Sunday, January 26, 2014

Will You Pay $1.7 Million for a Condo?

I went to the following open house during the weekend and I am not too impressed with this home because it's in front of a busy and noisy street called South Catalina Avenue in Redondo Beach and its kind of busy cross street Avenue C.  The price tag is $1,6999,000.  It's not a house, it's only a condo.

After paying 20% down ($339,800), the monthly cash out-flow for this condo is $8,075 for a 30 year mortgage ( mortgage payment + property tax + HOA fees).  That is only assuming the new buyer isn't going to re-paint the interior or re-decorate.  Some of the interior painting is pretty gloomy looking to me.   I personally don't like the layout of the home because it has 2 bedrooms on the ground floor.  I don't like homes that have bedrooms downstairs and living room and the rest of the home upstairs.    The traffic was pretty noisy when I was there and it was a Sunday.  I can't imagine the noise when it 's a weekday.  There is the side way ocean view from one of the balconies on the side on the cross street of Avenue C.  The ocean view isn't front and center.  Even though the home is supposed to be 2,300 square feet, it feels a lot smaller inside because of the three-level layout.   If I have $339,800 cash on hand, I will definitely not want to buy a condo in front of the intersection like this one, what about you?  Will you pay this kind of down payment and monthly cash to buy a condo like this?

Saturday, May 18, 2013

Housing Bubbles in 2013

Wizard of Oz Snow Globe Music Box $64.95

It's been over 3 years now since I got married and I'm still in an apartment rental with my husband. Our kind landlord had kept our rent the same for the whole time, God bless him!!!  For the last 3 years, we have been told it was the best time to buy.  It seems no matter what year or what month we went to an open house, the brokers always said the same thing, "Now is the best time to buy."

Throughout the years, there were few times when we submitted an offer on something we liked and also could afford.  But each of the offer we submitted (we offered at listing price) were outbid by other offers that  were tens of thousands of dollars more.  Since 2008, I had never seen housing price come down much in much of the Los Angeles area except for the ghettos or areas close to the ghettos and high crime areas where nobody wants to live, like Carson, Hawthorne, Inglewood, Compton, South Gate, Baldwin Hills, on and on.   When I look at the map, it's a shame to see these areas where nobody wants to live make up most of Los Angeles.. How did this happen??

It's heart breaking to go to an open house of an ugly 2 bedroom condo or townhouse that is over 40 years old and that is asking for over $500K and even $600K.  Yet such properties are selling.  People are buying them because they fear that they will miss the benefit of low mortgage interest rate if they don't buy now.

I don't care about the low interest rate, no matter how low the interest rate is, I still have to pay interest.  Since my husband and I don't itemize on our tax return, we can't deduct the interest on our tax return.   The price of the home is our main concern.  The price of the home to our income is too high... We just don't want to be in debt for several hundred thousand dollars for the next 30 years after putting down $200K.  The current home price level for a 2 bedrooms in a decent area and in decent condition is just way too high for our combined annual income.  My mom told me in the past, the price of a new single family  home was only 3 times to my dad's annual income.  Now I look at the price of an ugly 2 bedroom condo with expensive HOA fees that is costing more than half of million, it really makes me sick.

The housing bubbles are definitely still going on, even though I don't know exactly what the government, Fannie and Freddie  had done to preserve the bubbles.  According to economists and experts in the real estate industry, homes are currently overpriced.  Why is my paycheck not increasing the same speed?  I have been trying to find a job that pays a few thousands more a year, but haven't had any luck yet....

Sunday, December 30, 2012

2202 Huntington Ln, Redondo Beach, CA 90278 at $680K

When I went to the open house, it was priced at $729K.  The real space inside felt a lot smaller than the square footage reported.  The lens of the camera made the house look a lot newer, sharper and a lot more spacious.  I was a little disappointed when I stepped out to the backyard, it was pretty small and cramped.  The master bedroom is of a good size but with wall colors and decors that reminded me of the show "The Golden Girls".  The master bathroom has tiles that are so very 80s and that need to be redone too.  One thing about having that kind of tiles is, dirt and mildew tends to accumulate on the grids easily and fast, making the bathroom look dated and dirty too frequently.  This kind of tiles require a lot more cleaning time and therefore they are not for me.   The rest of the bedrooms are all very small with wall paint that needs to be redone. Typical of most of the townhouses in North Redondo Beach, a lot of bedrooms have windows facing closely with neighbors' windows.  

At the time of the open house, I felt that $729K was too pricey for the work that I will need to do to re-decorate the interior to suit my taste. Besides, I felt cramped and I smelt stuffiness when I was inside.  It was overall not better than my upper level apartment rental that has city view.  With the property tax and my tax bracket, even after the portion that was tax deductible, I will actually need to pay the non-deductible portion of over $1500 a month for interest expense and property taxes, before homeowners insurance,  and other upkeep and maintenance expense or the redecorating expenses and the repayment of the actual principal.  That is only if I put 20% down payment.  Despite the money side, I didn't think I would want to  rent this house, let alone settling down on it with a 30 year mortgage. My rule of thumb is, I'm not going to buy a house if I don't even see myself renting it.

This is why I am still at my rental apartment.  Buying that house will cost me more cash outflows each month and tie up over $145K of money in a 30 year mortgage. For the next 10 years, what really goes into the equity of the house may be a few hundred dollars after the non tax deductible portion of the property tax and interest.  Even interest rate will be low, the size of the loan and my personal income tax bracket will still generate quite a big amount of non tax deductible interest.  Also, the property tax is very high and will continue to increase. Redondo Beach has a huge burden of future obligation for pension and health benefits for the city employees, I just don't know what's going to happen when the city finally runs out of money to fund them... This creeps me out whenever I consider whether or not I should buy a mere townhouse at over $700K...This house eventually was sold at $680K, not to a first-time home buyer, but to a wealthy investor.

Wednesday, June 13, 2012

This 11,058 mega country cabin up in Canmore, Alberta is listed for sale at US$11.9 million.  This house remind me of 4 diamond ski resort I visited several years ago....  I love the antlers chandelier.  May be there is a cheap version of this chandelier out there  for poor people like me??  Click here for virtual tour of the house.

Sunday, February 12, 2012

514 N Juanita Ave Unit A $750K

This house has a very nice and modern exterior. It's on a good street, but far away from the beach. The interior, however is a lot smaller than the pictures show. The inside has some stuffy smell when I was touring inside. The smell reminded me of the apartments of college students. I'm not sure whether it's the ventilation or the layout of the townhouse that traps odors. It was hot when I was there. May be they hadn't opened all the windows, except the balcony in the master bedroom that faces the street. I don't think they wanted to open all the windows during open house because the rest of the windows in other rooms are in close proximity with neighbor's windows. This is the front unit, and it at least has the front side of the house that has a decent distance from the neighbors across the street. The sides of the houses and the back of the house are all too close to neighbor's windows. So they are closed during open house or may be for a long time so this explained the stuffy and stale food smell...

The tiny kitchen opens right into the tiny living room. Again, it reminds of an apartment setup... The inside of this house is too cramped and not opened. It just feels smaller than the reported square footage on the listing. I absolutely do not want to pay $750K to live in a cramped space like an apartment.... This house is not a bargain at this real estate market and it is absolutely not worth paying the property tax and HOA and also the closing cost to live in a house this quality. With that price, one can get a much better house in Torrance... I will pass this one again...

A Mediterranean Palace in Las Vagas

When people have money, the choice of quality housing is limitless.... This beautiful mansion that looks like a summer Palace is beyond the dreams of millions of people. But we can still dream on, in case we win a lottery in the future......I bet this mansion will be sold for $5million. Click here for a virtual tour...

Sunday, January 8, 2012

710 North LUCIA Ave Unit A Redondo Beach, CA 90277

I went to look at this home today. It looks much bigger and newer on the pictures than it really is. Priced at $739,500, I think it's too much because the layout of this townhouse feels tiny and cramped. Every window is surrounded by neighbor's windows at very close distance. There is very little privacy. The master bedroom has a normal size. But the other bedrooms are very very small. All the bedrooms are on the ground floor and the living room and kitchen on the top floor. I personally hate this kind of layout. The so-called ocean view advertised on the listing is a joke and totally embarrassing. I see more obstructive windows and tree tops from the very close neighbors than anything.... The listing sounds good but the quality at this price level is really disappointing. The property tax is sky high at $9,306 for 2010. Even if my tax rate were at the highest bracket of 35%, I would still be paying $6,048 a year just for property tax. This number will be much bigger for me because my income is far less than the 35% tax bracket. The lower one's tax bracket, the lower one can benefit from the tax deduction effect on property tax. Besides, there is the earthquake insurance, the HOA, the loan fees and interest for a 30-year mortgage and closing cost. I will have to make quite a lot of money to afford this tiny townhouse. This townhouse also needs some updating because the interior is kind of dated. At this price level, it's beyond my annual income. I do have the 20% down payment, but it doesn't make sense for me to spend a lot more every month so I can move from my current beautiful rental home in a nicer street to this cramped tiny townhouse, just to be a homeowner (actually a renter of the government of the city, the state, the fed and the bank?) I will pass this one and I will remain a happy renter for the time being.