Real Homes of Genius: Today we Salute you Pacoima. Zillow says $457,000 but Listed at $225,000?
Real Homes of Genius: Today we Salute you Pacoima. Zillow says $457,000 but Listed at $225,000? Who Would Have thought 770 Square Feet Would Cause Such a Discrepancy!
It is official. No one knows what the hell is going on with prices in Southern California housing. Why? I present to you exhibit number one in the up and coming city of Pacoima. Today we salute a wonderful 2 bedroom 1 bath home sprawling over 770 square feet of luscious terrain. This place is so magnificent that you can park your entourage of vehicles on the lawn. The place was originally listed at $250,000 but is currently reduced to $225,000. What! $200,000 homes in Southern California? Yes, I know what you are saying, “but Dr. Housing Bubble, this is Southern California, the chosen land and homes do not sell for under $300,000, this is written.†Although what I am presenting may seem like housing blasphemy Zillow is still living in the Wonderland of what use to be Southern California Circa 2005. Let us take a look at what Zillow expects this property to sell for:
Wow, off by $232,000. Bwahahah! Zillow is off the amount of the home. Maybe they need to tweak their algorithm a bit for prime cities like Pacoima and Compton. Let us dig into tax records and see what this house sold for in the past:
Sale History
01/21/1998: $133,370
05/10/1993: $133,000
Damn! Approximately five years and we have a whopping $370 price increase. I’m sure when they sold in 1998 they figured the $370 would be for the security (read fence) they installed for your automobiles. Crazy crazy California. Again if you are to listen to the pundits, you would be overpaying thousands of hard earned dollars in locations where the family median income is barely $40,000 a year. I can only imagine how many out of state investors loaded up on California properties simply because they were listed in California.
Today we salute you Pacoima with our Real Homes of Genius Award. You are so brilliant you defy the massive mathematical power crunching abilities of our friends at Zillow.
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14 Responses to “Real Homes of Genius: Today we Salute you Pacoima. Zillow says $457,000 but Listed at $225,000?”
Dr. Bubble, I’m now getting addicted to a daily fix of these genius awards. I think these alone, if widely distributed to the public, would have burst the bubble.
In all honesty, what is a house like this in a neighborhood like this really worth? Even for a struggling working class immigrant? I would say a price level that would permit me to at least break even on mortgage and upkeep as a RENTAL. Return would then be made as inflationary gains over time and realized at the time of sale.
Do you think Pacoima is a safer or more dangerous place to live since the thing sold for $133 in the 90’s. I would say worse. The value, then, should be considered lower, perhaps $100K, though I wouldn’t fork over a dime for it.
How much would someone consider paying in monthly rent for it? And I don’t mean 6 families.
Maybe you could get these genius homes linked on Drudge or something.
Anyway, thank you for the continuing education and entertainment.
Dr. Bubble,
That one is a great find!
ROTFL. Zillow off by 100%. ROTFL.
Sigh…
As to value… I cannot say. But compared to your Stanton example… infinately better priced. A grade 2 genius at best. 😉
Note: I do like your “genius series.”
Got popcorn?
Neil
Whoops, I didn’t mean I’m the struggling working immigrant. However, this is certainly the sort of folks who live in Pacoima and shouldn’t be trapped in the games run by Irvine fraudsters partying on cruise liners.
I just don’t see how homes like this are worth anything but salvage value and for assembling tracts of land for future use.
Yo, Dr. BH:
Seriously, there was just an ad from NAR on a NYPD Blue episode on TNT tonight. The language used about what a great home market is out there included “more choices” (read unsold inventory) “better prices” (the bubble burst) and what you call permabull phrases. It was an awesome ad.
Long live speculation.
wannabuy,
Yeah, Zillow is a great program in terms of what they are doing but obviously it is only as good as the data that is being put into it.
Grab a seat and join the 2007 party. You can finance that popcorn at 2% for 1 year.
sed,
“Seriously, there was just an ad from NAR on a NYPD Blue episode on TNT tonight.”
TNT, home of great drama. Excellent place to put a housing ad. I can imagine future ads having one of those talk over guys saying…
“In the year 2007, man thinks housing is overpriced. But little does he know that the greatest bull market of all time was around the corner. Yes, 2008 expect the unexpected when housing goes from 0 to 1 million over night.”
I’ve heard ads on the radio talking about companies refinancing your mortgage and you making no payments for one year. Looking into this they just tack it on the backside of the principle. Ah yes, forever in debt.
Ah, yes, beautiful Pacoima. In terms of relative safety, gang violence has exploded in 2006-2007 throughout the SFV and it’s hard to imagine what housing/credit collapse will do to blighted areas no city offical gave two craps about even during the boom. My guess is the Vineland Boyz will need a new meth lab and at $200k it’s a steal. Well, they’ll probly wait out the market too and wait til it’s abandoned. Good times.
GeneralVanNuys,
You are right. The area is not exactly what you would consider prime. That is why it is amazing to see prices still in the stratosphere for many Southern California areas. How many of these places sold in the last three years on risky loans? Do you think they will be able to sell these quickly if a payment shock is in store?
At least these folks can sell the SUV and survive for a few more months. Where else in the world would you pay $400,000 to put your life at risk? I understand people need to rent here but to lock yourself in here for decades is not exactly a smart move. Just look at the massive appreciation that it had over 5 years. $370. In terms of a nominal gain yes but considering inflation this is a big loss.
Just ran across this headline on:
http://www.nationalmortgagenews.com/
Rulemakers Told to Slow Down
Regulators and legislators should not go too far in reining in so-called “toxic loans,” the chairman of the Mortgage Bankers Association said at the group’s nonprime conference.
Damn, I’d consider subscribing just to see what kind of bone-headed advice the chairman could offer…
What part of the term “toxic mortgage” does he NOT understand?
It’s clear he’s not worried about ineptitude handling of HIS $$$, but some mortgage-backed derivative or DCO that can be passed off to Wall Street. Other people’s money.
For if you run your own business and you’re hemmorhaging profitability, would YOU accept that perhaps you should “slow down” stop-loss attempts?
Hi Dr Bubble, it’s David from Zillow.
I need an address if I’m going to comment on a Zestimate but I doubt that the reason we’re this far off is related to depreciation — as you point out, it’s more likely that we don’t have good data to work with.
David,
Welcome onboard. Glad to see Zillow active on housing bear blogs! Zillow is an excellent tool especially in regards to finding quick information on a property, especially previous tax sales since this theoretically should be 100% accurate. This property is easily found on http://www.realtor.com or ZipRealty; just query a property between $220,000 and $250,000 in Pacoima – not much of these exist in California especially in this city. You’ll recognize it by the cars on the lawn.
I feel that Zillow will dominate in a market where prices are stable. I have used it for querying properties in Oklahoma and Texas and find the prices are about 2 to 3 percent off real appraisal values. Pretty damn good if you ask me.
However, you can see what occurs in really hot markets such as those on the coast. They perpetuated the high price myth because sales data take 2 to 3 months to show after escrow has closed; tax records take even longer from my experience. From what I gather, Zillow takes prices of homes in surrounding areas and Zestimates by previous sales data. So in a market that is rapidly shifting I’m not sure how Zillow can account for this. Maybe you can answer that for us since we’d be extremely curious?
Again, my hats off to Zillow and places like ZipRealty that are taking the power away from a monopoly such as the N.A.R. and C.A.R. and the way they stranglehold the MLS. This data is easily analyzed with a simple real estate evaluation tool from Excel however key points are so difficult to come by. How can you account for a home in Pacoima that was sold by fraud via a sub-prime mortgage obviously inflating the price and then using this as a reference point for future sales? Again, I think Zillow will do great once the market settles down in California but we will be going down for a few years especially with foreclosures rising.
Zillow notoriously (at least notorious to me) over zestimates what should be lower priced starter homes. I’ve seen it time and time again. Maybe not to this degree though.
How cool is that, you got someone from zillow defending themselves.
Hey zillow guy, there is an art and science to pricing a home and you only have the science part down, not the art. But a great service nevertheless.
Zillow bases values on closed sales – in a decining market this obviously doesn’t work. In an increasing market it doesn’t work either.
Active and current esscrows also need to be considered (if you want an accurate opinion/estimate of value) .
Zillow also doesn’t seem to take into account location issues (busy street, or other negative influences).
thanks to stated income were in this mess. hey zillow why dont you take a little time and look up comps on the mls put a little effort and dont just put the last sales price, all their zestimates or w.e they call it are all off by far!! clients that i am workin with are always on this site its a good tool for info but not good for finding property values or even active listings. d. hb im lovin the articles nice work. keep those awsome graphs coming!
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