Chasing Down the market!

It is a known fact in team sport games like soccer or basketball that passing is much faster way to move the ball than dribbling.
The analogy to RE, is that if you chase down the market, you will never catch it. The fact is that you will get buried under the house or literally get foreclosed in today's market.
Here is a nice example of this:

5716 WILBUR AVENUE, Tarzana, CA 91356


Sales History:
Oct 17, 2000 $230,000
Sep 02, 2005 $699,000

Asking price history:
Feb 20, 2007 $749,950
Apr 22, 2007 $650,000
Jun 05, 2007 $595,000
Jul 21, 2007 $555,000
Aug 12, 2007 $545,000
Aug 21, 2007 $490,000
Nov 30, 2007 $489,000
Mar 26, 2008 $475,000
Mar 27, 2008 $465,000
Jun 10, 2008 $435,000
Aug 19, 2008 $405,000
off market
Relisted as new listing:
Sep 23, 2008 $395,000

This seller is trying to sell for the last year and a half...
He slashed his asking price from $750,000 down to $400,000. Almost 50% and still can sell.
Had he been not so greedy but more reasonable....Had he just wanted to sell and not chase down the market...
He could have sold it long ago...It is safe to assume he could have sold it for $600,000 in Feb-march 2007. (when loans were still given to anybody that can sign x and say his name...)

HALF PRICE

Some have question me about finding half priced homes. I refer to those that sold recently for HALF the amount of the last sale price.

So....here is one to start with


5022 Don Pio Dr, Woodland Hills CA 91364

Here is the Sales history:

SOLD May 17, 1990 $311,000
SOLD Jun 10, 1993 $250,000
SOLD Mar 24, 1994 $190,000
SOLD Sep 30, 2003 $425,000
SOLD Dec 22, 2005 $615,000
SOLD Feb 23, 2006 $800,000
FORECLOSED May 11, 2007 $701,771
SOLD Jul 07, 2008 $410,000

So from 2006 to 2008 about two years, the house went from $800,000 to $410,000. To me that is 50% decline! or HALF PRICE.

Funny that i found that the bank once wanted $549,000 but we all see they settled at $410,000

====================================================================
Here is another one that is about to join the list.



5327 Don Pio Dr. Woodland Hills, CA 91364

This is a common example of how far the loan owner was able to milk his lenders.
To our congress people like Senator Dodd and Frank, it looks like the poor homeowner just lost his house to foreclosure...
However, let me show you how this "poor" home owner just scored $200,000 cash tax free and is smiling everyday when he goes to his bank....

sales history:
Sold May 02, 1989 $290,000
Sold Apr 14, 1995 $185,000
Sold Jun 02, 2005 $655,500
Sold Oct 18, 2005 $746,000
Foreclosed Jun 03, 2008 $573,750

For Sale asking $459,900

SOLD !!!
Oct 14, 2008 Sold $450,000

What you don't see here is that in April 2007, the loan owner was able to get a $200,000 HELOC from City national bank.

The foreclosure occurred on his 1st mortgage was for $596,500 and Bear Stearns foreclosed for $573750.
There was also a second mortgage for about $112,000 that got wiped out completely.
Add to that National city that was wiped out of $200,000.
If this house is for sale asking $459,900 and assuming it will sell for $400,000 (like many next door comps)
Bear sterns (JP Morgan chase) will lose $196,000 (probably more after sales commission something like $210,000)
Didn't the FED agreed to guarantee $30 Billion of Bear's assets...So I guess thie $210,000 is our (tax payers money...)
2nd mortgage $112,000 loss
National city HELOC $200,000 loss.

Foreclosed loan owner gain about $200,000 from his cash out HELOC, and only god knows how many months of free rent...

50% reductions in prime areas?

Wanted to see 50% reductions, check this out:

4388 Pampas Rd Woodland Hills, CA 91364

Sold new Dec 16, 2003 $699,000
Sold Jun 13, 2006 $1,500,000

Now offered for $750,000
Basic algebra skill say 1,500,000/750,000 = 2

==================================================================
Another interesting one:
19440 Shirley Ct Tarzana, CA 91356


Sold Sep 11, 1997 $590,000
Sold Apr 11, 2000 $700,000
Sold Sep 01, 2005 $1,350,000
Sold Sep 29, 2006 $1,700,000

Was offered couple weeks ago for $900,000.
That is 48% discount...almost half.

Updated Case Shiller index for LA to April 2008

So far my prediction is within +-3%. I did however corrected the housing bull prediction as i moved the yellow line down from their previous guesstimates. RE Bulls have been claiming every single month that we have reached bottom...
Yet we still falling down the slippery slope.
Enjoy the free ride!

Case Shiller Updated to March 2008

I am plotting here the graph for LA based on Case shiller updated to March 2008 with additional two projections. I want to know which one makes more sense to you.


The Blue line is the current S&P Case shiller for LA updated to March 2008
The Pink line is my prediction of house prices behavior from now to about 2012
The yellow line is the housing Bulls prediction of house prices behavior from now to about 2012

The pink line assumes that the unavailability of stated income loans, Option ARMS and stated second mortgages will simply decrease the number of qualified buyers to such a point where over correction would occur, then after getting to some support level by wages, market will flatten and start increasing at the rate of inflation.

The yellow line assumes we have hit bottom, and are going to be flat or start appreciating again....

Now, you tell me, who do you think is right?

Fraud in Day Light

This is an update to my post back from Saturday, March 29, 2008.
Well, the house was put on the MLS for sale asking $725,000. I called on the second day to the listing agent and was told that the house is in escrow....
The seller (flipper) slapped a coat of paint to the house and was thinking to flip it. So I was thinking that there is now way to sell this painted leaking roof shack for more than what he bought it from the bank just in January for $500,000.
Surprise! I just checked public records and found that indeed a sale was done and a buyer got it for $700,000.
From my good knowledge of the area, there is absolutely no way that a legit appraiser will give $700,000 to this place. There is no chance that any crazy bank will give a loan for this amount unless of course there is some serious down payment. Similar houses in the area are selling for $500,000 range.
Check out websites such as propertyshark.com to find the owner's name.
So far, i haven't seen anyone moving in...the house is still vacant.
My bet, is that this is a straw buyer that does not exist and that the poor bank got jacked. The flipper managed to bailout of the shack with some nice cash...Amazing, only in the US of A.
Give it 4-6 months, and we are going to see a fresh NOD on this one.
And if the bank's people are reading this...look no other place, the robber is the seller, go after him!

REO Blow out! REDUCED!!! MULTIPLE OFFERS,

5316 Mecca Ave Tarzana, CA 91356

This one is a tail about a bank, "US Bank", that is in denial, acting very slow and basically losing money as we speak. The listing description is simply a killer. The bank/agent claims that there are multiple offers for this amazing property and that last best offer need be submitted by...3-11-08 AT 9:00 A.M.
Well, we are more than two months after...and what happened to those multiple offers???? NOT EVEN ONE!
Here is the full description from the listing:
===================================================================
*** THIS PROPERTY IS IN MULTIPLE OFFERS, IF YOU CHOOSE TO WRITE AN OFFER, PLEASE CALL FOR FORMS, DEADLINE FOR ALL 'HIGHEST & BEST' OFFERS IS TUESDAY, 03-11-08 AT 9:00 A.M. - THANK YOU! *** REO Blow out! REDUCED!!! S of Ventura, 3+2+Fam rm, Hardwd, Fp's; great master, sliding glass to pool! Some copper, newer electric, Seller crediting $10,000 for Buyer Closing Costs,Direct entry 2 car garage; gated parking; 2 car att gar; cent air/ht; Breakfat rm, open kitchen; Great newer home with old style craftsman - work. A fantastic Value. Covered patio, Just Reduced and incentives added; This is your chande!!! Step-down dining area. Paver tile flooring, wet bar. Some dual Pane windows. Vaulted ceilings. Pool, spa, Rear bedroom with own separate bath with dressing area and separate tub and shower. 2 car attached garage with direct access to house. Separate laundry room. ***Reduced with Bonus and Seller incentives to buyer and buyer's agents!!! Go Quickly, now's the time!!!
===================================================================
The bank took this house back for $852,129 back in May 2007, it is already a year and they still hold it...
Here is the History of asking prices:

Aug 18, 2007	$985,000
Sep 12, 2007	$965,000
Nov 10, 2007	$920,000
Nov 22, 2007	$895,000
Dec 08, 2007	$870,000
Jan 15, 2008	$820,000
Jan 29, 2008	$799,000
Jan 30, 2008	$790,000
May 23, 2008	$744,900

UPDATE:
As of August 1, 2008 Asking price is $690,000

Zillow zestimates it at: $937,000. My only advice to the bank is to sell the house to zillow...and my advice to zillow is to correct their wishing price to actual market price. (somewhere in the $600,000 for that area)
UPDATE:
zillow zestimate is now at $832,000 I guess they corrected by $100,000 in about 90 days....
They have another $200,000 to go....

Smoking Crack Seller

5511 FALLBROOK Ave Woodland Hills, CA 91367
3 Bedrooms, 2 Bath 1700 sf on a 7800 sf lot.

Asking Price: $799,000 that is $467 per sf
UPDATE:
Now asking $610,000
Value is around $400,000 and dropping...

This seller is smoking crack, the house description is hilarious.
" NICE AND LOVELY 3 BEDROOM AND 2 BATH WITH FIRE PLACE IN LIVING ROOM HAS GREAT OPPORTUNITY FOR ALL TYPE OF USE"
As always, the asking price is a result of a flipper getting stuck by buying at the peak and getting the worst timing doing that...
Sales History:

Sep 10, 1997	$157,500	.
Sep 30, 1998	$205,000	.
Sep 22, 2005	$620,000	.

similar houses are at that area are selling for 2003-2004 prices, that means that this house value today is about $420,000-470,000, while the owner is asking for almost double....
Zillow zestimate it at $549,500. Pay attention to they latest ranges, for this one it is $467,075 as low and $604,450 as high.


For reference here is a similar house practically next door.
5611 FALLBROOK AVENUE, Woodland Hills, CA 91367
3 Bedroom, 3 bath, 1700 sf, on a 7800 sf lot.

Asking price: $455,000 that is $271 per sf
UPDATE:
Sold $432,000 (08/05/2008)

Case Shiller Updated to February 2008

I am plotting here the graph for LA with two projections. I want to know which one makes more sense to you.
The Blue line is the current S&P Case shiller for LA updated to February 2008
The Pink line is my prediction of house prices behavior from now to about 2012
The yellow line is the housing Bulls prediction of house prices behavior from now to about 2012

The pink line assumes that the unavailability of stated income loans, Option ARMS and stated second mortgages will simply decrease the number of qualified buyers to such a point where over correction would occur, then after getting to some support level by wages, market will flatten and start increasing at the rate of inflation.

The yellow line assumes we have hit bottom, and not going to be flat or start appreciating again....

Now, you tell me, who do you think is right?

Fraudlent COMPS in the Valley

This property might be a reason to open a brand new category on this blog and call it the BEST FRAUD CASE.
I accidentally found this house while browsing foreclosures and pre-foreclosure properties

6201 Corbin Ave Tarzana CA 91356

Sales History:
Sold Aug 29, 1995 $203,000
Sold Feb 07, 2006 $640,000
Sold Jan 05, 2007 $1,330,000
It has NOD right now
Will be Foreclosed on **** for $*****

Zillow zestimate(tm) : $1,108,000
True market value : $500,000-700,000

This is my idea of things that went on here;
Buyer X bought in Feb of 2006 for $640,000 (this is close to the peak of prices in the valley)
He then either fixes the house a little, or throws a fresh paint and lists it for sale for $800,000-1,000,000. Then comes buyer Y, and offer X to pay him more than asking price. How?? Simply on January 2007, every thing that can walk on two feet can get a loan. They find a "good" appraiser that is probably getting paid to appraise this house for more than $1,330,000.... So Y gets the loan, X kicks back $200,000 to Y and everybody wins...You might thing that the bank is about to loose here...Rest assured Congress is working now on ways to make sure that the bank will not loose here. We the tax payers need to bailout this People...

Even worse, if buyer Z wants to buy a house on the street, his RE agent will use that fraudulent comp of $1,330,000 to justify him paying similar amounts for a similar sized house.....
You tell me, does any comp on that street is legit???
It is all based on fraud.

REO for sale by bank that doesn't want to sell....

5537 Sylvia AVE Tarzana, CA 91356
Sales History:
Sold old shack Apr 10, 2003 $370,000
Sold after building new house Jun 01, 2005 $1,260,000
Found (another) sucker to pay Mar 15, 2006 $1,520,000
Foreclosed Jul 06, 2007 $1,074,207
Now asking $979,900 (after initially asking Jan 05, 2008 $1,153,900

This one is awesome. I would not spend your reading time going through the process of the bank realizing he needs to slash the asking price, but would rather show you one picture from the listing.
Look at the pool and the water condition inside, is that a way to sell a house??? If you can't clean the pool and maintain it, please don't take a picture of it. Also poor neighbors with mosquitoes...
One picture is worth a 1000 words....
LOL....

Flipper Bought from Foreclosure & Heading to Foreclosure...

22603 Clarendon St., Woodland Hills 91367
4 bd, 3.5 ba, 2501 sf, 6750 sf lot
So this house is located in the epicenter of the valley's flipper city.
I don't know if this is funny or stupid. It does show us what catching a falling knife is.
Also, this can help to see how is it to buy at REDC auction together with another 3000 (un-knowledgeable or over-excited) buyers.

On Oct 28th 2007 - It sold for $640K plus 5% REDC commission to total $672,000
This house was listed for $759,900 - $679,900 for 125 days May thru Sept. 2007 and obviously did not draw any offers.
Here is the sales history:
Sold Jan 11, 1989 $333,000
Sold Nov 23, 1998 $299,000
Sold Oct 03, 2001 $320,000
Sold Jul 15, 2005 $820,000
Sold Mar 21, 2006 $980,000
Foreclosed Mar 27, 2007 $744,750
Sold Nov 27, 2007 $672,000

I decided to show the 1989 sales price since i think most of you know this was a sale close to the 90s housing boom. If we consider even high 4% inflation of 19 years since then. The price should have been about $701,000. Since it sold in end of 2007 for less than that. It proves that housing is terrible investment tool. It barely tracked inflation for 19 years!!! But not more than that...Also today is not the bottom either...

The interesting part here that the buyer which is obviously a flipper, paid $672,000 that is $308,000 (or 31%) less than last price which might sound great...(btw who was the fool to pay $980,000... I'll get to that later)
So, this flipper turns around, paints the house and cleans/changes the carpets. Then he lists it for sale for......$900,000. WOW. Today after about 3 months of no bids, he placed a FOR RENT sign...
The zillow zestimate(tm) is $844,000
Today its street price is $500,000-540,000 (check out next block 22620 Clarendon ST listing...)
Actual value per lakerland estimation $320,000 (roughly 2001 price)

Now, let's get back to the $980,000 sales price. As you can see using the sales history, the house was foreclosed exactly 12 month after being purchased or refinanced. For those who know how foreclosure work in CA, will know that 12 months is about the time it takes from the moment the borrower stops paying. That is 3-5 months to get NOD, another 3-4 months to get NTS, and another 1-3 months to become sold at court step auction and become REO.
That means this borrower never made a single payment!!!! If you look at public records, it is clear the this property was sold in 2005 for $820,000. The owners, after 6 months, figured out that they overpaid, and would probably can't afford the house (which was used as an elderly rehabilitation center). So they decided to use the lax, no doc, maybe option ARM country wide loan, and cash refinanced it by pulling $160,000 cash. Countrywide has never since a payment from them since....

Conclusions:
1) Fraud, lax lending, crazy loan - foreclosure
2) Greed by new flipper that thought he could paint and flip but ops...he caught a falling knife.
Now with mortgage payment of about $3000, he can't find a renter to pay it. He also put 20% of his cash for down payment.....bye bye $134,000....

Buying at Top of Market or Just Plain Flipper Stupidity

4656 Willens AVE Woodland Hills, CA 91364

It is unclear whether this seller has bought to flip this house or to actually live there but did that in the wrong time.
In any case, he simply over paid, and within 6-8 months got himself in upside down position...
Sales History:
Jun 29, 2007 $755,000

After about 5 month, he lists for sale and plans for some $100,000 gross profit:
Asking Dec 24, 2007 $865,000
Price decrease Jan 12, 2008 $799,000
Zillow zestimate(tm) $827,500

Still no takers...

=================================================================


5869 Eilat PL Woodland Hills, CA 91367
This one seems to be a loan owner that bought the wrong place at the wrong time...
It is simply hard to believe it was a flipper with expectations that this property would go to $2M or more...
Sales History:
Sold Dec 23, 1996 $335,000
Sold Sep 08, 2006 $1,246,000 ( I thought this was the peak year...)
Sold Jul 11, 2007 $1,499,000 (wow....)

Listed for sale after six months of "loan" ownership.
Asking: Feb 14, 2008 $1,400,000 (loss of $100,000 or 6.7% but still asking above 2006 price)
Reduced Mar 26, 2008 $1,100,000 (loss of $400,000 or 27% and gets closer to reality...)

Still, this property is probably worth $900,000 today considering a fresh comp (larger&newer house) but has actual value of about $550,000.

A new contender for flipper of the week

Check out this flipper...acting quick to fix, and list on MLS. I guess he knows where prices are going...and how fast...
19953 HAYNES Woodland Hills, CA 91367

Prior Sales History:
Sold May 25, 2001 $285,000
Sold Mar 31, 2006 $750,000
Foreclosed Jul 18, 2007 $557,750
Jan 25, 2008 $500,000

Zillow zestimate(C): $579,500

Asking Price: $725,000

Now, let me get this straight. The guy buys this shack from the bank for $500,000. The house was completely destroyed and was used as whore house for couple of months...
The flipper claims he spent $100,000 in remodeling...So after less than 60 days, he lists for sale and looking to make $225,000 gross profit, that is 45%...
Even if we take 2-3% commission to buyer's agent and the claimed $100,000 (i wonder if he can prove it) Still very nice "theoretical" profit.
Problem is that this is still a shack. Couple of travertine (made in china) tiles in the kitchen, and a fresh coat of paint does not justify that asking price.
We will track and see what happens to this smart flipper.
My guess, he will be lucky to get his $500,000 back.

Case Shiller index for LA updated to Jan 08

Pay attention to the peak and the shape. Compare to the last boom-bust of 1990's. The current decline is much steeper. Did anybody say slippery slope...

West part of valley sells for early 2004 levels

Here is a property in a nice part of Woodland Hills.
24840 EILAT ST, 91367

May 22, 1998 $510,000
May 21, 2004 $1,075,000
Sep 21, 2006 $1,525,000
Feb 29, 2008 $980,000

btw: Zillow Zestiamate: $1,300,000 (about 25% off)
If you know the area, zillow is "estimations" are about 20% more than the property is/will sell for.

As you you can see, the house was sold for LESS than its price in May 2004.
If you divide the "appreciation" from 1998 to 2004, $980,000 is just about price somewhere in 2003.

Flipper of the week Update...

Our Joe sixpacks Flipper has just reduced his asking price to $675,000.
Now he is "just" $100,000 above the price he paid 2 months ago for this "lovely" home.
Of course take away the change money he spent at home depot buying paint and new piece of carpet. Also 5% RE commission. Will keep you updated.

Flipper of the week

Welcome back, as i promised, I found an interesting listing that's both entertaining but mainly belongs to my new category of "Flipper of the Day"


5806 Laramie Ave Woodland Hills CA 91367

Sold Jun 20, 1995 $219,000
Sold Dec 18, 2003 $505,000
Sold Aug 22, 2006 $900,000
Foreclosed Aug 10, 2007 $639,435
Sold Jan 04, 2008 $575,000

Asking Price History:
Feb 07, 2008 $752,950
Feb 14, 2008 $749,500
Mar 04, 2008 $729,500
UPDATE: Mar 17, 2008 $675,000

Zillow zestimate tm : $732,500

Why it belongs to Flipper of the Day?
Joe "six pack" Flipper bought in January for $575,000, might have changed the carpet, painted the walls, and immediately listed for sale for $752,950. My bet is that it cost him $950 bucks at homedepot to buy the new piece of carpet and couple buckets of paint....
Joe "six pack" Flipper is trying to make $177,950 (or 30% profit)
Well, Joe, right now you are down to $154,500. Take away agents commission of 5%, that nets you $118,025. Not to bad...for paper money.
Considering this area is selling at about 2004 price levels, that means the house can sell for about $500,000-520,000.
If you want to know its actual value (smart buyer), add about 3-4% of inflation to the 1995 figure: You'll get $322,000-395,000

Smart Casher:
Look at Aug 22, 2006 sale, that seller sold for $900,000 bought for $505,000 in 2003. He made about $400,000 (or 80% profit) in less than 3 years!

This Week's Best Price Crash in the valley

Welcome to LA House Price Crash,
We are all aware of the housing/credit meltdown both nationally, but mainly here in So Cal.
Every week, I will try to bring selected homes that would be of interest to you.
While searching the available houses in the market, we could see many sellers that are still living in a dream. We all hear about those "poor" homeowners that are losing their houses and getting thrown to the streets...while some homeowners indeed suffer major losses both financial and emotional, other home owners either by luck or wisdom managed to sell in time, and cash enormous amount of money. Nobody today hardly mentions that, so i will try to pick up the task and bring those "winners" for your recognition!
I'm spending major time in particularly the west San Fernando valley so most of the properties would be local to that area.
Since i find this to be very informative to both today's buyers AND sellers, stay tuned and enjoy the show.
Additionally, those that are not potential buyers or sellers could still benefit as it provides a great amount of entertainment...if you know what i mean.

03/14/2008 House of the day:
23747 Canzonet St. Woodland Hills, CA 91367
According to public records, this nice property was purchased in Mar 21, 2007 for $1,250,000 and asking price today is $900,000. That is a $350,000 below last year purchase price...or 28% reduction if you wish.
What do you think it will sell for?
Did the seller overpaid just less than 12 months ago...
Summery:
Sold Sep 02, 2005 $901,000
Sold Mar 21, 2007 $1,250,000

Zillow zestimate $1,105,000
Asking price:
Feb 07, 2008 $985,000
Mar 07, 2008 $925,000
Mar 14, 2008 $900,000

Smart Casher made $349,000 (or 39%) in about 18 months!