Tuesday, December 26, 2006

2102 Swehtam hits the one year mark; rental bubble in its early stages

As suggested by one blog reader, maybe we ought to start sending cakes out to these property owners when they've hit the one year anniversary milestone for having their property listed without a sale. So on that note, a one year Humpty Dumpty cake goes to 2102 Swetham unit C (back unit).

I discovered this property for sale a year ago when I was on Christmas vacation from work, and I went back and visited it again during my current Christmas vacation. I photographed it again but except for a few plants and a different listing agent hanging from the yardarm, it looks exactly the same:

(Long time blog readers know that I don't like to post the full real address of a property in order to protect the guilty, so I scramble the address.)

A year ago the asking price was $995,000. It has been listed at $789,000 for several months now, so it is obviously waaayyy overdue for yet another price reduction.

Soon to hit the one-year mark is 3032 Mossolb. It's been listed as least since February. Originally listed at $1,299,000, it has been "reduced" to $1,200,000. Today while driving by I noticed it appears the builder has thrown in the towel and decided to rent it out. Now I am wondering, is somebody who is so unwilling to cut his asking price when trying to sell a property still going to have a clear view of the rental market, and set his rental asking price by what reality dictates or by what fantasy dictates? And the second question preying on my brain is, with a rental sign in the window, and a For Sale sign in the yard, with a reduction banner affixed to it, why would any renter in his right mind want to fork over his firstborn in asking rent, when the owner so clearly wants to sell the property, thereby displacing and inconveniencing the renter and forcing him to move again? And the third thought haunting me, for which I sincerely hope the answer is an overwhelming NO, is - are there really morons out there who would hand over their firstborns just for the privilege of renting here? (Sigh.)

This rental is just a few blocks away on Nelson.

I repeat - with the neighborhood being pretty much the same in these two spots, WHO would pay $4800 a month rent, when a comparable property just a couple of blocks away on Nelson may rent for at least 33% less?!?

And finally, we have 4012 Llerraf. I am not sure this rental is for Unit A or Unit B. Unit B is currently listed for sale at $1,049,000 in Zip Realty, but there is no obvious For Sale sign visible from the street.

Rental prices have exploded upwards within the last year, accounting for the jumps in CPI and perceived inflation threat the Federal Reserve loves to talk about. In spite of this, I've held the opinion that the rental market in this area will eventually start to feel some pressure, just like the sales market. The number of rental listings in my neighborhood is growing by leaps and bounds, so a partial answer to a question I've asked earlier this year about what happens to these unresolved sale listings is that, increasingly, it looks like the owner tries to rent the property out. But since so many owners are still in such denial, I seriously doubt their asking prices for rent will be any more realistic than their asking prices for sale. Will these For Rent signs just end up as lawn decoration or will they bring in any money to slow the cash bleeding?

In my opinion, ALL of these are fantasy rental asking prices, and between them and the asking prices on properties for sale, it will just compel habitat seekers to flee and look elsewhere all the faster.

Ugh what a mess. This housing market is the ultimate chaotic feedback system, if ever there was one.


Blogger wannabuy said...


I smiled as I read about the birthday cake. Nice find! :)

These rents are just crazy too... No wonder the Christmas discussion has been about what jobs were going out of state: Boeing's Delta rockets to Colorado, Lockheed sending 400 jobs to Colorado, 400+ to Ft. Worth. Amgen just bought a Colorado campus... hmmm...

In this morning's daily breeze I found out my employer had sold off a whole bunch of land that was already approved for condos/townhomes.

2007 being flat? Yea... I believe that one. As long as the market is flat, I'll rent. (Its the only way to save money in Southern California.)


12:11 AM, December 27, 2006  
Blogger bearmaster said...

It sure doesn't look good when industry is quietly slinking out the exit door, does it?

12:24 AM, December 27, 2006  
Blogger wannabuy said...

It sure doesn't look good when industry is quietly slinking out the exit door, does it?
Rotfl... it really doesn't. Its actually starting to really make me wonder as my company sells yet another block of office buildings. My question is, what jobs are leaving that we don't know about?

Don't worry, I'm very familiar with the concept that most job growth is quiet and slow. I have no doubt someone, somewhere in the south bay is hiring. But do those jobs pay the mortgage?

And when will Nissan's old campus be reocupied? It seems odd that such a prime property is sitting empty.... Did I miss something?


9:58 AM, December 29, 2006  
Blogger Rob Dawg said...

What we need is a REOutrage.com website where we can all post local examples of excess and the rest can point and laugh at the last fool aka bagholder.

The rent asks you show would make a great first example.

12:35 PM, December 29, 2006  
Blogger bearmaster said...

We should add to REOutrage.com blatant examples of false advertising in real estate.

Last night I was looking at the Manhattan Beach Reporter and noticed an ad in which the realtor proudly posted pictures and addresses of properties that had been sold. I looked up one Redondo Beach property that had been sold and the dollar value shown in the ad was not the same as what the property actually sold for - the sale price was a bit less. The dollar value in the ad was the last listed asking price for the property. In fact, the final sale price was over 10% down from the original asking price.

7:07 AM, December 30, 2006  

Post a Comment

<< Home