LA Digs - Northeast LA Real Estate Blog

Eagle Rock Real Estate Report February 13, 2009

What's the story with short sales? (Again, a short sale is where the owner owes more to the bank than they can get for the property, so they can't sell unless the lender agrees to take less).  Are they working out for people?  In Eagle Rock, 17 of the 47 active listings are short sales, 7 of the 22 properties in escrow are short sales, and 1 of the 9 closed sales so far this year was a short sale. So the percentage of each goes from 36% of the actives to 32% of the pendings to 11% of the solds are short sales.

Contrast that with foreclosures: 7 of the 47 active listings, 9 of the 22 pending, and 5 of the 9 closed sales are REO. The percentage goes like this: 15% of the actives, 41% of the pending, and 55% of the closed are bank-owned.

So there are a number of short sales that try to close escrow, few that actually do. On the other hand, foreclosures are selling like hotcakes. And, though it's a very small sample, two-thirds of the closed sales in Eagle Rock so far this year, 2009, were distress sales, which is almost as high a number as in Highland Park (see my February 7 blog). And actually, one of the "regular" sales was a trust sale, so that reduces the "normal" number even more.

My view is that the short sales you see clogging up the active listing inventory are confusing the general buyer public. You see these artificially low-priced homes, like the one at 4911 Townsend listed for $250,000, and everyone thinks they are going to get a deal. Well, let's follow that one and see how it pans out. It will be a learning experience for us all. My prediction: if it ever sells as a short sale, it won't sell for $250,000, it will be more, because the house is too big to sell for that little, even though it needs a lot of work. It will get bid up to a higher price. Will the bank approve that price? Or will it eventually go to foreclosure? Let's watch that one and find out.

**UPDATE** Today (November 14, 2010) I looked up the MLS record on 4911 Townsend to see what did ever happen to that property, and the answer is... nothing!  It expired on the MLS July 29, 2009, which means that it either did not sell and the seller decided to keep making payments, or the listing agent never updated the listing.  Looking up the property in the title records I see that it hasn't changed hands since 2006, so I'm assuming the lender did not give short sale approval and so the seller has kept making his payments and kept the house.

Here is an example of what pricing right will do: I saw 5420 Mt. Helena, which came on the market at $559,000 with a list date of 2/6/09 and by 2/10/09, the listing agent told me it had received 4 offers and was now in escrow. It was a trust sale and the family just wanted it sold. I'll bet that one sold for more than its list price as well, because you cannot underprice a home, even in this price-conscious market. If it looks like a deal, more than one buyer will think so.

Of course we all want a deal, we don't want to pay more than something is worth, especially in today's market. Which gets us into the whole discussion of value, of what is a fair market price? Is the price today the same price it will be worth in a month? If the buyer and seller can't agree on a number today, then we don't have a sale. What will the property be worth in two months? Is the market going up or down? If you are overpriced today, what does that make you in two months if you still have't sold? Or is it just that the right person hasn't come along?

It's not simple buying real estate today, is it? Unless you just want to buy a home, need to move, find a place you can afford, and buy it. Oh, that sounds simple. Why is all the rest going on?

And that's why we have the whole real estate industry, my friends. What should be a simple transaction is full of so many questions to be answered.

From a community member who loved our $1/clothing item sale at  The Neighborhood Green Fair last weekend:

You may be interested in this opportunity in East LA:  This is a long-time organization that was founded by the Methodist Episcopal Church. The industrial department of the Plaza Community Center became the Goodwill Industries of Southern California in 1919. Their website lists needs for their Esperanza Drug and Alcohol Treatment Program, Child Development Program, Family Services, and Youth Services programs: http://www.plazacs.org

Plaza Community Services is collecting thousands of clothing items to help the thousands who have lost their homes and jobs over the last two years. On Valentine's Day, Saturday February 14th from 9 a.m. to noon, the clothes you give will be given FREE to hundreds of families throughout East Los Angeles and neighboring communities. Remember, the clothes will be distributed for FREE!

During this time of change, we all want to know how to help. Here are three ways:

1. Forward this post to those that need the assistance.

2. If you have clothing to donate, deliver it to 4108 City Terrace Drive on Thursday, February 12th and Friday, February 13-From 9am-5pm.

Please only bring clean items on their hanger. E-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or call (323) 267-9749 and ask for Cecilia.

3. You can donate directly to Plaza Community Services to assist us with our newest effort to assist those most in need. Any donation will do and will be helpful!

While this recession is affecting us all, we can all do more. E-mail me directly at This email address is being protected from spambots. You need JavaScript enabled to view it. if you have any questions. Have a great day!

Thank you!
Gabriel Buelna
Executive Director

From our spiffy Multiple Listing Service that has all the listings in one place, no matter what far-flung MLS an agent might put a listing in, our sales data are now much more complete. The following table is a sales overview comparing 2007 to 2008:

Highland Park has really been through the wringer, as we say in professional Realtor terms. From the beginning of 2007 to the end of 2008, the number of sales dropped 36%, and the lowest sales price dropped 56%! Wow, though the low sales price isn't as meaningful as the median and average prices which dropped by about 30%. The high sales prices of $950,000 in 2007 were mostly in the new development in the Monterey Hills, and that wasn't the case in 2008. In fact, the last house that sold over there was a foreclosure that closed at $705,000, a very significant 25% drop in price in one year.

What I think is really interesting about the trends in Highland Park is that the number of units sold appears to have bottomed out in the first half of 2008, with the second half showing an increase of 43%! The prices actually dropped close to 15% in the last half of the year. This indicates to me that we saw some kind of a bottom at that time in Highland Park, buyers perceived that there were deals to pick up, and the sales numbers, not prices, finally started to pick up.
In 2007, 7% of the sales were foreclosures, 1.6% were short sales, and 2.4% were trust or probate sales, for a grand total of 11% distressed sales. Compare that to 2008, when the sales were 45% REO, 10% short sales, and 2% trust sales, for a total of 57% distressed sales. Whew!

So what do we have going on in 2009? Of the 127 active listings, 39 are REOs, 31 are short sales, and 3 are probates, so 57% of the listings are distress sales. Of the 30 listings that went into escrow since January 1, 2009, 17 are REOs, 6 are short sales - 77 % are distress sales. Of the 18 closed sales, 11 are REO and 2 are short sales, which means that 72% of the sales are distress sales. What does all this mean?

- The bargain hunters are out and are buying. If you are a seller and you have to sell, you'd better be really well-priced and ready to negotiate further if you want to sell in this market.
- If you are a buyer and you see something you like, you'd better jump on it. The days of having your parents come the following weekend to approve your choice before you make an offer are over. In fact, if you need your parents' approval before you buy, you'd better bring them with you when you look at stuff.
- If you are waiting for prices to drop further, you may miss your chance to buy anything. Why? Because you won't know when the prices have bottomed out until you see that they have started back up. The minute that happens, sellers will be less negotiable and will wait to put their homes on the market. Simply put, there won't be anything good for you to buy.
- If you are a seller and you want or need to make a move, now is a good time because the buyers are out looking, but prices are still dropping, so price it right to start. That means price it under what the recent sales show. Yikes! (I know).

New Business in the Community

I put this new cafe in my restaurant guide based on rave reviews from some friends of mine, but you know, dear Reader, that I do try to experience the fruits of our corner of the city myself at every opportunity. Buttertart: coffee & treats. Yum. You have to go there. Located in Sagamore Park, a nifty little neighborhood wedged between Eagle Rock and Glendale, it's named after its signature dish, "a Canadian treat of a soft pastry shell filled with a savoury butter and sugar filling."  They have the regular kind plus a bacon Buttertart. I can't even imagine how much cholesterol that might contain. If the plain one is any indication, you will fall down gasping with your heart attack in complete bliss.

Here's their contact info which I obtained from their website, www.myButtertart.com:
4126 Verdugo Road
Los Angeles, CA 90065
Phone: (323) 258-TART (8278)
Office: (323) 254-5040
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Besides serving superb treats, sandwiches and coffee, Buttertart plans to decorate with local art, helping local artists be seen and hopefully be paid:

On Friday, Feb 13th, Butter Tart Presents... Fill in the Blank Gallery opens its doors & fills its blank walls with an inaugural group art show curated by Frank Ryan. What a better way to spend your Friday the 13th of February & Valentine's Day Eve? Next door, Butter Tart Cafe will be open during the show for your thirst & snacking desires. The show goes from 7pm - 10pm, then we mosey on over to Verdugo Bar to continue the freaky activities.

Artists:
Joshua Aster
Nathan Danilowicz

Kate Barclay
Alex Lee Harris

Jamie Chan
Frank Ryan

David D'Andrade

Good morning! Good week! Starting off February, there are 47 single family homes showing as active on the market in the 90041 zip code, with 15 of them declaring themselves as short sales, and 7 as REO, or Real Estate Owned, which means foreclosure. So, almost one third of what is on the market is subject to lender approval, with another 15% bank-owned, which leaves us with 53% of what is on the market today as "normal" sales. In truth, several more of the "normal" sales are under duress. What does this mean?

1. A short sale is a swamp sale, by and large. By that I mean trying to do one is like slogging through a swamp, where your most likely result is that you'll get mired in mud, maybe even quicksand, and you'll come away with a peculiar rotten smell that's hard to wash off. It is subject to lender approval, which means that you make your offer to the seller, his agent in turn submits it to the bank. You might even open escrow. Then you wait, your agent calls daily, time passes as you think that any day now your sale will be approved and you'll buy this house. Unbeknownst to you, the listing agent is still taking offers and submitting them to the bank. Some poor clerk who makes minimum wage and who couldn't care less that you are salivating over your great deal is buried under a mountain of these and decides to take a few sick days. So many times, the offers trickle in until the property goes to foreclosure sale, the listing agent is out of luck (but many times won't admit it), and some time later the property shows up sold to someone else. Some person who is related to some officer of the bank. (Oh how cynical of me!) Basically, most short sales are a fiction and they clutter up our inventory with what look like great deals and they just aren't, they are no deals at all. My research shows maybe 1 in 20 have been going through, though that number is increasing as the economy has worsened. If you are incredibly persistent, you might end up with something. But don't think you're going to get it at that bargain basement price you saw on the MLS.

2. Foreclosures are almost as hard to do. Strange how the really good deals come on sold or you can't get an answer for days and then it comes up sold, or other frustrating scenarios. In truth, most REO listing agents get piles of offers, have lots of listings and do not behave like human being Realtors like me. They seem to wait for the highest offer to come in, counter that one, and open escrow. Sometimes that one doesn't work out and it goes back on the market and the same system goes on again. They don't take backups, they don't return phone calls, they don't care about you and your offer.

If you are a buyer and you want to buy a home to live in - you know, like a regular person who just wants to buy in this great market, you will find that the ones that are actually for sale that you can actually negotiate for and purchase number maybe 15 to 20 out of that 47 on the market. And the ones in your actual price range number maybe 3 or 4 at best. But you see these 47, priced from $240,000 to $899,000, and you think there are all these deals and there will be more, and you listen to all your friends that the market will drop another 20-50%, and you are stymied. Do you want to buy a house or do you want to sit on the sidelines?

An interesting exercise would be to look at what sold in the last month and see if you would have bought those deals. Would you be interested in a blog post about that?