More evidence that small condos are not faring well - virtually no matter where the location in South Orange County. Here is a short sale that also is a major rollback in Laguna Niguel.
119 Pearl, 92677
Asking price: $199,000
Asking price/ sq ft: $256
Income requirement: $49,750
Purchase price: $349,000
Purchase date: 4/29/05
Size: 1 bed, 1 bath, 776 sq ft (built in 1983)
MLS: S525277 (60 days on Redfin)
Zillow Zestimate: $253,500
2007 property tax: $3,552
HOA dues: $300 + $45
Type: Condominium
Style: Contemporary/Modern
Stories: 1 Level
From listing: Great area with association pool, really nice complex. Priced to sell!
Short and sweet description, but that's the point: It's all about price. This is the type of unit that could become attractive to an investor when it falls in value enough, because its size and setup (virtually identical to an apartment) could make for a good rental for perhaps a young person just starting out who is saving up for a downpayment to buy a home.
But are we there yet? Looking at other properties currently offered for rent in Laguna Niguel, we estimate the market rent at around $1,500. That then would value this property at about $180,000 to an investor, assuming a GRM of 120. Very close! But, the fact that this property is a short sale (that must be approved by the lender) makes us hesitant to believe the property could actually complete the sales process for even the full asking price.
If we were to assume the property appreciated consistently at the ridiculous 15.5% yearly pace it did between its previous sales in 1995 and 2005, the "value" would have been $205,356 in 2001 and $237,187 in 2002 - though we know much of the appreciation took place between 2003 and 2005. The asking price now is already below both of these, and likely will fall a bit further before the absolute bottom.
Assuming, though, that the sale does go through for the full asking price, it would represent a loss of $161,940, including 6% sales costs. The depreciation, not including sales costs, would be about 43%.
Tuesday, May 13, 2008
43% off in Laguna Niguel
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7 comments:
That is below rental parity for an owner-occupant. Amazing...
Now we're talking! This is in a great area close to George White Elementary School, a blue ribbon school in Capo. This would be a great opportunity for a single parent looking to get a start in home ownership. I fell like if more homes were priced like this our economy would start to bounce back. Any clue about why this property owner is in this situation?
I do not have the financial info for this property, but judging by what I've seen from many others, I would venture a guess that either no or a low downpayment was used.
And IR also nailed it on the head...this would get my seal of approval for an owner-occupant as a legitimate good buy, assuming you can actually complete the sale at the asking price.
my quick perusal of LN suggests that you can get a 1bd for ~$1250, a 2bd with garage for ~$1750.
why would a single parent want a 1bd? especially a 775 sqft with no garage.
also, consider the $350/mo HOA, which brings the rental equiv. down.
so let's say $1350 re - $350 = $1000/mo X 160 means $160k for an owner, but more likely $125 for an investor (let's face it, who wants to live in a 1bd in LN, most younger people would at least want to be in SC, DP)
FreedomCM
Single parents don't have kids full time. 1/2 with mom 1/2 with Dad. Pull out sofas work fine for someone in this situation. Good schools, homeownership, good area, and affortable. All positives in my book. I think that $350 is a mistake. Laguna Heights HOA are $53/month.
$350/month for HOA in a Condo of this type is normal... Laguna Heights is SFR, so lower association costs. Regarding the complex, Crystal Cay is low end for Laguna Niguel. The Demographic in the complex is working-class and struggling. It's not a slum, but about as close to slum as Laguna Niguel can get. You are better off renting... there are two apartment complexes in the same block of Golden Lantern (Laguna Serrano & Hidden Hills). Hidden Hills currently has 1 Bedroom apartments listed for $1500/mo but they have multiples sitting vacant so I'm sure they will cut a deal.
Its a "slum" within walking distance to one of the best schools in the area. A good investment for a struggling family. I like that.
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