January 20, 2011

A nightmare on Glen Mawr

image

Beds: 3
Baths: 1.5
Sq. Ft.: 1,406
$/Sq. Ft.: $142
Lot Size: 6,300 Sq. Ft.
TYPE: Detached
STYLE: Contemporary
STORIES: 1
Year Built: 1950
Community: El Cerrito Hills
County: Contra Costa
MLS#: 40502277
Source: EBRD
Status: ActiveThis listing is for sale and the sellers are accepting offers.
On Redfin: 10 days
A fixer in a very convenient location. Contractor’s special.

At first I was hesitant to post this as this is in El Cerrito, which is one of those cities that I have to check a map to make sure that it isn’t in Costa Rica or something – but that photo. WOW. Almost, JWOWW… but just WOW.

Here’s what A. Lewis who submitted this had to say:

I’m really sorry there are only 2 pictures. I have driven by this home many times over the years, and it’s got quite a history. I think it was Christmas 2009 when they started making exciting changes – it was some boring normal color, and then they spray-painted "Merry Christmas!" in big sloppy letters on the garage door. Then a lot of random paint colors were used on a lot of random patches around the house. I kept wondering what the heck was going on – and how they could stand it. I think it was early 2010 when the garage turned bright orange, and then the rest of the house started to follow. The exciting variety of trim colors were added piecemeal, too.

It reminded me of when my parents took down some old wallpaper in our kitchen, and decided to allow us to draw wha
tever we wanted for a while. They were planning to re-paint, so they said what the hell, go nuts, we’ll fix it in the end. We painted a big Turkey in November, then a big Christmas Tree in December, and lots of mini art projects in the corners whenever we wanted. Crayon, paint, permanent markers – anything was allowed! It was great. Then they painted it over after a few more months.

Well, this house didn’t seem to do the ‘fix it in the end’ part. They just let the kids do whatever they wanted! Right up until it’s time to sell! And it’s an awesome prominent location, right next to a K-8 school, and near a BART station so a lot of commuters see it twice a day.

It’s also a DEAL! Now I know the East Bay doesn’t even qualify to smell the RBA’s dirty laundry, but similar houses nearby have easily gone for $300-500k. It’s not like Tracy or something. Maybe when they say ‘fixer’ they really mean it. Gosh, what does "Probate/Court Approval" mean in the Redfin details? Don’t let that scare you away…I think it has a view of the Golden Gate bridge!
Remember, the value’s in the land!

You tell him A-Man!

Personally, I’m just fascinated by the “very convenient location” comment. Let’s look at this location:

image

This nightmare house really should bill itself as being on Elm St. “Yeah, just take Cutting Blvd,and then slash over to Elm St”. It’d be awesome of the buyer was Freddy K.

Comments (20) -- Posted by: burbed @ 5:58 am

20 Responses to “A nightmare on Glen Mawr”

  1. nomadic Says:

    Well done, A. This is just what we need to see before our first cup of coffee. ;-)

    The probate is no big deal – the owner died, that’s all. I want to know what “Point of Sale Ordinance” means.

  2. nomadic Says:

    There’s an example under the first Berkeley question here, but we don’t know if it’s the same ordinance in El Cerrito:

    http://www.dianeverducci.com/needtoknow.html

  3. A. Lewis Says:

    Man, I love this house. I wonder what the neighbors think – having to see that every time you walk out your front door?

    Thanks for that link in #2, Nomadic. Aren’t transfer taxes wonderful? 1.5% in Berkeley, 1.15% in Albany, a cash outlay at closing payable to the city just for the privelege of making the transaction there!

    On a $600k home, that’s $9,000 in Berkeley.

    El Cerrito – only 0.055% Transfer Tax – El Cerrito is the way to go!

  4. SEA Says:

    A.Lewis- Perfect ending. The whole time I was reading I kept thinking how someone is going to claim that the value is in the land.

    My favorite garage door paint job is one that show some mathematical style, such as these orthogonal Latin squares: A photo of the doors.

    “The Reactions
    We love our doors! More fun has been the reaction of other people, which has been almost uniformly positive. (On the other hand, would you approach a stranger and tell them their garage doors are hideous?)

    The reactions to the project began while we were painting. One neighbor stopped by and asked ‘What are you doing?’ We gave a fairly short explanation, and he seemed satisfied and allowed that it seemed a good family project. A passing driver slowed down long enough to shout ‘My daughter thinks it’s the coolest!’ and a British neighbor said ‘Actually, it’s rather neat,’ (read this with a British accent). An artist (who was selling us a car) got out his sketchbook to write the patterns down.

    People understand the Latin square property quickly; it’s easy to see that each color appears once in each row and column on each door. It’s harder to explain orthogonality; we tell them to focus on the positions of the purple rectangles (for example) on one door and to find the corresponding positions on the other door. They can see that all four colors appear in these corresponding positions on the second door. Then they can check that this property holds for the other three colors, if they want, or they can take our word for it.”

    See this for the rest of the story.

  5. madhaus Says:

    Great find, A. Your commentary is almost as colorful as the house.

    El Cerrito might be in Costa Rica… lol. Sure. Near San Jose.

  6. nomadic Says:

    I noticed the thing about transfer taxes too, A. Incredible. Is that an East Bay thing, or does anyone know if any peninsula communities have them? 1.5% is really steep! All I’ve ever noticed for a transfer tax was a fixed fee under $100.

  7. gallileo Says:

    Nomadic,

    I think the given Berkeley rate is both city and county transfer taxes together.

    Many peninsula cities have them including the perfect city that shall not be named at 0.33% , usually split between the buyers and sellers. Also, the county transfer tax is 0.1%–but you still aren’t up to El Cerrito levels. Surprised they don’t whack you more, myself, but it just goes to show you that the fortress is the bestest place to own everest. Still, higher taxes would keep more riff-raff out, so perhaps its time to lobby to raise them.

    Transfer taxes increase transaction costs, and therefore decrease property turnover, which in turn prevents houses from getting reassessed under Prop 13. I wonder if cities would be better off just increasing churn….

  8. enoch Says:

    I was thinking Glengarry Glen Mawr, so @1: Put. That. Coffee. Down!

  9. nomadic Says:

    After that funny post, no one has anything to add, eh?

  10. Tuno Says:

    huh, if I wanted a cheap place in the East Bay I’d be really tempted. I’ve lived in that area and it was really pleasant; kind of like being on Valium. was the inside of the house totally trashed?? why is it so cheap??

    I took a stroll up and down Glen Mawr on Street View; it’s a typical quiet, serene El Cerrito Street. the house *is* the focus of every utility pole wire in sight; maybe that scares off people with kids?? (in e.g. NJ, where people have more options, people with kids are really into avoiding utility wires). this one has so many that the house looks like the generator for the neighborhood.

    the probate/court approval mention is curious. did Mom or Pop’s mentally unstable kid move in to help in the last days? Um, are there any interesting disclosures in store for serious buyers??

  11. Tuno Says:

    wow. I just checked Trulia. by far the majority of houses listed for sale in El Cerrito are in foreclosure or are in pre-foreclosure. and there are decent looking houses on nice streets with teaser auction prices (79k; 49k); I have no idea what they would actually go for. I wonder if this neighborhood is going to have some problems. yikes.

    time to start building a bunker

  12. A. Lewis Says:

    Like many cities, El Cerrito has neighborhoods with VERY different prices. As you go West, into the ‘flats’, it gets cheaper and has higher crime rates. It is adjacent to Richmond on 2 sides. As you go up into the hills, the prices go stratospheric (well, let’s just say “high” – it doesn’t hit $1,000/sqft.).

    The school district boundaries make a huge difference, of course. The district is West Country Costa Unified, which spans a HUGE area, including Hercules, Richmond, El Cerrito, Kensington and lots of other places. It has some of the worst schools around, and a few with API over 900 (elementary schools), and “10”s on Great Schools.

    This house is right in the transition from ‘down the hill’ to ‘up the hill’. Go 6 blocks up and you are a world away from 6 blocks down.

    San Pablo ave. is an important dividing line. The rich people homes are up along “The Arlington” (Arlington Blvd.), there is a private golf course up there (Mira Vista CC). The rich part blends into Kensington, which is a special enclave of rich people in old houses. Some of the homes up the hill are very large, but there are lots of modest place about 1200-1600 sqft.

    Entire neighborhoods were built at once in 1955-1960, with the same style, it’s Eichler-esque: 1 story, exposed beams with highish ceilings, little mini-courtyard in the middle, cute front and backyards.

    The nice homes have stunning views of the Bay – sometimes 3 or 4 bridges.

  13. A. Lewis Says:

    But to your point, #11, yes there are lots of foreclosures. Most of the city is underwater (those in the hills deny it). As a renter, I look forward to falling home prices – maybe the price to rent ratio will drop to the point it’s worth buying! Scary to buy into a falling market, of course – but one shouldn’t be too greedy and attempt to catch rock bottom.

    It’s a lot better than it used to be, and I’m sure glad I didn’t buy anytime in the 2003-2010 period around here, but I’m inclined to wait a while longer.

  14. SEA Says:

    “maybe the price to rent ratio will drop to the point it’s worth buying!”

    Or, possibly, the rents will go down at an equal or higher rate than purchase prices.

    That said, we need to consider the cost of ownership relative to a person’s financial position. At some low purchase price, the difference will not be material even if it’s cheaper to rent. That is, if purchase prices are low enough, then the difference in cost between renting and buying approach pocket change.

    We’ve seen examples of homes that have lost 50%+ in market value over 6 years, or sooner. Many of the so-called owners purchased at 6 times annual income. Now it’s easy to see that the market losses amount to 50% of the owner’s pre-tax income for the six years. (Assume no change in the owner’s income. Total the owner’s income for six years. This is the purchase price, since the purchase price-to-income ratio was 6. The home has gone down by 50%, so the market value changes amount to 50% of the owner’s gross income for these six years.)

  15. A. Lewis Says:

    “Or, possibly, the rents will go down at an equal or higher rate than purchase prices.”

    This would also be a very positive outcome for me as a renter.

    My personal rent has not changed since we moved in Dec. 2008. Judging by Craigslist postings in my corner of the East Bay, the low end (for renting) has weakened, but the high end has strengthened a little. Quite a gap now. Former homeowners who foreclosed increasing demand for rentals of SFH? Seems plausible.

    Rents are tied to incomes and not so sticky-downwards as home prices. In this economy, the low-end of wage earners was hit much harder than the high-end (in general). So that fits my story, too, to a degree.

    What does the future hold for rents in the area? With inflation at near zero, and a very sluggish recovery in the job market, combined with a glacial foreclosure tsunami process….flat for a long time with the potential for black swans?

    Stay tuned.

  16. A. Lewis Says:

    “At some low purchase price, the difference will not be material…”

    You’re right, but this house is the exception in the El Cerrito hills – $200k is not to be found uphill from here. $400k for 2/1 crap with the lesser school districts. $1M for the big 5/4 with a view. Look up the home sales in the last 6 months on Redfin, and stick to the high elevation areas – prices are well below the bubble, but not crashing to the tune of “low” relative to incomes in the area.

    Price to monthly rent of 200-300 is common for the nice SFH. Better to rent.

  17. SEA Says:

    “Former homeowners who foreclosed increasing demand for rentals of SFH? Seems plausible.”

    This is something that I’ve given a bit of consideration. There is one fact that I have not been able to incorporate, and this is a key difference between how I measure inventory and how many others measure inventory.

    Let me start with I have nothing against looking at the availability of given units today as an indicator of inventory. If you are looking for a given unit, it doesn’t do you any good if they are all rented. That’s a bottom up methodology.

    Going from the top down, I’ve made the basic observation that the number of units in a given area is basically static. Using that same example above, there is one more unit demanded than available.

    Now let’s say there is some major shift to renting instead of owning. The shift would be from many people owning one or two properties, where the ownership is distributed over a large number of individuals, to a fewer people owning a greater number of properties.

    For example, if we have 10 people and 10 properties, then maybe we start with 10 owners. Now if 5 want to rent, then we must cut the number of owners down to 5. This might be 1 person owning 6 and the other 4 owning 1, or it could be 5 owing 2 units each, or some other combination. In any event, the underlying quantity of housing has not changed: There are still 10 units available.

    If a unit sits empty, then that’s just lost economic value to the person(s) who have a financial interest in the property.

    In other words, the shift to renting does not change the housing stock. Yes, I know that a birth/death/migration model needs to be incorporated for both the population as well as the housing stock.

    There is the “always cheaper to own” mantra. On the other hand, I’ve point out that at some price, it’s cheaper for a given individual to rent.

    There is one question that I’m yet to get a decent answer about: What is the best way to value all the property in a given area. This is very similar to how stocks are valued at the last sale price. Everyone then suggests that their shares are worth that amount, but if everyone wanted to sell, there would be a major problem.

  18. A. Lewis Says:

    The number of units is basically static, that is correct (no significant construction in any of the established Bay Area urban, or slightly suburban areas, like El Cerrito). But the people are not static – when folks lose their job and foreclose they may move in with their parents, dropping the number of households. Or they may move to Tracy.

    So your baseline to demand is aging into the homebuying years of life, dying out of it, and then the economy driving people to form new households (or destroy them).

    I don’t argue that shift to renting changes housing stock, but affects supply and demand for SFH for sale and SFH for rent. In a simple model, they are inversely related. If a renter gets a great new job and has more money and wants to buy a similar SFH to what they rent, they look for a unit for sale, not for rent, and increase demand (and presumably prices). If they are owners who lose their job and can’t afford the mortgage, but discover a similar SFH for rent that’s within their budget, they reduce demand and prices for SFH for sale. And they might make local rents go up.

    On the one year time frame, it’s vastly cheaper to rent in the nice areas of El Cerrito, even ignoring the downpayment. On any other time frame, it depends hugely on the trajectory of home values…

  19. A. Lewis Says:

    For your second question, about valuing – it’s intractable. The last sale price is the margin and always moving…and housing stock is so heterogeneous, that “what it’s worth” is total guesswork until you’ve looked at the foundation, read the inspection report, and seen the view from the yard yourself. And most owners probably don’t get a sense for it until they’ve lived through 4 seasons of weather – and repaired a few things, and had a contractor tell them what’s actually lurking behind that wall in the kitchen, etc.

    People generally think of their homes as large stable investments, and banks have too (at least historically). But it seems to me in the Bay Area home values are extremely volatile. It’s a good reason to either be a renter (to avoid exposure to big drops you can’t afford to weather), or be a high volume flipper. By 10 properties, fix em up a little, and sell a bunch of them on a volatile but temporary upswing – if 1 or 2 go bad, maybe you can rent them out for enough to cover, or at least cut your losses, and give you enough room to wait for a sudden volatile upswing, and then sell. But you have to keep buying and keep risking capital…a serious major prolonged downturn could wipe you out, too…

    I still consider all the high-priced areas of the Bay Area to be at significant risk for a sudden and strong downturn, and very low chance of fast appreciation. More reasons to rent…but I’m watching and waiting.

  20. Tuno Says:

    yes, A.Lewis, I noticed someof those boundaries in El Cerrito when I was living there, years ago. I guess I was renting a decent distance uphill, since when I walked downhill to go to Safeway, everything got grosser.

    And I had a friend who rented on the other side of San Pablo, and since he was/is white, the cops were always stopping him, since they figured a white guy in that neighborhood had to be buying drugs.

    I *completely* agree with you re the high priced areas of the Bay Area to be at risk for a strong and sudden downturn. e.g., those nice invisible lines in El Cerrito could shift a few blocks, and then a few more, and then more.

    Also, we keep looking at overpriced crapshacks, which I love. but the big picture: WHO IS GOING TO BUY ALL THAT INVENTORY??? In Redwood City, just on yahoo realty, there are close to 500 places for sale. and they’re all priced at over double what people can really afford, given salaries. they’re just *sitting* there, and have been for ages. and it’s no different in Sunnyvale.


Leave a Reply

Please be nice. No name calling, no personal attacks, no racist stuff, no baiting, etc. Let's be nice to each other in the true Bay Area spirit! (Comments may be edited/removed without notice.)