Slow bleed in Ladera Ranch

The real estate market continues to sour in Ladera Ranch - almost 40% of the 301 properties for sale there are either foreclosures or short sales, according to the latest Steve Thomas report.

Here is one of those distressed properties that's logged a lot of time on the MLS. Will it finally sell, or is it destined to end up a full-fledged foreclosure?

10 Garrison Loop, 92694
Asking price: $365,000
Asking price/ sq ft: $243
Income requirement: $91,250
Purchase price: $555,000
Purchase date: 2/22/06
Size: 3 beds, 2.5 baths, 1,500 sq ft (built in 2001)
MLS: S508210 (276 days on Redfin)
Zillow Zestimate: $402,000
HOA dues: $160 + $190
Type: Condominium
Style: Craftsman
Stories: 2 Levels
From listing: Fantastic price for a light and bright end unit. 3 Bedrooms, 2.5 baths, attached 2 car garage. Family room with mirrored media niche and granite faced gas fireplace. Granite counters,crown molding and baseboards, inside laundry. Internet included in HOA. Master suite w/dual vanities and walk in closet, ceiling fan. Short walk to restaurants, shopping, walking trails.


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We purposely left off the ZipRealty price history so we could show it to you here:

Price Reduced: 10/15/07 -- $445,000 to $425,000
Price Reduced: 10/26/07 -- $425,000 to $418,000
Price Reduced: 11/02/07 -- $418,000 to $405,000
Price Reduced: 2/16/08 -- $423,000 to $415,000
Price Reduced: 3/11/08 -- $415,000 to $399,000
Price Reduced: 3/21/08 -- $399,000 to $389,000
Price Reduced: 6/12/08 -- $389,000 to $379,000
Price Reduced: 6/20/08 -- $379,000 to $375,000
Price Reduced: 6/24/08 -- $375,000 to $370,000
Price Reduced: 7/02/08 -- $370,000 to $365,000

The owner used 100% financing from New Century when he purchased the property at the peak in 2006. The jig was painfully up as they decided to list the property in October for $445,000 - more than $100,000 less than they had paid about a year and a half earlier.

Then the mortgage went delinquent. A notice of default in the amount of $24,592 was filed against the $444,000 first loan on the property in April. This is one of five properties on the street that ForeclosureRadar.com lists as being in some stage of foreclosure: One REO, two that have received their NTS and two (including our subject property) that have had a notice of default.

There have now been 10 price reductions for a total of $80,000 off the original asking price, and the property is still up for sale and approaching the 300-day mark.

Assuming the property can be sold for the full asking price, it would mean a loss of $211,900, including 6% sales costs. Not including sales costs, it would signal a depreciation of 34%.

REOs in Ladera

Same street...same situation: REO. These two properties are both bank-owned foreclosures in Ladera Ranch.

REO No. 1 (photo above)
22 Duskywing Ct, 92694
Asking price: $900,000
Asking price/ sq ft: $346
Income requirement: $225,000
FB purchase price: $750,500
FB purchase date: 10/03/03
Size: 5 beds, 4 baths, 2,600 sq ft (built in 2002)
MLS: S519387 (143 days on Redfin)
ZipRealty price tracker: Price Reduced: 3/21/08 -- $1,080,000 to $900,000
Zillow Zestimate: $837,000
2007 property tax: $11,041
HOA dues: $185
Type: Single Family Residence
Style: Traditional
Stories: 3+ Levels
Lot size: 5,800 sq ft
From listing: This property has it all! Pool, Spa, Covered Patio, Fireplace, Fountains, in-ground Trampoline and that's just the backyard. Tons of upgrades. Custom paint, window treatments, cabinetry, countertops, flooring and so much more. A great deal...don't miss out. Check out this fabulous 5 bedroom, 4 bath home with a spacious family room adjacent to the chef's kitchen with stainless appliances and granite countertops. Generously sized living room and dining room, downstairs bedroom, 3rd floor bedroom suite and loft plus a child's clubhouse. Master suite and master bath with dual vanities, jetted tub, spacious shower with seat and walk-in closet. Spacious secondary bedrooms with a shared bath and an amazing park-like backyard. DON'T MISS THIS OPPORTUNITY.


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Judging by the sales history, you wouldn't expect this one to have ended in foreclosure. The former and original owners purchased the home from William Lyon Homes and financed $700,000 of the $750,500 purchase price from American Sterling Bank.

In August 2004, they took on a new $750,000 first loan and a $101,306 second, liberating their downpayment plus a bit extra. In December 2004 the debt was consolidated into a $864,000 loan, and this was increased in April 2005 to an $886,600 loan from Bank of America. A second loan was added in March 2007 for $24,900.

The total amount of debt on the property was now more than $910,000. Doubtful that much if any principal was paid on that $886,600 loan - the notice of default came in January 2008, and the notice of trustee sale was filed in May for $930,979, which is $44,379 more than the original loan amount.

ForeclosureRadar shows the property went back to the bank June 5 for $945,219. It's a little odd then that Redfin shows the property has been on the market since before it was REO. Perhaps the listing is old and hasn't been taken down yet?

Either way, this will be a big loss for the banks involved. A sale for anywhere close to the asking price (doubtful since to compete with our other subject property they would need to drop the price substantially) would still show an increase over the 2003 sales price.

Here's REO No. 2:
11 Duskywing Ct, 92694
Asking price: $719,900
Asking price/ sq ft: $277
Income requirement: $179,975
FB purchase price: $970,000
FB purchase date: 5/22/06
Size: 5 beds, 4 baths, 2,600 sq ft (built in 2004)
MLS: S533904 (23 days on Redfin)
Zillow Zestimate: $774,042
HOA dues: $160
Type: Single Family Residence
Style: Craftsman
Stories: 3+ Levels
Lot size:
From listing: **Spacious & Upgraded Cul De Sac Home** This is a great Floorplan; Featuring a mainfloor Bedroom or Office,Open Family Room to the Kitchen, Granite Kitchen Counters & Natural Stone Backsplash, Ceramic Tile, Berber Carpet & Wood Floors, Plantation Shutters, Crown Moulding, Cased Windows, Freshly Painted, Spacious Master w/Upgraded Tile Bath, Walk-In Closet, Jacuzzi Tub & Separate Shower, Wired for an Alarm System, Custom Built-in Media Niche, Surround Sound Pre-wiring. Landscaped Yard w/Slate Patio, Lush Foliage & Waterfall. Great Opportunity! A Must See!

This REO followed a different path than the other one on the street. The former owners did not buy from the builder, but instead paid $970,000 to a private seller during the peak of the bubble. They financed $873,000 (90%) through Countrywide and put $97,000 down.

The payments soon became unbearable, and the property slipped into foreclosure. The notice of default on the first loan was filed in October 2007, and the trustee sale for $781,392 ($53,892 more than the original loan amount) came in January 2008. The property went back to the bank on April Fools Day for $669,375.

Assuming the property sells for the full asking price, it would mean a depreciation of $250,100 or 26% off the 2006 bubble price, not including any sales costs.

If you'd like to get an idea of what the area looks like in terms of foreclosures, take a look at this heatmap from ForeclosureRadar.com. The site limits at 200, so imagine what 42 more markers would look like on this if we could see them all at once:

(The green markers signify notice of defaults, the blues are notice of trustee sales, and the red ones are bank owned. For an explanation of the California foreclosure process, click here.)

29% discount in Ladera Ranch

Merrill Lynch, which owns this REO in Ladera Ranch, has priced this property at 29% off the 2006 peak purchase price. Who will step in and purchase this home that sold for almost $950,000 just two and a half years ago?

25 Sachem Way, 92694
Asking price: $664,950
Asking price/ sq ft: $260
Income requirement: $166,237.50
Bank purchase price: $680,000
Purchase date: 1/9/08
Size: 5 beds, 4 baths, 2,560 sq ft (built in 2003)
MLS: U8001199 (61 days on Redfin)
ZipRealty price tracker: Price Reduced: 4/19/08 -- $699,900 to $664,950
Zillow Zestimate: $822,000
2007 property tax: $14,017.78 - 2006 taxes also unpaid
HOA dues: $165
Type: Single Family Residence
Stories: 3+ Levels
Lot size: 2,600 sq ft
From listing: WOW, THIS IS ONE OF THE VERY BEST VALUES IN ORANGE COUNTY. THIS IS THE COMMUNITY OF LADERA RANCH. LADERA RANCH HAS IT ALL, PARKS, RECREATION, SHOPPING, ENTERTAINMENT AND SO MUCH MORE YOU AND THE FAMILY WILL LOVE THE ARE. THE HOME FEATURES FIVE BEDROOMS AND FOUR BATHROOMS, A GREAT VIEW, AND A REAR YARD THAT IS JUST RIGHT FOR ENTERTAINING, YOU EVEN HAVE A FIRE PIT AND A SPLASH POOL... COME HOME TO LADERA RANCH AND START LIVING THE SOUTHERN CALIFORNIA LIFESTYLE TODAY!!

A fixer that's five years old and last sold for nearly $1 million. Go figure. Considering there are no interior photos, we wonder if this one might have been trashed on the way out.

The previous owner paid $940,000 in 2006, but didn't have to pay a dime of his own money. He received 100% financing from People's Choice Home Loan - another (now defunct) subprime lender. The funding came in the form of an 80% first loan ($752,000) and a 20% second ($188,000).

Wait a minute: Someone went to a subprime lender and was granted loans totaling
$940,000 to buy a luxury property? Something seem wrong with that picture? Is it any surprise the property ended up as a foreclosure?


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The owner made very few (if any) payments on the first loan, as the notice of default came in the first week of April 2007 - less than six months after the purchase. The notice of trustee sale was filed in July in the amount of $794,822 - $42,822 more than the original loan - and the bank ended up taking the property back for $72,000 less than the original loan, though unpaid interest and fees had accrued.

Assuming a sale for the current full asking price, it would represent a decline of $275,050 or about 29% off the 2006 purchase price, not including any sales costs.

(Another) Ladera Ranch foreclosure

Ladera Ranch came up in the LA Times' new foreclosure widget as being the area in Orange County with the worst rate of households per foreclosure (15.58 - but, the number is likely off since the number of homes in the area seems to be understated). So, today we're featuring a foreclosure property in Ladera's Covenant Hills that is selling for a huge markdown off the 2006 price.

14 Drackert Lane, 92694

Asking price: $879,900

Asking price/ sq ft: $251
Income requirement: $219,975
Buyer purchase price: $1,500,000
Buyer purchase date: 8/28/06
Size: 4 beds, 4 baths, 3,500 sq ft (built in 2005)

MLS: S529187 (8 days on Redfin)

Zillow Zestimate: $1,235,000
2007 property tax: $23,920.54 (2006 taxes of $22,129.58 unpaid)
HOA dues: $404
Type: Single Family Residence

Style: Mediterranean

Stories: Two Levels
Lot size: 6,500 sq ft
From listing: Beautiful home in desired gated community of Covenant Hills. Cul-de-Sac location with landscaped front. Backyard landscaped needs completed. Main floor Master bedroom and bath/spa including jacuzzi tub. His and her closets with double sinks. Custom paint, crown moulding, through out home. Travertine floors downstairs. Kitchen with island and granite counter tops.

The original owner walked away with a cool $455k in sales proceeds after holding the property for about a year and selling it to our greater fool in 2006 for $1.5 million. The progression from there is not hard to predict:

8/28/06: GF puts $75,950 down and finances $1,424,050 via a $1,199,200 1st mortgage and a $224,850 2nd from First Franklin.
9/24/07: Notice of default filed in the amount of $32,236.
2/1/08: Notice of trustee sale filed, amount is $1,271,924.
3/18/08: Home scheduled to be auctioned. Opening bid of $1,202,574.95.

Now, the vacant property is on the market. Assuming a sale at the full asking price, the loss would be $672,894 off the previous sales price, including 6% sales costs. Not including transaction costs, that would also be a depreciation of 41% off the previous sales price.

Think about that: 41% off in less than two years. In a luxury neighborhood. Of course, there is always the possibility that the price is artificially low to attract multiple bids. We will know for sure when this property sells.

The latest home stats came out Friday, and there's still not really much of an improvement on the South OC numbers - if anything, the retreat continues. Here are the DataQuick stats for the 22 business days ending April 8, as reported by the OC Register:

More on Ladera Ranch foreclosure at auction

The L.A. Land Blog is back with another update on 3 Magnolia Drive, a Ladera Ranch foreclosure property that was "sold" at auction, only to have the lender demand more money to complete the sale. The winning bidders balked, and, as we reported, the home was quickly back on the MLS for sale.

The blogger posted a link to the property details from the lender's Web site (coincidentally, as he points out, American Home Mortgage itself is headed for bankruptcy). It's showing an asking price of $885,000. The Redfin posting still has a price of $915,000.

Peter Viles of L.A. Land talked to the winning bidder last night. Here is what the bidder said:

"We just said, 'forget it,' " (George) Sarantos said tonight. "It's not worth it to us." ...

Because auction buyers agree to pay a 5% premium to the auctioneer, the true cost of the Sarantoses' bid was about $740,000. Because they felt they would have to put up even more money for some repairs and maintenance, they didn't want to pay much more than that.ecause auction buyers agree to pay a 5% premium to the auctioneer, the true cost of the Sarantoses' bid was about $740,000. Because they felt they would have to put up even more money for some repairs and maintenance, they didn't want to pay much more than that.

"The house needs work, and by the time we pay all the closing costs, it's over $800,000, and it's just not worth it," Sarantos said. "This isn't going to be the last house out there for us. We didn't lose any sleep over it."

Props to the Sarantoses...they walked away from the deal without reservations when it was clear the situation was not in their best interest.

LA Times tells backstory behind Ladera luxury foreclosure

Photo credit: LA Times

Those of you who do a lot of clicking on listing sites like Redfin and ZipRealty may have come across 3 Magnolia in Ladera Ranch. It's a very nice-looking place with 4 bedrooms and 3 baths, and it sold for $1.2 million at the peak in 2005.

The recent listing price was $429,000 (obviously, way too low to be a regular sale, even REO), with the following in the description:

'Property To Be Sold At Public Auction Event March 15Th At The Pomona Fairplex. List Price Is The Starting Bid For This Home, Subject To A Reserve Price And Lender Confirmation. You May Bid At The Auction, Or Via Live Internet Web Cast, Or Via Absentee Bid ( Written Offer ) Submitted In Advance Of The Auction. No Offers Will Be Accepted Prior To Auction. Homes Open For Inspection From 10Am To 4Pm On Sat And Sun March 8Th And 9Th. For Property And Auction Information Contact Listing Broker'

Peter Viles of the LA Times' excellent L.A. Land blog posted on the fate of this property today. Some snippets:

"Because the opening bid was so low, there was a spirited bidding war for the home. ...

Here's what happened: The winning bid for this home came in at $705,000. Remember, the bidder agrees to pay an additional 5% premium to the auction companies. So the total bid was $740,000 -- a 38% discount from the peak sales price of $1.2 million. However, the bank or lender that owns the home reserves the right to reject the high bid as too low, and that is what happened here."

To recap, the auction established that a buyer was willing to pay a total of $740,000 for the property. The bank said no.

In fact, it looks like the bank may already be trying to get more for the property. It's showing up in Redfin with a new asking price of $915,000.

*There is also an interesting LA Times video Viles did on the auction, specifically on the Ladera Ranch property. See it here.

Former million-dollar Ladera home

Today we're heading back to Ladera Ranch to check out this huge luxury home that's on the market for well below the value of its peak sale price in 2005. Does this qualify as a McMansion? If not, it's kinda borderline.

3 Franklin Way, 92694

Asking price: $985,000*

Asking price/ sq ft: $340
Income requirement: $246,250
Purchase price: $1,368,500
Purchase date: 12/7/2005
Size: 5 beds, 3 baths, 2,900 sq ft (built in 2001)

MLS: S517613 (14 days on Redfin)

2006 property tax: $8,084
HOA dues: $194
Type: Single Family Residence

Style: Contemporary

Stories: Two Levels
Lot size: 7,000 sq ft
From listing: This is a 'wow' house...If ever there was one! Totally perfect with everything you could want! Incredible location next to green open area, on a cul de sac, privacy, no neighbor on one side so it feels open & large! Large lot which is unusual in ladera! Fabulous big kitchen, giant nook or dining, family room & fireplace next to kitchen - plus gigantic bonus room with another fireplace on the ground flr-where it belongs!! Nice, office, play rm or can be a bedrm on the ground flr as well! Great up- grades & amenities, inc. Granite of course!! Upstairs is huge master with walk-in, bath w/seperate tub/shower,large secondary bedrooms, seperate computer or study area,room 4 everything & every one! This is the prfect home if you are looking for beauty, condition, location, privace & space! A sure winner and easy to find. Walking path to nearby award winning schools and just a truly prime property!! The best home out there! Don't waste your time on the others!! Model perfect ....Really!!!

* - Redfin also shows a low search price of $925,000

If you were able to make it through the novel-length listing description, you may have caught a handful of spelling mistakes, including one heinous one - "privace" instead of privacy.

Beauty is certainly in the eye of the beholder, but does this really look like a $1.37-million dollar home to you? I didn't know there was such a thing as a "wow house," (if someone had asked before what one was I probably would have guessed a type of carnival ride) and that I would be lucky enough to stumble on the wow house.

I personally prefer the wow factor of the ocean view with this property in Laguna Beach, which sold for a little less during the bubble in 2006:
Assuming a sale at the top of the range for $985,000, the loss on this one would be a mind-blowing $442,600. If the price ended up being $925,000, the loss would escalate to $499,000, including 6% sales costs. That would also represent a depreciation of 32% in just a little more than two years, not including transaction costs.

Wow.

Ladera Ranch update

Ladera Ranch (ZIP code 92694) is a very interesting area for a variety of reasons. First, a good portion of the 8,000-home community was built during the recent real estate boom (starting in 1999), so it's exposed to more extreme fluctuations in value as the bubble inflated and is now deflating. It also features some striking architecture and provides good community amenities. Ladera is very family friendly.

The biggest drawback is perhaps its location - the commute can be bad depending on the destination. Homeowner dues also can be high, depending on the neighborhood.

Then, there's the natural gas power plant issue that's made news and become a hot issue in the community. Proponents argue it will service the area in peak use times and in case of emergency. They also point out that it's a clean-energy station.

Opponents say it's bad for a variety of reasons, among them decreased property values, a "50' exhaust stack - 300' from homes" and that it "opens the door to future industrial expansion." Right or wrong (we're not judging), this is the NIMBY (Not In My BackYard) point of view.

A pro-power plant local assessed the situation this way: "...the way these people are portraying (the situation), it will certainly cause prospective buyers to move along to Talega or elsewhere. It is the PERCEPTION that this Peaker plant will somehow diminish the lifestyle in Ladera that will further hurt values beyond what the mortgage and current market conditions have."

Here are some examples of how the real estate market is faring out there:

FOR SALE

19 Irish Moss
Asking price: $475,000 ($264/sq ft)
Purchase price: $626,000
Purchase date: 11/15/2005
Size: 3 beds, 2.5 baths, 1,800 sq ft
Days on Redfin: 196


32 Tisbury Way
Asking price: $645,999
Peak price: $812,000
Peak purchase date: 10/19/2005
Size: 4 beds, 3 baths, 2,200 sq ft
Days on Redfin: 92


23 Second Street
Asking price: $525,900
Purchase price: $635,000
Purchase date: 5/25/2004
Size: 3 beds, 2.5 baths, 1,750 sq ft
Days on Redfin: 11

RECENT SALES

114 Sansovino
Purchase price: $399,000
Purchase date: 12/7/07
Final asking price: $399,900
Original asking price: $480,000
Previous purchase price: $430,000


15 Wood Barn Road
Purchase price: $590,000
Purchase date: 12/06/2007
Final asking price: $599,000
Original asking price: $669,000
Previous purchase price: $405,500


17 Smoke Tree Drive
Purchase price: $1,100,000
Purchase date: 12/20/2007
Final asking price: $ 1,090,000 - $ 1,189,000
Original asking price: $1,275,000
Previous purchase price: $723,000


All sales data came from Zillow and isn't guaranteed to be reliable. Recent sales also assume these are completed transactions and not foreclosures going back to the bank.