Inventory Swelling

We've now closed our spreadsheet for the month of March, and here we are with the highest inventory figure MBC has reported since its inception a year ago: 97 SFRs west of Sepulveda.

It has been a steep and almost unbridled climb since the first of the year.

As is clear in the graph, we've now substantially exceeded the June 2007 peak of 83.

It could be worse. In the month of March, we saw 7 cancellations, expirations and withdrawals. (Ignoring, of course, the cancellations followed immediately by a bogus re-list.)

We saw 13 sales (new escrows) in this period west of Sepulveda, which also helped tamp down inventory levels. That figure was lower, however, than February's new-deal figure of 19.

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UPDATE: We revised the graph, inventory and sales numbers slightly after publication. Turns out we had to re-open the spreadsheets for a moment to make changes.

If You Waited...

There are plenty of potential home buyers waiting on the sidelines, in MB and elsewhere. Imagine yours was one of the families that decided about 6 months ago to stop searching and reassess in the Spring.

What would you find now? Was waiting the right call?

Let's look at the big picture first, then the local market:

• Housing market generally – There's not much debating the fact that the housing market continued its deterioration with a vengeance these past 6 months. The current Case-Shiller index shows a home price drop nationally of about 10% over 6 months (July '07-Jan. '08), and a drop of 14% in LA County. January was the worst for sales in all of Dataquick's 20 years in business, and February was only a trickle better.

• The economy – Recession talk was largely confined to bears late last September (6 months ago). By mid-October, however, Treasury Secretary Henry Paulson began the now-familiar march to the podium by official bigwigs with the dual purpose of warning us of peril ahead and promising solutions. Now it's news if someone thinks the U.S. economy is not in recession already. What's more, it's shaping up to be a housing-led recession, which they used to say could not happen. (Time to rewrite the textbooks.)

There's as much foreboding out there now as there is a budding confidence that aggressive actions are going to come wherever the financial markets can be intervened upon to stave off disaster. Recession – sure. Meltdown – ummm, maybe not!?...?...?!? The import here is that recessions nearly always mean dropping home prices, regardless of how those recessions get kicked off.

• Interest rates & loans – The Fed has cut its target rates sharply in hopes of stimulating borrowing and economic activity. At the same time, consumer CDs and money-market accounts are paying sub-inflation rates. Yuck.

What matters to home buyers is mortgage loan rates, and jumbos (30yr fixed and ARMs) are essentially even now with their early-October levels, after some dips and spikes during the past 6 months. The big news of this period is the congressional move to increase the "conforming" loan limits to almost $730k, which might help break some of the liquidity logjam in the mortgage finance pipeline, though the change is of little use to the average MB buyer.

OK, hypothetical family, you consciously took time off to see what happened in the world. Now, what has happened in your local RE market of interest?

Slowdown arrived – In MB, the first thing to note is that by Oct. 1, 2007, MB was entering a serious slump. As we reported in our MB Market Update for 9/30/07 (click for the story), there were no sales, none at all, of SFRs west of Sepulveda in the second half of September, and the month ended with just 6 sales (new escrows) west of Sepulveda that stuck. We're seeing a sales pace nowadays that is roughly half that seen during the bulk of 2007. Also:

Inventory – SFR inventory west of Sepulveda stood at 81, by MBC's count, on Sept. 30. Six months later, we count 94, the highest number we've published in a year-plus. That means more choice and, they told us in Econ 101, downward price pressure.

Chops – We looked back at the Sept. 30, 2007, Market Update spreadsheets (click to download and play at home) to see what's still around. There are plenty of listings with impressive price cuts (click addresses for details via Redfin):

• In the Hill Section, 3 actives are down at least $200k from their Oct. 1 prices (811 Boundary [-$300k], 916 9th and 869 3rd, which is down $245k).

• In the Sand Section, the highlights are 225 39th (-$155k), 4419 Highland (-$281k) and 228 29th Place (-$450k).

• In the Tree Section, at least 13 listings are still lingering from Oct. 1. Some lower-priced homes have taken cuts, but the news is among new construction: 3305 Laurel cut 10% (-$360k), 570 27th cut 9% (-$300k) and 2509 Walnut cut 10% (-$250k). And so on.

Missed Opportunities – Alas, waiting out the market means missing out on some great homes and good deals. Among the examples (search the address using the search box in the upper-left corner for prior coverage) in which significant cuts were taken:

• In the Hill Section, 911 Duncan was at $3.770m last October, but it sold for $3.190m (-$580k/-15%) in February.

• In the Sand Section, someone saved $300k (-12%) off the Oct. 1 price on 420 30th, someone else took $150k (-7%) off 3617 Vista's Oct. 1 price and someone brought home a great deal overall on 209 42nd, which had begun at $2.3m and had neared its sale price of $1.830m by last October.

• In the Tree Section, we count at least 19 sales from inventory active Oct. 1, 2007. In this period, we saw the first recent examples of new construction going for less than $2m (3104 Pacific [$1.950m], 2705 Oak [$1.95m] and 1901 Poinsettia [$1.999m]). We also saw a raft of sales that went for double-digits below their start prices (see "Early Warning: Ask-Close Spreads").

Plenty of other great homes came and went during these past 6 months, some with little or no discount. It's hard to capture all the costs of waiting. And yet, there were the savings...

What to Do with Comments?

It seems the time has really come to consider a change in comments policy at MBC.

This was a week in which we had some days with substantive, well-considered comments, and some days with comments that went off the rails. So maybe it really is time to change, if this is disrupting the average reader's experience – as we often hear.

We recognize that the final decision on the subject belongs to your humble correspondent here. But we'd rather get some input first. Please vote in the poll – and keep in mind that you can vote for all the options you like. Voting closes Weds. at 8pm. Please support your rationale for voting within the comments on this story.

Know this: We've so far deleted about 5 comments in one year of MB Confidential. (Excluding SEO advertising BS.) Not one deleted comment was critical of the blog or the author. Allowing your direct criticism of the content is vital.

In our view, there ought to be sufficient room for a spirited debate, emotional at times, even with harsh words. Perhaps you disagree and want something more watered-down and with more rules.

Most particularly, we want to find the balance between encouraging free discussion and maintaining a somewhat civil forum. Our chief concern is that requiring sign-in, in any form, is going to restrict people from posting what might otherwise be useful, valuable information and perspective. That's why we've held off all this time.

It's true, MBC could set up guidelines and we could be more aggressive in moderating the comments. However, we don't relish the extra work. And we're sure people will feel stifled and perhaps treated unfairly along the way.

That's why our preference is to go with some form of sign-in requirement, but not much more. There are 2 options, requiring Google identities or Open ID identities – a broader option that includes Google. (Click Open ID for a little more info.) We're thinking this doesn't burden posters much, given that anyone can set up a gmail account or an identity under other Open ID providers that is private to everyone on the outside.

The hypocrisy angle: There's a rather obvious point to be made here while we're on the subject. If MBC comments require sign-in, shouldn't the author's identity be made public?

However, that's a nonsequitur. We can't imagine a comments policy that requires "true" identities to post. If we don't do much more comment moderation, really we're just talking about requiring posters to use handles. Will that be sufficient to improve the tone?

Consider your vote and comment here – anonymously if you like.

Weekend Opens (3/29-3/30)

We're back to a more normal volume of opens this weekend. Click here for the complete list of opens published in the Beach Reporter, or at any time use the link in the right-hand column under "Prop. Search Tools."


Hill Section

916 9th is a perennial favorite here at MBC; it made Mrs. MBC's year-end list. It's the great room/living room/yard combo, mainly, that works. Offers 5br/5ba, 4550 sq. ft. It was on the market last year, as high as $3.275m, but it's at $2.895m now. The first posted open since its late-February return is Sun. 1-4pm.

923 1st offers the lay public the chance to see a $7.6m home, much as they were once offered the chance to see an $8m home. But please recognize this one requires advance arrangements/RSVP (see info in the BR open house listings). Worth a shot. Sun. 3-5pm.


Sand Section

400 3rd (pictured) is Mrs. MBC's pick this week, though – just like her pick last week – it's not posted as open. Well, we suppose that just walking by any old day could be delightful. 400 3rd is a lovely, large (4br/4ba, 4000 sq. ft.) classically styled beach home on a corner lot down in MB's South End. A couple of ocean peeks = bonus. Starts at $3.499m.

341 10th is a South End flat walkstreet home right next to downtown that we featured last week, when it was only open Saturday. Definitely worth a look for its great style and materials. Starts at $3.3m. Open Sun. 1-4pm.

228 29th Place is ultra-cool, unlike anything we've seen recently in the Sand. Big wows, big views, and a price that has moderated from a big $3.049m last year to $2.499m now. (NOTE: The newest reduction of $130k just occurred Saturday.) If you haven't yet seen it, do. Open Sat. & Sun., 1-4pm.


Tree Section

621 Marine (pictured) is a custom-built (2002), "rustic Spanish" with 5br/4ba and 3100 sq. ft.

As we noted previously, the owners just purchased it last year (March 2007) for $2.436m (double checked) and they're offering it now for $2.489m (double checked!).

Open Sun. 1-5pm.


560 36th (second pic) is daring for a speckie, with an ultra-modern design in a land of Mediterraneans and Cape Cods. Offers 4br/4ba and 4040 sq. ft., but it's not priced at $4m, just $2.999m. A bit close to the armory and Sand Dune Park. Open Sat. and Sun. 1-4pm.

2611 Palm is a new one in the Trees – well, it has been new for some time (first offered Jan. 2007), but it's worth a first mention here anyway. Plenty charming, with some unique details and 5br/4ba, 3200 sq. ft., priced at $2.399m. Its twin (with reverse layout) is at 2309 Pacific (now at $2.099m). Both are open Sat. & Sun. 1-4pm.

Great Escape

It wasn't long ago at all that someone purchased 523 Marine – September 2006, to be exact. Purchase price then was $1.310m.

It was a nice discount at the time – our older records show the property was first listed at $1.450m in May of that year.

The purchase was about 18 months ago. Then 523 Marine was back on the market in early late February of this year.

This owner sought $1.379m, and the property sold quickly – less than 3 weeks on the market. (There's some of that going around these days – what's selling seems to be selling fairly fast.)

After a quick escrow, the former owner got $1.340m (-$39k/-3% off list, +30k/+2% over Fall 2006).

Though the price was essentially flat, it seems fair to assume the owner took some kind of financial hit. The buyers' agent's commissions alone, at 2.5%, would be $33k, wiping out the $30k bump over the purchase price. Also, assuming there was a mortgage on the home, you have to consider 18 months' worth of mortgage payments, much of which would have gone to interest. Tax deduction or no, much of that money is simply gone.

Still, in today's market this could have worked out a lot worse. A quick sale and a quick escrow gave the seller a great escape, and the buyer a pretty good deal.

Just down the block, a brand-new listing at 621 Marine has a seller hoping for a similar escape after a shorter hold. This home was purchased in March 2007 for $2.436m. A year later, it's up at $2.489m (+$53k/+2%). Quick sale, anyone?


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NOTE: The original story transposed two digits of the sale price at 621 Marine and two digits of the original sale price. A percentage increase was calculated based on those incorrect figures – explaining the first several comments on this story. We regret the errors.

Meet Francisco

In our somewhat whimsical poll this week, we tried to determine which MB street might be the least-well-known in town.

The results, which we'll publish in another brief story soon, told us that Francisco St. is the city's most obscure street.

It's with good reason. For one, Francisco is a border street, more or less, at the far south end near Hermosa. For another, there are only 6 homes with a Francisco St. address, so odds are you haven't visited anyone there. We also don't see any sales on the short block since 2001.

Finally, Francisco is only part of a street. Most of the block you see in the picture here is actually 33rd St., Hermosa.

On the map here, from the county assessor's site, you can see how the grey border line between Hermosa and MB cuts a little jog at Ingleside to create what must be MB's shortest street. (Bonus fact: this map also reveals that 5 MB homes west of Sepulveda have a Longfellow address.)

Our poll showed that just 22% of MBC readers were familiar with Francisco. But if you've got kids at Robinson (part of which is highlighted in yellow here), you've got to know Francisco. It's the only legal street to use to approach the school – in a vehicle – during pickup/dropoff times.

And so, dear Francisco, now's your time in the sun. No one knew you before; soon few will know you again. But online, you're king for a day.

Median Price Preview (Q1 2008)

We've said here before that median price is just one of many awful measures of real estate prices and activity. Still, it's a common measure and most people can wrap their minds around it. (It never hurts to remind folks that a median is not an "average" [mean], but the one price at which half of all sales recorded are above that number, and half are below.)

In comments here at MBC, someone posted the following median price stats for Q1 2006-2008, drawn from the MLS:

2006 - $1,625,000
2007 - $1,655,000
2008 - $1,832,000

These statistics were said to reflect all sales in MB in these 3 comparative periods – which means some sales we don't cover here, i.e., THs/condos and sales East of Sepulveda. And, obviously, Q1 2008 hasn't quite finished yet, so there's some chance for that number to change.

We were inspired to check on the number of sales in our subject region, and the median price for those, so we compiled the sales to date in a one-page spreadsheet. (Click to download the PDF.) It will be little work to re-publish that once the quarter's over, so we'll let you know when that's up and ready.

What did we find?

There were 29 sales in our subject region in this period. (We're dealing with closed sales; these were deals made in December 2007-Feb. 2008, mostly.) That's a pretty small sample, so we should be careful what kinds of conclusions we draw.

The sales prices went from a low of $772k to a high of $5.6m – quite a range. The median for this sample is pretty solid at $1.950m – solid, because the next sale below it was also $1.950m and the next above was $1.999m. You wouldn't expect too much movement with 5 more days' worth of sales coming in.

There's more to look at here than just median prices drawn from small samples.

Look at the price ranges of these sales, and they fall this way:

• 8 sales below $1.5m
• 12 sales between $1.5m-$2.5m
• 9 sales above $2.5m

On first impression, seeing that 21 of 29 sales were over $1.5m, we wondered if sales were out of proportion to current inventory. That is, were there more higher-priced sales, for instance, represented in that group than there are higher-priced listings among current inventory?

Alas, no. Take this small sample of 29 sales and compare it to a somewhat larger sample of 91 current active SFR listings in our subject region, and the numbers match up:

• 26% of inventory is priced below $1.5m; 28% of sales were in that range;
• 40% of inventory is priced between $1.5m-$2.5m; 41% of sales were in that range; and
• 34% of inventory is priced above $2.5m; 31% of sales were in that range.

So closed sales are being reported in essentially the same proportions, based on these price ranges, as we see among active listings. To make that simpler: There's no obvious spike in sales in one price range or another.

We have the general sense from tracking market activity over the past year that inventory below $1.5m is starting to bloat for the first time in a while – mostly in the Tree Section. And we, like many, have seen the proliferation of sales at the high end as a sign of a significant bifurcation in the local market – luxury homes just keep selling, while more modest (and marginal) offerings are stalling out.

We think both trends are real, but at the same time we'll concede that this data snapshot doesn't support either claim. We're eager to hear your thoughts on what this quarter's sales (to date) say to you.

All New, Except for All Those Months Before

We had once sincerely hoped that the whole DOM issue would just go away. But it won't.

We'll write up some current activity on this front now, but henceforth we'll try to confine references to re-lists and True DOM to our twice-monthly market updates.

The bottom line for now is that the old tricks seem to be back. Our faith that Mr. MLS would solve this issue is largely broken, and the practice of bogus re-lists survives.

To recap: As is well-documented in MBC's 1-year history of public market tracking, it's a deeply embedded practice among local real estate agents to cancel and re-list properties that have gone stale. We call the tactic a "bogus re-list." The new sheriff in town, Mr. MLS, calls it "churning," and also a "deceptive business practice." Nice. We agree.

Getting ready for the Feb. 4 transition, Mr. MLS notified our local MLS members of its "data integrity policy" prohibiting churning. Individual agents would no longer be able to cancel listings. They'd need broker approval – a step that, in Mr. MLS's experience, had "virtually eliminated the practice" of churning. (We're quoting from Kaye Thomas quoting the memo. See our Jan. 20 story here.)

So how is this new regime working? In our view, impressively, but not perfectly. We've seen one bogus re-list get reversed (3009 Poinsettia), while another that some view as arguable was let stand (1413 Pine).

Now there are 3 new examples.

Heading the new bogus re-list parade is 2309 Pacific, new construction that was first put on public offer on May 18, 2007. (Click address for details via Redfin.)

About 10 days ago, the listing with MLS # S951920 was canceled. This week, it's back with a new price and a new MLS # S08042842. This one began in May at $2.299m, got re-listed in July 2007 at $2.239m, trimmed a bit before dropping off and came back at $2.099m – $200k in reductions over 300+ days.

An alternative tack is being taken over at 516 24th. The old listing has not been canceled. There are 2 active listings for the same home. Click to see the old listing under MLS # S961440, or click the new MLS # S08042231 to see the same information there, with fewer DOM.

The existence of two listings for the same home creates the bizarre spectacle captured here in a screen grab from Realtor.com. Same home, same details, but one is "New this week!"

There may be some perfectly reasonable explanation for the dupes on 24th. F'rinstance, the older one is listed as Sand Section, while the new one is Tree Section. Wait, that's not an explanation for the re-list.

There is also the matter of the change in construction date listed for this home – from 2007, to 2008. It's a small detail, perhaps. But the fact is that the home was first offered in October 2007, and it was quite complete then – staged, even. MBC featured the home in "Mrs. MBC's Xmas List," and also in a year-end column in the Easy Reader, because we like it. However, since it's now said to have been built in 2008, we have to conclude that the completion date was changed willfully while freshening up the listing.

Finally, another re-list has hidden the history of 473 31st. This brand-new home first came on in early November 2007. The listing with MLS # S957772 expired recently, but the home began a new life right away – how very nicely in keeping with the season! – with a new clock and a new # S08039357. (There's also a dupe of this one on CLAW MLS.) Best that can be said: The "CDOM" (combined days on market) field for this one properly states 140 CDOM.

Two of the listings above meet the "new product" test, put forth by a prominent local agent in the Daily Breeze earlier this year:

"My contention is that when you have a piece of property, and you change it $100,000 in price, it's a new piece of property. It shouldn't be penalized by the number of days on the market that it was at another number. It's a new product."

Of course, we'll watch to see if Mr. MLS takes any action to un-re-list these properties, but we're skeptical. After all, if "broker approval" is all that's needed to make a re-list legit, we've got plenty of brokers in town who will gladly give their approval. That, we have learned.

As we wind down this perennial discussion, after all the battle-line-drawing, back-and-forth debating and you-don't-get-it lectures, what have we learned?

First, the number for "Days on Market" means something other than the "number" of "days" that a property has been "on market."

Second, there's an unbridgeable gap in perspectives on this issue between agents and consumers. Some people view re-listing as "deceptive" and some don't. Here's wondering if we can come together on the idea of changing new-construction completion dates.

Third, there's still a need for independent tracking to keep more accurate records of our local RE market. MBC will keep doing that, and we'll try to stop explaining why we need to.

Finally: caveat emptor, but then, you knew that.

Want Lower Taxes?

To paraphrase Mark Twain, there are only three things that are certain in a real estate downturn: foreclosures, bank failures and declining property tax bills.

The LA County Assessor, Rick Auerbach, has seen beyond the horizon. He knows he's going to be flooded soon with requests for re-assessments (and lower property tax bills), given all the headlines about the RE market's rapid crash in the county. So he's offering to do the work himself first, lowering property tax bills en masse before the requests start pouring in.

In print, on radio and TV – and on the internet – the assessor is trying to get the message out and tell homeowners: Don't bother us, we'll take care of you, it'll be fine – you'll pay less, just let us do our work. (Click to download the Assessor's press release.)

Re-assessments? Lower taxes? Where do I get mine?

Let's back up a moment for a refresher on California's property tax laws to understand what the Assessor is up to.

In their wisdom, the voters of California cut themselves a great deal in the 1970s. Via ballot initiative, the voters ended routine re-assessments of homes – and with them, routinely increasing property tax bills. Voters also capped the property tax rate at 1% and limited the annual increase in homes' assessed values to 2%. Homes would only be assessed at market rates when purchased.

Get that: 2% per year – below the annual rate of consumer price inflation, and below the average long-term rate of home price appreciation as well.

That was a good deal, but the voters also gave themselves a bonus: If the market value of your home drops, you can get your property tax bill reduced. So how about that?!? If the market value goes up substantially, you sit tight and pay very little more in taxes. If the value goes down, you might save on taxes by getting your home re-assessed.

That brings us back to the present day. Home values are now going down. So the Assessor is going to reevaluate over 300,000 properties in the county and reduce property tax bills where necessary.

What Auerbach & Co. are looking for is recent purchases that already aren't worth what was paid during the boom years.

How do they define boom years? At first they assumed it would be purchases from 2005-2007 that might merit a downward revision. After some sampling, they realized that they needed to go back to 2004. (Translation: The downturn is already worse than the county tax assessor realized – there are homes in the county that are now worth less than their purchase prices from 2004.)

Auerbach & Co. have now decided to look at all homes purchased between July 1, 2004-June 30, 2007. That's 310,000 homes. If you purchased your home during that period, the assessor's geeks are working on it.

If they determine that your home was worth less on Jan. 1, 2008, than at the time of purchase – plus 2% annual increases – the assessed value will be cut along with your property tax bill. So far, 60% of the 67,000 homes examined have qualified for a reduction.

If you're a homeowner who bought after July 1, 2004, it seems best to wait for the notice in the mail this summer (by June 30) and see if you like the Assessor's work. If not, you'll still have 6 months to appeal for a further reduction.

Anyone can, at any time, file a "Decline-in-Value Reassessment Application" to seek an adjustment in the assessed value of a property. (Click title to download the 1-page form.) You don't even need to support your case with data, but it's better if you do. The form asks for you to list 2 recent comparable sales "that sold as close to January 1, 2008, as possible."

In our local market in Manhattan Beach, sale prices have only begun to decline recently, and there's plenty of statistical noise, like high-dollar sales in highly desirable areas.

Recent home buyers might be encouraged, however, by the Assessor's focus on sales near January 1, 2008.

The current MB Market Update spreadsheets (click to download) show that several sales in late 2007 and early 2008 were discounted significantly. Based on PPSF and other factors, you can see that the data that the assessor's geeks will be working from will reflect one of the softer periods in this market in some time.

Hence, the geeks might be more inclined to cut some local tax bills. And if they don't cut your bill enough, you can always appeal.

It's true that, in MB, we're not talking about a lot of people getting big tax cuts. Not yet. It's early. We'll be late to the tax-cut party.

But if they're already looking at 2004 purchases, how far back might the assessor's team be looking in 2009 and 2010?

Where's Homer, Again?

Here's hoping you had a great Beachster Sunday.

We've got plenty to cover this week, but we're going start on a more whimsical note, with a different sort of poll. This one will test readers' knowledge of the back streets and hidden corners of MB.

The idea for this poll comes out of the fact that there's now a second listing of the year on Homer (225 Homer). Well, we know where Homer is, but we had lived in MB quite a while before we saw that street. We wondered how many other MB residents even know there is a Homer in town.

Another listing at 131 Kelp posed the same sort of question for us before: Do people know where Kelp is?

Here's how the poll works: You can select multiple answers. We're asking which of the fairly obscure streets – all west of Sepulveda – that are listed in the poll you already know and could locate, more or less, if you had to. (Could you give someone directions?) Vote for all of the streets you know, and leave blank the ones you really don't know.

This is both a test-your-knowledge quiz and a way to generate a result that might be interesting: MB's most obscure street. The street with which the fewest readers claim any familiarity will "win" as the city's most obscure. Poll closes Weds. nite at 8pm.

We will then find a way to recognize this distinction and perhaps bring the street out of the shadows.

Find this concept entirely too vapid? Check out Kaye Thomas' new post on the end – or redefinition – of "starter homes."

Weekend Opens (3/22-3/23)

It's a short weekend for open houses given Easter – lots of listings are only open Saturday, while many of the listings that are new this week are not listed as open.

Idea for a drinking game: Browse this week's Beach Reporter ads and take a quaff each time an ad says "Hop on Over!"

You can click here for the list of weekend open houses via the Beach Reporter online, or any time use the link under "Prop. Search Tools" in the right-hand column on the front page.

As always, click on any highlighted address for more pics & details via Redfin.


Hill Section

There's a dearth of open houses in the Hill Section this weekend. It's a very observant region of MB.

We're happy to call attention to the Easter open at 939 Duncan, a big-time remodel purchased 2 years ago by some flippers. Opulent, overdone, odd, and – hey, you expect this – overpriced. Nearly 6 months on market so far. Along with 534 14th, Duncan shares the remarkable quality of offering access to the pool through the master bedroom. Currently $3.695m. Open Sun. 2-5pm.


Sand Section


341 10th is on a South End walkstreet. Need we say more?

Offers 4br/5ba, 3150 sq. ft. Steps to downtown.

Nice, spacious remodel with a rental unit (not much improved) to help you defray the costs of ownership, which are considerable: Starts at $3.3m.

Open Sat. 1-4pm.



Mrs. MBC's pick for the week isn't posted as open (it's a funny weekend that way), but we'll write it up anyway, just in case they throw the doors open after all.

She loves a good project, so her pick is 456 27th. It's a rare Tudor-style home (3br/3ba, 2625 sq. ft.) in a sleepy location up on the plateau above Sand Dune park. (Is it just us, or has this become the busiest area of the Sand Section recently?) The home is a bit dated – OK, really 70s – but one person's ghastly throwback is another person's great remodeling opportunity. Bonus: Roofdeck. Starts at $1.950m.


Tree Section


672 19th is a square box with little inherent style, but my, how they've gussied it up with paint and decor. (Click the address for pics.) The home offers 3br/2ba and almost 1700 sq. ft. You've just got to see a home that touts a "beautiful hardscape" and tiki lights. Psssst! Nice location. Starts at $1.789m. Open Sat. 1-4pm.

As we mentioned in the MB Market Update the other day, 3412 Pacific was purchased just a year ago (Jan. 2007) for $1.491m. It's up now at $1.199m ($-292k). We don't think they've trashed the place; there are other issues behind the fall. Open Sat. 1-4pm.

A price war is breaking out at the lowest end of Tree Section inventory – 1708 Oak and 3612 Poinsettia keep undercutting each other. Both are 2br/1ba and 850 sq. ft. in off locations. Last week, Oak moved down to $899k; now Poinsettia is at $849k. Take your pick: 1708 Oak is open Saturday 1-4pm; or drop in Sunday (1-4pm) at 3612 Poinsettia and say hi to Kaye Thomas.

Pricing Poll: 3200 Alma

You've got to love older homes to want to buy one today for top dollar.

And top dollar is exactly what the sellers are asking for 3200 Alma. The start price is $1.899m for 3br/2ba and 1500 sq. ft. Old-home lovers, come on out!

We're asking MBC readers once again to weigh in, through a pricing poll, on what the final sale price for 3200 Alma is likely to be.

Please read the story below, vote in the pricing poll and explain or support your vote in the comments. Voting closes Sunday night at 8pm.

Here at MBC, we have a well-documented soft spot for charming old Spanish homes on Alma. Specifically, we went ga-ga for Matthew Fox's home at 3116 Alma (see "Old's Cool"), only to find that he wasn't serious about selling (never cut the price, tested the market for just 2 1/2 months), and that no one was serious about buying. The listing was canceled and the home continued, presumably, as a rental.

So we were looking forward to 3200 Alma. The listing language set the stage:

This is the Spanish Charmer that everyone knows and loves. It has been updated over the years, but its authentic elegance has been carefully preserved.

So, would we join the multitudes who "know and love" this home? Nah.

Alma is quirky and authentic and cute in all the right ways, but there was no "wow" factor for us. The phrase that occurred to us over and over was "rough edges." Overgrown vines, chipped tiles, dirt here and there, a BBQ that saw better days several years ago, a tiny kitchen with old cabinets that are just painted over.

We quickly got the sense that this home hasn't been tidied up much for sale. The flaws, we guess, are supposed to be part of the charm.

Likewise for the dated, er, period tile work in the bathrooms. Impossible color combinations. (Did we really see green and purple together?) The kitchen and baths really challenged our broader commitment to the ideal of preservation. We'd take these compromises in the right circumstances, but not for a big premium.

On the plus side, the home has natural character, two small but sweet outdoor spaces, and here are some ocean views from the master (and even from the master closet – a first for us).

The owners paid $1.1m in July 2002. That means they're asking for a markup of $799k/+73% over 5 1/2 years – 13% average annual appreciation. That's certainly not unprecedented in MB over recent years, but it's on the high end.

At $1.899m, the sellers seek a remarkable $1,266/PSF, the second-highest PPSF in all of the Sand Section now. At just $1,000/PSF – still a premium price – the sale price would come down $400k. The often-optimistic Zillow thinks $1.47m is about right.

Another newer listing really undermines the price on 3200 Alma. Quite nearby – although lacking ocean views – 445 30th St. offers an older Spanish-style home with 1100 more square feet on a larger lot (2700 vs. 2150 at Alma) for just $100k more ($1.999m), and at just $769/PSF. The big differences on 30th St. are that there's adequate living space – two living rooms plus a separate dining area – and the kitchen is modern.

We wanted to like 3200 Alma more than we did, but there's no question that it has its charms. The question is: What's the right price?

What's Up with Rates?

It appears that mortgage rates are settling down, but there's a notable break between traditional 30-yr. fixed loans and jumbos, which are most common in MB.

One month ago, in "Rates Spiking Again?," we took note of a recent uptick in 30-yr. fixed loan rates, and noted the fears of one local realtor that the rate increases could continue.

Today's headlines include "Mortgage Rates Fall, 1st Time Since February" (via CNN Money). However, as the first graph here shows (via Bankrate.com) – on a short, 3-month time scale – jumbos are remaining stuck in the lofty territory of late February. (Note: We created these graphs using Bankrate's free tool.)

The second graph shows two jumbo products. The green line is the same 30-yr. fixed as in the first graph, while the blue line is a 5/1 ARM with interest-only payments. The ARM rates seem to have risen significantly from the late-February peak.

Of course, these graphs provide only an illusion of hard data. The data are drawn from lots of sources and there is a lot of variation by region and by lender.

We also have yet to see the effect of higher conforming-loan limits (about $730k) working through the system – redefining what a "jumbo" loan is. Finally, knowing what rates are generally doesn't tell you whether there are willing lenders and whether buyers can meet increasingly rigid criteria.

We're curious what buyers and pros are experiencing right now in the local market.

MB Market Update for 3/15/08, Trees

This is the third installment of the MB Market Update for the period 3/1-3/15/08. The Hill Section and Sand Section stories were posted earlier this week.

Click here to download the complete 3/15/08 spreadsheet, or any time, use the link at the upper-right corner of the front page.

In the article below, click on the smaller pics to enlarge and, as always, click on any highlighted address for pics and details via Redfin.

Tree Section

There were 47 active SFRs in the Trees as of 3/15/08, of which 26 were priced below $2m, and 21 were priced above $2m. This continues the trend we've noted previously, a slight reversal of what we saw for much of the year 2007, when most of the Tree Section inventory was above $2m.

Seven of the 9 new listings in our spreadsheets this period were priced below $2m; 5 were between $1m-$1.5m. (Note that one of the Twins in the Trees – 3309 Poinsettia – is shown as "new" here, too, meaning 10 show as new in the Trees, but its start date was actually Feb. 28.)

Short Holds

Two new listings were purchased in late 2006/early 2007 by their current owners:

2005 Oak (another Oak listing!) was offered for $1.460m in Fall 2006, and purchased for $1.350m by the current owners, who now face a job transfer. The home is delightful in some respects – garage tucked away in back, spacious kitchen/dining area, cute living room up front. There are only 3br/3ba, however, and the living spaces could start to seem cramped quickly. Asking $1.479m to start.

3412 Pacific was offered seemingly forever in 2006, staring at $1.65m and slashing down to $1.349m over time. The listing canceled late in the year. Imagine our surprise to learn that the home sold for $1.491m in January 2007 – $150k over asking, after almost a year on market. There's a story in there somewhere... The remodeled home is not much on the outside, but has surprising space – 3br/3ba and 2200 sq. ft., on two levels. It returns to market at $1.199m, fully $300k below its Jan. 2007 purchase price, and $150k below its last list price.

Gotta Have 'Em

Two gems came on and sold quickly. 1906 Flournoy, a flat ranch-style home with 4br/2ba and 1800 sq. ft. in a quiet location, came up at $1.680m and sold within 3 days – for all cash, according to comments at MBC.

Meanwhile, much larger 738 26th (pictured) sought $1.799m for 4br/5ba and 2900 sq. ft. in an nicely isolated location (at 26th/Agnes). Before you knew it, the home was in escrow, but unfortunately that didn't hold. Mrs. MBC liked the traditional look and feel; others didn't like the layout. You've got another chance now, but we doubt it will last.

The Rest

The bargain among the other new listings was 709 35th (pictured), with 5br/4ba and 3400 sq. ft., priced at $1.499m – at $441/PSF, the lowest among actives and barely higher than the $425/PSF paid for nearby 561 35th just a month ago. (We say it "was" the bargain because it's now in escrow as we write.)

1412 Elm and 2904 Laurel offer similar profiles: 3br and 1850 sq. ft., both near $1.4m (Elm: $1.385m and Laurel: $1.449m). Laurel has no garage; that was converted to an extra bonus room with bath.

661 26th is new construction in the Cape Cod style – a familiar layout with high ceilings on a larger lot (5120 sq. ft.), with a good-sized back yard and a spacious front patio that might really be usable as an outdoor living space. This one offers 5br/5ba, 3400 sq. ft., and starts a bit high at $2.699m. Also new is 2705 Palm – still nearing completion (as the dirt piles in the pic show), it will have 5br/5ba and 3300 sq. ft. It also begins at $2.699m.

There were 6 sales in the Tree Section from homes listed on the MLS, plus another sale that was posted to the MLS, though we had not seen the listing active (2401 John at 3br/2ba, 1350 sq. ft., $1.189m):

• 742 27th is in its second escrow; the last price was $1.999m but we're hearing the sale price is higher. This one began at $2.4m in October 2007 and MBC ran a pricing poll on it in January. (Click here for the results.)

• 2507 N. Valley, a longtime listing that foreclosed last October and was purchased for $1.643m by a private party, had been listed for 3 months at $1.790m, offering up to 90% seller financing.

• 609 26th, a home that had been offered in 2007 at $2.299m and came back a bit lighter at $2.099m.

• Two new homes that, oddly, had the same numerical addresses, both sold during this period – 644 33rd and 644 35th. The 33rd St. home (5br/5ba, 4200 sq. ft.), a somewhat striking Spanish-style home, has always been listed at $3.250m, and it was nearing 500 days on market. The 35th St. home (6br/6ba, 3650 sq. ft.), by contrast, was offered for less than 2 months and took one cut, from $2.459m to $2.359m.

In this period, 11 listings made price reductions (all indicated on the spreadsheets with boldface type). Some of the highlights:

• 570 27th (a.k.a. "The Farmhouse," pictured) cut $200k more and is now below $3m for the first time, down $900k from its start price of one year ago (March 14, 2007);

• 3500 Blanche, a month-old listing of new, busy, Spanish-style construction, chopped $150k to $2.399m;

• 1825 Oak, a practically new home, cut $100k to $2.299m; and

• 1413 Pine and 3505 Pine, both intriguing new listings from early January, each completed $100k worth of cuts, with 1413 now at $1.659m and 3505 at $1.399m. In this period, 1413 also re-listed upon "expiration" of the initial listing, and Mr. MLS hasn't imposed the full DOM count of 66 (as of March 15).

Interestingly, while we count 12 homes in escrow in the Trees during this period that had made their deals prior to March 1, only 1 sale closed in this 2-week period. We imagine that credit market issues are slowing some escrows down, but we can't be sure in any specific case.

2709 Oak, the one sale, was one of the longer-term listings of new construction, with 521 DOM when the escrow began. It closed for $1.950m, down $445k/-19% from its start price of $2.395m from August 2006.

Oak is now the second example of new construction in the Trees to close under $2m in the past year. 3104 Pacific, in the last report, was the first, and 1901 Poinsettia is waiting in the wings to become #3.

Coming Soon to El Norte

They're tearing up one of the last big lots in the land formerly known as El Porto (officially, "North Manhattan Beach," but we prefer El Norte).

On the way: 5 new condos in 2 technically separate, simultaneous projects. (See artist's rendering from the developer's website).

The development is at 44th/Highland, on the east side of the street, where for years you may have noticed a giant hill of sand. Up at the top was an older home at 4321 Crest.

You might have wondered, in passing: When are they going to unload that land? And what's it worth?

Well, recently the green construction fences went up. The home at the top came down. And this prompted some questions: What finally happened? What's coming?

The answers: The land was sold quite nearly at the local RE market's peak, with a sale closing for $3m a year ago, in late February 2007.

The parcel is considered a double lot. (Photo: Microsoft Virtual Earth via Zillow.com.) On that space, zoning would allow up to 9 units, but the developers plan only 5, which is a nice stroke for lower density, we suppose. (It's 4 more units than previously occupied the space.) Approvals were mostly worked out late in 2007.

It's an ambitious project starting up at a rough time for the local market. (Let alone the credit markets.) Give the developers credit for having cojones.

The units will have ocean views, and they'll be new, but the location is going to be a problem.

Nearby, an SFR at 4104 Highland has sat on the market, unwanted, for more than 8 months. (It has technically canceled but there's still a sign out.) 305 Gull, a dated (and bright green!) duplex just a tad north on Highland, has now dropped below $1m after 5+ months. The most spectacular new entry, a trapezoidal tower at 4419 Highland, hasn't sold after 9 months and is now available for rent.

SFRs aren't a perfect comparison, but it's noteworthy that buyers are steering clear of the area while they have options.

There are condos further down the block (nearer to 41st) that have had their issues in recent years, but which all got sold and filled up, mostly in 2006. It can be done.

These builders are like toros, bullish on the future. The question is whether they'll find buyers in a year or two, or whether this project will offer some of El Norte's most splendid new rentals.

MB Market Update for 3/15/08, Sand

As we noted in the first post, as of March 15, inventory was the highest MBC has yet reported in one year of public tracking, with 89 active SFRs. (Note, we've revised down by 1 due to an error – our apologies.) Click here to download the complete 3/15/08 MB Market Update. Below we cover the Sand Section.

Sand Section

There are 29 active SFRs.

We had 5 new listings come on in the Sand in this 2-week period, including:

3200 Alma (first pic), a 1930s-vintage Spanish-style home offering 3br/2ba and 1500 sq. ft. It's as cute and charming as you might hope, but with lots of compromises that will turn off the average buyer – a small kitchen, limited living spaces, small bedrooms and, especially, period details like the tile work in the bathrooms. We love a sweet old home like this – with an ocean-view master closet, no less – but for $1.899m, people will generally want more.

445 30th is another older Spanish (1950s) asking just $100k more that has got many more updates and greater square footage. This one offers 3br/3ba, 2600 sq. ft. and a modern kitchen, with two living rooms and a separate dining area downstairs. The sellers also own the home next door to the west and might sell that, too. Start price for 445 30th is $1.999m.

465 30th (second pic) is unlike the others, a very large-feeling newer home offering 5br/6ba and 3600 sq. ft. on 3 levels. Plenty of living space including the third-floor deck and, as the current owners show, the front bedroom makes for a great rec room. Starts at $2.799m.

Also new is 472 35th, a teardown on a full lot (2700 sq. ft.) offered at $1.199m. A purchase just closed on this property for $1m on Feb. 29 – the day this listing began – and someone has already applied for a permit to build a new SFR. That's a quick $200k or so if they can pull off the flip rather than go through the process of building.

We saw the return of 337 16th, which came on last year at$4.095m and returns anew at $3.850m after significant time off the MLS. (We're treating it as a "new" listing due to the time off.) It's a huge (4br/5ba, 4550 sq. ft.) and very nice home with sweeping ocean views, perched at the peak of 16th St. The 4-car garage is both generous and essential in this area. The home is decorated now with an overbearing "Safari" theme throughout that you might love. Might.

There were 2 sales (new escrows) in the Sand in this period:

• 523 Marine, a cute cottage that had been held for less than 18 months by the sellers; they paid $1.310m and were asking $1.379m.

• 428 27th, the unique Brownstone of which we took note just a few weeks ago, and which was offered at $2.899m to start. There were a couple of offers but not, as we hear it, overbids.

There were a few price cuts in the region worth noting:

• 516 24th (pictured), a very crisp and spacious, beachy home, made its first $100k cut, now $2.395m.

• 305 Gull, a duplex-cum-SFR in a highly challenged location in El Norte ("North Manhattan Beach") on Highland, is $1k under $1m now.

• 4419 Highland is down almost $400k from its lofty heights, a start at $1.695m – another $50k came off and it's now at $1.299m.

And finally, there were 4 sales that closed in this period:

• 3617 Vista, new construction on Rosecrans (see "As Good As It Gets on Rosecrans"), closed at $1.840m, -$309k/-14% from its start. (MBC had guessed "nearer to $1.9m" for a final price back in September.)
  

• 420 30th, on the same block as the two new listings mentioned above, fetched $2.275m, -$304k/-12% from its initial price.

• 224 31st Place got $1.550m, down just a bit (-$89k/-5%) from its longtime price of $1.639m.

• 232 30th Place, one of the longest-running listings covered by MBC (nearly 10 months on the market in 2007), closed for $1.271m, down $98k/-7% from its start, and up just $46k (+3%) over its July 2005 purchase price.

MB Market Update for 3/15/08, Hills

The new MB Market Update spreadsheets are available: download the 3/15/08 update by clicking here, or by using the link at the upper-right corner of the main MBC page. Information in this update closed March 15.

We now split up the discussions of our 3 areas west of Sepulveda into separate articles so we can focus more on each one. You can download the complete spreadsheet now or any time. Articles on the Sand Section and Tree Section will follow.

Total SFR inventory west of Sepulveda was at 90 on March 15, +6 from the end of February. During this period, inventory briefly hit 94. The inventory total of 90 at the close of the period is the highest, by 6, that MBC has reported in almost one full year of public market tracking.

In this 2-week period in March, there were 17 new listings, and 3 cancellations and 8 sales (new escrows) of SFRs listed on the MLS. (In our subject region west of Sepulveda.) Of those sales, several occurred in the last few days of the 2-week period. By way of comparison, there were 14 sales (new escrows) in the second half of February, and 19 total last month.

We watched a couple of fresh escrows fail in this period, and we see several escrows stretching out for what seem to be longer-than-normal periods. The latter observation is difficult to quantify, since these deals are private and are sometimes made with contingencies or built-in longer escrow periods. Certainly we wonder to what degree financial market turmoil might be disrupting buyers' financing.

As always, we'll look at our region by section, with a focus today only on the Hill Section:

Hill Section

There are 13 active SFRs.

There was just 1 new listing in the Hill Section, the "new King on the Hill," as Blake Roberts has quipped. It's 218 N. Dianthus, offering 4br and a vast 5600 sq. ft. of living space.

There's a lot to love here, but the home suffers from some of the quirks that view homes sometimes do. To maximize the top-floor living spaces with the ocean views, the first level has all the bedrooms. The master feels like a living room, with glass doors opening onto the back yard. Other bedrooms are accessed off of a winding hallway around one side of the home that actually ends in a living room that also opens onto the back yard.

That said, the kitchen, dining and living spaces upstairs are robust and opulent. There's really too much space for regular family living, but you'll appreciate that when the house is full when you're entertaining. A large basement rounds out the offerings. Start price is $6.75m.

Another ultra-high-dollar listing took a second big cut since our last report. The 8,000 sq. ft. palace at 923 1st is now at $7.595m, down $403k from start. (See "Unpredictable" for MBC's review.)

It's interesting to note that 9 of the 13 actives hit the market for the first time in 2008. The 3 exceptions are:

• 872 MBB – now at 4 months on market, down about $100k to $1.150m. Sellers paid $960k in Sept. 2005. For the first time, we note that the listing says the owner may accept a lease option or a straight-up lease of the property in lieu of sale.

• 939 Duncan – nearing 6 months on market, a big remodel, down $200k to $3.695m.

• 811 Boundary – nearing 9 months, down $400k to $2.199m. The sellers grabbed it for about $1.8m in Sept. 2004.

Meanwhile, 916 9th spent some time on the market in 2007 but was gone for more than the requisite 60 days before it started anew last month. We now show it as a 2008 listing for that reason. Current price of $2.895m is down almost $400k from its start last year.

We saw no closed sales in this period; there is one pending escrow at 1019 11th.

Time for Some Cake

One year ago, in a profound act of folly, your humble correspondent created Manhattan Beach Confidential.

Folly? We kid, sorta. It’s a time-consuming hobby for someone outside the RE industry; probably the third- or fourth-most demanding thing in our lives. Not so sure we would have started it if we had known what was ahead.

We’ve made a lot of friends, we’ve made some enemies. We’ve learned a lot. We have made some mistakes and issued some apologies. We’ve seen readership blossom, growing constantly, and have watched the comments section become one of the more interesting parts of the site as a result.

We got called the “#1 Consumer Real Estate Blog” in our earlier days. For a time, MBC was also a column in the Easy Reader. And we somehow wound up on the front page of the local newspaper (Daily Breeze). All completely unexpected.

How did we get here?

MBC exists because we always wished there was something like it. Real estate information seems tightly controlled, available only to people active in the market.

Why should that be? We all live in homes and we’re all affected in some way by the fluctuations of the market around us. We always thought that there ought to be a place to gather data, learn some of the inside scoop, discuss trends and see independent analysis. There is independent reporting and analysis about almost every other financial market, why not local real estate?

We knew we’d have enough material if, in addition to local RE, we tackled other housing bubble and economic issues. That big picture is a crucial part of the answer to why homes in MB tripled (or more) in price over the past decade. And the bursting of the bubble, and potential financial meltdown/government bailout in its wake, could be a big part of the story about the future of our market.

To keep the whole package interesting, we try to remind everyone why MB is special. Make no mistake, we love MB. And there are a hundred reasons why, of which we’ve covered only a fraction so far.

MBC has evolved a great deal in reaction to reader feedback – what you like, what you don’t like, what you do while on the blog… all things that we can use to tailor the offerings. Certainly we’ve adjusted our tone from time to time as we worked to find a voice.

We feel just a bit validated by the rush of events this past year. After all, MBC’s first post fairly blared (in all caps, no less) “prices are dropping in Manhattan Beach.” That was maybe a bit edgy at the time, but it’s a fact that’s more widely acknowledged now. Last Friday morning’s LA Times lead story was headlined, “Southland Home Prices Tumble Fast.”

Over the past year, we’ve covered a wide range of topics, particularly individual listings and local market activity. We’ve covered 2 dozen homes put up for sale just 2 years or so after the owners moved in. We’ve seen sellers try raising the prices on their homes to attract buyers. We’ve seen others take off $800k-$1.25m to make a deal. We’ve covered some seemingly never-ending listings.

We called the Tree Section glutted with new construction. We’ve seen builders of new construction start to take losses for the first time in this decade, and we even saw one builder try to argue – in an advertisement – that it’s impossible for prices to go down much in MB.

Along the way, we’ve delivered a steady stream of data to help readers draw their own conclusions. Whether you use our market updates to help you shop or to help chart pricing trends, we strive to make it possible for most anyone to use MBC to learn more about the local market than they can anywhere else.

Until we sputter to the finish, exhausted, or get cut off at the knees, or find someone else that does it all better, we’ll try to keep it going. Year One, meet Year Two. And now it's time for some cake.