Friday, August 31, 2007

Million dollar slum - Manhattan beach, CA




The realtor describes the property as a Spanish Bungalow. I've been to Spain and I don't remember seeing anything as nasty as this PoS. This particularly ugly slum was initially listed at $1,195,ooo. However, nobody showed up to buy, and the seller has just taken $100,000 off the asking price. So far, it has been on the market 109 days and isn't going anywhere.

Many thanks to Roy, who found this horror. Roy wondered whether it had one or two bedrooms. Actually, it only has 3 rooms. Moreover, it is only 800 sq. ft. However, it is by the beach. The future buyer can live in squalor and comtemplate life's miseries while looking at the waves.

Million Dollar Slum - Santa Monica





This 2 bedroom cottage is on the market for $1 million dollars. It was the yard that got me. For some reason, when I saw this one, I thought of my dear old grandfather. Did he brave that hazardous voyage across the Atlantic, so that his grandson would live in a slum like this? If he were alive today, I am sure he would say to me - "we were better off in the old country, at least we had space to breath".

The MLS on this one is 06-001349. Check out the rest of the photos. It doesn't get any better. Sad to say, the open day was two weeks ago. So I may have missed your opportunity to get ripped on this slum. Nevertheless, I am hopeful that this property is still on the market. And given that the market is slowing, I am thinking of phoning the realtor to check on buyer incentives. However, I can't decide whether I should ask for a) a cruise, b) a new TV or c) a redecorated rec room. What should I ask for?

Is this the most expensive house in America?




This is the perfect house for a very rich midget. This southern Californian 2 bedroom, one bathroom bungalow is on the market for $2,700,000. However, it is only 868 square feet, which means that the midget will be paying $21.60 per square INCH.

So the gauntlet is thrown down. Can anyone find a house more expensive in terms of space than this $21.60 per square inch property?

Overvalued real estate - Santa Cruz



It first, I thought that this was a masuleum. However, it turns out to be a 754 ft. HSF (human storage facility) in Santa Cruz. It boast 2 coffin-sized bedrooms and one urn-like bathroom. It doesn't quite make the million dollar slum category, but is still way overpriced at $730,000. For the non-believers, the MLS ID# is 608063. It is posted on realty.com.

Desperation takes hold...

With many housing markets rapidly going into reverse, Realty Times offer ten helpful tips for the desperate buyer. For those sellers having difficulty shifting those million dollar PoS, we helpfully reproduce an abidged version. That way, you don't have to have your intelligence insulted by reading this piece of garbage. Starting from the top:

  1. Finish that recreation room for the buyer.
  2. Give the buyer a decorating allowance.
  3. Pay the buyer’s Mortgage payments for 3 to 6 months.
  4. Buy-down points to lower the interest rate.
  5. Give the buyer a vacations. Offer a "Buy a house, get a Caribbean Cruise deal".
  6. Buy a Media room for the seller. Doesn't everyone want a flat-screen TV?
  7. Pay a Year of home owner association fees.
  8. Offer seller financing to the buyer.
  9. Pay off the buyer’s credit cards.
  10. Pay closing costs.

Sadly, it will take more than a new TV set or a week’s cruise to save today's sellers. The market has just run out of fools. People are just going to sit it out until house prices adjust to more reasonable levels.

Million dollar slums - Santa Monica



This is not a real estate sale, this is a monument to the madness of a generation.

The jokers who currently own this 3-bedroom human storage facility are asking $1,650,000. Does anyone know anything about 14th Street, Santa Monica 90404? Initially, I was going to post it under our crackhouse category. For those who need further verification, look on realty.com. The MLS ID number is 05-069081.

Is there a bubble in Boulder?




Recently, the blog has received some commentary from a realtor with a blog covering the Boulder, Colorado real estate market. He argues that that unlike other major US cities, Boulder is not in the middle of a housing bubble. I sense the guy has some integrity. He has included one or two links from bubble bloggers, thus giving his readers both sides of the story.

For what it is worth, my opinion is that Boulder is currently suffering from a bubble, although it hasn't reached the crazy levels of coastal cities. Currently, the market is about 35 percent above its long run trend. Moreover, prices have accelerated in recent months. It is also worth noting the long period of stagnating house prices in boulder during the 1980s.

In America, we may disagree, but we always respect each other's opinions. Please check out his blog and make up your own mind.

Nasty Real Estate - Los Angeles




This abandoned one bedroom, one bathroom LA property is currently on the market for $300,000. The "al fresco" bath is a special feature. However, it isn't clear whether the outside bath represents the bathroom in the realtor write up.

This property will attract the environmentally aware buyer. The overgrown scrubbery will allow him or her to commune with nature. Moreover, the buyer will be able to make the world a better place by clearing up the rubbish in the garden.

Again, this property is so bad that the credibility of this blog is inevitably questioned. For the non-believers, the MLS number is 05-073901. Find it on realtor.com.

And the winner is...




We have a winner in our "America's nastiest and most overvalued real estate". It is Million Dollar shack from Santa Barbara. I hesitate to congratulate to the owner. I think it was the oil drum that did it for them. However, congratulations are in order for Cyrus, who found this gem. Thanks to everyone who participated in the voting

The voting was:
1. Million Dollar Shack, Santa Barbara - 36 percent
2. Crackhouse Chic, Washington DC - 18 percent
3. Crackhouse Classic - 16 percent.

I'll post another vote when we have some more candidates. I'll also include the champ - Million Dollar Shack - so that it can defend its title.

Multi-million dollar slums - Marina, CA




I fell out of my chair when I saw this one. The seller is asking for $2,500,000 for this 3 bedroom, one bathroom property. The property itself is small, just 1,000 sq. ft. The realtor advert boasts that there is room on this property to park an RV. Presumably, the realtor realizes that you wouldn't actually want to live in this PoS, and that the RV would be more comfortable.

Since the price on this property stretches credibility to breaking point, the MLS number is MF13283 (or it might be MFI32383). Seeing is believing.

Nasty real estate - Hollywood, Florida




Fancy living in a drive-by hotdog stand? Well, this is the property for you. Although, this is a 3 bedroom, four bathroom house, it has only 732 sq. foot. Assuming that there is also a living room and a kitchen, then the average size of each room is well under 100 square foot. Judging by the outside decor, it is not obvious that this place has inside plumbing. Perhaps the four bathrooms are in the garden. That might be a good thing. More bathrooms in the garden, more space inside the house.

For those interesting in pursuing this hot property the MLS number is F701569.

My grateful thanks to Mike, who writes a great blog in South Florida. Check out his blog, and keep 'em coming Mike.

Idiot Investment - Brandentown, Florida





Here is a condo-flipper special - 8 duplexes and 4 triplexes for $3,600,000. That is 12 apartments for $300,000 each. Just buy them, put in 12 granite kitchens and sell them for $600,000. Personally, I think the new owner would do better if he actually sealed the road in front of the apartments. Dirt track isn't exactly an attractive selling point.

However, this investment seems to break the cardinal rule of real estate investment - location, location location. No disrespect to the good people of Brandentown Florida, but I don't know where it is. Can someone help me?

How big is this bubble? Very big - Boston




The good people of Boston have been through housing bubbles before. In the mid-1980s, house prices increased by around 50 percent in four years. However, house prices declined in real terms in 1990 and overall prices didn't recover for all most a decade.

The current bubble is in a completely different league. Prices have gone up for 9 straight years. During that period, prices have more than doubled. Simply put, for 9 years housing prices in Boston have been out of control.

My grateful thanks to Mike, who suggested that I run this chart. Mike runs a great blog down in South Florida. I recommend that you check it out and learn something about the crazy things that are happening down there.

Further explanation of the Chart - The chart plots both housing bubbles across the same time span. The horizontal axis indicates years since the beginning of the bubble. The vertical axis is the OFHEO house price index. Prices at the beginning of each bubble equal 100 and therefore compare the relative magnitudes of each bubble.

Crashing real estate markets - San Diego




Inventory is on the way up again in San Diego. A lot of property came off the market as the holiday season. However, the reduced supply did nothing for MLS asking prices. The just kept going south. Now that spring is approaching, inventory is climbing again.

Million dollar shack - Santa Barbara




This 2 bedroom, 1 bathroom "house" in Santa Barbara is currently listed at $1,095,000. Question: do you think that the oil drum is included in the price? Perhaps the seller with include the bush that currently obstructs the door. Here is another question that I want to throw out there. If you had a spare million dollars, would you choose a Californian shack or a Washington DC crackhouse? Personally, I would go with the crackhouse.

Many thanks to Cyrus for the photo. He has promised me more. Cyrus tells me that Santa Barbara is a sea of sales signs. Sounds a lot like Northern Virginia.

Cute Starter - Manhattan Beach, CA




The realtor describes it as a "cute starter"; I call it a garden shed. This million dollar slum has 870 square feet, and currently priced at $998,000. The property also boasts "newer windows", what ever that means.

We also have a photo of the interior. Haven't you always dreamed of a kitchen just like this one. You can cook your meal and wash your cloth without moving.



This posting was a collaborative effort. Many thanks to Robert for the photo of the building, and to Jason who provided a photo of the interior.

Overvalued real estate - Chicago




I received an email from Brian, who wanted to see the housing price index chart for Chicago. Historically, the housing market there has enjoyed stable housing price appreciations. However, things took off in the late 1990s, and now prices are about 34 percent above long term trend. Since 2001, prices have increased by almost 44 percent.

I have posted charts and summary data for major cities on the Housing Bubble Resource Center website. There you will find links to other blogs and sites that follow the inflationary madness that has affected the real estate markets of this country.

School District Scammers - Piedmont, CA




Originally, this Piedmont house was nominated by Ann from California as one of our million dollar slums. However, I hesitate to describe it as a slum. It looks a little too pretty, especially compared to some recent crackers posted on this site. Nevertheless, Anne assures me that it looks a lot worse close up. Moreover, it is only 1,400 square foot.

Ann made a very valid point. The only reason that this house was listed at $1,125,000 and not at $125,000 was because of the local school district. But why condemn you kids to living in a poke? Why not save half the money, buy a nicer house for $600,000 and send your kids to private school. What does private school cost? In DC, its about $20,000 per child a year. If you don't have $20,000 to send you kids to private school, then you don't have the cash to buy this house. The school district math underlying the valuation of this house just doesn't add up.

Lets face it - this school distict issue is yet another realtor scam to push up prices. Therefore, this property goes into the school district scammer category.

Crackhouse Classic - Washington DC




There was a time when mobsters used to burn these types of buildings for insurance scams. Today, the scam has changed. Now, realtors send out flyers describing these properties as "investments". Nevertheless, the principle is still the same - parting a fool from his money.

This property has 8 bedrooms, and one toilet. It is situated in the "up-and-coming" district of NE Washington DC. Judging by the photos posted on http://www.ziprealty.com/, the building is derelict and the utilities have been disconnected. Undeterred by reality, The realtor write-up claims that this building is a "great investment opportunity". The realtor also claims that the seller is "motivated". Obviously, he is motivated to take some hapless buyer to the cleaners. And the Price for this crackhouse? A gob-smacking $899,000.

The MLS is DC5508084. Check the photos out - unbelievable! This property gives new meaning to the phrase "overvalued real estate".

Crack House Chic- Washington DC




Location, Location Location - how many times have you heard that from realtors. Well, the location for this overvalued piece of real estate is NE Washington DC, formerly the Crack Capital of the USA. Thoughtfully, the investor who refurbished this house, left the bars on the windows and the doors.

However, he is having some difficulty selling. The property has been on the market for 82 days, and the price has already been reduced by $10,000. Did I mention the price - the owner wants $419,000 for this two bedroom house.

Nasty Real Estate - Marin County




Is it a house or is it a shack? Whatever it is, the owner is asking $739,000. The word "overvalued" doesn't do justice to this piece of crap. This nightmare property is situated in Marin County, California.

Thanks to marinite for sending the link. Please tell me marinite, nobody actually bought it?

Please check out his blogs covering real estate developments in Marin Country: Marin real estate bubble and Marin PoS.

Crashing House Prices - Miami




After witnessing one of the fastest explosions in house prices, Miami is now looking at a similarly rapid increase in housing inventory. Since August last year, inventory has increased by 95 percent.

Listed prices on the MLS database are also sliding. Loooking at the listed price chart, one can almost hear the realtor advice. After Thanksgiving, MLS prices did not fall. No doubt the realtors were advising "the holiday season is always slow, wait until the spring." Well, the moment of truth has arrived - today is Superbowl Sunday, and if you believe realtor spin, the buyers come back to the market starting Monday.

Given the rapidly rising inventory, sellers are becoming increasingly desperate. According to the http://www.ziprealty.com/ database, just over 20 percent of listed properties in central Miami are offering price reductions.

There is a spike in the data at Christmas, when MLS listed prices temporarily rise. One can only assume that sellers were expecting some seasonal generosity from house hunters. In contrast to previous years, buyers were just not in a giving mood. Their mood hasn't improved in recent weeks. Expect rising inventory, seller panic, rapid and large price reductions in Miami over the coming months.

Bubble Superbowl




The Steelers play the Seahawks tomorrow in Superbowl XL, but how do the two cities compare in terms of house prices. Its no contest, Seattle are miles ahead with unmerited house price appreciation. Of course, the higher you fly, the further you must come down. In the bubbletown superbowl, we all lose in the long run.

I got the idea of the chart from the bubblemeter blog. Its a great blog that has for some time provided sane commentary on an insane market. Stay informed; check out the bubblemeter site and revisit it regularly.

Crashing real estate prices - Oakland




There was a time when you could buy a slum like this on your credit card. Not so today. The Joker who owns this Oakland CA house is looking for $699,000. However, this seller isn't joking quite as much as he was a few months ago. Then, the owner was looking for $800,000.

Actually, I am a little pissed that the owner didn't push for a $1 million. Then it would have qualified for the million dollar slum category. However, a slum is still a slum, whether the price is $1 million, $800,000 or $8,000.

One million dollar price reduction




Here in Washington DC, greed is quickly being replaced by fear. According to the MLS database, this 7 bedroom 3 bathroom North West DC house was originally listed at $1,950,000. Since then, the price has been reduced twice; first to $1,095,000, and more recently to $995,000. Taking the two reductions together, the price has been reduced by 49 percent.

My first reaction was to think that the original price was incorrectly listed. However, I checked out the price range for similar 7 bedroom houses in the same area. I found at least one other nearby house, also with 7 bedrooms, that was listed for $1,475,000. Within a 1/10 of a mile, a two bedroom apartment just sold for $705,000. The original valuation was high, but certainly not outlandish.

The DC housing market is cooling very rapidly. Around a quarter of listings are now offering price reductions. The market is saturated with rental listings from condo-flippers. Moreover, the market is about to be flooded by new condos currently under construction. For the whole story, click here for details.

Further details about the property can be found on www.ziprealty.com. The MLS listing is DC5483629.

Thursday, August 30, 2007

Over valued real estate - West Palm Beach




The bubble party is finally over in Palm Beach. In December, median home prices fell to $408,200, down from $421,500 in November. For the first 9 months of 2005, the real estate market was really hot. Prices had increased by 21 percent. However, buyers started to exit towards the end of the year. Currently, Palm Beach multiple listing service now shows 20,399 homes for sales, up from 7,799 two years ago. New home construction is also slowing. Palm beach County saw 1,415 housing starts in the fourth quarter of last year, down 25 percent from a year ago, while St. Lucie County's housing starts fell 11 percent.

However, the market remains massively overvalued. As of October last year, prices were 115 percent above long run trend. However, more recent data points decidedly south for Palm Beach property prices.

Million dollar slums #2 - Santa Barbara




California is definitely the place to go if you want to live in a million dollar slum. Here is another shocker from Santa Barbara. This 3 bedroom, one bath home will set you back $1,050,000. Moveover, it is somewhat smaller than the photo would suggest. That one million dollar sticker price will get you just 855 Sq. Ft on a 0.11 acre plot.

Housing inventory - now at 5.1 months of sales




Here is a follow-up to an earlier posting about the NAR. Here is the nation's housing inventory, expressed in months of housing sales. As you can see, inventory is climbing sharply upwards.

Get RSS Now

You will have noticed some small buttons on the right hand side of the screen called "bloglines", "newsgater" and "my yahoo". This is a new development in the world of blogging - RSS - otherwise known as "Really simple sindication". At the press of a button, you can get automatic feeds of your favorite blogs without going through internet explorer. Rather than searching for your favorite sites, with RSS, the sites come to you in a single program.

This site recommends bloglines. It is without doubt the simplest to set up. Moreover, it is completely free RSS. You can download it from their site here. I will try to put other RSS buttons onto the web. However, I have only managed to figure out bloglines and newsgater. I have posted the yahoo button, but it doesn't seem to work properly.

Once you have downloaded an RSS system, please make sure that you subscribe to the overvalued blog.

Overvalued real estate - Santa Barbara


It has been a while since I posted a housing price index chart. California is always the best place to find those ludicrously overvalued real estate markets. Santa Barbara prices are currently over 115 percent above trend. Over the last 5 years, prices are up over 130 percent. If this was a stock, I would be screaming SELL, SELL SELL.





Talking of stocks, I thought it might be interesting to see how some residential construction firms have been doing recently. We start with Hovnanian enterprises. Oh dear, investors seem to be dumping this stock. It must be that "soft landing" that those realtors keep telling me about at the open houses in DC.

Million Dollar Slums




There was a time in this country when a million dollars meant something. It meant that you were rich, and you could afford a nice home. Not so today. In many cities in America today, a million dollars will barely get you a basic single family home.

Take this property in Camarillo, CA. It is a typical million dollar slum; ugly, small(only 1,700 square foot) and massively over priced.

Are we really $70,000 richer?

According to the National Association of Realtors, since 2000 housing equity increased by $4 trillion dollars. That is equivalent to $70,000 for each household in this country. So by virtue of a crazy housing bubble, driven by greed and fear, the nation has become richer.

But hold on a second. Has this new found wealth been created by Americans becoming more productive? Have we been working harder? Do our factories have more capital equipment that can produce more goods? Of course not. It seems that we are richer because of the housing market. But what has changed in the housing market? Notwithstanding some new condos, the housing stock hasn't increased much. Nor has the quality of houses improved fundamentally. Sure, more houses have overdosed on granite and marble, but they still fulfill the same basic function. The more you think about this housing equity, the more vaporous it seems.

No one denies that the market is now rapidly cooling. Inventory is rising, sales volumes are collapsing, and in some cities, such as Phoenix and Washington DC, prices are starting to tumble. This home equity wealth, which came quickly, and will also disappear in the same dramatic fashion.

Condo flipping is not dead!

It is hard to believe, but there are still people out there offering advice on how to flip condos. Here is a site offering a $99 dollar MP3 file that will explain "how to find and flip properties quickly, legally and ethically". On second thoughts, don't bother clicking on that site, click on this one instead. Here, you will learn all about the dangers of buying an overpriced apartment, offering a rent below your mortgage payments, and losing a lot of money very quickly.

California - housing afforability index




Here is a chart, published in a press release from the California Building Industry Association. All those declining lines on the chart represent housing affordability. This is defined as the percentage of homes that are affordable to families earning the median income. The basic point is clear enough. If you live in LA, San Bernadino or San Diego and earn the median income, then there you can afford literally nothing.

Thanks to the South Beach housing blog for the link.

Crashing Property Prices - Los Angeles




Here is another "bubble gone bad" - Los Angeles. Since August 2005, inventory is up 20 percent, while list prices are down around 7 percent. Inventory had been falling as the holiday season approached. Not that the decline did anything for prices. They just kept falling. Since the new year, inventory has been on the rise again.

Bubble bargains #3




Here is another great Californian bubble picture supplied by Robert. This Oxnard 700 square foot property will set you back $2,100,000. The only redeeming feature of this "apartment" is a sea view. However, there are other ways to enjoy the sea air. For example, $2,100,000 will buy you 29 years in a $200-a-night hotel room. So instead of buying this little beauty, save the money and go on holiday to somewhere nice.

Crashing property prices - Phoenix




If you were thinking of selling that newly acquired investment property in Phoenix, then you should brace youself for a serious reduction in your wealth. Since August last year, housing inventory has increased by a bubble-piercing 115 percent. Listed prices, (that is not actual sales prices), have fallen by 8 percent. Further details on the sorry state of the phoenix housing market can be found on housing panic blog.

The data for the chart came from Housetracker.

Overvalued real estate - Columbus, OH




Here is a chart requested by Leon from Cleveland. He sensed that Columbus OH has not gone through the same kind price appreciation as coastal cities. It looks like you are right, Leon. House prices are up 25 percent over the last years. Currently, prices are about 13 percent above trend.

Bubble bargains #2




Here is a delightful "pied-a-terre", for those interested in living in Southern California. However, it will cost you $17.50 per square inch or $2,500 per square foot. Quality housing and plastic seating doesn't come cheap. Thanks Robert for the photo. If anyone is interested in buying this property, possibly as an "investment" then quickly click here for further information from the realtor.

Bubble bargains #1




I saw this on New Brunswich "bargain" on this New Jersey real estate blog.

Apparently, the owner wants $150,000. The price must have something to do with the location. What do realtors call these houses? Oh yeah, fixer-uppers. I would call it a tear-down-and-start-againer. I would love to know if it was sold.

Overvalued real estate #40 - Des Moines




I thought we should go into the mid-west to seek out our next bubbletown. Real estate prices in Des Moines are currently 23 percent above their long run trend. Prices have been drifting off course since 1997. However, Des Moines has a long way to go before it is in the "A" league of bubbletowns. Let's hope it stays that way.

Wednesday, August 29, 2007

Here is the disease...




Bubblefever!
  • Overvalued house prices;
  • Unrealistic price expectations;
  • First-time buyers priced out of the market;
  • Condo-flippers making bad investments;
  • Homeowners taking out home equity loans on inflated real estate valuations;
  • Low income families taking out inappropriate interest-only mortgages;
  • Fear and greed everywhere.

....and here is the cure




Sellers are starting to reduce prices in Washington DC. Inventory is up, sales are declining, and if those houses are going to change hands, then prices must come down. DC sellers are learning the lesson first, but other cities will follow.

Ignore all that rubbish from realtors about "soft landings" and "more moderate price appreciation in 2006". Most bubbletowns are looking at corrections of between 20-30 percent over the next two years. Assuming of course, that you can actually find anyone to buy your house. Remember, the houses tend to be very illiquid in downturns. Sales volumes fall dramatically.

Battle of the bubbles #3 - Santa Barbara versus Cincinnati




I just wanted to see just how mad things were in Santa Barbara. The thing is out of control over there........

Over-valued real estate #39 - Cincinnati




I am still recovering from the shock of seeing the Santa Barbara bubble. In fact, I find the Cinncinnati chart strangely soothing. Prices have only slighly diverged from trend. Currently, Prices are 15 percent above trend.

Over-valued real estate #38 - Santa Barbara, California




Santa Barbara is the King of Bubbles. Overall, the index is at 327. Real estate prices have increased by 130 percent in five years. Housing prices are now a massive 115 percent above long run trend. I would love to know how realtors in this town try to explain this run-up of prices. Just wait the "soft-landing" in Santa Barbara. However, the past offers a warning for Santa Barbara. There was a bubble in the late 1980s, and prices fell throughout the early 1990s. A crash can and will happen again.

Battle of the bubbles #2 - Philadelphia versus Pittsburgh




Continuing with our Pennsylvannian theme, we have Philadelphia up against Pittsburgh. Well, Philadelphia wins by a mile. But here is a curious thing; until 2000 Pittsburgh house prices were outpacing those in Philadephia. Then in 2002, Philadelphia prices shoot off, leaving Pittsburgh eating dust. What happened?

Over-valued real estate # 37 - Pittsburgh




This is posted for Hua, who wanted to know what Pittsbugh looked like. It is definitely not the worst, Hua. Over the last five years, Pittsburgh real estate prices have inflated by around 32 percent over the last five years. House prices are currently running about 18 percent above trend.

Over-valued real estate #36 - Philadelphia




I posted Philadelphia already. Unfortunately, I used the years 1977-2004 rather than 1978-2005. The mistake was important; house prices went up 13 percent last year. House values are now 41 percent above trend. Sorry about the error, but it does go to show just how much of the bubble has been due to the price rise in the last year. That is the power of compounding!

Over-valued real estate #35 - Kansas City




Kansas city has been struck down by creeping bubble fever. Prices slowly departed from their long run trend in late 1998. Seven years later, the market is 30 percent above trend. The cure, I'm afraid, won't be so gentle.....