Tuesday, September 11, 2007

Has the South Bay housing slowdown ensnared a bubble pusher from a major local realty?

I won't make a secret of it, since the property is listed in the September 10, 2007 foreclosures at Nef Cortez (check the sidebar for links).

1206 Rindge was new construction that sold in July 2005 for $1,165,000. It first started making "noise" of the financial distress kind back in late July of last year. Then there was silence, and finally the property was listed early this year initially for $1,275,000. The listing agents were John Houston and Aggie Lammers from Shorewood. The property showed up in Zip Realty on March 9, but the For Sale sign had been sitting out front at least a month prior to that.

The asking price has been slivered down a few times, but to no avail; it currently sits at $1,179,000. It might look like they are really trying to sell the place when they do the price slivering, but let's face it, if people can't comfortably afford a property above, say, $200,000, then the asking price might as well be a trillion dollars.

I thought this was another ordinary bubble going POP until I looked at the foreclosure data. The owner's name in the foreclosure data is that of one of the listing agents.

If I can rule out any weird financial deal where the listing agent took the lethal foreclosure blow for the original owner (why the hell would he?!?), and if it is a fact that the listing agent and the original owner are one and the same, then we've reached a point where the bubble pusher foot soldiers are being killed by their own friendly fire. Some of my sister blogs have devoted much time into documenting realtors-flippers in trouble - this could well be another example. Bubble pushers - and those who feed them - have been known to fall into the trap of believing the hype that real estate doesn't go down; that it'll recover quickly if it does happen to hiccup; and the biggest myth of all, that this area is in such high demand that it is immune to the real estate problems of the rest of the country. Now the excesses of overconsumption and too much easy credit, and the belief in all the hype, are backfiring.

The last time Southern California went through a housing slump, the papers devoted a great deal of ink to the destruction of the American dream. There was much weeping and moaning and hand-wringing on the pages of the L.A. Times and who knows where else. But not a whole lot of press was devoted to how out of the ashes of the bonfire of one dream destroyed, another's dream is seeded and grows.

The foreclosure sale for this property is September 19. The minimum bid on this property is $874,250. IF somebody gets the property at the minimum bid, that's 25% less than the purchase price in 2005. That may SEEM like a great deal, but there are actually a few properties in RB with comparable square feet (> 2700) at even lower current asking prices. One of them is even in the TRW tract. Personally, I think it is best to WAIT so that your financial situation doesn't end up going down like a lead balloon in case of some little hiccup. You want to keep your dream alive.

There is another property about 4 doors away from me, also on Rindge, that is also available at that September 19 foreclosure sale. It's a more modest place than the first property I discussed; nevertheless, rumblings of financial distress also came in July 2006. It's hard to believe this place sold to the current owners in November 2002 for "only" $220,000. I'd sure as hell would like to know how a $220,000 property bought in 2002 exploded into a $630,000 loan liability in November 2005, going into foreclosure sale with just over $10,000 delinquent.

The owners of this particular property owned two hounds (I think they were black and tan coonhounds), which always used to "greet" us when we walked by. I think they have all moved out - if so I am going to miss those dogs.


Blogger wannabuy said...

I'd sure as hell would like to know how a $220,000 property bought in 2002 exploded into a $630,000 loan liability in November 2005, going into foreclosure sale with just over $10,000 delinquent.

Wow! That is $390k of good times. Just out of curiosity, did you see what type of cars were in the driveway? The shear number of over $100k vehicles on the road in the south bay is a very good indicator the economy is about to turn south.

Great information as always! Sadly, coworkers are just too frustrated waiting and are pulling the plug. :( Not many... but we simply cannot replace them fast enough (due to the cost of living in the South bay). Sigh...

Any large scale move by my company has been postponed to the Christmas break. (Earlier announcement, but move families during the school break.) We are all wondering if it will be trivial (1,500 or so) or more major (3,000 to 6,000 tend to be the upper bounds quoted by people likely to be "in the know.")

Sigh... must wait (years), but its like waiting for some ice to melt and wondering when it will cause an avalanche.

Got popcorn?

8:53 AM, September 12, 2007  
Blogger bearmaster said...


It's a more modest place when compared to the first property I talked about (about 1680 sqft versus about 2800), and I never noticed any glitzy cars there. The dogs were never in the yard (there wasn't much of a yard), but would be at the front window and would howl when we'd go by.

I'm kinda wondering if something catastrophic happened (like health care expenses). Which reminds me that investments in health (proper food, exercise) go a long way.

Waiting for ice to melt? Actually that's a short amount of time, relative to waiting for water to boil! :) Watching this market is like waiting for water to boil. Very interesting what you say about your coworkers. Hang in there.

9:04 AM, September 12, 2007  

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