Jul 15, 2007

LA Housing Market / LANL Health Indicator?

A commenter on an earlier post made this request:


"Gussie, maybe you should start a thread on the stampede out of housing in Los Alamos -- as an early indicator of what is going on at the lab?"


I'll start the discussion off with my own observations. The risks of being invested in the Los Alamos housing market are obvious, and will become more so if/when the RIFs start.

Owning in Santa Fe is less risky than Los Alamos because it is not a one-company town. The high end of the Santa Fe market in particular is not as sensitive to the country-wide housing market slowdown because so many wealthy people still want to live in Santa Fe.

It is unclear to me to what extent the slow housing market in Los Alamos is due to LANL's present state, and how much is due to the national economy. What is clear to me is that trying to sell a house in LA will become much more difficult if the FY'08 budget meets its current low expectations.

--Gussie

29 comments:

Anonymous said...

It is entirely due to LANL, except maybe for some non-realistic prices in Quemazon. The national slowdown is due to a housing bubble, which LA was not part of.

Unless there are more sub-prime or interest only ARMs in LA that one would guess.

Anonymous said...

What were those budget predictions again? I recall someone saying that "best case" forecasts were for a $90 million reduction from the current FY. Worst case was anybody's guess.

Anonymous said...

All the gloom and doom on this blog is tiresome... Los Alamos ALWAYS has a higher inventory (and sales for that matter) in the summer. If you have checked lately, Los Alamos housing is not that out of line compared to other places. The east and west cost are higher- and most big city suburbs are priced proportionally to the length of commute. I'm sure you can find pockets where prices are low- perhaps Arkansas or Iowa.

Maybe you gloom types are right- that LANS was pulled in to shut the town and board everything up. But otherwise- the town will survive as long as there is a major business here. Personally, I have looked around enough to know that anywhere I want to live is going to be expensive... might as well be here.

Anonymous said...

It's RIFF, not RIF.

The extra F is for how Fucked the situation is.

Anonymous said...

Doom and gloom, or reality? The realities are that there are lots of houses on the market in Los Alamos presently, and they are not moving. The budget for '08 looks like a disaster approaching. Look around yourself at work: how many people look like they are enjoying the new, improved LANL? If you've got some good news about the realities of working here, how about sharing it?

Anonymous said...

I am enjoying work. I found a fluffer.

Anonymous said...

How fortunate for you, 9:10. Unfortunately, it's hard for the rest of us.

K. Boland said...

I have to confess I've been thinking about buying a house in LA. The main thing that has stopped me is getting stuck in LA (a town I have a strong love/hate relationship with.) If I definitely wanted to stay here, I'd buy. But I have a fantasy about living some place more interesting and exciting. (And not such a sausage fest) And goddamit the prices are inflated. Have you looked at ABQ housing lately? Even a TEC can afford to buy a sweet place down there. I just can't "buy" a long commute right now.

Pros: some people have made a killing on some really shitty houses going up in value (a quad for +200K????)

Cons: the future of LANL/LANS.

BTW: I still rent.....

Gussie Fink-Nottle said...

"BTW: I still rent....."

No one ever accused you of being stupid, Kevin.

;-}

--Gussie

K. Boland said...

actually, Gussie, I have been accused of being stupid. And an asshole. And much worse. Luckily for me, I no longer care.

Thanks :-)

Gussie Fink-Nottle said...

That would make two of us, then.

--Gussie

Anonymous said...

"How fortunate for you, 9:10. Unfortunately, it's hard for the rest of us."

I think u mean it's hard on the rest of us.

Anonymous said...

At the risk of finding a ray of sunshine, Realtor.com reports about 300 properties for sale in Los Alamos, and about 3000 properties for sale in Santa Fe. Given that Santa Fe has only about 4-5 times the population of Los Alamos, the market in Los Alamos, while undeniably slower right now, still seems to be a far cry from a panic.

Eric said...

I have created projections for the housing market in Los Alamos.

The housing market seems to be mostly driven by events at LANL. Santa Fe's market has different drivers.

The best predictions that I have at the moment are that the Los Alamos county housing market will go down significantly in the near term and then stabilize. It will stabilize because there are short term non Lab forces at work on it.

Most of my scenarios predict that there will be an upturn in local housing and that this upturn will not be Lab driven. Unfortunately, this upturn appears to be 10 to 15 years in the future.

The scenarios have included all the factors listed above.

So, there appears to be gloom but not doom.

Later

Anonymous said...

The housing market in LA sucks. I lost a hell of an amount on selling my house when I left. I could not afford to carry it any longer and just gave up.

Kevin - LEAVE!! LA is not only an unhealthy place to be if you are young, there are plenty of educated attractive women OUTSIDE of NM

Anonymous said...

I've lived in LA 10 years, and have never seen housing this depressed. On my street, there are a number of identical units. Last year was the top. A 1600 sqft unit sold for 280. Last week, an identical one sold for 260.

Also, I think you have to look at the influx of postdocs. These are the only ones green enough to consider buying a house here. Funding aside, there are a number of staff that no longer think it is ethical to recruit postdocs.

The idea that sub-prime is the only think thats going to melt down is wrong. First, RE is a pyramid scheme. If the bottom goes, the top will go too (it will just take longer). Second, I know a number of would be flippers that have a million $ or more in mortgage debt (2-4 properties) on a one staff member sallary or less. These are prime loans that are clearly not going to work out, and these homedebtors are starting to freak out now that their inflated prices are not being met. I also know a number of folks with bridge loans, that were certain of their ability to sell their second house. Two of these have been renting their homes for over a year, and one (is SFe) had 20K damages this year (renters just walked away).

I'm not sure where the anon above got the idea that housing swells in summer. Supplies typically rise in March as sellers pursue families with children who seek new homes in the spring, so they can move during summer vacations. I think that increasing inventory into the summer and fall is a very, very bad sign. And if you watch the trend in LA, its linear and up. It didn't plateu last month. You can watch for yourself at

http://www.paperdinero.com/Inventory.aspx

Choose single family for best resolution.

Also, comparing the SFe market to LA is maybe not the best argument. SFe was hugely, massively inflated, and is now in major meltdown. LA is doing better than Pheonix too, but I wouldn't cheer To be objective, we really should look at historical data, and I don't know how to do that. Perhaps someone from remax would blog on over and reasure us ;)

I think LA is caught in the double whammy of national and local RE meltdown. This is a very interesting time in terms of the national RE problem as the Fed trys to keep the ten year rate below 5.25 while defending the dollar above 80. Somethings going to break loose. Either housing and the stock market go or the dollar goes. Could be an historic couple of weeks here. My guess is that the nominal value of housing will be defended, and the dollar sacrificed.

Anonymous said...

Gee, thanks for the penetrating insight Eric.

And if there are RIFs in FY'08 you predict that the LA housing market will stabilize?

Yep, Id sure trust to to be my financial planner.

Not.

Anonymous said...

Eric,

Where did you get the data for your projections? Care to share?

Anonymous said...

Eric's comments are penetrating indeed:

1. LANL affects the Los Alamos Housing market, and
2. The market will stabilize in spite of pending RIFS.

Anyone who is foolish enough to pay Eric for financial planning services deserves what he gets.

Anonymous said...

Observations from a 20-yr. Labbie who left as Nanos arrived:

- After growing up amidst the steel and coal towns of the East, my wife and I were never completely comfortable in Los Alamos (actually White Rock); we had seen the result when the mine or mill closed. The LANL "mill" won't be closed, but will be downsized.

- We had a severe case of sticker shock when we first arrived in Los Alamos. Houses in LA county have been 30-50% overpriced for the better part of 50 years. Its not going to help current owners, but a little dose of reality could actually get some non-LANL enterprises and residents interested in locating to the community. And a little dose of diversity might do a lot for the community -- couldn't hurt.

- regardless of the LANL situation, there is probably a housing price floor for locations that are a reasonable commute to Santa Fe. There are a lot of professionals employed by the state (many of which live in Rio Rancho and Abq.) that might be very interested in relocating to LA for access to the schools -- IF the commute is about the same. White Rock, townsite, and the Eastern area probably are attractive to these folks; Barranca Mesa or anywhere else that requires an extra 10-20 minutes to leave the county is screwed.

- since almost everyone who owns a house in LA county works for the lab and has/will retire from it, and since the LANL pensions are so rich (don't get excited; I'm speaking in relative terms to everyone else in the US) most will not HAVE to sell unless they can get the price they want. And, LA county is the kind of place that many active retirees like to retire to. End result is that there are going to be a lot of houses for sale for a very long time.

Anonymous said...

One comment to 10:46am

Mines and mills do close, as you point out. LANL could close too. It is a potential reality that I would not be so quick to discount. People in Washington are *seriously* questioning the need for three weapons labs. The outcome of the RRW competition makes it pretty clear that LANL's contributions to nuclear weaponry are less appreciated than LLNL's. LANL is sucking on the hind tit regarding nuclear weapons money, and that is usually the first one to dry up.

Anonymous said...

And to think I bid against others like a f*cking idiot when I bought my house many years ago. Almost tempted to throw a few lowballs out there; maybe after the Lab stabilizes.

I know a few people selling who have new jobs. They have told me they will price very aggressively. I still see people trying to sell POS houses in LA and WR for fantasy prices.

Anonymous said...

I thought Eric had been banned from this blog.

Maybe not, but Eric do you get the (non) subtle message that your input is not valued here.

Anonymous said...

I hope the bottom falls out of the rental market too. There is no reason for a 3bd 1 ba at Los Cerros to rent for 895.00/month + electricity. That's just plain greed. Of course the landlord will let rentals sit empty rather than rent at a lower rate. But eventually the rents will come down all around town.

Anonymous said...

Get your homes listed on "www.Zillow.com". Zillow is a handy reference for relocation real estate as well as getting useful market information aside from a realtor.

Anonymous said...

Los Alamos is now like the roach motel of real estate. Buyers can come into the market, but they can never afford to leave. Even staid, conservative Los Alamos National Bank must be getting worried. They've been putting ads in the local real estate magazines advertising 40 year mortgages, interest only, with use of stated income (i.e., you can lie about your income and they won't bother to check it out). The times must be getting desperate in the local real estate market if LANB is beginning to stoop to these types of lending practices to gain some mortgage business.

Anonymous said...

When we first came to LANL more than 20 years ago, the LANB would write zero downpayment mortgages for LANL employees.

We were nervous about a one-company town and bought in Santa Fe instead. We got a whole lot more house for the money. The commute was a pain until the last rennovation of the road from Pojoaque. But, we sure feel a lot more comfortable with the value and marketability of our Santa Fe house.

Anonymous said...

Good point 12:12. Any idea of where I can find detail about LANB's mortgage portfolio? I have a substantial amount of $ cycling through there. Could be time to get back down to the FDIC limit.

K. Boland said...

7/17/07 8:44 AM

Call Steve Wells or Bill Enloe. Or look on LANB.com TCC has been a very good performing stock over the past few years.