South Bay-Beach Cities: Sold July 2007

Manhattan Beach Walkstreet

What a difference a week can make. Had I posted Beach Cities: Sold July 2007 figures the first week in August I would have said that rates were low and the market was chugging along although at a slow rate. That was before August 4 and the collapse of American Home Mortgage and a number of other lenders.

Who would have thought Countrywide would possibly be on the verge of bankruptcy or that the FED might seriously be considering bailing them out. While I think Angelo Mozilo is a bit smarmy I also realize it would be a disaster if they went into bankruptcy at this time. They make 1 out of every 6 loans in the country so you can see what their demise would do to the fragile credit market. Brian Brady wrote an excellent post on The Bloodhound Blog about the problems with Countrywide going down in this market. It's worth a read.

At this time jumbo loans are hovering around 7%-8% depending on the lender and the amount of points. Lenders are dropping like flies as they succumb to the woes of the subprime market. It will be a few weeks before the dust clears and rates settle down after much hand wringing and blame tossed around by the major players.

Buyers with FICO scores over 720 with money for a downpayment who have jobs where they can document their incomes will be in high demand. While I suspect there will still be stated income loans the regulations on them will be significantly tighter. Sellers will need to pay a lot more attention to a buyer's qualifications when choosing the best offer to accept for their property.

North and South Redondo did better then the other beach cities in sales. They were close to June numbers. Inventory is also holding steady in both cities. Manhattan Beach had a surge in sales and closings toward the end of the month....however most of the sales were in the under $2 million range. Pendings since August 4, 2007 are definitely down in all cities but especially in Manhattan Beach. There were 44 properties that went into escrow since August 1, 2007 in all of the beach cities... 22 homes and 22 townhomes. El Segundo ..3 Manhattan Beach...7 Hermosa Beach.....3 North Redondo...... 14 and South Redondo...17

Beach Cities: Sold July 2007 (click on graph to enlarge)

South Bay-Beach Cities: Sold July 2006

South Bay-Beach Cities: Sold June 2007

South Bay-Beach Cities: Sold May 2007

South Bay-Beach Cities: Sold April 2007

South Bay-Beach Cities: Sold March 2007

South Bay-Beach Cities: Sold February 2007

SouthBay-Beach Cities: Sold January 2007

Manhattan Beach : Fall Fun Things To Do...

It's here.. The Fall Parks and Recreation book of fun things to do is on the way to your home..and it has a new name. No more boring The City of Manhattan Beach...Newsletter and Recreation Guide... We have a new name proposed by local resident Doug McMillan... Welcome to ManHappenings...Experience the Fun our new guide to events and programs being offered by the Parks and Recreation Department.

The name has changed but the City of Manhattan Beach is still offering some great programs for residents whether you are a kid or an adult. If you don't get your copy just click on the link above to download a copy. Fall offerings include Ceramics classes, Swing"n"Sway dance classes, fitness programs, a community playwriting class, Soccer for kids and adults and a lot more. Some of the trips include a jaunt to the Oktoberfest in Big Bear and a trip to the Candlelight Dinner Theatre

Not only has the Parks and Recreation brochure been redone but the official Manhattan Beach City Website has taken on a new look. I must say things are getting pretty spiffy around town.

Manhattan Beach: Market Snapshot August 5, 2007

July was not a great month for SOLD real estate sales in Manhattan Beach or any of the beach cities. Actually it was a very strange month .... not much happened until after the 15th and then the market suddenly jumped to life. Pending sales usually give the best read on the market.. of the 36 homes that went into escrow in July.. 21 happened after July 15, 2007.

Listings are staying around the 106-112 level.. currently there are 109 homes for sale in Manhattan Beach. There are 51 homes in escrow and 27 homes Sold in July. I expect to see the media posting some real doom and gloom headlines shortly.


However Sold homes last month may not be a good indicator of the market. Look to the pending sales to see what's happening. The majority of the activity is under $2,000,000. Many homes that are now pending were on the market less then three weeks and some had multiple offers. That tells you those properties were priced to sell and people were buying. The homes that were over $2 million were generally priced at market value... although some had to see a few price reductions before they found market value.


The next big hurdle Manhattan Beach homeowners will face is what is happening in the financial markets. Last week was very volatile as some major companies declared bankruptcy and the credit markets took a nose dive. Suddnely not only will sellers need to worry about pricing their home right; but they will need to be very agressive in determining how well qualified a buyer is when looking at offers. The sales price may not be nearly as important as a buyer's ability to close escrow.

Manhattan Beach: Market Snapshot August 5, 2007






Manhattan Beach: Market Snapshot July 18, 2007

Manhattan Beach: Market Snapshot June 25, 2007

Manhattan Beach: Market Snapshot June 2, 2007

Manhattan Beach: Market Snapshot May 6, 2007

Manhattan Beach: Market Snapshot April 23, 2007

CA Beach Cities: Home Loans...: It's Going to be a Bumpy Ride

I've spent a lot of time today talking with local lenders about the changing home mortgage market. It's going to get nasty out there before it gets better. Buyers who have traditional jobs with a regular paycheck and 20% down will breeze through.. everyone else may have trouble getting the loan they want to purchase a home. Underwriting rules are going back to the old days.. 10%-20% down and full document verification for most loans. If you want to do a loan using stated income you will need 20% down.

I've got clients in all price ranges. Fortunately most of them have good down payments but a few were hoping to use 5% and get an 80/15/5 loan. They still might be able to do it as they have no debt but it will be extremely hard. I noted a few brokers still pushing 100% financing but I think that's a thing of the past.

The fortunate buyers are the ones with 20% + down; especially in the $800,000-$1.5m - range in Hermosa, Redondo and El Segundo and in $1.5m -$2.5m price range in Manhattan Beach. These buyers are going to be gold as far as buying a home. Others who had been hoping to buy a beach home using an 80/10/10 with a stated income loan are going to have problems. They will have to use full documentation to get that loan and many, because of the type of jobs they have, will have a difficult time qualifying.

Buyers with less then 20% down who have to use fully documented income may not qualify for as large a loan as they would have with a stated income loan because of the ratios that will be used. In the old days the basic ratios were 28-34% of your gross income for a mortgage payment and 36%-38% of gross income to include all debt including a mortgage payment. Lots of people in the Beach Cities are in fields where they are not straight salaried employees but are either commission based or a mix of salary/commission and/ or a quarterly or yearly bonus. These people often make a lot of money but they will have a harder time obtaining financing with the tightening of lending rules. There will still be stated income loans but a buyer will need 20% down to use them.


The group that is going to have real difficulties are those who had some of the more exotic loans and had planned to refinance. Many of the options that have been open to homeowners are going to disappear. Refinancing is going to be tough as some lenders may require an 90% equity position and or occupancy of at least one year. I strongly urge anyone who needs to refinance this year to call a local lender now... there may still be a program you can get into but they won't be here long.


Don't kid yourself, the new financing rules are going to affect the potential buyer pool. The hardest hit will be those trying to purchase an entry level home. Not many first time buyers have a large downpayment. Most were counting on using loans that may no longer be available. So hang onto your hats folks because it just may be a bumpy ride..

Manhattan Beach/Beach Cities: The Seller's Lament

Historic Strand Home

Where Oh Where Have the Buyers Gone.... is a question being asked by many sellers in the Beach Cities . I think the answer might be found in a post on LA Land.. the LA Times Real Estate blog by Peter Viles. Buyers are reading stories like this and like Kate in the article believe they may not have to settle for a small fixer but can buy something better without having to go above the amount they have budgeted. From what I'm seeing and hearing from my clients this is exactly the position taken by many buyers in Manhattan, Hermosa, Redondo and El Segundo.

Inventory is rising in the Beach Cities and sales volume is slowing. Some of this is seasonal but lot of the reason for slower sales is that many buyers have set price limits. I have clients who are willing to go to $2.M for the right house.. older about 2000-3000 sqft but they won't go over that price. They won't pay $2.25 or $2.5 for a home they believe is worth around $2.M. They will wait until properties come on the market that meet their criteria. I think there are a lot of buyers who feel the same way. Townhomes in Manhattan Beach and Redondo Beach that are priced at market value are selling quite well. Inventory is these markets is not growing as fewer properties come on the market to replace those that have sold.

There are 112 homes for sale in Manhattan Beach; the DOM is for homes under $M is 72 for those in the $2-M range it's 98 and over $M is 106 and over $M is 116.

There are 83 homes for sale in Redondo Beach; DOM in North Redondo is 72 and 58 in south Redondo.

There are 50 homes available in Hermosa Beach; DOM is 109.

There are 33 homes in El Segundo and the DOM is 74 days..

Pending sales (homes in escrow) are not too bad but the homes that are selling are mainly under the $2 million mark in all the Beach Cities. Home sales ( homes that have closed escrow) are not looking great for July in most of the Beach Cities and are really low in Manhattan Beach.

The graphs below tell the story. Most of the homes that have been selling are in the under $2 million price range. Those in the $2 million plus range are not seeing a lot of activity. Possible reasons are the tightening mortgage market but a lot of the slowing is the price. Buyers and Sellers are just not in the same ballpark on prices. Many sellers are looking at prices from their perceived idea of value not true market value. The Days on Market numbers in the different price ranges tell the tale. Buyers will buy if they believe the property is priced at market value. But the ones they feel are over that value are just sitting.. often for a very long time.

The true test will be to see who can hold out the longest in the price war.. buyers or sellers..

(to enlarge click on graphs)

Beach Homes: For Sale July 2007

Beach Homes: Pending Sales July 2007

Beach Homes:Sold July 1-23, 2007

Manhattan Beach: Home Pricing 2000-2007

Manhattan Beach: Home Prices... Price per sqft..

Click on graph to enlarge... Single Family Homes Manhattan Beach

A lot of people don't feel that using the median or average price is a good measurement of the price of homes in the Manhattan Beach real estate market. I think if you use one market value measurement consistently then it doesn't make a lot of difference... as you are always using the same form of measurement.

When CAR releases their monthly figures they use the median figure... so I have always used that number for South Bay real estate figures too. However beginning with the Beach Cities:June 2007 Sold statistics I will be including the cost per sqft for all the Beach Cities. I will also periodically post a price per sqft comparison for Manhattan Beach homes from 2000 to 2007. Below you will find the numbers for the first 6 months of the year.

One of the interesting things about price per square foot is that the number (in a given year) can actually decline as homes get larger. If a lot of larger homes sell in a given month then the figure will be smaller then if a number of smaller homes sold in the previous month of the same year. Also if you have a lot of new construction selling in any given month it can skew the figures. This explains some of the big fluctuatons you often see in Manhattan Beach home prices from month to month.

There is simply no perfect measure of housing costs. If you live in an area with a lot of conforming housing (track homes).. then tracking by cost per sqft is easy. In the Beach Cities it is a more difficult process.

The Chart below reflects the days on market and price per sqft for homes sold from January - June 2000-20007

If you would like to see this expanded to the other beach cities let me know and I will set up graphs for them.. You can e-mail me if you would like to see information for for Hermosa, Redondo and El Segundo.

South Bay/Beach Cities: SOLD.... June 2007

The Strand in Hermosa Beach


No question the local real estate market is slowing but then sales always slow in the summer. Last year at this time the South Bay/Beach Cities market was stalled.. as buyers just simply withdrew. I'm not seeing that this year as buyers are still coming to open houses and I'm getting a lot of inquiries from my websites.

The market is in a real pickle right now as Buyers continue looking closely at prices and wondering if Sellers are going to stand firmon listing prices for their homes or if there might be a little leeway as we hit mid year. Sellers, on the other hand, are wondering if Buyers will finally step up to the listed price or will continue to be selective about price. I suspect they will meet somewhere in the middle.


I know there are a number of sellers who don't want to officially lower the asking price but are hoping someone will make an offer to get things moving. No one wants to make the first move.. Reminds me of teens at a middle school dance.. girls on one side of the room and boys on the other while the music plays and plays.. each one is afraid to be the first on the floor.

I've added a new feature as requested by a lot of readers... The Sold price per sqft next to the median sold price. In another post I'll track if for single family homes in Manhattan Beach and later for all the Beach Cities. for the last few years. I've added it to the inventory list in my newsletter for listings found in the Market Conditions Report.

Beach Cities: Sold June 2007 ( click on the information to enlarge graphic)




Beach Cities: Sold June 2006

Beach Cities: Sold May 2007

Beach Cities: Sold April 2007

Beach Cities: Sold March 2007

Beach Cities: Sold February 2007

Beach Cities: Sold January 2007

South Bay/Beach Cities: July 4.. Fun Things to do..

El Segundo:

Plan a day of fun in El Segundo with two events..
10:00 am-2:00 pm Rec Park
5:00 pm -9:00 pm 300 and 400 block of Eucalyptus
Lots of games and food and live music


8:30 pm Fireworks at Stevenson Field (tickets a must for grandstand seating.. $3.00 pre-sale $5.00 at the gate)


Manhattan Beach:
Pool Party
10:00 am-2:oo pm at Begg Pool

$ 5.00 to swim and have snacks

Hermosa Beach:
No city planned activities

Redondo Beach:

Seaside Lagoon is the setting for a huge July 4th celebration

The fun begins at 4:00 pm and continues until 11:00 pm

The fireworks and Laser show starts at 8:30 click this link for more information and prices of tickets on the sand.

Torrance:

Wilson Park is the place for the annual Old Fashioned Fourth of July Celebration

The fun starts at 11:00 and finishes with a Fireworks show at 9:00pm

Palos Verdes Estates:

Old Fashioned Independence Celebration at Malaga Cove School begins at 9:00 am

A bicycle parade and pie-eating contest are some of the activities

Rancho Palos Verdes:

32nd annual Independence Celebration runs from 11:00 am -5:00 pm at Point Vicente Park

There will be music, a petting zoo, puppet show and lots of games and crafts

Westchester:

Don't miss the annual parade at Loyola and Manchester.. it starts at 11:00 am

A Loan With No Closing Costs?

Lenders are definitely under the gun right now. With all the hoopla about sub prime loans and who did what to who... we will see some changes in how mainstream lenders are doing business as they try to regain the trust of the public.

No matter how silly Banks may appear to be they are not entirely stupid.. even in the wake of heavy foreclosure activity in many areas they are counting on people buying those properties.. and they are right. It would be suicide for them to offer loan products that are similar to the ones now being disparaged so there will be new twists in the game..

That said..Bank of America is offering a new loan to entice borrowers back.. A No Closing Cost Loan which they swear is not covered by higher interest rates. These loans will be held in-house.. meaning they will not package them to sell to the secondary market. Currently the loan is only available for purchase money loans ( buying a property) not for refinancing. They are stating that they hope to make up what they are losing in typical closing cost fees by increases in the volume of new loans. In addition to no closing costs they are also not going to require PMI or impound accounts and the loan ratios are 95% loan to value.

I'm guessing that the requirements will be fairly tough and will require full documentation and high credit scores... in other words limited to the bank's best customers.. and there is nothing wrong with that.. if you are financially sound there should be some perk.

Currently the whole closing cost structure is a joke with lots of garbage fees thrown in for no reason.. My favorite is document preparation.. Back in the old days someone really did have to type up each document but today they just throw a name into the computer and .. presto.. with the click of a mouse the entire doc is prepared.. I can see where a $50 service fee might be OK but $200-$500 seems a bit excessive.


What will be interesting is to see if the idea catches on with other major lenders. Even if the whole closing cost fee structure is not deleted it would be a good thing if it finally got regulated with standard fees that all lenders use so the consumer could really compare loans from lender to lender.

6:00 pm update:

I ran the No Cost Loan from Bank of America by one of the local Manhattan Beach lenders that I highly recommend..

Here are some thoughts from Tony Drockton of Branded Mortgage who is a direct lender.

Bank of America offers no fees... but they only refer to bank fees and the appraisal....

I think your blog is 'spot on' (pun intended) they are only really waiving about $1000 in fees of which as you state are mainly junk fees anyway. The misleading part is that people still have to pay all the larger fees of title, escrow and such...but they don't really do a good job of explaining that portion. When you listen to the advertisement, if you are not real estate savvy, it appears you will pay nothing at all to buy a home......

There is no free lunch with anything that is NO COST or FREE. I believe in avoiding costs for clients in many situations, but I always want them to understand that banks or brokers only get paid by either charging fees or getting a rebate from the loan. The higher the interest rate, the more rebate, the less costs the borrower needs to pay (if any) up front..i.e. closing costs. As long as the borrower understands this relationship, then it is acceptable to provide the no cost option to them.

It will be very interesting to see how this new loan actually works .. My suspicions are that Tony is right on the money.. there is no free lunch and I have never seen free money from a bank.

Why the Beach Cities are Going Up in Value

Marilyn Alva in an article Waterfront Homes Seen Weathering Housing Market Storm from Investors Business Daily on April 12, 2007 discusses the issues about why homes along the coasts seem to be doing so much better at holding their values then their inland counterparts. Her conclusion and that of Alan Hummel from Forsythe Appraisals is that ocean is king.. followed by inland waterways and lake front homes. Water rules.
Their conclusions follow what those of us who live in Manhattan, Hermosa , Redondo or El Segundo have known for years... people want to live at the beach and are willing to pay for the privilege.
Home prices will adjust in a slow market but it's why we don't see values drop 30-50% as predicted by many. It's why home prices in the coastal cities in Southern California continue to rise while inland towns of the state and country are seeing a different market.

In the article Lewis Goodkin of Goodkin Consulting notes that while many people have the resources to buy there are fewer ocean front properties available. He further notes that Southern California coastal cities are one of the areas resistant to price declines in a slowing market. He makes the same argument that I have always noted.. namely that most people who buy in our area are looking for a home and a community to raise their families. We are more about owner occupancy then speculation.

I highly recommmend you read the entire article.

Manhattan Beach... Where are the Listings?

If you are house hunting in Manhattan Beach you know that inventory is very limited especially in the $2,000,000 or less range. On February 12, 2007 there were 97 homes for sale in Manhattan Beach. Today there are 87.

Here is how they break out based on price:

• $0-$1,000,000 ( 5 properties for sale )


• $1,000,000-$2,000,000 ( 31 properties for sale )


• $2,000,000-$3,000,000 ( 35 properties for sale )


• $3,000,000-$4,000,000 (13 properties for sale )


• $5,000,000 or more (3 properties for sale )

This is the break out by area:

Sand Section ( Area 42) 20 homes

Tree Section (Area 43) 29 homes

Hill Section ( Area 44) 9 homes

Manhattan Village (Area 45) 1 home

Manhattan Heights (Area 46) 11 homes

Mira Costa ( Area 47) 17 homes

There are 56 homes pending ( in escrow.. price not released) median price is $1,995,000

30 homes have closed escrow since February 1, 2007 with a median price of $1,787,000

I suspect the February numbers for the price of homes in Manhattan Beach will be significantly higher then those posted for January. If inventory continues to decline you will see a very different market in May of 2007

House Hunting: How to Dress for Success

There is something really exciting about looking for a new home. The anticipation of finding the perfect place is an amazing feeling. However house hunting can be fun, tiring, a pain or all of the above. Wearing the right clothes and shoes can make looking at homes easier for everyone. This is especially true if you are relocating and have to see a lot of inventory in a short amount of time. Fortunately in Manhattan Beach and the other beach cities our dress is beach casual.

Here are a few tips to make your house hunting experience a bit easier and more fun.

Clothes: Getting in and out of a car is tiring and fussing with clothing makes it worse. Wear something comfortable and layer your clothes. Our weather can change in an instant from warm and sunny to cool and breezy. Good choices are natural fiber pants and skirts that are comfortable with a shirt /tee and light weight jacket. This is good for both men and women..however some men may not be too happy with the skirt idea ... This is also true for children. They need to be able to move in their clothes.

Shoes: At least 70% of the homes you will visit want you to remove your shoes or wear shoe covers. Most of these homes will not have a place to sit so you will often find yourself having to balance on one foot doing the bootie dance while trying to tie or untie a shoe. I suggest wearing socks with some type of loafer or clog that is easy to slip on and off. Tennis shoes and boots are not good choices. Children should have shoes that have velcro fastenings.. makes life much easier. It might even be a good idea to check out an inexpensive pair at Target etc.. that you will never wear for anything else. If your parents will be coming along and they have a hard time bending over they will be miserable if they don't have on the right shoe.

Purses: This is tough... we carry our lives in our hand bags. You might consider something small to carry with you and a larger one that can go in the trunk to hold items you may want for later. I always lock my purse in the trunk and just have my phone and lock box key with me. I usually try to wear something with a pocket to hold these items.

At the end of the day you will feel better if you didn't have to worry about your clothes or shoes and could concentrate on finding the right home.

Where Have all the Listings Gone?

It's been a busy 3 months. Since November inventory in most of the beach cities is down by almost 50%..and property is selling not just going off the market.

Here's what's happening in your town:

El Segundo has actually seen an increase as new construction is coming on the market...
There are 21 Single Family Homes available and 17 Town homes

Manhattan Beach has seen a major decline in inventory since the end of October.There are 100 Single Family Homes available.. at the end of October there were 215..There are only 23 town homes available.. at one point there were that many in Manhattan Village.

Hermosa Beach is seeing a reduction but not on the same scale as Manhattan Beach. There are 37 single family homes for sale and 37 townhomes for sale.

North Redondo has really seen a large number of town home sales in the last few months.There are 46 Single Family Homes on the market. There are only 81 town homes available down from a consistent inventory of 125- 135 for most of last year.

South Redondo has also seen a big decline in the town home and condominium market.There are currently 29 Single Family homes for sale and 93 townhome and condo units combined from over 160 a few months ago.

Two things are influencing the market... Prices didn't crash as predicted and interest rates have held steady for the last 5 months. Many buyers who have waited for a year to purchase are tired of waiting and are ready to buy.... BUT.. only if the home is priced right and in good condition.

My October Challenge... January Results.. MB Home Sales

On October 27 in a post on Making Housing Decisions from Headline News..
I posed the following challenge:


So here's a thought... In Manhattan Beach there are currently 215 single family homes on the market. 70 have been listed since October 1; 23 have gone into escrow since October 1; and 18 have closed escrow in the same period. So let's say that by next week perhaps another 10 homes are in escrow and 5 new ones have been added so we are 5 down in inventory to 210 as of Nov 1. As we get closer to the holidays about 15% (30) of the homes now available will be taken off the market each month. There will be a few new listings maybe 8 added per month. So... 30-8= 22 x 2 months 44 homes off the market in November and December. Perhaps another 15 a month go into escrow.. that's 30 gone. Not a lot of sales but the inventory level would go from 210 as of Nov 1 to 136 in January. That's about a 35% change in inventory. Would a 35% change and low interest rates bring out buyers? Let's compare notes in January.

Well it's a little past mid January so what happened in Manhattan Beach since November 1, 2006?
There are 103 homes currently listed. 42 are in escrow and 60 have closed escrow since November 1, 2006. 51 homes were withdrawn from the market and have not returned active. Let assume that 30% (16)of those withdrawn return to the market by the end of this month. That would make make a total of 119 available listings which is about 55% of the number that were available October 27,2006.

In two months almost 50% of the inventory in Manhattan Beach has disappeared..... and most of the decline is due to sales not withdrawn/expired properties. Rates were very low from Mid November through the end of December. It looks as if if many people took advantage of sellers who were willing to negotiate and low rates.

I wrote this in the same article in October:
Trying to time a housing market is almost impossible and usually depends on luck more then skill. Often by the time the general public realizes a market has changed it is too late to get in at the right time.

Just something to think about over the next few months for those of you who are still waiting for prices to drop to 2000 levels.

*** These numbers are for single family homes.. but numbers are similar for townhomes.. inventory is very low and a lot of property has closed escrow.