The foreclosure 'discount': 45% in Glassell Park

I just finished putting together another collection of foreclosure listings for latimes.com, and it includes the house pictured at right. This one really tells a story. Details:

2117 W. Avenue 33, Los Angeles 90065. Built in 1922, three bedrooms, one bath, 978 square feet on a 2,500-square foot lot.

Prior peak sales price: Sold for $510,000 in February 2007.

Current listing price: $279,900.

Discount from peak sales price: 45.1%.

Agent's description: "Bank owned ... House sits high above street level ... Nice quiet Glassell Park street. Raised foundation, hardwood floors."

The Zillow "Zestimate" on this house is $420,000. It's going to sell for a lot less than that. I don't mention that as a knock on Zillow -- I happen to believe their estimates are about as good as computer-driven estimates can get. I mention it to demonstrate that prices are falling so rapidly in this neighborhood that there is no way for Zillow's computers to keep up. The information that this house is worth somewhere around $280,000 is still unknown to Zillow's computers. It is still unknown to DataQuick. It is a shoe waiting to drop on this street, where people -- making the same calculations Zillow's computer makes -- might still believe their homes are still worth in the low $400s, or the high $300s. This is a meltdown happening before our eyes.

Update: Reader Brady Westwater weighs in: "Both you and Zillow missed the point of this sale. This house is on a 2,500-foot lot (which is a substandard-sized lot) -- while all the other comps on are 6,000 - 7,500 foot lots. ...  To say this shows the other houses have also declined to that price, when they are are on lots two and three times the size of this lot, is a clear factual error and should be corrected."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.

Comments

[John T Watts]

Take a look at realtor.com at how much home you could get for $279,900 in San Antonio Texas. I have never even been to San Antonio, but the price differences are pretty amazing.

[Deb P]

I live in TN and for $200,000 you can get a brand new 3000 sq foot house outside of nashville that has 4 bedrooms and 2 1/2 baths. For what they want for that little place, I could have paid for my house in full and had an additional $80,000 to play with

[Inland Empire]

All this speculation about how much these houses will sell for is great. How about following some houses from start to finish on the sales process? Bet there will be more than one surprise.

[Inland Empire]

Take a look at realtor.com at how much home you could get for $279,900 in San Antonio Texas. I have never even been to San Antonio, but the price differences are pretty amazing.

They have gangs there too but 279K will really buy alot more in Minot, ND.

[gotforeclosure]

"...this house is worth somewhere around $280,000"

Regardless of what anyone thinks THIS HOUSE is worth, assuming that its asking price sets the new valuation standard for the entire neighborhood is following a faulty paradigm.

The real estate market is distinctly different from the stock market. Not every item of "stock" in real estate is equal to every other (even "comparable") one.

Therefore, the asking or selling price of a specific property IN DISTRESS has limited effect on the valuation of other inventory.

We routinely purchase distressed properties at 30 to 50% below CURRENT SOLD COMPARABLES, and resell them to savvy move-in or investor buyers at 20 to 40% below.

Sitting on the sidelines and watching a catastrophic event doesn't add any value to the market place.

Negotiating deals does. Learn how to do that, and you'll be on the plus-side of the greatest shift of wealth in our generation.

[perks]

AJK's assessment is right on. Zillow's formula is equipped to handle an accelerating market, or even a slowly decelerating market...but definitely not an outright crash.

The last two transactions on my house aren't "counted" in the Zestimate either: the foreclosure sale, which was $110k less than the previously recorded sale 18 months earlier, and my purchase, which was $120k less than the foreclosure. Zillow is still happily telling me the house is worth WAY more than I paid, which is utterly ridiculous.

I also checked the last house I lived in (a rental that's been in the same family's hands since the 70's). Despite being exactly the same square footage (both house AND lot size) as the next three houses on the block, Zillow says that my last place of residence is worth roughly $170k more than the adjacent three houses.

I don't think there's any need to knock Zillow. I assume it's always implicit in any reference to them anyway...

[Susan Hilton]

I think you guys should decide to move to Bryan/College Station instead. Texas prices are still reasonable and rising. And, you could get the house shown above in a NICE neighborhood with a GREAT school for about $100,000 and you get more land and NO state income tax.... Just a thought.

[Milla]

Hula: I'm not planning on putting my house on the market tomorrow (I haven't even moved in yet!), so I'm not all that obsessed with prices.

[Stacy Tolchin]

well I live in this area and bought my little bungalow last year. I love my house, it has great character and I have a huge lot with fruit trees. Minus the tagging in the area, it is pretty mellow and there are lots of families around. Bar Verdugo opened up by the Rec Center and it is the happening spot these days. For those of you looking to get into the market, I think this is a great area with historical houses and great character.

[Ragnar]

Sure you can get more home in San Antonio, TX, but then you live in Texas and not in California. San Antonio really is a neat place, but don't forget about the property taxes (3-4x the rate of those in CA) as well as the monthly electric bill for air conditioning in that large Texas home!

[Phyllis Harb]

What Zillow and appraisers need to factor in, is the active listings - the competition. Blue collar neighborhoods such as this have been particularly hard hit by the sub-prime crisis.

[puckhead]

"Take a look at realtor.com at how much home you could get for $279,900 in San Antonio Texas. I have never even been to San Antonio, but the price differences are pretty amazing."

Big deal Texas. Check out what $279K can get you in Bangladesh. You can live like a king there!

[tarbubble]

Austin, TX is a very nice city (and not terribly far from San Antonio). if we had any family there we'd probably already have moved. but we're stuck in CA - unless i want my kids to see their grandparents only 2x a year. c'est la vie.

[j]

The agent can't even spell Glassell Park correctly. Not even giving it any effort to try to sell!

[MyLessThanPrimeBeef]

That house is so small.

HOW SMALL IS IT?

Well, it's dwarfed by the windmill in the miniature golf course next door.

This being California, you could probably get that windmill for about half a million....hey, miniature golf course windmills don't grow on trees. No, they don't.

[Rich]

I love to pick on HGTV here, because their programs are mostly filmed in the California market which is local to the television industry and they seem to be as conflicted about how to handle the bubble market as anyone else. Some of their newer programs like "first time buyers" are now leaving out mentioning the actual home prices--perhaps because they've gotten flack or because the prices distract from the program?--while their program "sleep on it" brazenly shows the viewers that "in Sioux City this same house would go for only $159k instead of $700k". You wonder whether the families taking part in that program had ever seen an episode out of the can before they filmed their own and whether they now feel stupid for what they paid.

So as they say in "sleep on it", "this same house in Pittsburgh would sell for $130,000".

[MyLessThanPrimeBeef]

Winfield, you are right about that spectacle of socialist fraud.

Make no mistake about it, what we have here is Soviet planned economy at its best.

The serially-bubbling comrades at the Federal Reserve premeditated this Mother of All Bubbles for our serially-bankrupting-hey-I-got-a-new-credit-card-2-
years-later fellow citizens and the target price for this Lietchtenstein (no offense, a great coutnry, I am sure) of a house in Glassel Park was $280,000 all along.

Even today, all the omnipotent tovarishes are doing everything they can, with other people's money of course, (ney, come to think of it, with others' money, they always give more than they can, they always give 110%) like tax rebates, bank bailouts, expanded super-preserving formaldehyde programs, etc, to interfere with our glorious capitalist free market in order to maintain the goals spelled out in their five-year or ten year, who knows, these guys are always planning, program.

Hey, where is that Internationale? Let's get some music to go with this.

[TakeFive]

Take a look at the Google Street View to get an idea of what the neighborhood looks like. Peter's picture really doesn't convey all the local flavor you get for $279,900.

[Joseph... the Real Estate Guy]

I am just wondering why prices only skyrocketed in areas with LARGE LATINO POPULATIONS!

California, Nevada, Arizona, Florida? Coincidence!

(I am Latino by the way)

Could it be too many fraudulent loan officers from down south?

[dclogang]

Have we all completely lost our minds here?

Look at that house again and somebody, anybody convince me that, THAT house is worth...

drum roll please... over ONE QUARTER of a MILLION dollars?

Sounds like a lot when I put it in these terms.
Well, it's because it is a lot.

Think about it before you dive into this market.

Be patient ,very very patient. The longer we wait the lower it will go. Don't be fooled by real estate agents that tell you to buy now.

I want to get out of my apartment like crazy too, because I have a 2 year old boy who I think needs a back yard to play in like I did growing up in the midwest. But I'm going to wait for a much better deal.

I'll say it again... Low $200K to High $100k for median house prices in LA. (maybe even lower by end of the year.)
I was told I was crazy, in so many words a few blogs ago. It will be fun when I come back to read this to see if I was right.

[rickstar1]

I did research to try and beat Peter's example and I found one! How about a 53% discount:

1822 Lucille Ave, Silverlake, 90026
Built in 1924, two bedrooms, one bath, 988 square feet on a 2614-square foot lot.

Prior peak sales price (zillow.com): Sold for $800,000 in Oct. 2005.

Current listing price: $379,900.

Discount from peak sales price: 52.5%.

CAN ANYONE BEAT ME??!?
Seeing people's past stupidity in the midst of this real estate meltdown is kinda fun!

[kosher krab]

I live right above this house, it seems like it has been on the market (successive sales) for two years. This isn't Mama Leon's neighborhood, that's actually on the other side of the freeway. No matter what it sells for it seems that any turnover in homes here has benefitted the neighborhood. Not too many gang families can afford 220k (unless they have it all cash in small bills), and either it will be new families who can actually mmet mortgage requirements or it will be a new landlord who will want to expell the low rent renters who were there before. In the last three years about 1/3 of the houses on this street and Arthur have been fixed up for sale. I still see graffiti in the area but I also see Range Rovers and nice landscaping.

[JohnnyB]

Chris; "Drop off the key, Lee, And set yourself free."

Nice theme song for the collapse...

50 Ways To Flip Big Brother.

Laker; "This shack... was sold on 01/04/2001: for $129,000. That is the value... of this house."

Right on... nice bit 'o context.

Some of these current foreclosure discounts sound drastic until you step back and take peak at pre-bubble pricing (date range 1999-2001).

These anecdotal sales are just the early canaries in the coal mine. Millions are deeper in the cave gagging for life.

We ain't seen nuttin' yet.

[Jeff Storey]

This is why the government should not interfere with foreclosures. This is no bargain: even the foreclosure price is grossly overvalued!!! Sadly enough, the values are so inflated that prices need to return to a level in sync with earnings for normal people, and the only way this is going to happen is buy letting the market play out. The government should have intervened long ago by making fraudulent sub-prime hocus-pocus loans ILLEGAL. now it is too late and any government action will only prolong the misery. In a world of swindlers and fools...

[jaded]

I have no problem believing that house sold for over $500k at the peak. I vividly remember looking at shacks in Glendora that were going in the 600s, and even chicken coops in the worst part of Pomona were over $400k.

Have you forgotten already how insane the bubble was?