Still No Sign for SoCal Housing Price Stablization

As I observed, the momentum of downfall in Los Angeles County is so huge. The speed toward South is just beginning to accelerate.

About 3 months ago, I asked our real estate agent folks help me in buying a piece of property in San Gabriel valley. I wrote some articles to express my frustration in making offers. Finally, I had an all cash deal made to Wells Fargo bankers. They are more aggressive to Countrywide and I have had a very smart agent to work with. But, the escrow failed through because my situation changed. We decided to cancel the escrow without losing a dime and still have a very good relationship with the agent.

Why I changed my position. It is a long story, just make it short. My personal situation was changed so that I had no pressure or timetable to work with. In addition, the discount given by some financial institutions is expanding so large that I don't think it is a good time to buy at least for now.

From my personal touch, I can see some strange things happen in San Gabriel valley, CA:

1. Condo markets have NOT been falling so fast as it should be, if the 1990's Patten sustained. Condo owners are still in "denial" stage and it seems not so big pressure for a banker since not so many condos were foreclosed upon so far. We can see the asking prices are pretty steady, even they are down about 30-45 percent from its peak.

Some regular condo owners are still so crazy in making fun to ask about $350 per square footage for their units, even REO listings in the community are sold less than $200. In one complex, we see a REO with 2+2+2 asked less than a regular 1+1+1 unit. Generally, the price went back at least to the level of 2004.

Well, some people said that the market would be stablized and sustainable when the housing price going back to the year of 2002. I found one condo (3+3+2) in a 3-complex, its asking price has approaching $100 per square foot, about half the previous sold price at its peak. However, it is weired that condo price downfall is NOT in the lead, at least in the moment, not ahead of single housing as in 1990's.

2. On the opposite, the single house markets are really starting to meltdown fast , sharply and quickly, particularly for those built in 50' or 60'. It is amazing to see that a REO listing of similar single house is going down about 25-30 percent in just 3 months. Furthermore, a few months ago, it is out of my imagination to buy a single house in SoCal for the same price range in a remote Texan countryside. But, it is not true anymore. A house with 1,000 sqft and half acre is currently available for less than $23,000 in Barstow, CA. What a heck, still nobody is willing to buy it?

A friend of mine just closed escrow last week to buy a late model in the area for $600K price range. But I don't see any excitement of his, just sense a little sad or sorrow since there is no excuse clause for him to cancel the deal without losing his deposit. Generally speaking, those REO bankers asked about $400K 3 months ago, and now reduced to $320K. It seems to me that nobody is looking for anything above $300K from a simple fact that they are not moving.

A single house with 100,000 square foot lot was sold for $about $560K in 2005. It is in a decent neighborhood. It was foreclosed and a bank took it back for $440K in June 2006. Now it was listed for $162K last week.

When I saw the listing coming up, I am so excited about the price. For a 1400 square foot 3 bed room single house at that price? In that decent area, you must be kidding and out of your mind. It is a steal or bank robbery.

But now, I know why the price is so "low?" After 2 year's vacant condition without TLC, it was severely vandalized. It is an almost stripped house. From outside, it looks as a house. Once you stepped in, you'll realize it is just a "frame," everything is gone, even its carpet. Realistically, it is just a "land value only" offer. At this time, new construction is down, demand is low, do you expect anyone in business to do a remodeling (to make sense, I will say to tear it down and build a new one will be a smarter move)? If you do, look eastward to Florida where the value of a vacant land has been dropping crazy, 80% off. Will you be so brave to take the risk? I doubt it.

Well, it also seems that the financial credit crunch is showing some signs to an end. Maybe, we have to thank FED. But, I haven't be able to see the bottom in the light of real estate tunnel.

Okay, give me your two pennies for my penny.