What $330K buys in .... Lawndale

Sorry the picture doesn't provide more information, but I wanted to let you know what the current teardown price is on a small lot in Lawndale: $330,000.

Here's what your third of a million purchases: A three-bedroom, one bathroom, 988 square-foot house on a 2,500 square foot lot.

"What a deal! Great opportunity for that handy investor, contractor or developer to transform this 988 sq. ft. fixer. It is located in a quiet neighborhood with many well cared-for and remodeled homes. Near to stores, transportation and the freeway, someone with great imagination can have the deal of the year. Included are washer, dryer and refrigerator. The fireplace is red brick and is close to dinning area. Come see it!"

Interested? Email Judithbershak@yahoo.com. Comments? Thoughts? Email story tips to peter.viles@latimes.com.
Photo Credit: MLS via Judith Bershak

Comments

[mattress man]

The red brick fireplace is right out of ceramics class
and the bedroom window was cut with a jigsaw...
$330,000 for Lawndale dirt! Bite me!!!

[dylliot]

I'm first!!

Are the cars included in the deal?
Even then, the price seems way too much for Lawndale.

[NationalBubble.com]

Well, let's check back a year from now. This same house will be selling for 200K.
While the Fed is lowering rates, mortgage rates are going up. Home prices have to come down for people to be able to afford it.

http://www.nationalbubble.com/

[Martin]

Oh, c'mon already. While scrounging for blog items, the cynicisms and overstatements here seem to run amuck.

We know ... we know ... we know. Prices bubbled. Most of it was due to idiotic lending practices and dreams of making lots of money quickly. Then it went bust.

Day after day ... week after week ... these points are made clear on this blog. But journalists and bloggers have to know when to move on to a new subject that will educate and inform.

Let's examine current "real" appraisals and sales, mortgage loan programs and what lenders forsee during the next six months. Let's ask the lenders about their current inventory of homes they foreclosed on. This is interesting.

Talking about a shack in Lawndale with so many bloggers here -- who also happen to be insightful, intelligent and well-written -- is insulting.

Summary point: Reaction time is over. Let's get proactive.

[mbagrad]

It's sad to think that's all I could afford with "old school" finance rules of no more than 3x yearly income or no more than 25% of your monthly income for the payment.

Luckily we now have Interest-only mortgages that make it affordable for people who make $100,000 per year.

I think I pay more in rent than I would for this place, but of course I live in a better neighborhood.

[Cal]

The CARs joke of the housing affordability index came out today.

They claim that LA County entry level homes (defined as 85% of median price minus a 10% down, so 76.5% of the median price) are affordable to 27% of the LA County population. The minimum qualifying income is $86,700 for their idealized scenario... and 40%... F O R T Y percent of income goes to housing cost.

I know about ten thousand mortgage brokers who would love to know who underwrites the theoretical loan the CAR is using.

http://www.car.org/index.php?id=MzgyODA=

I enjoyed the fact that affordability became so low that 2 years ago the CAR came up with the brilliant solution of changing their methodolgy rather than admit that prices and incomes were out of whack.

[Laker]

What a DUMP!
I love the energy start efficient label that by the looks of the washer, looks like a 23 year old machine...probably purchased with the house back in 1985 for $100,000...what a deal....today for $300,000 - LEFTY!!!
Just look at next door dump that was Sold 03/22/2001:
for $178,000.
That is the top dollar any smart buyer will put into that deal, that is if you can call buying 2500 square foot of land (land not house) in lawndale...
What a DUMP!

[The Problemwithcaring]

Cal,

The press release said:

" The percentage of households that could afford to buy an entry-level home in California stood at 33 percent in the fourth quarter of 2007, compared with 25 percent for the same period a year ago."

So does that mean, despite the listing price, median price and selling price of the average home decreasing so much that another 8% of households *could* afford (on CAR's paper, at least ) to buy a house, they didn't?

And CAR says this is good news, why?

[erinkeenan]

my a-- is bigger than this 'house'. can i get 330K for my a--, i ask??????????

[FromHouseFlipperToBurgerFlipper,]

OK, now I feel ill.

[Roger]

Following up on Cal's statement that the mortgage, taxes etc would be 40% of income is actually understated I think. Annual income used by CAR is $86,700. Income taxes, federal and CA, and social security taxes have to be paid by everybody. So let's assume income taxes of 10% (combined fed and CA), and social taxes of 7.65%, total 17.65%. Take home pay is then: $71,397. or $5,950 per month. So the $2,890 monthly 'house' payment is more like 48.5%, or 50% of monthly income!. That's still quite a lot to pay. And with the price of groceries, gas going up, they need to rethink their methodology.

[CD]

Martin,
Unfortunately reaction time is not over...Just look at the stock market and the banking news. We are just at the beginning of a horrible year and who knows how things will unravel...My decision to buy another house will not come from the real estate market news but where we will be as a country 12 months from now. So until then it's fun to see what the nuts want for their bamboo shacks....Just a little fun in this turmoil....The entire Victory boulevard in the SF valley is for lease. One sign after another...what, no recession??

[Roger Moore]

Cal,

I you want to put a more realistic slant on it, consider what it means if you reverse their figures. If 33% of California families can afford a starter home, that means that 67%- about two-thirds- can't. Current housing prices are so high that 2/3 of California families can't even afford a starter home, much less a median priced home.

What's worse is that their figure for California is very likely to be a distortion on a grand scale. Their "California" figure is made by comparing the median price for the whole state to the income for the whole state. But that's not a practical definition because the cheap houses aren't in the same place as the high paying jobs. The high population areas- LA and Orange Counties and the SF Bay area- have substantially lower affordability.

Affordability is given as 21% in Santa Barbara, 27% in LA County, and 28% in Orange County. But affordability for Southern California as a whole is listed as 33%, largely because it's 42% in Riverside County and 46% in San Bernardino County. So 1/3 of Southern California families can afford to buy starter homes, but many of them can only afford those houses at the price of hellish commutes.

[peter m]

Here's what your third of a million purchases: A three-bedroom, one bathroom, 988 square-foot house on a 2,500 square foot lot

Lawndale is a rundown marginal hood no better than Compton. There are still plenty of 60-80 yr old claptrap/stucco garbage teardowns in the uncounted ghetto hoods all over LA with fantasyland wishing prices . And there are still a lot of ignorant functionally illterate idiots still buying these ghetto crackshcks at those prices. 99.9 of populace in LA is brain dead as far as knowing the current state of the Re Market and is quite unaware that LA prices in the ghetto are about to take a big Elephant sized dump .

Compton auctioned homes are now fetching around $200,000. Hawthorne, Lawndale, inglewood,gardena are about 10% better than Compton.

[steveRB]

Martin -
What does it mean to be proactive? Is that realtor talk to encourage everyone to buy? If not, please elaborate.

[Laker]

Roger, :"CAR...hey need to rethink their methodology..."
Roger, wake up, CAR have only one methodology - that is buy now or be priced out forever. Ohh wait, they actually have another - House prices always go Up...
These are the sleazy, greedy, and most disgusting interest group currently in business. I'm sure waling to a whore house will have a better and cleaner feel than walking into the CAR main office...
What a bunch of crooks!

[perks]

If I offer asking price...Will they throw in the globe?

Get real. I just paid barely more than what they're asking for a house hundreds of square feet larger, in a better neighborhood, on a lot three times the size...and I'm still half an hour from the Westside. I wish them the best of luck.

[Ed]

Lawndale. What a toilet. I wouldn't live in that house if someone gave it to me.

I'd rather be in b.f. North Dakota. No offense to North Dakotans.

[Ann]

Hmmmm.... borrowing a blogging technique from Dr.HousingBubble.com?

This is right up there with some of the good 'doctor's' Real Homes of Genius posts.

Borrow another of his methods. Look up the median income that neighborhood and figure out how much of such an income would have to go to pay the mortgage on this (I'll be polite) handyman's special.

I will guaran-dam-tee you that no way could the incomes in that neighborhood pay for that place at that price..

If you can find rental property listings in that same neighborhood. I think the odds are well over 100% that what it would rent for will be a fraction of the mortgage at that price (and forget covering the taxes and insurance out of the rent.)

When it is priced so the residents of that neighborhood can afford to buy it and not spend more than 31% of gross on mortgage, taxes and insurance. it will be where it should be. I use 31% since that is a lower income area and having 49% left of a lower income to pay for everything else is a lot different than having 50% left after a mortgage payment from a top 5-10% income left for other expenses,

When it priced so that 60% of the rent covers the mortgage, taxes and insurance with 20% left for maintenance and 20 % left for profit, it will be priced where a rational investor would consider it. Got a LONG ways to go.

[mbagrad]

LOL - Cal I remember when they changed the methodology. If I'm not mistaken the old numbers would have resulted in negative numbers in some areas!

That "payment" they quote is Interest Only IIRC.

[producer 08]

Martin, the fallout has not even begun, that is why we are out there touting the inevitable

When the Dow hits 7000-8000 Nasdaq hits 1200 and the median price comes down to 100k then it is time to be proactive not before hand.

Martin either you are a realtor who now has to get a job as Mickey D's or you are way to naive, or you are a developer or a banker who is trying to find more suckers out there and take their money .

which is it ?

[producer 08]

Uhh ohh.......

This just in
Subprime loans defaulting even before resets

It turns out that massive interest rate spikes aren't the problem -- many borrowers couldn't afford these mortgages even at the low, introductory interest rates.

CNN

Is our nation getting set up for the kill ? are we going to get sold out to China, Russia, Japan, Europe ?

[Steve]

Again location is everything and you would be insane to pay $1.00 for this dive and you may not live to fix it up given the gang bangers. Get real this is an extension of Compton on a good day.

[Fourth Generation]

OK, this was just a joke made tongue in cheek right? I would not live in that dump even for free.

[Mary C.]

Sellers count on buyer naivete, which is still out there. When most houses still have asking prices of over $500k, this looks cheap by comparison. Someone might be dumb enough to buy it and think they can fix it up themselves. Lots of people new to the area know nothing about neighborhoods. But if anyone with a brain buys it, it will probably sell for a good portion less than $200K. I don't think fixers are a good deal in any market, let alone this market, unless the price reflects a hard cost estimate of getting the work done (and all work, including that which you can't see, such as foundations and drainage), at least 20% for unforeseen circumstances, and a profit margin (which will keep going down as real estate prices are going down going forward). And this is a very relevant blog entry, because there are a lot of people looking for an affordable first home that might be suckered into a deal like this at over $300K.