If I Had a Million Dollars

If I had a million dollars (If I had a million dollars)

And if I had a million dollars, I’d buy your love

If I had a million dollars I’d build a tree-fort in our yard

If I had a million dollars you could help, it wouldn’t be that hard

If I had a million dollars — Barenaked Ladies

Link to Music Video

$1,000 Grand: a million dollars. Today’s WTF award winner thinks his house has appreciated $1,108,000 in the last year — a year in which we have shown rollbacks of 10%-20%. We even documented a neighbor who went into foreclosure and sold at a 20% loss, but somehow this house has appreciated 25%. WTF?

Asking Price: $4,495,000

Income Requirement: $1,123,750

Downpayment Needed: $899,000

Purchase Price: $3,387,000

Purchase Date: 5/19/2006

Address: 25 Grandview, Irvine, CA 92603

Beds: 5

Baths: 5.5

Sq. Ft.: 5,900

$/Sq. Ft.: $762

Lot Size: 0.32 acres

Type: Single Family Residence

Style: French, Traditional

Year Built: 2006

Stories: Two Levels

View(s): City Lights, Hills, Mountain, Panoramic, Trees/Woods, Valley, Has View

Area: Turtle Ridge

County: Orange

MLS#: U7003538

Status: Active

On Redfin: 37 days

From Redfin, “Beautiful La Cima estate in Turtle Ridge. 5 Bed, 5.5 bath with exceptional panoramic views of hills and city lights. Built in 2006 by Laing Luxury, enjoy an upstaris Master and a downstairs Jr Suite, downstairs playroom, and upstairs bonus room. 4-car garage, 1,200 bottle climate-controlled wine cellar, pre-wired for custom sound in and out. Approved plans for custom pool and spa.”

Approved plans? You mean you want a million dollars more than you paid, and you didn’t even bother building the pool? WTF?

Maybe this seller put a million dollars worth of wine in the cellar? He must have added some value…

This appears to have been purchased new from the builder. Nice to know the builder found their bagholder.

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Weren’t the bubble years great? You could just buy a property, hold it for a year, and make a million dollars. Isn’t that the way it works? Everyone is making 25% more money each year, right?

When you see a listing like this, do you get a sense of what a Ponzi Scheme this whole bubble really was? When does it all end? Will this house be worth $6,000,000 next year, and $8,000,000 the year after that?

This seller is certifiably crazy in my opinion. Do you think kool aid intoxication a disease? I wonder if there is a treatment? I suppose this seller could be made to read the Irvine Housing Blog every day. A few weeks of reading here should cure almost anyone.

Catch a wave and you’re sitting on top of the world

You gotta catch a wave and you’re sittin’ on top of the world

Catch a Wave — The Beach Boys

Link to Video

Isn’t flipping houses a bit like surfing? Just catch a wave and ride it to financial prosperity. Today’s flipper who bought a Pacific Crest home certainly hopes so.

Asking Price: $979,900

Income Requirement: $244,975

Downpayment Needed: $195,980

Purchase Price: $791,000

Purchase Date: 8/15/2007

Address: 15 Pacific Crest, Irvine, CA 92602

Beds: 4

Baths: 3.5

Sq. Ft.: 2,557

$/Sq. Ft.: $383

Lot Size: –

Type: Single Family Residence

Style: Modern

Year Built: 2002

Stories: Three or More Levels

Area: Northpark

County: Orange

MLS#: S504923

Status: Active

On Redfin: 6 days

From Redfin, “4 Bedroom plus 3rd floor bonus room or master suite with full bath, 2nd floor bonus room for games/den, ground floor living/kitchen open floor plan with office or additional family room. Seperate laundry room on 2nd floor. Upgraded tiles on ground floor, fireplace, built-in entertainment center, huge kitchen with center island and lots of cabinet space.”

Only 1 misspelled word. Not bad…

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So all of you making $250K, is this your dream home? Do you like the white tile kitchen? Is this an estate worthy of someone with such a high income, or is this a nondescript tract home more suited to someone making $150K? The market will decide.

I have to give this flipper credit for nerve. To drop $791K on a house in this market environment takes courage. I think it is remarkably foolish, but the market may prove me wrong.

In today’s market, this does seem to be a good purchase price at $791K. You would think a buyer would see this as reflective of the overall market, but if you are drinking the kool aid, this is a steal. Of course, this sale went through before our most recent round of credit tightening, so this flipper may regret the purchase, but this regret certainly isn’t reflected in the asking price.

Surfing is fun, but sometimes it does not go as planned.

This post first appeared on March 17, 2007. The owners lowered their price to breakeven and left it there for about 6 months. Now it appears they are becoming more motivated to sell. The price has been reduced to $550,000. Unfortunately, that is still too much money for this apartment condo.

New Asking Price: $550,000

Old Asking Price: $610,000

Purchase Price: $565,000
Purchase Date: 5/26/2005

Address: 1 MONTGOMERY 46, Irvine, CA 92604

Beds: 3
Baths: 2.5
Sq. Ft.*: 1,639
Year Built: 1977
Stories: 2
$/Sq. Ft.*: $381
MLS: I700005
Status: Active on market

Craigslist, Redfin, Zillow.

This property is located in the triangular area between the 5, Walnut and Yale. It is very near the 5 (in other words, it is noisy.) It was purchased on May 26, 2005 for $565,000. There is a first mortgage from New Century for $452,000 and a second from New Century for $113,000. This is a 100% financed property. The current owner is asking $610,000. If sold at the current asking price and assuming 6% in selling costs, the sellers are looking at a profit of around $7,500. This leaves them a bit of negotiating room to break even. It looks like they might need it: Zillow thinks it is only worth $603,830. Do you think they will get it? Or, perhaps, New Century will have to eat another one?

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P.S. I originally wrote this post on 3/15/2007 and the asking price was $625,000. When I posted it on 3/17/2007, the price had been reduced to $610,000. Are the owners becoming more motivated?

This property was taken back by the bank for $541,273. Since the first mortgage was originally $516,000, it looks as if our “owners” had a little problem with their Option ARM. Looks to me like we are 20% off the peak in this neighborhood…

Asking Price: $624,900

Purchase Price: $660,000

Purchase Date: 3/6/2006

Address: 2 Riverstone #36, Irvine, CA 92606

Beds: 3
Baths: 2.5
Sq. Ft.: 1,721
Year Built: 1985
Stories: 2
Type: Single Family Residence
View: Mountain
Neighborhood: Walnut
$/Sq. Ft.: $363
MLS#: U7001714
Status: Active on market
On Redfin: 7 days

From Redfin: “Outstanding detached sfr condo, next to the park with plenty of open s pace. Big backyard, and very private location. this is a three bedroom two and a half BATH home in the highly sought after city of Irvine. Outstanding schools and services. Home is sold ‘as-is’ and ‘where-is’ without warranty. Property is a ‘Z-Lot’ (Zero Lot Line). Home backs to a Rail Road and a Public Park and High Voltage Power Lines.”

The brutal honesty of that descriptions makes one suspect it is a bank owned property. The current owner is listed as SBC Bank USA. There is a first mortgage shown at $516,000 and a second at $129,000 both from SBC. It looks as if the buyer originally put $15,000 down. Given that this property was purchased 14 months ago, and the foreclosure process takes 9 months, this was an early payment default, probably a flip gone bad. SBC probably has more on its books than the 545,000 due to lost interest payments and foreclosure costs. If they get their asking price, even with the reduced commissions banks are willing to pay, they still stand to lose over $50,000.

The bank will not be happy about losing $50,000+, but the neighbors trying to sell their homes are going to be really ticked off:

44 Riverstone #58, Irvine, CA 92606 asking $516/SF or $619,000 and

11 Millstone #2, Irvine, CA 92606 asking $546/SF or $655,000.

If 2 Riverstone #36 sets the new comps for the neighborhood at $363/SF, the above two properties just lost 30% or more of their value. Ouch!

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This value drop will be particularly painful for the flipper who bought 11 Millstone #2 for $619,000 on 4/21/2006. This flipper is holding out for a breakeven sale, and they need to get $564/SF to do it. How many buyers are going to pay that price once a house in the neighborhood goes for 30% less? At least this flipper will not be alone. A quick scan of the neighborhood property records shows 5 properties purchased in 2005 or 2006 that will also be underwater. Cry me a river…

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So you took a chance
And made other plans
But I bet you didn’t think that they would come crashing down, no…

Your bridges were burned, and now it’s your turn
To cry, cry me a river
Cry me a river-er
Cry me a river
Cry me a river-er, yea yea

Cry Me a River — Justin Timberlake