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SANTA MONICA REAL ESTATE SNAPSHOT – AUGUST 2010

By Jodi Summers

Real Estate Broker/Owner with Sotheby's International Realty

August 05, 2010 07:34 PM

By Jodi Summers

First the big picture, then Santa Monica. The Los Angeles Economic Development Corporation reports that home sales in Southern California (houses, townhomes and condominiums) rose in June to 23,871 units (new and resale homes), edging up by +2.6% compared to June of 2009. On a month-over basis, June sales rose by +7.2% and were the strongest since July 2009 when 24,104 homes were sold.

Analyzing two years of supply and demand in Santa Monica, Clarus Market Metrics calculates that comparing July 2008 vs. July 2010, the number of for sale properties is up 7%, while the number of sold properties is up 19%.

In June, the median price in Los Angeles County increased by +4.7% to $335,000 and sales ticked up by +2.8%.

In Santa Monica, contrasting July 2008 vs. July 2010, the median price of for sale properties is down 10% to $ 899,000 and the median price of sold properties is up 5% to $942,000.

Southern California's housing market is still troubled, but compared with last year, there has been a great deal of improvement. Prices and sales have been trending up the last several months, but much of that may be attributable to investors and government support. Investors accounted for 19.7% of the homes sold in June.

Locally, the strengthening market means the months’ supply of inventory is down to 4.6 months from 5 months two years ago. (Experts say 3.7 months is parity.)

“It is clear that investors are back in the market,” notes Robert Leveen, a senior vice president of Lee & Associates investment services group. “There is significant activity around any REO property. Buyers assume that the lender is motivated to sell at any price. There is sufficient demand in the marketplace and although there are discounts,

certain product will trade with multiple offers, and the discount is not as steep as many buyers would want.”

More money was spent buying homes in June than in the past two years. Still, mortgage financing (or the lack thereof) remains a pressing issue, but seems to be relaxing in Santa Monica. Brad Blackwell, a national mortgage sales manager at Wells Fargo Home Mortgage notes that, to write a jumbo loan in the coastal areas of Los Angeles and Orange counties, the lender is currently asking for a 20% down payment or that percentage of equity, down from 25% last year.

According to author E. Scott Reckard in 'The jumbo mortgage market is beginning to thaw,' “The reason: Wells believes high-end home prices are stabilizing in those coastal counties. But the bank still requires higher down payments in the Inland Empire and other battered housing markets such as Florida, Nevada and Arizona, where prices for jumbo-size homes don’t appear to be stabilizing”

The continued slowdown in the real estate market has been attributed to the fact that jumbo loans remain much harder to get than before the recession. Currently, borrowers typically must have a credit score of at least 700, compared with boom-era minimums in the 600s.

Another sign of the easing credit market is the increasing availability of “stated income” loans – but unlike the phat times, borrowers are asking for at least a 40% down payment.

We’re here to help you with residential properties. Please contact Jodi Summers -jodi@jodisummers.com or 310.392.1211 and let us move forward together.