patrick.net

I abhor CNN "Money."

Well, I like CNN money.
But this particular CNN article losts me when it listed Ellicott city, MD as #2.
It's quite nice place, but #2 in US? I wonder what would be the criteria CNN is using.
If it is # of mean bitches in population or something, I can rate my area as #1 in US. :P

seaside says

Well, I like CNN money.

But this particular CNN article losts me when it listed Ellicott city, MD as #2.

It’s quite nice place, but #2 in US? I wonder what would be the criteria CNN is using.

If it is # of mean bitches in population or something, I can rate my area as #1 in US.

Well aren't you just the comedian.

DC metro area. Be corky or be bullied out is the motto.

to MarkLA:

Where can teachers (public or private) earning $75,000 annually afford to buy in these 'GREAT South Pasadena school districts???

Oh, they must be "The only ones pissed off by this are the PermaRenters with the low median incomes who can’t afford to buy in an area with good schools" that you wrote about.

And by the way, I would never buy a house from a realtor wearing a bow tie.

That house is where I had my first-ever beer, in 1980. It was awful. Bud, I think.

Philistine says

Pasadena is bizarro-land. It wants to be 1910 quaint but with contemporary hipster parent attitudes. Yet, please, I can shop at Banana Republic and pay $12 for mediocre ice cream cones anywhere in SoCal–what’s so special about Pasadena for that?

You've got it wrong. It's a great city. The consumer-hipster parent scene only developed in the past 20 years, around the time "Old Town" really took off. And Banana Republic? That's been there, what, 6 years?

thealicat13 says

to MarkLA:

Where can teachers (public or private) earning $75,000 annually afford to buy in these ‘GREAT South Pasadena school districts???

Irvine has a good school district and you can buy a condo that used to sell in 2006 for $800k (unaffordable to school teachers) for $500k now (affordable to school teachers): http://www.redfin.com/CA/Irvine/73-Juneberry-92606/home/17473935

And by the way, I would never buy a house from a realtor wearing a bow tie.

I just changed my avatar to better please your sense of style. I don't think Angelo is selling homes though.

Hi Guys,

My two cents:

We moved to SP in 2004 for my son 6th grade. He went to privet school for K-5. Yes, SP schools are decent, but do not expect miracles. MS was better than SH, although both have a very "twisted" liberal arts departments (to be fair, this is probably true anywhere in umber liberal So.Cal). Drags is a "quiet" problem, which administration is trying to keep under wraps, at both schools. All-in-all, these are good schools, IF you, the parent, know exactly what your child is up to... :-)

My son is a senior now, so I will not care as much in three month, but anybody considering moving to SP for schools, should know that the District has changed its policy, and will no longer enforce strict residency rules (used to be done every year). This will increase class size, and hurt SP property prices. Why would you pay ~ 1M for a house in 91030, when you can live in Alhambra, literary across the street, sent your kids to the same schools, enjoy the same safe neighborhood, and pay 500-600K for a similar house??? I do expect prices on nearby Alhambra and LA blocks to go up a bit, but mostly it will be SP going down.

Unrelated, SP is a very dog friendly city, which is a big plus for my family, as well as a lot of our neighbors.

Now my take on RE:

I am one of those said, angry renters, Mark_LA was talking about... :-)

We rented an apartment at first, and started looking to buy a house right away (July 2004). Prices went ballistic early in 2005 and never looked back, well until a few month ago... I'm starting to see meaningful shifts in market dynamics lately. NOT that I'm still actively looking, I am not. I've been renting a house since 2005, and I'm absolutely loving it. What's NOT to like: we live in the prime area (next to Monterey hills elem.), in a beautifully updated house, which sits on a huge lot (I mean that literally, not in So.Cal speak). I pay ~$1.40 per sq ft, and in a rare event there is a problem (ex: main line backed up a 3 weeks ago), property manager is a text msg away! This is truly a dream come true. I have to confess, listening to my friends and neighbors bitching about markets, equity, mortgage-slaves unemployment fears, etc... provides an extra entertainment.

I do not agree that SP is anything but a middle class city - I know most families with kids in SPHS senior class - most of them do not have incomes to support a LONG TERM service of a 700K+ mortgage. Especially, as prices for all essentials go through the roof.

My advise to a new comer to SP would be to rent one of the readily available houses and see what happens. My opinion is: with rates heading up, in the medium term, RE will severely under perform other asset classes in the next 3-5 years, in general, and SP will face it own, unique challenges.

What is the resume of all of this? Even though per sq ft stats imply that this house is a "deal", I agree that a person willing to part with 1.5M for a shelter, will not buy this house.

Best.

@Mark - you rock, if I were buying I'd hire you :-) I do agree with almost everything you said, except that I do believe that South Pasadena will fall. Simply because the "good school premium" is starting to reach the point where it's getting cheaper to opt for private schools. Have you noticed how the average $/sf on homes sold in the past 6 months is down to $409, while the active listings average $454 (under contract = $425)?

Average sale price history for South Pasadena according to Redfin:
12mo, 6mo, 3mo
$710k, $667k, $647k

$/sf for the same:
12mo, 6mo, 3mo
$423, $409, $406

Can you see the trend?

BTW - I think it's ironic that people from LA are complaining about OC traffic. I moved from Newport to Santa Monica 4 years ago and I really miss OC traffic. At least people there know how to drive on a freeway.

It's interesting these are the houses that sucked the banks under. Typically these kind of borrowers go to banks instead of anything with a mortgage backed security. There were a few mbs lenders who would deal in these. However the type of borrower that would get these was hip enough to go to a bank. So all the small banks that lent in these went under quick. Also they delt in construction loans for these and spec houses. Not to mention infrustructure for subdivisions.

I read today Justin Biebers locks of hair sold for 40k yea ok sure. Reality Trac is reporting sales have dropped. However most of the sales are foreclousers. Yea thats the ticket forclouser sales. Yea thats a good deal and I will tell you something else. The only people buying in a negative equity market are escaped mental patients. Next month your house may be worth 10 thousand dollars less than you put down. It's a good deal for people that like to be publicly whipped.

New construction is off of course. Cause well there's that competition with foreclousers and home prices that are nose diving like flipper with 5 sharks on his tail. I would personally like to slap the nose off of the faces of the people that run Reality Trac and all the other lender owned, figure pump houses. That think I am stupid enough to believe them. When I personally go out and witness every day. Vacant REO's by the score. That just sit there. Some with curtains still in the windows. Garbage cans outside the garage doors. Along with the other things they use to make them look occupied.

Mostly I am just upset. With the continuing confidence game they run on people. Trying to get homeowners to stay put. While their values plumet. Pumping up numbers. That if you do a little work you can see they are just selling bald faced lies now, not houses. The happy side of this says. This will be a really nice low these houses could hit. If people would just stop believeing their lies. Move out of your 200k house with the loan and get a 300k house for 120k. Seems off take a look at Detriot and rural areas if you want a fantastic deal. It's there now. Forget the investment potential. Get a really nice place to live cheap.

Rural area's even in the very best of times. Any realtor with experience will tell you are a very hard sale. They mostly don't have any appreciation. Typically are about 1/3 the price of the Suburbs. Somewhere around that. Now rural areas are slammed against the wall. That's something good ole Realty Trac fails to mention. Theres reasons for that. Even the lenders won't lend in rural areas many times. Why well I guess they own a lot of land near the cities. Makes you wonder why you live near a city. Anyway take a look at those. If you want an astonishingly good deal.

Woah... I screwed up the html in that last post. I meant to comment on Mr. Fantastic's comment / quote his. Instead I managed to attribute my own comment to someone else by mistake.

These are my words in reply to Mr. F.:

DING! DING! DING! When will some people learn that much of government is nothing but organized crime with a flag on the wall?

Suddenly the news was filled with "None of the bankers went to prison". I wondered about this. I konw a friend of the guy that made that statement. He told me yep its true. None of them did go to jail. Thats the bad news. The good news he said is that he's a sociopathic liar. You mean he's not telling the truth. I said. Could me maybe he said. Then again couldn't be. You can never tell with them.

Erkle was a sociopathic liar. He said there are some famous sociopathic liars out there. Who's Erkle. I wondered. Look dosen't matter. He said. I asked. You mean one of these guys makes a statement and it's carried accross 25 different newpapers and on TV. Yep he said it's almost like they are interconnected in some way. It's mysterious. However I think somethings up with that. I wondered where all the interest money went that people pay in. Goes to. Wonder who pays for all of the newspapers and television that they will never let the common guy on? Yep he said if you want to see a bunch of shills. People with fake names like Wolf Blitzer and just the biggest fast talking scammers in the country just turn on the Television. Yep I thought to myself that just could be the deal.

Mr Fantastic. Bluto rebukes you.

I'm just kidding. Everyone knows in America there is no strong arming. Still one has to wonder. Why none of Bluto's friends were in jail. Everyone that was had to pay Blutos friends in the "justice system" to get out.

Ronnie Honduras says

Mr.Fantastic says
Remember this is the government, not some crooked realtor. It seems like this level of corruption would be easy to prove and easy to prosecute.

DING! DING! DING! When will some people learn that much of government is nothing but organized crime with a flag on the wall?

Capital gains tax - 15%, income tax - 35%. (Something like that).
Should explain a lot on who is in charge of this country.

Mr.Fantastic says

You can buy a condos in the $500,000 range in South Pasadena too:

http://www.redfin.com/CA/South-Pasadena/812-Fremont-Ave-91030/unit-301/home/22927366

http://www.redfin.com/CA/South-Pasadena/1035-Arroyo-Verde-Rd-91030/unit-D/home/7003363
And some in the $400,000 range:

http://www.redfin.com/CA/South-Pasadena/1035-Arroyo-Verde-Rd-91030/unit-D/home/7003363

http://www.redfin.com/CA/South-Pasadena/1202-Indiana-Ave-91030/unit-1/home/7004781
But my question is, can a teacher afford to buy at $400k to $500k?
Maybe two teachers? But buying based on a dual income, especially in a declining field, just seems really risky and foolish.

I have quite a few teacher friends, they all rent!

FalconMaster says

Pasadena Native - here is what this house needs - (a little TLC of the destructive variety).

$1.5 Million??? No thanks! Find another sucker!
p.s.: are you Native Pasadenan on DoctorHousingBubble.Com?

Now where did you get that idea? ;-)

Mr.Fantastic says

You can buy a condos in the $500,000 range in South Pasadena too:

But the sample I posted in Irvine was twice the size & in twice better condition, due to the RE market crash in Irvine being more pronounced.

They stopped "making land" in South Pasadena 1/2 a century ago. The Irvine Company isn't done "making land" by any means and will continue to "make land" available for more cookie-cutter HOAs for the next century, smartly doling it out at the start of housing market booms, just like they have for the past 5 decades.

When I made this initial post, I was expecting just a couple comments at the most. I often don't feel that I fit in here, being a Progressive liberal amid more mainstream investor types. I tend to find that my views sync with Dr. HBB, but I think it's good to see both sides of the coin.

So. Pas recently decided to take on a huge city redevelopment project; more retail and 60 more condos - - as if we don't have enough empty ones already. I'll keep you updated, as I'm sure you are all just chomping at the bit ;-) We already have gridlock at peak rush hour so I can't imagine what it will be like when it's completed...I say " if it ain't broke"...you know the rest!

Tschuss!

Mark_LA says

Mr.Fantastic says

You can buy a condos in the $500,000 range in South Pasadena too:

But the sample I posted in Irvine was twice the size & in twice better condition, due to the RE market crash in Irvine being more pronounced.
They stopped “making land” in South Pasadena 1/2 a century ago. The Irvine Company isn’t done “making land” by any means and will continue to “make land” available for more cookie-cutter HOAs for the next century, smartly doling it out at the start of housing market booms, just like they have for the past 5 decades.

Yeah, and their fucking up the hillsides in Irvine as well, all for the sake of the mighty $$.

PasadenaNative says

Mark_LA says

Mr.Fantastic says

You can buy a condos in the $500,000 range in South Pasadena too:

But the sample I posted in Irvine was twice the size & in twice better condition, due to the RE market crash in Irvine being more pronounced.

They stopped “making land” in South Pasadena 1/2 a century ago. The Irvine Company isn’t done “making land” by any means and will continue to “make land” available for more cookie-cutter HOAs for the next century, smartly doling it out at the start of housing market booms, just like they have for the past 5 decades.

Yeah, and their fucking up the hillsides in Irvine as well, all for the sake of the mighty $$.

*they're

This is for all the women of the earth I guess. Get that out of the way first. I think the Carter scam years are upon us now. You know when they suddenly found out that oil is not generated out of lava which continually makes pools of oil. Of course it's not we are running out of oil. Yea yea running out of oil. Thats the ticket. It started with a cartel of course. Ole Jimmy is faster than you knew. See if you come up with a good scam. You could even become President. Ever since then day in and day out this oil game has been run into war and everything else till we are sick of it. Now with the tax base eroded. I guess they will be skimming for oil. Yea thats the ticket skimming for oil. Profits skiming oil profits. I'll make out good there so will all concerned. Whoops a little to much off the top there.

Bill Clintons Mortgage Backed Security scam. Which was backed by nothing. Does not seem to be working out anymore. Time to order some take out. See you later

DaveM_Renter says

@Mark - you rock, if I were buying I’d hire you I do agree with almost everything you said, except that I do believe that South Pasadena will fall. Simply because the “good school premium” is starting to reach the point where it’s getting cheaper to opt for private schools.

I'm certainly hoping that's the case that prices will fall in South Pasadena, but will buy even if they stay flat for 18 months straight. That's why I'm sitting pretty and waiting for 18 months straight of RE prices staying flat or going up before I purchase.

As has been stated, the "good public school premium" is just a pass-through cost. The $300k extra that I pay compared to LAUSD territory as an example, I will get back when I sell 15+ years later to another family with school age kids that values good public schools.

It costs $500k-$800k (accounting for future inflation) to send 2 kids to a good K-12 private school. Most good private schools are in the $20k/year range....you do the math. You will never get those $500k-$800k back like you will with the good public school housing premium.

Mr.Fantastic says

Ronnie Honduras says

Woah… I screwed up the html in that last post. I meant to comment on Mr. Fantastic’s comment / quote his. Instead I managed to attribute my own comment to someone else by mistake.

These are my words in reply to Mr. F.:

DING! DING! DING! When will some people learn that much of government is nothing but organized crime with a flag on the wall?

Exactly. Appraisers are just people. You push $15,000 towards them with a wink, and they know what to do. Corruption is inherent in the housing market.

Agree. Housing sector is the most corrupt and lying/fraud/predatory stuff etc. are hardly prosecuted.

Mr.Fantastic says

run-down $1.5 million fixers because people simply don’t have the cash to fix them on $80,412 a year.

Oh no! We must be fueling another bubble since households that make $80k/year can get loans for $1.5 million fixers + $300k HELOCs to restore the grand old dames--according to you.

Mr.Fantastic says

The Irvine economy, along with being centrally located to all of OC, and LA/SD is one of the biggest perks of living here.

Haha....it's a 2 hour drive from Irvine to downtown L.A. or downtown San Diego during rush hour...definitely not centrally located by any means....and that's reflected in the low average $/sq ft. Land isn't scarce in Irvine, and won't be for many decades. As long as there's more supply than demand, the average $/sq. ft will remain low.

Stockton is centrally located to SF and Sacramento by your standards.

ArtimusMaxtor says

Bill Clintons Mortgage Backed Security scam. Which was backed by nothing. Does not seem to be working out anymore. Time to order some take out. See you later

Artimus what in the world are you talking about? Some of the stuff you post seems incredibly random.

Sorry I don't mean to bore the incredibly intelligent Knew. Your my fav too Mr. Fantastic. How could you be second to none. HaHa.

In rural areas they grow their own pot. Their own wine. Mostly don't wear clothes around the place. Party like you've never partied before. Sleep like a baby. With no traffic. That may be a bit to hedonistic for many of you. So be careful when and if you buy there. You may run into some counter culture people.

@Mark_M -
Mark_LA says

As has been stated, the “good public school premium” is just a pass-through cost. The $300k extra that I pay compared to LAUSD territory as an example, I will get back when I sell 15+ years later to another family with school age kids that values good public schools.
It costs $500k-$800k (accounting for future inflation) to send 2 kids to a good K-12 private school. Most good private schools are in the $20k/year range….you do the math. You will never get those $500k-$800k back like you will with the good public school housing premium.

About that math - you're comparing that $300k upfront to $40k/year over 12 years, they're awefully close, in fact you end up paying close to $600k if you pay your loan over 30 years. And if the school happens to go downhill (not all good schools remain good forever) then you're locked in and your "pass though premium" also is at risk.

But the point I was making is that if house prices drop in the surrounding areas then either your $300k premium turns into a $400k or $500k premium - or Pasadena prices will have to fall too. It's as simple as that.

See everyones screwed that goes into those newer building type rentals. The older buildings for the most part ok. Because they price fix. They fix them near mortgage payment levels. They may be even higher than that now. Where you make out is you keep your down payment. The first 10 years on any loan. Is nothing but interest payments. To go and refinance your house. Just isn't all that swift. Hardly nothing goes to principle.

What needs to happen is people only rent from those that own older buildings. However even in those sometimes the lenders call the shots or the landlords are too greedy to make their prices at the proper level. So you rent a house or you go into and rent something else. I wouldn't give someone that gouged me a dime.

A liter of coke costs 1.59 by coincidence so does a liter of pepsi. Ok so is there price fixing. Of course there is. Look at the price of cars. All prices are fixed for the most part. You can't negotiate the price of a coke. By way of that a liter of coke costs 1c to make including the bottle. THATS ALMOST A 1500% MARKUP. See if you want to eat your going to have to accept price fixing with ridiculously high mark ups. The one place I found I can get away with negotiations. Is as an investor. I take a big chunk out of them there. For every time they've screwed me with their price fixing. A VW used to cost 3k most cars were around 4k now they are almost uniformly 13 to 20k. The productions lines have gotten better and automated. Yet they cost more.

A whole lot of people try to discover what it costs to make that car. I can tell you not that much. You have on an average of a 700 to 10,000 percent markup on anything you buy. I try to get them back for screwing me. I'm not working for these gougers. I used to I was very unhappy. They get you trapped living in their dwellings. Working for them. Buying their greedy marked up goods.

MMM. Nice shot Dave. You mean pretenders. That owe more than they look it?

FalconMaster says

Take your liberal, socialist-loving ideals elsewhere.

That's a technique called "Label the message, shoot the messenger." It's very common on AM radio as a way to avoid actually discussing any ideas that might result in fair taxes on the ultra-rich.

Discussing ideas is hard and dangerous, because you might have to admit the other side has some merit.

Simply labelling and dismissing the individual is easy and safe, because then you never have to consider the possibility of mistakes in your own position.

I learned this from a book called "Answering Back" by David Coates. Chapter 2 is brilliant.

Pardon me if this is redundant. I didn't read all the previous comments. I have to agree with Patrick on his assessment of the pricing on this property. I live in LA and know this area well. One important factor to consider is the income to price ratio in the area. According to Wikipedia, South Pas has a median household income of around $80,000 as of 2009. The median selling price in the area should hover around three times that. So the median home price in South Pas should be around $240,000. According to Redfin the median house value in the city is currently over $800,000! The actual median selling price in Nov 2010 was $590,000, which includes condos as well as houses. The lower figure is most likely due to the fact that most sales activity is happening at the low end - even in supposedly wealthy areas. Some desirable areas will run a little higher, but even if we allow for prices to run five times the median household income (which is way outside of the formula for sound affordability) we are looking at a projected median of $400,000 for the city, max. Homes are still hugely overpriced in South Pasadena. We should see a fall of at least thirty or even fifty percent in that area before we hit sustainable fundamentals.

Mr.Fantastic says

ArtimusMaxtor says

MMM. Nice shot Dave. You mean pretenders. That owe more than they look it?

Pretty much. The current pricing in South Pasadena isn’t sustainable (at least not until 2035). You think these pretenders are going to hold on that long bleeding money?

It will probably come down in the next 5 to 10 years. It will be a slow fall due to government slowing it down, but it's still a gradual going down. Free market won't let it stay there, people don't have the income for that.

Mr.Fantastic says

Of course, I’m sure there will be plenty of suckers willing to drop 600 large on a 100 year old house with 1 bathroom.

Yep, one sucker will hand it over to next sucker and so on, all the way to the bottom!

HaHa bubble sitter hahahaha thats a neat nick