Tuesday, January 22, 2008
Real Homes of Genius
I have a particular interest in some of the more arcane discussions because I spent a good portion of my career in structured credit, including three years analyzing mortgage pools and mortgage-backed securities. However, you don't need to be a mortgage expert to appreciate the Real Homes of Genius feature over at the Dr. Housing Bubble Blog.
Real Homes of Geniusis a periodic feature that looks at the sales history of ridiculously overpriced homes in Southern California, evidence of the housing bubble in all its gory glory.
At the end of December, the good Doctor posted Real State of Genius, featuring ten exquisite clunkers in the "golden bubble state" of California. If you are having trouble understanding how ridiculous home prices got (and remain), just take a gander at these. Here's a beauty from the list:
Price: $749,000
Square Feet: 635
Details: 2 bedroom / 1 bath
Median Rent for Similar Unit: $2,500
For those of you not from Southern California, Santa Monica is prime. Great location and one of the best cities in Los Angeles County. That doesn’t mean that we don’t have any Real Homes of Genius in the area. With this magnificent 635 square foot mansion, you will be the envy of all the people flocking to the thirty-mile zone. For this extraordinary privilege you will pay $1,179 per square foot! Bwahaha! Even in the current housing market we still have people thinking housing is going to rebound even when a similar rental would go for $2,500 to $3,000. Who would buy this place? A buy and hold investor will not buy this place. A flipper may buy this place but they would need to knock it down and build on the land. But by the time the new home is ready to flip the market will be even deeper in the dark with less buyers and more inventory.
For more guilty pleasures like this, click on over.
3 Comments:
By 
, at
Tue Jan 22, 06:07:00 PM:
The taxes each year will be more than what I'd be willing to pay for it.
By 
Who Struck John, at
Tue Jan 22, 09:22:00 PM:
When the asking price is equivalent to 25 YEARS of rent, why in the world would any sane individual buy?
By , at
Wed Jan 23, 10:56:00 AM:
Which reminds me of the old joke about Argentines that circulates among their South American neighbors. How do you get rich? Buy an Argentine for what he's worth, and sell him for what he thinks he's worth. A similar joke about California real estate could be in the works.
