May 11, 2011
Apples To Apples (And Sour Statistics) For 333 Oak Park Drive
Purchased for $775,000 a year ago (April 2010), the single-family Forest Knolls home at 333 Oak Park Drive has returned to the market listed for $875,000.
In the words of a couple of readers wondering about its return, "from what we can gather, there is little more than a lick of paint (internally) and an amazing collection of contemporary art which is, sadly, not included in the sale."
As best we can tell, no permits for major work have been issued since its April purchase, nor have the street level third bedroom and bath which were built without permits according to its listing last year been legalized.
And while we might debate the amazing call with respect to the collection of art, unless we missed a permit, we are calling this an apple to be.
The resale of 333 Oak Park Drive closed escrow on Friday with a reported contract price of $800,000, up 3 percent year-over-year. On the same day the $800,000 sale was recorded the list price for the property was reduced to $800,000 on the MLS as well.
So in terms of MLS based market statistics and industry reports, it’s another "at asking" sale versus 3 percent under the price at which it was listed when the property went into escrow ($829,000) or 9 percent under the price at which it was originally listed in March.
First Published: May 11, 2011 8:15 AM
Comments from "Plugged In" Readers
nice catch ss.
now Mr Kirkpatrick needs to change the asking price to $800 on his website too.
another useless statistic that will be marketed to the next uninformed client. sad.
Posted by: resp at May 11, 2011 8:41 AM
$25,000 for a coat of paint? 3% over an April 10 interim peak? go figure.
Posted by: sanfrantim at May 11, 2011 9:10 AM
Yes, everybody focus on the mls list price manipulation. Fraud! Sham! Shills! Ignore the 3% market increase. Good thing they didn't wait for the conforming loan limits to be dropped or this place would have sold for $500k. :)
Actually, I do agree the manipulation of the MLS is a load of BS; but it's the final sale price that matters. And that's the story here.
[Editor’s Note: Who’s ignoring the 3 percent increase? We’re not and we’re the ones who "cherry picked it" in the first place, right? Regardless, that doesn’t mean there’s another layer to the onion to be peeled back and food for thought with respect to frequently published market statistics such as sales price to list price ratios.]
Posted by: eddy at May 11, 2011 9:34 AM
I can only shake my head in disbelief.
Probably another sucker who thought $75K off list was a "deal".
Or as I often say when I'm standing at the sale rack at Macy's, "It's been marked down from outrageous to merely ridiculous!"
Posted by: diemos at May 11, 2011 9:36 AM
Not too bad, it only cost them around $3k/mo to live there.
Posted by: HappyRenter at May 11, 2011 9:47 AM
Opportunity cost + mortgage interest + property taxes probably cost 40K. Realtor's commission, probably another 40K. There's a 25K "profit". This all pans out to 55K net loss + the cost of the paint job/staging. It's more like 5K/month.
Selling after one year is never a good idea.
Posted by: lol at May 11, 2011 9:54 AM
Director, Community Development--Western Region at Fannie Mae
I'm thinking financing was probably not a problem for whoever bought this place.
It looks like when he bought it last year, there were several liens on the property. May have been distressed. Listed for sale and went pending two week later over asking. Last year's seller might have been in a bit of a hurry to sell.
Posted by: tipster at May 11, 2011 10:18 AM
Yes, everybody focus on the mls list price manipulation. Fraud! Sham! Shills!
I agree. Corruption is distasteful.
Posted by: EH at May 11, 2011 10:33 AM
@Adam, I'm not in the cherry picking camp although I do think there is a bias, which is totally fine (not that you need my approval :). The NYT, Wash Post, etc.. all have their political lean. However, the headline and bulk of the story here are about the manipulation of MLS stats with only a cursory mention of the +3% comp.
There are positive signals in the market but the site tone and bulk of audience commenters tend to focus on the negatives. Trust me, a LOT of your readers are interested in an opposing (i.e., positive) viewpoint and what is driving those situations.
Sometimes I feel like no one here really cares to have a healthy debate about the intricacies of the market / market drivers. Anyone with a positive comment is labeled a Bull and attacked. So, of course, no one here takes a stand for fear of retribution.
I see no harm in my original comment other than being a bit passive aggressive and unintentionally directed at the editor, despite it being directed at the broader base of participants.
Posted by: eddy at May 11, 2011 10:47 AM
"We’re not and we’re the ones who "cherry picked it" in the first place. But that doesn’t mean there’s another layer to the onion to be peeled back and food for thought with respect to frequently published market statistics."
Its just that you keep peeling back the same layer...... tiring
And even when you publish what should be good news with regard to market statistics, you almost always qualify such good news with "although home sales spiked for January, don't forget that the sky is falling" - again so tiring and predictable
lol and happyrenter - nice to see you soothing each other this morning
Posted by: bubblesurfer at May 11, 2011 10:56 AM
No one here missed the 3%, though as I pointed out, it may have been obtained at the time of the buy rather than the sell.
But this could be a good lesson for the con artists who make up so many of our Realtors: stop pulling this nonsense because it might overshadow a different lie you could tell that might be more valuable than the sale-to-list ratio lie you were trying to pull off: that the seller, whose closing costs were not likely paid by what appears to be the distressed seller last year, probably paid 3% towards closing costs, and the con artists who make up so many of the Realtors could have used a different lie to claim that the market was rising when in fact the price paid was flat.
Posted by: tipster at May 11, 2011 11:04 AM
thank god there were some Realtor lies and cons going on so we can rest assured the sale was actually flat and not up. Good eye catching that, the editor had spun it in such positive light the clear fact of these lies could have been overlooked while we were busy on the MLS list price front.
Posted by: sparky-b at May 11, 2011 11:20 AM
To all those chastising bears to pay attention to the 3% increase, how about you pay attention to the fact that the seller lost money, probably tens of thousands of dollars, over 1 year.
Posted by: lyqwyd at May 11, 2011 1:02 PM
Yes, let's focus our attention on individual / personal losses and not the market appreciation on this home of +3%. We all know buying / selling a home over a short period of time is a recipe for disaster. The diversion tactics are classic. I'm sure the nominal / real / inflation adjusted dollar argument is right around the corner.
I'm not saying the market on this home is going to increase YoY @ +3% a year indefinitely; and tipster may very well be accurate that the 2010 buyer got a good deal on the property. I'm also not a "Bull", per se, I think the market will slide with a slight downward trend. A lot of people are calling / hoping for the double dip, or Rent vs Buy normalization. I don't think we're going to see another major correction like the one we've seen over the past 2-3 years.
Posted by: eddy at May 11, 2011 2:11 PM
"I'm sure the nominal / real / inflation adjusted dollar argument is right around the corner."
Well, that's because it's dumb not to consider inflation, along with other costs of housing. If the argument is that housing is a "good investment" and is a good way to build equity and all the nonsense/marketing-speak that people use to point out what a great financial decision buying is over renting, then you must consider inflation when determining investment return.
There aren't very many people who don't consider those bogus rationales at all when purchasing a house. Even the people who aren't concerned about appreciation might see the purchase as consumption with the high likelihood of upside.
The discussion of inflation helps ground people in reality, which is that the return on housing isn't always as great as people think. If you're one of those people who thinks they made a good investment by buying a house for $800K in 2000 and selling for $810K in 2011, or even buying a house for $775K in 2010 and selling it for $800K in 2011, bully for you, but you're not a financial genius by any means.
"I don't think we're going to see another major correction like the one we've seen over the past 2-3 years."
A large portion of a "correction" is having prices flat for many years while real prices catch up. See 1990-1996 or so. That's why inflation matters.
Posted by: sfrenegade at May 11, 2011 2:44 PM
"if the argument is that housing is a "good investment""
It wasn't. So feel free to dispense with that "insert argument that wasn't there in order to deliver the same pedantry" routine.
But yes. Kudos to Tipster for having made a point based in reality.
Posted by: [anon.ed] at May 11, 2011 3:08 PM
"Yes, let's focus our attention on individual / personal losses and not the market appreciation on this home of +3%."
There's really three issues here.
First, if tipster is correct that the 2010 purchaser paid liens, seller closing costs or other atypical fees then the recorded prices may not reflect market pricing.
Second, there was some real ROI gain/loss here excluding transaction costs depending on the rental value of this place. It seems relevant to look at this regardless of the short hold. Market price is interesting too, but real ROI is what is ultimately experienced by homeowners.
Third, because of the short hold the transaction costs were amortized over an unusually short time period. I agree here that this doesn't hold great relevance to the housing market at large. Although it can be reasonable to look at transactions costs amortized over average holding periods.
Posted by: tc_sf at May 11, 2011 4:07 PM
Sure, fluj, no one has ever made that argument or even suggested it, right?
In any case, this recent study suggesting that long-term return on housing might be zero or less is intriguing -- looking at a national market, not an individual city:
Posted by: sfrenegade at May 11, 2011 4:31 PM
"no one has ever made that argument or even suggested it, right?"
What does that have to do with the price of fish? Of course people have made that argument before. But not here. So how about you talk about the things being talked about and stop talking at people in such a caustic, verbose and pedantic manner?
Posted by: [anon.ed] at May 11, 2011 5:05 PM
"What does that have to do with the price of fish? "
Assuming lol's estimates are correct that's about 1,253 pounds of rainbow trout per month.
Or perhaps more appropriately for measuring financial losses, 1,672 pounds of Cherrystone Clams!
Regarding the Philly Fed paper, I do think it's interesting and important to look at the aggregate ROI of homeownership. In a previous thread people were commenting on how to help move middle income people into homeownership and if there is an aggregate negative ROI for homeownership this calls into question the wisdom of attempting this.
On an individual level it would seem that a wise use of price to rent calculators would be to plot out the ROI breakeven price for your potential home for each year of projected tenancy.
Posted by: tc_sf at May 11, 2011 6:00 PM
"Yes, let's focus our attention on individual / personal losses and not the market appreciation on this home of +3%."
Anybody who buys real estate, and later sells for a 3% gain has the same 10s of thousands of dollar losses, so it's neither individual, nor personal. The transaction and holding costs are so high that even without real estate commissions it is almost impossible for that to be a profitable trade.
I'm not clear on why you think a 3% increase in nominal price on a single property is more important that nominal losses on the same property. Feel free to explain why one is more important than the other.
' "if the argument is that housing is a "good investment""
so what is the argument?
Posted by: lyqwyd at May 11, 2011 8:01 PM
"so what is the argument?"
Well that's the problem, isn't it? It's OK to simply share musings without treating things like a Lincoln Douglass debate. Last week we had MOD questioning "logic," as if an argument wasn't sound, and it was. Whatever. Stop being so combative. Eddy was merely saying that this was a mildly surprising positive result, no minutiea about individual loss, no sales rhetoric, none of that. Yet it's parse parse parse, argue argue argue, pedantic pedantic pedantic. Well, yawn already.
Posted by: [anon.ed] at May 11, 2011 8:20 PM
OK, so you are saying you have no argument.
"Eddy was merely saying that this was a mildly surprising positive result"
No he wasn't, he was criticizing resp for pointing out that the Realtor MLS statistics system is seriously flawed.
Posted by: lyqwyd at May 11, 2011 9:07 PM
anon.ed - I questioned the logic on last week's climate change thread because what was presented was faux logic : an assembly of data that seems related and relevant but isn't. It is a clever trick used to fool people and often works. Get the reader to trust the base data and they might just buy into your conclusion even though there's a lapse of logic connecting the two.
Posted by: The Milkshake of Despair at May 11, 2011 9:53 PM
It wasn't an assembly of data at all. It was a simple question based upon a known event within a known actual geothermal period. It made assumptions of knowledge, because it was pulled out of context. But it went: If Greenland supported animal husbandry, which it did, then where was evidence of flooding elswewhere? You went to the "logic" card because you're an internet arguer, and that's the sort of thing posters like you do when you want to look intelligent and be dismissive without trying very hard.
Posted by: [anon.ed] at May 12, 2011 9:04 AM
"OK, so you are saying you have no argument."
No. The argument in question, if you must, was that the editor devoted a lot more language to the MLS manipulation than the sale price, and that's less interesting to real market watchers.
Eddy also preempted a lot of very stale pedantic and irrelevante to the "argument" grandstanding that would subsequently appear. And of course, it did.
Posted by: [anon.ed] at May 12, 2011 9:08 AM
THAT's your argument?!? Who cares what the editor's bias is? Nobody is claiming the editor is unbiased, everybody has a bias.
hmm... that pre-empting post of eddy's must have been deleted. all I've seen of his posts is attempts to ignore relevant and material facts.
Inflation IS important.
Trading costs ARE important.
Attempts by Realtors to misrepresent the real estate statistics ARE important.
Rent vs. Buy is important.
You are welcome to ignore them in your personal life, but they are still real factors that a any financially savvy person should consider in their purchase decision.
Posted by: lyqwyd at May 12, 2011 9:21 AM
I have a habit of reading the comments more than the article, but then I was totally confused & had to return to double-check the content.
News-Flash- the best indicator of the market is actual SOLD figures... inflated asking prices are more related to the owner's inability to see/accept reality.
I really don't understand so much acrimony & negativity from people that actually sought out a website devoted to Real Estate.
From an 'inside tipster'; get a life!
Posted by: Pete n SFO at May 12, 2011 9:29 AM
"You are welcome to ignore them in your personal life,"
Indeed, I'm sure that were anon.ed to start up a brokerage that eschewed the pedantry and irrelevance involved in collecting a commission then the world would be his oyster!
Posted by: tc_sf at May 12, 2011 9:31 AM
"inflated asking prices are more related to the owner's inability to see/accept reality"
somewhat true, but then why does it seem agents only seem to fudge the numbers in the direction that makes the market look stronger? I've never seen a list price adjusted up to the selling price when it's an over asking situation. List price/sale price ratio is used by many people in determining what price to offer when buying, so it's not an irrelevant number.
I do not believe RE agents are bad in general, I used to be one, I have many friends that currently are, as well as a family member who is one and I greatly respect. But manipulating statistics is underhanded, and shouldn't be condoned or allowed.
Posted by: lyqwyd at May 12, 2011 9:56 AM
seriously, if someone's using 'asking price' to determine what they're offering, they're likely working w/ the wrong realtor. Asking price is fiction & following 'market stats' around asking is folly. Sold price is all that matters- you're kidding yourself if you think it isn't.
Not sure why agents bother with adjusting prices, b/c again, sold price is king, but maybe it was reduced & hadn't been adjusted. Who knows? It's irrelevant regardless b/c aside from a few notorious 'underpricing agents', final sales price is really all that matters.
Posted by: Pete n SFO at May 12, 2011 10:08 AM
anon.ed - in an effort to prevent this thread from drifting OT into climate change I responded to your most recent post over in the original climate change thread.
Posted by: The Milkshake of Despair at May 12, 2011 10:11 AM
"THAT's your argument?!?"
Always with the "argument" thing, as if any of you are following some sort or codified manner of discourse. I'm simply not having that.
Posted by: [anon.ed] at May 12, 2011 10:17 AM
Importance is much more subjective than topic. I understand it's important for some of you to say the same things over and over again, regardless of topic. Subjectively, I find that incredibly lame.
Posted by: [anon.ed] at May 12, 2011 10:26 AM