#90245

Work is hectic and despite the time of year it looks like everyone is fighting to get their listing out and sold in the new year. We continue to see the price of dirt escalate.  Looks like $900kish is the new tear-down price. From my personal experience this is up ~$100-$150K since we were looking last spring. For most people the math only works if you are a developer and have a pocket full of contractors you keep busy. $900K plus $200-$300K and 12 months of your life and 12 months of carrying costs. Or you can just buy the $1.3 mil home and maybe spend $50-$75k. The flippers are out in force. The boo radley house on Acacia and Hillcrest looks almost done. Goes to show you what a good flipper can do in less than six months. From my experience it will take that long to line up a contractor and if you need permits add six-nine months to the time-table. 

228 W Oak at $1.2???? WTF? Big lot, 1400 sqft but apparently Kirk Brown didn’t think it was worthy of photography. We all know what that means.  So it’s your $1.2 mil plus $200K. 

336 Valley St at $1.375 mil. Another listing priced with hope and a prayer. Listed by Andrew Adam at Palm Beach. Big House on a big lot.  Don’t know who the buyer for that house is. I think I put Andrew Adam on blast for being stupid in a previous post.  What does he care, maybe it sells for $1.1 mi, he still gets $27,500 in commission. 

526 Whiting at $1.5mil. Listed by Karen Sellers. A Big House on a big lot on a prime street in El Segundo. Seems pricey but locals know about Whiting. It’s got lots of positives. 

I’m excited about this listing! Another bullshit “coming soon” fishing expedition by Bill Ruane. I wonder if these highbrow owners didn’t want a for sale sign parked in their yard for weeks before the listing? I’ll have to drive by. 

Anyway, I’m excited because it may give us a glimpse of the true appreciation of a home. This house was built in 2015/2016 and along with 3 others on the same and street and an additional 3 directly behind on Maple. They were all new construction and the six homes are sized about the same and look similar. This home sold in March 2016 for $1.85mil. 

Even though the price is not the average El Segundo residential price we’ll get to see if a buyer with a lot of money feels that the home appreciated 12% after a year of use! If you were a buyer or buyer’s agent wouldn’t you hammer them close to last year’s sale price? We’ll leave the airport noise and pooh smell up to the discerning new buyer. 

Rental armageddon in El Segundo. Some landlords want good tenants that are willing to stay and take care of their home, others just want a body that maximizes the income they make. 

Here are the three rental homes active on Zillow. 

400 Kansas St - $3.35/sq ft - Tiny 3/1 - 1076 sqft

527 Penn St - $1.57/sqft - 3/2.5 2926 sqft w central air. 

533 Concord St - $3.18 sqft - 3/3 1574 sqft

The funny thing is that Kansas only has one photo and it looks like your typical rental house (kinda crappy). 533 Concord is the house I wrote about last week and the rent is $5000 (I’m guessing the previous renter was in the $3500 range). 

527 Penn is the nicest, the biggest (almost 3000sqft) and has the best photos. 

I’ve written about this before but after some latest bat-shit crazy listings I felt like it needed revisiting. 

Prices set at the margins means that it only takes one sale to set a new market price. 

Some dumb-ass wants to pay $1000 sqft for a livable fixer upper and now homeowners and uneducated real estate agents want to scream - “ Hey, that sold for $1000 sq ft, mine is as good or better, I’ll ask $1000 sqft too” 

Other than seeing and comparing the homes the latest sales comp is kind of meaningless. It just means that Joe was willing to pay $X to buy they house. Maybe Joe’s wife is 5 months pregnant and they have lost out on four homes? Maybe Joe just moved into town and has had his family in a tiny 2 bedroom apartment for 13 months and has to buy a bigger home or he’ll kill someone?

We don’t know. 

Let’s take a look at a townhome for sale:

887 Washington St. 90245 2bed/3bath 1265 sqft. HOA only $265 - Listed at $675K yet zillow’s bullshit Zestimate is $600k. 

173 days on! Started at $700k with one price drop. I guess they don’t want to sell it. 

But here’s where it gets weird, there are several comps in the same complex.

867 Washington a 2/1.5 bath for $620k in December. 

863 Washington a 2/1.5 sold for $700k in May 2016 

851 Washington a 3/2 with an additional 300 sq ft also sold in May 2016 for $760k

Funny enough this is an example of the price being set lower by the margin sale. $620k is now the price of that condo. Like it or not. Yes, the one that closed at $620k wasn’t as nice as the one currently listed for $675k, but it’s nothing $10k in paint, carpet and cabinets couldn’t fix. 

867 Washington took six months to sell, started at $689K and it took a 10% drop to get the deal done.  With two units in the same complex for sale it looks like one cut the legs out from the other.  

A week or so ago someone posted on a private El Segundo Facebook group that they were moving and suggested for anyone looking for a 3/3/ house to call the landlord at the number provide. 

The first thing I noticed was people’s inability to read the post. “For info call this number.” The original poster is the current tenant and just trying to offer up some info on the house to locals in search for a rental. Most of the questions asked OVER and OVER were the price. Then people would complain that the price wasn’t listed. RTFM! Or in this case read the fucking post!

The second thing I noticed was the absolute feeding frenzy that was created. 23 comments of people referring other people, begging, asking the same stupid question, pleading their case on why they were a great candidate.  A couple dozen people thought that they would be better suited by asking stupid questions rather than immediately picking up the phone and calling the number. Well at least a lot of the competition have shown themselves to be not so bright. 

It made me sick. It also showed me just how fucked up supply and demand is in this town. Locals wanting more space or out of an apartment, friends of locals who know how great El Segundo is. Out of towners just looking in the area. Employees of the several dozen fortune 500 companies located in town. They all want in.

This supply demand imbalance is further exacerbating the pricing issue. We’ve seen the pricing in town continue to get nutty and over the past year I’ve witnessed the rental pricing get insane. As a home owner there’s a delicate line between renting to the best tenant and maximizing the most profit. Err too far in either direction and there is bound be have large financial implications. If you figure most houses and decent condos are renting for $3500-$5000 then you can see how a month or two without a tenant can hurt.  

So if you are looking to rent in this town, good luck. I will say that there are TONS of long time El Segundo residents with rental properties that aren’t out trying to gouge people. On the other hand, supply and demand has a strong influence on market price and right now demand is far and away above supply. 

I first wrote about 625 Center St back in September. On a recent drive through town I noticed the for sale sign was still up. Zillow calls it 200 days but the for-sale sign was up for months during construction. 

Well after about a year of advertising this house for sale Dan looks to have a fish on the hook. 

I’m anxious to see where the dust settled. 

More and more I lump real estate agents in the same class as used car salesmen. Their goal is to get the deal done as quickly as possible, with the most profit, while using the least amount of effort. 

Once again the air reeks of 2007. 

Let’s take a look at Marc Faerber’s new listing at 403 Loma Vista here in El Segundo. 

I’m shocked he even stepped out of his car to earn his potential $32,000 in commission! (shit $64K if he could find a sucker to take the other side of the deal)

Yes, the house is being sold “As-Is” which in Real Estate parlance translates to “it’s a dump and will need a ton of money”. So maybe it’s not worth photographing the inside, or the backyard...But WTF at least pretend like you care!

This gets me back to my thoughts on out of town realtors. Not sure how much knowledge or experience Marc has in regards to El Segundo but his listing and the pricing of this property speaks volumes. 

He doesn’t give a fuck. He doesn’t care about his client. He doesn’t give a fuck about El Segundo. He doesn’t care about you, the prospective El Segundo new home owner. He just wants to make a buck. (or thirty two fucking thousand of them) 

The owner probably has a personal relationship with him and gave him the listing. Does Marc have a list of potential buyers in his back pocket looking to buy? Probably not. Does Marc have knowledge of the pricing and trends in town or has he just done a comp search and came up with an asinine number of $1100 sqft for a dump? (Average for past three months is $764 sqft)

Will it backfire? You’ve just priced it out of the hands of the majority of people shopping for a home in this town. Yeah - $1.2-$1.3 mil is the sweet spot for a livable house but $1.3 + $300K in capital expenditures + 6 months of your life in construction hell isn’t the ideal situation for many people. 

What will the local agents say when their client asks....What would you tell your client? Yeah, let’s go take a look. It looks like there’s a deal to be had. 

Greed, stupidity, laziness and lack of concern for his client or the neighborhood.