Real Homes of Genius: Today we Salute you Van Nuys. $535,000 for 814 Square Feet.
From county to county the party is heating up. Spring is in the air and overpriced homes are coming online like AOL. Each day, the MLS is flooded with delusional sellers thinking we are in 2005 and the market somehow will reflect yesteryear prices. In our 16 installment of Real Homes of Genius we will cover Van Nuys. We’ve covered such glorious places like Compton, Bell, Santa Ana, and Stanton. The jewels of Southern California and all showing sub-1,000 square feet homes for $400,000 to $500,000. Today we show that pie in the sky radius is rather large in Southern California. Today’s specimen is a 814 square foot 2 bedroom 1 bath mansion in East Van Nuys. This home is an excellent starter home with all the amenities you would ever want in a nest; a white picket fence, garage, and tree in the front yard. Okay the fence is actually security steel and the tree is bald but you get my point.
Average household income for this area is $44,712 and median net worth is $29,675. So yes, $535,000 is affordable for anyone looking to purchase here. If you are from out of state you are probably scratching your head and wondering “what is wrong with Denmark?†but you must understand that California has the sun and you don’t. I think the California Association of Realtors is trying to patent the sun for our soul usage. Hence you have homes for $200,000 and we have them for $500,000+. Makes sense? Good. It is always enlightening to see what this home sold for in the past:
Sale History
12/29/2004: $380,000
12/30/1991: $155,000
So these folks initially had the place listed at $574,000+ but realized they might be a bit too greedy trying to sell for over $194,000 in two years. Now they have dropped the price by $39,000 thinking they’ll lure someone into this magnificent place. I’m sure someone will do a case study on how folks can ask for ridiculous prices but have a hard time lowering their price. They call this the “sticky” nature of housing but I like to call it the delusional Napoleonic vision of grandeur you have on your home; why mince words when we can say sticky right? I discussed this in my previous post regarding the Duesenberry effect and how people rarely adjust their standard of living on the way down. Either way, these folks no longer have the lambs that were being suckered in by no-doc loans and claiming they make $95,000 working graveyard at Wal-Mart. Little by little underwriting is getting more stringent as the credit sewer system in Wall Street is getting clogged up and we need a little reality Drano to get this thing moving again.
Today we Salute you Van Nuys with our Real Homes of Genius Award.
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16 Responses to “Real Homes of Genius: Today we Salute you Van Nuys. $535,000 for 814 Square Feet.”
C’mon Dr. BH, no reason to be so cynical! After all, this home DOES have a livingroom window.
I admit the tree doesn’t look good now, but the owners are just waiting for the next crop of dollar bills to leaf out.
Hey Dr HB – love your site! The Ken and Barbie post had me ROTFLMAO…
Re: Lunacy in Van Nuys East…You have to wonder what is going on the minds of the sellers if they think its worth over 1/2 a million dollars. Bald trees and brown lawns can be fixed…but you’re on crack if you think this place was selling for more than 200K only 6 years ago.
Personally, I’m all for smaller houses – so many little houses have been torn down, only for a huge 4000 sq ft Tuscan Villa to be thrown up in its place. Most of the new listings on ZipRealty in that neck of the woods are for 1+ million dollar McMansions than no one in thier right minds would want to live in
BTW – can you give us any more info on the street/address? I live in Van Nuys, and would love to be able to give y’all some more first-hand notes on this little gem-in-the-rough.
Dr. my eyes! Thanks for saluting my home town. Reminds me how me and Mrs. Van Nuys nearly bought some prime property near the VN Airport after selling our Sherman Oaks Hills place near the top. Despite the constant din of jet noise, blankets of pollution and the slow unwinding of noise retrictions, there were a dozen or so bids on the house. The owner also wanted a letter from prospective buyers testifying that the owner’s precious rose gardens would be kept in perfect order. I, of course, had thoughts of bulldozing the roses to put in a strip mall (why walk a whole block for a Slurpee?). Fortunately, we were outbid and some lucky folks paid a little over 750k for that sweet spot about 200 yards from where a private plane recently took a powder in someone’s front yard.
I am always struck by the mentality which believes your house makes more money than you do. Simply by owning real estate, you are entitled to double your income. Does this really make sense to people?
I suppose once you accept that absurdity, a house like this makes sense. If you want to double your income, the price you pay is living in a house that is not as nice as a rental, but with neg-am financing, you can at least get the payments close to rent. So you give up a little in house quality, but you have double the spending money. Cool!
Dr. Housing Bubble,
Part of me thinks this kind of lunacy would have to be limited to the financially illiterate, but I see well-educated people believing this garbage. Do you think the greed makes otherwise smart people stupid and irrational?
The home is located at:
7107 Natick Ave.
Van Nuys, CA 91405
(closest cross street is Van Nuys Blvd. & Sherman Way)
“BEAUTIFUL HOME FOR FIRST TIME BUYER. FEATURES: VERY SECURE FRONT IRON AND BLOCK FENCE, SET ON QUIET STREET. BACKYARD HAS A LARGE PATIO AND GRASSY YARD, BIG ENOUGH TO BUILD EXTRA ROOMS. GARAGE WAS CONVERTED BY PREVIOUS OWNERS, BEING USED AS EXTRA BEDROOM”
The current owner is carrying a mortgage of $485,000.00, so there is not much more room to drop the price here without having to take a loss.
Listed on 2/1/07 @ $574,950.00
Price dropped on 3/25/07 to $535,000.00
Hope the sellers have a good dental plan… as I think they will be eating a little stucco on this deal.
As far as well educated people believing some of the REspeak… I think that if anyone hears something long enough they start to believe it. Propaganda can be powerful. I mean, look at FOX news….. I know people that believe that stuff also.
sed,
You are right. $530,000 does sound reasonable. Afterall, we are talking about 2 bedrooms here. Maybe they can get a HELOC and buy a Palm Tree.
Speedingpullet,
Thanks for reading. An easy way to find this place is just query it on Realtor.com. With this price you should easily find this great place. Make sure to touch base with us and let us know your findings.
generalvannuys,
Fortune comes in many ways. Maybe being out bid was a blessing in disguise. I doubt many owners are asking for affidavits for garden safety anymore. Prep yourself for next year, prices will be coming down.
irvinerenter,
I am reminded of the quote that, “people want to be deceived, therefore let the deception reign.” In psychiatry it is said that a co-dependent relationship exists with swindler and fool. No loans without a hunger for homes. Both are in it together. Yet massive speculation creates massive greed; and at the same time when the party is over it creates massive anger and massive disaster.
Check this out.
Michael Hudson speaking on real estate. 2006
http://michael-hudson.com/audio/061208HudsonRealEstates.mp3
I found this on this site.
http://marinrealestatebubble.blogspot.com/2007_03_01_archive.html
Tuesday, March 27, 2007
Hudson on Housing and Our Neo-Feudal Society
anon:
Thanks for the actual realtor description. I like the “a very secure fence”, which I guess means the thing can’t actually be picked up and stolen overnight and might withstand a 3.0 quake. Now we know why the car is parked outside the garage since someone is sleeping in it.
And those extra rooms, boy you’re gonna need ’em. Then the place could be worth 700K.
Hey pullet — I totally agree. Classic communities had that “village” look with individually designed houses of various sizes, meant for people of mixed incomes. Generally led to a certain amount of stability. It’s sad to watch reasonably sized bungalows with treed yards turn into shadeless lots with huge boxes on them. Not too mention the quality of the construction and materials.
Lumber costs plummet. http://infohype.blogspot.com
According to Dr Bubble’s records, they bought this beauty for $380k in 12/04.
The current owner is carrying a mortgage of $485,000.00
So can we conclude they took a HELOC for $105k to enjoy the sweet mother’s milk of homedebtorship, suckling some of that “guaranteed” future gains in equity, using that quick cash to live the lifestyles of the Rich and Famous in Van Nuys?
Of course, in their mind, that HELOC money didn’t really need to be re-paid per se, since the principal would be offset by the rising equity…
so there is not much more room to drop the price here without having to take a loss.
Hey, who decided to raise the stakes and cut the margin for error to razor-thin levels, taking out a $100k HELOC consumer loan secured against a fantasy asset (AKA home equity)? Let me check: was it me? Nope.
Their inability to consider a possibility of negative consequences (and a need to hedge for the inevitable financial rainy day) sounds like a personal problem to me.
For who in their right mind takes out a HELOC/re-fi loan to enjoy the good life and trinkets today, forgetting that bad things can happen tomorrow?
While optimism is a glorious trait, we need to ban it from hanging out with it’s thrill-seeking cousin, the infamous bad-boy known as “irrational exhuberance”.
Apparently they’re banking on someone bailing them out if/when the times get tight: and they’re not alone!
But why exactly should I feel compelled to bail them out, in essence sacrificing MY future to help extricate them from the pickle they got themselves in? Did they invite me to share in the good times (watching Super Bowl on their brand-new Plasma T.V., etc) when they were enjoying the good times?
Oh, yeah: they were too good to hang out with riff-raff (AKA renters)…
Listed on 2/1/07 @ $574,950.00
Price dropped on 3/25/07 to $535,000.00
They dropped the price in less than two months that equals the average annual salary for the residents of Van Nuys. That alone indicates how delusional people became, treating theses prices as “funny money”.
Sad part is, in order to sell, they’ll need to drop well below their current asking price (and they’ll be getting upside down in their mortgage). So another FB (AKA financial genius) will soon be welcomed to the land of short sales/foreclosure….
Oh, they’ll be fine… Someone will buy it. It’s a great deal right?!?! My neighbor justed closed on a sweet 50’s tract house in Sherman Oaks. Got it for 10k under list! What a deal huh? Only 870k for a 3BR.
Oh, the slighltly smaller 2 BR right next door, on the exact same size lot etc, sold in FEB for 620K. Wonder if their Relitter bothered to give them that info? Oh well… 🙁
Owning is over-rated. Ask YOUR Doctor if buying a home is right for you…
My 1,750 foot brick home with a finished basement (not included in footage) and a very big yard would sell for about $170,000 in a very nice neighborhood, on a cul de sac.
CA prices are unreal – that is about 6X more than here. Does that mean if I move to CA I have to live in a homeless shelter?
Milwaukee, WI
We bought a house in that area of Van Nuys in 2000 for $190K. We sold the house (admittedly fixed up, however only cosmetically) in 2004 for $535K, thinking that was an insane price for VAN NUYS. Who knew it would get higher????
We bought in Van Nuys because it was cheap compared to the rest of L.A. However, the mania from 2003 through 2005 was purely the result of the Creative Financing.
We’re now renting, with our equity in a MM and will do so for the next few years until the prices drop – and drop they will. It’s all fundamentals.
Follow up, redfin lists as selling for 449,000 on 8/30/2007
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