Monthly Archives: October 2007

Come Fly With Me ** Update 1 **

Big price reduction from $630,000 to $560,000. Sellers are getting smart or scared, I suppose it depends on your point of view.

Come fly with me, let’s fly, let’s fly away
If you can use some exotic booze

Once I get you up there where the air is rarefied
We’ll just glide, starry-eyed

Come fly with me, let’s fly, let’s fly
Pack up, let’s fly away!!

Come Fly With Me — Frank Sinatra

Link to Music Video

Isn’t this song the ode to the relationship between every Californian and the housing market? Grab that exotic loan and let prices fly to where the air is rarefied. It certainly made everyone starry-eyed.

4392 Skylark FrontSkylark Kitchen

Asking Price: $630,000IrvineRenter

Income Requirement: $157,500

Downpayment Needed: $126,000

Purchase Price: $670,000

Purchase Date: 8/1/2005

Address: 4392 Skylark St., Irvine, CA 92604

Rollback

Beds: 3
Baths: 2
Sq. Ft.: 1,493
$/Sq. Ft.: $422
Lot Size: 5,669 sq. ft.
Type: Single Family Residence
Style: Ranch
Year Built: 1974
Stories: One Level
Area: El Camino Real
County: Orange
MLS#: S509371
Status: Active
On Redfin: 12 days

From Redfin, “Large corner lot with spacious front and backyards. Flowing floorplan with berber carpet, laminated wood floors, recessed lighting, Enjoy the living room with vaulted ceiling and a warm fireplace. Nice grass backyard with paved side yards with brick accents and patio cover. Master bedroom with nice garden atrium. Association pool and parks.”

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Assuming a 6% commission, and assuming the seller gets their asking price, they stand to lose $77,800.

Since the theme of this post is flying, I thought I would share two more properties with you because of their names. These are actually in Tustin, but Tustin Fields is close to Irvine, and it is southeast of Jamboree. In fact, I didn’t realize this was Tustin until Redfin told me so. No matter…

319 Flyers Lane Front 319 Flyers Lane Inside

Asking Price: $565,000IrvineRenter

Income Requirement: $157,500

Downpayment Needed: $126,000

Purchase Price: $623,000

Purchase Date: 9/7/2005

Address: 319 Flyers Lane, Tustin, CA 92782

Rollback

1st Loan $497,504
2nd Mtg. $62,188
Downpayment $63,308

Beds: 3
Baths: 2.5
Sq. Ft.: 1,488
$/Sq. Ft.: $380
Lot Size: –
Type: Condominium
Style: Modern
Year Built: 2005
Stories: Two Levels
Area: Tustin Field
County: Orange
MLS#: S508922
Status: Active
On Redfin: 16 days

From Redfin, “MOVE IN READY, upgraded to the nines, and in IRVINE SCHOOL DISTRICT! Private interior location, Granite countertops, 18×18 porcelain tiles, upgraded base and crown moldings, newer stainless steel appliances, and a tumbled edge travertine marble backsplash. Private patio area, fully landscaped, automatic sprinklers, and slate stone throughout. Custom interior paint throughout entire home, and lots of storage areas. Master suite complete with large walk-in closet and gorgeous master bath!!”

upgraded to the nines but selling in the fives.

This seller is looking at a $91,900 loss after a 6% commission. Actually, this seller is going to lose their entire $63,308 downpayment, and the bank is going to lose $28,592.

1 Aviator Front 1 Aviator Kitchen

Asking Price: $550,000IrvineRenter

Income Requirement: $137,500

Downpayment Needed: $110,000

Purchase Price: $600,000

Purchase Date: 11/4/2005

Address: 1 Aviator, Tustin, CA 92782

Beds: 3
Baths: 3.51 Aviator Inside
Sq. Ft.: 1,600
$/Sq. Ft.: $344
Lot Size: –
Type: Condominium
Style: Other
Year Built: 2005
Stories: Three or More Levels
Area: Tustin Field
County: Orange
MLS#: P593218
Status: Active
On Redfin: 82 days

From Redfin, “* * FORMER MODEL HOME * * SHORT PAY-OFF SALE * * REDUCED! * * HIGHLY UPGRADED * * IRVINE SCHOOL DISTRICT * * 3 BR 3.5 BA * * PLANTATION WOOD SHUTTERS * * GOURMET KITCHEN * * GREAT RM W FIREPLACE & BUILT-IN ENTERTAINMENT CABINET * * PARK VIEW FM GREAT RM & KITCHEN * * X’LNT CORNER LOCATION LOCATION “

*** CAPS LOCK AND ASTERISKS *** X’LNT!

Another ADHD listing with 3 word phrases.

Another gourmet kitchen. Must be the white tile that makes it so special.

What is the deal with the picture of the doll?

This seller is going to lose $83,000 after commissions.

What can you say about this string of $75K to 90K losses? Well, everyone should be a bit less starry-eyed.

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Fly me to the moonFly me to the moon
Let me play among the stars
Let me see what spring is like
On a-Jupiter and Mars
In other words, hold my hand
In other words, baby, kiss me

Fill my heart with song
And let me sing for ever more
You are all I long for
All I worship and adore
In other words, please be true
In other words, I love you

Fly Me to the Moon — Frank Sinatra

Link to Video of Bellagio Fountains

Link to Studio Music Video

Summer Wind

The summer wind, came blowin’ in from across the sea
It lingered there to touch your hair and walk with me
All summer long we sang a song and then we strolled that golden sand
Two sweethearts and the summer wind

Like painted kites, those days and nights, they went flyin’ by
The world was new beneath a blue umbrella sky
Then softer than a piper man one day it called to you
I lost you, I lost you to the summer wind

The autumn wind and the winter winds, they have come and gone
And still the days, those lonely days, they go on and on
And guess who sighs his lullabies through nights that never end
My fickle friend, the summer wind

Summer Wind — Frank Sinatra

Link to Music Video

Today, I am coming out of the closet: I am a Frank Sinatra fan. I have been carrying this secret shame since high school. When everyone else was blasting some obnoxious noise from their car stereo for all to hear, sometimes I would roll up my windows and crank Frank Sinatra. I am so white.

Back to the song…

Isn’t the market like a fickle summer wind? Doesn’t everyone have fond memories of great summer selling seasons gone by? So what happened in 2007?

3 Pearleaf Front 3 Pearleaf Kitchen

Asking Price: $550,000IrvineRenter

Income Requirement: $137,500

Downpayment Needed: $110,000

Purchase Price: $622,000

Purchase Date: 7/6/2005

Address: 3 Pearleaf, Irvine, CA 92618

1st Loan $400,000
Downpayment $222,000

Rollback

Beds: 2
Baths: 2.5
Sq. Ft.: 1,508
$/Sq. Ft.: $365
Lot Size: –
Type: Condominium
Style: Mediterranean
Year Built: 2000
Stories: Three or More Levels
Area: Oak Creek
County: Orange
MLS#: S506892
Status: Active
On Redfin: 30 days

From Redfin, “Absolutely Pristine Detached 2 BDRM + LARGE LOFT w/ Elegant Upgrades in Gated Oak Creek! Enjoy the RICH HARDWOOD FLOORS * NEW CARPET * HUNTER DOUGLAS SILHOUETTES * PLANTATION SHUTTERS & CUSTOM PAINT! Fantastic Floor Plan has 1st Floor Bdrm/Bath * Spacious Family Room w/ Terrace * Dining Rm * Spacious Kitchen w/ Corian Counters & SS Appl * Main Floor Laundry Rm & Pituresque Backyard! Enjoy the Award Winning Schools & Resort Style Amenities!”

Todd Muradian is probably the best realtor in Irvine. When we did Irvine Realtor Ratings 7-8-2007, Todd had the largest number of sales in Irvine.

Even the best still have issues with their CAPS LOCK sticking INTERMITTENTLY.

What is Pituresque? Is this place a Pit?

A bit slash happy, and fond of asterisks, but only 2 exclamation points…

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If this seller gets their asking price, they stand to lose $105,000, assuming a 6% commission. Will they get it?

The selling season has past. Fall is here, Halloween is coming, and the winter doldrums are right around the corner. Buyers are hard to find. Good luck.

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Autumn LeavesThe falling leaves drift by the window,
the autumn leaves of red and gold,
I see your lips, the summer kisses,
the sunburned hands, I used to hold.
Since you went away, the days grow long,
and soon I’ll hear old winter’s song
But I miss you most of all, my darling,
when autumn leaves start to fall

Autumn Leaves — Frank Sinatra

Link to Music Video — must see if you miss fall color

Oh, it’s a long, long while from May to December
But the days grow short when you reach September
When the autumn weather turns the leaves to flame
One hasn’t got time for the waiting game

September Song — Frank Sinatra

Link to Music Video — Duet with John Denver

The Supply Side- Postponements and Pent Up Supply

As the busted 2007 summer selling (listing?) season has transitioned to a paralyzed fall market with persistently high new and resale inventory, the fact that Orange County real estate can decline in price is no longer deniable. The precipitous drop in sales creates a serious conundrum for most homebuilders: they have to balance the need for cash flow with the desire to maximize profits (or at least minimize losses) on their investments in land purchases and in-process construction. The homebuilders working with TIC have the significant added wrinkle of not fully controlling their own pricing.

Since the fear of being ‘priced out forever‘ has convincingly departed prospective homebuyers, many have accepted the proposition that remaining in a current home or renting might not be such a bad thing after all, at least until some more of the price excess is eliminated. The term “wait and see” is showing up in more and more mainstream media (MSM) real estate stories referring to the position of buyers in this standoff. Interestingly, I’ve heard with increasing frequency anecdotal suggestions that since transaction numbers are so low, perhaps so many buyers are now on the sidelines that once prices show any sign of stabilizing, everyone at once will come rushing in to purchase and it will be off to the races with happy days and increasing medians all over again. This is the “pent up demand” theory. Although it shouldn’t be a big surprise to hear realtors make this comment, some relatively rational colleagues and friends of mine have also wondered this out loud.

Well, my analysis of news in and around Irvine developments shows that this is almost certainly not going to happen. I would argue that any pent up demand is being countered with similar, or probably more, pent up supply. Many of these have been discussed on the forums, but here is my working summary of projects that are imminent and/or postponed. All will contribute to pent up supply in the months and years ahead:

Woodbury East– John Laing’s Celadon bravely opened on schedule this summer, but the originally-scheduled (late summer 2008) debut of California Pacific’s Sienna came and went, and William Lyon’s Ivy models look complete but are standing by, currently promised as January 2008.

Lyon Ivy

Above- William Lyon’s Ivy: “bold” attached product. Are the salespeople keeping themselves occupied watching satellite TV?

CalPac Sienna Sienna spacing

Above- California Pacific’s Sienna detached condos, models still under construction…laid out like Decada and its predecessors. Is it my imagination, or did they manage to place these even closer together?

In Woodbury, CalPac’s Andalucia single family homes appear delayed (“early 2008” the letter says), but I’m not sure of what their original opening date might have been.

Not now, later.

Orchard Hills- This entire development, originally slated to begin sales in late 2007, is officially postponed more than a year to 2009. Don’t be surprised if the opening is not early 2009 or the delay goes even longer. The Orchard Hills Apartments opened this summer, and do not appear to have incentives, so they may be leasing better than I predicted. The retail shops also opened on schedule, but how long will they be willing to pay TIC lease rates without progress building the community that was (presumably) supposed to be their primary market?

You can see more discussion on Orchard Hills here in the forum or here in a previous blog posting.

The Great Park (former El Toro MCAS)- Lennar has become rather quiet regarding progress and planning at the Great Park; apparently enough so to cause questions on behalf of the City of Irvine as to whether they are still committed to the original proposals. Keep in mind that Lennar won the bid for this property at the apparent peak of the market, in mid-2005.

LA Times Lennar Delay

“In Irvine, Lennar’s plans to build thousands of homes around the planned Orange County Great Park have been pushed back, and the city has not received an updated timeline from the developer since 2005.City officials said Lennar had projected that it would have 781 homes for sale by next year, though the developer said it vowed only to have that number of home sites ready for construction.A plan unveiled by Lennar last summer to nearly triple the number of homes from 3,625 to 9,500, while cutting back on commercial space and adding 400 acres to the park, hasn’t even been discussed with city officials.”

The Orange County Business Journal(registration required) quoted company officials as saying “I don’t think anyone has seen the bottom yet…[but] Lennar will be ready when the rebound comes” in reference to the housing market and their Orange County plans.

The new Village of Stonegate, north of Woodbury, has two signs from CalPac: Palmeras and Mirasol. I couldn’t find any details about either. One or both could even be apartments.

Palmeras Sign CalPac Mirasol

The grading and laying of utilities at Stonegate appears not too far behind similar work at Orchard Hills.

In the Villages of Columbus, William Lyon’s Mirabella luxury townhomes and Ainsley Park paired homes are “Coming soon.” From the brief description on the VOC website, it appears Mirabella is the Columbus Square successor to Kensington Court. Interestingly, they list a higher starting price point than Kensington Court (Columbus Grove, Irvine), which seems implausible given the change in the market and Tustin address.

For a good recap of Irvine project planning, see Zovall’s zoning map post.

A few interesting nuggets of industry rumor: Lennar is reportedly contemplating an end-of-year auction for at least some of their properties at the Villages of Columbus. Their end of fiscal is November, so this would likely occur in the next 30 days if true. Also, The Irvine Company is floating proposals for some kind of post-sale price guarantee to try to coax buyers off the fence. Details are very sketchy, and even if true, timing is unknown.

So the bottom line question should be: Will the buyers waiting for the market to get worse outlast the sellers waiting for the market to get better? For the sellers to win that battle, it assumes plausible the argument that the market is capable of postponing itself back to prosperity. Don’t bet on it.

Housing Valuations

You must remember this
A kiss is still a kiss
A sigh is just a sigh
The fundamental things apply
As time goes by

As Time Goes By — Frank Sinatra

Link to Music Video

Frank had it right, didn’t he? Fundamental things apply.

(Click on either image below to enlarge)

From Goldman Sachs…

Goldman Sachs Housing Valuations

From IrvineRenter…

Irvine Housing Market Prediction Chart

It is one thing when some crackpot bubble blogger says the market is overvalued and due for a fall. It is quite another when Goldman Sachs, one of world’s largest investment banking and securities firms, says the same thing.

Anyone think Goldman Sachs is full of it?

Goldman Sachs report on California House price valuations — PDF File

Sweetan the Deal Please ** Update 1 **

This house became an REO on 9/27/2007 for $607,901. It is now back on the market for $625,000.

Sweetan Pool

Asking Price: $690,000IrvineRenter

Purchase Price: $729,500

Purchase Date: 11/21/2005

Address: 14712 Sweetan St, Irvine, CA 92604

Beds: 4
Baths: 2
Sq. Ft.: 1,480
Lot Sq. Ft.: 5,543
Year Built: 1970
Stories: 1
Type: Single Family Residence

Rollback

County: Orange
Neighborhood: Walnut
$/Sq. Ft.: $466
MLS#: P576515
Status: Active on market
On Redfin: 36 days
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You have to wonder how badly this seller wants out when after 36 days, the realtor hasn’t even bothered to upload any pictures or write a description about the property. Realtor negligence aside, here we have a 2005 property offered for less than purchase price. If the seller gets their price, minus a 6% commission, they stand to lose $80,900.

It wasn’t long ago, you could count on your house making you an amount equal to the median income each year. Now, houses seem to have gotten lazy, and they are costing owners the median income each year in depreciation. I am glad I didn’t work for nothing last year…