So I cruise into the neighborhood just in time to spot a perky-looking Realtor setting up a couple of open-house signs pointing up into a little enclave I happen to covet (unrealistically). Naturally, nothing will do but what I have to take a side-trip to view that thing.
It’s at the end of a pretty, quiet cul-de-sac…and it’s a place I’ve seen before. It was on the market last fall for $290,000; sold in September. At the time, it defined “dump.” I couldn’t believe such a wreck was standing on such a sweet little street, but then had to acknowledge that our big, sprawling classic 1950s North Central ranch houses are getting old. Very old.
So I thought, well, what the heck. If they couldn’t unload it, maybe it’ll be on the market for something close to what I can afford, and for a modest 100 grand or so I could renovate it and dwell in genteel splendor until they cart me off to the old-folkerie.
HOLY mackerel! Take a look at what they’ve done to the thing:
See that refrigerator? It’s bigger than my master bedroom closet!
These photos of the kitchen do not do justice to what the fix&flippers have done. Everything in there is absolutely primo, and it is GORGEOUS! Too, you have to have seen what a disaster area the place was to appreciate what they’ve accomplished.
I want this bathroom. I don’t want to clean it, but I want it:
You, too, can wipe down the shower from ceiling to floor and clean the inside of those glass doors every time you bathe:
Only a person who enjoys supervising servants could covet living in this house. But…it really is quite beautiful. They’ve done an awesome renovation job.
For 3,254 square feet of this, they want a mere $545,000.
And that is a good sign. About $500,000 is what an updated North Central ranch house a block off a large, green park is worth. Or rather, what it was worth before the bubble inflated. While prices were insane, places like this in the neighborhood were selling for between $750,000 and $1 million. In the ensuing bust, you could have scored a comparable shack for $350,000. Or less, if it needed serious renovation. I came very near to buying one on an irrigated half-acre for $250,000, but backed off after contemplating the sheer amount of work required to modernize it. Someone else bought it and turned it into a palace.
That prices are returning to their pre-bubble state bodes well for M’hijito and me, who are still upside-down on a house we bought as prices were falling and (falsely) appeared to be about to bottom out. La Maya noted that an identical house on the next street north of M’hijito’s place was on the market for $225,000. We don’t yet know what it sold for, but since it moved quickly, we figure they probably got around $200,000. That is in the ball park of what we owe, suggesting that within another five years we should be more or less OK on the mortgage.
Four factors are working in our favor:
• First, residential inventories are reaching historic lows. The Valley now has slightly less than a two-month supply of houses for sale on the market.
• Second, people who defaulted or did short-sales two or three years ago are starting to recover and become eligible to take out home loans again. This means a lot of folks who have been paying off debt while living in miserable rentals are anxious to get back into homes of their own.
• Third, mortgage rates are in the sub-subbasement.
• And fourth—this is huge!—appraisers and lenders are beginning to provide two appraisals: one comparing a property with all other recent sales in the vicinity, and the other using only “regular” sales (not short sales; not foreclosures) as comparables. That strategy produces a valuation considerably higher (and IMHO more realistic) than the likes of Zillow are tossing out there.
I think we’ve got a good shot at seeing values return to where they should be, which is where they were before the crazed frenzy took hold.
First to recover will be central areas like mine and M’hijito’s. His neighborhood is just as ripe for gentrification as it was before the crash of the Bush economy, and as a matter of fact houses up and down his street are already beginning to look a lot better maintained.
My neighborhood at least is holding up; we were really thumped when the city ripped out an entire row of nice homes along 19th for the construction of the damn train that now is never going to be built. It’s not outside the realm of possibility the houses that were blighted by this moment of bureaucratic idiocy will recover someday. It’ll be quite a while, but it could happen. As gasoline prices rise (and they certainly will), the houses here and in M’hijito’s even more centrally located neighborhood will grow more and more desirable.
At any rate, it looks like we may be seeing the beginning of the end of the housing crisis, at least in the central parts of Phoenix, Arizona.
Getting rid of the tree certainly improved your mood! Hope you are right. There are 4 houses for sale on my block–more than the total for sale in the last 15 years.
People can ask whatever they want but the true test will be once these places sell. Hopefully you can do a follow-up post in a couple months letting us know that they’ve sold and at what price. When actual prices start going up, that will be the true sign of a recovery. Beautiful place by the way 🙂
@ Money Beagle: Quite a hovel, isn’t it? Wow. But…if you knew what it looked like before: water damage, decrepit roof, empty pool, stuff falling down around your ears, 1950s or 60s construction that includes black iron plumbing…you might be dubious about what’s inside the walls.
You’re right, though, that a house (like anything) is worth what someone will pay for it. Usually, when no one will come up to the desired price, the place sits on the market for a while. Houses have been moving fairly quickly in these parts, when they’re priced accurately. A place about a block from this house went for something near 500 grand, but I think it was bigger. It also was right on the park, which some people regard as something grand.
@ frugalscholar: You live in an amazingly stable neighborhood! The population around here is a lot more transient — supposedly people move on average once every three years. That notwithstanding, some enclaves hardly ever see a vacancy. Naturally, those are the places where you’d like to live. If they’re very much in demand, sometimes places will sell without ever going on the market; people will call the Realtors who dominate the area and ask them to watch for a place, and Realtors will actually go door to door asking owners if they’d like to sell.
The crash of the “Bush economy”again. Haven’t your guys had a chance to put their own stamp on the economy? Only when we’re in paradise will you be calling in the “Obama economy”.
Feel free to rant.
@ Hilary: 😉 No rant necessary. I’ve taken to writing “the crash of the Bush economy” just to get a rise out of my fave conservative readers, of whom there are quite a few. And it never fails, as we can see.
That is good news indeed. Prices appear to be stabilizing around my area too which is welcome news also. I’m just not sure who to believe anymore though …. Wall Street analysts say that there will be another huge wave of foreclosures any time now. One just has to stay whatever course makes the most sense for now and, for me, that means staying put and paying the mortgage off.
I live also in a high cost of living area that pays the sunshine tax. And I’ve seen much of the same thing. Actually the high end areas in my city (I don’t mean super high end) didn’t drop at all. The outside suburbs had dipped quite a bit but I think now are safely back up to 2008 values. No worrying of a double dip in home prices here. Think it’s only a matter of time before they get back up to pre-crash. Probably inflation will help a little and rising interest rates should start to make a lot of the people sitting on the sidelines get in the market.
@ Quest: Friends in the financial business tell me it’s not true the banks are holding some gigantic pool of future foreclosures. It’s not in their interest to hang onto vacant homes, nor do they want to be in the landlord business. According to these guys, banks have been moving foreclosures fairly quickly of late, and there aren’t all that many left.
In addition, Realtor friends report that foreclosures move off the market rapidly; the supply is now so low that prices are being bid up.
@ Alex Morgan: Prices here are still depressed in the surrounding suburban areas. As I think I wrote a few days ago (??), KJG and I went into a new development of 3500- to 5000-square-foot houses on third-of-an-acre lots, where every model was selling for under $300,000. If I wanted to keep 3500 square feet clean, I could have bought a very nice house (indeed!) for just a little more than my centrally located 1860-sf shack would sell for.