I was going to save this newly listed property for Monday but it got me so excited that it’s only right I post about it today. Since Father’s Day is coming up and we’ll be busy with family, I will just leave this profile up over the weekend. I’d love to hear your thoughts regarding the $2,500,000 monstrosity.

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Five days ago I profiled a $2.5MM property renting for just $3,500. In exchange, you are required to showboat the home to prospective buyers. More details can be found here and many thanks to our reader T K Eng for the info.

Redfin caught the listing today providing additional details.

2002 N Bella Vista Ave
Arcadia, CA 91006

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

With the addition of this home, there are now 15 homes in Arcadia listing for over $2,000,000. It is definitely an elite club to be in since the buyer would have to be flushed with cash and have extra cashflow to maintain these homes. Heck, property taxes alone will be over $20,000 per year.

I have a few comments regarding this listing:

1) Where’s the landscaping? For $2.5MM I would expect some exotic landscaping, privacy trees and perhaps even a pool and spa. Instead, you get grass and some shrubs.

2) No privacy. Make sure you install curtains because the McMansion next door can monitor your every movement.

3) 5,600sf building on a sub-half acre lot? Take a look at the aerial – the home and garage cover half the parcel.

I could go on and on about this property but we’ll save that for the upcoming week. From what you’ve seen so far, is this the luxury home you would envision a multi-millionaire buying?

Up for sale is a million dollar home located blocks from Monrovia and the gang shooting area months earlier. But that aside, if safety isn’t your top concern, then this property seems to be promising:

316 Laurel Ave
Arcadia, CA 91006

Listing Price: $1,085,000

• BEDS: 4
• BATHS: 4.5
• SQ. FT.: 3,201
• $/SQ. FT.: $339
• LOT SIZE: 6,350 Sq. Ft.

A typical overbuilt cookie cutter home. It was upgraded in 2001 and according to the seller,

There are so many Amenities that I can’t list them all. You must come and see the home for yourself. Furniture negotiable.

Sure, you get a lot of living space. But for $1,000,000+ I’d expect some privacy too. Check out the backyard; you can almost shakes hands with your neighbor from window to window!

Sales History

11/1990 $670,000
05/2001 $555,000
10/2006 $1,080,000

Listing History
Jan 11, 2008 $1,150,000
Apr 19, 2008 $1,085,000 (-$65,000, -5.6%)

So wait, all the “upgrades” were actually done by the previous owner and now this guy wants nearly double the 2001 sales price? It’s going to take more than a measly 5.6% price reduction to get rid of this home and the owner knows it. The listing description says it all:

Attention all Guests! Seller is giving away 3 days/2 nights vacations, with 26 different destinations to choose from. This is not a raffle. No purchase necessary. Just come and take a look at the property.

So how can they afford to give away free vacations to all visitors? Sounds too good to be true, right? You’ve probably guessed it from the title but I believe the sellers are just “giving away” vacations normally offered by Timeshares. All the recipient has to do is sit through a 2-3 hour sales pitch and be pressured and ridiculed into buying a share of a vacation home.

In the end, you’re given a voucher for a “free vacation” which includes blackout dates and restrictions that usually isn’t worth your time figuring out.

This seller actually put a $200,000+ downpayment on his home. How much do you think he will get back after months of depreciation, 6% commissions and the inevitable price reductions?

Perhaps I will stop by this weekend and insist on getting my 2-night vacation with no strings attached.

300 N. Altura Rd.
Arcadia, CA 91007

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

This is a For Sale by Owner listing (FSBO). Seeing as how the listing price is exactly what the seller bought it for 8 months earlier, I’m not surprised. With agent commissions costing up to 6%, can you afford to lose $83,940 over 8 months?

The listing description is even more intersting:

ASSUMABLE LOAN AT 5.375%% INTEREST ONLY FOR 9.5 YEARS; $3050/MO!! Exquisite and spacious Lower Rancho family home is on a quiet, tree-lined street in one of …

As an added incentive, you can take over the seller’s 10-year Interest Only mortgage. While I don’t think this type of mortgage is necessarily bad, it’s just a reflection of what buyers would do to “afford” a million dollar home.

This property is located in the Peacock Village community and despite the lack of photos, I’d be surprised if it wasn’t a nice home. But is it worth $1,399,000? I pulled up comparable properties also located on Altura Rd.

500 N. Altura Rd.
2,670sf
15,978sf lot
Purchased in 1987 for $418,000

400 N. Altura Rd.
2,685sf
16,220sf lot
Purchased in 1987 for $350,000

Applying the standard appreciation table, we get the following:

$418,000 after 21 years:

3% $777,603
4% $952,525
5% $1,164,532
6% $1,421,017

$350,000 after 21 years:

3% $651,103
4% $797,568
5% $975,086
6% $1,189,847

Both of these homes are a bit bigger than our current property so if it was worth $350,000 in 1987, I would have to apply a 7% annual appreciation on it to break the $1,400,000 value.

*** Update on 1511 Hyland Ave. ***

We profiled this property back on April 21st. At the time, it was an REO listing for nearly $1,700,000 ($485/sf). Now it is back on the market with an updated pricing of $1,580,000 ($451/sf) and a modified description:

• No mention of REO status
• New photos
• Properly staged for viewing
• Description with proper spelling, grammar and NO ANNOYING CAPITALIZATIONS.

Although it’s still overpriced, $120,000 off the original asking price is a small start (-7%). Another $300,000 decline and we’re looking at a 25% peak-to-bottom price correction. We’re nearly a third of the way there and this housing crisis will play out at least another 3-4 years. This will always be a $1MM+ home but nothing about it would compel me to spend over $1.5MM for it.

Although the new photographs are impressive, a drive-by shot isn’t as inspiring.

I must give props to the new listing agent. It has a proper description, professional photos and tastefully staged. I would have no problem with paying my agent a 3% commission if he/she did all this work for me.

***Old Post Below***

1511 Hyland Ave.

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

Many often wonder if the high end of the market is immune from the market downturn. So far, subprime has done its share of damage to California and as expected, it hasn’t affected certain markets much. Subprime isn’t really a problem in Arcadia. In markets such as these, Alt-A & even prime ARMs (as well as other option loans) are the thorns in this area. Today’s property is a REO up in the Highlands.

Purchase History
Date 01/07/2005
$1,500,000
Date 01/15/2003
$700,000

Asking Price April 2008
1,698,800

I see activity on both 3/14/05 (2 months after purchase) and 8/17/06 (1 1/2 years from purchase), but the price information is only listed as N/A. For the asking price to be $198,800 above the previous sale price the seller must have pulled some serious cash out from a HELOC since January of 2005. There were some major renovations made to the property which probably means it was a failed flip.

If the sellers used a 2/28 ARM, the loan would have reset in Q1 of 2007. That’s precisely when the credit crunch started to rear its ugly head and the flippers probably stopped paying a few months thereafter. The foreclosure process can take a long time. It can take anywhere from 9 months to a year from the time the owner stops paying their mortgage payment till the day the property gets re-listed for sale by the bank.

Since both high and low end markets experienced enormous gains during the boom due to unjustified speculation, both will likely incur a similar correction back to a sustainable market. The participation in HELOC abuse is not contained within certain market segments. Condominium and townhome owners were just as eager to tape into their equity as SFR owners. This was evident in the widespread use of “free money” during recent years as homedebtors were enabled by greedy bankers to refinance themselves into oblivion.

The bank will lose money if the cannot sell the property for what they paid a couple years ago. With home prices tumbling all across the nation, I find it hard to believe they can find a sucker to buy this for $1.7MM. The sale in 2003 went for just $700,000. That seller made out with a whopping 47%/yr appreciation when the property was sold for $1.5MM 2 years later. Now if that isn’t a massive bubble, I don’t know what is.

Since 2003 was already well into the bubble, I would venture to say that this property would drop back down to 2003-2004 prices in a few years when the correction draws close to the bottom. It’s a nice house, but not $1.7MM nice.

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

*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?

2029 S. Baldwin Ave.
Arcadia, CA 91007

*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.

Update* – Reduced to $1,294,876 (-$64,000)

I profiled this property two months ago and it has since taken a $64k reduction in the asking price. As noted in the comments section of the original post, there was decent foot traffic through the open house back in March. Apparently nothing came about because it’s still on the market.

The Highlands is suppose to be one of Arcadia’s premier locations, but properties are sitting on the market just like any other listing. Not only that, the spring and summer seasons are suppose to be prime “boom months” in real estate, yet we’re seeing price reductions and increasing days on the market. At what point will the bulls stop their propaganda about how we’ve bottomed, how things will pick up during the summer and turn around towards the end of the year?

A near 5% price reduction isn’t enough to wet my palette, but that’s enough to show softness in the market. $64k isn’t a whole lot of money, but it’s more than most people make in the two months it took for the price to drop. Let’s see – wait a couple months and save $64,000; I could do that. Heck, I could wait all year!

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1714 Highland Oaks Dr.

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

“Completely redesigned by daniel deleon design, the subtle, yet tasteful, Asian contemporary elements lend it a zen-like ambiance and the great floor plan is oriented to fully enjoy yard and canyon views. Move from the brand new kitchen into the large great room or spacious dining room. Enjoy the fireplaces or the view from either room. Truly a turn-key home, it boasts a media-ready family room, a master suite, private in-law or guest apartment, all new windows and doors, hardwood floors throughout, large under-ground wine cellar and many other fine features.”

This is a beautiful property and an example of why I’ve fallen in love with parts of Arcadia. Although it was built in the 50s, it’s been completely remodeled and in my opinion look leagues better than any of those mcmansions that have sprung up over the years. It sits up in the hills on the east edge of the Highland community, which I will profile soon. Without any neighbors along the back of the property, it’s probably very private. I like this house and could I afford it, I would probably buy it.

Back to the profile part of things, this is a flip. It was purchased a little over half a year ago for $980k and renovated to its current state. The original structure was half a century old and from the pictures, it seems like it was a complete gut. It’s also the first property I’ve profiled that has an underground wine cellar. If that wasn’t original, the flipper spent a lot of money digging dirt.

Purchase Price $980,000
Purchase Date 08/24/2007
1st Loan $784,000
2nd Loan $98,000
Downpayment $98,000 (10%)

With similar sized homes in the Highland Oaks area renting for $3,000/month, this property is overpriced. Granted, it was completely renovated, but I find it hard to believe it would rent for anymore than a 25% premium (or $3,750/month). A recent sale on 1728 Highland Oaks just up the street sold for $910,000 in February 08. That property had one less bedroom, but was of comparable size in the same community. At $910k, the sale occurred at $379/sq-ft.

$379/sq-ft x 2,788 sqft = $1,056,652
$910,000 (recent comp) / $3,000 (rental) = GRM of 303
1,358,876 (asking price) / $3,000 (rental) = GRM of 453

Admittedly, it would probably be worth a little more than $1,056,652 right now because of the remodeling that was done to the property, but I don’t think it’s $300k+ in renovations. That’s at today’s prices. I would venture to say that a home like this could dip as low as the $900k’s in a few years time.

Thanks to our reader 626chump for alerting me to this property. If you end up going to the open house this weekend, don’t forget to come back on AHB to let us all know how it went. Also, I invite anyone else who attends open house(s) to drop a comment or two about how the market is doing. Since I’m not currently in the market to buy, I’m not evil enough to attend open houses just to make low-ball offers. Although, that will change as the market correction continues.

Have a wonderful weekend 🙂