Kate watches, waits and fears a falling knife

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Kate is back, still blogging, still looking for the future home of Mr. Kate. This week she explains her current strategy and tells us about the houses she has her eye on. Enjoy:

One of the most common questions I get asked is: ‘Why haven’t you bought a house yet?’ The answer to that question changed dramatically since I began my search. At first, it was because the listings in my target neighborhoods and price range were few and far between and (luckily!) I ended up on the losing end of several bidding wars, as you know from one of my earlier posts.

Eventually, people urged me to expand my search area to include neighborhoods north of the 101 where bidding wars were not as common. So, in June, I went looking in an area called Fashion Square. Fashion Square is bound by Hazeltine and Woodman, Magnolia and Riverside, and is named after the adjacent Westfield Shopping Center.

I figured these homes had to be more affordable than homes south of the 101, as they were not in the hills and not walking distance to Ventura Boulevard’s restaurants and boutiques. But they weren’t. As of June 30, there were 11 homes in this neighborhood listed for sale between $800k and $900k (remember, these are mid-century tract houses we’re talking about). I couldn’t believe people were paying that much for these homes, so I decided to watch and see who would pony up.

After two months (that’s two months of watching these listings, many of these homes have been listed in excess of four months), how many of those original 11 listings do you think sold? Well, one definitely sold. As detailed below, it was an REO that sold for nearly $400k less than its previous recorded sale. One went inactive, and no sale data is available so it seems to have merely expired. Four of the 11 are still priced between $800k and $900k, but two of them have seen at least 8% reductions. And the remaining five have been reduced below $800k. (In fairness, a couple of other homes in this neighborhood came on the market in July and then went inactive, but here again no sale data is available for them and they were not part of the original 11 listings).

Read on below: Kate gets specific about the houses she’s monitoring, and the price reductions she’s tracking.

Bidding wars are not a problem these days, so why don’t I scoop up one of these listings? Because I’m genuinely afraid of catching the proverbial falling knife. If these homes have dropped approximately 8% already, how much farther will they fall after the holidays? A few months ago, these reduced numbers seemed like a pipe dream, and now it’s happening so fast it’s scary. Sure, interest rates appear to be on the rise, but that doesn’t scare me as much as being stuck with a negative equity house.

STILL LISTED BETWEEN $800k-$900k:

04/06/07:
13512 Addison St.
Price Reduced: 05/24/07 -- $899k to $885k
Price Reduced: 06/05/07 -- $885k to $875k
Price Reduced: 06/26/07 -- $875k to $850k
Price Reduced: 08/02/07 -- $850k to $825k (8.23% down)

04/12/07:
4937 Woodman Ave.
Price Reduced: 04/17/07 -- $900k to $849.95k
Price Reduced: 05/31/07 -- $849,95k to $800k (11.11% down)

05/01/07:
5124 Sunnyslope Ave. ($855k)

05/30/07
5057 Stern Ave. ($899k)

REDUCED BELOW $800k:

04/11/07:
14007 Morrison St.
Price Reduced: 08/20/07 -- $820k to $779k (down 5.00%)

05/15/07:
4917 Woodman Ave.
Price Reduced: 06/18/07 -- $869k to $849k
Price Reduced: 07/18/07 -- $849k to $799k (8.06% down)
*This home is now also available for lease at $3k/month

05/31/07:
4918 Ranchito Ave.
Price Reduced: 07/18/07 -- $825k to $775k (6.06% down)

05/31/07:
14019 Huston St.
Price Reduced: 06/27/07 -- $819k to $799k
Price Reduced: 07/12/07 -- $799k to $779k
Price Reduced: 07/26/07 -- $779k to $759k
Price Reduced: 07/31/07 -- $759k to $749k (8.55% down)

06/05/07:
13739 Hartsook St.
Price Reduced: 07/06/07 -- $825k to $775k
Price Reduced: 08/14/07 -- $775k to $759k (8.00% down).
*This is the infamous cash-back-at-close house. It’s still available!

OFF MARKET:

05/07/07:
13454 Otsego Ave. ($830k)
*Inactive; no sale recorded.

06/04/07:
13952 Hartsook St.
*This REO sold after 50 D.O.M. at $880k in July 2007. The prior sale was in January 2006 for $1.2M.

Thanks, Kate.
Comments? Thoughts? Insights? Be respectful. You know who we’re talking to.