Foreclosure actions were initiated on 1.37 percent of first mortgages during the first quarter of 2009.
The percentage of loans in the foreclosure process at the end of the first quarter was 3.85 percent.
The [seasonally adjusted] delinquency rate for mortgage loans on one-to-four-unit residential properties was 9.12 percent of all loans outstanding as of the end of the first quarter of 2009.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.
The combined percentage of loans in foreclosure and at least one payment past due, meaning the percentage of mortgage holders not current on their mortgages, was 12.07 percent on a non-seasonally adjusted basis, the highest ever recorded. [Mortgage Bankers Association]
America has achieved a new record: one in eight homes is delinquent or in the foreclosure process.
The loans going delinquent now are not the subprime and "exotic" option ARM/Alt-A loans, but prime, fixed rate loans, due to homeowners' job losses.
According to the writers, California, Florida, Arizona and Nevada are responsible for about 46 percent of the foreclosure starts. The big boom in the west turned into the big bust in the west.
Overall, the figures shows the magnitude of the US housing debacle, and how in the national picture it’s premature to call a market bottom.
Thursday, May 28, 2009
Foreclosure actions were initiated on 1.37 percent of first mortgages during the first quarter of 2009.
Wednesday, May 27, 2009
There are big plans for Downtown LA. From the Hills of Bunker to the Industrial Heights of the Toy District to the Parking Lots-Turned-High Rises in South Park, developers are sculpting the future of the urban core block by mega-block.
Some projects are ambitious, like the $1 billion two-tower development replacing the Wilshire Grand Hotel, and Park Fifth, the highest residential tower west of Chicago to be built at Olive and Fifth.
But many projects have been delayed, deferred or derailed because of the recession, the lack of funding and the lack of perceived need. The building boom is being scaled back.
That’s not necessarily a bad thing. Let the businesses return to the office towers; let the residents buy up the lofts and occupy the rentals; let energy prices resume their climb so the people return to the city center. Downtown will retrench, catch its breath and absorb what’s been erected.
Dozens of residential projects are being entitled, built, completed and sold. Courtesy of the excellent reporting in the Los Angeles Downtown News, below is a summary of residential developments in Downtown Los Angeles. Grid numbers refer to a Downtown Los Angeles map, also courtesy of Los Angeles Downtown News.
The 17-story adaptive reuse condominium project has pushed back its opening date from late April to July 1. Construction is mostly complete. The Financial District project will offer 11 levels of residential space, with 80 lofts from 600-1,268 square feet. Prices have been lowered to $349,000-$920,000. The structure also has three floors of indoor parking, a gym and a roof deck with a wet bar. At 655hope.com. B7
711 N. BROADWAY
Groundbreaking for the conversion of a four-story office building in Chinatown into condominiums has been pushed back to early 2010. The $22 million project would transform the BC Plaza building into a 53-unit complex. Condos are expected to sell for $300,000-$600,000. C3
808 S. OLIVE ST.
There has been no movement on a proposed mixed-use, residential/hotel project. The property currently holds a 900-space parking lot and will remain as such until the economy improves. C7
1133 S. HOPE ST.
There is not a solid timeline on the project. Plans call for a 29-story, 159-unit building to rise on a current South Park parking lot across from the South Group’s Elleven high rise. The development, which would take two years to build, would include 250 parking spaces, 6,700 square feet of retail and an outdoor pool. B9
ALAMEDA AND FOURTH CONDOS
Construction on the $30 million adaptive reuse project in the Arts District has been pushed back at least a month, to June or later, due to the economy. Plans call for the conversion of the five-story, 1923 structure that was once home to the Bekins storage company into 53 artist-in-residence lofts. Units would range from 650-2,400 square feet. E5
An adaptive reuse project at 695 S. Santa Fe Ave. is still on hold. The developers have not disclosed any budget or timeline information for the Arts District project.
The third building in this $75 million Arts District complex opened this month at 530 S. Hewitt St., bringing 116 condominiums onto the market. Lofts range from 750-2,400 square feet and prices start in the high $200,000s. There is no timeline for two additional residential buildings at 549 Molino St., which will house 55 units. barkerblock.com. F6
Conversion of the former Spreckels Brothers sugar beet warehouse at 940 E. Second St. into a 58,000-square-foot residential complex is expected to be completed in July. Prices have not yet been set for the 38 market-rate, three-story, loft-style townhouses, ranging from 1,300-2,600 square feet. All units contain two-and-a-half bathrooms, two bedrooms and roof decks. F5
CITY HOUSE AND THE OLYMPIC
Investors are still searching for financing for a proposed 800,000-square-foot residential and hotel project in South Park at Grand Avenue and Olympic. Plans call for a 60-story structure, the City House, and the 49-floor Olympic that would cost about $450 million. Once expected to break ground in early 2008, the project currently has no timeline. titanorganization.com. C8
As construction continues, the developer has begun sales for the 348 condominiums in two buildings. The first phase of the project includes a mid-rise “loft” structure at Ninth and Flower streets with occupancy slated for June, and a 30-story tower at Figueroa and Ninth streets. Prices are from $295,000 to $3.5 million. There remains no timeline for the second phase, expected to bring another 281 market-rate condominiums in a second 30-story tower. At concertodowntown.com. B8
EIGHTH AND GRAND
Plans exist for a 14-story residential tower, a two-story commercial building and a 53-story residential tower at Eighth Street and Grand Avenue.. A pedestrian paseo would connect Grand Avenue and Olive Street. The project has no timeline. At astanienterprises.com. C7
Renovation of a former hotel at 416 S. Spring St. will be completed in the fourth quarter. The 1913, 12-story building is being transformed into 65 units that will range from 850-1,700 square feet. Prices will start in the $400,000s. Residences include Italian kitchens and bathroom cabinets. Parking lot immediately south of the project to the city is slated to become a public park. At eldoradolofts.com. D6
Move-ins could begin by June for this 33-unit project at 120-130 Hewitt St. in the Arts District. The project will offer residences in two buildings, one erected in 1936, the other in 1948; a central entrance will feature a water fountain powered by solar energy. Units will range from 800-2,500 square feet and will have 18-26 foot cathedral ceilings and stainless steel kitchens. At hewittfirst.com. E5
A proposed 432,000-square-foot project at 1028 S. Hope St.remains on hold due to the economy. The South Park project is planned for a parcel near the company’s Packard Lofts. Designs call for a 25-story tower with 250 loft-style condominiums, two levels of underground parking with 390 spaces and 10,000 square feet of ground-floor retail. At veniceinvestments.com. B8
There has been no progress on a proposed $1.3 billion project just north of Pershing Square. The fully entitled project would rise on a current parking lot at Olive and Fifth streets. The development would include a 76-story tower, which would be the tallest residential building west of Chicago, and a 44-story tower joined by a third, 15-story residential building. The project would create 790 condominiums and a 212-room hotel, plus retail and restaurant space. C6
SHY BARRY TOWER II
Developer Barry Shy plans to begin construction on a 39-story, 700-unit condominium tower at 601 S. Main St. in 2010, he said. In the meantime, he plans to build a five-story parking structure on the site, which will eventually sit beside the residential building. Groundbreaking on the garage is expected in six months, said Shy, and construction will take approximately one year. D7
Groundbreaking on two 34-story condominium towers at 624 W.12th St. and 1200 S. Figueroa St. is expected to take place in early 2010. The development, by the team who built EVO, Elleven and Luma in South Park, will contain 324 condominiums with hardwood floors, decks and balconies. There are plans for a third tower at 1241 S. Flower St. At exploresouthgroup.com. B9
Groundbreaking is pushed back from 2009 to 2011 for the 50-story Zen condominium tower slated for Third and Hill streets. If built, the skyscraper would be taller than any current residential building in Downtown. Designs call for a tower atop a 10-story parking podium with 302 lofts; 66 of them would be reserved for workforce housing. Construction would take four years. C5
Tuesday, May 26, 2009
The irony about the challenging Downtown real estate market is that some of the best projects are now coming online. Evo South is one of these projects.
This 24-floor ground-up construction in the South Park neighborhood near the Staples Center offers high style, views and green living at a fair price. Buyers should take note.
Address: 1155 S Grand Avenue, Los Angeles 90015
Prices: $420,000 and up (1 bedrooms), $730,000 and up (2 bedrooms) updated 3/10/10
HOA: high $400s - $700s (1 - 2 bedrooms)
Sales: 75% sold (updated 3/10/10)
Parking: 1 space for 1 bedroom homes; 2 spaces for 2 bedroom homes
Click here for current pricing (updated 3/10/10) of EVO units and photos of Downtown from the two penthouses.
EVO South is the third building in a development by the South Group that includes Luma and Elleven near the corner of 12th Street and Grand Avenue. Luma and Elleven share amenities, but EVO South is a world unto itself.
EVO feels (and looks) a lot like a high-end hotel – and with a 6th floor infinity salt water pool, a 24th floor gym, wool carpet, and Poliform-like accents – the amenities are superior to say, The Standard Downtown or The Mondrian.
There are 311 homes and more than fifty different floorplans. Units include:
Performance Bosch oven, cooktop, dishwasher
Stainless Steel refrigerator
Caesarstone countertop and backsplash
Millenium hardwood floors
Utility room with washer/dryer hook-ups
Pre-wiring for phone or data
Limestone slab countertops
Slate tile flooring
There is a concierge and 24-hour security. Roam with your laptop on site -- there is wi-fi throughout the premises.
EVO South is the first high-rise nationwide to be certified LEED Silver by the US Building Council. The experience of being in a pristine, odor-free, non-toxic environment is a novel and pleasant one.
The developers are offering a high quality and value, and are succeeding in moving the units.
First-time buyers who are priced out of West Hollywood, Hollywood and Silver Lake are now finding they can get more for their money Downtown. The excess inventory from overbuilding during the boom will (eventually) be absorbed by transplants from other neighborhoods.
If there’s any downside, it’s that the building has been constructed without guest parking. Many nights, the streets are empty and vacant metered spaces are abundant. But beware the evening a friend drops by only to discover the sole parking option is a $20 lot.
Bottom Line: Best quality and value in Downtown LA.
Sold by the Mark Group.
Saturday, May 23, 2009
From the rooftop deck of this new five-unit building you see exactly where you are: front-center to the West Hollywood scene. The Mediterranean-style building offers four townhouse-style condos and one colossal penthouse with 360 degree views.
Address: 8833 Cynthia Avenue, West Hollywood 90069
Asking price: Updated 9/8/09 $889,000 - $1,995,000 (two units reduced from $995,000 to $889,000)
HOA: to be determined
Parking: 2 spaces
Days on Market: 10
Stroll down to Tender Greens for lunch or up to The London West Hollywood for a drink. Or catch a show at the Viper Room and walk to dinner at The Palm: you are home.
The four townhouses are constructed on three-levels and have 3 bedrooms, 2.5 baths and range in size from 1,550 to 1,825 square feet.
Units have hardwood floors, large closets, Grohe bathroom fixtures and stainless steel appliances.
The single-level penthouse (two above photos) has a large living room with fireplace and south and west views, a large open kitchen, and 3 bedrooms, 3.5 baths and 2,410 sq ft of living area.
The townhouse with the best view – Unit #201 – which faces Cynthia Street – has 1,825 sq ft of living area and is priced at $1,145,000, $150,000 above the other townhouses.
Bottom Line: Welcome to the block, Cynthia House. You may not have the design flair of some other new projects, but you make it up in space and location, location, location.
Sold by Nelson Shelton & Associates. 8833 Cynthia Avenue website.
Wednesday, May 20, 2009
A smart, new twelve-unit condo development has just been brought to market at 928 Croft Avenue in the West Hollywood area. Updated 4/26/10: Only 3 of 12 units are still for sale, all over 2,000 sq ft. Other units have sold in the $420 - $500/sq ft range, see sale prices here. This has been perhaps the most successful development in West Hollywood in the past 12 months.
- #101 - 2,053 sq ft, 120 sq ft patio - $1,095,000 (now $949,000)
- #102 - 2,247 sq ft, 275 sq ft patio - $1,195,000 (now $1,099,000)
- #103 - 2,413 sq ft, 835 sq ft patio - $1,250,000 (in contract)
- #201 - 2,053 sq ft, 44 sq ft patio - $995,000 (sold $864,500, $421/sq ft)
- #202 - 1,379 sq ft, 72 sq ft patio - $595,000 (sold $575,000, $426/sq ft)
- #203 - 1,661 sq ft, 26 sq ft patio - $795,000 (sold $769,000, $462/sq ft)
- PH301 - 2,053 sq ft, 44 sq ft patio - $1,095,000 (sold $950,000, $462/sq ft)
- PH302 - 1,106 sq ft, 108 sq ft patio - $575,000 (sold $550,000, $497/sq ft)
- PH303 - 2,128 sq ft, 108 sq ft patio - $1,195,000 (price unchanged)
- PH304 - 2,337 sq ft, 52 sq ft patio - $1,225,000 (sold $1,125,000, $481/sq ft)
Centrally located between Santa Monica Boulevard and Melrose Place in the center of West Hollywood, the Luminaire is within a few minutes’ walk of restaurants, gyms, shopping and entertainment.
Designed by Holtz Architecture, this development has a pleasant, neutral design, which will appeal to a broad spectrum of buyers.
The complex contains a blend of unique floorplans. There are four penthouses, ranging in size from 1106 sq ft (PH302) with great views of the hills, to PH304, with 2337 sq ft of living area, which faces Croft Avenue.
Sprawling Unit #103 with 2413 sq ft of living are is a built on two levels and includes 835 sq ft of outdoor space.
Units include large closets. Bathrooms have Grohe fixtures. Kitchen appliances are by Bosch, except the cooktop which is a hip Italian stainless steel design by Smeg. Kitchen cabinetry is by Gatto Cucine, an environmentally friendly, modular cabinetry system from Italy.
Bottom Line: Luminaire offers formidable competition to Hancock Lofts, 123 Kings Boutique Residences and other design-forward condo projects coming to market in West Hollywood.
Sold by deasy/penner & partners. www.928croft.com
Tuesday, May 19, 2009
Single Family. Sales activity has picked up in Santa Monica since January, when only four houses sold. Nineteen homes sold in the February – April 2009 period, with a median sale price of $1,775,000. Bucking the trend of other neighborhoods, only one of these properties was a short sale, and none was bank-owned.
Sales volume is off more than 50% from the same period in 2008 (41 sales), and more than 75% from the same period in 2006 and 2007 (82 sales both years). The combined effects of difficult financing and the yawning gap between buyer and seller pricing has contributed to the current languishing of the Santa Monica market.
During the same February – April 2009 period, 46 single family listings in Santa Monica expired, with an average list price of $2,272,000.
Freshly built or remodeled properties seem to dominate the high-end of sales activity. 703 Palisades Beach Road, on the Santa Monica “Gold Coast”, sold for $6,500,000, below its $7,350,000 asking price, after 39 days on the market. The home, within spitting distance of the ocean, has a pool, 5 bedrooms, 4.5 baths, and 3,198 sq ft of living area on a 5,700 sq ft lot.
821 Georgina Avenue, on one of the most sought-after streets north of Montana, sold for $3,883,300, slightly below its $3,995,000 asking price, after a brief nine days on the market. Originally constructed in 2000, this newly-remodeled Mediterranean palazzo has 5 bedrooms, 4.5 baths, 4,650 sq ft of living area on an 8,270 sq ft lot, and a pool.
It’s still possible to benefit from low interest rates in the “jumbo conforming” category in Santa Monica. 1008 Bay Street, a 1,000 sq ft 2 bedroom, 1 bath Spanish bungalow on a large 6,499 sq ft lot, closed at $825,000, close to its $849,000 asking price. The same home sold for $850,000 in October 2004.
Like in other neighborhoods, sales activity in Santa Monica has picked up quite substantially. Fifteen homes went into contract in March. Eighteen homes went into contract in April. The months supply of inventory in Santa Monica has fallen from a multi-year high of 22 months in February to 8 months in April. After sales figures plummeted in the September 2008 – February 2009 period, the Santa Monica market seems well on its road to recovery.
Condos. Condos of all stripes sold in the February – April 2009 period. 64 condo sales closed, including twelve for $1 million or more. The median sale price was $640,000. Eight of these sales were bank-owned.
Monday, May 18, 2009
Commercial Property News reports that in the first quarter of 2009, Los Angeles County's industrial property market had its greatest amount of negative net absorption in nineteen years.
This is the largest quarterly hit to occupied space in the metropolitan area since the first quarter of 1990. This contraction in demand for industrial space increased the availability rate by 100 basis points for the quarter to 6.5 percent. The current economic turmoil is having a large effect on one of the nation’s largest industrial markets. The port is at a standstill, given the drop-off in trade activity, with both imports and exports lacking. And the local consumer is struggling given the pace of job losses and the housing bust.
We can see how all this bad news has an impact across the Los Angeles Basin. Creaky demand has led to declining warehouse prices.
709 E Walnut Street in Carson reveals just how much prices have fallen of late. This 26,250 sq ft warehouse on a 49,615 sq ft lot sold in January 2007 for $3,200,000 ($121.90/sq ft). The property was later marketed and closed in April 2009 for $2,625,000 ($100/sq ft) – an 18% reduction from the previous sale price in only 15 months.
The “bid ask” spreads on industrial properties have grown wide. 2221 S Main Street in Downtown Los Angeles, a 34,427 sq ft warehouse-manufacturing facility on a 20,473 sq ft lot, sold for $3,662,500 in April 2009, at a 19% discount from its asking price of $4,500,000.
3116 Vanowen Street, a 31,195 sq ft vacant owner-user warehouse-manufacturing building in Burbank, sold for $3,500,000, 25% below its list price of $4,648,000. The property, which closed in March 2009, had been marketed since September 2007.
The downward trend in industrial property pricing seems to be building momentum. Big and small businesses are downsizing and cutting costs to survive the current economic climate. Commercial foreclosures are on the rise. Los Angeles’ role as port and distribution center is curtailed as trade with Asia wanes and consumers pull back.
Is there a ‘silver lining’? LA should be one of the first markets to emerge from this mess.
Overall, however, Los Angeles is well positioned to be one of the first industrial markets to recover, owing to limited industrial-zoned land, low levels of new construction and low availability rates. [Commercial Property News]
Saturday, May 16, 2009
The epic boom and bust of this recession has roiled the multifamily industry, bringing the apartment market to a virtual standstill.
In the first quarter of '09, only $1.8 billion in apartment assets (totaling 152 properties) changed hands...That’s a drop of 86 percent from a year ago. Volume fell 61 percent from the fourth quarter of 2008 and offerings outpaced closings by five to one. “We’re basically at zero.”
Los Angeles, where apartment assets are still trading, bucked the trend.
Only Los Angeles (with more than $200 million in sales), Manhattan, Northern New Jersey, and Indianapolis … had more than $100 million in sales. Most properties that did sell in the first quarter were between $5 million and $10 million.
This huge drop in large apartment sales nationwide suggests sellers and buyers are eyeing different returns. Interestingly, cap rates for small properties are holding firm.
Cap rates for properties with a price tag of more than $30 million have risen 120 basis points, while they haven’t moved much for properties below that threshold.
As in the residential market, foreclosures on multifamily properties will likely contribute to a market bottom as buyers swoop in to buy up these distressed assets.
CMBS [commercial mortgage backed securities] delinquencies rose from 1.14 percent to 1.76 percent, or $10.7 billion, in the first quarter. A third of these loans were in multifamily. And once those distressed assets hit the market, multifamily vulture funds waiting to finally jump into the market will do so. And ultimately, that's what will finally push up transaction figures.
This research tracks large apartment complexes, typically the province of institutional investors (REITS, pension funds, insurance companies, etc.)
The financing and financial objectives of these large players are different from the small investor’s. Fannie Mae and Freddie Mac hold sway over small multifamily financing, and the government’s backing has supported this market. [Multifamily Executive]
Friday, May 15, 2009
Forty-five homes sold in the Sunset Strip-Hollywood Hills West neighborhood during March – April 2009, ranging in price from $220,000 to $6,250,000. The median sale price was $1.4 million. Half the properties sold in 50 days or fewer.
At the top of the market (and at the top of the world), 9262 Nightingale Drive, a four bedroom, three and one-half bath, 3,562 sq ft house in the Bird Streets sold for $6,250,000, well below its $7,995,000 listing price, after 770 days on the market. This gated “entertainer’s paradise” has a private pool and views from the ocean to Downtown. This house sold for $4,350,000 in June 2005.
Demand for some multi-million dollar homes is strong enough to elicit bidding wars. 2132 Mount Olympus Drive, a newly-remodeled contemporary four bedroom, four bath home with 3,476 of living area with sweeping views and a great pool sold for $3,140,000, $140,000 above the asking price, in seven days.
All multi-million dollar properties don’t attract multiple offers with buyers fumbling to get into the bidding fray. Over-priced homes, even the very desirable ones, will sit on the market until they reach a “clearing” price. 8855 St Ives Drive, a 1931 character Spanish pool home with three bedrooms, four baths and 3,929 sq ft of living area, sold in 262 days for $2,200,000, 37% below its original asking price of $3,495,000. The sellers were hardly running a loss -- this home sold for $1,367,500 in April 2003.
Sales activity has picked up in this luxury market. There is currently a twelve-month supply of inventory priced over $1 million in the Sunset Strip – Hollywood Hills West area – a far cry from the withering 38 month supply of inventory recorded in November 2008, after the financial crisis took its first whack at the stock market.
There are strong indications that the Sunset Strip – Hollywood Hills West market is stabilizing. For many buyers – even with excellent income and abundant reserves – it is still difficult to obtain a loan for $1 million or more. The fact that sales are as strong as they are in this challenging lending environment is nothing short of astonishing. What will be required for a full recovery of this market is the relaxing of jumbo loan underwriting requirements for well-qualified buyers.
Thursday, May 14, 2009
Today, Barker Block, a project developed by the Kor Group in the Downtown Arts District, is releasing discounted pricing on some units.
Recently, they offered to buy down interest rates and to pay homeowners dues for a year. In the competitive Downtown market, the developers are ready to bargain.
There is a variety of floorplans, with some of the larger units built on two levels. With many units priced $300,000 - $400,000, this complex offers quality and value.
Downtown, and the gritty, hip Arts District are not for everyone. This is a cool, pioneering area of the city, not too far from Skid Row.
The Kor Group, developers of nearby Molino Lofts, the Broadway Hollywood, and the Eastern Columbia lofts, have brought a community to what was formerly a dormant, factory and warehouse district in the east part of Downtown.
But with Urth Caffe, a Downtown outpost of the famed West Hollywood establishment opening its doors, civilization is just a latte away.
Converted from a former furniture factory, this project offers true loft living, complete with original brick walls, sand-blasted wood beams and a large scale reminiscent of the building’s original, industrial use.
I had the opportunity to view a few of the offerings on a recent tour. #238 is a second floor, east-facing unit, with about 1,000 sq ft, currently priced at $369,000. This unit, like other east-facing units on floors 1 – 4 in this part of Barker Block, looks onto an attractive – but close – brick industrial building, to be developed in the future into lofts.
West-facing #331 looks onto the hustle and bustle of S Hewitt Street with a panoramic view of the Downtown skyline and is priced at $459,000. (The west-facing units are priced at a premium). It has a small patio, 1,120 sq ft, and higher-than-normal 11-foot ceilings.
Unit #534, priced at $389,000, seems to be a particularly good value. This top floor, east-facing unit has high vaulted ceilings (and no one living above). It clears the adjacent brick industrial building and has an unobstructed urban rooftop view, with the snowcapped mountains visible on a clear day.
Barker Block has a hotel-like rooftop pool and a fitness center. Appliances are Jenn-Air (refrigerator is not included). Floors are hardwood. Bathrooms are clean and well-appointed. Units come with washer/dryer hook-ups and their own heating-AC units. Bring your armoire – there is little to no closet or storage space.
You may do a lot of walking. The garage is on the east side of the bock. The units currently for sale are close to Palmetto Street on the west side, a long distance away.
HOA dues are around $360 for a 1,000 sq ft unit. There is no concierge or 24-hour security. Small units come with one parking space; larger units with two spaces. HOA covers maintenance, gas and window washing a few times a year.
Bottom Line: An experienced developer brings a cool, moderately-priced building to market in a funky, up-and-coming neighborhood. Artistic acolytes and creative non-conformists follow.
Exclusively represented by the Mark Company. www.barkerblock.com
Wednesday, May 13, 2009
The long-dreaded increase in commercial loan delinquencies has arrived and will have a profound impact on the regional banks that underwrote those loans.
Seriously overdue loans against commercial developments have shot up dramatically in recent months, as delinquencies snowball on construction loans and mortgages for office buildings, malls and apartments.
That's bad for giants like Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. But it's even worse for smaller banks, which stepped up lending to local developers and businesses as a way to stay afloat after the national institutions grabbed big-ticket consumer businesses such as home loans, credit cards and checking accounts.
For instance, Pasadena-based East West Bank set aside $226 million to cover loan losses in 2008, up from $12 million in 2007.
The rate of increase in commercial delinquencies is staggering.
Uncollectable commercial mortgages quadrupled over the last three quarters of 2008, according to data reported to regulators. Uncollectable commercial construction loans increased eightfold during the same period.
The collateral that these loans were made on – the equity in the commercial properties and the assets of developers – has all but vanished.
Most of the loans were secured not only by the properties but also by the personal fortunes of the developers. Now, many have been wiped out by the recession, making the loans uncollectable.
The increase in foreclosures in the residential sector is old news. But the increase in commercial defaults and foreclosures may be in its early stages, boding ill for any quick recovery in commercial real estate values.
"While [residential] mortgage losses may be halfway to the peak, card and consumer losses may only be about one-third of the way, and industrial and commercial real estate problems (except construction) seem in the early stages."
In the next year, look for regional bank failures and commercial properties priced at generational lows. [Los Angeles Times]
Monday, May 11, 2009
37 homes sold in Los Feliz in the February – April 2009 period. The median sale price was $950,000.
The Los Feliz MLS area includes two different markets – Los Feliz and Atwater Village. In Los Feliz, seventeen sales were recorded over $1,100,000; in Atwater Village, there were 4 REO sales, and six sales of $600,000 or less.
The sale of two trophy properties shows that the best-quality homes are trading hands. 2440 Vermont Avenue, the Bixby Estate, a Mediterranean Palazzo from 1919, sold for $4,000,000, $5,000 above the asking price, in fifteen days. This sprawling home has four bedrooms, four baths, and 5,919 sq ft of living area on a 35,658 sq ft parcel (four-fifths of an acre.)
5200 Linwood Drive, a 1933 manor featuring the best of Cal-Medieval English design, sold for $3,250,000, $51,000 above the asking price, after eight days on the market. This manor has four bedrooms, two baths, 4,866 sq ft of living area – including a drawing room worthy of Hearst Castle – and is situated on an 18,300 sq ft lot.
REO properties have allowed some buyers to get into central, desirable neighborhoods at an affordable level. A bank-owned 1910 Craftsman house a few blocks east of Hillhurst, 4403 Camero Avenue, sold for $555,000. This bungalow retains much of its original character and has three bedrooms, two baths, 1,255 sq ft of living area and a 6,750 sq ft lot.
Although some high-end homes are selling, many are not. Job losses, dwindling bank accounts (despite the current stock market rally, which has erased all of 2009’s 25%+ losses) and stringent jumbo loan underwriting requirements have dampened the demand for Loz Feliz homes over $1 million, and the percent of these in contract has trended to a two-year low.
This downtrend contrasts with the uptrend in the number of properties in contract in Los Feliz priced $1 million and less, which is nearing a two-year high of 25%. These homes can be bought with interest rates at 50-year lows and in some cases with an $8,000 first-time buyer credit.
What we’re witnessing across the city is a competitive market on the low end, and near-moribund sales on the high end. (The break-point between “low end” and “high end” is close to $850,000 - $900,000, largely defined by the maximum jumbo-conforming loan limit of $729,750 in Los Angeles County).
The recovery on the low end of the market will inevitably help lead to the recovery of the high end of the market. But, because of new lending rules and the recession, homes funded by jumbo loans and jumbo bank accounts are going through an asset “repricing”.
A $2 million property sold in a bidding war in 2005 where a buyer could rely on stated income and a scant 10% downpayment is very different from a $2 million home sold today with documentable income, a 30% downpayment, and very tough lending rules.
Unless there are major changes in lending or improvements in the economy, expect the high end to be under downward pricing pressure for a long time to come.
Friday, May 8, 2009
Single family. Anyone searching for support that the market is turning should look no further than Silver Lake / Echo Park where in April 2009 million dollar properties are getting bidding wars and REOs are flying off the shelves.
There were 21 single family home sales in April 2009. The median sale price was $545,000, up from a median of $505,000 in February – March 2009.
Two sales were for over $1 million and nine were under $500,000. Five of the 21 sales (24%) were bank-owned properties, all selling for under $400,000.
On the high end, 1954 Micheltorena Street sold for $1,890,000, above the $1,849,000 asking price, in seventeen days. This pool home in the Moreno Highlands has 4 bedrooms, 3.5 baths, 3,148 sq ft of living area and a 13,721 sq ft lot.
A stone’s throw across the Silver Lake Reservoir, 2712 Armstrong Avenue sold for $1,215,000, $115,000 above the $1,100,000 asking price, in 22 days. This home has a pool, 3 bedrooms, 3 baths, 2,895 sq ft of living area and an 8,650 sq ft lot.
Four statistics support what many homehunters are experiencing in Silver Lake / Echo Park: it’s a tight, competitive market. In April 2009, 21% of single family homes in Silver Lake / Echo Park are in contract – a two-year high. There is currently a 2.7 months supply of inventory – a two year low. Half of all properties went into contract in 22 days or less. There are currently 33 pending sales.
The sense that the worst part of the economic crisis has passed, interest rates at 50-year lows, and the $8,000 first-time buyer credit seem to be creating momentum in the market. Multiple offers and bidding wars are becoming the norm.
In Silver Lake / Echo Park, which traverses the spectrum from low-priced REOs to luxury pool homes, there is strong evidence that a real estate recovery is underway. After two years of languor, it’s time to adjust to the new “new”: it is a tight, competitive market.
Thursday, May 7, 2009
The four-unit LUX925 loft building has just gone on sale south of Santa Monica Boulevard and east of Fairfax Avenue. These lofts with unique floorplans come with some of the highest ceilings, biggest spaces, most expansive views, and loftiest list prices around.
Address: 925 N Genesee Avenue, West Hollywood, CA 90046
Asking price: $1,149,000 - $1,299,000 (updated 7/7/09)
Number of units in development: 4
Unit type: 2 bedroom, 2.5 bath
Square footage: 1,924 – 2,273 sq ft (interior) and 265 – 870 sq ft (private exterior deck)
Days on Market: 3
The windows are large and the sliding doors are over-sized and glide with ease. The high-end kitchens feature Bosch appliances and other custom German fixtures. The developer did not scrimp on space or materials.
The front facing units, including the model (Unit #3 - above) and the unit below, have excellent light and east-facing views.
The west-facing units (below) are partially compromised by the adjacent buildings, but nevertheless have the same sense of openness.
Bathrooms are large and nicely appointed.
The view from the upper level bedroom of a unit is top-rate.
Each of the units comes with a private rooftop deck. Currently, this building is the tallest in the area and views are excellent in all directions.
If there's any drawback to the building, it's the price, which is in the range of rehabbed pool homes in the vicinity. With a $1,299,000 list price -- and a hefty 25% downpayment ($325,000) -- the monthly cost of a 30 year-fixed mortgage is $6,158/month. Add in $1,353 in property tax and $375 in homeowners dues -- and you're talking about a $7,886 monthly nut.
Bottom Line: The fundamentals -- design, living area, views -- all high caliber. Price could use a haircut.