Like the beautiful image of a Sconset sunset from Nantucket Island shown above, the sun is setting on the Southern California housing bubble. Peoples dreams of endless appreciation and instant riches are slowly wasting away into the silent summer sky.
Asking Price: $629,999
Purchase Price: $780,000
Purchase Date: 5/18/2006
Address: 51 Sconset Lane, Irvine, CA 92620
Beds: 3
Baths: 2.5
Sq. Ft.: 2,000
$/Sq. Ft.: $315
Lot Size: –
Year Built: 2000
Stories: 2
Type: Single Family Residence
County: Orange
Neighborhood: Northwood
MLS#: S497195
Status: Active
On Redfin: 5 days
From Redfin, “This is a great 3 bedroom , loft and 2.5 bath Cottage Style home in No rthwood pointe. Open light floorplan w tile floors on the first level. Gormet kitchen with tile counters and custom backsplash. Check out the master bath!Private yard is perfect for entertaining. “
What is a gormet? Another realtor that gets excited about bathrooms. What would Freud say?
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When I first profiled a property in this neighborhood (The English Garden) I said it is one of my favorites in Irvine. When I first discovered this little enclave, there was a house for sale on this same street for $875,000. It was about the same size but with one more bedroom. How times have changed.
This is one of the most extreme price reductions I have seen to date. I actually admire this seller for accepting the reality of life and setting the price to a level which will sell in this market. Assuming a 6% sales commission, this seller stands to lose $187,800 in just over one year. Think about that for a moment…
I have speculated we will see prices 40% to 50% off the peak in Irvine. Here we are early in the decline, and we have a property selling for 20% off peak pricing. Does that make you believe in a more serious decline as I have speculated, or are you of the opinion this is as bad as it gets?
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I would like to offer a special thanks to Rockysan99 for pointing out this property
I did a similar thing to this owner when I sold my house in the Turtle Rock Broadmoor in Nov 06. The writing was already on the wall, and my house wasn’t moving after 5 months even though my wife and I originally priced the property BELOW what the Realtor had suggested. Well, after 5 months we decided to burn it down (we were living on the East Coast, talk about stress!) We cut the price about $100k (over 10%) and it sold in a week. Our Realtor tells us we also pissed off our old neighbors (like I care). Lucky for us, we had a lot of equity so while it was painful we didn’t lose anything (in fact we still made a ludicrous profit, just a little less obscene).
The point is if you need to sell and you got both the equity and the cajones, you can get out if you need to, even in this market. I would venture a guess that the true bloodbath is before us, so if you are in difficultly get out now before everyone heads to the exit. The golden rule: DON’T BE GREEDY!
This seller is in a lot of pain I’m sure, and probably not sleeping at night. I can say that he or she is most likely way in over his or her head and taking the medicine now and getting free of the weight of a declining asset will be better than holding out for the coming slaughter. I respect this seller too.
We’re planning to come back to OC in a few years. Looks like we’ll be able to get a nice house the second time around…
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This is a nice place, probably worth about $395,000.
How much does it cost to install a custom backsplash?
Although the pics are fuzzy and kind of hard to make out this place looks awesome. IrvineRenter I will truly be on the band wagon of a 40% to 50% decline off peak prices if we see a few more of these.
Carl,
You are absolutely correct. If you want to sell a home, reduce the price…….a reduction that will get the attention of home buyers. 25% below comps is a good place to start.
Real Estate agents are afraid to tell you this because they sold all the neighbors homes over the past 3 years at inflated prices and do not want to offend them………..
A formula that works well:
a) Price the house 15 % below the average of three professional appraisals.
b) Give the RE agents an 8% comission(50/50 split)
c) Reduce the price 5% per week
The home will sell in less than two months.
Doesnt the MLS have a spellcheck?
I love the comments “you’ll piss off the neighbors.” Well, my advice to neighbors. Get used to it! (or if I were a Realator GET USED TO IT!!!!!!!)
I would bet this one is a short sale. Very few buyer put anything close to 100K down in the last 2 years. Since they’re using the bank’s money, why not set a lower price and get rid of the property.
Two interesting foreclosure graphs:
For OC:
http://blogs.ocregister.com/lansner/archives/2007/07/foreclosures_now_1.html
And, for San Diego (will the OC graph ever look like this?)
http://voiceofsandiego.org/articles/2007/07/12/toscano/898foreclosures071207.txt
Countrywide’s profit sinks 33%, delinquencies spike on home equity loans
http://mortgage.freedomblogging.com/2007/07/24/countrywides-profit-sinks-33-delinquencies-spike-on-home-equity-loans/
“And its problems are not limited to subprime. Delinquencies more than doubled on prime home equity loans it services, the lender said.”
Wow, lots of news today. When it rains, it pours…
Defaults on Some `Alt A’ Loans Surpass Subprime, Citigroup Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUpNyFT0QpJU&refer=home
“The three-month constant default rate for 2006 Alt A hybrid adjustable-rate mortgages is 2.3 percent, compared with 2.2 percent for subprime ARMs, New York-based Citigroup analysts led by Rahul Parulekar wrote in a July 20 report”
That San Diego graph is ugly, and I do think it is coming our way. Their market has been leading ours by about a year.
So much for the subprime containment theory…
No lot size info? It looks like it’s built on top of the homes next to it.
I agree with NanoWest; I see something like this going for $400k in a “normal” SoCal market. I was checking out homes in Carlsbad the other day and actually found something I like that I am able to afford. Once I get out of the hell that is Los Angeles, that is.
I see some 85% price reductions coming to the city of angels. Shacks in places like culver city are currently going for like $750k. These aren’t nice places like Irvine; they’re trash.
You’re going to have to start factoring inflation into your losses as well. 6% commission + about 4-8% (or whatever, I don’t want to start an OT debate) for inflation.
The numbers that come out will be used and abused by the media.
Alt-A will naturally have VASTLY more defaults than subprime… but there are VASTLY more Alt-A loans/homeowners than there are subprime! 🙂
Percentage-wise, the Alt-A defaults will probably be a little less than the subprime defaults when all is said and done. However, in the media you will see:
“ALT-A LOAN IMPLOSION!!!! ATOMIC ARMS DETONATING!!! ALT-A FORECLOSURES SURPASS SUBPRIME FORECLOSURES BY 100000%!!!!”
LOL.
Alt-A basically covers EVERYTHING that ISN’T subprime, and ISN’T straight conforming A paper Fannie Mae/Freddie Mac.
That’s about 70-80% of the market. 620-850 ficos that ARE NOT in a conforming loan.
This market share will definitely be the ‘leader in defaults’, but with up to 80% of the business falling in this category, I would hope they qualify that with percentages before going nuts.
Probably delusional to think that the media will report accurately….
This was reported on a percentage basis, that is why it is so newsworthy. It it probably a statistical blip, but I would not expect default rates on a percentage basis to by higher in Alt A than subprime. Nobody does, that is why the when the percentages actually are higher, it is news. If Alt A rates continue to increase, the sheer size of the market will make this a huge problem.
Thanks, Sue. …all good stuff!
I agree with mino2126, we need to see more of this of a kind to confirm 20% drop. look for transactions not asking price though
At that asking price, it’s a better deal than than some of the newer detached condos in PS and Woodbury.
The most cryptic to follow link, but in some ways, the most alarming.
KKR, Homeowners Face Funding Drain as CDO Sales Slow (Update1)
http://www.bloomberg.com/apps/news?pid=20601103&sid=aG18rnNeuGxc&refer=us
Per the description on MLS, this is an REO property.
As BigD already stated, this appears to be an REO, neither the price or terms appear to be approved by the bank.
getting close to 300/sq ft!
“More than $800 billion of subprime mortgage bonds and $700 billion of Alt A bonds are outstanding, with ARM bonds totaling more than $600 billion and $450 billion, respectively, according to a March report by Zurich-based Credit Suisse Group.”
It appears they are comparing only “ARMS” and not all mortgages. The majority of subprime loans are 2/28 or 3/27 arms. There is over a Trillion in ALT-A loans out there. Anything that isn’t purchased by Fannie Mae or Freddie Mac is considered ALT-A. Even if it is a 30 year fixed full-doc loan.
This estimating that 450/700 (64%) of ALT-A bonds are ARMS. whereas 75% of subprime loans are ARMS
By the way, IR
I know several of these frequent posters personally and we are all experiencing this….
The links are not nesting on the right side of the home page. They are nesting on the right side when you click to view comments, but not on the home page.
I had an automated message on my answering machine yesterday saying that there was a lender who was willing to give me a home loan at 1.XX% rate.
I would like to think this was just the forlorn hope of a “loan” foolish lender prospecting the spent riverbed for a few nuggets left behind.
Thanks for letting us know about this lendingmaestro! The issue should be fixed now 🙂
Haha…it wasn’t from me, I can assure you. 🙂
This property is an REO yes. They had about 8 offers already last Saturday. FWIW, there’s still plenty of buyers when the price is right. Most the bidders have bid above asking…so it will be interesting to see what the final selling price is. Yes, that should create new baseline for housing in that neighborhood. For example, another one in that same neighborhood, a detached 2bd/2ba ~1050sqft is asking for 585k. Price/sqft is ridiculous.
This property is not currently REO but it is scheduled for the foreclosure auction on Thursday 7/26 at the Santa Ana court house. I don’t know what the minimum bid is but the notice of sale amount is just shy of $665k. It has been postponed several times but I think this will be the last. Maybe the agent thinks it is REO because the owner has already sent the bank the jingle mail.
I agree with IR that this is one of my favorite neighborhoods in Irvine. And oh how have the times changed. I wouldn’t be surprised if we see this home here http://www.ushomeauction.com sometime in the future. They only have two Irvine properties and I sure there are more to come.
This house makes me want to buy now… Someone assure me that its foolish. My husband says two more years, but will we really get a much better deal than some of the deals I’ve been seeing? Another question for anyone who wants to answer. How do I go about going to an auction at the Santa Ana courthouse. I just want to check out the process for later. Do you just show up and cruise in, or do you have to be a bidder to get in. Sorry if this is a dumb question!
You don’t get to just “walk away” from a property. If there’s a loss, the homeowner is responsible for it. There are options, such as bankruptcy, but it’s not as simple as walking away. That will keep many 80+ LTV borrowers from the last couple years in their homes. The best option might just be to swallow the paper loss and wait for years for the value to return.
You have to be able to puchase the home for cash at auction, which is why most become REO properties. There aren’t many people out there with 665k in cash lying around. If they have that kind of cash, they’re probably in stocks.
I’m learning about the housing stuff too – was thinking about auctions and such and so read this book
The Pre-Foreclosure Property Investor’s Kit: How to Make Money Buying Distressed Real Estate — Before the Public Auction
http://www.amazon.com/gp/product/0471692794/104-6152688-7411962
It was an eye opener about all the things that can go wrong – bascially, you have to be very very knowledgeable or you can get very burned.
I don’t think I’ll be trying any of that pre-foreclosure or auction stuff – it’s just too scary. I’m just going to wait it out for two years or so and then see if the prices seem reasonable after the wave of foreclosures are done.
To get a gut feel on house prices (ie. is this a bargain or not?) – if you haven’t seen this video yet, give it a try. It’s historic house prices mapped as a roller coaster.
http://video.google.com/videoplay?docid=-2757699799528285056
I would wait Gloria. We bought last month in Columbus Square after much thought and analysis, and after the market had been flat since 2005. And although our monthly tax-considered cost is very close to the prospective rental cost, every day I’m thinking about the paper loss I’m about to endure over the next few years. I thought paying $2,000 in monthly rent was annoying, but it’s nowhere near the annoyance of being concerned about local real estate values. If there’s ever a good time to try and “time the market,” I think this is it.
Yes, but don’t you just have to be pre-approved by the bank for the amount you would like to spend on a home. I’ve heard that the investors show up with brief cases of cash, and the rest of us schmucks show up with a loan that has already been approved. Maybe I just don’t understand the process! haha. I guess it would be easy enough to look it up…
Mark – Thanks for your honesty.
Yes, thanks! A good perspective to get is from someone who bought. But, there must be some security in knowing that you don’t have to worry about this anymore… We have a two year old daughter and I’d really feel a lot more secure in a home, rather than renting someone else’s home! If I were you, I’d forget about the market at this point, and enjoy your home!
Thanks again…
Security is owning the home, free and clear (no mortgage).
If you own the home, but have a large mortgage, that’s less secure than renting.
It’s less secure, because if the housing prices crash, you just don’t care as a renter. You can get a U-Haul and walk away anytime, for the small cost of breaking your lease.
If you own, and have to pay a mortgage every month, you own all the risk of the housing going up and down (both the gains and the losses). And you can’t walk away for just the cost of breaking a lease (see the many examples of burned homeowners on this blog). And even if you finance 100% and declare bankrupcy, you’ll still have a payment plan that’ll force you to pay it all back until the day you die.
The prime mortgage disaster has yet to register on the consciousness of most analysts, but it might be the biggest disaster of all, because it is the ‘prime’ borrowers who got the IO and revers amo loans. You had to have a FICO over 720 to get these, a loan officer told me.
I have met many “prime” borrowers who are now in the sub-sub-prime category because these savage loans blew up in their faces, often as they were being downsized out of their good jobs.
mark, what tract did you buy at Columbus Square (Gables, Astoria, etc?) How do you like it? We are interested in that development as well. How’s the noise from the planes landing at John Wayne and the train and traffic from Edinger, is it noticeable?
You really would have to be crazy to buy this house at $629K. Sorry, but we are headed for the worst housing crash in history and yes, it goes beyond Irvine, Ca. This is a Wall Street issue which is spreading globally and i’m talking about the mortgage backed securities that have toasted quite a few hedge funds. The liquidity you are all used to is drying up. This mean tighter standards. Much tighter. Full Doc loans, higher rates, down payments. The money pool and the buyer pool is drying up until these homes drop 40-50% in value. Minimum. Whether you think I’m nuts or not is immaterial. It will happen. It is inevitable. There will be much pain felt. But we have to pay the fiddler for the dance.
Fumbling – On the right hand side there is a link to the Irvine Housing Forums. Click on that and when the forums open up, at the top of the page will be a “Search” button. Click on that. From there, put in the name of one of the housing developments (e.g., Astoria) and it will provide a link to the discussion (and known historical pricing) of that development. Enjoy!
I owned a home free and clear in Irivine……I had an 8,000 yearly tax payments, $2,000 in HO fees, $1,000 year in gardner fees……
…..I rent now and love it.
That fits with more Countrywide reporting at http://www.forbes.com/feeds/ap/2007/07/24/ap3947760.html
Countrywide said 4.56 percent of its prime home-equity loans were delinquent at the end of the quarter, up from 1.77 percent in the year-ago period. Some 23.71 percent of its subprime loans were delinquent, up from 15.33 percent.
…
The company said the delinquencies were not due to borrowers struggling with mortgage interest rate resets, as many had expected.
Instead, the delinquencies have been largely due to people losing their jobs or similar factors, the company said. Those homeowners have been unable to refinance because the value on their home has fallen and the credit crunch has cut off other borrowing options.
“I do think it’s important to observe what happens going forward,” Mozilo said. “We are experiencing home price depreciation almost like never before, with the exception of the Great Depression.”
Pissed off the neighbors by lowering the price BEFORE you got buried?
F ’em!
BTW, that is a strange place for the fireplace to be so close to the window and the grass in the middle of the driveway is something I have never seen in a newer home, let alone a condo style development.
We bought in Camden Place and we like it so far. There is no noise from planes, although I’ve heard that flight patterns vary over time so there may be a time when planes fly more closely. You can hear the commuter trains sometimes, but unless you’re adjacent to Edinger, it’s not an issue at all. However, at night there are freight trains that use the tracks, so the noise from those is louder and longer. I think I’ve been awakened once by this.
The community pool just opened! It will be really nice when roads open south through the area (instead of just having Edinger to enter and exit).
I can’t agree more with the points that Sue mentioned. Just spot on.
51 Sconset’s foreclosure was postponed today to 8/8. The banks seem to be losing their patience because they usually give them more than two weeks and not less.
Go Carlsbad!!
Any update on the foreclosure sale on 51 Sconset (previously scheduled for 8/8)? I’m really curious as to what happens with this one. It is still on Redfin today at same price.
Never mind — Just found it under the Heated Topic thread on the forums. But now I am REALLY interested in what happens to this one, after the fire.