March 08, 2007

Real Homes of Genius: Today We Salute you Huntington Park. Tweedledum and Tweedledee of housing. $500,000 Homes in Wonderland.

$500,000 Homes in a Neighborhood of Folks Making $41,404 a Year!






Today we have a special Real Homes of Genius post. Two homes, months on the market, prices dropping, and rates tightening up. Let us call them Tweedledum and Tweedledee. We ask you, the hypothetical home sellers and agent, what would you do? Would you lower the price? Maybe throw in a few incentives? Not on Real Homes of Genius! We actually notice an interesting tactic being used on these homes; first we have the home listed as follows:

Tweedledum (1,493 square feet 4/2)
Price Reduced: 02/01/07 -- $539,900 to $529,900
Price Increased: 02/24/07 -- $529,900 to $539,900

The next example is listed as follows:

Tweedledee (784 square feet 2/1)
Price Reduced: 01/30/07 -- $429,900 to $425,000
Price Increased: 02/16/07 -- $425,000 to $429,000

Now I know you, the bubblehead intelligentsia is saying, why in the world would someone do this? Let us dig further into Tweedledee and find more answers by querying previous sold data:

Sale History
03/02/2006: $375,000
10/06/2004: $246,000
09/04/2001: $142,727

Wow, these sellers still think they can net a profit? So this home went up $54,000 since last March? Why work when the price increase in your home is more than folks in your neighborhood net in a year. Let us look into Tweedledum:

Sale History
05/11/2006: $410,000
05/12/2003: $252,000
05/19/1994: $16,000

Bwahahah! There are flippers in Huntington Park of all places! These people want to net $129,000 in 8 months! If we were to look even further, why wouldn’t I be surprised to see the first loan holder as New Century Financial and the second being nestled by Fremont? And what is up with the knock down and then increasing the price? Do they really think that because an e-mail will be sent out to realtors and onlookers of a price decrease that people will jump into this? There is no economically justifiable reason for these prices.

I would dig deeper but my hands are already full of waste and the smell is making me nauseous. Today we salute you Huntington Park with our Real Homes of Genius award.

12 Comments:

Anonymous said...

Huntington Park is quite possibly the WORST part of Los Angeles - Are they high?

Dr Housing Bubble said...

anon:

More and more I'm starting to believe we'll have a hard-landing as opposed to a softer sticky price correction. Home prices to market value are so disconnected from reality and based on mortgage fraud and exotic financing that a shock will need to change sellers sentiment.

Not sure when this will happen. Again my guess is by the end of Q4 we'll start seeing major price corrections.

Anonymous said...

The bars on the tweedledum house should be a warning to a potential buyer that if you buy that house you will be a prisoner to that house for life (heck, non-violent drug dealers get a lesser jail sentence).

Anonymous said...

Kudos on the observation, the bars are a warning. If Huntington Park is not “The Worst” neighborhood in LA the cities adjacent to it are. The street Florence runs through it, and its spitting distance of location where the LA Riots started back in 1992.

TweedleDee has like 10 for sale signs on the front yard I don’t know if that’s because they are that desperate to sell or they figure the vandals can’t make off with that many signs in one trip. These houses sold for $16,000 in 1994 and the neighborhood has only gotten worst since then. Today those houses have two and three families living in them. It’s so bad you can’t find a single place to park because each house has 5 or more cars and since the people are even living in the garage you have to park your car on the already narrow street. I have a friend that lived there all his life till 3 years ago when they found a sucker that would pay $250,000+ for his place then they got the hell out of there.

My wife and I are college graduates making close to $80,000 a year with no children; no debt and we have been priced out of the worst neighborhoods in South Central LA. Explain to me how this can be rational.

Anonymous said...

Amen to that ... This is going to get interesting after the subprime money stream is cut off. I can't wait ...

Anonymous said...

Dr. Housing Bubble - you rock!

IrvineRenter said...

Dr. Housing Bubble,

That one with the bars is the best yet. I agree with the other two posters about the symbolism of being trapped in your home. Perhaps they could convert this to a minimum security half-way house. The bars could both keep people in and out.

I am with you on the hard landing as well. With all the foreclosures and probable panic, prices may drop precipitously.

Dr Housing Bubble said...

Great observation about the bars; wasn’t sure if people would catch on to that. But yes, it metaphorically represents the debtor’s prison that one would need to shoulder in order to pay for this place. Even scouring through the previous sales of this home, you can understand how outrageous the price really is. I agree with anon that some drug dealers serve less time than a 30 year mortgage (and probably have more square feet too).

Not sure what I can say but more mainstream media is attacking the National Association of Realtors. A couple of weeks ago there was a Reader’s Digest article discussing how many local agents and brokers blackball folks that try to sell their home through discount brokers. They all describe how the NAR is the largest contributing entity to both political parties. The NAR has lobbied and successfully pushed state laws in a few places that will offer protection in case federal statues come about. Talk about hedging your bets.

Yet public sentiment bends like a reed in the wind in the United States. One day you are loved as commander for taking swift action against an opposing force, the next day you are hated and despised by the majority of folks for taking too swift of an action. It is the nature of public sentiment. When things are good, no one really questions or doubts what is going on. Yet now that the market is collapsing and people will lose jobs, homes, and friends the blame game will begin. Just remember that the public has a very short-term memory and currently those bars are getting to be a very heavy burden.

IrvineRenter said...

I have made predictions for the Irvine Housing Market.

* Median sales price will decline approximately 40% from near $700,000 to near $400,000 over the next 5 years.
* There will be a multi-year flattening of prices at the bottom.
* Sustained appreciation will not return until 2013 or later.
* Peak bubble prices will not be seen until 2027 (unless we get another bubble).

I would enjoy hearing your input (link below).

http://tinyurl.com/2penea

http://www.irvinehousingblog.com/

Anonymous said...

I found this gem in Westminster california.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=S477804&page=1&property_type=SFR&mls=mls_so_cal&cKey=h0ks23n2&source=SOCALMLS

Dr Housing Bubble said...

800 Sqaurefeet for $750,000. Even smoking crank, boozing up, and taking shrooms would not make this thing look like a deal. They might as well ask for $2,000,000 since they are asking for pie in the sky prices.

jt said...

westminster? probably an asian seller (I get to say that, I'm asian). They live off of there own calculators, not necessarily calibrated to reality. $750,000 must be in 'dong' currency. Try tinyurl, can't see the zip link.