605 Lorena Ave.
Arcadia, CA 91006

Price: $695,000 ($363/sf)

• Beds: 4
• Baths: 3
• Sq. Ft.: 1,915
• Lot Size: 4,918 Sq. Ft.

I’ll great straight to it. This is a 32 year old freeway-loaded property. It is definitely in need of some TLC… no, scratch that. This home needs a complete renovation.

Did I mention that your neighbor is the 210 freeway?

This property was purchased in 1999 for $243,000. The current listing price is 3x that.

Valuation after 9 years of ownership:

3%  $317,060 ($166 /sf)
4%  $345,865 ($181 /sf)
5%  $376,973 ($197 /sf)
6%  $410,543 ($214 /sf)
7%  $446,746 ($233 /sf)

Currently listing for $695,000 ($363/sf)

So even assuming an above-average appreciation of 7% a year, the home is a quarter million dollars overpriced. Now, I don’t consider this move-in ready so $197/sf is a more reasonable valuation at $376,973.

Today’s new listing is a property that, for the right price, would be a decent home. Although it backs up against Michillinda, you get decent living space, a 10,400sf lot and what looks like a floor plan that can be worked with. Of course, the asking price of $788,000 rubbish….

1151 Drake Rd.
Arcadia, CA 91007

Price: $788,000 ($485/sf)

• Beds: 3
• Baths: 2
• Sq. Ft.: 1,626
• Lot Size: 10,400 Sq. Ft.

Unlike most properties that slowly appreciated in value between 1996 and 2003, this one got an early start on the bubble:

Sales History
Sep. 1998 $310,000 ($190/sf)
Apr. 2000 $400,000 ($246/sf)
July 2002 $486,000 ($299/sf)

The last 2 owners made approximately $90,000 after two years of ownership. The current seller is aiming for a $302,000 profit after just 6 years! If this was 2006, I would have no doubt that this home would sell between $800 – 900k. Well, that is no longer the case and a $485/sf asking price for this 57 year old home unrealistic.

Straightline appreciation from 2002 gives us the following values:

3%    $580,309    ($357/sf)
4%    $614,945    ($378/sf)
5%    $651,286    ($401/sf)
6%    $689,400    ($424/sf)

My suggestion? List the property at $600k and allow the knife catchers or sideliners bid up the finals sales price. This is a sure way to get a quick sale and still walk away with a sizable profit.

2 E Longden Ave.
Arcadia, CA 91006

Price: $799,000 ($519/sf)

• Beds: 3
• Baths: 2
• Sq. Ft.: 1,539
• Lot Size: 8,370 Sq. Ft.

During a normal housing market, rundown properties could be bought for cheap and flipped for a premium after proper rennovations. When we’re in a frenzy bubble era, “flipping” usually meant buying a home and putting it back in the market 3 months later. As seen from here, the folks who actually tried to upgrade properties during irrational times are left in the dust.

Sales History
Jun 1993 $240,000 —
Feb 1996 $225,000 -2.4%/yr
Aug 2005 $660,000 12.0%/yr
May 2007 $708,000 4.0%/yr

After spending a good chunk of money on the “Birch” hardwood floors, appliances, new floor plans, ect… It is now listed for $91,000 over last year’s purchase price. After paying out 6% for commissions, I doubt there will be much profit left in the sale.

Using the 1996 sales price of $225,000 as our base, we get the following valuation:

$225,000 after 12 years of appreciation

3%    $320,796    ($208/sf)
4%    $360,232    ($234/sf)
5%    $404,068    ($263/sf)
6%    $452,744    ($294/sf)
7%    $506,743    ($329/sf)

Currently listing for $799,000 ($519/sf)

Based on the $506k value, do you think the flipper’s upgrades are worth this listing’s $300k premium? Located on the corner of Longden Dr. and Santa Anita Blvd., I expect this home to drop like a dead weight.

**Update**

Here is the requested aerial photo. Great location!

Today’s homeowner is left holding the bag and desperately needs to sell the it before his 20% downpayment is gone. No pictures have been provided but the aerial photo is all we need to see…

344 W Foothill Blvd.
Arcadia, CA 91006

Price: $1,775,000 ($685.sf)

• Beds: 3
• Baths: 3.25
• Sq. Ft.: 2,590
• Lot Size: 1.14 Acres

At first glance, this property seems like a decent deal. Although the home itself is only 2,590sf, it has been completely renovated AND you get a 1.14acre lot. Think of the possibilities (i.e. 4+ McMansions).

Of course, we already know that anything too good to be true… usually is!

[Click below to see the property’s incredible location.]

Wow. It sure has one heck of a view (of the 210fwy). On top of that, it is buried between 2 cul-de-sacs so the owner has no room left to pave a street through it. There goes any plans of breaking this property up into 6 smaller lots.

I’m certain the owner had grand dreams of making a killing on this home when he bought it in 2005:

Sales History
Jun 24, 1992 $620,000
Jul 12, 2005 $1,050,000
Sep 15, 2005 $1,550,000 <– WTH

Looks like flipper #1 knew he had a dud in his hands and immediately sold it to flipper #2 for a $500,000 profit after 2 months. $100,000+ in renovations and 3 years later, flipper #2 is trying to break even by listing the home for $1,775,000 ($100k for remodel & $100k for commissions).

$1.775MM to live next to the freeway? I’ll pass.

Knowing all this, I’d have to say this seller is screwed and his $310,000 downpayment will get eaten up significantly by the time the home sells.

I have no doubt that the following property could have sold for nearly $1MM back in 2006. Fast forward two years later and we have an owner who believes he can still get $888k for a property purchased for half a million dollars less just 9 years ago.

1317 Holly Ave
Arcadia, CA 91007

Price: $888,000 ($485/sf)

• Beds: 4
• Baths: 2.5
• Sq. Ft.: 1,830
• Lot Size: 6,510 Sq. Ft.
• Year built: 1963

This is not a McMansion. It is a 45 year old home situated on the butt of other McMansions. Take a look at what I mean:

According to the description, this property is located “close to Million Dollar homes.” Is that why the seller thinks $485 per square foot is even a reasonable listing price? For almost $900k, you ge neight the larger lot size of your neighbors or even the newness of the surrounding McMansions.

Sales History

Apr 30, 1998 $275,000
Sep 01, 1999 $357,500 21.6%/yr

Applying the standard appreciation chart, we get a good idea of what this property is really worth:

Standard Straight-line Appreciation
After 9 years of ownership…

3%    $466,456    $233/sf
4%    $508,834    $254/sf
5%    $554,600    $277/sf
6%    $603,989    $302/sf

Current listing price: $888,000 ($485/sf)

Valuing this property at $302/sf means the listing is currently 32% overpriced. Do you find it hard to believe that Arcadia home prices will drop ~30% over the next 2 years?