This property went back to the lender on 11/9/2007 for $506,429. Apparently the seller bought the property with a $460,000 negative amortization loan with a 1% teaser rate. I don’t see a second, so it appears the $125,000 downpayment was consumed by the negative amortization on the loan and the dropping property values.
The property was originally posted here: The English Garden.
Now the property is back on the market at a significant discount. If they get their asking price, they stand to lose $96,800 after commissions.
Old Asking Price: $595,000
New Asking Price: $530,000
Purchase Price: $575,000
Purchase Date: 1/30/2006
Address: 54 Paisley Place, Irvine, CA 92620
Beds: 2
Baths: 2
Sq. Ft.*: 1,050
Year Built: 1999
Stories: 2
Type: Single Family Residence
View: Hills
Neighborhood: Northwood
$/Sq. Ft.*: $567
MLS: S476148
Status: Active on market
On Redfin: 42 days
In my opinion one of the most notable features of this bubble has been the increase in price of entry level housing product. I suspect this is a result of sub-prime lending and/or exotic financing terms. Back when you could not afford to finance more than 3 or 4 times earnings, entry level housing was priced at $200,000 or less. During the rally when 10 to 12 times earnings could be easily borrowed, $200,000 properties where bid up to $550,000. Nobody was actually making any more money, they were just borrowing a lot more. Once the limit of borrowing was reached last year, the rally fizzled. Now that credit is tightening, those who bought at the top are having difficulty finding buyers. The result of all this borrowing is properties like the two I am featuring today.
First, I want to say this is one of my favorite neighborhoods in Irvine. It features architecture reminiscent of a small English village with quaint cottages. There are few visible garages, the sidewalks are detached from the street, and the trees make for a great street scene. It is very close to Canyon View Elementary in Northwood. If prices were not ridiculous, I would buy in this neighborhood.
These two flips are showing signs of stress. They are overpriced and hoping a greater fool comes along to save them. 206 Garden Gate Lane has been on the market nearly 100 days. If they get their asking price of $655,800 assuming a 6% commission, they will lose $8,548.
The flipper at 54 Paisley Place gets their asking price of $595,000 assuming a 6% commission, they will lose $15,700. Does anyone want to go up there and pay well over $500 per square foot for some 8 year old properties when you could buy 75 Chantilly, a nearly new, much larger 2 bedroom over in Woodbury for $370 per square foot? I think I will pass.
What a lovely small house. I love it. I would almost move to CA for it if we didn’t have so many similar overpriced offerings here in Chicago.
Now, I don’t know the CA market,and can only say it looks surreal to me. Chicago’s bad enough, very much a bubble, and this cottage isn’t priced much over what much worse stuff in far less desirable Chitown neighborhoods. are priced at.
But methinks that $200-$250 a square foot is really more like it, given that this is an “entry level” place and is targeted to buyers making less than the area median income. After all, 2 bedrooms is NOT a full-sized family home.
What do all you Irvine denizens think?
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I think your analysis is right on the mark.
I think it is funny how 8 years old is considered “old” already and “needs a remodel”…
Stuff there ages that fast?? LOL
I live in Chicago also. I like this house too because it reminds me of a few houses in some of my favorite neighborhoods like Lincoln Park, Roscoe Village and Lakeview. We do not have a bubble like SoCal in anywhere near the proportions, but what we do have is a major condo glut. Rehabs are all over the place and those plain, look-alike three/four flat buildings are popping up everywhere at stupid prices.
Just add granite counters, wood floors, neat little track lights and cherry cabinets, and VIOLA! You have a $500K condo that costs more than the 80yr old house sitting next to it.
Plus, the 3 year county property tax reassessments are coming around and alot of people who have owned for a long time but not enough to get the tax freeze are seeing some staggering jumps in their bill.
I moved to Irvine from Madison, WI a couple weeks ago (for a job). During my condo-for-rent search trips earlier this year I noticed that indeed, an 8-year-old house or condo here is “old”. The construction standards don’t seem to be anywhere near what they are in Wisconsin. Everything is done on the cheap and the homes (or at least the condos) are dumps after just a few years. #1 lesson my father taught me as a child was that if you’re going to do something, do it right or don’t do it at all…they do it all wrong here.
Kim,
If you really want to get a sense of how different the mentality is here as compared to the Upper Midwest, read this post:
https://www.irvinehousingblog.com/2007/04/08/southern-californias-cultural-pathology/
I have to admit though, I could never go back to all the cold and snow.
I’m curious to know if sellers commonly use the same RE agent that helped them buy the home.
Can you imagine making $33,150.00 for “helping” your client to buy and later sell (because they realized they couldn’t afford it as the house stopped appreciating like it was suppose to) this home while they lose $96,800?
I don’t think I could look at them in the eye, especially if I was touting the benefits of homeownership during the first transaction.
(Just speaking hypothetically here, as I don’t know the actual details of the featured post).
I really like the little house…but I just can’t believe the price. With conventional financing (20% down) + HOA + property taxes, I wonder what the monthly cost would be.
Did you ever think that the rest of the world had gone mad and you were the last sane person left, or, worse yet, that you were somehow crazy and everyone else was sane? Is it too much to hope for that some day in California an average home would be affordable for an average person making an average income?
Congrats on the blog mention in a Washington Post article.
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/27/AR2007072701693.html
This place place does look cute and all, but its 1050 sq ft.
372k sale price in 2003.
Our bubble isn’t quite like that of California but it is very close.
Lakeview’s my old nabe, and I now live in the Rogers Park-Edgewater area, close to the lake. Edgewater prices are at last starting to break down, but Rogers Park developers clearly think they have the next Lincoln Park on their hands.
One unit, at 1216 W Jarvis, is a case in point. We are talking about a non-rehabbed vintage, very pretty but needy of new windows and plumbing upgrades. The unit, 1N, was listed in 1998 at $42,000. In 2002, when I viewed it and passed, at $127K. Then, a year later, at $144K. Then at $169K.
Think about that , a 400% profit for merely living in the place, in an area with an elevated crime profile and a massive glut of rehabbed condos.
A rehabbed vintage around here with 3 beds and 2 baths is typically listed at $375K-$450K. We are talking about 1,250 sq foot units with the usual amenities- granite, stainless, a spa bath- with no parking and that don’t even necessarily have beach views that are as expensive as comparables in Lakeview. Many of these buildings are only 25%-50% sold after being on the market for over 500 days, yet the seller clings to these elevated prices. Why would someone buy in RP when you can get a comparable in Lakeview?
Chicago now has over 70,000 condos and houses languishing on the market, and our foreclosures have tripled in the past couple of years, for the usual reason: 97% of all foreclosures are for adjustable loans, which surprises no one, I’m sure.
The neighborhoods that stupefy me, though,are the ugly west town hoods like Bucktown and Wicker Park and Logan Square. I mean, these places have everything: elevated violent crime rates, miles from the lake or beach, no access to rapid transit, and hideous architecture. Yet an 80-year-old former worker’s cottage with 1400 sq ft and a schlock rehab done on it , located on a semi-blighted street with weed-and-trash choked vacant lots and boarded up warehouses fetches over $700K.
The only difference between Chicago and SoCal that I can discern is a slight difference in magnitude. Out there, you could get a liar’s loan for 10X your income, while here you could only get one 5X or 6X your income.
What I find interesting is the other sellers in this neighborhood.
212 Garden Gate Ln. listed for $585k last sold 3/05 $505k 17 DOM.
206 Garden Gate Ln. listed for $649.6K last sold 9/06 $625k 214 DOM.
71 Middlebury Ln. listed for $648k last sold 7/06 $645k 29 DOM.
“What I find interesting is the other sellers in this neighborhood….”
Yes but this was in stupid years of 2005/6. Best to buy in foreclosure. Give money to stupid greedy people living under the bridge that bought in 2005 and 2006 and cannot afford the mortagages.
You figure for that kinda of ca$h, they would help you move too…
My sister bought a 2BR/2BA rehab in Rogers Park on Pratt. Nice place, but they paid like $250K for it. I rented an apartment on Northshore about 10 years ago. The neighborhood is changing, but slowly. It is still the best bang for the buck in Chicago, though!
I do not get Wicker Park or Bucktown either. The hipsters love it, though. I think it is still dumpy but is changing. The biggest difference between Chi-Town and SoCal is all the bidding frenzies and speculation. The only major speculation seemed to be from contractors rehabbing.
I did move here from Chicago in Nov 2005. I think you can’t compare the bubble aspect of Chicago to Irvine. This is suburbia. I compare it living in Hinsdale- something of that nature- and when I compare what I could get in Hinsdale (great schools (ranked higher than Uni High), excellent 20 minute commute to downtown Chicago with Metra, etc. The bubble here is definitely nowhere near comparable to a Chicago suburb. It is quite depressing. Just my 2 cents!
Thanks, IR. I read that post the first time around but enjoyed reading it again. I’ve been reading your blog for about 6 months and it truly has helped me to feel OK about not being able to buy a house here. I’m giving it a year here, then I’ll see how I feel…if I decide to stay, then I suppose I’ll sell my house in Madison and just go with it.
I envy you southern californians… See my post on the real estate in San Mateo to experience how bad it still is up north:
http://baglady.dreamhosters.com/2007/07/29/a-taste-of-san-mateo-real-estate/
SoCal watcher, I live right down the block from your sister, if she bought at 1152 W Pratt, or at the other rehab in the 1100 block.
These places are really overpriced, in that my beautiful rental at 1228 is about the same size as these places and rents for $925 a month to new tenants (as a senior tenant, I pay less). The actual rent is really less because our heat (big item in Chicago) is bundled into the rent. We are talking a large, really beautiful 4-room place with all the lovely millwork and 5 immense closets.
I looked at those places in the 1100 block, and was agape. I thought, what are people getting for their dough here? A nice enough rehab, but without the vintage charm and with almost no closet spaceand of course no parking. The building closer to the beach is half unsold, even though these places have been on the market more than a year. Yet one owner is trying to resell his place for $333K alongside unsold places in the same bldg. with the same floorplan available for $259K. If they can’t sell at $259K, are they worth $333K.
Now they’re offering places at 1200 W Pratt, the place on the corner of Pratt & Sheridan, for sale. This place is right next door to my place, and the contrast is ugly. 1200, you might remember, was a very slummy, troubled rental building, and I was calling 911 every other night on that hive. So I was glad to see it sold by court order, to a developer, who has gutted it and is selling the rehabbed units as condos. PLEEEEEEEEEEASE!! They are offering the tiniest 2-bedroom apt I ever saw for $199K to start. The entire apt would fit into my living room and dining room. The second bed is the size of my living room closet. It has only 2 tiny little closets, just big enough for 3 dresses and a coat and a couple of skirts and blouses. Keep shoes under your bed. No parking of course. Ample storage locker you will need for anything you don’t store on a hanger. The one bed is 550 sq ft and is $155K. The price per sq ft is $201/sq ft for a two-bed and a whopping $280/sq ft for a one bed.
It would be a really steep comedown from my nice rental. I thought, why would I trade my lovely, warm, well-kept, large rental with character and charm, at $815 a month, for a tiny, squeezy, charmless rehab with the kitchen in the living room for $1400 a month including assessments and ever-escalating taxes?
If a nice community like Irvine, with fine schools and no crime, is only worth $250 a sq ft, is East Rogers Park worth that much for a mingy little apt that is steeply inferior to most rentals. Keep in mind we still have a crime problem not far from here, and the public schools absolutely suck.
I love this section of Rogers Park and I love Edgewater but enough is enough. One building in the area, 1415 W Lunt, had to be auctioned off. Better yet, I’m seeing beautiful stuff in Edgewater, a really beautiful and absolutely safe nabe, for sale at prices 15% lower than last year, and they are not selling. I can show you rehabs all over this nabe that have been languishing for 2 years mostly unsold. If a place is on the market for 584 days, might it be a tad overpriced?
My sis lives on the corner of Pratt and Greenview. I remember when some of the buildings that were rented out to the Loyola kids were so bad, we nicknamed the one next to us “Auschwitz” because it was so slummy. It even had a “mysterious natural gas explosion” when it was vacant…
Edgewater is an interesting area. Getting better, but still bad. Anything around the Green Mill/Aragon/Riviera is so seedy. I guess all the Jetta driving LP’ers who are priced out after graduating from DePaul are looking elsewhere for the next hot area. Lincoln Park WAS a nasty area about 25 years ago…
How does this compare to Irvine? In a smaller scale, the wishing pricers and the speculators are similar. Just much lower price-per-sq. ft. numbers.
Actually, I would say Highland Park, Northbrook, Winnetka, Wilmette, Glencoe, etc. have almost the same mentality as OC’ers. The difference is alot of these people actually have the money to spend on Bentley’s and expensive luxury items to compete with each other.
She’s up at the 1400 block then. It’s a nice street, no crime. Farwell on south through Edgewater is very good.
But I think that all the places available have been overpriced since 2003.
I believe we will see more supply coming on line, too, since many landords are doing “soft” conversions to beat the taxes. It’s getting too rough to be a landlord.
So look for more downward price revisions.
About Edgewater, the area you refer to , by the Aragon and Green Mill, is not Edgewater. That is Uptown and I am not optimistic about it. It has a lot of permanent, structural problems, like a huge number of CHA buildings, old abandoned industrial sites (SuperFund cleanup) and dozens of seedy rooming houses. I don’t go there at night and not at all if I can avoid it. I think Uptown has a very doubtful future, and feel that Rogers Park, already considerably improved, will clean up much faster.
Edgewater runs from Foster to Devon, and it is now Rock Solid. Did you know that Edgewater has the second lowest crime rate in Chicago, second only to Jeff Park-Saganash for safety? This is my pet area and not only is it a night/day change from Uptown, it is cheaper.
New reader. Love the blog.
Can we get a post on how insane realtor compensation is? Six percent might have made sense when houses cost $75,000, but at 10 times as much…
Well, let’s do the math. 6% of $750,000 is $45,000. To put this in perspective, I could hire a partner level real estate attorney for $450/hr and get 100 hours of his/her time for this amount. That’s 2 and a half weeks of full time work from a highly educated, top of their field professional.
Compare that to the gal who cuts my hair, and like everyone else in SoCal, also has her real estate license. Can she really be earning her half of that $45k? What’s wrong with this picture?
This house still has not sold. Per public records, owner purchased 1/06 with a 1% neg-am 1st of 460,000 and a 2nd for 57,000. If they have been making the minimum payment since the purchase, they owe almost 560,000 on the principle, which will be recasting soon. They obviously cannot even sell it for 530,000. Ouch. We are about to enter a huge wave of foreclosures for this very same reason. 1% neg-am loans were extremely popular in ’06, they will all BEGIN to recast within the next year, this is just the beggining of the burst, we have a while before we will hit bottom.
I don’t see the bank loss? I see the bank drinking the koolaid and still trying to get out of this foreclosure whole.
If they took it back at $506K, they’ll only pay 2.5-3% buyer side commission, if that on the $530K sale, which I doubt will ever happen. It’s still $500/sf for a REO.
Here’s the history on this little PUD:
1050 sq. ft. built in 1998; lot size is 28′ x 54′ – 1500 sq. ft.!
Current taxes: $7873
Sold new in 1998 for $207,000
Sold 7/2003 $372,500
Sold 1/2006 $575,000 $460 1st $57.5 2nd, 10% down
Foreclosure 10/24/2007, trustee’s deed recorded 11/9/2007 apparently to the holder of the 1st, a Deutsche Bank bond pool.
After 1/06 purchase, property was back on the market 5/06 at $615,000; listed with owner, a real estate agent. Off market 9/06 at $598,000. Back on market 1/2007 at $615,000, now rented. Off market at $570,000 6/07, back one last time 7/07 at $530,000, list was $515,000 at time of foreclosure.
Servicing lender (IndyMac) got this back on the market unusually quickly – 11/21/2007 at $515,000, the current list price.
I am seeing now that many of the foreclosures that I am handling in the Valley have 1st & 2nd loans held by the same lender. So, DB is going to take a decent hit here, especially as we don’t know where this will end up selling. Selling costs are 6-7%, I don’t know why No_Such_Reality feels that lenders don’t pay listing side commissions – they certainly do. The last sale of this unit was the last sale of this model here; the most recent sale in tract was a 1700′ unit at $665,000 in 10/2007. The same size model as that had sold in 4/2006 at $830,000. Looks like the sky is indeed falling.
“Did you ever think that the rest of the world had gone mad and you were the last sane person left, or, worse yet, that you were somehow crazy and everyone else was sane?”
I definitely thought other people were crazy.
I managed to convince a couple of real estate agents that everyone else was crazy. That’s out of a few dozen that I tried to convince. I said things like “15% off by the end of 2007, 45% off by the end of 2009”.
One of the agents I convinced (in July) had seen prices slowly going down. He said “prices are only dropping by about $1000 a week”. That was a true statement at the time; it’s worse now. I pointed out that after two years of dropping at that rate, a $1 million home would be worth about 25% less.
The matchstick house looks almost exactly like some project housing directly on Broward Blvd, except I think the Ft. Lauderdale housing is newer, and of course, it is built to withstand hurricanes, so is better built. Same institutional color and everything.
Update on 54 PAISLEY PL IRVINE – foreclosed on 11/09/2007 for 506,429
The current housing bubble actually is quite golbal in scope. I mean in UK, EU, Honk Kong, China….literally every where…
You are right. An average home is NOT affordable for an average person making an average income in any of the global housing bubble regions.
This place is now listed at $445k… this bank is getting killed.
Place now sold. Now I’m going to begin some minor repairs to it.