A Realtor's View from Manhattan Beach: "Normal," "Mellow"

We link often to the doom-and-gloom bubble blogs, so it's only fair we link to this: a post from a Manhattan Beach realtor who says the market's fine, prices are "fairly even", and the bloggers got it all wrong. Here's Realtor Kaye Thomas on the the blogs: "I'm noting some major changes in the last 6-8 months on most of these blogs.  For one thing the authors have either gotten day jobs or don't have as much to say because the number and frequency of posts has declined on most sites.  The volume of readership has also decreased compared  last year when the media frenzy was at it's height predicting 30%-50% price declines." And here's her take on the market in her area: "It appears we may have reached that place called a normal market.  Most people don't remember what that is but the general characteristics are...prices move up and down as does the volume of sales.  The key to a normal market is no highs or lows... just mellow for a period of time."

LA Homes For Sale: Another 1,000 Went on the Market This Week

The number of homes for sale in Los Angeles spiked by nearly 1,000 over the past week, according to HousingTracker.net, which tracks MLS listings. Median asking prices were flat week-to-week at $545,000, and down 5.9% over the past 12 months.

The total number of listings ballooned from 36,348 to 37,338 -- that represents 33.0% more inventory than was on the market a year ago.

As we've reported here before, HousingTracker.net tracks MLS listings and monitors asking prices.  True, we have no idea what these homes will eventually sell for, but this sample represents the entire universes of houses listed on the MLS -- not just the much smaller sample of those that sell in a given month, which is where median sales price comes from.

Thoughts? Comments? Undeniably brilliant analysis?

The British Are Coming: Beckhams Find A Home in Beverly Hills

First the news: Realestalker is reporting that the Beckhams have bought a home in Beverly Hills. From Your Mama at Realestalker: "We had long heard the couple wanted to spend between $12 and $15 million, but it looks like they've blown the budget with this one having paid, we're told by a tipster right around $20,000,000. Various notes: --LA Land doesn't read British tabloids and I'm not sure which nicknames are current for the Beckhams, so I didn't try. Posh? Becks? Sexy? Whatever. --Apparently the exact address is a secret given that Beckham is so famous and has little children he wants to protect. So we run his picture, not the picture of the house. --Contrary to many media reports, the soccer team in Los Angeles is not paying Beckham $250 million over any period of time. The team only said that it's possible he could make that much money on his own... provided he endorses everything from sneakers to soft drinks to sub-prime mortgages. The New York Times has reported the team itself is paying him $27.5 million over five years.

The Bill Gross Plankton Theory: Watch Out, Beverly Hills

As promised, more on the Bill Gross' Plankton theory of real estate. Bear with me, it's a short post and there will not be a test.

To begin, one popular theory of the current LA real estate market holds that the subprime meltdown hitting the Antelope Valley and the Inland Empire will never climb its way up the food chain, and up the price ladder, to the $900,000 and above market, let alone to Beverly Hills and Bel Air.

Then there is Bill Gross' Plankton Theory: that it's all one big market, it's all related, and every part of the market is vulnerable to trouble at the bottom.

He wrote this a long time ago, in the summer of 1980, before Reagan was elected: "Plankton, of course, are almost microscopic organisms that serve as food for higher life forms. Without plankton almost every fish and mammal in the sea could not survive, since most species depend upon other fish for their existence and plankton are the initial building blocks of the entire process."

What does that have to do with housing prices? Be patient, grasshopper. Again, this is Gross from August 1980: "In the case of real estate, the plankton would be the first-time buyer (perhaps a young married couple) with a desire to own their own home but with very little capital to carry it off. When the time comes that they can’t pull it off – either through an inability to come up with a down payment, or to service the monthly mortgage – then the ‘plankton’ would disappear and the rapid escalation in housing prices would ease as well. For, unless the current homeowner has someone to sell his house to, he’ll be unable to afford the house with the view or that extra bedroom, and the process would continue into the echelons of Beverly Hills and Shaker Heights. In the end, the entire market would wither on the investment vine and home prices would stop increasing at the same rapid rate. So to gauge the health of the housing market, look first at the plankton."

There, that wasn't so complicated, was it? But do you agree? Comments are always welcome.

Gross on Funny Money Loans, Plankton Theory, and Why The Fed Will Rescue Housing

As I have written before, I plead guilty to being a member of the Bill Gross Fan Club. His writings about the economy are as clear and engaging as anything you'll find, but he also gives you some heart and soul and history. Can you name another economist (or another person in all of corporate America) who has published his personal thoughts about the Iraq war? Seriously, if you can, I'd like to hear it.

If you missed it, Gross' economic column last month began by quoting the great anti-war anthem "War" by Edwin Starr:"I can only conclude from personal experience in Viet Nam, and redundant renderings of history books that Motown singer Edwin Starr was right – war is good for absolutely nothing."

But I digress; this is about real estate. Click here to find video of Gross on CNBC explaining the following: Why houses are 20% overvalued, why subprime loans are dinosaurs, why the Plankton theory applies to housing, and why a series of Fed rate cuts is coming later this year to save the housing market from disaster.

I find the Plankton theory particularly relevant, so I'll do a separate post about it later this morning.

Thoughts? Comments? Insights?

Monday Morning: The Foreclosure Game, Before and After

Good morning. There's an excellent piece in Business Week today about the unusual efforts by lenders to help homeowners avoid foreclosure. Why are the lenders trying so hard? Because "never before have prices fallen so broadly," and they don't want to own houses that are sinking in value. More important, Wall Street is pressuring the lenders: "a big chunk of the loans made recently are held not by federally insured thrifts or banks but by hard-charging hedge funds and other big investors that are aggressively pushing lenders to stop the bleeding."

But the foreclosures are piling up, which means more properties are being auctioned off on courthouse steps. In the LA Times, Annette Haddad's story of the foreclosure auction game -- told through the experience of a newbie -- is a good read. I won't spoil the ending, but I will remind you that most of these courthouse foreclosure auctions are duds: Roughly 90 percent of the homes listed for courthouse auction in California don't really sell -- they're taken back by the banks or lenders that own the mortgage.

Thoughts? Comments? Use the comment button, or send story tips to lalandblog@yahoo.com.

OC Sees Trouble In The Inland Empire

The Inland Empire is the 14th largest Metro area in America, and one of the fastest growing, home to roughly as many people as the state of Kentucky. So it matters, big time. And the housing market is weakening rapidly, as this takeout from the OC Register documents.

If you don't have time for the whole thing:

--The number of defaults ending in actual foreclosures in the IE rose from 8 percent in the fourth quarter of 2005 to 32 percent in the fourth quarter of 2006.
--At the current pace of sales, it would take 13.2 months to sell all the houses now for sale in the IE; that’s compared to 6.9 months a year earlier.
--A Lake Elsinore homeowner listed his house last June for $499,900, and hasn’t sold it, even though he has dropped his asking price twelve times, by a total of $100,000.

Comments, thoughts, insights?

Sunday Morning: Inventory Bloat in LA, Greenspan's Housing Obsession

Sunday morning roundup, before the kids wake up: Big Brad Garrett, the sitcom actor, is selling his big place in Hidden Hills. Brad by the numbers: He's asking $9.495 million for a 10,300-square-foot-compound, and he's 47 and a bit taller than 6-foot-8.

The morning's must-read is Gayle Pollard-Terry's takeout on why the LA housing market is mixed right now. Reasonably-priced entry-level homes are attracting multiple bids right away, but inventory is bloating: The Realtors' own index says there is a 9.6-month supply of unsold houses on the market in LA, up from a 5.2-month supply a year ago.

Do you really need earthquake insurance? In a story refreshingly free of nannyish financial advice ("You need insurance against everything!") The Times points out that only about 1 in 8 Southern California homeowners has quake insurance (it's expensive and deductibles are high).

Why does the headline say Greenspan has a housing obsession? Well, because he's semi-retired and can do anything he wants, and he chooses to spend his time crunching numbers on how much consumer spending was generated by extracting cash from home equity. His conclusion: 2.1% of all consumer spending in 2005. Doesn't sound like a lot, but the economy would really miss it if went away.

Lastly, Why are closing costs so high? In part because title insurance is a big ripoff, at least according to a government report cited here by columnist Kenneth Harney. The study concludes only 10% to 20% of what you pay for "title insurance" actually goes to insurance premiums.

Comments? Thoughts? Please share your brilliant analysis. And thank you for reading LA Land in its first week of publication. Email story tips to lalandblog@yahoo.com.

When $7.5 million Just Isn't a Good Enough Offer

The price of land, and houses, is slipping, but they are still building houses like crazy out in Ontario, as the Times' Alana Semuels reports today.

I know that the Inland Empire economy is booming; I just get the impression the growth industry out there is growth itself. What happens to a region built on building if the building stops?

Worth noting from her report:
--City planners forsee 30,000 new houses, and 120,000 new residents, in Ontario over the next twenty years.
--"In March, sales of existing homes in the city were down 59% from the same month last year... , The median sale price fell to $408,000 from $425,000."
--"The value of undeveloped land, much of it still home to cows, has fallen by as much as $100,000 an acre in this part of San Bernardino County in the last six months..."

She ends with an anecdote about a farmer who had a deal to sell 20 acres of farmland at $515,000 an acre in 2005 -- that's a bit more than $10 million. But the deal fell through, and the farmer is balking at a reduced offer of $375,000 per acre, or $7.5 million. "He figures it will be more than seven years before prices will climb to where he wants them," Semuels reports.

That is a confident farmer, I guess. Your thoughts?

284 Million Reasons To Smile

There's nothing sub-prime about Angelo Mozilo's compensation for running Countrywide Financial in Calabasas. The Times' Kathy Kristof reports he took home $120 million last year, and $284 million over the past two years.

So far, Countrywide has survived the subprime meltdown, though it is building up a pretty big pile of foreclosed houses that it will need to sell. This Countrywide Foreclosure Blog calculates that the company now owns 7,610 houses it has foreclosed on.

But Jeez, $284 million? I'm not sure what to say. Go, Angelo, Go? You Da Man?

You tell me.