Friday, July 24, 2009

1994 Pricing and Zillowho?

People are talking about home prices making a "round trip." Well here's a peach that is sitting with 1994 prices. A month on market and still for sale.

1685 Twin Lakes Wrightwood, CA 92397
$131,000 2 Bed, 2 Bath | 1,179 Sq Ft on 0.14 Acres (6,000 Sq Ft Lot) | MLS ID #374968

Sale History
07/01/2009: $165,251 * (back to the bank)
02/15/1994: $127,500

And what does Zillow think?:
Zestimate: $235,000 30-day change: -$3,000 Value Range: $159,800 - $253,800

How can they ever expect to be taken seriously.

This house should cost $700/month to buy and rent for $800. 3 years ago this would have sold for $250k.


Anonymous said...

Cali's stuff is all good and ours is no good.

Rob Dawg said...

Check out the realotrs other listings:

Agent #777 said...

I know this is a long way from CA, but I saw this house go at auction this week - for 1/12th (or 1/10th if you add back the $2500 buyer premium) of its ZESTIMATE price on zillow!
A house for less than 10K! Still not Detroit pricing, but I was tempted.

chickelit said...

This house should cost $700/month to buy and rent for $800. 3 years ago this would have sold for $250k.

I love your simple math (not being snarky). What is your formula? I want to apply it to my own situation.

TJandTheBear said...

That looks nice on the outside; wish there were inside shots.

Damn, Dawg, if that's available now at that price, it really makes you wonder what prices'll be later.

Rob Dawg said...

Doing the math:

Ask $131,000
Pay $125,000
Mortgage $110,000
At current rates expect $570/$100k
Mortgage $625
Taxes ~1% $100
Maintenance I just use ~1% $100
Deductions again ~2% or $200

I just do this in my head and play conservatively.
As you can see expenses less than $700 and rent is likely closer to $900 and tax deductions are actually much higher in the early years.

ROI less than 5 years. Pretty good.

sm_landlord said...

So at what point does this place become such a screaming deal that you just write a check? Or do you think it makes more sense to take advantage of the leverage by having a mortgage?

Rob Dawg said...

Write a check? When the interest is deductible? No, buy 4 of them instead using leverage as you note. The only thing holding me back is rent price softness and I think we've got another dip to go.

Bill in NC said...

Still a lot of money for a small cabin in the woods several hours from anywhere.

Bet the next dip down drops it under six figures.

averagerainfall said...

Rob wrote: No, buy 4 of them instead using leverage as you note.

Or, maybe buy 8 of them sight-unseen in 4 different states!!

Oh, wait, that didn't work out too well for the last guy. :-)

Property Flopper said...

More fun with the state - the assembly just passed -MOST- of the bills that the agreement called for. It left a couple out.

We'll see if this gets signed or not and we'll see how they plan to make up the "small" differences left (hey, what's a couple billion these days).

W.C. Varones said...

I had the exact same observation on 803 Ida in Solana Beach. They have been trying to sell it for more than a year, the price is now down to $899K, and Zillow still says $1.6 million.

Cobradriver said...

"Write a check? When the interest is deductible? No, buy 4 of them instead using leverage as you note. The only thing holding me back is rent price softness and I think we've got another dip to go."

Listen to Rob on rent softness. Right now,here in Florida,it has gotten bad enough that even with paid for properties Mom and Dad are going to lose 500-600 this month. We currently have a half dozen evictions in the pipeline. To get any calls at all the current ask is 475/mo.

When the places were purchased in 93/94/95 rents were 435,to give you an idea.

I track the 50K,75K and 100K inventory levels for our county/area. The overall number of properties is pretty stable now. Watching the various price points though you can see inventory levels increasing.

50K...140 listings(approx) last year. Currently over 300 and climbing.

75K...3-400 in just December. 850+ right now.

100K...6-700 also in December. 1700+ right now.

8K listings in the areas I follow.

Right now I am VERY glad I didn't grab something last fall. There were a couple of good deals but I chose to wait. I may end up on a direct gulf access canal before this is over...

As icing on the cake,foreclosure numbers through the courthouse are double last year so far. It works out to about 4% of the housing stock foreclosed in 1 year. Nice.



Jean ValJean said...

@Cobra: You evidently know what you're talking about.

Thanks for sharing.

TJandTheBear said...

Hey Chris!!! Good to hear from you.

sm, you have a fatter checkbook than I, but I already knew that. ;-)

Dawg, care to guesstimate how much farther it could fall? I'd say under $100K is assured, and a lot less than than when interest rates take off. Right now it's still just over $100/sf; could be $50/sf in a year or two.

Unknown said...

I wonder how much this one will go for: 17 Ware St, Cambridge 02138. This is the cop-hating professor's yellow shack in Cambridge....

Rob Dawg said...

$50/sf? I don't think so. In fact, I'm sure. There may be a few tear downs on tiny lots or problem situations but those are legitimate exceptions. Could decent cabins like this fall more? Sure, another 10-15% perhaps. $80/sf would be $95,000. I on't see that on a supply constraint basis.

TJandTheBear said...

Don't know about Wrightwood specifically, but...

We *are* talking vacation homes, not primary residences, which'll again be a luxury in an economy devoid of middle-class discretionary income. The well-heeled aren't likely to buy 1200sf abodes in "cabin suburbs" either. Those boomers with any money are moving out of the "second home" demographic, too.

IMHO interest rates will exceed historical norms, and non-primary residences will engender even higher rates. $125K at 5% equates to $75K at 10%.

All things considered, I see more constraints on demand than supply going forward.

w said...

Well said tj.

It seems to me that most of the country is ignorant of how their assets are related to interest rates. It will be another "Oh My, Who Could Have Known" moment when that changes.

wagga said...

"Seriously, though, this is very good news. You should be happy. Schwarzenegger has found a way to close the state's $26 billion budget deficit. It's giant. Now I can't get into all the details, but in short, Fresno is now part of China." --Conan O'Brien