Real Homes of Genius: Manhattan Beach and million dollar neighborhood trends. Commercial real estate and residential foreclosures meet in unlikely zip code. Forbes 29th most expensive zip code enters correction.
Do anything for long enough and people start accepting it as reality. Just watch any movie from the late 1980s or early 1990s and you start smiling at the “technology†they used and how advanced they thought it was. For the time it was. We tend to forget how quickly things can change. When I talk with people and show them the median price of homes just from the year 2000, they look upon it as if they just saw their first beeper. The only difference with housing and technology is that housing hasn’t really evolved in the last decade. On the contrary, technology has gotten better and cheaper as time goes forward. Housing has gotten more inflated and expensive even at a time when incomes have not. That is probably the key factor in this housing debacle. Home prices inflated away while incomes stayed back with the phones of yesteryear. Manhattan Beach, one of the most expensive areas in the country had a median home price of $590,000 in January of 2001. The housing correction is now fully in place for high priced California areas.
Today we salute you Manhattan Beach with our Real Homes of Genius Award.
Some think that corrections in expensive areas can’t happen but they are. Let us run some quick number for Manhattan Beach:
Median Price – Manhattan Beach
January 2001:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $590,000
February 2006:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $1,925,000
July 2010:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $1,525,000Â Â (decline of 20 percent)
$400,000 is no drop in the bucket. In fact, the correction of the last four years is quickly approaching the full price of a Manhattan Beach median priced home of January of 2001! Without a doubt, the market is correcting. After all, we see it in the figures. The big question is whether the current price is closer to a bottom or is merely a first stop before falling further? Examining Southern California housing data my perspective is that housing in mid-tier and high-tier areas like Manhattan Beach will correct further. Just look at the price increase from 2001 to 2006. In a matter of 5 years prices tripled. Even today, the median price is up nearly $1 million from the price 9 years ago. What did incomes do over this time? Let us take a look:
Source:Â Census
This is where you can really see the bubble in all its California glory. Back in 2001 it would take a little under 6 years of household income from this area to purchase the median priced home. Today, it will take over 12 years! Not only is this a bubble but a big one at that even after the recent 20 percent correction. Just because you’re near a beach doesn’t pay your monthly mortgage and we are now seeing that with distressed inventory spiking:
MLS
Foreclosures:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2
Short sales:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3
Non-MLS data
Bank owned:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 6
Auction scheduled:Â Â Â Â Â Â Â Â 25
Notice of default:Â Â Â Â Â Â Â Â Â Â Â 22
As you can gather from the above data, what the public can’t see is ten times larger than what is being presented in the MLS. In other words, many people are unable to sell for a profit or are unable to meet their mortgage payment in what is the 29th most expensive zip code in the United States. This trend is now being picked up by the media:
“(LA Times) Foreclosure is blind.
After the mortgage meltdown and the plunge in home prices, record numbers of ordinary houses tumbled into foreclosure across Southern California as borrowers became unable or unwilling to pay their mortgages. But the rich aren’t so different after all: Million-dollar-plus homes have reverted to lender ownership in increasing numbers — previous sales prices, prime locations and even celebrity pedigrees have provided no immunity.
Earlier this year, Oscar-winning actor Nicolas Cage’s English Tudor joined the foreclosure fraternity. The nearly 12,000-square-foot house, once marketed at $35 million, now is listed for $11.8 million; the seller, Citibank.â€
Manhattan Beach is a fantastic area, there is no doubt about that. But the ocean didn’t get $1 million better from 2001 to 2010. The toxic loan leverage was utilized with great delight in this area. You don’t believe it? Let us look at one of those 53 distressed properties:
The above data is for a commercial real estate loan. It looks to be an apartment:
On the default data it looks to be a place with 5 units. With the 1st and 2nd mortgage the total loan amount came out to $2,310,000. With principal, interest, taxes, and insurance you are looking at close to $18,000 a month for a payment. Divide that among 5 units and you need to yield $3,600 per unit just to break even (and we have 7 bedrooms listed and 5 baths for this place so we’re not talking big places either). This is part of the commercial real estate bust in Manhattan Beach.
But you want to see a million dollar home. That is what you came for after all:
3613 PINE AVE, Manhattan Beach, CA 90266
Beds:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 5
Baths:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 4/1
Square feet:Â Â Â Â Â Â 3,377
Built:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2002
Listing price:Â Â Â Â Â Â $1,495,000
This is an interesting find. This isn’t a bank owned foreclosure but an investor owned foreclosure. From the listing:
“Note: this foreclosure is owned by a private investor & not a bank or corporate institution. No red tape. No committees. No hassles. Offers responded to immediately. Please see private remarks before calling.â€
The size of the place is good and looks to be a nice home. But it isn’t necessarily close to the beach:
When you buy million dollar property in beach cities you usually want to be within three blocks of the beach. Either way, the correction is now here for some of the most expensive zip codes in California. Manhattan Beach in 2005 came in 2nd for the most million dollar homes sold in California, not a small task to accomplish. But even with that trophy, the tools of maximum leverage are now completely gone. Even absurd FHA lender financing won’t help you on a place like this unless you have a 50 percent down payment.
Today we salute you Manhattan Beach with our Real Homes of Genius Award.
Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information
Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis,
Subscribe to feed
78 Responses to “Real Homes of Genius: Manhattan Beach and million dollar neighborhood trends. Commercial real estate and residential foreclosures meet in unlikely zip code. Forbes 29th most expensive zip code enters correction.”
Was beside myself yesterday seeing a 2bed/1bath originally listed for $795,000 in South Torrance (nearish to Manhattan Beach, and still quite bubblish itself along with neighboring Redondo Beach) back in September, now down to $599,000 as of last week! Prices going down!
I know a house that is listed as a short sell in Newport Beqch that the bank is in no hurry to boot the owner out( who stopped making payments many months ago). Apparently the banks can not handle all of these rich folk who stopped making payments and now live rent free.
We live in the San Francisco area, so are used to overpriced home, but M.B. is in a league of their own. We stayed at an upscale hotel there 4 years ago. Across the street was an old (circa 1910 house,minimal updates, 2 bedroom) for sale. I thought is might go for $600-$700K. Asking price was $1,400,000. At least 10 blocks from the beach, but only 2 blocks away from the oil storage facility.Who wouldn’t want to live near a few million gallons of flamable liquid?
Throw in a lot of “Paris Hilton wannabees” prowling the downtown area, snooty shopkeepers, overpriced restaurants, and you truely have to wonder what the big attraction is.
Greetings to a fellow Bay Area resident.
Reason MB is priced so high is due to younger MD’s wanting to live there. Its a favorite place to live due to its proximity to to beach *and* to UCLA Medical Center and School of Medicine. Short commute on the 405 & PCH.
My brother is an MD and lived in MB while attending UCLA Medical School, which is how I know this.
Realtors and sellers know this and price accordingly.
MB is the closest adjudicated beach city to Los Angeles. So Angelenos who don’t want their kids in L.A. Unified schools (and who does?) can live in MB and commute to their West L.A./Mid-Wilshire jobs. That’s why MB is more expensive than Hermosa, Redondo, P.V., etc. – it’s the proximity to the city.
Young MDs in Manhattan Beach? Seriously? Is this the new “foreign buyers will save MB”?
Your brother was atypical. Most UCLA med students live in and around Westwood, especially during 3rd and 4th year.
The bigger they are the harder they fall. Manhattan Beach had been the hottest neighborhood for development and speculation, bar none. Obviously it was aided by easy credit manufactured by the baking and real estate industry. We have hit the next leg down in this real estate bust and the high end is in for a beating. Now everyone realizes, we won’t see bubble prices of 2007 for a long long time. 10 years minimum. I expect this area to suffer extremely in the next 2-3 years, as we head back towards 2000′ pricing. Comparable areas on the Westside of Los Angeles are in the same boat.
http://www.westsideremeltdown.blogspot.com
http://www.santamonicameltdownthe90402.blogspot.com
As always, Dr. HB you do a spectacular job! LateSummer, I hear you but I have to say…10 years? I’m betting 20 or more before we see VALUES back at peak 2005-2007 values. Prices will probably get there by 10 years, but that will be with due to the continued devaluation of the dollar.
As far as that “meh” looking (looks like every other cookie cutter Spanish/Mediterranean casita from the last 10 years) Manhattan Beach “investor owned” foreclosed home – 3,377 feet on a TINY 4,640 sq ft lot…LOL that’s about as far from the beach as you can get for Manhattan Beach!
Not only is it just a couple of blocks east of Sepulveda and the Fry’s, it’s practically across the street from the Chevron refinery/oil storage complex in El Segundo. I can just imagine how nice the stench must be, considering that stretch of Sepulveda just north of Rosecrans reeks worse than the La Brea tarpits. I guess if you’re a roofer slapping the hot mops and/or playing with hot asphalt all day it wouldn’t be too bad.
whoops, I meant to say it’s only a couple of blocks WEST of Sepulveda. Truly the poor, poor rich man’s Manhattan Beach…
Foolio, if you go even further east towards Aviation Blvd the prices are still beyond bubbly. Teardowns in MB just west of Aviation Blvd are still going for 800K. At that point you are nowhere near the beach and right across the street from Lawndale or Hawthorne. It absolutely amazes me what premium people will pay for a zip code. I think MB is poised for a steep decline in prices since the run up there was simply mind blowing.
The whole MB scene bugs me, talk about snooty people. I saw one douche driving his 911 down Sepulveda in MB, his license plate frame read “Don’t Hate Success.” All these people who won the lottery by owning there were simply in the right place during the biggest bubble in human history. I would much rather live or own in South Redondo. Much more laid back atmosphere, nicer people and not nearly as crowded. The only downside is freeway access from S. Redondo…but if you work in the area that doesn’t matter.
Take a gander at this article from the NYT.
Widespread Fear Freezes Housing Market
By JOE NOCERA
You have to wonder sometimes what they’re smoking over there at the National Association of Realtors.
On Tuesday, the self-proclaimed “voice for real estate†released its “existing home sales†figures for July. They were gruesome. Sales were down 27 percent from the previous month, and down 26 percent from a year ago. Annualized, the July sales figures would translate into fewer than 3.9 million homes sold this year — a staggeringly low figure. (The record high occurred in 2005, when more than seven million houses were sold.)
The months-to-sale number was depressingly high; the Realtors group reported that it now takes more than a year to sell a typical house, compared with six months in a normal market. The amount of inventory is high.
Lest we forget, these awful numbers are coming out at a time when the financial incentive to buy could hardly be stronger: the fixed rate on a 30-year mortgage is at an incredibly low 4.36 percent, according to an authoritative survey conducted by Freddie Mac.
Yet here was Lawrence Yun, the association’s chief economist, trying to turn lemons into lemonade: “Given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs,†he said in a news release.
Mr. Yun went on to attribute the weak July numbers to the expiration of the Obama administration’s tax credit for home buyers. They had caused consumers to “rationally†jump into the market during the first half of the year — at the expense of summer sales, he said. The post-tax-credit slump, he predicted, would be over by the fall, and by the end of the year, five million existing homes would be sold. (“To place in perspective, annual sales averaged 4.9 million in the past 20 years,†he said.)
Mr. Yun also predicted that home values would not fall much further, since they were “back in line relative to income.†In other words, the July numbers were a mere blip.
Clearly, Mr. Yun needs to get out a little more often. Specifically, he ought to talk to people on the ground — like mortgage lenders or prospective borrowers. Talking to these people would probably give him a more sober take on the larger meaning of the latest sales numbers for existing homes. Sometimes, you see, lemons really can’t be turned into lemonade.
•
“In the financial markets, a lack of liquidity immediately leads to falling prices,†said Lou Barnes, the founder of Boulder West Financial Services. (Boulder West was acquired last year by Premier Mortgage Group.) “In the real estate market, something different happens,†he added. “Illiquid real estate markets freeze.†That is what is happening now. For months, the Obama tax credit had been the only grease in the housing market. Now that it is gone, the buying and selling of houses is essentially grinding to a halt.
Why is this happening? Just as the subprime bubble of 2006 and 2007 required one kind of perfect storm — namely, incentives to throw underwriting standards out the window — we are now living through the opposite kind of perfect storm. Essentially, every participant in the housing market has a reason to be afraid. And that fear is paralyzing.
The prospective buyer, for instance, has two good rationales to fear buying a new home. One is the unemployment rate. “A major psychological thing happens with high unemployment,†says Dave Zitting, a veteran mortgage banker and founder of Primary Residential Mortgages. “Those with a job worry about whether they are going to keep that job†— which, in turn, prevents them from taking the plunge on a new home.
The second reason is that, Mr. Yun notwithstanding, most people simply do not believe that housing prices are even close to hitting bottom. “In the Bay Area, a house that was worth $300,000 a decade ago became a million-dollar home,†said Greg Fielding, a real estate broker and blogger. “Now it is listed at $800,000.†That price, he suggested, was still unrealistically high. The seller, meanwhile, doesn’t want to face the fact that his or her home is too richly priced, and won’t sell at a more realistic price — which may well be below his or her mortgage debt.
There is also an immense amount of inventory that has yet to hit the market but will, sooner or later. People in the real estate business have taken to calling this “the shadow inventory.†It consists of homes for which the owners have stopped paying the mortgage but the banks haven’t foreclosed on yet, foreclosed properties that have not yet been put up for sale, homes with modified mortgages that the owners still can’t afford and will soon default on and so on.
Mr. Barnes describes the shadow inventory as akin to “ranks of Napoleonic infantry, rows deep, hidden in the fog.†This inventory, estimated by Rick Sharga of RealtyTrac to be between three million and four million homes, is almost certain to drag down home prices for the foreseeable future. “The disinterest of buyers, in an interest-rate environment that may be the lowest ever, is striking,†Mr. Barnes said. But, he added, it makes perfect sense. Since 2007, housing prices have been in a deflationary spiral, and nobody can say when it will end. “It doesn’t matter if interest rates go down to 2 percent,†Mr. Barnes said — buyers won’t reappear in big numbers until they can see the light at the end of the tunnel.
So that is what it looks like for the prospective borrower. Now look at it from the lender’s perspective. Chastened by the excesses of the bubble, mortgage lenders have swung hard in the other direction, becoming excessively, almost insanely, conservative. They demand high FICO scores. They won’t lend to anyone who is recently self-employed — even if the potential borrower has socked away a lot of money in the bank, or is making a good income. They won’t count income from capital gains.
“I have wonderful people in my office every day who would have qualified for a loan prior to the bubble†but now can’t get one, Mr. Zitting said. Mr. Barnes said: “Underwriting standards are vastly tighter than any time in my lifetime. It is choking off buyers.â€
Here’s the strangest part, though: it is really not the lenders themselves who are imposing the most draconian of these tight new underwriting standards. Rather, it is the federal government. That’s right, the government.
At the same time that the administration was offering a hefty tax credit to spur home sales, the government’s wholly owned subsidiaries, Fannie Mae and Freddie Mac, were imposing rules that made it increasingly difficult to buy a home. And Fannie and Freddie have the ultimate say these days because without their guarantee, Wall Street securitizers won’t buy a mortgage from a bank — because Wall Street is just as fearful as every other participant in the market.
“The government right now is insuring something like 85 to 90 percent of the country’s mortgages,†said Daniel Alpert, a managing director of Westwood Capital. And given the enormous losses Fannie and Freddie were saddled with during the financial crisis, they are in no mood to take risks, not even on borrowers who are normally considered creditworthy. So they are saying no a lot more than they used to — even though this is having a terrible effect on the housing market.
It’s even become nearly impossible for well-heeled investors to buy rental properties. This is no small matter. At the peak of the bubble, the rate of homeownership approached 70 percent. Now it is falling toward 65 percent — which is more or less where it was before all the housing madness of the last decade. That means that millions of Americans who were briefly homeowners need to become renters again. They need a place to rent.
But somebody has to buy the homes they are leaving behind and turn them into rental properties. The most likely buyer is a professional investor who purchases rental properties for a living. Yet, absurdly, government rules have made it exceedingly difficult to make loans to investors who want to buy up rental properties. This only adds to the shadow inventory.
A few weeks ago, some of the better known financial bloggers had a background briefing at the Treasury Department with officials who included Treasury Secretary Timothy F. Geithner. In their blog posts after the meeting, they did not, alas, describe a government strategy that called for loosening Fannie’s and Freddie’s overly cautious standards — the obvious short-term solution. Instead they described a Treasury housing strategy that was essentially a play for time.
The tax credit for home buyers; the willingness to look the other way as banks refused to foreclose, pretending that the owners still planned to pay their mortgage; the half-baked government mortgage modification programs — they were all aimed at buying time until the economy recovered and employment picked up. At which point, they hoped, the housing market would have achieved enough lift that it could take off on its own.
At the end of June, though, the tax credit disappeared — and that’s when time ran out. On Friday, the new G.D.P. numbers came out, confirming what everybody already knew. The economy has not recovered — not even close. If the housing market is like an airplane on a runway, it is far more likely to crash at this point than it is to take off. That is why the July numbers are so scary to those in the housing business.
On the ground, they don’t look like a blip. They look like a very painful future.
Another couple sources of buyer reticence:
Threatened end to mortgage interest deduction
Threatened overturn of property tax rate increase limits (Does NY have a Prop 13?)
I might offer a slightly different perspective on Manhattan Beach than the doctor. With a median income of 127K, MB is at the top of the food chain. I’m curious, though, what the median income of a homeowner in MB is. My guess is much higher. MB is attractive because it’s 10 minutes to LAX, it’s ON the beach, and it’s a 30 minute drive to the westside. Compare this with areas like Beverly Hills, which are 30+ minutes to LAX, 30+ minutes to beach (Santa Monica and Venice beaches are nowhere near as nice as MB) and if you’ve got the ca$$$h, then MB is a compelling buy.
Who lives in MB?? Superstar athletes (Jon Elway, Lamar Odom, Maria Sharapova) aerospace industry VPs and executives. Unlike other sectors of the economy, the sports and aerospace industries are still going strong, and provide lots of steady high income jobs. While MB may correct, I wouldn’t expect to see 2001 prices here anytime soon.
Again, what’s the median income of a homeowner in MB? That would be more telling, because I have a lot of engineer friends who make $100k/year and rent in MB and are skewing the median. MB is not Santa Monica, or Culver City, with the influx of money into this city in the past 10 years, it is now on par with Beverly Hills or Malibu.
Brandon, I work at one of the big aerospace companies in the south bay. The number of VPs and executives at these companies is miniscule compared to the average worker. The average engineer probably pulls down between 70K and 170K…all depending on experience and job skill. Unless you bought in MB 20 years ago, that salary ain’t gonna cut the mustard today. The aerospace industry here is dying and will get severely downsized in the next few years. Most of these jobs depend on government spending, and the government is just about out of money if you haven’t been keeping track of current events. Additionally, new hires out of college stay on average a grand total of 3 years before leaving. Many blame it on the fact that young people can never afford to buy a place close to work in a decent part of the south bay. Living in an apartment in Hermosa is fun if you are 25. If you want to get married and have a family and a house…be prepared for a nasty commute if you plan on working at one of these companies.
Manhattan Beach is way overpriced. I don’t think it can be compared to Malibu or Beverly Hills. Being 10 minutes from the airport isn’t great unless you travel for business every week. The proximity to the big oil refinery and bordering some shady areas doesn’t help either. I think we will definitely see some price pressure in the next few years.
dr housing bubble…arent you just f’ing sick of writing about the housing crash. jesus it has been years now…!!!! i was reading a thread on patrick.net and the group was discussing how home prices in the bay area were not going to go down any more…..we are back to 2007 when everyone still thought RE would go to the moon.
you are still relevent and your blog is excellent but i just cringe when someone wants me to (still) prove that RE will go down and that we are not at a bottom…!
keep up the good work.
Govt intervention in the RE market has been incredible in the last two years. If someone would have told me this would happen 5 years ago I would have thought they were crazy. So how long can it go on? 8M mortgages are not being paid in the US right now. Twice that many are underwater on their loans. Unemployment is not decreasing. This is going to get a lot worse before it gets better.
Brandon, do you have the same good explanation why prices in Torrance or Redondo Beach or even pity Lomita will not correct. Common!? It all goes down the drain from here, because the whole South Bay on-block managed somehow to stay inflated until the endgame of this debacle.
Actually, with all my regards to DHB’s job (hat down) I have some comments on the median in Manhattan Beach. I think the median in MB in 2006 has gone extra high since that was the time all the low ends of the market was going down and only the upper part was still going strong. That fact differentiated prices in MB itself where in its high end in 2006 was still business as usual and its low end has budge down already. What I mean certainly the number for 2006 is skewed up and it may be that the number for 2010 is skewed down since there is some foreclosure even in MB now. So as percentage MB has gone down only 20 (measured by the most likely skewed median stick), but in reality particular properties has gone down only about 10%… My point is MB is corrected even less than the numbers of DHB suggest and what is coming there is even bigger. It is bigger because you cannot escape economic fundamentals as you cannot escape gravity, you can bounce as high as you can but you are not getting anywhere else but here on earth.
Two reasons for higher prices in MB: Medical doctors (younger) and airline flight crew (pilots) who choose to live close to LAX.
This also includes pilots with foreign airlines that rack up big salaries flying across the Pacific and/or North Pole (Korean Air, Japan Airlines, Singapore Airlines, Quantas, British Airways, etc.).
These pilots are from countries where their currency is stronger than the U.S. dollar, so the financial hit via real estate purchase doesn’t hurt them as much as it would hit an American engineer or other professional.
~Misstrial
You forgot that is absolutely necessary for the young doctors and pilots to not have brains. Otherwise they will not buy MB. Waky-waky, last call for waking up! The average incomein MB is 150K (no matter if it comes from young doctors salaries or foreign pilots lost in space) and it stands boldly against the average price of 1.5 million. Seriously!? Wake up!!!
da-di-da:
Check Melissadata. Incomes are higher than you think – even in this economy, average probably ranges from high $100k to low to mid $200k.
We agree – Still not enough income in dollars to support these prices, however if a buyer converts their Yen to dollars, or Brit Pound to dollars, they will have a great ratio. Thus even if their iincome is lower than you’d expect, their currency goes further and so they can buy more, quite possibly all-cash or with a minimal loan.
Chalk it up to a lowered US dollar intentionally done by Ben Bernanke.
Sorry but all those years average and below-average income people were granted home loans to buy $600k cr*pboxes has devolved into a currency devaluation for the dollar.
~Misstrial
doc, have you revised your bottom-call? I forgot what year you called it for these last 3 years, was it 2011? Anyway, what with the artificial stimulus, rebates and all the dufus-perks, that kept reality from setting in, “extending and pretending”, I’m betting you revise your call for a bottom, nearer to 2014-2015.
Hey Doc, please write a little about Ventura County. We have been stuck in mega million dollar bubble… Just starting to show signs of weakness. When Realtors do Comps out here they drag in high priced houses from other cities to keep prices looking high, when in fact many homes in my area tanked when sold this past year. Our oun Realtor has been caught doing this to protect thier clients. People, do your own comps, you will be amazed at the rip off of the professional Realestate market working on you behalf. They work both ends to protect thier income and thier clients…
I agree, I am looking in Ventura County, Thousand Oaks, and it’s ridiculously
overpriced still. We are renting, and I don’t care how long it takes, Im going to rent until prices come down, and if they never come down, well, we will rent forever. We bought in New York, and luckily sold right before WallStreet colapsed, I’m so glad, because the house is worth way less then when we bought it. I would love to know if anyone thinks houses in Thousand Oaks will ever come down to realistic prices based on income levels?
Out in Ventura County you’d think prices would have dropped a bit more dramatically after a certain defense contractor relocated a bulk of operations to China Lake/Ridgecrest.
Must be all those who are working and commuting to UCSB to the north and UCLA to the south – maybe that’s what keeping prices up.
~Misstrial
MB is insanely overpriced, period.
I stopped in to see a little condo for sale there, expecting it to be maybe 300k, and it was 600K.
Fuck that.
I can have a mansion in Texas for 200K, and from the looks of it that’s where I’m headed.
Our government totally failed us, the moneymen have raped and will continue to rape us.
Sickening.
Robin, you mention that “our government has failed us.” You didn’t mean Governor Perry. I know that Texas is the promised land, but for now, we must endure living in Sodom. We pay for the weather to live here. Is it worth the price? Where do you go for good Texas BBQ in Los Angeles?
My BIL works in aerospace and they are actively downsizing and laying off. No one or place is immune to economic contraction. Besides, 127,000 a year is not enough to buy a million dollar shack. But hey, if you want delude yourself into thinking MB is Malibu go for it. Who wouldn’t want to live near oil refineries and LAX?
Right Gael,
Not like you replace that job stocking shelves at Walmarxist. I’m still waiting for the Green Shoots.
M B is going to continue to slide for a while! Thanks for the post. I am sick of this economy and all the sketchy bankers and country leaders who failed us!
The entire coast of CA all the way from SD to Marin County is still on the bubble. Asking prices for the Central Coast are possibly the least affordable in the whole country. One has to ask if there are enough centimillionaires for all the $30M properties or enough decimillionaires for all the $2M houses. Homefinder.com shows Santa Barbara County with 289 properties over 2M;San Luis Obispo County, 138; Monterey County, 289 (coincidental match); Santa Clara County, 236; San Mateo County, 180; San Francisco, 109; Marin County, 128; even 92 in Sonoma County, where the bubble has burst hard. For Southern CA we get San Diego with 1,066 (a pivotal year); Orange, 1433; Los Angeles, 2750; and Ventura, 154. I should probably add Contra Costa County, with another 109.
The high-end bubble has yet to burst.
Everyone is holding out for a bailout. They are in denial about housing and think bernanke is going to hellicopter-plop a recovery on their head. Got the plop on the head part right anyway…
Well I don’t know.
In SLO and SLO County, prices are going down. In Arroyo Grande (“AG” to the locals), a beautiful home recently sold for $445k. Original asking was about $200k more.
This home is in a custom-home neighborhood just off Oak Park in AG:
\http://www.zillow.com/homedetails/1005-Acorn-Dr-Arroyo-Grande-CA-93420/15394850_zpid/
Lowball, people!
~Misstrial
I found this interesting, since I live in Westchester, CA and work in Redondo Beach near Aviation and Sepulveda.
However, using a bar chart to show just two values is “chartjunk” – totally unnecessary.
From Manhattan Beach to Manhattan, Bitch…the tranfer is still alive and well. The vampires won’t kill us completely–they need fresh blood. Glad to see some elaborate explanations and not just some Fox news parrotting ditto-heads. This is a very complex problem and political talking points won’t get us through it.
Old folks like me can’t lose another decade. This old dog can’t learn enough new tricks to work another 20 years, and what if i could? I don’t want to work till I’m 80. I guess the permabulls can quit talking about the v-shape, cause this spiral staircase is still going down. The ‘psuedo-wealthy’ are finally realizing they still aren’t in the club with the Manhattan wealthy…they’re in coach on the Hindenburg with the rest of us.
I find it amusing how people blame the gov’t for a bubble that was lead by realtors and mortgage people….and of course a very stupid and greedy buying public.
The government enabled this whole mess from the start. As we saw there was no financial regulation…Wall St. ran wild, banks lent money to anybody with a pulse and the idiotic Fed fueled the fire by continuously lowering interest rates. The realtors and mortgage brokers smelled the blood and knew they could make EASY money for quite some time. Housing appreciation and the various housing related industries fueled the economy for the last decade filling the government coffers with lots of revenue. They weren’t going to kill the goose that laid the golden egg.
Now that the whole Ponzi scheme has blown up, the government is doing everything in their power to keep prices from dropping off a cliff. I seriously think they underestimated how bad things would get. All this mess led to a global financial meltdown and massive recession, a generation who has been wiped out financially and home prices that are still out of whack in many areas compared to incomes.
Hey, Brandon. It’s a great time to buy, buddy. Grab all of Manhattan Beach RE
you can… Just be willing to stay behind and pay for it… for the rest of your life.
I grew up in Manhattan Beach. It isn’t that nice. I took my family there a year or so ago and the sidewalks were dirty. The storefronts looked a little worse for wear. The landscaping at many homes was not being taken care of all that well. It did not impress me. MB is a place to live if it is important to you to see and be seen.
Believe it or not the average household income in Manhattan Beach is between $100,000 and $150,000. The reason most people can afford houses here are because many of them grew up here and bought at the right time. If I had bought when I moved here in 95 – I would be a millionaire. The prices will never go back to where they were in 2001 but they won’t ever go back to the 2007 prices either. It will fall a little bit more and hold here. Many people still want to live here and it’s a great quality of life. It’s central to LA and OC and if you travel it’s the perfect location. IT has a good school system and it’s kid and family friendly and generally a safe place to live. Granted their are other areas with better looking homes but people here are paying for a quality of life. Not sure who the post is about snobby people but I don’t know who you hang out with but it’s not snobby at all – I’ve been here 15 years.
Its higher than that, likely down to the high $100k or lower $200k due to the economy:
http://www.melissadata.com/lookups/TaxZip.asp?Zip=90266&submit1=Submit
Last figures are from 2007. Its probably somewhat lower now in 2010.
~Misstrial
Misstrial, You chose interesting but debatable statistics. The 90266 is without a doubt wealthy. But the MEDIAN income is only 100,761. Your use of average is disingenuous… remember that if u have 10 people with an average of 100K, adding one with income of 1MM will skew the “average for all” – Median is a much more reliable indicator of the health of a market. My figures are drawn from http://zipskinny.com/index.php?zip=90266 – That being said, 50% of people make over $100K (as opposed to around 10% nationally).
There’s a potential issue with the logic. If incomes cannot support prices….there is no fundamental underpinning. Basically the area goes illiquid and no one can move/relocate as the market is false. I understand wanting to pay up for quality of life and MB is nice but $150K does not support $1m homes. Also, should the market go illiquid long-term and let’s just say no one is ever forced to move/sell….we’ll inheritance tax is coming and it’s 55%. Passing the house down will be damn hard and force a sale.
The issue with CA is that the homeowners have been trading inflated equity between themselves with increases in income/equity at the margins impacting the choices of where they live. Without bottom end demand and ability to pay those prices entering the housing market on income alone with no massive appreciation in site – you are stuck. Best case scenario the ‘haves’ and ‘have nots’ form their own separate enclaves and the haves trade their inflated equity values between themselves until they die and then the 55% cut comes in and crushes it house by house. The population of haves decreases steadily as does the enclave areas until we reach some broad housing/income parity. I’d also note that eventually people see through this and no one is willing to lend or finance so no more money withdrawal and turned over houses sell for fractional values creating super ugly comparable. The market always finds its level. I think the hope is to get inflation and more importantly salaries up to put a bottom under housing while keeping affordability. This is a long road and we aren’t even remotely there.
I would be willing to bet that most people who own in MB could not afford to buy their own house today if they had to. Go down any street in MB and you can tell who the original owners are, people who have owned the same house for decades. There is new money coming into the area, but you need to be making probably 300 to 400K+ per year year to afford a house in these areas. Most jobs don’t pay that, even doctors. And lastly, the well of move up equity from selling other properties is starting to dry up. I don’t think you will see the monster downpayments used during the bubble years from selling other bubble market houses. I personally think MB is dead money for the next 10 years.
I’m wondering how much the average Manhattan Beach home got upgraded between 2000 and 2010. The original housing stock was pretty weak, so probably a lot of HELOC money got poured into home improvements. So, I wouldn’t be surprised if the average 2010 MB home would have gone for 20% or 30% more back in 2000.
Ventura people. I hope you are right. My thought is that we are starting to see at long last a correction in the Somis, Moorpark area. Properties are in foreclosure, prices are being reduced, and none are selling. I don’t know how any comps are being produced in this area given the lack of sales. One or two distress sales will make it impossible for financing in this area. It may be possible yet to get back to 2002 pricing.
I’ve been tracking Moorpark foreclosures for the last couple of years and have noticed something. Looking at the RealtyTrac maps I used to see mostly P’s (for preforeclosure), few A’s (for pending auction) and a smaller number of B’s (bank owned REOs). Lately I’ve been seeing more and more A’s and almost no P’s – as if the foreclosure inventory is working its way through the system and the number of homes still going into default is drying up. Since I find it hard to believe that the economic crisis is over in Moorpark I wonder what’s up. Either banks are now sitting on bad loans and not foreclosing, or this is a calm-before-the-storm phenomenon (we can only hope).
Home prices in the Central Coast of Ca (San Luis Obispo, Pismo Beach ) are still bubble priced, but will not drop as much as some other areas. A very large portion of the people who bought here in 2002-2007 are retired, sold a house, and paid cash for something in this area. They are not dependent on jobs, or the local economy (very lucky for them.)
Areas where people have to still work to afford a house, will drop much further.
Retired people get older and need to sell when it’s time to go into a retirement home or. . . (I’m past retirement age and would dearly love to have a house on the Central Coast, but it makes no economic sense, given the fact that, contrary to my own expectations, I won’t live forever.)
Interestingly, retirement communities, such as Del Mesa Carmel or Hacienda Carmel, are seeing some real panic setting in: units are for sale for as much as $300K less than the outstanding balance on some (foreclosed or in default) similar properties in the same developments. Expect even more price pressure on such developments, for empty units will force already startling HOA fees even higher.
Two relatives of mine are aerospace engineers. Their jobs are secure, and they still get regular raises, because the projects they both work on military in nature.
Anyone who works on civilian projects (passenger jets, etc.) however, are going to get hammered in this recession. No house in Manhatten Beach for them.
Big cuts will be coming to the defense budget next year and on down the line. The cuts are needed. When the defense department can say, “Um, we don’t know where that $8 billion went” then you know that there’s massive waste in the defense budget. I don’t think anyone should take for granted that their defense related job is secure.
What is this obsession Californians have with an ocean view? A line on the horizon is not such an interesting view to me. A giant tsunami caused by an asteroid slamming into the Pacific, now THAT’s interesting.
It won’t even take a giant asteroid, a big earthquake will probably do it. What’s that you say? CA is located on many fault lines?
As someone who lived oceanfront in Santa Barbara, all I can tell you is that overlooking the beach/water is very calming – unlikely one would ever need psychotherapy.
Its also refreshing, since the moisture from the seaspray is aerosolized and contains negative ions which have been proven to be very beneficial to human moods and general health.
These ions are also given off in the mist of waterfalls, rivers, and natural springs.
http://www.webmd.com/balance/features/negative-ions-create-positive-vibes
Not to mention the calming sounds of surf crashing on the beach and the momentous sounds of the sea hitting the cliffs during storms or the quiet of a calm sea are a delight to the ears.
Then there is the visual of miles of cooling blue and green coloration that is soothing to the eyes.
Nothing quite like it. And this is why beachfront will always be a more desirable habitat as opposed to the deserts (and not to slam the Mojave or the Coachella) since moist air and negative ions are very beneficial to humans.
~Misstrial
An earthquake IN Calif. does not trigger a tsunami that will hit the state.
Waves move outward, toward Hawaii.
The only tsunami to hit Calif. was from the Alaska quake in the 60’s. Waves radiated down from Alaska, and hit Crescent city.
Too bad, a giant tsunami would help to wash away the debris that will be all that is left of those oceanfront homes from an earthquake IN California.
As a 4th-generation Californian, one who’s family survived the 1906 SF quake, the 1972 Sylmar quake, the 1989 Loma Prieta quake, the Northridge quake of 1994 (which moved the Inglewood-Newport Fault) among many others, I am happy to inform you that none of these very serious quakes that originated “IN” California triggered a tsunami (though you’d think they would have)…..
….and as a 7th-generation Westerner, I am also happy to tell you that my pioneer ancestors have never equated coastal living with a danger from “tidal waves” (their term). Hawaii – yes. California – no.
~Misstrial
Even a small comet woud open up vast new swaths of ocean front property for development.
Miso:
So desperate….lol
Correction: the Sylmar quake was in 1971, not ’72. My apologies to all Californians.
~Misstrial
In Ventura County many homes are priced at or close to what is owed to the banks, many took Home Equity Loans to-boot. Next Stop, – Short Sale, last stop, – Foreclosure! house becomes Less valuable as Landscapes die… Investor picks up at auction and lists on MLS… Nice homes become fixer-uppers… Bring down value of neighborhood… Many folks don’t have the equity to drop prices any lower themselves. What a Sad situation! Look for homes where families have been in for long time, perhaps they paid early 90s prices, have good equity and can afford to drop thier asking price.
That sounds about right for Ventura County. Some of the open houses are reflecting this. But, even the houses picked up by investors in Thousand Oaks are overpriced, but still under slightly from normal resales. I guess we have to wait like you say until they go to short sale or foreclosure, or buy from someone that has owned a long time and is able to lower the price. When we suggest short sale or foreclosure to realtors however, they always indicate that will take tons of time, and always try and discourage us from trying to buy a house that way. Seems odd, since that seems like where the prices are heading and where they are the most reasonable. But, we can wait forever if we need to for prices to be set accurately for Thousand Oaks area, or never buy and just rent.
Yes.
This L.A. Times article on a short-saled Moorpark couple is self-explanatory:
http://articles.latimes.com/2010/feb/07/business/la-fi-money-makeover7-2010feb07
~Misstrial
I believe prices will eventually settle back to 1997 levels or prior. I purchased my first home in the San Francisco Bay Area in early 1997. Shopping around in late 1996 there were no buyers at all. Absolutely dead. Soon after I went into escrow on a home in January 1997, the frenzy began. Prices began escalating and buyers were everywhere. So why do I think 1997 or prior? Back in 1997 the job market was stable and prices were closer in line (by California standards) with incomes. Now the job market in California is anything but stable. 12% plus will look like a dream when the federal subsidies propping up California state workers jobs ends. The California state budget cannot support the current level of state employment.
Everything the government touches ends up in ruins. When you think about the areas of our economy that are most in peril, those are also the areas where our government has been most active – housing and healthcare. Government is never the answer – unless it’s less government.
Twisted logic. Our government decided not to regulate the mortgage business (and the credit derivatives) and that led to the housing mess. Yes, it stepped in afterwards but too little/too late.
If you think government is bad, feel free to go to Africa (see how I can play your game?).
Yes, Africa has no government. So who are those armed men exterminating the people there? Oh, that’s right -the military controlled by THE GOVERNMENT.
If the government had nothing to do with the housing mess, except in your opinion to try to step in to clean up the mess, why did housing activity just happen to suddenly pick up along with prices in 1997? Could it be the Community Reinvestment Act? No, the government had nothing to do with it (sarcastically).
Please – the mortgage industry and finance are some of the most heavily regulated industries out there. It’s called FAIL and a good portion of this can be laid directly at the government’s doorstep.
You think securitization came about as a new idea or something? No. It was because regulatory requirements allowed much higher leverage on “securities” that could be market prices as opposed to the same underlying whole loans held to maturity. You think it was a coincidence that the government repealed the leverage limits on financial? Nope, we were facing deflation post-tech bubble and they needed increased velocity and to create the shadow bank system to better inflate the currency. You don’t think the push for low income/subprime borrowers to own homes was an accident do you? Nope, major government push to get votes and increase housing/lending demand which in turn drives prices up/increases equity borrowing and velocity of lending.
I’m not going to tell you others are not to blame also here- ratings agencies, borrowers themselves, and the ultimate end borrowers who due to lower interest rate policies needed to scramble for yield to meet allocation/funding requirements (many entities also government regulated), but let’s not pretend for one instant that Government didn’t have a MAJOR role in this and have been distorting this market for a long long time (i.e. Fanny/Freddie/FHA, mortgage interest deduction, and tons of government programs right back to WWII to stimulate jobs/economy).
Banks who created exotic loans and individuals who took advantage of them to purchase homes they had no business buying were responsible for their part in the housing mess, but the government’s fingerprints are all over the housing debacle. The following is a WSJ article from 2008 chronicling the government’s involvement and manipulation of the housing industry.
Many believe that wild greed and market failure led us into this sorry mess. According to that narrative, investors in search of higher yields bought novel securities that bundled loans made to high-risk borrowers. Banks issued these loans because they could sell them to hungry investors. It was a giant Ponzi scheme that only worked as long as housing prices were on the rise. But housing prices were the result of a speculative mania. Once the bubble burst, too many borrowers had negative equity, and the system collapsed.
Part of this story is true. The fall in housing prices did lead to a sudden increase in defaults that reduced the value of mortgage-backed securities. What’s missing is the role politicians and policy makers played in creating artificially high housing prices, and artificially reducing the danger of extremely risky assets.
Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target — 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.
For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be “special affordable” loans, typically to borrowers with income less than 60% of their area’s median income. That number was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down.
Fannie and Freddie also purchased hundreds of billions of subprime securities for their own portfolios to make money and to help satisfy HUD affordable housing goals. Fannie and Freddie were important contributors to the demand for subprime securities.
Congress designed Fannie and Freddie to serve both their investors and the political class. Demanding that Fannie and Freddie do more to increase home ownership among poor people allowed Congress and the White House to subsidize low-income housing outside of the budget, at least in the short run. It was a political free lunch.
The Community Reinvestment Act (CRA) did the same thing with traditional banks. It encouraged banks to serve two masters — their bottom line and the so-called common good. First passed in 1977, the CRA was “strengthened” in 1995, causing an increase of 80% in the number of bank loans going to low- and moderate-income families.
Fannie and Freddie were part of the CRA story, too. In 1997, Bear Stearns did the first securitization of CRA loans, a $384 million offering guaranteed by Freddie Mac. Over the next 10 months, Bear Stearns issued $1.9 billion of CRA mortgages backed by Fannie or Freddie. Between 2000 and 2002 Fannie Mae securitized $394 billion in CRA loans with $20 billion going to securitized mortgages.
By pressuring banks to serve poor borrowers and poor regions of the country, politicians could push for increases in home ownership and urban development without having to commit budgetary dollars. Another political free lunch.
Fannie and Freddie and the banks opposed these policy changes at first through both lobbying and intransigence. But when they found out that following these policies could be profitable — which they were as long as rising housing prices kept default rates unusually low — their complaints disappeared. Maybe they could serve two masters. They turned out to be wrong. And when Fannie and Freddie went into conservatorship, politicians found out that budgetary dollars were on the line after all.
While Fannie and Freddie and the CRA were pushing up the demand for relatively low-priced property, the Taxpayer Relief Act of 1997 increased the demand for higher valued property by expanding the availability and size of the capital-gains exclusion to $500,000 from $125,000. It also made it easier to exclude capital gains from rental property, further pushing up the demand for housing.
The Fed did its part, too. In 2003, the federal-funds rate hit 40-year lows of 1.25%. That pushed the rates on adjustable loans to historic lows as well, helping to fuel the housing boom.
The Taxpayer Relief Act of 1997 and low interest rates — along with the regulatory push for more low-income homeowners — dramatically increased the demand for housing. Between 1997 and 2005, the average price of a house in the U.S. more than doubled. It wasn’t simply a speculative bubble. Much of the rise in housing prices was the result of public policies that increased the demand for housing. Without the surge in housing prices, the subprime market would have never taken off.
Fannie and Freddie played a significant role in the explosion of subprime mortgages and subprime mortgage-backed securities. Without Fannie and Freddie’s implicit guarantee of government support (which turned out to be all too real), would the mortgage-backed securities market and the subprime part of it have expanded the way they did?
Perhaps. But before we conclude that markets failed, we need a careful analysis of public policy’s role in creating this mess. Greedy investors obviously played a part, but investors have always been greedy, and some inevitably overreach and destroy themselves. Why did they take so many down with them this time?
Part of the answer is a political class greedy to push home-ownership rates to historic highs — from 64% in 1994 to 69% in 2004. This was mostly the result of loans to low-income, higher-risk borrowers. Both Bill Clinton and George W. Bush, abetted by Congress, trumpeted that rise as it occurred. The consequence? On top of putting the entire financial system at risk, the hidden cost has been hundreds of billions of dollars funneled into the housing market instead of more productive assets.
Beware of trying to do good with other people’s money. Unfortunately, that strategy remains at the heart of the political process, and of proposed solutions to this crisis.
Thanks everyone for all the usefull information! And a Big Thank you to the Doc for all the number crunching and stories that help make a better choice on a subject with such great importance!
Doc, can you do a piece about ventura county? I agree, way over priced. I have been waiting for Camarillo to go down. One house just listed on MLS wanted $316 sq ft. I thought are you kidding me? I just have to keep waiting.
@Standford law. Very true. Somalia is the perfect example of a true free market-anything goes, no regulation, no socila net, no entitlement programs. I think those screaming for that ever take aminute to ponder what they are actually asking for.
I am not saying I like a totally controlled economy-but extremes on either ends are not good. I think the fed has exhausted its moves. Unless they decide to loan every American directly 500-900k interest free, no repayment and total forgivment of principal at end of loans-they have pulled out all their stops. So the market will go down and stabilize.
@ a few folks:
Why the hyperbole? With many liberals it seems to always be the same- someone questions (and with ample explanation i.e. Taz’s highly detailed account- thanks!) the role of state intrusion in economic life and suddenly the questioner must want the US to become Somalia? Somalia is an example of shear chaos, the absence of a state and any sort of civil society. I don’t know any conservatives who are interested in that (maybe some extreme libertarians or something). Is it possible that when we question the role of the state in economic life we don’t necessarily want to shut down the local fire department and stop having roads? Sheesh…
ZeroHedge is reporting possible artificial propping up of home prices:
http://www.zerohedge.com/article/are-existing-home-prices-overrepresented-40
@old cali. This is because a lot of the current crop are advocating exactly that. Wipe out/phase out social security and medicare seems to be one of the most common principles. Then you have people call the unemployed as lazy and drunks-one senator on the right even wanted mandatory drug testing-not withstanding that congress has always passed unemployment benefits when the unemployment was above 7.2% for like the last 50+ years.
We have had the lowest tax rates in decades for the last ten years(and two of those two years are under Obama). That should be clear evidence that lower taxes simply does not guarantee a better economy. Then they want even more deregulation and even more free trade-claiming regulations of the state is what killed the economy.
Remember what happened to the electricity market when deregulation was allowed and Enron’s and others role in it as opposed to supply and demand. CA pleaded with the fed regulators to do somehting and they refused-because the ones there were of the deregulation mantra and market forces as the supreme arbiter of all things. Same thing with housing markets-when they almost tripled with no increase in wages/employment/jobs/outside factors-it should have rung a bell with the regulators. Nope at the peak of the boom, Alan Greenspan chairman of the fed was exhorting people to buy adjustable rate mortgages.
These free market forces have been given full reign in Somalia and the cuirrent crop of folks running on those extreme principles need to look at Somalia and look at the results and we need to decide wether we want to live by them. The electricity crisis, the housing crisis could have been avoided-those were artificially created bubbles under total free market, anything goes principles and the regulators refusing to lift a finger. Even today bernake claims it is difficult to spot a bubble. how were Nouriel Rouibini, patrick.net and even some financial wizards who were betting against housing while selling their clients CDOs able to see it coming? Just plain fundamentals-same way the doctor is looking at fundamentals.
The only difference is the doctor doesn’t have the power to interfere-the regulators did and due to the extreme free market principles-refused to intervene. Even greenspan has come on record and said the markets are not always right or somehting to that effect.
I am not saying we need a totally regulated, strict, bureacratic economy-but we did just fine for a long while-with a few minor bumps here and there. Then we had this grand expereimentation in free markets-where a 14k per year earning strawberry picker was allowed to buy a 720k house , just because he could sign some papers-that is just wrong.
Again for the current bunch railing against high taxes and less regulation-the last ten years do offer a sobering thought of what that can be-we had some of the lowest taxes in decades and some of the most free market friendly , anything goes administration in recent history. If one still wants more of the same-then we do need to look at Somalia to see what happens-where people live in a total free market utopia and have no medicare or social security or any form of govt-less govt?? No thank you-years of that is enough.
Yes we’ve had low tax rates and for a lot of the decade the economy was cruising and people were making money. Maybe the fuel was partially tax cuts? The Fed chose to push rates down to keep things pumping after the crash in 2001 and 9/11- obviously they went overboard on that, but remember the Fed operates outside of the political sphere. I can’t take arguments seriously that argue that a de-regulated housing market is what got us into all of this mess; it’s the area of the economy with perhaps the most governmental intrusion (except agriculture via subsidies?).
People are questioning Social Security and Medicare because they are quickly going broke and we aren’t making enough people to keep the pyramid functioning in the way that it had historically- it’s a hell of a lot easier to implement stuff like that in a post war baby boom and huge economic expansion. Maybe you have some magic bullet there, but know one else does.
Now President Obama is starting to make some rumbles about cutting payroll taxes which is the same thing most republicans were advocating in lieu of the democrats now failed stimulus plan. If you can draw some line between Somalia and cutting payroll taxes in the United States…
I laugh at all the fools in California! Manhattan Beach…what a joke…right next to a big oil refinery and sewage treatment plant…yeah that is impressive place to live….NOT!
And yet you are here posting…
btw, Carson & Wilmington (Arco) and Torrance (Exxon) for refineries and Playa del Rey next to LAX for sewage treatment, not in or near Manhattan Beach.
~Misstrial
As a recent buyer in MB I thought I would add abit to this discussion. I looked for a home since summer 2007. The best prices turned out to be in late fall/Winter 2009. This spring there was not a lot of inventory and anything good sold quickly, near asking. I looked for any short sales or foreclosures, but no real deals there. Got a subscription to foreclosure radar and nothing really there to act on.
I work in El Segundo, most of my coworkers live in Torrance or Redondo Beach. All of which would jump at a chance ot live in MB if prices came down. Our CEO bought a place in MB when he was hired. Most choose MB due to good public schools, good city services, excellent commuting choices, and weather.
Even though I am a bear on the housing market I could not deny the fact 2-3 bed/1 bath bungalows along Aviation were easily selling in 2 weeks or less for $800k+
There are some original owners that are passing away in my old rental neighborhood and usually their heirs choose to sell, but there is always a family wanting MB willing to pay the $800k+ ticket of admission.
My sense is alot of younger, non-CEO / Athlete types, are affording the area due to inheritance or family helping with down payments.
End of the day I waited as long as I could, thinking this summer would have been the summer of foreclosures and shortsales….but it never materialized…and honestly I don’t know if it ever will…we may trend down for the next few years, but I don’t think there will be a catastrophic drop many are expecting…Median income is an excellent gauge of housing value but right now there is a lot of cash being poured in…and this trend may continue for an area like MB for a while…as much as one clings to median income, I would argue one should also not ignore generational cash/wealth.
Agree regarding athletes. The Toyota Sport Center on Nash is big with hockey and figure skaters and Robert Lansdorp who coached Maria Sharapova coaches out of PV.
~Misstrial
Well, how did all that negative beach attitude turn out?
Oh, and the predicts for massive losses to continue past 2010 (the bottom)
And, the 20 year or more recovery period.
Purchased April 1993 on Ocean Dr, 4 blocks to the pier, approx value 8X purchase price.
Sell? Rent is 5x the fixed 3.625% rate mortgage payment……….
Leave a Reply