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 🙂

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.