Fighting over $1.4 million

Alex Abad dropped the price of 710 Redwood Ave 90245 a whopping $20k. Seems like he/they are serious! To put that in perspective that’s 1.3%. Sounds motivated to me.

According to zillow there are five homes for sale between $1.3 and $1.45 million in El Segundo.  Three of the five have had reductions in the past couple weeks. 754 Hillcrest doesn’t even count because it’s been on the market around the same price for almost two years. And 400 Bungalow has many failed attempts at the $1.4 mark.

But then again it only takes five uniformed people to think that these $1.4 million dollar ponies are gonna be their winners.

728 Loma Vista gets another haircut

Jim Marak cut $45k off the listing price of 728 Loma Vista 90245 It came on market at $1.424 in March and received it’s second price reduction this week.

There’s not much to say about this house. At 2599 sqft for $1.3 mil it’s just odd. Five beds and two baths with two kitchens? It’s weird, it’s ugly, it has a pool, it’s old…There’s not many redeeming qualities. Did I mention it has a pool? Good luck to Jim and the sucker that thinks this is a good deal because it’s priced at $507/sqft.

The price history shows someone paid $1.165 mil in August 2006 for this house. Cheers to the owner for buying at the absolute top of the bubble and selling at another top. I guess if you have time and big balls real estate can never go wrong….

is6uqab3chf4010000000000

Oh Hi, Jim. Nice photos

isibkasjzsqc010000000000

You are not alone

Feeling the pinch of ever increasing rents, healthcare and education costs while your income stays flat to slightly up? You are not alone.

https://www.citylab.com/equity/2017/06/harvard-joint-center-for-housing-studies-2017-state-of-the-nation-housing-report/530535/

 

In large swaths of coastal California and the Pacific Northwest, less than one-third of renter households can afford house payments. Just 12 percent of L.A. renters meet that mark.

Housing affordability is a profound problem, one that is reshaping the way the country looks and lives. Multifamily construction now outpaces single-family homes as the prime source for rental housing (since 2013).

Conflict of interest?

When does a real estate agent working as a flipper with his own property for sale become a conflict of interest?  Maybe it’s not, but when I see Alex Abad throw another batshit fucking crazy ludicrous price on a home that’s only a $5,000 price difference from the home flip he has on the market it made me question it.

Alex lists 519 Eucalyptus 90245 for $1.9 fucking million dollars.  I just don’t get it. Yes, it’s big but it has no yard and has the 1990s written all over it. You Want to spend $1.9 million dollars to live in your grandma’s house?

isma6qn5zo1vhx0000000000

You want good schools a nice house, no airplane noise or weird chemical smells, here’s one just up the road in Manhattan Beach for $150k less. A tad smaller, with 40% more land and what looks to be upgrades made in the past couple years.   The price history leads me to believe it was a flip from last summer.  1856 9th St (Manhattan Beach East) is 2265 sqft on a 7000 sqft lot priced at $1.7 mil.

isqtnvzkeltsiq1000000000

This is another example of things being so off. A couple idiots believing that real estate can only go higher are dictating the market. They are being led to the slaughter by agents like Alex.

 

Which came first?

Which came first? Was it the chicken or the egg?

Google’s high paid employees can’t afford rents on their high salary because other higher paid Google employees bid up the prices of rent and real estate?  So Google is going to build apartments especially for their employees? And this isn’t just a Google issue, substitute any company in the bay area, Los Angeles, Silicon Valley and you have the same issue.

High demand = increasing prices. Increasing prices = no affordable homes. If you were the landlord you would raise the rent to the market value too.

What’s the solution? Set up offices in Oregon, Texas or Washington State? So now you have tech employees with salaries higher than the norm for the area and they don’t mind paying a little extra because it’s chump change when compared to LA/Silicon Valley. If you are looking at spending a million on a house in California and you move to Portland and see an amazing home for $400k, do you think throwing an extra $50k in your offer is going to make you bat an eye? Hell No. That’s why people in Portland hate people from California Moving up there. We bid up the prices and now it’s no longer affordable for the people that live there. 

971756_630x354

https://www.theverge.com/2017/6/15/15807762/google-factory-os-modular-housing-san-francisco

Crystal Ball Watch

If I could predict when the bubble will pop I’d be a rich man. Unfortunately I have been very wrong on many fronts going on 18 months.

But I can’t in my right mind risk the amount of money that’s at stake to see if I’m wrong. I’d rather be wrong sitting on the sidelines then risking several hundred thousand dollars and heading to the punch bowl like everyone else.  I’m not sure about you but I can not afford to lose my life savings.

A home used to be purchased for shelter. Because of government tax incentives it was a way to REDUCE the living expenses associated with renting. In most parts of the country the rent vs buy scenarios clearly points that it’s better to buy if you plan to stay for 7-10 years. Not so much in Southern California and clearly not with today’s metrics.

If it makes sense for you to spend 50-75% more per month to “own” a house you should sit down and spend some time with an accountant or book keeper that can really break down the costs and cash flow associated with each.

Am I “throwing my money away” renting? I’d say no. I am simply paying for shelter at a cost that is significantly less than the cost to live in a similar home. I have less risk, I have no maintenance costs and I don’t pay property taxes.  You on the other hand have a huge amount of risk, maintenance, taxes and the potential to make or lose a great deal of money.

In Mark Hanson’s latest post he references an article that talks about how this bubble is different. This time we may not be giving mortgages to people that can’t afford them or pushing interest only craziness but thanks to the fed and it’s easy money policy since the great recession they have found other ways to inflate asset prices.

Bottom line: The Fed, during Obama, did everything in its power to surge all asset prices — stocks, bonds, real estate, collectibles, et al — with no regard for its own guidance, as to when it would take its lead-foot off the accelerator.  …  If, the past 8-years of a Fed in Armageddon-mode created the “everything bubble” (hat-tip Wolf Richter), what will shifting monetary policy into reverse do to said asset price levels?

That’s the deal, the next time this won’t be limited to a real estate mess. It will be an economic mess that includes auto loans, student loans, WTF crypto currencies….the list goes on. If everyone runs for the exits at the same time panic ensues.

Now if I can only get my timing right we could all make a lot of money.

What’s wrong with this picture?

I woke up to see two of the $1.4 million club are now pending. It dawned on me just how wrong something is.

Like I’ve mentioned it only takes one idiot to make a real estate transaction successful but it makes me question if people who are spending one million dollars to live in a house have any financial sense.

423 Loma Vista is a remodeled Spanish home. 3/2 1500 sq ft. Nice, but priced at $927/sq ft. Someone is going to put a $300k down payment for the privilege of writing a check for $7000/month.  For a 1500 square foot house! You are an idiot.

732 W Acacia is also priced at $1.45 million but is 1000 square feet bigger. Let that sink in, for the same price you are getting 66% more house. The 2674 house is priced at $524 per square foot.

All things being equal someone is about to pay almost double the price per square foot.

I’m sorry but the white toyota camry is $10,000 more than the silver one.

Why?

No Reason, just because I know you want the white one I’ll charge extra.

I could be wrong

If you’re not familiar with the term, ‘confirmation bias’ suggests that once we’ve invested time and emotional energy into developing a worldview, we’ll then seek information to confirm that view.   

After writing about the economy for so many years, I’m now so convinced that we can’t print our way to prosperity that I find myself seeing signs confirming this view everywhere, every single day. So that’s the danger to be aware of when listening to me.  I’m going to keep repeating this mantra and Im going to keep finding data that supports this view.

https://peakprosperity.com/blog/109221/why-markets-overdue-gigantic-bust

 

I feel the same way. Everyday I see signs and more evidence that we are on the precipice of something catastrophic. It may not be the tech bubble, or the real estate bubble but it’s a something bubble and has the potential to hurt a lot of people.

BUT, maybe I’m wrong. I have been wrong for 18 months when I sold all of my stocks to cash. I missed out on ~50% plus I had/have investments that will only increase if the stock market goes down (and those have all been losers).

I can’t help but wonder if I’m wrong. Am I sitting in my bubble reading only information that supports my thesis? Maybe but now I can no longer change my mind. I couldn’t in my right mind invest in stocks right now. I can’t in my right mind invest in real estate right now. So I have to wait. Will I be waiting 6 months, years? If I wait that long am I proving myself right or is a broken clock right twice a day?

 

Kirk Brown is at it again!

Another listing with less than shitty photos. This time Kirk’s taken to google maps to do the marketing for him.  414 W Oak 4/1 1200 sqft on an 8232 sqft lot for $995k.

Why in the world anyone would pay this guy $25k to “market” and list their property is beyond me.

He doesn’t want to spell it out as it would most likely insult the current homeowner but what’s he’s saying is

“Here’s the tear-down I have for sale, take t or leave it”

ismq2uof2jf0v40000000000