All posts by TheArcadian

$2.5MM Home for Rent

June 9, 2008 TheArcadian 13 Comments

In addition to tracking home listings in Arcadia, I also try to stay updated in the rental market. My usual sources are the following:

Rentals.com
Apartments.com
Craigslist
Newspaper Classifieds

This weekend I came across a new site: oodle.com. Their property rental section somehow pulls listings from several other sites and aggregates them into a searchable database. I decided to give it a test-run to see what the largest and most expensive rental in Arcadia currently is.

Magnificant Brand New $2.5 Million Dollar Home

$3,500
5 Bed
4.5 Bth
5,000 Sq. Feet

Property Description

~Save money by living in this beautiful home while it’s for sale.

Stunning brand new Tuscan influenced home with many extras.

Would you bother renting a house if the owner told you it was listed on the market and at anytime you’d have to move out after a 30 days notice?

If this home really is listed for $2,500,000, then it is definitely cheaper to rent it for $3,500. Your typical mortgage on this fella would be $12,640,! I would really like to know the history behind this property. Was a it new construction that won’t sell or a failed flip? Unfortunately, we weren’t able to find the listing on Redfin. Perhaps you guys will have better luck at hunting down the address?

Inventory

Inventory & Market Report – 6/7/08

June 8, 2008 TheArcadian

Zip Codes: 91006, 91007

Current Market Listings as of June 7th, 2008*
Properties for Sale: 224 (-19)
Median Listing Price: $759,900 (1.32%)

Weekly Foreclosure Update*
Properties in Foreclosure: 27(+2)
Properties in Pre-Foreclosure: 66 (-9)
*+/- is compared to previous week’s data.

Property and foreclosure numbers obtained from U.S. Census, ZipRealty, Trulia, Yahoo Real Estate and Foreclosure.com. Market listings and price data obtained from DataQuick News.

News

3 steps to a housing crash

June 7, 2008 TheArcadian 5 Comments

Somebody told me today that it’s time to buy a home soon because the next housing bubble is right around the corner. Oh dears…

My sources from Wall Street are saying that we got at least 5 years to go before any significant recovery of real estate can even be considered. First time buyers, making up for nearly 30% of the buyer’s market, have been priced out and a major correction throughout the U.S. is inevitable. Even public builders like KB Homes are starting to realize what this market needs: AFFORDABLE HOUSING.

Downsizing the American Home – CNN Money

Another article from USA Today is full of quotes that can be used to highlight the housing crisis we are facing.

While there’s still a plentiful pipeline of home buyers looking to make a deal, finding one willing to make a split-second decision to buy and pay whatever it takes to get in the door is no longer a lock, real estate agents say.

This one applies to Arcadia:

Part of the problem, Baker says, is that today’s sellers are pricing their homes based on what comparable homes went for six months ago and tacking on an extra 10%. That formula, he says, is too aggressive.

Bubble theory proponents say it will end badly, with sharp price declines and intense financial pain like that investors suffered after the tech stock bubble burst in 2000. But for that to occur, it would take a dramatic rise in interest rates or a major shock to local economies resulting in steep job losses,

Let’s see – It would take 3 things for the market to crash:

Rise in interest rates
Shock to the economy
Leading to… steep job losses

This article on MarketWatch covers all 3 scenarios:

Wall Street is betting 2 to 1 that Feds will increase rates.
Today, oil made its largest one-day jump ever to $139/barrel.
The unemployment rate is reporting its largest increase since 1975.

I am normally a very optimistic person but there is nothing to convince me that this housing and credit crisis is going to blow over anytime soon.

Here’s to a happy weekend to all you readers.

Analysis

A Peak and 2 Bottoms

June 6, 2008 TheArcadian 5 Comments

Most people give me a crazed look when I tell them home prices in Arcadia will drop another 25-30% over the next 3 years. Why is that so hard to believe when values doubled and nearly tripled over the course of 4 years? A housing bubble consists of 3 points: a peak and two bottoms.

Have we hit the second bottom yet?

Over the course of this housing downturn, I’ve personally met friends and associates who are all at different stages of the home buying process:

1) Renter Savers
These people may or may not have money for a downpayment. They understand how bad the market is and rent because it’s cheaper. This group of renters are living below their means and save a good portion of their monthly income.

2) The Clueless
These guys have very little money and absolutely clueless regarding what it takes to buy a home. Therefore, they rent and have no idea as to how bad this housing crisis is because it seemingly doesn’t affect them.

3) Would-be Knife Catchers
I am most worried about this group of friends. They are just starting to realize how much money homeowners made off real estate over the last 5 years and are eager to jump into the market. They view real estate as a great investment and renting as a “waste of money”. Many of them are excited over all the REO auctions popping up throughout Southern California and are eager to land a smashing deal.

In addition, these individuals all seem to know a Realtor or prominent financial guru who encourages them to buy now because we’ve hit bottom. I tell them we have a few more years of double digit price reductions to go and they shrug me off.

For those in Group 1, they’re in a good position. After this whole crisis blows over, those with cash-on-hand will have no shortage of affordable homes to choose from. Even if interest rates skyrocket, home prices will fall even further and a sizable downpayment increases your buying power.

For Group 2 folks, I’ll sum up the housing bubble in 7 points:

Late 1990’s – The tech boom crashes and everyone wants a safe investment: Real estate!

2000 thru 2003 – Fed lowers interest rates and increases home buying.

2003 – Sales weaken so lenders push for more interest-only (IO) and adjustable rate mortgages (ARMs).

2003 thru 2005 – Housing prices double and nearly triple throughout the country. East and West coasts become investment flipping hot spots and we get:

Media hype
A buying frenzy
Investors flood the market
Developers overbuild
…and 1 out of ever 4 adults becomes a real estate agent. [sarcasm]

2005 thru 2006 – Mainstream media acknowledges that we’re in a “bubble” but the Feds, Wall Street and National Association of Realtors is resistant to the news.

2007 – Show’s over as the secondary lending market collapses overnight and eventually giants like Countrywide, Washington Mutual and Citibank get hammered. Sales volume and prices begin dropping at record levels.

2008 – We see no stabilization in prices and definitely no bottom in site. The crisis makes it way into Los Angeles and all but a handful of cities show resistance to the trend. Sorry, Arcadia isn’t one of them.

Property Profiles

$1,180,000 for Dirt

June 5, 2008 TheArcadian 6 Comments

Before reading on, I wanted to let you know that the following property listing nearly floored me. We have profiled several ridiculously overpriced properties the last 2-3 weeks but this one gets to take home the prize.

1015 S 8th Ave
Arcadia, CA 91006

Asking Price	$1,180,000	:::	Sq-ft	1,374
Purchased Price	$1,017,500	:::	Lot Size	0.49 acres
Purchased Date	11/28/2005	:::	Beds	3
Days on Redfin	2	:::	Baths	2
$/Sq-ft	$859	:::	Year Built	1934
20% Downpayment	$236,000	:::	Area	Near Monrovia
Income Required	$295,000	:::	Type	SFR
Est. Payment*	$5,966/month	:::	MLS#	W08080872

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

$1.18MM for a property located approximately 6-8 blocks from the Monrovia gang shootings back in January. Not only that, you only get a 1,374sf 74 year old home so a new construction is in order. Essentially, you are buying a piece of land just shy of half an acre.

I know what this seller is thinking – “Just like my neighbors, this lot is big enough to be split into multiple smaller lots so it must be worth a fortune.”

Unfortunately, there’s nothing in the listing saying that the owner got the Permits approved or even bothered to get plans approved for a new McMansion. All they did over the last 2.5 years was water the grass until it was green again (aerial photos show a brown piece of dirt).

If you were to buy the property and live in it, you’d be paying a whopping $859 per square foot. Lets compare that figure to its neighbor located right next door.

725 Tiffany Terrace

2,777sf
4bed 3bath
Listing price: $998,000 ($359 per sf)

For $182,000 less, you get a livable decent sized home. Oh yea, this property has been sitting on the market for 221 days, has 2 price reduction and is a short-sale.

I’m not nitpicking with my properties either. Just 2 blocks South is 1318 8th St.

This home was completely gutted and remodeled several months ago. It’s currently listed for $928,000 ($414 per sf).

After construction, new landscaping, permit and financing costs, today’s subject property will cost you over $1,700,000. Would you spend that kind of money to live on 8th Street?

Property Profiles

Little to gain on Baldwin

June 4, 2008 TheArcadian 1 Comment

2029 S. Baldwin Ave.
Arcadia, CA 91007

Asking Price	$718,000	:::	Sq-ft	1,859
Purchased Price	$650,000	:::	Lot Size	7,480sf
Purchased Date	5/4/2007	:::	Beds	3
Days on Redfin	17	:::	Baths	2
$/Sq-ft	$386	:::	Year Built	1973
20% Downpayment	$143,600	:::	Area	Baldwin/Longden
Income Required	$179,500	:::	Type	SFR
Est. Payment*	$3,630/month	:::	MLS#	A08072792

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

This property is located on the corner of Baldwin Ave. and Longden Ave. From the exterior, it’s undoubtedly a bit dated but reflects adequate maintenance. Unlike many people who flipped homes during the bubble (i.e. buy, wait 3 months then sell), this flipper actually gutted the interior of the home and added a new kitchen, flooring, restroom and knocked down a few walls.

According to the sales history, the original owner made a decent return of 8.3% per year on his property after owning it for 33 years. The 2006 buyer was not so fortunate as he lost money after 1 year of ownership.

Sales history

July ’73 – $48,000
Mar ’06 – $655,000
May ’07 – $650,000

After buying the home for $650,000 and remodeling the interior, this flipper was sure they added plenty of value to this property – to the tune of $133,000. Unfortunately, the home was overpriced to begin with and no matter how fancy or high-end your rennovations are, the open market will the final say as to what your home is worth.

As reflected by the listing history, this home will sell no where near its initial asking price of $783,000.

Listing History

Unknown Date $783,000
May 17, 2008 $698,000 (-$85k)
May 19, 2008 $718,000 (+$20k)

After a year’s worth of mortgage payments, Realtor commissions, property maintenance and all the new upgrades, this seller will be lucky to break even on their investment.

As you probably noticed, photos and additional listing information was pulled from NeighborCity.com. Come across a home you like? NeighborCity makes it easy to tour the property by allowing you to schedule a date and time right on the listing page. After scheduling, the site pairs you up with pre-screened and experienced buyer’s agent.

If you’re feeling lucky, NeighborCity also makes it easy to submit an offer on a home. I can see many people using this feature to ‘test the waters’ and gauge the current housing market. Although an agent is sure to give you a call, this site just makes it easy to get the ball rolling.

Misc. Post

First look: Trulia Snapshots

June 3, 2008 TheArcadian 1 Comment

Obviously, I’m not up at 5am every morning when the daily posts go ‘live’. Property profiles are written the evening before and set to publish the following morning. Unfortunately for me, it’s 12:00am and both Redfin and NeighborCity are down. I’m guessing the servers are undergoing routine maintenance.

Since this is the case, I decided to skip the regular Property Profile and introduce you to a new web feature we came across last week: Trulia Snapshots. Trulia, similar to Redfin, gathers and display residential MLS and public records data.

Snapshots takes real estate research to the next level by presenting a graphical and interactive display of properties currently on the market.

I’d say give it a run-through and take a break from the usual line-by-line property listings. If you search for Arcadia, CA, It looks like our friend, 388 Torrey Pines, is still the most expensive single-family property on the market at $4,698,000. Although some sites say otherwise (DOM refresh?), Snapshots pegs this property to have been sitting idle for 55+ weeks.

Arcadia Housing Blog