I am always amazed at the asking prices in Turtle Ridge. There are REOs and defaults everywhere and prices rolling back under $1,000,000 on high end properties, and yet there are owners like today’s who think their properties have appreciated 40% since they bought at the peak in 2006. WTF?
Asking Price: $2,688,000
Address: 28 Woods Trail, Irvine, CA 92603
{book7}
BTW, Kelli Hart has an interesting post at South Coast Homes on the house in San Clemente falling off a cliff, and Matt Padilla has a great post on the impact of HELOC abuse on the foreclosure market. Check them out.
Busy Being Fabulous — The Eagles
Do you think I don’t know that you’re out on the town
With all of your high-rollin’ friends?
What do you do when you come up empty?
Where do you go when the party ends?
Everyone wants to be rich, right? Doesn’t everyone want to believe they made a $1,000,000 though simply owning a piece of real estate? So what happens when you find out that you and everyone in your neighborhood was simply pretending?
The conventional wisdom is that the high end will be the least impacted by the housing crash. This is wrong. It will be among the most effected; it will just happen last.
During the bubble, the more you bought, the more you made. When all properties are appreciating greatly, you wanted to buy the most property you could because in absolute dollars, buying expensive property was how you made the most money. This phenomenon caused high end properties to be bid up beyond WTF price levels. The stratospheric prices are so far above fundamental valuations, that I believe many of these neighborhoods will experience 65% declines before this debacle is done.
Today’s featured property has been the object of my gaze before. On May 8, 2008, this property has already been for sale for 204 days at an asking price of $2,975,000. You think that might have been too high?
It is good to see they have come to their senses and lowered the price to $2,688,000.
WTF?
I can’t imagine how painful it must have been for them to cut their price by over $300,000. They must feel like they are giving it away.
Isn’t everyone who bought at the peak in Turtle Ridge seeing 40% appreciation in 3 years?
THIS HOUSE IS RIDICULOUSLY OVERPRICED!
IT WOULD BE OVERPRICED AT $1,688,000!!!
I even wrote it in realtorspeak so everyone understands.
What do you do with people like this? How do you tactfully convey the fact that houses do not appreciate that fast even in a bull market, and the last few years have not been bullish? This listing is so far out-of-touch with reality that it should be embarrassing.
Asking Price: $2,688,000
Income Requirement: $672,000
Downpayment Needed: $537,600
Monthly Equity Burn: $22,400
Purchase Price: $1,882,500
Purchase Date: 7/13/2006
Address: 28 Woods Trail, Irvine, CA 92603
| Beds: | 5 |
| Baths: | 5 |
| Sq. Ft.: | 3,800 |
| $/Sq. Ft.: | $707 |
| Lot Size: | 8,929
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Mediterranean |
| Stories: | 2 |
| View: | Hills |
| Year Built: | 2007 |
| Community: | Turtle Ridge |
| County: | Orange |
| MLS#: | P689072 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
PERFECT HOME FOR ENTERTAINING! OVER $500,000 IN UPGRADES! COMPLETELY
REMODELED! LARGE FAMILY HOME WITH 5 BEDROOMS, 5 BATHS, UPPER LEVEL
MEDIA/GAMEROOM LOFT, GOURMET KITCHEN W/UPGRADED STAINLESS STEEL
APPLIANCES, GRAITE COUNTERS, TRAVERTINE FLOORS, CUSTOM MEDIA NICHES
W/SOURROUND SOUND, CLOSET ORGANIZERS, CUSTOM TILE IN ALL BATHS, CROWN
MOLDING, SECURITY, INTERCOM, PROFESSIONAL LANDSCAPING W/CUSTOM POOL,
SPA, OUTDOOR KITCHEN, FIREPLACE, OUTDOOR TV/CABLE, COURTYARD FOUNTAINS,
WATER FEATURES, UPGRADED GARAGE W/CUSTOM FLOORING, PAINT AND CROWN
MOLDING. QUITE CUL DE SAC STREET W/ GREAT NEIGHBOORS!
ALL CAP
OVER $500,000 IN UPGRADES! COMPLETELY
REMODELED! BFD!
SOURROUND? GRAITE? QUITE CUL DE SAC?
And my favorite NEIGHBOORS..
If these sellers can manage to get their asking price, the stand to make about $750,000. Isn’t that their due for owning real estate in California?
This property or a comparable one will sell for under $1,000,000 when we find the bottom.
I hope you have enjoyed this week at the Irvine Housing Blog. Be sure
to come back next week as we
continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
🙂
Time to send postcards to the delusional sellers cluing them on on the bubble and reminding them that their properties really aren’t special.
What’s a postcard cost to mail?
25 cents?
A hundred bucks would go a long way.
One of the cruel realizations for folks like this is that their half a million in upgrades didn’t increase the value of their home significantly. If they get five cents on the dollar in added value for the money they poured into this place in today’s market, it would be a surprise.
In fact, features like a pool can diminish the number of buyers who would consider the property.
Absolutely agreed – we have a baby, and I will not consider a home with a pool. That’s one of my deal breakers.
Not that I can afford this place, but apparently neither can they!
One of the cruel realizations for folks like this is that their half a million in upgrades didn’t increase the value of their home significantly.
Sounds like The Granite Counter Fallacy
Whoops. That link didn’t work. Trying again:
The Granite Counter Fallacy
There is a term for people who fall for the Granite Counter Fallacy: Chumba Monkey
Hey, man — way to go. You got your own urban dictionary entry!
The 500k is most probably not even 200k. Brokers usually multiply this number for a listing.
Aww c’mon! You’re being a spoilsport. They invested $500k and are obviously entitled to a return of 25%++ per year on that investment. Then there’s the appreciation on the property added over that. Isn’t that the way things should work?
I have no idea how IR managed to pick out the spelling mistakes in that ad. In all caps, I can barely read it at all, much less read it carefully.
Actually, I have to copy and paste the description into Microsoft Word, convert everything to lower case so the program can read it, then find the misspellings. I find the ALL CAPS descriptions so difficult to read that conversion is the only way I can even get through them.
You know what is great about the listing agent’s Freudian slip “GREAT NEIGHBOORS”
is that the definition of a BOOR is:
“A person with rude, clumsy manners and little refinement.”
Classic.
The half million quotes always fascinate me. I just don’t see how someone can make $500,000 in upgrades in a 4000 sq ft house. That’s $100 per sq ft with $100,000 left over for the pool and landscaping. The kitchen doesn’t even have custom cabinets hiding all the appliances so I’d really like to see their budget.
I paid less than $100 per square foot for my entire house (in Riverside).
Given that the house was built in 2007, I’m not sure all of the “upgrades” are from after it was built. Those might be original builder upgrades.
I don’t know. The blurb sez “COMPLETELY REMODELED”. You should know that the high ethical standards of REALTORS means that they must have ripped out the existing granite to replace it with the much harder-to-find graite, and brought in custom stereo technicians to replace the surround sound with the slightly higher-pitched SOURROUND sound. The first set of crown moldings weren’t quite big enough.
Still, looking at the aerial birds-eye view, this guy really didn’t do as much as his neighbors. His driveway is still tacky grey concrete instead of stone, brick, or some pattern, and there’s no gazebo by the pool area. By TR standards, this is a fixer-upper.
Quit making fun of the listing. When (not if) this property sells for $2.6mil, the realtor is only going to make about $80k in commissions, so you shouldn’t expect them to do a spell check. Geez, what’s wrong with you?
No No! You guys have ALL missed the point. These loanowners have taken out 500K in MEW, or some such, and spent it on “upgrades” to their lifestyle. Now, they are, in fact, home upgrades! You just can’t see them.
Maybe they mean builder upgrades. Like, no, we don’t want the free shag carpet, let’s go high end with “Apartment Grade” carpet. That’s $25,000 right there!
I wonder where on these charts the owner is http://i45.photobucket.com/albums/f53/midtowng/option-arm2.png
http://i45.photobucket.com/albums/f53/midtowng/prime-jumbo.jpg
Based on the rate of increase on that delinquency graph, I don’t see any signs of stabilization in the housing market, do you?
We have all seen the graphs of NODs and NOTs that Mr. Mortgage has published. They show a drop on NODs due to the moratoria, and a drop in actual foreclosures that is even more dramatic. Since the actual delinquencies as represented by this graph show no decline anywhere, we must conclude that the differences between delinquencies, NODs and NOTs represents the shadow inventory. It seems to me that the one thing the moratoria succeeded in doing was create a massive shadow inventory.
Speaking of Mr. Mortgage: 6-5 Beware Real Estate False Bottoms.
“Bottom Line: Headlines are about to get wild, as the age of false bottoms in real estate is upon us.”
I wonder what our SD realtor friend has to stay about this bottom for SD real estate. haha
PROFESSIONAL LANDSCAPING
That’s where the added value comes in. The shrubs are professionals. The plants make you money.
Damn right.
http://www.crackthecode.us/images/professional_landscaping.jpg
That is great. LOL!
HAHA! One of your best yet, AZDavid.
Is this code for some sort of cash crop? I remember Jim the Realtor showing a grow house in one of his videos.
This would be a good example of how Robert Shiller’s housing futures could work. You could be able to short this home and when it sold for closer to its true value the short sellers would profit. Short positions can also move the markets closer to the equilibrium point.
Consider what we had – huge groups of people taking the position that real estate was massively underpriced – that’s the position you’re taking if you think prices will continue to appreciate. A market is nowhere near equilibrium when you have a huge group thinking it’s underpriced and the group thinking it’s overpriced not able to participate in the market.
I was wondering what the recent comp sales were and “No similar recent past sales could be found. ” There are homes built in 2006/7 in FL near my in-laws that sold new for $1.5M listed for $635k with FC auction this month. Those drastic reductions are mostly empty homes bought by speculators, so the drop in more owner occupied areas might be less.
If you owe $2.2 mil on the mortgage, it really makes no difference to you if the home will sell for $2 mil or $1 mil, so why not ask $2.4 mil?
Owner:”I’ll sell only if I get my price. After all, it is TR in Irvine, and it will be worth $10 million in 15 years.”
What do you expect them to do? Give the place away for a peasant’s ransom of say a mere few hundred thousand dollars? That’s un-American.
These people have worked hard these past few years, eating their KFC, browsing the internet, and watching the television from within the confines of this palace and they deserve a handsome reward for their hard work.
IR – from your book, mortgage rates consist of a base rate + inflation expectation + risk premium. Why do we think fixed-rate, or fixed spread + index for ARMs accurately represent that? Shouldn’t the risk premium on a mortgage go down as the mortgage ages – principal paid down, borrower shows she has the income to support payment? Wouldn’t a larger down payment also vastly reduce the risk premium? Is there a wide variation of interest rates for different dp’s – 10%/20%/30%/40%/50%?
I’m thinking that mortgage rates should be higher earlier in a loan and then go down as the loan ages. I don’t think any banks present this, mostly because they wouldn’t get many people going to them for loans, but it seems better for the lender.
Obviously the risk premium was not calculated correctly during the bubble, but how much better is it being calculated today?
winstongator,
That was actually the selling point concept of sub-prime lending. Get in the house now, prove you can make the payment for 2 years, thereby cleaning up your credit, and then refinance into a prime loan (or at least a better one). The problem is that rates may drift up in the interim, or your house could lose value and not appraise for enough to let you refinance. The FHA offers all kinds of funky loan structures, so I wouldn’t be surprised if what you’ve listed is amongst their options.
(This also basically describes PMI, the mortgage insurance goes away once you’ve paid down enough principal).
Can you imagine hiring a realtor- knowing that they will make 150K if your house sells – and then reading this description? Words fail me.
Hey! That realtor would have to work hard to sell that house. They’ll probably put in at least 30 or 40 hours!!!!!
Hey, this is irvine, all the realtor has to do is post the address and a 10c red balloon for the open house. Houses gets sold in within a couple of days. There is extra charge for pictures, text and research. 😉
Join the movement today. It’s time that we educate our adults.
http://www.crackthecode.us/images/DARE_To_Keep_Adults_Off_Credit_Small.jpg
http://mortgage.freedomblogging.com/2009/06/05/do-these-homeowners-deserve-help/11597/
Did you see Mortgage Insider’s post today? Heloc abusers are not just an anecdotal phenomenon. They are the bulk of the problem.
LaCour-Little tracked all houses and condos set for foreclosure auctions, known as trustee’s sales, in the first two weeks of November 2006, 2007 and 2008 in Orange, Los Angeles, Riverside, San Bernardino and San Diego counties. He is presenting his study today in Washington, D.C. at the mid-year conference of the American Real Estate and Urban Economics Association.
I plan a bigger story on his findings, but wanted to share a few results now.
For example, for the early November 2008 data sample, he tracked 2,358 properties. Here’s what he found:
They were purchased at an average price of $354,000 and average year of 2002 (long before the housing peak of 2005).
Total debt on the properties averaged $551,000 at time of foreclosure. That’s 56% more than the properties were worth when purchased, meaning at least that much was cashed out!
The owners couldn’t buy a clue.
They also appear to really, really like TV. Love the one over the bathtub!
You can’t let an inconvenience like bathing interrupt marathon re-runs of “Flip This House”.
What services out there allows you to see the mortgage amounts open for borrowers that do not charge a per transaction fee? RealtyTrac only shows it for foreclose properties.
Seems like there’s still plenty of crack smokers around this area.
One of our Newport Coast neighbors is trying to get $1M for his place and I want to tell him at his open house this weekend that unfortunately his neighbor’s same floorplan just sold 3 mos. ago for $900k.
But, we just moved in so maybe I don’t want to piss everyone off right away.
The listing on Redfin is “courtesy of Lenders Rate Approval.com Corp”.
Sounds like a mortgage company – does that mean this is a short sale????
wondering what “Arezzo” means in the last picture. BTW, those are pretty small, low quality pictures. Do they really want to sell it?
It was the name of the housing tract this home was built in.
Did everyone check out the photos of Geitner’s house on Zillow?
7500.00$ a month rent sure doesn’t get you what it used to.
Nice pergraniteel kitchen though.
A house down wind from the old sanitary landfill (aka dump). Nice looking house but the price still does change the aroma of the NEIGHBOOR- hood on a hot summer day.
Remodeled a new house. What was wrong with it for warrant a remodel.
IR your generous with a $1.6 million price estimate.
IR: regarding the San Clemente house falling off a clifF:
What does “yellow tagged by the city” mean?
If I remember correctly, it means, “Don’t enter unless you want to fall into a fissure.”
Yellow tagged typically means you can go in and out for brief periods, but the building is unstable and might collapse. Red tagged means the thing is so completely unsafe that it is forbidden to enter it at all.
In my real estate browsing I discover “quiet” a few “quite” neighborhoods.
Hello neighbors and your walls on both sides of my $2.6 million dollar house.
This is actually a large lot for Irvine.
True, but in the last 2 pictures you see both sides of the house with the neighbors right there behind each wall.
Please keep us informed about what this house sells for. That is, if it sells. I’ve also noticed that in some of the more upscale neighborhoods the prices have stayed up beyond what one might expect. But I’ve also noticed that the houses are often still selling. Updates on the sales prices of any similar posts that you’ve made in the past would also be appreciated.
IR,
What no loan information.
If a house has a second of 3/4 million (recourse) and is way under loan value and borrower defaults, then the primary 1 million balance does a DOT, what recourse does the second have? Say the borrower is under water by two million, but has half million in the bank and another million in a 401k. Can the second go after the money? If yes, why have I not heard of any going after the money? Also can the second go after future earning, say a year later?
A buyer for a $1.5M house in Irvine? They must not be reading this blog.
Geotpf, I’m interested in getting something in Riverside. Let’s connect! Email in my profile..