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Tell us ‘Is SoCal luxury home market slipping?’
May 20th, 2008, 12:15 pm · 37 Comments · posted by Jon Lansner/O.C. Register columnist
Two views of high-end SoCal real estate in today’s newspapers …
• L.A. Times …
Median sale prices fell by 13% in Beverly Hills in April, compared with the same month last year. Rancho Palos Verdes dropped 18% over the same period, while Newport Beach’s 92660 ZIP Code took a 34% hit, according to DataQuick Information Systems. Experts say these areas and others are catching up with price declines that struck first in outlying suburbs such as the Antelope Valley and the Inland Empire, where many first-time home buyers purchased their properties with sub-prime loans.
“You can’t have one market hugely cheaper than another forever,” said UC Berkeley professor Thomas Davidoff, who specializes in real estate. Davidoff and others say the time lag stems from the fact that affluent homeowners generally don’t have to sell under duress, unlike struggling borrowers facing escalating mortgage payments. But wealthy homeowners are increasingly finding out that if they want to sell their homes, they will need to discount the prices. (To read more, CLICK HERE!)
• Wall Street Journal …
The only notable area of strength: high-end real estate. L.A.’s Westside, home to affluent neighborhoods such as Brentwood and Westwood, “tends to be more insulated because this is where people with money want to be,” says Madison Offenhauser, regional director in Los Angeles for Keller Williams Realty.
Median prices in Brentwood are up 16%. The Hollywood Hills, up 26% to a median price of more than $2.1 million. Rancho Palos Verdes and the Palos Verdes peninsula, up 17%. Parts of Newport Beach, one of Orange County’s poshest addresses, are up as much as 67% to $2.75 million. The coastal village of Laguna Beach is up 6%. Lee Ann Canaday, owner of the Canaday Group, a Laguna Beach real-estate firm, says “almost every deal I’ve done this year” in Laguna and Newport Beach has had multiple offers. (To read more, CLICK HERE!)
So, who’s got it right?
Psst! Want a hint? READ THIS!
May 20th, 2008 at 12:27 pm
Sounds like a great time to buy.
Aloha,
Keahi
May 20th, 2008 at 12:34 pm
Hmmm Jon, What type of responses do you expect to get from this crowd?
May 20th, 2008 at 12:47 pm
For sale signs everywhere. Open houses all week long in CDM and NB. Just look at the time on market for most of these homes.
May 20th, 2008 at 12:48 pm
The luxury market is definitely hurting as you can see in this article.
May 20th, 2008 at 12:56 pm
It looks like not even the rich can escape this housing crash. I hate to say “I told you so” but unfortunately, me and other bears in this blog were right.
May 20th, 2008 at 1:08 pm
It’s simple.
As I said before, the better areas always will carry a premium, however that premium has to be relative to something. If that something (inland a bit) drops …… again it’s all relative. Always will be.
Those with the ability to pay more didn’t get there by being foolish. If the premium gets too large the buyers get scarce. Seems to be what we are seeing at this time.
Two hundred listings in CdM !!
May 20th, 2008 at 1:49 pm
PDU - I’d like suggest an amendment your comment:
“Those with the ability to pay more didn’t get there by being foolish.”
. . . unless we are talking inherited wealth, in which case the “shirt sleeves to shirt sleeves in three generations” rule tends to prevail ….
May 20th, 2008 at 2:06 pm
Yawn
May 20th, 2008 at 2:16 pm
Hey Blood,
Looks like you caused ReekingofAfalfa to try to think…….
May 20th, 2008 at 2:31 pm
http://www.signonsandiego.com/news/metro/20080520-9999-1n20housing.html
May 20th, 2008 at 2:46 pm
Another positive headline, Alfalfa. I am seeing more and more (and more) of these. And to think, these HUGE pops in sales came into being absent any of these headlines.
May 20th, 2008 at 2:48 pm
Looks like SD may have had a spring bounce after all – huh. Guess you don’t need headlines to get a SPRING BOUNCE.
Re: wealthy=savvy
I suppose I’m hyper sensitive to suggestions that people with money are necessarily money-savvy. I have seen close-up, many examples where large amounts of family wealth disappeared pretty quickly when progeny got it.
Semi-related:
I was in line in Costco about 6 months ago, and heard a father figure talking to a mother figure saying “we need to buy a house for Brian. It’s time, he’s (pause) he’s 23, it’s about time he was on his own.” M’F’ replied that houses were losing value, and that it might not be a good time. F’F’ started up again as if he didn’t hear anything she said, and kept going on about how it really was something that he wanted to do, and that it was time.
From what I’ve seen, I think that the 3 generations rule probably is obsolete these days, it can be as short as 2. If the money came easy to the first generation, then I would say that the loss will more likely occur in 2 generations.
This link has a brief spiel with some interesting concepts regarding inherited wealth tendencies:
http://www.cumberlandlegacy.com/index.php?option=com_content&task=view&id=22&Itemid=1
(Though I’d consider ‘maturity’ to be a better word for the author’s use of ‘leadership’).
May 20th, 2008 at 2:51 pm
Don’t you guys read this stuff before going all orgasmic on us?
““For the most part, this is a good, old-fashioned blue-plate special – this is discounts spurring more home sales for the most part,” DataQuick analyst Andrew LePage said.”
Right there, from the story….what is so hard to see?
May 20th, 2008 at 2:59 pm
I’ve seen a 33 percent rise in the number of positive headlines versus March (though we’re down 18.6% versus last year).
May 20th, 2008 at 3:32 pm
2-3 million dollar homes are not hard to find in the great OC.
What’s much harder to find-people who earn $500k a year.
The SoCal luxury home market isn’t slipping its crashing.
OC is not looking good anymore!
May 20th, 2008 at 3:37 pm
Well don’t tell squeekingalfalfa or snoughtful that it’s crashing. They’ll be upset.
May 20th, 2008 at 3:44 pm
The new ones are still sitting too. Do you think they would do 0% down?
May 20th, 2008 at 3:56 pm
Hey Thoughtful, how far off from peak do you think we are and how bad do you think its going to be?
May 20th, 2008 at 4:44 pm
Off topic but too good to pass up…yet again the actually environment on the ground speaks LOUDLY and CLEARLY that there is no basis to the fear product that is trying to marketed here by the resident paid RE shills.
Time for another installment of “The Price is NOT right!” Our contestants today are all from the same tract of the same neighborhood, some desperate, one greedy and another just …let’s play the game.
Our first contestant is a real greedy squirrel isn’t he(get it?)…check out that asking price versus previous sale…that’s a profit of $469.5K if he gets it (is this guy seriously high or what?) …which we all know he won’t because our next contestant..at 4 Nutcracker…
11 Nutcracker Ln
Aliso Viejo, CA 92656
Beds: 3
Baths: 2.5
On Redfin: 469 days
Year Built: 1991
SQ.FT.: 1,682
Lot Size: 4,000 sf
$/SQ.FT.: $431
Status: Active
Last Sale: $255,500 (12/31/1990)
Listing Price History
Date Price
Feb 06, 2007 $760,000
Feb 22, 2007 $725,000
is under cutting his asking by only $210.1K ..but I’m sure any prudent buyer wouldn’t let one comp sway them so easily..but then there’s another contestant…
4 Nutcracker Ln
Aliso Viejo, CA 92656
Beds: 3
Baths: 3
On Redfin: 24 days
Year Built: 1992
SQ.FT.: 1,553
Lot Size: 3,271 sf
$/SQ.FT.: $332
Status: Active
Last Sale: $481,500 (01/29/2008)
Listing Price History
Date Price
Apr 26, 2008 $522,900
May 20, 2008 $514,900
…who’s probably a little more desperate that the our 4 Nutcracker guy..
ooh..looks like we may be headed for short sale unless our lucky contestant has $100K in paid equity…some how I don’t think that’s the case…But he’s not alone because right around the corner is another equally desperate seller at 2 Pinyon Jay…
5 Bob White Ln
Aliso Viejo, CA 92656
Beds: 3
Baths: 3
On Redfin: 75 days
Year Built: 1991
SQ.FT.: 1,424
Lot Size: 3,434 sf
$/SQ.FT.: $365
Status: Active
Last Sale: $620,000 (06/16/2005)
Listing Price History
Date Price
Mar 06, 2008 $570,000
May 01, 2008 $520,000
2 Pinyon Jay Ln
Aliso Viejo, CA 92656
Beds: 3
Baths: 3
On Redfin: 120 days
Year Built: 1991
SQ.FT.: 1,800
Lot Size: 7,140 sf
$/SQ.FT.: $333
Status: Active
Last Sale: $685,000 (06/23/2004)
Listing Price History
Date Price
Jan 21, 2008 $599,000
Mar 06, 2008 $649,000
Apr 24, 2008 $599,000
But if that were’nt enough for you then there’s always the 800lb Gorilla in the room.. our friendly, caring comp destroying Bank-Owned home..
16 WIGEON LN
ALISO VIEJO, CA 92656
Beds: 3
Baths: 2
On Redfin: 78 days
Year Built: 1991
SQ.FT.: 1,682 Lot Size: -
$/SQ.FT.: $309
Status: Bank Owned
Last Sale: $545,000 (12/04/2007)
Asking: $519,900
Listing Price History
Redfin has no price changes for this listing.
This Real Time snap shot of the local RE market has been brought to buy the Coallition for the Return of Truth and Justice.
May 20th, 2008 at 4:45 pm
a
May 20th, 2008 at 4:46 pm
Housing is still going to fall over the next 6-12 months. Don’t drink the realtors cool aid.
May 20th, 2008 at 4:54 pm
All of your examples are far above $300 per square foot.
May 20th, 2008 at 5:07 pm
Fears of longer credit crisis set to hit Wall St
Wall Street stocks were set for a lower start on Tuesday after a leading banking analyst said the credit crisis will extend well into 2009 and possibly beyond and a rise in core inflation threatened to trim corporate profits and consumer spending.
According to Meredith Whitney and a team of analysts from Oppenheimer, the extended credit crisis will results in “multi-billion dollar revenue reversals” and further significant writedowns and loan loss provisions.
“We believe the real harrowing days of the credit crisis are still in front of us and will prove more widespread in effect than anything yet seen,” Ms Whitney said
More severe price drops are on the horizon.
http://us.ft.com/ftgateway/superpage.ft?news_id=fto052020080934150607&referrer_id=yahoofinance
May 20th, 2008 at 5:10 pm
“California is leading the way in the next leg: a consumer bust”
Squeezed by rising unemployment, inflation in food and energy costs and plunging house prices, Californians are cutting back on spending.
Besides causing woes for state and local government, this is giving California’s economy another knock and makes further job losses, home repossessions and banking problems more likely
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080519/REG/533900601/1036
May 20th, 2008 at 5:14 pm
Housing slump, economy hammer Home Depot’s Q1 net income
The Home Depot Inc.’s profit sank 66 percent in the first quarter, as the home improvement retailer continued to battle the slumping housing market and weakening economy and also took a $543 million charge to close stores
More unemployment means more foreclosures.
http://www.bizjournals.com/albuquerque/stories/2008/05/19/daily15.html
May 20th, 2008 at 5:18 pm
“Warren Buffett, the world’s richest man and chief executive of conglomerate Berkshire Hathaway, on Monday said he thought the effects of the financial crisis were “far from over”
http://www.ft.com/cms/s/76410c1a-25b4-11dd-b510-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F76410c1a-25b4-11dd-b510-000077b07658.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fwww.europac.net%2F&nclick_check=1
DOES ANYONE HAVE ANY QUESTIONS ABOUT WHICH WAY THE HOUSING MARKET IS HEADED?
May 20th, 2008 at 5:37 pm
Poor Bill, he never reads his own links. He only seeks out the worst headlines he can find. For your information, Bill, Home Depot is ADDING a brand new store in Huntington Beach in the fall, (how many employees is that?) and is also adding employees to the floor of each and every existing store. As for the other stories, it’s east to find differing OPINIONS! Next.
May 20th, 2008 at 5:41 pm
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May 20th, 2008 at 5:43 pm
That was supposed to be a smiley face … it got mashed by the character parsing here … (not by me .. I’m not that tweaked)
May 20th, 2008 at 5:45 pm
Yeah, like T’ has suggeted before in light of such damning evidence - that hack buffet has probably predicted 9 of the last 2 recess…. blah blah
May 20th, 2008 at 5:51 pm
In the 90’s RE slowdown, I remember running into former aerospace engineers . . . wearing orange aprons in the fastener section at Home Depot (not kidding here) . . . this time I suppose it will be former RE agents and come-lately mortgage brokers wearing orange.
I want you guys to know that I support you, I will CONTINUE to shop at HD.
May 20th, 2008 at 8:06 pm
Jonathan,
Remember that headline on the front page “I feel sorry for my kids as they will never be able to afford a home in orange county.” I couldnt wait to send you an email about this front page blunder when i got to work that day, now the kid can buy the parents home out of foreclsure on his mere $50k per year job. The funniest part, the kid already makes more money than the parent ever did and the parent serioulsy thought her house would be worth 2 million in 5 more years. Hilarious.
May 20th, 2008 at 10:38 pm
The luxury market is starting to crack because the financing is getting very restrictive.
http://thegreatloanblog.blogspot.com/2008/05/chaos-in-luxury-finance-other-shoe-has.html
May 21st, 2008 at 5:10 am
[…] more here. Lansner’s readers believe the local paper got it right and The Journal missed the boat. […]
May 21st, 2008 at 9:56 am
“All of your examples are far above $300 per square foot.”
yes yes, 309 is waaaaaaaaaay above 300!! it may sell at that price, or it may not. we’ll see. but nothing at 333+ in this neighborhood is selling obviously
May 21st, 2008 at 10:14 am
NationalBooble had this to pitch: The luxury market is definitely hurting as you can see in this article. ( And while I’ve got you suckered into visiting my website, please be sure to sign up for, or buy something - my house payment is rapidly approaching.)
June 18th, 2008 at 9:49 am
[…] Tell us ‘Is SoCal luxury home market slipping?’ […]