1844 Anita Crest Dr.

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

Sometimes I wonder if a seller is serious about selling their property. Even after being on the market for 4 months, they have refused to lower the asking price. What are they waiting for? Do they think they simply haven’t come across a buyer who likes their home? There’s a buyer for every home in every market – at the right price. Apparently, $900,000 is not the right price for this particular property.

Purchase Price $615,454
Purchase Date 12/11/2003
Loan $462,000
Downpayment $153,454 (25%)

With other 3 bedroom SFRs like this and this in the north Arcadia area renting for $3000/month, this property is overpriced. If someone puts down the $180k 20% downpayment, the monthly payment is still 50% more than the comparable rentals in the area.

$900,000 asking price / $3,000 rental comparison = 300 GRM

By extension, if you assume the 300 gross rent multiplier is 50% more than the “right” GRM for a desirable such as the Highlands, that would mean that the appropriate GRM in that neighborhood is a 200. Of course, there’s no hard rule on the use of the gross rent multiplier, but I would say that 200 sounds about right. Rent-savers and investors probably won’t jump in until we reach GRMs of 150-180.

The previous purchase in 1993 was at $362,000. That was about halfway through the 1990s real estate correction which lasted a total of 7 years. This property most likely dipped down to the low $300k in the mid-90s and the made its way back up to the million dollar mark during this recent bubble. How much this home will eventually sell for is anyone guess. If they don’t lower their asking price, buyers will simply overlook the property and the owners will end up chasing down the market like so many others we have seen.

Perhaps they should read about how to sell a house in this market.

2165 Highland Vista Dr.

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

“New windows, plantation shutters, doors and wood floors, were installed several years ago. The sunny kitchen has recently had manufactured granite counter tops installed as well as a new kitchen sink, double convection ovens and Italian 5-burner gas cooktop.”

From the title information, this appears to be an investment property and according to the description noted above, it’s also a flip attempt several years late. I find it odd that the sellers would spend money on new appliances, hardwood floors and granite countertops, but leave the dated kitchen cabinetry. If I were a buyer, I would still classify this as a fixer. The plantation shutters are nice, but most of the rooms still need some work. The property is nice, but dated and could use a refresher. Additionally, instead of worrying about significant home repairs after you move it, it might be wise to consider purchasing a home owners warranty.

Purchase Price $455,000
Purchase Date 05/23/2001
Loan $364,000
Downpayment $91,000 (or 20%)

This was purchased 7 years ago for half of the current asking price. The original listing price from March 2nd, 2008 was $925k and was reduced to $899,500 yesterday. The purchase in 2001 was already showing some symptoms of early-bubble fever. The previous purchase just two years prior in 1999 for $365k meant that the 2001 purchase for $455k gained 11.7%/yr appreciation. Incomes and comparable rents don’t jump 11% a year. Little did we know that 1999-2001 was only the beginning of a massive housing bubble.

If there the bubble did not exist and we applied the 3%, 4% and 5% compound annual appreciation to the 2001 purchase price, this property would be worth approximately $560k, $599k and $640k, respectively. If we use that as a baseline comparison, that means this property is overpriced by over 40%. Surely one can make the argument that this property is worth what buyers are willing to pay for it today and although it may not be $640k, it obviously wasn’t $925k. It’s another classic case of sellers chasing down the market.

Will someone pony up money to buy at the current asking price? Who can put down $180k cash downpayment and support a $720k mortgage at today’s interest rates? Who has good credit? Who has the documented income to secure such a loan? And most importantly, do the people who qualify for all of the above even like this house? Perhaps. Perhaps not.

1714 Highland Oaks Dr.

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

“Completely redesigned by daniel deleon design, the subtle, yet tasteful, Asian contemporary elements lend it a zen-like ambiance and the great floor plan is oriented to fully enjoy yard and canyon views. Move from the brand new kitchen into the large great room or spacious dining room. Enjoy the fireplaces or the view from either room. Truly a turn-key home, it boasts a media-ready family room, a master suite, private in-law or guest apartment, all new windows and doors, hardwood floors throughout, large under-ground wine cellar and many other fine features.”

This is a beautiful property and an example of why I’ve fallen in love with parts of Arcadia. Although it was built in the 50s, it’s been completely remodeled and in my opinion look leagues better than any of those mcmansions that have sprung up over the years. It sits up in the hills on the east edge of the Highland community, which I will profile soon. Without any neighbors along the back of the property, it’s probably very private. I like this house and could I afford it, I would probably buy it.

Back to the profile part of things, this is a flip. It was purchased a little over half a year ago for $980k and renovated to its current state. The original structure was half a century old and from the pictures, it seems like it was a complete gut. It’s also the first property I’ve profiled that has an underground wine cellar. If that wasn’t original, the flipper spent a lot of money digging dirt.

Purchase Price $980,000
Purchase Date 08/24/2007
1st Loan $784,000
2nd Loan $98,000
Downpayment $98,000 (10%)

With similar sized homes in the Highland Oaks area renting for $3,000/month, this property is overpriced. Granted, it was completely renovated, but I find it hard to believe it would rent for anymore than a 25% premium (or $3,750/month). A recent sale on 1728 Highland Oaks just up the street sold for $910,000 in February 08. That property had one less bedroom, but was of comparable size in the same community. At $910k, the sale occurred at $379/sq-ft.

$379/sq-ft x 2,788 sqft = $1,056,652
$910,000 (recent comp) / $3,000 (rental) = GRM of 303
1,358,876 (asking price) / $3,000 (rental) = GRM of 453

Admittedly, it would probably be worth a little more than $1,056,652 right now because of the remodeling that was done to the property, but I don’t think it’s $300k+ in renovations. That’s at today’s prices. I would venture to say that a home like this could dip as low as the $900k’s in a few years time.

Thanks to our reader 626chump for alerting me to this property. If you end up going to the open house this weekend, don’t forget to come back on AHB to let us all know how it went. Also, I invite anyone else who attends open house(s) to drop a comment or two about how the market is doing. Since I’m not currently in the market to buy, I’m not evil enough to attend open houses just to make low-ball offers. Although, that will change as the market correction continues.

Have a wonderful weekend

5674 Huddart Ave

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

It never ceases to amaze me how greedy people can become when they have their eyes and heart fixated on a certain price point. No one told this dreamer that the real estate boom is over and they can no longer expect buyers to put up with ridiculous, unjustified prices. I don’t know what these sellers expect out of this because they sure aren’t getting anyone to bite. Three-quarters a million dollars for this dump!

Purchase Price $245,000
Purchase Date 09/15/00
Loan $171,500
Downpayment $73,500

After holding the property for almost 8 years, these people aren’t flippers. As a matter of fact, they put 30% down when they purchased the property so they are vested in the property. However, greed must have gotten the best of them because after 8 years they’ve listed the house for over triple their original purchase price. Triple!!

This isn’t in the best of areas since it borders north El Monte so location is not a factor. They supposedly remodeled the kitchen, but they probably did a bad job or used cheap materials because even a realtor with half a brain is smart enough to take pictures of a renovated kitchen. There’s nothing in this listing that tells me I should pay more than 3X what they current sellers paid less than 8 years ago.

At 3, 4 and 5% annual appreciation/inflation, this house would be worth…

3% $310,158
4% $335,299
5% $361,976

Instead of the mid-$300k, it’s listed at $749,800! If this doesn’t scream greed, I don’t know what does. This listing is downright insulting to buyers. Even someone not following the market as closely as some of you would agree that it’s insanely overpriced. What an outrage!