Stall: 3 big L.A.-area projects in trouble (Updated)

This has not been a good week for big real estate development projects. Three very big ones have failed, stalled or sputtered. Two words come to mind: credit crunch.

In Pasadena, from the Star-News: "The Ambassador West project [site pictured], one of the largest and most prestigious in the city's history, has been foreclosed on and the property is back on the market for the fourth time in a decade. 'We no longer own any of the property,' Howard Weinberg, a part-owner of Ambassador West, said Monday. 'A foreclosure sale has occurred.' " The L.A. Times matches the story here.

There's also the bankruptcy filing Sunday of CalPERS-backed LandSource, which was developing 15,000 acres north of Los Angeles. When big entities like LandSource file for bankruptcy, they still have enough money for lawyers and public relations executives, and they publish press releases that make it sound like bankruptcy is nothing special or unexpected, just another challenging chapter in the life of a business. This is not true. Nobody expects bankruptcy to happen. Do you really think honest, hardworking local businesses that did work for LandSource thought they would have to fight in court to get paid for work they've already done?  You can follow the bankruptcy at this site.

Lastly, government leaders in Los Angeles are threatening -- threatening -- to play hardball with the cash-strapped developers of the Grand Avenue project: "The government board overseeing the $3-billion Grand Avenue project on Monday unexpectedly rejected the developer's request for an eight-month delay to begin construction on the development across from the Walt Disney Concert Hall.  While both sides said they remain optimistic that the sprawling downtown Los Angeles development is on track, the vote is the strongest sign yet that government officials are growing concerned over repeated delays and hope to keep a tight rein on the developer they handpicked for the project almost four years ago."

Update: Barbara Casey, a public relations consultant to Related California, e-mailed this afternoon with these thoughts: "The Grand Avenue project is not in foreclosure or bankruptcy and neither is its developer, Related Companies. It is completely unfair to include it in your litany of bad news. In fact, Related is not cash strapped at all, having received a $1.4-billion investment from Goldman Sachs, Michael Dell, and sovereign funds of Abu Dhabi and Saudi Arabia at year end 2007. The JPA did not threaten in any way to take the project away and did not reject Related’s request to move the construction start to February 2009 but deferred a decision on this until its next meeting July 28 in order to gather more information. Nothing was indicated that the JPA would not approve the extension to February 15, 2009. I refer you to the Downtown News and Daily News for more accurate accounts of what occurred at yesterday’s meeting."

Those of you who want to take Casey's advice and compare and contrast the two news accounts of Grand Avenue, here they are:
L.A. Times: "Developer's request to delay L.A.'s Grand Avenue project is rejected"
L.A. Daily News: "Grand Developer gets extension"
I would happily include a link to the Downtown News story but can't for the life of me find the article on their website.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo credit: Los Angeles Times

Update: Meet today's homebuyer, an L.A. Land reader

No, it's not Lefty. NF, A longtime reader, writes to describe his recent change of heart and purchase of a single family home in Pasadena. (Update: NF added a few more comments at the bottom of the post).

"It is funny, at first while I was on the sidelines and simply browsing for homes I agreed wholeheartedly with the majority of your readers; don’t buy, wait it out, the bottom is not even close.  It was great hearing about the price drops and seeing the rift between those who commented.  The smile on my face when thinking of the greedy speculators who were now in despair was often wiped away when thinking of those individuals who work beyond belief at minimum wage and were swindled by the sketchy mortgage brokers.

"As I continued shopping around and heard the stories of individuals that purchased homes during the boom I realized how fortunate I was to be in my current position.  My wife and I had the opportunity to have a checklist of all we wanted; nice-sized back yard (with fruit trees), 3 bedrooms, remodeled kitchen, a safe and quiet street etc.  We found a handful that fit the bill and that we would be happy to own.  We did not have to worry about competing offers.  We had the peace of mind to think things through rationally.  We quickly got pre-approved by several banks and put in offers at about 10% below asking price – we went back and forth with a few homes and ended up paying about 8% below asking price.  I was fortunate enough to put 20% down on the house – I am 28 and my wife is 27 but we have tried our best to live frugally the past few years in anticipation of the impending purchase. 

"Yes, the prices of home may/most likely will continue to decrease, but we do not plan on leaving this property for at least 4-7 years; plus the mortgage interest rates are pretty darn good.  The tax benefit from the interest payment lowering my taxable income will be embraced with open arms come this April – Thank you Republicans.  Plus, I still don’t know what it feels like, but I imagine the pride of owning your own home will feel pretty good. 

"I just wanted to say thanks for educating me on the real estate market.  I think most commenters on your site are hoping to enter the market at a bottom so they can get the best bang for their buck.  The thing is you can never determine when the market hits its bottom, and plus with the tax benefits from owning a home/mortgage and the ability to pick and choose your home stress free, perhaps entering a little prematurely isn’t that bad."

Update: Click below to see additional comments that NF added in the comment section.

Micro-Market Snapshot: In Pasadena, The Cheapest Houses Aren't Moving

Interesting take on the Pasadena market here from local real estate agent Doug Willis. He sees a "mixed market" in April, with the number of sales down 23% vs April 2006, but sales fairly stable in higher-priced neighborhoods.

It appears the weakness is coming from first-time buyers; Willis writes that the weakest part of that market is the cheapest part: Homes priced under $600,000 in Northwest Pasadena and Altadena. Speaking of this price range, he says, "Homes are staying on the market longer and home sellers have been reluctant to lower the price of the home to get it sold."

Comments? Thoughts? Brilliant Analysis? As always, send story tips to lalandblog@yahoo.com.