The Manhattan Beach price diet: Reduced by $800,000

A quickie from Manhattan Beach Confidential about the pressures on builders of high-end custom spec homes: 560 36th St., pictured at left, has been reduced in price by $800,000 since March, from $2.99 million to $2.19 million.

MB Confidential actually likes the house: "It's big – 4br/4ba and 3800 sq. ft., a good 500+ sq. ft. larger than the typical Tree Section newbie. And though it's sharply modern in style, we've always liked the warmth of some of the materials and the overall flow of the house.... Though the builder thought $3m to start was reasonable, just 2 months later, the price was already down $500k/-17% and the listing was screaming "please submit all reasonable offers!" (Listing price history taken from Redfin.)"

-- Peter Viles

Your thoughts? Comments?

Photo: Manhattan Beach Confidential

Buying versus renting at top football schools

Students at many college campuses around the country are back to school, and the bills are coming due. Wondering if there are some corners you could have cut?

Cyberhomes recently looked at 15 of the nation’s top-ranked football schools, including USC, to see if parents would be ahead buying a house nearby and collecting checks or paying rent to someone else. They found that it made more financial sense to rent in only four of the college towns.

Los Angeles is one of those markets. A monthly mortgage payment on a single-family home in the area, according to Cyberhome's research, is $3,163, versus only $2,270 for rent. After USC, other school markets where renting beats buying include the University of Oregon and Fresno State.

So which of the college markets look best for buyers? Penn State, the University of Oklahoma and the University of South Florida.

-- Lauren Beale

Your thoughts? Comments?

Photo: Move-in day at USC. Credit: Francine Orr / Los Angeles Times

L.A. story: Was $545,000, now $125,000

Back story: Earlier this week I blogged about a foreclosed house that had been reduced 57% in price from its peak sales price to its current asking price. In response, commenter "E" maintained that 57% was no big deal and that he could easily find a foreclosed house discounted 75% or more. Taking up the challenge, I responded that if he could find the house, I would drive over and take a picture of it.  No slouch, "E" quickly found this listing from Redfin.com.

So about two hours ago I motored over to Highland Park and shot the picture you see. By my math, the house is being offered at a discount of 77% from its peak sales price, but it's a listing that raises a few questions. I'll explore them below.

Frank Lloyd Wright homes for sale

Finding a Frank Lloyd Wright-designed home for sale in Southern California is unusual, but a number of the architect's houses are available across the nation.

Last Sunday's Home of the Week featured the Millard House, a.k.a. La Miniatura, in Pasadena, which is on the market for $7,733,000. The textile-block creation has four bedrooms and four bathrooms.

Now the Wright-designed Fawcett Residence in Los Banos, in the middle of California, is being marketed for $2.7 million. There are five bedrooms, a Japanese garden and 80 acres that support produce should the rural life appeal.

Both homes and more than a dozen other properties for sale that were designed by the architect are listed at the website of the Frank Lloyd Wright Building Conservancy.

The bulk of the listings are in Illinois, with Minnesota and Michigan also having respectable showings. The next priciest after the 1923 Pasadena gem is the 1909 Alpine Meadows Ranch, which includes 255 acres for the money, set in Darby, Mont. The least expensive on the site is the 1957 Carl E. Schultz House in St. Joseph, Mich., for $655,000. It has Wright's hand-signed tile at the front door, 3,850 square feet of living space and 170 feet of frontage on the St. Joseph River. That's a lot of bang for the buck.

-- Lauren Beale

Your thoughts? Comments?

Photo: The Wright-designed home and acreage in Los Banos, Calif., includes a pool, workshop, tractor bay and a Walnut orchard. Credit: Scott Mayoral

Shipping-container homes: Weird, yes, but viable?

The home at right, built largely of shipping containers in Redondo Beach by Manhattan Beach-based DeMaria Design, has created a fair amount of buzz. Fair enough, it's kind of cool. But is it a gimmick or the basis for a commercially viable homebuilding business?

MSN.com Real Estate reports that architect Peter DeMaria will soon find out. He is launching Logical Homes, which, MSN reports, "will offer nine different models of container homes on lots around Southern California."

More: "DeMaria says he has 10,000 people on the interest list for Logical Homes once it launches in coming weeks.... The price tag for all this eco-chic? DeMaria's homes average around $150 to $200 per square foot, compared with about $220 to $250 for much of the traditional building in the area."

My 2 cents: Some buyers are interested in a house with a history; but what if the history consists of shuttling back and forth between China and Long Beach carrying television sets one way and scrap cardboard the other?

-- Peter Viles

Your thoughts? Comments?
Photo Credit: DeMaria Design Associates

Cost of IndyMac bailout: Worse than the worst-case scenario

When the federal government seized IndyMac in July, it estimated the failure would cost the FDIC's insurance fund somewhere between $4 billion and $8 billion. Yesterday the FDIC said the cost will be even worse than its previous worst-case-scenario estimate: $8.9 billion. 

That's pretty significant -- banks and thrifts are regulated, they are not supposed to be mysterious; and now we learn the IndyMac failure will be even more expensive than the government's most pessimistic estimate, which was made just six weeks ago.

From this morning's L.A. Times: "That figure increased after the agency, which now runs the bank, performed its own valuation of IndyMac's assets and also discovered that more deposits than initially estimated were covered by insurance, said Diane Ellis, the FDIC's associate director of financial-risk management."

The IndyMac news is contained in a larger story, the FDIC's report that "the number of troubled U.S. banks shot up 30% in just three months."

Analysis: The news flow on banks, bad loans, and the availability of mortgages remains very negative. It is hard to cobble together a case for a stabilizing housing market during a time of continued deterioration in the financial industry. In three words, money is tight. True, it is always darkest just before the dawn, but sometimes it is dark because it is the middle of the night. I think Sheila Bair, the head of the FDIC, is correct: "We don't think this credit cycle's bottomed out yet."

-- Peter Viles
Your thoughts? Comments?
Photo credit: Associated Press

CNBC's Jim Cramer calls the bottom for housing*

CNBC's Jim Cramer has accurately called some of the major turning points in the ongoing housing bust, and he is making another call today. He sees the bottom for housing. But here's the asterisk: *Cramer said he expects a bottom by the third quarter of 2009.

In explaining his call, Cramer cobbles together a familiar litany of signs the housing market is stabilizing: an increase in sales spurred by falling prices; a slowdown in home building; federal efforts to help troubled borrowers; and population growth that will spur household creation and demand for housing.

More, from CNBC's article on why Cramer sees signs of a turnaround:

"The horror shows that are the California, Florida and Arizona real estate markets are no longer bleeding into other areas. These heavy losses are being cordoned off, Cramer said, and different markets are evening out.

Lastly, even these horrible areas –- Bradenton in Florida and the Central Valley in California –- are bottoming. The first to fall is usually the first to return, Cramer said. He’s predicting that Miami and the Inland Empire are next."

I've complimented Cramer's calls before, and that usually encourages a number of you to cite chapter and verse of big things he's messed up. Before you jump on him -- and you're welcome to -- I'll say for the record: He was the loudest voice last summer saying, correctly, that the Bernanke Fed was behind the curve in fighting the credit crisis (this was the classic "Bernanke has no idea!" meltdown on live television). He was also one of the first talking heads to articulate just how bad the housing bust was getting in places like the Inland Empire.

-- Peter Viles
Your thoughts? Comments? E-mail story tips to Peter Viles.

New-home inventories slipping

New-home sales continue to be sluggish, and prices weak, but it appears that builders are working their way through the glut of inventory. From Tom Petruno's Money & Co. blog today:

"The number of new homes for sale nationwide at the end of July totaled 416,000, down 5.2% from June, seasonally adjusted, the Commerce Department estimated. That was the biggest one-month drop since 1963, according to Gary Bigg, an economist at Banc of America Securities.

Unsold new-home inventories have tumbled for 15 consecutive months. The July total was down nearly 23% from 539,000 in July 2007.

"The trend in declining homes for sale suggests that home builders are having some success in working off unintended inventories," Bigg noted.

Even after falling in absolute terms for 15 months in a row, new home inventories, as expressed in the time it would take to sell off the inventory, are above year-earlier levels. Inventory stands at 10.1 months of sales; a year earlier, it was 8.3 months of sales.

Other headlines from the new-home sales report, from Inman.com:

"The sales rate for new single-family homes fell about 35.3 percent year-over-year in July, the U.S. Census Bureau and Department of Housing and Urban Development reported today, with the median new-home price dropping 6.2 percent and the average price down 4.1 percent."

-- Peter Viles

Your thoughts? Comments?

Photo: Getty Images

Fire Sale: California home prices now 40% below year-ago levels

The median sales price of California homes sold in July was 40.3% below year-ago levels as bargain-hunters snapped up distressed housing in large numbers, skewing the state's housing market toward cheaper houses, the California Association of Realtors reports.

Median sales prices in the state -- which peaked at just under $600,000 late last summer -- fell from $587,560 in July 2007 to $350,760 in July 2008, a staggering decline that translates into prices falling by $4,500 per week.

"Deeply-discounted, distressed sales continue to drive volume in     many regions of the state," said William E. brown, president of the  California Association of Realtors.

Median prices paid for single-family homes have now rolled back to levels not seen since early 2003, and the lower prices are luring buyers in large numbers:  The C.A.R. reports the pace of home sales in July surged by 43% from year-earlier levels. Inventory of for-sale homes also dropped sharply, a sign the California housing market may be stabilizing. From C.A.R.'s press release: "C.A.R.’s Unsold Inventory Index for existing, single-family detached     homes in July 2008 was 6.7 months, compared     with 10 months (revised) for the same period a year ago."

Note: It's important to remember that the 40.3% decline does not indicate that individual houses have, on average, lost 40% of their value. The decline comes from a combination of two factors: yes, houses are losing value; but also, the "mix" of homes being sold has changed -- that is, houses in cheaper neighborhoods are selling faster, and in larger numbers, than more expensive homes, which skews the statistics toward lower median prices.

--Peter Viles
Your thoughts? Comments?
Photo Credit: Getty Images

Buy my house, I'll throw in the Ferrari

A sign of the times in Thousand Oaks: The seller of a home that has been languishing on the market, and has been reduced in price by $400,000, is now offering to throw in a Ferrari if a buyer will step forward and the price is right.

The four-bedroom, four-ath house, measuring nearly 4,000 square feet, is listed at $1.125 million -- or $1.36 million with the Ferrari. Here's the listing from Redfin.com:

"PRICE REDUCED BY $400,000! Great value for this new, almost 4000 sq. ft. Mediterranean Estate. No Expense spared. High quality craftsmanship throughout. ... Recently appraised at $1,589,000 (per owner). A 2004 Ferrari 360 Modena can possibly be included w/house for purchase price of $1,360,000."

That would value the Ferrari at $235,000. Everything I know about the value of a 2004 Ferrari 360 Modena I learned from reading Hemmings.com, which lists exactly one 2004 Ferrari 360 Modena for sale, asking price $195,500. Of course, the vehicle that comes with the house could be special in every possible way and worth more than that.

--Peter Viles
--Hat tip: KP via e-mail.
Your thoughts? Comments?
Photo Credit: A Ferrari Modena -- not the one that comes with the house, via L.A. Times.