The resort community looks to wealthy buyers to shore up second-home sales.

By Diane Wedner, Los Angeles Times Staff Writer
March 3, 2008

Talk about putting on the Ritz.

Never mind that most of Mammoth Lakes’ second-home market is crawling as slowly as a car in a blizzard. The luxurious, soon-to-be-built Ritz-Carlton Residences, Mammoth and the recently opened Westin Monache Mammoth condo-hotel have many in the resort community ready to haul out the finery and celebrate.

“The Ritz and Westin bring in a certain caliber of people who’ve never been here, and we’re excited about that,” said George Fowler, a Mammoth Lakes Coldwell Banker broker who has represented Westin condo buyers.

It’s a small niche, but it packs a financial wallop. The Ritz’s two- to four-bedroom, furnished attached units in 1,200 to 4,000 square feet will come with mud rooms, full kitchens, steam showers and walk-in closets. The development will have a pool, a spa, a library and a group living room, plus it’s a short walk to the shops and restaurants at the Village at Mammoth. All for $1.7 million to $6.5 million.

The buyers — not your typical Mammoth jeans-and-sweat-shirt crowd — are putting down $10,000 refundable deposits on the homes. Construction is scheduled to start in May on the first 60 of 130 units, said Kathy Richardson, sales director for the development.

The Westin, which opened in November, offers upscale condos that buyers can rent out. The 230-unit complex — 131 units went in just hours in an April 2005 pre-sale and the rest four months later — last week had 18 condos for sale, from $419,000 for a studio to $1.25 million for two bedrooms, said Stephanie Cook, the broker at Mammoth Realty Group.

While new construction is banking on the resiliency of the wealthy, most of the mountain resort’s buyers and sellers are experiencing a market that has tumbled, as has most of California, like a novice skier on a black-diamond run. In 2007, 278 condos sold, 22% fewer than the 358 in 2006, according to the Mammoth Lakes Multiple Listing Service. Single-family home sales also decreased to 42 in 2007 from 55 in 2006.

The mortgage meltdown has exacerbated the vacation-home slowdown. Owners tend to sell second homes before shedding their principal ones when the going gets rough financially, so resorts have more inventory than usual.

Despite the sales downturn, prices haven’t entered the bargain realm. The median sales price for a Mammoth area house in 2007 was $900,000, according to the MLS data, compared with $895,000 in 2006. Condos sold for a median of $540,700 in 2007, only slightly off the $550,000 median in 2006.

Prices aside, one major concern of many would-be second-home buyers is the rental market for their properties. Here the news is mixed, depending on the rental term.

Long-term rentals (six months plus) are on the slide, said Bill Wagner, a Century 21 Mammoth Realty agent who specializes in such housing.

“This is the slowest year ever,” Wagner said. “In winter, I never have an opening. Right now, I have two and am getting another the first of next week.”

He attributes the slowdown to the state’s economic turbulence.

On the brighter side, nightly rentals are up 40% from last year, said Kathie Tipton, owner of Mammoth Premiere Reservations. Occupancy “is running at least 95% every weekend and at 20% to 40% midweek.”

She added that the snowpack — at 12 feet in January, it was the fourth-greatest on record for that month — bodes well for a strong ski season and demand for rentals through April.

Buyers, however, are stuck in a holding pattern, said broker Steve Schwind of Mammoth’s Prestige Properties. “Some are waiting for the market to bottom out, some are waiting for a resolution of the nervous economy and some are waiting for the expanded-airport approval.”

The proposal for Mammoth Yosemite Airport would transform a maintenance building into a commercial passenger terminal. Only private aircraft land there now.

Approval for Horizon Air to begin service to Mammoth Lakes — two flights a day between LAX and the resort during the winter — is awaiting a final environmental-impact statement, which is near completion. The decision could come this spring or summer, with potential commercial airline service up and running next winter, said Charles Cox, a technical specialist for the Federal Aviation Administration. If it goes through, visitors who don’t love the 5 1/2 -hour drive from Los Angeles to the resort would be able to fly there in about 45 minutes from LAX.

“The airport could draw a big range of folks to Mammoth,” Schwind said, “beyond the drivers’ market from Southern California.”

Meanwhile, sellers are hoping this season’s deep snow and good attendance will spur residential sales.

Mammoth Realty Group agent Sue O’Brien recently represented a buyer who purchased an in-town two-bedroom, three-bath town house for $400,000. The original listing price in July was $485,000, which then dropped to $448,000.

“Motivated sellers are willing to negotiate prices,” O’Brien said.

The lowest-priced condo currently available, a 1969 one-bedroom fixer in 700 square feet at the Sierra Manors development, is listed for $209,000.

The venerable 101-unit 1849 development, built in 1971 and within walking distance to a ski lift, has two-bedroom, two-bathroom units listing for an average of $525,000.

For those who love the shopping and other amenities the Village at Mammoth offers — including the gondola ride to Canyon Lodge — there are units available at three housing developments: Lincoln House, White Mountain Lodge and Grand Sierra Lodge. Buyers can find condos ranging from $429,000 for a 601-square-foot, one-bedroom unit at White Mountain Lodge to $1.5 million for a 1,425-square-foot, three-bedroom unit at Grand Sierra Lodge.

For “ski-in, ski-out” folks who want condos on the slopes, there’s Juniper Springs, with more than 300 units.

“Juniper Springs is the mountain equivalent of ‘beachfront property,’ ” Schwind said. “It’s for skiers who want to be right in the action.”

The development was built by Intrawest in 1996. There currently are 28 listings at the three main complexes. The average price of a condo is $773,275, for a two-bedroom, two-bathroom unit at Eagle Run.

Scott Meek, 56, a consulting engineer, and his wife, Julie Smith-Meek, 49, an aerospace worker, visit Mammoth year-round. They waited until last summer, traditionally the slowest time of the market there, and when the prices fell low enough, they bought a condo.

The couple, who are avid skiers and hikers, had rented over the years and jumped at the chance to buy a two-bedroom Snowcreek Resort home in 1,800 square feet in the $500,000 range, after years of spiraling prices kept them out of the market.

“It’s still expensive in Mammoth,” Meek said, “but prices have definitely dropped.”

Snowcreek is a newer, 355-acre development with 755 units, located a couple miles from the village. The company launched its latest phase, CreekHouse, which offers 118 single-family homes, duplexes and tri- and four-plexes, in July. Currently, there are 23 homes for sale in the entire development, from $369,000 for a one-bedroom condo to $1.25 million for a four-bedroom home, said Julie Wright, a Snowcreek Property Co. broker in Mammoth Lakes.

Even pricier is a four-bedroom detached town home in 3,400 square feet for $2.5 million at Stonegate, a luxury development on the sixth fairway of Sierra Star Golf Course. It comes with a golf-course view and is a short jog from the Village.

“We’re not trying to be Vail or Aspen,” despite the new expensive housing, said broker Schwind. “Mammoth is a place where the fur folks and jeans crowd all come together.”

Office, Industrial Hold Up Amid Slowing Economy

Office

The Los Angeles market still has the market fundamentals of an attractive investment.

Though there has been upward pressure on capitalization rates of roughly 50 to 70 basis points and downward pressure on pricing—which has fallen between 10% and 15%—the Los Angeles market continues to have a low vacancy rate with rising lease rates.

The declining values in office buildings should be met next year by an influx of foreign investment that continues to be fed by the weak dollar. While significant projects and buildings, such as Union Bank Plaza in Downtown Los Angeles, have been taken off the market due to falling prices, it is expected that investment activity will pick up in the coming year as timidity subsides to an increase in bargain shoppers.

It should be noted that these buyers will be much more conservative in their purchasing as underwriting has become an arduous task—though nowhere near as difficult as other markets.

Less leveraged investment entities remain active players in the market. CalPERS, the largest U.S. pension fund, increased its real estate holdings this past month to an unprecedented 10% of total assets as bargains become ever more present.

There is no doubt that the pace of leasing activity decreased in the fourth quarter with a noticeable decrease in demand. The vacancy rate in greater Los Angeles has increased by nearly a half of a percentage point, which has resulted in a substantial negative net absorption of nearly 500,000 square feet. Despite this, lease rates in the region have increased to a record of $2.84 per square foot.

Due to recent changes in the economy and capital markets, tenants are becoming increasingly diligent and cautious about space requirements and more creative with space usage. This creativity has stifled the significant organic growth that has drastically reduced the vacancy rates over previous quarters.

Industrial

Although facing considerable challenges to the economy and the greater Los Angeles industrial market, positive attributes of the current conditions are strong rents (69 cents per square foot), healthy tenancy (1.6% vacancy) and positive growth (557,055 square feet of net absorption).

However, investors and users alike seek signs of sustained stability and this cautionary behavior is causing activity to slow from levels experienced year over year since 2004. Yet, market slowdowns are the catalyst for more serious and opportunistic buyers, local and foreign, often flush with cash and banking on continued strong global economic activity to drive demand for industrial space.

With demand trending toward smaller spaces, buildings with more than 100,000 square feet are sitting for longer periods of time while investor and user interest turn to blocks of space as low as 2,000 square feet.

On the trade front, a key driver of the industrial market, the total number of containers handled at the ports of Los Angeles and Long Beach in November fell by 3.8% from a year earlier. According to the Los Angeles Economic Development Corp., this was the fourth month in a row of year-over-year declines.

Data and analysis provided by CB Richard Ellis Group Inc. Research.

By Sue Kirchhoff, USA TODAY

WASHINGTON — Mounting home foreclosures will have “profound” effects on the economy next year, reducing job growth, bleeding billions of dollars in tax revenues and hitting consumer spending — but shouldn’t push the country into a recession, according to a report Tuesday.

Financial analysis firm Global Insight, in an study for the National Conference of Mayors, predicted at least 1.4 million homes will enter foreclosure next year. That will worsen the already sharp housing downturn, with ripple effects on hiring and spending.

Overall, businesses will create 524,000 fewer jobs next year. Tax receipts will fall by $6.6 billion in ten select states, the report predicts. Nearly 130 cities around the country will face sluggish growth, as economic activity expansion is reduced by more than a third in 65 metro areas alone.

FIND MORE STORIES IN: Foreclosures

The housing downturn will shave a full percentage point off growth, with the economy expanding at a tepid 1.9% annual rate, the report says. Property values will drop by $1.2 trillion, as foreclosures mount and the housing market remains in the doldrums. Home prices will fall by an average of 7%, but price declines could range as high as 16% in California, the report says

“Everyone has some culpability but we have to fix the problems,” says Mayor Douglas Palmer of Trenton, N.J., president of the U.S. Conference of Mayors. “We can’t afford not to do anything. We’re losing tax revenues, have to maintain foreclosed property and we’re going to see more and more homeless families.”

Federal, state and local lawmakers have struggled to respond to a growing wave of foreclosures among borrowers with higher-cost subprime mortgages. Nearly 17% of subprime adjustable rate mortgages are delinquent, a number that looks to rise as adjustable rate loans reset in coming months, often to sharply higher interest rates.

Federal Reserve Chairman Ben Bernnanke in testimony to Congress earlier this month noted that, on average, nearly 450,000 subprime mortgages will reset every calendar quarter from now until the end of 2008.

“Avoiding the payment shock of an interest rate reset by refinancing the mortgage will be much more difficult, as home prices have flattened out or declined, thereby reducing homeowners’ equity, and lending terms have tightened,” Bernanke noted. He said rising foreclosures could reduce property values, weaken struggling housing markets and the economy.

The House has passed legislation to give federal housing agencies more freedom to lend to borrowers who would otherwise turn to the subprime market, while setting tighter standards for future mortgage lending. The Senate has yet to act on the bill. Federal and state banking regulators are trying to help loan servicing firms find ways to quickly restructure large groups of loans, instead of considering each mortgage on a case-by-case basis.

Palmer says the mayors are looking at ways to modify existing loans, strengthen counseling services and other steps in line with what Congress is debating. The mayors will also be meeting with lenders to assess the situation.

The Global Insight report says the housing market financial fallout will be widespread. New York City is forecast to lose more than $10 billion in 2008, followed by Los Angeles at $8.3 billion, Dallas at $4 billion; Washington at $4 billion, and Chicago at $3.9 billion.

In percentage terms, Myrtle Beach, S.C., could suffer the biggest hit, growing 1.7 percentage points less than it would have. California will suffer the most distress.

In other findings the report predicts that job growth will average 75,000 per month during the next six months. That’s more than 100,000 fewer new jobs per month than the 2006 average. Consumer spending will expand by just 2% in 2008, buffered by falling home prices. And new home construction will fall through the spring of 2008, declining about 20% from current levels.

October 12, 2007

The US housing bust is like a leaking ship. You may still be able to stay afloat, depending upon where and how bad the holes are.

Will the home market continue to sink, or is it just bobbing around, waiting for buyers to rescue it? With odds almost favoring a recession due to the housing and mortgage meltdown, it’s a good time to examine what makes local markets weak or robust.

There was no single cause that burst the housing bubble. Demographics, economics, and mass psychology - what I call demoeconology - merged to create a buying frenzy that was like a meme, a contagious mass information pattern that infects minds with new ideas.

If you understand the dynamics of these powerful forces, you can then begin to see which markets will have more painful price declines and which will experience appreciation.

For now, it’s fairly easy to conclude that most home markets are in a funk and won’t pull out of it soon.

In August, housing prices posted their biggest drop in almost 40 years, and pending sales fell the most on record. New-home sales declined to a seven-year low. There are more than 5 million homes sitting unsold. The behavioral economics of this market are tugging buyers to the sidelines, for now. And with the possibility of 2 million more homes coming on the market due to foreclosures, the supply is outpacing demand.

Mass psychology anchored home buyers to the myth that homes were endlessly appreciating wealth vehicles. Now the sentiment has shifted.

As Yale University economist Robert Shiller wrote, home buyers fell prey to a “social epidemic” and a “widespread perception that houses are a great investment.”

Shiller found that “residential investment as a percentage of gross domestic product has had a prominent peak before almost every recession since 1950.”

In the last quarter of 2005, he notes, home investment rose to 6.3 percent of GDP, “the highest level since 1950.”

Will this downturn be like the 15 percent decline between the third quarter of 1989 and to the fourth quarter of 1996, or the 42 percent rout in Los Angeles between December 1989 and March 1997? Since real estate is a conglomeration of local markets, it depends what area you are considering. Location is everything in surveying this moribund market.

To get an idea of how overpriced a market may be, you need to compare it with some benchmarks. Until the recent decline, Florida had been well ahead of the pack in terms of price appreciation - up more than 95 percent over past five years. The US average over the same period was almost half that at about 51 percent.

Now six of the 20 worst markets are in Florida, and all of them are located in desirable areas on the coasts. Fort Pierce, for instance, is feeling the pullback with a 21 percent drop in its condo market.

The most important truth is that buyer sentiment, rising population, demographic changes, and supply/demand ratios all need to be weighed when you try to divine which housing markets are headed for more pain and which may be good investments.

Will the markets that are benefiting from demoeconology continue to grow if the United States enters a recession? Probably not, unless they continue to expand their labor pool, find new buyers, or see an influx of brain-burb residents or retirees.

Markets glutted with housing may sink further. Like too much water in a ship, excess inventory doesn’t contribute to buoyancy.

By GARY GENTILE – 2 days ago

LOS ANGELES (AP) — Ongoing weakness in the housing market will push the national economy to the brink of recession, but growth in other areas should put the country back on a slow road to recovery by 2009, according to an economic forecast released Wednesday.

The quarterly Anderson Forecast by the University of California at Los Angeles predicts growth in the gross domestic product of just over 1 percent for the fourth quarter of 2007 and first quarter of 2008.

Economic growth will remain “tepid” for the remainder of 2008 and return to 3 percent in 2009, said David Shulman, senior economist for the forecast.

That growth is just above the traditional definition of a recession — two consecutive quarters of decline in gross domestic product.

“Of course, when the economy slows to a 1 percent pace, it runs the risk of falling into an actual recession, just as when an airplane’s velocity dips down to its ’stall speed’ and falls out of the sky,” Shulman wrote.

The declining housing market could remain at the heart of the nation’s economic woes for some time.

Shulman lowered his forecast for housing starts to an annual rate of about 1 million to 1.1 million, down from a range of 1.2 million to 1.3 million.

That outlook is less optimistic than one presented Tuesday by the National Association of Realtors, which projected construction of new homes will fall to 1.4 million this year from 1.8 million last year.

Shulman also expects housing prices to plunge 10 percent to 15 percent before they start to recover, sometime in 2009.

“The small recent minimal declines represent not the end, but rather the beginning of what will be a very painful decline,” he wrote.

Housing woes have already started to affect consumer spending and are expected to keep doing so through 2008, the forecast said.

Auto sales will reach only 15.7 million units in 2008 — the lowest rate since 1998, Shulman predicted. Housing-related purchases, such as furniture and appliances, were also expected to decline.

Still, strong global demand for U.S.-produced goods and reduced domestic demand for imports should fuel economic growth of about 1.8 percent for 2008, according to the report. Corporate investment in software and equipment was also predicted to fuel modest growth.

Other key factors affecting the economic slowdown could include further credit tightening, which could discourage corporate investment, and the willingness of foreign investors to hold dollar-based assets, the report said.

Shulman expects Congress to pass tough new regulations for the mortgage industry as a result of rising defaults and the demise of the subprime lending market.

Congress is also likely to increase the price limit for home mortgages that government-sponsored Fannie Mae and Freddie Mac can buy.

While regulators focus on the role of lenders in the current crisis, little attention will be given to homebuyers, who “got caught up in the real estate mania seeking a quick path to wealth,” Shulman wrote.

Noise and other disruptions from film shoots at all hours have spurred calls for tighter controls.
By Richard Verrier
Times Staff Writer

July 2, 2007

For Benjamin Pezzillo and his wife, Erica, the flashpoint came one Sunday night in March, when the noise from the black chopper was so deafening that it made the couple’s glass dining room table vibrate.

Hovering about 300 feet above their building at 6th and Spring streets in downtown Los Angeles, the helicopter’s incessant roar had Pezzillo convinced he was in the middle of a police chase. At least until he saw the aerial camera pointed downward that, he learned later, was being used to film a Verizon ad.

“It was like a bus revving its engine right outside your window,” Pezzillo said. “It was inescapable.”

Concerned that downtown is turning into an urban back lot for movie, TV and commercial producers, the area’s growing population of residents and merchants is rebelling. A surge in filming, combined with incidents such as the March chopper episode, is galvanizing residents to push for tighter rules that could crimp shoots in one of the world’s busiest places for filming.

The dispute reflects a larger clash playing out in the world’s entertainment capital between producers and residents weary of trucks, trailers, klieg lights, noise and crews in their neighborhoods at all hours.

“We’re not against filming, we’re just against filming that’s out of control and with no common sense,” said Russell Brown, president of the Downtown Los Angeles Neighborhood Council. “It’s been a very, very contentious issue for a lot of people.”

Southern California’s signature industry likes to shoot close to home. But it can easily pack up and move shoots to other locales that promise to make things easier. Elected officials worry that an inhospitable downtown could drain the region’s economy of some of the billions of dollars the industry generates each year.

Melissa Patack, vice president of the Motion Picture Assn. of America, said companies recognized the changes downtown and were working to accommodate residents. But, she added, “there are many governments and other cities that are actively pursuing the industry.”

Downtown Los Angeles has been one of Hollywood’s favorite film spots dating to 1909’s “In the Sultan’s Power.” Its skyline is relatively free of landmarks, so it can easily stand in for other cities.

High above 9th Street and Broadway, silent film legend Harold Lloyd clung to a clock’s hands in 1923’s “Safety Last!” Gov. Arnold Schwarzenegger prowled downtown streets as an evil cyborg in the 1984 sci-fi classic “The Terminator.”

More recently, Kiefer Sutherland chased terrorists through the streets and across the Los Angeles River bridges on episodes of “24.” BMWs, Mazdas, Volkswagens and Hyundais zip down streets such as Grand Avenue in commercials.

During a 19-day period this spring, some 90 productions filmed downtown. On any given night, the 2nd Street tunnel west of Broadway, one of the bridges over the Los Angeles River or City Hall may be featured in a movie, TV program or commercial.

“What people have to remember is that there is a 98-year history of downtown Los Angeles playing big city USA and other locales on the big screen,” said Harry Medved, coauthor of film location guide “Hollywood Escapes.”

Film production soared from 2002 to 2006 as local TV and commercial production boomed and the U.S. dollar sank in value, making shoots here more economical. Production days rose 21% to today’s record level, mostly because of TV shows including “Cold Case” and “Dancing With the Stars” and ads for such products as Coors Light.

Eight of this summer’s movies include scenes shot downtown, including “Live Free or Die Hard,” which opened last week and for which crews built a faux tunnel on Grand, and “Transformers,” which opens today and has scenes shot in the refurbished Orpheum Theatre on Broadway.

But as shooting boomed, tensions rose with the influx of new merchants and upscale professional residents — many of whom work in the entertainment industry.

From 2004 to 2006, according to the Downtown Los Angeles Business Improvement District, the number of residents downtown grew 20% to 28,878. An additional 20,000 residents are expected over the next two years, bringing the total population of a place that was largely vacant at night to nearly 50,000, according to the Central City Assn. of Los Angeles.

Buying expensive lofts and patronizing new trendy restaurants and bars in the area, downtown’s new residents were soon reviving formerly run-down pockets. Many saw filming as intrusive. What once was an annoyance quickly turned into a tense public-policy issue confronting residents and merchants alike.

“There are street closures every other weekend and sometimes every week,” said Bert Green, a neighborhood activist who owns an art gallery on 5th Street. During the closures “people can’t get anywhere near my business.”

Even downtown residents who work in the business have reached their limits.

Screenwriter Celia Esguerra was awakened recently by a crew that started shooting a music video at 6 a.m., sending billows of smoke into her Los Angeles Street loft. That night, she said, another film crew shooting at the nearby Alexandria Hotel worked with giant crane lights until midnight — two hours beyond what the film permit specified.

Then, at 2:40 a.m., she was awakened by what sounded like a freight train, as eight semitrailer equipment trucks pulled into a vacant lot to prepare for an eight-day shoot of the Patrick Dempsey comedy “Made of Honor.”

“It was like, ‘Oh my God! When is this going to stop?’ ” she said. “I don’t think this would happen in Hancock Park.”

For city officials, the issue is especially delicate. They want to encourage producers to keep shooting in Los Angeles but also want to encourage people and businesses to move downtown to help revitalize it.

Trying to defuse tensions is the Central City Assn., a business advocacy group whose members include major Hollywood studios. It has hosted several meetings with the Downtown Los Angeles Neighborhood Council and FilmL.A. Inc., the nonprofit group that handles permits and notices of filming. The three groups are drafting special conditions similar to those that exist in other communities that would limit filming hours and require more stringent notifications in residential areas downtown.

“There’s been a drastic change downtown,” said Steve MacDonald, president of FilmL.A., which contracts with the city and county. “We’re trying to address that change by working with the production companies, the residents and merchants to ensure that their needs are met.”

Although it lacks the enforcement authority of a city agency, FilmL.A. in April put new guidelines into effect requiring monitors for all activity in the bank district and prohibiting late-night helicopter flights like the one that disturbed the Pezzillos. FilmL.A. says it is sending more e-mail notices directly to affected residents instead of relying on standard door hanger notices. Those and other changes will probably be included in the special conditions the City Council is expected to vote on this summer.

“We’re very hospitable to filming,” said City Councilwoman Jan Perry, whose district includes much of downtown. “I don’t think people are asking that much.”

Tom Gilmore, whose company owns several buildings in the old bank district and is one of the architects of downtown’s revitalization, believes that tensions are easing with the new guidelines.

“We are both stakeholders downtown and we need to help each other do better business without hurting each other,” he said.

The new rules show the growing clout of downtown’s residents and their willingness now to push back against powerful entertainment interests.

Four years ago, resident councils sought more say in the way film shoots take place across Los Angeles, but the effort failed to gain traction after film industry representatives flooded City Hall and raised the prospect of massive job losses.

The newfound muscle isn’t lost on Hollywood’s location managers, who scout places to shoot.

“Some film companies have not adjusted to the new terrain and they still view L.A. as a kind of back lot,” said Ilt Jones, a veteran location manager who worked on “Transformers.” “That’s anachronistic thinking.”

Yes, there have been small declines in some relatively overbuilt parts of this state. But in places where homes have not been overbuilt, or where in-migration continues at a fast pace, prices are still rising slightly or just staying flat.
By Tom Elias

It happens every year about the same time pitchers and catchers report to Florida and Arizona for the start of spring training: “For sale” signs pop up all around California like toadstools after a heavy rain.

And this year, there was good news and bad news in the springtime for both buyers and sellers.

First, the bad news. The intense boom of the 1995-2005 decade has plainly petered out. Anyone who buys a California home and expects to make a 20 percent profit in less than one year - the same kind of expectation fostered by the dot-com stock balloon of the late 1990s - is in for a serious disappointment. In the most heavily populated parts of the state, there will still be profits, but they will be in a more normal range, about 4 percent or 5 percent per year.

That is also the good news. For while the rest of America, places like Miami, Denver, Houston, Phoenix, Boston, Washington, D.C., and other boom markets of the last 10 years are suffering declines, that’s not true in most of California.

Yes, there have been small declines in some relatively overbuilt parts of this state. In the third quarter of last year, home prices in Orange County dropped by 0.8 percent - less than 1 percent - from the previous year. In Sacramento, the drop was about 3.5 percent and in San Diego County approximately 2.1 percent.

But in places where homes have not been overbuilt, or where in-migration continues at a fast pace, prices are still rising slightly or just staying flat. That’s also true in places that are built out, with little hope for new housing that isn’t constructed on the sites of previously existing homes.

Examples of these phenomena are Seattle, with a 14.6 percent price rise during last year’s third quarter and the Inland Empire area including Riverside, San Bernardino and Ontario. Prices there were stable, even as the number of houses and condominiums sold was down. Reason: Many people who expected to make a quick profit pulled homes from the market when they realized windfalls weren’t coming.

In the Los Angeles-Long Beach market, buyers paid 5.2 percent more this spring than a year earlier, and in San Francisco they paid an average of 3.8 percent more.

None of these positive numbers will blow investors away. But they ought to be comforting to recent homebuyers who paid top dollar and worried they might lose equity they saved for years to create.

In fact, price increases have slowed gradually for most of the past year all over California, but the state has been spared any precipitous drop. It’s one thing not to be making windfall profits. But it’s no disaster when prices remain fairly stable while wages and salaries gradually catch up with prices that have risen sharply for about 10 years. That kind of pause can even be constructive, as it both allows a new cadre of homebuyers time to save up the down payments that can get them into the market.

It’s also a familiar part of the California real estate cycle. Booms in California generally last eight to 10 years, followed by leveling-off periods of about four or five years.

Immigration is the reason this state rarely experiences true busts after its booms. The more people pile into California, the greater the demand for housing. Demand begins at the bottom of the price scale, but when owners of the cheapest housing sell to newcomers at a profit, they suddenly gain the ability to move up to a new level. This propels the homeowners from whom they buy yet another step up the ladder.

So California is not in a real estate crisis and doesn’t figure to be in one very soon. Real estate agents in the 1970s and ’80s often told their clients that, “No one ever lost money on California real estate.”

After the bust of the ’90s, this statement is no longer completely correct. But it’s still at least close to being true.

By Annette Haddad
Times Staff Writer

10:27 AM PDT, May 15, 2007

Southern California home sales plunged to a 12-year low for the month of April, dragged down by a dearth of transactions at the lower end of the market even as prices held steady, data released today showed.

The median price paid last month for a house in the six-county region was $505,000, the same as the month before and a 6.1% increase from a year ago, La Jolla-based research firm DataQuick Information Systems reported. It was the greatest rate of year-over-year appreciation since June, when the median rose 7.7%. The median price is the point at which half of all homes sold for more, half for less.

Yet nearly a third fewer homes in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties closed escrow last month compared to a year earlier for the worst April showing since 1995, DataQuick found.

Among new and existing homes, 19,269 escrows closed in April , a 28.9% drop from April 2006 and a 12% decline from March. That’s the fewest number of homes sold in the month of April since 1995, when 15,303 homes sold.

Most of the erosion in sales appeared in the lower-priced markets of the Inland Empire that only a year ago still seemed to be soaring. In Riverside County, sales dropped 45.1% to 2,987 year over year, while in neighboring San Bernardino County, sales plunged 46.7% to 2,049, according to DataQuick, which compiles its statistics from a review of all closed residential transactions each month.

These are areas where the typical home is valued at about $400,000, making them more attractive to investors and to first-time home buyers. But with tighter lending standards now preventing many entry-level borrowers from qualifying for mortgages, and with fewer investors speculating on Southern California real estate, sales in the Inland Empire have plunged.

“The falloff in starter home sales has the effect of pushing median prices up a bit, although it’s still somewhat surprising prices haven’t declined more,” said DataQuick president Marshall Prentice.

Indeed, home price growth in the Inland Empire is waning but not collapsing. In April, the median in Riverside County fell 1% to 409,000, while San Bernardino’s median edged up 2.8%. One year earlier, in April 2006, the median rose 9.4% and 18.4%, respectively.

Elsewhere in Southern California, Los Angeles was the only other county aside from San Bernardino to see a rise in its April median price compared to a year earlier. In L.A. County, the median home price gained 5.9% to $540,000 and was identical to March’s median price. Meanwhile, sales fell 22.2% from a year ago, DataQuick said.

Orange County’s median was virtually flat at $629,000, which was a 0.2% dip from April 2006 and unchanged from the month before. Sales in Orange County declined 24.7%. Meanwhile, the median in Ventura County fell 2.4% to $572,000 as sales dropped 11.7% compared to a year earlier.

In San Diego County, where the region’s housing boom started seven years ago and where many prognosticators anticipated the first signs of a housing crash, the median price dipped 3% to $490,000 for the slowest year-over-year rate of decline since August. Sales fell 13.5%.

Southern California’s housing trends mirror what’s happening throughout the U.S. housing market. Today, the National Assn. of Realtors group reported that existing home sales nationwide fell 6.6% in the first quarter, while the national median price dipped 1.8% to $212,300.

But some analyst see a bottom to the nation’s housing market correction coming as soon as the end of the current quarter.

The pace of the decline in sales has slowed significantly since mid-2006, Ben Garber, an economist for Moody’s Investors Service said in a report Tuesday. That phenomenon, coupled with persistently low interest rates and small gains in income growth, have helped to “ameliorate the extent of the housing bust and set the stage for its recovery,” he said.

May 01, 2007
By Barbra Murray, Contributing Editor

Two sales transactions valued at an aggregate $94.1 million have brought three fully leased retail assets in the Los Angeles area under new ownership. BlackRock Realty sold the properties, accounting for a total of approximately 277,000 square feet, to two separate private investors.

The 164,700-square-foot Plaza de Hacienda in La Puente commanded $33.8 million from a Los Angeles-based buyer. Built in 1992, the shopping center underwent an expansion process 1995 and again in 2001. Gateway at Burbank in Burbank and Creekside Place (pictured) in Santa Clarita sold in off-market deals to a Bellevue, Wash.-headquartered buyer that had a previous relationship with BlackRock. The eight-year-old, 74,400-square-foot Gateway property carried a price tag of $37.6 million, while Creekside, a 47,700 square-foot center built in 1995, sold for $22.8 million. For its part BlackRock opted to sell the assets, which it had acquired in 2006 as part of a 16-property portfolio purchase from Barclays Realty & Management Co., because they did not meet the company’s investment criteria.

Real estate services firm Grubb & Ellis Co. marketed the properties on behalf of BlackRock and represented the seller and buyers in the transactions. Grubb & Ellis’ Peter Spragg, Dixie Walker and Charles Simpson handled the negotiations.

British company will replace old building with pricey condos and stores.

By Roger Vincent
LOS ANGELES TIMES
Friday, April 13, 2007

BEVERLY HILLS, Calif. — It might be the ultimate Beverly Hills teardown.

British developers paid $500 million this week for the once-grand Robinsons-May department store in one of the priciest property sales ever in Southern California.

The buyers said they would proceed with the previous owner’s plans to raze the store on Wilshire Boulevard and build a condominium and retail complex designed by Richard Meier, architect of the Getty Center.

The extraordinary price catapults Los Angeles County real estate values into the realm of such top European markets as London and Paris.

“We intend to see this vision through and bring Beverly Hills what will truly be the world’s most luxurious address,” said Nick Candy of Candy & Candy Ltd., the London-based firm behind the acquisition known for building “superpremium” residences.

The new complex will have 252 multimillion-dollar condominiums at the western gateway to Beverly Hills and overlook the Los Angeles Country Club.

“Candy & Candy in the U.K. is what Tiffany is to jewelry here,” said Laurie Lustig-Bower of brokerage firm CB Richard Ellis, which represented Candy in the transaction. “Therefore, they believe they will achieve record prices for their condos.”

“It’s of historic proportions in sheer magnitude,” said broker Carl Muhlstein of international real estate firm Cushman & Wakefield who was not involved in the deal. “This is huge.”

The sale is a huge jump in value from the $33.5 million that the seller, Beverly Hills-based New Pacific Realty, paid for the eight-acre site three years ago. New Pacific was planning to spend $500 million to redevelop the site.

Work could start by early next year, but hurdles remain. Neighbors are likely to object to the potential effect on traffic from the Candy & Candy project and others planned nearby.

But the new owners of the Robinsons-May property say their development would not generate any more traffic than the department store did.

Perhaps Candy’s best-known development is One Hyde Park, an ultraluxury project in London where residences are selling for almost $10,000 per square foot, Candy said. The company declined to say how much the Beverly Hills units would cost.

“I believe this will be the One Hyde Park of the West Coast of America,” Candy said.