Ten Million Dollar Listing Episode 3: Touring Three Beverly Hills Homes

Adner Realty Group is pleased to present Episode 3 of our series, "Ten Million Dollar Listing." Come ride with Jamie Adner and Luke Jones as we explore three extraordinary Beverly Hills estates priced over $10 million dollars. First up, "Mediterranean Estate", with its exquisite grounds, then "Timeless Classic", a 1983 Hal Levitt architectural wonder, and finally "Modern Splendor", ultra-cool, with some of the best views in town. Enjoy the sights!

2011 Median Home Prices: Lower End Trends Up; Higher End Trends Down; Beverly Center - Miracle Mile +7%, Los Feliz + 5%, Santa Monica -13%, Pacific Palisades - 15%

What's happening in the market? We took a look at ten neighborhoods to see how median price in 2011 compares to the median price in 2010.

(click on image to enlarge)

We examined five neighborhoods in the "central" part of the Los Angeles, where overall, there has been price appreciation.

• Silver Lake / Echo Park + 4.4% 
• Los Feliz + 5.2% 
• Hancock Park - Wilshire 0.0% 
• Beverly Center - Miracle Mile + 6.9% 
• Sunset Strip - Hollywood Hills West + 0.6% 

The standout case is Beverly Center - Miracle Mile where median price rose 7%  -- which by any standard would be considered a "hot market."  Surprisingly, none of these neighborhoods showed a price decline.

(click on image to enlarge)

We also looked at five neighborhoods in Westside Los Angeles, where the trend has been towards declining median price. 

• Venice -3.2% 
• Santa Monica -12.6% 
• Pacific Palisades -16.1% 
• Brentwood + 5.1% 
• Beverly Hillls -8.8%

The only anomaly of the crop is Brentwood, where prices have increased 5% year over year.  The biggest median sale price declines are in Pacific Palisades (down 16%) and Santa Monica (off 13%).

But what does this mean?  We can draw the following five conclusions:

1. The composition of homes selling is changing.  Distressed properties (bank-owned foreclosures and short sales) are a greater percentage of the market and, selling at a discount, are driving down the median price.
2. Median price is up in lower-priced neighborhoods, median price is down in higher-priced neighborhoods.  The high-end market is still deflating as multi-million dollar properties financed with little downpayment and exotic loans (option ARM anyone?) are finally passing through the short sale / foreclosure process.
3. Hot markets: Beverly Center-Miracle Mile, Los Feliz, Silver Lake - Echo Park.  These lower-priced neighborhoods are trending up.
4. Not so hot markets: Pacific Palisades, Santa Monica and Beverly Hills are "trending down."  There is undoubtedly downward pricing pressure as more owners lose their high-end homes.  However, 37 homes have sold for more than $5 million so far this year.  Hardly markets in pain.

Concerto in Downtown Los Angeles Will Be Leased in Fall 2011; Complex Has Identity Crisis, Loses Its Moniker and Becomes Apex

Concerto (now Apex) with Rental Building in Rear, Condo Building in Front

One Downtown Los Angeles condo project that we grew to love -- Concerto -- has a new name -- Apex -- and will be coming to market this fall as a rental building.  Those of you with deep memory may recall that embattled developer Sonny Astani lost control of the building, and ownership was handed to Corus Construction Venture.

View down Figueroa from Corner Unit

A recent post from Curbed LA reports that the building will in all likelihood be leased, rather than sold as condos.  (See the Apex listed here.)

Pool / Garden Area Under Construction

We are disappointed that these excellent units will not be coming up for sale.  We have every confidence that they would sell: this product type (clean, new, 1 br / 2 br units) and location (can't beat 9th and Fig -- close to LA Live) are precisely what would be in demand at the moment. 

Alas, Concerto-watchers, time to turn your sights to Apex, and lease the unit that you dreamed of owning.

Silver Lake / Echo Park Homes up 4% in 2011. Sure, the Market's a Mess, but with 4% Interest Rates, Buyers and Sellers Should Have Confidence to "Get Off the Dime"

We've always loved the the Silver Lake / Echo Park neighborhood of Los Angeles, partly because it's priced at a discount to such other "Westside"-adjacent areas as Los Feliz, Hancock Park-Wilshire, and Beverly Center-Miracle Mile, and is just as nice (if not more scenic.) 

Echo Park Hills

As a result, Silver Lake / Echo Park has become the first rung on the ladder for first-time buyers who are looking to get a toe-hold in the Los Angeles residential market.

And how is the Silver Lake / Echo Park "entry market" faring?  Quite well.  Year-to-date, the median price for a single family home in Silver Lake / Echo Park is $570,000, up 4% over the 2010 median sale price of $550,000.  Despite the negative sentiment about the "housing market", the median price in Silver Lake / Echo Park is increasing.

2011 Median Sale Price up 4%

The Silver Lake / Echo Park market is "hot" and "the inventory is moving".  56% of sales during the past two months took place in 30 days or less. 

The message here is:

1. Real estate markets are hyperlocal, and opportunities exist in "neighborhoods", not in the market at large;
2. The Silver Lake / Echo Park market "bottomed out" in 2010;
3. Owners in Silver Lake / Echo Park looking to "move up" should leverage this market's strength, and capitalize in weakness in some higher-end markets; 
4. Buyers should take advantage of ultra-low 4% interest rates and jump in to this appreciating market before they are "priced out".

We are certainly not "out of the woods" when it comes to the housing market.  In August, foreclosures in California rose 12.3% over the previous month.  There is still Armageddon-like talk around Fannie, Freddie and everything having to do with homeownership.  However, when it comes to Silver Lake / Echo Park, it is "morning in America."

____________________________________________________________

Looking to buy or sell in Silver Lake or Echo Park? Have a question about the commercial or multifamily markets?  Please call us at (310) 845-6810 or email us by clicking on this link.  We'd love to hear from you.
____________________________________________________________

Downtown Los Angeles in the 1940's -- B-Roll Footage From Film Noir Era Shows Bunker Hill and $2.50 per Day Car Rentals

It wasn't accidental that the film industry emerged in Southern California. Producers and directors flocked to the city from the east coast for the natural light and the myriad of landscapes that could adapt to any scenario. But there is also a je ne sais quoi, an indescribable attribute that has made Los Angeles iconic in the realm of images. Like an improbably chiseled actress who enchants the camera from any angle, Los Angeles loves being photographed.

Nothing captures the Los Angeles of yore better than Film Noir, with its stark, black and white images in movies such as Mildred Pierce, Double Indemnity, and The Big Sleep.  In this "B-roll" footage (that would be rear-projected behind actors in driving scenes), you witness Los Angeles of this era, unedited.  We particularly liked seeing the Zelda Apartments (1:52), two blonde girls crossing the street (2:22), an old-school stop light (3:15), and a cool, airstream moderne bus (3:51).  The biggest surprise is that parking that was 50 cents per day then can still be had for $3 or $5 per day.

This Victorian-era Los Angeles -- that looks remarkably like San Francisco -- exists no more since Bunker Hill and the Chavez Ravine were razed for the construction of Downtown west.  The writers John Fante in "Ask The Dust" and Charles Bukowski  in "Factotum" portray the grit of that time and place.  Here your eyes can feast on images from a very photogenic time gone by. 

Courtesy of Curbed LA, Blogdowntown and The Atlantic

Big Ticket Los Angeles Multifamily Sales Demonstrate LA Apartment Fundamentals Are Shining Brighter than Bonds and Blue Chips (but Maybe Not Gold)

In the past three months, some big-ticket apartment building sales in the Beverly Hills Adjacent area, West Hollywood, Hollywood and Koreatown have supported the idea that for investors, Los Angeles apartments are looking like a safe bet.

Whether a $4 million building purchased by a career apartment investor, or a $40 million apartment block bought by an institutional investor, apartment buildings are selling, with particular interest in those which are not rent controlled.

Financial information is not available for most of these sales, so the only measure of "trading values" is cost per unit ("door"), a vague metric, at best.  Our evaluaton is that most of these building are selling in the mid 6% cap range.

1745 and 1750 N Wilcox Avenue, Los Angeles 90038 -- Hollywood

You can't find better located buildings than these two non-rent controlled buildings in the center of Hollywood that sold as a package for $40.0 million and $17.1 million, respectively. 

1745 Wilcox Avenue, Hollywood

The buildings were built in 1987/8 and are not subject to Los Angeles Rent Stabilization Ordinance.  The properties were renovated in 2004, and have 243 units and 101 units, respectively, selling in total for $166,000/door.  The buildings sold in May 2006 and January 2007 to one owner for $183,000/door, indicating a price decline of 9.3% for this asset during the past five years.

1750 Wilcox Avenue, Hollywood

The near-$60 million purchase price for of 1745 and 1750 Wilcox is a vote of confidence for Los Angeles multifamily and for the burgeoning Hollywood neighborhood.

1342 N Highland Avenue, Los Angeles 90028 -- Hollywood

Anchoring the other end of Hollywood, 1342 N Highland Avenue is a 15 unit non-rent controlled building located between Sunset and Fountain and adjacent to West Hollywood that sold for $5,250,000 or $350,000/door. 

1342 N Highland Avenue, Hollywood

The high cost/door for this building can be attributed to the unit mix which consists of 2 and 3 bedroom multi-level townhomes.  This 2004 construction sold at a 9.7 GRM, which is an excellent return for this high-quality building in a high-demand rental corridor.

817 and 825 Wilcox Avenue, Los Angeles 90038 -- Hollywood

Located in the Hollywood Media District south of Santa Monica Boulevard, 817 and 825 Wilcox Avenue, a pair of non-rent controlled buildings built in 2004 and 2002, respectively, sold for $4,420,000 and $4,675,000.

817 Wilcox Avenue

Each buildings has 18 units, and collectively they sold for $253,000/door.

825 Wilcox Avenue

This "double header" was an all cash sale.  In our view what we're seeing is a "flight to quality" and parties rich in capital are investing in Los Angeles apartment buildings as an alternative to stocks, bonds, commodities, hedge funds and other investments.

321 S Berendo Street, Los Angeles 90020 -- Koreatown

Moving east into Koreatown, 321 S Berendo Street with 23 non-rent controlled units sold for $3,600,000 or $157,000/door.  Some financing information is available for this 1991 building located near 3rd and Wilshire, and the cap rate at sale price is in the mid-6% range.

321 S Berendo Street, Koreatown

526 North Orlando Avenue, West Hollywood 90048 -- West Hollywood

The West Hollywood sub-market, like other incoporated cities such as Beverly Hills and Santa Monica, has its own market forces, and cap rates here are lower here than in adjacent areas of Hollywood. 

526 N Orlando Avenue, West Hollywood

526 North Orlando Avenue is a 19-unit building dating from 1964 that sold for $4,695,000 or $247,000/door.

467 S Arnaz Drive, Los Angeles 9048 -- Beverly Hills Adjacent

We end with 467 S Arnaz Drive, a 100-unit building one block from Beverly Hills that sold for $39,350,000, or $393,500/door.  This 1980 building commanded a super-premium because of its location next to Beverly Hills and because it is not subject to Los Angeles Rent Stabilization Ordinance.

467 S Arnaz Drive, Beverly Hills

The strength of the multifamily market has been confirmed in the press. At Globest.com, a recent article, "Apartment Shine as Beacon of Hope", begins:

The nation’s apartment market continues to beat expectations as it speeds along to a full-scale recovery.

Over at Multi-Housing News Online, an article, "Amid Economic Gloom, Investors Keen For Multi-Housing Projects", the author writes:

Fannie Mae ... reported this week that U.S. multifamily investment sales have spiked thus far during 2011, reaching $13.9 billion during the second quarter of 2011, or more than half again as much as the first quarter 2011 total of $9 billion. The second quarter sales figure is also a whopping 132 percent increase compared with the same quarter in 2010.

In terms of sales, Los Angeles is the #2 market, behind Manhattan, and recorded over $1 billion in apartment sales during the first half of 2011.

************************************************************************************** We'd love to hear from you! If you have a question about the Los Angeles apartment building market, please call us at (310) 845-6810 or email us by clicking on this link. **************************************************************************************