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.
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.
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?