Of course we're in a recession

Everyone knows we're in a recession. But economy.com has issued a report to show exactly where the economy stinks the most and where it doesn't. Their report puts states and metro areas in the U.S. in one of four categories: "In Recession", "At Risk", "Recovery", or "Expansion".

Los Angeles? Recession.

Riverside? Recession.

Orange County? Recession.

San Diego? Just "at risk."

Santa Barbara? At risk.

San Francisco? At risk.

Texas? "Expansion."

To see the entire list, CLICK HERE.

Tracking L.A. Multi-Million-Dollar Sales

The data sharks over at PropertyShark.com released some interesting figures this week on sales of homes over $1 million and over $5 million. They are calling their groups luxury and ultra-luxury. However, if you’re a regular reader of this blog, you’ll know I don’t like labeling the $1 million + category “luxury.” There still are many homes selling for $1 million or more that wouldn’t fit the definition of “luxury” for Southern California.

Also, this spring, I delved deep into the numbers on multi-million homes. Through the first quarter of the year, true luxury, multi-million-dollar homes had declines in the number of sales vs. Q1 2007, but prices were up. But clearly a lot has changed since then.

In the coming days, I’m going to revisit my numbers to see where things stand now. Until then, I want to give you the numbers from the PropertyShark.com folks:

ULTRA-LUXURY SALES ($5 million +)

Location	Zip	Sales*	Avg. Sale Price	SP/SF
Beverly Hills	90210	20	$7,401,310	$1,226
Malibu	90265	15	$9,889,433	$3,393
Pacific Palisades	90272	13	$8,013,515	$1,876
Brentwood	90049	10	$6,403,800	$1,841
Bel-Air/Holmby Hills	90077	7	$9,140,729	$1,377
Calabasas	91302	4	$7,837,411	$726
Palos Verdes Penin.	90274	4	$5,600,000	$933
Santa Monica (N. of Montana)	90402	3	$5,848,333	$2,586
Manhattan Beach	90266	3	$6,566,667	$1,833
Sherman Oaks	91423	2	$5,092,500	$1,153

*Sales from 1-1-08 to 10-14-08
**Single Family Residences and Condos
SOURCE: PropertyShark.com

$1-MILLION-PLUS SALES

Location	Zip	Sales*	Avg. Sale Price	SP/SF
Manhattan Beach	90266	211	$1,944,333	$1,108
Pacific Palisades	90272	138	$2,694,547	$1,123
Brentwood	90049	135	$2,346,152	$988
Rancho Palos Verdes	90275	135	$1,594,463	$531
Palos Verdes Penin.	90274	134	$1,913,900	$674
Malibu	90265	99	$3,458,336	$1,395
Studio City	91604	99	$1,399,447	$639
Beverly Hills	90210	98	$3,503,478	$929
Calabasas	91302	94	$2,159,861	$498
Hollywood Hills West	90046	90	$1,637,446	$728
La Canada Flintridge	91011	87	$1,751,260	$659
San Marino	91108	83	$1,701,295	$632
Santa Monica (N. of Montana)	90402	75	$2,690,583	$1,191
Hollywood Hills East	90068	74	$1,606,257	$725
Westwood	90024	71	$2,088,709	$805
Encino	91436	70	$1,517,083	$508
West Hollywood	90069	70	$2,417,392	$977
Venice	90291	67	$1,616,334	$1,382
Hermosa Beach	90254	65	$1,804,723	$1,199
Tarzana	91356	59	$1,478,142	$495
Cheviot Hills/Rancho Park	90064	59	$1,601,012	$874
Sherman Oaks	91423	55	$1,708,159	$723
Redondo Beach	90277	54	$1,572,193	$799
Los Feliz	90027	54	$1,671,233	$623
Sherman Oaks	91403	52	$1,383,909	$691

*Sales from 1-1-08 to 10-14-08
**Single Family Residences and Condos
SOURCE: PropertyShark.com

For the most part, these numbers square with my knowledge of these markets. The one that puzzles me a bit is Venice -- $1,382/sf.

They also make two of my current listings look even more like bargains than I already thought they were:

• 3733 Avenida del Sol in Studio City -- $1.75 million for 4,200 sf – that’s $416/sf vs. a Studio City average of $639 – and it’s got great views!
• 2131 Cedarhurst Drive in Los Feliz -- $2.499 million for 4,928 sf – that’s $507/sf vs. a Los Feliz average of $623 – downtown views, pool, and great old character.

Trouble Spots in the Best Areas of Los Angeles

As the housing slump, credit crisis, financial collapse and economic recession all continue, there are some disturbing trends in some of the best neighborhoods of Los Angeles.

Unquestionably, all areas of Los Angeles have felt this downturn. But not all areas have felt it equally. Nor will all areas ever be hit equally hard. Nonetheless, some of the better areas have some bad trends developing -- we'll see if they last.

First, as I've noted the last two months, some areas simply have too much inventory of Single Family Homes to not see additional price declines, most notably: Malibu (90265) with 33 months of SFR inventory, and West Hollywood (90069) with 30 months of SFR inventory.

But here's something new. A few zip codes that had seen low numbers of foreclosure auctions saw a spike up in foreclosure auctions in September, according to reports from PropertyShark.com, including:

• 90048 - from 1 to 5 - Beverly Center/Grove/West Hollywood


• 90403 - from 1 to 4 - Santa Monica (Wilshire to Montana)


• 90077 - from 1 to 4 - Bel Air/Holmby Hills


• 90068 - from 4 to 10 - Hollywood Hills


• 91316 - from 11 to 27 - Encino

However, sheer numbers of foreclosures are not as important until you put them in the context of the number of unsold homes/condos on the market. And some neighborhoods in last month saw a significant increase in new foreclosure auctions relative to the number of homes/condos on the market:

• Encino (91316) - 7% to 18% - new auctions as a % of unsold inventory


• North Hollywood (91601) - 4% to 11%

Those are not good trends for housing prices in those areas going forward over the next few months.

For my complete breakdown of "Trouble Spots in Prime Areas," CLICK HERE.

For the entire statistical analysis behind these "Trouble Spots," showing inventory and foreclosure trends in the best neighborhoods of Los Angeles, CLICK HERE.

The man who predicted our financial collapse and what he thinks we should do

I love Charlie Rose's show, and he's been doing some excellent interviews as our financial system has come to the brink of collapse (better than the important but scatter-brained coverage by CNBC).

Last night he had a great interview with Nouriel Roubini, an NYU professor known as Dr. Doom who predicted this collapse in 2006 and earlier this year laid out what was going to happen and was correct, even as the top minds on Wall Street and in Washington continued to be surprised. And he's got some ideas of what to do. Check it out by CLICKING HERE.

Pleading for Rational Thinking in Real Estate

As the real estate market and stock market both continue to struggle horrendously, local REITs like Maguire Properties are particularly hard hit.
But the company's founder has issued an open letter to sharholders of the company he once led pleading for more rational thinking. He makes some good points in his letter, including:

• The company's total current market capitalization of around $200 million could be realized by selling just one of its more expensive properties.
  
• "Los Angeles County is now viewed by major real estate investors as the best in the country with the decline in the Manhattan market."

Interesting food for thought, Mr. Maguire, as we all wonder where things are headed and whether or not we are yet at the bottom.

To read Maguire's entire letter, CLICK HERE.

Adverse market fees for real estate investors

If you've seen a single-family home or rental property of 1-4 units you want to buy as an investment in the next few months, here's a reason to lock it up sooner rather than later: Adverse Market Fees.

Fannie Mae and Freddie Mac are both jacking up their adverse market fees -- so you can expect those fees to be tacked on to many loans that sell to the GSEs. Freddie Mac's increase goes up Nov. 7th, Fannie Mae Dec. 1st.

Here's a good article explaining it: http://realtytimes.com/rtpages/20081010_investorreport.htm

Tracking housing inventory in Los Angeles' best neighborhoods

One of the conditions putting the most downward pressure on home prices in much of Southern California has been the high level of inventory. When too many homes are on the market, sellers must lower prices to sell get them sold.

Not surprisingly, there is a huge variance between different areas in the housing inventory on the market. That also means there is a huge difference in the downward pressure on home prices going forward in the next few months. Furthermore, if you combine unsold housing inventory figures with other factors, you can come up with a reasonable guess at which areas are nearer the bottom and closer to recovery -- and which areas will likely still see more of a drop in home prices.

To that end, looking only at single-family homes and excluding condos, here are the 12 zip codes in prime Los Angeles with the lowest inventory:

1. 90403 -- Santa Monica (Wilshire to Montana) -- 3 months of inventory
2. 90402 -- Santa Monica (N. of Montana) -- 4 months
3. 90404 -- Santa Monica -- 4 months
4. 91607 -- Valley Village -- 4 months
5. 90064 -- Cheviot Hills/Rancho Park -- 5 months
6. 90036 -- Miracle Mile -- 5 months
7. 90025 -- Sawtelle/West L.A. -- 5 months
8. 90038 -- Hollywood -- 6 months
9. 91316 -- Encino -- 6 months
10. 90291 -- Venice -- 6 months
11. 90035 -- S. Robertson/S. Carthay -- 6 months
12. 91423 -- Sherman Oaks -- 6 months

And on the negative side, here are the 11 zip codes with the highest level of inventory among single-family homes:

1. 90265 -- Malibu -- 33 months of inventory
2. 90069 -- West Hollywood -- 30 months
3. 90211 -- Beverly Hills (SE) -- 14 months
4. 90210 -- Beverly Hills -- 13 months
5. 90401 -- Santa Monica -- 12 months
6. 91602 -- Toluca Lake -- 12 months
7. 90046 -- Hollywood Hills West -- 11 months
8. 91436 -- Encino -- 11 months
9. 90049 -- Brentwood -- 11 months
10. 90077 -- Bel Air/Holmby Hills -- 10 months
11. 90212 -- Beverly Hills (SW) -- 10 months

These are figures based on sales through the end of September and for inventory through Oct. 9.

The prime areas of Santa Monica remain in the best shape. Malibu and West Hollywood remain in the most difficult position with prices just ripe for a tumble.

Interestingly, some areas so significant increases or decreases on the list.

Big increases in inventory: Westwood (25%), Toluca Lake (21%), Hollywood Hills East (18%). Big drops in inventory: Silver Lake (-24%), Valley Village (-22%), Sherman Oaks (-20% in 91403, -13% in 91423).