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Foreclosure Statistics for Highland Park from LA Times From LA Times 4/17/08: The foreclosure 'discount': 45% in Glassel Park
I just finished putting together another collection of foreclosure listings for latimes.com, and it includes the house pictured at right. This one really tells a story. Details:
2117 W. Avenue 33, Los Angeles 90065. Built in 1922, three bedrooms, one bath, 978 square feet on a 2,500-square foot lot.
Prior peak sales price: Sold for $510,000 in February 2007.
Current listing price: $279,900.
Discount from peak sales price: 45.1%.
Agent's description: "Bank owned ... House sits high above street level ... Nice quiet Glassel Park street. Raised foundation, hardwood floors."
The Zillow "Zestimate" on this house is $420,000. It's going to sell for a lot less than that. I don't mention that as a knock on Zillow -- I happen to believe their estimates are about as good as computer-driven estimates can get. I mention it to demonstrate that prices are falling so rapidly in this neighborhood that there is no way for Zillow's computers to keep up. The information that this house is worth somewhere around $280,000 is still unknown to Zillow's computers. It is still unknown to DataQuick. It is a shoe waiting to drop on this street, where people -- making the same calculations Zillow's computer makes -- might still believe their homes are still worth in the low $400s, or the high $300s. This is a meltdown happening before our eyes.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Posted by Peter Viles on April 17, 2008 in Commentary , Foreclosure , Foreclosures for sale | Permalink
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Comments
wow. that is a price that will bring some "wait-and-watch" buyers off the sidelines. too bad it is a VERY small house on a VERY small lot.
Posted by: tarbubble | April 17, 2008 at 06:40 PM
It is still too much money. Renters do not have the ability to save money because it takes two incomes to pay rent. This is an old, deteriorated house. The price needs to come way, way down.
Posted by: Landless | April 17, 2008 at 07:19 PM
Yeah! An 85 year old house that requires Sherpa assistance to get to the front door. And all that for about $285 a square foot. Show me more of these. I'll take a dozen.
Posted by: Gman | April 17, 2008 at 07:44 PM
It'll be fun to watch the Highland Park meltdown.
:grin:
Posted by: E | April 17, 2008 at 08:00 PM
I'm willing to bet that they don't even get $280K for this house. Still trying to imagine a 900s/ft house in Glassel Park going to over half a million dollars just last year! What fool...?
Posted by: JK | April 17, 2008 at 08:18 PM
Drop off the Key Lee
And set yourself free
The most beautiful description so far....
I’m at the annual Hyman Minsky Conference at the Levy Institute at Bard College.
Minsky, if you do not know him, was an economist who pointed out that stability is destabilizing. Because stability breeds confidence that it will continue, it encourages people to make ever riskier investments, and to take on ever more leverage.
Minsky argued there were three levels of investment as the cycle progresses. First comes hedging, in which investments are made to reduce risk. Then comes the speculative phase, and finally the Ponzi phase, in which the investment can be justified only by the assumption that prices will keep rising, not by the expected income.
Paul McCulley of Pimco, the big bond manager, gave an interesting speech in which he said the recent subprime mortgage fiasco proceeded to a fourth level — one that he called “Ponzi-squared” — before it collapsed.
At the end, he said, the marginal subprime loan was:
No money down
No documentation of income
Initial below-market teaser interest rate
Negative amortization
That is not a loan, he said. Instead, it amounted to giving the home buyer a call option to buy the house at the current market price, coupled with a put option to sell the house back at that price.
If house prices kept rising, the “buyer” could make the small interest payments to keep the option open, and eventually sell the house. That happened for a time, and led to the conclusion by rating agencies that such borrowers were good risks.
But when prices went down, the “buyer” would suffer no loss if he exercised the put and gave the house to the lender. That is just what happened.
As Paul Simon wrote in 1975, said Mr. McCulley, the strategy became:
Drop off the key, Lee,
And set yourself free.
from here - http://norris.blogs.nytimes.com/
Posted by: Chris | April 17, 2008 at 08:28 PM
And it has a nice view of power/telephone lines. Let me see, 978 sq ft, built in 1922, gang adjacent, LAUSD schools. Yep, its worth about $47K. No more.
Posted by: buz | April 17, 2008 at 08:29 PM
Was the 2007 sale a fraudulent cash-back sale? (i.e.- did the buyer in 2007 actually think the property was worth $510,000?)
The buyer must have defaulted on the mortgage almost immediately if the property is already being listed for sale by the bank (14 months later).
Zillow lists a prior sale of $345,000 in May 2005- most likely the real peak. How much did fradulent straw-man buyer deals push prices higher?
Posted by: Creative Destruction | April 17, 2008 at 08:34 PM
$285K???? That's way too high in HP.
Who wants to pay $285k to live in Gangland? Idiots, that's who.
Posted by: What | April 17, 2008 at 08:48 PM
No way that house sold for $510K a year ago! I live over the hill in Mt. Wash where a house in foreclosure across the street from me sold for $627K at auction, which is a steal and in a much safer, quiet, neighborly neighborhood. I just recently drove through the area where this house was for sale trying to get my twins asleep in the car and in broad daylight across the street from the elementary school this house is near a tagger was tagging a wall. I was scared and got the hell out of there. They will be lucky to get $200K.
Posted by: momtotwins | April 17, 2008 at 09:22 PM
Whoever sold this shack in a gang-infested area to a fool for half a million dollars is an absolute genius.
Posted by: Arti | April 17, 2008 at 09:23 PM
Is this a "foreclosure" discount or a "Los Avenidas" discount? Gang Abatement Districts (and adjacent neighborhoods) rarely attract top dollar.
On the plus side, it looks like Mama Leon is out of the picture for a little while. http://www.latimes.com/news/local/
la-me-leon16apr16,1,7978071.story
$280k is getting in the neighborhood of reasonable, and if ICE and the LAPD can work together to get the criminals arrested and/or deported while leaving the hardworking folks alone, there might be some deals there pretty soon.
Posted by: John | April 17, 2008 at 09:41 PM
Peter, I just read your foreclosure article.
One or two of those homes were fairly priced, but there's NO WAY some of those houses are going to sell anywhere near the asking price.
Also, and this may be fodder for another post, but do you know if there's any truth to the rumor that banks are waiting to foreclose on condos where the owner has stopped paying the mortgage to avoid the HOA fees?
This could spell disaster for the condo market PDQ.
Posted by: John | April 17, 2008 at 09:46 PM
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