Panic on West Oak?

A reader sent me an email that 425 W Oak changed hands from Gina Hoffman to Halton Pardee. I mentioned in a previous post that Pardee also took over the listing on West Maple. Looks like someone in Venice has decided that El Segundo is the best place to make a buck. Little do they know that just like surfing at Venice Pier, El Segundo is a bit of a locals only area.

Like all the other out of towner agents Penny Muck of Hilton Pardee is about to get schooled on the economics of El Segundo. And from what I hear the flipper/designer is also about to get schooled on how El Segundo ain’t the new Manhattan beach and sure as shit ain’t Venice Beach.

So Hilton Pardee takes over the listing and knocks 1% off the price to $2.467 mil. I guess I had not been paying attention because this giant monstrosity started at the ridiculous price of $3.1 mil! Ladies and gentlemen that is 20 effing percent! I smell blood in the water. Paid $1.075 mil for a tear down and at $400/sqft to build, plus 15 months carrying costs, plus another $45k in soft costs, plus another $120k for commission I’d say someone is about to get fucked. Even if my back of the envelope numbers are off they are damn close to cost and/or losing money on this flip.

Here’s where it gets interesting. This same house would go for about $4 mil in Venice without any yard and Pardee probably has a roster of potential clients that they can try to convince to come 45 minutes south to little ole El Segundo. And if you think I’m joking about it taking 45 minutes to travel 9 miles then you haven’t driven on Lincoln at 6PM.

But maybe there’s an actual employee at SnapChat that is over 40 years old, has kids and doesn’t want to step over needles on his way out the door. So they take a little drive to El Segundo and listen to the sweet sounds of LAX.

When I was first looking to buy I bought a decibel meter app and sat in front of a home we were really considering. I ran the meter and clocked the stopwatch. From an out of towner’s perspective the airplane noise is incessant.  Yeah you get (a little) used to it, but when spending top dollar and making this kind of life decision maybe hearing a plane every 90 seconds is a deal breaker.

But at $616/sqft this is starting to look interesting.

I’m sure the local cabal of agents have done their best to lay out the welcome mat for our visiting Venice agents! Odd’s are Gina brings a buyer to the table and gets paid anyway!

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433 W. Maple – I guess Flippin ain’t easy

I briefly wrote about 433 W Maple in late November when it hit the market at $1.3 mil for a 1,500 sqft home that was flipped in a few months from an original sale price of $920k . Well after 30 days and no action the flipper looks to have dumped the previous out of town agent (Kase realty/ Dakoda Muta and Micah Flores of Keller based out of Orange County!) and by the looks of the new for sale sign the flipper has replaced the first agents with a new one from the OC.

I drove by last week and noticed a staging truck. I assumed that another sucker overpaid for a home in El Segundo and that the home had changed hands at $1.3 mil but I also noticed a new For Sale sign from Terry Rogers of Global Luxury. WTF – Terry Rogers is based out of Newport Beach! Seems logical to hire another agent that is based an hour away and most likely has zero first-hand knowledge of the El Segundo Real Estate Market.

The listing hasn’t hit the MLS so I headed back to the house and grabbed the flyer. Another WTF moment when the new agent from Coldwell had left the flyers from the previous Keller agents in the box.  Nice move.

If you want to see the current photos check out trulia.

My guess is that they are now in for six months carrying costs. Maybe $50/sqft renovation costs ($75k) add an extra $40k for the kitchen new cabinets and appliances and maybe another $10k for landscaping.  Now they are bumping into a cost basis of $1.05 mil plus they will lose $60k in commission once it sells. Lucy, I smell trouble.  The flyer boasts: New copper plumbing, new roof, new driveway, new “porcelain wood tiling”, water heater, furnace and garage door. Shit maybe their cost basis is higher than $1.05 mil.

433a

433b

I’m anxious to see what kind of logic transpired. Fire an agent for not moving an overpriced home in 45 days around Christmas. Hire a new agent, pay money to stage, hire another photographer and then what? Keep the high price the same?

I swear most real estate agents have never taken a basic economics class.  That house would sell in a heartbeat at $1.15 mil.  Shit I might be in at $1.15!

I noticed the price history seems fishy too. Listed for $1.1 mil in June, but changed hands for $920k?

If the purchaser was smart they would have made a deal with Lynn O’Neil to market the home once the home depot renovation was completed.

 

DATE EVENT PRICE AGENTS
12/27/17 Listing removed $1,299,000
11/20/17 Listed for sale $1,299,000+41.2%
06/19/17 Sold $920,000-16.4% Lynn O’Neil
06/11/17 Pending sale $1,099,900
06/04/17 Price change $1,099,900-0.0%
06/04/17 Listed for sale $1,100,000

Another WTF listing in El Segundo

Alex Abad rings in the new year with 833 McCarty Ct. A 2,019 sqft 2/2 for $1.6 mil. 

If you ever had aspirations of having your home featured on MTVs Cribs this is your chance. Oh, and don’t have more than one kid or this is gonna get messy.

But if you are rich and single or a couple with no intentions of having kids (you still need to be wealthy) then this weird ass house is for you.  You can bathe under a chandelier in your 300 sqft bathroom.

You can get dressed in the comfy confines of this 150 sqft walk-in closet. Hey, I see third bedroom potential here!

And if you like that private cabana feeling you get when you visit Palm Springs then you get to have your own deck within a deck! There’s nothing like bumping a toe at a BBQ on your awesome deck in a deck.

And if you like open floor plans, love entertaining but have in-laws and step families that just can’t get along, you can separate them in your giant multi-living-area. But hey, everyone will be well-lit since there are can lights every two feet!

Someone designed their dream house that fit their specific lifestyle and now they will feel the wrath of buyers who think their designs are stupid and worthless.   Good luck selling your $1.6 mil two bedroom house. (It will sell he doesn’t need luck) And don’t mind the noise and the dust, DR Horton will be finished in another 12-18 months.

 

Looking back at 2017

I have to admit that I feel dejected, angry and my FOMO is through the roof! FOMO= Fear Of Missing Out and I think that’s the real motto of 2017. I think 2017 will be looked at as the year everyone chased gains.

What’s changed in the past year? We have a new president, we have a new tax structure, but the economy is basically the same to slightly better, we are still full of fear over North Korea, the Russians, housing, income inequality….

But the FOMO is real. Whether it’s a fear that real estate prices will keep going up so I better buy now. The thought that your coworker made a “fortune” on Bitcoin and that if I had only got in when he mentioned it I’d be making money. The Fear of missing out on another ~25% run in the market. Woulda, coulda, shoulda… It’s all BS. Making financial decisions based on fear of missing out or the assumption that the trajectory will remain the same is just plain bad. Yes if you would have bought that crappy million dollar home you’d be grandfathered into better taxes. Yes if you bought bitcoin at $5000 you’d still be up even after it’s 30% drop. Hindsight is always 20/20. But we’ve been here before. Replace bitcoin with internet stocks. The conversations are the same. When your manicurist, barber, grocery clerk… mentions bitcoin it’s just a sign of a giant bubble. Remember in 2005 when everyone said real estate never falls?

If I look back at properties I wrote about when I first started the blog in late 2016 I see that the real estate market in El Segundo is up 10-15% depending on the property size.  Starter and sub $1.3 mil buyers are still getting screwed while those with a budget of $1.4 to $1.6 mil have options and get more bang for their buck. Despite the recent rash of asinine prices, they were basically asinine prices a year ago. All it takes is a 10-20% correction for many of these people to lose their life savings in one fell swoop. Then what? Will they ever have another $200,000 sitting around to put down as a down payment?

I feel dejected because my time frame has been so wrong. So much has changed in the past 12-15 months just with the mere election of Trump. Love him or hate him he’s a game changer. The market rallied based on his promises and the promise of change. It will be interesting to look back at this time in history to see whether he was good or bad for America. Regardless things have and are changing. Will this tax “break” help or hinder the real estate market? We already know that people in our situation (looking at million dollar properties with a 1% property tax) will lose.  Will that be enough to move the needle or does it give us another 12 months of runway for things to change. If that’s the case I may have kidnapped my family and moved out of state by 2019.

I’ve got no crystal ball to predict when things will change. I could be wrong but I don’t think I am. I’m just early and by the looks of it way, way, way too early.

 

Roommates for 30 year olds

When I think of still living with roommates in my 30s or 40s the thought makes me want to die. But if I’m honest with myself I have a roommate, it just so happens I married her. And in this household that roommate is responsible for about half of our expenses.

So what do single and divorced people do in SoCal?

This article from zillow points out how many renters are having to double up in order to keep the boat afloat. 

As Rents Rise, More Renters Turn to Doubling Up

  • 30 percent of working-age adults—aged 23 to 65—live in doubled-up households, up from a low of 21 percent in 2005 and 23 percent in 1990.
  • More than half (54 percent) of young adults aged 23-29 live in doubled-up households, with either roommates or family members.

However, our research suggests that the trend toward doubling-up is often driven by financial concerns. For instance, there is a strong relationship between doubling-up and rental affordability: In metro areas where rent drains a larger share of household income, more adults choose to live with roommates or family members. Some of the most extreme examples include Los Angeles (46 percent doubled-up), Miami (41 percent), and San Francisco (38 percent).

I pulled this graph based on the California cities in the study. It shows the relationship between rental price increases and the need to double up to afford the rent. It also shows the astronomical percentage of our income we pay to rent in LA.

We are phucked.

 

double

Updates for El Segundo

710 Redwood Ave finally closed for $1.395 mil. $529/sqft for a big 4/2.5 house on a cul de sac. It took FOUR realtors nine months to sell this home for 5% under the original asking price of $1.465 mil. WTF? Sound like awesome clients. It looks like two locals took a swing (Ruane and Palm Realty) and then Strand Hill (Manhattan Beach) finally found a sucker.

I wonder how logical it is to buy a home from a salesperson that does not have experience in nor live in El Segundo? Plane noise, nahh, not so bad. Poop smell, nahh not so bad.  Good luck in your new home with a clear view of EVERY plane that takes off from LAX.

Another WTF listing but this time by an out-of-towner. Penny Muck of Halton Pardee (The biggest residential brokerage company in Venice) hits the streets with a WTF were you thinking list price of $1.45 million for a 1194 sqft house. Ringing the bell at $1214/sqft 521 Concord ensure no one will bother to come see the home at that price. Plus being an out -of-towner guarantees that the listing will be shunned by the cabal and their huge list of El Segundo home owner wannabes.

It looks like a POS, it’s small and if the landscaping is any indication of the interior and condition of the home then I bet that it’s a dump. Nice one Penny! Welcome to El Segundo. Oh and it’s being sold as-is.

Everyone’s favorite street has a new listing. Tree lined with famous block parties 432 Whiting is a 2078 sqft 4/2 listed for $1.65 mil. $794/sqft. It’s a nice sized home on a big lot that looks to have been updated in the past 15 years. It shows the previous homeowners fingerprints and some odd design choices. It’s weird and overpriced.

And if you are like me and can’t stomach spending a life changing amount of money for a roof over your head (forget the tax break) then you can rent this overpriced POS for $4150/month. Who the hell is Red Eye Property Management and do they want that lame, overpriced small house to sit vacant for months? 914 Pepper is 1050 sqft which somehow manages to cram three bedrooms and 2.5 baths into that tiny footprint. 

Nice trash can!

 

 

A kernel of good news for renters?

Doctor Housing is out with a look at the tax plan and by his estimation it looks like those of us that make a living-SoCal salary and are still renting may come out ahead. 

Like most tax code it’s just a matter of gaming the system. That’s the game. If you know how (or are in the position) to play it, it can benefit you.

I once had a mortgage broker ask who my CPA was because my effective tax rate was in the low double digits (I think 11%). So after I sit down with my accountant in a few weeks I’ll decide on how I feel about the plan. I know at these real estate prices if I was on the buying fence this tax plan and it’s penalties just knocked me off the fence.

Out of towner lists below cabal prices

I guess Jack and Natalie didn’t get the memo from the cabal of local real estate agents.

If you were a member of the local cabal they would tell you:

“These dumbasses that want to own in El Segundo will pay at or near $1000/sqft” Don’t list  a starter home under $900/sqft”

Well because Jack and Natalie aren’t a member of the elite, ass-ripping club of “we love our town, but” local real estate agents they came to market with 848 Pepper st for a paltry $768/sqft. 

848 Pepper is a livable 3/2 1626 sqft on a 5131 sqft lot for $1.25 mil. Funny how a home that was worth $775k four years ago seems reasonable at a 61% markup. The listing doesn’t say flip but the photos an price history scream flip. WTF is up with that $360k sale in September? I’ll have to some more digging to see what was happening when it listed at $1.3 mil back in June.

Pepper is now one of the most attractive single family homes in El Segundo.The price and updates combination make the other listings look like dogs.

1509 E Oak at $982/sqft (Kirk Brown) surprise listing with one measly photo.
825 Center St at $900/sqft (Kirk Brown) – looks like a tear-down.
1030 E Acacia Ave $728/sqft (Bill Ruane) did someone say Candy Cane lane?
509 Eucalyptus $773/sqft (Lynn O’Neil) 73 days on

 

Price / Tax History

DATE EVENT PRICE AGENTS
12/26/17 Listed for sale $1,249,000+247%
09/19/17 Sold $360,000-72.3%
09/08/17 Listing removed $1,299,000
08/10/17 Back on market $1,299,000
08/07/17 Pending sale $1,299,000
08/01/17 Back on market $1,299,000
07/18/17 Pending sale $1,299,000
06/26/17 Listed for sale $1,299,000+67.6%
06/14/13 Sold $775,000 Charles Fisher

Merry Christmas – You can’t afford to live here.

More anecdotal evidence that the housing crisis runs rampant across the US.  I guess we should be glad we don’t live in Seattle.

 

Home Prices in 20 U.S. Cities Increase by Most Since 2014

  • All 20 cities in the index showed year-over-year gains, led by a 12.7 percent increase in Seattle and a 10.2 percent advance in Las Vegas
  • After seasonal adjustment, Las Vegas had the biggest month-over-month rise at 1.4 percent, followed by San Francisco with a 1.2 percent increase
  • Home prices rose 0.1 percent in Miami from the prior month, marking the smallest advance of all cities

https://www.bloomberg.com/news/articles/2017-12-26/home-prices-in-20-u-s-cities-increase-by-most-since-mid-2014?utm_content=markets&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-markets

 

Delusional on East Oak

Krik Brown and Co are back again. Looks like this time someone bothered to take their phone out of their pocket to shoot some million dollar photos. Yet, that must have been too much to ask for. Decent photography was not one the menu items when paying an agent $40,000 to sell and market your home.  At least Alex Abad acts like he cares.

Free tilted bench!genmid-sb17276921_2_0

Spacious bedrooms!

Please god, tell me this is not the 150 sqft “Bonus room” he’s referring to! Hey asshole, that’s called a shed. 

Who lists their home several weeks before year end? And if you really want to sell it, why let Kirk Brown and Co dictate some delusional price? $982 per square foot? I swear these fucking agents don’t care.

So what does a person get for $1.6 million American Dollars? A bunch of fancy upgrades that do not add real value to the home.

  • Automatic driveway entrance gate with smart phone control
  • 8 camera security system
  • Renovated dog run
  • Garage with work bench and built in storage cabinets

How bout you stop with the bullshit and give me a fourth bedroom for $1.6 mil? To add insult to injury the current owners bought three measly years ago for $1.05 mil. Greedy AF.