FORECLOSURES HAVE TRIPLED, ISN’T THIS incredible!
By Simon Salloom Simon Says
Editor’s note: This is the first in a series of columns about foreclosures.
Pretty darn exciting — isn’t it? No, not really, not at all. In 2007 Brentwood had six residential property foreclosures. Santa Monica 90402 had zero foreclosures. Santa Monica 90403 had three, 90404 had five, 90405 had eight and 90401 had one. In other Westside neighborhoods such as Playa del Rey, there were four foreclosures in 2007. In Marina del Rey there were seven and in Venice there were three. The neighborhoods of Westwood and Mar Vista/Palms were a little less fortunate. Westwood had 14 foreclosures and Mar Vista had 17. Beverly Hills has remained strong with only four foreclosures.
Never before, when writing this column, have I felt so confident that my point was made within the first two paragraphs. However, it will probably be a little more interesting to everyone if I elaborate a little bit. And this is what I am going to do, with some of my own personal opinions thrown in.
Now, one could argue that this is only the beginning of the real estate “collapse.” Truthfully, one never knows what is to come. However, I like to note that the less desirable parts of our county have already been experiencing significant declines in values for as long as three years now.
Additionally, if more than another 5 percent drop in values occurs, it will become effectively less expensive to own than it will be to rent. This applies mainly to those neighborhoods, like ours, where the residents are in the 30 to 45 percent tax brackets. This includes the majority of Westside residents with college degrees who are of working age. Santa Monica for example is always the last to drop and the first to rebound from a market slowdown.
I would like to say that it is somewhat upsetting to hear people talking about foreclosures as if they are rampant on the Westside. They evidently are not. In the past year, the most difficult part of being a realtor in this market isn’t how challenging business has been. The real drag these days is the unrelenting negativity of the media and of some people.
I understand how people feel about all this. I also thought the excesses of the prior market boom were obnoxious and at times ridiculous. That is why now, as it was then, we all need to be able to approach what is happening in a grounded and well thought out manner.
At the end of the day, we have to own or we have to rent. If owning isn’t much more than renting, many people will choose to own. It’s more pleasurable for most people to own and it has tax advantages. Renting involves less responsibility and provides greater flexibility.
I am involved in a half dozen conversations a week with prospective buyers who are under the impression that the Westside’s values are down about 20 percent and that foreclosures are everywhere. There have been statistics published that property values are down as much as 30 percent in Los Angeles County. This is true, but only in certain limited geographical locations. Places that most Westside residents have never been to and would need a GPS to find and would certainly find highly undesirable to inhabit. Remember, this is a big, sprawling city.
The other day I was chatting with an agent friend of mine while he was doing “floor time.” Floor time is when an agent takes random calls as they come into a real estate office. An annoyingly common call for “foreclosure properties” came in to our Brentwood office. The woman wanted a list of foreclosure properties. He told her to go on the Internet and call some banks and that we didn’t work directly with a lot of foreclosures. It’s pretty silly to call a Brentwood real estate office looking for a “list” of foreclosures when there have only been six in the past year.
Unless a property being in foreclosure is your prime requirement when buying a property, it’s a poor business decision to look for foreclosures only. Remember that foreclosures are thrown into the market like every other property, subject to competition like any old home on any old street.
The advantage with foreclosures is that the banks are the sellers and are often involved at an arms length. Additionally, some of the brokers involved in listing foreclosures for sale are out of the area, and have little knowledge and or concern for surrounding property values. Presentation can also be lacking. It’s not uncommon for a home in foreclosure to be filthy, broken down, unkempt and littered with trash. This is not a good selling point for prospective buyers.
SIMON SALLOOM is a local Santa Monica and Brentwood based Realtor with Coldwell Banker. Comment on this and other articles at his Web site: WestsideSimon.com and he at: 310-749-8686
Originally published in the Santa Monica Daily Press print edition on May 14, 2008. Read the original PDF.