Great Recession

Bubbleproof Stooge: After 5 Years, Realtors® Still Pushing $Million Lemons


You really know how to hurt a guy, Moe!

How much of the turmoil in the real estate market could have been avoided if prices had just been allowed to fall in a HAMPless, TARPless, FHB-tax-creditless alt.universe? A fable, before I head out for Sunday afternoon looky-loos: 

The great artist Drew Friedman comes across a piece of history: a March 1962 check in the amount of $1.38, made out to RCA Record Club by one Joe DeRita, better known as "Curly Joe," the sixth and final Stooge. 

Normal people may ask what records Curly Joe was buying – and was he paying the regular club prices or a special introductory offer? 

Others may wonder how much that $1.38 would come to in today's Monopoly money ($9.84).

Truly normal people may not care at all. 

But I want to know what became of Curly Joe's North Hollywood home, listed on the check as 10611 Moorpark St. Apparently it was, in the great L.A. County tradition, transformed at some point from a single-family home into a five-unit dingbat. The current structure was built in 1990. It does not appear to be on the market right now. Here's the current information from

This is what the dream looks like.

Let's take a closer look at that Financial History. 

Now how much would you pay? But wait…

On October 10, 2003, the five-unit building was sold for $250,000. We can presume that this sale price, ten years after De Rita's death, had absorbed whatever Stooge-multiplier could be applied. According to the National Association of Realtors, the price of the building increased 373 percent in five years, to weigh in at $932,701 in 2008. According to NAR, it has lost virtually no value since the bubble burst. 

Is this possible? Federal Reserve Chairman Ben Bernanke, in this 2003 address to the Japan Society of Monetary Economics, suggested targeting post-deflation prices by plugging in previous price figures to an arbitrary rate of inflation: 

What I have in mind is that the Bank of Japan would announce its intention to restore the price level (as measured by some standard index of prices, such as the consumer price index excluding fresh food) to the value it would have reached if, instead of the deflation of the past five years, a moderate inflation of, say, 1 percent per year had occurred. (I choose 1 percent to allow for the measurement bias issue noted above, and because a slightly positive average rate of inflation reduces the risk of future episodes of sustained deflation.) 

The idea that a central planner could make a price with any kind of accuracy using the above formula seems fanciful to me, but Bernanke's complete 2003 speech is worth reading for an eerily complete catalogue of the gimmicks he is now using against the American people. Anyway, plugging $250,000 into a CPI calculator – i.e., trying to imagine a counterfactual in which other things are equal and the growth of Los Angeles and California have kept pace with the rest of the country (in fact they've been down relative to national rates of population and economic growth) we still get only $303,623.64. 

Clearly, is using a formula that's just out of whack and needs tinkering, so maybe we shouldn't read too much into these numbers. (Though these mathematical snafus are important. A few years ago agents were complaining that they couldn't shed REO property because unbearably high asking prices were being set by numbers-crunching software in overseas back offices. Presumably this has been worked out since then.) But note that the estimated price actually did come down – by one-fifth of one percent – in 2010. So these numbers actually have been revisited by some intelligence human, artificial or alien. Is there a better example of this big, dopey country's confidence in the downward-stickiness of real estate prices? 

Put it another way: There are five units in the building. North Hollywood is not exactly booming, and this does not appear to be a premium property, but let's be generous and say you could fill all five units at an average of $1,100 each. At this price, that income would just barely cover or fall short of your monthly payment on a 30-year fixed-rate mortgage. 

If it were just Curly Joe's old place, it might not be worth notice. But let's not kid ourselves. When Bernanke makes monetary policy, he's basing it on data not too different from this. This level of delusion on house prices, five years after the great deleveraging began, is still widespread. Last week I got yelled at by an agent who was showing a house directly across the street from another house that was asking $400,000 less. Keep that in mind next time you hear about the house in Detroit that sold for $3,500. The real estate market is still sick because real estate is still wildly overpriced in this great land. 

NEXT: The Post-Ideological Pragmatism of Blowing People Up

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  1. What’s great about it?

  2. So do realtors have to keep prices up so that the Federal Reserve won’t go bankrupt on its agency debt?

  3. I’m not sure what or the NAR has to do with the value that the tax assessors put on the property. It plainly says Source: Public Records.

    1. And Tax Assessors surely produce those numbers ex rectum, with no reference to sales history.

      1. They are supposed to use comparable sales to determine the assessment, but you’re correct; an “assessment” is really a made up number. Which is why people should appeal if they feel theirs is too high.

        1. Wait really? I was being sarcastic.

          Tax assessors can just make up numbers without reference to the prices a property has sold for?

          Man, seriously. Fuck property ownership.

          1. Wait really?

            No not really.

            They are based on comparable sales.

            Though Epi is sort of right in that those numbers are more of a product of art rather then a specific formula.

            Also if you disagree with them you can contest them.

          2. Fuck property ownership taxation.

          3. What they’ll do, Hugh, is find the comparables (similar numbers of beds, baths, square footage, etc.) that sold for the most, whereas if you appeal, you’ll do the opposite; find comparables that sold for the least.

            They can’t make it up out of thin air, but they have a lot of wiggle room. And it gets really nuts when a locality only reassesses every X number of years; so a person could have been assessed very high because it was done at the height of the housing bubble, and then retain that assessment for X years until the next assessment year (unless they appeal) even though all sales have plummeted in price.

            Property tax is utter bullshit anyway; it means that you don’t own your property, you rent it from the government. And they will never give it up because it pays for nearly everything at the local level.

      2. Ah, ah, ah.

        Ex recto. Or Ex recto intestino to be precise in the Latin.

      3. Right, but the article seems to say that realtors are trying to sell the property for the amount of the tax assessment, which is clearly not the case.

    2. See reply to Joshua Corning below.

  4. Um, the assessed price is a price the government tax assessors place on the property- it has nothing to do with or any private appraisals.

    FWIW, the tax assessments on my home were always much LOWER than the market value value, at least prior to the bubble. Maybe it was a government trick to make people feel better about property taxes. Now they are probably more in-line. My assessment actually decreased a little over the last few years. Too bad the irrational/unconstitutional tax formulas resulted in a huge increase, though.

    1. Correct. Assessed value is usually supposed to be determined off of comparable sales, but it doesn’t matter what the assessor says your assessment is; that’s just a value to use to calculate your property taxes. The market value is whatever someone will pay. People often confuse the two.

      And Johnny, some localities will use an “assessment ratio”. They’ll make up a number (say, 25%) and multiply your full assessed value by it to get your assessment value. So, say your house is assessed at $400,000; they’ll hit it with the assessment ratio and the number you see on your tax bill will be $100,000. A lot of stupid homeowners see this and go “hey, that’s a really low value compared to the value of my house; I have a really low assessment!” But of course, the assessor’s office increases the tax percentage by 4 to make up for it. Assessor’s offices can be very sneaky.

      1. And don’t forget that in California assessments are especially twisted, because they’re generally kept low on people who own property for a long time, made up for by screwing over newcomers.

        1. Right, Prop 13. And yes, they do everything they can to max the assessment of new sales and construction to make up for the fact that prop 13 stops them from raising beyond a certain percentage.

    2. See reply to Joshua Corning below.

  5. What I have in mind is that the Bank of Japan would announce its intention to restore the price level et c, blah blah blah.







    1. Diocletian without a toga.

  6. I think the mispricing starts with the government mandating that certain investors must heed the ratings of credit rating agencies. The credit rating agencies become unreliable (as perhaps you may have noticed), and the slippery slope begins.

  7. Keep that in mind next time you hear about the house in Detroit that sold for $3,500. The real estate market is still sick because real estate is still wildly overpriced in this great land.

    Real estate doesn’t have an abstract, perfect price. It’s all about location, and if people are willing to continue to overpay to live in certain locations, then they probably aren’t overpaying at all.

    It isn’t about four walls and a roof close to work. It’s about four walls, a roof, and not hearing “yo, you jacked my chain!” out in front.

  8. I’m absolutely APPALLED that you would include a picture of any Third Stooge besides Curly or Shemp.

    1. Shemp?


  9. Aren’t housing prices part of the free market you yearn for?

    The owner sets the price and your choice is to fuck off or buy. It isn’t like a life saving procedure and you can’t walk away.

    Tough if you can’t afford the one you want but you aren’t going to die from the lack of market availability in your price range.

    1. Surprise! I missed the point again!

      Off topic: can someone change my diaper?


        2. You hate yourself? Tell everyone something the don’t know…

      1. When will you ever learn ? Not making sense in any of my comments and not understanding the articles is what I am about.

  10. Last week I got yelled at by an agent who was showing a house directly across the street from another house that was asking $400,000 less.

    Why was he yelling at you?

    1. The Cavanaugh family Camaro is up on blocks in the front yard of the $400k cheaper house.

      1. It does block the view of the couch on the front lawn next to the broken toilet.

        1. it’s not broken if you can pee in it

      2. Don’t worry, though, the Cavanaugh IROC-Z is cherry.

  11. Any chance the 2003 prices were for individual units in the building? Probably not – that’d be way too high I guess.

    I used to live in a building like that. I can smell the 6 Koreans in the unit below us cooking god knows what. The Persians across the courtyard, not talking to me in the elevator. The 3′ tall bathroom counter. The formica kitchen countertop and linoleum floor. Worn out carpet. The tandem parking and dinged car doors. The cottage cheese ceiling acoustic insulation. Sounds like a million dollars well spent.

    1. If you have Koreans downstairs you might be able to get the greatest gift of all: cheap kimchee.

      1. Kimchee, yuk.

        Has any nation with a cuisine in which cabbage figures prominently ever been great?

        Just saying.

        1. Slaw certainly features prominently in American cuisine. Even if most restaurant slaw is disgusting and done simply because cabbage is cheap, good coleslaw (such as made by my family) is quite good.

          How could one eat barbecue, hot dogs, or hamburgers otherwise?

        2. Uh, sauerkraut is cabbage, dude. Germany’s been pretty important in European history.

        3. Japan’s cuisine features quite a few cabbage dishes as a staple. Russian cabbage soup is traditionally prominent, as well.

        4. Has any nation with a cuisine in which cabbage figures prominently ever been great?

          At least they don’t have tractor pulls.

    2. It smelt as if someone had died;
      the living room was full of flies,
      the kitchen sink was blocked,
      the bathroom sink not there at all.

    3. Broken glass everywhere
      People pissing on the stairs, you know they just don?t care
      I can’t take the smell, I can’t take the noise no more
      Got no money to move out, I guess I got no choice
      Rats in the front room, roaches in the back
      Junkie’s in the alley with a baseball bat

      1. No, not anywhere near that bad. No dead babies crawling on the ceiling.

  12. Teachers are underpaid, and here’s proof:

    McKinsey polled 900 top-tier American college students and found that 68 percent would consider teaching if salaries started at $65,000 and rose to a maximum of $150,000.

    The pony, presumably, is assumed.

    1. Took a break from cursing David Axelrod’s televised image to do some surfing, eh?

      You’ve done a man’s job sir. I guess you’re through?

    2. How would 900 top-tier college student feel about collecting garbage if it started at $65,000?

      1. math = hard
        picking things up = easy

        pick things up plus lots of money = hells yeah

  13. And, in conclusion:

    For those who say, “How do we pay for this?” ? well, how are we paying for three concurrent wars? How did we pay for the interstate highway system? Or the bailout of the savings and loans in 1989 and that of the investment banks in 2008? How did we pay for the equally ambitious project of sending Americans to the moon? We had the vision and we had the will and we found a way.

    Diner’s Club!

  14. Down, boy!

    I’m not going to throw your slimy slobbery stick!

  15. Clearly, is using a formula that’s just out of whack and needs tinkering

    The word “assessments” makes me think these numbers come from the county assessor and the Realtors are simply copy and pasting it from county records.

    A Realtor if generating these numbers by themselves would use the term market analysis or if it was appraised would call it appraised value.

    Considering that if the property was properly assessed the county and the state would only be getting property taxes on 300,000 worth of property rather then taxes for 900,000 worth of property.

    note: these are the terms that are used in the real estate industry in my neck of the woods. Perhaps the nomenclature in California is different, but i would check it out Tim.

    1. Assessor’s ID No. 2423-003-044
      Site Address 10611 MOORPARK ST
      LOS ANGELES CA 91602
      Property Type Multi-Family Residential
      Region / Cluster 03 / 03409
      Tax Rate Area (TRA) 00013
      Recent Sale Information
      Latest Sale Date
      Indicated Sale Price
      2010 Roll Values
      Recording Date 10/10/2003
      Land $589,037

      Improvements $341,452

      Personal Property $0

      Fixtures $0

      Homeowners’ Exemption $0

      Real Estate Exemption $0

      Personal Property Exemption $0

      Fixture Exemption $0

      Yup it sure looks like the Realtors are getting those assessment numbers from the county

      589037 + 341452 = 930489
      Which is the exact number in the listing.

      1. Assessors web site can be found here.

        To get the info I posted click on the “property tax & map” link

        1. Tim i suggest you check this out.

          The Realtors got those numbers form the LA county

          Other wise i will be forced to email you and no one wants that.


      2. The information for this address is from a county assessment. So is the information at Zillow, which has the site of Curly Joe’s haunting in the center of a multimillion-dollar neighborhood, sprinkled with odd ducks in the $400Ks. Amusingly, real estate agents are always badmouthing Zillow on the grounds it gives unacceptably low assessments.

        I’m happy to second you in pointing out that the government is once again responsible for the misinformation. I just want to point out that NAR is happy to pass it along. To wit:

        To Devil Inchoate and Johnny Cosmos: A Realtor? title is a badge of honor. Move Inc. the registrant for, calls it “the official site of the National Association of REALTORS?.” Assuming Move Inc. is telling the truth, people using an NAR site should reasonably expect a level of diligence that goes beyond repurposing the self-interested assessments of county tax men.

        As Judge Lance Ito told a better, more innocent Los Angeles, the point is to find out the truth.

        1. i would respond but Obama is about to tell me that we killed Osama.

          1. he just said justice has been done….

            Justice is not a word i would use.

            In war it probably should never be used…in fact i would use as one of the definitions of war as the absance of Justice.

  16. Truly normal people may not care at all.

    Truly normal people don’t comment, either.


  17. Doooooooom is at hand!

    Keep those smelling salts handy!

    Republicans of conscience and common sense should think long and hard about why a senior Republican Cabinet member would compare them to terrorists. There is an extremism in some Republican circles, a hostility to the very notion of honorable compromise, a demeaning and derisive attitude toward any political opponents and the very idea of honorable compromise that is so essential to making Congress work effectively.

    1. That article really pissed me off, however after reading the comments I am pleased to note I am far from alone.

      I know it’s never going away but the wheedling “why can’t the Republicans just stop being kook extremists and prove they’re swell guys by reasonably compromising with a total ideological concession of defeat” shame-articles are completely tonedeaf.

      I mean, come on, just read that Republicans are “demeaning and derisive attitude toward any political opponents” paragraph again and bask in the utter lack of self-awareness.

  18. Ivanka and the chinless one will be my advisor tonight. Will Nene’s weave win out?

    1. Prediction: Gary Busey will show up during the hair show and bite someone.

    2. YEAH!!

    3. OK, so past 4 weeks have been about lotion, cooking, luxury hotels, and hairstyling. I wonder which team they’re favoring…

      1. LaToya coming back?

  19. President Obama is making an important statement to the nation shortly… during Donald Trump’s show. Coincidence? LOL.

    1. He’s going to fire Nene

    2. So this is the first 2012 primary? Who wins Neilson?

      Gonna be a loooooong election.

    3. Bin Laden is dead!

      I better get a mutherfuggin hat tip this time!

  20. Irregardless, it’s a great time to buy or sell a house!

  21. UFOs Captured Bin Laden

  22. Osama Bin Laden, YOU’RE FIRED!

  23. Osama Bin Laden, YOU’RE FIRED!

  24. Osama Bin Laden, YOU’RE FIRED!

  25. Should be interesting to see how that turns out. Wow.

  26. Last week I got yelled at by an agent who was showing a house directly across the street from another house that was asking $400,000 less. Keep that in mind next time you hear about the house in Detroit that sold for $3,500.

    Wait what? Was the agent showing the home to you? What was he yelling? What does that have to with cheep ghetto homes?

  27. Every time I read “X number of whatever year dollars is now this much” it just makes me think if you had $1.38 in pocket change from 1962 the silver would be over $40.

  28. If the market had been allowed to correct itself the dip would have been much lower and much quicker to bounce back. But logic doesn’t govern good intentions.


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