Where Are We Headed?

Some seem to think that the bailout - whenever it finally passes - will stop the downward slide of housing prices. I doubt it. As the post on Calculate Risk states "Right now prices are still too high."

Another very informative post looks at current housing prices from three different angles: real prices (inflation adjusted), price-to-rent ratio, and price-to-income ratio. All three indicate that prices still have ways to fall.

Roadkill

I discovered the house on the corner of Vineland and Kittridge in early summer, 2006. That area can be best described as a "dump," and the house looked anachronistic there. For starters it was on a really big lot. The house itself was smallish, with dainty peaked roof.

I climbed through the well worn hole on the chain link fence. There were big old trees surrounding the house, a bird bath to the side. There was graffiti all over. This green and black one felt strangely fitting.

There were a couple of extra buildings in the back and a boarded up gazebo.

Behind one of the buildings I found an old work bench. The whole place harkened back to an earlier time. Have there ever been orange groves in North Hollywood? I wouldn't be surprised.

A couple of weeks after my visit the house burned down. I sneaked through the fence again. The walls and the trees were still standing, but the roof was gone. I got my first peak into the house. The only recognizable feature was a white tiled fireplace.


Next time I drove by the house was bulldozed off. So were most of the trees.

There was a note on the fence, something about building an apartment building, or maybe condos. Then the notice was gone, but they haven't built anything. It's just a big empty lot now, with overgrown dead weeds, and tree stumps.

Charlie Rose - September 15, 2008

Luckily I just happened to land on the channel as the program was starting. I stayed up till 1 am to watch it. Then I watched it again on the web today. It is refreshing to watch smart people talk about issues - Wall Street in this case - without theatricality, taking their time, talking in a way that does not talk down to the viewer, yet understandable to the layman.

"A discussion about the crisis on Wall Street with Lawrence Summers, Andrew Ross Sorkin of The New York Times Charles Gasparino of CNBC, Josh Rosner of Graham Fisher & Co. and Nouriel Roubini:"

Charlie Rose About the Current Situation

A must see.

Land of Overpriced Shoe Boxes

In the Summer of 2007 I walked into an open house on Chandler, Burbank. It was towards one end of the newly constructed walk/bicycle path, within spitting distance of the high-voltage power lines. The house was 640 sq. ft. From the postage stamp size front yard I stepped into the living room, where the wall and even the ceiling had dark wood paneling, making the space feel even smaller. The normal size fridge was too big for the kitchen, I could only walk past it sideways. The bathroom was small, sparse and ugly. Backyard another postage stamp. The punchline is that the seller wanted over half a million for this ugly claustrophobic shoe box.

This insanity is apparently not over yet. Just look at this listing:

101 W Howard St Pasadena, CA 91103 ( MLS#: C07136762)

Beds: 1
Baths: 1
Sq. Ft.: 670
$/Sq. Ft.: $746
Lot Size: -

The description is a must read:
"Beautiful 2 bedroom 2 full bath home. With cool patio perfect for those family and BBQ gatherings truly a must see. Located in desirable area of Pasadena near downtown, shopping, freeways and schools. This cozy home is great for a small family and or a business executive. Tree lined street! HURRY, HURRY, HURRY THIS HOME WILL NOT LAST!"

"This cozy home is great for a small family..." A family of gnomes, perhaps? "...and or a business executive." A what?!?

There is also a little bit of discrepancy there. Is this a 1 br, 1 bath, or a 2 br, 2 bath? How on earth could you possibly squeeze 2 bedrooms and 2 full bathrooms into 670 sq. ft?
Like this I guess. Well, who needs to open that closet door, anyway?
The lot size is maesly 3052 according to county records, so it doesn't even have a huge lot going for it.

The seller who bought this house for $114,000 in 1999, and now wants to make a cool 440% profit on it. This begs the question: IS HE OUT OF HIS FRAKKING MIND?

I especially love the the last line of the description, since the property have been sitting on the market for 360 days! You'd think at the one year anniversary they'd change the description and, uh maybe knock the price down a notch, like, oh, 300k or so.

"Inventory in Los Angeles County is declining..."

...and the real picture:


Yes, technically it is declining, and sales are up, but if you step back and look at the full picture, you realize how tiny these movements are, and how deep in the doo-doo the market still is. Not to mentions that the Option ARM loan resets have barely started to make their effects felt.

(Graph from doctorhousingbubble.com)

Some People are Still Trying to Flip

2721 Marengo Ave Altadena, CA 91001 (Listing #: 752760615)

Price: $525,000
Beds: 3
Baths: 1
Sq. Ft.: 1,300
$/Sq. Ft.: $404

This house sold 07/24/08, A bit more than a month ago for $425,000.
It looks like It's been renovated, fresh paint, hardwood floors, and do I see granite countertops? I must admit that glass tile thing over the kitchen counter is very nice. There is one discrepancy however. It is listed as 1,300 sq. ft, but the county records indicate 1,209 sq. ft. Did they do an addition? Does it have permit? All in all, not a bad looking flip, and seems to be priced along the lines of other listings in the area. It is questionable however how good a chance it has to sell at that price. It does not compare favorably with this other property:

4390 N El Prieto Rd Altadena, CA 91001 (MLS#: F1778214)

Price: $435,000
Beds: 3
Baths: 2
Sq. Ft.: 1,302
$/Sq. Ft.: $334
Lot Size: 8,220 Sq. Ft.
Very nice, newly remodeled house, same size, much bigger backyard, and location is as good, if not better, at a much better price.

**Edit: Further research uncovered that the first house was not for sale any more, the listing agent just never got around updating it. The final story of it is that it was listed for $525,000, but sold for a 100k less. The second house is still better.