Weekend Opens (5/31-6/1)

We're getting back to normal, or above-normal, with lots of opens this weekend. Our weekly feature mainly looks at new offerings, but 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."

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


Hill Section

If you're a regular reader, you know they just don't give us many new Hill Section listings in a given week, and even fewer new opens.

953 9th is a new listing, but not posted as open. Offers 5br/4ba and 4100 sq. ft. for $2.650m. It's on the same street as Mrs. MBC's pick 2 weeks ago, 619 9th, which is open (Sun. 1-4pm) and which will run you $4.195m. Can we get really micro for a moment? 619 is west of Highview, and 953 is one door west of Dianthus. That means one's near downtown, and one's near Sepulveda. That's part of why you've got a $1.5m gap between them.

Meanwhile, this week's bogus re-list is intended to make you think 923 1st is a "new" listing; it's not, it's just got another price cut. (See "Call Off the Bump.") They're celebrating with another sunset open house, 2 hours before sunset – Open Sun. 5-6pm.


Sand Section

117 7th is a newer home close to the Strand, on a walkstreet near downtown. What could be better? Well, for $4m, you might want more than 2br and 2350 sq. ft.

The issue here is that the home is on a half lot (a bit bigger at 1500 sq. ft.), unusual in these parts. The more we look at that price, the more we say "hmmmm..." Open Sat. & Sun. 2-5pm.

4419 Highland pulled a re-list this week – it's got a new agent. That's 3 agents now, for those scoring at home. New price: $1.265m. New money quote in the listing: "effortless access to all local services." We assume they mean not only the Chevron station, but also the snack shop. Open Sun. 2-4pm.


Tree Section

Mrs. MBC is often taken by the sweet $3-4m homes. You know, the South End walkstreets, Hill Section paradises, etc. But those are for the few. We've still got plenty of spiffy, traditional family homes in MB that are perfectly good choices for regular folk.

Mrs. MBC's pick this week, 2907 Pacific, is an example. It's got 3br/2ba and 1900 sq. ft. There's nothing about the home that will blow you away, but it's sweet, updated, flows nicely and is priced as if the sellers mean to make a deal at $1.199m. Did you notice that decent homes are rapidly approaching $1m?

2907 Pacific is open Sat. & Sun., 2-4pm. If you drop by, be sure to tell them Mrs. MBC sent you. They do want to know.

We just have to mention 3119 Valley, the lowest-priced home west of Hwy. 1, a small cottage (2br/1ba, 850 sq. ft.) on one of those little slivers of a lot (2500 sq. ft.) you see on this stretch of Valley. It's dominated by bigger homes – including one under construction – on either side. Get into MB, reduce your carbon footprint, own for just $799k. Open Sun. 2-5pm.

Another week, more new construction coming online. 664 33rd offers 5br/5ba, 3550 sq. ft., and – well, you've heard this before – this one is so much better than the rest, it needs to start near $2.7m ($2.689m).

That means it's the highest-priced Tree Section newbie except one at $4.4m. It's blue, it's different and it's described as "Coastal Plantation" in style. Hey, did MB once have plantations? Open Sat. & Sun. 1-4pm.

A $600k Reality Check

Hold a house for a year, and you're not very likely to make money if you try to sell it.

Even in MB.

This is a lesson hard-learned, but gradually dawning on the owner/seller of 317 17th, a walkstreet home near downtown.

17th was purchased in Nov. 2006 for $2.050m. As MBC recently noted, that was "about 30 minutes ago in local real estate time."

Just over a year later, the owner offered 317 17th for $2.799m. And that struck MBC as, well, ambitious. (See "Stuff Our Stockings (Please).")

We described $2.799m as a "highway-robbery price" and noted that the seller sought a profit of $749k (+36%) after a short hold. We speculated, in a perhaps non-PC way, that the reason for sale might be that the owner "face[s] imminent court-ordered institutionalization."

Quite suddenly, those delusions have (almost) ended. Last week, the price was reduced to $2.499m, but this week, a bigger chunk came off, and the list price now stands at $2.199m.

That's a drop of $600k and 21% from that silly start price.

It's now just +$149k/+7% over the Nov. 2006 purchase price, barely enough to cover the costs of sale.

It's all downhill from there.

Renter Turns Buyer

Of all the many people weighing the rent-buy equation, one has the ear of perhaps a million people.

David Leonhardt of the New York Times calls himself "an evangelist for renting," the sort of guy who has tried, repeatedly, to persuade people that the rent-buy equation only favored renting in recent years with bubble-inflated housing prices. (See, for instance, this piece from April 2007.)

But Leonhardt is leaving Manhattan (the island, not MB) and moving to the Washington, D.C., area, where he now finds housing more affordable and buying more rational. He's under contract to buy a home. (See the story of his "conversion" in Wednesday's NYT.)

As Leonhardt explains it, his decision was tied to the "rent ratio" in the area. (Others call this the "price/rent ratio.") To calculate the "rent ratio," you need two comparable homes – one for sale, one for rent. (You need to pick your inputs carefully to get this right, of course.)

Divide the price you'd pay to buy one by the total annual rent you'd pay to live in the other. That's your "rent ratio."

Here's an illustration using the same MB home for both sides of the equation – 437 1st was recently offered for sale at $1.650m (it's in escrow). We're told it was also offered for rent at $7,495/mo. Multiply that monthly rent by 12, and $89,940 is your divisor. The offering price ($1.650m) divided by the annual rent yields a "rent ratio" of 18.3.

So what's "normal?" Leonhardt says that ratios nationwide stuck between 10-14 for most of the 1970s through the 1990s, then bubbled up to 19 recently. Individual markets vary, and the coasts have higher "normal" ratios.

A chart provided with the story (use this link to the story, then pull up the national map graphic online) gives the ratio for all of the LA metropolitan area as 24.1 today, and 31.5 at the recent peak. (Also see here for a Nov. 2007 Fortune/CNN story about the ratios nationwide, and click here for the accompanying data – select the "P/R" tab at top to the chart.)

Leonhardt says he decided to buy when he saw ratios in Washington of 16 for condos and 15 for SFRs. He still thought that was high, but the excess cost now is worth it to him. (He doesn't discuss prices much, though we're sure that the prospect of buying in D.C. was easier to tackle than buying in Manhattan for a reporter and his wife.)

Now we'll ask readers to calculate some rent ratios of your own. That 1st St. example we offered above may be a poor one, since that monthly rent seemed very high for that home. If the rent is too high, the ratio will be too low.

It's best to use market-rate examples. Please run some examples of active listings (for sale and for rent), and share your inputs and results. What do you see as the "rent ratio" in MB?

If you're not inclined to do the math, you can still use this cool online tool the NYT is providing. You input rental rates (monthly), a home price and some other standard variables, and you get a custom chart telling you when – if ever – buying works out to be a better deal financially than renting.

Happy calculating...

Call Off the Bump

A 3-week experiment with a price increase now has been called off at 923 1st.

As we noted earlier this month (see "One Up, One Down"), on May 6, the list price for 923 1st shot up from $7.375m to $7.595m, same as the price from March 26-April 28. There were just 8 days to catch the discount then.

Today, the price is down again to $7.350m, $25k below where it stood from April 28-May 6, so it seems buyers didn't completely miss out on a bargain here.

It's hard to figure what's up, but it's not hard to imagine some terse meetings about pricing. (We're guessing.)

The listing began at $7.998m in early January, so it's now down $648k (-8%) from there.

The home is spectacular in many ways, and would be an especially great place to visit for a rollicking pool party. (See "Unpredictable.") In fact, in that alternative universe in which your blog author is a single guy with deep pockets entertaining the rich and famous, it'd be a spectacular choice for a radical pad – big views, big fun.

Alas, it's not a family home, and that sticker price (er, those various sticker prices) doesn't work but for a few. We still think there will be quite a bit more cutting to come if a deal is to be made.

Another Hill Section listing that recently made a bump, 312 S. Dianthus, is standing firm for now at $3.749m, a boost of $259k (+7%) after it began at $3.490m. We'll check in later to see how that's working out.

More About You

We learn a lot from readers here, even though the MBC comments section is anonymous. Correspondents reflect several different viewpoints based upon factors that include homeownership status.

Twice recently, we have run polls that gathered interesting evidence on who reads MBC. Our most popular poll yet asked simply which RE-related actions readers had taken, if any, in the past 2 years. (See "Recently Bought? Or Sold? Why?")

In comments on that story, people described their decisions to buy and sell in recent years, and gave some sense of market psychology. In the poll, we learned that slightly more than a quarter of the MBC readership has bought or sold in the past 2 years. Most readers have not been active in the market in that timeframe.

About a third of readers (32%) say they've "stayed put" in homes they own during this period. Added to the 18% who bought in these past 2 years, our poll tells us that fully half the MBC readership consists of MB homeowners.

Meanwhile, 27% of poll respondents said they "stayed put" in rental homes over the past 2 years. It is conceivable that, also, some of the 8% who said they had sold in MB as their last RE-related action are currently renting in MB. If so, the total number of MB renters reading MBC could be as high as 35%, still considerably below the number of homeowners.

Finally, 15% of readers chose "other" to describe their actions in the past 2 years. We know that we have plenty of readers from outside MB to whom this category would apply, but it's also possible that our poll didn't offer adequate choices to readers who do live in MB.


The Scoop on HELOCs

Now, as to MB homeowners, we ran a poll a little while back asking about Home Equity Lines of Credit (HELOCs). (See "How's Your HELOC?")

A loyal reader had asked for help getting a HELOC "unfrozen." The bank claimed that a "decline in value" had wiped out the available credit, but any halfway reasonable calculation of LTV would show that not to be true, the reader felt. We saw this as a case of a bank in trouble shutting down credit, not really a reflection of the reader's home's value.

We asked how common this problem was among readers with HELOCs. And we found that it was somewhat uncommon, but not unheard of.

Nearly one-third (31%) of readers with HELOCs said they had their credit lines frozen or reduced recently.

In comments, a few readers complained of Washington Mutual having chopped their limits substantially, while a couple others mentioned Chase doing the same thing. Our reader whose experience sparked the story worked with a third lender, a popular, but troubled, online brokerage.

A second graph of the poll results includes the 34% of readers who said they owned their homes but did not have a HELOC. This is a different way of looking at the problem among all MB homeowners.

Holiday Open Thread

Memorial Day is the traditional kickoff to Summer.

We're not getting the hot weather this year – more of a shorts-and-long-sleeves kind of day – but it's still shaping up to be one of the nicer days in a week.

How are you celebrating? Where? With whom?

And on point with the purpose of the holiday, what or who are you remembering most today?

In Baghdad, it's 101 and getting hotter throughout the week.

MB Market Update for 5/15/08, Trees

The new MB Market Update spreadsheets are available: download the 5/15/08 update by clicking here (note: this one is revised, fixing layout problems), or at any time by using the link at the upper-right corner of the main MBC page. Information in this update closed May 15.

This is the third of 3 articles describing market activity May 1-15.


Tree Section

There were 51 active SFRs in the Tree Section as of May 15, with 27 priced below $2m, and 24 priced above $2m.

We had 7 new listings, 3 of them new construction:

• 2901 Oak (pictured) is located on a not-terrible part of Oak. Home is essentially Spanish, 5br/5ba and 3250 sq. ft. Starts a hair below $2m at $1.995m.

• 2504 Poinsettia is very surprising – they say "not cookie-cutter," and they're not kidding. A completely different layout, an interesting mix of styles that is not purely contemporary nor Mediterranean (click for the pics via Redfin). All bedrooms downstairs, most boxy. Hmmm. Starts at $2.499m.

• 721 36th is a Cape Cod that was new last year, and we're letting it sneak onto this list now. Purchased for $2.327m in March 2007; the markup after a year: +$172k/+7% to $2.499m. Well, they only need one buyer who thinks the market has appreciated 7% over on 36th in the past year.

The resales new to the list:

• 1705 Pacific (4br/4ba, 2650 sq. ft.) was remodeled awkwardly in stages by previous owners, and radically redone inside by the current owners. Very classy, but you need to get past the strange layout (master downstairs), so-so curb and location on Pacific near the school. The start at $1.875m struck MBC as fanciful (sellers paid $1.060m in late 2003), but comparably few MBC readers found the price "delusional" in our poll – or, at least, not the worst offender in the bunch.

• 3104 Palm shows its 80s vintage outside, but it's large (4br/3ba, 3425 sq. ft.) and ultra-updated inside. Starts at $1.799m (with a low $525/PSF).

• 2905 Valley is a comfy cottage with 3br/2ba and 1500 sq. ft. that the listing insists is "sophisticated." It's clean. Starts at $1.239m.

• 1816 Agnes, a humble remodel (3br/2ba, 1820 sq. ft.) in a quiet, "A" location, came up at $1.775m and sold quickly, just after our May 15 window closed.

In the first half of may, there were 5 sales (new escrows):

• 3404 Maple (pictured), akin to new construction though born 8 years ago (5br/5ba, 3300 sq. ft.) sold quickly at $1.799m;

• 1821 Walnut, new construction, fell out of escrow and then fell right back into it with a new buyer, last at $2.399m (recall its start last year at $2.75m);

• 2310 John is a unique contemporary – rare for the Trees, last at $2.099m;

• 2204 Palm is a huge home that once boasted the title "Colossal Corner Cape Cod" (see our review: "Oh Yes, It Is Big"). Started at $3.45m and never budged; and
  

• 625 26th is a nice, late-80s Mediterranean that sold after chopping almost $200k from its start at $2.185m; that last $1.999m price was about $200k higher (+11%) than its Aug. 2004 purchase price ($1.795m).

Noteworthy price cuts:

• 560 36th, a surprisingly warm modern, made a sudden cut of $300k before May 15 to $2.699m, and a few days later (outside the report window) has cut another $200k to $2.499m;

• 1829 Poinsettia, now on market more than a year, lost another agent and returned $100k lighter at $1.475m – now -$310k/-17% from its preposterous start last May; and

• 500 14th cut $100k, now -$150k/-8% from start and at $1.699m.

There were 4 closed sales, the first 2 being short sales that skipped straight from "active" to "sold" –

• 3412 Pacific got its asking price: $1.199m – remember this one sold just over a year ago for $1.491m (Jan. 2007), nearly $300k more, although that was also probably $100k-$150k higher than its true market value at the time;

• 1313 Oak went for $1.780m, -$710k/-29% from the most recent start price of $2.490m;

• 3517 Elm got $1.155m, -$244k/-17% from its October 2007 start – sellers paid only a bit more ($1.045m) in Oct 2004; and

• 738 26th (pictured), the picket-fence beauty on a corner lot at Agnes, closed at $1.770m, just a $29k hair below asking.

Weekend Opens (5/24-5/25)

May and June may be great selling months, in general, but Memorial Day weekend is a time for car races, barbeques and beach time, not new listings or open houses.

Literally 1 new SFR listing west of Sepulveda has come on since last week, and that's a $6m+ Sand Section home (2719 Manhattan Ave.) that isn't open this weekend. So we'll pick out listings worth special attention for one reason or another.

The way the weather is shaping up this weekend, don a parka if you dare to trod from open to open.

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."

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


Hill Section

Everyone talks about the big money and even bigger estates in the Hills, but regular folks live there, too. They snatch up houses like 511 N. Dianthus (open Sat. 1-4pm) and 1100 John (open Sun. 1-4pm) and then make it a point to be overheard in crowded restaurants talking about their "home up in the Hill Section."


Sand Section

We've said it before, we'll say it again – 332 20th (pictured), up at the top of the 20th St. walkstreet above Highland, is splendid, plush, unique and offers great ocean views, plus back-door access to Live Oak Park. You would think it'd be taken by Summer, but that's just around the corner. Currently at $4.495m. Open Sat. & Sun., 1-4pm.

Another wower is at 228 29th Place, which we've urged readers to drop in on previously.

The fall from great heights would seem to be nearly complete – this one began at $3.049m last year and now stands (after a legit re-list) at $2.499m. Contemporary, custom, big views and 4 levels, if memory serves – seems like 6. Open Sun. 1-4pm.



Tree Section

560 36th is a new home that's really trying to move. After just 2 months on market, the price is down $500k/17%. The listing screams "please submit all reasonable offers!"

36th is surprisingly warm for a concrete-glass-and-steel modern home. It's new construction with 4br/4ba, 4000 sq. ft. and a different flavor – not what you expect in the neighborhood and not the sort of stark, soulless contemporary that you might find elsewhere. (The listing has pics but they don't do it much justice.) Overall, the project is pretty daring for a speckie and for this location – steps from the armory and Sand Dune Park. That's why it's down already to $2.499m. Open Sun. 2-5pm.

2812 Elm recently crossed a shocking threshold – 600 days on market. It began Sept. 13, 2006, and if it has taken 7 total days off market since then, we've got monkeys for nephews.

When the listing urged buyers, in January, to "Hurry, this home will not last!" MBC said, "Really, Don't Hurry," because we thought they must be kidding.

But now, partly with Mrs. MBC's urging, we're changing our tune completely. It's a weekend must-see.

The sad part about this case is that it's a very charming house, great curb, nice kitchen, and yet challenged by a layout that is just too hard to swallow, with 2 of the 4 bedrooms in awkward places downstairs.

Homes that haven't sold have a way of not selling, so this one's been stuck in a feedback loop for months. The first problem was that shoot-the-moon start price 600+ days ago: $1.769m. Current price of $1.599m means the sellers lose something if they make a deal – they paid just $15k less in June 2005.

It's time folks, it's time. First, drop by, even if it's just for moral support. Give the layout and location and other charms a serious thought. Somebody, please make an offer. Have some holiday spirit. Open Sun. 1-4pm.

MB Market Update for 5/15/08, Sand

The new MB Market Update spreadsheets are available: download the 5/15/08 update by clicking here (note: this one is revised, fixing layout problems), or at any time by using the link at the upper-right corner of the main MBC page. Information in this update closed May 15.

This is the second of 3 articles describing market activity May 1-15; again, shooting for shorter this round...


Sand Section

There were 36 active SFRs on May 15.

The biggest news was the raft of sales (new escrows), 7 in all, so we’ll start there:

• 437 1st, a 2007 purchase ($1.450m) that was tidied up and last offered at $1.65m;

• 401 3rd (pictured), a large remodel that may have been "underpriced" in a way that only a $2.7m home in the South End could be – lasted less than 2 weeks;

• 408 6th, the midblock walkstreet home that we're hearing is sold to a builder – last at $2.099m;

• 2211 Highland, twice surprising us as a listing on Highland that went quickly (listed at $1.399m);

• 516 24th, Mrs. MBC's year-end 2007 favorite among new construction in MB, last at $2.349m;

• 324 25th, a new listing of an older, smallish (1400 sq. ft.) home on a midtown walkstreet east of Highland, which didn't last a week at $2.2m; and

• 125 31st, a contemporary in a sleepy walkstreet block of the North End at Manhattan Ave., last at $3.399m.

Meanwhile, just 3 other new listings, including:

• 452 36th Pl, a lot sale (2700 sq. ft.) at $1.365m;
  

• 217 35th Pl, perhaps a lot sale, given that the status of the converted duplex is not that of a dream home – at the corner of two alleys. Clear second-place finisher in MBC's "most delusional" poll last week. Started at $1.5m, about 50% above the March 2006 purchase price; and

• 204 38th St., a small "as-is" cottage on a half-lot (1350 sq. ft.) priced at $899k, which sold the day after our report window closed.
  

Several listings made cuts, including:

• 473 31st, a new home (pictured), took another $150k off, now -$251k/-8% at $2.999m;

• 341 10th, which took another $196k off, now -$301k/-10% at $2.999m;

• 448 27th, a fairly large (2650 sq. ft.) 2br home, took off another $100k to -$190k/-9% below start, now at $1.899m; and

• 417 28th took its first $201k off, now -6% at $3.298m (with a bogus re-list to boot).

There were 3 closed sales:

• 3200 Alma at $1.909m, $10k above asking – recall that this one sold quickly in late March (see story here);

• 207 Homer, another quick sale, at $1.715m, just -$64k/-4% from asking; and

• The "brownstone" (pictured) at 428 27th went for $2.712m, -$186k/-6% from the start at $2.899m.

MB Market Update for 5/15/08, Hills

The new MB Market Update spreadsheets are available: download the 5/15/08 update by clicking here, or at any time by using the link at the upper-right corner of the main MBC page. Information in this update closed May 15.

We now split up the discussions of our 3 areas west of Sepulveda into separate articles. By necessity, we'll be short on text and pics this round. As always, you can click on a highlighted address for pics & details on active listings via Redfin.

Total SFR inventory west of Sepulveda was at 108 on May 15, just +1 from the end of April. It is, nonetheless, another new inventory record in MBC's year-plus of public market tracking.

In the whole of our subject region west of Sepulveda, we recorded 14 new listings in this 2-week period and 14 sales (new escrows). Nice balance. Some listings returned – some had gone on hold or had sold but fell out of escrow. One listing canceled.

Onward, then, to the details...


Hill Section

There were 21 active SFRs as of May 15.

There were 3 new listings, dreamers all, some might say:

• 114 N. Poinsettia is a pricey, beautiful, newer home starting at $7.750m. Credit the writeup for labeling it "Andalucian" rather than, say, "Spanish." Someone has been test-driving the home for about a year – oh, that's the agent, too;

• 619 9th is a Cape Cod-style remodel with charms like a beautiful yard & pool, good space, but surprising layout and general need for updates, starting at $4.195m; and

• 1015 Boundary, reluctantly wearing the crown of "most delusional" among new listings, that being the clear choice of MBC readers after it began at $2.480m for 3br/3ba and 2400 sq. ft. on an alley.

One sale (new escrow): 869 3rd, last at $3.750m. This one began at $3.995m last Summer (see "Two Views from the Hills").

Sellers paid $2.437m in May 2004, so this looks like a sweet payday of $1m+ when the sale settles out.

A few price changes worth noting...

First, a more traditional move on the new home at 218 N. Dianthus – began at $6.75m, chopped $455k to $6.295m after several weeks with no takers.

Less traditional actions – 2 listings increased their prices:

• 923 1st, on market 4 months, retracted a previous price chop from late April to $7.375m, rising back to $7.595m (see "One Up, One Down"); and

• 312 S. Dianthus, on market only a few weeks, jumped to $3.749m from $3.490m, no doubt reacting to the recent sale at 869 3rd.

Great Streets: 7th Street (Sand)

Seventh Street in the South End is one of those fabled Manhattan Beach walkstreets. As much or more than others, this one is a kid's paradise.

7th is a flat stretch that goes all the way from Crest to Valley – no break at Ingleside. On a recent stroll we counted no fewer than 3 playhouses, 4 basketball hoops (of varying sizes) and a tetherball post in the walkstreet. It's a playground.

7th boasts a number of beach cottages that are well-kept and have preserved their original charm. Many of the entrances are warm and welcoming, embracing the walkstreet. (We cringe when we see walkstreet homes that are tucked behind fences or don't have a patio or deck fronting the public areas – why bother being on a walkstreet?)

On 7th, you'll also see a handful of new homes that are designed to take the utmost advantage of the location.

One home in particular is notable for how most of a whole wall on the ground floor opens out onto the front yard, which continues out onto the walkstreet without interruption.

The flat south end walkstreets are super kid-friendly, but as we've heard from current and former residents, they're not for everyone.

Some say that once their kids have grown older they'd rather live in a more mellow location. We don't take this as anti-kid so much as pro-peace-and-quiet.

The adults get their share of fun, too, though – the extraordinary, raucous Halloween activities on these South End blocks are a major draw, with plenty of parties for grown-ups alongside the trick-or-treating.

For its charm, family appeal, and easy access to the beach and downtown, 7th Street is one of MB's Great Streets.

Recently Bought? Or Sold? Why?

There's little doubt that our local RE market has changed recently.

MBC's perception is that the go-go times ended somewhere in 2006, roughly, though prices have only recently begun to degrade noticeably. (More on that later this week, with more DataQuick charts.)

If you're an MBC reader, you've got an above-average level of interest in the state of the local market, and its future. But we know the homeownership status of MBC readers varies widely.

For instance, in comments and private email, we hear from people who are longtime local homeowners, others who are actively looking, folks who have decided to wait, and plenty who have bought or sold homes recently.

So where do you fit? If you have bought or sold a home within the last 2 years, we're particularly interested in your reasoning. Did you perceive a change in the market, and did that play any role in your decisions? Be as specific as you can.

Please vote in the poll, too. There are 4 options: Tell us whether you have, in the past 2 years (May 2006-present), bought a home in MB, sold a home in MB, or stayed put in MB (specify renting or owning). If you both bought and sold in this period, go by the last transaction (i.e., a move-up seller/buyer would be a buyer).

Privately, we've heard from recent buyers of a Sand Section townhome, who told MBC they're "super happy" with their purchase of a "nice home in a great location" after more than 2 years of searching in their price range. We've heard the inside story on some recent short sales. We've heard from people searching for lots and buying new homes at a substantial discount.

In comments at MBC, particularly, you'll hear from people who have sold homes recently – sometimes a personal residence, in other cases a second home in MB held for some time as an investment. Many attribute their decisions to the change in the market. Some are profit-takers, others, perhaps, market-timers hoping to buy back in at lower prices some day.

Whatever your situation, please offer parts of your story here. And please consider creating a nickname via "Name/URL" – no URL necessary – just so we can track and refer to your comments here on this post.

Weekend Opens (5/17-5/18)

Lakers are off for the weekend, so do your duty and drop in on a few opens. Who knows when your next break might be?

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."

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


Hill Section

Mrs. MBC doesn't pick many Hill Section listings, but an interesting option presents itself this week – 619 9th.

The home is comfortably large at 4br/4ba and about 3800 sq. ft. (BTV – public records say closer to 3400) on a nice, large lot – almost 10,000 sq. ft. It's attractively landscaped (includes a "meditation garden") with a pool. A sweet great room, but you must like brick. And if you find some of the décor a bit frumpy, remember that stuff is easy to change.

619 9th is close to downtown, not a view home. The buzz is that it's high at $4.195m, but the first question is: Could it be a great home? Mrs. MBC thinks it could be. Open Sat. & Sun. 1-4pm.


Sand Section

Folks have been too busy buying and selling in the Sand (7 sales in the first half of May) to open up anything new this week. Retread time.

There's that attractive downtown walkstreet home, 341 10th – a bit of a head-scratcher because a chunk of the living space is tied up in a rental unit. It gets another mention this week because it's now down 10% from its ambitious $3.3m start in March. Can anyone explain why the walkstreet homes aren't moving? Now $2.999m. Open Sun. 1-4pm.

Another walkstreet home not moving yet: 317 5th, still at $3.2m, which seemed pretty aggressive (we mean low, not absurd) when it began. Open Sun. 1-4pm.

There's a contemporary (90s) home in El Norte that's actually located on El Porto St. – they haven't changed that yet? – but hasn't had any takers after a few months. 125 El Porto offers 3br/4ba and 2000 sq. ft. It has squeeked down just a bit to $1.599m. Open Sun. 1-4pm.


Tree Section

721 36th is a newer Cape Cod with 5br/5ba and 3450 sq. ft. It was purchased last year, in March 2007, for $2.327m. The markup after a year: +$172k/+7% to $2.499m.

Did we mention that this is 36th St.? And 2008? Good luck with that. Open Sun. 1-4pm.

Worth another mention this week is 621 Marine, a newer home (2002) that – get this – was also purchased in March 2007 (for $2.436m). The "rustic Spanish" home offers 5br/4ba, 3100 sq. ft., but it is now priced below last year's purchase price. Now $2.419m. Open Sun. 1-4pm.


Looking for something on the more affordable end of the spectrum? Suck up the busy street and you can have 2905 Valley for $1.239m. It's got 3br/2ba and 1500 sq. ft. The listing calls it "sophisticated." Remember, there are no regulations on the use of that word to promote real estate. It's a comfy, clean cottage. Open Sat. 2:30-5pm, Sun. 3-5pm.

2901 Oak is a new home with perhaps the most defensive – no, we'll say "proactive" – listing language we can recall. It begins with:

This property is situated on a very quite [sic] part of oak st. There is no ingress off sepulveda at 30th st.

They're right, it's not a terrible part of Oak. Home is essentially Spanish, 5br/5ba and 3250 sq. ft. Starts a hair below $2m at $1.995m. Open Sun. 1-4pm.

Who's Most Delusional?

If you stop in at MBC from time to time, you might get the impression that the local RE market is softening, and prices gently stepping down. Maybe it's some bias on the part of the author, maybe it's some of the commenters, or maybe it's the data.

But we must remind ourselves, there's a parallel universe out there. In it there live thinking, breathing people. And in that parallel universe, prices are apparently as strong as ever, maybe trending up.

Sure, it sounds silly here, but how else can we explain the pricing decisions of 3 new listings? We'll describe them here (with links to listing pics & details via Redfin) and ask you to vote in our poll for which one is the most out of whack.

• 217 35th Pl. is a small home (3br/2ba, 975 sq. ft.) on a 2/3rds-size lot (1650 sq. ft.) at the corner of 2 alleys (Bayview and 35th Pl.). It's nice enough to "[l]ive in now, build later." For the privilege, the sellers would like $1.5m. They paid $990k about 2 years ago in March 2006 (may have been a private sale).

• 1015 Boundary Pl. offers 3br/3ba and 2400 sq. ft., also on an alley. (What else can we call Boundary?) The listing touts the home's "one-of-a-kind style," but all we see is the 1950s. (The interior is updated.)
  

Keep in mind that down the hill, 811 Boundary – 2004 construction with 1,000 more square feet – went into escrow recently while listed at $2.099m. (Property Shark tells us it has sold for $2.025m, but the MLS doesn't show that yet.) But to move on up to 1015 Boundary, you'll need $2.480m.

• 1705 Pacific is a very nicely remodeled home (4br/4ba, 2650 sq. ft.) whose location near Pacific School is either perfect or a strike. It depends. Though we can't deny the home's family-friendly appeal, its layout is peculiar (downstairs master off the living room). The exterior, while spiffed up, is a mishmash, design-wise.

Compare this to the terrific and well-located home at 738 26th, slightly larger, which just sold for $1.770m ($610/PSF). That would put 1705 Pacific at $1.6m before adjusting for location. Instead, it starts at $1.875m.

Each of these homes, to our eyes, seems to start at least 15% and hundreds of thousands of dollars too high. We just can't figure out which one is off by the most. Please vote in the poll – which seller is most delusional? Poll closes Sunday night at 7pm.

And yes, we know that putting this opinion and poll out there invites a sort of rebuttal from the parallel universe. Sometimes MBC features properties we think are overpriced and they go quickly anyway. So we've added an option to the poll – if you think MBC was wrong to pick these homes as crazily priced, you can say MBC's the most delusional of all.

The 90s: What a Drag

The last big housing slump was in the mid-1990s. Everyone took a hit, but how bad was it in MB?

Data from Dataquick, compiled by MBC, paint the picture.

Our graph here (click to enlarge further) shows the change in median home prices in Manhattan Beach throughout the 1990s. The two separate series here come from the same data, although one series (the top two lines, in blue and red) is adjusted for inflation, showing values in 2007 dollars. The bottom series (green and orange) uses the values reported from each year without any adjustment.

Let's start with that bottom series, since adjusted figures can be confusing. Here, the green, bouncy line shows the median price of all homes (SFRs, THs and condos) sold in a given month. The orange line shows the 12-month moving average – the average of that month plus the 11 months before it. The moving average smooths out seasonal factors and limits the problem of small samples sizes month-by-month. (The data start in 1988, but we start the graph in 1989 to allow that 11-month look back in time.)

You'll see that median prices were on an upward trend by 1989, peaking early in the chart at $506,938 in July 1990. (All dollar figures we cite here come from the 12-month averages.) Then a slower, steady reversal took hold. Four years later, in July 1994, a trough was reached at $366,354. This was slightly below the January 1989 figure.

The drop, peak-to-trough: 27.7%.

The recovery to July 1990 levels took almost 4 more years. The chart notes that a value of $509,506 was reached in March 1998 – 44 months after the trough. That means the pause between the peak and the return to peak was 7 years, 9 months.

Now, anyone knows that the value of a dollar – or 500,000 of them – changes quite a bit over 8 years. So the return to "peak" values in March 1998 is a bit misleading. On paper, it was the same median price, but the real value wasn't the same.

To see how steep the real decline was, and how long the recovery really took, we look again at the data in constant dollars – in this case, using 2007 dollars across the board. (We had a choice here of constant dollars tied to 2000 – the last year in the chart – or 2007, i.e., current dollars. We chose 2007, partly because future graphs in this series will also use 2007 dollars.)

Using 2007 dollars affords us an interesting view of MB home values. When we adjust all the values in the chart, we learn that homes at the median were worth $912,373 in today's dollars at the peak in July 1990. That's almost double the $500k or so we saw in nominal dollars.

Perhaps more interestingly, this chart is implying that you ought to be able to buy a median-priced home today in MB for about $900k – the peak price of 18 years ago. Of course, you can't. Prices have gone far higher than a mere inflation adjustment would account for.

The timing of the drop in values in the early 1990s coincides with that found in the first chart – the drop ran till July 1994, down to $596,782. (Anyone for a $600k MB house?)

The drop, peak-to-trough, in constant dollars: 34.6%.

The recovery of values in real-dollar terms took much longer. It was 70 months (5 yrs., 10 mos.) from the trough until the previous peak value was reached again in May 2000. The total gap between the peak in July 1990 and the return to peak in May 2000 was 9 years, 11 months. That means, in simplest terms, if you bought at the peak, you had to hold the home for nearly 10 years to be able to sell it again for the same real value.

We're also re-publishing our first graph from the DataQuick series here, partly to note that sales totals in MB consistently exceeded 500 per year even in the slumpiest year (1995), while running at a rate near 800 per year for almost 4 years before that real-dollar peak was re-attained in the year 2000.

Those sales figures suggest that, while lower demand briefly followed the price trough, substantially higher demand kicked right back in. And yet, over several years, more sales still did not correspond to much higher prices.

As we've previously noted, the sales pace of 2006 was consistent with cruddy 1995 while 2007 sank below that to a new sub-500 low. The pace in 2008 is even slower. We'll look at the runup of the 2000s shortly and ask when the slower sales pace might begin to affect prices in a significant way. The curious lesson from this 1990s experience is that when the sales pace picks up again some day in MB, higher prices are by no means guaranteed to follow.

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UPDATE: The story originally said that the price recovery from the mid-90s low was reached in March 2000. It was May 2000, as the current version shows.
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Nerdy Notes

Important caveat: The charts are imprecise in one respect – we are using monthly median prices for all of this analysis. Even the 12-month moving average represents a smoothed average of 12 monthly median prices, which is not the same as the "true" median for that particular 12-month period. The "true" median could only be calculated month-by-month by DataQuick using the actual sales records for 243 months that went into this dataset. We believe this representation is accurate and certainly illustrative, but it necessarily falls short of that ultimate precision.

Sources: The figures presented here come from a dataset produced by DataQuick Information Systems. Data for sales of one-family homes (including SFRs, THs and condos) in Manhattan Beach were purchased by an MBC reader and forwarded to us. (Thanks!) We have permission to create and publish charts and analyses using the data, but we cannot provide substantial amounts of the source material, per the agreement with DataQuick. (In other words, they want to keep the raw data private.)

Adjustments for inflation were made using data published by the U.S. Dept. of Commerce, Bureau of Economic Analysis. We used the bureau's implicit price deflator figures for residential investment, the figure most appropriate to home prices. These figures are published for each quarter of each year; therefore, each quarter's worth of median price data has been adjusted separately, rather than using an annual figure for each year's data. Quarter 4 of 2007 is the base figure used for all the adjustments – not only are we using constant 2007 dollars, but Q4 '07 dollars.

How’s Your HELOC?

The national news has carried warnings that several household-name banks have been freezing, reducing or otherwise restricting Home Equity Lines of Credit (HELOCs).

There have been stories about the more hard-charging, riskier lenders (Countrywide, WaMu) cutting back, as well as new limits being imposed by Bank of America and Chase.

This was one of those phenomena that we, frankly, assumed was a bigger problem outside MB than here in town. And then a loyal reader asked for help using MBC data to back up a rough, conservative estimate of his home’s value. Why? To tell the bank how wrong they are about the home’s value, so they’ll unfreeze the HELOC.

That freeze, the bank’s letter said, was allegedly due to a decline in value. However, in that case, the real underlying issue seems to be the bank’s growing problems, and resulting extreme conservatism, not the home’s value or our reader’s LTV ratios.

From that anecdote we spin out to a new MBC poll of a different sort. Tell us: How’s your HELOC? Vote in the poll and tell a part of your story in the comments.

We’re really looking for homeowners with HELOCs to respond, but we’re offering choices for others, too.

No doubt along the way we’ll hear about which banks are cutting back on credit and which might still be offering it to those whose HELOCs are frozen or too restricted with their current banks. We welcome your input, even borderline advertising, as to which local, reputable lenders might be worth considering for those who need a HELOC or want to move theirs.
Poll closes Wednesday night at 8pm.

Warming Trend

A small flurry of sales in May so far should brighten moods a bit.

We know of 9 sales/deals/new escrows in the first 10 days of this month, plus 2 short sales that skipped the "pending" stage and closed this week. (That's going to be common for shorties). What we've got, with the last list price for each:

• 437 1st ($1.650m) – a quickie remodel held about a year, purchased off market last April for $1.45m;
  
• 625 26th ($1.999m) – ca. 1988, on a quiet street, somewhat flat price (sellers paid $1.795m in Aug. 2004);
  
• 408 6th ($2.099m) – South End, mid-block walkstreet home with some challenges; we're hearing it's sold to a builder; a pick on "Mrs. MBC's Xmas List";
  
• 2310 John ($2.099m) – surprising Tree Section contemporary; sellers paid $1.725m in Dec. 2003;
  
• 516 24th ($2.349m) – a crisp, new beachy home, also on Mrs. MBC's Xmas List, that had to hang around a while to find a buyer;
  
• 401 3rd ($2.685m) – a major rebuild in 2006, Mrs. MBC's pick last week;
  
• 125 31st ($3.399m) – a contemporary on a walkstreet at Manhattan Ave.;
  
• 2204 Palm ($3.450m) – once touted as a "Colossal Cape Cod," a new home on a corner with a simply gigantic basement; and
  
• 869 3rd ($3.750m) – an ultramodern home in the Hill Section; sellers paid $2.44m in May 2004.
  

In addition to these, we've heard tell via comments that 452 32nd is in escrow. (It's Saturday night as we write, so we're running with that news before verifying.)

The short sales that posted as sold this week were 3412 Pacific (at list, $1.199m) and 1313 Oak ($1.780m).

In the snapshot we can offer now, SFR inventory west of Sepulveda is at 105, -2 from the month's start, with 9 new listings for the month but the 11 posted sales above coming off the boards.

Weekend Opens (5/10-5/11)

If you want to do right by mom this weekend, you're probably not doing much in the way of open-house visiting. Well, maybe Saturday.

There are fewer "new" opens this weekend than most, reflecting the holiday. But this is one of those weeks where a few of the ads in the Beach Reporter semi-comically strain to draw in a reference to the occasion. (Remember "Hop On Over!" in all the Easter ads?):

• "Give the Gift of Home for Mother's Day!"
• "Gourmet Kitchen for Mom"
• "Remodeled Tree Section Home 4 Mom"

That's right, if you didn't get a card, why not a new mortgage?

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."

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


Hill Section

Mom had better not be looking in the Hill Section, for there are but two posted opens:

930 John, a new home we've made mention of several times, priced at $4.995m. Open Sat. & Sun. 1-4pm.

511 N. Dianthus, Kaye Thomas' "entry-level" offering at $1.479m, which we featured last week. Open Sun. 1-4pm.


Sand Section

2319 Grandview is a townhome (detached), we know, but it's one of the classier new opens of the weekend. This one offers 3br/4ba and 2300 sq. ft. and is just a year old. The ad copy notes its "unrivaled, unblockable, panoramic" views of the Tree Section. Not noted: Grandview School across the street. Starts at $1.950m, a tick above its purchase price in Spring 2007. Open Sat. 1-4pm.

448 27th is a fairly nice & different remodel (don't judge a book by its cover) with the surprising feature of just 2 bedrooms spread out among 2650 sq. ft. A former bedroom was converted to a terrific family room in front, over the garage. It would be a crime to convert it back, but it would also be unusual to share your master with the kids. (Question for mom: At what age, again, is "co-sleeping" supposed to end?) Now at $1.899m. Open Sat. & Sun. 1-4pm.


Tree Section

Mrs. MBC is drawn in totally by the promise of 2504 Poinsettia's pitch – "Not your typical cookie-cutter home!" Finally?!?

The profile is typical – 4br/4ba and 3200 sq. ft., but they're promising a "one-of-a-kind design & floor plan," plus all kinds of nice details. (We'll be honest, the listing writeup is one of the most literate and imaginative we've seen in months. Check it out.)

Now, don't disappoint Mrs. MBC on Mother's Day weekend. Starts at $2.499m. Open Sat. 1-4pm.

Also new this week is 769 33rd, a 5000 sq. ft. home (6br/5ba) on a nearly double-size lot. A beauty with a Spanish flair that starts at $4.4m. The listing pitches an 11oo-sq.-ft. master (no "green" home here) and it once pitched the 2500-sq. -ft. yard. Here's hoping this one works out better than 3305 Laurel. Open Sun. 2-4pm.

Now, we're not going to pretend that 1829 Poinsettia is a "new" listing, as the newest agents seem to insist, but it does have a new price, and that's been like pulling teeth over there. The listing began 51 weeks ago at $1.785m, shocking even in those go-go days for a tricked-out cottage with 3br/2ba, 1450 sq. ft. and virtually no yard. Now it's at $1.475m (-$310k/-17%) and perhaps creeping toward reality. Perhaps. Open Sun. 1-4pm.

Nearby, 1821 Walnut isn't new, either, but it's back after a blown escrow with a new price: $2.399m. It began at $2.750m a full 50 weeks ago. Open Sun. 2-4pm.

One Up, One Down

Maybe you overpriced your home. Everyone does it, at least to start. No shame there.

The next move, eventually, is to trim a bit. See if that builds interest. And if not, cut again.

This seems elementary, and it’s the strategy pursued recently by 923 1st (click address for pics & details via Redfin), a Hill Section listing that began in early 2008 at a whopping $8m (-$2k). (See our review in “Unpredictable.”)

By late March, with no takers, the sellers cut $403k (-5%) to $7.595m.

That did not do the trick. The next step was to take another $220k off the top on April 28. Now the listing was down to $7.375m, as we noted in our MB Market Update the other day.

Just a few days later, however, a second listing of 923 1st began on a different MLS (SoCal MLS), and that one began at $7.595m, the old price.

No, they couldn’t be increasing the price, we figured. We chalked it up to some kind of anomaly or clerical error. The local MLS listing (on Mr. MLS) stayed at $7.375m.

And then it got strange. Tuesday, the local listing did, in fact, bump back up to $7.595m. (Graphic via the Redfin listing.) So it appears that the seller had a kind of seller's regret, and potential buyers missed an unannounced 10-day sale.

This is a strategy to sell the home?

We saw a chaotic listing like this last year. In the Tree Section, 579 29th started in December 2006 at $2.575m, dropped to $2.4m, rose to $2.519m, cut again to $2.329m and eventually sold in August 2007 for $2.250m (-$350k/-13% from start). (See stories here and here.)

The bump up did not speed the sale or net the sellers any more money, but for those critical days or weeks when they were driving the pricing, perhaps the move might have helped them dream bigger. Before reality interceded.

Meanwhile, some more conventional pricing behavior is on display over at 225 Homer. That one began at $2.3m in late March.

Last weekend, as we noted in our Weekend Opens column, the price online was still posted as $2.3m – but the open-house listings said it was $2.1m.

We kinda knew that cut was coming for real, so we lightheartedly urged readers to clip the BR listings as a coupon for $200k off last weekend. Alas, discounts usually make their way to the list price of things, no coupons necessary.

We expect the same, one of these days, up at 923 1st.

Maybe It Can't Get Worse

You may have seen some chatter recently about a new dataset MBC's working with.

Thanks to a loyal reader, we now have 20+ years' worth of data on MB home sales via DataQuick Information Systems, plus permission to publish the information in certain forms. ("Thanks" is an understatement, dear reader.)

There's a lot of work to be done to present this data in a useful fashion, and to offer some analysis. The price data is particularly valuable, but we're taking our time to get it right.

For now we present one of the simplest, and yet, most eye-opening facts gleaned from the DQ numbers: MB home sales in 2007 were the lowest in 20 years – the entire period for which DataQuick has collected figures.

Please note, DataQuick reports on sales of all kinds of homes – including SFRs, condos and townhomes. These data exclude only multi-family units. Also, DataQuick says they capture all sales, not just those reported on the MLS, by searching tax records. Therefore, this ought to be the most complete picture possible of home sales in MB.

Worth noting – the 2007 sales figure we published previously was 344. That covered only SFRs, no THs or condos, and was limited to MLS-reported transactions, although it did cover all areas of MB, not just our customary west-of-Sepulveda region. The new 2007 figure of 471 sales (+127/+37%) indicates how much we missed by using narrower data before.

The new data add better context to a fact MBC has reported previously. Using the MLS as the source, we showed that MB had the worst year of the decade in 2007. (See "Slower, Slower, Slower.") Now, with the DQ data, we add another decade and find 2007 was still the worst.

With this 2007 slowdown, MB is like LA and like SoCal and like most of the rest of the nation. Things are slow all over.

It's striking that we have already fallen below the sales rates seen in the 1990s housing slump.

The previous low was in 1995, with 513 sales. The 2006 sales barely topped that at 514, but 2007 fell a bit further.

It's almost enough to make you say "it can't get worse."

Past performance is no predictor of the future, however. Sales are anemic now compared to 2007 – 61 for Q1 2008 against 140 sales in Q1 2007, according to DataQuick. So this year certainly seems to be shaping up to be slower than last.

Maybe it can't get worse. Maybe it can.