Zillow's L.A. rankings: Areas with biggest declines in home values

Zillow's quarterly analysis of real estate trends is out tonight, and contains some fascinating data. My personal take is that even though individual Zestimates -- the estimated value of a particular home -- may be unreliable in many cases, the overall trends that Zillow captures are valuable and probably pretty accurate. These are the 20 Zips in greater L.A. with the biggest year-over-year declines in median home values, as measured by Zillow.

To find the percentage year-over-year decline in median "Zestimate," click on the zip code.
Thoughts? Comments? E-mail story tips to peter.viles@latimes.com

Comments

[HONESTLY]

If you can't trust their property valuation they call "zestimate" how could one possible trust any other statistical or projected data. Zillow is pretty much good for nothing.

[Bunja!]

Apparently, Subprimees are not only ones feeling the drop:

Latest Walk-Away: Toll Brother Family Member

One of the Toll family members decided to walkaway from a condo purchase:

"Luxury builder Toll Brothers Inc (TOL), hurt as many buyers to try to get out of contracts for new homes amid falling prices, says a member of its founding family is trying to walk away from an agreement to buy a new condominium.

The daughter of Vice Chairman and co-founder Bruce Toll informed the company last month that she and her husband "did not intend to make settlement" on a $2.47 million home they had previously agreed to purchase, the company said in a regulatory filing.

Toll Brothers went on to say that it intends to pursue its rights under the agreement of sale with Toll's daughter, Wendy Topkis . . . The contract with Topkis was reached prior to fiscal 2007, it said. The location of the condo was not disclosed."

Fascinating!

http://www.reuters.com/article/marketsNews/
idUKN1150816620080211?rpc=44

[Brian S]

It's interesting to see the overlap between where prices are falling according to the Zillow report and the areas hit by trustee sales and NOD. I see Palmdale is #4 in the Zillow report and it is also top of the list in Trustee Sales. Another indicator of problems (but not necessarily a foreclosure) is looking at a map of current Notices of Default in Los Angeles (see http://tinyurl.com/2pe477). This highlights potential trouble spots both in terms of trustee sales and/or price declines. I think to assess a market it's good to look at changes in local median sale prices, changes in the number of transactions, changes in rents, and changes in NODs or Trustee Sales, all by building class.

[bulwark]

Zillow's a joke. All last year it valued our house $1.3-1.5M. In January we looked at the Zillow value history graph again, and POOF! our house was worth $500K more. Zillow rewrote last year's history and now it was worth $1.8-2M. Maybe the National Association of Realtors sent them a big check.

[Curious]

It looks like 15 of the 20 hardest hit areas are in the OC. I wonder why that is...maybe they had the biggest run-ups? Any other ideas?

[Brian S]

Sorry here is the right link for my prior comment- it seemed to hyperlink the ")."

http://tinyurl.com/2pe477

[Joseph... the Real Estate Guy]

Mr. Viles,

1) Why did you guys remove the negative comment about Zillow zestimates? Bias?

2) Where is the posting about Lenders giving a 30-day extension to Borrowers in foreclosure?

[Anthrodiva]

Dear Honestly, it is called regression to the mean.

http://www.socialresearchmethods.net/kb/regrmean.php

http://en.wikipedia.org/wiki/Regression_toward_the_mean

[adoptivefather]

Analyze This

Mortgage Crisis Spreads Past Subprime Loans

http://www.nytimes.com/2008/02/12/
business/12credit.html?hp

Watch the video link with the story - its precious! I love the home workout specialists with all the body piercings.

Now lets take this excerpt from NY Times paragraph by paragaph:

In a conference call with analysts in December, Kenneth Lewis, the chief executive of Bank of America, said more borrowers appear to be giving up on their homes as prices fall, noting a “change in social attitudes toward default.”

No kidding Kenny boy. And our govment doing all they can to speed up the departure with no tax liability due on short sales. Change in social attitudes I don't buy though. You can't get blood out of a turnip. Maids and nannys aren't supposed to be buying $300-500k homes.

“You don’t mind making a $2,000 payment when the house is going up” in value, said Steve Walsh, a mortgage broker in Scottsdale, Arizona, who has seen several clients walk away from their homes because they couldn’t refinance or sell. “When it’s going down, it becomes a weight around your neck, it becomes an anchor.”

Since when did the loan contract ever disclose that home prices ONLY GO UP?

Home prices in the North Las Vegas neighborhood of Brenda Harris, a technology analyst at a casino company, have fallen 20 percent to 30 percent. The builder who sold her a new three-bedroom home on Pink Flamingos Place for about $392,000 in 2006 is now listing similar properties for $314,000. A larger house a block down from Ms. Harris was recently listed online for $310,000.

Hmmm. Lets see. I wonder if Brenda Harris is a single person. I also wonder what a single person working as a analyst in a casino is doing buying a home costing almost $400,000.

But Ms. Harris does not want to leave her home. She estimates that she has spent close to $40,000 on her property, about half for a down payment and much of the rest on a deck and landscaping.

Hmmm. Now we find she only put $20,000 or 5% down. And rather than make full payments she blows another $20,000 on a deck and plants in a place that is freezing in the winter and hell in the summer. How much does that casino pay anyway?

“I’m not behind in my payments, but I’m trying to prevent getting behind,” Ms. Harris said. “I don’t want to ruin my credit.”

Earth to Ms Harris: if you are making just the minimum payment on a negative ammo loan, you ARE BEHIND ON YOUR PAYMENTS. I hope you do a better job analyzing at that casino then you do at your kitchen table.

In addition to the declining value of her home, Ms. Harris, 53, will soon be hit with a sharply higher house payment. She has an option adjustable-rate mortgage, a loan that allows borrowers to pay less than the interest and principal due every month. The unpaid interest gets added to the principal balance. She is making the minimum monthly payments due on her loan, about $2,400.

A while back I pondered how a single woman working as a analyst in a casino could buy a $400,000 home and now you tell me she 53 years old?? And she's in a negative ammo loan?? Is that casino guaranteeing her employment for the next 30 years? Any chance her technology job might be wiped out by new technology? And now somehow its the taxpayers (as in my kids who don't own a home yet) problem to save her??

But she knows she will not be able to pay the $3,400 needed to cover her interest and principal, which she will be required to pay once her loan balance reaches 115 percent of her starting balance. And under the terms of her loan, which was made by Countrywide Financial, she would have to pay a prepayment penalty of about $40,000 if she chose to refinance or sell her home before May 2009.

Uhhh, Ms Harris!!! The reason you have a prepayment clause is because you got a WAY below market rate to start and up till 2007 there was no free lunch. Alas we now are pondering free lunches for all irresponsible home buyers.

She said that she now wishes she had taken a traditional fixed-rate loan when she bought the home. At the time, she asked for a loan that could be refinanced after one year without penalty. She said her broker had told her a week before the closing that the penalty would extend until May 2009 and that she reluctantly agreed because she had already started moving.

Uhh Ms Harris!!!! You now wish you had taken a fixed rate loan to start?? But problem is you can't handle more than the teaser rate now. Your crappy credit didn't qualify you for anything better and now the govment wants to HELP you out - I mean stay in your home. I just can't help but wonder where and what she was moving from. Might it have been a rental? Wonder what rent she was paying compared what her reasonbly expected all in costs for a $400,000 home are.

[Jeff]

Interesting. I'm suprised Pasadena and especially Altadena (91001) aren't listed. I thought I had read that Altadena was one of the top foreclosure areas in the state now -- but maybe foreclosures don't effect the Zillow trends because they are excluded?

[Chris]

Jeff, I actually read that that part of the SGV has been comparatively immune so far to the foreclosure bonanza. I live in Pasadena, and the number of For Sale signs I see around here seems to have been fairly steady over the past few years, unlike many other areas around greater LA.

[tonyE]

92617 in Irvine is UCI. The school builds home for its staff and only sells the land. Since this is a tightly controlled, heavily subsidized market the "free market" need not apply. What these numbers show is the UCI did not build expensive homes this time around, the profs are all housed and now it's time for more graduate assistants to get their condos.

[Drew Meyers from Zillow]

Hey, it's Drew from Zillow. Thanks for writing Peter -- and I like your little mashup you created.

Jeff - Actually Pasedana and Altadena were both included (Peter just didn't map all of them, likely due to the sheer volume of cities/neighborhoods included). Pasedana was down 3.7% quarter over quarter, while Altadena was down 10.6% (sounds like you were right). If you download the entire LA spreadsheet, you can dig down to the city level, and even the neighborhood level depending on the size of city. You can download the .xls file here - http://www.zillow.com/quarterlies/QuarterlyReports.htm

Hope this helps.

[Drew Meyers from Zillow]

Honestly-
Zestimates are a starting point to do your research. We always recommend consulting a local professional -- either an appraiser or a Realtor -- when you start to base serious financial decisions on the value of a home.

[peter m]

It looks like 15 of the 20 hardest hit areas are in the OC. I wonder why that is...maybe they had the biggest run-ups? Any other ideas"

Eight of the 20 are within a 10 X 10 sq mile area of northwest OC encompassing almost the entire city of Garden Grove and adjacent areas(Stanton, buena park anahein,). I have a theory - these are heavily immigrant low-wage areas and current obscene SFH prices are not matched by wage levels in this lower-working class section of the OC. Buena park and Stanton are OC marginal zones. GG is heavily lower working-class immigrant with virtuallly no hi-wage income earners- professionals to support $500,000 homes. No high paying job sectors at all and it is all retail, malls, disney tourism ,small workshops, or mom and pops.
These area are not yet SCentral LA dumps but prevailing wages about the same so this area of OC will not support $400-000-$500,000 homes. They will go down to 2.5- 3X income which in that area is $50-60,000 per household. $200,000 is what the homes should be valued at, with max prices of $300,000 for the few upscale zip areas( GG 92845.)

Pacoima 91331 is a fraud & gang infested slumzone so no surprize there.

[HONESTLY]

Drew Meyers from Zillow-
"Zestimates are a starting point to do your research."

I have looked up the word "Zestimate" and it's not in the dictionary. Your home valuations on your website is so inaccurate that it is basically a public disservice to publish them.

I'm not sure what you're doing posting on this board. Are you trying by any chance to control public opinion about your idiotic website? The fact that you're here tells it all. Maybe you should join Scientology.

[HONESTLY]

Zillow's house valuation is pretty much useless. They should be prevented from publishing data that is not backed up.