Author: SavedbyGrace
May 22, 2008
That’s who the average sellers are…hopeful romantics. If this were 2005, I can imagine the logic of buy, wait and resell for profit, but I find it difficult to comprehend that silly people were still doing that last year. The numbers are out for the month of April and DataQuick reported that Arcadia zipcode 91007 SFR sales price change dropped 25% from April of 2007.
Today’s featured properties are all in the 91007 zipcode, purchased in 2007 and listed for resale in 2008. Did their asking prices reflect the data? Let’s take a look.
A) 10421 E. Live Oak Ave.
Purchase Date 08/09/2007
Purchase Price $610,000
Listing Date 05/17/2008
Current Asking Price $729,000
Price Change +19.5%
B) 1107 W. Duarte Rd. #B
Purchase Date 11/28/2007
Purchase Price $442,000
Listing Date 05/09/2008
Current Asking Price $559,000
Price Change +26.5%
C) 2105 S. Baldwin Ave.
Purchase Date 06/18/2007
Purchase Price $550,000
Listing Date 05/21/2008
Current Asking Price $573,888
Price Change +4.3%
D) 2029 S. Baldwin Ave.
Purchase Date 05/04/2007
Purchase Price $650,000
Listing Date 05/19/2008
Current Asking Price $718,000
Price Change +10.5%
Are these folks hopeful romantics or what? Instead of following the trend of the market and actually pricing it for sale, they’re still trying to make a profit despite buying in 2007. If these properties were to sell at the 25% discount like the rest of the 91007 properties in April, they would go for A) $457,500 B) $331,500 C) $412,500 D) $487,500 instead of the above listing asking prices.
When will we see these prices on reflected in the market? Soon. Actually the 25% decrease in price from April 07 vs 08 is REAL. It’s not a prediction or a guess; it’s the actual sales prices of homes sold. It’s important to look at data from homes sold and not homes listed on the market. After all, we have seen countless homedebtors romanticizing about selling for a profit – even in this desperate market.
A) Has been pulled from the market.
B) Seems to have done good deal of improvement since the purchase last year. But “flip this house” in 2007 or 2008 is not the smartest thing to do.
C) Is just a WTF act.
D) Some work done to the kitchen.
B) might attract some knife catcher back down to mid $400k. The other three go to sit and rot pile.
i wouldn’t buy (b) though. I drove by the property the other day, the color of the wall is light pink/light orange which makes the property even older than it is. From outside, you can predict that the HOA didn’t do a good job.
Some comments on listing B after its open house last weekend: Aside from the improvements(nice kitchen), it is not the most ideal place to live. It is located at the intersection of Sunset/Duarte with a driveway approach leading to an underground parking only a few car lengths from the intersection. Getting in and out of the parking lot would not be a fun experience during rush hours, and the noise and the smog from that intersection is a given. The open subterranean parking has no direct access to the unit. One would have to walk out to the street and enter through the front door, which makes it more apartment like.
Well, I beleive that this is another sign of “lack of knowledge” and/or lack of education.
Most people just don’t get economics and or the marketplace.
Saying that, they are about to go to the school of hard knocks, on supply and demand. Although at the same time you got to hand it to them, with their almost pure form of logic. “If I was stupid enough to buy this property, there has to be someone just as dumb to take it off my hands out there.”
These were ill informed buyers when they bought their places. And they are still ill informed as sellers trying to off load these hot potatoes. Let it rot.
Can’t speak specifically about any of these houses, but while zip code 91007 showed a YOY decline of 25% in April, it did show a YOY increase of 18% in March. Plus the median price of April was $900K. Seems like a lot of higher priced homes were sold in April. BTW, I love the venom coming from people regarding houses for sale. It shows real class.
Yup, it looks like the bottom market is out of the game while the higher-end continues to move properties (although at lower volumes).
I think much of the venting against sellers is more “frustration” than “lack of class.” The “housing boom” has priced a lot of people with less than $200K/yr income out of desirable areas like Arcadia and Sierra Madre. With rising inflation and unemployment, most potential buyers (I presume most readers here are either buyers or real estate professionals monitoring the market) are simply frustrated with the astronomical prices, myself included. I grew up in SoCal and remember it wasn’t long too ago when home prices were about 4 – 5 times the annual income, and most people could plan to buy a home with a yard and pool for their kids to grow up in. Now that home prices are at 27 to 30 times our annual income, Los Angeles has turned into another un-affordable city (eg. Beijing, Shanghai, Tokyo, London,Moscow) where the overwhelming majority of the people can no longer afford a home. For those of us who are not making a percentage on real estate transactions, the housing situation in SoCal has been pretty depressing until recently. Let’s hope there will be NO HOUSING BAILOUT and the market forces will drive these unreasonable prices further down to affordable levels.
Wish the 25% price decrease was real, but it is not. As much as we may want prices to decline, we need to understand what the reality is. Dataquick median price data on individual zip codes is statistically meaningless. The same Dataquick report referenced above shows the sales price of all of Altadena actually increasing in the past year. Do you really believe that? The actual year over year decline in 91007 as of April is 3%, according to Zillow. Zillow tracks a massive database and compares sales with former sales of the same properties to eliminate the problems with Dataquick stats. Unless we use valid data in our discussions, we are just kidding ourselves.
Although I am not a big fan of using the median sales price as a “true” indicator of current property values, I would hardly call it meaningless. An an analyst, we avoid using averages to avoid erroneous data since a handful of extremely priced transactions can skew the report. The median, on the other hand, moves in line with actual data.
DataQuick provides hard data that is used widely in real estate appraisal and research.
Zillow is completely opposite in the fact that they use grab millions of data points and creates an average likely property value (their ‘secret algorithm’). In some areas it is very accurate and in others values they are off by tens or hundreds of thousand of dollars.
From Zillow.com:
“Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for, such as entertaining offers, negotiating, closing costs, timing, etc.”
I like Zillow because they do a great job at putting together graphs reporting data that we already know:
http://www.zillow.com/quarterlies/QuarterlyThumbs.htm?msa=Los+Angeles+Long+Beach+Santa+Ana+CA
Are the previous two commentors “real estate professionals” working in Arcadia?
In my part of OC, I’ve found prices have rolled back to 2004 levels for the individual properties I have been monitoring, about a 30% decrease, and IPO has found the same for Irvine.
But maybe “Arcadia really is different” (or not)
I would say Irvine is similar to Arcadia in the fact that its school district is desirable and has a big (and increasing) Asian population/culture. Irvine is of course 20 times better in terms of infrastructure and community planning.
Irvine’s current housing housing crisis is just a shadow of things to come in the San Gabriel Valley.
One of the key difference between Arcadia and Irvine is that Arcadia is centrally located in the SGV, which has a much larger recent immigrant population (less than 15 yrs in US) than South OC, although that maybe changing rapidly. Recent immigrants are not familiar with past market history, and in many Asian countries there is no past housing data available for research whatsoever. Many recent immigrant buyers simply want to live in Arcadia for the status symbol, school district, convenience, etc. I think demand from wealthy recent immigrants (esp. investors, govt. officials and their family members, etc.) from countries w/high economic growth rates will continue to support these high prices until the demand slows. Hopefully the overall market forces will soon dampen the “wealthy foreigner” effect on Arcadia housing.
Arcadia has definately seen declines and higher inventory. The biggest difference between Arcadia and OC is that there are still new houses being built in OC while Arcadia is pretty much built out.
Want to see a stop-motion video about a couple of mice who must second-guess their real-estate-purchase descision? I made this video recently. Please check it out and comment. Thanks.
Blemish and Pittance: The New Place
Nevermind all these properties are way overpriced but their locations leave a lot to be desired. Busy streets, crowded intersections, junkyard neighbors, etc.