The damage is done
You've had all your fun
The party's begun
The enemy has won
Walking off a cliff again
You've used all your tricks
Your lies don't stick
You don't want to admit
You're done
Walking off a cliff again
Walking Off a Cliff Again -- The Mint Chicks
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Isn't this what the market is doing: Walking off a cliff again? The realtors have used all their tricks, and their lies don't stick, and the sellers don't want to admit, the market is walking off a cliff again.
Today, I am introducing a new line in the property data: Monthly Equity Burn. Since prices have dropped more than 10% in the last year, and since this trend will likely continue for the next 2 years, anyone who buys now will see a 10% per year decline in the value of their property. If you divide this 10% by 12, you arrive at the monthly loss of equity any buyer will endure for the next 2 years. Look at it as part of the cost of ownership, or call it "equity evaporation," but it is the reality of our market, and buyers should be educated to its presence and its effect.
Light and bright unit, this one is clean and ready to live in. Bring the bank an offer today.
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The lender is really getting killed on this one. The owner (bank renter) lost their $8,000 downpayment, and assuming the bank gets their asking price and pays a 6% commission, the total loss on the property will be $215,094 of which the lender will lose $217,094. Look at the size of this rollback: the asking price is 29.5% off the 2005 purchase price.
Here is a 3/2 in Irvine with an attached, 2-car garage going for $272/SF. Does $200/SF seem so far away?
Party time, going down
you better not mess us around
the stakes are rich, take a hit or stay
the price is high, someone's gonna pay
Looking for trouble, now you've found it
you're a drum and we're gonna pound it
Last one standing wins the fight
hear us scream and shout all night
down on the floor and eat the grit
this is gonna hurt a little bit
Heads I win, tails you lose
out of my way I'm coming through
roll the dice don't think twice
and we crush (crush), crush 'em (crush 'em)
Don't need reason, don't want names
just a John Doe to put to shame
step aside let me explain
the name of the game is pain
Now we've found you
We're gonna pound you
We're gonna beat you
Gonna defeat you
We're gonna bust you
We're gonna crush you
We're gonna crush 'em
Crush 'Em -- Megadeth
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Financial markets can be brutal, particularly for those who speculate. Today's property was purchased for nearly double its cashflow value as were all the other properties in Northwood II. These properties were all built in 2004 and 2005 near the peak of the housing bubble. Most of them were purchased by speculators, and the featured property today was one of these. So what did the market do? It crushed him...
Gated community, best location next to green belt on the end of the Cul De Sac, bright light open floor plan. Tumbled stone flooring, granite kitchen counter's, maple cabinets w/ cognac finish. Northwood school district.
Cognac finish? I would rather drink the stuff than finish my cabinets with it.
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If this seller gets their asking price and pays a 6% commission, they will have lost $114,300 in a little over 1 year. Since this price is only 10% off the peak, and we have seen many properties going for 20% or more off peak, this property's asking price may be $75,000 over market. This speculator may lose over $200,000 in their little foray into the housing market. It is a good thing they are getting out now, properties in this neighborhood could easily drop to near $500,000 in the next couple of years.
That concludes another week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
The sirens are screaming and the fires are howling
Way down in the valley tonight
Theres a man in the shadows with a gun in his eye
And a blade shining oh so bright
Theres evil in the air and theres thunder in the sky
And a killers on the bloodshot streets
And down in the tunnel where the deadly are rising
Oh I swear I saw a young boy
Down in the gutter
He was starting to foam in the heat
Oh baby you're the only thing in this whole world
Thats pure and good and right
And wherever you are and wherever you go
Theres always gonna be some light
But I gotta get out
I gotta break it out now
Before the final crack of dawn
From the land of kool-aid, pretense, and noveau-riche nonsense, Turtle Ridge, we have a new race to the bottom, and they are going like a bat out of hell. This neighborhood first began to implode back in August when the credit crunch hit. We documented the troubles in the post Crimson and Clover. The property at 30 Crimson Rose went to auction at $1,400,000. Apparently the neighbors did not believe that was where the market stood for their houses. In their race to the bottom, they are almost there, and they still are not selling.
Dazzling ultra-luxury masterpiece perched on oversized lot in exclusive gated community of highly sought after Turtle Ridge. Dramatic curb appeal thanks to sharp contemporary styling. Remarkable entertainers floorplan complete w/ formal dining room, great room & guest house/casita. Magnificent European style gourmet kitchen w/ enormous granite island, slab countertops, full backsplash & breakfast nook. Huge master suite w/ retreat & lavish bath. Massive entertainers' yard w/ fireplace. WOW!
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This property has already been sold to the lender, they just don't know it yet. On 2/28/2007, this owner refinanced for $1,425,000, and three months later, they opened a HELOC for $284,990. For the lender's sake, let's hope they haven't taken all this money out and spent it. Assuming this seller gets their asking price and pays a 6% commission, they will need to come out-of-pocket $15,000 to avoid a short sale. Of course, if they spent the HELOC money, then they have a different problem...
One of the LARGEST LOTS in Ledges * * * * * * * * * 7800 feet * * * * * * PRIVACY PLUS * * * * with huge wrap around yards. This home has it all with hundreds of upgrades. Rod iron stair case, front door with iron, travertine floors, upgraded cabinets thru-out, Wolf range and upgraded thru builder master retreat!!Total turn-key home. CORNER LOT LOCATION. You will not be disappointed !!!!!!!!!!!!!
What is the deal with all the ALL CAPS, asterisks and exclamation points? I count 13 exclamation points to end the description.
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These people have fallen $200,000 behind in the race to the bottom. At 258 days on the market, they don't seem particularly motivated sellers. Perhaps the fact that any lowering of the price would make them lose money has something to do with their reluctance to lower it. I have news for them -- they are more than $250,000 over market, and they are losing more every day !!!!!!!!!!!!!
Remember the property from the post Desperation? It appears that giving away the free Mercedes was not successful, and now they have reduced their price $200,000. Unfortunately, they are losing their race to the bottom, and they are already a rollback.
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.
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This property is already underwater. If they get their asking price and pay a 6% commission, they stand to lose $169,440, and the same house across the street asking $300,000 less, so I think this asking price is a bit too high. OK, it is a WTF, and these sellers are probably going to lose $500K.
Turtle Ridge -- a little HELOC abuse, a stubborn seller praying for breakeven, and a desperate seller who is both overpriced and underwater. Another day in hell for those who want to leave...
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BTW, if you didn't see this great post at South OC Real Estate Tracker, go check it out. Let's play...Match Game.
Since our original post on August 2, our race to the bottom has been continuing. Our low price leader is really starting to race now. Their new asking price is $515,000. That is a full $100,000 below their 2004 purchase price. Wow! .
There's a lady who's sure All that glitters is gold And she's buying a stairway to heaven. When she gets there she knows If the stores are all closed With a word she can get what she came for. Ooh, ooh, and shes buying a stairway to heaven.
Beds: 3 Baths: 3 Sq. Ft.: 1,553 $/Sq. Ft.: $406 Lot Size: - Year Built: 2004 Stories: 3 Type: Condominium View: Hills County: Orange Neighborhood: Quail Hill MLS#: S496508 Status: Active On Redfin: 17 days
From Redfin, "Great property - Great location, surrounded by mountain views, greenbelts and wide open spaces. Decorator colors, epoxy gar flrs, full bedroom/bath downstairs perfect for home office. French doors, front porch, totally move-in. All white kitchen with added cabinets and rear balcony with view. Large living room with fireplace and dining room. Each bedroom has it's own bath"
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As you can see, this was a typical 2004 100% financing deal (well a 99.27% financing deal). And I suppose this isn't technically a 2004 rollback, yet, but with $14,400 in negotiating room, it probably will be. If this seller manages to get full asking price, and assuming a 6% commission, they still stand to lose their whopping $4,520 investment, and the bank will eat an additional $27,914.
Beds: 3 Baths: 3 Sq. Ft.: 1,553 $/Sq. Ft.: $412 Lot Size: - Year Built: 2004 Stories: 3 Type: Condominium View: Hills, Park or Green Belt County: Orange Neighborhood: Quail Hill MLS#: S485936 Status: Active On Redfin: 89 days
From Redfin, "Amazing 'Mame' award winning model * * Dramatic floorplan * * Enormous Great room/fireplace & large viewing Patio * * Gourmet Kitchen/ Granite Island * * Granite counter top with 6'splash * * Upgraded Dishwasher * * 3 huge bedrooms suites/ bathrooms * * ceiling fans in every bedroom * * Designer Paint * * surround sound * * Upgraded carpet and ceramic tile * * custom window coverings * * country club facilites-pools, spas, parks-tennis cts, * * Award winning Irvine schools * * Seller motivated. Will look at all offers. "
I guess the MAME (Major Acheivement in Marketing) award isn't helping the marketing of this unit.
Enough with the asterisks already...
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This unit is priced $10,000 higher, and it has been on the market almost 90 days. This strongly suggests the price is too high. This doesn't make the asking price of 112 Stepping Stone look to promising.
Beds: 3 Baths: 3 Sq. Ft.: 1,553 $/Sq. Ft.: $415 Lot Size: - Year Built: 2004 Stories: 3 Type: Condominium View: Hills, Mountain, Park or Green Belt County: Orange Neighborhood: Quail Hill MLS#: P575773 Status: Active On Redfin: 86 days
From Redfin, "Gorgeous 3 Bed & 3 Bath Townhome. It is situated away from the street, View of Hills, Green belt, Park, Prime location. One bed/full bath on downstairs, large gourmet kitchen with solid granite counter top w/ full back splash, Upgraded ceramic tile, New Paint, Upgraded Lush Carpet, Relaxing Balcony w/ view. Assoc. pool, spa, BBQ , fitness center, tennis ct. Close to award winning Irvine school, village shopping center. Easy access to #405, #133 & #5."
Yet another gourmet kitchen...
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This seller is sitting on plenty of equity at this point, so they don't seem too motivated. It is probably why they are in third place on the race to the bottom.
Beds: 3 Baths: 3 Sq. Ft.: 1,553 $/Sq. Ft.: $419 Lot Size: - Year Built: 2003 Stories: 2 Type: Condominium County: Orange Neighborhood: Quail Hill MLS#: S471673 Status: Active On Redfin: 195 days Unsold in 90+ days
From Redfin, "Premier Quail Hill condominium with upgraded kitchen. Granite countert ops and stainless steel appliances, ceiling fans, hardwood floors, ceramic floors & berber carpet. Main level room can be used as an office or 3rd bedroom. Unit has large storage area in garage and spacious front entry porch. This unit is tucked away from traffic noise. Washer/Dryer/Refrigerater included. A must see!!!! Seller will consider all offers."
Wow!!!! Four exclamation points. This realtor must be very excited about this listing.
As you can see, this unit is bringing up the rear on our race to the bottom. At 195 days on the market, perhaps the seller should consider lowing the price. The market is obviously not where this seller wants it to be.
These races to the bottom are very revealing. You can see how the sellers financing terms and purchase price plays into their motivation and their asking prices. One of these units will sell eventually, and it will set the comps for the other three. I would guess a sale will take place under $600,000, but there are still some buyers out there who can get the necessary financing. These units are on the edge of the abyss of the financing picture. Units smaller and less expensive than this are not moving at all. Do you think one of these sellers will get lucky?
I hear the train a comin'
It's rollin' 'round the bend,
And I ain't seen the sunshine,
Since, I don't know when,
I'm stuck in Folsom Prison,
And time keeps draggin' on,
But that train keeps a-rollin',
On down to San Antone.
Well, if they freed me from this prison,
If that railroad train was mine,
I bet I'd move out over a little,
Farther down the line,
Far from Folsom Prison,
That's where I want to stay,
And I'd let that lonesome whistle,
Blow my Blues away.
Today's property is the lowest priced unit in Irvine, and it is very near the breakeven point for an owner occupant as evidenced by these comparative rental units asking $1,095 and $1,195. The problem is the same one all small condos face: who wants to be an owner-occupant? This unit is a tiny prison, and the person who buys it is going to be trapped there for the duration of the bear market. They would probably be listening to a lot of Johnny Cash...
Great Location at a Fantastic Price! Enjoy the sounds of meandering streams from one of the least expensive condos in all of Irvine. This studio unit is on the ground floor within a great community close to shopping, dining and transportation. numerous association amenities including 2 clubhouses, 2 pools, 2 spas, and tennis courts make this a great place to live!!!
The two needless capital letters at the beginning were excusable, but then he added three exclamation points after offering his dubious opinion of "great" living. Do you really think this realtor thinks this is a great place to live?
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Sales History
Date..................Price
06/11/2007 $191,826
03/21/2005 $210,000
04/16/1998 $57,500
I am not sure if this was an REO or just a really stupid flip attempt. In either case, the 2007 purchase was a discount off the 2005 price. If the current seller can get their asking price, they stand to lose $23,132 after a 6% commission. Of course if this is an REO, and if the lender had $210,000 in it originally, the loss is closer to $45,000.
Also take note of the 1998 price. This was probably its worth to an investor in 1998 using a 100 GRM. This unit or similar ones will probably be heading down to the 100-120 GRM range because the only people who would be interested in owning them would be an investor looking for positive cashflow as a rental. This is also one of the reasons condos will crash particularly hard in the bear market because people will not want to be imprisoned in one for long.
New Listing (24 hours)
Unsold in 90+ days
