Capital of slow sales: Paramount, CA

The New York Times crunched home sales numbers from across the country and found that home sales have collapsed the most dramatically in ... Paramount, Calif. Home sales dropped 78% in Paramount from the third quarter of '06 to the third quarter of '07.

Columnist David Leonhardt reports Paramount fits the profile of places where sales have dried up: moderate-income towns on the outskirts of big cities. His analysis: Sellers are refusing to budge, refusing to believe prices are falling: "We’re going through that transition where sellers can’t accept that prices are falling," said Gary Endo, a real estate agent in Paramount. "They’re still caught up in this idea that their property is worth more than it is. It’s just strange.”

Why the white picket fence in the photo? The blog featured Paramount back in June, linking to a story about its program of subsidized picket fences. Back in June, Paramount resident Jose Luis Romero (pictured), told the  The L.A. Times: "I bought my home in 1994 for about $120,000. Now, I could get $400,000 for it, no problem."

Your thoughts? Comments? Email story tips to peter.viles@latimes.com.
Photo Credit: L.A. Times

Comments

[upthecreek]

the sellers will figure out real quick that their house value is dropping when their neighbors house sells in Foreclosure at 20-30% lower than their value.
Just a matter of time....its' already happening in my neighborhood

[Cal]

"If he can’t sell the house for something close to the asking price of $549,900, he expects the bank will take it from him. “The truth is, I don’t think my house will sell,” Mr. Perez said in Spanish, to my colleague, Ana Facio Contreras. “If in four months I’ve had no offers, I don’t see how I’ll get an offer now that it’s more difficult to sell.”"

Well at least this guy has accepted reality, its weird to see the sellers in such complete denial. I think the realtor propaganda is backfiring on them, sellers see the "Interest rates are low! They aren't making anymore land! Everyone wants to live in (insert location here)" and are confident things will be fine.

Things will be fine, if they can afford their home and dont need to move, take your house off the market and accept reality. If you are going for 90+ days with no offers, your home is overpriced, its that simple. Think about what has happened every 90 days since last December.. it was almost a year ago today that OwnIt blew up. February/March subprime imploded... Alt-A in June and Jumbo in August/September.

The people who get out the soonest will get the most. It is as simple as that.

[Hula Girl]

That lovely picket fence may be worth $400K, but the house is not.

[lefty]

The bottom is here for L.A.!! Sellers are just not going to go much lower. If the buyers don't have the money they must buy somewhere else. Pretty soon they will even start buying in hard-hit Riverside, where it's farther but cheaper!

[Inland Empire]

Paramount used to be a lovely place to live. It has a history of dairy farms and friendly people. Then came taggers, crime and illegal aliens. Not necessarily in that order.

[Peter]

"Paramount used to be a lovely place to live. It has a history of dairy farms and friendly people. Then came taggers, crime and illegal aliens. Not necessarily in that order."

What's a thread about a working class suburb in LA without expressions of a little bit nostalgia for days gone past, as well as not so subtle digs at the dark skinned people who made it go all so horribly wrong?

[Tim K.]

About sellers being in denial - it's not really so much about being in denial, it's the psychological feeling that is driven by blind optimism. It's the same feeling that makes you bet on any game where you know the house is going to win - "But I'm different; I feel lucky."

Lots of homeowners out there are feeling like they can't lower their price because then they give up on the fantasy that they could "get lucky" when that one buyer with a bucket of cash and a box of stupid comes along.

So they'll hold out until some external factor means they can't hold out any longer (like a job loss, or something else that forces them into foreclosure).

[Tim K.]

I should add the corollary to the above theory about feeling lucky - no seller right now wants to believe "I'm the greatest fool." Nobody wants to think they were the last, the unluckiest one. The flip side of "I'm lucky" is "If I'm not lucky, I can't possibly be the *unluckiest*."

[ray]

Paramount, right next to Long Beach and Compton. Who would have thought a 78% drop would be coming?

How about doing a blog on an unfortunate builder who decided to invest a McMansion in Paramount. That would be some story.

[Keith]

Good job on calling it Lefty, I'll bet everyone is really surprised to see the market stabilize so quickly for LA.

[Rob]

Please don’t feed the Troll.

Cal, you nailed it. The RE industry propaganda has come back to bite em' in the pocketbook. Problem is, those who fell for it are now the sellers...

[peter m]

"Mr. Perez, who is 43 and works as a machine operator, bought his house for $380,000 six years ago. He later refinanced his mortgage and took out a home-equity loan. As a result, the interest rate on his new mortgage reset in October, causing the monthly payment to jump $1,300, to $3,900.
If he can’t sell the house for something close to the asking price of $549,900, he expects the bank will take it from him. “The truth is, I don’t think my house will sell,” Mr. Perez said in Spanish, to my colleague, Ana Facio Contreras. “If in four months I’ve had no offers, I don’t see how I’ll get an offer now that it’s more difficult to sell"

I cannot figure out why MR Perez payed 380K in 2001 for a house in paramount. That is rediculous. Paramount is strictly a working class /lower working class city mainly of first time hispanic homebuyers. The median household income is around 50,000-55,000. No home in paramount is worth more than $250,000 IMOP. The community is a below average LA community, almost a marginal region like Sgate, N long beach, bell or Lynwood and about the same as Norwalk.
He wants $549,999 now for a house in paramou nt. HA HA HA!! That may be the most rediicuous wishing price on the planet for a home in paramou nt which is adjacent to Compton and which IMP is Barely above Compton.
All the 710 fwy/'alameda coridor communities had rediculous price runups due almost 100% to massive fraudulent selling to hispanic immigrant families using %100 financing, no docs, stated, teasers, subprimes . That game is now ended and prices will plunge in these lower exurban gritty edge districts liberally sprinkled with graffitti and gangs .

[MyLessThanPrimeBeef]

How is Santa Ana doing? Just curious.

[amir]

"Sellers are just not going to go much lower. If the buyers don't have the money they must buy somewhere else. Pretty soon they will even start buying in hard-hit Riverside, where it's farther but cheaper!"

Please don't make me laugh. Cut and paste your response into the Times in 1990, it will fit perfectly. That's what people thought then. You should read the headlines from the 90's. "prices will never drop in Beverly Hills!". Prices dropped 50% all over the city between 1989 and 1995. That's six years of declines until we reached bottom.

[Maggie Knowles]

I don't agree we've hit bottom yet here in Los Angeles. I'm working with buyers who offer $50K-$70K less than asking price (many instances after sellers have already dropped their prices by over $100K) and sellers are negotiating. When sellers see offers with 10% and 20% down payments and pre-approvals from lenders (as opposed to pre-qualification letters), they know they've got an offer from someone who can actually close the deal. And so many of the properties are REOs now, the companies don't want to hold. This is a different experience from even three months ago when listing agents would get very pissed off to receive a "low-ball" offer. The buyer's market has just begun.

[peter m]

"Columnist David Leonhardt reports Paramount fits the profile of places where sales have dried up: moderate-income towns on the outskirts of big cities. His analysis: sellers are refusing to budge, refusing to believe prices are falling: "We’re going through that transition where sellers can’t accept that prices are falling," said Gary Endo, a real estate agent in Paramount. "They’re still caught up in this idea that their property is worth more than it is. It’s just strange.”

Problem is that in all LA county would be sellers in the 'moderate income regions out side the city' actually think that their precious 3/2 ordinary 4- sided plain stucco and wood framed WWII built POS with the 5500 lot is worth $500,000. HA HA HA!! THESE WWII built homes or even the later ones of the 50-60,s are just simple wood frames with foundations along with that termite- eaten garage. Yeh U can spank a coat of paint on it and dress up that pig and keep a neat mancured law but that don't mean jack. The interior wood may be rotton with half century or 80 years of termite infestation. 80-90% of all unattached SFh's in South LA county are the older smallish 2/1's , 3/1's or 3/2;s aveage half century old with 2500-6500 sq ft lots s .
These homes were being ponzied financed and sold to naive immigrants buyers for $400,000-500,000 as late as 2QT 2007. IN 2008-2009 the duped(?)buyers will dump these onto the bank s who will have fun holding onto an albatross 2/1 or 3/1 80 yrs crack house in Compton which was once 'valued" at $400,000 and now is a POS REO in a gangland warzone no one wants at 200,000.

[inland Empire]

What's a thread about a working class suburb in LA without expressions of a little bit nostalgia for days gone past, as well as not so subtle digs at the dark skinned people who made it go all so horribly wrong?

Don't know about "dark skinned' people. When the Dutch dairy farmers were the main occupants, they did not have the crime they now have. But then, those Dutchmen did come here legally.

[MyLessThanPrimeBeef]

Lefty, are you buying now?

[Bad Planning]

To Peter and Inland Empire......Besides posting your racy comments regarding colored people and illegal immigrants in Paramount...That is beside the point.. you are correlating facts with the market and immigrants in Paramount..That is irrelevant....If your pushing and feeding this idea out to the rest of your cohorts I suggest you run a report to the banks too. Banks are wonderful in screwing ANYONE with shady credit history...Thats why these are risky loans and they risked to hand these loans out...

Paramount is a great little community..Yes, it once was a dairy farm land but all of that vanished with greedy sellers and created the environment it is today....I'm glad though that I did not fall prey to the unethical realtors in Paramount..Believe me theres alot of bad ones but very few good ones. I was house hunting in 2005 and this agent was trying to sucker me to buy a 3,000 square foot lot with a doll house on it.....The asking price was $390,000! He tried every effort to say that this house would be sold right away and that he already had offers...two years have gone by and the house was never sold...

Honestly, Paramount is a prime example of how sellers slowly realize that they are stuck...

[Tim K.]

I think lefty is an automatic bot, or a some guy paid to cut and paste THE SAME TEXT with each post in a pump-and-dump scheme, probably perpetrated by the National Association of Realtors.

A similar poster is doing the same thing on LA Curbed.

[Ann]

. The bottom is here for L.A.!! Sellers are just not going to go much lower. If the buyers don't have the money they must buy somewhere else. Pretty soon they will even start buying in hard-hit Riverside, where it's farther but cheaper!
Posted by: lefty

Yes it will go lower. It is called “foreclosure’ and ‘lenders dumping properties.’

Yes it will go lower. Buyers don’t have the income to pay the mortgage. There are not many people in the US who can afford a $550,000 house. That takes an income of $188,000 with a 6+% 20 year mortgage.

LA median income is pretty much the same as the rest of the US – around $48,000. Only 15-18% of the population have the income that would buy that $550,000 stucco box and there are far more of such boxes than there are people in that 18% group.

Paramount is strictly a working class /lower working class city mainly of first time hispanic homebuyers. The median household income is around 50,000-55,000. No home in paramount is worth more than $250,000 IMOP. The community is a below average LA community, almost a marginal region like Sgate, N long beach, bell or Lynwood and about the same as Norwalk.
Posted by: peter m

Peter, median income is where 50% of households have more and 50% have less. Median is “the middle.” It is EXACTLY the middle of all the incomes. Given that the median income in the county is around slightly below $48,000, households with incomes of $50 – 55K are ABOVE the middle and, in economic terms, are hardly “lower class” incomes. In fact they are better off than about 54-55% of all households in LA.

This idea that the ‘normal’, ‘average’ and ‘middle’ income is in the $90K – 200K range is absolutely ludicrous and has not basis in reality. Maybe when someone with a household income of $180,000 compares themselves to Bill Gates, they think they are poor or ‘just getting by’ but compared to 96% of the US, they are far far far better off financially.

“Jose Luis Romero (pictured), told the The LA Times: "I bought my home in 1994 for about $120,000. Now, I could get $400,000 for it, no problem."

The guy has the words “sucker” and “greedy” and “economically ignorant” on his forehead. His neighbors make $50-55k and he thinks that others like them who want to live there are going to be able to buy a $400,000 house with a 5-10% down payment ($20 –40K) and pay a 6%+ 20 year mortgage payment of at least $2300 NOT including taxes and insurance on a gross income of $4166 (probable net income of $3500) a month??

Ask the idiot what a house on his street rents for. I guarantee it is NOT anywhere near the cost of the mortgage, taxes and insurance.

[Steve]

Get real this poor guy was set up at $549K for a shack in Paramount. I am not sure what is worse, Paramount viewed as an extension of LA or Compton.

[Santos]

Inland Empire, since you are going back in history, we might as well go a little farther back. Don't forget that these lands in the west had previous owners that were never compensated. Those Dutchmen were farming ill gotten lands. That was not a crime?! Did you know there was illegal U.S. migration while this country invaded the Southwest? Did you know that Mexico used to deport Americans out of the Southwest? Study your history a little bit and accept that we are all immigrants or descendants of immigrants.

This blog is turning more and more into an immigrant bashing site. The minute a Hispanic surname is printed in association with a story, posts start showing up with some seriously flawed or racist assumptions.

[Rick Johnson]

If you buy into the 14.5 to 15.0 x annual rents theory for a retail price, what would the guy's house be worth?

Seems like high 200,000 to mid-300,000 to me. What do you think?

[Gary B]

Hey while your at it Santos ....why dont you just bring up the Alamo