80% Off
From the Sacramento Bee:
It's now possible to buy a Sacramento home for less than the price of a Honda Accord. At least two dozen homes in the Sacramento region sold during the last three months for $25,000 or less....In Oak Park and Del Paso Heights...median home prices have fallen 80 percent from their mid-2006 peak to around $60 a square foot.Related post: Housing Bubble Casualties: Professionals 'Suckered' into Oak Park
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On Tuesday...Deutsche Bank lowered the price on a vacant, 728-square-foot home on 21st Avenue in the heart of Oak Park from $29,000 to $19,000. The house had belonged to the same family for years. An investor purchased it for $197,000, or $270 per square foot, in mid-2005, property records show...Seven months after buying it, the first investor sold the property again to another out-of-town buyer for $255,000, or $350 per square foot. In December, Deutsche Bank foreclosed. Today, the home is selling for $26 per square foot.
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Most real estate experts expect many more sub-$25,000 homes on the market. They predict more foreclosures, leading to more vacant homes, leading to more desperate banks..."There's a whole lot of inventory that has not been cleared," said [Real estate investor Reggie] Lal, the real estate investor, referring to foreclosures still on the market. The number of homes selling for less than $25,000, he added, is "going to explode."
20 comments:
I wonder which one will be worth more in 2 years, a new Honda Accord or a 25k house in Oak Park?
There's your skewed median. I don't want to hear any more BS about the median going up in the near future as a bottom signal.
Called a realtor to ask to see one of the short sales in my area. Said the bank is not interested in getting any more offers because they have enough and are evaluating. Home has been on the market for 80+ days and the list price is $330K. If I had like it, I would have bid $250K. At its peak this home would have sold for more than $600K. I know this neighborhood because I was about to buy there in early 2004 and almost bought a smaller plan in that area. At the time, the price was $333K and the last one of that plan sold for ~550K some time in 2005. (Since the homes were new that price did not include the backyard and upgrades; upgrades would have pushed my price to ~$370K.)
The current home I'm talking about is 8176 Sienna loop.
PR - I'd say that house closes very close to 300.
I just notice the lot size on that place - 13000 sqft. Huge for that area.
Boy I wish that EDH and Folsom had examples like what PR is referring to. I am sure they will come, just not yet.
PR, BTW, what would that house rent for?
I was guessing 75% off, looks like I was too optimistic lol. But I was talking about median for Sac and not an isolated crappy area, so we will see...
Where are all the investors? At $25k a pop you would have to be able to make money on renting it, right? Assuming you don't get shot trying to collect...
Maybe the real investors have realized it is better to wait and the specuvestors are running out of $$...
Paranoid,
I'd run from that house (unless used as a rental) for six reasons:
1-4) Four two story neighbors. Imagine trying to get a fence fixed with only one (arghh!) AND the lack of privacy.
5-6) after dealing with your four possibly snoopy neighbors looking down on your yard from their too close two story homes, you are backed up to TWO commercial areas.
It looks like a pretty house, even though the kitchen was done in granite tile rather than slabs, but all those neighbors would make me crazy.
I'm not against owning, I own (yes, really own) my house in a small subdivision. I'm a big fan of single story construction when you're dealing with subdivision lots (if you're on 1+ acres build as high as you want, within reason :D).
I live on a small street of eight houses and only have two neighbors and even with the best of neighbors there can be some friction when it comes to paying for communal structures,or dealing with destructive pets. I cannot imagine having to deal with six of them.
As I said, it seems a pretty house, but not built to the higher standards and there are way too many neighbors to deal with. It's at a decent price for Roseville, but there are at least six reasons why it's priced this low and that's before anyone digs into the build quality of the home.
For a house in Roseville/Rocklin to have sold for nearly $500k in 2004 with granite tile speaks to the bubble pricing and probable low end quality for everything else the builder put into the home.
I'd keep looking if I were you...
I recall not too long ago the "experts" were buying up lots in Oak Park for $50K saying it was a steal.
A good friend of mine bought homes in Indiana back in the early80's for $1, so anything is possible in a bombed out market. The homes at those price levels had been bought up by some government agency and sold to the public. Could the government intervene at some point, to relieve the banks of any further price deterioration, and end up the sellers of last resort? They've done it in the past.
Imo, the takeaway from this article isn't the $25,000 home. That's the hype that lures in readership. It's the panic stricken bank, the inventory that has yet to hit the street, and a race to see if the banks can unload those properties before they fail.
As for affecting the median, it could if sufficient numbers were there. But there are probably offsetters in the mid-upper price range properties that get sold in greater numbers as their prices come down. I think Patient Renter's example is a good one.
Median prices are nothing more than a weak tool to gauge market health. Price per sq. ft. against a median sized home might be a better indicator overall.
@Husmanen:
A good friend has a rental (2,100 sqft) home nearby to that home. They rent it for 1,850/mo. They have had no trouble renting it at that rate.
@Curious:
You just described almost any home in the area. You may as well be saying "it's that blonde over there" in Huntington Beach.
DoS... according to my calc the rent parity on a house renting at $1850/month is about $325k. That would include PITI (20% down, 5% 30 yr fixed), but not maintenance etc.
That is in the 'zone'. I would be very happy with that in EDH and Folsom.
Hus,
I came up with a lower sale price but not as low as this: http://www.krunching.com/property/CA/Roseville/8176-SIENNA-LOOP-95678/M_METROLIST_90009711
My figure assumed no HOA, MR, bonds, or other special assessments tacked unto the taxes. The taxes on new homes seem benign until the first bill hits and the wave of fees flows down the page. For instance, tax bill on my rental runs is about $2,000 on top of the standard taxes and services.
Then figure having to cover maintenance and vacancies... makes holding that 20% in a CD look a bit better.
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PR, BTW, what would that house rent for?
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My guess is that it would rent for ~1500/mo given that it costs about $1200-1300 for a 2bed/2bath apartment in this area.
Curious,
Thanks. Yes, I'm in no hurry to buy. When the realtor told me the bank is not not taking any offers I just said "fine"...
I have setup setup on Zip Realty to send me alerts for homes in the areas that I'm interested in.
I'm in no hurry whatsoever. To buy now the home would have to be something that I really, really like and the price has to be "right" -- about 20% below the prevailing rate for a similar home.
And yes, I'm really concerned about the build quality. I have a friend who bought a new place in Empire Ranch eight years ago and now they have one expense or the other every couple of months - heater, doors, garage door...
Hey Paranoid, I'm persuing a deal now where the listing agent is giving me the same jive. My realtor and I suspect the listing agent is partnered up with a freind or reltive with a different last name.
Their plan is to:
a)List property below market price
b)Line up offers at or below this price
c)Have the partner submit the high offer (still well below market value)
d) Bank gives up and sells to listting agent's partner
e)Listing agent quickly flips property for it's real value and divides profit with partner.
Fortunately my realtor is also a lender and talked to the bank officer in charge of the short sale.
Result: the bank is going to trustee sale the property to try and beat the listing agent's best offer.
There's alot of lies and BS going on out there right now in this business!
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There's alot of lies and BS going on out there right now in this business!
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As would be expected...I'm a techie and lived through the tech bust and saw tech companies get creative in all sorts of ways as they imploded. Of course, that was on a MUCH smaller scale than the housing problem, so this is going to last for years. It is amazing how many people do not think about that large-scale consequence of their selfish actions.
What ... Oak Park ... man I thought it was an up comming multi ethnic neighborhood.
Yes it has all ... black, hispanic, white, Asian, chineese and european and all other stripes of low lives ... and they are the up comming low lives, as opposed to the non up comming low life, who starts as a pick pocket and stays there ... is content to be a low life pickpocket. the up comming low life just keeps moving up in life, today a pick pocket, tommorow a cat burgler, the next day armed robbery and so on.
Cool.
Cow_tipping.
As with any purchase, you get what you pay for. Right now you can buy homes in downtown Detroit for under $10,000, ready for occupancy, positive cashflow, seemingly a perfect opportunity for investors. But the risks with contingencies added in, and allowing for neighborhoods that are falling apart socially and economically, not to mention a past history of violence, isn't drawing the investment money that one might think it would.
Oak Park might fall into the same category albeit in a fairly small, confined area of the city.
Agents are discouraging us from making offers on properties, too. My suspicion is the offer they want the seller to accept comes from a person that agent also represents as buyer's agent. Seller's best interests are being ignored in favor of double-dipping agents. Seller never knows a better offer existed because the agent told the prospective buyer the offer window was closed. Want to put them on the spot? Send your offer anyway and confirm the agent received it-- the agent has a fiduciary duty to the seller and must disclose that your offer arrived. Please correct me if I'm wrong, but I believe there is no such thing as an "offer window", and offers may be accepted until escrow closes. As long as we put up with such shenanigans, sellers' agents will continue to lie to us and their clients. Sorry for the rant on my first post, but I've been treated like dreck by more agents in this town than I can remember. BTW, my buyer's agent is in Solano County -- maybe the locals are ticked off about that because none of them is getting any of my money. One seller's agent actually recommended I dump mine and hire a local instead. Grrrrr.
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