Priced to Sell or Priced to Sit?

August 20, 2008 · TheArcadian · Property Profiles

Price: $589,000 ($405/sf)

Beds: 3
Baths: 2.5
Sq. Ft.: 1,453
Property Type Attached, Townhouse

OWNER PURCHASED THIS PROPERTY AT YEAR 2005 FOR $575,000 AND SPENT $20,000 TO UPGRADE KITCHEN COUNTER TOP, CABINETS, HARDWOOD/TILE FLOOR AND GARAGE FLOOR. THIS IS PRICED TO SELL.

Here’s a seller hoping to get out of his 2005 purchase with a minimal loss. Assuming the $20,000 spent on upgrades is true, here’s where he currently stands:

2005 Purchase – $575,000
ADD Upgrades- $20,000
ADD Agent Fees – $35,340
MINUS Sales Price – $589,000

Total loss = $41,340

Unfortunately, I do not think $589,000 is “priced to sell”. Other PUDs in the area are similary listed at $405/sf but actual sales are closing between $300 to $360/sf. At 1,453sf, this property should fall within the following price range:

$435,900 $300/sf
$479,490 $330/sf
$523,080 $360/sf

A neighboring PUD, newer and bigger, is currently listed at $404/sf and has been sitting unsold for 222 days. Will this seller suffer the same fate?

Comments (17)

Tootsie · August 20, 2008 #4305

Priced to sit for sure.

Doubt $20k was spent on upgrades.Not on that tiny kitchen and hardwood for just the second floor? Someone is lying.

Kuma · August 20, 2008 #4306

The houses in this area are still, at least, 20-30% over priced, so we see an almost frozen market right now. The reasonable market price is eqivalent to the price at early 2004.

As you can see more and more 2003 buyers put houses on the market to bail out at 2005-6’s price. To me that is no sale.

The sellers need to understand the current mortage application stand to price to sale. Priced at 2005 level won’t help nowadays.

My opinion: Significant price drop to come after summer (school starts). After Chinese stock market drop to 20 months low. There is no Chinese to save our housing market any more. Even worse, they probably will try to cash US out to invest Chinese instead.

Ken · August 20, 2008

You may call those who bought the house now are “nife catcher”. The truth is, nobody is sure about which direction the market will go from here. If not for investment, for those who purchase house to live for next 10 years the the only question is, can you afford?

Unfortunately, most at here are who can’t or the only hope is if the house price in arcadia can go lower. Wishful thinking I’d say.

llking · August 20, 2008 #4309

what is PUD?

TheArcadian · August 20, 2008

llking,

PUD = Planned Unit Development

There are a handful of definition for PUDs but in this case it is development consisting of a group of individually owned lots that share common area and/or facilities. This common area is typically owned by the homeowner’s association that you are a part of after moving into the development.

They are also referred to as detached-condos or courtyard homes. You will also see plenty of “townhome PUDs” that actually share some walls.

Common areas are usually the shared driveways, general landscaping and trash holding areas.

george8 · August 20, 2008 #4316

Assuming it can rent for $2500. Its rent equivalent price for owner occupant is $400k(GRM 160).

It will get there in the near future.

Sean · August 20, 2008 #4343

Priced to SIT. The market is just sitting and I see very little turnover. The same homes go on and off the market in my area. I think the upcoming ARM resets will crack the bubble once and for all. This market isn’t coming back any time soon. 2009 is wishful thinking.

I want to an open house this weekend, and the realtor had a “facts” sheet with payments. ALL payments required 20% down (about 180K) and the payments were high!

Good luck finding fools to put 20%/180K down on a home that they feel is going to fall 20-30% in a few years.

I just love the market returning to the fundamentals! In a normal market the homes might go up 4% year, so there is no rush. Even if you miss the bottom you only lose 4% by waiting a year and finding a house you truly want to buy.

· August 21, 2008

Why do people continue to harp on the $ value homes? Could we just buy what we can afford recgardless of whether it is overpriced or undervalue? Why do people always look at a home as an investment and not just as a home? If you have the money and are willing to pay for the asking price, what is the problem with that? If someone want to play the investment game, bet on stocks. I love to make it mandatory to have 20% down before you can even be considered for a loan. That way we will only have serious buyers, no speculators to inflate the prices!

akr889 · August 21, 2008 #4365

>>If you have the money and are willing to pay for the asking price, what is the problem with that?<<

Not a problem if you can live with following scenarios
1) a few months after the close of escrow, your neighbor’s house which is similar to yours goes on for sale for $100k less than what you paid.
2) a few months after the close of escrow, you found your dream house asking for the same amount of money your paid for yours
3) a few months after the close of escrow, you attend your friend’s open house party and found out that her/his house is much nicer and he/she paid much less.
4) 3 years after the close of escrow, you found a new job and have to move to another city. You think about selling your house, but find out that your neighbor’s house is still on sale (for much less of course). You rent your house out, luckily the rent covers the mortgage and you move to another city. You can not afford to buy another house because the loan underwriting rule is so tough that you can’t get 2nd mortgage unless you have 2nd income.
5) 10 years after the close of escrow, the market finally recovers. Your house is sold and you get your down payment and principles back. You are a happy man again, but looking back you suddenly realized that you are back to where you were 10 years ago. Keep renting would be much better choice!

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