815 E. Longden Ave.

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

Another day, another 100% financing deal gone wrong in Arcadia. According to Property Shark, this property was purchased in December of 2004 with two loans, a first loan of $460k on a ARM and a fixed second of $115k. The March 2008 transaction shows the bank taking back the property for $616,421. Since the original purchase price was just $575k, I suspect the homedebtor used that ATM bolted on the side of the house to pull out some easy HELOC money between 2004 and 2008.

I’ve said it before and I’m going to say it again. Banks have no emotional ties to the properties they hold and will unload them at whatever price the market will bear. With the rising notice of defaults and foreclosures raping the southland, banks cannot afford to hold on to REOs in hopes that the crash has “bottomed,” nor can they wait for prices to increase. They have obligations to shareholders and unsold REOs on their books is like an anvil in the water.

This particular property is moderately priced, but not priced to sell. There is another listing just down the street with 3 bedrooms and a bigger lot asking for $429,900. At $299/sqft, it’s slightly cheaper than this house. Coincidentally, that listing is also an REO. It’s still early in the housing correction, but we are starting to see 2004 rollback prices in Arcadia and I expect to see more of those later this year.

68 W. Longden
Arcadia, CA 91007

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

This property is very similar to the 1219 S. 6th Ave. that I profiled 2 days ago. They both sit on large lots (0.45 – 0.61 acres), have comparable square footage (~1,900), very old (60+ years) and both listings hint that you’re better off demolishing the existing structure and building a new one. To top it all off, both properties are listing for $618+ per square foot.

Assuming the structure itself is worth nothing, does the listing price of $1,248,888 justify the cost for this sub-1/2 acre lot? If you look at the aerial map, the property is surrounded by half a dozen or more 3,000 – 4,000sf McMansions. Can you spot them?

It could be that I’m not the target audience for these types of properties but it looks like $1.2MM buys you very little. Permits, financing costs, architectural fees and the construction of a new three to four thousand square feet home will put you near or at the $2,000,000 mark. Even in this inflated market, $2MM can buy you a very nice existing home, not just in Arcadia, but in the Highland or Peacock Village communities.

$940k – 240 Vanquero Rd., 0.4 acres
$1,358,876 – 1714 Highland Oaks Dr., 0.28 acres, 2,788sf
$1,580,000 – 1249 Oakhaven Rd., 0.35 acres, 3,700sf, Private gated community (Whispering Pines Estate)

I could go on and list a dozen more properties but I’m sure you get the point. So what’s your favorite property for under $2MM in Arcadia?

114 W. Pamela Rd.

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

This property was purchased for just $700,000 back in 2001 when it was a new construction. According to PropertyShark, the seller put $200k (or 28.5%) down at the time of purchase. At 3%, 4% and 5% annual appreciation, it would now be worth $850,290, $906,103 and $964,992 respectively. Instead, it’s currently being listed for $1.298MM — a $598k gain over about 6.5 years.

Rental equivalents are a great way to gauge the market because they’re based off fundamentals and directly tied to income. When home prices are tied to income, it suggests stability and sustainability. As of yesterday, Craigslist didn’t have any 5 bedroom homes for rent in Arcadia, but I doubt the rental market is anywhere near $6500/month for a SFR in the Baldwin Stocker area.

Surely there are families who have $260k for a 20% downpayment and an annual gross income of $325k, but how many of them are out there actively looking for a house in this neighborhood? How many of them can qualify for a loan in today’s tough market? Furthermore, how many who can afford the payments actually like this cookie cutter stucco box? Yes, the seller only needs to find one such buyer, but I go back to my point that buyers must be both willing and able to purchase a property for the sale to go through. There has been a lot of discussion in the comments lately about the Asian rescue scenario and I maintain my position that this phenomenon will not save Arcadia nor any other SGV city.

1219 S. 6th Ave.
Arcadia, CA 91006

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

Remember this property that we profiled 3 months ago? Back then it was listed for $1,392,000 and unsold after 75 days on the market. It is now listing for less than the purchase price and the lender is most likely keeping an eye our on this sale due to their foolish 100% financing.

The seller had originally purchased this property for $1,230,000 back in 2007 and got the City to approve plans for an 8,000sf home to be built.

I have no doubts that the owner was expecting to hit it big when he originally listed this home for $1,850,000. Today, he will be lucky to walk away with a short-sale and intact credit.

Listing history

Date	Price
Dec 12, 2007	$1,850,000
Dec 18, 2007	$1,392,000
Feb 29, 2008	$940,000
Mar 09, 2008	$1,200,000

Are you a sucker?

Take a look at the price bump from $940,000 to $1,200,000. This is neither a typo on my part or the listing agent. If you scan through the Redfin listings, many properties have actually had their listing price increased during the last 2-3 months. Although we can’t say for sure, it is my suspicion that local Realtors are expecting a strong Summer sell-off as students graduate, empty nesters relocate and young professionals start property hunting. Perhaps the Realtors are also trying to create a sense of urgency by reminding suckers – sorry, I meant buyers – that they need to purchase soon or risk being priced out forever.

It is probably a combination of both scenarios as sellers refuse to face the reality of our housing crisis. This Summer is important because it will get the ball really rolling in terms of price reductions and REO sales. I know many of you have been waiting for a long time to buy a home in Arcadia and your patience will be justified as we slowly witness the unraveling of this housing bubble. Personally, I’ve been waiting for 3 years and it has already paid off in terms of what my money could buy in 2005 versus today.

443 Las Tunas Dr.
Arcadia, CA 91007

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

I actually referred to this property in a weekend post earlier in the month. Looking at the numbers again, I think the listing deserves its own WTF you-gotta-be-kidding-me post.

Location
I drive by this property every other day. It’s located just East of Baldwin Ave. where, although traffic isn’t heavy, cars constantly blow by it at above-average speeds. Right down the street is the Big Lots and H.K. Cafe shopping plazas. I wouldn’t say it was a bad location, but it’s not anything stellar either.

Property
For $775,000 you’re getting a 1,020sf 67 year-old home. At $760 per square foot, there is no question that this listing is way overpriced. As an extra bonus, this property comes packaged with the “EXTRA AMENITIES OF WORKSHOP, GREENHOUSE AND ENCLOSED PATIO.” Personally, I don’t have a green thumb so I don’t quite understand the benefits of a greenhouse. But hey, there are probably folks out there who would really appreciate one.

Purchase & Financing

This property was purchased in January of 2008 for $600,000. No, that date wasn’t a typo. After holding onto it for just under 4 months, the owner has now put it back on the market for $175,000 over his/her purchase price. There was a 10% downpayment that was most likely required by the lender. I’m certain the buyer would have gone 105% financing if they were allowed to but someone forgot to inform this flipper that we’re now in a housing and credit crisis.

Not only is the $775,000 asking price ridiculous, I am amazed at what kind of profit this flipper is trying to make.

Downpayment – $60,000
Loan amount – $540,000
Asking Price -> $775,000 – $60,000 – $540,00 = $175,000

I deal with extremely risky real estate investments and a projected 30-40% return is already very tempting to my investors. Based on this flipper’s $60k investment, he/she hopes to make a 290% return in just 4 months!

Day in and day out we profile properties in Arcadia and constantly remind ourselves how much money people would spend for good schools, good location and a generally a safe and welcoming neighborhood. Sometimes we forget that there are cities surrounding Arcadia that may offer more, or even less, home for the same price. I can see how empty nesters may not require the best school districts or young professionals choosing to pass on the maintenance that comes large lots.

Let’s pick a random value, say $759,000, and see what you can buy in Arcadia, Sierra Madre and Temple City.

#1 Arcadia – 3bed/3bath attached townhouse 2,340 sqft. Built in 2005.
209 S. Third Ave. #A

While this property lacks in lot size, it is made up by offering more living area square footage and a new construction.

#2 Sierra Madre – 3bed/2bath SFR 1,567 sqft. Built in 1967.
290 W. Laurel Ave.

To the North of Arcadia is Sierra Madre. For $744,900 you get a 40 year old home that’s greatly in need of remodeling. But it’s generally in livable condition and you’re just a few minutes drive from the Santa Anita Mall.

#3 Temple City – 4bed/3bath SFR 2,447 sqft. Built in 1924.
6019 Agnes Ave.

To the South is the small town of Temple City. TC has its fair share of new McMansions sitting next to traditional homes. For $759,000 you can buy an 84 year old property that’s been very well maintained and tastefully upgraded.