Kool aid intoxication is very strong because homeowners were so richly rewarded during the bubble. Will the crash cause mass detoxification?
Today’s featured property is a WTF award winner in Quail Hill–$444/SF is so 2006.
Asking Price: $1,375,000
Address: 132 Treehouse, Irvine, CA 92603
Ain’t That Just the Way — Lutricia McNeal
Ain’t that just the way that life goes
Down, down, down, down
Movin’ way too fast or much too slow
Gettin’ up, gettin’ high, gettin’ down
Gettin’ no, no, nowhere
I always find it interesting when I have a conversation about the real estate market with people who have no idea what my hobby is. I get to hear their untainted opinion about what is going on. Sometimes I get the “Joe Six-pack” version, but sometimes I hear the opinions of professionals with access to data I do not have.
I recently had a conversation with a title officer from a major title company. Title officers are the guys who handle real estate closings. There is no profession that has greater insight into the process. This gentleman told me the following:
Prices in Orange County are going to crash very hard due to the adjustable rate mortgages. Since the vast majority of properties in OC were not conforming loans, they are not going to be eligible for the government’s loan modification program. When these borrowers need to refinance when their loans recast, they will not be able to, and most will end up in foreclosure. Even if these borrowers had enough equity to qualify, very few of them have the income. People added so much to their mortgage debt that they do not have the income to support it. Also, since many ARMs were being written up until the credit crunch in August of 2007, and these ARMs have 3. 5. 7 and 10 year terms, the foreclosure problem is going to be with use until 2017. Don’t expect any meaningful appreciation until then.
As he was telling me this, I felt like I was reading from the IHB. When I asked him if he read blogs, he said he didn’t. Although, he did say he reads many closing documents.
{book1}
Asking Price: $1,375,000
Income Requirement: $343,750
Downpayment Needed: $275,000
Monthly Equity Burn: $11,458
Purchase Price: $901,500
Purchase Date: 11/24/2003
Address: 132 Treehouse, Irvine, CA 92603
| Beds: | 4 |
| Baths: | 5 |
| Sq. Ft.: | 3,100 |
| $/Sq. Ft.: | $444 |
| Lot Size: | 5,521
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Tuscan |
| Year Built: | 2004 |
| Stories: | 2 |
| View: | City Lights |
| Area: | Quail Hill |
| County: | Orange |
| MLS#: | S567348 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 2 days |
Check out the photos. A dream kitchen with dark espresso cabinets and
Seafoam Green Granite Counters. Custom Beams in the liivingroom and
dining room. Travertine flooring downstairs. Walk in butlers pantry.
Main floor bedroom and bath. Loft upstairs great for an office or
childrens play area. Beautiful stair rails. Huge master suite and
oversized master bath. Large secondary bedrooms. Arched raised panel
doors throughout. Check out the landscaping. Mature olive trees
surround the property. Stone fireplace and a custom chefs BBQ. Great
private location.
When I first perused this description, I read “for that prick buyer who wants it all.” Only after I reread it did I see what was actually written.
A dream kitchen with dark espresso cabinets and
Seafoam Green Granite Counters. Are the color descriptors really necessary? dark espresso? Seafoam Green? This screams of pretentious poppycock (isn’t poppycock a cool word?)
liivingroom?
Today’s featured property interested me not only because it is
ridiculously priced but because it reveals how kool aid pickles the
brains of people in our real estate market.
- This property was purchased on 11/24/2003 for $901,500. The owners used a $650,000 first mortgage, a $161,000 second mortgage, and a $90,500 downpayment.
- On 1/10/2005 they opened a HELOC for $175,000.
- On 8/29/2006 they refinanced with a $837,500 first mortgage.
These people were not major HELOC abusers, but they did take out $26,500 for whatever. They did not pay down their mortgage while occupying this house.
Now these people want the $473,500 that is their due for owning Irvine real estate for five years. WTF? At least they are waiting until they sell the property to spend that free bubble money.
This is typical of a pattern I see in how Irvine homeowners manage their finances. They buy a house, extract some equity for spending money as prices wildly appreciate, and then they want to take a big pile of money with them when they leave. Many of the houses I profile show this behavior in previous owners who were lucky enough to sell out in 2005 or 2006. Of course, many of those fortunate sellers “doubled down” on their next house and lost it all. Why wouldn’t they? The free money was going to keep coming in forever, right?
The people who behaved that way are not bad people. Many of the routine security measures we encounter in our daily lives are there to keep the honest person honest. If you make it ridiculously easy for people to steal, they will. The lenders made it too easy to spend too much money. Although we chastise these people for their lack of self control, the lenders do bear some responsibility for the problem. Both parties are suffering; people are losing their homes, and our banking system is insolvent.
Despite the fact that house prices are
crashing, most California residents remember how much free money came
through home ownership. Most of these people do not realize that the
rules have changed. After losing a trillion dollars, lenders are not
going to hand out HELOCs
like ecstasy at a rave. Until it becomes common knowledge that the free
money associated with home ownership is not going to be there, the
psychology of kool aid will keep an addicted population high on real
estate. We will not bottom until this kool aid is purged from our
system.
I write much about the change in psychology associated with a bust, but it has been happening slower here in Irvine than it has in other communities. As you can see from today’s post, the kool aid is very strong. I was thinking about how difficult it is to reason with the kool aid intoxicated, and the following video came to mind. Enjoy.
{book6}
Now he’s in another place and I can’t reach him
And I feel as though I’m guilty of a crime
I took all he had to give and gave him nothin’
And all it would have taken was some time
Ain’t that just the way that life goes
Down, down, down, down
Movin’ way too fast or much too slow
Gettin’ up, gettin’ high, gettin’ down
Gettin’ no, no, nowhere
But not gettin’ into someone I should know
Gettin’ up, gettin’ high, gettin’ down
Gettin’ no, no, nowhere
Gettin’ up, gettin’ high, gettin’ down
Gettin’ no, no, nowhere
Gettin’ up, gettin’ high, gettin’ down
Gettin’ no, no, nowhere
Gettin’ up, gettin’ high, gettin’ down
Gettin’ no, no, nowhere
Ain’t That Just the Way — Lutricia McNeal
I’ve been amazed at the way listing prices have held up in Irvine, and am waiting for the resets to bring some rational pricing. I’ve been renting in the area for 18 months and checking out open houses during that time–and there’s been no noticeable decrease (yet) for Irvine SFRs. And when you’re looking at $600,000-750,000 homes, they’re frequently a dirty mess, even when not a short sale. Come on people, at least clean the house! You want people making $200,000 a year to buy your house–because it comes with dirt? WTF!
I think prices in Irvine dropped by an average of say 20% while the OC has dropped about 40% from the peak – so yes we could say Irvine held up. I think some agents & sellers maybe playing “contrarians” in a bold move to reinforce the sense “Irvine is holding up”. If this crisis lasts, eventually people might decide it’s more affordable to live in Lake Forest or RSM, Ladera Ranch, Aliso Viejo, Yorba Linda, Anaheim Hills, among other places in OC, and there are many other “nice” places in OC. That will affect demand in Irvine as well. I, for one, would like to buy in Irvine or Tustin Ranch for personal & family reasons but would not mind at all living in other places in OC which have good schools.
These lines from the listing say it all:
Nearby Similar Sales
No similar recent past sales could be found.
I spoke with this realtor once back in 2007 while looking at another listing. I told him I had come close to buying a large Las Colinas model in Portola Springs, but had backed off over concern about a crash.
He said: “oh, that’s too bad. Those are nice models. They’re going to go up at least $500-600k. But if you wanted to be more conservative, that’s ok.” [Buy now or be priced out forever!!]
Did the realtor buy one?
The Kool-Aid is strong with this one.
I wonder how long the house has been empty. That should be a motivation to a seller, especially in a depreciating market.
Irvine hasn’t seen the depreciation that many of the higher-end suburbs of Miami/Ft. Lauderdale/Palm Beach. Maybe it was the timing of purchases, or the degree of speculative purchases. Lots of the foreclosures I know of in SoFL are people who bought more than one property.
I think it’s been for rent on-and-off for a while.
The Kool-Aid is strong with this one.
I love it.
Orange County’s problems are unique. We are not anything like other bubble cities. Most other bubble cities are much closer to the bottom than Orange County is.
Though I don’t work for a title company, my business does provide me with a birds eye view of what is (has been) going on with housing purchases and the housing ATM.
Homes like the one in IR’s posting have yet to see the real impact of what is to come. Even if these habitual home debtors could refinance, they couldn’t afford the amortized payment. They are simply way over their heads.
Orange County is facing a calamity with white collar home debtors on the time clock. JMHO ~ All of The OC’s most prestigious zip codes are likely going to see declines greater than 50% from the peak … and yes, that includes Turtle Rock/Ridge and Shady Canyon.
I know from my side of the business that none of the builders and developers think things are turning around any time soon, or if they do, they are not acting on it.
Irvine Renter,
What is the “Joe Six-pack” version?
It varies between the MSM interpretation of events filled with platitudes to the full-blown kool-aid version of happy days being right around the corner. Few have a grasp of the details, and most are still overly optimistic about the future. When the Joe Six-Pack version becomes overly pessimistic, we will be near the bottom.
Housing Bubble Grief Stages
1. Denial
2. Anger
3. Bargaining (Here’s where the MSM is)
4. Depression
5. Acceptance
IR this is so true and well olbserved by you. I see many homes in Turtle Ridge listed for months on end at 2-300k more than purchased in 05,06,07. It just boggles the mind what these owners and their brokers are thinking? Then after a couple months the inevitable “short sale ” notice shows up on the listing.
You would think someone who could “afford” a 2 million home would be able to take a 2-300k hit and move on with their lives. Why lose the house and credit?
Oh man, I read Butler’s Pantry and was all excited to see the return of the butler bear, but he was nowhere to be seen.
http://www.crackthecode.us/images/Chateaux.jpg
It was leased (MLS data) starting in 01/05 for 4250, then 01/06 for 4995, then 08/06 for 5500, then 10/07 for 4995 then 04/08 for 5350. I can’t help but think short-term rentals fare well in the “taking a beating” department. How many people want to pay this kind of money (or any kind of money) for a house that has been a rental for so long? I see that same kind of WTF pricing in Newport as well. No sales, but lots of ’06 pricing still in place. When will they “get it”?
“When will they “get it”?”
The owners who are not selling will never get it. They will never accept that their house fell in value. I heard an owner from the 90s tell me that his house didn’t fall in value. He said there were not buyers around, and if he had to sell he would have taken a loss, but the property never lost value. WTF? I think we will hear the same kind of nonsense from the owners who survived.
The owners who are trying to sell can remain in denial as long as all their neighbors do. It is like a cartel. It doesn’t matter if nothing is selling as long as nobody lowers their price. Of course, someone will lower the price (probably an REO), and prices will fall. Those who refuse to accept the new reality remain priced 25% over the market and wonder why the house doesn’t sell (think today’s seller).
Maybe that owner was thinking about fundamental value. I have the opposite annoyance when people say 1/3 of the home value in the US has been destroyed. Actually, it’s been revalued.
A home can have several values. 1. It’s value to the current owner. If they can keep paying for it, the ask price can stay there forever, unchanged. 2. The highest value a buyer will pay, given a reasonable time to sell. Since homes are illiquid, I’d set that time period at 3-12 months. 3. A discounted cashflow value, with rent of similar homes, maintenance, tax effect, insurance, etc. This number is fairly stable, but it’s nowhere near bubble numbers. 4. Replacement cost of construction. Note that this is not a good method, since it ignores the cost of land, and nothing stops prices from dropping below construction costs. 5. Purchase cost + expected appreciation for x years of ownership. It’s funny that this doesn’t work as a way of pricing for any asset. It’s a way of assessing returns if you have sold, or have a reasonable estimate of sale price. Otherwise, pricing at market using this method would be pure coincidence. 6. Comparables. Not very good. However, it’s the most popular method. Particularly frustrating if nothing has sold recently, and you are using other wtf prices from other similar homes for sale as comp.s
I’m annoyed with people discussing “value” as if it’s fixed and certain. I like to think of it as more of a range, which can be very wide using the values MalibuRenter describes above.
The guy I was referring to had a different value. I would add #7 to MalibuRenter’s list: 7. Value from memory of peak bubble prices which cannot be measured in any way except one’s fantasies. That is the value he was referring to.
I think sellers and realtards are going to use peak prices as a tactic (once the dust settles) in order to justify a price toward the higher end of a range of values.
“Thank you for the $500k offer, but we’re only asking for slightly more at $550k. And don’t forget, this home sold for $1 MILLION DOLLARS in 2005! It will be worth that shortly again!”
“It will be worth that shortly again!”
The “shortly” part is right, anyway.
At that point, ask “How much will a gallon of gas, be? $8? Maybe a Big Mac will be $6.50?”
I can’t tell you the number of times I have seen MLS descriptions with exactly that tactic. Something along the lines of “look at the bargain you are getting at WTF pricing, because some idiot paid super-WTF price 1.5 years ago.”
:coolsmirk:
“They will never accept that their house fell in value.”
In my opinion it never did fall in “value” it only rose in price and then the price started going back down to “value.” Now all these rate drops, a 10-year note purchases are only aimed at increasing price again, not value. Especially since end game will be huge devaluation of the dollar, which will then be circumvented with hiked interest rates leading to yet another price drop.
Actually, my favorites are the WTF listings that talk about being at lot value…when the house for sale down the street is 20% less.
Another tactic I see a lot lately is the “owners added more than $X in upgrades.” Ironically, “X” is usually roughly equivalent to what the house should be selling for, and what the asking price is. Sometimes, the upgrades appraoch 30% of the asking price. Them must be some fancy upgrades!
If they have stamina, they probably can get this price at 2025.
How much would it have to rent for to be cash-flow positive, assuming non-exotic financing?
$8,500-$9,000 per month.
When I first perused this description, I read “for that prick buyer who wants it all.”
IrvineRenter, that wasn’t a Freudian slip. That was a Freudian teddy with matching high heels and fishnet panty hose. What’s even funnier is that you probably hit this house’s future buyer right on the head.
Some house listings, rather than a single price ($500K), have a “value range” ($500-550K) of prices. What does this mean?
It is a lie to get into more MLS price brackets.
I’ve been watching the prices on CA north coast property, which went through much the same speculative bubble, and WTF pricing on non-conforming plywood shacks, lots of chateau and mansions built on sea-cliffs for multi-millions, and etc. Realistic pricing is slowly seeping in, with short sales and foreclosures beginning to bring down prices. But I see lots of Koolaid-influenced pricing on the North Coast, too. And just as before, I wonder, “Who are all these rich people with so much money to spend?” Well, no one, now.
IR,
If clear that this house is a WTF price, in many Irvine areas (TR, Woodbridge, Westpark), prices are not falling much.
Most of detached family houses are still priced above 350$/sqf, which makes 2000-2200 sqf houses far away from rental parity.
But in many cases, when asked prices are set up far too high, the houses still sale for a few 10k$ less, but not major drop, even compared to peak.
Worse, looking at redfin or others, you can even see average pricing going up a bit recently.
any comments ?
There are a few transactions taking place, but not very many. The volumes are so light that even with the reduced inventory, the time to clear the market would be over 3 years. This condition can persist until sellers become more motivated. REOs are the definition of motivated sellers. As the lenders acquire more of these properties and move them out, prices will drop.
I liken it to the lottery. As many have pointed out, there are very few sales. Many homes that go on the market at the wtf pricing never sell and eventually go off. Many more never even go on the market because the sellers realize they will probably never get the price they need/want and don’t want to go through the hassle. As such, all it takes are a few knife catchers to make it seem as though prices haven’t gone down. There are a handful of people in the crowd who have money/income and decide the time is now to act (kids going to school, wife insists on owning, etc.).
However, once the market has a lot of foreclosures that must be moved through, a wait and see attitude no longer cuts it. The quantity of foreclosures will have to be sold for less if they are to move and with enough of them it will be painfully clear where the new price points lie. Sellers will not be able to fool themselves when many nearby foreclosures have just lowered prices 20% or more.
Bear in mind also that nearby cities values are falling faster than Irvine meaning you get much more bang for the buck only a few miles away. This exerts downward pressure as people have a hard time justifying the significant premium that is Irvine. On top of all this, certain areas of Irvine are ready to implode big-time. Woodbury and NW II will be hammered in the coming years which puts even more downward pressure on the other non ground-zero areas (why pay 25% more to live in NW Pointe/PS vs. Woodbury when the schools are the same, etc?).
The Option ARM meltdown is underway, but there are lags in the system (at least 6 months non-payment to foreclosure). I’m thinking late 2010 or early 2011 should be an apex of foreclosure activity in Irvine (based on 2010 being the peak recast year). Thoughts?
Very good analysis. You are right on the mark.
The average price is rising because homes below the conforming limit are selling, and those far above the conforming limit aren’t. That’s why you see an upward drift in average list prices. The mix is changing to more and more high end homes sitting around.
You can also see this at housingtracker. The 75th percentile home list prices are going up in a lot of places. The list prices aren’t rising for individual homes, they are being taken down over time when it doesn’t sell. But the distribution gets more and more toward the high end over time.
CCR, most of the established parts of Irvine (e.g. Westpark, TR, Woodbridge) near the IBC (Irvine Business Complex) have been faring better than the newer areas that are further from the Irvine core and where specuvestors infested.
Some sellers do fail to set prices that are realistic and reflect existing values. It’s only after a property has lingered on the market for several months that they start to get the hint. Great post.
The question: Why are Irvine and similar beach, or beach-close, community home asking prices holding relatively steady compared to coastal Florida rapidily dropping prices? Answer: People are actually living in the Irvine homes (for the most part). Much of coastal Fla is speculation. It’s much easier to walk away from a place you don’t live in. As the second wave of adjustable rate loans on prime borrowers resets this and next year, price drops will gain momentum.
Plus, there are actually decent jobs in the Newport/Irvine area unlike many parts of FL that tend to rely on minimum wage tourism jobs.
From my research, there is another reason. In California’s nicer neighborhoods, the teaser and interest only periods were longer. That’s because of jumbo financing for even median priced homes during the bubble.
You can see this with Case Shiller data for different layers. If the cheap, median, and expensive homes all had the same sources of financing, the prices are falling at about the same rate. If they had different sources of financing, they fall at different rates, because people lose their homes at different rates.
Good point. Could be too that high-end folks have access to more credit/reserves and can hold out longer that other people.
“than” other people.
Not enough coffee this a.m.
I’m afraid to ask this, because it’s probably a very stupid scenario, but a buddy brought it up and I couldn’t think of much to say.
He proposes that “some people” are arranging short sales on the house they’re upside down in, and then arranging through a separate bank to purchase the property at this new price. The idea being to get the loan moved to favorable rates and market value. It sounds too good to be true, so I’m sure it is, but if one had outside help (in the form of a cash gift for down on the new loan, perhaps), is something like this even possible?
Spare me if this is incredibly naive 🙂
I’ve also hear an example of this in Riverside. Purchased at $300k, refinanced with down payment pulled out at $400. Short sale at $150k to the guy’s wife for cash purchase. The guy is a shuttle bus driver and was bragging about it to some passangers. I don’t know the truth or legality of the sale, but it should be illegal. If true the lenders were ilresponsible in 1. lending the money, 2. refinancing and 3. allowing the short sale to the guy’s wife. He essentially go the house for $50k cash less non-payment of monthly payments.
Wow. That ought to be easy to catch in a title search.
Now, if someone was doing a short sale and had an offer from a close relative with a different last name, I wouldn’t be so sure. Still, you end up with something like a married daughter or a father in law owning the house.
Yes, I have seen this done through extended family, but the title people catch it if it is an immediate family member.
This is the “buy and bail” that happened often in the 90s. The lenders cracked down on this practice early this time around.
Thanks for the replies. I guess I’m wondering how this isn’t allowed to happen?
Say a homeowner can’t afford their 600k loan at 6.5% so they request a short sale. Bank agrees they can’t afford it and says they’ll do 450k market value short sale. And then the original buyer comes in with a loan from another bank and says “well a 400k 4.5% loan I can afford (50k down)!” And let’s say they can.
I can totally understand why the first bank doesn’t wan this to happen, but is it really any different than the original intended short sale? Are there laws against this?
For the homeowner this would be a cramdown refinance wet dream.
The second lender would have to be complicit. They’ll know the borrower has another mortgage, and they’ll want to know the intent of the borrower with the home. Lenders are requiring signed leases for currently occupied homes intended to be rented.
“Also, since many ARMs were being written up until the credit crunch in August of 2007, and these ARMs have 3. 5. 7 and 10 year terms, the foreclosure problem is going to be with use until 2017. Don’t expect any meaningful appreciation until then”
IR,
Any updated loan $ vs. reset dates charts available? His estimated time to clear the foreclosure problems seems indicted a very long-term problems in RE for 10 more years.
A property can linger on the market for a long time with small payments (come-on interest rates) or cash reserves waiting for the market to turn around or low principle.
Almost all the sale from 2003-2007 fall into those catagories in that order. The first will also be the first to fall in price after the low interest is reset. The anticipation of a Fed bailout in housing is delaying the price decline.
I don’t have any hard data. His information is anecdotal. The problem will undoubtedly lessen over time.
The problem with defaults will continue through 2011.
The problem with foreclosures will continue through 2012.
The problem with REOs will continue through 2013.
There is a built-in time lag in each of these circumstances. Plus, at some point, interest rates will have to go up. This will wipe out anyone who may have survived the initial reset/recast, so there are plenty of delaying and dispersing mechanisms built into the system. There will be lingering problems for another 10 years, but these problems will probably cease to dominate the market by 2013-2015.
Man are you ever right about the Kool-Aid. I’m seeing this from another angle, though: that of the real estate agent who doesn’t realize that the good times are over. My husband and I live in the Bay Area and are just beginning to look around. We probably won’t buy for another year at least, but we want an idea of what the market looks like in our area. (And who knows? With the prices these people still expect to get, we may well be buying one of these same houses in a year, once they’ve figured out the true state of things.) We showed up to one of these places on Saturday and the real estate agent–just after she’d shaken our hands but before she’d deigned to show us inside–asked us if we had a lender approval letter for at least the asking price of the house. WTF? Even if we made an offer tomorrow we’d never pay asking, and since we’re not looking to buy soon unless we find something perfect and extremely underpriced, we’re not ready to get our credit dinged by getting an approval letter every couple of months. I explained this to her and she said, “Oh, but you’ll want to jump when you see something you like! We’re really seeing the market pick up! Things are going to be back to normal in six months!” *smell of desperation wafting from the general direction of her armpits*
Yeah, right, lady.
When realtors pull this sort of BS on me “Do you have a letter of lender approval for the asking price?”, I just respond,”Yes, but I am looking for a cash sale” (which is true), and then turn around and walk away. I even had one old bag ask me if I could really afford the house I was viewing. Yes, I really could. I could even buy outright, but when she insulted me like that, I just turned and walked out. I also took her card so that I would never turn up at another open house that was her listing.
I find these days I am dealing with even more obnoxius REA these days. Idiots.
How exactly are people supposed to answer those questions?
“No, I can’t afford this place. Have you had any prospects come through that can?”
“No, I cannot afford this property. I am only here to waste your valuable time.”
“No, I am cruising the neighborhood to find a place I can break into and squat for a while. The police raided my last meth lab.”
“No, I am following the example of ‘Wedding Crashers,’ and I am going to open houses to see if I can hook up with a desperate Realtwhore.”
I love number three, and will use it in the future. I will, of course, credit the source when asked.
Yeah, what is this about? This dumb cow should have been falling down on her knees in gratitude that anyone was even coming to look at her overpriced listing (on the market for seven months, a $100K price reduction from list and still another $100K to fall at least). She should have been handing out friggin’ door prizes, not interrogating me about my bank balance. The expectations these people (agents and sellers alike) still possess astounds me. As it happens, I could easily afford the place at the asking price–but why in the world would she think I’d pay it?!
Shannon I have had a realtard say the same thing to me. Granted it was in 06 but I was so mad at the attitude and arrogance of such a statement. I cannot wait to see him at an open house and give him a piece of my mind.
Why are brokers even needed? I consistantly wonder what on earth they bring to the table( apart from the contract which is drafted by the CAR) I say both sellers and buyers are better off without them. Hire a good looking escort to show the house for open houses. Then both buyers and sellers can communicate directly with each other and then move to closing with their respective lawyers. It’s safer for both parties, and a whole lot cheaper. With the info available today who needs a broker to lie to you about everything. I don’t need their color commentary, nor ideas on how to renovate. I don’t like their taste anyway…..
Please someone give me a good valid reason why their services are needed? If I am from another area I can understand how they could impart some local knowledge of schools etc. Besides that, WTF.
It used to be that realtors justified their commissions because they were the only people who knew what was for sale. Before the internet, there was no way to know what was for sale without access to the MLS, and the realtors controlled the MLS. Now with the internet, there really is no special advantage to a realtor.
At this point, the only thing they do bring to the transaction for the seller is the willingness to say and do things the seller would not. I couldn’t bring myself to spout the BS a realtor is willing to say, and if that BS helps sell for 6% more, then it is worth it.
$1.5M with white tile & grout in the master bath. Thanks for playing!
Since we’re discussing crazy agents and WTF prices I’ll jump on the bandwagon. Just for kicks we took a look at a house in Newport this weekend that I’ve been watching. It has been on the market for well over a year and the asking price has decreased from $3.1 million to $1.8 million. The agent was talking about what an amazing deal this was since the asking price had dropped by over a million and the owner was going to take a huge loss. I then pointed out that according to Redfin the house had sold for $1.1 million in 2002, and I also told her that this was where I thought prices were heading. “But the owner owes more than that!” she told me. Agents must hate the fact that all of this data is available on the Internet these days…..
“But the owner owes more than that!” she told me.
Did she think she was telling you something about the value of the property or the stupidity of the current owner?
Clearly the latter! And also the stupidity of the lender! I did get the agent to admit that the original $3.1 million asking price was (in her words) “a bit lofty!”
An interesting comparison – what else can you get in 92603 for that amount with a good elem school (Bonita Canyon instead of Alderwood)
http://www.redfin.com/CA/Irvine/19522-Sierra-Soto-Rd-92603/home/4740056
19522 Sierra Soto Rd
Irvine, CA 92603
Price: $1,399,500
BEDS: 5
BATHS: 4
SQ. FT.: 4,600
$/SQ. FT.: $304
LOT SIZE: 8,700 Sq. Ft.
PROPERTY TYPE: Single Family Residence
STYLE: Contemporary
YEAR BUILT: 1969
STORIES: 2
AREA: Turtle Rock
COUNTY: Orange
MLS#: S562216
SOURCE: SoCalMLS
STATUS: Active
ON REDFIN: 45 days
Bbbbuut, Sierra Soto isn’t “Tuscan”.
Key stat on Soto: 1969. What should be the appropriate discount for deferred maintenance?
I toured this house when it was open a few weekends ago. It is pretty much a renovated disaster. According to the agent, the additional 1500 or so of extra square footage was tacked on by the previous owner. And it all really looks tacked on. All they did was add a “master suite” on top of the garage and it looks ugly. Plus, all the finish work in the house (paint, casing, etc.) is really poorly done. My husband told the agent “This place needs a lot of work. And the add-on master bedroom faces the street instead of the backyard. How much are you asking again?” She seemed a bit surprised by his question and just repeated that the current owners were motivated.
Just a few days later, however, the price dropped from $1.538 million to where it’s at now at $1.399. But, it would take at least $200,000+ to gut this place and make it not fugly. This place is still waaayyyy overpriced. Despite the realturd’s description, these sellers are not yet motivated.
And now for something completely different…
I read on the ‘net that AIG had hired armed guards at its Manhattan headquarters. I pass the building on the way to lunch. So today I looked into the lobby.
It’s quite normal. No Wackenhutt or Blackwater in sight.
I think that was one of those phony plant stories put out after the spokeshole in front of congress read all the evil, threatening emails they were getting about paying out the bonuses as his reason for not being able to release the names of the people who had received the bonuses.
My guess is they’ve been getting those emails ever since they started picking the taxpayer’s pockets… remember the $500k “retreat” they held in Laguna right after they got the “bail-out” money?
I was just informed that the owner of this property also owns 16 Silhouette, Irvine, CA 92603. It is also WTF in its listing price.
Silhouette, with its nice view of cookie cutter rooftops…where do I sign up?! Silhouette was also on the mkt. as a rental in late ’05 and 07/07 to 01/08 at 6500/mo. and it apparently didn’t rent (the listings expired). I can’t imagine having to pay that sort of $$ for vacant properties.
Ooohh, Silhouette also has an enchanting view of Laguna Canyon Road and the 405.
“Both parties are suffering; people are losing their homes, and our banking system is insolvent.”
Only one party is suffering: the American Taxpayer.
I went looking for some other superbig price drops. Think back to 2005, when something in the high desert cost $285k. Now available for $49.9k, from Fannie Mae.
37848 PRENTISS AVE
PALMDALE , CA 93550
Single-Family
3 BR / 1 Baths
1424 sq. ft.
82.5% off peak.
This same property had it’s value go up in the bubble of the late 1980s. Sold for $100k. After 9 painful years of ownership, the owner sold it/had it foreclosed at $41,830 in 1998.
This is a 1998 rollback, and a mid 1980s rollback too.
Microcosm of two bubbles.
I pointed out in the previous thread a house in Riverside that had the exact same price drop-$285k to $50k. Of course, it was a 2 bedroom, 1 bath 876 sq ft house built in 1910 in one of the worst parts of the city. The scary thing is that somebody paid $285k for such a dump in the first place.
Is the $285k a real sale or a transfer of title and new loan with money to buyer? Govt. program is subprime with community ownship? No money down, cash at closing and low to no interest for a few years?
Oh, I’m sure it was a real sale. In fact, they might have put a lot down, since the bank was only owed $96,800 when it foreclosed on it and turned it into an REO.
Here it is again:
http://www.redfin.com/CA/Riverside/3680-Franklin-Ave-92507/home/4934263
Date Event Price Appreciation Source
Mar 06, 2009 Price Changed $49,900 — MRMLS #I08133833
Feb 21, 2009 Price Changed $73,900 — MRMLS #I08133833
Feb 09, 2009 Price Changed $76,900 — MRMLS #I08133833
Jan 30, 2009 Price Changed $77,900 — MRMLS #I08133833
Jan 16, 2009 Price Changed $79,900 — MRMLS #I08133833
Jan 07, 2009 Price Changed $81,900 — MRMLS #I08133833
Dec 23, 2008 Price Changed $85,900 — MRMLS #I08133833
Dec 11, 2008 Price Changed $87,900 — MRMLS #I08133833
Dec 01, 2008 Price Changed $89,900 — MRMLS #I08133833
Nov 18, 2008 Price Changed $92,900 — MRMLS #I08133833
Nov 07, 2008 Price Changed $94,900 — MRMLS #I08133833
Oct 28, 2008 Price Changed $99,900 — MRMLS #I08133833
Oct 24, 2008 Relisted — — MRMLS #I08133833
Oct 23, 2008 Off Redfin — — MRMLS #I08133833
Sep 17, 2008 Listed $104,900 — MRMLS #I08133833
Aug 21, 2008 Sold $96,800 -29.4%/yr Public Records
Jul 15, 2005 Sold $285,000 35.6%/yr Public Records
Oct 31, 2002 Sold $125,000 — Public Records
The $125k and $285k sales are real sales, the $96,800 one is the bank taking it back. The rest is the bank’s desperate attempt to find a new sucker to buy the place.
$1,375,000? Wow – and it includes while tile counters in the bathrooms.
My guess is they’ll sell for around $1,175,000 at best. (And it would lease for $4,500/mo. tops right now.)
BTW, it’s the same owner of 16 Silhouette, also in Quail Hill, which is a plan 3 Vicara listed at $1,599,000. (Silhouette has been on the market for a total of 634 days (!) and started at $2,195,000.)
This is a $450-500K home in reality pricing. I’d buy it for that. Otherwise, its sidelines baby, until 2013, when circumstances force these people to accept reality.