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.

Pasadena cutting down trees!

Over the past few weeks Pasadena has been cutting down trees along Colorado Blvd between Lake and Los Robles, which is where I work. It seems very odd to me that Pasadena would decide to do something like this, those trees were healthy, well established, and added irreplaceable character to the area. Pasadena decided to cut down the trees at night, which was done in my opinion to prevent protests. Someone wrote with a sharpie on the tree stumps urging people to contact the mayor's office to protest, but the city immediately spray-painted over the message. The next day there were printed signs attached to the stumps. I grabbed a picture with my cell-phone. According to this article in the Pasadena Star News, they hopefully will stop cutting down any more trees. However, the article states that Pasadena violated previous ordinances that prevents removing healthy trees! With luxury condos popping up every other block and now this ridiculous tree removal, Pasadena is deteriorating to an unrecognizable shell of its former self.

Lake at Walnut

Standard Pacific Homes has been building a lurxury condominium complex called 'Lake at Walnut' in Pasadena for the past several years. I have had a love/hate relationship with Lake at Walnut. First, I hate them for causing severe traffic headaches on the way to my favorite restaurant, Mediterranean Cafe. However, I love them for providing me with loads of amusement over the last year or two. Early 2009 they will be having their second grand opening. The first Grand Opening was unfortunately cancelled by the city of Pasadena for safety reasons, they were behind schedule but they went ahead anyway with tours even though the building was still undergoing major construction. I know this because I have been on the interest list since the beginning. 

The model I have been "interested" in is a 1200 sf 1 Bedroom, 1.5 Bathroom Townhome that at the first grand opening started at 530k. That is 440$ per square foot! For the second grand opening they claim that prices will drop to the mid to high 400's. This still seems very high. I am curious as to how they are going to sell these, because the model I was interested in is the second smallest plan out of 11, the larger units are closer to a million. 

The salespeople now pitch the Lake at Walnut as a hip urban community for young people. However, they require a 20% downpayment, which makes a lot of sense given the recent fallout in the housing market, but 20% of the cheapest model is around 100k. What young hip people are going to be able to fork over that kind of downpayment? FHA loans which require a much smaller 3% downpayment are not available until a complex reaches 60% occupancy. They are stuck in a Catch 22. The only way out that I see is to lower prices, but 530k to say 475k is a drop in the bucket.

As extravagent as this place sounds, it was actually originally pitched as a conservative and affordable alternative to the Prado just down the block. The Prado had much smaller units for almost double the price. The HOA fees were around 1000$ a month because the amenities included a pool, a movie theater, an over the top communal kitchen for throwing parties, consierge services, etc... I later found some irony that the salesperson at the Late at Walnut that I was speaking with revealed that she had purchased a unit at the Prado.

However, the biggest irony is that Standard Pacific Homes, the builders of Lake at Walnut, began construction  about a year ago on another luxery condo complex about a mile away called the Dalton. This place is over the top with penthouses that have rooftop balconies and more. And don't get me started on the Cinema Lofts next store which are 500 sf lofts for 370k, that unbelievably people have actually purchased. 

It is a little sad to see Pasadena change over the years. For decades to come the housing bubble will leave a scar on Pasadena with all of these rediculous complexes. Hopefully they won't end up abandoned and leave some real scars.