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, March 27, 2008
La Vista: Whole neighborhood for sale?
Monday, November 12, 2007
Out of town
Since it's Veterans Day weekend, we're going to get out of town for today's entry and chronicle a few properties in other parts of the country. Happy and safe travels to all...
5992 Grand Pavillion Way, Alexandria, Va., 22303
Asking price: $520,000
Purchase price: $739,900
Purchase date: 3/6/2006
Potential loss (incl. 6% sales costs): $251,100
Size: 3 beds, 3.5 baths
From listing: 3 LEVEL, 1 FP 3BEDROOM 3.5 BATHS GRANITE STAINLESS STEELE APPL. HARDWOOD FLOORS. * A MUST SEE TO APPRECIATE * 2 CAR GARAGE. .ONLY 2 YEARS OLD. GREAT LOCATION CLOSE TO OLD TOWN AND MAJOR HIGHWAYS. APPT. ONLY. THANKS FOR SHOWING!! -short sale--bring an offer!
1632 23rd Ave, Seattle, Wash., 98122
Asking price: $439,950
Purchase price: $500,000
Purchase date: 11/8/2006
Potential loss: $86,447
Size: 3 beds, 1 bath
From listing: Completely fenced corner lot home is awaiting that new home owner. Shopping is only blocks away. Neighborhood is well established and location key. Minutes from downtown Seattle
46 Shepard St. #B, Cambridge, Mass., 02138
Asking price: $220,000
Purchase price: $260,000
Purchase date: 1/9/2004
Potential loss: $53,200
Size: 1 bed, 1 bath, 533 sq ft
From listing: Located close to Harvard Sq. , area universities, coffee shops, restaurants, local shops, and transportation, plenty of windows, common garden and patio area, laundry and storage on site
Monday, November 05, 2007
All's not well in South County
Interesting post over at Jon Lansner's OC Register real estate blog today that outlines which county areas have the highest rate of "distressed" properties for sale - meaning foreclosures and short sales listed as up for sale. For the complete list, follow this link.
The top two - Santa Ana and Anaheim - are not surprising at all. These are lower-income areas where subprime lending ran especially rampant. Considering how far prices detatched from income fundamentals, it's not surprising how property values have fallen. But I was surprised at how many of the other areas near the top of the list are in South County.
Here is how South County areas rank (out of 40 communities in OC), and their percentage of distressed inventory:
3rd - RSM (31.8% of inventory is distressed)
4th - Lake Forest (29.8%)
5th - Laguna Hills (25.4%)
6th - Foothill Ranch (23.2%)
8th - Aliso Viejo (22.6%)
9th - San Juan Cap. (21.7%)
11th - Mission Viejo (19.4%)
12th - Ladera Ranch (19.2%)
13th - Talega (18.3%)
16th - Laguna Niguel (17.1%)
30th - San Clemente (9.2%)
31st - Coto de Caza (8.5%)
32nd - Dove Canyon (8.2%)
33rd - Dana Point (4.9%)
37th - Laguna Beach (2.1%)
40th - Laguna Woods (0.5%)
All OC total - 17.5%
Some notes about the data:
*This data shows 6 of the 10 worst-hit local areas in terms of distressed properties are in South County. Also, South County is also home to 9 of the 15 worst areas. This helps prove our assumption that the market is worse in South County than some realize.
*One would assume the distressed properties in RSM are skewed heavily toward the bottom end of the price scale (think condos), since nearby Coto and Dove Canyon are not seeing nearly the amount of problems.
*It is not surprising that some of the areas with the highest prices (Laguna Beach, Dana Point, Dove Canyon) are low on this list, since their prices have tended to be stickier than, say, Lake Forest. Other expensive areas like Newport Beach, Corona del Mar and Villa Park are also at the bottom. That is not to say, though, that you can't find short sales and foreclosures in these areas; they're just not as prevalent.
Thursday, November 01, 2007
What would prices be like...
...If there was no So Cal housing bubble? Here are some properties for sale now that were last sold in 2000, which happened to be the last year before the bubble started taking off.
An explanation: Projected prices are estimated assuming a very generous appreciation rate of 7% per year, every year for seven years until now.
Projected income required is a conservative estimate of how much money an owner should make per year. Difference is the amount between the current asking price and the projected 2007 price.
34041 Aurelio, Dana Point, 92629
2000 purchase price: $349,000
Projected 2007 price: $560,418
Projected income required: $140,104.50
Current asking price: $989,000
Difference: $428,582
34458 Calle Carmelita, S. Clemente, 92624
2000 purchase price: $289,500
2007 price: $464,874
Income required: $116,218.50
Asking price: $645,000
Difference: $180,126
47 Via Barcelona, RSM, 92688
2000 purchase price: $194,000
2007 price: $311,522
Income required: $77,880.50
Asking price: $479,000
Difference: $167,478
3203 Alta Laguna, L. Beach, 92651
2000 purchase price: $549,000
2007 price: $881,574
Income required: $220,393.50
Asking price: $1,495,000
Difference: $613,426
24782 Eldamar, Lake Forest, 92630
2000 purchase price: $370,000
2007 price: $594,139
Income required: $148,534.75
Asking price: $749,900
Difference: $155,761
49 Marseille, Laguna Niguel, 92677
2000 purchase price: $302,500
2007 price: $485,749
Income required: $121,437.25
Asking price: $1,419,900
Difference: $934,151
Monday, October 29, 2007
Mission Viejo luxury price-slasher
These sellers are going for what I would call the "cut-and-run" play. That is, cut the price a ton right from the beginning, (hopefully) attract a buyer and then get the heck out.
It's almost like raising a white flag to signal they understand this "investment" was a total bomb, but I don't see any dishonor in this approach. This owner bought at the peak of the market and now needs to sell - whether it be because of unforeseen circumstances or a bad mortgage. They're now hoping to quickly cut their losses and move on. Unfortunate but respectable.
Income requirement: $237,500
Purchase price: $1,250,000
Purchase date: 3/16/2006
Size: 4 beds, 3.5 baths, 4,000 sq ft (built in 1999)
HOA dues: $169
Type: Single Family Residence
From listing: Spectacular D. R. Horton Floor Plan In Prestigious Guard Gated. 3rd Story Attic/Bonus Room, 3 Fireplaces, Large Gourmet Kitchen, Granite Counter Tops, Grand Foyer w/ Dual Spiral Staircase, Extra Large Family-room w/ built In Speakers For Full Theater Surround Sound, Private Master Suite w/ Luxurious Bath, Entry & Formal dining room have chery wood, 18x18 Ceramic Tile Flooring w/ Granite Dots. A magnificent luxury home but do not take my word for it.
Don't take your word for it? Sounds a bit too defensive and confrontational for my taste, and makes me think we almost should be suspicious of something.And for a near million-dollar listing, the photos are way too small and grainy.
The property itself looks great. The yard is also very generously sized. Unless the new owner wants to spend half their Saturday mowing the lawn, or has one of those lawnmowers you can ride on to make things easier, I'd recommend bringing someone in to do yardwork.
Assuming a sale at this price and 6% sales costs, the loss would be $357,000. It also would equate to a 24% decline in value since the last sale, not including selling costs.
Saturday, October 27, 2007
We're still not being "mislead"
We were hoping this heinous ad we found in a recent newspaper, which tried to persuade readers not to be "mislead (still can't believe I missed this typo) by all the information out there on the housing market" was just some awful, one-time anomaly. Nope. Look what we received in the mail the other day...
This ad got me thinking...What would I say to counteract this type of deceptive behavior aimed at exposing potential buyers' emotionality, naivety and ignorance? Here's the same ad, but with a few tweaks to make it better reflect what's really going on. Enjoy.
Tuesday, October 23, 2007
Not going anywhere
This Laguna Niguel luxury property is priced $65,000 below what the current owner paid in 2006, but it still looks like the price might have to come down a bit more before it attracts a buyer. It's been four months now, and still no sale...12 Anacapri, Laguna Niguel, 92677
Asking price: $1,250,000
Asking price/ sq ft: $408
Income requirement: $312,500
Purchase price: $1,315,000
Purchase date: 4/10/2006
Size: 5 beds, 3.5 baths, 3,060 sq ft (built in 1991)
MLS: S488340 (159 days on Redfin)
2006 property tax: $8,240
HOA dues: $105
Type: Single Family Residence
Style: Contemporary/Modern
Stories: Two Levels
Lot size: 5,000 sq ft
From listing: MODEL PERFECT, MOVE IN READY HOME!! Beautiful 5 BR(4+bonus) home in the resort comm. of Marina Hills. Located on an award winning cul-de-sac, this highly upgraded home features custom paint, Travertine floors & baseboards downstairs, shutters, wrought iron staircase, new carpet, gourmet kitchen, stainless appliances, granite counters, buit-in refrigerator, custom stone bathrooms & sinks. Large master w/ private deck, fireplace, & retreat. Yard w/ Patio & built-in BBQ. Assoc. pool/spa/tennis, beach close.
So, is this place really four bedrooms plus a bonus room (assuming there isn't a closet)? And what made this "award winning (should be award-winning)" cul-de-sac better than the rest?I'll give out 10 bonus points to whomever can name the movie showing on the TV screen in the picture. It would probably help if I knew what it was first. Good news: The TV is included in the sale!
The original wishing price of $1,410,000 was lowered in mid-September, but there haven't been any further price reductions. Even if it had somehow sold at that wishing price, the net gain would have been only $10,000, assuming 6% sales costs.
The loss, including 6% in sales costs, is $140,000 and counting.
Thursday, October 18, 2007
Shall we compare?
Here is a collection of headlines and snippets from the LA Times (remember the O.C. edition?) during the last real estate bust in the 1990s, in chronological order beginning in 1987 (the market was still on its way up, but there were some telling signs) and ending in 1997 (the bottom).
It's interesting to try and connect some of these headlines with some similar types of stories that are beginning to play out today. Also significant is the timing - compared to the past slowdown, this current one we're in seems to have taken far less time in getting from the "sales down but prices up" phase to the "sales and prices both down" state we're at now. Note: Graphic is from Piggington.com
Nov. 26, 1987
Home Resales Drop 13.6% in October, but Median Price Continues Upward
"It was the largest decline in Orange County sales of used homes in almost a year, a 13.6% drop in October, contrasted with the year-earlier month, for which the California Assn. of Realtors blamed rising interest rates...But because there were relatively few houses for sale in the county, prices inched upward."
Jan. 30, 1988
The Rise in County's Home Prices New Housing Here Might Be a (Gulp) Bargain
"Few people in Orange County-especially recent buyers-would argue that new-home prices are cheap here. However, by at least two standards of measurement, prices could be rising much faster than they have in the 1980s."
Dec. 21, 1988
County's Housing Prices Jump Again
"November's resale housing market performance may have been strengthened by a decline in mortgage rates during September and October, when most home buyers with transactions that closed escrow in November were shopping for a mortgage loan.
"'In terms of sales, this was the strongest November of the decade and one of the best months we've seen this year,' said association President Dale Colby, a Realtor from Glendora. 'In fact, home sales were up sharply from last November in every major region of the state.'"
Nov. 14, 1989
O.C. Home Resales Fall Nearly 20% From Third Quarter of '88
"Orange County home sales dropped nearly 20% in the third quarter compared to last year...It's those high prices that have finally hurt sales, the trade association (CAR) said, forcing all but the most affluent buyers out of the county. Only about one in seven county households can afford the average resale home."
June 27, 1990
House Resales Decline While Median Prices Climb
"The declining sales pace in Orange County, based on reports from area realty boards, represents a 35% decline since May, 1988, when new and used homes in the county were selling almost as fast as realtors could put up 'for sale' signs."
Oct. 17, 1991
Standard Pacific Suffers Effects of Market Slump Home sales: Earnings dropped 88% in third quarter but the firm's executives are optimistic about orders placed for homes
"Standard Pacific L.P., suffering the effects of the deteriorated market for new home sales in California, saw its earnings plummet 88% and its revenue fall 41% for the third quarter."
Dec. 31, 1992
1993 May Provide Balm for Battered Housing Industry Homes: While 1992 sales were down 12%, traffic at builders' models held fairly steady, indicating pent-up demand
"'It shows that there is demand but that the potential buyers still want deals,'" said John Shumway, president of Market Profiles, a Costa Mesa real estate marketing consultant. 'People are still waiting for prices to come down even more in Orange County, so they are out there shopping, turning over every stone looking for that deal.'"
Aug. 4, 1993
Southland home values lead U.S. -- Downward
"Housing prices in Los Angeles and Orange Counties have fallen further during the last year than in any other part of the nation...'"California's housing market used to be the locomotive that led other markets out of recession. This time, it looks like we're going to be the caboose.'"
July 13, 1994
County Home Sales Up 26% in 2nd Quarter Real estate: Housing developers attribute promising figures to `typical June swoon'
"In another sign of new vigor in the Orange County real estate market, second-quarter sales of new and existing homes jumped more than 26% from the same period last year...Local housing developers, however, were not especially enthusiastic about the second-quarter figures, noting that home sales are typically strongest during the summer months and predicting that higher interest rates will depress housing sales."
Dec. 6, 1995
O.C. Home Sales Up for a Change; Real estate: The first year-to-year increase in 13 months is slight but offers some hope that the slump is over at last
"Home sales in Orange County inched up slightly in November, marking the first year-to-year increase in 13 months and providing a small measure of hope that the real estate market is beginning to recover."
Oct. 11, 1996
Southland home sales up slightly; Prices stable
"Southern California's housing market continued to show signs of a slow but steady recovery last month as home sales rose slightly compared with year-ago levels and prices were stable."
Nov. 1, 1997
O.C. Joins Statewide Foreclosure Decline; Housing: Drop to fewest seizures locally since '92 follows increased sales, higher prices
"A backlog of unsold foreclosed properties can depress home prices long after the general economy begins to recover. So declining foreclosure numbers should support the recent trend toward higher prices, real estate experts say."
Now that you've seen the timeline, what point does the current market most remind you of?
Monday, October 15, 2007
Be grateful you're not a seller in...
...Tustin. For the day, we're going to leave South County (aka the bubble within a bubble) and see what's going on in central OC. To sum it up: Things don't look too great there, either.
UPDATE: A reader tipped us that this property has undergone yet another price reduction. It's showing up in ZipRealty as $520,000 and on Redfin as a range of $500-520k. I've adjusted the calculations at the bottom to reflect this.
1772 Irvine Blvd, Tustin, 92780
Income requirement: $137,500
Size: 3 beds, 2 baths, 1,500 sq ft (built in 1956)
Purchase date: 11/22/2005
Type: Single Family Residence
Lot size: 9,338 sq ft
From listing: Single Story Ranch Style Home located in a desirable area of Tustin with Spacious Living and Family/Bonus Room, Fitted Kitchen with Dining Area and a Corner Lot with Large Back Yard. This Home has a lot of Potential and needs Tender Loving Care. No Mello Roos & No HOA. Great opportunity for Investment as well as for Primary Residence.
Judging by the recent sales history, it looks like this property may have been flipped successfully in 2005 for a $60k profit before selling costs. Even the owners before that only held the property for about a year, from 2004-2005, and cashed in as well.11/22/2005 $690,000
4/27/2005: $630,000
5/21/2004 $559,000
The property is showing up with a $599k asking price on ZipRealty, and a price range of $550k-$599k on Redfin. Since the house has been sitting, unsold, for more than four months, it seems safe to say that it's still too expensive, whatever the real price is.
Assuming an unlikely sale at $520k, the current loss would be just $201,000, assuming 6 percent selling costs. If the property were to sell at $500k, the loss would be $220,000.
Sunday, October 14, 2007
O.C. makes national news!
Not for the best reasons, though. The Washington Post did a very good story on our local saga with the headline "The O.C. Mortgage Bust." Some excerpts:
"'When I started working there (Homefield Financial) in 2003, I was embarrassed because I was driving a Cadillac and the young office clerks were all driving Mercedes and BMWs," said (mortgage manager Tony) Ventimiglio, 49. "There were a lot of people who knew nothing about mortgages. They were simply in the right place at the right time.'
"The good times are over for the get-rich-quick industry that grew up in Orange County and thrived in the first half of the decade.
"When the housing market soured, those lenders and dozens of others nationwide shut down or scaled back, leaving workers like Ventimiglio in the lurch and contributing to an abrupt drop in mortgage-related jobs.
"...part of Irvine's appeal was cheap and plentiful office space compared with Los Angeles, and an Orange County address that was posh enough to support the high-flying image these lenders cultivated...
"...Kelly Markham...earned $200,000 in commission in 2005 as a loan officer at an Irvine mortgage brokerage. When commissions dried up, she began looking for another job to support her six-month-old baby and hang on to her $600,000 home.
"'I've signed up for work at a temp agency, but all I've gotten is five hours of work in the past four weeks stuffing envelopes in some office,' said Markham, 34, as she perused Starbucks job listings online one recent afternoon. "
Friday, October 12, 2007
Off a cliff in Dana Point
Yet another example of a beautiful house caught in the middle of unfortunate market timing. The high end is still not and never was immune...
Income requirement: $387,500
Purchase price: $1,700,000
Purchase date: 5/31/2005
Size: 5 beds, 4 baths, 3,700 sq ft (built in 2001)
2006 property tax: $18,585
Type: Single Family Residence
Lot size: 6,420 sq ft
From listing: Experience your senses being fully engaged as you enjoy beach living at its finest from this beautifully one of a kind 'estate property' located on a rare double wide corner lot in capo beach. This exquisite custom home is finished with the finest craftsmanship throughout. Gourmet kitchen with granite counters and commercial grade stainless steel appliances. Red kempas hardwood floors, large master bedroom with fireplace and two floors of ocean views and a private ocean rooftop viewing deck.
Glad to see some serious effort made in the pictures to market the property well. Wish we could say the same for the listing description. I'm lost about halfway through the awkwardly worded first sentence. In other words, guess my senses aren't being fully engaged enough to appreciate the exquisiteness of it all.
The owner who purchased in 2003 and then sold to the current owner in 2005 made an absolute killing - $550,000 in profit, not including selling costs, which represents an appreciation of 25.1% per year.
The current owner dangled out a wishing price of $1,899,900 for a while, and then got more realistic and slashed the price by an attention-getting $349,900 near the end of September. Assuming the current owner can get this place sold for their current asking price, the loss would be $243,000, assuming 6 percent selling costs.
Monday, October 08, 2007
$225k loser in Coto
Let's just say this Coto de Caza property is not setting any records for rapid appreciation.
Income requirement: $398,750
Size: 4 beds, 4.5 baths, 4,000 sq ft (built in 2001)
Purchase date: 3/3/2006
Price Reduced: 4/04/07 -- $1,795,000 to $1,749,000
Price Reduced: 6/14/07 -- $1,749,000 to $1,695,000
Price Reduced: 8/11/07 -- $1,695,000 to $1,595,000
2006 property tax: $14,106
HOA dues: $200
Type: Single Family Residence
Lot size: 8,436 sq ft
From listing: Stuning 4 bed 4.5 bath home featuring a main floor office and guest suite, large family room with fireplace and built-ins adjacent to the gourmet kitchen with slab granite countertops and Dacor, Bosch, and GE Monogram Appliances, Formal Living room with granite faced fireplace and French doors to a private courtyard with fountain, formal dining room. Tons of upgrades: Beveled glass entry door, iron staircase railing, limestone, textured carpeting, pool, spa, waterfalls, firepit, built-in bbq and more!
This high-end (though for Coto, it's more along the lines of average) property looks great, so our guess is that price has something to do with the fact that this one has been on Redfin for more than 200 days. For example, nearby 4 Eisenhower Lane is a bit smaller than this property, but it has one more bedroom and is on a much larger lot. The Eisenhower house, which recently came on the market, is asking $1,099,000 (which, by the way, is virtually the same amount its owners paid in 2004).Is our subject property really worth $426k more that that neighboring property? Hard to believe it is. If the Sunningdale property were to somehow sell at the current price, which is a stretch considering how long it's been on the market, the loss would be $225,700, assuming 6 percent selling costs.
Thursday, October 04, 2007
Quote of the year, revisited
Well, what do you know...Newsweek columnist Daniel McGinn recently used the show as an lead-in to a very good article about the changing nature of property appraisals and the real estate downturn in general.
As the real estate market continues to look gloomier, I couldn't help but rehash the most obnoxious, disturbing, and yet telling exchange I've seen in a while involving an ignorant person's perception of how real estate "investing" works versus reality. An edited piece of the original post appears below. To see the whole thing, click on the link in the first paragraph.
Essentially, in "My House Is Worth What?" a RE agent takes a look at a person's house, points out some pluses and minuses, and then tells them what they would list it for.
Positive factors the RE agent finds about this particular homeowner's property, located somewhere in LA: There is a guest house on the property that she renovated and is renting out. There's also an outdoor patio that would be good for entertaining (is it just me or is that feature very overrated - sure, we would like some nice outdoor space, but just how often do we really use it?)
Minuses: No air conditioning. Washer and dryer literally within arm's reach of the sink in the kitchen, out in plain sight. Kitchen needs major work and has awful looking cabinets and counters. Floors in the kitchen should probably go, too.
She paid $550,000, and spent $25,000 renovating. So, she's in for $575,000 but is hoping it's "worth" about $775,000 - so that way, she says, she could have a big enough down payment to trade up for a bigger and better place. This doesn't pass the smell test, and you can tell the real estate agent sensed it too - $200,000 appreciation in two years, considering we're now in a major buyer's market? (Note: This was a number of months ago. Things obviously have only gotten worse since then)
The agent, confused, asks her: "How did you arrive at that figure?" (What he really means: What the @#$* are you thinking?)
Her answer: "Well, I've lived here for two years, and I heard you just add on $100,000 a year kind of thing..."
Excuse me while I hurl. This is a prime example of complete ridiculousity at work. That statement concisely sums up why we're in the situation we are now. People have been conned to believe that you can't go wrong with real estate, it always appreciates, blah, blah blah. This is one piece of the explanation as to why prices are now through the roof.
Cue the agent's nervous laugh, and joke about "Well, this is LA, right..." (What he really means: "You nut case! How can you possibly think that your house went up $100,000 each year? Good luck finding a buyer.")
He proceeds to tell her he would list it for $669,000 - still a whopping $94,000 above her costs (and she'd better try to get out now, otherwise she could be in for a surprise as the market continues its downward swing).
Despite what is in actuality very good fortune (and luck) for her, she pouts as we fade to commercial.
They should start doing follow ups with some of the more ridiculous people they've had on the show to see how their incredibly lame brained plans panned out (like the couple who wanted to pull all the equity out of their townhouse to buy themselves an over-the-top wedding they shouldn't possibly afford).
Only problem is, it would probably be way too realistic and depressing. And that, folks, is not good TV.
Wednesday, October 03, 2007
Snip, snip...boom
I was surprised to see how much of a price cut this Aliso Viejo condo took yesterday. Is this a half-hearted attempt to stir up some attention, since the property has been on the market for almost six months? Or, is this a case of the owners finally accepting the realities of today's market, and deciding to cut the price accordingly?
We hope the latter is the case, because that could signal that the market might correct a little sooner rather than way later. We'll continue to look for more examples of this type of thing.
29 Tradewinds, Aliso Viejo, 92656
New asking price: $399,000 ($293 per sq ft)
Old Asking price: $479,000
Original asking price: $549,000
Income requirement: $99,750
Size: 3 beds, 2 baths, 1,362 sq ft (built in 1995)
MLS: S484082 (168 days on Redfin)
Purchase price: $525,000
Purchase date: 7/30/2004
Other sales history: 5/31/2001: $238,000
9/20/1996: $131,000
4/26/1993: $161,000
2006 property tax: $6,883
HOA dues: $185
From listing: MUST SELL! MUST SELL! Upgraded Kitchen with Granite, Maple Cabinets, Recessed Lights & Walk-in Pantry. 3 full bedrooms, 2.5 bathrooms. Master bedroom with Double closets, Fireplace & Private Balcony. Master bath with Dual Sinks. Bright Living room with Marble finished Fireplace, Crown Molding & String Lights. Hardwood floors & Brand New Carpet. Plantation Shutters. Close to Shopping Centers, Restaurants, Theaters & more. HAO offers Pool, Spa, Tennis + More.
For a while, the owners were content to let this property sit unsold, while they lowered their asking price in little chunks. The latest drop was anything but little. The price fell from $479k to the current price of $399k - an $80k reduction.
This property is now $150k off its original asking price in April. Assuming a sale at this price, minus 6 percent in selling costs, we're looking at a loss of $149,940.
Monday, October 01, 2007
Burned by fire sale
Try to put yourself in the place of the owner of 26966 El Retiro in Mission Viejo (pictured above). They paid $317,000 for this 3-bedroom, 2 bath house in March 2002, and are now hoping to sell it for $619,000. There are also probably a few jokes to be had here with the street name, but we'll leave those alone.
They've added granite countertops, maple cabinets and "newer" appliances in the kitchen, plus a new roof, water heater and carpet, among other improvements. So, that should justify their asking price, right? Potential profit (minus 6 percent selling costs) assuming a sale at this price is $264,860. Obviously, it's going to be much less in reality considering the work they've done on the house has no doubt cost a decent amount of money.
But, let's assume that despite the repair/upgrade work, they're still in line to make a nice little bit of cash because they didn't tap into their home equity and/or were able to pay cash for the repairs. Perhaps it's time, these owners decide, to move up into a larger house. After all, the NAR says it's a buyer's market and therefore a great time to buy!
Meanwhile, there's a blowout sale going on just one street over, because the owner of 26926 Colmenar (pictured at left) has taken a large, sharp machete to the price of the property. Once listed for $629,000, the house is now showing up in Redfin at a price range of $499,000-559,000 (a discount of anywhere from $70,000-130,000, or 11-21 percent, depending on which part of the range you're calculating from).
Since these owners paid $673,000 in January 2006, the projected loss could be as much as $203,940 if we figure a sales price at the bottom of the price range, and factor in 6 percent selling costs.
This Colmenar property, by the way, is a bit larger and has one more bedroom than the El Retiro house.
Is there something we're not seeing here? It's very clear that the Retiro house is drastically overpriced considering the competition. By the way, this argument receives more support from neighbor 26971 Retiro, which is the same size as the other house on that street and appears to be an REO. The asking price on this property is $564,900. It's been sitting on Redfin for 130 days.
Uh oh.
Does the first Retiro property and its "totally turnkey!" condition justify the ridiculously high premium, considering it's smaller and has one fewer bedroom? No way, and these sellers are probably going to have to cut their price to keep up, despite their home's slight advantage in terms of repairs/improvements. Again, remember the principle of substitution. That's all you need to know.
