Classic Redondo Craftsman on the Avenues
There is no doubt that sales volume has declined from the peak of 2005. Prices, on the other hand, have increased in almost all areas and for all types of property in each of the Beach Cities. While 2007 was not a great year it was not as bad as many had predicted due to surprisingly strong sales in the first half of the year.
In August 2007 we saw the first hint of serious trouble within the financial community. Huge numbers of lenders have closed their doors because of losses from subprime loans. Lenders have supposedly revamped their requirements as Fannie Mae and Freddie Mac have restructured what they will buy and are putting a real premium on FICO scores with penalty points for those who have low scores.
While interest rates on conforming loans.. those under $417,000 are at one of the lowest levels in years.. jumbo loan rates continue on the high side. Lenders are claiming that the risk is too high and the cost(rates) must take risk into account... and who knows part of the statement is probably true. Wall Street is in real trouble and there is more to the problem then a few risky jumbo loans. My premise for that statement is that most areas of the country are still able to take advantage of conforming loan limits. It is only a few high priced markets that are dependent on jumbo loans... and surprisingly many of these markets are not in nearly as much trouble as their less pricey cousins.
Contrary to the thoughts and wishes of many our beach real estate markets have not crashed. Sales are slow but prices are holding up fairly well. The softest area seems to be townhomes in North Redondo which has always been less stable then other parts of our market area. North Redondo townhomes are our weakest segment and will be the first to be affected if there are a large number of foreclosures. so far we are not seeing the high numbers of foreclosures that were predicted. Rumors abound about lenders holding back massive inventories of foreclosed properties but I don't think we will see a lot of them here.
The biggest threat facing our market is if we wind up with a massive recession and people lose their jobs. The problems we saw in the 90's were because a large number of residents lost their jobs when the aerospace industry saw a loss of major government contracts with the end of the cold war. This time around we are a bit more diversified.. although I think settling the Writers' Strike would be a real boost to thoughts about our local economy.
These are the numbers for the Beach Cities... Manhattan, Hermosa, Redondo and El Segundo from January 2005- December 2007.
There is no doubt that sales volume has declined from the peak of 2005. Prices, on the other hand, have increased in almost all areas and for all types of property in each of the Beach Cities. While 2007 was not a great year it was not as bad as many had predicted due to surprisingly strong sales in the first half of the year.
In August 2007 we saw the first hint of serious trouble within the financial community. Huge numbers of lenders have closed their doors because of losses from subprime loans. Lenders have supposedly revamped their requirements as Fannie Mae and Freddie Mac have restructured what they will buy and are putting a real premium on FICO scores with penalty points for those who have low scores.
While interest rates on conforming loans.. those under $417,000 are at one of the lowest levels in years.. jumbo loan rates continue on the high side. Lenders are claiming that the risk is too high and the cost(rates) must take risk into account... and who knows part of the statement is probably true. Wall Street is in real trouble and there is more to the problem then a few risky jumbo loans. My premise for that statement is that most areas of the country are still able to take advantage of conforming loan limits. It is only a few high priced markets that are dependent on jumbo loans... and surprisingly many of these markets are not in nearly as much trouble as their less pricey cousins.
Contrary to the thoughts and wishes of many our beach real estate markets have not crashed. Sales are slow but prices are holding up fairly well. The softest area seems to be townhomes in North Redondo which has always been less stable then other parts of our market area. North Redondo townhomes are our weakest segment and will be the first to be affected if there are a large number of foreclosures. so far we are not seeing the high numbers of foreclosures that were predicted. Rumors abound about lenders holding back massive inventories of foreclosed properties but I don't think we will see a lot of them here.
The biggest threat facing our market is if we wind up with a massive recession and people lose their jobs. The problems we saw in the 90's were because a large number of residents lost their jobs when the aerospace industry saw a loss of major government contracts with the end of the cold war. This time around we are a bit more diversified.. although I think settling the Writers' Strike would be a real boost to thoughts about our local economy.
These are the numbers for the Beach Cities... Manhattan, Hermosa, Redondo and El Segundo from January 2005- December 2007.
Beach Cities: Sold 2005-2007 (click on graph to enlarge)
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