This Laguna Niguel luxury home has been discounted in the hopes it will sell quickly. Perhaps the sales team is so motivated they didn't even have a chance to go out and take any pictures yet (the photo is from the 2005 listing).
Or maybe they just aren't motivated enough to do what's necessary to sell a house in a real estate market like this.
If that's the case, the owner only has one person to blame...
13 Tramonti, 92677
Asking price: $900,000
Asking price/ sq ft: $344
Income requirement: $225,000
Purchase price: $1,289,000
Purchase date: 12/18/06
Size: 4 beds, 3 baths, 2,620 sq ft (built in 1989)
MLS: S539759 (12 days on Redfin)
ZipRealty price tracker: Price Reduced: 7/21/08 -- $1,100,000 to $900,000
Zillow Zestimate: $989,500
HOA dues: $107
Type: Single Family Residence
Style: Mediterranean
Stories: 2 levels
Lot size: 5,000 sq ft
From listing: This amazing Marina Hills home has it all. Panoromic city view from both levels. Upgraded kitchen w/ built-in Refrigerator. Walking distance to community pool, tennis courts and park.
The current owner purchased the property - not their primary residence - in 2006 for $1,289,000 using about 90% financing. The Redfin sales history says this property had previously sold for $1,078,000 in 2005, so theoretically that seller made a tidy little profit in a short amount of time.
A little flip like that is a bit suspicious considering the types of mortgage fraud that have gone on in Orange County, but you would think the 2006 buyer would know what they're doing. After all, they're not just the owner - they're a real estate agent who also just listed the house for sale.
In case you're wondering, ForeclosureRadar does not show any foreclosure activity on this property. So, we assume that the owner is up-to-date on their mortgage obligations. The property taxes also have been paid.
If we play the optimistic game of assuming a sale can and does go through for the current asking price, it would mean a loss of $443,000, including 6% sales costs, or a depreciation of $389,000 or 30% off the 2006 price, not including any transaction costs.
Wednesday, July 23, 2008
Weirdness in Marina Hills
Friday, July 11, 2008
'03 condo rollback in LN
The trickle of 2003 rollbacks in South County continues despite some observations that prices and sales numbers for OC as a whole appear to be leveling off for the time being.
Here is another of those discounted properties, located in Laguna Niguel.
28223 La Gallina, 92677
Asking price: $260,000
Asking price/ sq ft: $306
Income requirement: $65,000
Purchase price: $405,000
Purchase date: 5/17/06
Size: 2 beds, 2 baths, 850 sq ft (built in 1995)
MLS: S526912 (104 days on Redfin)
ZipRealty price tracker: Price Reduced: 6/24/08 -- $355,000 to $299,000
Price Reduced: 7/01/08 -- $299,000 to $260,000
Zillow Zestimate: $337,000
HOA dues: $230 + $22
Type: Condominium
Style: Townhouse
Stories: 1 Level
From listing: BEAUTIFUL UPPER LEVEL CONDO. LIGHT & BRIGHT, WARM MODERN PAINT TONES. SUNNY KITCHEN WITH OVERSIZED COUNTER SPACE AND LOTS OF CABINETS! INDOOR LAUNDRY,SPACIOUS PATIO WITH STORAGE CLOSET AND A GATED ENTRANCE.INVITING TIERED FIREPLACE IN LIVING ROOM WITH VAULTED CIELINGS. ASSOCIATION POOL AND AMENITIES. CARPORT WITH EXTRA STORAGE.
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Can you believe this property - a decent starter condo - was legitimately only affordable for people making more than $100,000 per year based on its peak price (if they wanted to be careful and use conservative financing)? Most likely you would answer "yes" if you've been following the local real estate market.
Laguna Niguel - a fairly affluent city as a whole - had an average adjusted gross income of $102,247 in 2005, according to IRS records. Interestingly, when adjusted for inflation, incomes there actually were still lower than they were at the high mark of 2000.
The current owner bought at the peak and used 100% financing. If the property can be sold for the current asking price, the loss would be $160,600, including 6% sales costs. All for the lender.
It also would mean a depreciation of $145,000 or 36% off the peak, not including any sales costs, as well as a depreciation of 13% off the mid-2003 price of $300,000.
Monday, June 30, 2008
Missing the market in Laguna Niguel
Today's property, located in Laguna Niguel, is a bit of an artifact. See, it's been for sale for well over a year.
And it's been chasing the market down all the way...
30442 La Vue, 92677
Asking price: $1,299,000
Asking price/ sq ft: $329
Income requirement: $324,750
Purchase price: $1,570,000
Purchase date: 8/17/05
Size: 4 beds, 4 baths, 3,954 sq ft (built in 1989)
MLS: S470041 (546 days on Redfin)
Zillow Zestimate: $1,598,500
HOA dues: $75
Type: Single Family Residence
Stories: 2 Levels
Lot size: 5,900 sq ft
From listing: Remodeled & Expanded, Nearly 4,000 sqft! Versatile Open floor plan. Tons of natural light. Two story Vaulted Ceiling entry. Huge Bonus room, Travertine floors, Granite counters, Stainless Steel Appliances, 3 Fire places. Salt Water Pool & Spa. Quiet neighborhood close to Beaches and World Class Resorts. Turnkey.
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Here's the asking price history, via Redfin:
Feb 03, 2007 $1,725,000
Feb 05, 2007 $1,675,000
May 23, 2007 $1,599,000
Aug 03, 2007 $1,559,000
Aug 15, 2007 $1,499,000
Sep 20, 2007 $1,449,000
Oct 06, 2007 $1,399,000
Feb 13, 2008 $1,349,000
Apr 03, 2008 $1,299,000
That's a decline of $426,000 over the course of more than a year. You can almost see the thinking in action: The property was first listed at a wishing price that would not only bail the owner out, but provide a little bit of profit too. Luxury real estate doesn't go down, right?
Then somewhere around the $1,559,000 mark we hit breakeven - this might have been the lowest amount the owner could take for the property and not have to either try for a short sale or pay the difference out of his own pocket.
But the market had already passed him by, and he kept chasing for many more months - always a step behind.
As of this writing, the property is showing up as active in Redfin but as inactive in other online
brokerages like ZipRealty. This could simply mean the property is back on the market and hasn't been updated yet on other sites, or it could be that Redfin is simply incorrect. Either way, this property makes for an interesting subject.
It was purchased in 2005 using 90% financing - a $1 million first from Bank of America, and $411,500 from Grand Capital & Associates. In March of 2006 what appears to be a $55,000 standalone second was added to the property.
We should also mention the property is a preforeclosure. A notice of default was recorded on the first loan in December for $26,145. The notice of trustee sale amount of $1,046,958 was posted in April. If you'd like to pick this one up at auction, it's scheduled for the block July 25. Its original auction date was last Wednesday, but was postponed due to bankruptcy.
It appears unlikely, but if the property could somehow be sold for the current asking price on the open market, and we deduct 6% for sales costs, the loss would be $348,940.
Friday, May 16, 2008
3-time failure in Laguna Niguel
The Redfin listing for this Laguna Niguel preforeclosure home does not designate it as a short sale, but how can it not be one? The owner put $0 down when he bought it during the bubble, and he is now trying to sell it for more than $150,000 less than he paid about two years ago.
As you will see, there is much more to this story than meets the eye.
28281 Via Alfonse, 92677
Asking price: $649,900
Asking price/ sq ft: $375
Income requirement: $162,475
Purchase price: $830,000
Purchase date: 5/19/06
Size: 3 beds, 3 baths, 1,731 sq ft (built in 1989)
MLS: S532406 (3 days on Redfin)
Zillow Zestimate: $645,500
2006 property tax: $7,207
HOA dues: $142
Type: Single Family Residence
Stories: 2 Levels
Lot size: 4,040 sq ft
From listing: Wonderful two story home in Laguna Niguel. This home features 3 bedrooms, 2.5 bathrooms, a family room with a fireplace, a formal dining room, mirrored closet doors, and a great view of the surrounding city. Home has access to association amenities, which include a pool, spa, tennis court, and work-out center. Come and enjoy all the wonderful things this home has to offer.
Considering how the photos look, it appears the property is already vacant, so it seems unlikely the owner will be trying too hard to keep the house. Does the bottle of alcohol in this picture come with the house, or does that have to be negotiated separately?
As we mentioned, the owner obtained 100% financing (78/22) from JPMorgan Chase. The notice of default was filed on New Year's Eve.
Assuming it is possible to successfully sell the property for the full asking price, the loss would be $219,094, including 6% sales costs. Not a good day for the lender. And it's not the only one who will be out a lot of money.
Think this is an isolated incident in this neighborhood? On this street? Wouldn't you believe it: 28272 Via Alfonse is also headed towards foreclosure. And, 28371 Via Alfonse is an REO that is not yet listed for sale.
All $0 down deals using virtually identical means of financing. All purchased in mid-May through early June of 2006. All by the same investor.
That's right: In a span of less than a month, our real estate investor "bought" three properties on the same street - for a total of $2,390,000 - using none of his own money. Carleton Sheets would be proud!
But the fantasy of real estate riches soon ended, and each of the three homes began the foreclosure process by early January. Fortunately for the investor, he didn't have to sacrifice his home. In fact, his primary residence is in another, very wealthy South OC city.
All told, the loss on these properties will be significant, and the lenders will be left holding the collective bags. Who do you get angry at here? The investor for walking away and potentially not disclosing on their loan applications that they were buying so many properties and leveraging themselves to the hilt? Or do you cry foul on the lenders who enabled this behavior by funding the loans?
No matter what your personal opinion, there is no denying it is the lenders that will be taking the brunt of it in the shorts. And the neighbors can't be too happy to have three homes possibly sitting vacant on the street, either.
Wednesday, May 14, 2008
Another good deal in Laguna Niguel
Yesterday, we profiled a property in Laguna Niguel that is a good real estate investment for an owner-occupant because the monthly cost to own is roughly equal to the monthly cost to rent a comparable property. Guess what: Today's condo is even more attractively priced.
23732 Hillhurst Dr #71, 92677
Asking price: $218,500
Asking price/ sq ft: $218
Income requirement: $54,625
Purchase price: $405,000
Purchase date: 8/29/06
Size: 2 beds, 2 baths, 1,000 sq ft (built in 1975)
MLS: S526568 (48 days on Redfin)
Zillow Zestimate: $327,500
2007 property tax: $2,334
HOA dues: $295
Type: Condominium
Stories: 1 Level
Lot size: 1,050 sq ft
From listing: Don't miss out on a Golden Opportunity to own this magnificent condo with the well planned layout for living ease. 2 Master Bedrooms, 2 Bathrooms. Part of the living room has been converted in a small sleeping room.(maybe illegal) Close to Shopping Center, Bus Stop, Freeway and just a few minutes to the Beach, excellent for this summer time. Community swimming pool. Washer and Dryer hookups. The best of everything. Easy to show. Won't last long. And have you check the price?...Oh what a price!
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"Oh what a price" is absolutely right, because in today's market this property is an excellent value for an owner-occupant. The property is already priced below the $240,000 mark we believe a non-investor should target as a value for this condo, (using a GRM of 160 and a rental value of $1,500 per month). Actually, this property has a GRM of about 146 as it is currently priced.
This means by our rough math, rental parity has been achieved: An owner who puts down a legitimate downpayment would be paying about the same each month to own as they would to rent. Can you believe someone paid more than $400,000 for this place not too long ago?
If we were to instead assume the property could rent for as much as $1,600, then the math gets even better - the property would have a GRM of about 137 as it is priced now. An even better deal! Just be careful - we wouldn't want you to get in trouble for the small sleeping room that is "maybe illegal."
The question is whether you can get this 2003 rollback for the asking price and successfully complete a sale. That certainly is no given considering the trouble with closing short sales - particularly ones like this that are priced significantly below the previous sales price.
Assuming the property does get sold for the current full asking price, the loss would be $199,610, including 6% sales costs. Not including sales costs, it would equal a depreciation of 46% in less than two years.
Tuesday, May 13, 2008
43% off in Laguna Niguel
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%.
Monday, May 05, 2008
File this under "priced to sell"
Here's an REO in Laguna Niguel that is likely going to incite a bidding war. Check out how far below the previous sale price it is...
28801 Charreadas, 92677
Asking price: $589,000
Asking price/ sq ft: $300
Income requirement: $147,250
Borrower purchase price: $910,000
Borrower purchase date: 8/22/06
Size: 4 beds, 3 baths, 1,965 sq ft (built in 1985)
MLS: S531303 (1 day on Redfin)
Zillow Zestimate: $736,500
2007 property tax: $5,961
HOA dues: $54
Type: Single Family Residence
Style: Spanish
Stories: 2 Levels
Lot size: 9,800 sq ft
From listing: !!!!!Attention Buyers and Agents!!!!! Act Fast on this Bank Owned home centrally located in Laguna Niguel. Priced right to sell, this incredible home is 100% Bank owned and ready for immediate occupancy. No more hassling with short sales......Get your unbeatable deal today!!! This home is on an interior street backing to beautiful hills and nature. Unparralelled privacy, lot size and views at this price! Dynamic and spacious floorplan offers plenty of living for the needs of your growing family. Location offers the convenience to be just minutes away from top notch shopping, award winning schools, Freeways, tollroad access, fine dining and entertainment. Bring your best offer today because a house with this much to offer at this bargain price will not last!!!!
OK, so the interior isn't perfect, but it is very colorful. Whomever buys this will be fine as long as they bring a few cans of paint.
Where does this stand in terms of rental parity? Glad you asked...28641 Charreadas is for rent asking $2,950 per month, and these two are fairly identical in terms of size. That would place a value of $472,000 on our subject property for an owner-occupant, if we assume a GRM of 160. So, by historical standards, the property is a bit overpriced at $589,000 because it is not supported by current rental rates.
Coincidentally, 28641 Charreadas is also for sale - for $750,000. That would put the asking price at a GRM of 254 - severely overpriced considering your monthly cost of ownership would be somewhere around $4,800, if you bought and put 20% down.
We wonder whether a prospective buyer would want to fight for the chance to buy our subject property, or whether they would prefer to go for 26002 Campeon, a bit bigger move-in-ready property a block over that is asking $649,900. But, this property is a short sale so there is likely a bigger hassle involved.
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Assuming a sale for the full asking price, our subject property/comp-in-the-making will record a decline of $321,000 from the peak, not including any sales costs. It would also represent a depreciation of 35% off the 2006 price.
Monday, April 21, 2008
UPDATE: Yes, a failed flip in Laguna Niguel
We posted in late February about 24171 La Hermosa, a property in Laguna Niguel that looked like it was a flip heading for failure. To recap:
Asking price: $575,000 (now $550,000)
Asking price/ sq ft: $353 (now $338)
Purchase price: $750,000
Purchase date: 11/13/06
Size: 4 beds, 2 baths, 1,628 sq ft (built in 1966)
MLS: S503764 (178 days on Redfin) - now 232 days
ZipRealty price tracker: Price Reduced: 09/17/07 -- $899,900 to $839,900
Price Reduced: 09/25/07 -- $839,900 to $829,900
Price Reduced: 10/18/07 -- $829,900 to $799,900
Price Reduced: 11/13/07 -- $799,900 to $650,000
Price Reduced: 12/21/07 -- $650,000 to $599,900
Price Reduced: 02/25/08 -- $599,900 to $575,000
Now: Price Reduced: 04/08/08 -- $575,000 to $550,000
Description: This property has been completely remodeled.Granite counter top in the kitchen with a serving bar.Office area or eating area opens to the backyard.Beautiful tile flooring throughout.Newly painted,cozy fire place in the family room with french doors opening to the back yard.Newly painted interior,crown molding throughout.New cabinetry in the kitchen.Both bathrooms have been redone with new flooring and fixtures. Move in condition very light and bright.Close to the freeway,shops,park and restaurants.
Here are the details behind the transaction. It's easy to see how things went wrong.
11/13/06: Purchased for $750,000 with 95% financing from Greenpoint Mortgage Funding.
12/5/07: Notice of default filed on $600,000 1st mortgage, delinquent amount of $21,343 (property had been on the market for a little more than three months at this point)
3/13/08: Notice of trustee sale filed, sale amount established at $635,818. Property is scheduled for auction May 16.
It also looks like there may be some issues with unpaid property taxes, too.
Assuming the property is able to be sold for the full asking price, the loss would be $233,000, including 6% sales costs. And, remember, we don't know how much additional money was spent rehabbing the property.
Tuesday, April 08, 2008
2003 rollback in Laguna Niguel
This Laguna Niguel REO property is one of the few to have been priced beneath its 2003 sales price right from the start. It's also one of a select company of 2003 rollbacks we've seen so far that aren't small condos.
Income requirement: $112,475
Purchase price: $532,548.46
Purchase date: 3/12/08
Size: 3 beds, 3 baths, 1,834 sq ft (built in 1978)
2007 property tax: $6,288
HOA dues: $182
Type: Single Family Residence
From listing: Super Laguna Knolls home! Huge yard, no street noise, and a beautiful view. Wood flooring the entry, livign and dining room. Fireplace. Separate dining room. Remodeled kitchen has slate floor, stainless steel appliances and granite countertops. Family nook. Three bedrooms upstairs. Don't miss this one! This has got to be one of the best locations in the tract.
As you can see, this property went back to the bank in mid-March for about $532k. Considering the house sold for $625,000 in 2006, that already represented a significant discount in a short amount of time.In fact, assuming a sale at the current asking price, it's 28% off the November 2006 sales amount. The asking price is also 16% below its October 2003 sales price of $535,000.
It will be interesting to see if this is more evidence of a growing trend of lender liquidations. The house obviously has some upgraded features, so perhaps this is one of the properties the bank thinks will go quickly if the price is right - or, they might even be thinking the low asking price will incite a bidding war that will push the final price higher.
Monday, March 31, 2008
"The phone is ringing off the hook!"
15 Amarante in Laguna Niguel is a single-family residence in Marina Hills that came up for sale a couple weeks ago with an asking price of $599,000.
The owners' situation is sketchy at best. Zillow shows this property sold for $810,000 in 2005, but it has also been on the market as a rental, first in September 2006 with a monthly asking price of $2,650, and again in October 2007 with a monthly asking price of $2,600.
We're not sure exactly what the house did end up being rented out for in the past, but there is no rational way the rent could even approach covering the mortgage, so it is possible the owner was banking on rapid appreciation to bail them out of a bad investment. If you're curious, the investor-friendly 120 GRM estimate has this place valued at $312,000 - assuming a rental rate of $2,600 per month.
Listing description (our emphasis in bold): Gorgeous single story detached home in the desireable Marina Hills. Remodeled kitchen with cherry wood finish cabinets and modern granite tile counters. Gorgeous travertine floors and plush carpet. Leaded glass front door with beautiful porch. Low maintenance private back yard with lovely landscape and flowers beds. Hurry on this one the phone is ringing off the hook!
If the phone is "ringing off the hook" with interest, then why did we see this today on ZipRealty?: Price Reduced: 3/31/08 -- $599,000 to $589,000
Guess you don't have to be in quite as much of a hurry as the listing leads you to believe.
Thursday, March 27, 2008
La Vista: Whole neighborhood for sale?
La Vista is a 280-unit condo neighborhood in Laguna Niguel, located near El Niguel Country Club and Laguna Niguel Racquet Club. The units were built as apartments in 1989 and later converted to condos during the boom.
Obviously, the timing was bad, and we're assuming that more than a few investors/speculators bought in considering there are currently 18 properties up for sale (or 6.42% of the entire neighborhood). And, a bunch are also up for rent, though there is certainly some overlap as a few of the same units are probably up for both sale and rent.
30902 Clubhouse Drive #27C is one of those seeking renters and is asking $1,695. It has 2 bedrooms and 2 baths, and is about 1,100 square feet. If we were to apply a GRM of 120, the property is worth about $203,400 for a cashflow investor.
The problem is the market is so cluttered with these units that it might be hard to stand out with so much competition, unless the price is right.
That makes it all the more absurd that properties in the tract like this are up for rent for $2,100 for a 1-bedroom and another like this is asking $2,400 for the same model as the first one we mentioned. Why would someone pay 42% more each month to live in another relatively equal unit?
The owner may not know of the principle of substitution, or perhaps that is a wishing price that will cover enough of the mortgage to keep them afloat for the time being.
The cheapest 2-bedroom rental in the neighborhood is asking $1,650. The most expensive rental in the neighborhood was the one priced at $2,400.
With that $203,400 target investor price tag in mind - or, $271,200 with an ideal GRM of 160 for an owner-occupant - let's see what some of the others for sale in the neighborhood are asking (hoping for in many cases):
30902 Clubhouse #13H: 2 beds, 2.5 baths, 1,100 sq ft. Asking price: $519,000. Days on Redfin: 63.
30902 Clubhouse #19G: 2 beds, 2.5 baths, 1,100 sq ft. Asking price: $499,999. Days on Redfin: 61.
30902 Clubhouse #1J: 2 beds, 2 baths, 1,100 sq ft. Asking price: $328,500. Days on Redfin: 122 (backup offers accepted). This property is scheduled for auction April 23rd, and has a notice of sale amount of $405,337.20.
30902 Clubhouse #13D: 2 beds, 2 baths, 1,100 sq ft. Asking price: $299,000. Days on Redfin: 158 (backup offers accepted).
These units went for about $475,000 at the peak in 2005 when they were converted. Recent sales are harder to determine, because it is difficult to distinguish between an actual sale on Zillow and a foreclosure.
Speaking of foreclosures, one went back to the bank in mid-March for $281,200. Another was scheduled for auction Wednesday with a notice of sale amount of about $391,000. And, get this: Six more are scheduled for auction in April!
La Vista is the type of bubble bloodbath that's not good for anyone. The investors (or, more likely, the lenders) lose their shirts, foreclosures and vacancies run rampant and residents get stuck with units that are rapidly depreciating in value in a community that is decimated by turnover.
Thursday, February 28, 2008
Stunning 42% off in Laguna Niguel
We can say with extreme confidence that this Laguna Niguel property will instantly generate a ton of buyer interest. Whether it can actually sell at the current price, assuming a lender has their say, is to be determined.
This home is beyond priced to sell: $454,000 below what Zillow says the current owners paid in late 2006.
Income requirement: $158,750
Purchase price: $1,089,000
Purchase date: 12/28/06
Size: 4 beds, 3 baths, 2,238 sq ft (built in 1972)
HOA dues: $68
Type: Single Family Residence
Lot size: 6,440 sq ft
From listing: Great 4 bdrm home in fantastic, beach close Laguna Niguel neighborhood! Lowest priced 4 bed home in town features upgraded kitchen with granite counters, wood floors, wainscoating throughout home, custom moldings, 2 fireplaces and big yard with great views! Located just 3 miles from world famous beaches and harbor, walking distance to award winning schools, HOA ammeneties include huge private park, clubhouse and big pool for some of lowest dues in town. Here is the deal you've been looking for!!
This seems like a no-brainer great deal - particularly when compared to the peak bubble price of $1,089,000. Then again, this property sold for $280,000 in 1997 - barely $5,000 more than its sale price in 1988.That means in the nine years between 1988 and 1997, it appreciated $5,500. But in the nine years after that, however, the property went on to appreciate by $809,000 - that's 147 times more appreciation than during the late 80s and early 90s.
Cutting to the math: If the property were to sell at the full asking price, the loss would be $492,100, assuming 6% sales costs. It would also be 42% off the previous sale price in late 2006.
How do you think this competitor feels - they're asking $899,900 for a property with a pool.
Wednesday, February 27, 2008
Failed flip in Laguna Niguel?
*In case you haven't already, be sure to read this testimony by NYU's Nouriel Roubini on "The Current U.S. Recession and the Risks of a Systemic Financial Crisis." Scary stuff.*
It would certainly appear that this is a sputtering flip based on the sales data, photos and home features, and if so, the unfortunate timing of this endeavor could not have been worse. The asking price has already been reduced by $324,900 and yet the property still is on the market.
24171 La Hermosa, 92677
Asking price: $575,000
Asking price/ sq ft: $353
Income requirement: $143,750
Purchase price: $750,000
Purchase date: 11/13/06
Size: 4 beds, 2 baths, 1,628 sq ft (built in 1966)
MLS: S503764 (178 days on Redfin)
ZipRealty price tracker: Price Reduced: 09/17/07 -- $899,900 to $839,900
Price Reduced: 09/25/07 -- $839,900 to $829,900
Price Reduced: 10/18/07 -- $829,900 to $799,900
Price Reduced: 11/13/07 -- $799,900 to $650,000
Price Reduced: 12/21/07 -- $650,000 to $599,900
Price Reduced: 02/25/08 -- $599,900 to $575,000
2006 property tax: $2,210
Type: Single Family Residence
Stories: One Level
Lot size: 8,640 sq ft
From listing: this property has been completely remodeled. granite counter top in the kitchen with a serving bar. office area or eating area opens to the backyard. beautiful tile flooring throughout. newly painted, cozy fire place in the family room with french doors opening to the back yard. newly painted interior, crown molding throughout. new cabinetry in the kitchen. both bathrooms have been redone with new flooring and fixtures. move in condition very light and bright. close to the freeway, shops, park and restaurants.
Notice Zillow's reported purchase price of $750,000. Also notice the focus areas of the upgrades: The kitchen (new cabinets, new granite counters?) and bathrooms (re-done flooring and fixtures), fresh not-just-white paint, nice-looking tile flooring and an attention to detail in terms of curb appeal.
Then, look at the original asking price: $899,900. Assuming a sale at that price and subtracting 6% in sales costs, the profit would be $95,906 before rehab costs. Again, assuming that this is a failed flip, there seems to have been plenty of room to make all the upgrades in this house and still come out with a nice profit. The only problem was the asking price proved to be far too high for the market.
What's clouding the is-it-or-isn't-it-a-flip issue is the fact that the property was first listed for sale in September 2007 - a full nine months after Zillow says the property was purchased by the current owner. Normally, that type of timeline is too long for a flip (time is money!), so it leads us to believe there might be an alternate explanation: Perhaps the owner bought the place and upgraded it intending to stay, but then was forced to leave...they just happened to make the types of upgrades typical of a flip, and also decided to price their house into the stratosphere.
Of course, it's also possible that this is indeed a flip that was financed in an all-cash deal, so time was not quite as much of the essence. The truth is any outsider's guess.
If the latest price reduction does the trick and the property sells for the full asking price, the loss would be $209,500, including 6% sales costs. Notice, though, that that amount doesn't include all the renovations and upgrades, so the actual loss is most certainly more.
Tuesday, January 22, 2008
Reality bites in Laguna Niguel
It's not the only luxury housing development in Laguna Niguel (not even close), but Hillcrest Estates is one of the area's newest. The guard-gated community has 211 homes - "estates" - that range in size from 3-5 bedrooms. The price tags start at more than $1 million.
It's becoming more and more apparent that not even this neighborhood will be spared from what is going on in the real estate market these days. Here's an exceedingly sad example of a housing bubble casualty, plus a case of real estate agent over-disclosure all rolled into one.
Income requirement: $274,750
Purchase price: $1,360,000
Purchase date: 1/19/2006
Size: 4 beds, 3 baths, 3,185 sq ft (built in 2004)
HOA dues: $185
Type: Single Family Residence
Lot size: 6,500 sq ft
From listing: This home is specatular located and price to sell quick! In the gated community of Hillcrest Estates at the end of a cul de sac. Large Master Suite has a retreat or office and spa like Bathroom. Gourmet Kitchen with Granite Counters. Custom Window Covering. Sits on a view lot. Seller has approved plans for professional landscaping front and back for less that $20,000 but ran out of $$$.
Classic case of TMI (that's "too much information") from our real estate agent. Not only did they publicly announce that their client apparently went broke before they could complete landscaping, but the listing is a beacon of desperation. Do you think they are getting many high-priced offers?
If I were the seller, I would be embarrassed. It shows the wealth they were hoping to display by purchasing a luxury home is now, in fact, a facade. It's also sad they won't be able to keep their house - unless, of course, they never deserved to own it in the first place.
Assuming a sale at the current asking price, the loss would be $326,940, including 6% sales costs.
Sunday, January 20, 2008
Pending sales in Laguna Niguel
I'm going to start regularly posting on pending sales around South County to give you an idea of what's moving in this slow real estate market. Today, we're looking at some sample properties in Laguna Niguel (92677 ZIP), which is showing 16 pending sales.
Keep in mind though that it's not uncommon in today's shaky lending environment for deals to fall apart at the last minute because of financing issues (among other reasons). So, there is no guarantee all of these will make it all the way to closing.
28571 La Alcala
Size: 3 beds, 2.5 baths, 1,360 sq ft
Last asking price: $579,900
Previous purchase price: $445,000
Purchase date: 8/8/03
Potential profit/loss*: $100,106
27943 Via Del Agua
Size: 3 beds, 2 baths, 1,609 sq ft
Last asking price: $519,500
Prev. purchase price: $187,000
Purchase date: 9/15/94
Profit/loss: $301,330
29546 Teracina
Size: 4 beds, 4 baths, 2,792 sq ft (REO)
Last asking price: $799,900
Prev. purchase price: $1,000,000 (looks like a refi)
Purchase date: 2/2/05
Profit/loss: $-248,094
23740 Sea Breeze Ln #19
Size: 3 beds, 2 baths, 944 sq ft
Last asking price: $324,900
Prev. purchase price: $460,000
Purchase date: 11/15/05
Profit/loss: $-154,594
25961 Montemar #69
Size: 3 beds, 2 baths, 1,101 sq ft
Last asking price: $304,900