2 E Longden Ave.
Arcadia, CA 91006

Price: $799,000 ($519/sf)

• Beds: 3
• Baths: 2
• Sq. Ft.: 1,539
• Lot Size: 8,370 Sq. Ft.

During a normal housing market, rundown properties could be bought for cheap and flipped for a premium after proper rennovations. When we’re in a frenzy bubble era, “flipping” usually meant buying a home and putting it back in the market 3 months later. As seen from here, the folks who actually tried to upgrade properties during irrational times are left in the dust.

Sales History
Jun 1993 $240,000 –
Feb 1996 $225,000 -2.4%/yr
Aug 2005 $660,000 12.0%/yr
May 2007 $708,000 4.0%/yr

After spending a good chunk of money on the “Birch” hardwood floors, appliances, new floor plans, ect… It is now listed for $91,000 over last year’s purchase price. After paying out 6% for commissions, I doubt there will be much profit left in the sale.

Using the 1996 sales price of $225,000 as our base, we get the following valuation:

$225,000 after 12 years of appreciation

3%    $320,796    ($208/sf)
4%    $360,232    ($234/sf)
5%    $404,068    ($263/sf)
6%    $452,744    ($294/sf)
7%    $506,743    ($329/sf)

Currently listing for $799,000 ($519/sf)

Based on the $506k value, do you think the flipper’s upgrades are worth this listing’s $300k premium? Located on the corner of Longden Dr. and Santa Anita Blvd., I expect this home to drop like a dead weight.

**Update**

Here is the requested aerial photo. Great location!

Today’s homeowner is left holding the bag and desperately needs to sell the it before his 20% downpayment is gone. No pictures have been provided but the aerial photo is all we need to see…

344 W Foothill Blvd.
Arcadia, CA 91006

Price: $1,775,000 ($685.sf)

• Beds: 3
• Baths: 3.25
• Sq. Ft.: 2,590
• Lot Size: 1.14 Acres

At first glance, this property seems like a decent deal. Although the home itself is only 2,590sf, it has been completely renovated AND you get a 1.14acre lot. Think of the possibilities (i.e. 4+ McMansions).

Of course, we already know that anything too good to be true… usually is!

[Click below to see the property's incredible location.]

Wow. It sure has one heck of a view (of the 210fwy). On top of that, it is buried between 2 cul-de-sacs so the owner has no room left to pave a street through it. There goes any plans of breaking this property up into 6 smaller lots.

I’m certain the owner had grand dreams of making a killing on this home when he bought it in 2005:

Sales History
Jun 24, 1992 $620,000
Jul 12, 2005 $1,050,000
Sep 15, 2005 $1,550,000 <– WTH

Looks like flipper #1 knew he had a dud in his hands and immediately sold it to flipper #2 for a $500,000 profit after 2 months. $100,000+ in renovations and 3 years later, flipper #2 is trying to break even by listing the home for $1,775,000 ($100k for remodel & $100k for commissions).

$1.775MM to live next to the freeway? I’ll pass.

Knowing all this, I’d have to say this seller is screwed and his $310,000 downpayment will get eaten up significantly by the time the home sells.

I have no doubt that the following property could have sold for nearly $1MM back in 2006. Fast forward two years later and we have an owner who believes he can still get $888k for a property purchased for half a million dollars less just 9 years ago.

1317 Holly Ave
Arcadia, CA 91007

Price: $888,000 ($485/sf)

• Beds: 4
• Baths: 2.5
• Sq. Ft.: 1,830
• Lot Size: 6,510 Sq. Ft.
• Year built: 1963

This is not a McMansion. It is a 45 year old home situated on the butt of other McMansions. Take a look at what I mean:

According to the description, this property is located “close to Million Dollar homes.” Is that why the seller thinks $485 per square foot is even a reasonable listing price? For almost $900k, you ge neight the larger lot size of your neighbors or even the newness of the surrounding McMansions.

Sales History

Apr 30, 1998 $275,000
Sep 01, 1999 $357,500 21.6%/yr

Applying the standard appreciation chart, we get a good idea of what this property is really worth:

Standard Straight-line Appreciation
After 9 years of ownership…

3%    $466,456    $233/sf
4%    $508,834    $254/sf
5%    $554,600    $277/sf
6%    $603,989    $302/sf

Current listing price: $888,000 ($485/sf)

Valuing this property at $302/sf means the listing is currently 32% overpriced. Do you find it hard to believe that Arcadia home prices will drop ~30% over the next 2 years?

There is a popular saying among wannabe real estate gurus,

There is nothing you can buy in desirable Los Angeles cities that will cashflow.

Maybe they are right. Maybe they are wrong? How low will this property have to drop in order to align itself with comparable rental rates?

1022 W Duarte Rd #13
Arcadia, CA 91007

Price: $415,000 ($315/sf)

• Beds: 3
• Baths: 1.75
• Sq. Ft.: 1,316
• Property Type: Attached, Townhouse
• Year Built: 1971

This is an old property located on a section of Duarte Rd. that’s home to rows and rows of similar type town homes and apartments.

At $415,000, this townhome will require a 20% down payment of $83,000 and a True Cost of Home Ownership (TCHO) of $2,500 per month. But wait! There’s a $205/month HOA fee; bringing your final total to $2,705/month.

What would it cost to rent an equivalent home or apartment?

$2200 / 3br
$1495 / 3br
$1980 / 3br
$2300 / 3br – Single family home
$1725 / 3br – Single family home

Would you spend $83,000 in addition to $2,705/month to own this place? At least the rooms comes painted!

1160 W Orange Grove Ave.
Arcadia, CA 91006

Price: $3,000,000 ($875/sf)

• Beds: 3
• Baths: 3
• Sq. Ft.: 3,427
• Lot Size: 1.3 Acres

This home has a lot going for it: 1.3 acre lot, large 1-story home, 1,100sf guest house and the desirable Santa Anita Oaks community (aka “Upper Rancho”). This is as close as an Arcadia home will get to being”A magnificent Spanish-style estate.”

There is almost enough land on this property to build 4 decent sized homes but the owner did well by maintaining its current condition. Although it’s being listed at $875/sf, my opinion is that 1.3 acres for $3,000,000 isn’t too bad. Compare that the the 1/3 acre property on 2428 S. 2nd Street also going for $3MM+:

Remember this property? $3.2MM and you get the convenience of no privacy.

Let’s just hope that a flipper doesn’t get a hold of this Orange Grove home and pack it with overbuilt McMansions.

It was by coincidence that I  profiled 4 freeway-loaded properties this week. We did not go out of our way to find them and they are all new or refreshed listings. So it did not surprise me to find another unfortunate seller on the market. 13 days running… any guess when the first price drop with come?

Oh My Poor Katherine

750 Katherine Ln.
Arcadia, CA 91006

Price: $850,000 ($392 per sq. ft.)

• Beds: 3
• Baths: 2
• Sq. Ft.: 2,169
• Lot Size: 9,620 Sq. Ft.

Oh poor poor Katherine indeed. This seller purchased the home back in 2006 for $800,000. They put 20% down and took on a conventional 30-year mortgage. Unfortunately, prudent borrowing will not save this family from losing money on their home.

At $850,000, this seller will most likely break even on their purchase (minus 2 years’ interest payment). To purchase an overpriced property sitting next to the freeway was a bad decision:

My Evaluation:

$300/sf – $650,700
$270/sf – $585,630

At minimum, this home is $200,000 overpriced.

Other freeway profiles from this series:

• McMansion for $301/sf
• Uninformed on Oxford
• Freeway loaded. Kool-aid loaded.
• Knife catcher on Oxford