Another week another $1.8 mil home

The first-time home buyer and those of us that used to be able to use our home equity to step up to a nicer or bigger home are getting screwed.  We have no options. There is nothing worth buying. Because the step-up crew can’t afford to let go of their equity only to buy an overpriced home that will increase their mortgage by 1.5-2x they are staying put or renting out the home. That makes a low inventory problem worse for everyone looking for a home under $1.3 mil.

Buyers looking for homes in that range are making stupid financial decisions and buying ugly, crappy, tiny homes because they fear they will miss out.  Someone just paid $1.1 mil to buy a 2/1 on a 3000sqft lot! It all sounds like monopoly money because it’s the sign of the times, but when you think about what a million dollars can do this purchase is outright asinine.

What we are left with is an ample inventory of homes over $1.5 mil.  Know what it takes to qualify for a $1.5 mil home?  An income of ~$400k. Think of your neighbors; out of 10 families how many are pulling in that much money?  Wanna buy a $1.8 mil home? You’ll need to be making half a million dollars a year.

This week we have another McMansion for sale at $1.9 mil. This gaudy monstrosity is brought to you by Darren Pujalet. 5/4 4500 sqft priced at $420/sqft.  It looks like it was new construction in 2011 when it sold for $1.25 mil. Let that sink in, this big-ass ugly house once sold for $1.25 mil.  Six years later and its value has increased 50%? Get the fuck outta hear.

So despite the cabal of agents trying to make El Segundo the next Manhattan Beach think about people that make a half a mil a year and what their options are.

Don’t gamble with your life savings.

 

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Trying to keep up

I wish I had more time to follow the bread crumbs of my former blog posts.  If any of the readers have any updates please share. These are the few I thought about this weekend.

802 Center St. I drove by the house a couple times this weekend and both times saw the new owner moving in. On one occasion I noted his look of utter exhaustion. Huntoon Brothers were at least a month late and I can only imagine the home owner was fighting to take possession of the house ASAP.

Who is writing all the checks for 303 Mariposa? It’s been exactly one year since it changed hands and it looks more and more like an HGTV makeover. Talk about throwing money away! A year ago it was 988 sqft. By the looks of construction they maybe added 200 sqft. The lot is only 4000 sqft and you live on Mariposa! What is the potential upside?

The ebay house at 203 W Walnut shows as pending. I’m anxious to see where the dust settled on this experimental flip.

 

Your money isn’t worth what it used to be

http://demomemo.blogspot.com/2017/10/how-does-2016-net-worth-compare.html

How Does 2016 Net Worth Compare?

Median household net worth climbed to $97,300 in 2016, reports the triennial Federal Reserve Board’s Survey of Consumer Finances. The 2016 figure was 16 percent higher than in 2013, after adjusting for inflation, but fully 30 percent below net worth in 2007.
But comparing today’s net worth with 2007 is perhaps a stretch because the 2007 figure was inflated by the housing bubble. So forget about 2007. Let’s compare today’s median household net worth with earlier years beginning with 1989, after adjusting for inflation…

$97,300 net worth of 2016 was higher than:
1989: $87,500
1992: $83,100
1995: $90,600

$97,300 net worth of 2016 was lower than:
1998: $105,800
2001: $117,300
2004: $118,400
2007: $139,700

The fact that net worth in 2016 was lower than in the years 1998 to 2004 is troubling. Net worth rises with age and should be at or near an all-time high today because of the aging of the baby-boom generation. Instead, net worth is well below the levels reached when the demographics were far less favorable.

Inflation?? Nah we still can’t see any inflation.

The natives are restless

People don’t believe me when I talk about El Segundo being a small town.  Like every other little pocket within Los Angeles most people just assume it’s a neighborhood or small city, a suburb of LA. Culver City, Manhattan, Beverly Hills, etc… Those cities are just areas within Los Angeles with their own government, but none of them are small towns.

El Segundo might as well be a town in the middle of Nebraska. Everyone is two degrees of separation from everyone else. Gossip is through the roof and we mostly have a secret pride in knowing what very few people outside of town realize, it’s like we don’t even live in Los Angeles.

Like any small town, when the natives get restless, shit is about to hit the fan. Be it the Top Golf debacle, lack of local traffic law enforcement or the new Waypointe, DR Horton Townhouse development on Imperial.  People are pissed.

Complaints of dirt, noise, parking issues and the DR Horton construction and earth moving causing settling issues in local homes. One of the seven other readers mentioned a house on McCarthy that’s come on the market. I haven’t come across it so it might be another Bill or Alex fishing expedition before it hits the MLS. Our reader commented that people in the area are pissed and she sees a move for people to get out of that particular area while they can.

While Alex Abad is screaming location, location, location while trying to convince you $1000 sqft is a great deal, here’s an example where a buyer gets screwed because they don’t have local knowledge.

Be informed, rent in town before you get sucked into this bullshit “american dream” of home ownership. Along with the benefits of being in a small town, there’s also a whole lot of Kool Aide being passed around.

National rents on Pause

National Rents on Pause for the Entire Peak Rental Season, Including Priciest Cities; Mid-Sized Cities Continue Rally

https://www.rentcafe.com/blog/rental-market/apartment-rent-report/rentcafe-apartment-market-report-september-2017/

Key takeaways:

  • The national average rent was $1,354 in September, remaining virtually flat for the 4th month in a row, and showing the slowest annual growth in six years — 2.2% — according to Yardi Matrix.
  • 82% of the 250 biggest cities in the U.S. (205 in total) experienced growth over the past year; 35 cities saw rents flat-line, and 10 cities had rent decreases.
  • Manhattan, San Francisco, Brooklyn rents have stabilized in September, with 0% month-over-month changes. 

 

I’ve read a lot of research that points to the growing glut of multi-family housing eventually having a downward affect on rental prices. Mostly those stories talk about San Fran, Texas and NYC with thousands of new units in development.  If supply and demand rings true the increase in supply will put downward pressure on price.

Here in LA where we have seen thousands of units come online in the past couple years we have not seen that affect. Many of these large development companies are trying to game the system with perks, free rent, free parking anything so as not to show lower rent prices on paper. Even the new development in Del Air at Aviation and Imperial is expensive.  Eventually these games stop working. With a ~10% vacancy rate in DTLA and a half dozen large new developments in Hollywood eventually there will be more vacant apartments then there are actors to fill them; when that happens they have to lower the prices so the plebeians can afford them.

Would you want a large fifteen story development built in El Segundo? There’s been whispers of it east of Sepulveda. People scream for lower and more affordable rent but when someone proposes a change to the status quo the locals scream Not in My Backyard!

New listings in El Segundo

905 Hillcrest is a 5/4 2900 sqft home listed for $1.535 mil. Ladies and gentlemen that’s $535/sqft for a large livable house that’s been updated in this decade that doesn’t have the stench of poor taste all over it. It may have a different stench as it’s Hyperion adjacent but for $536/sqft you might “get used to it”.  Listed by Antoinette Hopper based out of PV, this listing is bound to sell quickly and ruffle some feathers of the real estate cabal in town. (Doesn’t she know fools in El Segundo are paying $700-$1000 per square feet!)

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I can’t figure out WTF is going on with this pre-foreclosure listing on Zillow.  Foreclosure estimate is $1.6 mil but it’s a 2/1 on a 2000 sqft lot? 

Darren Pujalet’s ugly AirBnb hostel hit the market at $1.9 mil. What an asshole. If you have $2 mil to spend on a home and it requires you to bring on tenants to cover your mortgage while living in a shitty area then you get what you deserve.  I wonder if he would try to float this kind of design in his home turf of Manhattan Beach?  Go home Darren go flip houses somewhere else.

438 Virginia appears to be leaning over. The horribly photographed 4/3 is 1911 sqft on a 7100 sqft lot is priced a $1.35 mil – $706/sqft. Nice one Jim, why would a person with a brain spend $706/sqft to buy grandma’s house when they can buy a turn-key house on hillcrest? I’m not sure how you feel but it’s like the jack-ass local real estate agents care nothing about our town and community.  What a dump.

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San Francisco goes manic

San Francisco housing still in manic phase:  Dump that is “uninhabitable” with fire damage has pending offer at $1.4 million.

San Francisco is out of control.  And of course you have insulated mindsets from many that work in tech or the financial sector since they feel that money or an app can solve all of life’s challenges. 

http://www.doctorhousingbubble.com/san-francisco-uninhabitable-home-million-dollars-fire-damage/