Swords in the Wind — Manowar
“The wolf also shall dwell with the lamb, and the leopard shall lie down with the kid; and the calf and the young lion and the fatling together; and a little child shall lead them.” Isaiah 11:16
Builders are now leading the charge in our race to the market price bottom. We have made much about the presence of REOs in the market and the downward pressure they put on prices. However, REOs are not the only form of must-sell inventory. The builders also must sell homes or go out of business. Early in the deflation of the bubble, particularly on the Irvine Ranch, builders held to peak prices and watched their sales volumes drop to near zero. Since the credit crunch signaled the end to crazy financing, the builders have been consistently lowering their prices to generate sales and liquidate their inventories. This has happened without much fanfare here on the blog because we focus on the resale market; however, since the builders are also competing with resellers for the small number of available buyers, their activities are important as they will strongly impact resale home prices.
The builders have already trashed the resale market in the Villages of Columbus. Check out 22 Honey Locust now being offered for $350,000 off the original purchase price. The price drops in VOC have little to do with the quality of the homes, the location or anything else. It is almost exclusively due to the activities of the builders trying to get out of the project. It is my opinion that VOC will be on price parity with Westpark in 5 years, and this will not happen through appreciation in VOC.
Today’s featured property is a new home being offered in Portola Springs at $275/SF. That is new construction for $275/SF. What do you think that will do to the resale market? In a normal real estate market (if such a thing exists in California,) new homes command a premium of around 10% over resale mostly because they are new. If you look at the listing price history, you can see this home has already seen a 5% haircut, and it seems likely that builders will need to drop prices further to generate sufficient sales volumes to stay in business. I believe new home sales prices will bottom between $225/SF and $250/SF while most resales will fall to $200/SF or below. Even now at $275/SF, why would someone go pay someone $350/SF or more for a used house when you can get a new for much less? The fact that the builders are at these price levels and still lowering price to generate sales speaks volumes about the future prices of resale homes.
Asking Price: $578,880
Income Requirement: $144,720
Downpayment Needed: $115,776
Monthly Equity Burn: $4,824
Address: 128 Long Grass, Irvine, CA 92618
| Beds: | 3 |
| Baths: | 4 |
| Sq. Ft.: | 2,106 |
| $/Sq. Ft.: | $275 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Spanish |
| Year Built: | 2008 |
| Stories: | 3+ Levels |
| Area: | Portola Springs |
| County: | Orange |
| MLS#: | S524595 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 150 days |
 Unsold in 90+ days
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location combines the opportunity of living near nature, adjacent to
striking Lomas Ridge but still close to the Orange County Business
District and all of the convienences of some of the best shopping and
restaurants any area has to offer. Our homes are located in the award
winning Irvine School District and are within the much acclaimed
Northwood High School attendance boundary. This 3 bdrm/3.5 bath home
comes complete w/ a very unique floorplan, fantastic kitchen w/ huge
center island that makes entertaining fun and easy. For extra privacy,
you will find a bdrm on each floor. For your convienence you will also
enjoy a 2 car attched garage and down stairs laundry room. All this
backed by the John Laing Homes reputation and very unique 3 year ‘Fit
and Finish’ warranty to accompany your 10 year stuctural warranty. All
pictures listed are of the model. Actual home soon to be under
construction.
The realtors in Irvine could learn something from John Laing Homes on how to write a description and stage a home for photography.
If you pan back in Redfin to get a broad area of homes, they will provide a summary at the bottom of the page showing the average asking prices for resale homes. Depending on where you look, this average goes from over $400/Sf down to about $360/SF. If builders are willing to provide homes for $275/SF, and they are still lowering their prices, resellers have little or no hope of achieving these asking prices. Just based on this simple analysis alone, it appears that resale prices in Irvine still have to fall 30% to 40%. Granted, the asking prices are not where the transactions are, but it is where the fantasies of resellers resides. It certainly appears these asking prices have a deep decline in front of them…
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I Surrender My Soul Odin Hear My Call
One Day I’ll Sit Beside Your Throne In Valhalla’s Great Hall
Like So Many Before Me I’ll Die With Honor And Pride
The Right Of A Warrior Forever To Fight By Your Side
Send A Sign Raise The Sail Wave A Last Goodbye
Destiny Is Calling Immortality Be Mine
Call The Witch To Cast The Runes, Weave A Magic Spell
We Who Die In Battle Are Born Not For Heaven Not For Hell
We Are Sons Of Odin The Fire We Burn Inside
Is The Legacy Of Warrior Kings Who Reign Above In The Sky
I Will Lead The Charge My Sword Into The Wind
Sons Of Odin Fight To Die And Live Again
Viking Ships Cross The Sea, In Cold Wind, And Rain
Sail Into The Black Of Night Magic Stars Our Guiding Light
Today The Blood Of Battle Upon My Weapons Will Never Dry
Many I’ll Send Into The Ground Laughing As They Die.
We Are Sons Of Odin The Fire We Burn Inside
Is The Legacy Of Warrior Kings Who Reign Above In The Sky
I Will Lead The Charge My Sword Into The Wind
Sons Of Odin Fight To Die And Live Again
Viking Ships Cross The Sea, In Cold Wind, And Rain
Sail Into The Black Of Night Magic Stars Our Guiding Light
Place My Body On A Ship And Burn It In The Sea
Let My Spirit Rise Valkries Carry Me
Take Me To Valhalla Where My Brothers Wait For Me
Fire Burning To The Sky My Spirit Will Never Die
I Will Lead The Charge My Sword Into The Wind
Sons Of Odin Fight To Die And Live Again
Viking Ships Cross The Sea, In Cold Wind, And Rain
Sail Into The Black Of Night Magic Stars Our Guiding Light
Swords in the Wind — Manowar
despite your naysaying , i’m sure legions of rich asian immigrants will buy up these properties and create a new OC boom the likes of which you never saw.
Rich Asian immigrants are in deep financial stress just like everyone else. Credit crunch, sharp stock market declines back in Asia, Asian housing bubble busting, and China/US government crack down on corruption and other hot money – just to name a few – have made the Asian immigrants not as fearless in buying real estate.
I’m pretty sure he was just being sarcastic.
no one cold really believe that.
I just happen to be one of those “rich” asian immigrants you’re referring to.
But I’m not stupid, catching the knife for some foolish american who is over his/her head with oversized mortgage and deep, deep in HELOCs.
Count me out!
🙂
Aw, come on Anthony. Tell your homies to step up to the plate and help us out!
Asians are taking over Irvine. Where did all the white people go??
1988 called, it wonders where you have been.
Irvine will be china towm in 2015 and all white will be in Corona
I’m amused at the price banter found here in the comments section. “Blah, blah, can’t go below $300.” “Yada, yada, coastal yada $350.” All numbers based on nothing more than todays perspective. No, make that yesterdays perspective. Those numbers are so far from end game. You’ll be digging for change in your Eames sofa cusions before it’s over. I’ll meet you at the bottom. We can have a good laugh.
Clearly, allan, you are just another of the legions of clueless non-Californian yokels who aren’t sophisticated enough to realize how incredibly special a place Irvine is, or else you’d be willing to overpay to live there too!!!
Actually I rode the Cal market down in the 90’s. “That’s gonna leave a mark”. Now I’m older and wiser. I suspect most pumpers here were still in school back then.
There has been a lot of pounding of the chest by many of the IHB mortgage-owners.
It will be interesting to go back and read the bull’s comments in the IHB archives in a few years to get a few laughs.
I’ve been considering combing through some posts from over a year ago and picking out a few gems. A lot of people have reformed though, so it wouldn’t be cool to post what they said long ago when they have already admitted they were incorrect. Also, as of late I’m much more lazy than I am spiteful.
I can still remember when I though $400k was far too expensive for a small house in Irvine. It wasn’t that long ago.
Keep in mind, if perspective can shift to where it is now, it can shift back just as easily.
We’ve looked in Portola several times the last few years and each time left thinking WTF, nice homes but once you figure in the HOA and taxes (~1.8%) you might as well move to Corona.
1.8% on $578k is $10,404 to start. Then you have the Prop 13 to cap it. Relative to what people are paying in NJ, NY, CT and etc., that is a small change.
What I mean is I’m not buying today’s profiled property yet not because of the 1.8% MR & taxes, but because the price will go down 15-20% more in a year or two.
Really?
While Prop 13 caps tax RATES, property values in CA are generally higher (I think). Now, that’s certainly not true compared to Manhattan, or some of the swanky suburbs in CT. But, I still think that the prices in nice CT suburbs are lower than comparable areas in CA.
My gut suspicion has always been that the prop taxes work out relatively equally (certainly not EQUAL, but not that far off) if you calculated it on a tax dollar/sq ft basis, instead of as a % of sale price basis. I could be (and wouldn’t be surprised if I was) dead wrong, but I’m just saying what my suspicion was.
On property tax I think you are looking at closer to say 2 to 2.25% at least in Northern NJ so assuming this property’s value of $570k you’d be looking around $12-13k pa. However there is no prop 13 cap and these have been generally rising faster than inflation…about 2/3rd of NJ property tax bill is the schools and, outside poorer areas, the property tax funds around 70-90% of the cost of your local school district. So you have to plan on this getting into the mid 20k range or so in the next 10 years.
My sense is that if you look at property prices vs median income I think you are right that the east coast is lower – my town in Northern NJ has a median household income of appx. $100k and median house price of around $650k for a multiple of 6.5x…and I’d guess at the peak it was above 7x but not approaching 8x. I believe Irvine peaked in double digits and is still higher than 6x.
Wrong on both counts. Nice parts of CT (and Westchester county) are every bit as expensive as west LA, south OC, the SF penninsula, etc, and New England property taxes can be far higher than you imagine.
http://query.nytimes.com/gst/fullpage.html?res=9C06E6DF1530F933A25754C0A9649C8B63
Local governments lean very heavily on property tax for revenue in New England, and have a truly bizarre patchwork in place (which makes researching general effective state rates almost impossible). Various townships in NJ, for example, range all the way from under 0.5 to 3%.
Property taxes are a big part of the pressures that encourage older Yankees to move to the South, which generally has rock-bottom tax rates.
CA leans heavily on the state income tax, which is just one of many layers of pressure on working families, while property-owning baby boomers get a free ride on all 3 levels – SS money coming in, low FTB taxes if their retirement income squeaks in under 50K, and, of course, prop 13, which often means tax rates which are 5% or less of what their resale assessment would be.
We vistited Portola many times in late 2006/early 2007 and fortunately, just didn’t find the perfect house (for us) for anywhere near what we were willing to pay. The area’s beautiful, but it is distant.
Like you, the wifey and I visited Portola repeatedly when we were looking a little over a year ago. I distinctly remember these homes in Sendero, in fact we considered putting in for this exact unit. NOTE the photos are the model, it’s not the actual unit for sale. (Model heavily upgraded, about $90K in upgrades.)
Attached condo, shares two walls and worse, this one faces the new IAC apartment complex @ Portola Springs. This 2100 sq.ft. unit was selling for $661,000 and that’s without upgrades of any kind and very generic appliances. With modest upgrades like some hardwood flooring and Corian countertops, our estimate topped $735K. Needless to say we passed. Three quarters of a million dollars for a freeking condo with shared walls AND a crummy view of apartments to top it all off? (Sure Saddleback peeks from above the apartment roofline but really …)
Pretty much typifies how out of control prices were at peak around here. OH, and top it all off by hanging a 1.8% mello roos and tax rate AND $350 total HOA’s and SORRY, NO SALE!
Frankly, this place might be worth $475K with some decent upgrades and that might be a stretch given the rather poor views and compressed planning in Sendero. Even at half a million the tax,MR and HOA’s add another $1100 a month to the tab … I’d rather have a little more house and mortgage for my grand. Just my two pennies …
Invitation has been sent:
http://www.movoto.com/real-estate/homes-for-sale/CA/Irvine/79-Nature-203_S519492.htm
Dude!! Check out the double outdoor bbq’s at 22 Honey Locust! Let the BBQ Battle begin!
I want a barbeque cooking battleground! Complete with outdoor sinks! Now that’s what I call class!
Want! Want!
Can’t possibly afford. Or rather can’t possibly see myself prioritizing the money for it regardless of the price.
lol!
I was thinking about those dual fireplaces that were in that woodbridge home profiled in the past.Ridiculous excesses meant to out-do the joneses.
Cara, I believe that those BBQ’s are part of the HOA facilities. I see a little poster with some kind of rules on it between the two BBQ’s. But yes, you could probably duel it out with a neighbor – leave a flaming skewer and hot mitt burning on their front lawn with a cryptic message to meet you at the clubhouse at 5!
LOL.
Those are the rules of BATTLE!!!
(not silly pansy safety requirements, never!)
Yeah, I was wondering why someone would post rules on their own BBQ setup. HOA joint area makes a lot more sense than my combat rules scenario.
Thanks Cara, now I’m going to be buying dual BBQs for my house and having cookoffs. You just cost me $5k.
Seriously, that’s something that sounds like a lot of fun. Especially the way that NoWowway put it.
John Laing Homes publicists does write a nice description, but do note how s/he managed to leave out all reference to that Marine Corps Air Station runway in the backyard.
I think you are thinking of Columbus Grove, not Portola Springs. Portola Springs just has a landfill in the backyard…
Is “landfill” the politically correct way of saying “garbage dump.” Three more reasons to buy in Portola Stinks:
1)The scent of decaying baby diapers wafting gently on the wind;
2)The mix of toxic diesel fumes and auto exhaust drifting in from the toll road just a hundred yards away (those 18-wheelers spew a lot of black smoke as they pull up the 5% grade;)
3) Slipping softly to sleep with the drone of truck engines and freeway-speed cars racing by at all hours.
Yes, Portola Stinks really has all the amenities I’m looking for in a 3/4 million condo.
Even now at $275/SF, why would someone go pay someone $350/SF or more for a used house when you can get a new for much less?
What kind of silly logic is this? It’s like saying a new bottle of wine commands a 10% premium over one that has been finely aged.
Get it together over there.
The new house has not had enough time to ferment its value – you should always go used and pay the premium.
Yeah! what kind of logic… ??
everybody knows that used cars, especially 2006 and 2007 vintage SUVs and Hummers, are commanding a premium over new cars because of this fermentation issue!
personally, I agree with you & would never buy a new home bc you just don’t know the quality of construction for at least 5 years.
BUT that’s not true for most people. most people wold rather pay a premium for new construction
That’s like saying you would never buy a new car because you can’t be sure it won’t be a lemon.
no, it’s like saying I would never buy the first couple of years on a new line of cars bc I couldn’t be sure of the quality.
also, I would never buy a new car bc the minute I drove it off the lot I lose at least 10% of its “value”
579K for a condo!
Wow!
What a smoking deal this is!
This place is not for those of you who have failed in life and are only “earning” 100K annually.
No sir, the minumum wage for this apartment is 145K.
Congratulations to the 150K wage “earners”. You have finally arrived. Hitch up the U-Haul and move in today.
I’m sure the neighbors who bought in at the non-discount price are thrilled to death about this development. I predict a wave of lawsuits.
Awesome album choice today, BTW. The only album cover that’s more epic than that is the cover to Exciter’s “Long Live The Loud”.
Portola Springs is pretty much Corona of Irvine. To make matters worse, the almost $400 association and 1.8% tax rate turn this entire subdivision into the least desireable
neighborhood to live in Irvine IMO…
Oh wait, I can forget to give a shout-out to the landfill and the real estate surrounding PS that looks like a bombed-out middle eastern country.
Let me get my checkbook…
Is there a big difference between Portola Springs and Portola Hills reputation wise? I get them mixed up. I guess Portola Hills is part of Lake Forest and more like Foothill Ranch, right?
I saw a beauty with a deep discount in Portola Hills recently. Somebody talk me down.
that deep discount is going to look like deep doo-doo 2 years from now.
😉
Yes, Portola HILLS is Foothill Ranch which is all part of the city of Lake Forest. Portola SPRINGS is as suggested previously, just off the toll road east of Irvine Blvd and in close proximity to the now shuttered El Toro MCAS … aka The Great Park.
IMHO, Portola Springs could be a nice neighborhood if and when (a very BIG if nowadays) the Great Park ever gets completed as planned. Frankly I think the Great Park is a goner because Lennar won’t be able to meet their multi-million dollar obligations to partially finance the G.P. Hell, they may likely go tits-up before this is all over. I think it’s possible we’ll see PSprings devolve into myriad lawsuits and builders abandoning their plans for buildout and simply walking away. (I’d be interested in hearing if anyone can tell me if the Irvine Company has any teeth to enforce anything when it comes to these developments that are faltering and likely in danger of going BK.)
The cost/sq.ft ($275) on 22 Honey Locust is quite low compared to other parts of Irvine, which are substantially higher.
22 Honey Locust has very nice upgrades.
The kitchen, flooring, and backyard all look very nice.
The knock on it is location.
I’ve read that VOC does not have the appeal or quality of some other Irvine neighborhoods.
Similar type homes in these areas carry a price per square foot of $350 and above.
This house is also 50 feet away from a major power line. Who in the right of mind would nest in that condition?
Yeah, I noticed that on the map.
Looks like the power line is on Warner, which ties into the inferior location theme.
Yep. There are HUGE power line towers that line along Barranca Pkwy on that stretch which of course passes right by V.o.C.
I personally view VOC as a case study on how things went around here. Dirt purchased at auction by a variety of builders salivating at the thought of selling many, many million dollar homes. I cannot recall specifics but I think VOC was slated to have 300+ homes starting at $1.1MM and up. It was the development that did it for me … I recall wondering where in the world 300 or more families were going to come from that could swing $11K or more per month in mortgage and that’s before Bimmer payments and Gucci handbags. I just could NOT wrap my mind around that one. Turns out there aren’t nearly enough families with such resources.
The emperor would like his clothes back please.
$378 in total monthly dues? Cripes! (Which isn’t to say that it’s good, and expected, that the home’s selling price is dropping.)
One could write a whole separate blog on the subject of “condo complexes whose oppressively high HOA dues work to suppress the resale value of the condos.”
These INSANE HOA fees on simply everything (even private houses on a cul de sac) in OC may end up keeping me and the wife out of the market a long time.
Simply put, you pay a lot more every month, can’t deduct those payments, hurt your resale value, and in return for stuff that you simply don’t use (but one guy seems to spend his entire life -shirtlessly- in these common areas, which just happen to be directly in your line of view.
Of course, compared to ground leases, HOAs seem like a bargain!
You get to choose whether you want to pay $300 +/- monthly to live in a clean well-maintained beautifully landscaped neighborhood (that your neighbors can’t uglify); or whether you want to pay $0 in HOAs and live in an eclectic neighborhood where one neighbor has pitbulls in the front yard chain-linked in, another neighbor has an RV parked year-round in front of your house, and another neighbor has an over-grown yard harboring critters.
The example above is my mother’s non-HOA LA block.
Tell your mom to look into the CC&Rs;to see if they allow that. Then if that doesn’t work she can try for a city ordinance. Orange and Villa Park don’t have HOAs and they also have none of what you cited as issues for non-HOA areas. Maybe for perspective you should open your mind a bit.
There are no CC&Rs;in many older areas. There may be city/county laws, but that just means the chain-link fence in your front yard must be set-back a certain length and only so high. You can park an RV in many older neighborhoods legally. And there also aren’t laws in many older neighborhoods that require you to keep a clean well-manicured front yard.
The point is, you get to choose for what you want to pay. I choose reasonable HOAs.
I chose no HOAs and everyones lawn is kept up, per city ordinance requirements, no RVs parked on the driveway, per city ordinance, no barking dogs per city ordinance.
Point is, I chose no HOAs and I get all the same benefits you have but you pay extra for them. I sure hope you are getting what you pay for, because I don’t have to pay for them.
Justifying HOA and MR is a big symptom of Kool Aid intoxication. I suspect the people that choose to pay them value the new “look and feel” of their communities and would never stoop to live in a 40 yr old single story on a big lot in VP. I’ll take the VP rancher any day.
Portola Springs wasn’t looking so good when the fire was quickly approaching last October. Luckily the fire did not make it, however it definitely put a chill in the ardor of those hoping to buy there. It was enough to stop the construction of the retail center and the school, so if you buy there now plan on driving down to Woodbury or Northwood a lot. The IC apartments have filled in very nicely there though, especially with former 909ers who now can drive to their jobs in a lot less time. The pools for the homeowners are actually nearly always empty – definitely a plus. Woodbury pools used to be like that, now you need to grease yourself up t find a place to slide in between bodies on a hot day.
IR, you ask
“I believe new home sales prices will bottom between $225/SF and $250/SF while most resales will fall to $200/SF or below. Even now at $275/SF, why would someone go pay someone $350/SF or more for a used house when you can get a new for much less?”
but Portola Springs is not necessarily comparable to other parts of Irvine (because of it’s location)
So while I’m sure it’s going to have an impact, do you really think that there’s no discount from being ‘next to landfill’ and ‘kind out in the boondocks’ ?
Or were your statements specific to the PS neighborhood and not Irvine at large?
(personally, landfills are no goes… I remember driving past Montebello on the 60 back in the 80’s, to get to Stevenson’s Ranch (or whatever that new [back then] development on the way to Palmsprings, right past the 57 is called) and the smell… ah, the smell)
Is this a “Sendero” Plan C? If so it’s a 3 bed 3.5 bath home and not 4 bath (Redfin). $380 HOA?!
I’m pleased to see that there’s a bedroom with full bath on first floor, but the living room and kitchen is on 2nd. So it doesn’t really fit my needs.
Looking through Portola Springs web site, I think the least expensive floor plan that I’d accept is Los Arboles Residence 2 at mid $700k IF it comes with full drive way parking space.
Good GAWD IR, Manowar? Lemme guess, Saxon tomorrow?
Nice to see that the builders are finally freaking out.
Just for grins we checked these units out last year. My impressions were: Too far inland, really nicely finished but the units are really packed in tight with tiny little patios. We went through one of the 3 story units and if I remember correctly I thought they were going for 800k at the time. The units that share a wall don’t have windows in the kitchen which to me is a negative.
I kind of wonder about using price per square foot as a measure to compare properties. I don’t think that comparing condos with shared walls (or free standing but packed in with 2 feet to spare) to an SFR with a yard and some privacy is not an apples to apples comparison. In my opinion SFRs with a yard and separation from your neighbors should command a significantly higher price per sqare foot than condos.
From the listing:
All pictures listed are of the model. Actual home soon to be under construction.
! Anybody looked to see if this got built? Ok, the listing is 150 days old, but if the builder ran short… 130 Long Grass was listed at the same time, but appears to really be there, at $551,880. and $315 per sqft.
I’d want a pretty good discount these days before putting money up for a place that isn’t built. BIG difference between NEW and not there, with builders going under and taking buyer deposits into bankruptsy with them.
Well, and also, these are 3 unit condo structures, what happens when only 1 or 2 out of 3 get sold? It’s not like they can build 2/3 of a building.
Yes, I was also taken back by the “actual home soon to be under construction” clause. You don’t suppose there’d be any shortcuts employed during construction to save on cost, do you?
Its not just the investory Irvinerenter. Builders will clear inventory, at the same time they will need to keep building at a slower pace in order to stay in business. Otherwise, who will feed them food? As markets fall further, land values will drop forcing landowners to offer bargain to home builders who will take them and built more homes for lesser price and make little profits to stay in business. Existing homes will keep competing with time and new homes that are not even planned yet.
Remember, future market will dictate where new home pricing will be set.
Damn. Location doesn’t look that prime. Next to a marine base, what looks like manufacturing and some farms. I wouldn’t pay that much for it.
You’re talking about 22 Honey Locust, and the warehouse-looking thing is a greenhouse which recently renewed their long-term lease. Oh, you forgot to mention the power lines too, they’re huge!
I don’t believe that new homes command a premium, in fact, just the opposite. Olders homes go higher since the neighborhood is more established. I believe new homes in Irvine and the surrounding areas will need to go lower than existing homes to be able to better compete, and actually sell.