When a house has been on the market over two years, and the owner is not lowering the price, perhaps it should just be taken off the market.
Today’s property is 774 days and counting…
Asking Price: $789,000
Address: 11 Pollena, Irvine, CA 92602
{book4}
Give Me Just a Little More Time — Chairmen of the Board
Life’s too short to make a mistake
Let’s think of each other and hesitate
Young and impatient we may be
There’s no need to act foolishly
Sometimes I write about macro issues facing the housing market. Sometimes I write about our specific location conditions. Sometimes I just write about some particular property that has a story to tell. Today’s featured property is of the last category.
This property has been on the market for 774 days. WTF?
At some point in the last 774 days, did the owner decide she really did not want to sell it? If so, why is it still listed? If she did want to sell it, why hasn’t she lowered the price to sell it? These are simple questions that the realtor should have asked about 60-90 days into the listing.
In case the seller has not noticed, prices have dropped 20% since this house was listed. She has dropped her asking price 16% chasing the market down the whole way. It was overpriced when she listed it, and none of her price reductions have caught up to the market decline. If she had dropped her price sooner, she might have intersected with reality at a higher price point. As it stands, she remains in denial, and she remains priced above the market.
What is the point? Why not just take the property off the market?
Asking Price: $789,000
Income Requirement: $184,750
Downpayment Needed: $147,800
Monthly Equity Burn: $6,158
Purchase Price: $472,000
Purchase Date: 3/20/2002
Address: 11 Pollena, Irvine, CA 92602
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,478 |
| $/Sq. Ft.: | $318 |
| Lot Size: | 1
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Traditional |
| Year Built: | 2002 |
| Stories: | 2 |
| Area: | West Irvine |
| County: | Orange |
| MLS#: | P554341 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 772 days |
 Unsold in 90+ days
|
|
yard w/patio cover/dramatic slate hardscape in back & front
yard/ceiling fans/built-in cabinets in garage/french doors/beautiful
tile floors/full splash in kitchen. Do not miss seeing this home!
I profiled this property because this owner is one of the rare ones who did not add to her mortgage. The property was purchased on 3/20/2002 for $472,000. She used a $275,000 first mortgage, and a $197,000 downpayment. She refinanced on 6/26/2003 for $271,500. She actually paid down her mortgage and didn’t take anything out! I hadn’t seen that in so long I just had to share it. She was responsible: no refinances, not second mortgages, and no HELOCs. Amazing!
This does give her plenty of room to negotiate on the price. If it sells for its current asking price, she stands to make $269,660 after a 6% commission. Not bad considering she overpaid in 2002. If she can manage to lower her price enough to lure a knife catcher, she can probably get out before the price rolls back all the way to what she paid for it. Somehow I rather doubt she will. Two years of chasing market tells me the greed is just too strong. She is already hurting from “losing” $150,900 in asking price. Dropping the price another $70,000 to get it within range of today’s knife catchers is a lot to ask. I don’t see it happening.
I believe this house will sit on the market until she gets bored with the listing, then she will take it off the market. She will own this property as its value plummets all the way to her entry price (and perhaps beyond). All that phantom equity: all gone…
{book5}
Give me just a little more time
And our love will surely grow
Give me just a little more time
And our love will surely grow
Life’s too short to make a mistake
Let’s think of each other and hesitate
Young and impatient we may be
There’s no need to act foolishly
If we part our hearts won’t forget it
Years from now we’ll surely regret it
You’re young and you’re in a hurry
You’re eager for love but don’t you worry
We both want the sweetness in life
But these things don’t come overnight
Don’t give up cos love’s been slow
Boy, we’re gonna succeed with another blow
Give me just a little more time
And our love will surely grow
Baby please baby
Baby please baby
Love is that mountain we must climb
Let’s climb it together your hand in mine
We haven’t known each other too long
But the feeling I have is oh so strong
I know we can make it there’s no doubt
We owe it to ourselves to find it out
Give Me Just a Little More Time — Chairmen of the Board
Wow!! So properties such as this do exist! A shame that the owner may not end up with anything to show for their prudence.
Gee only a few 100 yards from busy Jamboree road too.. What a steal.. not
Well, she just COULD end up with a house she really enjoys living in.
I mean, do you really care if you “make money” on your house if it’s the place you wanted and intended to live in your entire life?
She might just figure that if she can make a killing selling it, then fine, she’ll sell. If not, why, she’ll just kick back and enjoy her house. I have met sellers like this and they are impossible to negotiate with. She’s just not a motivated seller, and someone who wants a home for a reasonable price had best move on to someone who needs to sell.
“Not bad considering she overpaid in 2002.”
My wife and I looked at model homes in this neighborhood when they were built. I had hoped to buy here once she finished school and we had 2 incomes to justify it. But the prices seemed extravagant then and I never imagined them going much higher…
$472,000 is still plenty high.
***Mildly Bullish Comment Alert***
$472K is $190/sq. ft. for this particular house. Not too high even in 2002 IMO…
“The property was purchased on 3/20/2000 for $472,000.”
“Not bad considering she overpaid in 2002.”
Is there a typo here? Purchased in 2000 or 2002?
Does anyone realy think we’re going to Y2K price levels? A 1,500 ft2 house in W. Irvine (a vacant short sale) was napped up for $499k in just 2 days. Orange County probably dropped about 40% from the peak but Irvine about 20 to 25%. Why?
Y2K is around the corner. Knife catchers will dry up during capitulation when the masses accept the fact real-estate values do not increase very much year after year in a stable market.
Irvine is just a higher demand area so there is going to be enthusiasm from knife catchers who have felt priced out for awhile and now have their turn to lose some real money.
Imagine what all these knife catchers are going to be thinking when they get settled in to their new houses and all the jobs have left the state.
Correct me if I’m wrong but the year to year prices are not apples to apples; 2009 is artificially high. Comparatively speaking, 2009 prices should see a 16% decline simply from a rise in interest rates (5.5%) to 2002 rates (7.1%). That would then require a 29% drop to equal 2002 pricing.
We are already in 2001 territory here in PHX.
Well sure; when one talks about price level, they should say whether that level is adjusted for inflation, wage rise…etc. However, if not mentioned, then I assume no adjustment. If you assume a house sold for $350k in 2000, then it should sell for say, $450k now assuming an inflation rate of about 3%. Then, there’s the affordability factor which has to do with interest rate, then, and now (in addition to rising or falling incomes…etc). So, it’s complex and you have to make assumptions about all the variables.
I think ya’ll are going to 1997 prices.
Maybe I’m smoking crack.
Maybe I’m not.
What do ya’ll do down in the OC anyway? Sell houses to each other?
Is this failure to refinance recklessly really that rare?!? I’d assumed that the multiple HELOCs right up to (or above) the current bubble price posted here were examples of the lunatic fringe, not the majority. What fraction of home “owners” HELOCed their necks into the noose? I’ve been reading this blog (and a couple like it) fairly often for 6 months, and I don’t recall seeing that figure. If I’d had to guess at a number, I probably would have thought it was something like 20%. Pitifully naive?
I was hoping someone would make a comment like yours.
I can’t estimate the percentage of the total population that has abused HELOCs. My sample set is the subset of the total population that is for sale. To make a judgment on the total based on my biased subset would be committing a sampling error.
That being said, in my sample (houses currently for sale), I come across 1 listing in 20 like today’s were the owner did not add to their mortgage. Basically, if there are responsible homeowners out there, they are not listing their homes for sale right now.
So if only 5% to 10% of the homes for sale did not abuse their HELOCs, what percentage of the broader population of homeowners did not abuse their HELOCs? I don’t know, but I surmise that the HELOC abusers are far from being the lunatic fringe, and in fact, they are the rule rather than the exception.
IR,
Agreed. This is very rare in SoCal. You guess 90-95%, but I’d put it more like 75-80% (what can I say, I’m an optimist, and believe that there is a silent group that just want to live in their homes and pay it down. That’s very rare here in SoCal. Even if they say the above, they do the opposite.
Chuck Ponzi
There are some of us out there. I admit, it is tempting to use my equity to “move up”, but when I’m faced with the current economic situation, there is really no alternative but to stay put. How else will I retire? If I move to a “better/bigger” home, I will most likely have to start another mortgage. I don’t want to be working into my 60’s or 70’s to pay down a mortgage. I prefer to have the peace-of-mind that comes with owning a home outright.
A good friend of mine and her husband wanted to “move up” to a big house. All his golf buddies were doing it and she had just redecorated their lovely condo. I told her to wait because the bottom was going to fall out of the housing market (even in NoKY) and they’d be fools to step up into debt.
Their condo was paid off and both of them are over 62. Luckily for her she did listen and they now are very well set for life. His golf buddies are all under water and about the same age. Some have even had to go back to work after retiring. I sort of feel bad for them, but they wanted it all and were stupid enough to fall for the “real estate never goes down” mantra.
$3000 monthly rent @ GRM160=$480k in 2012.
This place will rent for $2500………..makeing it worth about 400K. Wait about 5 years.
Not to mention at the bottom of the market, GRMs may go substantially under 160.
I know some one renting a 2700 sqft house a few streets over in a gated community for 3000. I have to agree with Nano, 2500$ sounds about right for this one.
“I heard some guy who knows some guy who rented a mansion in Shady for 2600 a month so this should go for way less”.
Uh huh.
I’ve been looking at rentals around this area a lot lately. It will rent for significantly higher then 2500.
“I heard some guy who knows some guy who rented a mansion in Shady for 2600 a month so this should go for way less”.
Actually, I was just at said house last weekend. Prices are coming down not matter what you wish for.
Irvine is special 😆 NOT
I am renting the same model house nearby which is a block further away from Jamboree. The inside and backyard are similar. The rent is $3000.
Who pay over $2K for renting? I remember back in the 90’s, 4BR SFR is rent for under 2K. Why people accept the rent rate that high? It makes owners have WTF pricing on their properties because they’d based WTF pricing on how much people are willing to pay on rent.
There is a property which I noticed before I got married that is still for sale. At least 5 years without a transaction.
A couple more solar rotations and your kids will be grown, you will move on to your trophy wife and the property you passed up on will still be for sale.
Oh, the horror.
Here’s a thought. Maybe they only want to sell at this price and don’t have any particular need to sell. If the market won’t bear the price, they’ll sell later. Let all the bottom feeders seek out distressed properties. The price is X, firm. If it sells in 2009 or 2013, what does it matter?
It only matters if they want to capture some of the bubble equity. The question becomes do you sell for $700,000 in 2009, or do you wait and sell for $700,000 in 2019? Between 2009 and 2019, the price will drop to the $400s. There are still some significant inflation-adjusted gains if they sell today. If they wait until 2019, not so much…
Yes, I thought something like that too. I have an old, classic car. I’ve had it for many years, have restored it to just how I want it, and still enjoy this car. On occasion, someone sees it and asks if I would sell … of course I will if the price is high enough. But if they are looking for a low price where they could then quickly re-sell at a profit, or even offer current market price, then no deal. I’m happy to keep and enjoy this car. I’m an unmotivated seller.
Perhaps they only want to sell if they can then move up to a considerably nicer house and neighborhood, plus cover the moving expenses, buying costs, refurnishing, etc. Otherwise they are happy to stay put. Perhaps an idiot will come along and pay their WTF price – it’s not like there are no such idiots out there, just that they’ve already been burned but still need another lesson.
Yeah, something like this just occurred with the house my parents were renting in Newport Beach. They were given until the beginning of March to get out because the (60s ranch-style) house was going to be torn down by the new owners, yet around a month prior to the deadline, the new owners put the house back up for sale at a WTF price. Guess they were just seeing if they could nab a sucker for a high enough amount to make that the preferable course of action rather than building a better house on the property and selling that.
You’re correct that such people do exist. But for every one with that mindset, there are a hundred who are unwilling to lower the price enough to sell because they believe prices are going to rebound *any minute now*. It’s NOT that they value their own homes above the market; it’s that they have stupid opinions about where prices are going next.
IR, There’s a typo. Your post states “property was purchased on 3/20/2000 for $472,000… She used a $275,000 first mortgage, and a $197,000 downpayment. She refinanced on 6/26/2003 for $271,500.”
I was figuring out why paying down $3,500 of principle was so commendable between 2000 and 2003. Until I figured out the typo and realized its suppose to be 2002-2003. In 1 year, without tapping HELOC kool-aid, and paying down principle in Irvine… now that’s amazing.
You are right. I didn’t notice that. I just changed the post.
We’re chasing the market down right now in our 30 year fixed @ 6.5% at the rate of $600+ monthly. Assuming a reasonable bottom in 2012 and appreciation of 3.5% thereafter, our mortgage debt will catch-up to our home’s value in 2016.
3.5% may be a pretty optimistic assumption. I’d plan on the market being stagnant for quite awhile.
Yeah, that’s definitely a “fuzzy” number. Who knows what the economy will look like toward the middle of the next decade? There are too many variables to consider today, to be able to make a reasonably accurate forecast 10 years out.
Another contradiction from that section that confused me: “She refinanced on 6/26/2003 for $271,500. […] She was responsible: no refinances”.
And right after that, “not second mortgages” should be “no…”.
It’s pretty clear that IR meant that she didn’t make any transactions that extracted equity from the house.
Yup, only “pretty clear”, thus my comment. 😉
Touché.
There’s a HUGE difference between a “cash out” refi and a “rate & term” refi! Cash outs had traditionally carried a higher risk premium over rate & terms. That will likely return.
Thank God you said it!
I was looking for a house around last Jan and this was still there. Apparently, the owner of this house wants to buy another house and they have everything ready – they are just waiting to sell this off. But does not want to budge on the price. I think its just stupid to leave it on the listing like this.
it is a good house (floorplan wise) but needs a lot of upgrade work.
Lady – please listen to IHB – please take this listing off your market – atleast for our sake’s!
During the first couple of years (even with a standard 30 year fixed) only about 20% of your mortgage payment goes towards the principal. It’s not until about the 19th year that what you pay towards interest exceeds principal.
If you don’t believe me use this loan calculator:
http://www.schoolsfirstfcu.org/calculators/java/mortgageloan.html
Of course if you pay more than you mortgage payment it will go down quite a bit quicker.
2009-02-18 10:10 AM
“The property was purchased on 3/20/2000 for $472,000.”
“Not bad considering she overpaid in 2002.”
Is there a typo here? Purchased in 2000 or 2002?
Does anyone realy think we’re going to Y2K price levels? A 1,500 ft2 house in W. Irvine (a vacant short sale) was napped up for $499k in just 2 days. Orange County probably dropped about 40% from the peak but Irvine about 20 to 25%. Why?
You can find $42/sq ft in Riverside County. That’s right — under $150k for a 3000 sq ft almost new house, bigger than this.
I heard Lake Elsinore is about 50% off the peak but $150,000 for a 3,000 sq.ft house is way low considering the construction costs. We’re renting and wish we had a desire to move out there but too set in our ways to move out of the OC. Gosh, I don’t really even want to move to M.V. or RSM because of the drive to work (and I know these are excellent places to live too.)
I am looking at redfin — which has 10 houses in San Jacinto for about $159k over 3000 sq ft. There are literally hundreds below $100 sq ft construction cost.
“…perhaps it should just be taken off the market.
Very true, or perhaps they should strongly consider relenting and lowering the price. No guarantee it will work but it’s another option.
At least have some common sense to pull it off the market and re-list it. Maybe someone should drop the web address off on her doorstep.
Tiny lot: 1 sq ft. 772 days on the market, and not long enough to correct that error. Jeeze.
IR,
That is the actual building cost is Irvine? Land? Housing per sq. ft? Ground level? Second floor?
Ond Tustin track home saleman said the building cost of a luxury home was $200 per sq. ft (a 2 story house). I though that was high for just the house.
Unless this house’s school system is rezoned and the price drops $100 per sq. ft, I’m not interested.
To Newbie: You do not like the schools the house is in? why not?
It’s not if I like the school system on prioing. People just take the school system into account. Beckman is okay, but not great. The other school in Tustin are not as good as Beckman HS. The pricing of houses are highly dependent on schools. If your in the best school and get rezoned, the price may drop significantly. Happened in one of the places I rented. Prices dropped ~15% due to scoial engineering (best HS school to lower middle quality HS)
Big Bear is similar in that listings have been “forever”. But at least (it appears that) prices are tumbling.
FWIW “observation”… If sellers are female, listings “overpriced, and listed for years”.
Please no bashing for being a women-hater etc. Just an observation…
P.