Originally posted on October 16, 2006
Address: 7 Chenile, Irvine, CA 92614 (Woodbridge)
Plan: 2201 sq ft – 4/2.5
MLS: S442943 DOM: 137
Sale History: 4/27/2006: $885,000
9/17/2003: $665,000
Price Reduced: 07/11/06 — $1,045,000 to $999,000
Price Reduced: 08/02/06 — $999,000 to $979,000
Current Price: $979,000
Our flipper purchased this Plan C in the Parklane tract in Woodbridge earlier this year and then put it back on the market 1 month later on 6/1/2006 hoping to flip this home for a quick $160,000! He apparently has had a difficult time finding a GF as this home has been on the market for 4.5 months.
The private remarks state:
Price Reduction for the 2nd time. Great Value for the location with lots of upgrades. Vacant – Owner is extremely motivated to sell. Please show and bring all reasonable offers!
Vacant? That explains the extreme motivation. But 2 price reductions and it’s still priced $94,000 over what he purchased it for! After 6% in selling costs, our flipper stands to make over $35,000 in profit if he gets his ‘reduced’ asking price. We’ll have to keep our eyes on this one. The flipper put 10% down as far as I can tell and so there is definitely some room for this price to come down.
UPDATE #1 – December 26, 2007
Well it’s been a little over a year now and thanks to our wonderful helper britney, we know that this flipper did NOT succeed. The latest listing for this property is: MLS #: S493874. It started out at $947,000, went to a low of $819,000, and is now listed at $850,000.
It looks like when the flipper bought in April 2006, they put 10% down. If sold at the short sale price of $850,000, I’d imagine the bank/seller are going to lose a combined total of about $86,000!
This is a $200k drop from the original asking price in June 2006. Time to buy!! Would you purchase this home for $850k? What about the 2003 price of $665k?
I hope this flipper is greedy and rides the market all the way down. What are these morons thinking? Did he really expect to make $160,000 by buying then selling a month later? I am tired of these quick money scam-artists.
I really hope he waits until this property sucks his down payment and savings dry. I think these housing flippers will learn a terrible lesson in 2007. House is not a stock that you can flip. House is very illiquid and this flipper will learn it the hard way. Good luck on that IO/Liar loan.
—–
don’t forget that each day this property remains unsold the seller is losing a lot of cash. His downpayment could be earning 8-10% in other investments.
Only 2 comments in 10/06? Boy has the blog grown. You guys are to be commended in sticking with it.
One thing I’ve noticed in all the pictures, including the ones that were not so bad, is that they nearly always focus in on the garage, as tho it were cars that mostly live there, not people. For that reason, I don’t like houses where the garage opening makes a right angle with the front door. So instead of looking out on greenery, you look out on either a driveway, or your parked cars.
Also, why would they lower the price and then raise it again?
For $665k, probably. It works out to about $300 per/sq ft
But I think $600k is doable 🙂
I love it. I hope you do more follow ups. I think the 2003 price is still very high given the income needed to support a mortgage of that amount, but maybe more acceptable in the Irvine Market. No more funny money flowing these days however.
So if I am reading this right, the seller has had this on the market almost two years? Any chance it has been rented at all or has it been vacant the whole time? I would imagine that after two years of interest only payments, there is not a point where the owner could make money or break even in this market.
I also agree about the garage shots. I think it is a function of the house design itself. They tend to be narrow and long. a two car garage is going to take up 25′ of width and then you add 15′ feet more for the door and whatever and the garage will always be the most prominent feature. Tha lots are way too narrow to allow for rear entry garages.
I also love all of the shots of inside the garages. What exactly are they trying to show there? That the garage actually exists and it hasn’t been converted to a living space? I don’t really understand it myself.
This Woodbridge home is about 1/3 mile from the busy 405 expressway (from Gmap). For those of you living in S Cal., how far does the expressway traffic noise have negative impact on home location?
Do you think the 405 noise has negative impact on this home?
A standard, decent looking house on a tiny lot.
Is it just me or does the 2003 price seem like a lot of money to pay for a house like this? I guess thats what happens when manias end. We can look at things for what they really are.
George:
The 405 is soundwalled off. I live about a hundred yards from the 55 and can see the soundwall from the street in front of my house. I can’t hear the freeway at all.
When I lived in Chino Hills, I was about 250 yards from Chino Hills Parkway and you could absolutely hear that one (no soundwall).
anybody for starting a pool on what these properties eventually sell for and when? winner gets an IHB t-shirt?
This guy will most definitely chase the market down; he wouldn’t be raising the price otherwise. This guy needs to get burned bad as he kept genuine home owner out of reach by buying in 2006 and then holding the price higher, had he not purchased in 2006 for the price he paid, some genuine guy may have bought this for much less as its primary residence.
These are the folks who are delaying the inevitable. To answer the question whether I would buy or not, I would not buy anything until the mortgage gets within 15% of what you would pay rental for the same property. Let me know what that happens.
My best guess would be that this flipper’s riding a roller-coaster of emotion, and when the price was at its lowest, s/he was drained and ready to be done with it. Then s/he calmed down and started thinking about the loss, self-justifying an increase.
They’re called “freeways” around these parts. You can here the hum of a freeway within a couple miles, but as long as you’re not too close, it just becomes background noise – this is a densly populated city, so you can’t expect quiet and the sound of crickets.
What down, the 10% or $86K is gone after commision, these sellers are trying to get out without taxable income on the debt forgiveness.
In my experience, these deals were done by a consortium of a several people, not just one, so one wonders how the investment was structured.
ochomehunter! You’re not supposed to use reason and logic in your comment – “I would not buy anything until the mortgage gets within 15% of what you would pay rental for the same property.”
You’re supposed to share your feelings. e.g. This home FEELS too expensive; I wouldn’t pay $200K for this home; For $600K it FEELS like I should get some land and maybe a pool; etc.
In that case then:
I FEEL that with 0% down and big HELOC the owner would have FELT like moving to Puerto Vallarta instead of FEELIN’ extremely motivated to sell and if s/he/they sell it will be after a substantial haircut 😉
Are you kidding about paying $665,000 for this tract home? I sure hope so. The 2003 price factored in “expected” appreciation. What’s the “expected” appreciation today? Ummm…negative! So instead of a premium over the fair rental (ie, living there) value for the expected appreciation, there should now be a discount for the virtually certain depreciation. Any guess as to what that discount should be?
In all seriousness….$200k ???
Good luck..I’m sure you’ll see $200k if CA gets rocked by a 10.0 Earthquake that destabilizes the economy for the next decade.
There’s a difference between being rational and irrational…I find some Housing bears just as bad as Housing bulls.
Seriously if this home dipped to $500-600k neighborhood..I’d be a buyer!
I agree, my 2 cents is that the price will drop to $450K at the bottom. It’s a tract home on a small lot near the freeway, competing with other tract homes on larger lots in neighboring cities.
Just as likely, the bank did not accept lower offer on short-sale and therefore they relist at lowest offer bank communicates they are interested in looking at. I have seen that scenario several times in the past year.
Chuck Ponzi
Remember that in 2003, interest rates were 5.5% for jumbo. Now they’re 6.25 to 7.85.
Agreed, but the noise is louder in winter for 2 reasons:
1. Lower temps makes denser air transmit sound more
2. Trees without leaves lose their buffering ability.
Generally, you want to be at least 2 miles away from a freeway to not hear it in the winter. That’s my .02.
This definitely depends on whether the road is on an incline or decline. there is no way to get rid of ambient noise completely, even with a sound wall.
I would definitely pay 650,000 for that home… 300 per sq ft in irvine is a good deal, and it won’t go much lower. there is just too much demand for the irvine schools.
I think the most interesting feature of this house is the fact that the bank is likely dictating the sales price based on its willingness to accept a loss on the short sale. will they do better by eventually foreclosing?
This is definitely a move up home so if you factor in a largish DP, perhaps 650K might work but that really depends on when you bought your first home and how much equity you carry over. It seems that the further down the prices there is less money to carry into the next purchase making it more difficult to sustain these move-up home prices.
The intended tone of my comment was sarcastic. I was essentially thanking ochomehunter for providing a reasonable comment.
These homes will be in the $200 – $225 psf by 2011
For those of us who just arrived at this fascinating blog, would you mind providing a quickie glossary for your acronyms?
GF?
DP?
HELOC?
IR = Irvine Renter, the author of the blog?
Thanks!
Former Irvine Resident, astounded by how much has changed
No way is that house worth $650,000.
Try $450,000.
Hey OptimusPrime – 600k?! You kidding? I will put money down that by summer 2010, prices for comparable homes in this area will top out at 550k. And I mean the peak price.
HELOC is home equity line of credit.
As to the GF, I assme it mean girl friend, but it just does not make sense in this blog…
Most places I’ve seen in Irvine have landscaping that doesn’t drop all of its leaves in the winter, but that might just be my preference for native and low water landscaping in me talking.
Welcome to IHB – Irvine Housing Blog 😉
GF = Greater Fool
DP = Down Payment
HELOC = Home Equity Line of Credit
IR = Irvine Renter (the author of most of the blog’s content)
I had close friends whose backyard jutted up to a freeway. They had a soundwall and they swore they couldn’t hear the noise from the cars. The wall certainly muted the sound but the rest of us could still hear the noise. I think they were just so used to it as background noise that they didn’t hear it anymore.
Now when people tell me that the walls work I always take it with a grain of salt. I think eventually we get used to noises and don’t notice it anymore.
450k is more like it.
hence most of the 450k predictions 😆
the problem is still to many koolaid drinkers (Irvine is different)
“too many”
Shark, that’s the thing….asking for $979k now..if it does drop to $600k, you’re looking at close to a 40% discount.
If there are home buyers waiting in the wings for this….I seriously doubt another $50-100k discount would even matter.
Sure one could sit there and say, I will not budge, this is $225 per sq ft tops etc etc.
But it’s a market and if there’s a willing buyer, it will be bought.
Personally for me I would buy at $600k. I am sure someone would buy in a heart beat at $700k.
It’s all up to you and your financial situation and what you’re ultimately willing to pay.
The house sold in 9/17/2003 for $665,000
If you put that total in an inflation calculator today that same money is:$741,167.98. The market went up from 03-05 then went down from 05-07. I think this house is worth a little more than 600k right now. If you wait it out and pick this house up for anything around 600k, your a hero.
I know the number of transactions in Woodbridge is down substantially from the prior year which makes analytical comparisons more difficult. For the transactions which have occurred, what has been the going rate per square foot? From the Zillow website, it appears that the detached housing in Woodbridge is going for $390 or so a square foot. The number is headed south, but this appears to be the current rate that sellers are accepting. Any thoughts?
Congratulations to IR for your efforts on your entertaining and informative blogsite.
GF = “Greater Fool”.
All of you are referencing the original blog post (garage pictures? 2 posts?) which I can’t find, but I did find this interesting post about potential fraud:
https://www.irvinehousingblog.com/2006/10/10/bad-investment-fraud-or-what/
I looked up the original property that started the thread:
http://www.zillow.com/Charts.htm?chartDuration=5years&testAds=false&zpid=61647235
It was resold at a $120k loss, about a year later.
I wonder if anyone knows how the whole thing worked out. Was it actually fraud? Was anyone prosecuted? Was it a case of identity theft and the perpetrators are gone?
All of you are referencing the original blog post (garage pictures? 2 posts?) which I can’t find, but I did find this interesting post about potential fraud:
https://www.irvinehousingblog.com/2006/10/10/bad-investment-fraud-or-what/
I looked up the original property that started the thread:
http://www.zillow.com/Charts.htm?chartDuration=5years&testAds=false&zpid=61647235
It was resold at a $120k loss, about a year later.
I wonder if anyone knows how the whole thing worked out. Was it actually fraud? Was anyone prosecuted? Was it a case of identity theft and the perpetrators are gone?
(having trouble posting
today
“there is just too much demand”
That’s the problem, supply and demand. For there to be too much demand buyers must outnumber sellers. We have quite the opposite. this is supposed to be the low season but inventory didn’t fall and it is at 16 months supply, instead of the normal 4-5 months. My guess is that inventory will only increase as loans reset and the economy sours, placing more homes chasing fewer buyers, thus prices have to fall.
shure, they may be 200 like you waiting to buy this home for 600K, but the problem is that there are 400 homes like this that need to sell. You still underestimate the magnitude of the oversupply relative to the shortage of buyers.
Prices were way inflated by 2000… I remember people moving to Lake Forest back in the late 90s because the rent in Irvine was getting too high.
I personally don’t see something like this ever being worth more than $200/sqft, especially considering that the lot is small enough to jump from your roof to your neighbor’s.
That being stated, someone will catch this knife in the upper $700k range and thing they are getting a steal. What an ugly POS house. In any other state it would currently sell for $220k max. Once the dream is over things like this will sell for about double in the land of milk and rape that is Irvine.
“I would definitely pay 650,000 for that home”
IF
you have 20% down, and can easily afford & qualify for a 15 or 30 yr fixed rate loan, and you are ready to “set down your roots” & stay in this place for the next 15 to 20 yrs or so
THEN
go fo it @ 650k
ELSE
wait.
Sorry, but the fact that home prices tripled over the last 10 years is about as irrational as it gets. Compared to the reality of that everyone in here is conservative.
Say that all credit went away and people were forced to pay cash. How much do you think that house would be worth then? How much would someone pay for it?
You just broke my lollerskates.
“It won’t go much lower [than 300/sqft],” said the man from Boston.
Irvine schools are trash.
I get it…(5 minutes later)
Lets say it is worth $450K. I’ll pay $500k. So now what’s it worth?
I’ll bet someone will pay $550k. Maybe to you it’s worth $450K, but to the market? More.
15-20 years is a long time. Get a loan with no prepayment penalties and pay the house off in 10 years. Then look at buying a bigger home.
Irvine skools are da best in da nashon, I went dare.
From no-so-sunny-today Space Coast Florida, I think this house and houses everywhere around the country will be selling for between 525 and $550,000 because. . .
If you take 20% of 525, you get 105,000 which gets you to a loan amount of $420,000. I assume that most can scrounge up an additional $3,000 not including closing costs, and there you are.
My impression is banks everywhere are scared sh**less to loan money to anybody, no matter how impressive the credit scores and downpayment. Hey lending maestro, are banks actually as opposed to theoretically giving out jumbos?
If I were moving to Irvine, which I am not, I’d not want to put more than 25% down, on the not-putting-all-eggs-in-one-basket paradyme.
(Paradine? Paradime? Paradygne? Well, you know what I mean.)
Unless the houses are aimed at the really and truly rich of course.
The original blog post is part of this post. Look more carefully.
Everyone in Irvine is wealthy well beyond any need for a silly paradigm such as that.
We’ll see the effects of credit on prices in a couple of months I’m guessing.
Everyone in Irvine is wealthy….. in their mind anyway. Sure folks may good salaries here but I’d bet dollars to donuts that most people think they are a lot richer than they really (debt to assets ration) are and the free money is over. Think banks are in a big hurry to give a jumbo, regardless of twenty percent down payment, on an asset that actual cannot realistically be evaluated in the current market? (see banks marking assets to market having to come up with billions and the markdown just keeps on going).
In addition, when this house actually hits the 600k mark do you honestly believe this is the best house you will find for this price?? Hell no, by that time 600k will get you a lot more house than this. This on is definetly in the 450k-525k range at the bottom…. that is assuming the 2008 recession is a shallow one… anything deeper than a 3-4 month recession could drop the bottom price another 10/15 percent. Just my BS .02.
may – make
ration = ration
still can’t spell ratio right.
Who cares about the noise, the pollution will kill you way before the ears get damaged.
Optimus – Take Alan’s comment and add to it those qualifying to buy these houses are very low. Who is in the market for this type of houses? 30+ professional couple with a couple of kids is what I’m thinking. Even if both were making pretty good income, there wouldn’t be much left for savings and college fund and raising the kids. Let’s say you would buy it. Ok. Would you buy it to flip it? Would you buy it to live in it with your wife and 2 or 3 kids. On this lot? C’mon, not for that price. It would never appreciate even after the kids grown up and move out. No offense, but you sound like an agent trying to floor out the pricing possibilities on these flips.
The place is worth $700-725K right now, i.e. if they priced it accordingly I think they would get a foolish buyer, and will likely drop to $525-575K by the time the real estate market stabilizes.
$450K is not going to happen on this property or others like it… Inflation people, you have to consider years and years of inflation. Even if in 2003 it was overvalued by 40%, that would still put it around $450K today considering inflation.
Jumbos are not bought buy the GSE’s, they are (were) bought by private investors. These companies are not touching jumbo loans right now. My bank has not sold a single solitary jumbo loan on the secondary market since AUGUST!!
Any jumbo loan currently originated is being retained on the banks balance sheet. It is classified as “held-for-sale.” Once the secondary market’s appetite returns (as if!) the banks will then start to unload them.
I was up in Monterey for Christmas and “foreclosures” were the talk of the town. Everyone is thinking about it, whether they own a home or not.
No worries tregen – I add that extra n at the end all the time and the spell checker doesn’t help me out either.
Well, I closed by first regular loan since August last week. Maybe your bank will sell one!
So they are making them and keeping them on the books. No wonder the interest rate is so high. How much equity, (if you can even figure that out) is your bank demanding percentage wise?
Won’t your bank run out of money to loan, since the mtg conveyor belt has gone away?
Will investors buy after a year or 2 of seasoning? ‘Course that may only mean the equity has gone away in a year or 2.
There are cycles. It could be that 10 years ago housing was oversold. We know it was overbought in the past 5, why not oversold prior? The issue is equilibrium in supply / demand. Picking a bottom and comparing a peak is deceptive. Look at the trend line and the fundamentals – cost to rent vs cost to finance/buy.
Perhaps your Genius is beyond me, but this is potentially the most ridiculous comment I have ever read on any blog. Say all movie theaters went away… would DVD rentals go up? Say I had wheels… would I be a bicycle or a motorcycle?
lendingmaestro,
Ok, so banks are having to hold onto their jumbo loans, but they are still lending pretty darn freely. Do I have that right? And is that because (a) they are re-selling lots of loans to FHA, FNMA, etc, and (b) the FHLB is lending money very freely (in the amount of over half a trillion $ extra this year alone), even on loans that have downpayments of less than 20%.
You really couldn’t understand what I meant by that comment? Here’s a hint: it was rhetorical.
If you had wheels you would still be slow.
LA times front page today says to expect to pay $4/gallon for gas in 08. That’s got to hurt the economy at some point.
If you admittedly don’t care about value, would you like to buy my old sofa for about $5k? You can obviously afford it if you live in Irvine.
I wish there was a common metric which was independent of inflation.
I didn’t say it was not understood – I said it was ridiculous. Mortgages may be in short supply, but they’re always going to be around. To suggest that we should determine pricing based on a mythical assumption is, well, far below genius.
Way to put words in my mouth and miss my point entirely.
The boredom of being at the parents house in AZ must be killing me if I’m arguing over the interwebs. Thank god I head back to socal tomorrow.
For all I care you can believe housing was oversold in 2002, crash my roflcopter, then go ahead and line up with the rest of the sheep to buy this pos tract home for $600k or whatever you can “afford.”
We were discussing 10 years ago – that would be 1997 – 1998, when I proposed housing was oversold… not 5 years ago — when I said housing was overbought.
You definitely need to get out of AZ, Genius. Hope your time was well spent with parents, and safe travels coming back!
ANYONE who pays more than $225k for this crap shack is BEYOND stupid. But then 95% of people living in Irvine are BEYONE stupid as well.
snicker.
Since my favorite motel chain is Motel 6, I am somewhat familiar with freeway noise. 🙂
The noise is worse at night-same reasons as winter-colder and I think other noises quiet down, so you notice it more. Also there is a LOT of long-haul truck traffic at night, if you’re near a hill or a high traffic entrance/exit with a lot of accelerating/deceleration (think JAKE breaks), then it can be really annoying.
I don’t know how much truck traffic the 405 gets, but I suspect a 10 lane freeway gets a fair bit…
Um, that’s brakes, not “breaks”. Firefox finds spelling, but not grammatical errors.
I am curious. Those of you who write, “I would buy this property at a price of $600,000.” or something along that line, would you buy the property for whatever amount sounds reasonable if you thought the same property will be selling for 80% of that amount in two years?
I would awgee. I already own, so I don’t care about equity as loss as much as a renter… Also, if I am buying for a 20-30 year hold as a primary residence, I don’t really much care about the value in 2 years.
Its not worth anywhere near 700k right now! Mark this post and check back in 18 months. 525k top, 450k maybe. I mean that’s a half million dollars for this.. c’mon.
Ipop – what a comment..
You don’t know what the hell you are talking about Shark. 14 Carnelian closed escrow on 10/10/07 for $975K. It was 2500 sf. That is $390 per sf and it’s around the friggin’ corner from this place. You think prices have fallen 20% since September?! Must be some good crack you are smokin’…
Hum, what else has closed in that neighborhood recently? 2 Briarglen, 10/15 close @ $699K for 1899sf. 18 Briarglen on 11/2 @ $650K for 1585sf… Average per sf price in the $385 range on those. This place is probably worth MORE than $ range I quoted – I was being conservative and hadn’t even looked at recent comps in that area. They could move it for $750K right now if they wanted to. Hell, they could probably move it for $800K right now.
Very recent comps, less some discounting for a falling market, indicate the current market value for a property. YOU may not think it’s worth $700K for YOU, I might not think it’s worth $700K to ME, but those are personal opinions not indicators of market value. Obviously people are buying houses in this area still and paying north of $350 per sf. MLS doesn’t lie.
I’m in the same situation Caddy. Very tight in a 3/2 in West Irvine and want a 4th bedroom (at least), another shower, and hopefully a three-car garage for all the kid crap.
I don’t think we’ll hold our property as a rental though. Why hold it as a rental if you could sell it now and buy it back later for maybe 20% less and turn it into a rental then? Property tax base?
So Shark, you still around?
“Its not worth anywhere near 700k right now! Mark this post and check back in 18 months. 525k top, 450k maybe. I mean that’s a half million dollars for this.. c’mon.”
I marked your post. Didn’t take 18 months to check back. Just a week… You still want to bet that this place isn’t worth over $700K as I suggested? We’ll see once escrow closes but I have a feeling my figures were much closer than yours.