According to the MLS, there were 15 SFR sales in October in the Beverly Center-Miracle Mile area at an average of $466/sq. ft., which is 21% below the 2006 market peak. With 61 active listings, and an average of 11.6 sales per month YTD, this indicates an inventory of 5.5 months. There are also 99 REO, or bank-owned properties in the area at the moment. Although it is common to have a 1-2 month pipeline for REO property that is not yet listed with a broker, another 99 houses represents an additional 8.5 months of unlisted, or “shadow inventory.”

In the Beverly Center-Miracle Mile condo market  there were 4 sales in October at an average of $442/sq. ft. which is 16% below the 2006 market peak. With 37 active listings, and an average of 6.5 sales per month YTD, this puts the condo inventory at 5.7 months. With 30 REOs, there is 4.6 months of unlisted inventory.

In  the  Hancock Park-Wilshire area, there were 20 SFR sales in October at an average of $453/sq. ft., which is 19% below the 2006 market peak. With 82 active listings, and an average of 14.6 sales per month YTD, that leaves us with an inventory of 5.6 months supply. There are 44 REOs presently, which gives us 3 months of unlisted SFR inventory.

In the Hancock Park-Wilshire condo market, there were 4 sales in October at an average of $324/sq.ft. which is 26% below the 2006  market peak. With 72 active listings and an average of 12.8 sales/month YTD, that gives us an inventory of 5.6 months. At the moment there are 45 REOs which is equal to 3.5 months of unlisted inventory.

In sum, it would appear that inventory has contracted in both areas , and to some market observers, may even appear to be a “seller’s market.” What is unclear however, is the amount of  unlisted REOs and to what extent more property coming on the market will put downward pressure on prices in the near future, especially with 2 years worth of Option ARM /Interest-Only resets on the horizon. While there has been some improvement in  these areas, my feeling is that we are going to have quite a bit of inventory to go through before we can describe current market condtions as a”seller’s market.”

If you have any questions, comments, or need more information specific to your neighborhood, please do not hesitate to contact me.

Since April, there have been 64 sales of single family homes in the Beverly Center-Miracle Mile area, and 90 YTD. At $ 491/SF List/$ 463/SF Sold, down about 22% from the 2006 peak of $590/SF Sold.  Current SFR inventory is at 6.5 months using  data for the last 5 months, and 7.4 months YTD.

Condos: 20 sales since April, 36 YTD., $465/SF List/$433/SF Sold, down about 17% from the 2006 peak of $523/SF Sold.  Condo inventory is  at 12  months since April and 10.6 months YTD. While the SFR market has picked up, suggesting a “normal” market of about 6-7 months, condo inventory has increased in the same period. Please note these numbers do not include pocket listings, or bank owned property not actively listed.

Since April, there have been 62 sales this season of single family homes in the Hancock Park-Wilshire area. That is about 13.7 per month, and with 170 active listings that puts inventory at 12.4 months supply- up from 8-9 months from the April-May period. The average $/sq.ft was $474 list/$436 sold- off about 22% from the 2006 peak of $ 564list/$556 sold.

There were 72 condo sales in the same period, or about 16 per month, with 167 active listings which translates to  inventory of 10.4 months supply. This number is also up from 8-9 months supply from April-May as well. So far, the average $/sq. ft. for condos is $352 list/$319 sold this season, down about 30% from the 2006 peak of $463 list/$455 sold.

Notice that not only are $/sq.ft numbers down, but also the spread between list and sold figures have increased. A shrinkage of this spread will be as telling as the inventory numbers in the future. If you are considering selling your property in this market, these numbers should be taken into consideration, especially with increasing inventory and homes currently selling for about 90% of what they are listed at.

As we all know, there is currently a 90 day moratorium on foreclosures here in California. Also worth noting, the Attorney General’s office has demanded all  foreclosure rescue and loan modification consultant firms register with the AG by July 1st and post a $100,000 bond. Keep in mind, attorneys are exempt from this action. So why is it that an attorney who did personal injury cases 3 months ago is suddenly more qualified for the task than a legitimate loss mitigation company? Is this the kind of person you want working on your file? What exactly does this measure accomplish? At this time, it is estimated that there will be roughly $500 Billion in mortgage resets in the Alt A, Prime and Option ARM arenas between the last quarter of 2009 through 2012. About 58% of those mortgages are here in California. You can read more about that here. There are a growing number of short sales, and yes, it is spreading to the Westside of Los Angeles. The question many people have is : can we qualify for a loan modification.? We have all heard the TV and radio spots for these companies- What most of these loan mod “consultants”, and even the attorneys will not tell you is that many people will not qualify. For instance, even if the lender is satisfied the homeowner has documented hardship and verified income, whomever is holding the note will ultimately take the action which is in their best interest, which in many cases is to let the property go into foreclosure. Furthermore, more than 50% of loan mods currently are re-defaulting, which just adds more to what is already a hot mess. The truth is, unless the homeowners qualify for a government backed loan mod program, in most cases the best case scenario is that the modification will be good for about 5 years. You can see for yourself who can qualify for Obama’s loan modification program here . Currently, most non-realtor opinions have home values on the westside declining for at least another year. This means even more homeowners will be eventually be underwater, along with more loan mod re-defaults, which inevitably increases housing inventory, which puts downward pressure on prices. In the present climate, with the aforementioned massive defaults looming, for a homeowner who owes more than what the property is worth, it makes more sense in this case to do a short sale and cut your losses. Why? because if you don’t you are potentially chasing bad money with more bad money, or in other words, investing in a non-performing asset, like buying stock in a declining market with no real basis for upside potential. I realize there are no easy solutions here to avoiding foreclosure, but for the homeowner who owes more than what the property is worth, a short sale is a much better alternative than waiting for a bailout, which in many cases is like Waiting For Godot.

Our office will be holding a seminar for first time home buyers on Tuesday, June 23rd from 7:00 to 8:30 PM . The things you will learn:

The entire buying process from start to finish

Current (historically low) mortgage rates

The different loans available, Difference between short sales, foreclosures, and REO properties

The $8,000 first time home buyers’ tax credit which expires 11/30/09 and the new construction tax rebate. 

This will be a great experience for those of you who have questions about the buying process, and best of all, it’s FREE!  All I ask is that you RSVP for this event as there will be limited seating.

Tuesday,  June 23 from  7:00 to 8:30pm

Keller Willams Realty

5900 Wilshire Blvd., Suite 610

Los Angeles, CA 90036

(Plenty of street parking)

Please RSVP

Johnny Burke

323-527-6600

johnnyb1@kw.com

As if the last year was not tumultous enough. It’s Summer of 2009, with at least a few pundits who cover Wall Street  hinting that the worst of the recession is over, stocks are off recent lows, so we have reason for optimism, right? After all, we have weathered most of the subprime debacle, at least for the time being. But what about the prime mortgages that are currently defaulting  at a faster rate than the subprime loans did previously? Remember the 5-1 ARMs that were very popular  just a few years ago? well, there is going to be another wave of resets/recasts which could last until 2012. You can read more here 

Is this Option ARM-Ageddon?  more defaults, means more foreclosures, which increases an already bloated housing inventory we currently have on the Westside of Los Angeles. How much more can this market bear?

I’ve had loads of people ask me about Loan Modification lately, and like many other responsible licensees have done, I have contacted the CA Dept of Real Estate in order to determine what choices are available for homeowners who are having trouble making their mortgage payments, due to a rate reset, loss of income, etc. There are of course, mortgage brokers who went into the loan mod business, which some people are proclaiming “The New Subprime”, and then there are “attorney-based” Loan Mod shops as well. These days, In order for a broker to accept fees, they need to file an advance fee agreement with the DRE, and with that comes an audit. The headache I see coming however, is not with the brokers, but with the shops who claim to work with an attorney in order to justify taking a fee up-front, many times without even sending the client’s docs to the underwriters. This brings up many questions, such as: can an attorney hire another company, to collect fees for the law firm?, if so, should they be in the law offices?  do these “consultants” need to be licensed? It seems to me that many of these shops are asking for fees ranging from $3000-$5,000 without even seeing the client’s financials first, which can result in client “slammed”  into a loan mod for the sake of a quick commission, when the client who has good credit, steady employment, equity and so on might have qaulified for another option, such as  one of the new FHA programs, or a re-fi. There are no clear answers according to the DRE, who suggested I call the CA State Bar, who then told me to call the DRE. My feeling is that many of these attorney-based shops are going to be under as much scrutiny, if not more than the brokers doing loan mods. The new year should be a very interesting one indeed.

I would like to hear from those of you who have experience holding auctions, especially those of you in California. I am not talking about Foreclosure auctions, but rather the type where the homeowner still has equity in the house. With the current market climate of high inventory, auctions are beginning to look like a viable alternative to listing a property and waiting for it to sell.  What kind of fees can a Buyer and Seller expect in an auction situation? what are the requirements for both to participate? What about realtor referrals?  I am looking for someone to work with in The Los Angeles area, so if you or anyone you know may be interested,  I would like to hear from you.

If you have been following the Real Estate Market to any degree in the past 7 months, the sheer amount of information with headlines from “Mortgage Meltdown” to “168 Billion Economic Stimulus package” is positively mind-numbing. Moreover, when was the last time you heard a Realtor tell you it wasn’t a “good time to buy?” Specifically in California, where housing tends to cost a tad more than other areas, will raising conforming limits on loans help the market here ? maybe. The question I have is this: Since inventory here in Los Angeles County has basically doubled from last year’s levels, how long will it take to get levels down to more “normal” levels? At the moment, we have 12-18 months worth of unsold homes depending on your neighborhood. The reason I am asking is that I constantly hear radio commercials pronouncing “it’s a great time to buy” versus bubble-bloggers declaring the end of civilization as we know it. So am I really doing my job by telling my friends now is a good time to buy? of course. But do I also preface said statement by warning them prices could go lower? Definitely. It is true rates are the lowest in about 4 years, but with this proposed “Economic Stimulus Package” who really knows what will happen? Will the foreclosure situation get worse and add even more unsold property to the already ridiculous levels of inventory? or will it stabilize? Here is another question: As the stock market goes down after going up for the last six years, will that shift investment dollars into Real Estate?