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Median listing prices in Greater L.A. were essentially flat over the last week, falling $100, as the inventory of unsold homes and condos inched slightly higher, according to Housing Tracker's analysis of MLS listings.
Highlights:
-- Median listing prices fell to $459,900, a decline of 2.1% in the last month and 16.2% in the last year.
-- The inventory of unsold houses and condos rose to 42,038, which is 27.6% ahead of last year's levels.
Date Median listing 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)
10/07 $510,000 46,603 (up 15.6% y/y)
11/07 $499,900 46,503 (up 19.0% y/y)
12/07 $495,000 (down 10.0% y/y) 43,174 (up 28.2% y/y)
1/08 $479,900 (down 12.6%) 40,850 (up 33.3% y/y)
2/08 $475,000 (down 13.5%) 43,625 (Up 38.3%)
3/10/08 $465,500 (down 15.4%) 41,838 (Up 32.3%)
3/17/08 $464,900 (down 15.5%) 42,098 (Up 31.4%)
3/24/08 $460,000 (down 16.2%) 41,934 (Up 27.2%)
3/31/08 $459,900 (down 16.2%) 42,038 (Up 27.6%)
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
 I hope those of you who like to make a punching bag out of my employer (no, not Sam Zell, the Los Angeles Times) have noticed that the newspaper continues to publish full-throated, anti-bailout opinion pieces.
Last week it was economist Christopher Thornberg's politically incorrect, but historically obvious argument that the housing bubble was caused by "greed on steroids."
Today it's Peter Schiff, who writes on the opinion page that bailouts won't work, and housing prices must be allowed to fall to a "sustainable bottom" -- levels supported by the market, not by government intervention.
Highlights:
"At current levels, the average American still can't afford the average house. Despite the creativity of its new policies, Washington can't alter that math. The only mechanism to restore balance and get the credit flowing is for prices to fall steeply to a true market level, and for losses (for consumers and corporations) to be recognized and absorbed."
"The government is trying in vain to get funds flowing again and put a floor under prices. But it's too late. U.S. home prices are like a beach house supported by eight pillars: lax lending standards, low down payments, 'teaser' interest rates, widespread real estate speculation, pliant appraisers, willing lenders, easy refinancing and a market for mortgage-backed securities. Knock out even half of these pillars and the house comes crashing down. We've knocked out all of them. Yet everyone hopes that this allegorical house can defy gravity and that bubble-era prices can be sustained in a post-bubble world."
Thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Getty Images
 The next time you are trying to impress your friends by telling them how much bad debt America's banks are choking on (It's $400 billion, I tell you!), you can trot out this new estimate: $1 trillion. Yes, that's trillion with a "t." A thousand billion, if you prefer.
Bloomberg News: "Yes, $1 trillion is the amount of defaults and writedowns
Americans will likely witness before they emerge at the far side
of the bursting credit bubble, estimates Charles R. Morris in his
shrewd primer, 'The Trillion Dollar Meltdown.' That calculation
assumes an orderly unwinding, which he doesn't expect.
More: "'The sad truth,'' he writes, 'is that subprime is just the
first big boulder in an avalanche of asset writedowns that will
rattle on through much of 2008.''
Where is Carl Sagan when you really need him?
Thoughts? Comments? Email story tips to peter.viles@latimes.com.
Photo Credit: Amazon.com
News item: Newsday reports that longtime Hillary Clinton aide and fixer Maggie Williams made $200,000 working for a now-bankrupt sub-prime lender that was known for marketing high-fee loans to low-income borrowers. The lender, Delta Financial Corp., hired Williams to improve its crisis-management operation after state and federal investigations led the company to pay $12 million to borrowers.
I've been hoping for an item like this so that I could climb up on my high horse and make a few political points. First, let's be honest about why Delta Financial hired Maggie Williams: they hired her because she is known and respected by the Clintons and other important Democrats (she was recruited by a former New York City politician). She was hired as a political fixer. Someone who could pick up the phone and get a United States senator on the other end.
Second, the Clinton connection is a reminder that sub-prime lenders had friends and defenders in both parties. There is a bit or revisionist history running around right now that claims Democrats tried to rein in sub-prime lenders. Yes, a few state attorneys general did try. But the Democratic Party in Washington was deep into this mess, cheering just as loudly as Republicans were for the "rise in homeownership levels." The responsibility for years of criminally weak regulation of mortgage lending rests with both political parties.
True, the mortgage mess now has become a partisan issue, with Democrats advocating aggressive government intervention and new regulations on lenders. But let's not confuse that with history, and how we got here. And let's remember, the lenders, builders, the banks may be dumb, but they're not stupid: they have plenty of friends in both parties today, massaging legislation and regulation as we speak.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: AP
If you're up for some pragmatic, pro-bailout, big-picture thinking, check out this interview with PIMCO economist Paul McCulley. I'll summarize and highlight, but encourage you to read it for yourself.
McCulley's take on real estate right now is that no-money-down, underwater homeowners are making a rational business decision by walking away from their mortgages (where have we heard that before? From readers of this blog). "When you have no skin in the game ... it’s eminently rational to go into early payment default." This, McCulley argues, is creating a deflationary spiral in home prices.
One problem with a deflationary spiral like this, he argues, is that smart buyers (of homes) refuse to buy into it. Who wants to catch a falling knife? So prices continue to fall. But won't investors buy the homes as rental properties at some point? McCulley says prices are so far above that point that the decline would be hellish: "That would conceptually be your
floor, but that is so far away from here that the economy would have to
go through absolute hell to reach that point."
The solution? Like many others, McCulley looks favorably on the Barney Frank proposal, in which banks would write down problem loans rather than foreclose, and then the government would guarantee new loans at lower amounts, in hopes of keeping underwater buyers from walking away. Is it a bailout? McCulley says it is -- it puts taxpayers are risk in the likely case that the re-written loans go bad. McCulley: ".. The inequities smell to
high heaven, and that is one of the huge problems in dealing with it.
It runs against the streak of basic fairness in a lot of Americans.
You’re going to provide a handout to the fool. The fool is going to be
rewarded and I, the taxpayer, will be put at risk at the margin for
that handout to the fool. When all I did was exactly what I was
supposed to do. Where is the fairness here? It’s a hard question to
answer."
Thoughts? Comments? Email story tips to peter.viles@latimes.com.
Hat Tip: TW
News item from the L.A. Times: "The top two executives of beleaguered Countrywide Financial Corp. will pocket $19 million in stock next week, according to a regulatory filing. It's the start of a series of multimillion-dollar payments expected to go to the pair before and after the company's pending takeover by Bank of America Corp."
More: "The largesse for Countrywide Chief Executive Angelo Mozilo and President David Sambol drew immediate fire from Sen. Charles E. Schumer (D-N.Y.), a member of the Senate Finance Committee, whose members have been debating the merits of a government bailout of consumers and mortgage lenders caught in the sub-prime meltdown.
"It's perverse [emphasis added] for Bank of America to reward the principal architects of the bad business practices that caused this housing crisis," Schumer said in a statement. "Bank of America will hopefully correct the bad practices Countrywide put in place. But enriching people who specialized in deceiving borrowers for the sake of their bottom line will not help that cause."
Also: "Bank of America Corp. will pay $28 million to Countrywide Financial Corp. to chief operating officer David Sambol to retain him as head of the merging companies' consumer mortgage operations."
The headline is a cheap shot, I'll admit -- anytime you're quoting Chuck Schumer in a headline, it's a low blow. But in all seriousness: Do you mean to tell me David Sambol is uniquely qualified to lead Countrywide after Bank of America buys it? I mean, I'm sure he's good at his job. So was Karl Dorrell, but UCLA found another football coach. So was Grady Little, but the Dodgers found another manager.
This is the Countrywide management team that says no one predicted the mortgage crisis; these are the guys who said last summer that Countrywide would benefit from the mortgage meltdown. Then they went out and lost $1.2 billion in the third quarter, lost $442 million in the fourth and sold the company for a fraction of its previous value. And this is the very best management team Bank of America can find?
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
 As another week draws to a close, L.A. Land looks forward to a mellow spring weekend in Los Angeles. This is the season when trees flower by the tens of thousands, draping the urban forest in a sweet-smelling blanket. Pieter Severynen on one of the trees that makes this "fragrance time" in Southern California:
The Victorian Box – Pittosporum undulatum
"Early spring is fragrance time in Southern California: You step outside and if you are lucky you smell a strong orange blossom aroma in the air. If so, look around to see if a Victorian box is blooming nearby. For a few weeks the tree is covered with extremely fragrant tiny white flowers. Not a spectacular or a superlative tree, the Victorian Box instead is a dependable, quietly beautiful performer. A medium-sized, round-headed, evergreen tree from southeast Australia, which is also called mock orange, it grows fairly fast initially to 15 feet tall; then slows down to eventually reach 30-40 feet tall and wide. The glossy leaves are light green when they first emerge, gradually turning a darker shade of green. To 6 inches long, they are lance-shaped and wavy-edged. Thin brown bark covers the trunk. That sweet fragrance is a characteristic the tree shares with other members of the family, such as the Willow and Queensland Pittosporums from Australia and the South African Cape Pittosporum.
"While good as a closely planted screen or windbreak, the tree looks best when standing alone and pruned periodically to enhance its form. It loves full sun to partial shade and low-to-moderate water. Its drawbacks are hard, small, inedible, orange fruits with sticky seeds; abundant drop of leaves that may be allelopathic (poisonous to other plants); and roots that become invasive with age: Best to keep it away from pavement. But one major problem has emerged that overshadows all others: The tree becomes invasive in favorable climates. It has turned into a weed in parts of Australia, South Africa and California, and in Hawaii, the Caribbean and Pacific islands, where it invades disturbed soils. We would be wise to select safer substitutes in our new plantings."
Thanks, Pieter
E-mail Pieter: plseve@earthlink.net
Thoughts? Comments?
Photo Credit: The city of Monterey Park
 Breaking news from Reuters: "Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments -- potential relief for tens of thousands of struggling debtors."
More: "Sheriff John Green said he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period. His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes."
The story raises questions: First, is this action legal? If I'm running a large bank and I'm trying to get my hands on houses so I can put them on the market before they fall further in value, I might want the houses now. Second, will other municipalities follow suit? My guess is that the answers are no and yes, in that order.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Philadelphia Mayor Michael Nutter, by AP.
Recently I had a conversation with a fellow journalist about government efforts to ease the mortgage crisis. I was explaining to this person that mainstream media accounts of the issue very often ignore the anti-bailout sentiment that dominates blogs like this one. The journalist was confused. Opposition to a bailout? Here in liberal L.A.? On a blog on the L.A. Times website? "Your readers must be rich," she told me. If I had been drinking coffee, I would have spit it out. I explained that, no, as far as I know, that's not the case. In fact, many of them can't afford to buy a house in Los Angeles, and they're upset (not the word I used) at government efforts to support inflated housing prices in one of the nation's least-affordable housing markets. With that conversation in mind, I pass along an e-mail I received this morning: "Along with NationalBubble.com and Patrick.net, I invite you to join our efforts to stop the planned government bailout of the housing industry. We believe that it is not the government's role (i.e., not the taxpayer's burden) to bailout irresponsible lenders, brokers, and borrowers. "Accordingly, we have created a website www.StopTheHousingBailout.com (currently hosted on NationalBubble) that is designed to be a clearinghouse of information for a movement against the bailout. The website is in its infancy, but currently consists of a statement why the bailout is wrong and several links to efforts to stop the bailout (e.g., a petition, a pledge, anti-bailout apparel, links to contact political representatives, etc.). "We ask that you consider joining forces with us to stop the bailout. A band of bloggers against the bailout can be a powerful political weapon. Moreover, a united front will present a newsworthy story for the media. By banding together against this ill-advised bailout, we can be heard beyond the readership of our collective pages and make a difference. Together, we can present a stronger message than the sum of our individual voices." Your thoughts? Comment? E-mail story tips to peter.viles@latimes.com
 An update tonight on 3 Magnolia Drive, a foreclosed house owned by a bankrupt lender that was put up for auction on March 15 ... and still hasn't sold.
It's a nice enough house: 4 bedrooms, 3 baths, 3,238 square feet, in the Ladera Ranch section of Orange County. Built in 2003, it sold for $1.2 million in 2005, and went into foreclosure last year.
I reported last week that, at the auction at the Fairplex in Pomona, George and Kim Sarantos were the high bidders for the house at $705,000. Trouble is, the company servicing the loan on the house -- American Home Mortgage -- didn't accept their bid, and countered with a higher price, asking $40,000 more, according to Kim Sarantos. After some haggling, and some frustration, she and her husband walked away.
"We just said, 'forget it,' " Sarantos said tonight. "It's not worth it to us."
American Home Mortgage -- which is in bankruptcy -- has the house listed on its website for $885,000. Because auction buyers agree to pay a 5% premium to the auctioneer, the true cost of the Sarantoses' bid was about $740,000. Because they felt they would have to put up even more money for some repairs and maintenance, they didn't want to pay much more than that.
"The house needs work, and by the time we pay all the closing costs, it's over $800,000, and it's just not worth it," Sarantos said. "This isn't going to be the last house out there for us. We didn't lose any sleep over it."
Thoughts? Insights? E-mail story tips to peter.viles@latimes.com.
 As promised, the blog is retracing the housing bubble in hopes of better understanding where we are today and how we got here. This is not meant to be a definitive history, but a rough outline for discussion. I'll likely add to these posts with more information, anecdotes, and statistics, partly at your suggestion.
1997: The housing bubble begins to take shape in Southern California as median home prices slowly begin their long rise. In celebrity news, the L.A. Times' Hot Property reports that Brad Pitt (pictured) has bought a two-bedroom, 2,200-square-foot house in the Hollywood Hills for about $400,000.
According to DataQuick's tracking of median sales prices in Southern California, prices bottomed at $146,000 in January of 1996 and again in February 1997, ending a five-year slide. Prices across the region then began a historic, 10-year rise, peaking at $505,000 in March of 2007, a rise of 246%. Had prices over that period only matched inflation, as measured by the consumer price index, median home prices would have peaked at about $189,000 in 2007.
1997 at a glance: Median sales prices rose $12,500, or 9.8%; inflation that year, as measured by the CPI, was 1.7%.
Month SoCal median sales price % change y/y %change from bottom
Jan. $147,500 1.0% 1.0%
Feb. $146,000 -1.0% 0.0%
March $152,500 1.6% 4.4%
April $152,000 1.3% 4.1%
May $155,000 2.6% 5.5%
June $156,500 2.0% 7.2%
July $155,000 2.0% 5.5%
Aug. $159,500 4.6% 9.2%
Sept. $160,000 5.3% 9.6%
Oct. $158,500 5.7% 8.6%
Nov. $160,000 6.7% 9.6%
Dec. $162,000 8.0% 11.0%
Your thoughts? Suggestions? Insights? E-mail story tips to peter.viles@latimes.com.
More on Brat Pitt: The home Pitt bought in early 1997, fresh from proposing to Gwyneth Paltrow in Argentina, was the third he had purchased in the same gated enclave.
Photo Credit: CP.
Transcript of prepared remarks delivered Thursday by Sen. Barack Obama on housing and the economy, as posted on www.barackobama.com:
"I want to thank Mayor Bloomberg for his extraordinary leadership. At a time when Washington is divided in old ideological battles, he shows us what can be achieved when we bring people together to seek pragmatic solutions. Not only has he been a remarkable leader for New York –- he has established himself as a major voice in our national debate on issues like renewing our economy, educating our children, and seeking energy independence. Mr. Mayor, I share your determination to bring this country together to finally make progress for the American people."
Click below to read the rest of the speech.
Read more Transcript: Sen. Obama's speech on housing »
 Sen. Barack Obama joins the housing speech parade today with what appears to be a difference-splitter: more government action and intervention than John McCain proposed this week, but not as much as Hillary Clinton favors.
Read the entire Obama speech here.
Reuters, via CNBC: "Democratic presidential candidate Barack Obama called for greater government regulation of the U.S. financial system Thursday and proposed a new $30-billion economic stimulus plan to help homeowners. ... He proposed a $30-billion stimulus plan that would provide relief to areas hardest hit by the housing crisis, and an extension of unemployment insurance for those out of work."
L.A. Times: "Democratic candidate Barack Obama ... called for reform of the nation's regulatory system, immediate relief for homeowners caught in the sub-prime mortgage crisis and a $30-billion stimulus package to boost the economy. 'If we can extend a hand to banks on Wall Street, we can extend a hand to Americans who are struggling through no fault of their own,' he said."
On this language, McCain, Clinton and Obama agree: They support aid to the blameless. Who doesn't? The idea that there is some discrete group of blameless, faultless borrowers is a convenient piece of Washington fiction that ignores recent history. Everybody in this mess made mistakes. Borrowers took out loans they didn't understand to buy houses they couldn't afford. Some borrowers understood the risks they were taking; some didn't. Lenders made spectacularly bad loans because someone (Wall Street) was stupid enough to buy the loans. Washington witnessed the entire train wreck and declared it a good thing as it was happening, and only now sees the wreckage.
It's hard to see how an intelligent government response will somehow emerge from collective ignorance of what happened.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Getty Images
Today's earlier post on the dramatic median price decline in California was linked by The Drudge Report, and many of you commented on how the Drudge audience changed the tenor of the comments section. Yes, it's a different crowd.
But I learned something from it: I received quite a few e-mails complaining that the post lacked historical context, because it failed to mention, or quantify, the huge run-ups in prices in California that preceded the decline. At first, I reflexively dismissed that criticism -- all of us are well aware of where we stand in the cycle. Then I thought about it, and it struck me that a number of regular readers have made the same complaint recently.
You're right -- this blog needs a bit of a history lesson. I'll start with a modest one tonight, and, with your guidance, keep at it until we've put together a workable history of the bubble.
Tonight, the big picture. In June of 2000, DataQuick reported that median sales prices in Los Angeles had reached $203,000 -- finally reaching the levels of the previous peak, in May of 1991. Though I think a history of the bubble probably goes back to 1997 or so, when prices started rising from the bottom of the previous cycle, June 2000 will do for tonight:
Month/Year Median home price in LA Y/Y % Change
June 2000 $203,000 2.5%
June 2001 $228,000 12.3%
June 2002 $269,000 18.0%
June 2003 $313,000 16.4%
June 2004 $414,000 32.4%
June 2005 $475,000 14.7%
June 2006 $517,000 8.8%
June 2007 $545,000 4.8%
Feb. 2008 $460,000 -12.9%
Thoughts? Comments? Aspects of the Bubble History you'd like to see? I'll try to post more tomorrow.
Email story tips to peter.viles@latimes.com.
Photo Credit: AFP
 From The LATimes: "Driven by a 'brazen obsession' with generating sub-prime mortgages,
Irvine's New Century Financial Corp. engaged in improper accounting
that overstated its profit and allowed top executives to reap millions
of dollars in inflated or undeserved bonuses, a U.S. Bankruptcy Court
examiner said in a report released Wednesday.
More: "Michael J. Missal's report said senior managers 'turned a blind eye' to
the 'ticking time bomb' created by the high-risk lending in 2005 and
2006. At the same time, Missal said, New Century's auditor, KPMG,
contributed to the problems by failing to exercise due care in
reviewing its books, leading to material misstatements in New Century's
financial reports."
From The New York Times:
"In a sweeping accusation against one of the country’s largest
accounting
firms, an investigator released a report on Wednesday that said
'improper and imprudent practices' by a once high-flying mortgage
company were condoned and enabled by its auditors."
KPMG denies the accusations in the report, which was commissioned by the United States Trustee overseeing the New Century bankruptcy.
Your thoughts? Comments? Email story tips to peter.viles@latimes.com
Photo Credit: New Century Financial's Irvine headquarters, in a file photo from May 2007, via L.A. Times
Transcript of Sen. John McCain's March 25 speech on housing, as prepared for delivery, from www.johnmccain.com.
"Thank you for joining me here today. I just returned from a trip overseas that included assessing the state of affairs in Iraq, the Middle East, and Europe. I will have more to say on those important issues in the days and weeks to come.
While I was traveling overseas, our financial markets experienced another round of upheaval. This market turmoil leaves many Americans feeling both concerned and angry. People see the value of their homes fall at the same time that the price of gasoline and food is rising. Already-tight household budgets are getting tighter. A lot of Americans read the headlines about credit crunches and liquidity crises and ask: 'How did we get here?' In the end, the motivation and behaviors that caused the current crisis are not terribly complicated, even though the alphabet soup of financial instruments is complex. The past decade witnessed the largest increase in home ownership in the past 50 years. Home ownership is part of the American dream, and we want as many Americans as possible to be able to afford their own home. But in the process of a huge, and largely positive, upturn in home construction and ownership, a housing bubble was created."
Click below to read the rest of the speech.
Read more Transcript: Sen. McCain's March 25 speech on housing »
A transcript of Sen. Hillary Clinton's speech on housing and the economy, delivered March 24 in Philadelphia. The transcript, from www.hillaryclinton.com, is of her remarks as prepared for delivery.
"Thank you. Thank you. It’s great to be back here at Penn and in Philadelphia. I remember giving the commencement address here some years ago and I always had that image of the beauty of this campus and, of course, its extraordinary reputation. And I’m delighted to have a chance to be here with you to talk about an issue that is critical not only to Pennsylvania but to our country.
Click below to read the rest of the speech.
Read more Transcript: Sen. Clinton's March 24 speech on housing »
 Important speech from the Treasury Secretary (pictured) today: "Housing prices need to fall further to permit shell-shocked housing markets to stabilize and policy-makers should not interfere with that process, Treasury Secretary Henry Paulson said on Wednesday."
More from Reuters via LATimes.com: Treasury Secretary Henry Paulson "... said regulators including the Federal Reserve were 'vigilant' and doing everything they could to minimize damage to the economy but played down the value of a more direct government role."
The entire speech is here:, but I've taken the liberty of cutting and pasting the section in which Paulson addresses housing prices:
"The housing downturn and the surrounding uncertainty are significantly impacting our financial institutions and capital markets. However, we should not lose sight of the fact that this downturn was precipitated by unsustainable home price appreciation which was particularly pronounced in a relatively few regions. A correction was inevitable and the sooner we work through it, with a minimum of disorder, the sooner we will see home values stabilize, more buyers return to the housing market, and housing will again contribute to economic growth. Having stability in housing markets will in turn contribute to better conditions in credit markets for mortgage-backed securities.
More, "Data releases every month create headlines about declining housing sales, starts and prices. Yet, declines are exactly what we should expect during a correction. It takes time to work through the excess inventory – and we are. The question many are asking is how deep the correction will be and how long it will last. ...
Read more Paulson: Let housing prices fall »
 Signs of distress are piling up in the California housing market, where prices are falling at three times the national rate of decline.
--Statewide, median sales prices fell by a stunning 26% from year-ago levels in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed's interest rate-cutting campaign "will have little near-term direct effect on the housing market."
--In the San Fernando Valley, losing a home to foreclosure is now almost as common for families as buying a home. The L.A. Daily News: "During January and February, there were 1,084 foreclosures and 1,335 sales of houses and condos in Valley communities from Glendale to Calabasas, according to the San Fernando Valley Economic Research Center at California State University, Northridge."
"It's bad. It's really bad," market analyst Nima Nattagh told the Daily News.
The California Association of Realtors reports median prices fell 27.2% from year-ago levels in the hard-hit Inland Empire east of Los Angeles, 30.9% in Sacramento, and 39.1% in Santa Barbara County.
On a percentage basis, the California price meltdown is more than three times as severe as the national decline of 8.2% in median prices reported this week by the National Association of Realtors. On an absolute basis, the California meltdown is even more severe: Nationally, prices fell over the past year at a rate of $338 per week; in California, prices fell at a rate of $2,788 per week.
According to the CAR, "The median sales price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2 percent decrease from the revised $554,280 median for February 2007." The February 2008 median price fell 4.8 percent compared with January’s revised $429,790 median price.
"The Federal Reserve Bank’s recent action to reduce the federal funds rate will have little near-term direct effect on the housing market," said CAR Vice President and Chief Economist Leslie Appleton-Young. "However, Fed rate cuts should result in more favorable real estate finance rates as we move through the year."
Read more California freefall: Home prices down 26% in February »
Earlier I wrote that it was hard to pick a headline out of Sen. John McCain's housing speech today, and tonight I stand corrected, by The New York Times: "Drawing a sharp distinction between himself and the two Democratic presidential candidates, Sen. John McCain of Arizona warned Tuesday against vigorous government action to solve the deepening mortgage crisis and the market turmoil it has caused, saying that 'it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.' "
A long headline, but a good summary of an important speech.
More: "... in a departure from Democrats, who have focused on the lending industry’s role in the crisis, Mr. McCain suggested that some homeowners had also engaged in dangerous practices, including borrowing too much in hopes that a rising market would cover their mortgages."
Key quotes from the speech, which you can read in its entirety here:
--"But in the process of a huge, and largely positive, upturn in home construction and ownership, a housing bubble was created. ... The normal market forces of people buying and selling their homes were overwhelmed by rampant speculation." Comment: It was a bubble -- sounds obvious, but you didn't hear this from Sen. Clinton yesterday; her lengthy analysis of the housing problem failed this pass-fail test of intellectual honesty.
--"Some Americans bought homes they couldn't afford, betting that rising prices would make it easier to refinance later at more affordable rates. There are 80 million family homes in America and those homeowners are now facing the reality that the bubble has burst and prices go down as well as up." Comment: Again, sounds obvious, but Clinton's speech treated falling prices as a crisis to be stopped, not a reality to be faced.
Read more More on McCain's housing speech »
Sen. John McCain has just finished a speech in Santa Ana about the economy and the housing crisis, and I'll be darned if I can spot the headline right now. Reuters leads with "McCain seeks solutions to housing crisis."
Don't we all?
Bloomberg News focuses a single line in the speech: "Republican presidential candidate John McCain said a government bailout of banks should be based 'solely on preventing systemic risk' and not on helping
financial and property speculators."
Here's the Reuters lead: "Republican presidential candidate John McCain, looking to bolster his economic credentials, called on Tuesday for
quick meetings of mortgage lenders and accountants to begin to tackle
the U.S. housing crisis. McCain, who has been criticized as weak on the economy, said he was
open to a variety of solutions to ease problems in U.S. housing markets
but did not specify an immediate approach."
The line that wants to be a headline: "I have always been committed to the principle that it is not the duty
of government to bail out and reward those who act irresponsibly,
whether they are big banks or small borrowers," he said.
On first read, it appears the speech leaves open the possibility that McCain will embrace one of the ascendant myths in Washington right now: that government is capable of carefully crafting a bailout for the blameless.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Getty Images
This morning's Case-Shiller home prices report shows prices fell by 16.5% in Los Angeles over the past year -- one of the steepest levels of decline in the nation. It also shows that Los Angeles no longer has the distinction of having America's biggest housing bubble -- that honor now goes to Miami.
More data from the report, which many analysts consider the most accurate measure of home prices because it tracks individual houses over time:
--Price declines in Los Angeles are accelerating. Prices fell 3.1% from November '07 to December '07, and 3.7% from December '07 to January '08.
The weakest housing markets in the nation, according to the report:
1) Miami -19.3%
1) Las Vegas -19.3%
3) Phoenix -18.2%
4) San Diego -16.7%
5) Los Angeles -16.5%
Composite for 10 largest cities: -11.4%
The biggest price bubbles in America, as measured by price increases since 2000:
1) Miami 225.4
2) Los Angeles 224.4
3) Washington DC 212.8
4) New York 200.5
Thoughts? Comments? Email story tips to peter.viles@latimes.com.
 Recommended reading: The "dust-up" in the L.A. Times Opinion section pitting consumer advocate Paul Leonard against economist Christopher Thornberg.
Leonard argues that Congress should rework bankruptcy laws so that homeowners, who were sucked into an unregulated world of reckless lending, can renegotiate their mortgages in bankruptcy proceedings.
In response, Thornberg argues that borrowers have only themselves to blame, and should not receive special breaks. You've heard that argument before -- sputtered angrily on the comment section of housing blogs like this one -- but rarely from an accomplished economist. I recommend you read the whole thing, but here are excerpts:
Thornberg writes: "At their root, all bubbles are driven by individual greed -- the desire to make money."
"Think of it this way: Every buyer over the last few years had a choice: Buy a home or rent an apartment until income was more in line with prices. Many leaped into the housing market even as prices climbed to such high levels because they thought they could sell at a higher price. To a degree, they were all speculators. ... This isn't a sub-prime problem; it's the same old greed problem on sub-prime steroids."
"No one likes to think of a family thrown out of a house. But many people made a very unwise decision in recent years: They bought a house they couldn't possibly afford. ... Now that the house of cards is falling, all parties are taking a hit. But it all started with buyers who bought something they couldn't afford and listened to the words they wanted to hear to help themselves justify that bad decision. You can't have a lender without a borrower. To single out that one party as the hapless victim is to distort the true situation. Everyone had a choice -- and still has one. If you can't afford to buy, you rent."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: A foreclosed house in Lake Elsinore, courtsey of Richard Novak.
 Median listing prices in greater L.A. fell another $4,900 over the past week and have now fallen a stunning $119,666 -- or 21% -- from their peak in April 2006, according to Housing Tracker's analysis of MLS listings.
Highlights:
--Median listing prices fell to $460,000, a decline of 2.1% in the last month and 16.2% in the last year.
--The inventory of unsold houses and condos declined to 41,934, which is 27.2% ahead of last year's levels.
Date Median listing 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)
10/07 $510,000 46,603 (up 15.6% y/y)
11/07 $499,900 46,503 (up 19.0% y/y)
12/07 $495,000 (down 10.0% y/y) 43,174 (up 28.2% y/y)
1/08 $479,900 (down 12.6%) 40,850 (up 33.3% y/y)
2/08 $475,000 (down 13.5%) 43,625 (Up 38.3%)
3/10/08 $465,500 (down 15.4%) 41,838 (Up 32.3%)
3/17/08 $464,900 (down 15.5%) 42,098 (Up 31.4%)
3/24/08 $460,000 (down 16.2%) 41,934 (Up 27.2%)
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: L.A. Times
 Sen. Hillary Clinton (pictured) made a political speech today about the foreclosure crisis, and as a political effort, it may prove fairly successful for her. But, thankfully, this is not a politics blog, so my analysis can largely ignore politics and stick to housing and economics.
Of the three presidential candidates, Clinton's fix is the most aggressive -- the biggest bailout, if you will. That makes it the most offensive to those who believe the solution to artificially inflated housing prices is, yes, a period of declining housing prices. Instead, she says the government should get ready to start buying mortgages: "... I believe the Federal Housing Administration should also stand ready to be a temporary buyer -- to purchase, restructure, and resell underwater mortgages."
She also proposes a freeze on foreclosures and a $30-billion fund so that cities and states can start buying foreclosed and "distressed" properties for possible resale or rent (Imagine the bungling, the fraud, and the favoritism, if the city of Los Angeles -- which can't even keep track of foreclosed houses -- gets a pile of federal money to start buying them).
The headline-grabber was the suggestion that the president assemble a group of economic geniuses -- an "emergency working group on foreclosure." She suggested, evidently with a straight face, that the group would be led by "nonpartisan" economic leaders like former Treasury Secretary Robert Rubin.
Now, Bob Rubin is a smart guy and all that, but he served in a Democratic administration, which his not a bad thing, but is not "nonpartisan." Further, he works for a company, Citigroup, that, as Fortune recently reported, "has written down more than $24 billion in losses due in large part of greed, cynicism, and bad judgment." Citi has been so wounded by the mortgage mess that Rubin had to jump on a plane and fly halfway around the world to ask the government of the United Arab Emirates for money. This is a nonpartisan figure capable of objectively analyzing the mortgage crisis? This is like putting Snoop Dogg on an anti-drug panel.
Clinton manages to acknowledge that reckless borrowers bear some responsibility for the housing mess, but can't bring herself to call it what it is: the inevitable unwinding of a bubble of unsustainably high prices and disastrous lending against those prices.
Read more Hillary on housing: Clinton's foreclosure bailout plan »
 Update from the Los Angeles Fire Department blog: "Fire was 'accidental,' sparked by welders torch. Loss being tabulated."
From the the L.A. Times on the fire on the construction site at the Warner Center: "It took about 200 firefighters just over an hour to extinguish a fire at a five-story condominium complex under construction at Warner Center in Woodland Hills, fire officials said."
More: "The structure, which is about a block long, was failing in some places because of the fire, LAFD spokesman Brian Humphrey said."
For the record, commenter Michael Snyder had this story nailed before noon, when he wrote, "From the picture and the area the fire allegedly started my money's on either a roofer's torch or an overheated tar kettle. Roofers use that infamous stinking kettle to soften the tar used to seal flat roofs and that material will flash into flame. The torch us used to melt hardening tar so it will flow & seal the roof." Thanks, Michael.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: KTLA
 Update: Home sales showed unexpected signs of life nationally in February, prompting talk that the housing market may be nearing a turnaround.
The AP: "After falling for six straight months, sales of existing homes posted
an unexpected increase in February which may have reflected more
aggressive price cutting by sellers in some parts of the country, a
real estate trade group reported."
More, from the AP: "Analysts cautioned against reading too much into the one-month rise in
sales. Many economists are predicting that the steep slump in housing
will not bottom-out until later this year after prices fall further and
allow huge levels of unsold inventories to be reduced."
An important local reminder: We've already seen the results for February sales in Los Angles, and there was no hint of a rebound in the February statistics from DataQuick: February sales in Los Angeles County were 45% below year-ago levels, and median sales prices were down 12.9%. So if you see some glimmer of hope in today's national numbers, remember, the L.A. numbers for February were awful.
More on today's numbers, from Reuters: "The pace of existing home sales in the United States rose in February to a 5.03 million-unit annual rate. ... February broke a six-month streak of decreasing home sales."
On prices: "Prices took a record fall ... an 8.2% decline in median home prices from a year ago. That drop to $195,900 was the sharpest since the trade group began keeping records in 1968."
The pace of annual sales rose from 4.89 million in January to 5.03 million in February, which is 24% below last February's pace of 6.60 million sales.
The National Association of Realtors' news release is here, including analysis from association economist Lawrence Yun: "We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said. “Buyers taking advantage of higher loan limits for both [Federal Housing Administration] and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.”
Your thoughts? Comments? E-mail story tips to peter.viles.@latimes.com
The L.A. Times finally warms to the "big bailout is coming" story this morning, reporting in a front-page story, "Housing bailout gains backers." The story by business ace Michael Hiltzik summarizes recent developments nicely and concludes the Barney Frank plan is "perhaps the one with the most political clout behind it."
Agreed: When Congress is through with it, the Frank plan will become a Christmas Tree in July bearing all manner of goodies for the homebuilding industry (tax incentives to buy now!), local governments (money to create new bureaucracies to buy and manage foreclosed properties!) and on and on. The biggest giveaway will likely be to the biggest industry, financial services, which will unload bad mortgages at subsidized prices and probably get massive tax breaks on past income.
The story repeats one of those Washington half-truths ("border security!") that politicians seem to believe will somehow become true if only repeated again and again: "Any relief program will have to be carefully fashioned to focus only on deserving homeowners whose financial ills are no fault of their own."
A worthy but unrealistic goal; anybody in need of government help at the moment -- borrowers, lenders, builders, investors -- is there at least in part due to their own financial mistakes and miscalculations. No one's in this sinking boat through "no fault of their own."
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo Credit: Submitted to Your Scene on LATimes.com by
 Good morning, and Happy Easter in advance. Today, the third in Pieter Severynen's inspirational three-part essay about California's superlative trees -- he's told us about the oldest, the biggest, and now, the tallest. Enjoy.
The Coast Redwood – Sequoia sempervirens
"The Coast redwoods thrive in the thickest part of California’s fog belt, where each summer day cool fog moves onto land from the ocean. In this 5- to 45-mile-wide strip of land, stretching 470 miles from Central California north to southern Oregon, the fog condenses on the branches and drips down onto the ground, supplying from 15% to almost half the water needs of these trees. Grouped in cathedral-like groves, each tree hosts many guests: some leaves fall onto branches below, decompose there into ‘canopy soil’, which supports dozens of epiphytic ferns high up in the air, accompanied by beetles, earthworms, millipedes and salamanders; herons, spotted owls, murrelets and other birds love to nest high in the canopy. The trees love company: root systems are extensive but shallow, and once the outer individuals of a cluster of trees have been cut down, strong winds may topple the rest. New trees sprout from cut stumps; many second-growth forests exist.
From a very fast 3-5’ a year initially, the trees gradually slow down, but they just don’t stop. They can attain 2,200 years of age and 23’ diameter at the base. ‘Hyperion’, the currently tallest tree, is located in the Redwood National Park; discovered and measured in 2006, it stands 379.1 ft. tall. It has several neighbors in the 350’ range. (The theoretical physical limit to tree growth is estimated to be 400-425’).
Redwoods grow well in Southern California: the more we approximate their native habitat (moist canyons, nearby stream, enough water), the better they will do. The tree grows into a beautiful symmetrical pyramid, with branches coming horizontally out of the trunk, and then curving up. Inch-long leaves are medium green on top, grayish green below; they grow in one plane, giving the branchlets a feathery look. Thick, fibrous red-brown bark on the trunk is fire resistant. Round brown cones are only 1-1 1/2” long."
Thanks, Pieter.
E-mail Pieter: plseve@earthlink.net
Comments? Thoughts?
Photo credit: Courtesy of the L.A. County Arboretum
 This one from the Financial Times is brief but you guys are smart, you'll get the idea: "Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis."
More: "Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets."
Start your weekend on the good foot by writing a caption for the above photo. My entry: "You're doing a heckuva job, Bennie."
Photo Credit: AP photo of, from left, Treasury Secretary Henry M. Paulson Jr., President Bush and Fed Chairman Ben S. Bernanke.
 What really happens at foreclosure auctions? I've posted an latimes.com video and a photo gallery that take you inside the foreclosure auction staged last week by DoveBid and Catalist Homes at the Fairplex in Pomona.
We focused on the bidding for the Orange County house at left: 3 Magnolia Drive in Ladera Ranch, probably the nicest house of the 75 homes that went up for auction. Four bedrooms, 3 bathrooms, it sold for $1.2 million in 2005, but in this market was put up for auction with a scheduled opening bid of just $429,000. Because the opening bid was so low, there was a spirited bidding war for the home.
I'd like to think the video is worth watching for the surprise ending -- which itself is an education in how foreclosure auctions work. Those of you who can't wait can click below and I'll explain what happened.
Read more Auction for Ladera Ranch: A foreclosure bidding war with a twist »
The recent post arguing that Los Angeles has split into two real estate markets -- the high-end, where prices are holding relatively steady, and everything else, which is deteriorating quickly -- generated a lot of comment, so I'm back with more.
This time I looked just at the ZIP Codes in L.A. County with 20 or more single-family home sales in February, according to DataQuick's analysis. Here they are:
Area/ZIP No. of sales Median Price decline from Feb. '07
Lancaster/93536 50 $258,000 -31.7%
Palmdale/93551 36 $308,000 | |
