The Ballad of Gilligan’s Island — George Wyle and Sherwood Shwartz
Would you like to get stranded on Alicante Isle? (I know it is spelled Aisle and it means something else, but just go with it.) People buying properties as flips during the down cycle are betting on the return of the market. There is no shortage of ignorant prognostications of the bottom, and if flippers are foolish enough to believe them, then they deserve to become bagholders. If flippers and lenders became the bagholders for the decline, Karma would be delivering its comeuppance. Flippers hope to get in and out of a property quickly, and like the passengers on the US Minnow who thought they were going on a 3 hour tour, getting off the island will likely take much longer than planned. They end up stranded in a condo searching desperately for a way to get out. The market will eventually rescue them. The castaways of Gilligan’s Island were only trapped for 4 years until the series was mercifully cancelled. The flipper who gets trapped in today’s featured property will likely be there much longer.
Asking Price: $322,000
Income Requirement: $80,500
Downpayment Needed: $64,400
Lender Purchase Price: $349,000
Lender Purchase Date: 1/17/2008
FB Purchase Price: $440,000
FB Purchase Date: 5/6/2004
Address: 79 Alicante Aisle #64, Irvine, CA 92614
| Beds: | 2 |
| Baths: | 2 |
| Sq. Ft.: | 1,032 |
| $/Sq. Ft.: | $312 |
| Lot Size: | – |
| Type: | Condominium |
| Style: | Mediterranean |
| Year Built: | 1987 |
| Stories: | Two Levels |
| Area: | Westpark |
| County: | Orange |
| MLS#: | U8001751 |
| Status: | Active |
| On Redfin: | 9 days |
large community greenbelt & direct access to ‘San Diego Creek
Channel’ with paved walking & biking trails. Impressive light &
bright floorplan featuring 2 master suites each with their own private
full baths. Cozy breakfast nook with bay style window, gas fireplace in
living room, inside laundry & front patio. Carport adjacent to
unit. Close to shopping & numerous parks. HURRY!
Carport adjacent to
unit? That is a plus…
light &
bright — This expression is like “nails on a chalkboard” for me, and it makes me think of a toy I had as a child.
Sales History
| Date | Price | Appreciation |
| Dec 13, 1991 | $160,000 |
|
| Mar 28, 1997 | $130,000 |
|
| Jan 29, 2002 | $230,000 |
|
| May 06, 2004 | $440,000 |
|
| Jan 17, 2008 | $349,000 |
|
Just eyeballing it, I would say we are back at 2003 prices.
.
.
We are setting new records every day here. This property is being offered 27% off a 2004 price.
The buyer who got this property in May of 2004 put 10% down and used a 80/10 combo loan. The downpayment was lost during the foreclosure, and the second mortgage was wiped out as well. As you can see from the asking price, the first mortgage holder is just trying to get out with a minimal loss. If they get their asking price and pay a 6% commission, they stand to lose $46,320. Each of the three losers in this deal lost around $45K or 10% of the purchase price.
Have you noticed the lenders are getting more aggressive in unloading their properties? I received an email a few days ago from an REO liquidator who wishes to remain anonymous. He told me that some of the lenders are giving him many of their properties, and he is able to sell them at whatever price he wants. The lender literally does not care as long as it is a legitimate, arms-length transaction. The lenders have absolutely no concern for the neighborhood comps; their only concern is the liquidation of their REO inventory. It is a classic prisoner’s dilemma when it comes to these REOs. If the lenders all stick together, they can get better pricing, but the first one to cut pricing and sell out is going to get a better deal. The lenders selling right now are trying to get out before the market drops even farther. I am sure they are enjoying some of the bottom calling going on, but their actions show that they do not believe a word of it.
.
Just sit right back and you’ll hear a tale,
A tale of a fateful trip
That started from this tropic port
Aboard this tiny ship.
The mate was a mighty sailing man,
The skipper brave and sure.
Five passengers set sail that day
For a three hour tour, a three hour tour.
The weather started getting rough,
The tiny ship was tossed,
If not for the courage of the fearless crew
The minnow would be lost, the minnow would be lost.
The ship set ground on the shore of this uncharted desert isle
With Gilligan
The Skipper too,
The millionaire and his wife,
The movie star
The professor and Mary Ann,
Here on Gilligans Isle.
So this is the tale of the castways,
They’re here for a long, long time,
They’ll have to make the best of things,
It’s an uphill climb.
The first mate and the Skipper too,
Will do their very best,
To make the others comfortable,
In the tropic island nest.
No phone, no lights no motor cars,
Not a single luxury,
Like Robinson Crusoe,
As primative as can be.
So join us here each week my freinds,
You’re sure to get a smile,
From seven stranded castways,
Here on “Gilligan’s Isle.”
The Ballad of Gilligan’s Island — George Wyle and Sherwood Shwartz
Hmmm, the listing’s already down again.
I wonder if redfin is facing issues about non-buyers looking at properties through them, in particular linked to from here. For the Boston area you have to register in order to see the listings because the only want serious buyers to have access to the MLS. With the link in Slate, there could be serious traffic to these listings.
Or we really do have a bunch of eager knife catchers snapping up these bargain homes. (at least the non-shoe-box sized, recent construction ones).
I am starting to wonder what is going on. Two days in a row is a strange coincidence. It would seem a foolish selling strategy to pull a listing on a day when it is likely to be viewed by several thousand people. Since I have already captured the important information in the post, very little is accomplished by removing it from Redfin. If this becomes a trend, I will start adding links to dozens of properties in my posts just to see if they will pull all of them. On any given day, I am selecting one property out of 2 dozen good candidates. Perhaps I will add a section on “other properties to view” with all these links. If this is a tactic aimed at the IHB, I think they underestimate our creativity and resourcefulness.
I would not do that. Some MLSs are dying to cut off websites like Redfin from posting MLS data on the Internet. This sentiment has diminished lately, but it is still out there. I think most people would agree that the market is better for having the easily accessible information without having to go through a real estate agent.
Noticed that the feature property on South OC RE Tracker was also pulled. Could be related to volume. I’ve noticed that redfin has slowed recently. Maybe they are trying to manage traffic.
prudentialcal.com shows this unit as a ‘pending sale’
I couldn’t locate yesterday’s (109 Reunion) as a pending sale, and it wasn’t listed anymore on ziprealty either. hmm..
HURRY!
This will be an easy 2002 rollback. I would not even be surprised to see it go back as far as 2000 by the time all is said and done.
great logo but I think you should show some fingers sliced off or maybe blood from the palm…
I think everyone would appreciate today’s non sequitur comic strip (4/23/08) on the subject of why it’s a good idea to buy in a bear market!
http://www.gocomics.com/nonsequitur/
whoops, forgot link! Here it is for the comic I referenced (if you look at it after 4/23, may have to select the date to see it)
Gilligan’s isle is so apt for an Orange County housing blog… a lot of it was filmed at Pirate’s Cove in Corona Del Mar, and in Newport Harbor.
Really? I thought it was shot at the CBS Radford lot in Studio City. (Gilligan’s Island is now a parking structure, fwiw.)
My bid: $1800 rent at 150 GRM makes it $270k.
One of my staff just moved into an 750sf or so 1/1 in this same complex. Rent was $1500 so $1800 is probably about right…
This is getting close to owner-occupied rental equivalency. At list, financing $260K or so, the monthly on everything with $250 per month in maintenance exp/reservers comes out to around $1800 on an after-tax basis.
At a price of around $275-280K, given today’s mortgage rates, this would be cheaper on a monthly basis vs. renting for sure. If that is the case, this can’t have too much further to fall unless rents head down materially.
I have been following this blog since Sept 2007 and this is the first property that I can actually match the income requirement and downpayment needed. Not bad for 8 months. In 8 more, I might even be movin up like the Jeffersons.
P.S. IR…I am committed to rattling the tip jar in the near future. Your efforts are appreciated.
The real question this post brings up is not should you buy or rent…. it’s who was hotter – Mary Ann or Ginger? My vote has always gone to Mary Ann – even with her latest brush with the law for possession of paca lolo….
Dano
Hey bruddah…
Dat’s PAKALOLO….. u no can spell rite da pidgin, eh?
No matta, McGarret stay da big kahuna. Dano jus da small haole.
IR,
I disagree that the situation is a prisoner’s dilemma. There is no way the lenders could possibly band together to hold prices at current levels since prices are fundamentally misaligned with the market. If supply was more limited and prices were only say 20% above market the lenders might have a chance of forming a cartel (like OPEC). Smart lenders are looking at projections of continued gradual price declines for the next 3-4 years and thinking whatever they get now will still be better than what they will get next year.
If this one ends up selling for asking price, it’s very close to a cash flow break even investment. With 10% down at 6% the PI is $1740 add $180 for HOA and $300 for taxes and you’re at $2220. The San Carlos apartments which are right next to this complex are renting 2/2’s with no garage or washer dryer in the unit for $1900/mo. I would bet this one could rent for $2000/mo. While it’s not there yet, if the prices go under 300K, investors will be all over these.
160 GRM is break even for buyers. For investors, you only get a tax benefit for a loss, so you need to cover maintenance and the unit sitting empty. That’s why the GRM of 120/130 is batted around for investment. At 130 and net rent of 1800/mo, you get 234K which is close to what it sold for in 2002. According to my back of the envelope calculations for a variety of neighborhoods, prices have to roll back to 2002 (unadjusted for inflation) to be at fundamental values today.
We’re both in the same ballpark. I didn’t take into account that roughly $350 of the payment will be going to principle. If you run this as an I/O (not that it’s available in the marketplace anymore) it is about cash flow break even now. At that point, many people who were renting will have a logical reason to buy. Even though the number work out at 235K now, unless rates go about 8%, I doubt we’ll see it down to that.
Interest-only is still very available if you have 80% or better LTV. A buyer for this property could pick up a 10-year I/O for 5.75% today if they had the quals. 30-year fixed I/O for 6.25%.
There Mello Roos associated with this property?
I think MR goes for 30 years and unless this is a westpark I, i believe it is going to be paying MR for a few more years, at least.
Funny — I lived in this model in Westpark right after college. Wasn’t a bad setup for a roomie situation except that anyone coming over had to go through one of the bedrooms to use a bathroom. Can’t imagine actually buying it to live in longish-term though. This is exactly the type of place that should be rental units only.
I have been in this exact model and only one of the bathrooms is through a bedroom, the other bathroom is off the hallway, near the other bedroom, but you don’t have to go through it. This is a really good floorplan for a room mate situation, both bedrooms are good size, dont share any walls and both bathrooms are full baths. I have seen ads for a room mate in this model for $1,000/month.
“Light & Bright” also reminds me of the Aqua Teen Hunger Force paranoia trip the city of Boston took a while ago…
Anyone remember the early black & white days of Gilligan’s Isle when the opening lyrics were “The movie star, and the rest…”. What a burn for the professor and Mary Ann. After all, where would the castaways have been without the professor?
Don’t you think prices need to roll back to a level where investors once again become interested? First time home owners are still priced out of the market and homes 500k+ are going to really suffer because nobody’s moving up anytime soon. I just see the market tumbling until real estate is an attractive investment.
IR – how can we get in touch with an REO liquidator? I think it would be interesting to see how low lenders are willing to go. I wonder if they would accept 2002-2003 pricing this early.
Hi all,
I don’t think this listing is in MLS anymore. You can certain try checking all available MLS listings from this site:
http://www.pacificnetmortgage.com/search/index.html
Grab any of the MLS listing numbers and copy/paste onto redfin and you’ll see more details of that particular listing.
There’s no conspiracy amongst the RE agents *yet*.
Here is a home in Mission Viejo at close to 50% off peak prices. Identical 5 bd 2500sf model next door to my in-laws sold in the mid 800’s in 2005. Now 490K
http://www.socalmls-homes.com/Listing/ListingDetail.aspx?Listing=28874055
Buying anything now, no matter the price, assumes some things that, to me, are pretty risky.
Unless you absolutely had to, there’s just no reason to buy now. Yes, it might cash flow (or come close) right now. But what happens if rents go down? Then what?
79 ALICANTE ALLEY #64