Wednesday, March 11, 2009
Overpriced Pasadena Condo
On my way to work I often pass by this particular condominium complex that should be the poster child for our housing bubble. The complex has 19 units, and about 6 months ago at least 5 of those units were for sale all at the same time. I am not sure if any of those sold. However, at least one of those units is still on the market and is the subject of this blog post.
Unit #2 has been on the market for quite a long time. It is a 1200 sf, 2 bedroom, 3 bath condo that is currently listed for 659,900$. Now if that didn't jolt you, the kicker is the 445$ monthly HOA fee. Keep in mind that there are no amenities other than perhaps the landscaping.
Assuming a 30 year, 5% interest rate mortgage and a 10% down payment, the mortgage would be 3200$ per month, but add in property tax and that crazy HOA fee and suddenly it is 4300$. According to the flyer, they would also be willing to lease this unit for 2500$ per month, which includes utilities. The monthly rent price is therefore roughly half the total monthly price of ownership, because insurance and utilities would have to be added to that 4300$ figure.
According to Zillow (which I know is not always the most reliable resource), the current value of the unit is 485,000$. This figure is in my opinion still overpriced, but is at least somewhat in the range of the rental price. To truly match the rent I figure a 340,000$ sale price, which is basically half of the current price of 659,000$.
However, even if the condo was priced at 200,000$, I would still be hesitant to make a purchase because of that HOA fee. Either the association is very poorly managed, or there is something very wrong with the building. I cannot figure out why on earth the fees are so high. For a condo in the area, the fees are typically around 200$ with no amenities.
Zillow also states that the last sale was in 2004 for 525,000$. It also looks like a fair amount of upgrades were put in place, because they are advertising travertine tile and stainless steel appliances (note in the flyer that they don't even know how to spell travertine). Given that purchase price and all of the money that was poured into this condo, I can see why they are holding on to such a delusional price. I wonder if they had unloaded it for much less a year ago that in end they might not have ended up hemorrhaging as much money away.