From seven to six figures

What's worth a million? The market seems to be struggling now with that question. A few listings:

South Pasadena: 1908 Mission St. Listed at $899,000, sold in 2005 for $1.2 million.

Irvine: 5 Villager. Listed at $999,888, sold in 2007 for $1.15 million.

Laguna Niguel: 28791 Riki Ct. Listed at $990,000, sold in 2005 for $1.125 million.

Long Beach: 4141 Pine Ave. Listed at $865,000, sold in 2005 for $1 million.

Pasadena: 1930 Kaweah Drive. Listed at $939,000, sold in 2007 for $1.04 million.

Are these properties quirks, or signs of more price cuts to come in the upper end?

--Peter Y. Hong, Times staff writer

Photo: Associated Press

Comments? Questions? Email peter.hong@latimes.com

Comments

[tarbubble]

Wow, when I left town a month ago, there were folks on here insisting that the high end wasn't going to get hit. Then I come back to this. Are we now going to see a re-defining of what "the high end" is?

[yourkillingmelarry]

What you are seeing is a modest preview of 2009. These areas are the last bastion of the bubble and they will not hold. Period!

[dilbert dogbert]

The SIL and BiL just listed their condo in Napa at $500K down from $900K. Ouch!
They bought at $250K so maybe they were just a bit greedy?

[Clarence]

Sadly, even now (at least on the west side), $1M doesn't represent "the upper end"... at least not yet.

[mucker]

I think they are the cracks in the damn leading to the flood gates. Most of these listings are small reductions in price at those levels. I'd venture none of them will sell for asking and they will all be listed lower - and soon.

[RO]

1908 Mission is a short sale. I don't think that price means anything.

[Valley Observer]

Considering that at the peak an ordinary 50s tract house in the Valley could fetch $700K, I'm not sure that $1M really represents the upper end.

[Scott McIntosh]

I think there is some psychological factor that involves a price going from above 1 million to below a million. But in all reality its not different from something going from 1.5 to 1.2 etc..

In Westwood there has been 18 sales (single family homes) that sold in 2008 under 1 million dollars out of 82 total sales. Only 3 of them started with an original asking price above 1 million and sold below 1 million.

http://www.thewestwoodblog.com

[SoCalJim]

In our area, we see many houses that were originally listed at 1M-1.25M, and are now under the seven figures. And still sitting. One has dropped its price by 270k and is now under 1M. They bought awhile ago so they will still have a large profit. A second house that is larger than 3k sq ft was completely remodeled - new everything, inside and out. Bought back in '05 in the high 800s (before the remodel), was recently listed above 7 figures (probably an attempt to just get out with recouping remodel costs), now already dropped the price down to the 900s, and presumably a signficiant loss in just a year or two. When I visited the open house, the realtor simply said - "sign of the times, even 1M houses are dropping signficiantly." Indeed. When I visited a third open house in the area for the high 700s (in need of signfiicant work, somewhat small, and definitely not as nice an area) and remarked to the realtor there that we are now seeing much nicer, larger houses in nicer areas for the 800s-900s (totally remodeled) putting major pressure on avg houses in the high 700s, his only remark was - "but they are more expensive." Genius - if only I could live a life of such simplicity (and denial). But I guess that is the only response you can give when your livelihood depends on sales.

[E]

No...it wasn't Peter Hong I was asking for.

I'm still upset that he hasn't come clean with the flipper story and his botched fact finding.

[Pat]

In high end areas, banks are not willing to negotiate on price. Thus, short sales listings on ~$1,000,000 listings are pointless. Even on listings that are bank owned, banks are not willing to negotiate. Counter offers are typically for the full asking price. Let's see what happens this fall and winter.

[John Reece]

"...But I guess that is the only response you can give when your livelihood depends on sales..." Uh, the broker gets a commission regardless of the sale price. 6% of 900K vs. 6% of 1.1M is still a big hunk of change. It's like Eddie Murphy in 'Trading Places' told the Duke brothers: Ya'll just like bookies, huh? Fact is, economists have concluded brokers are more interested in getting a percentage of a deal sooner than in holding out for a percentage of a slightly bigger deal later. Or much, much later in today's market.

[anon]

First it's the outlying areas... then the more prestigious. I'm pretty sure the ex-Indymac folks living in South Pasadena/San Marino won't be making their mortgage payments soon.

I can see why the banks don't want these properties to go back to their 2001 levels, however inevitable. Billions more will be lost.

Who many major corporate headquarters are left in Los Angeles now? Certainly the banks and oil companies are long gone...

[poundpuppy]

I think the drop in home price is directly related to the increase mortagege interest rate. I do not believe current buyers are paying less per month vs. someone who bought a house in 2005. The mortgage rate has gone up by almost 1% since 2005. Dropping in overall loan size brings the payment to about the same income level/affordability.

A home is for life, it's hard to objectify it purely from an investment perspect. It sucks for people who's buy/sell cycle is less then a few years. For myself, I'm happy with home ownership and not renting.

[John D.]

The problem is that you can't look at a few examples and extrapolate anything. These houses could each be a product of (1) the initial buyer overpaying; and (2) the seller having to sell under pressure. If you look beyond anecdotes, to market wide data, you will probably see some 7 to 6 figure declines in areas of the valley and the oc. It certainly is not the case in the better areas of the Westside. Not saying it won't happen, but it just has not happened yet.

[mrincomestream]

Censorship is a bad thing...Peter

[frank]

LA is one thing, OC is another...in my part of south OC we are down about 20%, however it looks like year-to-year sales are up over 2007 and foreclosures/low end properties are getting sucked up...

[cary]

any idea what happened at the auctions for these lonb beach condos over the weekend? they were selling 30 units. ocean front.

http://la.curbed.com/archives/2008/07/long_beachs_west_ocean_two_to_auction_off_condos.php#more

[puckhead]

“Who many major corporate headquarters are left in Los Angeles now? Certainly the banks and oil companies are long gone...”

You are kidding right? Off the top of my head, here are some major companies that are either HQ or have major prescence in SoCal;

Disney/Cap Cities
Time Warner
Sony Entertainment
Paramount
Wellpoint
Aegon
Yahoo
Oracle
Nestle USA
Dole Foods
McDonnell Douglas
Occidental Petroleum
CB Richard Ellis
Universal
DirecTV
Toyota USA
News Corp

And that’s with about 1 minute of thinking off the top of my head.

[unomas]

A lot of these million dollar homes were never really million dollar homes. I go into the open houses and after going through it, I would go "That's it?" I feel gypped. A million dollar home is the one that just keeps me daydreaming days after the open house and I end up buying a lotto ticket at the end of the week.

[Expert]

Do you even know what a short sale is? That price says it all.

[Enlightenment]

We are not even close to the bottom yet. Get use to lower prices for the next 2 to 3 years!

[Marina]

Where is Peter Viles??

[Steve]

Cryiing I ain't. The homes in the primo areas of LA increased between 300% to 400% between 1995 and 2007. It was and still is an enormous bubble. None of the homeowners who reaped this windfall did a bit of work to earn that windfall. The LA Times reported that a quarter of the homes were bought for speculation.

Let it crash and bring reality back to the housing market. And then the ordinary person may have a chance to once again afford a decent home.

[The original RZ]

Based on how inflated house prices have become the last few years, I don't think the question should be "What is worth a million dollars?". Way too many regular family homes got up there in price and were sold for a million, but didn't deserve to be. I think a better question is, "What should be worth a million dollars?"