Originally posted October 3, 2006
Address: 9 Stonegate, Irvine, CA 92602 (Northpark)
Plan: Plan 1 - 1980 sq ft - 3/2.5
MLS: S457264 DOM: 28
Sale History: 7/22/2005: $954,000
Current Price: $969,900
This SFR built by Shea Homes in the Rutherford tract in Northpark Square looks like a nice, cute starter home. Too bad the pricy Irvine RE market means you have to pony up almost $1 million for a starter home. Question for Northpark experts: What is Bella Rosa? Is it a part of Northpark Square?
The seller purchased this property in July 2005 for $954k. From what I can gather, there were two loans taken out: one for $763,000 and a second for $190,800. Add those up and what do you get?? One FB with a classic 100% financed purchase (okay, okay, they DID put $200 down)! Fast forward one year and it seems the flipper may have to sell because of a possible job relocation (for those with MLS access, see the Private Remarks). If sold at the asking price and taking into consideration 6% in selling costs, they will have to SPEND at least $42,000 to sell this home!
UPDATE #1 - May 18, 2007
Here's the first of many updates to some of our older posts. After 163 DOM, 9 Stonegate sold for $939,000 on 3/2/2007. Assuming 6% in selling costs gives us a loss of $71,340!
Originally posted October 28, 2006
Address: 17 Georgetown #24, Irvine, CA 92612 (University Town Center)
Plan: 1100 sq ft - 2/2
MLS: S446969 DOM: 124
Sale History: 5/23/2005: $550,000
Current Price: $549,000 (Accepting Backup Offers)
University Town Center is a 'village' in Irvine that includes all the condos near the University of California: Irvine (UCI). There are many apartments in this area as well (owned by the Irvine Company of course). The proximity to UCI ensures that there is a large student population here.
I'm sure there are quite a few investors who purchased condos here to be used as rental properties. Those who bought years ago are probably doing real well if they have kept their properties - huge appreciation and positive cash flow make a nice cash cow!
But since prices for 2 bedroom units like this one are now in the mid 500s, it's hard to make the numbers work as a rental even though rents are strong. This Plan 1 condo in Cambridge Court was purchased in May 2005 with 20% down for $550k. They put it back on the market a year later. The status in MLS is 'Backup' meaning that a sale is pending but the sellers are accepting backup offers. They originally had listed it at $599k and have reduced it $49k since then. If it sells for $549k, they will have lost about $34,000 (after 6% in selling costs).
UPDATE: I just found this blog post by the OC Realty Group that shows how to make the numbers work in University Town Center: http://www.ocrealestateblog.com/blog/_archives/2006/1/30/1718817.html
UPDATE #2 - May 18, 2007
17 Georgetown sold on 11/21/2006 for $535,000. Assuming 6% in selling costs, the sellers lost about $47,100 or about 42% of their down payment!
The new buyers purchased the place using 100% financing. Who knows.. Maybe this unit will come back on the market.
Address: 11 Evening Song, Irvine, CA 92603 (Turtle Rock)
Plan: 1525 sq ft - 2/2.5
MLS: P557467 DOM: 113
Sale History: 6/22/2006: $655,000
Price Reduced: 03/27/07 -- $700,000 to $600,000
Current Price: $600,000
This Plan D townhome in the Ridge Bren tract in Turtle Rock was last purchased in July of 2006 for $655k using 100% financing. Not surprisingly, it is being listed as a short sale. The original asking price of $700k quickly got reduced to $600k.
These folks aren't trying hard to sell the place. 113 DOM and there still aren't any pictures in MLS! I grabbed the pictures above from an older listing. Anyways, if sold for $600k and assuming 6% in selling costs, this flop will lose about $91,000!
There is one other Plan D currently on the market in this tract:
18 Morning Star was purchased back in 1988 or 1989. It's been nicely upgraded - check out the pictures. But is the difference worth $70,000? If 11 Evening Song sells for $600k, it'll be tough to move 18 Morning Star for $669k IMO.
Also, with 11 Evening Song priced at $600k, who would buy this Plan A in the same tract?
11 Evening Song has 40% more square footage and an extra 1/2 bath when compared to 12 Misty Shadow. 12 Misty Shadow started at a price of $615k and has been on the market for about 35 days. 12 Misty Shadow was purchased back on 12/15/2004 for $535,000 using 100% financing. And it looks like it was refinanced for $549,000 with a 1.9% rate in November 2006. What do you think will happen to 12 Misty Shadow?
May 15th, 2007
Asking Price: $899,900
Purchase Price: $940,000
Purchase Date: 5/10/2005
Address: 18 Sheridan, Irvine, CA 92620
Sq. Ft.: 2,453
Lot Sq. Ft.: 6,400
Year Built: 1977
Type: Single Family Residence
$/Sq. Ft.: $367
Status: Active on market
On Redfin: 70 days
From Redfin "Beautifully Upgraded End Of Cul-de-Sac Cape Cod Home W/ Pool & Spa. Rem odeled Kitchen W/ Newer Stainless Steel GE Profile Appliances, Granite Countertops/Backsplash, Cherry Cabinets & Breakfast Counter. Originally A 5 Bedroom Home Where A Bedroom Has Been Converted Into A Huge Master Bedroom Retreat. Incredible Outside Amenities; Enclosed Front Courtyard, Very Large Grassy Side Yard W/ Rose Bushes & Fruit Trees, Backyard With Shady Patio Cover & Large Private Pool & Spa. No Mello Roos Or HOA Dues."
Date ------------- Price -----------Appreciation
05/10/2005 -- $940,000 -- 30.5%/yr
01/14/2003 -- $507,000 -- 6.6%/yr
04/17/2000 -- $425,000 -- 5.4%/yr
11/17/1993 -- $304,000 --
If the property records I have access to are accurate, there is no mortgage on this property, so there is no lender to share in the losses. When you look at the sales history for this house it certainly looks like this seller overpaid in 2005. This was a time when prices were rapidly appreciating, and the buyer probably was convinced they should buy now or be "priced out" forever. Now, 2 years later, they are looking at a $94,094 loss assuming a 6% commission. Now, they are "priced in" forever.
Think of all the money these owners could have saved if they had rented. I know I spent less than that over the last two years...
May 14th, 2007
Financial markets represent the collective result of individual actions. To fully understand how our current housing bubble was inflated, one needs to understand how the actions of the individual market participants impacted house prices. In my last analysis post, Your Buyer’s Loan Terms, I discussed future interest rates and debt-to-income ratios and their impact on future housing prices. In that post, I made a blanket assumption that interest-only and negative amortization loans will simply not be available in the future. It is a debatable assumption. In this post, I want to show more clearly how these two loan types created this bubble and why I believe they will not be available in the future. In short, I will describe the anatomy of a credit bubble.
To illustrate how this loosening and tightening of credit creates housing market bubbles, I will examine the last two bubbles similarities and differences. I will demonstrate how the bubble from 1987 to 1990 was very similar to our current bubble from 2001 to 2004. The last two years of our bubble, 2005 and 2006, were uncharted territory created by "innovation" in the lending industry.
How People Buy
When people decide they want to buy a house, they figure out how much they can afford and then go find something they want in their price range. For most people, what they can "afford" depends almost entirely upon how much a lender is willing to loan them. In the past, lenders would apply debt-to-income ratios and other affordability criteria to determine how much they were willing to loan. Buyers were generally limited in how much they could borrow because lenders were wise enough not to loan borrowers so much that they might default.
Buyers / borrowers behave much like drug addicts -- they will borrow all the money a lender will loan them whether it is good for them or not. Most are not wise to the differences between the various loan types, and they have limited understanding on the risks they are taking on. This financially irresponsible borrower behavior is particularly bad here in California due to Southern California’s Cultural Pathology. If you need a primer on the various loan types, start with Financially Conservative Home Financing or Your Buyer’s Loan Terms.
Comparing the Bubbles
The circumstances during each bubble was different. Prices and wages were lower in the last bubble, interest rates were higher, the economies were different, etc. What is the same is the evaluation of personal circumstances each buyer goes through when contemplating a purchase. The cumulative impact of these decisions in represented in the debt-to-income ratios -- how much each household pays to borrow versus how much they make. Comparing the trends in debt-to-income ratios provides a great tool for seeing how this bubble compared to the last one.
The chart above shows the historic debt-to-income ratios for California, Orange County and Irvine from 1986 to 2006. It is calculated based on historic interest rates, median home prices and median incomes. The last bubble is pretty obvious. In 1987, 1988 and 1989 people believed they would be "priced out forever," so they bought in a fear frenzy. Mostly people stretched with conventional mortgages, but interest-only was used, and helped propel the bubble to a high level of unaffordability. Basically, prices couldn't get pushed up any higher because lenders would not loan any more.
The Affordability Limit
When affordability limits are reached, prices must fall. This is caused by two related phenomenons:
People will stretch to buy an asset that is appreciating; when appreciation stops, so does the stretching to buy. During the bubble rally, rising prices justifies paying too much because you obtain a return on your investment. Once prices quit rising due to the affordability limit (lenders won't loan more money), there is no justification for the high prices, and people quit buying. The lack of buying causes volume to wither and inventories to spike; prices start coming down as sellers are forced to sell.
Banks will not loan large percentages of the value for a depreciating asset, nor will they allow borrowers to utilize high debt-to-income ratios. Banks don't like to lose money. Banks used to demand 20% down payments to give them a cushion if values dropped. Banks used to limit debt-to-income ratios to 28% to make sure the borrowers could afford to pay them back. The only assurance banks have for getting their money back is the value of the collateral (house). If house values start declining, banks want even more cushion to protect their investment. The era of 100% financing and 60% DTI is gone because houses stopped going up in value. As prices start to decline, down payment requirements will continue to rise and DTI will continue to fall which in turn reduces the number of available buyers which makes prices drop even further: a downward spiral.
What starts as buyers being unable and unwilling to buy turns into a downward spiral of tightening credit. This continues unabated until 20% down payments are the norm, and debt-to-income ratios fall back to their historically "safe" levels for banks of 28%. This is exactly what occurred from 1990-1997, and What is Past is Prologue.
Cheating on Affordability
Despite what the affordability charts show. People do not really make payments which are 62% of their gross pay. They cheat. They do this by utilizing risky financing options including interest-only and negative amortization.
Interest-only loans artificially "adds" affordability to the market because it allows for larger sums of money to be borrowed with lower payments. For example:
The median income in Irvine is $83,891. Applying a 28% DTI leaves a payment of $1,957. At current interest rates, a payment of $1,957 on a fixed-rate 30-year mortgage at 6.4% would finance $312,866. This same $1,957 payment on a 5-year ARM at 5.6% would finance $419,454. As you can see, the interest-only loan terms allows borrowers to increase their loans by 25% thus artificially increasing prices 25%.
2004's False Top
On the DTI chart, notice the similarities between the periods 1987-1989 and 2001-2003. Both were rising DTI's moving through the affordability zone pushing prices to the top of the range. If history had repeated itself, lenders would have become cautious in 2004 just as they did in 1990, and the market would have topped in 2004.
As you can see from the chart of available inventory above, 2004 would have indeed been the top. Inventory exploded, time-on-the-market went way up, and it looked like the party was over. It should have been; however, the lending industry "innovated" and came up with the negative amortization loan.
Negative Amortization Loans
When lenders "innovate" trouble is brewing. Banking has been around over 500 years. Everything has been tried at least once. Innovation in banking is a matter of trying something which has probably failed dozens of times before and hoping for a different outcome (the definition of insanity if you didn't notice). It should not surprise anyone when the negative amortization experiment fails brilliantly.
From our example above, we can see how changing the terms from a conventional, fixed-rate mortgage with a 30 year term to an interest-only adjustable rate mortgage artificially increases home prices by 25%. Now look at what negative amortization does. In 2004, prices reached the limit imposed by interest-only. The only way to push prices higher would be to finance even larger sums with the same available payment. Option ARMs differ widely due to differences in their teaser rate, but for the sake of this calculation, I will assume a 3.75% teaser rate (I have seen them as low as 1%). The $1,957 payment finances $312,866 with a conventional mortgage, $419,454 with an interest-only mortgage, and a whopping $626,239 with negative amortization. In 2004, 2005 and 2006, people took out Option ARMs, bought the huge inventory spike from the summer of 2004, and sent prices into the stratosphere.
32% of loan originations in Orange County in 2006 were negative amortization (Option ARM).
Stop for a moment and ponder the math: the same payment now finances 100% more money. Is it any wonder our real estate market was 100% overvalued at the top? People purchasing with Option ARMs are buying at the rental equivalent value. From a financing perspective, the market is not overvalued. People are paying exactly what they should be paying. They are just doing it with loan terms which are going to destroy them -- hence the term "suicide loan."
These exotic financing terms are going away for one simple reason: foreclosures. People simply cannot make the payments when interest rates rise. If you look at the foreclosure rates in the early 90's, you can see what happens when lenders get too loose with credit. Lenders overcooked the market then, and they got burned. You think they would have learned their lesson...
(One note on the foreclosures: defense industry layoffs are often blamed for the problems with the housing market. These layoffs came after the housing market was already in trouble. It slowed the recovery, but it was not the cause.)
Lenders faced high foreclosure rates in the early 90's because they were too aggressive with their lending practices in the rally of the late 80's: it was their own doing. As you can see from the above chart, the ultra-aggressive lending practices of the early 00's are just now starting to show up in the foreclosures. Just as in the early 90's, this is being caused by the past sins of the lenders: karma on grand scale. If does not take an expert to extrapolate from the chart above to see that foreclosures are going to shatter the old records set in the 90's.
Price to Income Ratios
Just in case you still don't believe there was a credit bubble. Examine the chart below of historic price-to-income ratios.
Very high price to income ratios signify borrowing large sums with small payments just as illustrated in the previous financing example. Ratio's greater than 5 are considered very unaffordable and prone to high rates of default. The bubble of the early 90's did not exceed 6 partly because interest rates were higher and partly because they did not use negative amortization.
Elimination of Exotic Financing
I have speculated that exotic financing is going to disappear. To be more accurate, exotic financing is going to become so expensive for borrowers as to render it practically useless. These loans will always be available, but the interest rate spreads will grow and the qualification standards will tighten to make them not usable. For example, in the heyday of negative amortization loans, lenders would qualify borrowers based only on the teaser rate payment without regard to whether or not they could afford the payment at reset. For more sophisticated borrowers, lenders allowed stated income or "liar loans." Basically, a borrower would tell the lender how much they wanted to borrow, and the lender would fill out fraudulent paperwork showing the borrower was making enough money to afford the payment. This is amazingly irresponsible lending, but it was widespread. Now, lenders are requiring borrowers be able to actually afford the payments; of course, this makes many borrowers unable to obtain financing. That is credit tightening; that is how the downward spiral begins.
The next phase in the tightening of credit is an increase in interest rate spreads between prime loan terms and exotic loan terms. This is driven by the defaults and foreclosures. Mortgage rates for prime customers are very low because they rarely default. During the rally nobody was defaulting because prices were rising; people just sold if they got in trouble. This allowed banks to originates risky loans at very low interest rates because the loans didn't look risky. Now that the market has stopped rising, the underlying risk is starting to show with dramatically increasing default rates. The true risks of these loans will become apparent over the next few years.
Banks have to make enough money on their good loans to pay for the losses on their bad loans and still make a profit. As exotic loans start showing very high default rates, banks have to start charging higher interest rates to cover the losses. Higher interest rates make for lower amounts of borrowing.
When banks realize the true risk associated with exotic financing terms, they may have to charge much more than they are charging for conventional loans. As you can see from the table above, if the interest rate is only 3% higher, the amount financed is 25% less. If the default rates are very high, no amount of interest rate spread can compensate the bank for the risk, and that loan program will be eliminated. This will be the fate of the negative amortization loan.
The 2006 vintage sub-prime negative amortization loans have already defaulted in record numbers. These loans are less than a year old. It is forecast that over 20% of these loans will default, and this is without a crashing housing market. If lenders have to make enough money on 4 loans to cover the loss on 1, interest rate spreads will be very high. If a negative amortization loan costs 13.75% rather than 3.75%, nobody will want it, and if lenders require borrowers to actually afford the 13.75% interest rate, nobody will qualify. Either way, negative amortization loans will die. The fate of stated income and interest-only loans may be no better.
When prices crash, defaults rates will increase for all borrower classes. Prime borrowers will not default at the high rates of sub-prime borrowers, but they will still default at rates higher than in the past; therefore, interest rates will rise for prime borrowers as well. The crash in house prices will cause all mortgage interest rates to rise.
What Happens Next?
Over the next several years, interest rates will rise to at least 8%, 20% down payments will become the norm, and debt-to-income ratios will fall back to their historically "safe" levels for banks of 28%. What will that do to prices?
At some point in the future, the market will bottom near the values above. How it gets there will depend on the number of foreclosures. If there are a great many foreclosures, it will happen quickly, if there are fewer, it could take longer. Either way, the median prices shown above will occur, it is just a matter of when. I have constructed two different scenarios as to how and when: Predictions for the Irvine Housing Market and How Bad Could Bad Get?
The conditions for the above disaster are already in place. Right now, we are in the lull before the storm, but the storm is coming; there isn't much anybody can do about it.
May 12th, 2007
Turtle Rock is a neighborhood in the south part of Irvine, near the University of California, Irvine. It is bounded to the north by University Drive and Mason Regional Park, to the east by the Strawberry Farms Golf Club and Ridgeline Drive, to the south by Shady Canyon Drive, and to the west by Culver Drive. Turtle Rock is one of the five "villages" originally forming Irvine; its 1967 founding is commemorated by a sculpture of a turtle in Turtle Rock Community Park, at the corner of Turtle Rock and Sunnyhill Drives. The villages of Turtle Rock, University Park, Culverdale, the Ranch and Walnut were completed by 1970.
Geographically, Turtle Rock lies in the San Joaquin Hills. It's unclear where the name "Turtle Rock" comes from; although the highest peak in the neighborhood is also sometimes called Turtle Rock, it has no official name. A lower peak to the north within the neighborhood is called French Hill.
Click on the image above for a much larger version.
Click on this link to download a high resolution version: Turtle Rock Panorama 1 - Large
Above is a panorama shot from the "Turtle Rock" peak. The panorama extends from the southwest looking toward Corona Del Mar to the east toward Portola Springs. Unfortunately there is no easy way to get to the top of the hill. Unlike "Top of the World" in Laguna Beach, you cannot drive to this spot. Your blogger had some hiking to do...
Actually, this is part of the fun of doing these community profiles. If I lived in Turtle Rock, I would climb this hill. As you can see from the panorama, the view is sublime. This would be a great location for meditation or simply taking a few moments to contemplate life. Since you can't drive there, when you arrive at the top of the hill, your heart rate is elevated, and the endorphins make you feel euphoric. That feeling is part of the experience of the view. It is a special joy reserved for residents.
The view from the South is just as spectacular as the view from the North, but it is a bit more difficult to photograph. The above picture shows Turtle Rock in the foreground, and Shady Canyon beyond.
Looking east you have Saddleback Peak from the top of Turtle Rock.
There are three major entry points into Turtle Rock: Ridgeline Drive from the 405 south, Campus Drive and Culver from the 405 north, and Shady Canyon Drive from the 73. The entry above is adjacent to the Shady Canyon entrance at the southern edge of Turtle Rock. It displays the characteristic look of the signage and landscaping which typifies Turtle Rock.
As you come up Ridgeline Drive to enter Turtle Rock from the east, you pass between the Strawberry Farms golf course and a preserved hillside of Turtle Ridge. The first neighborhood you come to is Turtle Rock Pointe; an exclusive, gated community overlooking the golf course.
The main loop road uniting Turtle Rock is Turtle Rock Drive. Near the intersection of this road with Ridgeline is Canyon Park. Like the other parks in Turtle Rock, it has a pool and a tot lot. In the photo above a college student is playing with her dog.
Adjacent to the park is the Turtle Rock Summit Towne Collection.
A little farther down Turtle Rock Drive is the guard-gated enclave of Turtle Rock Summit.
Turtle Rock Drive is an attractive street with several areas bordering on the preserved hillsides.
The park serving the west side of Turtle Rock Drive has one of the sculptural turtles symbolizing the community.
Serving the southwest portion of Turtle Rock Drive is Chaparral Park. BTW, there are no kids in these parks because the pictures were taken during school hours.
The top of the community is neighborhood known as Turtle Rock Crest.
Turtle Rock has a higher percentage of large, single-family detached homes than do the other neighborhoods in Irvine. This is one of the reasons it is considered one of Irvine's premier places to live.
A park in Turtle Rock Crest.
Another typical Turtle Rock Crest Home.
Turtle Rock Community Park is a large park at the south end of Turtle Rock. Though open to the public, its location at the south end of Turtle Rock makes it reasonably accessible only to residents of Turtle Rock, Turtle Ridge and Shady Canyon.
French Hill and the surrounding housing viewed across Turtle Rock Community Park.
One of the great features of Turtle Rock is the walking trail system. You can easily walk from the south end of Turtle Rock Community Park (above picture along the stream) to University High School on the North end of the Community going around the hills in either direction.
Walking up the hill going north.
If you walk these trails a lot, you will be in excellent physical condition. Turtle Rock is hilly.
In a few locations, long tunnels are built under the road so pedestrians do not have to cross the street. In other communities, this would be a safety problem, but this is Irvine...
The trails are well maintained, beautiful and shady.
Several parks occur along the trail system path.
You might even see wildlife on your walk...
It is an impressive trail system.
With locations for every mood.
The trail system links the homes to the schools.
Schools within Turtle Rock include Turtle Rock Elementary School, Bonita Canyon Elementary School, University High School, and Concordia University.
Unfortunately, there really is not any commercial center or suburban plaza associated with Turtle Ridge. The center of community life is its neighborhood parks...
The neighborhood park in the Highlands is typical of those in Turtle Ridge.
Turtle Rock is designed as a series of neighborhoods with their own identity accessed from Turtle Rock Drive.
Even the lower elevation neighborhoods have larger homes.
All of the homes are very well maintained.
There is a mixture of single-story and two-story homes. Note the backyard with natural open space populated with boulders.
I couldn't resist photographing this one. There was enough HELOC money to purchase two new luxury cars and fill the garage with junk so the cars are parked outside on display, but there was not enough left over to put grass or landscaping the in the front yard. OK, this is Turtle Rock; perhaps these people actually make that much money...
The Highlands shows the typical land planning pattern with a park at the entry.
The Sierra Ridge neighborhood is on the west side of Turtle Rock.
It has a beautiful entry park with a tot lot, pool, basketball, and an open green space for flag football, picnics, etc.
This homeowner went all-out on his front yard landscaping.
Another western Turtle Rock neighbhorhood. Note the homes from Turtle Ridge in the background.
Turtle Ridge is the new nighbhorhood between Turtle Rock and highway 73 begun in 1999.
Another neighborhood park with our friendly turtle.
Beautiful local streets.
Neighborhood pool with gas grill and picnic area.
Another typical neighborhood park.
The smaller homes also show great pride in ownership.
Too many parks, too little time...
Nature preserves and hiking trails are central to the community.
I hope these pictures have given you a sense of the quality of life in Turtle Rock. The community has a lot to offer: large homes, numerous parks, walking trails, nature preserves and hiking, etc. As you can see from the view, you are in the heart of Orange County, but the feeling of Turtle Ridge is more of a suburban fringe transitioning to rural. It does not feel as dense -- or as claustrophobic -- as some of the newer communities.
Irvine's Turtle Rock: a great place to live.
Originally posted October 18, 2006
Avenue One is a condo development built in 2006 by K. Hovnanian Homes located off Jamboree and DuPont. It is/will be surrounded by the Toscana apartments, the Watermarke condos, The Plaza, and 3000 The Plaza. The location is very convenient if you're single and have a job nearby. But it'll definitely be a while before Jamboree can be compared to the Wilshire corridor.
In MLS, there are currently 5 Avenue One homes listed for sale by flippers:
The Plans that end in 'L' have a loft and are on the 4th floor. Unfortunately, I haven't been able to find the purchase prices for any of these condos. But I'm sure some of these flippers will lose money. Click on the address to see the actual MLS listing. You'll be suprised at what some of the original asking prices were. You know the flippers were thinking 'I'll buy in the first phase and then make a ton of money as the builder raises prices in subsequent phases'. Well the builder isn't on their side and has actually listed several properties on MLS (yup, the builder is offering agents 3% to bring in a buyer):
Why would anyone buy from the flippers if they can get a BRAND NEW home from the builder for LESS??? If you look at the actual MLS listings for the builder listed homes, you'll see that the builder has been reducing their asking prices as well. They need to sell these homes and will lower the prices until they are all sold. What's a flipper to do?
UPDATE #1 - November 16, 2006
It's been about a month since the original post and I thought it would be interesting to see how the pricing at Avenue One has changed. Here's a look at what's currently available for sale by flippers:
- 2119 Scholarship - Plan 1B - 1/1 - 602 sq ft - 86 DOM - $429,999
- 2310 Scholarship - Plan 1A - 1/1 - 725 sq ft - 83 DOM (+180) - $437,000
- 2406 Scholarship - Plan 1CL - 1/1 - 923 sq ft - 42 DOM - $615,000
- 2302 Scholarship - Plan 2A - 2/2 - 1037 sq ft - 15 DOM (+43) - $568,000
- 2402 Scholarship - Plan 2AL - 2/2 - 1213 sq ft - 147 DOM - $654,900
- 2172 Scholarship - Plan 2? - 2/2 - 1100 sq ft - 0 DOM - $569,000
- 2418 Scholarship - Plan 2AL - 2/2 - 1213 sq ft - 2 DOM - $714,900
You'll notice that NONE of the flippers lowered their prices from a month ago. Also, there is more competition as another 2 properties were just listed by flippers in the last couple days. Now let's take a look at the properties available directly from the builder:
- 1231 Scholarship - Plan 1B - 1/1 - 602 sq ft - 148 DOM - $369,990
- 1150 Scholarship - Plan 1A - 1/1 - 725 sq ft - 80 DOM - $376,990
- 1418 Scholarship - Plan 3AL - 3/2 - 1538 sq ft - 52 DOM - $725,990
- 1334 Scholarship (SOLD on 10/23 for $545,990)
The builder lowered prices on ALL their properties: the 1 bedroom models were lowered by $20,000 and the 3 bedroom model was reduced by $15,000. Not much right? But think about what that's doing to the flippers who are trying to sell. Wouldn't you rather buy a Brand New home from the builder and save $60k-$70k versus buying the same plan from a flipper?
Oh and guess what? The builder is now offering **5%** (that's an increase from the 3% they offered only a month ago) to agents to bring in a buyer. So if anyone reading this is interested in buying a unit from the builder, make sure you negotiate AT LEAST 5% off their asking price. (For those that don't want to do the calc.. that means, right now, you can get 1231 Scholarship for $351,490, 1150 Scholarship for $358,140, and 1418 Scholarship for $689,690.)
UPDATE #2 - May 11, 2007
It's been almost 7 months since this was originally posted. Here's an update in the tract:
Out of the 7 properties listed by flippers in the November update, none have yet sold. 4 are no longer on the market:
- 2119 Scholarship - Plan 1B - 1/1 - 602 sq ft - $429,999, $399,900
- 2310 Scholarship - Plan 1A - 1/1 - 725 sq ft - $437,000, $434,500
- 2406 Scholarship - Plan 1CL - 1/1 - 923 sq ft - $615,000
- 2418 Scholarship - Plan 2AL - 2/2 - 1213 sq ft - $714,900
3 are still on the market (2 with reduced prices):
Joining them are 4 more units put up by flippers:
Now, let's see what happened with the 3 units that the builder had available as of the November update:
- 1231 Scholarship - Plan 1B - 1/1 - 602 sq ft - 223 DOM - Sold for $369,990 on 2/26/2007
- 1150 Scholarship - Plan 1A - 1/1 - 725 sq ft - 138 DOM - Sold for $376,990 on 1/29/2007
- 1418 Scholarship - Plan 3AL - 3/2 - 1538 sq ft - 181 DOM - Sold for $695,000 on 4/19/2007
All 3 of the builder's units eventually sold. There is one more available from the builder currently:
In total, there are 8 units currently on the market (7 by flippers, 1 by the builder). Any guesses on which sells first?