A year in realty time
The Real Estate section tracked trends near and far in 2006. Where in the country were there bargains still to be had? Was it the year to walk away from the Las Vegas table and perhaps say “Hola!” to Mexico’s real estate market?
And closer to home, we watched the city deal with the McMansionization of some of our favorite neighborhoods and mobile home parks going condo. Mortgage rates ticked up, then came down again. Home inventories grew and, no surprise here, foreclosures grew too.
Where do things stand now? Real Estate staff writers revisit some of our 2006 cover stories.
Cooling trend takes hold
The sizzling market at the beginning of the year morphed into a more balanced one by spring as appreciation slowed to a crawl, homes lingered on the market and buyers took over the driver’s seat.
By October, a chill reached many of the expensive and mid-range markets. Beverly Hills, Manhattan Beach, Tarzana and Alhambra saw median prices fall at least 10% from September to November, according to the latest figures from La Jolla-based research firm DataQuick Information Systems.
Inglewood, Whittier, Bell, Pasadena and South L.A. still are riding the realty crest, according to DataQuick.
-- Diane Wedner
Loans we love and loans we loathe
Falling mortgage rates -- recently at an 11-month low -- should keep the market from crashing, experts say.
On the home-mortgage front, borrowers of adjustable-rate loans sighed in relief as rates ended the year near 6%.
Thirty-year fixed-rate and 10-year interest-only loans remained the most popular, lenders say. Borrowers who had opted for short, fixed-period adjustable-rate mortgages when rates were at record lows have been dumping them in favor of the more-secure 10-year loans.
Home-equity loans also have lost their luster in favor of fixed-rate second mortgages, brokers say. Borrowers who chose risky negative-amortization loans, which allow low monthly payments but can eat away at home equity, are desperately trying to get out of them now, said L.A.-based Legend Mortgage broker Mitch Ohlbaum.
No longer flipping out over Vegas
It’s still OK to bet the house -- actually, a high-rise condo -- in Sin City. We reported in April that the departure of investors caused at least seven marquee condo construction projects to fold or get put on hold. Since then, the city has seen additional projects evaporate. But demand for hotel rooms and luxury condos near the Strip still has some construction cranes stretching skyward.
MGM is making a splash just off the Strip with the Signature at MGM Grand, which features hotel rooms and residences. The first of three towers opened in June, the second on Dec. 20 and the third is scheduled for 2007. Vdara, the condo-hotel portion of MGM Mirage Corp.'s CityCenter Las Vegas, a $7-billion project, will begin taking reservations Tuesday. As will the center’s Veer Towers and the Residences at the Mandarin Oriental.
The all-condo, luxury Sky project is under construction, and the Trump Las Vegas Tower II will take reservations for luxury high-rise condos in January.
“Flip investors have exited the market,” said Bruce Hiatt, the owner of Vegas-based Luxury Realty Group. “Now we’re getting true buyers.”
The country’s hottest hot spots
In May, we offered would-be investors a few out-of-state areas worthy of a close look.
Where in the country were the greatest price gains seen?
The National Assn. of Realtors reported the largest single-family home-price gains in the Salem, Ore., area, where the third-quarter median price of $228,000 was 24.7% higher than the third quarter of 2005. Next was Elmira, N.Y., where a median home price of $93,000 saw a price boost of 21.4% from the third quarter of 2005.
Neither of those places made The Times’ roundup. How did the market fare in the places we picked to profile?
The median sales price in northeast Richland County in South Carolina, including Columbia, was $136,979 in October 2005 and had gone up 18.6% by October 2006 to $162,487. That’s a jump from $83 to $92 in the average price per square foot.
Walter Rock of Rock Properties in Round Rock, Texas, reports that the single-family median price in the Round Rock-Austin area went up 9% from October 2005 to October 2006.
In Augusta, in Georgia’s Columbia County, home prices appreciated 5.8% from 2005 to 2006. In nearby Richmond County, they went up 3.1% in that period.
-- Ann Brenoff
New McRules for McMansions?
Your home is your castle, but does that new house going up on that tiny lot down the street have to be as big as one?
L.A. City Councilman Tom LaBonge in June proposed exploring how big is too big in response to homeowners who complained about shadows, blocked views and houses out of scale for the neighborhood.
LaBonge is not the only council member interested in reining in McMansions. At the council’s direction, the city planning department has been working on proposed guidelines for two years, said deputy planning director Bob Sutton.
Public hearings will be held in February regarding limits on the size of new houses built “in the flatlands,” he said. The department expects in April to make recommendations to the Planning Commission.
LaBonge’s motion asked the planning department to recommend the appropriate size of new houses and additions in relationship to lot size and to determine which land is suitable for building on slopes and hillsides. The department will address hillsides separately after completing work on proposed guidelines for the flatlands, Sutton said.
-- Gayle Pollard-Terry
Power to the people interrupted
Close to 80,000 L.A. Department of Water and Power customers and more than 1 million Southern California Edison consumers experienced power interruptions in July as the region sweltered through a week of temperatures topping 100 degrees.
Desiree Causey, a Westminster lawyer, was among those who sought reimbursement from Edison for spoiled frozen and refrigerated items.
Her claim, which included itemized receipts for nearly $300 worth of food, was denied.
“I’m not done yet,” said Causey, who believes that the problem in her area was caused by equipment failure, not an “act of God,” and that her loss should be reimbursed.
“The letter says if I don’t like their answer, pursue them in Small Claims Court,” she said. “I’ll make time in the new year.”
Edison and DWP failed to respond to questions about the number of claims filed and paid.
Mobile-home park is still in limbo
At most mobile-home developments, residents own the mobile home and rent the land. If the park is converted to condominiums, which requires approval from the state Department of Real Estate, a resident could own both.
In October, we reported that James F. Goldsmith, owner of Colony Cove Mobile Estates in Carson, had applied to turn the seniors-only park into condominiums. Under his proposal, those who want to continue to rent the pad on which their mobile home sits may do so. But they could face higher rents.
After state authorities approve the conversion and a single person buys that plot from the owner, rents rise in stages to market rates for any tenants who are not low-income. At Colony Cove, where rents average about $400 a month and increases are governed by a local rent control law, that could mean hundreds of dollars, according to park residents who actively oppose the conversion.
“Nothing is happening at this time,” said Bill Smalley, leader of a residents’ group that is fighting the change.
The owner’s lawyer, L. Sue Loftin, did not respond to a request for comment regarding the status of the conversion.
They’re bound for Baja luxury
Earlier this month, Trump Ocean Resort Baja set a one-day real estate sales record for Mexico when $122 million worth of condos were sold. Priced from the $200,000s to nearly $3 million, the 188 suites sold represented 80% of Phase 1 of the project.
About 30 minutes from downtown San Diego, the resort is a high-end complex that will operate like a hotel with an owner’s concierge, a pool house bar and cafe, an upscale restaurant, a spa and fitness center, tennis courts and walking trails.
“Baja is clearly gaining momentum as a destination,” said Sid Landolt, president of S&P; Destination Properties. Construction is scheduled to begin in early 2007 with the completion of the first tower anticipated in late 2008.
In other Baja news, the National Assn. of Realtors signed a reciprocal membership agreement with the Mexican real estate association, Asociacion Mexicana de Profesionales Inmobiliarios, in October. This means that all of Mexico’s 2,500 members will become Realtors on Jan. 1.
The agreement is intended to build U.S. consumer confidence in the home-buying process in Mexico.
A giant step in foreclosures
The number of Southern California homeowners who fell behind on their mortgages through the third quarter of this year more than doubled to 18,516 from 7,080 in the same period last year, according to Rick Sharga, the vice president of marketing for RealtyTrac Inc., an Irvine-based company that monitors foreclosure activity.
For San Diego, the figure rose to 4,069 from 970 during the same time period.
“The bulk of the increase is in initial notices of default,” he said, referring to letters from lenders indicating that the borrower must catch up on house-note payments or face losing the property. “Historically, about 60% of those properties won’t get as far as the foreclosure auction.”
Sharga attributed the increase to higher payments on adjustable-rate mortgages and the slowdown of housing sales. When homes take longer to sell, some desperate borrowers who need a quick sale run out of time.
By another measure, however, California is doing better than the rest of the nation.
“Statewide, in terms of the selling price of the properties, California foreclosure properties have the highest retention value -- average 88% to 89% of the estimated market value,” he said, explaining that few foreclosure properties are big bargains.
“If you look at a state like Ohio, foreclosure properties are selling for about 57% of market value.”