You can tell we are in Los Angeles when the Oscars role into town, 80 degree weather in the middle of winter, and the smell of overpriced boxes rotting while inventory amounts. Yes, this is Southern California. Today we salute San Fernando for giving us the next Real Home of Genius. Today’s example is an exquisite 865 square foot masterpiece in wonderful San Fernando. Initially, these folks set the price back in September at $455,000 but felt this was too low so they boosted it up to $465,000. Let us take a look at the manic pricing below:
As you can see, they dabbled in little token drops here and there until this month they realized they had to make some drastic cuts. Nothing more motivated than a seller leaving the country in an imploding market. Here is another case of yesteryear housing syndrome while wearing rose colored glasses wishing for peak price levels like children hoping for Santa Clause. So you feel bad for these folks, heck they already dropped the price by $80,000 from their peak level right? Well let us dig a little deeper:
So don’t fell too bad, even at the current selling price minus 6 percent for selling fees they will profit by $86,900 (maybe that is there logic in dropping the price; we give you $80,000 and you give us $80,000). Unfortunately this home has been on the market for 5 months and not much interest either. In addition, with the collapse of the subprime market not many folks would have 10 percent down to come into this property and carry a beastly monthly nut on a regular 30 year fixed. Yes the relics of the past those 30 year fixed mortgages.
We salute you San Fernando with today’s Real Homes of Genius Award.
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8 Comments:
I remember when I first moved to California in 2001, I arrived in San Diego and did a quick internet search to see what I could afford. I had just sold my 4 bedroom home in Florida, and I had heard California prices were much higher, so I started my scan with a number 50% higher than the sales price of my Florida home. About 3 properties appeared in my scan; they all looked like this one. I was aghast.
California is a different world.
In what alternate reality must one be living to be willing to pay $469,000 for this house. In 2030 this house will not be worth that much money. Wikipedia probably has this house in the entry for POS. Unbelievable.
Irvinerenter,
Agreed that California is a different beast and will always need a special unique cage. But this is a perfect example of bubblicious behavior. I mean dropping $80,000 in a few months? Are you kidding me? This family probably makes $40,000 a year; so there goes two years of net income.
When you start breaking the numbers down and realize that this place would rent for $900 to $1,000 a month you see that this is a poor investment. Good schools? No. Good area? No. Big house? No. In California? Yes. Therefore it is equal to peyote high prices.
The money is going away fast.subprime loans are a lot harder to do today than they were the first of the month.according to a friend of mine they went from 80% approval to 29% approval sincce the first of the year.BOJ's increase in discount rate had an immediate effect on underwriting for prime loans,and will effect rates pdq.blood in the streets this summer
tom:
That is a significant drop. In addition, investors are fleeing any companies that associate with subprime mortgages; just look at the recent implosion over at Novastar.
Since savings is at an all time low, where are folks going to find 10 to 20 percent for a down payment? Finally having some docs means something.
2007 will bring a "new reality" to the coastal markets of California. The bigger they are, the harder they fall...
I love Real Homes of Genius!
The mainstream media always highlights "unreal estate" by showing some shack and we're supposed to be shocked that it's worth a millon bucks, but it always turns out that it's in Palo Alto or Pacific Palisaides and the value is based only on the land. The reader always finds this out, and it desensitizes the public to the housing bubble.
That's why Real Homes of Genius is so great. In the L.A. market, places with clean streets, no crime, and good public schools are a tiny percentage of the market and yes, cost a fortune. Those are statistial outliers. The true sign of the bubble is not the $900,000 sh!tbox in Santa Monica. It's the $500,000 sh!tbox in Compton or Pacoima or Lynwood.
Bravo, Dr. Housing Bubble!
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