As you prepare to give thanks for your blessings this week, here's one to add to the list:
You do not now, and probably never will, live at 462 36th Place.
This dreadful SFR is currently the cheapest home west of Sepulveda – for the second time this year. (Click address above for details via Redfin.) For $929k, the listing says you will get 3br/2ba and 1150 sq. ft. on a 1260 sq. ft. lot. The writeup concludes: "Must see!"
But if you see it, you may be traumatized – so be warned.
After this home was purchased in August of this year for $760k (second pic is the "before"), it was rapidly remodeled – just 8 weeks between closing and return to market on Sept. 27. The remodel did update the exterior, and surely improved the interior, but it had to be pretty bad previously for this Home-Depot-clearance-table job to qualify as an improvement:
- Pergo-type faux-wood flooring that has soft, bubbly, bouncy spots;
- Low-end appliances and presswood countertops in the kitchen;
- $70 "fancy" mirrors screwed to the bathroom walls as accents; and
- Raw wood stairs from the 2nd to the 3rd floor bedroom.
The remodel is subpar, but that's not the biggest issue in this horror show. From small to big:
Le Garage. There is a garage (apparently legal), but good luck fitting any modern car into it. Good for a pinball machine, bad for opening your doors.
Location, location... The location is on one of MB's most-shameful streets. 36th Place is just not discussed in polite company. It's an alley, and a ghastly one at that. We're not sure any other house has an entry on this street – mostly it's garages for homes on Rosecrans or 36th St. (a street that's no beaut up here, either). (Third pic shows the street; fourth pic, the view of the refinery from the top of the block.)The Tower of Horrors. Alas, there's something worse than the location – a late-1980s addition that produced a strange, 3-story tower at the back of the main house. Start up the steps, and you're awed by the height of the ceiling above, which we might call cathedral-like, if not for the risk of offending various religions. The 150-sq.-ft. 2nd-floor landing is, apparently, a "bedroom." (No door.) If you dare, you may hike up the ultra-steep, extremely perilous, raw-wood staircase (just get me a ladder!!) to the loft above, which, given the closet, is evidently the third "bedroom." Oh, the horror.
MBC cannot tell you:
- Why this lot was split in the first place (forcing 462 36th Pl to front the alley);
- Why this home was built;
- Why the late-80s remodel (adding the second & third floors) was so awful;
- Why the Sept. 2007 remodel was so uninspired and cheap;
- What the flippers were thinking; or
- Why anyone would spend $900k+ to live here, given the many, many... ok, many better options all over the world for $900k.
21 comments:
The house, and especially the "tower," reminds me exactly of a playhouse my kids built with cardboard moving boxes when they were younger.
Same quality construction.
I am all for capitalism and making money, but this goes beyond ridiculous. This is an absolute joke to any well educated buyer.
Price Reductions
Well it looks like another developer is getting the hint. Rich VR has reduced 4 of his properties. His Tree Section catastrophe was reduced by another $150,000 to $2,199,000. I would be shocked if someone even offered him $2,000,000. I guess the Bank is knocking on Rich VRs door. At least he is trying to unload some of his inventory. How much longer can some of these developers afford to wait and let their inventory just sit. They are just going to loose more money by letting these homes sit for another 6 months.
2807 Elm is finally showing a pending. Does anyone know if this developer ended up at $2.1?
Further evidence California is rapidly melting into Mexifornia.
Interesting statistics:
Vineyard Bank has $2.1B in outstanding loans, and only $22.0M set aside for nonperforming loans.
That is to say, two or three smaller builders go BK, and Vineyard takes a larger hit than they expect.
But wait!
It has $12.9M in REO. Similarly, it has $11.5M in "non-accruing" loans, basically loans to builders that it doesn't expect to collect on.
Vineyard seems fairly stable for now, but one or two missteps and they are in deep, deep trouble.
BSR, your racist comment belies your stupidity. Please keep your uneducated comments to yourself.
Given the level of education of most people I know in MB, it's nothing less than mind blowing that this market got so out of control. I've lived in MB for 10 years now - and watched the same thing happen here as what happened to the westside when I was a kid...only this time, my family is in a home, not chasing one. It was mind blowing then too. It didn't end pretty back then either.
I know one of you rocket scientists with one of those really hard to get real estate licenses will probably try and tell me for whatever reason that this time it's different (because strangely enough you all seem to gain economics degrees at the most opportune times)...well, don't waste your breath on me kids. I've been there and REALLY experienced that.
Happy Holidays All!! And remember to be grateful for what you have - it makes all this noise a lot less deafening.
Anon 12:16, why so bitter? If you've owned a home here for 10 years, be happy. And, during this holiday season, remember the less fortunate - the bitter renter crowd and the cult of the clueless, still hoping that prices here will drop back to where they were when you were a kid. Maybe Santa will be sensitive to their tender psyches and forego the lumps of coal in their stockings this season.
I know that when I read comments like yours, I am thankful for my blessings, not the least of which is the blessing of common sense that tempers any inclination to imply that all my fellow homeowners and the entire real estate community are just a bunch of intellectual lightweights. Too bad all that experience of yours hasn't at least taught you that.
By the way, since your economic sense is far more advanced that the rest of ours and since you are absolutely certain that our real estate market here will crash, why isn't your house already on the market?
I believe Rich VR did the remodel on 462 36th Place, Anon 11:06.
Seriously, though, I wouldn't use Rich VR as an exemplar of the development community. He is perhaps my least favorite builder. When the market was hot, his strategy was to overpay for the lots and underfund the quality of finishes (he doesn't even throw in a refrigerator in the kitchen - it's a negotiation item!). Buyers would buy his product anyway because they were being outbid on higher quality product.
Now that the market has turned sluggish, his product languishes. Examples are:
2612 Poinsettia, listed for $2,199,000 - originally listed for $2,450,000 on September 7, 2006.
1154 2nd Street, listed for $1,999,000 - originally listed for $2,075,000 on September 28, 2006 with a brief 2-week interlude at $2,150,000 in the spring.
1521 11th Street, listed for $2,200,000 - originally listed for $2,350,000 in March of this year.
I was told (and the tax records seem to confirm) that he does not take out construction loans on his projects, preferring to pay cash. If true, he can hold out for some time to get his price (but with plenty of other product out there, that could be a very long wait).
Happy holidays!
Typo - My last comment was addressed to Anon 10:34, not Anon 11:06/BSR (I don't understand where the latter is coming from).
How much longer can some of these developers afford to wait and let their inventory just sit. They are just going to loose more money by letting these homes sit for another 6 months.
I concur, the best time to get out is ASAP. But I'm just a bearish blogger. (Short-term bearish; long-term bullish, believe it or not.) So what are the builders thinking?
First they were waiting to see if the situation improved over the summer. They got the mortgage meltdown instead.
Then they figured, hold tight, wait to see what others do to get a deal. By xmas, we'll see more data on that. Maybe the writing will be on the wall. (2807 Elm, we're talking about you again.)
And then comes whatever's next. 6 months out looks awful in a macro sense. (Freddie Mac, Countrywide, Citibank... we're talking about you.)
But a lot of folks are ready to write off Winter and see what happens later with pent-up demand. That's a bigger gamble, IMHO, than slashing now to get a deal.
Actually, anon 10:34, you said it more succinctly: you're likely to lose more by waiting 6 months to "see what happens."
Actually, MBWatcher, it's not as big a gamble as you might think, although it is most certainly a gamble.
Right now, the market is extremely sluggish with few buyers circling as we head into the holidays. Look at the Tree section; there have been a few sales of new or newer homes (2807 Elm, 3011 Elm, 1725 Oak) but, for the most part, the new home market is stagnant so the thinking is that if there is a serious buyer out there, they will probably low-ball anyway so might as well leave the price where it is and negotiate down from there.
If the buyers re-appear in the spring as they did at the beginning of this year, the builders figure they'll either attract offers at that time based on the current list price or they will be in a better postion to attract an offer with a price reduction at that time. Hell, last spring was so robust, Rich VR got carried away and actually boosted the price on his 1154 2nd Street (he quickly brought it back down again and just recently lowered it again but it's still available; CDOM=420).
I'm not saying this all makes sense because, as you point out, this spring may be qualitatively different than last spring but we won't know that until the first quarter of next year.
Another negative for the builders - more new inventory in the pipeline ready to come out in the spring so our current percentage of new single family construction (19 of 42 active listings in the Trees or 45% / 48 of 117 active listings in all of Manhattan Beach or 38%) may increase before it decreases.
Anyway, that's my take. Look for some serious price-cutting in the first quarter for the more 'seasoned' new construction if the market continues to stagnate.
Wow Huggy,
You are starting to sound a little bearish. If developers wait until next Spring, I think it is a huge gamble. I think hoping that buyers come back in the spring (like they did last spring) is unrealistic. The market is completely different now; compounded with stricter lending standards, higher interest rates and a severe downturn in the financial services industry.
No one can predict for sure what will happen, but it certainly seems there is a much greater liklihood that the market continues to slowdown.
Uh, excuse me, Anon 7:14, I beg to differ on a few points. First of all, interest rates are not higher than last spring; in fact, with the 10-year T-note hitting 4% today, mortgage rates are going to be dragged lower, despite the recent widening of the spread between the 10-year note and mortgage rates (historically only 1.5-1.75%, the current 2+% spread is the widest in years, I believe). IMO, that spread cannot continue to widen. Even as of last week, jumbo rates were down to 6.125% (with a point) or 5.875% for a 7/1 adjustable. I'm betting they'll be lower still next week (unless equities rally).
Also, the stricter lending standards may have been the typical over-reaction as the pendulum swung too far in the other direction. Already, there is evidence of some loosening (I even saw a "stated income, stated assets" product last week and we thought those were dead).
Maybe the market doesn't take off like last spring but with pent-up demand, the continuing perception that it is a buyer's market and (hopefully) lower rates, I can see why a builder may want to gamble on a pickup in buyer interest in the first quarter of '08, before deciding whether to drop the price. We're now into the holiday season when buyer interest completely dries up so there will be few if any buyers to notice a price cut at this time (although that didn't stop Rich VR from cutting the price on 4 of his, ahem, 'stale' listings yesterday; average CDOM = 288 days).
In any case, I've had a good year; hopefully, you have too so we can both sit back, enjoy the season and see what the new year brings.
Happy holidays!
Huggy??? "...see what the new year brings?"!!!
From all your hilarious posts I've been reading, it seems quite clear that you've already got that all figured out. What a goof! No wonder you're an agent...you probably double as a mortgage broker.
-Fat & Happy
Huggy, if you believe that rates are going to go lower, do you believe that right now is a good time to buy?
Anon 9:23 / Fat & Happy - an example, no doubt, of ignorance is bliss. The degree to which you find my comments hilarious is inversely proportional to your level of comprehension. I'm sure you must be rolling on the floor.
Anon 9:58, now is definitely a good time to buy. Why? Because, while rates may drop between now and the end of the year, there is no guarantee that trend will continue into the spring. What if equities rally? That will drive rates up, not down.
Meanwhile, as a buyer, you'd have the field practically to yourself. Again, no guarantee that will be true in the spring. You can aggressively negotiate the price on many new (and some not so new) homes that have been languishing on the market as I am reasonably confidant that the builders/sellers will entertain almost any offer, even if it's well below list.
I know the foregoing is contrary to the conventional "wisdom" (and that's stretching the meaning of the word) on this blog but, with the holiday shopping season upon us, I've never understood why real estate should be the only product that people shun when it goes on sale.
Of course, the refrain we hear from the market timing 'experts' on this site is "All real estate will be much cheaper in a year or two." I heard the same thing in 2000, 2001, 2002, 2003, 2004, etc - oh right, but this time they've got it nailed.
Bottom line: They don't ring a bell when the market hits bottom; you won't know the market has bottomed until well afterwards when we are in a seller's market again (and who knows where rates will be at that time?). So what's the sense in trying to time the market?
If you are looking to buy a home in your neighborhood of choice and the market hands you low interest rates and a strong negotiating position due to an absence of competing buyers, take it. In the long run, you'll be glad you did.
Have a great Thanksgiving!
But if rates are going to drop, why not wait, and save thousands of dollars? This is where you're confusing me, Huggy.
I think rates may drop between now and the end of the year (my previous comment only suggested lower rates next week, which looks like a safe bet) because the 10-year T-note hit 4% yesterday. I don't have a crystal ball to tell me where they will be next year or the year after. They may be lower still or they may be higher.
The builders are certainly hoping that they stay low or go lower as one component in their strategy of waiting until first quarter '08 before they decide if they need to cut prices but, as I suggested, that overall strategy is still a gamble. If you buy now, you can make the cut for them (you know it's on their mind already).
Huggy, the self proclaimed genius that is obvious from his post says,"...what's the sense in trying to time the market"?
Yeah sure, why not just throw caution to the wind, it's only the single biggest financial commitment 99% of Americans make. What the hell, what's a few hundred thousand dollars between friends anyway? I heard someone call you a goof. They're too kind. Pack your lunch and go home.
Equities don't rally from here - Dow Theory sell signal now in effect. Stocks down, interest rates down, dollar down, MB...over.
-MB Reality
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