This installment of "Friday Night Fights" (yes, I know, one of these days I'll actually be able to post on Friday night!) looks at two newly-listed SFRs in the Poinsettia/Greenacre neighborhood, between SMB and Fountain in eastern WeHo.
These are both "challengers" as they've each been on the market for just a week:
CHALLENGER #1
1139 N. Poinsettia Pl. (90046)
$899,000
2BR / 1BA
1,331 sq ft ($675/ft)
Lot Size: 5,800 sq ft
CRAFTSMAN STYLE HOME IN PRIME AREA OF WEST HOLLYWOOD. COMPLETELY REMODELED IN 2006. LIVING ROOM WITH FIREPLACE, FORMAL DINING ROOM, OPEN FLOOR PLAN WITH RECESSED LIGHTING OVERHEAD. KITCHEN INCLUDES BUILT-IN STOVE, MICROWAVE, WINE FRIGE, BUIT-IN REFRGERATOR, AND WASHER AND DRYER. ( ALL PURCHASED IN 2006) BRAND NEW SUB FLOORING WITH BRAND NEW HARDWOOD FLOORING THROUGHOUT HOME. BATHROOM HAS ALSO BEEN REDONE TASTEFULLY. FRENCH DOORS LEAD OUT TO A GREAT OUTDOOR DECK OVERLLOKING A BEAUTIFUL NEW PROFESSIONALLY LANDSCAPED YARD WTIH A NEW SPRINKLER SYSTEM THROUGHOUT.
Sold: 9/06 - $760,000
CHALLENGER #2
1236 Greenacre Ave (90046)$849,000
2BR / 2BA
1,209 sq ft ($702/ft)
Lot Size: 4,900 sq ft
This unique, ultra chic 40's bungalow sits at the end of a little known cul-de-sac in West Hollywood's hot east side. Gated and hedged with a romantic courtyard, and spacious backyard. Natural light and greenery abound with 2BR/2BA, eat in kitchen with separate laundry area, huge liv room with gorgeous fireplace, original built-in bookcases, deep chocolate hdwd flrs throughout - an entertainers dream! This one of a kind home offers peace, quiet and lots of privacy, a true in town retreat!
Sold: 12/97 - $295,000
Sold: 3/03 - $600,000 (100%+ in 6 years)
Sold: 1/05 - $806,000 (+35% in 2 years)
So here we have two similarly-sized "starter-type" homes in a nice neighborhood on good-sized lots.
1139 Poinsettia probably doesn't have much room to work in terms of pricing since it looks like the fairly significant upgrades were done after the prior purchase.
1236 Greenacre - well, the history on that one reads like a poster child for bubblicious pricing. A double in value in 6 years from 1997 to 2003, and then a greater than 30% increase from there in 2 more years? It's difficult to tell what upgrades may have been done during those periods, but at a minimum, based on other properties we've seen, we're probably at least at a 2005 rollback price. Any coincidence that $849k less a 5% agent commission of $43k equals the $806k purchase price from 2005? "Break-even", anyone?
Of course, we would argue that small, albeit nice, homes like this should be affordable to a household in the $150k income range, meaning "true" pricing around $700k in today's low-rate environment, and somewhat lower when rates move up ...
7 comments:
just wondering how a $150k income would be able to afford a $700k house... isn't the rule of thumb no more than 3 and a half times your income?
Five doors down from the Greenacre house there is a very similar house with a sign on the lawn announcing its availability for rent on June 1 for $2,000 per month. Now, what impact will THAT have on the $849K listing price?
I have a guy in my office who, along with his wife, were able to "afford" a $700K house on about a $125K family income back in late 2006. They're planning to walk away, find a rental and let foreclosure happen when their loan adjusts in a couple of years.
That's how that works...
As for comment #2, I've also noticed that rentals are going empty and/or being reduced, and suspect that will impact these sales prices quite a bit.
20% down is 140K. Leaving 560K to be financed. 150 * 3.5 = 525. So, yes, they fall out but by a small margin. It's doable, but they fall out of the classic rule of thumb for affordability.
Re: the "affordability", thanks for the comments. I was assuming that for those buying a "starter-type" home in a nicer neighborhood, there's typically a little stretching (not "funny money" from a couple years ago) going on.
The math I used was $700k purchase, $140k down = $560k to finance. 5% rate gives you a monthly (pre-tax) P+I+T of approx $3,800. At a 30% DTI (here's the stretching since the buyer may have more debt, etc), works out to approx $150k/year.
I think we'll see these places creep into the mid-600s, maybe not nominally, but taking into account inflation over the next several years.
Bubblewatcher, I certainly wonder how many people would view $849K as a realistic price for a house that can be rented for $2,000 a month. When I saw that sign I just laughed.
I think our host is being too timid about what will be happening to the values. Houses like these will be down to $500K in about two years. And THAT's speaking conservatively.
!236 Greenacre sold on 6/19/09, per Redfin but no record yet at either LA County Assessor or Property Shark web sites. Here's the history:
Sold: 12/97 - $295,000
Sold: 3/03 - $600,000 (100%+ in 6 years)
Sold: 1/05 - $806,000 (+35% in 2 years)
Listed: early 2009 - $867,500, then delisted
Relisted: April 2009 -$849,000
Sold: 06/09 - $830,000
So, it's back to early 2005 on Greenacre, still the finest street IMHO on the east side of WEHO.
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