Ashley Long, Home Buyer / Knife CatcherThis was from an article featured on Jan 1, 2008, Ashley Long Part I. The average person was brainwashed during this bubble. They seemed incapable of thinking for themselves. Lets revisit to see if this buyer made the right decision.
This buyer thought...
“I got a pretty good deal. I know this is a low market and the house is worth more than that,” WRONG
and
“It’s the only time I’m going to be able to afford to buy in Sonoma County,” WRONG
and
“I can’t imagine it going down a lot lower, and eventually it has to come back up. I don’t want to gamble.” WRONG
“I got a pretty good deal. I know this is a low market and the house is worth more than that,” WRONG
and
“It’s the only time I’m going to be able to afford to buy in Sonoma County,” WRONG
and
“I can’t imagine it going down a lot lower, and eventually it has to come back up. I don’t want to gamble.” WRONG
Conclusion: FAIL
Here is Ms. Long's house:
7108 Hastings Pl Windsor, CA
4 beds, 3.0 baths, 2,032 sq ft
APN: 163-120-052-000
Sale History:
03/13/1998: $222,500
12/07/2007: $470,000
Lets see if her purchase and statements made sense. You can check the comps and properties for sale in this neighborhood. How about 210 Mali Ct: 2200 sqft for $370K. Check out that brown lawn. If it sells for $370K that is a 40% drop from the peak purchase price. What a joke. The sheeple need to start THINKING FOR THEMSELVES.
210 Mali Ct Sale History
08/06/2008: $415,840 * (bank taking it back)
03/30/2006: $629,000
03/10/1995: $225,000
What should Ms. Long do now?
Post your comments and let her and other knife catchers know.
3 comments:
If Ms. Long wanted to see a quick turnaround and a profit, she will be disappointed. If she wants to sell now, her house wiill nedd to be in great condition because she has a lot of comptetition. Some homes are getting in the $500K range, but others are getting inthe $300-400K range as well, and some of those don't look half bad. She has a nice-sized corner lot, larger than the comp, her yard looks well-kept and has a nice fence, and the lots in her neighborhood seem somewhat larger than in the comp neighborhood.
However, the house on Maili Court is in a more secluded location, even if it is on a corner lot like the house on Hastings. Ms. Long's home is not directly behind the freeway, but it's across the last street before it. It must be noisy outside, maybe not all that quiet on the inside.
Noise and pollution notwithstanding, if her neighborhood is still as well-kept as it appears on the latest satellite maps, this may give her an edge if she wishes to sell. Whether it will be enough of an edge to make a modest profit or at least break even is hard to say without more information, but the overall trends point against any expectation of net profit.
As for a strategy, she should first take stock of her overall situation. What is the outlook for job security? Is she likely to get fired, laid off, or transferred in the next few years, or is she likely to be secure for at least the next five years? How long can she make payments if she stops working tomorrow? Why did she buy the house? Was it a sense of place, a shelter of her own, or was it more of an investment?
If she cannot expect to ride things out comfortably enough for at least five years, she should rethink staying in the house. If her house has something special that will allow to break even, or nearly even, she should consider herself fortunate and start rebuilding her wealth methodically from a rental she can easily afford.
Of course, if she is convinced that she can ride out the storm and that she really loves her house, then I wish her all the good fortune in the world in making that dream a reality.
In short, it may be too late for her to recoup her investment in the short term, but it's better that she take stock of what she has and what she wants out of life now instead of just hoping things will turn about.
Remember the story of Pandora's box: it was a box of misfortunes, and the presence of hope within the box speaks to the Ancient Greek attitude toward hope: it's problematic because it is always contrary to fact. We hope our investments make money, but to say so is to express something that isn't true yet, and may or may not be true in the future. Yes it's gambling, but researching a business decision helps buffer the shock when things go wrong, and make it easier to adjust to sudden changes. That's why I mention both the strictly financial factors and the emotional ones.
If she's in any doubt about her financial future or her attachment to the house, she should have her house ready to sell as soon as possible.
I stand by my initial post, but want to address some things that are specific to Ms. Long's case.
Every one of Long's stated premises for buying this house is invalid, as is the implicit conclusion that she had rightly called bottom and bought at or near the moment of peak opportunity.
If what she states in print is the extent of her motivations, she bought it mainly as an investment, not a home.
In that case, she should get out with all possible speed. She's not going to want to wait for things to improve if it's all about the money.
Great analysis of this situation, Tom. Thanks for posting.
I revisited the original story because I'm sure the author won't. Too many people were calibrated to consider the peak bubble prices in their buy decision. As everyone is now learning, the peak prices were artificially created. At the true bottom, this house will be valued at around $300K, but could easily return to the '98-99 value. And given the meltdown that is occurring in the economy, that seems to be the likely outcome.
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