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.

416 S. Old Ranch Rd.

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

“This is located in the desirable Santa Anita Village neighboorhood. Living Room features fireplace and crown moldings, dining area, central air/heat, 2 car detached garage with many possibilites.”

Yesterday I wrote about comp killers dragging the entire neighborhood down with it and today we have a prime good example of that. At first glance, this property isn’t anything special. It’s old, dated and could use a serious home makeover so surely you’d agree that it’s not worth the asking price of $750k. That being said, at 1438 sq-ft it’s a comfortable 3 bed, 2 bath in a desirable neighborhood so is it priced correctly?

Let’s take a look at the neighborhood comps.

Candidate #1 – 812 Victoria Dr.
$748,000 3bed/1bath 1,256 sqft on 7,675 sqft lot $596/sqft
This house is just around the corner and is asking for $2,000 less, but you lose 200 sqft of living space and 1,325 sqft of lot. On top of that, it only has 1 bathroom — a big no no in today’s market.

Candidate #2 – 716 Joaquin Rd.
$758,000 2bed/1.75bath 1,550 sqft on 9,000 sqft lot $489/sqft
This house is a few steps away and asking for $8,000 more in exchange for 112 more sqft of living space, the same sized lot and a (probably dated) bathtub. Personally, I wouldn’t pay $8k more for112 sqft. It was last sold in 2000 for just $343k.

Candidate #3 – 707 Joaquin Rd.
$829,900 2bed/1.75bath 1,513 sqft on 8,625 sqft lot $549/sqft
This distressed seller is so confused he/she increased the asking price from $699k (April 2008) to $829,900 (May 2008). For $79,900 more than today’s featured property, you get 75 sqft more living space, a smaller yard and lots of fruit trees. The notice of default must have knocked the sense out of them because this property sold for just $365k in 2001.

Candidate #4 – 860 Coronado Dr.
$868,000 3bed/1bath 1,974 sqft on what appears to be roughly the same size lot $440/sqft
This for-sale-by-owner property wants $118,000 more for 536 more sqft of living space. That’s $220/sqft for something that’s old, not new construction. Crikeys – you also lose a bathroom.

Sold 1 month ago on April 16, 2008 – 839 Palo Alto Dr.
$750,000 2bed/2bath 1,645 sqft on a similar sized lot with a pool
This property sold last month for the same $750,000 the sellers are asking for today. That’s probably how they came up with the asking price. You get 200 more sqft, but lose the extra bedroom so it’s about equivalent.

Based on the above information, it appears that 416 S. Old Ranch Road will depress the asking prices of all four neighboring candidates in the lower east Peacock area. When you’re the lone ranger for sale, it may be possible to deceive a potential buyer into thinking your property is worth the asking price. When you have another comparable sale within a mile from your property going for less, then you have a serious problem.

In addition, the recent sale on Palo Alto Dr. places today’s property at a reasonable price. Of course, that doesn’t mean it won’t depress further in the coming months. If the comparables sold in the early 2000s for around $350k, at 3%, 4% and 5% annual appreciation, it would be worth $443k, $479k and $517k, respectively.

3137 Center St.
Arcadia, CA 91006

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%
This is an REO currently listing for 50% off its 2006 asking price! From the only photo they uploaded, the property has been neglected for some time as you can see from the overgrown grass. It’s not in the greatest part of town, but it’s still Arcadia and I couldn’t pass up sharing a 50% off listing. Pretty soon we’ll be seeing large discounts even in the better neighborhoods.

The property is another example of how stupidity and greed is a lethal combination. This house was purchased in 2006 with 100% financing and now the bank is left holding the bag. There was a $750,000 first and a $150,000 second mortgage on this distressed property. The banks paid $900k for something that, in my opinion, is worth less than the current asking price of $459,900. Think about that for a moment. The second loan suffers a total loss of $150k and the primary mortgage holder could lose $317,694 after 6% commission. The grand total depreciation of this property is $467,694 — if they get their current asking price.

Who are the losers here? The homedebtors who were actually flippers that came into the market at the wrong time? The banks who got greedy and lent out more money than was reasonable? They’re both losers, but the ones that have to live with it and breathe it day in & day out are the neighbors. Sure the property was never worth that much to begin with, but nothing screams neighborhood comp killer like a property at half off the previous transaction just 19 months ago.

Neglected homes not only bring down the neighborhood comp prices, but also its hopes and emotions for any summer rebound of the market. Banks don’t have emotions. They have numbers, record books, shareholders and investors. This REO will make it tough for any other comparable properties in the area to sell for much more than $230/sqft.

8 W. Camino Real Ave.

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

“* Short Sale * Nice corner lot, needs new owner to give it TLC. Good size pool in backyard. Property is being sold in its “as is” condition. Buyer and buyers’ agent to verify all listing information. Seller to choose all services.”

When I starting looking at Arcadia properties on a daily basis a little over a year ago, it was difficult to find many properties in distress. Today, the picture is very different. Today’s short sale is one of the 65 pre-foreclosures TheArcadian reported on in last Sunday’s inventory report. With a good chunk of Alt-A loans still to reset in the coming months, I can’t imagine things getting any better any time soon.

This property is listed as a fixer upper with no pictures of the interior. If I were a buyer, I would just consider the interior a complete gut. Also, if the inside is in bad shape, it’s fair to assume the exterior of the house has not been maintained well either. Anything that’s being sold “as is” should raise a red flag caution in any buyer’s mind.

From the available loan information, this house was purchased for $268k in 1993. If they had a 15yr mortgage, the house would be paid off by now. Instead, this listing is currently a short sale subject to lender approval. For that to happen, the seller must owe the lender more than the $718k asking price if it requires the bank’s approval. That means they pulled out their 20% downpayment, the payments they made over the years plus some easy HELOC money during the boom to fund whatever lifestyle and/or investments they have going on.

Purchased for $268k and listed as a short sale for $718k. If this is typical of the massive housing bubble, and I believe it is, then we’re in for a rough ride. The weekend has arrived so keep your eye out for interesting properties, distressed or not, in the area and come back to AHB to let us know about it.