Address: 1615 Ashland - 90405Details: 3 bed/2 bath 1,624 sq ft house, 6,917 sq ft lot, 1938 construction
Description: Cozy 3 bedroom + 2 bathroom on a tree-lined street presents an excellent opportunity to live in Sunset Park. The home features a fireplace in the living room, wood floors and ample natural light. The covered deck off of the living room and kitchen overlooks the private and sizable yard.
Previous Purchase: 10/14/83 - $210,000
Listing History: 1/4/10 - $999,000
SOLD: 3/12/10 - $1,055,000
I don't feature as much 90405 as other zips so I thought I would show this as an example of robust demand for "box ticking" entry level houses in 90405. This sold quickly for over list. I think that is the best way to sell something. The environment is strong enough that if you price something appropriately then you will get bids quickly.
Since I'm always curious to see long term growth rates, note that the appreciation on this is north of 6% over the 26+ year holding period.
Similar situation for 2413 30TH St, 3 bd, 2.75 bath, 1732 sqft, 9000 sqft lot.
ReplyDeleteListed 1/4 for $999,000, escrow within two weeks, and sold for $1,075,000.
Westside Village
ReplyDeletemy neighbors put house up at a very good price got 15 offers! one offer almost 20% over listing price.
Is this the new reality? Or is it just a rally in a bear market?
I think its a reflection of that fact that prices have stabilized at lower levels which are attracting buyers who are more confident that there isn't much downside left and who want to take advantage of stupidly low interest rates. Its spring selling season now and there isn't a ton of good inventory in the entry level area. This area is also where you can stretch into with a conforming loan and solid 20% downpayment.
ReplyDeleteJoker listings still rot on the MLS, but if a solid property is listed at a realistic price it seems to have no problem selling.
Conforming jumbo I should have said
ReplyDeleteCurious what you mean by "box ticking"?
ReplyDelete"the appreciation on this is north of 6% over the 26+ year holding period"
ReplyDeleteThat's great especially considering this sale happened at a low point in the market. It's nice to have a roof over your head and a 6% annual return on your money. My bank doesn't give me 6% for my money or provide shelter.
This person bought and held long term which practically guarantees a positive outcome. Bubbles and crashes don't effect the long term owners as much. Good for this seller.
In the aggregate---i.e., for most places, for most of history---buying and holding real estate long term has done nothing more than match inflation.
ReplyDeleteA "box ticker" is a solid SFR on a decent sized lot usually with 3 beds and 2 baths which is very much in livable condition.
ReplyDeleteThis is exactly what most entry level SFR buyers want -- a property which "ticks" or checks the boxes on a list of these requirements.
"My bank doesn't give me 6% for my money" -- it will when interest rates eventually rise...thinking rates will always be so low is equivalent to thinking real estate prices will go up forever at 10%+/year.
Epsilon is right about long term real estate appreciation being roughly equal to inflation. If someone wants to go back and see what actual realized inflation was on an average basis over the holding period I would be interested to see. I am lazy and use a 3% inflation + 1% "SM premium".
My family has done very well in real estate. I think the idea that it does not beat inflation may be fallacious. Location location location
ReplyDeleteplus tax advantages
no tax until gain is realized etc.
With 20% down, the initial mortgage in 1983 would have been about $2100 (at a 15% mortgage), which is equivalent to about $4500 in 2009 dollars (at official inflation rates). At prevailing market rates, the payment would be about $4500 with 20% down. In other words, ex the tailwind provided by the massive drop in interest rates in the last 26 years, the value of the house just kept pace with (official) inflation in terms of required monthly payment. That really is not all that impressive considering all the ways in which this person got "lucky" -- bought in a trough in 1983 just past peak mortgage rates; booked all of the run-up in the late-80's bubble and kept the majority of the nought's bubble; and Sunset Park is dramatically nicer now than it was in the 80's. Had this person bought in 1989 or in Palisades, my guess is you would not have anywhere close to a 6% annual appreciation rate.
ReplyDeleteOf course, the equivalence between mortgage payments then and now might suggest this price is out of bubble territory -- any thoughts? Adjusted for inflation, the property tax is significantly higher now. LA has less of an upper-middle class now. Is it harder for the average SM buyer to save $210,000 now than it was to save $42,000 in 1983?