There are alot of statistics, reports and graphs dealing with the current real estate market in Los Angeles. However, sometimes studying one individual case can present a clearer picture than all the combined data.
The home in this case study is an average 2 bedroom, 1 bath structure in the heart of Highland Park. The original siding has been stuccoed over, which is always a detriment in an historical neighborhood, but the original hardwood floors are still intact.
The property sold in April of 2006 for $425,000.
It resold in October of 2006 for $499,000. It was financed with two loans, a first loan of $399,200, and a second loan of $99,800.
It was put on the market in April of 2007 for $550,000 subject to lender approval of a short sale. It did not sell.
It was foreclosed by trustee sale in September of 2007.
The foreclosing lender put it on the market for $315,000 in September of 2007, immediately after the trustee sale. It did not sell.
It was relisted in December of 2007 for $285,000. It finally sold and closed in April of 2008 for $255,000.
Interesting study that just shows things were sold way too high with way too easy financing.
Cheryl:
It is a sad situation, all to often had the person who needed to sell before it was foreclosed on could have sold what would the price have been even if it had been a short sale.
Does not look like the 2nd owner ever made a payment if it was a short sale at 550K
I wonder if the buyer of the house is deluding him/herself into thinking that they bought a $499,000 house for $255,000?
Hopefully, the bottom has been reached for that particular house and the current owner will a) make the payments and b) enjoy some modest appreciation over the years and c) enjoy home ownership for the esoteric value and not the $$$$$.
It looks like a modest home even at 255,000 in our market would be quite a bit. I am guessing the end is near but until we keep hearing these stories it is difficult to guess when.
Holy Cow! When you dissect the sale of a single property over time - it really highlights how inflated and crazy the market got! I've just started doing this with my short sales - tracking back the property history to see just how distorted it was.
Many people bought over priced houses with the easy financing that was in the marketplace jut to get into the game.
I'm not mad at them! However, I just wish they knew what they were getting into.
Rick: I think you are right, also no real estate agent was involved on the $499,000 sale, so maybe something "interesting" went on there.
I was thinking along the lines of Rick, it was bought in October, and already in short sale by April. They were probably planning on flipping, so it may not have been all that inappropriate, but that is about when the market fell off a cliff, and that is why the price dropped so quick. Interesting though!