Update* – Reduced to $1,294,876 (-$64,000)

I profiled this property two months ago and it has since taken a $64k reduction in the asking price. As noted in the comments section of the original post, there was decent foot traffic through the open house back in March. Apparently nothing came about because it’s still on the market.

The Highlands is suppose to be one of Arcadia’s premier locations, but properties are sitting on the market just like any other listing. Not only that, the spring and summer seasons are suppose to be prime “boom months” in real estate, yet we’re seeing price reductions and increasing days on the market. At what point will the bulls stop their propaganda about how we’ve bottomed, how things will pick up during the summer and turn around towards the end of the year?

A near 5% price reduction isn’t enough to wet my palette, but that’s enough to show softness in the market. $64k isn’t a whole lot of money, but it’s more than most people make in the two months it took for the price to drop. Let’s see – wait a couple months and save $64,000; I could do that. Heck, I could wait all year!

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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

815 E. Longden Ave.

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

Another day, another 100% financing deal gone wrong in Arcadia. According to Property Shark, this property was purchased in December of 2004 with two loans, a first loan of $460k on a ARM and a fixed second of $115k. The March 2008 transaction shows the bank taking back the property for $616,421. Since the original purchase price was just $575k, I suspect the homedebtor used that ATM bolted on the side of the house to pull out some easy HELOC money between 2004 and 2008.

I’ve said it before and I’m going to say it again. Banks have no emotional ties to the properties they hold and will unload them at whatever price the market will bear. With the rising notice of defaults and foreclosures raping the southland, banks cannot afford to hold on to REOs in hopes that the crash has “bottomed,” nor can they wait for prices to increase. They have obligations to shareholders and unsold REOs on their books is like an anvil in the water.

This particular property is moderately priced, but not priced to sell. There is another listing just down the street with 3 bedrooms and a bigger lot asking for $429,900. At $299/sqft, it’s slightly cheaper than this house. Coincidentally, that listing is also an REO. It’s still early in the housing correction, but we are starting to see 2004 rollback prices in Arcadia and I expect to see more of those later this year.

68 W. Longden
Arcadia, CA 91007

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

This property is very similar to the 1219 S. 6th Ave. that I profiled 2 days ago. They both sit on large lots (0.45 – 0.61 acres), have comparable square footage (~1,900), very old (60+ years) and both listings hint that you’re better off demolishing the existing structure and building a new one. To top it all off, both properties are listing for $618+ per square foot.

Assuming the structure itself is worth nothing, does the listing price of $1,248,888 justify the cost for this sub-1/2 acre lot? If you look at the aerial map, the property is surrounded by half a dozen or more 3,000 – 4,000sf McMansions. Can you spot them?

It could be that I’m not the target audience for these types of properties but it looks like $1.2MM buys you very little. Permits, financing costs, architectural fees and the construction of a new three to four thousand square feet home will put you near or at the $2,000,000 mark. Even in this inflated market, $2MM can buy you a very nice existing home, not just in Arcadia, but in the Highland or Peacock Village communities.

$940k – 240 Vanquero Rd., 0.4 acres
$1,358,876 – 1714 Highland Oaks Dr., 0.28 acres, 2,788sf
$1,580,000 – 1249 Oakhaven Rd., 0.35 acres, 3,700sf, Private gated community (Whispering Pines Estate)

I could go on and list a dozen more properties but I’m sure you get the point. So what’s your favorite property for under $2MM in Arcadia?

114 W. Pamela Rd.

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

This property was purchased for just $700,000 back in 2001 when it was a new construction. According to PropertyShark, the seller put $200k (or 28.5%) down at the time of purchase. At 3%, 4% and 5% annual appreciation, it would now be worth $850,290, $906,103 and $964,992 respectively. Instead, it’s currently being listed for $1.298MM — a $598k gain over about 6.5 years.

Rental equivalents are a great way to gauge the market because they’re based off fundamentals and directly tied to income. When home prices are tied to income, it suggests stability and sustainability. As of yesterday, Craigslist didn’t have any 5 bedroom homes for rent in Arcadia, but I doubt the rental market is anywhere near $6500/month for a SFR in the Baldwin Stocker area.

Surely there are families who have $260k for a 20% downpayment and an annual gross income of $325k, but how many of them are out there actively looking for a house in this neighborhood? How many of them can qualify for a loan in today’s tough market? Furthermore, how many who can afford the payments actually like this cookie cutter stucco box? Yes, the seller only needs to find one such buyer, but I go back to my point that buyers must be both willing and able to purchase a property for the sale to go through. There has been a lot of discussion in the comments lately about the Asian rescue scenario and I maintain my position that this phenomenon will not save Arcadia nor any other SGV city.

1219 S. 6th Ave.
Arcadia, CA 91006

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

Remember this property that we profiled 3 months ago? Back then it was listed for $1,392,000 and unsold after 75 days on the market. It is now listing for less than the purchase price and the lender is most likely keeping an eye our on this sale due to their foolish 100% financing.

The seller had originally purchased this property for $1,230,000 back in 2007 and got the City to approve plans for an 8,000sf home to be built.

I have no doubts that the owner was expecting to hit it big when he originally listed this home for $1,850,000. Today, he will be lucky to walk away with a short-sale and intact credit.

Listing history

Date	Price
Dec 12, 2007	$1,850,000
Dec 18, 2007	$1,392,000
Feb 29, 2008	$940,000
Mar 09, 2008	$1,200,000

Are you a sucker?

Take a look at the price bump from $940,000 to $1,200,000. This is neither a typo on my part or the listing agent. If you scan through the Redfin listings, many properties have actually had their listing price increased during the last 2-3 months. Although we can’t say for sure, it is my suspicion that local Realtors are expecting a strong Summer sell-off as students graduate, empty nesters relocate and young professionals start property hunting. Perhaps the Realtors are also trying to create a sense of urgency by reminding suckers – sorry, I meant buyers – that they need to purchase soon or risk being priced out forever.

It is probably a combination of both scenarios as sellers refuse to face the reality of our housing crisis. This Summer is important because it will get the ball really rolling in terms of price reductions and REO sales. I know many of you have been waiting for a long time to buy a home in Arcadia and your patience will be justified as we slowly witness the unraveling of this housing bubble. Personally, I’ve been waiting for 3 years and it has already paid off in terms of what my money could buy in 2005 versus today.