Real City of Genius – The Westside of Los Angeles. Three short sales in Palms, Santa Monica, and Culver City. $100k to $300k in discounts in prime Southern California locations. Short sales still too expensive even with large discounts
I think it is time that we revisit the West Side of Los Angeles. This area receives probably the most coverage in real estate circles even though 529,000 of the 10 million people in Los Angeles County live there. Glamour attracts attention. But within the Westside, there are many overpriced homes and areas. It is hard to convince people that their 700 square foot box isn’t worth $700,000 but that is due to years of HGTV and other housing love programming that has slanted perspectives on the actual value of real estate. You can’t blame the sellers, because who wouldn’t want to squeeze every penny out of their sale? You can blame the banks and government backed loans since we are all now shouldering the horrible bets made from years ago. If the banks were lending their own money, then who could begrudge them? Yet banks are the middlemen in lending out FHA insured loans, Fannie Mae, and Freddie Mac paper that we now carry through a taxpayer bailout.  Â
Let us bring our attention to the Westside of Los Angeles. Today we salute Palms, Santa Monica, and Culver City with our Real City of Genius Award:
Source:Â Wikipedia
Even within this niche area, there is a wide variance of properties. The halo effect permeates to other cities from the big movers. Maybe breathing in the Beverly Hills air gets to other surrounding cities at least when it comes to valuing real estate. These mid-tier markets within a prime area are the next, I believe, place that will face price adjustments. Even with all evidence pointing to this with massive amounts of shadow inventory building because people can’t afford to pay their mortgage, there is still a lot of doubt as to the extent of the price correction. There is definitely a trend of more short sales making it to market. Everyone by now has an understanding of a short sale (the lender agrees to sell a home for less than the mortgage balance) and the impact it has on the market. Yet short sales are now part of the SoCal real estate market especially in prime locations.
I was meeting with a colleague, good guy but definitely a perma-bull on housing so you can imagine the conversation, but he is actually looking to jump back into Westside real estate. His impression is that since prices haven’t fallen drastically in this disastrous climate, then nothing will jolt values later on. However, the collapse of prices at the higher end is merely in the first stages. The process is sequential and fluid; just because it hasn’t corrected doesn’t mean it won’t.
Let us look at our first short sale example.
Short Sale #1 – Palms, Mar Vista
12844 GREENE AVE, Palms – Mar Vista, CA 90066
Listing Details
Listing price:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $495,000
Last sold (6/1/2007):Â Â Â Â Â Â $655,000
Current difference:Â Â Â Â Â Â Â -$160,000
Beds: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 Â Â Â Â Â Â Â 2
Baths: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 Â Â Â Â Â 1
Square feet:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 972
Built: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 Â Â Â Â Â Â Â Â 1952
On market for:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 90 days
The above property is located in the Palms, Mar Vista area of Los Angeles. A nice area and certainly a good place for a starter home for a young professional family. But prices are very much disconnected from fundamentals. Look at the above home. It is listed at 972 square feet and supposedly has a sale pending. However, we are still talking about close to $500,000 for 972 square feet. Now this is a big discount from the $655,000 peak sales price back in 2007. So we are definitely seeing more movement with banks being more aggressive on certain homes in terms of taking lower offers. But again, these are typically the lower priced homes in each area. There are many higher priced homes with missed payments that are simply sitting in the shadow inventory.
Short Sale #2 – Santa Monica
2712 6TH ST, Santa Monica, CA 90405
Listing Details
Listing price:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $850,000
Last sold (12/6/2006):Â Â Â $1,155,000
Current difference:Â Â Â Â Â Â Â -$305,000
Beds: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 Â Â Â Â Â Â Â 3
Baths: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 Â Â Â Â Â 2
Square feet:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1,064
Built: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 Â Â Â Â Â Â Â Â 1914
On market for:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 27 days
It’s easy to be a millionaire when you don’t count your liabilities. Just because you “own†a million dollar home doesn’t make you a millionaire. The above Santa Monica home is listed for sale at $850,000. It is 1,064 feet with 3 bedrooms and 2 baths. At one point, it did sell for $1,155,000 in 2006. Can prices fall in prime locations? Absolutely. And to most, a $300,000 haircut in 4 years is a significant deal. Still think the Westside is immune to the correction?
Short Sale #3– Culver City
4178 CENTER STREET, Culver City, CA 90232
Listing Details
Listing price:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $600,000
Last sold (12/2/2005):Â Â Â $850,000
Current difference:Â Â Â Â Â Â Â -$250,000
Beds: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 Â Â Â Â Â Â Â 3
Baths: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 Â Â Â Â Â 2
Square feet:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1,918
Built: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 Â Â Â Â Â Â Â Â 1950
I’ve covered Culver City many times before and the above is a typical short sale in the area. This home was bought back in 2005, half a decade ago, for $850,000 and is now listed for sale at $600,000. It is listed at 1,918 square feet with 3 bedrooms and 2 baths. We still have people willing to pay at these levels but only with the right lending. For this home, let us run the numbers assuming a 10% down payment:
Sale price: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 $600,000
Down payment:Â Â Â Â Â Â Â Â Â Â Â Â Â Â $60,000
Mortgage PITI:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $3,606
Is this a good deal? At the lower end you will need a household income of $175,000 to $200,000 a year to purchase this place. The Westside is already showing major cracks in housing values. $100k to $300k discounts are large for most people, even those in the Westside.
On a side note, I’ve added a new forum where people can discuss the specifics of certain areas so make sure to check it out.
Today we salute the Westside of Los Angeles with our Real City of Genius Award.
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56 Responses to “Real City of Genius – The Westside of Los Angeles. Three short sales in Palms, Santa Monica, and Culver City. $100k to $300k in discounts in prime Southern California locations. Short sales still too expensive even with large discounts”
Surprised to see a 1900 sq ft. house for $600k in Culver City, even if it’s kind of in a marginal area. Wife and I went to a couple of open houses in Beverlywood and Culver City and couldn’t help but shake our heads. People are still asking for 800-900k for 3 bedroom 2 bath, 1500 sq ft. type of places. You scoff and laugh at them at first… but after awhile it’s pretty discouraging to consistently see ludicrous shit like that. That’s why it’s nice to come on this site and get a dose of reason from DHB. Thanks again for your site, hope your forum does well.
All I have to say about the overpriced shanties you’ve featured in this post is that they better be in REALLY GOOD NEIGHBORHOODS.
It is really something to have to earn more than 90% of the population to have the privileged of living in these glorified hovels.
It’s comical that people will pay huge money for a POS like those listed above! Not to mention the assumed risk of continued depreciation and paying huge property tax. I guess there really is a sucker born every minute! Oh wait…… I forgot you can write off the interest! hehehe
“If the banks were lending their own money, then who could begrudge them? Yet banks are the middlemen in lending out FHA insured loans, Fannie Mae, and Freddie Mac paper that we now carry through a taxpayer bailout.”
I couldn’t agree more. Until this is off the backs of the taxpayers and back onto the backs of the people making loans in the first place, we will all be getting bled for money.
This is not quite fair — these are terrible houses. Small, fixers, tiny lots. There is a lot of this stuff on the Westside just sitting there. Look at the area near the freeways and near where the Expo line will be. My sense is that these folks bought a couple of years ago thinking that these even these marginal houses were a good deal, but no one wants them now, at any price. But the decent stuff is moving fast. For example, 11954 WOODBINE St Los Angeles, CA 90066 — sale hasn’t closed yet, but I’m sure it will be well above asking.
Still smaller than my rent controlled apartment for more than twice as much a month. Makes so much sense.
This whole mess is going to take along time to play out if jobs don’t come back real estate is going no where. It looks to me more and more like we are following in the foot steps of Japan.
@gael – I know, you can rent nice apartments just down the street from these places -bigger, cheaper, no maintenance. 3 beds, 2 baths in 1000 sq feet is kinda cramped. I live in a 950 sq. foot, 2 bdrm apartment and it’s claustrophobic. It is nice to see some prices starting to go down. Another 60% off and you’re in a good range. Before you flame me for saying that, remember folks, these are small starter homes in middle class areas, they shouldn’t be above $200K or so.
Doc,
I enjoy reading your blogs keep them coming. Hopefully people will start catching on that there is STILL a lot of risk out there.
LAer agree on the prices. Anything above 300-400k should be considered luxury. Nobody makes the money or has the job stability anymore to justify those obscene prices.
Homes like these shown are selling for 50K in my area. (SW Ohio) The foreclosures are rising due to the protracted unemployment. As the banks do the short sales, these homes in the “starter” market are just being clobbered on pricing. I forsee at least another 10-20% correction on home values before the market stops dropping like a rock.
Very sad that a lot of people got caught up in this sham. The problem is, EVERYONE is caught up in it, even the workmen who repair these homes. They are still demanding 90$ an hour for repairs. And as a result, many of them are working at Home Depot or Lowe’s….
Yes, these are middle class homes, which if they were in Indianapolis, would probably sell for $200k.
However, it is the glorious sunshine of SoCal in a town which many people have made a lot of money providing a “fantasy” world for the entire world.
Thus, LA has more millionaires per capita, and many of these people think that if they “fake it” long enough and pretend they are rich, then one day, perhaps, maybe, someday…
@LAer
I think $60,000 is more like it.
LA is filled with CRAZY COOOKEY ABNORMAL BONKERS CUT-THROAT ILLEGALS & DROP OUTS, FELONS, DRUGGIES & ARE NOT THE TYPE OF PEOPLE YOU WANT AS FRIENDS OR NEIGHBORS!
I don’t know about Indy, but any house under 1000 sq ft in the SW Ohio area is going to go for well under 100K if they are on 1/8 acre of land. I don’t care what area of town you are in – unless its the super-rich areas like Oakwood outside of Dayton, OH. Those home values are not falling (yet) but then again, the average joe who is trying to buy into the market, isn’t able to qualify for those homes. The homes that qualify are in older areas, have been somewhat renovated. What is equally difficult is that these same buyers are not only few and far between, but the banks won’t give a 2nd on them to finish the fix up. So the result is either bargain-basement prices or top sellers in “move in” condition. Turnkey homes are the way to go if you are stuck in that market.
“People are still asking for 800-900k for 3 bedroom 2 bath, 1500 sq ft. type of places. You scoff and laugh at them at first… but after awhile it’s pretty discouraging to consistently see ludicrous shit like that. That’s why it’s nice to come on this site and get a dose of reason from DHB. Thanks again for your site, hope your forum does well.”
~
Just ask yourself if you want to be on the hook for a million dollars.
~
Everyone’s becoming bullish on the housing market in SoCal again, meaning we’re just about to enter a bear market again. This is exactly how it was in 2005-2006. Since wages haven’t gone up and a quarter of the state is out of work, those prices must go back down to at least 2000 levels.
But wait, the L.A. housing market is in “recovery”!
I know because I just read it at CNN Money!
Buy while prices are cheap!
@LAer: I agree completely. Pretty sure that’s what they cost around 1999. And that’s the price they would need to return to before I’d be tempted to consider buying.
Or there needs to be massive wage inflation to justify the inflated prices.
There seems to be resistance to both solutions though.
At least the weather is nice and the beach is close. 🙂
Yes, it has and it will take a long time before prices come down to where they should be. Govt, Banks, CAR, NAR, Realtors, Homedebtors etc… are putting up quite a fight. In the end they will fail. Time is not on their side. Sit back, rent and watch all the kicking and screaming, as prices eventually revert back to historic norms. The true values of starter homes on the Westside should go back to the $300s with more desirable areas starting in the $400s. Still lots of bubble mentality out there trying to justify prices, for whatever reason.
Cracks have already started to form in the hIghest end areas with some houses selling at 2004′ and 2003′ prices. 2000′ prices are more in line with reality. Even Santa Monica, Beverly Hills, Pacific Palisades, Malibu and Westwood showing a few 20%+ discounts now. However, it’s still very early in the game for the high end..
Beat the banks at their own game. Sooner or later, they fold.
http://www.westsideremeltdown.blogspot.com
Not so much here on DHB, but on other Westside housing blogs, there’s real denial about prices coming down. Lots of talk about how ‘reasonable’ $600K is for a ‘starter’ home.
To which I say “are you frikking kidding? Over half a milion dollars for a ‘starter’ home? What kind of ppl just starting out have that kind of money?
Chipchick and Ohiogal are right – these places in any other part of the country would fetch $200K maximum. Ask these same Bulls over on the other blogs how much they think is reasonable as an L.A Sunshine Tax and they can never answer – apparently from their comments a “Tax” of 3 or 4 times the national price is quite reasonable for them.
Don’t get me wrong, I would love to buy. But I’ve been waiting since Dec 2006 for something to give, over on Westside, And until the prices reflect some vague correlation to price in the rest of the country, then I’m happy to rent.
The missing piece is devaluation of the dollar, and the downturn since the 1970s of what a real dollar earns.
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Which is why those horrible horrlble working men and women ask for $90 an hour (if indeed they do–more likely the employer gets that, pays the workers $20 an hour or less, no benefits, then pockets the rest).
~
So long as dollars are devalued by the global bankster class, and wages and prices are set by professional pickpockets, it’s no wonder people try to make a killing on housing. But I do realize that bashing workers is easy and feels good to some.
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The message is clear: the economy is being re-engineered by the very rich to cater only to those who cater to the very rich.
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Me, I’d rather rent or live with rain.
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DHB wrote of his permabull housing friend, “His impression is that since prices haven’t fallen drastically in this disastrous climate, then nothing will jolt values later on.” This is the sort of person who jumps off a 150-storey building and sings the Hallelujah chorus till about the tenth floor.
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rose
All of these houses are why I stopped even looking at houses a while ago.
I love my realtor and know he needs a sale, but I simply couldn’t be polite when we went to look at drab cramped house after drab cramped house in places on the Westside where I knew the schools were horrible and the neighborhood “marginal” (to be polite!) when those stinkers were all listed above 685k.
Crappy houses on busy streets still crammed with estate clutter or current renter’s hookahs were listed at 750k while next door neighbors in wife-beaters hung out waxing their cars while drinking beer with their homies.
Can’t wait for the banks to get real and prices to drop further! (If not, we’ll just stay in our rent-controlled 1 bdrm for another five years before leaving the state once the job market improves!)
Those westside prices are insane and only have one way to go…and that’s down. The pockets of affluence (westside, southbay, coastal OC) have been almost immune to the great recession, I wonder how long this can last? Like was mentioned, there will be kicking and screaming from various groups as home prices continue their slide down. The government is setting us up for a Japan style deflation period. Japan is in its second decade of this, how long will our’s last given the excesses and pathetic savings rates here.
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I’ll keep renting and won’t lose any sleep at night. The suckers can buy these bargain starters for 600K+. There is no margin for error at that point. If you unemployed for 6 months…forget about it, you are through!
Most houses in Culver City are about 1100 square feet, on a 50 foot wide by 100 foot deep lot, with permit parking, for at least $700K. In 2000 they were about $300K. There is no justification for them being so expensive as Culver City along with every other city got caught up in the housing boom. Banks are sitting on inventory in Culver City. Nevertheless, buyers will be scarce, and Culver City will decline to affordable prices.
I had to laugh that someone would think that these shitty houses would fetch 200K elsewhere in the country! No fucking way. My sister lives in Katy, Texas, has a gorgeous new FIVE bedroom, two story mansion, THREE CAR garage, POOL, NEW SCHOOLS that look like college campuses…all for 220K. That’s right $220,000.
Her close friend bought a four bedroom brick ranch foreclosure near this same area for 125K.
Those shitboxes in Culver City that were built in the 40’s would probably fetch 100K elsewhere.
California is insane, and our government is insane and criminal.
I’ll stay in my cheap/small apartment and if the prices don’t come down I’m outta here.
HUH??
These little hovels would be lucky to sell for $65K in Indianapolis.
I live in Chicago, and you’d be lucky to get $75K for one. Never mind “good neighborhood because you will not find shanties like this in a “good” neighborhood. Stuff like this is to be found only in poor, blighted south suburbs and way out at the edge of the exurbs.
The charade must go on as long as possible. If we let the natrual course of events unfold it will be devestating. If I get another 15 years I’ll be ready to check out. I’m not really interested in living through the collapse at the end of the rainbow. We have to prop up the phoney real estate market, the Wall Street casino, massive government beauracracy. Honestly, what would happen if they didn’t? The ramifications spread through every capillary of our society. Think of Detroit Plaugue spreading all across the nation.
Ahhh, to live and die in (west) L.A. Although Dr. H.B., Palms/Mar Vista, Culver City, and Santa Monica, like every other neighborhood/little city of LA, have their “problem areas” – their “ghettos” chock full of crime, gangbangers, blight, drugs, etc. Over $500 a square foot for that little shitbox, pardon me “shoebox”. Please!
Certainly, these areas have been tanking, slowly but surely, but unfortunately – at the 25-33% average losses since peak as you’ve demonstrated in your examples, that is still no where near enough. So let the suckers, the knife catchers and fools with money to burn continue to burn!
I’ll wait for prices to be in line with historical norms/values, or better yet, to over-correct, as they should considering the colossal economic calamity we have been and continue to face, despite all the illusions and delusions the powers that be, the too big to fail banks, FED, government cronies and MSM continue to try to feed us. Let them choke on their Koolaid.
Roughly 13% official unemployment in this state, and in actuality 25% effective unemployment and underemployment, not to mention the endless host of other problems in the economy/state – and yet these “not-quite-best” areas like Mid-Wilshire, Miracle Mile, Carthay, Beverly Grove, Beverlywood, Cheviot Hills, parts of Beverly Hills, Westwood, Santa Monica, etc. etc. have fixers/tear downs asking $800K and up, anything decent is 1 mil at least and usually 1.2-1.5 mil, and upwards from there. Absolute insanity.
Now Robin, while we’ve all heard of the deals to be had relative to various major metropolitan/global cities like LA/SoCal, SanFran/Bay Area, Manhattan etc., mostly I’ve heard of the deals in Texas but also elsewhere in the midwest and mid-Atlantic, however there are often significant catches/tradeoffs. Not saying there are $500K worth of catches/tradeoffs, but how’s the job market in Katy, Texas? How is it for job prospects?
No doubt the property taxes are significant – 3% or so in Texas, right?
Although as others have said – if those shitboxes above were in virtually any other part of the country, most could be had for $50K-$100K depending upon the location/condition.
Now Foolio, of course there are significant tradeoffs in Texas vs California. For example – unemployment in Texas is about 7% versus about 18%? in California. Texas has no income tax to match California’s income tax. Sales taxes in Texas are also lower than in California.
Now, California has great natural beauty and climate to help make up for all that but the bottom line is unemployment is unemployment. Who can afford anything when you have no job? When the average family is making 75-100k with both adults working – who can afford $600k? The Dr pounds this in over and over and people still don’t get it! That is why people talk about other areas – because you can actually make 75-100k and have a decent home to live in and not be a slave who has to forgo eating to make the mortgage payment.
@Robin:
Yeah, but it’s Texas for god’s sake!
Yeah, in fact a friend in Dayton, Ohio has 25 rentals, many of which he only paid 30K for, and they are about the same size as those shitboxes above.
Ridiculous.
Oh, the job market in Katy is much better than Los Angeles, and my brother in law makes big money in the oil biz.
Oil biz….great.
Until shadow inventory is brought out into the light, this charade can continue and will. 14% of all mortgages are not being paid right now. And this statistic will probably increase in the months ahead.
According to wiki, Katy, TX is a “wealthy” suburb of Houston, that is 84% White and where half the people make less than 51K a year.
http://en.wikipedia.org/wiki/Katy,_Texas
Can you imagine living among the white bread “so-phis-i-cated” hillbillies that think they are “wealthy” because they make less than $51K a year?
Can you say “YEEE HAAAAW”?
In Shaker Heights, lovely condos are being given away. I viewed on the MLS three immense beautiful vintage condos in a very high-end old building in Shaker Heights. A 2000 sq ft beauty replete with herringbone parquet floors, 9.5′ ceilings, fireplaces and huge rooms, 3 bed 2 bath for less than $100K. And Shaker Heights is a GOOD neighborhood.
Yeah, sure, the Cleveland area is very dangerous and blighted, part of the midwestern Rust Belt so devastated by the trends of the Post WW2 era.
But those trends are about to reverse with a vengeance, and once more these mid-sized Heartland cities that are 500′ above sea level, and have ample fresh water, fertile hinterlands nearby, and have been so beaten up by the past 50 years that they are grateful for business development and have thousands of beautiful homes for sale at fire sale prices, will be much more competitive in the future we’re moving into than cities that are outrageously expensive to operate, have gaping deficits and business flight in spite of great wealth, and are nightmarishly expensive to live in while being impossible to get employed in, will see their competitive advantage erode quickly as we proceed down the slope of resource depletion.
People, get out more. Texas has some incredibly beautiful places. You have to get off the freeways and actually spend a little time visiting. I don’t care how much time you spent in any one city. The state is 5 different and distinct regions. You might have spent years living in Houston but don’t have a clue about the rest of it. The people are some of the most helpful, friendly, good ones you’ll meet anywhere. If you’ve run into someone there who’s not so nice find out what state they moved there from….
Look…. Texas sucks. Period. I lived in the Dallas/Fort Worth area for two years and would never move back. I’ve been in California since 2008.
The reason real estate is so cheap in Texas is because property tax is INSANE !!! About 1/3 of my mortgage was property tax (about 3 – 3.3% of appraised value) and what’s even suckier is that the county tells you what your home is worth – not what you paid. So when the state gets tight on money, they either raise taxes, or tell you your home is worth more. Not to mention they drill for natural gas EVERYWHERE (even in neighborhoods) so you know that the long term effects on the water supply will be horrible – plus it’s dirty, loud, and unsightly.
My wife and I live in Monterey, CA now, where it’s a hella lot more expensive with respect to housing, but my salary is about 20% higher and rent isn’t too bad… I NEVER sit in traffic, you always have an ocean view, it’s always 65-70 degrees (year around), surf 4-5 times a week, and the quality of life is much better. My electric bill last month was $42 because we have such a moderate climate – when in Fort Worth I was paying $150 +/mo just to cool the house. My kids can always play outside, it never gets any colder than a hooded sweatshirt, and the views are unbelievable.
If you like Texas, more power to you. But the reality is, it sucks. Flame all you want, but Texas pride reminds me of New Jersey (dirty jersey) pride – the state and the majority of people suck in those area’s and are the most materialistic bunch I’ve come to encounter. Texas is hot, nasty, you’re never outside because it’s 110 degrees +, and when winter time hits, all the overpasses freeze over and there are hundreds of pile ups all over the metroplex.
Reality is that anywhere on the East or West coast is better than ANYWHERE in Texas. If California goes tax crazy or gets unaffordable, no problem – pack up and move… but i’ll never subject myself or my family in the hot, crowded, ugly, and toxic dump that Texas really is.
CPA in Fortworth TX, most people in SoCal already own a home, so it is taking the equity out(many people have no mortgage) and moving up(income pays for move up mortgage). That is how people can afford a $600k home on a $100k salary or Cal Pers retirement income. The climate here is much better than the climate in Dallas or Houston. I know that God’s country is Kerrville, but that is another story.
Wow, didn’t mean to start a culture/opinion war with my comments. Everyone knows that Texas is godawful hot and full of hicks. Everyone also knows that California is full of hustlers, con artists and gangsters. So what? My point was and still is that housing is all about economics. Over the last couple of years I have met several “Californians” who came to Texas and they sure did not come for the culture or the nice weather. They came for jobs and economic opportunity. They are economic refugees who moved because they had no opportunities in San Diego and LA to make a living and they sure were not gonna sit around waiting. This is what educated, active people do. As far as affordability if you just graduated from UCLA or USC or anywhere else with 50K in student loans and your “starter house” is 600K how are you going to afford it with a 40-60K a year job? – assuming you can get a job. Maybe your parents can get a home equity loan on their $1,000,000 home and give you the down payment? Not everyone is so lucky.
The reason so many Westside of LA houses are glorified hovels is that at some point in the middle of the 20th Century there was a huge change in where wealthy people wanted to live relative to the ocean. For example, when my grandfather retired from business in Chicago in 1929 and decided to move to SoCal, he looked at Palos Verdes but decided it was too damp for his health. So, he bought a house in Altadena above Pasadena, where rich people had been moving for 40 years. That’s why there is so much impressive housing stock in Pasadena, San Marino, South Pasadena, and La Canada: wealthy people with taste built there in 1890-1930. In contrast, Santa Monica was mostly for losers.
Then, around 1945, smog started and penicillin became common. People stopped worrying about tuberculosis and started worrying about air pollution. So, the upwind beach areas became increasingly fashionable, but by the time they became very upscale around 1980, they were built out with unimpressive housing.
Now, there’s no more smog and houses are air conditioned, so Pasadena has come back in fashion, but Santa Monica is still fashionable on momentum.
This all goes back to the main point–CA,FL,NV,AZ were all used as mortgage mills to feed toxic mortgages to Wall Street CDO’s, which in turn were guaranteed implicitly by the USG through swaps to TBTFs. The price of the home had nothing to do with the value–if it was in the right locale it could fetch almost anything if you could get the cat to put his paw print on the application.
Now it’s unwinding, but Bernanke said he would drop money out of hellicopters so the moral hazzard is in place that the rediculous prices will settle back gradually because FIRE is too big to fail. The game is who can hold out the longest: buyers or sellers. Banks are allowed to stay in business by props and rule-bends, such as mark-to-mega. The blatant intervention is the big difference between this depression and the last one. result is the same–only the timetable is shifted.
Things are now dead here in Canada. Expect Alberta & BC to sewer soon.
I’ve noticed lately that some of the lower end Short Sales in my neighborhood (Hermosa Beach) that I track end up being taken off the MLS, but there is no sale. Has anyone else noticed this occurance in their neighborhood? Any idea what is going on?
My God, what a bunch of douches! It’s stunning. You’ve never been to Texas(you’ve probably never been anywhere) and yet you sling shit, stupidly trying to defend the indefensible cost of California housing.
Retards.
Ok, you don’t like Texas? Go to findyourspot.com and the site can spit out at least 20 cities that would provide a better quality of life than SOCA.
As to Katy, Texas being backward? Not remotely. I went to visit in May, the weather was exactly the same as Los Angeles, same temperatures, and the people were great. In fact, when we went to the Cheesecake Factory and I saw the Maseratis parked out front, I felt like I was in L.A., minus the tagging.
It’s funny how you dipshits think that California is the center of the known universe. While in Houston, I saw no cowboy boots or “hicks”. I wish I could say the same for L.A.
I’ve been robbed at gunpoint by gang members here in the “good” area of West Hollywood, my shithead neighbors slam into my parked cars constantly causing major damage on a monthly basis, I spend hours in miserable traffic, etc.etc.etc.
Also, the stories about “higher” wages in SOCA are pure mythology. Salaries here are only slightly higher than Texas, we’re talking about a tiny difference, while housing in Texas is probably one third or maybe one fourth of what it is here. Housing is FAR less expensive just about anywhere else in this country.
CA. is fucked in every conceivable way, has the largest budget deficit in the entire country, but oh yeah, we have good weather!
Idiots.
Robin displays the ‘superiority’ of Texans in his posts.
There are only a few things wrong with L.A. that can’t be solved completely by RENTING.
Yeah all of you Texas haters sound like such bigoted idiots (except for the guy who actually lived there- he gets the right to his opinion for sure). I lived there a bit, liked it, lived in the south a few years, liked it a lot. I would leave LA if it weren’t for the entertainment industry- pretty easy to see the writing on the wall in CA for the last 20 years. It ain’t the CA of my youth…
Ending rant.. Question for you guys- why is it that houses in my mid Wilshire neighborhood- average let’s say 1600 sq. ft, semi-renovated, built in early 30s cost $1 mil plus? I mean it’s borderline ghetto fabulous about 6 blocks away! I look online and see that one can find larger houses in really posh areas like Benedict and Coldwater Canyon for around the same price. What’s up with that? Totally perplexed! Thanks to the Doctor for his hard work and my continuing education!!
Oh yeah a bit more rant- I guess those of you who go off on this redneck meme about TX have apparently never been to art galleries or museums in Houston and must know nothing about American music. TX has produced a ton of amazing musicians- tons of culture there and there’s always been money to fuel it- culture industries are not free! someone has to pay for it. A lot of rich Texans have been paying for it for a long time. And the rivers in the hill country- sheer beauty- check out the Frio River sometime outside San Antonio. Yes, CA has unbelievable nature, but too bad so many people here are such bigots (and vote for the jerks who continue to turn the place into a dump).
It’s amazing to see the elitist attitudes that still remain in coastal California. I’m originally from the east Bay Area. We’ve all heard the derogatory term “fly over country”. What I didn’t realize until I worked in San Francisco was that people who live in that city think “fly over country” starts at the Bay Bridge. I lived in the east bay city of Dublin. My co-workers thought I lived in farm country. Many people in SF think they are so advanced that much of the middle of the country has no indoor plumbing or electricity. I have a sister that lives in Ft. Worth TX and have been there a few times to visit. No, it’s not a pretty as CA, but it’s modern and liveable. The people are much nicer there than in CA. As a native Californian their friendliness is very unsettling. If someone were as friendly to you in CA as the people in TX, you’d start having crazy paranoid thoughts like “do they want to have sex with me, or my wife, or my children?”. Luckily that will never happen to you – unless you happen to have a conversation with someone visiting from out of state. The economy in TX is much better than in CA. Yes, property taxes are very high in TX, but they have no income tax and sales taxes are lower. I would’ve gladly traded total tax bills with my sister when I owned a home in the bay area – and her house is over 4x the size. In CA it’s really hard to believe that Jerry Brown is a serious contender for governor. I was a kid the last time he held that office but was old enough to know what a disaster he was. If he wins I’m outta here. I’ll watch the carnage from afar as California looks back fondly at the good old days of 13% unemployment with Moonbeam at the helm.
Robin Thomas, I know that many Texans are superior to most folks in California and that Texas is the promised land. But for the poor souls who have to live in this Sodom, let’s try to make the best of the situation for now. In Texas, retired folk get a property tax break and people who live outside of the school districts. As for the Texas heat that so many people complain about, read Stan Cox’s book, “losing our cool”. The book states that the body adapts to heat(e.g. Texas heat). So with the climate argument out of the way, let us all migrate to Texas where the people are friendly(except for the road rage from the traffic jams and the heat) and the home prices are cheaper than Riverside county. Sounds like Betty likes Kerrville like Kinky Freidman. “If you’re patient and you wait long enough, something will usually happen. And it’ll usually be something you don’t like”-Kinky Freidman.
Unfortunately, the nutty west side areas won’t drop as much as one thinks. Of course the crap will. There are still nut cases from all over the world that still want to live there that have money for now. Everybody always rants about the Japan depression, but if you haven’t noticed, the properties in Tokyo and all the other desirable areas around Japan are still untouchable for the average person And the Chinese rarely, of at all, purchase property over there!
“Can you imagine living among the white bread “so-phis-i-cated†hillbillies that think they are “wealthy†because they make less than $51K a year?
Can you say “YEEE HAAAAW�
”
~
Unbelievably bigoted comment.
At least we all have fun while we head over the falls into the abyss…
Well, I grew up in West L.A., and moved to Houston not quite 10 years ago, so I guess I’ve got a dog in this fight.
Mike T.: You’re right – property taxes are much higher out here. But let’s look at the entire picture. I pay about $15k on a house valued at $750k. Brand-new spec house, bought 2 years ago, very good finishes, travertine down, hardwoods up, 3 car garage. Not too McMansiony, bright, energy-efficient, and I love coming home. The lot was about $300k for ~7500 sf; construction cost was about $115/sf for the house. Nice area near the galleria and the financial district. 8 minute drive to medical center (HUGE medical center – largest in the world). About 15 minutes coming home. I drive about 5000 miles a year, of which maybe half is to/from work. Public transit is poor.
I would compare my neighborhood with … well, there’s no direct comparison to L.A. It’s a mixed bag. My tiny neighborhood was developed in the 50s. Most older homes in my subdivision are around 1400 sf, tops. Some have been kept up, others not so much. Neighbors are ethnically and economically diverse. Not much crime in my area, in spite of living smack-dab in the city. Probably because there aren’t any low-rent apartments anywhere nearby. Plenty of good restaurants, good museums, some nice parks. Costco nearby.
Wages in my sector – anesthesiology – are higher than in SoCal. Maybe 20% higher? Medicine in general pays better here than in CA.
And no state income tax! I would have paid $23k in CA income taxes last year. Instead I paid zero. Plus, my property taxes are deductible from my federal taxes, but state income tax would not have been deductible, because of AMT. Every year I practice in Texas means another year of college expenses for one of my kids, tucked away in the bank.
TX state government is much more “laissez-faire” than CA. Much less of a safety net out here. But also no special property tax levy to protect, say, the Santa Monica mountains because it’s someone’s pet cause.
Houston is, well, growing on me. It’s a little boring, but “a good place to raise kids”. The people are friendly, although definitely more religious and more conservative in general than in SoCal. The city is ethnically very diverse. That was not always true, and many white folks, particularly older ones, are bent out of shape about how things have changed. There is old money, as well as new, and there are snobs here. My kids are in a very good private school, and the fortunes there compare with the fortunes of Beverly Hills. Not my cup of tea, but I had to put my kids in private school because the public schools I am zoned to aren’t great. There are a few excellent public schools in town, but those areas are very pricey (by Houston standards).
Here’s a nice place (on a busy street, so location discount applies) in a nice area not far from mine. Excellent elementary school, so-so middle school, very good high school.
http://search.har.com/engine/4003-Dumbarton-St-Houston-TX-77025_HAR12008314.htm
If you’re willing to drive, Sugar Land and Siena Plantation are master-planned communities, still ethnically diverse (Siena Plantation less so, I think), with very good schools. Considerably cheaper, although they have a high end as well.
More of the big picture:
I was out in the yard today and was dripping with sweat after five minutes. The climate, 4-5 months out of the year, is awful. The rest of the year is very nice. Late fall and most of spring are just gorgeous. It rarely freezes or snows. Lots of rain – about 54 inches a year. We are neck-and-neck with SoCal for worst air quality in the U.S., largely because of refineries and lax oversight from the state.
Our pitiful beaches are an hour away, and cannot begin to compare with SoCal beaches. No mountains. Dead flat. But camping, kayaking, bicycling opportunities are no more than an hour away. Austin is 2 1/2 hours away.
Unemployment is lower in Houston than in L.A. by a long shot. State-wide, it was 8.2% in June. Compare that to 12.2% in L.A. county in June! The oil industry continues to bubble along, health care is doing well, housing stumbled a little but seems to be recovering (no real bubble here, since there’s an endless supply of land, and no natural barriers to growth).
Would I move back to L.A.? Woudl I move to San Diego? Sure, if I made two or three times what I do now! I can’t see spending insane amounts of money on a shack. Like short sale #2 above – an $850k hovel. In keeping with DHB’s time-tested advice about not spending more than 3x your yearly income on a house, I could afford a “million-dollar house” (whatever THAT is) if I moved back to L.A. It wouldn’t feel like a million dollar house, though. It would likely be a tarted-up shack. Whatever increased happiness I would have from being in SoCal would be more than offset by the increased anxiety from not being able to save for a decent retirement, and not being able to save for my kids’ college, and worrying about future state/federal income tax changes, and changes in the social security retirement age, and being stuck in traffic for an extra five to ten hours per week, and on and on and on. I’m sure that if I had been in SoCal when I started as an anesthesiologist, I’d have been sucked into the housing bubble, and would not have contributed to my retirement accounts to the full extent possible, so I’d probably be tearing my hair out now. But I’d have granite countertops!
All in all, life in Houston is pretty good, if you look at the big picture. Not just for me, but for a lot of folks.
If real estate continues to slump in L.A., and physician incomes hold steady, I might move back, but I’m not counting on it. If I do move back, I’ll rent for several years.
Yes, he can be voted out, just like the Governor. Non-Arizonans don’t understand that Phoenix is much different from the rest of the state. The Governor can pass whatever crap she wants for Arizona, doesn’t mean the city is going to comply with it.
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