For those of you who have been waiting to check out what 360 South Bay is offering keep next Saturday open.  The Grand Opening is planned for Saturday February 20, 2010 from 10:00 a.m.-5:00 p.m.  

The good news is that prices are lower then the projected prices I posted a few weeks ago.... although I suspect they may need to drop a bit more especially on the Plan 1 Sudios in The Flats.  Most folks are going to want a bedroom is they are going to spend almost $400,000 for a unit.    Location and price are  definitely going to be  issues for the development.  As Renee Moilanen pointed out in her column in the Daily Breeze last week  most of us know that there is a big difference between  living  in a beach community and Hawthorne.   

 

About a month ago I wrote a post on the return of the housing development at 360 South Bay.  The project was scheduled to open sometime this month but  it may take them a bit longer  with all the rain we have been having in the last few weeks.  In my last post I speculated about the possible pricing of these units.  I believe one of the reasons the project had such a tough time last time around was that the units were priced too high for the location.  A reader was kind enough to send me some information posted by the company in November about the prices the company was projecting upon the re-opening of the project. 

There are 3 phases to the project.  If all goes well the development will take about 3 years from re-opening  to completion.  The Flats and the Courts  will be offered for sale this year.  The Lofts and The Rows in 2011 and the Gardens  in 2012.   The prices above may not be the asking prices on the units when the project officially re-opens, but these are the prices the company was posting in November on the company financial information .

The prices for the Flats and The Courts appear to be fairly close to the  prices the last time around in 2007-2008 and we know they didn't generate the interest that William Lyon Homes  had hoped to see.   You can't help but wonder what they are  thinking... $495,000 for a  studio condominium in Hawthorne by the 405 Freeway in today's market seems rather pricey...especially when you can buy a 2 bedroom 2 bath unit at Fusion for less. 

 I'm hoping the above prices are higher then the actual asking prices will be when the project officially re-opens.  I would like to see the project succeed as we don't have much in the way of newer affordable housing in our area. However at  roughly  $500,000-$790,000 for the first phase  these units may not be affordable for most of the folks who would like to live there.   $790,000 will buy a nice rear unit  townhome  in North Redondo....

 The three rules of real estate are location, location, location... it will be interesting to see if folks are willing to pay these prices for new in this location. 

Looking back over 2009 there were a lot of changes in our  Beach Cities real estate market.  In the first part of the year we saw sales volume decline and inventory rise.  Financing was difficult to obtain.  The conforming loan limit had dropped back to $625,000 from $729,750 in November of 2008  and didn't go back to $729,750 for almost 6 months even though the higher limit had been approved in February.   Jumbo loans were tough to obtain until some of the major banks decided to get involved and even now jumbo loans are not easy to secure. Appraisals were troublesome for many buyers and sellers as new rules went into effect.

Then in the summer the market took a new direction.  Prices were down and buyers noticed.  Sales volume increased and held steady into the 4th quarter when the market is usually at its lowest.  Inventory dropped to levels not seen in many years.  Even homes that had been around for years seem to have finally found buyers although at much lower prices.

The media stories  about the California real estate market were numerous and conflicting.  One day prices were up,  the next they were down.  Sales volume was increasing... whoops... no it was declining.  The recession was over... but not quite yet.  Real estate prices were going to go up in March 2010.. no make that June 2010  or  maybe November... nope... in the summer of 2011  home prices would take a dramatic upturn.   The truth  is that no one really knows what is happening in  local markets as they are changing by the minute.

There is a lot of talk that we have reached the bottom of the cycle and prices will now be moving up as property inventory remains on the low side.  Other opinions have it that markets across the country are about to be blitzed with  REO homes that lenders have been holding off the market along with vast  numbers of properties that are so far underwater that a short sale is the only hope.  As odd as this market is there is probably a bit of truth in both opinions.

Some factors to consider: 

By the end of March, the Federal Reserve is expected to stop the $1.25 trillion program that's kept mortgage rates artificially low.  Without the FED support you can expect to see rates rise to at least 6% and maybe higher.  Higher mortgage rates will affect sales as each uptick in rates means fewer folks can qualify for the specific loan they want.

Shaun Donovan has been hinting that in addition to the  tighter rules that went into effect in December buyers may  soon need to put 5% down compared to 3.5% currently required.  Townhome.and condo buyers have already  had to deal with recent  changes FHA has instituted.  While the South Bay doesn't see a huge number of FHA sales,  you can bet that changes by them will influence the folks at Fannie and Freddie and even jumbo loan lenders. . Congress will let the expanded home buyer tax credit expire for buyers not under contract by April 30 and closing by June 30. The rumor around town is that like the cash for clunkers program members of Congress didn't want to extend the program and have made it clear to all that this is the one and only extension.  Again the extension didn't really affect our local real estate market in Manhattan and Hermosa but it was definitely a factor in Redondo and El Segundo as well as the South Bay Cities of  Torrance, Hawthorne and Lawndale.

The Federal Housing Administration's (FHA)says that plans to tighten underwriting standards could take effect as soon as April. HUD Secretary

Shadow Inventory has been speculated about since the market started to decline.  First American Core Logic puts the  shadow inventory at about 1.7 million homes.  The big issue here is that  many of these homes in the shadow inventory are higher  priced properties compared to the sub prime properties that were mainly found at the entry level in most markets.   Speculation is rampant that we will see a large increase in  higher priced homes hitting the market as distressed sales  in 2010.  If that happens it will affect all segments of the market.

The Fannie Mae forecast is for a subdued recovery. Fannie and Freddie aren't sold on the idea that the recession is over and the housing market is on the road to  nationwide recovery.  They think the worst is over and I suspect they may be right but they also know there may be more trouble down the way.  Reaching the bottom of the market doesn't mean a return to double digit appreciation.  Reaching the bottom  may  mean minimal declines in price at best but more likely a market that is flat with a few bounces along the way for exceptional properties.

The Economy remains tricky.  While the recession may technically be over there are still a lot of pockets with problems.  California unemployment remains a big factor.   In the South Bay  things aren't as tight as in other parts of the state which is good for us. However that doesn't mean we are not going to see continued difficulties in the job market. The government is pouring billions of dollars into the economy hoping to spark some new life. The problem I see is what happens when the subsidies stop. So far we aren't seeing much in California that points to immediate gains in the economy.  The state economy  is in deep trouble and that has to have some effect on all of us.

The outlook for commercial real estate is not good.  Every commercial banker I have spoken with in the last 4 months says 2010 is going to be bad news for commercial properties.  Lenders are already poised to start foreclosing on large numbers of commercial properties in the coming year.  Banks,  who are just now seeing some light at the end of the tunnel in the residential market,  are not happy about the prospect of owning commercial properties.  These are a tough sell  as financing is difficult to obtain and finding tenants to service the debt is no easy task.  If lenders find themselves awash in commercial properties you can bet they are going to hold back making loans on all properties including new home loans.

So what does this all mean... darned if I know....

What I think is that we are going to see inventory rise in the Spring.  Some of the increase will be homes that are returning to the market in hopes of finding a buyer. I think we will see more short sales and foreclosure properties in the upper end of the market.    Other entries will be sellers who are hoping the market has improved enough for them to get the price they want/need.  I suspect there will continue to be buyers and sellers disappointed to find  that just because the market may have stopped hemorrhaging doesn't mean the patient is cured.

A lot of homeowners that held on for the last few years are simply out of resources.  I think prices will  bounce around but overall will continue to decline slightly in the upper levels of the market while perhaps seeing slight increases in the entry level of most markets.   That said there will be some homes that will sell at prices well beyond where most folks would predict while others that seemed to be sure bets will flounder.

Buyers are still very savvy about what they will and will not pay for a property.  Multiple offers on a property don't necessarily mean multiple high offers.  In many instances they are multiple low offers.  Financing is going to remain tight even for the best qualified buyers.  Appraisals are going to continue to be troublesome for all price ranges. Sellers will try to force buyers to write offers without an appraisal contingency but most smart buyers just aren't going to do that.  In fact smart buyers have learned not to give up any contingency no matter what.

All in all I think this will be a better year for real estate as everyone finally realizes that buying a home is about more then funding your retirement.    Our thoughts about home buying will be pre-1999 ( shelter) rather then post 2002( make me rich).  Lending rules will continue to be tough until everyone cries UNCLE and lenders  once again decide there is room for a number of buyers that don't fit the prototype.

In 2006 Joe Ferrara and Rudy Bachraty , when blogging was just beginning, decided to name the Top 10 Women Real Estate Bloggers for 2006.  In 2007  and 2008 the list grew to 12 Women.  These women are chosen from all over the United States.  It is an amazing honor to be part of this special group of women. 

This year I am very excited to be among the 12 Top Women Real Estate Bloggers in the United States.   I am still stunned and amazed and thrilled to be chosen along with  these 11 amazing Women Real Estate Bloggers:

 Colleen Kulikowski Buffalo New York 

 Mary Pope-Handy in the Sillicon Valley

 Dru Bloomfield from Scottsdale AZ

 Diane Guercio founder of The TwitterQueens,

Amy Chorew truly a Tech Queen

 Jessica Riffle Edwards from Wilmington North Carolina

Susie Blackmon another North Carolina blogger with some great insights

Elaine Reese from Central Ohio has lots of sweet information  

Gena Riede  The Sacramento  Real Estate Voice of experience, 

 Kim Wood from Philadelphia loves photography,

 Monika McGillicuddy from New Hampshire has amazing photos.

 Kaye Thomas Manhattan Beach CA

 I am fortuante to be friends with many of these women and know others by their wonderful blogs.  All of us are actively working in some part of the real estate market. Most of us are actively engaged in sales while others are finding ways to make real estate more user friendly for both consumers and agents.  Blogging has allowed us to be more interactive  within  our communities and offer consumers a more intimate view of our local real estate markets.

Last week Curbed LA  pondered that real estate may be on the way to boring.    They wondered  if our local real estate markets have lost the frenzy we have all come to associate with buying and selling real estate in Southern California.

However if the 24 folks who made offers on 1708 Magnolia in East Manhattan Beach  last week are any indication... we have not reached boring.   The home was listed for $699,000 and drew big crowds.  The accepted offer was about $825,000 for a 3 bedroom+ den,  1 bath home with 1236 sq ft home on a 4870 sq ft lot that needed upgrading.  A few days later  1509 Manzanita  a 3 bedroom 1 bath 1098 sq ft home also needing updates on a 5247 sq ft lot  in Liberty Village  saw a quick sale.  Originally listed for $749,000 this one appears to have accepted an offer at $799,000.

Of course the real excitement will occur when these homes are appraised. That is the cliff hanger as the loans on both these homes fall under conventional guidelines and therefore will be subject to the appraisal rules under Fannie Mae and Freddie Mac guidelines.


Mid level priced homes  also seem to be faring well.  In the Trees a  newer home at 648 26th Street  on an over-sized lot drew over 300 people at the  Saturday and Sunday Open Houses.  The home was built in 2004 and is on a 5120 sq ft lot.  It  is listed at $1,799,000.    Rumor has it that they have received offers but so far no sale has been reported.


While sellers in the upscale price ranges continue to search for buyers, sellers in the entry to mid level price ranges seem to be having better luck providing they are priced right.  Overpricing is still the kiss of death no matter where your property falls on the price scale.   I can think of  a number of   homes that have been on the market forever.  They were priced too high and have been rejected by buyers.  Now they are "old" inventory and will likely have to really drop their price to attract interest.  It's never a good idea to chase the market down  at any price level.

An  article in the Daily Breeze  points out that South Bay median home prices were up overall even as prices were lower then at this time last year.  While prices in the South Bay were up 7.4%, the Beach Cities saw prices drop 25.6% from last year.  Manhattan Beach was down 12.9%, Hermosa saw declines of 25.8% and Redondo was off 7.2% from September 2008.  However even though prices were off from last year by a fairly significant amount,  Manhattan Beach had the highest median home price in the California with a median of $1,502,000. 

Meanwhile the financial markets are very concerned about what's happening in the commercial real estate sector.   For those of us who remember the S & L debacle of the '80's this could be an issue that will have consequences for the residential market.   We just saw what happened when credit dried up from 2007-2008 and the effect that had on the  residential housing market. 


Personally,  I think a little boring might be nice....