ABC News on Santa Monica collapsing prices

ABC News / Forbes.com highlighted Santa Monica (Thanks, Anon 7/4!) in their article today. It begins,

America's Most Troubled Luxury Neighborhoods
The Collapse in Prices Has Finally Come Home to the Rich

Has the housing market scraped bottom? Not in some of the wealthier neighborhoods -- places like New York City's Greenwich Village, Santa Monica, Calif. and Chicago's Lincoln Park. They held up nicely while the rest of the country slumped last year. This year such Tiffany zip codes are on track to fall 15 percent to 25 percent.

Why haven't you heard about this? Statistics lag. With relatively low unemployment, high-end addresses don't have foreclosures to hasten capitulation. ...

There is a still-growing supply of wildly overpriced, unsold homes--60,000 U.S. properties priced above $2 million listed on Realtor.com. Experts get these gloomy vibes by dividing inventory by the current monthly rate of purchases.

"Any result over seven months generally means falling prices," says David Stiff, chief economist at Fiserv in Brookfield, Wis. In some tony neighborhoods the level of glut is higher than the national average of ten months.

Let's see: 110 house listings in Santa Monica, divided by average monthly sales of 8-12 (depending on whether we average the last 3, 6 or 12 months) = 9-14 months supply. And we've already seen around a 25% low-end north of Montana price fall.

ABC's section about Santa Monica cites,

In Santa Monica's coveted "north of Montana" area overlooking the Pacific, listings are up 60% since last year and the number of days on the market for those listings has doubled to 140. Homes once sold in as little as a week here. Closer to Main Street, Bill H. Meyers has struggled for more than a year to sell his condo.

In April 2008 L.A. was hurting, but Santa Monica values hovered around their peaks. So Meyers tried to unload his property for $850,000, roughly in line with what another unit in his building sold for. He turned down bids near $800,000 after he found a renter at $3,500 a month.

Now that his tenant is gone, Meyers hasn't found a replacement at that price, and getting another $800,000 bid is impossible. The data still say Santa Monica is stronger than other nearby markets. It's just 14 percent off peak prices, versus Los Angeles, down 38%. But the beach city's inventory of unsold homes has just crossed the 15-month level, as high as Los Angeles' were last year. By that grim logic, Santa Monica's values are likely to tumble as far as those in Los Angeles did last year, 27 percent.

Like Meyers, anyone who can afford to will hang on as long as possible, banking on the faith, he says, that "the market is going to come back." Meantime, excess supply is piling up.

Our graphs have been telling the same story.

New, Sold, and Withdrawn/Expired listings

You know the "bathtub" model - water level (inventory) in the bathtub depends on the water tap (new listings) and the drain (sales and withdrawn/expired listings). Listings and sales are generally down, while inventories and withdrawn/expired listings are at high levels.

Nothing over $3M closed in Santa Monica in June. Mar Vista's buying frenzy of the last couple of months has largely finished escrow, resulting in the June spike (third chart from the bottom), and I'm not seeing nearly as many new escrows now.

This and the falling prices we've been noting were the best that could be done even in the optimistic "green shoots" second quarter of 2009. Look out below as economic reality reasserts ahead!

Westside inventory charts

At the end of the first half of 2009 most inventories remain at high levels, although some are off a peak earlier in the spring.

Monthly inventory update

7/3/09 - Santa Monica and Mar Vista inventory were again up slightly for the week - and month - while Pacific Palisades was down for both.

6/26/09 - Santa Monica and Mar Vista inventory were up slightly for the week, while Pacific Palisades was down. I'll do month-end plus end of 1H 2009 updates (charts and latest sales) next weekend.

6/19/09 - SM inventory is flat overall; PP is down slightly; MV has rebounded up for the week.

6/12/09 - SM and PP inventories are up a little. Conversely it's almost a buying mania in lower-priced Mar Vista listings. I'll do a sales update for all three after the end of June.

6/5/09 - All are up for the week except Santa Monica over $3M, down, and it seems a lot of new price reductions.

      LA County  Santa Monica Pacific Palisades  Mar Vista
               <$3M New Tot DOM<$2M New Tot DOM Tot New DOM
-------- ------  --------------  --------------  ----------
 1/30/06 27,732
 2/28/06 29,420
 3/31/06 31,819
 5/ 1/06 34,032  38  33
 6/ 2/06 37,847  56  36  38
 6/30/06 42,317  66  40  49
 8/ 4/06 45,315  70  34  50
 9/ 1/06 46,781  71  27  59
10/ 6/06 47,369  83  25  98  71
11/ 3/06 45,780  80  20  91  77
12/ 1/06 43,103  65  18  72  96  39  20
 1/ 5/07 35,646  54   4  60 117  33   6  71  66
-------- ------  --------------  --------------  ----------
 2/ 2/07 36,715  38  15  45 124  29  16  61  71  70
 3/ 2/07 41,251  42  14  51 114  26  10  68  79  55  25  76
 4/ 6/07 42,857  41  23  49 107  18   8  73 103  54  52  50
 5/ 4/07 45,918  46  28  54  92  19   6  82  79  71  37  52
 6/ 1/07 52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07 52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07 54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07 57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07 58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07 58,731  62  19  81 120  29   7 106  77  98  35  88
11/30/07 59,108  52  14  67 136  23  11  88  94  96  23  96
12/31/07 53,475  42   5  53 148  19   2  73 119  79  13 116
-------- ------  --------------  --------------  ----------
 2/ 1/08 53,722  54  16  67 157  26  16 101 118  89  36  96
 2/29/08 53,520  50  10  68 178  29   8 108 108  88  21 103
 3/28/08 53,566  57  17  81 171  32  14 122  92  82  22 105
 5/ 2/08 54,098  59  14  83 159  35   7 136  93  90  33  96
 5/30/08 53,216  56  23  79 147  34   9 142 106  91  29  89
 6/27/08 53,058  74  28  98 131  30   6 129 107  96  26  95
 8/ 2/08 51,906  66  14  89 125  34   8 120 136  99  35 101
 8/29/08 50,124  62   9  79 122  29   5 108 156  91  25 104
10/ 3/08 48,113  58  14  82 145  41  15 128 132  84  24 109
10/31/08 47,017  64  22  90 131  55  18 159 126  83  21 103
11/28/08 45,216  64  12  91 141  54   7 151 124  73   9 130
12/31/08 40,810  52   3  80 171  47   5 130 134  63  10 144
-------- ------  --------------  --------------  ----------
 1/30/09 38,486  67  16  94 181  59  15 157 145  66  15 157
 2/27/09 37,647  73  14  98 164  73  17 181 148  75  19 131
 4/ 3/09         84  25 108 155  73  11 187 150  74  24 128
 5/ 1/09         89  23 115 163  72  11 188 155  73  22 127
 5/29/09         80  15 107 175  67  14 176 142  70  28 117
 6/ 5/09         82   4 106 170  74   8 184 139  74   5 122
 6/12/09         84  10 107 169  75   9 185 146  69  10 133
 6/19/09         82  13 107 165  71  12 183 139  73  15 144
 6/26/09         84  19 109 162  65  16 172 148  74  17 151
 7/ 3/09         85  21 110 142  63  16 167 164  75  19 157
 7/10/09

All Westside

            1/30     4/3    5/29    7/31    10/2   11/27
                2/27     5/1     7/3    8/28   10/30   12/31 
B.Air-H.Hls. 101 106 120 137 147 152
Bv.Ctr.-M.M.  58  65  78  83  72  58
Beverly Hls. 109 123 134 114 107 120
B.H. P.O.    127 147 162 153 152 159
Bvywd.Vic.    47  54  62  60  48  42
Brentwood    146 162 157 167 155 155
Chv.-R.Pk.'8' 31  38  33  39  31  31
Culver City   52  44  36  33  34  41
Malibu       254 267 288 290 281 280
Malibu Beach  63  70  70  70  69  65
Marina D.Rey  32  32  28  34  34  35
P.Palisades  157 181 187 188 176 167
Palms-M.Vista 66  75  74  73  70  75
Playa Del Rey 24  24  20  21  27  22
Playa Vista    6   6   5   3   5   4
Santa Monica  94  98 108 115 107 110
Sunset-Hwd.H.285 299 312 293 294 288
Topanga       70  73  71  73  77  75
Venice       104 121 119 115 111 102
W.Hwood.Vic.  61  58  50  56  51  48
West L.A.     20  30  32  25  23  17
Westchester   53  60  57  42  43  47
Wwood.-C.City 67  72  78  78  82  67
             ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ 
2009 Total  2027    2281    2196
                2205    2262    2160
2008 Total  1509    1694    1917    2019    2006    2128
                1524    1846    1974    1942    2085    1822
2007 Total  1282    1274    1457    1522    1671    1600
                1308    1377    1483    1551    1731    1329

Notes

See here for 2007 monthly totals. LA County inventory via OC Renter. Santa Monica Days on Market (DOM) is for <$3M, and omits Santa Monica Canyon (in City of Los Angeles but S.M. Post Office). Pacific Palisades DOM is for <$2M and count omits mobile homes. "New" is for previous month, or month-to-date for current partial month.

April S&P/Case-Shiller

Los Angeles is still falling but not as steeply in the latest, April 2009 S&P/Case-Shiller update. Including Orange County, it is now down 41.8% from its September 2006 peak, back to July 2003 levels.

By month that's 0.9% from March, 1.4% from February, 2.0% from January, 2.8% from December, 2.5% from November, 2.2% from October, 2.6% from September, 2.5% from August, 1.8% from July, 1.6% from June, 1.4% from May, 1.9% from April, 2.2% from March, 3.6% from February, 4.3% from January, 3.7% from December 2007, 3.6% from November, 3.6% from October, 2.1% from September and 1.3% from August. The national (orange line, their original 10-city Composite) index is down 33.6% from its peak in June 2006.

Besides the original city index they have each city broken into Low, Middle, and High tiers (Under $281,165, $281,165 - $433,383, and Over $433,383; updated for April). Los Angeles' Low Tier rose the most and has fallen back the most so far from its November 2006 peak, now 54.7%.

The High Tier rose the least and plateaued for awhile before falling more steeply, now 31.2% from its June 2006 peak. It hasn't retraced quite as far, only to December 2003. Our Westside index is lagging so far, down 22% from its June 2007 peak (below).

Added: Link to the 1/09 post where I introduced this model and projected a 33% drop from the peak. And be sure to see Calculated Risk's discussion today.

Weekly inventory update

6/26/09 - Santa Monica and Mar Vista inventory were up slightly for the week, while Pacific Palisades was down. I'll do month-end plus end of 1H 2009 updates (charts and latest sales) next weekend.

6/19/09 - SM inventory is flat overall; PP is down slightly; MV has rebounded up for the week.

6/12/09 - SM and PP inventories are up a little. Conversely it's almost a buying mania in lower-priced Mar Vista listings. I'll do a sales update for all three after the end of June.

6/5/09 - All are up for the week except Santa Monica over $3M, down, and it seems a lot of new price reductions.

      LA County  Santa Monica Pacific Palisades  Mar Vista
               <$3M New Tot DOM<$2M New Tot DOM Tot New DOM
-------- ------  --------------  --------------  ----------
 1/30/06 27,732
 2/28/06 29,420
 3/31/06 31,819
 5/ 1/06 34,032  38  33
 6/ 2/06 37,847  56  36  38
 6/30/06 42,317  66  40  49
 8/ 4/06 45,315  70  34  50
 9/ 1/06 46,781  71  27  59
10/ 6/06 47,369  83  25  98  71
11/ 3/06 45,780  80  20  91  77
12/ 1/06 43,103  65  18  72  96  39  20
 1/ 5/07 35,646  54   4  60 117  33   6  71  66
-------- ------  --------------  --------------  ----------
 2/ 2/07 36,715  38  15  45 124  29  16  61  71  70
 3/ 2/07 41,251  42  14  51 114  26  10  68  79  55  25  76
 4/ 6/07 42,857  41  23  49 107  18   8  73 103  54  52  50
 5/ 4/07 45,918  46  28  54  92  19   6  82  79  71  37  52
 6/ 1/07 52,198  50  25  61  78  17  15  87  78  77  39  53
 6/30/07 52,769  42  18  56  81  17  11  92  77  74  33  61
 8/ 3/07 54,166  53  28  68  86  23  12  78  76  84  39  68
 8/31/07 57,432  57  21  72  98  18   7  69  75  90  40  79
 9/28/07 58,973  59  17  74 103  26   9  90  81  87  20  87
11/ 2/07 58,731  62  19  81 120  29   7 106  77  98  35  88
11/30/07 59,108  52  14  67 136  23  11  88  94  96  23  96
12/31/07 53,475  42   5  53 148  19   2  73 119  79  13 116
-------- ------  --------------  --------------  ----------
 2/ 1/08 53,722  54  16  67 157  26  16 101 118  89  36  96
 2/29/08 53,520  50  10  68 178  29   8 108 108  88  21 103
 3/28/08 53,566  57  17  81 171  32  14 122  92  82  22 105
 5/ 2/08 54,098  59  14  83 159  35   7 136  93  90  33  96
 5/30/08 53,216  56  23  79 147  34   9 142 106  91  29  89
 6/27/08 53,058  74  28  98 131  30   6 129 107  96  26  95
 8/ 2/08 51,906  66  14  89 125  34   8 120 136  99  35 101
 8/29/08 50,124  62   9  79 122  29   5 108 156  91  25 104
10/ 3/08 48,113  58  14  82 145  41  15 128 132  84  24 109
10/31/08 47,017  64  22  90 131  55  18 159 126  83  21 103
11/28/08 45,216  64  12  91 141  54   7 151 124  73   9 130
12/31/08 40,810  52   3  80 171  47   5 130 134  63  10 144
-------- ------  --------------  --------------  ----------
 1/30/09 38,486  67  16  94 181  59  15 157 145  66  15 157
 2/27/09 37,647  73  14  98 164  73  17 181 148  75  19 131
 4/ 3/09         84  25 108 155  73  11 187 150  74  24 128
 5/ 1/09         89  23 115 163  72  11 188 155  73  22 127
 5/29/09         80  15 107 175  67  14 176 142  70  28 117
 6/ 5/09         82   4 106 170  74   8 184 139  74   5 122
 6/12/09         84  10 107 169  75   9 185 146  69  10 133
 6/19/09         82  13 107 165  71  12 183 139  73  15 144
 6/26/09         84  19 109 162  65  16 172 148  74  17 151
 7/ 3/09

Not the CRA's fault

Barry Ritholtz's The Big Picture today is a good bookmark, recapping and further debunking the Right's misplaced blame on the Community Reinvestment Act (CRA) for the housing bubble. This is his intro; you should read the whole piece.

Given how thoroughly the “CRA caused everything” meme has been debunked, you have to wonder why some poor souls are still pushing this discredited political talking point (other than as linkbait).

I’ve already spilled too many pixels debunking Phil Gramm’s attempt to shift blame from his radical deregulation to other parties (see partial list at bottom). Oh, and I dropped another 322 pages explaining the actual causes of the crisis.

And yet, these attempts at misplaced fault continue.

So this morning, I want to try a completely different approach — the opposite of our usual data driven, analytical framework. Rather than show more facts, data and specific details, instead, I want to do a little thought experiment.

Imagine, if you will, that the discredited far right meme is actually correct: Assume that the CRA was a prime cause of the mortgage, credit and housing related crises.