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 Sometimes an auction has nothing to do with foreclosure. News item from New York Times via Curbed Los Angeles: The Kaufmann House, a 1946 glass, steel and stone landmark built by architect Richard Neutra outside Palm Springs, is on the auction block. The pre-sale estimate: $15 million to $25 million.
The N.Y. Times reports the auction -- to be held at Christie's in New York next May -- is an effort at "promoting architecture as a collectible art worthy of the same consideration as painting and sculpture."
The owners, Brent Harris, an investment manager at PIMCO, and Beth Edwards Harris, an architectural historian, are finalizing their divorce, the N.Y. Times reports.
Thoughts? Comments? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: Eichlernetwork.com
News item: The Ventura County Star reports a large condo project in Simi Valley has stopped in mid-development: "Citing slumping market conditions, a developer has abruptly halted
construction of a 66-unit condominium development near what is known as
Happy Face Hill in Simi Valley, city officials said Tuesday." More: "After several months of grading work, Encino-based Larwin Co. told
City Manager Mike Sedell in an e-mail that construction of the housing
development on 10 acres near Kuehner Drive would be stopped for at
least six months."
The reader who emailed us to alert us to this story noticed another condo development in Thousand Oaks that appears to have been halted in its tracks, and wonders how widespread this trend is. Thoughts? Comments? Insights? Email story tips to lalandblog@yahoo.com.
Hat tip: FD in TO
 Good afternoon. We've been stuck in meetings, we apologize. As you know, the Fed cut rates today by a quarter of a point. You can read the Fed's statement here. The headline quote: "Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction."
We read this two ways: the credit crunch eased somewhat, but the Fed sees more economic trouble coming from the weak -- weakening? -- housing market. Is the housing market weakening? Technically, the Fed didn't say that -- it sees that as a likely possibility.
Update: Commenter Cal writes, "You don't think they are saying housing is weakening? Intesify a correction? How could it mean anything but?"
Fair point, let us explain our hair-splitting here, because we believe the Fed is in the hair-splitting business: The Fed said is likely the economy will slow "reflecting the intensification of the housing correction." There are two ways to read this: one is that the housing correction has already intensified -- gotten worse, and it's likely that will hurt the economy; the other is that the housing correction will get worse in the future, and it's likely that hurt the economy going forward. As we said, it's splitting hairs, but it allows the Fed to have it both ways.
Our take: We think the housing correction has intensified in recent weeks, and will intensify further.
Your thoughts? Comments? Email story tips to lalandblog@yahoo.com
Photo Credit: Reuters
 A tawdry excuse to run a photo of Britney, or a legitimate real estate item? You decide. Here goes: the normally welcome wagon-y blog Manhattan Beach Confidential, hearing that Ms. Spears-Federline-Spears may be house-hunting in Manhattan Beach, encourages her to look elsewhere:
"If you go and snap up some majestic Strand house, or a garish Hill Section lair, you're going to ruin things for your neighbors – who, we might note, will be between 6 and 12 feet away from you. (We don't do "gated" or "estates.")
"Yes, we're sure you're a willing buyer with cash (albeit with an agenda, too), but we'd really ask that you look farther and wider."
For what it's worth, a commenter on the post reports Britney is also condo-hunting in Marina del Rey.
Thoughts? Comments? Insights? Email story tips to lalandblog@yahoo.com.
Photo Credit: AP
News, notes and headlines:
--L.A. housing prices have dropped 5.7% over the past year, according to the Standard & Poor's/Case Shiller home price index. That's a slightly worse performance than the average for the 10 largest cities -- a 5.0% drop. Reuters headline: "The decline in prices of existing U.S. single-family homes accelerated in August and fell at their fastest pace since 1991, according to the Standard & Poor's/Case Shiller national home price index."
--The mortgage crisis today claimed its highest-profile victim: Merrill Lynch CEO Stanly O'Neal resigned.
Don't feel bad for O'Neal: his walking-away money has been estimated at *at least* $159 million.
--Countrywide's Angelo Mozilo continues to blame divorce, job loss and illness -- but not bad underwriting -- for mounting defaults, according to this account in today's LATimes.
Thoughts? Comments? Email story tips to lalandblog@yahoo.com.
 Good morning. Guest commentary today from Leo Nordine, a realtor who specializes in selling bank-owned, foreclosed houses. It's all yours, Leo:
Why aren't foreclosure sales regulated?
By Leo Nordine
In the early 1990s I tracked every foreclosure in south L.A. County, soliciting every REO listing I could get. I quickly found that some of the smaller "companies" conducting the trustee sales were crooks. Unfortunately, nothing's changed. They'll hold the auction for a Long Beach property in Lancaster, for instance, as far away as possible, but only after postponing the sale several times. But after the initial sale date, no one knows when the sale is scheduled because the trustee never answers the phone. The eventual buyer is always the foreclosing note holder, usually one who has bought the note at discount. They acquire the property under market because they have no competition.
Then there are the semi-legitimate trustees that at least answer the phone, but play the same game, not giving any information about their sales. These "trustees" are also active real estate investors, often silent partners of the foreclosing note holders. Also, lenders who hire honest trustees often get shortchanged. The buyers at the auctions all know each other. Instead of bidding against each other, they'll often partner up to keep the price down. Two, three, four, even five or six partners on one property. One of them will be the official buyer, whose name shows up on the trustee’s deed, and the rest will be silent.
I could give more examples, but you get the idea. The problem is that anyone can conduct a trustee sale, with no license required, and no regulation. It's the Wild West, and there's a lot of cowboys. I've explained this to the D.R.E., the Corporations Commissioner, and the California Attorney General’s office. All were indifferent. If mortgage brokers have to have a real estate license, why not trustee sale companies? This should have been done decades ago. The D.R.E. should do this to protect the public and institutional lenders, as well as improve the reputation of the real estate industry.
Thanks, Leo.
Thoughts? Comments? Email story tips to lalandblog@yahoo.com
Photo Credit: AP
A quick follow-up to yesterday's post about open houses in Reseda. We checked Zillow for the sales history on the foreclosed house at 6921 Lindley Ave., and it's instructive. It looks like this:
Sold 4/2004: $345,000
Sold 7/2006: $520,000
Sold 4/2007: $441,429
Listed (date unknown): $457,900
Reduced, now listed: $379,900
This is the listing billed as "You Better Act Fast" ... "Bank Foreclosure"... "Needs some minor TLC" ... "Bank is serious so make an offer!" It's a 3-bedroom, 1-bath with a one-bedroom "guest unit" that "may not have permit." It needs some cosmetic repairs and is on a busy, noisy street. The hard-pan back yard was decorated Sunday with a Bud Light can.
Our take: What shows up as an April 2007 sale is probably the foreclosure. If the home sells for the current listing price -- a big stretch -- the decline in price from the 2006 peak would be 27% in 16 months. That's steep. And that's assuming it sells at the listing price, which is unlikely.
Thoughts? Comments? Insights? Email story tips to lalandblog@yahoo.com.
 Median listing prices slipped again in greater L.A. over the past week, dopping by $9,000, to $500,000, according to Housing Tracker's weekly analysis of MLS listings.
Inventory of for-sale homes slipped by 472 listings, to 46,710, but remains 16.5% ahead of year-ago levels.
The median price drops are significant: Median prices have now dropped $79,666, or 14%, from peak levels of April 2006, and have dropped $45,000, or 8%, since early April of this year.
Date Median Price Inventory
4/06 $579,666 27,251
4/07 $545,000 35,489
5/07 $545,000 38,297
6/07 $540,000 40,766 (up 20.4% y/y)
7/07 $535,000 42,685 (up 14.5% y/y)
8/07 $529,000 44,483 (up 13.6% y/y)
9/07 $520,000 46,414 (up 16.9% y/y)
10/8/07 $514,900 46,219 (up 15.1% y/y)
10/15/07 $510,000 46,603 (up 15.6% y/y)
10/22/07 $509,000 47,182 (up 17.0% y/y)
10/29/07 $500,000 46,710 (up 16.5% y/y)
Thoughts? Comments? E-mail story tips to lalandblog@yahoo.com
Photo Credit: Reuters
Good piece in today's Los Angeles Times reporting that big lenders are still aggressively pitching home refinancing: "Despite the mortgage meltdown, the blizzard of advertising for home loans continues. With the sub-prime market in tatters in the wake of record defaults and foreclosures, fewer pitches scream 'Bad credit? No problem!' Instead, lenders struggling to remain profitable now are targeting people who have good credit and plenty of home equity."
Countrywide Financial is a big player: "David Sambol, Countrywide's president, told financial analysts Friday ... 'There remains a very large stock of home equity that has not yet been tapped -- greater than $10 trillion -- which can be tapped to finance home improvements and other expenditures, such as education investment, small-business development and retirement spending.' "
Our take: One of the reasons this real estate downturn threatens to do unusually widespread damage to the overall economy is the refinancing boom. Even some buyers who bought their houses a decade ago, and should in theory be sitting on a small mountain of equity, are finding themselves in default and foreclosure. Why? Where did their cushion, that mountain of equity, go? They borrowed against it. Again, and again, and again. The refinancing boom has distorted economic activity in ways policy-makers seem to be ignoring: In the recent past, it pumped up economic activity with spending growth that could not be justified based on income growth; and now, not only is much of that extra economic activity drying up, but refinancing has put at risk homeowners who should in theory have a cushion against a housing downturn.
Your thoughts? Comments? E-mail story tips to lalandblog@yahoo.com.
 More from our buzz through Reseda yesterday:
From Realtor Mary Burak: "It's a terrible market. I've been doing this for 25 years, so I've been selling -- I have referrals. But the newer agents are going out of business. ... I don't even work off of comps any more. I base it on what's for sale in the area." The market, she says, is still sprinkled with OPTs -- "overpriced turkeys." On losing a potential short sale because the lender, Countrywide Financial, failed to approve the sale quickly, and then the buyer's lender -- also Countrywide -- yanked the purchase loan. "Countrywide shot themselves in the foot twice. I'm so angry with them. Unfortunately, they don't know how to set up their loss mitigation group." On buyers right now: "They're so picky that they don't know when they're getting a deal."
From Realtor Alan Rosenberg: "The market is slowing down. There's a lot of buyers out there, but they're concerned about commiting. But interest rates are fantastic and prices are really good." He says the foreclosure problem is worst in the East Valley, but is slowly moving west through the Valley.
From Realtor Charles Henry: "We won't know we've hit the bottom until we hit it." (We're not sure what that means). In a neighborhood where listings under $500,000 were rare a year ago, he said, listings are now common at under $400,000. "Houses sell pretty quickly when they get into the high-$300,000s."
Your thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: www.caseysstation.com
Good morning. A while back we posted on a speech in which the head of the FDIC encouraged lenders to freeze adjustable rate mortgages so that homebuyers won't have to worry about higher payments. That idea lives on: The New York Times editorial page, which we consider to be as influential as any left-of-center institution in America, this weekend strongly endorsed the little-noticed FDIC proposal:
After arguing the economy needs to be "rescued" from the mortgage crisis, the Times writes, "Fortunately, the Federal Deposit Insurance Corporation has come up with such a solution. It has made a compelling case for freezing the introductory rates, typically 7 percent or 8 percent, on the most default-prone adjustable-rate loans. To qualify, a borrower would need to live in the home, be current in monthly payments and not yet have faced an increase in the loan’s rate. The plan would remove up to 1.75 million people from the ranks of future defaulters."
The idea raises numerous questions, which we've posed before -- not the least of which is fairness. Why should lenders cut a break to borrowers who chose a risky mortgage? Leaving aside that question, we thought the Times editorial was newsworthy: The N.Y. Times is a "thought leader," particularly within the Democratic Party, which could soon control the White House and both houses of Congress.
Thoughts? Comments? E-mail story tips to lalandblog@yahoo.com.
 We snuck out to five Open Houses in Reseda today. Headline: Thin traffic. In those five homes, we saw exactly one possible buyer. Houses, notes, and local flavor:
6900 Jamieson Avenue (pictured). 3-bed, 2-bath, 1,785 SF, remodeled, reduced; was $550,000, now $525,000.
6921 Lindley Avenue. "You Better Act Fast," reads the flyer for this scruffy (no grass, Bud Light can in the back yard) bank foreclosure. 3 bed, 1 bath plus a 1 bed/1 bath "guest unit." Was $457,900, reduced to $379,900. Suggested financing in hand-out: 35-year fixed, 100%, (interest only) under CAlHFA first-time homebuyer program, works out to $2057/month.
6856 Zelzah Avenue. 3-bedroom, 1 bath, 1,017 SF, flyer reads, "Price negotiable just reduced from $585,000 to $500,000." We thought that was a big price cut for 2 1/2 months on the market, so we asked the agent sitting house, "Why the big reduction?" His four-word response: "Foreclosure on the corner."
18101 Gault Street. This one will be a short sale if and when it happens. Listing reads, "Reduced again! Seller wants to see all offers." 4-bedroom, 2 bath, 1,712 SF on a busy street; Reduced from $470,000 to $420,000. Was in escrow, in a previous short sale, but fell out of escrow while the lender (Countrywide) considered whether to accept the short sale offer.
6920 Garden Grove Avenue. 4-bedroom, 2-bath, 1,756 SF, tidy, well-kept, carpeted, nice lawn. On the market for a month, listed at $519,000, but the agent says, "They have a little room."
Comments? Thoughts? Insights?
Good morning, Dennis Dixon.
The Los Angeles Times today explores the current plight of Realtors -- stuck in the middle between picky buyers and unrealistic sellers, and fed up with both breeds:
"ATTENTION, you picky buyers who think you have all the time in the world to house hunt before you ink an offer. (And this goes double for those of you who think that a listing price is just some silly number pulled from the air and that you can offer 30% less.) Listen up: Agents are mad as hell and aren't going to take you anymore."
Story says realty agents (we sometimes say "Realtors," knowing full well that only some agents are Realtors) are looking for flexible sellers and real buyers, and brushing off the rest. One guru is quoted as saying agents should skip repping buyers entirely, and spend their time looking for motivated sellers. Another agent, Valerie Van De Zilver, advises straight talk to unrealistic sellers: "Sometimes, I have to tell a client that he just isn't going to be able to meet his price goal in this market and that maybe he should think about holding off on his plans to sell."
Our take: That sounds like a nice enough brush-off, but we wonder if it is helpful. We've talked with agents who see it another way entirely: "The longer you sit on a price that's too high, the weaker the market will get, the lower your eventual selling price will be. Prices are falling; the smart time to sell is now, not later. Being stubborn -- or unrealistic -- will cost you money."
Your thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
 A couple of follow-ups to yesterday's Dataquick report on California foreclosures:
--Motivated sellers. We've heard often that this downturn won't be as severe as the mid-'90s real estate bust because the California economy is fine, and thus there are few "motivated sellers" as desperate as the newly jobless aerospace workers who, according to economic legend, helped drive prices lower in the early and mid-'90s. Commenter Cal sets this one straight: The banks and lenders that find themselves owning foreclosed houses are as motivated as any seller as you will find, and there are more of these motivated sellers every day, and they are becoming a bigger and bigger part of the market:
(This from Cal):
--2006 Third Quarter, Notice of Trustee sale (NTS) as a percentage of sales reported by DQ for L.A. County in 3Q06: 1.93%
--2007 Third Quarter, Notice of Trustee sale (NTS) as a percentage of sales reported by DQ for L.A. County in 3Q07: 20.35%
--So 1 in 5 sales last quarter essentially have been replaced by more motivated sellers.
Trouble on the Westside? Writing in today's Los Angeles Times, Peter Hong quotes a Beverly Hills agent who predicts the foreclosure wave will eventually make its way west of the 405: "It's working its way to the Westside. The Westside is always last to get hit." More: "In four Newport Beach-area ZIP codes, for example, there were 11 foreclosures in the third quarter, up from just three in the same period last year. There were seven foreclosures in Bel-Air, and none a year ago."
Your thoughts? Comments? E-mail story tips to lalandblog@yahoo.com
Photo Credit: AP
 Good morning. This week's "tree of the week" comes with, at no extra cost, a few fire prevention tips from our tree-loving friend, Pieter Severynen.
About fires, Christmasberries and chaparral
Fire season will still be with us for a while. If you live close to wildlands, you will find excellent tips and references on making your outdoors fire resistant in a newly issued 2008 calendar and guidebook. Titled ‘Safe Landscapes’ and issued by the Los Angeles County UC Cooperative Extension, it is available here. That website also describes upcoming free workshops in Santa Clarita (Nov. 3) and Malibu (Nov. 17), where you may also learn about desirable and undesirable plants in fire-prone areas.
Toyon or Christmasberry – Heteromeles arbutifolia
Technically a shrub up to 10 feet by 10 feet, our native toyon, also known as California Holly, can be pruned into a very attractive single- or multi-trunk, small evergreen tree, 20 feet tall by 15 feet wide. The 2- to 4-inch-long leaves are thick, leathery, with pointed teeth. The bark is smooth and brown. Heads of small white flowers in summer are followed by abundant clusters of long lasting small bright red berries in fall or winter, beloved by birds and people alike and spectacular enough for this plant to supposedly give Hollywoodland its name. Drought resistant as any good native, in cultivation it actually looks better with occasional watering. Sometimes it is subject to fireblight, a bacterial disease.
Toyon is a prominent member of coastal sage scrub, chaparral (our most extensive natural plant community) and oak woodland. Chaparral is the unique and valuable shrub vegetation typical for the 5 areas in the world with a summer dry, rainy winter Mediterranean climate: California, Mediterranean basin, central Chile, South Africa Cape region, and Western and Southern Australia. The plants of each of those regions are different, but they share common leaf and lifestyle characteristics, including the ability to adapt to the occasional fire. Our region’s notorious fires occur naturally in chaparral and forest, but the explosion of urban growth in the wildlands has led to dramatically increased fire frequency and shortened intervals between fires, thus threatening native landscapes. We need more effective ways of protecting both our homes and our indigenous vegetation.
Thanks, Pieter
Comments? Insights? E-mail story tips to lalandblog@yahoo.com
E-mail Pieter: plseve@earthlink.net
Photo credit: bahiker.com
Headlines from today's DataQuick report on California foreclosures in the 3rd Quarter of '07:
--Notices of default spiked by 144% in LA from 3Q 06 to 3Q 07, a slightly slower rate of increase than the statewide rise of 167%.
--The rise in actual loss of homes to foreclosure is pretty much the same in LA (up 578% from 3Q 06 to 3Q 07) as it is statewide (605%).
--The foreclosure "hot spots" continues to be the Inland Empire and the Central Valley.
--Ominous trend: homeowners in default are much more likely to lose their homes than they were a year ago -- A year ago, only 19% of homeowners of homeowners in default were headed toward foreclosure; the rate is now estimated at 54%.
LATimes lede: 'Foreclosures statewide were at an all-time high for the three months
ended Sept. 30, after shattering a record level the previous quarter,
the La Jolla firm DataQuick Information Services said."
Reuters lede: Mortgage lenders launched more than 70,000 foreclosure proceedings in California in the third quarter, marking a record for the state, where many housing markets are slumping amid mortgage market turmoil, according to a report released on Friday.
Your thoughts? Comments? Insights? Email story tips to lalandblog@yahoo.com.
 News item from Reuters via CNBC: "Countrywide Financial posted a $1.2 billion third-quarter loss Friday as the housing market slumped, but its shares soared after the largest U.S. mortgage lender projected a return to profit this quarter as it slashes jobs and regains its footing."
More: "Shares of Countrywide rose $2.87, or 22 percent, to $15.94 in pre-market trading. Stock futures also moved higher."
Comments? Thoughts? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: Los Angeles Times
More trouble for mortgage brokers: Bank of America is quitting the wholesale lending business. This tonight from AP on a move the bank will officially announce tomorrow: "In addition to scaling back its investment banking operations, Bank of America Corp. is exiting the wholesale mortgage business and eliminating about 700 jobs, bank officials said Thursday."
More: "The nation's second-largest bank will stop offering home mortgages through brokers at the end of the year to focus on direct-to-consumer lending through its banking centers and loan officers. The move also eliminates the jobs in the bank's consumer real estate unit."
Thoughts? Comments? E-mail story tips to lalandblog@yahoo.com.
Today's Los Angeles Times/Bloomberg poll on economic issues contains a couple of headlines: Most Americans (65%) believe a recession is likely in the next year, and a lot of Americans (45%) have no opinion on the way Fed Chairman Ben Bernanke is doing his job (we suspect a large portion of those don't know who he is, or what he does).
As for the housing crisis, we consider the poll a missed opportunity, and thus a disappointment. Asked, "What should be done to help alleviate the sub-prime mortgage problem?" respondents were given these options:
--Nothing, the government should stay out of it (28%)
--Government should help homeowners or tighten mortgage rules (40%)
--Prosecute firms that knowingly promoted unaffordable mortgages (15%)
--More than one of these things or all of them should be done (9%)
--Don't know (8%)
Our disappointment is this: One of the biggest sources of controversy surrounding this issue is whether the government should help people pay their mortgages. The pollsters, at some level, seem to understand this, and yet they have elicited no meaningful information on it -- lumping "help homeowners" in with "tighten mortgage rules" muddies the issue rather than clarifying it.
Your thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
 News item from Reuters via CNBC: "Sales of new single-family U.S. homes rose 4.8 percent in September but sales in August were revised down sharply, painting a mixed picture of the battered housing sector."
Update: This roundup of comment from economists at the Wall Street Journal contains a common theme -- one already epxressed by commenters here -- that these numbers are not particularly reliable or useful. Bear Stearns observes: "The size of the downward revisions to the prior two months’ home sales data and the failure of the Commerce Department to track cancellations makes this series of very limited usefulness in tracking trends in the housing market. As a result, we would not read anything into the small increase in new home sales reported for September. Most housing data suggest that the sector continued to contract in September."
More from Reuters: "New single-family home sales set an annual rate of 770,000 units in September, up from a downwardly revised rate of 735,000 in August, the Commerce Department said. Analysts had expected a 10,000 drop from the previously reported 780,000."
Sales in September were 23.3% below year-ago levels. Inventory of new houses for sale is now estimated at 523,000, or an 8.3 months' supply at current sales levels.
Inventory analysis: As with existing home sales yesterday, inventory is down slightly in absolute terms, but when expressed in terms of "months to sell," inventory is slightly higher.
Total homes Existing homes Existing homes New homes New homes
Month for sale for sale months to sell for sale months to sell
Sept. 07 4.92 million 4.40 million 10.5 mo. 523,000 8.3 mo.
Aug 07 5.11 million 4.58 million 10.0 mo. 529,000 8.2 mo.
Aug 06 4.49 million 3.92 million 7.5 mo. 568,000 6.6 mo.
Aug 05 3.34 million 2.86 million 4.7 mo. 479,000 4.7 mo.
Aug 04 2.88 million 2.48 million 4.6 mo. 404,000 4.2 mo.
Sources: NAR (Existing homes), Commerce Dept. (New homes)
Comments? Insights? E-mail story tips to lalandblog@yahoo.com
Photo Credit: AP
The New York Times has a good "trend" piece about housing tonight, pointing out that the situation continues to deteriorate in front of us. Two examples: "Merrill Lynch said yesterday that it would take a charge for mortgage-related securities on its books that is $3 billion more than the $5 billion it expected just two weeks ago. And a report from the National Association of Realtors showed that sales of existing homes in September fell twice as much as economists had expected, to their lowest level in nearly 10 years."
The Times goes on to theorize that $2 trillion or more of wealth destroyed in a housing slump will likely have a greater economic impact than the same amount of wealth destroyed in a stock market decline -- because more people are exposed to housing. (The idea that half of Americans own stock is misleading; a small number of Americans own a huge percentage of the stock market. Housing wealth is much more evenly, and widely, distributed).
Your thoughts? Comments? E-mail story tips to lalandblog@yahoo.com.
Hat tip: Amir
 Commenter "gman" wrote, "Something that's been missed by this blog, possibly due to the fires, is this astonishing accidential posting of 196,000 (up from 13,000 the day before) REOs/forclosures for sale on the Countrywide website yesterday. The list was up for a day and a half (I think) and then quickly taken down. Is it possible that Countrywide has 196,000 of these and they've just been holding back?"
We did see this -- and we noted that it was "accidental" -- that is, a mistake, by Countrywide. Here's the backstory: The Countrywide Foreclosure blog, which tracks real estate owned by Countrywide -- or REOs -- reported yesterday that Countrywide's own tally rose, shockingly, from 13,000 to 195,000 homes.
We called Countrywide PR Tuesday to ask about this, and after a few hours, we recevied an e-mail that said, "There was a technical glitch. I'm trying to get you the accurate number but it probably won't happen until tomorrow."
Today Countrywide corrected the "technical glitch," and the new tally is this: 13,674 REOs for sale.
To answer gman's question ("Is it possible that Countrywide has 196,000 of these and they've just been holding back?"), we think that is highly unlikely, and we take Countrywide at its word on this one: a technical glitch.
Your thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: EPA via Los Angeles Times.
News item from the AP: "Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years."
More: "The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record."
Realtors' take: The NAR reasons that the market is actually stronger than these numbers indicate: "It appears raw inventories are stabilizing, but the housing supply is a bit inflated now because the sales pace does not reflect underlying market conditions – sales were dampened by the mortgage cancellations,” NAR economist Lawrence Yun explained. “Once the pent-up demand begins to move, we’ll see housing supplies begin to ease and then prices will edge up.”
The inventory of unsold existing homes dipped from August to September, from 4.58 million to 4.4 million, the NAR reported.
Total homes Existing homes Existing homes New homes New homes
Month for sale for sale months to sell for sale months to sell
Sept. 07 4.95 million 4.40 million 10.5 mo. 529,000 (Aug.) 8.2 mo.
Aug 07 5.11 million 4.58 million 10.0 mo. 529,000 8.2 mo.
Aug 06 4.49 million 3.92 million 7.5 mo. 568,000 6.6 mo.
Aug 05 3.34 million 2.86 million 4.7 mo. 479,000 4.7 mo.
Aug 04 2.88 million 2.48 million 4.6 mo. 404,000 4.2 mo.
Sources: NAR (Existing homes), Commerce Dept. (New homes)
 Good morning. We've had a few requests for a post on the fires, so here it is. Our first thought is probably yours as well: We're hoping for the best -- minimal loss of life, and minimal damage to property.
Though we are hesitant to go straight into an economic discussion of such a disaster, this is an economic blog and we sense some interest.
Random thoughts: It is possible the fires will cause a slight, temporary change in the supply-demand dynamic in Southern California real estate -- that is, marginally more demand, marginally less supply. At present there are 157,000 homes for sale in the five counties most affected (Inventory levels from Bubble Markets Inventory Tracking: Riverside, 32,000; Los Angeles, 59,000; San Bernardino, 23,000; Orange, 20,000; San Diego, 23,000). In those five counties, sales last month totaled 11,800 homes. Remember, not everyone who loses a home will run out and buy one; and not everyone who loses a home will stay in the area; some of the burning homes are vacant. Another caveat: Throughout the affected areas, the fires will cause a temporary freeze on all home sales activity -- very few people will go to open houses this weekend in the affected areas.
Economic impact: Generally speaking, quick natural disasters cause a short-term increase in economic activity. People flock to Home Depot and Wal-Mart to buy emergency supplies, the government spends a lot of money, insurance claims are paid out, houses and businesses are rebuilt. That said, Gov. Arnold Schwarzenegger is warning that this disaster will cost the state some economic activity.
Big-picture longer term fallout: It's possible the fires will represent a "tipping point" of sorts that will cause governments to pause and reconsider the wisdom of heavy development in dry, fire-prone areas in the Southwest. We consider this unlikely -- central planning and decision-making are not big factors in the American economy. An event of this magnitude, though, could make it more expensive, and thus less attractive, to build in fire zones -- through higher insurance premiums.
Your thoughts? Insights? E-mail story tips to lalandblog@yahoo.com
Photo Credit: Los Angeles Times
More on Countrywide's announced plans to help borrowers restructure their mortgages: Fellow real estate blogger Diana Olick of CNBC, in a quick piece of analysis, observes, "... Countrywide is saving its own skin, as well as saving home ownership. The company simply has to do this because there is no way it can survive otherwise. Obviously they are seeing the recovery rates and just don’t want to risk it. This is a pre-emptive strike, and I say no matter what the motivation, it’s a positive move from Countrywide."
Backstory: Olick quotes mortgage data expert Janet Tavakoli, who in turn reports that sub-prime loans are failing at shockingly high rates -- far higher than any financial institution has yet acknowledged: “Last week I met with a major mortgage servicer of geographically diverse U.S. subprime loans. They work 13-hour days trying to salvage what they can, doing anything to avoid reporting a delinquency or foreclosure. They disclosed disturbing information unavailable even on trustee reports. The servicer asserted the rating agencies are incorrect in their optimism; recovery rates of 60% are unattainable. My average recovery rate assumption of 30% is also currently unattainable."
Our take: We would add one more piece of analysis: The Bush administration, in the person of Treasury Secretary Paulson, took the mortgage industry to the woodshed, in public, recently. He all but ordered lenders and servicers to take the moves Countrywide took today.
Thoughts? Comments? More soon on this story.
 Breaking news item from Bloomberg: "Countrywide Financial Corp., the biggest U.S. mortgage lender, may change terms on $16 billion of adjustable-rate mortgages before the end of 2008 so borrowers won't lose their homes to foreclosure."
More: "About 52,000 customers who hold subprime loans can refinance into prime and government-backed loans, the Calabasas, California-based company said today in a statement."
--Update: Here's the Countrywide press release describing the program.
--CNBC headline: "Countrywide Offers Help For 82,000 Borrowers"
--Reuters via CNBC: "It announced the program as pressure mounts on the mortgage industry from politicians and consumer groups worried about rising foreclosures to clean up lending excesses, and make only home loans that consumers can afford in the first place."
--CNBC blogger Diana Olick observes that Countrywide is "saving its own skin" -- because sub-prime loans are failing at a far higher rate than Countrywide or any other big financial firm has admitted -- but is also doing the right thing.
Thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: EPA via Los Angeles Times.
News item from Bloomberg: "California homes are overvalued by as much as 40 percent and stricter lending standards will probably contribute to 'material' price declines, according to analysts at Goldman Sachs."
More: "In August, the median price for houses in California was $589,000, though economic conditions only support prices of $350,000 to $380,000, the analysts said. The average U.S. home is 13 percent to 14 percent overvalued, the report estimated."
Our take: Not to split hairs, but we don't read this as a prediction of a 40% decline.
Your thoughts? Insights? E-mail story tips to lalandblog@yahoo.com.
Hat tip: Cal
 Another week, another tick downward in median listing prices in greater LA -- this week down by $1,000, to $509,000, according to Housing Tracker's weekly monitoring of MLS listings. Median listing prices are now down 8.9% from year-ago levels.
The bigger statistical trend is a jump in inventory -- nearly 600 new listings came on the market in the week, bringing the total number of listings to 47,182 -- an increase of 17% over year-ago levels. In a normal real estate market, the number of listings tends to decline after the summer selling season; that is not happening, at least not yet.
Date Median Price Inventory
4/06 $579,666 27,251
4/07 $545,000 35,489
5/07 $545,000 38,297
6/07 $540,000 40,766 (up 20.4% y/y)
7/07 $535,000 42,685 (up 14.5% y/y)
8/07 $529,000 44,483 (up 13.6% y/y)
9/07 $520,000 46,414 (up 16.9% y/y)
10/8/07 $514,900 46,219 (up 15.1% y/y)
10/15/07 $510,000 46,603 (up 15.6% y/y)
10/22/07 $509,000 47,182 (up 17.0% y/y)
Thoughts? Comments? E-mail story tips to lalandblog@yahoo.com
Photo Credit: Reuters
 Sign of the times: Westside Bubble posts on finding the 4-inch-by-6-inch card at right as a little windshield handout at a Home Depot.
We've covered this part of the story in bits and pieces, but never really in depth: A lot of the foreclosure activity in Southern California involves non-English-speaking immigrants.
The flier says in part, "I can buy your house from you today."
With prices falling throughout the region, but prices still too high to make homes attractive as rental investments, we can't imagine it's a good time to be in the business of buying foreclosed homes. So we wonder what the catch is here.
Your thoughts? Comments? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: Westside Bubble
A couple of quick thoughts about the long story in the Los Angeles Times today about government programs that help first-time home buyers squeeze into homeownership in the L.A. area.
- We were surprised to learn that, even with a household income of up to $98,000, you can qualify for a below-market mortgage rate from the California Housing Finance Agency. Up to $98,000 per year is considered "moderate income."
- We were perplexed (we're always confused and perplexed) that the Los Angeles Housing Authority has such a tiny level of activity. The story says the authority funded 50 loans last year, and has funded 274 loans so far this year. That's great for those 324 borrowers; but in a city the size of Los Angeles, it is like spitting in the ocean. It's a less than token effort.
Your thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
It certainly feels to us like the pace of real estate auctions is quickening. This makes perfect sense, given that the sales prices at recent big auctions have been in line with the overall market, which means auctions -- at least, well-publicized auctions -- are proving to be a decent strategy for stuck sellers.
That said, we noticed quite a few advertisements for auctions in the Sunday Los Angeles Times:
Thoughts? Insights? E-mail story tips to lalandblog@yahoo.com
 Good morning. We always enjoy tree of the week a little bit more when it follows a week of bad news. (See: Dow drops 366 points, L.A. home sales hit 20-year low, etc.) So our tree-loving friend Pieter Severynen is especially welcome this week:
California Sycamore – Platanus racemosa
Our native Plane Tree evokes California’s wild nature, picturesque streams and open spaces. One of our most striking natives, its growth is unpredictable, with gracefully contorted and twisted branches or leaning trunk(s). Always graceful, the tree grows very fast to 30 to 80 feet tall, 20 to 50 feet wide and can build a massive trunk in the process. The old bark on the trunk sheds in pieces, revealing attractive smooth white skin below. The maple-like leaves are deeply lobed. The first crop of leaves is usually subject to anthracnose, a fungus disease that causes some of the leaves to curl up. While it looks disfiguring it is not fatal. Leaves turn a subtle yellowish brown in autumn before falling off. Three to seven seed balls hang from a single stalk (‘racemosa’ refers to a raceme, i.e. flowers opening along a central axis from the bottom up).
All sycamore genera are recognizable for the characteristic lobed leaf and the patchy bark. The London plane tree, P. x acerifolia, is a hybrid between the American (P. occidentalis) and the Eastern (P. orientalis) plane trees; it is a beloved street tree in many countries, and a common tree in Paris; it takes polluted air and pollarding, but lacks the grace of our California Sycamore. Some varieties are resistant to anthracnose and mildew. The oriental plane tree is featured in the ‘Ombre mai fu -– the sweet shade’ aria of Handel’s comic opera ‘Serse’, its tune later recycled in his Largo, wherein the Persian king Xerxes was so smitten with the beauty of a tree that he encountered on his way to teach the Greeks a lesson that he loaded the tree with golden ornaments and ordered a guard to keep watch forever.
Thanks, Pieter
Comments are always welcome. E-mail story tips to lalandblog@yahoo.com
E-mail Pieter: plseve@earthlink.net
Photo Credit: ucla.edu
 Those trying to make sense of today's 366-point sell-off on Wall Street would do well to read Lou Barnes' take today.
In short, he writes that the credit crunch is every bit as bad as it was two months ago, and perhaps worse because of this: The ugly, stinking, potentially disastrous investment vehicles that caused all the worry in the first place are still sitting there, just as ugly and smelly as ever. Nobody has even poked them or turned them over to see what is under them. How bad is it? Worse than any of the big players have yet acknowledged:
"Reported losses at financial institutions, at first thought to be overstated ('kitchen sink' write-offs) are not. More will come. The institutional embarrassment is a greater impediment to new credit than the numbers: The losses are formal confessions by management and directors of personal incompetence. That’ll make you risk-averse."
Yes, you say, but what about that $80-billion fund the big banks put together this week? Won't that help? An unfunny joke, says Barnes: "The best black comedy: Citi led a parade of giant banks to the Treasury, trying for official blessing to keep $400 billion in off-balance-sheet trash from being forced back on (where it belongs) or into disorderly liquidation (Eeeeek! Might find out what it’s really worth!). Why Secretary Paulson let them in the building is beyond me. He loaned them a conference room and bought sandwiches (day-old, I hope), and the bankers left without even a lipstick-on-a-pig deal among themselves."
Your thoughts? Comments? Insights? E-mail story tips to lalandblog@yahoo.com.
Photo Credit: AP
 Good morning. Yes, we think this video is funny.* No, we're not entirely sure what the point is. And yes, it is safe for work. Enjoy.
If you liked that one, we think this one is even funnier: Bush, Greenspan, Mozilo and Bernanke.
Comments? Insights? *If you want to criticize our sense of humor (we're smack between the brothers Farrelly and the brothers Coen), feel free.
Hat tip: Ace
It may not happen this year, but it will happen: Californians who bought homes in the past two or three years will demand lower property taxes when they realize the value of their home has fallen since they purchased it. Franklin Avenue explores the issue here:
"I'm starting to wonder whether it's time yet to evoke the 'decline in value' statute in the assessment processs:
'If you have evidence that the market value of your property on January 1, 2007 is less than the assessed value shown on this tax bill, you may request a review for the 2007-2008 fiscal year. The filing period is January 1 through December 31, 2007.'"
More: "... next year, the county should probably brace for a whole lotta 'decline in value' submissions. Because if the market continues to decline, I'm sure as hell not going to continue to reward the county just because I had the unfortunate luck of finally having enough money to buy a house in 2004."
The New York Times explores this issue from a national perspective here -- noting that the mayor of Chicago is pushing for a 15% property tax hike to make up for revenue lost in the housing downturn. Evidently Chicago -- unlike California -- has the novel idea of taxing property based on what it is worth. (Sorry, we tried to make it through this post without a dig at Prop. 13, and we failed).
Thoughts? Comments? Anybody out there filing one of these 'decline in value" requests? Email story tips to lalandblog@yahoo.com
Hat tip: silverfern
Photo Credit: Franklin Avenue
Good morning, again. We don't generally post about rental prices and trends, but Better Village requested something, and lo and behold, the LATimes has a story this morning. Headlines, highlights, insights and asides:
Headline: In large apartment complexes (100 or more units), average rents in L.A. and Orange County rose 5.2% from year-ago levels. During that time period, median sales prices for homes in L.A. County rose 1.2%. Insight: We have no idea what percentage of renters live in complexes this large, and the story doesn't take a stab at that question. One of the reasons we rarely post on rentals is that we don't know the statistical landscape very well.
Headline: Conflicting trends. Westside Rentals says demand for rentals is up, but the company has been "getting more calls than ever" from real estate agents interested in leasing out homes because they have been unable to sell them. That would indicate that both supply and demand are rising.
Headline: You can lease a 3-bedroom house in Corona for $500/month.
Headline: The average rent in L.A .and Orange County in large complexes is now $1,630 per month.
Aside: We see more and more brand-new condos for rent. Our unscientific analysis indicates this would lead to higher average rental prices. Why? Because the brand-new condos we see for rent are expensive -- so expensive no one will buy them. They will not be cheap, or even, "average" rentals. Hence, they will likely lead to higher average rents. If this trend drives up average rental prices, is that necessarily bad news for renters? No. In that scenario, it simply means there are more expensive rentals available.
Your thoughts? Comments? Email story tips to lalandblog@yahoo.com
Hat tip: Better Village
Good morning. As Leo Nordine told us earlier in the week, banks are finally starting to smell the coffee and cut prices on foreclosed homes in greater L.A. The Daily News: "Try finding a foreclosure because you might snap it up for about 20 percent or more under its recent market value. Take a foreclosed home in Winnekta on the market for $404,900. The asking price is 24 percent lower than what the former owner paid in June of 2006, according to Realtor Steve Smallson."
More: "Market research firm Geostat Advisory's analysis of the Los Angeles and Orange County residential real estate markets suggest lenders that repossessed homes and condominiums are slashing sale prices similar to the discount offered on Smallson's listing."
Our take: This is a tricky topic -- the idea that some houses are priced at a "discount," or "below market value." If ten identical houses are for sale on the same block, all listed at $500,000, and one seller drops his price to $450,000, is he offering at "below market value?" No, he's not. We don't know what the market value is until someone buys one of the houses. The value could be $425,000, and everybody, including the price cutter, is priced above it. To further complicate things, if the market value is declining, it doesn't necessarily matter what the first house sells for -- the "market value" for the other nine is going to be lower. The longer they sit on the market, the lower their "market value" is.
The article, as we read it, tries to steer clear of this trap; it defines "discount" in relation to the previous sales price, as in the first example. It also uses the phrase "recent market value" -- which refers back to that previous sales price.
Your thoughts? Insights? Email story tips to lalandblog@yahoo.com.
Hat tip: Cal
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Sometimes an auction has nothing to do with foreclosure. News item from New York Times via Curbed Los Angeles: The Kaufmann House, a 1946 glass, steel and stone landmark built by architect Richard Neutra outside Palm Springs, is on the auction block. The pre-sale estimate: $15 million to $25 million.
