This months OC Metro has a cover story talking about how "homebuilders are working hard to bring buyers in the door."
Some blame for the rapid appreciation is placed on speculators but I didn't notice anything mentioning the suicide loans.
" All the speculation had a variety of disruptive effects on the market, he says, including an “artificial demand” that fuels price increases, as well as “a less-engaged community.
“Neighborhoods get homes that sit empty until buyers can resell,” he says. “And that’s not good for (buyers) who are striving for a great place to live.” "
There are some quotes from a few of the builders, Taylor Woodrow, Centex, Standard Pacific, and Brookfield Homes, that are worth reading.
" Forsum, whose firm offers homes ranging from the $200,000s in Corona and $600,000s in Buena Park to the multi-millions in Newport Coast, said that foot traffic at the company’s developments “has not really been the problem. It’s really a lack of urgency on the part of prospects – how to get them to buy.” So the firm has been offering some “targeted incentives” that range from mortgage help to design upgrades to a reduction in lot and view premiums – but not, he stresses “wholesale discounts.”
Those don’t appear necessary, “because things have picked up, and we’re very encouraged. There’s a market out there for sure, a demand by customers, and we’re in a position to give it to them. We can sell a clear and present value proposition.” "
It seems like the builders don't think they'll have to lower prices any more. I've definitely noticed that foot traffic has increased since 2007 started (due to the price cuts). The quote above makes it sound like there are a lot of people looking but not necessarily buying. But then it says that things have picked up. So... what is the dealio?
Found this today via the Irvine World News:
I don't have much information on this, so please share if you know something. Rancho Mission Viejo, probably the only other big landowner in Orange County other than The Irvine Company, is going to build another master planned community just south of Ladera Ranch (mostly east of the Antonio and Ortega Hwy intersection). I'll call it Ladera Ranch II until I learn of the official name.
It looks like there will be 12,530 homes built (in 5 villages) starting in 2008. The homes will be built on about 5,373 acres and the rest of the area should be open space. I took some survey regarding this several months ago and one of the things they were considering for this community was some sort of golf cart for each home. I wish I remembered the specifics. I also recall that there will be plenty of housing targetted towards seniors.
Here is a map of the overall plan for "Ladera Ranch II":
Read on to see a detailed map of the first village...
Anyone care to guess when the first homes here will really start selling? To me, it sure seems like there will be plenty of product available in Irvine and south of Irvine. Portola Springs is just starting to sell in two of the five enclaves. Orchard Hills, Stone Gate, and the homes in Planning Area 18 should be coming up soon. There will be plenty of homes built at the Tustin Base as well as at the Great Park. And don't forget about Central Park West. Right now, there isn't much at Ladera Ranch except the bigger homes in Covenant Hills. But if Ladera Ranch II is just around the corner, hopefully this will add to the competition between The Irvine Company and Lennar and start to bring prices down a bit.
Stupid MLS Login Procedures
I haven't been able to scour MLS lately. The reason is that the MLS system I have access to, Tempo SoCalMLS, requires the use of a token that has a code that changes every minute or so (and I don't have this stupid token handy). I've been able to get around it by using the MLS Alliance system which actually is a more comprehensive database as it contains listings from the EIGHT Southern California (excluding SD) MLS systems (of which Tempo is one - the main one for OC). But just recently, they changed the login procedure so that I HAVE to login through Tempo first. Argh! Time for me to get that token. Until then, I won't be able to feature any flips. I should get this squared away in the next few days.
Bad news from New Century of Irvine
LA Times: "The bad news from Irvine's New Century Financial Corp. and London's HSBC Holdings sent shares of sub-prime lenders tumbling by double digits, with New Century down 36%."
"New Century is the second-largest sub-prime mortgage originator after San Francisco-based Wells Fargo, with HSBC just behind in the No. 3 slot. The Irvine company said late Wednesday that it had greatly underestimated the losses it would record as a result of loan buyers forcing it to repurchase mortgages that had quickly fallen into default."
OC Register story
Central Park West Grand Opening
Central Park West, the development on the corner of Jamboree and Michelson (across from Park Place), is debuting their Lennar homes tomorrow. Almost all of the tracts in Central Park West are built by Lennar. The high rise towers are built by another company and I'm not sure who is building the affordable condo complex hidden behind the high rises. I won't be able to check it out tomorrow but hopefully some of you will. Here are the details:
Date: February 10th
Time: 10am - 4pm
Place: CPW Living Studio / Central Park West
2500 Michelson Drive, Suite 100, Irvine, CA
Complimentary valet parking
Just a quick note to check out the recent story on ocrenter's blog: Fraudera Ranch: It's a Family Affair. The tactics used here may be pretty similar to the fraud I uncovered last year.
Let's get some exposure to what ocrenter, Graphrix, Anon Investigator, and Ladera Mom have uncovered! Here's a link to Digg their story: Fraudera Ranch
Feb 5th, 2007
I visited La Casella again today, at lunch. Gotta feed the obsession every now and then, ya know. I liked the models a lot more than I liked them the first time through, for some reason. Even Residence 1 with the casita – that could be my home gym!
I engaged the sales person in questions and she was very friendly and attentive. I was quite surprised by much of what she said, though. So surprised, in fact, that I expected my BS meter to be ringing in alarm. It was not, however. Was she just that good at smooth-talking? Or have I lost my ability to smell BS? Or could what she told me have possibly been, in fact, true????
1. Lennar has “paid the bank” for every La Casella unit sold thus far. In other words, they have sold every unit at a loss after taking into account the cost of land and construction costs.
2. During their most recent phase release, every single unit (8) sold out in one day.
3. Lennar has only purchased less than half of the land shown in their plans for final build-out at La Casella. The sales person said it was very likely the remaining units would not be built (by Lennar, anyway. She said Lennar would sell the plans and models to some other company who would take over the development). She said that they are in a “pissing contest” with TIC over final sales cost of the land, and TIC is not willing to come down enough to make it worthwhile for Lennar.
I asked, if by some chance TIC does reduce land prices, what would happen to the units’ asking prices? She said there was no way the prices would be reduced, as evidenced by the quick sell-out of the most recent phase release. She said Lennar would need to maintain or raise prices just to make up for all the losses incurred so far.
I then probed about who exactly has been buying these units. She said many single people have been buying them, with average incomes of 175k to 200k. She also told me that I needed to “change my lens” with respect to monthly carrying costs, and that if I wanted to own in Irvine, or anywhere in SoCal, then I needed to accept the fact that I would be paying 60-75% of my take-home pay on mortgage and HOA. I suggested that in fact most people were not using 30 year, fixed-rate mortgages, but she disagreed and said that most of the La Casella buyers had in fact used the standard, fixed mortgages, and were just paying big monthly payments.
So, your thoughts? Anyone care to comment? Clearly, La Casella is slightly less expensive than other options in Woodbury. But still. Sold out in one day? A loss on every unit? Mostly 30 year fixed mortgages? What is up with this story???
Address: 21 Eden, Irvine, CA 92620 (Northwood)
Plan: 1915 sq ft - 3/2.5
MLS: S473170 DOM: 6
Sale History: 12/28/2005: $755,000
Current Price: $759,000
Here we've got a Plan C SFR in the Park Paseo tract (builder?) in Northwood. Our seller purchased this home about a year ago (with 20%/151k down it seems) and is now relocating to Austin, TX. It's refreshing to see they aren't asking a ton more than what they bought it for. At a sales prices of $759k, they are facing a loss of about $41,000!
I haven't found any recent sales for this plan. Early last year there were a couple:
- 18 Alba East - Sold 2/15/2006 - $760,000
- 3 East Entrada - Sold 2/23/2006 - $769,000
I don't think they'll get their asking price. We'll have to see how motivated they really are. If they really put 20% down, then they have plenty of room to lower the price.
Most of the flips we've uncovered here have been newer homes. It's been pretty rare to find one in the older communities. There's a lot less specuvesting going on there I suppose.