Thursday, February 26, 2009

At What Price Reality?

955 N Vista St.
3BR/2.5BA, 1558 sq ft.

REDUCED! BANK OWNED COSMETIC FIXER! Great opportunity to buy this older charmer located in desirable W. Hollywood neighborhood. Close to both Santa Monica Blvd & Melrose Ave. famous shops, restaurants & businesses. Newer bathrms & some kitchen cabinets. Hardwd floors through out. Fireplace in living room, sep. dining rm, breakfast area in kitchen. Garage was converted into a game room. House has been re-arranged, buyer is to check for all permits. Needs TLC, sold "AS IS". See remarks for details

Sold: 7/98 - $288,000

Sold: 12/05 - $827,500

Sold: 11/06 - $1,200,000

Sold (Bank buyback?): 12/07 - $995,000

Listed: 8/08 - $815,900

Reduced: 1/09 - $759,900


There is so much going on with this I don't even know where to start. Maybe just listing some of the points is easier. And remember, we're talking about a small house on a typical but tiny lot in 90046, on what I think is a fairly busy street, since Vista actually merges into Gardner at Santa Monica, with a couple decent-sized condo buildings in your backyard.

1) Look at the price in 1998.
Our friends over at Westside Bubble always post some good charts from Case-Shiller and DataQuick illustrating the market cycles going back to the early 80s. You could argue that 1998 - maybe a couple years earlier - represented the low of the last cycle. Not that I think prices for a single family in a decent part of WeHo will drop below $300k, but if you take the 1998 price and add a reasonable 5% per year typical real estate appreciation, you get a number around $450k. Just sayin' ...

2) "Sold as-is", "Needs TLC", "The house has been 'rearranged'"???
Alarm bells going off all over the place here. From the pictures, it looks like there were some upgrades done - maybe the recent owner ran out of money. The problem is, how much will it cost to "fix"? Does a teardown even make sense here above a price of maybe half of listing?

3) Allegedly this place appreciated almost $400k in less than a year back in 2005-2006.
There have been a number of stories about appraisal fraud during the boom years. I would guess this falls into that category.

Back to one of the main themes on this blog ... who SHOULD be able to afford a place like this? Assuming it needs at least another $100k in improvements, not only would the buyer need $170k to put down, but the monthly cost (pre-tax) would be approximately $4700/mo, meaning somewhere between a $175-200k annual income to reasonably afford. That income level probably puts you in the top 5% of earners in the US. And you can afford this slice of heaven?

7 comments:

Anonymous said...

This offering is an egregious example of what led to the current economic meltdown. In less than one year, the property increased by $370,000 --one wonders, who was the lender, and, as you point out, who was the appraiser? I've noticed that we often hear about the realtors, the brokers, the lenders, but the appraisers seem to go unnoticed. It's like they're untouchable.

And regarding who could afford a place like this now- very few - at this price. Income stats for 2006 from MelissaData show that the adjusted gross income for zip 90046 taxpayers was $66,525.

Just up the street where it intersects with Romaine, an elderly man was murdered last year while taking his evening walk--it's still unsolved apparently. I remember his last name beginning with a "K" and that he was from E. Europe. Press reports indicated that neighbors heard cries for an hour, but did nothing. So much for the neighborhood and the neighbors. This type of information will not appear in any real estate listing, but localized blogs, such as yours, will hopefully alert readers to information not only about prices but also about safety.

Anonymous said...

It's overpriced at this level, but the pictures I saw out on the internets didn't look (to my eye) like they amount to $100K in necessary renovations. As you say, though, the description makes it pretty clear that no permits were pulled, so who knows? Sadly, it's a really cute, decent-sized Craftsman.

That said, the garage has been converted to a "game room", and it's very tough to live anywhere in WeHo without your own parking space. Plus, this stretch of Vista's kind of a freeway and yes, this is kind of a dicey part of WeHo.

All things considered, in answer to your question, I'd love to see a home like this accessible to a couple making about $120K per year between them, so that would seem to put it in that $450K range, which is where I'm sure it will be in the next year or so.

WeHo Homes said...

All things considered, in answer to your question, I'd love to see a home like this accessible to a couple making about $120K per year between them, so that would seem to put it in that $450K range, which is where I'm sure it will be in the next year or so.


I agree in terms of who "should" be able to afford.

I didn't have the ole calculator in front of me when posting, but if you take the 1998 price (which you could argue is a good "baseline" figure since the last cycle probably overcorrected in the '94-96 timeframe) and add 5% appreciation, you magically end up at approx $490k.

Somewhere in the $450-500k range seems to make sense. Anyone's guess as to how long it takes for anything to make "sense".

Anonymous said...

Well, recalling WEHO fixers going for the high $800s during the bubble, it's noteworthy that the fixer at 935 N. Ogden went for $577,500 on 12/18/08. A 1,146 sq.ft house on a generous 6,240 sq.ft lot. Looks like one of those "close to the vest, close to the chest" deals that flew under the radar. It does appear to be a new low for that area of town and not all that far from 955 N. Vista (although it's surrounded by two-story apartments).

But now that it's on the radar, will it be used by appraisers and lenders as a recent comparable for similar sized fixers? One can only hope. Perhaps, prices will then become more reasonable.

Anonymous said...

Great Blog!! Thanks!!

Anonymous said...

Actually Ogden is very far from Vista and a completely different type of neighborhood. But, yes, this price is still unrealistic. It should be listed at $599K right now. It's been an REO on the market for quite a long while. I don't see how this half-remuddled house on a relatively busy street in--I believe--the LAPD zone (so indifferent police response) can compete with the cheaper listing in bona fide WeHo on 1202 Poinsettia on which the remuddling was at least completed. Both are still overpriced. I expect these smallish houses on the east side to eventually settle down at about $400k. It's interesting that the banks are so clueless.

Anonymous said...

You're correct -- 955 N. Vista is in LAPD's jurisdiction.

Perhaps 927 N. Vista, sold on 01-30-09 for $775,000, could be considered a much better comp than Ogden but then again it's larger with a rather haphazard-looking second story.

As for 1202 N. Poinsettia Place in WEHO, it looks as though it's sinking into the ground, and its remuddling (great addition to the lexicon!) was done on the cheap.

Agree that these properties and others like them will be worth a lot less once all is said and done...