Thursday, March 25, 2010

A Jim-the-Realtor video

Jim the Realtor is a fabulous feed on the Southern Californian residential (and small-scale commercial) real estate market – its directions and its intricacies.

This video is one of his best ever.  It is 9 minutes long and in his usual monotone. 

I wish it were three minutes shorter because I recommend you watch it to the end.  The last two minutes are intriguing. 

 

 

Explanations sought.

 

 

 

John

12 comments:

IF said...

I don't know. Friends and colleagues of mine with decent engineering salaries have bought starter condos (no houses, too expensive in the bay area) in the 1/2 million range recently. Tax credit and coming hyperinflation were the motivations. Tech people have a bit more money now with stock prices rebounding and ESPP/options putting cash into pockets. But the 1 million range is pretty dead here, no value for the money. Everybody who had the cash 5 years ago already has such a house, the others have not enough to make a down payment in the 200-300k range. Either Dinkys or rich parents.

For me the 1+ million sales are suspicious. But if a realtor sold, probably knew how to game the system. There is hardly any white collar fraud prosecuted in the US. I'd think many people would consider a cheat as "smart" and mostly "risk free" now. Scary implications, but such is life in CA.

mark said...

My ten cents is that the $1 Million plus home sales are not suspicious sales just likely to be bad buys for the purchasers (on the basis that top-end California will continue to fall).

Bad buys or not these are the relevant comps and the $700k smells to high heaven. All signs point to Jim's fraud call being correct. You gotta think that there is some sort of connection between the buyer and purchaser or other arrangement (which the bank doesn't know about) whereby the vendor gets the benefit of the difference between the true market price and the $700k purchase price.

Craig said...

Great catch. Either the sale price is a misprint or the deal is rotten. It's Wells Fargo too, in case anyone forgot the story of their former exec that held a foreclosure in Malibu off the market to use it as their personal party house.

mckenzieg1 said...

Interesting that the "suspicious" house was by far the smallest of the group - I believe Jim said 3800 sqft, when most of the rest were 5000+. I'm sure the lot is a big component of the price, but wouldn't you expect a per-sqft component as well?

Anonymous said...

Powerlines?

Jim Fickett said...

There is an awful lot that doesn't smell right at Wells Fargo. I'll bet on cash under the table on second and third liens.

Jim Fickett
ClearOnMoney.com

Anonymous said...

Jim the Realtor had another post about something very similar in San Diego.

It's really just a case of people fraudulently gaming the system. I don't think the banks even care, because the taxpayers are on the hook. So people game the system up, and they game the system down.

It's sickening, but that's what happens when you do things like bailouts. Accountability flies out the door, and no one cares.

Anonymous said...

Maybe the foundation of the house was damaged :)

Or more likely the seller and the buyer split the $300K-$400K differential between the purchase price and the fair value.

Seller sell house for $700K, write off $1.15M loan. Buyer buys for $700K, cuts a under the table check for $150-$200K cash to the seller.

najdorf said...

My call is simple: not a very good house. Smaller than neighbors, ugly. Does someone who makes more than 200k a year want to live there? No. So everyone involved let it go for that price. The neighbors are sustained by idiots who wake up with a million dollars and want a huge, tacky house. This one is the odd duck out. It's only because so much California real estate has been and remains so bubbly that anyone is surprised this one went in the 700s. In a lot of states I could get an adequately sized beautiful house with excellent construction for 700k.

Anonymous said...

Jim should be very worried for his life at this point. The only thing I saw there was a farm community for pot. The house next to the gate would be the most strategic location for defense of the compound, and the most valuable.

Peter Rickwood said...

The land size seems enough to explain a decent chunk of the difference. The other blocks were around 5000 sqft, costing around 1.15 million, working out at $230 per sqft. The suspicious house was $770k and 3800 sqft, which is $202 per sqft.

So the discount to market is perhaps 10%. Actually a bit more because price isn't just a linear function of land size, but perhaps still in the plausible range, given what I expect is high volatility at the moment?

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