Thursday, December 24, 2009

Decisions, Decisions ...

It's been a long time since my last post. A vacation, new job and some personal stuff thrown in the mix. Plenty of excuses!

Will be evaluating my time available to continue the blog. Based on the lack of comments from the most recent posts, seems as though interest in the WeHo real estate market has cooled. If you are still out there and interested, let me know what you'd like to see more of in 2010.

It will be interesting to see the effects of the removal of government "subsidies" currently in place as we move through 2010. I definitely think that these programs are keeping things artificially inflated - how could they not? We're still out of whack on a rent/own cost basis.

Monday, October 12, 2009

R & R ...


Your friendly blogger will be taking some much-needed time away for the next couple of weeks.

Look forward to returning in early November rejuvenated and ready to see if the summer "selling season" has morphed into a "back to reality" fall (and maybe leading into a "winter of continued discontent" ... sorry, couldn't resist ...)

The Condo-That's-An-Alternative

Out of curiosity, I looked in the general neighborhood of the last property we featured, which is pitched as a "condo alternative", to see if there was a condo to which it would be the alternative (if that makes sense) ...

1345 N. Hayworth Ave
$615,000
2BR + 2BA
1,013 sq ft
HOA Fees: $390/mo

Beautifully restored 2 bed, 2 bath condo in the vintage Hayworth Gardens. One of the best streets in West Hollywood. Light and bright second floor unit. Loads of Character with arched doorways, dark hardwood floors, high ceilings and a wood burning fireplace. Dining room too Tree top views from the vintage French windows. Upgraded baths. Remodeled kitchen has a butcher block counter and stainless steel appliances. Spacious floor plan has great flow.

Sold: 7/26/00 - $259,000

Sold: 11/30/04 - $501,000

Sold: 2/29/08 - $586,500

A few things here:
- Is the 2004 price before the upgrades they mentioned?
- The 2004 to 2008 appreciation seems modest for the peak of the bubble (although prices had started to dip a bit in early '08

In any case, here's a potential "alternative" to the SFR. Better location with the condo, similar sizing to the SFR, although of course, no yard.

Sunday, October 11, 2009

Attractive "Condo Alternative"?

1307 N. Fairfax (90046)
$595,000
2 BR / 2BA
1,020 sq ft
Lot Size: 3,450 sq ft

AN URBAN OASIS COMPLETELY GATED, HEDGED & VERY PRIVATE. Short of a fresh coat of paint this property is totally turnkey and offers an amazing opportunity to buy a house for the price of a condo. tranquil fountain entry, High ceilings in the industrial, fully equipped kitchen w/Wolf range. Living room with fireplace. Recessed lighting and built in sound system throughout. Spiral staircase to rooftop. Garage converted to guest/art/office studio, 3 outdoor garden areas, great indoor/outdoor flow.

Sold: 1/26/01 - $355,000

An interesting property here. Cons are that you're on the busy (to put it lightly) corner of Fairfax and Fountain, and with the garage converted to a studio, parking must be on the street (permit).

On Edit: Thanks to Full Disclosure for pointing out that my quick drive-by of the address location was incorrect; it's actually one house in from the corner.

That said, you have a decent corner lot, a property seemingly set back enough from the street, and redone inside. You're also truly in WeHo, as odd addresses in this section of Fairfax are in the city boundaries.

Redfin shows that condos in the same size range in 90046, over the past 6 months, have sold for an average of approx $450/ft. That would put this place at just over $450k, but of course, you have a stand-alone house and property. So determine what that's worth to you.

I have not seen this property, but am betting that it will go fairly quickly at this price or slightly lower. Of course, I believe we'll see similarly-sized condos priced in the mid-$300s when all is said and done, which might make $600k for a slice of Fountain/Fairfax heaven seem a bit steep a year or two from now. But, with conforming loans hovering at 5% and the tax credit, it's certainly "affordable".

Saturday, October 3, 2009

Stop Yelling About "Market Value"!!!

1100 Alta Loma Rd., #801 (90069)
$999,000
2BR / 2.5BA
2,252 sq ft
HOA: $1,641/mo (full-service bldg)
Days on Market: 114

THIS IS A BLOW OUT SALE! PRICE WAY BELOW MARKET VALUE. GREAT VALUE. CLASSICAL CONTEMPORARY STYLE. DESIRABLE TWO BEDROOM AND DEN FLOOR PLAN. GORGEOUS FLOORS THRU-OUT. STATE-OF-THE-ART KITCHEN. AMAZING NATURAL LIGHT. PRESTIGIOUS FULL SERVICE BUILDING WITH POOL, TENNIS COURT, CONCIERGE. VIEWS FROM EVERY ROOM. MASTER SUITE WITH GUEST BEDROOM SUITE PLUS DEN/LIBRARY. LOVELY LANDSCAPED TERRACE. MOTIVATED SELLER.

Sold: 1/14/98 - $278,000

Sold: 8/15/03 - $895,000

Sold: 8/18/05 - $1,550,000

Listed: 6/12/09 - $1,345,000

Reduced: 10/2/09 - to current price


The sales price run-ups speak for themselves here, and yes, it does look like the 2005 price was a "real" sale, although based on some quick research, the buyer is probably one who, if they want a property, don't have to care much about price.

That said, what about "market value"? In my book, the definition is "the price at which a transaction will clear the market". Of course, that definition can move around fairly quickly in uncertain times. Was the "market value" $1.5mm in 2005? Of course - that's the price someone was willing to pay. Of course, we'll be exiting the funny money times soon enough. I'd look for pricing to settle below the 2003 price eventually. Yep, that's a 50% reduction in the 90069.

Saturday, September 26, 2009

Papercuts in the 90069

We last featured the new-construction condo complex "841 Westmount Townhomes" in a June post, where we wondered if a greater than 40% reduction from original bubble list pricing would be market-clearing.

These are "new" construction only in the sense that some are unsold - from the info I could find, this project started selling in early 2008.

There are 16 total units, all 2+2, 3 level townhomes ranging in size from approx 1200 to 1600 sq ft.

As of June, a real estate broker's blog was indicating that 5 units had been sold, with one pending. I show no public sale records for any units in the building - wonder if they've been leasing them?

And now, we have anther round of minor reductions on 4 of the units - to the tune of 3% or so, bringing some into the low $700 to mid $800k range.

Will this be enough? Next door at 843 Westmount, looks like the "summer selling season" was moderately successful for the "Westmount Oasis", with a 2+3, 1500 sq ft unit selling for $800k in July, and a similarly-sized unit selling for $775k in early Sept.

Anyone seen either or both properties?

Sunday, September 20, 2009

I Got Your Pride of Ownership Right Here ...

8709 Sherwood Dr. (90069)
$572,300 - bank owned
2BR / 1 BA
765 sq ft
Lot Size: 2300 sq ft

Great find in a highly desirable area. This 2 BR/1 BA home is ready for your touches. Bath has been redone. Close to trendy shopping & dining! lInformation herein is not verified by agent. Buyer to verify all information & rely on their findings. Offers must be submitted on CAR form w/pre-approval (NOT pre-qual), copy of earnest money check, proof of funds (if cash offer) & agency disclosure. For guarantee receipt of your offer please check private remarks for fax cover & faxing instructions.

Bank Buyback: 1/13/09 - $588,720

We'll go ahead and make the informed assumption that this is an REO, given the wording in the description. Cause, you know, we wouldn't want to disclose that, or anything ...

In fairness, there was no ubiquitous "pride of ownership" reference in the description. I just always find that phrase hilarious, in a "what-you-mean-to-say is buyers for properties at this level are too poor to afford a real house" kind of way.

Almost $600k. For a 765 sq ft property. With a lot size maybe allowing you to a little more than double the footprint while still having some semblance of a yard (someone can enlighten me on the restrictions on building vertically).

Let's say you doubled the size, at approx $300k/ft construction costs. That's just over $200k, plus permitting, other misc costs, overruns, landscaping, etc. So call it $300k, or around $900k at the current list price.

For comparable purposes, the REO at 8616 Sherwood, a 1400 sq ft new construction, sold for $810k in early June, although it may have had some of the "it was originally listed for over $1mm, it must be a deal" psychology.

Also, 8625 Rugby, just up the street, a 1+1, 884 sq ft SFR, sold for just over $600k in early August.

Tuesday, September 15, 2009

Get the Picture?

I'm feeling a little anal-ytical today, so indulge me - there will be a point, I promise ...

We spend a decent amount of time using words like "bubble", and "rollback", and "funny money" to talk about what happened over the past 7-10 years in the real estate market, and to try and paint some picture of what "normal" price levels should and/or will look like.

Of course, this is anyone's guess, not only based on whether you fall on the bullish or bearish side of things, but also based on nuances like what home affordability should be vs. income or rental levels, when the "bubble" really started, where interest rates will go, etc.

One thing's clear to this blogger ... when you look at examples that illustrate 1) how frothy the market of the 2000-2007 time frame was, 2) how easy the money was during that time period, and 3) what history might dictate, you conclude that we have a ways to go in terms of declines. And no, it's not different this time.

So with that, here's a picture of all three. And yeah, it's a condo, and no one should ever buy a condo, blah, blah blah.

637 N. West Knoll Dr #202 (90069)
$560,000
2BR / 2BA
1,156 sq ft

Super clean split bedroom style centrally located in WeHo literally steps to Urth Caffe, Le Pain & the fashion district on Melrose. Located on the 2nd flr w/N facing balcony & views of the Hollywood Hills. A generous size kitchen opens to din & liv areas. Bedrooms are suites w/walk-in closets. Plenty of add'l closets as well. Gated prkg with tandem spots, extra storage in garage. Bldg has been extensively remodeled w/new railings & dbl-pain windows. Not a short-sale or foreclosure

Sold: 4/22/05 - $505,000 (95% financing)

Sold: 12/14/04 - $400,300 (4 months, 25% increase)

Sold: 4/88 - $157,000

Clean-looking, OK-sized condo, good stretch of WeHo. "Not a short sale or foreclosure". So it's got that going for it.

In the words of Jules from Pulp Fiction, "allow me to retort":

1. You're trying to get the agent's commission plus a little back off of a 2005 sale, where we're already seeing 2005 rollbacks. And that price was 25% above the price from merely 4 months prior

2. 95% financing on a half-million dollar property. Sounds like a good title for a case study from a finance textbook 10 years from now. Or, the name of one of Angelo Mozilo's boats.

3. At the $560k offer price, the 3x income rule of thumb means someone earning just under $200k "can" afford this. Really? We ain't in 2006 anymore, kids. Despite what the "but the entertainment crowd", "but the SLS Hotel lobby is crowded", etc etc crowd would have you believe, $200k is still a decent amount of money. Ask a laid-off attorney. And oh yeah, it gets you just under 1200 sq ft.

Also pencils out to somewhere in the $2700/mo after-tax ($3300 before) range. Check Craigslist - bet you can find a comparable rental for around $2,000.

4. $157k in 1988 was near-peak pricing for that time, but let's say, for the sake of argument, it was a "normal" level. Here's where today's pricing "should" be with the following annual inflation/appreciation assumptions from 1988:

3% - $290k
4% - $360k
5% - $440k

Draw your own conclusions.

With all that said, let me step back and say that I am, most certainly, a capitalist. I have no issue with sellers listing their properties at a level they think the market will bear, regardless of how delusional I think it may be. Opinions make markets, and if there's a buyer willing to pay a certain price, then that's what the property's worth, damn what I say.

However, recognizing a market that's moved away from you (vs. denial of that) is another important aspect of capitalism - the whole supply and demand thing.

So, if there are no takers at this level, how long will it take the sellers to lower the price? That's of more interest. This isn't a short sale or REO - yet ...

But, who knows, maybe "cash for clunker homes" - above the tax credits, etc - will be the next program. First my car, then my washing machine, now my condo!

Saturday, September 12, 2009

Canary Competition

8917 Dorrington Ave (90048)
$1,295,000
2BR / 2BA
1,455 sq ft
Lot Size: 4,000 sq ft

Totally renovated, enchanting Traditional home. Enter long, gated drive to a spacious, bautifully landscaped yard w/tranquil fountain, lovely patio, and room for a pool. Step inside to long gallery entrance w/hardwood flrs, an enormous living toom w/vaulted ceilings and stunning views, and a Chef's kitchen w/great light. 2 bedrooms with 1 3/4 baths that have been immaculately redone. Sophisticated den w/huge walk-in closet. This is a truly magical property. A real gem!

Sold: 8/28/08 - $1,400,000

Sold: 4/20/05 - $1,235,000

Sold: 3/96 - $254,000
Sold: 5/93 - $225,000
Sold: 6/88 - $285,000

A few things here:

1) I'll call this the "competition" canary since it's a relatively similar property to the Cynthia St we just featured. Yes, plenty of arguments either way - this is not Norma Triangle/the vaunted "69" although might be quieter overall, one less BR here, etc. But we do have a couple sales over the past few years, and it's a close enough "comparable" that buyers would probably look at both.

2) Sorry, long time readers know one of my pet peeves (and ok, maybe a little mean-spirited) is listing descriptions with misspellings, etc. I mean, it's a $1.3mm (at least list price) property for Allah's sake, show a little attention to detail. I know that $1mm shacks were commonplace a couple years ago, but we're in or getting to an environment where places like this will be attracting discriminating buyers, not those who thought they could afford a no money down $1mm mortgage with $100k income. (OK - the "realize I'm in La-La-Land moment" - thinking twice about my "discriminating" comment ...) And really, can driveways and hallways be "long" in a 4000 ft lot/1400 ft property?

3) As 'Full Disclosure' commented on the prior post, it would be nice if the dates of renovation were disclosed on properties, but I doubt we'll ever get there. I assume you could pull permits, depending on the extent of the work/if it was done legally as part of your due diligence.

Let's assume this place was renovated within the past 4 years, in which case we're talking a pre-2005 rollback. If the work was done after the 2008 purchase, well, kudos to the sellers for at least starting to recognize the current market and pricing around the 2005 levels.

4) Property records (I refuse to disclose anything "personal" on the blog, so do your own homework if you like) seem to indicate that the owner/seller is an investor who owns a few other buildings in the area, all which were purchased in the past few years, so perhaps there's some pressure to move on this one.

5) I show the 1989 - 1996 time frame sales, not to argue that prices are going back to that level (perma-bears feel free to chime in ...), but to illustrate, once again, that the unwinding after run-ups, like the one in the late 80s/early 90s, can be long and result in nominally the same pricing level, which of course means lower on a real basis assuming any inflation.

Another "Where Are We Now?" Canary

9040 Cynthia St (90069)
$1,245,000
3BR / 3BA
1,279 sq ft (?)
Lot Size: 4,500 sq ft

Pristine Country English home situated behind lush privacy hedges, pedestrian gate, and gated driveway. French doors, hardwood floors, updated kitchen/bathrooms and high ceilings. Detached guest studio with gorgeous remodeled bathroom. Flat grassy yard, verdant period landscaping, spacious outdoor patio off of sun filled den complete this charming offering. Seconds from Sunset Strip and Beverly Hills adjacent. Show cold.

Sold: 8/27/02 - $575,000

Sold: 3/16/05 - $921,500


The Redfin/MLS listing didn't show square footage, so the number is from my least favorite site, Zillow, but Zillow's also reporting the house to be a 3+2, so I'm guessing the guest studio with bath mentioned in the description isn't included in the size. So maybe closer to 1500 sq ft?

Anyway, this looks like a nice property with some recent renovation. I would give this a slight location discount since you're on Cynthia a half-block off Doheny, in a mixed residential area (large multi-family building across the street and at the beginning and end of your side of the block).

So, why the "canary" in the title? Much like the birds sent in first to test the quality of air in a mine, it will be interesting to see if and how listings like this, with sales near the beginning and in the thick of of the "bubble" era, will survive.

It's difficult to tell what renovations were done when, but from the info I see, this wasn't a tear-down situation. Same structure with some renovations over time. So an almost doubling in less than 3 years from 2002-2005, and now another 30% on top of the early 2005 price?

Ask 10 people about when the "bubble" started (in other words, what prior price levels we should be looking at for normalcy over the next few years) and you'll get 11 opinions.

Personally, I think we're in for a period where, 5-8 years from now, prices will be nominally the same as they were in the 2004-2005 era, so lower on a real basis including the effects of inflation.

Do I think we'll get back to sub-$600k for a nice SFR like this in a solid area? I'm not that bearish. But could we see a $900k type price tag 5+ years from now? Sure think so.

Tree Falls, Sound Made

Ahhh - it's good to be missed, even if one doesn't have Perez Hilton-level blogging fame (or audience, or hair ...)

Thanks for the messages asking, to put it bluntly, "when the hell are you going to post again"?

Now that I've gotten a bunch of that whole darned work-for-pay thing behind me over the past couple of weeks, back to it ...

Sunday, August 30, 2009

... Just Not Necessarily a "Smart" Investor?

8835 Betty Way (90069)
$699,000
2BR / 1BA
806 sq ft
Lot Size: 2,000 sq ft

Equity sale, cute Spanish bungalow. 2 bedroom with one car garage. -Near everthing. Nice cul-de-sac street. Must sell due to illness. Tenant would love to stay, good for investor. New stove was just put in. Single family home, Laundry area in garage. Sold in it present condition.

Sold: 12/99 - $245,000

Sold: 10/03 - $497,000

Your monthly P+I on this place, assuming 20% down and a generous 5% rate, is approx $3000. Add in taxes and take out some deductibility, depending on your personal situation, you're still at least in the upper $2,000 range, if not mid-$3,000. Anyone think this rents currently for close to that? I'm sure there's a reason the "tenant would love to stay"!

[BTW - if anyone knows if the City of WeHo lists Max Allowable Rent by property address, a la Santa Monica, let me know. The city website has limited info, and not specific to any properties.]

People can debate the virtues of cul-de-sac Betty Way, but the reality is you have a condo-substitute "starter home" (am I Ok to use that term for this? I know we've had debate in the past about what's "starter") on a tiny lot with limited, if any, room to expand.

Strictly from an investor perspective (unless I'm missing something about the possibility to build multi-units here), I think this will need to get back near its 2003 price.

Saturday, August 29, 2009

No Guests on "The Vue"

We highlighted "The Vue", located at 912 N. San Vicente (b/w SMB and Cynthia), in one of a couple posts back in March discussing new construction projects.

At that point, this particular project looked like it was just getting finished, and the description boasted:

A state-of-the-art condo development, 1 blk from famed Sunset Strip in WeHo. Just blocks from Bev Hills & Pacific Design Center, these luxury 4-story twnhms epitomize luxury & convenience. The main floor dining & living area boasts a 2story ceiling w/sweeping metal railings along the mezzanine. All units incl priv rooftop decks, & 20-ft high walls of glass in the LR's, affording a vw of the entire city. Hand scraped maple floors, SS appl's, caesarstone counters & more.

Now I see 3 of the 5 units having been officially listed back in June, at prices currently ranging from approximately $1.1 - $1.3.

These are larger units, with seemingly nice amenities. Three problems:

1) Awfully busy part of San Vicente (although I guess you're not RIGHT next door to the 90069 P.O.!)

2) Per an Anon's comments on the original post, and now visible, there is development slated for the lot next door. You would think that the Vue developers did some homework on what size property could be put up, so that the "vues" were protected, but who knows ...

3) Like most artist renderings/mock illustrations, this one is laughable. You see the small, quaint street that it appears the units look out over with their "walls of glass"? Uh, no - that would be the lot next door. You know, the one slated for development. What appears to be the side of the building is actually the part on San Vicente (so at least they had the foresight to shield the units somewhat).

I went running (unfortunately, without my smoke respirator) the other night, and ended up on San Vicente. Of course, all dark here. Only listed for a couple months and I would guess we need to see these knocked down a few hundred grand to get in the ballgame.

Get Me Off the Island

With apologies to "Lost", you know we at WeHoHo love a good MLS description. Thanks to "Full Disclosure" for alerting us to this new listing.

1011 N. Crescent Heights (90046)
[picture coming]
$895,000 - SHORT SALE
2BR / 1BA
1,398 sq ft
Lot Size: 6,650 sq ft

Description: 3BD/2BA home in West Hollywood. Subject to short sale acceptance by EMC. Hostile tenant. Offers subject to interior inspection. Complete file submitted on 8/23/09.


Sold: 11/02 - $500,000

Sold: 1/07 - $1,065,000

Sold (bank buyback): 7/20/09 - $944,126


An Anon had already suggested that we'd see this property come on the market, when we profiled its neighbor in our "So It Begins" post in early August:

Where to begin, but to say that following upon the Harland Street Trifecta (now a doubleheader) is the new Trifecta of 1015, current listing 1011, and 1005 N. Crescent Heights. All sold in development-crazed WEHO during the boomdiada days about 2 years ago.

Appears that 1011 (last sale $1,065K in 1/07) and 1015 (last sale $1.070K in 2/07) were a package development deal now gone horribly sour. Zoning would have allowed 10 or 11 units total on both parcels after demolition of the SFRs. 1005 CH went for $1,000K in 3/08 to another purchaser.


My research shows that indeed, this property and our previously-profiled 1015 N. Crescent Heights have the same owner. Good information, thanks for the heads-up.

So, what's the progression here? Buy with the intent of developing, and while you're getting permitting/capital/etc together, figure you'll rent the place in the meantime to get some cash flow to cover part of your holding costs? Now the world has gone pear-shaped, your tenant has "gone native", Jacob's dead, as is the real John Locke, and Juliet's down the well (sorry).

Banks as the savior - maybe I'll pitch that to JJ Abrams and crew for the season finale next year ...

Sunday, August 23, 2009

WeHo East SFR Sale

Catching up on some recent sales ... with the caveat that, in a nod to some of the prior posts about what's actually "WeHo", this block falls just to the south of the WeHo boundary ...

Remember our "At What Price Reality" post back in February with updates in March and July on the SFR at 955 N. Vista, which was a bank-owned 3+2.5, 1558 sq ft "fixer" that ultimately sold in late June for $700k after being listed starting at $819k last August.

At the time of the July posting, "Bubblewatcher" commented:
'In the meantime, this was the second lowest priced three bedroom sfr for sale in all of WeHo, according to the MLS. And there's another on the same street at $849K looking for backup. I think the lure in these instances is probably lot size and square footage compared to the other 3 bed listings, as well as price.'

I'm guessing the property being referred to is the 3+1, 1384 sq ft 942 N. Vista, which closed on July 24th for $812,500, with a prior sale in 2001 for $412,000. Lot size is 6100 sq ft as opposed to the approx 6500 sq ft of 955 N. Vista.

I either don't have access to, or am too lazy to find, the listing history on this one, although Bubblewatcher's comment would indicate only a slight prie reduction. Anyone remember if this one was upgraded, etc?


UPDATE: Some additional research shows that there were only two 3BR condos of comparable size sold in the past three months (in fairness, August data is not yet posted). Both were at 718 N. Croft Ave, aka the "Croft Villas", which we profiled as one of our very first posts back in February as an example of new-construction developer distress:

#201, a 3+3, 1700 sq ft unit sold June 17 for $850,000. "List price" from the Croft Villas website shows $1,099,000.

#301, with the same specs at #201, sold for $890,000 on May 28 following an initially absurd/"party like it's 2007" list price of $1,249,000.

Now, the Croft units are also technically not in WeHo, but some might argue they sport a better overall location to the 900 block of Vista.

Saturday, August 22, 2009

West vs. East - "Starter Homes"

Recently on the market, two properties that I would deem starter homes.

Significant lot size and property differences - but does the coveted "WeHo West" trump these attributes for some people? Where would you live (if either)?

A WeHo West Sliver aka "The Condo Substitute"
8875 Cynthia St (90069)
[no picture yet]
$720,000
2BR / 2ba, 912 sq ft
Lot Size: 2100 sq ft

Description: Updated Craftsman Oasis. Complete restoration with detailed upgrades. Featuring Italian Granite, Travertine baths & Asian Maple floors with all stainless steel appliances (fully equipped).

Sold: 12/03 - $450,000

Sold: 3/07 - $840,000

Here we have a somewhat realistic seller. "Realistic", meaning that unlike others who are delusional, they at least recognize that the market has significantly changed in the past 2 years. Those cynics among us would argue that we were already well into the bubble by the end of 2003, so this property would need to get back to that pricing level. I'll give the benefit of the doubt that the upgrades were done between then and the 2007 sale. Should we be talking high $500k range for this condo substitute with a tiny lot?


The Eastern Bungalow aka "Get Yer Vitamin C"
1418 N. Orange Grove Ave (90046)
$995,000
3BR / 1 BA, 1,653 sq ft
Lot Size: 6700 sq ft

Description: The best street in the neighborhood. Such a great location; walk to great shopping, entertainment and wonderful restaurants. For the first time on the market, this wonderful California bungalow is filled with charm and character. Lots of curb appeal. Classic bungalow floor plan with tremendous potential to be anything you want it to be for today's lifestyle. An abundance of wood casement windows for a soft Natural light. Fabulous backyard with Orange trees. (The Oranges are delicious).

A prior commenter took some offense (maybe rightly so) with my suggestion on the recent "Room to Move" post that some people would prefer nicer condos vs. dinky SFRs, depending on lifestyle. The property on Orange Street, from the pictures, doesn't look to be very upgraded, but of course you have a large lot to "do what you will". It's a decent size, at least for a small family, and assuming you could easily put in another bathroom, probably works "as is" for the time being. Of course, if it's cosmetically OK but actually a teardown to make it workable, you're still talking lot value of $1mm which seems high.

Anyone seen these places?

Tuesday, August 18, 2009

Room to Move on Crescent Heights?

835 N. Crescent Heights (90046)
$760,000
3BR / 1BA
1,166 sq ft
6,000 sq ft lot

Adorable Spanish architecture home with lovely archways, jazz walls, barrel ceilings, hardwood floors, French doors, a wonderful large updated kitchen, charming original bathroom, copper plumbing, formal dining room, and beautiful fireplace in living room. There is a utility room leading to the very large backyard and the home is located within walking distance of trendy West Hollywood restaurants and shops. Seller to select services.

Sold: 6/88 - $250,000

No, the title isn't meant to poke fun at the size of this SFR. Rather, given the previous purchase, perhaps the current owner has some room to work with the price. I couldn't find any home-as-ATM indication data, although the owner is probably kicking themselves for not getting this place appraised at over $1mm a couple years ago and buying the Porsche and Range Rover.

Of course, we profiled up-the-street 1015 N. Crescent Heights in our "So it Begins" post a little while back, which has a slightly larger lot but looks to be a tear-down, listed as a short sale for $895,000.

I'm guessing places like this will set current "lot values" for this area, when sold. From the pictures, this place looks in reasonable shape, although certainly small. I laugh when people talk about the benefits of SFRs vs. condos. So, you're going to start your family in a 1BA place with less than 1,200 sq ft? All for the privilege of having a backyard that looks like this?

Wednesday, August 12, 2009

Green With Envy - Update 2 (The "Out of the Shadows" Edition)

We profiled the architecturally interesting (funky/cool/ugly, depending on your taste) 825 N. Kings Rd complex first in March when unit #4 went on the market, and updated the sale in July, which saw a relatively significant reduction from list.

We also contemplated whether, given the # of units shown sold in the building, there was additional "shadow inventory" here.

It appears we might have been on to something, as two additional units have come on to the market in the past few weeks. Neither have prior sales history, which would seem to suggest they were developers' units. In addition, the description for one indicates that it is "also for lease".

We disclose a lot of public info here, but I don't like putting individuals names, or even an insinuation of who they are, on the blog - just seems to go too far. Suffice it to say that it appears the original development group and/or "backers" still owns both of these.

Keep in mind that #4 was a 2BR/1.75BA, 1322 sq ft unit that ended up selling for $682,500 in July (prior sale 8/07 for $797k).

Both of these units look to be larger, more upgraded, and better-positioned in the building than #4. Will be interesting to see if they command a 50-100% premium.

825 N. Kings Rd #7
$959,000
2BR / 2 BA
(sq ft not listed)
Beautiful split-level dramatic unit in award-winning masterpiece by architect Lorcan O'Herlihy. Soaring ceilings & Amendium hardwood floors accentuate the sleek minimalist design. Sophisticated kitchen with Boffii cabinets, Miele appliances & large walk-in pantry opens to spacious living & dining area. Ceilings & walls converging at unique angles, the eco-conscious design is light & airy. Upstairs are 2nd bedroom & large master with private patio & well-appointed baths. Also for lease at $5,850.

825 N. Kings Rd #14
$1,249,000
2BR / 2.5 BA
1,490 sq ft
Unbelievable opportunity to own the BEST unit for sale in West Hollywood, in the award winning Habitat 825 by acclaimed architect, Lorcan O'Herlihy. Highly upgraded, this TOP floor split level floor plan (1 common wall) features walls of glass w/3 exposures, custom walnut flooring, a customized dual sided fireplace in liv rm that opens out to the enormous private patio. Boffi kitch w/Miele appliances, upgraded closets, upgraded master bath, custom window treatments & built-in sound. A must see!

Revisting Rent vs. Own

One of our not-rocket-science theses here at WeHoHo has been the need for pricing to reach a rent-equivalent level.

Now, we would agree that there's some intangible factors that come into play with owning vs. renting, and wouldn't expect a nice property in a nice area (particularly an SFR) to be purchased with a view to it being cash flow positive if rented out tomorrow.

That said, in the condo market, the rent vs. own analysis should still be alive and well, as potential buyers are likely weighing the "deals" in the current rental market with the pros and cons of buying, including: need for a significant % down payment, pride of ownership, have prices bottomed, no more "quick buck flipping" as in the past.

I thought this property was an interesting case study:

1222 N. Olive Dr #306 (90069)
1 BR / 1BA, 598 sq ft
For Rent: $2,295/mo

Bright and open unit with blond bamboo floors throughout along with updated kitchen and bath. Walk in all glass shower. Views of the Hollywood Hills and downtown Los Angeles. Safe and secured parking. Ideal WeHo location walking distance to Sunset Strip, Santa Monica Blvd and La Cienega's restaurant row. Located on one of the most beautiful streets in West Hollywood with tons of parking. The building is very quiet with an absolutely amazing pool that gets great sun. Utilities incl. PriceNeg

Sales History:
12/20/06 - $385,500

3/2/05 - $328,500

6/20/00 - $109,000

6/17/99 - $88,000

8/19/91 - $119,000

5/7/90 - $115,258


Lots going on here. Let's review:

1) Answer to the "how long can a cycle be" question with a sale around the prior top in the early 90s, and an 8 year span resulting in a sales price approx 25% lower

2) A bubbilicious 3x increase in less than 5 years from 2000 - 2005

3) A close-to-recent-peak last purchase

4) A current owner potentially waiting out the market/trying to recoup costs? I won't speculate, as there could be any number of things going on here

5) A seemingly way-above-market rent. Yours truly has been researching rentals in WeHo recently, and given the current market, you can get a nice 2BR in a nice area for around $2k. This is in a decent location, but almost $2,300/mo for a small 1BR?

However, it starts to get more clear if you make some reasonable assumptions on the monthly nut this owner is likely carrying:

$385k purchase
20% (being generous for the time) down
5% rate (again being generous, assuming a recent re-fi at low rates)
$300/mo HOA (probably at least that since bldg has a pool)
+ taxes
= $2,377/mo expenses

I think this has to get under $2K/mo to rent, meaning the owner is eating around $400+/mo, not including repairs or other related expenses. Not terrible, given the relatively small numbers, but some pain likely to be felt nonetheless.

Oh, yeah - and assuming $1900/mo rent (which I think is still too high), the purchase price equivalent would be around $285,000.

UPDATE:
After posting this earlier, I noticed another unit in the same building for sale, which makes the plot thicken:
1222 N. Olive Dr #314
$414,900 (REO)
2 BR / 2BA, 812 sq ft

Last Sale: 11/18/04 - $415,000 (100% financing and looks like at least 2 subsequent cash-outs)

The real evidence of "funny money" going back 5 or so years ago continues to drip out. Will be interesting to see where this sells. Any bets that they get less than the $385k last sales price of the 1BR above?

Friday, August 7, 2009

And So It Begins ...

I was driving down Highland (the stretch of primarily SFR between SMB and 3rd St) the other day during the late evening rush, and remarked to my carmate - "you couldn't pay me to live on Highland". Her reply: "yeah, or Crescent Heights".

I remember visiting a few SFR open houses a year or so ago on Crescent Heights, probably just after the market had peaked, and there were still relatively few data points of weakness. One open house in particular, the listing agent was going on and on about how $1.5mm was "very reasonable" for a 1500 sq ft house on Crescent Height. I know, I know, so what did I expect him to say?

In any case, one data point does not tell a story, but back to our not-rocket-science hypothesis of the downturn slowly rolling from lower-end 'hoods to nicer locales, I would put SFRs on this stretch of Crescent Heights in the "decent area but horrible street" category. In other words, not the first to fall, and not the last, but this is one of the first signs I've seen of cracking here.

The listing would suggest that this might be or an expected flip, or just a "project home" for someone who's hit rougher times. In any case, at a minimum, this will be an interesting "lot value" data point for this part of town


1015 N. Crescent Heights (90046)
$895,000 (SHORT SALE)
3BR / 1BA
1,558 sq ft

3BD/1BA Spanish charmer in need of TLC. Lot is zoned R3 with potential to build condos. Buyer to check with city of West Hollywood. Short Sale Subject to Lender Approval. Shown by appt only. Do Not Disturb Occupants


Last Sale: 2/9/07 - $1,070,000



Wednesday, August 5, 2009

Enjoy Your Mai Tai - It's On the Taxpayers!

901 Larrabee St (90069)
$489,000
1BR / 1BA
565 sq ft
2,350 sq ft lot

1 BEDROOM 1 BATH PER TAX ROLL- Has bonus room; Cozy, secluded cottage in a great part of West Hollywood, within walking distance of the heart of Sunset Blvd. Cute living room with fireplace and a separate dinning room with French doors opening to an enclosed patio deck. Large bedroom with a partially vaulted ceiling. Great starter home in the West Hollywood/Sunset Strip area! Don't miss this one! No garage; NEEDS SOME WORK - AGENTS: PLEASE SEE PRIVATE REMARKS FOR OFFER DETAIL-Thank you.

Sold: 11/18/99 - $319,000

Sold: 5/22/02 - $318,000

Sold: 8/24/05 - $825,000

Sold: 11/21/06 - $950,000

Sold (bank buyback) 1/22/08 - $795,960


Yeah, I'm feeling ornery tonight. Maybe it was the backhanded (although well-deserved - being backhanded, I mean) compliment in the comments about the blog not being "scintillating".

Maybe it's the fraud that's becoming more and more evident. Someone - oh, wait, the taxpayers - paid $950k for this palace at the end of 2006.

Maybe it's the ever-cheerful-even-when-the-sky-is-falling-and-your-2007-vintage-Porsche-payments-are-past-due attitude of the REAL-tors. I was going to pick apart the listing description, but honestly, why bother? Step right up and get your "starter home". What a joke.

*Deep breath*

OK, now I feel better. I'll put an end to the (blatant, at least) mean-spiritedness. Let's move on, shall we? ...

Seriously, What the Hell?

818 N. Doheny Dr. #806
$488,500
1 BR / 1BA
1,154 sq ft

REO Large south-facing unit with city views, designer recessed lighting and built-in sound, bamboo floors. Spacious bedroom with walk-in closet and city views. Full-service Building. HOD includes all utilities and basic cable.


Sold: 3/1/05 - $950,000

Sold: 6/28/05 - $600,000

Sold: 2/3/06 - $820,000

Have been reading several interesting stories recently about the rampant fraud that occured (not surprisingly, I suppose) during the bubble period. You know the drill ... buy a place, see the "appraised value" shoot up a few hundred grand, take out a HELOC/additional mortgage, cash in on the difference, and decide to get foreclosed on. Walk away with a nice chunk of change (and a temporary ding on your cedit rating, but who cares?)

I'm not suggesting (OK, maybe I am, subtely) that there was fraud occuring here. Maybe I just need an education on how to read the paper trail on this one. Propertyshark shows a bunch of "reconveyances" and trust deed exchanges. Not surprisingly, a number of the parties involved had defaults at one point and/or owned a number of other properties in the 2004-2006 timeframe.

So, did someone really pay $950k for this place? Or even $820k, for that matter? I guess anything was possible during the Great Era of Funny Money. The bank's price still seems too high (approx $3600/mo pre-tax) given current rent levels, but since this building is full service, a rent-equivalent in the high 2,000 range is probably in-line, which would put the price in the high $300k/low $400k range. Even if it sells at current levels, goes to show you that "prior sales", especially in the 2006 vintage, were so overinflated it's laughable.

Sunday, August 2, 2009

Welcome to the Jungle ... Toilet Paper Provided

1033 Carol Dr. #T5 (90069)
$799,000
2BR / 3BA
1,579 sq ft

Garden 3 story town home in rarely available and desirable award winning west-side/Sunset Strip building with amenities. 2beds, 3 baths, galley dining, kitchen, den with wet bar and step down living room with access to private patio. New hardwood floors, new carpet and freshly painted.


Last Sale: 12/88 - $325,000

Nothing to really see here ... another large "SFR-substitute" townhouse in a decent (although backing up to Sunset commercial lots) area.

Our friends over at Santa Monica Distress Monitor have a good post up about high-end townhomes in their slice of the world, and how pricing seems to be holding up in the summer "selling season". Will be interesting to see, particularly if SFR sellers hold their asking prices at the $1mm level, if we see some larger condos and townhomes move in the $700-800k range.

For a lazy Sunday, honestly, I just thought the pic was interesting ...

Saturday, August 1, 2009

My God, Man ... It's Only a Condo

935 Westbourne Dr. #103
$960,000
3BA / 2.5BA
1,800 sq ft
$697/mo HOA
"flip condition"

Highly sought after 3 bedroom 3 bath SINGLE story unit located on one of the most desirable street's in West Hollywood. Unit has been completly remodeled including granite countertops, stainless steel appliances, wood floors thorough out. Unit features 2 balconies one east facing one west facing offering views of both the street front and the buildings private pool and gym. 2 wood burning fireplaces Living room and Master suite. Contact me quickly and bring your most discriminating buyers . .. this one will not last long !!

I know there is a market for "high-end" (nice area, large living space, amenities) condos. In fact, I'd put yours truly in that category - no kids, "mobile" lifestyle, etc.

However, even in today's still low-rate environment, it's really dawned on me recently how absurd a nearly $1mm condo seems (and you can put smaller SFRs in that category as well). With 20% (yes, that's almost $200k) down, you're looking at approx $5k/month for this property, given the high HOAs.

I said "flip condition" due to our favorite twins of SS appliances and granite countertops, although in fairness, I couldn't find a prior sale. There does appear to be a past NOD which seems to have been recently resolved, and it looks like the building might have some kind of assessment being paid (Redfin shows an "Dues #1" of $697 and a "Dues #2" of $50).

Thursday, July 30, 2009

CSI: WeHo SFR

Apologies for the hiatus ... apparently the housing market is (ahem) "recovering", if you read the headlines.

8719 Bonner Dr. (90048)
$844,900
3BR / 2BA, 1,228 sq ft
Lot Size: 4300 sq ft

Take advantage of this opportunity. Great Spanish home with spacious & bright living room, with french doors leading to private front patio. Beautiful hardwood floors throughout. Detached guest house with bathroom. Faboulous open kitchen with breakfast nook that leads to private backyard. Very close proximity to restuarants, shopping, etc. Buyer to verify all information and rely on their own findings. Submit all offers with pre-approval, copy of deposit check and POFs.

Sold: 3/96 - $104,000 (yep)

Sold: 3/00 - $602,000

Sold: 7/10/09 - $685,865 (bank buyback)

Reading between the lines (and with sarcasm meter fully turned on), I'm going to make the wild leap that this is a foreclosed property. 'Cause, ya know, we can't just say "REO" or "bank owned" in the listing ... I mean, like, ohmigod, it's a single family house in WeHo. These were all selling for well over a million a couple years ago - it's SUCH A DEAL!!!

OK, sarcasm meter off now. I titled the post "CSI" because of the interesting puzzle of info on this one. I welcome any reader to be Horatio here (or whatever Fishburne's character's name is) and help solve things.

Pieces of info:

1. FACT: Previous buyer (2000 vintage) took out a conventional, 20% down, variable rate

2. DEDUCTION: Based on the interior pictures, they did some recent renovation

3. ASSUMPTION: Owners borrowed against the house for the renovation - and if they're in the keeping-up-with-the-Kadashians LA crowd (and who shouldn't be?), they took the vacations and bought the Range Rovers as well

4. FACT: Taxes go unpaid, and they get a notice of default earlier this year

5. FACT: Bank buys property back and proceeds to list the property a couple hundred grand higher than buy-back amount


Now, I don't expect the bank to look to initially lose money on this, particularly since we've seen some (IMHO uneducated) purchases recently.

Was this a case where the buyer just decided not to pay taxes? It's not like this is a flip, with the last sale 9 years ago. Maybe just someone in over their head?

A relative comp would be 8616 Sherwood, which we profiled in our Walking Dead post, which was a bank-owned SFR of similar size. It sat on a smaller lot, in what I would argue to be a better location. That sold for $810k in June, although psychologically from a buyer's perspective, it was "reduced" by the bank from above $1mm and sat on the market for a while.

I'd argue this has to get to at least the $800k range in the current market. Similar properties - as we've argued on the blog before - will go for the $700k range over the next year or two.

Sunday, July 19, 2009

Keep Those Properties Rollin' (Back)

A bit of a yawner for a lazy Sunday, since most of us believe we'll see 2002/2003 (earlier?) pricing when all's said and done, at least on an inflation-adjusted basis, but some data points anyway. Not surprisingly, condos continue to make up the bulk of the rollbacks ...

There were 14 new properties listed in the last two weeks (as of today).

Of those, 6 were 2007 or prior rollbacks, and we're really starting to see some disparity in pricing (vs. prior levels).

SFRs:
1130 N. Wetherly Dr. - $2,795,000
3 + 4.5, 2545 sq ft
Last Sold: 2/06 - $2,940,000
(has played relist game for more than a year)

Condos:
9255 Doheny Rd. #806 - $2,895,000
2 + 2, 1845 sq ft
Last Sold: 1/07 - $3,500,000
(aka the "Matthew Perry" building; relist game for a year +)

874 Hammond #4 - $380,000
1 + 1, 757 sq ft
Last Sold: 3/07 - $420,000
(Short Sale; Also sold in the 2002-2003 time frame for low to mid-$200k)

1250 N. Kings Rd #303 - $489,000
2 + 2, 1134 sq ft
Last Sold: 3/07 - $500,000

740 N. Kings Rd #311 - $269,900
1 + 1, 664 sq ft
Last Sold: 8/08 - $323,000

7505 Hampton Ave #8 - $455,500
2 + 2, 952 sq ft
Last Sold: 1/06 - $470,000

Wednesday, July 15, 2009

Whither the "Industry Crowd"?

An Anon commented on one of the recent posts:

"A major economic driver for West Hollywood and its environs is the entertainment industry. If the recent LA Times article on the subject is to be believed, the local entertainment industry is under serious pressure from distant (cheaper) competition. Totally aside from the inevitable deflation of the housing bubble there simply will not be the economic support for 1.5 million dollar apartments, nice size or not."

The story is here, for those that didn't see it.

A couple of things:

1) The story focuses on small "support industry" players, not the upper-echelon executives

2) The media has its tried-and-true "death knells" for various industries, and I'm sure the movie/TV production business' death has been called numerous times in the past.

That said, there's no doubt the economic conditions are weighing on all sectors (unless maybe you work at Goldman Sachs).

Again, LA is a big city. I'm not naive enough to think that there aren't people with a LOT of money among the masses.

The question of the day - have the high-paying, high-spending days in "the industry", whose participants I think a condo like this one (large "bachelor pad" style) is targeting, dried up? Peak Manhattan pricing for a condo in LA (OK, so it gets a premium because you can walk to the Roxy and the new Boa)?


9255 Doheny Rd #2203 (90069)
$1,495,000 ($1,132/ft)
1BR / 1.5BA
1,321 sq ft

Rare offering in the highly coveted Sierra Towers, one of LA's best full-service bldgs. Ideal 22nd-floor location, w/large deck to take in the stunning views. Updated chef's kitchen, dining area, and spacious LR, all adorned w/beautiful hardwood flrs. Oversized master suite w/abundantly spacious closet helps this stunning unit shine. Hand the keys to the valet & stroll over to the Sunset Strip. Top of the line building includes pool, newly updated gym, concierge & 24-hour security & valet.

Sold: 4/02 - $512,500

Sold: 9/03 - $700,000

Listed: 5/8/09 - $1,850,000

Reduced: 5/21/09

Sunday, July 12, 2009

More "Rarities" = More Pain?

Last month, I posted an entry about a fairly nondescript condo unit on Flores where the listing description called it a "rare opportunity". This despite the fact that the short sale price was barely below the inflated 2005 price.

I've been seeing a lot of "rare" being used in listing descriptions recently, and have to wonder, as we see with the example below, isn't "rare" or "rarely on market" just code for "the recent buyer is now in over his/her head"? As we've discussed, this will be a long cycle, so the idea of "rare" properties will probably be a commodity.


9024 Cynthia Street #304
$1,449,000

2BR / 2.5BA
2,331 sq ft

LUXURY LIVING IN THE HEART OF WEHO. 1992 BUILT TO LOOK LIKE "OLD HOLLYWOOD" BY ARCHITECT ROBERT EARL, "VILLA CYNTHIA" IS ONE OF THE MOST DESIRABLE BLDGS IN WEHO. HIGH CLNGS, ENORMOUS CLOSETS, & RMS & ROOF DECK ARE SOME AMENITIES IN THIS BEAUTIFUL, ONE OF A KIND PROPERTY. THIS PH IS THE MOST PVT & BRIGHTEST IN BLDG. 2 BDS & DEN OFF KITCH. HUGE ROOF DECK OVERLOOKING TREES & HOLLYWOOD HILLS. 2300+ SQFT W/2 SXS PRKG, EXTRA STORAGE & SEC. A RARE OFFERING, THESE PHS RARELY GO ON THE MARKET.

These look like really nice units - anyone seen them? Of course, "rarely go on the market" is on overstatement, seeing how, from the sales history, this unit's been turned over 4 times in 12 years. But, I'll give them a pass since there was a 7 year gap (and the requisite 2.5x increase in "value") since the prior sale. But, with that near-peak 2006 last sale, there's probably a reason this one's on the market. Will be shocked if this sells above the 2006 pricing.

Sold: 4/99 - $580,000

Sold: 4/06 - $1,300,000

Sunday, July 5, 2009

"Green With Envy" - Update - SOLD

We profiled 825 N. Kings Rd #4 in our "Green With Envy?" post back in March.

This was a fairly cool, innovative building that looked like it might have a shadow inventory situation. The building was marketed and most units sold in late 2007.

When we profiled #4 in March, its last/initial sale was in August 2007 for $797,000. It had been listed for 5 months with a couple of reductions, the most recent to $695,000.

Now we have a sale and a comp for the rest of the building:

Sold: 6/10/09 - $682,500 (-14%)

As our readers know, we have been seeing 2005 condo rollbacks, so this is not a surprise, although it is a new building with all sales (at higher levels) very recently. A tough comp for anyone else in the building feeling distress, although we're going lower still ...

Coincidentally, Harry Potter Opens Next Week

910 N. Orlando Ave (90069)
$2,495,000
3BR / 3BA
2,313 sq ft
13,100 sq ft lot

ON THE BEST STREET IN W. HOLLYWOOD W/ HUGE DEEP LOT, CHARMING DECORATOR'S COTTAGE W/ 3 BD AND 3 BA. 30FT LIVING RM W/ FP, MASTER W/ WALK IN CLOSET AND FP, LIBRARY W/ FP, DINING RM W/ LEATHER SQURE FLOORS AND UPDATED KITCHEN. 1 BDRM GUESTHOUSE W/ 30FT LIVINGROOM W/ FP AND ITS OWN GAZEBO. POOL, KOI POND W/ WATERFALL, OUTDOOR FP, INDIAN PAVILION FOR OUTDOOR CONTEMPLATION OF THE LOVELY GARDEN. DOMED ENTRY W/ MURAL. ENGLISH ROSE GARDEN, BOXWOOD HEDGES & GRAVEL WALKS, FEELS LIKE SOUTH OF FRANCE.

Don't have much to say about this, just a fun post for the end of the holiday weekend.

Without seeing pictures, this is a large SFR in a great WeHo location on a huge lot. Aside from the SHOUTING IN ALL CAPS in the listing, not much dispute there.



After seeing more pictures, I can only assume by "feels like South of France", they meant to add "as set in a fantasy novel."

And I remember worrying about buying a townhouse with 3 levels (2 sets of stairs) in that I was limiting my audience to a younger, more mobile crowd.

Friday, July 3, 2009

Why $700k Is Still Too High (IMHO)

Lots of good comments on the prior post about the 955 N. Vista sale. As a blogger, it's always interesting to see what really gets people's interest, so the blog can be more closely aligned with them.

Since the magical question is, "Where will things ultimately settle?", your humble blogger will make an attempt to put forth his position. As always, I welcome criticism, debate, and thrown tomatoes ...

Here's a point-by-point analysis of why $700k for a small SFR that needs work, in an OK but certainly not the nicest, area of WeHo, is still too high.

1. Requires $140k down.

In our fantasy world of celebreality and everyone on the streets of the Westside seemingly driving Range Rovers, $140k may seem like peanuts. But, especially given the general market downturn over the past year, it's even a larger sum. And yes, I know that some people may be "on the sidelines" and might have stayed out of the markets, but are they really going to plunk down their $140k for a property like this?

2. The Income Issue.

Some people like to use the "3x income" rule of thumb when discussing property afffordablity. I tend to be a little more flexible and look at a 30% DTI ratio. Using the average of those two calculations for a $700k property brings you to an income of $200k to support the purchase. Again, I know in our little Westside world there are "a lot" of people making $200k+. But, that's still a significant income, which puts you in the top 5% of households. OK, you say, but on the Westside that only puts you in the top [insert a number that may be closer to 20%]. Might be true - I still tend to think a lot of incomes are overstated - but does this property even scream "top 20%"?

3. The Condo Alternative

One commenter mentioned this. The drop in condo pricing is seeming to accelerate. A fair amount of new construction hitting the market, which, unless we have an extremely strong economic rebound in the next 12 months, will need to drop prices further. For this size of property, I think couples/small families will have a lot of options in the condo market. And yes, I know that HOA dues aren't deductible, but neither is the expense to have someone mow your (albeit tiny) lawn.

4. The Inflation Issue

I'm no economist, but am a believer in reversion to the mean. With mortgage rates around 5.5% currently for conforming loans (assuming excellent credit and 20% down), the pre-tax monthly on $700k (including taxes) is $3900. If rates move up a percent, which would still be low historically, the purchase price would need to adjust to $640,000 for the same monthly payment. If you believe in greater inflation, adjust accordingly.

With all that said, I'm not sure the buyer on the Vista property got a terrible deal. Depending on how much work the house still needs, your after-tax monthly nut is probably somewhere around $3500. I think you can rent for less in this market, but if you like a property, it's not the worst time to be looking ... as long as you plan to be there for at least the next 7-10 years.

Wednesday, July 1, 2009

"At What Price Reality?" - Update #2

Catching up on some previously-posted SFR sales.

We featured 955 Vista in our "At What Price Reality?" post back in February.

As a reminder, this is a 3BR + 2.5BA, 1558 sq ft "cosmetic fixer" that had "been rearranged" (?) and "needs TLC".

The property had been sold in Dec 2005 for $827,500 and then a price of $1,200,000 was recorded in November 2006, although that could have been a cash-out refi.

It was first listed in August of last year at $815,900 and reduced to $759,900 in January.

SOLD: 6/22/09 - $700,000

Tuesday, June 30, 2009

"The Walking Dead" - Update

We featured 8616 Sherwood Ave back in April in our "Walking Dead" post.

As a reminder, this was a bank-owned, 2BR / 2 BA 1,440 sq ft SFR on a 3,100 sq ft lot in what I would argue is a nice "WeHo West" neighborhood.

It appeared that the most recent buyers ran out of money while renovating (although having seen the place, it looked complete), and the bank buy-back was $782,000.

First listed in November for a ridiculous $1,049,900, it was reduced/relisted multiple times, with the last listing being in March for $849,900.

Well, it looks like the property sold on June 1 for $810,000.

Congrats to the bank on this one. Hard to tell what exactly transpired, but it looks like they might have come out even on this. Best of luck to the new buyers - given the property and lot size, I'd argue for a mid $600s market value, although it does get a location premium (but not 25%).

Sunday, June 28, 2009

Reality vs. Delusion

First, a tip of the hat to "Warchest" over at SMDM ... I should probably pay him a royalty every time I use some form of the word "delusion" when talking about pricing, since he really coined its use in this context. Warchest - put it on my tab!

One of our theses here at WeHo Homes - not that it takes a lot of smarts to figure it out (unless you're a delusional seller) - is that the wave of bubble deflation will look like this:

- Outlying areas hit. Check.
- Lower-priced "inlying" areas hit. Check.
- Condos in nicer neighborhoods hit. Happening.
- SFRs in nicer neighborhoods hit. Starting to happen but still in denial.

Here's an example of the last two events, and one that shows a contrast between two sellers. As we continue to say, be patient ...

1145 Larrabee St. #5 (90069)
$495,000
2BR / 1BA
870 sq ft
HOA: $326/mo

DESIGNER DONE CORNER UNIT CONDO! This ultra chic 2 bedroom 1 bath condo boasts loads of natural light, a beautifully updated kitchen with stainless steel appliances, wood floors and an in unit washer/dryer. The master is a tranquil oasis with french doors opening to a private balcony. The bathroom has been remodeled with top of the line materials. Wonderful location north of Sunset close to shops and restaurants.This is the BEST DEAL AROUND!

Sold: 7/90 - $185,000

Sold: 8/91 - $170,000

Sold: 7/98 - $85,000 (are we paying attention yet???)

Sold: 7/00 - $190,000

Sold: 7/02 - $337,500

Sold: 8/05 - $510,000

Here we seem to have a seller in touch with reality. We've already been seeing 2005 rollbacks and have started to see some 2004s. This unit appears to have been upgraded some since the prior purchase, so we may be into an early 2005 rollback with the listing price, which is probably a smart place to start. There are no signs of "distress" indicated (not a short sale or REO) from what I can find, so this seller has accepted that he/she will take a loss given the current environment. Kudos. Of course, we believe that we'll eventually get back to early 2000s pricing, so low to mid-300s is probably more reasonable, but time will tell.


559 Huntley Dr. (90048)
$1,995,000
4BR / 3BA
1,818 sq ft

Private & Gated, this Spacious Country English juxtaposes a modern interior w/ the charm of a Cottage style exterior. From the private courtyard w/ trickling fountain, Step into large scale rooms with vaulting open beamed ceilings, glass walls & a loft library. Spacious cooks kitchen with marble counters & stainless appliances. Step down master in the rear which opens to a sparkling pool & spa. Also a beautifully done detached one bedroom guest house plus bonus room perfect for a gym or office.

Sold: 6/12/08 - $1,830,000


No real comments here - the numbers speak for themselves. Of course, missing in the description is the fact that your property abuts the commercial establishments on Melrose. So you've got that going for you. Also, you're in competition with the larger, remodeled 551 Huntley a couple houses down, which has the benefit of a "nude pool" that we profiled last month.
No explicit signs of upgrades here, aside from the "flipper's double" of counters and appliances, so maybe some work has been done, but pricing higher than a year earlier? That's SO 2007 ...

Saturday, June 27, 2009

Apples to Apples in "WeHo West"?

435 Westmount Dr. (90048)
$1,150,000
3BR / 1.75BA
1,344 sq ft ($855/ft)
5,400 sq ft lot

Just listed

Cozy Span bungalow set privately in an urban oasis. Enter thru gated arbor. Living Room features barreled ceilings, FP, hardwood floors & picture window. Open LR & dining room flows into custom galley kitchen which is perfectly appointed for gourmet dinners. 3 bds/1.75 bas. Both rear bedrooms have French Doors which open out to lush yard, with Zen inspired Koi pond. Lose yourself in the tranquility, only minutes from shopping, entertainment & restaurants.

Sold: 9/3/04 - $950,000

Yes, I know. Technically, I think we're talking "WeHo Adjacent" here. This property is on the cul-de-sac portion of Westmount (the larger spur, not the smaller one coming off La Cienega), and the WeHo boundary - I believe - cuts through Westmount in that area.

In any case, I thought this would be an interesting base case. We've been seeing - and predicting - 2004 rollbacks to be hitting the market. The description doesn't seem to indicate any major upgrades to the property since the 2004 sale, so this could be a nice comparison.

Despite the not-technically-WeHo-address, the house is in a nice area and looks to be in good shape. We can debate the merits of being a block from La Cienega, but given that you're a few lots from the end of the cul-de-sac, at least you're not bounded by a parking lot, like the properties at the end.

Wednesday, June 24, 2009

WeHo West

Lots of good comments recently. When I get some more time in the next week or so, I'm going to try and do a comparison of a few neighborhoods and take a look at some data to try and answer that $64 question of "where are we headed?"

In the meantime, how about some real estate porn? The "crown jewel" of our little area to some, a/k/a "land of the snobs" to others, the neighborhood known as "West Hollywood West".

In looking at some of the SFR listings in WeHo West, and thinking about that "where are we headed" question, it's difficult to get an apples-to-apples because, like its truly Western brethren in Beverly Hills or Santa Monica, there's been a whole lotta scrapin' going on in the past 10 years.

Enjoy ...

8822 Rangely Ave.
$2,595,000
3BR / 3.5BA
3,150 sq ft
5,000 sq ft lot

New Construction

Newer Contemporary Architectural Musm. Quality Master-Piece in Prime Western part of West Hollywood. A 2bed+2.5bth main house built around a decadent designer central courtyard connecting to large roof top patio/lounge with fire place. There is also a sep. 1bed. loft unit with multi functional use & its own private patio. Open floor plan enhanced by over 14' high ceiling & walls of glass. Superb example of Urban with indoor/outdoor living.

Listed: 8/5/08 - $2,795,000

Delist/Relist game several times until latest listing on 6/22.


330 Huntley Dr.
$2,475,000
4BR / 3BA
2,600 sq ft
5,100 sq ft lot

Newer Construction

Beautiful execution & superb quality unite to create this extraordinary 4 bed, 3 ba + den Med. residence. Located majestically on a cul-de-sac, this home has a spacious Frml Lv, Dining rm highlighted by a frplce, wide plank dk wd flrs & arched windows. The gourmet kit incl SS applnc & extensive use of cust tiles, fixtures & cabinetry. Adj to the kit is a spectacular den w/ coffered beamed ceilings & cust built-ins. (see private remarks).

Sold: 12/05 - $1,000,000 (assume scraped property)


8703 Rosewood Ave
$2,149,000
3BR / 2.5BA
2,391 sq ft
4,600 sq ft lot

Reduced 100 K !!!Exquisite Mediterranean home in one of the best West Hollywood neighborhoods, steps away from high end boutiques, great restaurants and coffee houses. 2 stories, 3 bedrooms, 2.5 bathrooms and family room .Built in 1997 and recently remodeled.The chef's kitchen and family room open to the backyard with new pool creating the perfect flow for entertainment. Professional appliances in kitchen. 2 car garage attached with driveway wide enough to accomodate another 2 cars .

Sold: 7/00 - $710,000

Sold: 4/05 - $1,500,000 (remodeled prior to this to justify 100%+ increase in 4.5 yrs?)

Listed: 5/14/09 - $2,249,000 (if remodeled prior to 2005 purchase, up 40% from a date we've seen prices roll back to in some areas)


Monday, June 22, 2009

And by "Rare", You Mean Bloody??

1233 N. Flores St. #204
$359,000
1BR / 1BA
744 sq ft
HOA: $330/mo

Short Sale

RARE OPPORTUNITY TO OWN THIS FABULOUS CONDO IN THE HEART OF WEST HOLLYWOOD * THIS BEAUTIFUL TREE LINE STREET CONDO HAS IT ALL * WALKING DISTANCE TO RESTAURANTS, THE MARKET, SHOPS AND NIGHTLIFE CLUBS * GREAT SINGLE LEVEL FLOORPLAN WHICH IS HIGHLY LEASABLE FOR AN INVESTOR * CEILING FAN * A/C * INSIDE WASHER/DRYER * DISHWASHER * THIS IS A DREAM HOME AND PRICE TO SELL QUICKLY * THANK YOU FOR SHOWING!

Sold: 5/98 - $75,000

Sold: 7/01 - $174,000 (and people say the bubble didn't start until 2003?)

Sold: 11/05 - $385,000 (yep, 100%+ in 4 years sounds right)

Why, why, why? Why, when I'd prefer to focus on SFRs or nice and/or unique condos/townhomes, do listings like this come up to bring my cynical side to the surface?

This is one of several "rare" listings I've seen recently. No, "rare" is when the price drops to a level where it's actually "highly leasable for an investor". You know, investors are people who generally like to make money over a period of time?

At the current pricing level, monthly payment would be around $2,300 (5.5% with 20% down). This place looks to be in a nice area, but to think you're getting more than $1600 or so for rent in this market is laughable. I've seen decent 2BRs at $1800-2000 on Craigslist recently. So, yes, by all means, investors come forward!

Of course, we have another case of a seller trying to walk away with minimal losses in this short sale situation. This property sold for the high $100s in 2001 and I wouldn't be surprised to see it back to that level (not nominally, but inflation-adjusted) in the next several years.

I'd say the odds are high (as in, over 100%) that this is foreclosed on over the next month or so. Will be interesting to see where the bank starts its listing.