521 Columbia Rd.

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

“BANK OWNED REO! A wonderful ranch style home in a fantastic Arcadia locale. This home features a large living room with a cozy fireplace, formal dining room, upgraded bathrooms & laundry room. There is a large bonus room with a wet bar and direct access to home via the attached garage. Large front and back yard. Sold As-Is.”

Today’s property is a $330k+ loss member and serves as another poster child on the consequences of negligent lending. The 100% financing that the homedebtor used to “buy” this home soon caught up to him. The $105k 2nd mortgage is a complete wash and should they get this asking price, the primary loan bag holder will suffer over a 1/4 million dollar loss after 6% commission.

At 10,000sf, you get a decent size lot and a 2,000+ sf living area. Unfortunately, this property is located right at the intersection of 3 streets; Columbia, Balboa and Sunset. There is no escaping the noise in this high traffic cross section.

Sales History
01/03/1995 $280,000
02/27/2004 $580,000
10/16/2006 $1,050,000
02/20/2008 $826,845 (when the bank took this property back)

Taking the 1995 price and applying a 3, 4 and 5% annual appreciation, this property would be worth:

3% $411,189
4% $466,220
5% $527,981

This property listing in the low $700′s is an improvement for a single family home in a good neighborhood. However, there is still no sign of the bottom and prices are likely to drop even further over the next few years. But if you are looking to buy soon and searching for a home or investment properties at bargain prices, consider purchasing a bank owned property.

612 N. 1st Ave.

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

“Price Reduced !! Priced for quick sale. one story single family residence with swimming pool, located in a nice neighborhood, north of Colorado. 3 Bedroom plus a den. Property has been completely renvoated in 2007, including newer kitchen with granite counter tops, newer appliances, newer bathrooms, double pane windows, newer garage door with remote. Formal dining room , Separate family room with marble flooring and access to the big covered patio. large size pool. spacious storage room next to the 2 car detached garage. gated driveway. property is zoned for R-3. property to be sold in ‘AS IS’ condition.”

I hate reading the descriptions most realtors put on the Redfin sales page. A $29,000 price reduction is hardly anything to get excited about and I never understand real estate talk on “newer” this and newer that. Newer than what? The 1970s hardware that was there before it? How new is newer? Also, it’s amazing what realtors are willing to say to get a sale. This property is literally right next to the 210 freeway and within a stone’s throw of all the noise and smog that will drive anyone batty. It’s obviously not “in a nice neighborhood.” Oh and by the way, it’s another REO.

Undesirable properties like this are often the first to show signs of weakness in a tough real estate market. Although we’ve documented some other REOs in more desirable locations, most of the pressure so far has been on condos, townhomes, SFRs by the freeway and those along the city’s border. While homes in the premier locations are experiencing softness with some price reductions and sitting longer time on the market, they have yet to see the heavy pressure I’m anticipating for later this year.

What’s taking so long? The system. We are currently on number 17 of the famed Credit Suisse ARM Reset chart below, but are barely experiencing the price pressures of re-listed REOs that defaulted 9 months to a year ago. Consider this – notice of defaults from loans that reseted on number 5 through 8 on the chart are just beginning to show up on the market. It takes a while for these homes to work itself through the system so I’m not surprised there aren’t more REOs at this point in time. It’s going to be an ugly Fall and Winter season this year. Unfortunately (or fortunately – depending on how you look at it), 2009 won’t be any better.

As for today’s profile, $599k for this real-estate-owned dump next to the freeway is a complete joke. Holy freeway noise Batman, you’d have to pay me to live there. Thanks, but no thanks.

152 W. Norman Ave.

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

I profiled this house a month ago when it was asking for an even more ridiculous $1,888,888. At the time, the lame realtor had posted a picture of the house across the street and after a month or so, it’s finally be corrected. I wonder if she changed the picture after being mocked on this site? I also wonder how many realtors and their cronies know about Arcadia Housing Blog. They probably hate us, but I could care less.

From the recent sales history information listed on Redfin, it looks like the sellers did the unthinkable. When I looked at this property last month, the public records haven’t been updated with the transaction on March 31st, 2008. That appears to be a $50,000 HELOC just 3 months after the January purchase at $1,350,000. The property was listed the day after the heloc was registered for a whopping $1,888,888 or $538,888 profit. Then came a wave of weird price adjustments from the confused seller.

Asking Price History
04/01/2008 $1,888,888
04/18/2008 $1,680,000 -$208,888
04/22/2008 $1,380,000 -$300,000
04/23,2008 $1,888,000 +$508,000
05/01/2008 $1,480,000 -$408,000

Can you say bipolar? Crikeys the sellers and their realtor were high on something. They started out fully intoxicated with kool-aid, but went into rehab a few weeks later with significant price reductions and appear to be going in the right direction. Then all of a sudden, they were back on the crack pipe and wiped out all the reductions except for a measly $888 from the original listing price. Then about a week after that, they came to realization (again) about the market state and dropped the price by $408,000.

That’s $408,888 or 22% off the original listing price. Sounds like a lot, and it is a big number, but it’s still way overpriced. It was purchased back in January of 2008 for $1.35MM and apparently was suppose to make some flipper’s wild dream come true. It’s 2008 and there are still people trying to flip homes – amazing. The sellers did put some downpayment on the house and I expect them to take a 100% loss on that. It may sell for the amount owed to the bank if they drop the price quickly, but if the sellers let it sit, it will fall below $1.1MM and the bank will end up taking a loss.

It sits on a big lot, but the house appears old and dated. There aren’t any pictures of the inside so I assume it’s in bad shape. It’s also right next to the lovely drainage ditch. I must sound like a housing grinch that’s out of her mind, but it’s probably worth about half it’s current asking price. Unfortunately, some knife-catcher might pick it up for around $1million in the next few months. Ridiculous!