Part of my job task involves visiting new tract home developments and posing as a buyer. One day I am a single guy looking to blow money on a million dollar high rise condo; another I am a husband in desperate need of a “modest” 3,000sf home to raise my family of 2, 3 or 4 (depending on my mood). The whole point of this was to find out 2 things:
- How desperate sellers were and,
- What their bottom-line price was
Between 2005 and late-2006, sellers were in no rush to sell. In fact, many of them would not accept offers if it was within 1-2 weeks of their initial listing. Sellers would hold out until the very end in order to squeeze every last bit of equity out of their home. Even public builders would boast of the how long their waiting list was for homes in LA, OC and the outlying deserts. You’d be lucky to purchase a home for the listing price.
Anyways, times have changed and the tables have turned. Let’s take a look at $1,000,000 homes in Arcadia and South Pasadena. Do you think that a $900-950k offer would be rejected at this point?
ARCADIA
1733 Highland Oaks Dr.
Arcadia, CA 91006
Price: $1,050,000 ($511 per sq. ft.)
- Beds: 3
- Baths: 2.25
- Sq. Ft.: 2,055
- Lot Size: 0.35 Acres
Decent looking home located in a great neighborhood. But at $511 per sq. ft., this listing is ridiculous. Larger homes on the same street have recently sold for less.
316 Laurel Ave.
Arcadia, CA 91006
Price: $1,085,000 ($339 per sq. ft.)
- Beds: 4
- Baths: 4.5
- Sq. Ft.: 3,201
- Lot Size: 6,350 Sq. Ft.
$339 per square feet for a this home seems like a great deal until you find out how close it is to Monrovia and that the neighbor, 5 feet away, looms over your swimming pool. No wonder the seller is offering free vacations to anyone who tours the place.
South Pasadena
If you think Arcadia is expensive, then you’ve never been to South Pasadena. This city hovers North-East of the 110 Highway and, unlike many other cities in the SGV, its residents are determine to preserve its small-town culture and neighborhoods. Therefore, we won’t see too many Spanish stucco boxes in this area.
1124 Hope St.
South Pasadena, CA 91030
Price: $998,000 ($404 per sq. ft.)
- Beds: 4
- Baths: 3
- Sq. Ft.: 2,470
- Lot Size: 8,200 Sq. Ft.
A classic Victorian that has been completely gutted and remodeled. For $1MM you get to share the lot with a home behind you. But like I said, this is South Pasadena so don’t be expecting too much more than Arcadia.
827 Oneonta
South Pasadena, CA 91030
Price: $995,000 ($585 per sq. ft.)
- Beds: 3
- Baths: 2.75
- Sq. Ft.: 1,700
- Lot Size: 3,180 Sq. Ft.
This is one of the more interesting properties I’ve found in South Pas. A tri-level new construction in the hills. You get a view and… a new 58″ flat screeen TV!
The asking prices on these properties are still sky high of yesteryear. If I were living in either area, I’d just continue to rent for the time being. The bubble busting momentum, just like wild fire, is approaching quickly.
South Pasadena, unfortunately, is riding high mostly on two things – proximity to good neighborhoods like San Marino and Pasadena, and a school district that has lots of asian kids who are good test takers, which drives up the school quality score.
Aside from that, it has a few negative things going for it, mostly that it still has that looming 710 freeway extension looming in the indeterminate future, proximity to the not-so-nice Highland Park area, and surface streets which put it far away from any freeway unless you consider the tail end of the 110 freeway, which is really only effective for commuting to downtown.
South Pasadena may or may not fess up to the housing downtown because for some reason, you can still convince parents that a good school district is worth any price (it’s not – Pasadena residents who care about their schools get around this by sending their kids to private schools). The cost of excellent private schools is less than the price differential in home prices, plus the permanent property tax price you pay forever.
I definitely agree regarding the option to attend private school. If school ranking is your only concern, many people would be better off living in a safe Pasadena neighborhood and paying tuition for private school.
Shelling out $1-2MM+ just to get into a public school system is ridiculous.
Tim K,
Tim K,
It’s funny you mentioned this because I’m in the same scenario that you described. I live in Pasadena and have three kids and I’m would like a house in South Pas because of the schools and the central location. Private schools is an option but when you have three kids the cost of the increase housing costs sounds much more reasonable compared to tuition for private schools. Tuition and fees for 3 kids K-12 will run me about $400K, and that’s in todays dollars. Who knows what the tuition will be in 10 years. Good private schools in Pasadena are very competitive, so you have to factor in the schoomze time that you have to put in with the admissions people and the stress of the whole process. Buying a house in South Pas and Arcadia will be expensive, but assuming California does not fall into the ocean, you will be able to sell it at some point and get your money back. Tuition on the other hand is gone gone gone once you pay it. That’s why there’s such a premium to houses in South Pas.
I don’t understand. You won’t make your 3 kids pay back the ~$400k in tuition after they become doctors, lawyers and Wall Street gurus??
All kidding aside, I wouldn’t consider tuition completely gone once it’s spent. You ARE giving your kids the best that money could buy (within reason, location and affordability)!
puckhead – one small factor to consider regarding the cost:
If you buy into South Pasadena, you are paying UP FRONT for the costs of your 3 children’s education, and unless you have cash, you are financing the costs of this education. This more expensive, and often risky. Assuming all your kids are below Kindergarten age, so they can get the full 13 years of education, you are betting that in 12 years from now the school will still be high quality. If the school’s ratings drop, so does the value of your house, and you don’t get to send your kids to that highly rated school anymore.
If you send your kids to private schools, if the school runs into trouble, or you have to move due to a job change or some other family issue, you can always evaluate a new private school.
One thing you might want to consider, if you are not a single parent – home schooling. I know several coworkers who have done this, and the money you lose from having a parent not work is offset due to the lesser expenses, AND your kids get a much better education because you can go at their speed. If you find another parent in a similar situation, you can split duties and give your child some socialization as well.
One other thing I should mention regarding sending 3 kids through public schools – it is exceedingly *rare* that a good school district turns out superior students, both when it comes to future college performance and career goals.
A significant factor in what produces effective kids is how well they learn to learn – that skill is almost always taught and reinforced by parents when they do homework. Good students do well in crappy school districts, and learn that lesson well.
The other significant factor is socialization skills, and those are not necessarily helped by being among other students who are high achievers. Often the best achievers are the ones who have learned how to deal with “problem” children (i.e. learning good confronation avoidance skills) and imperfect teachers. They learn that the system is there to help, but it is their own responsibility to take control of their future.
If you truly are interested in the future of your children, these lessons will be learned at least as effectively in a mediocre school as they will in a highly rated one.
Being asian myself, I greatly prefer the ethic/racial diversity of the South Pasadena school district over Arcadia. Arcadia and San Marino are both pushing close to 60-65% asian student body.
from greatschools.net:
South Pasadena
Ethnicity This District State Average
White, not Hispanic 36% 29%
Asian 35% 8%
Hispanic or Latino 16% 48%
Multiple or No Response 8% 3%
African American, not Hispanic 3% 8%
Filipino 2% 3%
American Indian or Alaska Native <1% <1%
Pacific Islander <1% <1%
Arcadia
Ethnicity This District State Average
Asian 65% 8%
White, not Hispanic 21% 29%
Hispanic or Latino 11% 48%
Filipino 2% 3%
African American, not Hispanic 1% 8%
Multiple or No Response <1% 3%
American Indian or Alaska Native <1% <1%
Pacific Islander <1% <1%
San Marino
Ethnicity This District State Average
Asian 61% 8%
White, not Hispanic 32% 29%
Hispanic or Latino 5% 48%
Multiple or No Response 1% 3%
African American, not Hispanic <1% 8%
Filipino <1% 3%
Pacific Islander <1% <1%
Tim K,
If I try to home school my kids I think they’ll run away and join the circus or Army. It’ll be an easier life with a kinder boss.
In general, home prices in the “nice” parts of Pasadena are just as high, if not higher, than that of South Pasadena and Arcadia. I also have 3 kids, and my wife and I are still undecided as to where we want to settle down. I don’t think living north of the 210 and sending the kids to Polytechnic is a viable option for obvious reasons…
Tim K,
I respectfully have to take issue with many of the arguments that you are making about education and housing.
>If you buy into South Pasadena, you are paying UP FRONT for >the costs of your 3 children’s education, and unless you have >cash, you are financing the costs of this education. This more >expensive, and often risky. Assuming all your kids are below >Kindergarten age, so they can get the full 13 years of >education, you are betting that in 12 years from now the >school will still be high quality. If the school’s ratings >drop, so does the value of your house, and you don’t get to >send your kids to that highly rated school anymore.
I’m not sure what you’re trying to say because if Puckhead sends his kids to private school, he will have to pay up front in cash for the cost of their tuition. And that could be up to 40-60k a year for three kids depending on the private school.
I think putting the cost of the education into the mortgage by sending them to a good public school would be much more manageable than paying expensive private school bills in addition to mortgage payments.
Of course this all depends on what kind of house you’re looking for and what private schools you’re considering, but the cost of private schools will be much more than the home price differentials between neighborhoods like Pas and South Pas….especially if home prices are going to fall even further in the next few years.
And I think good school districts who have stood the test of time will continue to do well 12-13 years down the road. I was a product of the Claremont, CA school district which was ranked very well when I graduated in 1998. To this day it continues to do well. Established school districts with strong community involvement like South Pas and San Marino will also continue to meet high standards in education.
>One other thing I should mention regarding sending 3 kids >through public schools – it is exceedingly *rare* that a good >school district turns out superior students, both when it >comes to future college performance and career goals.
This statement just baffled me. We have a lot of excellent students that come out of good public school districts. What are you basing this on?
>The other significant factor is socialization skills, and >those are not necessarily helped by being among other students >who are high achievers. Often the best achievers are the ones >who have learned how to deal with “problem” children (i.e. >learning good confronation avoidance skills) and imperfect >teachers. They learn that the system is there to help, but it >is their own responsibility to take control of their future.
Again, is this your own observation and opinion or are you basing this on a study?
If what you are saying is true, then why aren’t wealthy people sending their kids to crappy public schools?
I think you are making very general statements about education that are completely unfounded and based purely on your own opinion.
I know what you’re trying to say, an individual can flourish in any environment if they put their mind to it.
But the average student who attends San Marino High will have many more tools and resources to succeed than a student at Morningside High in Inglewood. If this wasn’t true, nobody would care about where they sent their kids to school.
tracker wrote: “I think you are making very general statements about education that are completely unfounded and based purely on your own opinion.”
I agree with half of what you wrote – it is my opinion, but it is not unfounded. My research is based on professional recruiting I do for many large fortune 500 companies and I do look at the complete picture of people I place. I know from personal experience that the excellent, well paid workers in the companies I recruit do not share any patterns with regards to primary and high school education.
From college onward, there is a stronger correlation, but not much.
“If what you are saying is true, then why aren’t wealthy people sending their kids to crappy public schools?”
You have a significant flaw in your argument, which is that wealthy peoplea are in general, making the smartest decision for their children. As a general rule, wealthy people are about as good as non-wealthy people in setting up their children’s future success. They determining factor is money, not education. In other words, the kids get many second chances to fail.
Yes, I am intimiately familiar with Claremont High School, and I am also equally familiar with other schools in the area, including Upland High – they are fine school districts with well trained teachers, and yes, they do have many successful graduates, many of whom are good friends of mine. However, I also have many successful colleagues who graduated from public schools which were not so highly rated, and have many friends who went to Claremont High and are currently unemployed. Again, my point is that the high school you attend has no significant effect on your financial future.
You have reaffirmed my point, which is that MOST people do not believe what I say – they do honestly believe that a high school somehow imparts and advantage to their children, and they will pay dearly for this magic feather. And I believe it is for this reason that places like South Pasadena, irrationally, will have higher home prices because a core belief that supports them is irrational.
But we’re here to become enlightened and find values. South Pasadena is not value. It is perceived value, and part of being a good contrarian investor is realizing when real value is not present and choosing accordingly.
I would also add – sending your child to a very competitive school district full of excellent test takers will put your child at a significant DISADVANTAGE when it comes to college admissions. Why?
Most college admissions processes will not admit a significant number of students from the same high school. If your child’s peers are all gunning for Stanford and they admit 10 of them whom are sharper test takers and better at padding their extra-curricular resume than yours, you will lose out. You’ll stand a much better chance if your child is one of the smaller overachievers at another school.
Again, drawing from my experience at Claremont High, you will find that even the local Claremont Colleges have this significant, though unofficial policy. High school relative merits do not account for as much as college relative merits. Your valedictorian at Claremont has about even odds at the valedictorian at Chaffey. Yet I ask you, which valedictorian has to fight off more competition for that spot?
puckhead – home schooling is not as difficult as you might imagine. There are significant online resources available now that will help you produce lesson plans. You don’t have to write your own tests, or build your own curriculum – many well thought out systems are already in place, and you can purchase them for very little money.
Also, you don’t have to spend nearly as many hours each day attending to your children as you might think. Many home schoolers often find they can compress a typical 6 period school day into as short as 3 hours of instruction. Some parents even split it up into afternoon and evening classes.
If you haven’t considered it, give it careful consideration and perhaps even talk to some home schooling support groups in your area.
No matter how good a school system ranks, your children will still be mediocre if the parents do not provide sufficient support. I personally feel schools in Arcadia and San Marino are over rated. most parents I know send their kids to after school program and or have a private tutor in addition to parental support.