HILLS
10581 Butterfield Rd.
Sold on 9/22/05 for $1,450,000
Sold on 1/25/13 for $1,300,000

1375 Kelton Ave. #206
Sold on 7/29/05 for $463,000
Sold on 1/22/13 for $389,000

2506 Westwood Blvd.
Sold on 1/11/13 for $685,000

12117 Clarkson Rd.
Sold on 1/10/13 for $700,000

WESTWOOD
10633 Kinnard Ave. #12
Sold on 1/17/13 for $431,000

BRENTWOOD
11827 Goshen Ave. #101
Sold on 1/11/13 for $479,000

BEL AIR
1979 Stradella Rd.
Sold on 7/11/07 for $1,500,000
Sold on 1/8/13 for $760,000

2100 Roscomare Rd.
Sold on 4/8/04 for $925,000
Sold on 1/10/13 for $835,000

10388 Oletha Ln.
Sold on 1/18/13 for $715,000

MAR VISTA
12806 Pacific Ave. #10
Sold on 11/28/05 for $549,000
Sold on 1/25/13 for $459,000

12629 Caswell Ave. #10
Sold on 8/10/05 for $542,000
Sold on 1/9/13 for $405,000

3910 Coolidge Ave.
Sold on 1/18/13 for $600,000

PACIFIC PALISADES
16521 Las Casas Pl.
Sold on 1/30/07 for $1,800,000
Sold on 1/25/13 for $1,065,000

17185 Avenida de Santa Ynez
Sold on 1/15/13 for $1,095,000

600 Palisades Dr.
Sold on 1/10/13 for $895,000

MARINA DEL REY
3020 Yale Ave.
Sold on 12/13/05 for $995,000
Sold on 1/23/13 for $886,000

13700 Marina Pointe Dr. #1519
Sold on 3/7/06 for $680,000
Sold on 1/15/13 for $395,000

MALIBU
20330 Big Rock Dr.
Sold on 10/21/02 for $1,700,000
Sold on 1/18/13 for $2,229,000

23343 West Paloma Blanca
Sold on 1/23/13 for $975,500

SANTA MONICA
3101 5th St. #14
Sold on 7/26/05 for $295,000
Sold on 1/23/13 for $260,000

WEST HOLLYWOOD
962 Doheny Ave. #202
Sold on 9/5/07 for $1,050,000
Sold on 1/24/13 for $725,000

837 N. West Knoll Dr. #115
Sold on 1/18/04 for $425,000
Sold on 1/24/13 for $328,000

1233 N. Flores St. #103
Sold on 8/2/04 for $435,000
Sold on 1/16/13 for $410,000

1209 N. Kings Rd. #5
Sold on 3/26/07 for $610,000
Sold on 1/14/13 for $390,000

1023 Hancock Ave. #313
Sold on 1/13/05 for $435,000
Sold on 1/18/13 for $357,000

930 N. Doheny Dr. #412
Sold on 12/27/02 for $565,000
Sold on 1/8/13 for $480,000

967 Hammond St. #5
Sold on 1/10/13 for $670,000

1215 Genesee Ave.
Sold on 1/8/13 for $710,000


People paying top dollar via multiple offers could be in for a big suprise, if the banks have begun unloading these.







Sunday, January 13, 2013

Are We Really Turning Japanese?

I really think so.(Vapors Video) Just look at how Japan took care of their massive real estate bust and how we are duplicating their strategy. Zombie (insolvent) bank survival at all costs. They are now starting their third lost decade and real estate prices have retreated back to 1989.  We have completed our first lost decade as prices have rolled back to 2003.

You can argue that prices are rising for organic sales as available inventory has been severely restricted and interest rates are at historic lows. There is no denying that. However, there are still a large number of distressed sales going on as banks leak out some of their shadow inventory and REOs. We obviously have an usual market that has been manipulated by the FED and are now in uncharted territory. Nobody really knows where we go from here. With the suspension of "mark to market", whereby banks do not have to foreclose, it has fundamentally changed the market. Banks can trickle out properties without having to worry about their balance sheets. This continues the "Moral Hazard" problem which is really at the crux of it all. Banks still have no incentive to cut their risk as the Government continues rewarding them for bad behavior. With the financial crisis of 2008 almost sinking the global economy, what could be next for the banking industry?

Too Big To Fail banks are cancer that gets bigger each day. Eventually they will collapse. The big question is when, and after what? With the FED monetizing the debt, who will blink first, the US or foreign governments becoming wary of our debt problem. The Fed is more than happy to inflate their way out of debt. It might take another decade, but they have time. Unfortunately, incomes have stagnated over the last 10 years, and continue to do so. With the cost of inflation cutting more and more into the family budget, the pool of buyers will continue to shrink if housing prices and rents continue rising. Owning a home here has become a privilege for a few and renting the norm for the masses. What seems to be even more critical now in buying a home is the type of income. How steady is it? Are you relying on 2 incomes? Could an employer replace you for less, now that good jobs have become scarce? And, what is your time horizon? 5 years, 10 years,  15 or more? At a minimum, in 5 years you need an annual appreciation of at least 2% to warrant buying after closing costs, taxes, insurance, maintenance and commissions. Also, picking the right neighborhood is paramount as some will appreciate as others may not.

Now, it may seem like I am giving the green light to buy, but not necessarily. If you can find a place that is equal or very close to what your current housing cost is, have a minimum of a 5 year time horizon, ENJOY the neighborhood and is large enough for your family, now could be a good time to buy at a 2003-2004 price. That being said, with a current bubble for non distressed housing, be careful not to over pay. Short sales, if you can get one might be a good alternative.

Thank you to those who have continued following this blog in my absence. I tried to continue listing distressed sales in the 2003 range over the last 6 month and I will do my best to continue.  Now that I'm back, I will continue with new posts chronicling the current market conditions.

Sunday, December 30, 2012

250 Meltdowns 0n The Westside Since Mid September

That's right.  In just over 3 months, meltdowns from Malibu to Marina del Rey are averaging 2003 prices. Meltdowns in all neighborhoods have been posted in their respective areas on this blog. Many of these have been bank short sales. 250 is significant compared to having just a few outliers. The banks continue to leak out inventory and very few homeowners are in a position to sell. This restricted available inventory is causing bidding wars and price increases on some properties, while others are being sold at hefty discounts. The question is, WHO is getting their hands on these short sales and HOW?    

In addition, the move-up market is still comatose. At this rate, we could be looking at another lost decade rivaling Japan.

Tuesday, November 20, 2012

Must Read Articles

Even though I have not been actively posting, I'm still listing the most current meltdowns across the Westside on a weekly basis. Condos in Brentwood, Westwood, Marina del Rey, Culver City and West Hollywood are getting hit the hardest right now. But, every area on the Westside has some significant declines. For the next month, I am going to post "Must Read Articles" for anyone considering about real estate.

The first one is  Greatest Real Estate Bubble in Modern Day History Has Yet To Really Burst. By Forbes Magazine.

Next is Dont Believe the Near-Term Housing Data by Anthony Randazzo

 In Housing Debt We Trust by Dr. Housing Bubble

5 year outlook for Real Estate, "Fuzzy" 1.5% Annual appreciation at best by Robert Shiller


Sunday, June 24, 2012

6 Month Hiatus For New Posts

Yes, it is true. And no it is not because I feel the market has bottomed out, but due to personal reasons. Although, we have seen some 25 - 50% discounts from the summer of  2007, depending on the area. If you see something at 40 - 50% off that you like and can afford it, consider buying it. Like my previous post says, there are way too many variables for anybody to tell you when to buy or sell. Here, I have tried to build a website where people can get their own real estate data by using the links below or my Real Estate Tools/Data Section on the lower right hand side of this blog.

A few tools you can use are:

Redfin
Trulia
Foreclosure Radar
Blockshopper
Melissa Data
Zillow
Property Shark
  and
Dataquick

Analyze your own data and do not rely on the white lies from real estate agents. YOU HAVE TO DO YOUR OWN HOMEWORK! Redfin is my favorite as it gives you past sales histories and a Zillow estimation graph that goes back 10 years. Although not perfect, you can get a ballpark idea of how far back  prices have dropped. Fair value right now appears to be around 2002 - 2003.

The initial idea of this blog was to post price reductions for the major areas on the Westside. Each area was to have its own forum. There still is the chance for this if readers scroll down to the April 2nd posts on this page and write comments under their Meltdown Area of choice. As nobody can be an expert on the entire Westside, let us form groups and create a place for sharing important information with others interested in the same areas.  I highly encourage readers to do this, as knowledge is power. The sales in each area are updated every day and you can look at rolling weekly and monthly data. Take the time to register as a user on blogspot, get to know each other and it will enrich your conversations, as opposed to just anonymous comments. This is your blog now.

Since beginning this blog in 2007, my intention was to save some from real estate ruin. Hopefully I have done that. I am deleting the posts back to April 2nd, so the Meltdown Sections will be easy to access. However, I will continue to moderate the comments and chime in occasionally as before. Please keep it civil and do not attack anyone, as you will be deleted.

And as always remember, Caveat Emptor! (Buyer Beware)


Ciao'
Latesummer2009


Monday, April 9, 2012

Rolling Weekly and Monthly Sales for All Areas on The Westside of Los Angeles

Finally here is one spot where you can access ALL areas of The Westside at your fingertips. Courtesy of Redfin, just click on the weekly and monthly links for the area your interested in. You will find either the last week's worth or month's worth of sales transactions for that area. It's a great way to keep updated in different neighborhoods. Hopefully those who have information about these sales will inform others, keeping us abreast of market trends. Just some of the information you can get from this data are:

Sales Histories
Foreclosures
Short Sales
Taxes Paid
Zillow Estimates
Square Footage
Bathroom/Bedroom Counts
and
Lot Size


The areas covered are:


West LA
Malibu
Pacific Palisades
Santa Monica
Brentwood
Bel Air
Beverly Hills
Beverly Hills Post Office
Beverlywood
Westwood
West Hollywood
Cheviot Hills
Rancho Park
Mar Vista
Culver City
Marina del Rey
and Venice


Remember knowledge is power, especially in real estate. All the areas are listed below in separate posts. Start looking, post interesting sales, and become an expert in your own area. Good luck!  

Monday, April 2, 2012

West LA Weekly and Monthly Transactions

Here is a list of West LA weekly and  West LA monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Malibu Weekly and Monthly Transactions

Here is a list of Malibu weekly and Malibu monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Pacific Palisades Weekly and Monthly Transactions

Here is a list of Pacific Palisades weekly and Pacific Palisades monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Brentwood Weekly and Monthly Transactions

Here is a list of Brentwood weekly and Brentwood monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Bel Air & Westwood Weekly and Monthly Transactions

Here is a list of Bel Air weekly and Bel Air monthly transactions from Redfin. Post questions about any specific transaction for others in the area. And a list of Westwood weekly and Westwood monthly transactions from Redfin. Post questions for others about any specific transactions.

West Hollywood Weekly and Monthly Transactions

Here is a list of West Hollywood weekly and West Hollywood monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Beverly Hills Post Office Weekly and Monthly Transactions

Here is a list of Beverly Hills Post Office weekly and Beverly Hills Post Office monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Beverly Hills Weekly and Monthly Transactions

Here is a list of Beverly Hills weekly and Beverly Hills monthly transactions from Redfin. Post questions about any specific transaction for others in the area.

Beverlywood Weekly and MonthlyTransactions

Here is a list of Beverlywood weekly and Beverlywood Monthly transactions. Post questions about any specific transaction for others in the area