| Asking Price | $898,000 | ::: | Sq-ft | 2,000 |
| Purchased Price | $156,000 | ::: | Lot Size | 9,060 |
| Purchased Date | 09/28/1984 | ::: | Beds | 3 |
| Days on Redfin | 180 | ::: | Baths | 1.75 |
| $/Sq-ft | $449 | ::: | Year Built | 1948 |
| 20% Downpayment | $179,600 | ::: | Area | Peacock Village |
| Income Required | $224,500/yr | ::: | Type | SFR |
| Est. Payment* | $4,540/month | ::: | MLS# | A07140037 |
*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%
Remember what happened to Shuttle Columbia back in 2003? It disintegrated upon re-entry and lives were destroyed. If the sellers at 420 Columbia don’t drop the price down to market values, they can slowly watch their equity disintegrate as well. It’s a very dated property and has been on the market for half a year. I don’t see any reason why a transaction would occur without a significant drop in price.
Listing Price History
09/23/07 $925,000
12/01/07 $899,000
02/27/08 $898,000
In six months time they’ve managed to only drop the asking price by a total of $27k or just 2.9% of the original listing price. Am I missing something here? After two months the price was reduced by $26k and then another two months later, the second reduction is a whopping $1,000. If they’re serious about selling, shouldn’t the price reductions be faster and bigger as it sits on the market longer and longer?
We have documented many properties with sellers who are refusing to accept the reality of the national real estate market decline and reduce their ridiculous asking price to market values. Because of that, their property often sits on the market for months on end – only to sell at a reduced price anyways. This chasing down of the market is not only financially draining, but also takes a huge emotional toll. The stress and uncertainty on the sellers can be a crushing weight even during better economic times so I cannot imagine the anxiety they face today.
To the many others out there, I advise you to price your property at market value. Market value is not what you paid a few years ago, what you think its worth or what your friends and neighbors say its worth. Market value is what buyers are willing to pay for your house today.
- Buyers don’t care if you overpaid.
- Buyers don’t care if you need this to fund your retirement.
- Buyers don’t care if you priced it so that you can repay that HELOC.
- Buyers don’t care what you think it’s worth.
- Buyers don’t care what your realtor says.
- Buyers don’t care. Period.
They do, however, care about getting a good price and in this market they’re looking for killer deals. In a declining RE market, market value is at or below the previous sale of a comparable property in the area. It’s not what properties sold for last year, in 2006 or in 2005. Those days are gone. Price to sell – it works only if you do it right.
i agree that this place is overpriced and is probably not going to sell. the only thing i see that the owners have going for them is that the property was purchased back in 1984, before this ridiculous housing boom. i would assume that they did not participate in 100% financing, therefore they will not have the pressure of selling before their mortgage “kicks up”.
that kind of goes back to why i value the loan information that you guys typically provide. i have a few basic assumptions that i would like to share. first, a majority of the people that have bought during this last housing boom/bubble participated in 100% financing. the second assumption is that most of these mortgages will “kick up” after 5 years. since this type of 100% financing started in roughly 2001 and peaked in 2005, performing some quick math tells me that these loans will reset from 2006 to 2010. coincidentally, the 2006 date roughly matches when the downturn began.
i believe the supply of homes will cumulatively increase as the years progress, with even more and more homes being forced to sell due to rising mortgages. therefore, i see the homes that have 100% financing with 5 yrs added to the purchase date as prime foreclosure properties, unless the owners drastically reduce their price, which they obviously have not done. the other “downward pressure” should come from the $417k jumbo loan threshold. People with good credit and decent salaries are still not going to be able to afford a “jumbo” 30 yr. fixed loan, so prices will need to gravitate towards the threshold in order to be affordable. just my 2cents.
Your rationale corresponds with the famed Credit Suisse Option ARM reset chart. We’ve gone through about half of the subprime resets, but that’s just the beginning. There are still plenty of Alt-A, Option and even Prime loan resets to through over the next few years.
The conforming loan amount has been temporarily raised to over $700k in certain areas – Arcadia included. While this helps a bit, the real barrier is the inability of people to obtain loans. Gone are the days of no downpayment, wishy-washy credit scores and no-doc loans. Lenders are now very risk-adversed (as they should be).
Even though these people bought in 1984, they still might have HELOC’d themselves to death. I’ve noticed this with several houses that are for sale now, and I think this blog has featured some of them. So there still might be 100% financing issues.
Also note that refis are recourse debt, unlike purchase money mortgages. Banks can seek a deficiency judgment in California on refinanced loans.
I’m working on a story for the L.A. Times on the use of California Props. 60 and 90, which allow homeowners over age 55 a one-time opportunity to transfer their existing property tax base to a new property of the same or lesser value, and I’m looking for people to interview.
In the case of Prop. 60, the law covers property within the same county. In the case of Prop. 90, although the law in theory allows homeowners to transfer their existing tax base to another California county, since each county gets to choose if they want to participate, only a few actually do so (including several in Southern California).
But for those who want to use this law to move to the counties of Riverside (i.e., Palm Springs) or San Bernardino (i.e., the High Desert) or most of the Bay Area and Central California, they’re out of luck. Consequently, I’m looking for people who would consider moving to these areas but haven’t because they don’t want their property taxes to rise exponentially.
Finally, Prop. 110 is similar to Prop. 60 but allows severely disabled people of any age to use this one-time opportunity to transfer their existing tax base within the same county, and I’ll also be including that in the story.
If you’d like to get an idea of my writing style and how I cover subjects, click here for a story I wrote on reverse mortgages last month.
Please send any potential interview subjects to me directly at psduffy@sbcglobal.net.
Great writeup- I especially like the buyers don’t care part – I’m ROFL. Maybe that should be separate blog to highlight that point entitled “An Open letter to Sellers and Realtors: Dumb Buyer Days are Over”.
I think maybe these people are basing their strategy on what they see in the headlines nationwide – where some areas may be tapering off because it can’t get any worse in those places.
Or possibly they are counting on someone to be stupid enough to pay too much like whoever bought this beauty in the highlands, 1728 highland oaks drive, according to Zillow it sold for $1M in February 2008. Totally outdated – the only redeeming quality were the hardwood floors, there is no driveway to the garage in the rear of the house, so either its a teardown or a $250k+ renovation for a new kitchen, bathrooms and garage.
This post is spot on.
“Spot on” – Are you British?
I hardly ever hear that phrase used here. 🙂
The buyers-don’t-care part of it came straight from my heart and I think many potential buyers today share similar feelings. Then again, maybe it’s just me 😉
1728 Highland Oaks Drive sold for $910k on Valentine’s Day. That places the sale at $379/sqft which is improvement from the $400+/sqft in that area we were seeing earlier this year. The subsequent sales should be lower as the crash continues.
Los Angeles Time carries several Mortgage lending advertisements that state 100% financing, credit issues okay, and specialty loans packages available. What surprises me is that there are companies out there that continue to practice the very loose lending standards that were common place from 2001-2007 and the resultant housing crash? Who are the banks, investors, and others that are buying these speciality loans? Unless the advertisement is just a gimick to get someone to apply with them, I don’t see the housing market doing well for years to come.
Unless there are strict lending standards that state you must have an excellent credit score and have 20% downpayment, like the old days, I don’t see housing ever recovering again.
Arcadian, can you update the loan situation on this property? It seems that the owner bought it over 20 years ago. If they didn’t refinance the equity out during these years, they probably paid off the mortgage then they really do not be worried much at all. I saw the property at one of its open house, it does need a lot of remodeling work. Also, its location is not favored by Asian FengShui either. No wonder it is on the market for long time and nobody is interested. Need major price reduction to attract buyers!
AClover, you’ve sure been to a lot of these Open Houses!
From the records I pulled up, the only transaction showing is the original purchase in 1984. After discussing with SBG regarding this property, we can only assume that the seller is actually relying on an RE agent to get their home sold. So just replace “seller” with “Realtor” in the above post and it still makes sense.
If this was the case, then I feel sorry for the property owner. They obviously want to sell this 60 year old home but whoever their agent is deserves to be fired.
Of course, even public records aren’t always up-to-date so we’ll keep an eye on this property until it’s sold (if ever).
It is hard to believe that this property is in Escrow! I pray for this brave falling-knife-catcher. It will be very interesting to see the sold price. My guess it could be as low as just 800K. Any other guess?