July 10, 2007

Real Homes of Genius: Today we Salute you Compton with a Short Sale at $375,999. New! Short Sale Search Option.



We are having so much good housing news hit the media that you would think the White House press secretary is suddenly working for the housing industry. Next thing we will find out is the President issuing pardons to anyone who bought a home on negative-interest-option-only-adjustable-rate-suicide mortgages. After all, with the amazing tax cuts the government feels you deserve a get out of jail pass too. Today we salute another Compton property with our Real Homes of Genius award. ZipRealty has a wonderful feature that allows you to search for short sales. This was added in addition to other features, that of “fixer uppers” and “interest level.” I’m thinking that any home hitting as a short sale is probably a fixer upper with low interest level – maybe they should have defaulted the search item and save the buyer a minute. ZipRealty is ahead of the curve on this one since this is a booming market:



On with the home. This 1,089 square foot home includes four bedrooms and two “full” baths. Nestled in the majestic resort town of Compton, you will entertain your friends and family behind U.S. Steel reinforced gates, such as those guarding the Rockefeller Estate. This home uses transcendent features of the 1950s including a patented aqua green color to ward off nuclear attacks from Soviet warships. This moderately priced dream crib is all yours for the rock bottom price of $375,999. This is actually less than the sale price of 2006:

Sale History
06/23/2006: $412,000
10/01/1981: $58,500

So already in less than one year, we are giving you the dear buyer, a $36,001 discount. Or to look at it from another perspective, the median per capita income of someone living in the area. The absurd notion here is that someone paid $412,000 for a home that will rent from $900 to $950 a month. Now the bank is taking it in the shorts, hence the name short sale, and looking at yesteryear appraisals for a market value. Keep in mind this home initially was listed for approximately $400,000 but no bites. I’m not sure how anyone can justify prices like this. It’s almost like sellers went into asylums, removed the straightjacket from patients, showed them pictures of homes, and asked them how much would you pay for this? “$500,000!” Okay. And this home? “$500,000!” When people say we have crazy housing prices they mean it in more than a figurative sense.

And what is the agent thinking? Taking pictures behind bars isn’t exactly making this a hot item. Didn’t they see how unappealing the Paris Hilton mug shots appeared? They need to add some pizzazz or hire some unemployed paparazzi; there is plenty in the LA metro area for a good price. Or maybe you can ask Alan Greenspan to give you a stump speech on how adjustable rate mortgages are good for America. After his speech, he should be dragged to this home, and forced to purchase it via a New Century Financial no money down interest only mortgage. As he stated so eloquently that ARMs are good for the economy. Good job easy credit. Thanks for flooding the world with such lax standards that housing prices are beyond unreliable, we might as well purchase a pregnancy test from the 99 Cent Store to determine whether housing will appreciate in the next year. Let us see…two lines. I guess that means it’ll be 20 percent appreciation again in 2008.

Today we Salute you Compton with our Real Homes of Genius Award.




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11 Comments:

formul8 said...

When Greenspan said that ARMs are good for the economy, he mean actual human arms because those are what sign contracts for loans and mortgages.

BTW, If I was a billionaire, I would wait a year until Compton homes are back under $100K and buy the entire town and make it into a Gangsta Rap Theme Park and Hall of Fame!

-SoCalWatcher

Dr Housing Bubble said...

socalwatcher,

Maybe I misunderstood mister Greenspan. It was a throwback to his Irrational Exuberance speech. Isn't he getting like $100,000 for speaking engagements?

When I hear housing pundits argue that a drop will "hurt those in these poor areas" how is a basic home in these areas at $400,000 helping people that make $40,000 a year? The price is already hurting people! These prices are so far beyond their realm of income that that only outside investors can pick these homes up; or stated income liar loans but then you have all these short sales hitting the market.

Amazing how one can look at these cities and prices and with a straight face say, "I don't see a bubble."

speedingpullet said...

ZipRealty.....ahh good old Zip.

I just wish they'd implement a search for 'new' only - ie NOT 'already viewed'. If they have the power to give us searches on the pointless 'relative interest' (has anyone acutally used that feature?) then why do I still have to trawl through 200 listings to catch, out of the corner of my eye, a listing I haven't already seen?

Plus, why have they not filled in the gap in the 'proximity' map? It goes seamlessly from '10 mile radius' to '20 mile radius' - what happend to 15 miles, 12.5 miles, 17.5 miles?

The diference here in L.A between 10 miles and 20 miles is hundreds of properties.

Though, kudos to them for linking with Zillow - at least we can get an overview of what other places have gone for, and what the last listing price is, without having to switch windows.

Still, I'd give up 'relative interest' in a heartbeat, if I could search on (not) 'already viewed'

Dr Housing Bubble said...

speedingpullet,

Right about the 10 mile difference. You can be in the financial district of Los Angeles on one block and a few blocks away, skid row. I think people from other parts of the country have a hard time understanding this.

I've thought about that relative interest feature. I've seen homes with 300 DOM with high interest. Kind of begs the question, if the home was so interesting why hasn't it sold?

ZipRealty however is one of the better housing search engines. So far, the other company I like is Redfin. They need to go fully national to make a bigger impact.

sun-struck said...

Dear Dr. Hobub,

You are like a refreshing burst of lime-flavored seltzer! So cool! Give me an opinion on this one:
My hubby and I are in our late 40's; annual income from jobs + investments - about $190K; 3 kids (oldest about to start college); own a home in a northeast city with about $240K equity in it. We are moving to Orlando for a job opportunity. We think we found a house we like in an urban neighborhood w/ good high school (youngest child might end up using it) for about $150/square foot. We most likely will stay in the big O for about 5 years. I'm having trouble deciding to pull the trigger and make the offer. Rental in the area for a year would cost us about $26K (we're not going to live in a 2-br apt). $150/s.f. sounds reasonable to me. It just sounds so unlikely that I've actually found the only reasonably priced house in all Orlando at this crazy-bubblicous moment in time...bring me to reality before I call the broker, doc.

Signed,
Sun-struck bubbler-to-be

sun-struck said...
This comment has been removed by the author.
David said...

Nice fence! and as they say, "Good fences make good neighbors" (or at least keeps them from coming into your yard when you're gone, unless they're determined...)

nunami9 said...

I cant believe a dump in Compton sold for that price. Real Estate Finance

Dr Housing Bubble said...

@sun-struck,

You have a solid income and $150/s.f. seems reasonable. But again, what part of Orlando, quality of schools matters in arriving at a reasonable price. You mention that the oldest will start college. You have a solid income and with the equity you have, I would compare rental rates (which you have) with the price of the home. Florida is getting slammed. Highest foreclosure rates in the country. If anything, the ball is in your court. I would find a good realtor in the area, someone with experience and a proven track record, and make an offer below market if you can.

Keep in mind in a buyer’s market you are in control. Whether we are in a bubble or not doesn’t really matter if you can run a simple market analysis and see if owning makes more sense than renting. I would go online and run the numbers on a rent vs. buy calculator. If you are planning on staying their 5 years, I wouldn’t expect any significant appreciation and possibly, some minor declines. But you shouldn’t worry too much and enjoy your equity and new career opportunity.

Go watch an Orlando’s Magic game to acquaint yourself with the sporting atmosphere.

R said...

Why is the fence set up to make it extremely difficult to get OUT but relatively easy to climb in.

Is that because the person who bought this 1,000 square foot house for that price is crazy?

I live in a 1,750 square foot house with three bedrooms and one bath. How do you squeeze so many rooms in such a tiny house? (I also have a full basement with 700 square feet totally finished (beautiful woodwork, carpeting, etc.) + a full bath)

House includes a big yard, garden, many trees a half size soccer field, in a nice neighborhood (many parks and very low crime) in a large midwest city. Current price: $170,000.

CA prices are hard to fathom from a Midwest perspective.

Jon said...

This one is a real, real home of genius
http://idx.themls.com/georgeandeileen/_idx.cfm

mls # 07-199841
874 SANBORN AVE
LOS ANGELES 90029
$549,999 2 bedrooms
1.00 bathrooms
FIXER! SELLER RAN OUT OF MONEY. GREAT OPPORTUNITY! THIS PARTIALLY RENOVATED 2+1 LOFT, AND FRONT DECK IS ABOVE STREET. PROVIDING AMAZING CITY VITEW & HOLLYWOOD SIGN. NEW FOUNDATION. FLOORS, ELECTRIC. PLUMBING KITCHEN CABINET, EXOTIC GRANITE TOPS & WINDOW/WALLS. ALL IT NEEDS. IS YOUR MAGIC TOUCH! SELLER IS VERY MOTIVATED.