We got us a fight!

I’m not talking McGregor and Mayweather I’m talking about all the competition in the $1.2mil range. Just like we had a bunch of competition in the $1.4 range a few weeks ago we now have a GLUT of houses. This comes after a sad pending home sales report and the likes of CNBC calling it a “crisis”.

We have a new 1150 sqft 2/2 for 41.175 at 1538 E elm Ave 90245 there’s nothing worth writing about a million dollar two bedroom house.  If you think buying one is a good idea you deserve what you get.

We also have 840 Loma Vista St 90245. Another tiny house at 1000 sqft. This one has two beds and only one bath. It also lists a mother in law’s quarters so this will go quickly for someone that “wants their in-laws to live close” (read AirBnb). It’s not clear if the garage is the mother-in-law unit, if so the city would like to have a word with you.

Redfin has six homes in the $1-$1.2 million range.

 

The Supply & Demand Equation shifts

It’s been a busy couple weeks and I haven’t been able to look at and review every property that’s come to market in the past couple weeks. As I sit back and review the flood of new and “coming soon” listings in El Segundo I see that the supply and demand equation has shifted. Just a little. We now have ~two dozen houses for sale and that provides options. With options a buyer can compare similar properties and see where one house is priced incorrectly. When a buyer has only a couple options sometimes the buyer is choosing the lesser of two evils. That sounds like an ingenious way to spend a million dollars.

We now know that $1 million is the mark for flippers and tear-downs. I’m anxious to see the flipped homes that should be coming to market in the next six months.

940 Viriginia St hit the market at $999k.

813 McCarthy Ct. languishes at $1.2 mil. It’s been on market for 56 days. There must be something wrong with it. A look at the photos show an old house with new paint and staging. Any buyer that walks in will see that grandma’s house will need a couple hundred grand in upgrades.

424 California St is at $1.25 million is another old house that shows it’s age.

811 Concord Pl is priced at $1.25 million and although it shows signs of a lot of Home Depot upgrades, at $1.25 million for a 1026 sqft house people may not be brave enough to buy this tiny home.

1205 E Pine Ave is ANOTHER $1.25 mil home.  At 1400 sqft with upgrades this makes the other $1.2 mil homes look overpriced. This is exactly what the buyers need.

848 Pepper St at $1.3 mil is ugly but has been upgraded. It’s the house that the $1.2 mil buyers want. Another Alex Abad over-priced home.

511 Oregon St is $1.4 mil and shows cosmetic upgrades . You got to love a photo like this. I wonder if an overweight person can get by the bed?

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423 Virginia is an enormous 3555 sqft priced at $1.49 mil. This will get some people off their couch just because the price per square foot is enticing. While others are priced around $1000/sqft this house is $419/sqft. You just have to figure out how to fill that much house with stuff. I love that this housed is priced to sell. This is the home the $1.8 mil shopper should buy.

857 Maryland St is  1920 sqft and priced at $1.5 mil. This has been upgraded and has a detached mother in law’s unit but the description written by one Kirk Brown is hard to figure out WTF is going on.

1419 E Mariposa Ave is a failed Bill Ruane fishing expedition. It’s been sitting with a coming soon sign for weeks. No takers so he hits the market at $1.6 for a 3000 sqft house. Priced at $537 sqft this is another reasonably priced house on one of El Segundo’s drag strips. It’s big and it’s old.

I also saw a Gina Hoffman sign on W Sycamore and Concord that’s not listed. Probably another addition to the $1.3 mil club.

There you have it, lot’s of options if you have a ridiculous $1.3 million to spend on an old, small and most likely ugly house.

 

 

 

 

Bubble Talk

Remember in 2005-2007 when real estate was all anyone could talk about? Their price appreciation,  no interest loans, buying to flip or buying to rent out… It was the it thing to do. Everyone was making money and/or using their home equity like a piggy bank to finance remodels, new kitchens, baths, vacations….

I feel we are in a similar spot although it is different this time. Nowadays a borrower need to prove their ability to borrow and the recent price appreciation has priced people out of the market and taken away the SoCal step-up method that allowed people to use their equity to trade up to a nicer or bigger home. What are you going to do today when you sell your home in El Segundo for $1.2 million that you paid $800k? Take your $400k and put it down on a $1.5 mil home adding another $100k in debt and raising your property taxes $88%?

I bring this up because I met a guy this week that was in Oh-Shit I can’t sleep mode. Despite the several hundred thousand in equity he had in one of his two properties, his income was not enough to qualify for a refinance. Oh Shit.

Back in 2010 he had an opportunity to buy a home in Culver city in the mid $600s. He was only approved for $400k and used a hard-money lender to carry the $200k. AT TEN PERCENT! The interest on $200k at 10% is around $1000 a month.   All in he’s in for $4000/month. Then he somehow gets a co-signer that believes in his real estate mogul aspirations and he buys a duplex in Inglewood. He can’t really afford the Culver City home so he rents it and is barely cash flow positive. He pulls a similar move in Inglewood and rents out half of the duplex helping cover the mortgage in Inglewood. Now seven years later he is feeling the cash flow squeeze and can’t get out.

All in he owes $1.3 million and commented that he did not earn a six figure salary.  and he’s a single dad so there’s no second income for the bank to look at.

So despite his inability to sleep he’s unwilling to let go of Culver City because “real estate in SoCal” will always be worth more in the future.

My bubble alarm started going off. He has the potential to make enough money to change his life but thinks if he can only keep this sinking ship afloat for a bit longer he will be on his way. It’s that or the house of cards falls and he loses everything. Is that investing or gambling? Yes I’ll give you that a house in Culver City will be worth more in 20 years than today. But if in those 20 years we have another giant earthquake, or the real estate market gets soft for 10 years (see Japan) or he gets injured and can’t work….the list goes on. If you can’t afford it though the bad times, price appreciation is meaningless.

That is the problem, when people began to look at their homes as an investment instead of a roof over their head it changed the mentality and logic about risking this amount of money for a place to live.

I wish him luck. And if you read this and are thinking of going all-in on a house you don’t really like that costs a million dollars ask yourself if it’s worth it?

 

I guess there is more than one greedy bastard asking $4k for rent in El Segundo

I found another greedy fucker asking $4k/month two bedroom for rent.  Turns out Matt Crabbs isn’t the only asshole.

It’s actually $4200/month and unlike Matt Crabbs’ bullshit listing on Mariposa, at least this is a single family home.

It’s still ridiculous but at least it has a two one car garage. The listing doesn’t show square footage but the internet is limitless. This little doozy is all of 932 square feet.

Some enterprising flipper is hoping to recoup some of that money he spent at Home Depot. He should just throw the $1.2 mil price tag on it and walk away. But then again with his expenses and carrying costs that might not be a big enough profit. Real Estate never goes down! Someone will pay at least $4200/month forever to live here!

Price History

DATE EVENT PRICE $/SQFT SOURCE
06/23/17 Listed for rent $4,200/mo Marine View Ma…
11/02/16 Sold $800,000

So call Ann at Marine View Management, grab a bottle of lube and bend over.

Welcome to El Segundo.

Greed runneth over

I noticed some snipey comments on the El Segundo Parent’s network in regards to a two bedroom rental that was asking $4k/month. I guess I was late to the game in seeing this or maybe this is just another greedy asshole with a two bedroom home asking four fucking thousand dollars per month! After all monkey see, monkey do.

Let’s review: https://www.redfin.com/CA/El-Segundo/1217-E-Mariposa-Ave-90245/home/6661460

Matt Crabbs of Remax figured why the fuck not, I bet I can get some asshole to pay $1000 per bedroom to rent. Why not, there are people lined up around the block to pay $1000/sqft to buy. This takes the hassles of having $200k to put down and they take care of the gardener. BUT, by normal credit standards the renter must earn $156,000/year to qualify for this house.

Just because some flipper added new tile, plumbing and electric does not mean that it’s worth an extra $1000/month!

It’s listed as a “cottage” but this is part of a multi-unit gettoplex. Realtor.com call it a 14 bed/8bath property. Priced and written like it’s a single family home, yet you have all sorts of people sharing your “property”.

Here’s the colorful listing: Stunning!! Newly remodeled 2bed/2bath beach cottage in the heart of El Segundo. This home consists of a large master suite with walk in closet and a large master bath. Seamless showers, new modern tile stone throughout. Vaulted ceilings, new plumbing system, electrical system, fire sprinklers, large indoor/outdoor covered area for entertaining. 2 car covered parking. Kitchen is complete with all brand new Stainless-Steel appliances, marble counter tops and ample cabinetry storage. A spacious living room with an entrance to the 300 sqft. deck on the backyard that is beautifully manicured. This masterpiece is near the local market, great schools & parks, provides easy freeway access and is close to the beach.
  • Seamless showers – not worth extra money
  • new modern tile stone throughout – not worth extra money
  • new plumbing system – saves the owner money not the renter
  • electrical system – again – who gives a fuck Matt?
  • fire sprinklers – might want to look at your renters policy to see if the technological marvel is good or bad for you
  • Kitchen is complete with all brand new Stainless-Steel appliances, marble counter tops – OK, Matt fancy is good. Fancy = more money
  • 2 car covered parking – What no garage? for four fucking thousand a month? Where will I park my Tesla?
  • A spacious living room with an entrance to the 300 sqft deck. Hmm, spacious yet the entire house is 1000 square feet? Probably an exaggeration isn’t it Matt? Glad the living room has a patio door, that’s worth the extra $1000/month for sure!

All I can say is ASSHOLE. And I guess there are plenty of residents that think the same. Welcome to the site Matt Crabbs, may you be successful in ripping your neighbors for every bloody dime they have in their wallet.

1217

The big lie

I once read an article that ripped to shreds the investment thesis that the return on a balanced stock market portfolio is around 7%. That math only works if you invest for 100+ years. You and I have about 30 good years of investing with the goal of not having to work as a greeter at Walmart when we “retire”.

Businesses, pensions, 401ks and retirement plans have been built on that bullshit thesis. It’s easy to look at the long term trend and have a financial planner show you that if you invested X today you would have Y at retirement based on average results. What that does not take into consideration is when is X. At what date are you starting this process?Is your X today? Would you want to invest in the market while it’s this high? What if your X was July 2007 and you saw your nest egg drop 52% through January 2009.  52% drop! Ironic how so many people remember what happened just a few years ago. It would have taken you until December 2012 just to get back to break even.

Conversely what if you decided in January 2009 to start and had made 200% up through today.  Not all time periods are equal and we are precipitously close to hitting the rest button.

One, if not THE single biggest, factor in your average return is the time frame in which you invest. So tread carefully and keep an eye on your brokerage and retirement accounts. One wrong move and everything changes very quickly.

But hey, maybe it’s different this time. Just because it looks like a bubble doesn’t mean it is gonna pop.

sp500

For a better and more informative take on the subject read this article from Real Investment Advice. 

https://realinvestmentadvice.com/the-big-lie-of-market-indexes/

Another expensive tiny house in El Segundo

Jim Marak hit the streets with a wildly colorful and descriptive listing for 940 Virginia st 90245.  888 square feet on a 5797 sqft lot. Two beds, one bath and some semblance of an extra unit that needs a ton of work, all for the low, low price of $1 million US dollars!

This is a really cute and clean starter home in the Great and Family Friendly and Business Friendly City of El Segundo. The house has it’s own curb cut apron leading to a concrete driveway and to a two car detached garage….along the side of the garage there is a “Granny’s or Bachelor Quarters which would need a new water and natural gas line and some sheetrock in the bathroom to bring it back to use!!! The House has a pleasant appearance and and grassy front yard along the street and sidewalk frontage with a concrete porch and couple of steps and a “Bay Window” allowing for a Bright afternoon sunlight exposure and ornate natural brick surrounding the steps up to the front porch. The home has the advantages of triple paned windows, extra heavy soundproof type front door, a newer super high efficiency forced air heating system, and soundproofing blown into the Attic. There is room on the front porch for multiple chairs to sit and enjoy the Sundrenched Western Exposure sunlight and refreshing afternoon Ocean Breeze!!! Because the House opens to the West the Ocean Breeze comes thru to refresh and cool the house every afternoon…especially in the Summer!!! Ceramic tile kitchen, nice bedrooms, all new triple paned windows surround the house…a large room for the full sized clothes washer and dryer… a very comfortable home!!! 

I love this line in particular –

The House has a pleasant appearance and and grassy front yard along the street and sidewalk frontage with a concrete porch and couple of steps and a “Bay Window” allowing for a Bright afternoon sunlight exposure…

Gag, it should read – 1938 TINY, OVERPRICED tear-down for sale in El Segundo. After that any other descriptive words would be overkill.

When starting this post I noticed on Redfin this home had been viewed 356 times and FIVE people had marked it as a favorite.  Is there really five people in the world that think a crappy 888 square foot house for a million dollars is worth a second of your time other than for entertainment value?

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More Bill Ruane Shenanigans

Bill runs El Segundo Real Estate. He is the godfather. Love him or hate him he’s the head towney in regards to real estate and he’s got informants and info on every listing or potential listing in town.  Before I even got a chance to look at the new listing at 432 California St 90245 it showed up this morning as pending.

As I’ve mentioned when we were looking for a home to buy we encountered this multiple times. We’d call on house or go to an open house only to find that they already had offers. The open house was a fishing expedition to get more info on people that were willing and ready to buy.  It was disappointing on my end to know that we weren’t getting a fair shake in the process. I’m sure Bill’s clients were getting personal phone calls about upcoming listings before they even hit the MLS.

So love him or hate him Bill has some jacked up tactics that work. Whether you like them or not depends on what side of the equation you are on.

This morning I saw another one of Bill’s “fishing” signs at 1419 E Mariposa 90245.  You won’t find it on the MLS and I’m sure the home has already been shown to a handful of potential buyers all in the hopes that they get an offer before they have to have an open house. This is a big home on one of the busiest streets in town. The Zestimate is $1.85 mil. Unless it’s been completely redone I don’t see this as another $1.8 mil house. Who knows? I’m wrong all the time. It only takes one idiot to make a real estate transaction.

I guess flippin is easy

I stumbled on a show on A&E called Flipping Vegas.  I caught the latter half and they bought and renovated a disgusting house for $165K, sold it for $253K. That’s 53%! It doesn’t even matter what their time frame was, if you can make money like that you do it over and over again.

I did a cursory search and was blown away on how many shows are out there giving unsuspecting would-be flippers the ideas that it’s always easy and rewarding.

I guess it is easy. There’s plenty of educational material on demand.

flip

A sigh of relief

I wonder about the situation of the owner’s of 400 Bungalow Dr 90245. Are they downsizing, leaving El Segundo, just trying to get their head above water?  This house appears to have been for sale on and off for three years!

Price History

DATE EVENT PRICE AGENTS
06/30/17 Pending sale $1,449,500
05/31/17 Listed for sale $1,449,500-3.3%
11/18/16 Listing removed $1,499,000
05/04/16 Back on market $1,499,000
04/21/16 Pending sale $1,499,000
04/14/16 Listed for sale $1,499,000
02/05/16 Listing removed $1,499,000
07/21/15 Price change $1,499,000-6.3%
05/08/15 Listed for sale $1,599,000+23.1%
10/20/14 Listing removed $1,299,000
10/17/14 Pending sale $1,299,000
09/30/14 Listed for sale $1,299,000+58.0%

Back in 2015 when we were looking for a house this one kept poppin in and out of escrow. It was never a consideration because it’s just big for the sake of big and has very little yard, but for the square footage and upgrades it’s always been priced fairly reasonably. Even here at $1.5 mil it’s at $509/sqft. With the process taking so long it looks like the market finally came up to their price and they stand to make an extra $200k over their 2014 asking price.