Via Lomas: Street in despair

You may remember the OC Register report on Camile Street in Santa Ana. That neighborhood was doomed by the very subprime loans that once helped fuel the real estate boom that propelled prices to beyond-belief levels.

Camile is not the only Orange County street that's now full of broken real estate dreams, though.

Via Lomas in Laguna Hills also is suffering immensely from the real estate downturn. The homes in this area (highlighted in blue in the image above) are modest condos built in the early 1980s, and are of the typical starter-condo variety.

In 1999, you could buy one of these properties for about $100,000-$125,000. By 2002, homes were selling for closer to $200,000. In 2003-2006, prices continued to climb at a startling rate. For instance,25791 Via Lomas #183 (pictured at the left), a 3-bed, 2-bath, 1,173 sq-ft home sold for $410,000 in 2005. That signaled an 87% appreciation from the 2003 price of $219,000, and a 329% gain from the 1999 price of $95,500.

Obviously, these kind of prices were not sustainable in the least, and when the market did inevitably turn, it caused buyers to become scarce and financing to tighten. Values on this street predictably came crashing down.

There are 16 properties showing up as actively for sale today, according to ZipRealty. Below is a Redfin map of the street. The properties for sale show up as green dots:
Now, here is the ForeclosureRadar map of properties that are in some stage of foreclosure on Via Lomas:

There are currently 28 properties - yes, on this one street alone - that are working through the foreclosure process.

We (predictably) noticed some overlap between the properties are for sale and the ones that are in some stage of foreclosure. Properties for sale today include:

• 25812 Via Lomas # 68 - 2 beds, 2 baths, 897 sq ft. Asking $320,000. Preforeclosure that the seller purchased for $379,000 in 2005 using 100% financing from First Franklin.
• 25752 Via Lomas #103 - 3 beds, 2 baths, 1,357 sq ft. REO asking $230,000. Peak purchase made in 2006 for $425,000 using 100% financing from Resmae. A sale at full asking price would be 46% off peak price.
• 25775 Via Lomas #166 - 2 beds, 1 bath, 896 sq ft, sold for $338,000 in 2006. Buyer used 100% financing from Resmae and later took out a new, bigger loan for $355,500; it's now an REO.
• 25896 Via Lomas #6 - 2 beds, 2 baths, 897 sq ft. Asking $190,000. Preforeclosure the seller purchased for $330,000 in 2004 using 100% financing from BNC. New loan for $334,000 in 2006. Additional lines of credit established in 2006 and 2007 totaling $151,000 from First Source Funding and BofA. If sold for asking price, loss of 42% from previous sale, not including sales costs.
• 25886 Via Lomas #23 - 2 beds, 2 baths, 897 sq ft. Asking $279,000. Not in foreclosure. Zillow shows the owner purchased in 2001.
  

What is there to say about a street like this - one that's being decimated by declining values, foreclosures and properties in various stages of distress? It is hard not to feel sorry for many of the residents who purchased before the boom and are now living amongst the carnage.

Fortunately, many purchase transactions here during the bubble were completed with financing that used little or no money down from the buyer, so the bulk of the losses are falling to the lenders as opposed to the borrowers. The lenders acted as enablers by allowing people to take out the loans that are now exploding.

We're sure many who purchased properties during the boom who are now facing foreclosure were only doing what they thought was best at the time, so it's hard to find fault with them, either. They must have believed the notion that "investing" in real estate was their key to wealth and financial security. Sadly, that is not how things played out.

Neighborhood on sale: The Hamptons

The Hamptons in Aliso Viejo is a neighborhood of detached condos that was built right around the bottom of the 1990s real estate downturn in Orange County. The original owners paid anywhere from about $145,000 to $175,000 to buy in when these properties were offered new.

The upsides of the tract include the fact that many of the houses are visually appealing from the exterior, and they feel like single family homes even though they are officially classified as detached condos.

Downsides are the lack of driveways, and the development's narrow streets; typical Aliso Viejo packed-in feel as well in parts. And, the address numbering system is a joke (what is with the 1 Ryley Ct #15 thing?) . We've actually asked real estate agents before about this, and some aren't even sure what the deal is, other than it is the way the addresses were legally numbered. Soleil - also in Aliso Viejo - is guilty of this awkward system as well.

As with just about every neighborhood in the area, this one saw some extraordinarily high appreciation and turned in some high-priced sales during the bubble years, including these:

• 8 Avon Ct - 3 beds, 2.5 baths, 1,300 sq ft, sold for $494,000 on 9/1/04 ($380/sq ft)
  
• 4 Ashbury Ct - 3 beds, 2.5 baths, 1,400 sq ft, sold for $572,500 on 10/18/05 ($409/sq ft).
  
• 8 Constance Ct - 3 beds, 2.5 baths, 1,600 sq ft, sold for $602,500 on 4/21/06 ($377/sq ft)
• 1 Ryley Ct #15 - a fixer, 3 beds, 2.5 baths, 1,400 sq ft, sold for $542,000 on 7/22/04 ($387/sq ft)
• 3 Haley Ct #31- 4 beds, 2.5 baths, 1,600 sq ft, sold for $600,000 on 4/1/05 ($375/sq ft)
  

So, it looks like on average these properties were going for somewhere around $375-$390 during the bubble years.

The glut of properties that have recently come up for sale in this neighborhood is surprising - and it seems it is still growing. With the addition of another property for sale in the past couple days, we counted at least 10 that are now showing up as available on the MLS, including:

• 3 Sydney Ct - 3 beds, 2.5 baths, 1,533 sq ft, short sale/comp killer asking $399,000-$420,000. Paid $565,000 in 2006. Potential best-case loss of $189,940, including 6% sales costs. Possible 29% decline.
  
• 1 Sherrelwood Ct - 4 beds, 3 baths, 1,550 sq ft. Asking $499,000. Paid $575,000 at the peak. Chasing the market down from original asking price of $519,000. Best-case loss of $105,940. This is the second-highest-priced listing in the tract.
  
• 7 Ryley Ct #18 - 2 beds + loft, 3 baths, 1,300 sq ft, asking $449,900 ($346/sq ft). Previous sale of $310,500 in 2002 - not a short sale, just bad timing. Has chased the market down for 74 days from asking price of $474,900. Potential profit of $112,406.
  
• 11 East Southside Ct - 3 beds, 2.5 baths, 1,300 sq ft. Paid $305,000 in 2002. Asking $469,995, which would translate to a potential profit of $136,795.30.
• 7 Chatham Ct - 3 beds, 2.5 baths, 1,300 sq ft. Asking $449,900. Paid $517,500 in 2005. Offering $3,000 towards buyers closing costs. Potential best-case loss of $94,594.
  

4 Ashbury Court is an interesting one because it is for sale now for $475,000. That asking price is $97,500, or 17%, off the peak.

3 Haley Court is also showing as for sale, asking $519,000, which is $81,000 off the previous price. That would make it the highest-priced listing in the tract. The MLS number isn't showing up in Redfin, though.

Recent sales are few and far between. 6 Astoria Court - a 2-bedroom + loft, 2.5 bath property sold for $467,000 in late 2007 - $14,000 below the 2004 price. And, 3 Soho Court #38 is now taking backup offers. It was asking $430,000, which was (not coincidentally) one of the lower prices in the complex. A successful sale for the full asking price would set the value at 22% below the previous sale.

The relative lack of recent sales makes it hard to determine what types of value declines this neighborhood is witnessing, though it is probably a little more than 20% to this point. With the amount of supply in this neighborhood and relatively meager sales activity, it appears there will be continued downward pressure on prices here in the near future.

On the flip side, though - if you love this neighborhood and feel you want to buy now, you've got plenty of properties to choose from.

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.

Gilded immunity?

Even some expensive South OC areas like Laguna Beach are finally seeing declines in selling activity and median price (though it may be a better indicator to compare the price of individual houses over time). Here's an example of one neighborhood with a few sellers who refuse to think the real estate party might be over.

Hillcrest Estates in Laguna Niguel is a gated community of 2-5 bedroom homes located near the intersection of Highlands Ave. and Niguel Rd. Since this development is only a few years old, many of the current owners either bought just as the market began to take off, or at the peak. There are currently 10 properties in this neighborhood that are active on the MLS, ranging in asking price from $1,175,000 to $1,975,000. Here are the properties for sale with past sale history available on Redfin:

23632 Marin Way

5 beds, 4.5 baths

Asking price: $1,550,000

Asking price/sq ft: $403

Previous sales price: $1,248,500

Previous sales date: 10/15/2004

Potential profit before selling costs: $301,500

28882 Rockport Way
5 beds, 4.5 baths
Asking price: $1,899,000

Asking $/sq ft: $493
Previous sales price: $1,210,000
Previous sales date: 5/17/2004
Potential profit: $689,000

28772 Drakes Bay

3 beds, 2.5 baths
Asking price: $1,100,000
Asking $/sq ft: $452
Previous sales price: $544,500
Previous sales date: 7/6/2000
Potential profit: $555,500

28751 Riki Ct

5 beds, 4.5 baths
Asking price: $1,725,000

Asking $/sq ft: $475
Previous sales price: $1,650,000
Previous sales date: 12/5/2005
Potential profit: $75,000

28702 Point Loma
3 beds, 2.5 baths
Asking price: $1,199,000

Asking $/sq ft: $521
Previous sales price: $1,050,000
Previous sales date: 5/16/2005
Potential profit: $149,000

28631 Sea Pt.
5 beds, 4.5 baths
Asking price: $1,799,500

Asking $/sq ft: $493
Previous sales price: $1,700,000
Previous sales date: 1/18/2005
Potential profit: $99,500

28891 Westport Way

3 beds, 3 baths
Asking price: $1,200,000
Asking $/sq ft: $377
Previous sales price: $1,267,000
Previous sales date: 10/4/2004
Potential profit before selling costs: $-67,000

Mean price/sq ft (of all 10 actives): $405; Average days on market: 69.3

23632 Marin Way and 28891 Westport Way are the best values in terms of square feet for the price. 28702 Point Loma wins the not-so-coveted "most outrageous price for what you get" award. No surprise it's been on Redfin for 145 days.

28891 Westport Way is the only property we see that has an asking price that would equal an outright loss (though 28751 Riki Ct and 28631 Sea Pt are also looking at losses if you factor in 6% for selling costs). However, other sellers are hoping to see big-time appreciation after holding their properties for similar amounts of time.

Let's take a look at the recent sales over the past six months.:

28852 Drakes Way
5 beds, 4.5 baths
Sales price: $1,540,000
Sales date: 8/24/2007
$/sq ft: $424
Original asking price: $1,800,000
Percent of asking price received: 86%
Profit (before sales costs): N/A

22842 Westport Way
5 beds, 4.5 baths
Sales price: $1,675,000
Sales date: 6/21/2007
$/sq ft: $461
Original asking price: $1,899,900
Percent of asking price received: 88%
Profit: $682,000

28811 Westport Way
3 beds, 2.5 baths
Sales price: $1,200,000
Sales date: 6/4/2007
$/sq ft: $494
Original asking price: $1,350,876
Percent of asking price received: 89%
Profit: $640,500

28832 Drakes Bay
4 beds, 3.5 baths
Sales price: $1,430,000
Sales date: 4/17/2007
$/ sq ft: $431
Original asking price: $1,655,000
Percent of asking price received: 86%
Profit: N/A

Average $/sq ft of sold properties: $453

The average $/sq ft of properties on the market has declined by $48, and the properties we profiled at the top are all still sitting unsold despite the reduction. This would seem to indicate this neighborhood might be slipping just a bit in value. It's also worth noting that sellers who were able to unload their properties have been getting nowhere near their original asking prices. The average sale is 87.25% of the original asking price.

Once some more of these properties sell, we can better determine just how fast things are changing.

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Neighborhood analysis: Milano

Milano is a 132-unit gated townhome neighborhood in Aliso Viejo, located off Wood Canyon Drive and across the street from Soka University. It was built by Hearthside Homes from 1997-2000. Here is a map showing where this neighborhood is located (click on the image to make it larger):
Homeowner's dues will run you $179 a month. The units are located on a street called Trofello Lane. The picture to the left is the community entrance. The picture to the right shows off the nice association pool and spa for cooling down.
Here is a helpful link to a blog managed by the OC Realty Group that details the complex and provides some of the information we're drawing on here.
Positives

• Located in a good area - close to the big Aliso Viejo shopping center and the 73 freeway, but also feels a bit out of the way of congestion
• Not just a bland neighborhood - units are neatly styled
• Many units (at least the ones for sale) can have nice outdoor space
• Every model has a two-car garage
  

Negative

• Units are grouped into large U-shaped clusters; no private driveways (?) - see photo below

In summary: Looks like a nice place to live. Here are the five different floor plans, according to the other blog:

• Maderno - 2 Bedroom, 2.5 Bath, 1,150 SqFt, 2 Story
• Brindisi - 3 Bedroom, 2 Bath, 1,167 SqFt, 1 Story
• Villoresi - 2 Bedroom, 2.5 Bath, 1404 SqFt, 2 Story
• Mondavi - 3 Bedroom, 2.5 Bath, 1,582 SqFt, 2 Story
• Tuscany - 4 Bedroom, 2.5 Bath, 1,736 SqFt, 2 Story

There are nine properties for sale that are showing up on the MLS via ZipRealty. Here are the facts:
Range of asking prices: $137,500
Low asking price: $497,500 (Maderno plan)
High asking price: $635,000 (Tuscany plan)
Longest time on the market: 118 days (30 Trofello)
Mean price/sq ft of listings: $394
Potential short-sale properties: 35, 45. 45 Trofello last sold in fall, 2004 for $529,000. Current asking price: $549,000. 35 Trofello is asking the identical price ($569,000) it sold for in September, 2005. The other sellers we have info for purchased earlier, and still theoretically possess equity. Also: 174 Trofello last sold in Feburary, 2004 for $385,000 and is asking $497,500.

To compare, there were three properties for sale in January, 2006. A 3 bed, 2.5 bath was asking $569,000; $585,000 for a 3 bedroom, 2 bath and $545,000 for a 2 bed, 2.5 bath.

ZipRealty shows just four sales in this neighborhood in the past year - only one of which (97 Trofello) was in the past 6 months. This two-bedroom unit sold for $407,181 in April.

Comp killer

Three sellers on Tortuga Cay in Aliso Viejo, Calif. are all playing nice and fair with each other by setting fairly similar asking prices in terms of square footage. Then there's the fourth property, a short sale, with the possibility to shake up the neighborhood. First, the three similar ones:

32 Tortuga Cay
Size: 2 beds, 2.5 baths, 1,436 sq ft (built in 1989)
Asking price: $519,900
Asking price/ sq ft: $362
Days on Redfin: 15


78 Tortuga Cay
Size: 3 beds, 3 baths, 1,602 sq ft (built in 1994)
Asking price: $559,000
Asking price/sq ft: $349
Days on Redfin: 38

33 Tortuga Cay
Size: 3 beds, 3 baths, 1,602 sq ft (built in 1990)
Asking price: $589,500
Asking price/ sq ft: $368
Days on Redfin: 23

Bottom line...the 33 Tortuga Cay property is overpriced. These sellers paid $537,500 in May, 2005 and are wishing for someone to materialize in order to bail them out. One noticeable difference between 33 and 78 Tortuga Cay is that 33 has a driveway, but is it really worth that much extra?

By the way, 78 Tortuga Cay sold for $325,000 in 2002, so you would suspect then that the sellers of that property should have some more wiggle room to lower the price accordingly. No price reductions on either of these properties yet.

You could also estimate that the value of a third bedroom would be about $39,000, by comparing the two-bedroom property's price to that of the cheaper three bedroom.

Then, there's 6 Tortuga Cay. I'm going to say it: There goes the neighborhood.

Size: 2 bedrooms, 2.5 baths, 1,602 sq ft (built in 1992)
MLS: F1724911 (38 days on Redfin)
Asking price: $435,000
Asking price/sq ft: $272
Purchase price: $438,000
Purchase date: 3/10/2004
Other sales history: 05/16/2: $260,000
06/01/1998: $175,000
10/20/1994: $157,000
ZipRealty price tracker:Price Reduced: 08/05/07 -- $495,000 to $435,000
From listing: Shortsale subject to bank approval. Spacious floorplan, full driveway, large rear patio. $20,000 price reduction for fast sale. Please verify building sq feet. The building sqfeet on the listing is according assesor.
Good approach by these sellers: They want to unload this property right now, and set the price accordingly. Considering the property is $84,900 less than the competitor at 32 Tortuga Cay (a property that is supposedly 166 sq ft smaller), we would venture to say this one has a fighting chance of selling...assuming a buyer can qualify for and attain financing, and the lender approves the sale.

The loss at this point would be $29,100 assuming 6 percent in selling costs, but wouldn't it be better for these sellers to eject now than let this sit on the market for months and months?

Wateridge condo project (part 3)

I began a case study of the Wateridge neighborhood in San Diego back in March because I had a feeling we would be seeing some changes in the real estate market, and I was hoping to document those changes by using one 254-unit condo complex in Sorrento Valley as a microcosm of what might be going on in the rest of the area.

Here were the initial findings:
*There were four documented recent sales on Zillow, with an average price/sq ft of $357
*There were five condos I could find in ZipRealty for sale, average asking price/sq ft: $346 (Note: many of these were price ranges, so to be safe I used the lowest value in the range for calculation)

I came back to this complex again in May for an update. Here were those findings:
*Two additional sales resulted in $319 per sq ft
*Five properties I was following had been on the market for an average of 124 days. Usually there were price reductions, but they were typically small

Here is where we are now:
I am tracking nine active listings I found on ZipRealty. Mean asking price: $474,044 Median asking price: $475,000. Asking price/ sq ft (mean): $345
Median days on the market of active listings: 39
Note: Lowest value was taken in an asking price that was a range
FYI: The median asking price of a property in San Diego is currently $495,000, according to housingtracker.net

There were three sales since I last stopped by:
*10354 Wateridge Circle #314 sold after close to a year on the market for $445,000. This property is 3 bedrooms and 2.5 baths, 1,390 sq ft. It had originally been listed at $499,888. Price/sq ft paid: $320. Previous sale on 07/12/2002: $360,000.
*10362 Wateridge Circle #326 sold on the same day (6/27/07) . This sales price was $515,000. This unit is slightly bigger at 1,553 sq ft. Price/sq ft paid: $332. Previous sale on 10/3/2003: $459,840
*10288 Wateridge Circle #248 sold for $465,000 on 6/22. This unit is 1,390 sq ft. Whoops. Looks like these new owners could have lost $20,000 on paper in five days because of the sale of 10354 Wateridge Circle # 314. Price/sq ft paid: $335. Previous sale: 04/16/2002: $239,091

ZipRealty graph: Tracking median price per sq ft in Del Mar, Solana Beach, Rancho Santa Fe

Median sales price during this last tracking period: $465,000
Mean $/sq ft: $329
Median $/sq ft: $332
Mean sales price: $475,000
Change in median price/ sq ft between initial findings and this update: $-25

ZipRealty graph 2: Recent number of sales for the same area

Case studies: Wateridge (Update)

In case you've forgotten:
Wateridge is a nice 254-unit complex in Sorrento Valley (San Diego, 92121 ZIP code) built in 1998-2000.

We looked at four recent sales, of which the average price per sq ft was: $357

Now here's an update on some of the places that were featured:

10242 Wateridge Circle #194
3 bed, 2.5 bath, 1,553 sq ft
Sales history: 11/18/1998: $219,808
List price: $499,000-$520,000
SOLD 4/4/07: $490,000 ($316 per sq ft)


Other recent sales:
20620 Wateridge Circle #222
3 bed, 2.5 bath, 1,553 sq ft
Sales History: 11/30/1998: $223,990
SOLD 4/24/07: $500,000 ($322 per sq ft)

Featured properties still on the market/unsold:
10368 Wateridge Circle #330
2 bed, 2.5 bath, 1,148 sq ft
DOM: 93 MLS #: 078014555
Sales history: 05/24/2002: $324,000
Current price: $444,000-$464,000
$425,000-$445,000



0354 Wateridge Circle #314
3 bed, 2.5 bath, 1,390 sq ft
DOM: 278
MLS #: 066072228
Sales history:

07/12/2002:	$360,000
07/23/1999:	$222,990

Current price: $499,888; $450,000

10186 Wateridge Circle #151
2 bed, 2.5 bath, 1,148 sq ft
DOM: 132 MLS #: INACTIVE
Sales history:

09/14/2005:	$515,000
05/24/2002:	$319,909

Ending price: $464,000-$484,000
No sales info from Zillow

Newer listings:
10340 Wateridge Circle #305
3 bed, 2.5 bath, 1,390 sq ft
DOM: 38 MLS #: 071030988
Sales History:

02/11/2002:	$326,000
07/30/1999:	$229,265

Current price: $485,000


10158 Wateridge Circle #136
3 bed, 2.5 bath, 1,390 sq ft
DOM: 78 MLS #:076019058 (EXPIRED)
Price: $508,000 $490,000
New listing:
DOM: 17 MLS #: 076036865
Current price: $490,000



Average price per sq ft is down from $357...the last two sales averaged about $319. More to come on this neighborhood as things unfold.