Tales from the deep
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
A recent Deutsche Bank report estimated that 51% of Los Angeles area home mortgages are underwater. Another study, by ForeclosureRadar, estimates the average foreclosed property in California has a loan balance of about $425,000, on homes worth an average of $237,000. So the lender takes an average $188,000 loss on a foreclosure.
That’s the average amount, but a whole lot of high-end properties, which so far haven’t comprised the bulk of foreclosures, are much, much deeper underwater. I took a quick drive out of the office yesterday to check out a couple of nearby homes languishing in deep debt.
House one is in Eagle Rock:
For sale, list price: $495,000
Amount owed: $842,000
If the lender were to approve a short sale at the list price, that would be a $347,000 haircut. Houses nearby have sold in the listing price range. The listing says the house is 2,352 square feet with three bedrooms and three baths.
House two is in the San Rafael neighborhood in west Pasadena:
For sale, list price: $ 1.127 million
Amount owed: $1.317 million
If the house is sold for the list price, the loss would be right about the California average. This house was listed in January for $1.7 million. Either no one was interested in paying that amount or the bank wasn’t ready to take a nearly $400,000 hit. It’s scheduled for repossession in mid-September. Whether there’s still a market for seven-figure houses that size and in that condition remains to be seen.
ForeclosureRadar estimates its value at $849,000. Zillow estimates it’s worth from $851,000 to $1.45 million.
The three-bedroom, two-bath house is listed at 1,950 square feet, but its lot is .29 acres and abuts a scenic meadow.
--Peter Y. Hong
Sources: ForeclosureRadar, Redfin