As I scour through the gray dark fields of fallen angels, otherwise known as Real Homes of Genius, it just dawned on me that I haven’t featured the city itself, the City of Angels. Today we Salute Los Angeles with the Real Homes of Genius Award. This is a perfect example of delusion mixed in with a bit of hyperbole. Couple this with a magnificent housing bubble and we have a recipe for ridiculous housing prices. This 464 square foot 1 bedroom 1 bath home, if you can call it that, is being sold for $349,000. When the seller states that this place has “deferred maintenance” I expect all of you readers to open up laughing as if we were on a poorly written sitcom and the canned laughter sign is going off. This is a probate sale therefore the sellers are in a position of power to negotiate especially with a gem like this. And when they say this is in an “upcoming neighborhood” it is like the Captain saying the Titanic hit a minor bump in the water but the trip will continue. I’m not sure what impresses me more, the fact that they can post something like this with a straight face or the fact that these people aren’t put into a psychiatric ward for hallucinations. Something is rotten in the state of Denmark.
Let us humor this listing and believe that the worth is in the land. What are rentals going for in this area? Let us take a look:
So the median rent is $1,185 and they are asking $349,000? Apparently the upcoming renaissance has deferred appreciation of two decades. Even assuming you bought this place, how much money would you need to put into it to renovate the place? Oh yeah, it is only deferred maintenance so a can of ivory paint and new windows is all we need. Come on. This place looks like Uday and Qusay after the friendly confrontation with U.S. troops – they needed deferred maintenance after that encounter as well.
What does this example, like the many other fine specimens we have shown tell us about the current state of housing? They tell us many things including one need not smoke crack to be out of their mind. In addition, we are starting to hear horror stories of low waged workers partying it up like Donald Trump. I showed this place to a fellow colleague who is completely removed from all of the housing shenanigans and his first gut impression was correct when he blurted out, “what the hell is that?!”
“John that is $349,000 worth of L.A. Housing,” as I responded and a quizzical look took over his face. His innate primordial millisecond response was, “Why would someone pay that much for THAT?” I leave that question for all you dear readers to answer.
Today we Salute you Los Angeles, with our Real Homes of Genius Award.
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27 Comments:
So far, out of all the blogs listings I have seen, this one takes the cake.
"Deferred maintenance".... LMAO!!!!
I guess all you have to do is pop the boards off the windows and move some section 8'ers in and wait for the value to go up some more. It is going to double in 5 years because everyone wants to live in LA...
OMG that place looks horrible. I wouldn't even be a squatter there.
What maintenance *wasn't* deferred on that home? Besides the boarded up windows, I mean. Best thing you could do for this is burn it down.
Dr HousingBubble,
You got it all wrong. That is a crack house. The value of the home is not in the structure itself, the real money is in selling crack to the occupants. That's the only conclusion I can come up with after looking at the picture.
You got it all wrong. That is a crack house. The value of the home is not in the structure itself, the real money is in selling crack to the occupants. That's the only conclusion I can come up with after looking at the picture.
You should email the listing Agent to include "Potential Business opportunity".
Read the description, it's all there! The "value is the the land," duh. If you mined the lot for every mineral between the surface and the earth's mantle, you'd be raking in literally tens of dollars a day!
Socal, did you flunk marketing? You don't sell crack to the occupants, you make crack in the house and sell it to the neighborhood!
Seriously, this is on par with houses listed in Detroit, where part of the deal listed is "demolition at seller's expense." But those places sell for a couple thousand at most, not three hundred grand.
If it had a viable structure on it might be worth 200K. Since it does not...maybe 50K? Clearly they are looking for a greater fool...
@socalwatcher,
Print this home, store it somewhere and pull it out in 2008/09. You'll be shaking your head wondering what people were thinking about in the 2004-2006 market.
@kevin,
The boards on the windows are for keeping those folks out. Can you imagine boarded up windows in a "up and coming" neighborhood?
@bitterlarenter,
I think the note holder believes an investor will knock it down, build two condos on it and flip it. This was the mantra for so many years.
@anon 11:40,
Not thinking like an entrepreneur. Glad you can see the potential residual income on this place. Where would we put that source of income on our 1040?
@bear cave,
The land does have some value. I'll give you that much. And your comparison to Detroit is aptly noted because people in the area need to afford to live in the place. The median rent in this area is slightly over $1,100. How this is an investment is beyond me.
All,
If anything this is to cement the fact that we are in a housing bubble. Sellers, be it banks or individuls, still believe the antiquated appraisals from 2005 and 2006 will somehow yield the same value in 2007. Unfortunately we are in a different market.
Then we have DataQuick saying that the median home price is $540,000 in Los Angeles. Well look at the massive drop in sales. The homes that are moving are the high priced ones in Brentwood, BH, and other posh areas. So anyone with a basic knowledge of statistics actually will realize that prices will go up ! Say we have a 400k, 400k, 500k, 800k, 800k, 900k, 1000k that all sell. What is the median? 800k. But let us examine the current market and we see that the two 400k and 500k homes do not sell. What happens to the median? It goes up to $850k!
That is why the massive 28% sales drop in Southern California is so ominous. This is suppose to be the beginning of the spring and summer buying season. Maybe we are seeing "deferred" sales eh?
Damn tightening credit market, they won't let little cousin Jimmy buy it for $549,000 like they should!
C'mon, not much info on this house. Street? At least a neighboorhood... LA is a BIG place. It's easier to laugh if this is Westlake rather than West Hills...
Doc,
I truly appreciate your blog. Nice work.
Can you provide MLS link or reference to this "listing"?
It would be nice for people to see with their own eyes.
I missed it- in which up and coming part of El Lay is this fine property located?
It struck me just now--for all you people in SoCal, what are the zoning regulations like down there? I suspect part of the reason that you lack affordable housing, and part of the reason specuvestment by little guys took off, is that they saw the one-family unit as a way to "own" the American dream while renting it to someone else. But as a friend of mine pointed out, when was the last time a landlord wanted to build a one-unit when he could build a twenty-unit on the same property? The answer happens to be, "When the City Code won't let him", bogging him and developers down with mandatory setbacks, parking space requirements, impractical floor limits, etc., etc.
Building a 464 sq. ft. box screams "Zoning Laws" to me... So in the end you get garbage-can box-houses like this, but that urge to "buy the dream!" still lingers on in the late-night informercial set's heads and suddenly ever "investor" with a credit card is falling over himself to buy it.
Bear Cave,
That house has got to be at least 80+ years old.
Noticing the towering wall in the backyard means this gem is also freeway-close! Say hello to long nights of so-cal traffic noise.
@dcrogers,
This place on the westside of LA? Bwahaha! If that were the case, this "beauty" would cost $1 million, even for the land alone. No, this place is nestled between Echo Park, Boyle Heights, and East LA. That'll give you a perspective of this asking price and the location.
@etz3l,
Thank you for the comment. You can easily find this place on Realtor.com or any public MLS site. In addition, this is only one of thousands of overpriced places. These nuggets are to drive the point home that we are in a bubble like no other.
All,
This place is old and it is close to a freeway. But we are talking LA here, therefore the price is justified.
Doctor Housing Bubble, just happened upon this blog and have laughed until I cried!
Thanks.
Found the place on ZipRealty......wierdly enough, Zillow Zestimates it at $454K.
I'd like some of the drugs that the people at Zillow are on. Actually - both the sellers and Zillow are in possession of some mighty fine drugs.
The first thing I thought when I saw this little gem was "wonder how many million roaches live there...?"
Unfrackingbelieveable.
Dr HB,
Holy double-take batman ! There is a twin of this house on Sunland Blvd listed @ $399k which is also a POS "as-is trust sale".... see MLS# 22088632 for a good chuckle.
- Rich (Sherman Oaks)
Dr. HB
That price is what they are paying for someone to tear it down right?
Anyway I am letting everyone know about a luncheon on subprime in OC. I will be there and doing a post on IHB.
http://www.ocforum.org/speakers/?speakername=simon
OC forum is having a luncheon with Scott Simon of PIMCO on "The Subprime Meltdown" "What does it mean for OC?" on Wednesday the 23rd. Scott is the managing director of portfolio management of mortgage and ABS for PIMCO. OC Register blogger Matthew Padilla will be there to do the introduction.
"this place is nestled between Echo Park, Boyle Heights, and East LA. That'll give you a perspective of this asking price and the location."
So that's the "up and coming" area the ad speaks of? LOL
All you need is a " cement pond" and Jed Clampett's poor cousin folk can move on out to California!!
I think we should keep in mind that one man's trash is anothers treasure, in this case a "castle". And if it's by a freeway, the sound of the cars going by sounds just like the ocean waves crashing, right.. What a bargain!
I will pass, and let some other lucky smuck grab this before its all gone.
Your blog is a pure joy to read-- not only is the content fascinating, your style is so fresh and elegant. Thank you.
Whats the address of this place Id really like to know what http://www.easyonemortgages.com/home-value.html
values it at. haha.
Its on the Eastside in Echo Park. I believe its off Temple...
I have passed by it acouple of times. I think it might even be adjacent Angelino Heights.
I think I saw this on "Flip This House"! They bought this... "crack house" would be kind, for $300-350k, gutted and double the square footage, and I think were going to ask 750k for it.
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