January 29, 2008
Reduced Far Enough? A WeHo One-Bedroom
Here is a one-bedroom, one-bath condo — 8787 Shoreham Drive, Unit 207, West Hollywood – that showed up as reduced this morning — from $669,000 to $625,000. The listing description says it’s owned by interior decorators, and it does seem to be done up pretty nice.
But am I the only one out there saying, “There is no way in hell that I would pay over $600,000 for a one-bedroom apartment?” I doubt it.
You could rent that apartment for around $2,000 per month. The monthly payment on a $500,000 mortgage — fixed, for 30 years at 7 percent — would run you more than $3,300 a month. Throw in homeowners’ insurance and real estate taxes and HOA, and you’re looking at a monthly nut of about $4,500. And that’s assuming you have $125,000 to put down.
Sure, if you have good credit, you could probably qualify for an interest-only loan, which would lower your monthly payments. If you don’t care about ever paying down the loan balance, this could be an option.
Some people get so carried away by the idea of being “homeowners” that they overlook the fact that, these days, owning can cost two to three times more than renting. But they buy anyway, because they’ve been taught that it will pay off in the long run.
As real-estate agents always say, “You only need one” (buyer for your house). Today, that means one buyer willing to overlook financial fundamentals.
Let’s see what else is going on in the neighborhood.
8787 Shoreham Dr., Unit 1206: No doubt our seller is heartened by this November sale of a one-bedroom, two-bath in the same building for $755,000. Gotta love the sales history on this one: Bought in 1989 for $239,000. Sold in February 1992 for $300,000. Sold in September 1992 for $180,000. Sold in 1999 for $240,000 (zero appreciation in 10 years). Sold in 2004 for $460,000. With the latest sale, this unit, at 865 square feet, sold for a whopping $873 per foot. (”You only need one.”)
A recent sale that may not bode well for our seller is up the way, at 1230 Horn Ave., Apt. 404. This one-plus-one, 797 square feet, sold in December for $475,000.
A new condo development across the street claims to have taken a “substantial price reduction” on remaining units. This one, 8788 Shoreham Dr., Unit 11, is a new two-bedroom, 2.5 bath. It can be had for the substantially reduced price of $959,000. Does this mean that other units went for more than a million? Those buyers can’t be too happy about the new pricing.
