This house is at 1419 Sunshine Ct, near the corner of 77th Ave and E. 14th St. Right in the middle of the homicide tsunami. Miles away from any school that a diligent parent would consider worthwhile. It is now owned by Fremont Investment & Loan, which lent 100% on the $450K acquisition price back in June of 2006. They foreclosed in 2007 for about $310K, the amount left on the first trust deed (that is an indication that the last human buyer was not fraudulent, because one way or another, $50K of the first trust deed of $360K was paid off; as for the $90K second, who knows?). Before the last human buyer paid $450K in June of 2006, someone bought it from the previous long term owner for $407.5K (also a 100% loan), and was advertised as having new carpet, windows, and range (which were stripped out and sold for scrap — I listed and sold the old abandoned Safeway Soap Plant a few blocks away back in 1999, and every bit of scrap metal and copper had been stripped out).

The bubble in this area is concentrated on the outrageous land prices. The house itself has always been worth very little. But because cities in this area have made construction so difficult, it creates periodic bubbles in land values; add a little easy money from the Fed and loosen underwriting standards, and land values shoot up to nosebleed levels. And by the way, the lot for this house is tiny — 1960 feet!! So in the end, the house has to be rehabbed for around $40K ($50/ft for new windoes again, new floor covering again, new paint in and out, and new electrical and plumbing, along with new fixtures and appliances). If it sells for $60K, that’s a total of $100K, with a $75K loan costing $$500/mo, and taxes and insurance of around $250/month (and the taxes of $550/month are currently, of course, delinquent — the Bank ain’t paying local property taxes!!), for a total cost of $750/month. Throw in another $100/month for maintenance and landlord utilities, and city business tax on the rental income, for a grand total of $850/month. It could maybe be rented for $1000/month (this is a neighborhood where craigslist rental advertisements boast “even stevie wonder can see this is a great deal” (real quote — I didn’t make it up — and coul;dn’t have made it up if I tried). That leaves $150/month cash flow, or $1800/year for $30K cash investment ($25K downpayment, plus $5000 closing costs). A 6% return, to be a landlord in a bad neighborhood. Maybe the price has to come down another $10K-$20K to make the thing work.

I hope this background info helps! Great Blog!

Your average crap shack was selling for $500k in ‘hoods where anyone that could afford a “normal” mortgage would not touch. Even if crap shack drops from $500k to $150k, if you have a family and have to send your kids to school, would you buy a house in most part of Oakland or South Central LA? Heeeeeeeeeeeeeeeell no!

Lenders(Banks) went crazy because everyone was making money and let people that should never have been able to buy a house get $500k loan.

And the fallout is going to be painful.

There are only pockets of good neighborhood in Oakland.

As for this house, I’ve seen pretty decent ones selling for $120k in Oakland even back in 1999, this kind of crap only worth 50k because you might need $50k just to make it livable. Oakland is prime example of the stupidity of lenders gone wild, without funny money and liar loans this part of BA will always sell for what it is worthed - a garbage price.

http://icare.fairfaxcounty.gov/Search/GenericSearch.aspx?mode=ADDRESS

enter

“Spring Gate”

in the street query, for example. ( That’s a condo area in this wealthier than avg zipcode. )
Look at the most recent sales and tell me you didn’t see PANIC SELLING.

Dr, are you otherwise known as Meatpuddle in TF? Thanks.