Cold Property: update from the frozen upper-middle/lower-upper end

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Back in August, I posted on this 2,300-square-foot Pasadena house that was listed for sale at $875,000. It had been on the market then for about six months with numerous price reductions, but was still clearly over-priced for the time. It had sold for $898,000 in 2006.

This looked like a good ‘indicator house’ showing the lockup in that slice of the market. The sellers couldn’t cut their price to market level because that would be below what they owed; lenders weren’t being aggressive in moving properties through short sales.

In August, the agent at the time said the sellers were current on their mortgage, but would not be able to afford a looming jump in mortgage payments and were trying to get out. The house was pretty tricked-out by its last owner, with a Viking range in the kitchen, nice pool, marble and granite everywhere. But it lacked what it needed to sell -- a price appropriate to the market.

Eventually, the house was listed as a short sale, and a couple of months ago the price had come down to, I think, $760,000 -- still too high, apparently.

It was foreclosed last month, with the lender owed $650,250.

So for more than a year, the seller and the bank could pretty much see they had an asset not worth the stated price, but no one was able or willing to do anything that might cut their losses swiftly.

It’s now back on the market at $727,650. I’ll let you know if it sells. If this is what it takes for the market to find a bottom, we’re in for a long, inefficient crawl.

Full disclosure: I live within walking distance of this house.

--Peter Y. Hong