Mohacsy's Safe Portfolio Member Forum

[elena_murooni]

In Los Angeles last October, I walked through a house that was $650,000... 1200sf... built circa 1952. Every board on every threshold is rotten; pipes clank; several 1'square holes were sawed into the hardwood floors. All windows were "stuck" & wouldn't open.

In March 2005, I walked through a brick home HERE which was built ... ohhhhh... maybe 1955. Nothing rotten. Everything sound. It was 1450sf, sells for $80,000, & is close to a multitude of blue collar jobs. Good neighborhood, too. The couple who was asking my opinion on it & wanted to know if I foresaw costly problems. Well, yeah... I found my little list. (and... I do mean LITTLE). I asked them if they would pay $650,000 for this house and, without hesitation, they bellowed a loud, clear "NO! Are you out of your mind??".

Well now... one must conclude that the Los Angeles property had a house value of "zero" and a land value of $650,000 cuz that house needs bulldozing. And, because 'that's the trend', folks will buy that house to go-with-the-flow. They have no alternative. IMHO, the flow is downhill. These are not the elite, have-more-money than thou crowd. These are hard working folks whose income (combined) is barely below 6 digits.

Bubble here? I don't think so. Bubble there? YES!