UBS Global Real Estate Bubble Index 2017

UBS Global Real Estate Bubble Index 2017: San Francisco is the most overvalued US urban housing market in the study; bubble risks grow in other developed world cities globally

 

In Los Angeles, since 2012, real housing prices have increased by 45%, while across the US the figure is just 23%. The prospering economy and demand from China are fueling the boom and show no sign of decelerating. Prices, however, are still 20% below their 2006 peak. While income growth has escalated in the last two years, housing affordability is stretched and should slow price growth.

http://www.businesswire.com/news/home/20170928005413/en/UBS-Global-Real-Estate-Bubble-Index-2017

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Reductions & New Listings in El Segundo

425 W Oak’s $3 mil fantasy gets a $100k haircut. Gina Hoffman figured that reaching out to fellow residents on ESPN was gonna help. You have some people referring the property to their friends and other people that share my thoughts that $3 mil in El Segundo is crazy. But then again I’m sure the working class folk that lived in Venice once said the same thing. Time will tell.

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945 Sheldon St gets ANOTHER haircut. What once started at $1.25 mil is now down to $1.2 mil after two reductions. Maybe for $1.2 mil people aren’t willing to live next to a giant construction site with issues or so close to the runway that you could see passengers on a plane.

And if you really don’t think Airport noise is not an issue I’ll call you when the first giant jet takes off in the morning and we can talk about “you’ll get used to it”. This morning it was at 4:30 AM.

206 W Oak is the latest addition. 1400 sqft 3/1 priced at $1.175 mil. $832/sq ft helps shed some light of the asinine pricing at $1000 sqft. Ain’t nothing special but if you had an extra quarter mil you could have a nice home. Then again for $1.5 mil I’m sure you could avoid the hassle.

Even Zillow knows things are messed up

Rising Rents, Stagnant Wages, And the Burden of Unstable Housing

According to the Zillow Group Consumer Housing Trends Report 2017, 79 percent of renters who moved in the last 12 months experienced an increase in their monthly rent before moving to a new place. And over half (57 percent) said that hike was a factor in pushing them out the door and into another rental. Only 21 percent of renter households didn’t report experiencing an increase in rent.

Nearly a third (30 percent) of households nationwide, representing roughly 73 million adults, report they’re struggling or just getting by financially. And it’s no wonder; Americans spend on average a median of 29.1 percent of their income on rent,

https://www.zillow.com/blog/high-rents-homeless-221185/

So the moral of the story is do not move. If you are on a month to month lease you are at risk and your rent will go up.

Million dollar condos and another $1.8 mil home

John Skulick  hit the streets with a “patio home” at Elin Pointe for $1.15 mil.  I don’t know much about Elin Point or how much a patio home differs from a condo but what I do know is that you have HOA dues, communal living and I’m pretty sure you don’t own the land your property is built on. All for the low, low price of one million american dollars. Fingers crossed the neighbors and HOA aren’t crazy!

Because El Segundo needs another $1.8 mil home for sale Alex Abad has hired a flowery copy writer to help sell a giant house on a tiny lot.

627 Loma Vista is is 2450 sqft on a 3723 sqft lot. Hey at least you won’t have to mow the lawn!

Tear down time frame

One of the first homes we considered in the summer of 2015 was 648 W Mariposa. It was a decent home but at the time they weren’t willing to consider our contingent offer so we walked away. We knew that the teardown next door was coming to market and learned from the realtor that the shack at 638 W Mariposa (next door) was so old it couldn’t handle the weight of the free double pane windows provided by the sound abatement program. We knew we weren’t ballsy enough to embark on a tear down so it wasn’t much of a consideration. The home sold for $735K in July 2015. 26 months ago.

What does 26 months get you? That home is still under construction. Lucky for them in the same time frame the dirt has gone up 20% in value and any decent home worth buying is seeing $1.4+ so it’s a win-win, but it does go to show the ramifications of new construction, It’s not for the faint of heart nor those that don’t have a pile of money sitting and waiting to be spent.

Crap on West Acacia

Let’s look at the crap listings on West Acacia that not only hit the market but one of the twin turds is already in escrow. The two homes at 627 W Acacia and 631 W Acacia are:

  1. crappy
  2. small
  3. in a horribly undesirable location

I find it mind boggling that anyone thinks that these homes are worth one million american dollars. This deal would seam a tiny bit more logical if a developer bought the side by side lots but then again what person of means wants to live that close to an airport.

For those of you that aren’t from El Segundo W. Acacia is the second closest street you can get to the runways at LAX. When you ask locals about airport noise the party line is “you’ll get used to it”.  I call bull shit!

How do you get used to having to pause or rewind your TV show? How do you get used to stopping your conversation while at a BBQ? Double pane windows? We live at the beach and our windows are almost always open.

627 W Acacia is a 1069, 3/1 listed for $1.15 mil and according to Michael Early on ESPN they are already in escrow.  It’s basically grandma’s house on a 7700 sqft lot.

631 W Acacia is it’s twin brother with a shared driveway.  This home is 1079 sqft but only a 2/1.  This house shows some updates made in the past decade but not enough that it really matters.

For a million dollar home someone would need a down payment of ~$200k for the privilege of writing a $5500 check for PMIT.

If you really love the tiny house vibe you can rent a similar house on W Sycamore for $3495/month.  If you really love airplane noise there’s a similar house on E. Acaia for $3700. 

The vultures have begun to circle

Vultures may be a strong term but the reality is that in every financial transaction their are parties who’s sole job is to capitalize on distress and reap huge rewards. It goes back to the “life is not fair” post. Life isn’t fair. Those with capital have a huge advantage.

If you haven’t seen the headlines; between Houston and Florida and all the other areas destroyed by flooding and hurricanes there are billions of dollars in mortgages that are about to go south. Just imagine you dropped 20% of $300k. You don’t have flood insurance and your insurance does not cover damage from rising water. Your home is virtually destroyed as are it’s contents. It will take $200k to repair and fill it with stuff and FEMA wants to give you $20k. Do you take out a loan for $180k? Or do you hand the bank the keys and walk away? There will be countless mortgage holders that chose the latter option.

Flood, fix and flip: Houston housing investors see profit in Harvey’s wake

https://www.reuters.com/article/us-storm-harvey-housing-investors/flood-fix-and-flip-houston-housing-investors-see-profit-in-harveys-wake-idUSKCN1BX0DA

649 W Oak St 90245

$572/square foot!

649 W Oak St. is a nice, large 4/3.5 on a big lot priced at $572/sqft. At $1.65 mil it’s out of reach for a lot of buyers but it goes to show how much things change when the demand equation is tighter.

You’ve got first time buyers, renters and average shmoes trying to get in around $1.1-$1.3 mil but with just a bit more income (like 30%) or an extra couple hundred grand you start seeing prices that you can sit back and just watch the market swing up and down without a concern.

So cheers to Mathew Thomas Janes for pricing a nice home that someone would want to live in at a price that will get people off their computer and into an open house.

With this listing he just slammed the door shut on a couple of other grossly overpriced listings in the $1.6 mil range. If this house sells for $572/sqft he just took the legs out of the higher priced listing with a new comp that buyers will be using.

Darren Pujalet is back at it

I’m not sure if Darren is just the listing agent or is involved in the flipping but for the love of god why do these people hate windows so much?

I first came across Darren’s name after seeing his mug pasted on a construction fence for 754 Virgina St.  That ugly box was flipped and sold for $1.7 mil last year.

On a recent drive on Whiting I noticed a similar looking home (ugly with no windows) under construction. It had Darren’s writing all over it and sure enough it now has a for sale sign on it for none other than Darren Pujalet.

Originally purchased for $800k in October 2015 this 1000 square foot home is on an R3 lot and it’s now a 5/4 monstrosity on a corner lot with hundreds of neighbors since it’s surrounded by apartment buildings. I can’t tell if it’s being sold as individual townhomes or one big ugly home. Time will tell. Here’s the before….

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Here’s the design drawing for the after…Just think of all the money they saved by hiring a recent architectural graduate and not using many windows! Natural light….so over rated.  Barn living at it’s finest! They much watch one of those HGTV shows based in Texas. Bet it has a farm sink.

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Time will tell what this delight will list and sell for. Maybe it’s an AirBnb paradise. A little hostel next to your main family home. The future of “affordable housing”. Can’t really afford to own, buy something with income potential. Can’t afford your car payment, rent out your car on Turo a few weeks a month.