Real Homes of Genius: 4 Homes in Pasadena. Every Zip Code in Pasadena Seeing Pricing Pressure. Housing Enters the weak Fall and Winter Seasons.
The summer selling season is now over and as we enter the weaker fall and winter timeframe, the California housing market will be put to the test in the next few months. Many of those pesky Alt-A and option ARM loans are defaulting right on time during the slower selling season just as the market seemed to be gaining some traction. Banks are using every means possible to artificially keep inventory low by ignoring defaults, applying weak modifications, and employing every other sham to keep the shadow inventory going. Make no mistake, when you simply allow people making no payment to stay in their homes with 6, 9, even 12 months without filing any NOD/NTS you are artificially padding inventory.
As things seem to be leveling out on the surface for California, we have our Governor auctioning off the state on eBay. Part of the California garage sale, Arnold is selling an autographed jacket. The bid is up to $6,100. That’ll pay for 6 loan modifications that will default a few months later and give banks a few more dollars. The Southern California market is largely in a game of deception. Many buyers that sat on the fence are now enticed with FHA loans, cheaper home prices, $8,000 tax credits, and a general sense that the market is much better. And who can fault the buyer? They are simply going by what they see with their eyes. Inventory does appear to be low. Yet the pressure is building up. Bloomberg as you may know, won their Freedom of Information Act request against the Federal Reserve to see what the crony banks have been up to. The Clearing House that represents some of the largest banks is of course appealing this. Here is one of their reasons why:
Source:Â Zero Hedge
Bwahahahaha! Did you get that? What they are saying in essence is we need to keep the little man behind the curtain hidden or the public will freak out when they realize what kind of crap banks are pulling off. And recently, there has been a PR push to show that banks are paying off their TARP funds. The amount comes to a measly $14 billion or so but the gall of the crony banking system to say they are “paying off” the government is absolutely pathetic. What about the $13 trillion or so we’ve used to back stop these corrupt banks? Let us look into the books. They are fighting so hard because they know what is there. It is a sham of epic proportions. If you need any more proof that the banking system is corrupt here it is. If they have nothing to hide the data will show it. The fact that they try to use the Great Depression and FDR is insane. The FDIC was to protect depositors. Mom and pop deposits so they wouldn’t stuff money into mattresses. We already have protection up to $250,000. How many average Americans have $250,000 laying around? But here, exposing the numbers will show the ultimate gambling of the banking elite. Trying to sell it as “we are trying to protect the little people” is shameful.
Today we are going to examine a prime location in Southern California, Pasadena. Some people have e-mailed me saying that I have focused too much on Culver City so I will choose another desirable location in the region. Pasadena is one of those markets that has it all. Yet there are people in Pasadena that have the “not in my backyard” mentality when it comes to real estate. They say, “sure, properties are falling in crappy parts of Pasadena but certainly not in MY area.” Well I’ll give you 3 homes and 1 condo to show you that housing is going down in every range of the market. Today we salute you Pasadena with our Real Homes of Genius Award.
Pasadena – The Market Seeing it All
Our first home is a nice little 2 bedroom 1 bath home. 814 square feet to be exact. This home was built in 1901. 1901? Yup, over a century ago. The home is currently listed as a short sale. First, let us examine some sales history on the home:
Sale history
03/17/1999: $90,000
04/08/2005: $450,000
Seems like it did well. Whoever sold that place in 2005 made out nicely. The home has been on the market for 80 days. Let us look at the current list price:
Current price:Â Â Â $299,000
A drop of 33 percent in so-called prime Pasadena. But not in my back yard right? Let us examine a condo in a different zip code of Pasadena.
Not a bad looking place. The condo was built in 1972. This condo is a 3 bedroom 1 bath condo and comes in at 1,211 square feet. It has been listed on the market for 181 days. Let us look at some sales history:
Sale history
05/21/2004: $280,000
06/30/2006: $469,000
Not bad for appreciating nearly $200,000 in 2 years. Can you see why people were flying high in California real estate? Certainly this condo has retained its value over this time right?
Short sale list price $325,000
Another 30 percent drop. But of course, not in Pasadena.
This home is a 3 bedroom and 1 bath home. It is listed at 1,027 square feet. It has been patiently sitting on the market for 187 days. Let us dig into that sales history:
Sale history
09/01/2006: $610,000
Wow. $610,000 for a 3 bedroom home? Reminds me of the happy Real Home of Genius days. Let us look at the current list price:
Short sale list price $450,000
A drop of 26 percent from the peak. Are you noticing a pattern? But you say these are in the lower priced areas of Pasadena. Well let us look at a more prime home.
This is a very nice 5 bedroom 3 baths home listed at 2,750 square feet. It has been on the market for 85 days. Let us look at the sales history here:
Sale History
01/26/2006: $950,000
This home was built in 1924 and nearly reached the $1 million mark. Not bad for a 5 bedroom home. But those were the bubble days. Let us look at the current list price:
Short sale list price $799,000
A drop of 15 percent. So much for it not impacting every zip code in the city. As you can clearly see, from the lower end to the higher end of Pasadena, homes are taking a hit. Some don’t want to believe this because they want to pretend shadow inventory doesn’t exist and eat up everything their real estate agent tells them.   Let us run one of our quick experiments:
MLS foreclosures:Â Â Â Â Â Â Â Â Â Â Â 19
MLS short sales:Â Â Â Â Â Â Â Â Â Â Â Â Â Â 41
Total listings:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 555Â (condos and homes)
But what lurks in those shadows?
So we publicly can see 60 distressed properties but in reality, there are 737 properties in distress. Yup, no shadow inventory.
Today we salute you Pasadena with our Real Homes of Genius Award.
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24 Responses to “Real Homes of Genius: 4 Homes in Pasadena. Every Zip Code in Pasadena Seeing Pricing Pressure. Housing Enters the weak Fall and Winter Seasons.”
I love it DHB. Keep those RHG coming.
Check this one out.
http://www.realtor.com/realestateandhomes-detail/6619-Gifford-Ave_Bell_CA_90201_1108721770?mp=1
Comes with trashcan photography and a lowrider paint job.
Doc,
What your saying is completly opposite from what yesterday’s Jim at Bubbleinfo.com said about under $400,000.00 houses in San Diego?
http://www.bubbleinfo.com , Wednesday, Sept. 2nd at 11:02 pm
What’s crazy is that even the reduced prices are still too high.
I saw a quick report on CNBC yesterday about So Cal credit unions issuing mortgages and doing re-fi’s. I know that traditional banks have issued bad loans with intrest free, or at least low intrest money. Then when they get into trouble they get bailed out.
Do CU’s have enough cash to cure some of these bad loans. Would they get bailed out eventually too? CNBC seems to think this is a break through (don’t get me wrong, I filter most of their garbage out). But this is something I’m unfamiliar with.
if you want an even better laugh look at the housing prices in Coronado Ca 92118. The people here REALLY have the thought of “not in MY back yard”. Many preforeclosers on the list here. I will just sit back and rent……
I think before any meaningful recovery in real estate prices can take root, we need to overcome three major obstacles…
“Rebound Obstacle #1: Inventory Glut. Nearly 10% of all homes built this decade are sitting vacant, compared to a historical average of 2.2%. In total, we’re sitting on almost 10 months worth of inventory versus a historical average of four months. If we factor in the “shadow inventory†– the roughly 600,000 homes that banks are withholding from the market – the problem worsens. Excess supply always erodes prices.
Rebound Obstacle #2: Loan Resets. Forget subprime. We’ve already worked through 80% of those resets and written down $1.47 trillion in the process. Now we’re facing a $2.5 trillion mountain of Alt-A loan resets. The first big wave hits mid-2011, with the peak expected to come in early 2013. So we’ve still got time, but the early stats hardly instill confidence. More than 20% of Alt-A loans are already 60-plus days late, up from an average of about 3% for the last decade. If interest rates creep up even modestly in the next two years – a near cinch given the likelihood of inflation – payments will increase notably. In turn, so too will default rates.
Bottom line, another wave of massive writedowns looms on the horizon.
Rebound Obstacle #3: Foreclosures. One in four homeowners are now underwater. If we break it out by loan type the picture gets worse – 25% of prime loans, 45% of Alt-A loans, 50% of subprime loans are severely underwater. Add in the 6.5 million Americans out of work since the recession began and it doesn’t take an Einstein to predict where foreclosures are heading. Credit Suisse estimates that we’re in store for a total of 6.5 million by 2012.Even the Mortgage Bankers Association (MBA) concedes the obvious in its first quarter update, saying, “Looking forward, it does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve.†Since the rosiest prediction doesn’t expect unemployment to peak until early 2010, as the MBA acknowledges, “…It is unlikely we will see much of an improvement [in foreclosure rates] until after that.â€
The fact that the social stigma attached with “walking away†has been severely (and sadly) diminished over the past decade only adds to the foreclosure heap. And more foreclosures will inevitably push prices lower.”
Read More http://www.housingnewslive.com/articles/reasons-housing-market-going-down.php
Sambone – watching Jim’s video it appears the flippers are out
in force once again. It’s almost as if it’s 2005. Or am I not
understanding that video?
I’m with Steve. Consider what happens if the houses are sold at the asking price:
From 90K to 299K in 10 years is still a 13%/year appreciation rate for a 108-year-old home even after the bubble burst. If you gave it a still decent 9% rate that would yield an sell price of only $215 – a good 30% drop from what they’re asking now!
I think it would be nice to revisit some of the past Real Homes of Genius to see if they’ve sold finally, and to compare those sales prices to what they were asking. That would really help to demonstrate whether people priced their homes prudently or whether they were deluded victims bubble-mania holding out for the impossible.
Hey DHB,
Notice there is no trash can photography in Pasadena, maybe this is the reason prices have stayed so high !
Would love it if you would run a RHG edition for zip code 95186 or 95819, two areas of Sacramento that are populated with those of the same NIMBY attitude…
Credit unions are a LOT stricter. My girlfriend just closed on a house and LFCU requested a 35% down payment….. which I think is smart of them. No FHA (subprime) loans for them!
I went to a home buying seminar my Credit Union had about 6 months ago. They told us they were in a good position, as they had NEVER written a loan that didn’t require at least 10% down, with verified income. I forget what they said their minimum required FICO score was.
So yes, I think at least my Credit Union is doing well.
That 3 bedroom 1 bath home hasn’t actually been on the market for 180 days. It originally went on the market then, was up for a week or two, then went off until last week. I’ve been looking at homes in Pasadena for the last 9 months, every day, and I am starting to see this happen a bit. Many homes that went off the market awhile back are popping up. Sometimes it shows up as a new sale in the MLS, other times it keeps its original day. I can tell you one thing, that house will be sold (or at least taken off the market) in a week or two. Houses in that area are still selling and are still getting bid wars.
Last big weekend to snag a buyer. After Labor Day, we will feel the dead calm over real estate. No more seasonal moves due to school etc.. With the Alt-A and Prime timebombs now ticking away, Tthe Westside is in for a rude awakening. Banks are flush with propeeties and have to release them sooner or later. Govt is down to it’s last bullet. PPIP program, which is faltering.
http://www.westsideremeltdown.blogspot.com
I think maybe all the people with the shadow inventory are at loansafe.org, talking on the forums about what to do with their ARMs. “LoanSafe.org is America’s #1 home loan forum and loan article directory.”
I received a form email from Senator Feinstein that said that rentals are now more in demand than supply and that its “getting worse every month.”
With the summer season coming to a close this weekend, real estate transactions will drop off dramatically. No more school moves etc…. And with the Alt-A and Prime Loan timebombs ticking away, the Westside gets a wakeup call.
Venice was off 38% YOY in July….
http://www.westsideremeltdown.blogspot.com
Unemployment may hit 16%-
http://www.cnbc.com/id/32656438?
Lekas expects the unemployment rate to hit 16 percent as more companies consolidate and the equity markets will break their lows by the end of October and will go back the historic March 9 lows.
“You just fell off a 20-story building and you’re at floor 5,†he said. “Everything’s ok so far, but in the end, you’re just a little bit early.â€
High end homes are still way too high. For example, Yorba Linda still has some of the highest prices in Orange County. I am seeing lower prices, but not low to where they should be in comparison to its surroundings. I mean high end in areas where you can drive at night without a bullet proof vest.
Thanks for the insight on the credit unions. So it seems that report I saw may be a bit misleading. It seems credit unions may be willing to cure a prime loan with a decent amount of equity. But, not someone who is treading water or under water, as they made it sound. I should’ve known better than to turn up the volume on CNBC.
I was just working in Charlotte at ground-zero of BOA-East (It’s a two-headed monster, the old San Fran Bank America and Charlotte’s Nations Bank) and it looks like Dubai Junior with all the cranes and new towers going up. Maybe a problem elsewhere, but bailout-city (home of Wachovia, too) is alive and well. Thngs are booming for now. Bet they’re glad they don’t make cars here instead.
Obviously the FIRE industry is burning up all the rest of America and whoever ‘they’ are, aren’t going to let it fail–the rest of us be damned. Too big to do anything but fail.
Saw another movie waiting for Planet of the Alt Apes (they are keeping the film off the MLS, movie listing service, for as long as they can). It was called Along Came Paulson. One of the running jokes was when Hank kept dragging around a ferret called The American Taxpayer. Boy he really creamed that little guy…
Maybe this thing comes off the rails soon or maybe a few more years, but each time the scheme gets ready to blow up, the postponement plan becomes more radical.
“What they are saying in essence is we need to keep the little man behind the curtain hidden or the public will freak out when they realize what kind of crap banks are pulling off.”
I can’t remember where I read it (probably here) but with all the talk of “public confidence” someone noted that only confidence games require public confidence to be profitable. Three Card Monty, anyone?
Seems like these prices are STILL totally crazy – the first one, after a full 1/3 decline, is still MORE THAN TRIPLE the 1999 price.
That averages nearly 12% a year for ten years running! And at a time when incomes were rising only a few points a year.
Totally unjustifiable and unsustainable, this place needs to be 200k, not 300.
We have real homes of genius in San Diego, too.
I didn’t find any real home in your link could give the link again WC varones
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