Beds: 3 Baths: 3 Sq. Ft.: 2,146 $/Sq. Ft.: $315 Lot Size: - Type: Condominium Style: Mediterranean Year Built: 2004 Stories: Two Levels Area: Northwood County: Orange MLS#: S490583 Status: Active On Redfin: 172 days Unsold in 90+ days
From Redfin, "Move in condition, highly upgraded spacious home. This gorgeous home offers 3 bedrooms and a huge bonus room. There are two master bedrooms, one down plus additional bedroom and another master upstairs with a huge bonus room and builtin computer area. Upgraded hardwood flooring and carpeting, plus plantation shutters. Formal dining room, spacious kitchen upgraded with granite counters and wood cabinetry and stainless steel appliances."
That is a well written listing. You don't see those very often...
.
.
Price Reduced: 08/07/07 -- $818,000 to $780,000 Price Reduced: 09/06/07 -- $780,000 to $760,000 Price Reduced: 10/13/07 -- $760,000 to $730,000 Price Reduced: 10/26/07 -- $730,000 to $699,000 Price Reduced: 11/02/07 -- $699,000 to $675,000
The asking prices started somewhere in Wonderland on the exact day the credit crunch took hold. From there, the seller has slowly and methodically chased the market down, always staying one step behind the drops necessary to make a sale.
George Winston's version of Carol of the Bells has been a favorite of mine for years. The somber tone captures the bleak beauty of December. The degree of difficulty to play this must be very high. You can hear each of his hands are playing something completely different and very complex. Beyond that, it is just beautiful. I hope you enjoy it.
First Mortgage $450,000 Second Mortgage $60,000 Total Debt $510,000 Downpayment $60,000
Beds: 3 Baths: 2.5 Sq. Ft.: 1,500 $/Sq. Ft.: $367 Lot Size: 1 sq. ft. Type: Condominium Style: Contemporary, Spanish Year Built: 2001 Stories: Two Levels Area: West Irvine County: Orange MLS#: S495371 Status: Active On Redfin: 135 days Unsold in 90+ days
From Redfin, “Stunning 3 bedroom, 2.5 bath luxury townhome with attached 2-car garage. Marble-look Italian porcelain tile floors, recessed lighting through-out, custom beech-wood cabinetry and durable Corian counter tops in kitchen. Romantic raised fireplace in living room, fire and security alarm, custom-finished floor in garage, slate hardscape in front and much more! ”
.
.
This is the first owner we have seen in a while that actually put money into the property. Of course, they are about to lose all of it, but the lender will not get hurt on this one. If this property sells for asking price — which doesn’t seem very likely after 135 days on the market — and assuming a 6% commission, the seller will lose $53,094. I guess with $6,906 in equity left over, they can afford to pay a mover to take them to their rental…
Finding songs to relate to the real estate market has been a source of great fun and a unique creative outlet for me. However, there are many great songs that do not relate to the collapse of the housing market. Since we are entering the holiday season, and since the real estate bulls are thoroughly defeated, I will take a break from our normal routine and feature holiday music now through the end of the year. To start, I want to feature one of my favorite artists: George Winston. His album, December, begins with a song called Thanksgiving and follows with a series of Christmas Carols set to piano as only George Winston can. Enjoy.
From Turtle Ridge, the land of WTF listing prices and decadent kool-aid parties, we have a 2004 rollback. This can't be making the neighbors too happy.
First Mortgage $580,950 HELOC $33,000 Total Debt $613,950
Beds: 2 Baths: 2.5 Sq. Ft.: 1,155 $/Sq. Ft.: $498 Lot Size: - Type: Condominium Style: Mediterranean Year Built: 2003 Stories: Three or More Levels View(s): City Lights, Hills Area: Turtle Ridge County: Orange MLS#: U7003293 Status: Active On Redfin: 105 days Unsold in 90+ days
From Redfin, "Best Buy in the Community!!! Exquisite former Sutton Model in Turtle Ridge's Ashton Green featuring 2 bedrooms & 2.5 baths. Light & birght end unit in the best location with open hill views. Upgraded kitchen with custom distressed cabinetry and upgraded appliances to match, designer counters & back splash. Bathrooms are all upgraded with the custom cabinetry & designer wall paper. The master bathroom has beautiful custom stone on the counters & in the shower. So many more upgrades to list."
The obligatory three exclamation points.
designer wall paper? Is there another kind?
.
.
Date Price 05/27/2005 $599,000 04/26/2005 $606,000 04/08/2005 $722,500 03/30/2005 $620,000 03/28/2005 $627,500 03/22/2005 $618,500 03/21/2005 $615,500 03/11/2005 $611,000 12/28/2004 $572,000 12/22/2004 $640,000 12/21/2004 $615,000 12/17/2004 $581,000 12/15/2004 $583,000 It is difficult to tell from the sale history (it reads like an appraisal history,) but the property records show this house was purchased in late 2004 for more than the current asking price. If they get this price and pay a 6% commission, the lender stands to lose $74,390.
The lender won't be having a happy Thanksgiving, but I hope you will.
Everyone sitting around talking about their homes. Sounds like every western port, doesn't it? Certainly the ones in California.
Today's property isn't a rollback yet, but it still has an interesting story to tell. The property is located in the land of kool aid and real estate zealots: Turtle Ridge. The property has been on the market just short of forever, but the seller still refuses to lower the price. Why is that? Does it have something to do with the amount of debt on the property?
First Mortgage $1,500,000 HELOC $200,000 Total Debt $1,700,000
Beds: 4 Baths: 3.5 Sq. Ft.: 3,046 $/Sq. Ft.: $535 Lot Size: - Type: Single Family Residence Style: Mediterranean Year Built: 2004 Stories: Two Levels View(s): Hills Area: Turtle Ridge County: Orange MLS#: U7000774 Status: Active On Redfin: 270 days Unsold in 90+ days
From Redfin, "Ideal End of Cul-de-Sac Location. Taylor Woodrow Bontanica Plan 2 with Casita Garden Suite + Highly upgraded with Crown Moldings, Custom Built-ins. Private Courtyard. Rear yard with Grass, and Patio area with Built-in Grill. Desirable Guard Gated 'Summit Park'. Owner will consider Trade for Smaller Home in the Area. "
What do you make of the trade-down idea?
.
.
I don't know how much of the $200,000 HELOC has been borrowed and spent, but I think we can make an educated guess. When an asking price doesn't drop after 9 months on the market, there must be a reason (other than foolish stubbornness.) If the seller gets her asking price and pays a 6% commission, she will be left with $1,531,260. The first mortgage is listed as conventional, so we can assume very little of the $1,500,000 has been paid down since August of 2006 when it was initiated (the first mortgage is a refi.) Therefore, if our seller has borrowed more than $35,000 on the $200,000 HELOC, she is looking at a short sale.
Quite honestly, I doubt she cares. This was a 100% financing deal from the outset, and she has already pulled over $67,000 out with the refinance on the first mortgage. Any of the HELOC she walks away with is a bonus. The bank will get to eat the rest.
Anybody want to estimate how much the bank will lose on this one?
It's the edge of the world And all of western civilization The sun may rise in the East At least it settles in the final location It's understood that Hollywood sells Californication
Destruction leads to a very rough road But it also breeds creation And earthquakes are to a girl's guitar They're just another good vibration And tidal waves couldn't save the world From Californication
California is one of America's cultural centers -- for better or worse. Now that we have had our first nationwide housing bubble, it will be interesting to see if California exports one of its most pernicious beliefs: perpetual house price appreciation.
In the 1970s California experienced extreme price appreciation coinciding with the rampant inflation of the times. Like any financial bubble, many people made large fortunes, and many bagholders got burned. Once Californians realized they could drive up house prices and make large fortunes, the stage was set for repetition of the cycle.
This may be the most important point I have made on this blog:
House prices in California go up because Californians believe house prices go up.
Think about that for a moment. This simple fact eludes most people, and if there is anything I would like the readers of this blog to really understand it is how this works.
When people believe house prices will rise, it makes them want to buy. When they buy, they drive up house prices. Rising house prices convinces others that house prices will rise further. This causes even more buying. The cycle of rising and falling house prices in California is a completely psychological phenomenon.
It started in the 1970s, it was repeated again in the late 1980s, and it has been repeated again in the early 2000s. There is nothing magical about California real estate that makes it a better investment than real estate in other places. All California has is a pathological belief in appreciation that creates a high degree of volatility in the housing market. In my opinion, Houses Should Not Be a Commodity.
This uniquely Californian cultural pathology has been unleashed on the rest of the country. It will be interesting to see where else it takes hold.
Beds: 2 Baths: 2.5 Sq. Ft.: 1,824 $/Sq. Ft.: $381 Lot Size: - Type: Condominium Style: Other Year Built: 2005 Stories: Two Levels View(s): Mountain, Park or Green Belt Area: Woodbury County: Orange MLS#: S512634 Status: Active On Redfin: 4 days
From Redfin, "This home has it all; GREAT PRICE! BEST LOCATION! HIGHLY UPGRADED! OPEN FLOORPLAN! This home features gorgeous custom 'old board' wood flooring & berber carpeting. Gourmet kitchen w/ beautiful walnut cabinetry, ceasar stone counters & stainless steel appliances. Master suite offers walk-in closet, dual vanities w/ marble & Juliet's balcony. Private courtyard entry opens to a separate den/office (which can be converted to a 3rd bedrm). Uppper level private deck w/ 'picture perfect' views & MORE. .."
This home has all the UPPERCASE LETTERS AND EXCLAMATION POINTS YOU COULD EVER WANT!!!!!!!!!!
What is a 'picture perfect' view in Woodbury? Let me guess, your balcony looks directly into your neighbors bedroom, but at least the neighbor is hot.
Uppper?
And, of course, another gourmet kitchen...
.
.
Ordinarily I would tell you about how much this seller would lose if they get their asking price ($85,200), but this seller is not going to get their asking price because of the REO in the neighborhood...
Beds: 2 Baths: 2.5 Sq. Ft.: 1,850 $/Sq. Ft.: $346 Lot Size: - Type: Condominium Style: Other Year Built: 2006 Stories: Two Levels Area: Woodbury County: Orange MLS#: S513083 Status: Active On Redfin: 1 day New Listing (24 hours)
From Redfin, "Location, Location, Location! Fabulous Woodbury condo! Spacious kitchen with breakfast bar that opens to living room. Perfect for entertaining!!Gourgous tiled floors throughout. Master bedroom has it's own bath with dual sinks. Nice patio in front. Close to everything and resort style amenities that include pool, spa, and more! "
Gourgous? Is that like couscous?
.
.
I think the kool aid man must have visited JP Morgan's REO department if they think they can sell this place for 25% more than they paid at auction.
It appears to me that our featured property seller is screwed. They are being undercut by this REO by $60,000, and based on the auction price of the REO, there doesn't appear to be any market for these units at all. JP Morgan went to the auction and bought this unit for $491,396. There were no professional flippers out there who would even bid $500,000 and try to flip it for $575,000? If the pros don't think this could sell for over $600,000, how is our featured seller going to get $695,000? No, I am afraid our featured seller is going to lose more than $85,000... a lot more...
But you tell me Over and over and over again, my friend Ah, you don’t believe We’re on the eve of destruction.
Don’t you understand what I’m tryin’ to say Can’t you feel the fears I’m feelin’ today? If the button is pushed, there’s no runnin’ away There’ll be no one to save, with the world in a grave [Take a look around ya boy, it's bound to scare ya boy]
Eve of Destruction -- Barry McGuire
The following test came to me from a reader named Zileas. It is great stuff, and it contains some sobering conclusions for those hoping to sell in Ladera Ranch...
.
.
What I did was try to build a predictive model using the same statistical techniques used by economists and scientists to glean insights from data.
I did this because most of the time you just see "median price" or "low tier median price" or whatever, and this tells you very little, and with such a shallow market (low # of sales), these medians are all over the place... so I wanted to get the best estimate I could, so I used the tools I know how to use -- statistical regression. The quick summary is that price may be correcting a lot faster than the medians are letting on.
I took the last 6 months of condo sales in Ladera Ranch off of the MLS database. I only used 1, 2 or 3 bedrooms condos to try to allow some breadth of data, but to mostly be comparing apples to apples.
Anyway, before I get into the nitty-gritty of the model, here are my important findings, the ones that I'm very confident about:
- 1/2/3 bedrooms in Ladera Ranch, on average, are losing $334 in value PER DAY (over the last 6 months, and there is weak evidence this is accelerating, and no evidence it is decelerating). This represents a 2.6% value decrease per month on a 400k home!!! This is a lot higher than a lot of other estimates, but ties in to all the talk about the low-tier market falling faster.
- Each additional square foot you add to a property in this band adds $134 to the price, holding all else equal.
- Bedrooms and Bathrooms each add about 25k in value to a house, all other factors held constant.
- Overpricing your house causes you to lose $0.23 on the final sale price for every dollar you list it over its eventual sale price (if it sells at all). Note that this is an anomaly -- in good markets, over-pricing often causes you to get more. Note 2 (sellers): price to sell!
Details:
My approach was to start with what I thought the major factors would be: - Square Feet - # of Bedrooms - # of Bathrooms - Garage Capacity - Time at which it was sold (just raw market trend, not "seasonality" -- since I was only looking at 6 months of data its hard to do stuff like say that Christmas is slow and prove it) - Square of time at which it was sold (there is some rejiggering in here to make this work, but this is to crudely capture some accelerating/decelerating market trends) - Fixed effects for development (this is an adjustment for whatever tract the home was in) - (there were other factors I wanted too look at but which were not in the data set -- HOA dues, taxes, quality of property, the development it is in, if it was a REO, etc, but I had to work with what I had)
I was somewhat hampered by the lack of data points -- I only had 61 to work with, and more would allow me to make a much better model.
After messing around for a while, I realized I could only get meaningful results using the following variables, given my shortage of data(if only I had a full dump of the past year of MLS sales in OC...):
Square Feet # of Baths # of Beds # of days ago the sale closed (I did this analysis on Nov 2)
Results (for Ladera Ranch):
1) As every day goes by, the average price of a house drops by $334. No joke. On a $400k house that represents price going down 2.6% per month. This means if you were offering on a house there, and your comparables were telling you "$400k right now", you would at the very minimum add 6 weeks of depreciation in the offer to calculate when the house would actually close.
2) Garage capacity does not seem to predict housing price. This is probably due to my limited data and because "garages" on MLS are not very descriptive -- you can't tell if its tandem, or wide, or whatever. It's also because garages strongly predict baths and vice versa (bizarre!)
3) For every bed you add to a house, the value goes up about $25,000... But this value tweaks around depending on how you do the model -- it's not super accurate, but adding beds, holding all else equal, almost always increases values.
4) For every bath you add to a house, value goes up about $25,000. This has a lot of the same issues as the bed count, and has some other issues because beds and baths "predict" each other.
5) For every additional square foot you add to a property, given that you have a set # of beds, baths, etc, the value of the property rises by $143.
6) Yes, houses have some intrinsic value in this model at very small sqft and 1 bed/1 bath, but the lower you go, the less accurate the model becomes.
7) This model still has a fair amount of swing for properties, as you might expect... obviously, I'm not capturing a lot of other relevant factors and my model only accounts for about 3/4 of the pricing factors.
Interesting other random results
- For every $1 you list your property over market price, the actual amount you get for it goes down by about $0.23 in this market. This is fascinating because other studies I've read have shown the opposite, that every $1 you list over market price, you get $0.50 more. Note that I was able to prove this result with high confidence, but it wasn't in my model because it had a minor interaction with the beds/baths variables and due to my lack of data, I couldn't separate it out enough.
- I can definitely show that different complexes sell for more or less, but didn't have enough data to make it work out with enough confidence for me to include it in the model.
Technical notes for mathematicians:
This is an OLS regression. I whitewashed the results, though prior to that heteroskedasticity wasn't proven, with my Breusch-Pagan / Cook-Weisberg test p value at 27%. Boxcox showed a theta of 1.8 reinforcing my choice of a linear-linear model, which didn't surprise me much since sqft to price should be a somewhat linear relationship and sqft was the largest predictor. Multicolinearity was weak - my VIFs were not exceeding 2, and I don't see any reason why my chosen variables should have high multi-colinearity. I did have to filter out some weak predictors because I Felt they were likely to have too much multi-colinearity.
Throw a dog a bone, I'll take it if I have to Go real fast like there's somewhere we can get to What's the use of standing right there on the edge if there ain't nowhere to fall What's the use in hangin' on tight to the phone if nobody might call
Desperation There's anger in frustration Complicated words slippin' off of your tongue and ain't one of them the truth I'm still desperate for you
Today's listing is the most desperate seller I have seen to date. They are actually giving away a car to their buyer. Next they will be offering a year of free massages with happy endings...
Price: $1,999,000
37 Crimson Rose Irvine, CA 92603 Beds: 3 Baths: 3.5 Sq. Ft.: 2,900 $/Sq. Ft.: $689 Lot Size: 6,500 sq. ft. Type: Single Family Residence Style: Mediterranean, Spanish Year Built: 2004 Stories: Two Levels View(s): City Lights, Ocean, Panoramic Area: Turtle Ridge County: Orange MLS#: S495046 Status: Active On Redfin: 138 days Unsold in 90+ days
From Redfin, "SPECIAL OFFER TO BUYER: BRAND NEW 2008 MERCEDES BENZ 'GL' SUV OR 'CLK' CONVERTIBLE WITH PURCHASE AT 'LISTING ASKING PRICE'. FORMER MODEL HOME with PANORAMIC CITY LIGHTS/OCEAN VIEWS!One of the BEST and highest view lots in The Summit at Turtle Ridge; Over $500K in designer upgrades; Provencial Style Home; Casita with Bath, custom hardwood flooring/wainscoating walls, faux paint, stone walls and stone flooring, spa-like master bath; covered loggia with outdoor fireplace."
.
.
From the land of WTF listings and denial we have the first signs of desperation: high-end style. What do you think about that?
Free eCourse Sign up for our free 16-part eCourse with the complete text of The Great Housing Bubble. There is no charge, and you can opt out at any time. Sign up now!
