Today we salute South Gate for the Sunday Dr. Housing Bubble real homes of genius award. Yes, even though the above house is only 796 square feet and is 2 bedrooms and 1 bath, it is full of eager home buyer potential. So much potential that it has been on the market for 138 days. These folks have so much demand that they have reduced the price as follows:
Price Reduced: 09/22/06 -- $475,000 to $463,000
Price Increased: 10/17/06 -- $463,000 to $475,000
Price Reduced: 12/04/06 -- $475,000 to $449,000
Price Reduced: 01/12/07 -- $449,000 to $439,000
Price Reduced: 01/13/07 -- $439,000 to $397,000
Too much demand in September that they bumped up the price for Christmas shoppin. However after that, a nice $78,000 drop in a few months. I’m sure they’ve dropped it as such for the addition of more bars to the front door. But surely Zillow is correct when they assess this home at $434,000 no? Well let us look at the irony of Zillow:
First, Zillow gives you a Zestimate of $434,000 and in the same page, you can pull up the previous sales data. The last time this home sold was in 1999 for a whopping $142,000. These aspiring Donald Trump moguls wanted to pocket $333,000 in 7 years!
Ah yes, we salute you South Gate for being a real warrior and genius of housing.
Sunday, April 29, 2007
Real Homes of Genius: South Gate home at $397,000 – Reduced from $475,000.
Friday, April 27, 2007
Real Homes of Genius: $450,000 3/2 Home in Compton? Yes folks, Smoking Housing Bubble Peyote Will Make You See Things Like This!
Sometimes you just have to laugh at the rampant speculation in Southern California. The above sample is just one of thousands of overpriced homes in Southern California that have benefited simply by being in the Golden State. Forget simple rules such as quality of area, good schools, and growing neighborhoods we are living in a new paradigm! So what if Southern California spans 200 miles to the east and 200 miles to the south, as long as you are in this bull’s-eye you are a champion. Even better if you are in Los Angeles County, Orange County, or San Diego County. It is a thing to witness this unbelievable bubble. If you run a simple query about how much this home would rent for in the area you get the following:
I’ve highlighted the obvious outlier here because this is probably someone that purchased at the top and is trying to recoup some money via renting. As you can see though, this house would probably rent for $1,100 to $1,300 a month. Let us put on our housing math hats and run the numbers for a second. We will assume that someone will buy this place for $450,000 with 20 percent down:
20 percent down = $90,000
PITI on $360,000 at 6.25% = $2,216
Taxes at 1% = $375 a month
Total monthly caring cost =$2,591
Even after tax savings this is way off base by over $1,000 a month; a spread ratio of over 100 percent! Given that owning a home will always cost more than buying but there are many places in the U.S. where you can purchase a home in a metro area for $125,000 to $150,000 and rent it out for $1,250 a month.
Another case example of the true Real Genius of Housing. We salute you Compton for making us proud via voodoo finance math.
