LA Digs - Northeast LA Real Estate Blog

While we were in New York last week (attending the Inman Connect Real Estate conference), we closed escrow on this updated traditional home in La Canada. We listed the property for $919,000 back in November and quickly received an offer for $922,000 from a lovely family. Congratulations to our seller, and welcome to the neighborhood to the new homeowners!

Property Details:

Listed for $919,000
Sold for $922,000
3 bedrooms, 2 baths
2,243 sq. ft. on a 6,500 sq. ft. lot
Built in 1945

Our buyers just closed escrow on this Spanish Revival-style home at 4032 Hampstead Road, La Canada. Featuring a formal living with fireplace, formal dining room, sunroom, library, breakfast nook, and panoramic views, this home is located in the La Canada school district. The lower level of this home provides room for recreation room, gym, and plenty of storage. The terraced back yard has a pool and spa, patio, and views. Congratulations to our buyers!

Property details:
Listed for $1,290,000
Sold for $1,315,000
4 bedrooms, 4 baths
2,956 sq. ft. on a 0.43 acre lot
Built in 1938

Listing Courtesy of Janice McGlashan, Coldwell Banker

Today we closed escrow on this short sale in La Canada! 4849 Castle road is a 1954-built home is situated on a large, private lot set back from the street. Features include an open floor plan, double-sided fireplace, skylights, and updated kitchen. Congratulations to our buyers on their new home!

Property details:
Listed for $949,000
Sold for $925,000
3 bedrooms, 3 baths
2,034 sq. ft. on a 0.54 acre lot
Built in 1954

Listing Courtesy of David Friedman, Keller Williams

Distress sales account for between 30-50% of the total housing sales both nationwide and in a number of local areas. In 2008 and 2009, there were a lot of foreclosures and now there are many more short sales. This has had a downward pressure on home prices in general. Also affecting prices has been the uncertain job market. If you are afraid you might lose your job, you don’t want to put your life savings into a down payment on a home you might not be able to afford in a few months. A number of homeowners have experienced job loss and this has resulted in many of the distress sales. You see the inter-woven relationship between the economy and the housing industry operating here.

But look at this graph of housing inventory for Eagle Rock 90041:



The number of homes on the market compared to the number of homes that go pending and sold has dropped significantly over the last couple of years. The monthly supply of inventory of homes available to sell was slightly over 2 months in September, 2011.

Typically, less than 4 months inventory indicates a seller’s market. So why are prices down? The common theory today is that “Shadow Inventory” (the number of potential foreclosures and short sales from people who are currently “upside down” on their loans) is causing prices to stay low. Why? Because if they all came on the market at once, prices would collapse. I have pooh-poohed this theory before because why would they all come on the market at the same time?

But here is another way to look at it:

With the inventory so low, this inventory of distress sales does take on a significant importance. Meaning, if over half the properties that sell are distress sales, those distressed prices affect the regular market. The common discount that a short or foreclosed property sells at has been computed as around 27%. But if you look at this year’s Eagle Rock prices, you only see a 5% discount. Why? Partly because with so many distressed sales, they have pulled the prices of “normal” sales down to a lower level in general.

Another aspect of the market is the “retail show ready” property vs. the “fixer poorly presented” property.  Look at 2030 Estes Rd, a midcentury home, almost entirely remodeled, staged and gorgeous - and compare it to 4842 Algoma, a short sale, not available to be shown, in need of a lot of repair. Guess which one sold for $925,000 (23% over the original list price) in multiple offers in 21 days (start to close of escrow) and which one sold for $470,000 (15% under list price) in 48 days? That is a huge difference in price for houses that were very similar in size. And they both sold for cash!

This is an extreme example of a distress property selling at over 50% less than the regular sale, but the condition, location and amenities of the properties were quite different as well. In other words, if these two properties were in the exact same condition and presented equally, Estes still would have sold for more because of its location, style and amenities. But how much more? That’s why pricing a home for sale and determining value with an appraisal is an art, not a science.