Author: SavedbyGrace
March 29, 2008
| Asking Price | $228,000 | ::: | Sq-ft | 1,160 |
| Purchased Price | $200,000 | ::: | Lot Size | 2,117 |
| Purchased Date | 10/28/2005 | ::: | Beds | 3 |
| Days on Redfin | 25 | ::: | Baths | 2 |
| $/Sq-ft | $197 | ::: | Year Built | 1968 |
| 20% Downpayment | $45,600 | ::: | Area | Huntington |
| Income Required | $57,000/yr | ::: | Type | Condo |
| Est. Payment* | $1,153/month | ::: | MLS# | W08032144 |
*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%
This is the cheapest property on the market in Arcadia today. At $228,000 and $197/sqft it looks like a steal, but looks can be deceiving. The $1,153/month mortgage payment is very affordable; admittedly you’d have to put down $45k, but it’s not an outrageous amount. Then I look at the description to find out that you have to pay a mind-boggling $780/month to lease the land. In addition to that, there’s a $184/month HOA fee that bumps the monthly carrying costs to $2,117 excluding taxes, insurance, maintenance etc. For that price you can rent a 3bed/2bath SFR and still have $167 leftover to pay for the utilities. It’s also the equivalent of buying a $380k property with the same $45k downpayment at the same interest rate.
Sales History
Date Price Aug 14, 1996 $55,000 Jul 17, 2000 $152,000 Sep 07, 2000 $145,000 May 21, 2004 $200,000 Oct 28, 2005 $220,000
This was purchased on the high in 2005 and these sellers are still listing it above their purchase price. Obviously they didn’t read my letter in yesterday’s post. There must be something magical in “breaking even” on a bad investment. The psychological impact of it is so great that many choose to ignore the facts and live in their own alternate world until they’re forced back into reality. By then, it’s usually too late.
To top it all off, this is an awful property. I can’t find one redeeming quality that would make me want to buy it. It’s on a big street with heavy traffic and has a non-permitted addition. It’s also fairly small and dated with just one parking spot. Even as a renter, I wouldn’t want to live there.
Remember, this actually isn’t the cheapest property on the market today. The horrific $780/month lease for the land coupled with the homeowners association fee effectively puts this condo at about $380k. These sellers are on a hunt to find a knife-catcher to bail them out so beware. Don’t be fooled.
Have a great weekend 
Dear Saved by Grace,
I rent in San Dimas/Pomona. I have so many questions about real estate. I realize that I have to make my own decisions and live with them. However, I am crazy for mid-century modern, and there is a MCM in Pomona right 2,294 squ feet on a 32, 000 sq. ft. lot listed now for 500k; I am interested. We can well afford it on our income. We are first-time buyers. We will get a Cal Vet loan, fixed at the going rate. MCM homes in this price range are few and far between. Pomona is rough, but this home is at:
1660 Entrecolinas Pl, Pomona
and is in a fairly decent area of Pomona. If we could get the price down to 450k, then our monthly outgo for housing would be about 3k. The home is not turnkey, but I have always wanted to fix up a MCM. I am probably being Polllyanna-ish about the whole thing, but I have loved mcm for about 20 years.
So, do we rent at 2k per month and hold out for a cheap MCM to show up on the market [fat chance] or, buy this one for 3k a month? My dh could care less. He would love a big house on a stamp-sized lot with lots of shiny, new appliances. I am the architecture nut.
I do not know anyone besides you who has that ‘voice of reason’ about real estate. You seem to want to genuinely educate and dialogue. This is my first RE post ever in my life.
My friends will all tell me to buy. My dad will say not to buy. My dh will support whatever I want. I need to be able to process this decision in a safe, sane place. Umm…any ideas where I can find a safe, sane place to talk about RE?
Thanks, Leigh Anne
Hi Leigh Anne,
It seems like you’ve already fell in love with this house. That’s something I often caution against because it can lead to unwise financial decisions. You can get a Cal Vet loan which is good, but if you purchase this property – be prepared to potentially lose a couple hundred thousand dollars in equity over the next few years. Of course, if you love this house and plan to stay in it for 30 years then it may be okay with you, but most people I know have a hard time swallowing the fact that they overpaid by that much.
You said it yourself that “Pomona is rough” so do you really want to live there just to get the MCM architectural style? Do you see yourself living there for a long time? Also, do you have or plan to have kids? Pomona doesn’t exactly have stellar schools.
This property was purchased one year ago on 100% financing with 2 loans ($498,750 and $166,250) and has been on the market for almost 5 months with multiple price reductions totaling $110k. It doesn’t look like it will sell anytime soon. The previous sale before that in 2001 was $235k. At 3% inflation, it would be worth $289k in 2008. At 4% – $309k and at 5% – $330k. That makes the current asking price 36% to 45% over-valued.
There’s no question that this property will lose a big chunk of value over the next few years. The question you have to ask yourself is whether or not you’ll be able to live with “being underwater” for a long time? You obviously love the house, but that doesn’t negate the fact that you’ll be buying an overpriced property. I would advise not buying this house until it gets back closer to fundamental values.
The listing says that the HOA is considering buying the land so that they no longer have to pay the land lease of $780/mo. But if they do that, won’t the HOA fees spike like crazy, so the owner would have to pay a similar amount anyway (or even more, if the purchase price sucks)?
Yes!