Meanwhile AAPL split.
So in 2001 was actually $5-$7.5
Posted by Freetrader on 05/09/09 at 06:07 AM
It’s actually surprising difficult to figure out what the taxable gain to the sellers would be—I think you have roughly $5.1 million in gross gain on the sale of the property ($6.5 million sales price less $1.4 million basis), PLUS, because the sale price isn’t enough to pay off the debt, an additional $500k ($7 million - $6.5 million) of relief of debt income. I think you end up in a strange situation—no matter what the sales price is, as long as it is less than $7 million, the gain is always going to be about $5.6 million.
Posted by Ron on 05/09/09 at 06:36 AM
If you are referring to my comment last week about my friend doing the buy-and-bail shuffle, let it be clear that I didn’t say it was none of our business. I said that it is not immoral for someone to walk on a purchase money loan and allow the bank to take the home back. This is the contract. However, now that our government has decided that it is going to step in and give your money and mine to the banks to pay for their stupidity we should all be very angry… at our government first, the banks second and also at those who committed fraud. I don’t have room in my black heart for anger at the people who simply overpaid for a home. They didn’t get to buy Hummers and BMWs, they just got the pleasure of paying 3x the equivalent rent to live in a house.
People like those profiled today are a completely different story. HELOC abusers gave up their non-recourse status and the banks should go after them for this money. These people got hard cash from these loans and spent it how they saw fit; now it is time to pay it back.
I guess if you teach your house how to generate a million a year for you, you don’t mind $575 a month HOA payment to pay for the round-the-clock mall cops manning the gate or the extra property taxes, including money for building a toll road that they have to pay to use.
I guess what ticks me off most about the people in Newport Coast is that the toll road users from Riverside coming in on the Eastern and Foothill toll roads have to pay higher tolls to subsidize these high-rollers in Newport Coast as they take their Hummers onto the 73.
What’s crazy is knowing that this was bought for 1.3 just 8 short years ago. And, the expectation is for a quadruple in that time.
Does anyone, and I mean anyone know of another asset that has had this kind of rock-solid performance? Only gold which was at generational lows at that time (fiat was king back then) was even close.
Many of the lower-end properties are back to 2001 prices. Imagine the paradigm shift required for high-end properties to find their own bottom. I suspect that the high end will just languish and languish some more until we reinflate our entire economy.
For the price of this house, one can buy some medium-sized businesses that provide 1M+ in cash flow (legally without robbing a bank). Why would someone want to buy a depreciating asset that they wouldn’t be able to escape for 10, 15, or 20 years for the same price? Cachet? You gotta be one serious poser for that kind of abuse.
I wasn’t picking on any particular comment. There were several, and each had their own justifying argument. A couple of people were rather indignant that I was characterizing the behavior of an entrepreneur trying to save his business as HELOC abuse, as if that makes everything OK.
The buy-and-bail was common in the 90s, but the banks recognized this early this time and made it much more difficult to do. They did this buy making it necessary for the buyer to be able to prove they could support both payments, which of course, nobody can. The effect has been to stop people from buying a home before selling their first one which has effectively frozen the market for current homeowners; only renters can buy.
Posted by i boycott toll roads on 05/09/09 at 07:27 AM
you don’t have to take the toll road if you don’t mind sitting though some insanely long lights on Bonita Canyon and having to deal with church traffic on sundays or take a detour through UCI.
What ticks me off is that it costs $.75 to go a quarter of a mile on the toll road if I forget to exit on Bison especially when that road used to be free.
Posted by Woodbury Renter on 05/09/09 at 07:42 AM
I spent all week in NY and I am even more depressed about the unfolding of the bank bail-out. This stress test was an open joke that only the MSM and the people who get all their facts from the MSM don’t get. The personal fortune at-all-costs traders on all the bank desks get it, they are once again making personal millions making no-risk, sure-thing trades manipulating the various gov’t programs. Did you know that the bond traders at Citi, Goldman and BoA bought up billions of mortgage loans at depressed prices after the gov’t promised billions of guarantees on the same crap assets that they already own? It is mind-boggling that this is legal. If the MSM ever explained this to the public the mob would march into these banks and carry the traders and executives out on rails.
Back to this fascinating post today I have to say that I love visiting friends in Newport Coast, especially those that have a view down to the sunset over the coast. Of course I knew that many of these people were pretending to be wealthy. At the same time I don’t feel that the ‘non-pretenders’ who begot the money to buy these homes by trading bonds at PIMCO are realy any less ethically challenged. If they had to pay back their ill-gotten gains they would have to sell their wonder homes fast.
IR, I am really impressed by these weekend posts. I hope that they bring more well-deserved attention to your blog.
Posted by Skipper on 05/09/09 at 08:05 AM
You’re nuts if you think this home sold for $1.3 in 2001. Back in 2001, when Ocean Ridge came online, tract homes up to 5,000 square feet were going for $1.5m to $2.5m. This is a 7,300 square foot custom home. The land alone was probably $1.3m.
Posted by wintstongator on 05/09/09 at 08:16 AM
Since the home is listed built in 2001, the 1.3M could have been a land buy?
How much would the 10 mortgages, 1sts + helocs, have generated in fees? Those were profits booked by banks that will not be coming back. Banks generated huge mortgage volume because people were refi’ing to extract equity, and now they’re locking in low GSE rates.
With sales down, and everyone happy with their home, sitting on a low-rate Fannie securitized mortgage, where will the origination volume come from? I don’t think that point was acknowledged in the stress tests.
Posted by newbie2008 on 05/09/09 at 08:26 AM
“I think the MSM is missing a big story by not telling the tale of these people. I imagine Joe SixPack would love to see where his tax dollars are going.”
Are the main stream media just dumb or lazy on the lack of follow through on the borrower and what happened to the money? Or is there more to the story? The loan looks like a recourse loan. Is the borrower able to pay back or is a DT style cramdown taking place? Is the loss on the special cramdown going to be paid by the taxpayer and bank and borrow pocketing the money? Lots of questions but no answers from the media or govt. Looks like another bailout for bonus’ with taxpayer money (smoke and yelling on how it was going to be blocked, but quietly was done anyways). Overall the loss doesn’t look that bad ($7MM loan - 6.5MM asking = 0.5MM loss, likely 1.7MM loss for the bank or taxpayer)
More things change, the more they remain the same. IMHO
Posted by Skipper on 05/09/09 at 08:32 AM
The lot at 11 Island Drive sold in 2000 for $1.575m.
Posted by Surfing in Newport on 05/09/09 at 08:42 AM
My guess is that the 2001 sale was the purchase of the lot, although it seems a little low. Probably because it overlooks Newport Coast Drive and doesn’t have an ocean view. That would also explain the all cash purchase followed by a large first mortgage (construction loan). Anyway, at 7K sq. ft. you are probably talking way over 2 million in construction costs for a custom home. They could easily have $4 million in the property.
Posted by Modguy on 05/09/09 at 09:02 AM
Not to ruin the underlying premise of this post, I too think the purchase price must have been land-only. I remember smaller Taylor Woodrow tract homes in this area being 2-3 million back then… A 7000 custom home would have been even more. Maybe they paid cash to build to, then took out loans to get the money back (plus some)?
Posted by Skipper on 05/09/09 at 09:06 AM
The home at 18 Shoreridge, which has no view, sold for $3.5m in 2001.
Posted by Skipper on 05/09/09 at 09:16 AM
Same for 5 Shoreridge, no veiw and 1,000 square feet smaller and it sold for $4m in 2002.
I did not say the house was free. A certain amount of the $7,000,000 went toward the land and improvements. Let’s be generous and say $3,000,000 went toward the house, that still leaves $4,000,000 that went somewhere else.
Don’t lose sight of the obvious fact that there was an enormous amount of real HELOC abuse happening at this property.
The purchase price of the property in this post seems to be very important to you. Why?
Take a look at the mortgage records. You can speculate on what was land and what was improvements. It doesn’t really matter.
These owners took out a huge amount of HELOC money and spent it, and now the taxpayers are going to eat the bill.
Posted by Lee in Irvine on 05/09/09 at 10:16 AM
Does anyone, and I mean anyone know of another asset that has had this kind of rock-solid performance?
Paradigm shifting corporations. For instance, Apple Electronics and their iPod, and iPhone. But unlike real estate (which I consider a commodity), Apple has changed communication and the distribution of media forever.
Paradigm Shift
AAPL 2001 = $10-$15
AAPL 2009 = $129.19 <—Fridays Close
Ponzi Scheme
Newport Villa 2001 = $1,341,000
Newport Villa 2009 = $6,500,000 <—Asking Price
Posted by bill shoe on 05/09/09 at 10:31 AM
I can’t really wrap my mind around the $5 million haul. When IR profiled the first $1 million HELOC abuse in Irvine, AZDavid posted the great Austin Powers graphic with the “One MILLION Dollars” quote. The picture was perfect because it was simultaneously accurate and over-the-top. Now the same picture would simply be trivial. I don’t really have a feel for what $5 million dollars is, but if AZDavid has no corresponding picture then it must be pretty big.
Hey, has anybody considered that maybe this homeowner simply has a lot of medical bills?
Posted by Lee in Irvine on 05/09/09 at 10:35 AM
The stress test was a media event, orchestrated by the big banks ... literally.
Fed Cut Billions Off Some Initial Capital-Shortfall Estimates; Tempers Flare at Wells
The Federal Reserve at the last minute significantly scaled back the size of the capital hole facing some of the nation’s biggest banks, following days of intense bargaining over the stringency of the stress tests.
When the Fed last month informed banks of its preliminary stress-test findings, executives at corporations including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were furious with what they viewed as the Fed’s exaggerated capital holes.
People used to float the medical bill meme, but when I started posting these day after day, it became obvious to everyone that there are not that many catastrophic medical conditions not covered by insurance to explain the spending.
Can you think of a chronic medical condition not covered by insurance that requires $7,000,000 worth of periodic treatments?
Posted by Geotpf on 05/09/09 at 11:00 AM
I think we have established that at least some of the money from the loans have gone into improving the property (that is, there was absolutely no house at the beginning and now there’s a 7,300 square foot one). That is, they didn’t actually walk away with $5.6 million and change; there were construction costs (of an unknown amount) spent here as well. Of course, I doubt they spent much more than a million on construction, so they did still make quite a haul.
The only thing that doesn’t jive with that theory is that the house is listed as being built in 2001, but the first mortgage wasn’t issued until 2002. Maybe the buyers originally paid cash to build the house as well? If you can drop $1.3 million in cash on a lot, you might be able to pay for the construction costs out of pocket as well.
Posted by tonyE on 05/09/09 at 11:13 AM
Yeah…. but the fact that the cost of the house and land was likely $3M makes the $7M sale price a bit less outlandish. It’s likely that the first two rounds of mortgages were to finance the construction of the house and the wrap up the whole affair.
I mean, the owners want a 130% profit over what the house would have been worth when new back in ‘03.
So, those other houses going for just under 5MIL are pretty much getting close to 03 prices.
Given the economy, this home should sell just below 5MIL not 7MIL. And someone will take a financial bath.
Posted by tlc8386 on 05/09/09 at 11:45 AM
I wouldn’t be surprised if this house didn’t belong to someone in the business—RE or a banker ect.
There was an old saying for every one person here in the OC two were licensed RE agents—-lol
Posted by Craig on 05/09/09 at 11:47 AM
$5 million dollars is about 45 seconds worth of spending under Obama’s proposed budget.
Posted by nefron on 05/09/09 at 12:55 PM
Thank you. That was driving me nuts. Missing the forest for the trees.
Posted by CA on 05/09/09 at 02:05 PM
Hahah…holy cow, I know those two real estate agents on the right. I used to work with the guy in the middle and met his wife (on the right). They’re pretty nice people, and he obviously was doing better in his RE job since he left his well paying pharmacy job to do this full time back in ‘06.
“Can you think of a chronic medical condition not covered by insurance that requires $7,000,000 worth of periodic treatments?”
Shopaholicism?
Egomania?
Posted by norcal on 05/09/09 at 04:13 PM
Gambling?
Incompetent day trading?
Drugs?
Posted by norcal on 05/09/09 at 04:17 PM
OK, who ARE those people in the PRE-TEND RE ad mockup? If you were Jim the Realtor you’d name names. Not that you have to be Jim….
Posted by JoeF on 05/09/09 at 05:19 PM
If you doubt that they spent much more than a million on construction, you simply don’t know anything about custom home construction. $137 a sq. ft. won’t build much of a starter tract home in Visalia, much less a home like this.
My guess is about $350 to $400 per sq, in 2001, so 2.5 mil plus to build.
The people in Orange County, and in particular in the beach communities, are in complete denial that this same purging must happen in their neighborhoods.
Foreclosure—it’s not just for Moreno Valley anymore!
Posted by alan on 05/10/09 at 01:56 PM
IMHO I don’t think this was a pretender, the MO is most consistent with small company or individual builder/land speculator. They are a higher form of flipper since they buy the raw land, put a custom home on it, live there for a year or two then sell at a huge profit. In this case, since the builder was unable to sell for a profit they hocked the property to the hilt and gave it back to the bank. I know someone who tried this Palos Verdes back in the early 90’s and when real estate busted back then he had to declare BK. Of course, you couldn’t get 100% cash out financing back then, otherwise he would have made out OK as these builder/land speculators will.
Posted by lunatic fringe on 05/10/09 at 11:13 PM
$137 a sq. ft. won’t build much of a starter tract home in Visalia
That is simply bullshit. I’ve actually built tract homes near Visalia and construction costs run about $60 per SF for a tract builder. However, custom is a different ball game entirely and I could see $200-$300 per SF fairly easily. Unfortunately there isn’t much in the way of pictures for this home so it’s hard to guesstimate a cost per SF.
Posted by Phil on 05/11/09 at 05:56 PM
Is not so hard to figure out who owns the property and speculate their story after using “the google” on “the internets”.
The husband is in the IT industry and the company he founded at one time was very successful but then started to go downhill and ended up selling it to a big competitor in 2005.
Posted by Marian on 05/11/09 at 03:45 PM
Meanwhile AAPL split.
So in 2001 was actually $5-$7.5
Posted by Freetrader on 05/09/09 at 06:07 AM
It’s actually surprising difficult to figure out what the taxable gain to the sellers would be—I think you have roughly $5.1 million in gross gain on the sale of the property ($6.5 million sales price less $1.4 million basis), PLUS, because the sale price isn’t enough to pay off the debt, an additional $500k ($7 million - $6.5 million) of relief of debt income. I think you end up in a strange situation—no matter what the sales price is, as long as it is less than $7 million, the gain is always going to be about $5.6 million.
Posted by Ron on 05/09/09 at 06:36 AM
If you are referring to my comment last week about my friend doing the buy-and-bail shuffle, let it be clear that I didn’t say it was none of our business. I said that it is not immoral for someone to walk on a purchase money loan and allow the bank to take the home back. This is the contract. However, now that our government has decided that it is going to step in and give your money and mine to the banks to pay for their stupidity we should all be very angry… at our government first, the banks second and also at those who committed fraud. I don’t have room in my black heart for anger at the people who simply overpaid for a home. They didn’t get to buy Hummers and BMWs, they just got the pleasure of paying 3x the equivalent rent to live in a house.
People like those profiled today are a completely different story. HELOC abusers gave up their non-recourse status and the banks should go after them for this money. These people got hard cash from these loans and spent it how they saw fit; now it is time to pay it back.
Posted by OC Progressive on 05/09/09 at 06:56 AM
I guess if you teach your house how to generate a million a year for you, you don’t mind $575 a month HOA payment to pay for the round-the-clock mall cops manning the gate or the extra property taxes, including money for building a toll road that they have to pay to use.
I guess what ticks me off most about the people in Newport Coast is that the toll road users from Riverside coming in on the Eastern and Foothill toll roads have to pay higher tolls to subsidize these high-rollers in Newport Coast as they take their Hummers onto the 73.
Posted by Chuck Ponzi on 05/09/09 at 07:14 AM
What’s crazy is knowing that this was bought for 1.3 just 8 short years ago. And, the expectation is for a quadruple in that time.
Does anyone, and I mean anyone know of another asset that has had this kind of rock-solid performance? Only gold which was at generational lows at that time (fiat was king back then) was even close.
Many of the lower-end properties are back to 2001 prices. Imagine the paradigm shift required for high-end properties to find their own bottom. I suspect that the high end will just languish and languish some more until we reinflate our entire economy.
For the price of this house, one can buy some medium-sized businesses that provide 1M+ in cash flow (legally without robbing a bank). Why would someone want to buy a depreciating asset that they wouldn’t be able to escape for 10, 15, or 20 years for the same price? Cachet? You gotta be one serious poser for that kind of abuse.
Chuck Ponzi
Posted by IrvineRenter on 05/09/09 at 07:24 AM
I wasn’t picking on any particular comment. There were several, and each had their own justifying argument. A couple of people were rather indignant that I was characterizing the behavior of an entrepreneur trying to save his business as HELOC abuse, as if that makes everything OK.
The buy-and-bail was common in the 90s, but the banks recognized this early this time and made it much more difficult to do. They did this buy making it necessary for the buyer to be able to prove they could support both payments, which of course, nobody can. The effect has been to stop people from buying a home before selling their first one which has effectively frozen the market for current homeowners; only renters can buy.
Posted by i boycott toll roads on 05/09/09 at 07:27 AM
you don’t have to take the toll road if you don’t mind sitting though some insanely long lights on Bonita Canyon and having to deal with church traffic on sundays or take a detour through UCI.
What ticks me off is that it costs $.75 to go a quarter of a mile on the toll road if I forget to exit on Bison especially when that road used to be free.
Posted by Woodbury Renter on 05/09/09 at 07:42 AM
I spent all week in NY and I am even more depressed about the unfolding of the bank bail-out. This stress test was an open joke that only the MSM and the people who get all their facts from the MSM don’t get. The personal fortune at-all-costs traders on all the bank desks get it, they are once again making personal millions making no-risk, sure-thing trades manipulating the various gov’t programs. Did you know that the bond traders at Citi, Goldman and BoA bought up billions of mortgage loans at depressed prices after the gov’t promised billions of guarantees on the same crap assets that they already own? It is mind-boggling that this is legal. If the MSM ever explained this to the public the mob would march into these banks and carry the traders and executives out on rails.
Back to this fascinating post today I have to say that I love visiting friends in Newport Coast, especially those that have a view down to the sunset over the coast. Of course I knew that many of these people were pretending to be wealthy. At the same time I don’t feel that the ‘non-pretenders’ who begot the money to buy these homes by trading bonds at PIMCO are realy any less ethically challenged. If they had to pay back their ill-gotten gains they would have to sell their wonder homes fast.
IR, I am really impressed by these weekend posts. I hope that they bring more well-deserved attention to your blog.
Posted by Skipper on 05/09/09 at 08:05 AM
You’re nuts if you think this home sold for $1.3 in 2001. Back in 2001, when Ocean Ridge came online, tract homes up to 5,000 square feet were going for $1.5m to $2.5m. This is a 7,300 square foot custom home. The land alone was probably $1.3m.
Posted by wintstongator on 05/09/09 at 08:16 AM
Since the home is listed built in 2001, the 1.3M could have been a land buy?
How much would the 10 mortgages, 1sts + helocs, have generated in fees? Those were profits booked by banks that will not be coming back. Banks generated huge mortgage volume because people were refi’ing to extract equity, and now they’re locking in low GSE rates.
With sales down, and everyone happy with their home, sitting on a low-rate Fannie securitized mortgage, where will the origination volume come from? I don’t think that point was acknowledged in the stress tests.
Posted by newbie2008 on 05/09/09 at 08:26 AM
“I think the MSM is missing a big story by not telling the tale of these people. I imagine Joe SixPack would love to see where his tax dollars are going.”
Are the main stream media just dumb or lazy on the lack of follow through on the borrower and what happened to the money? Or is there more to the story? The loan looks like a recourse loan. Is the borrower able to pay back or is a DT style cramdown taking place? Is the loss on the special cramdown going to be paid by the taxpayer and bank and borrow pocketing the money? Lots of questions but no answers from the media or govt. Looks like another bailout for bonus’ with taxpayer money (smoke and yelling on how it was going to be blocked, but quietly was done anyways). Overall the loss doesn’t look that bad ($7MM loan - 6.5MM asking = 0.5MM loss, likely 1.7MM loss for the bank or taxpayer)
More things change, the more they remain the same. IMHO
Posted by Skipper on 05/09/09 at 08:32 AM
The lot at 11 Island Drive sold in 2000 for $1.575m.
Posted by Surfing in Newport on 05/09/09 at 08:42 AM
My guess is that the 2001 sale was the purchase of the lot, although it seems a little low. Probably because it overlooks Newport Coast Drive and doesn’t have an ocean view. That would also explain the all cash purchase followed by a large first mortgage (construction loan). Anyway, at 7K sq. ft. you are probably talking way over 2 million in construction costs for a custom home. They could easily have $4 million in the property.
Posted by Modguy on 05/09/09 at 09:02 AM
Not to ruin the underlying premise of this post, I too think the purchase price must have been land-only. I remember smaller Taylor Woodrow tract homes in this area being 2-3 million back then… A 7000 custom home would have been even more. Maybe they paid cash to build to, then took out loans to get the money back (plus some)?
Posted by Skipper on 05/09/09 at 09:06 AM
The home at 18 Shoreridge, which has no view, sold for $3.5m in 2001.
Posted by Skipper on 05/09/09 at 09:16 AM
Same for 5 Shoreridge, no veiw and 1,000 square feet smaller and it sold for $4m in 2002.
Posted by IrvineRenter on 05/09/09 at 09:20 AM
I did not say the house was free. A certain amount of the $7,000,000 went toward the land and improvements. Let’s be generous and say $3,000,000 went toward the house, that still leaves $4,000,000 that went somewhere else.
Don’t lose sight of the obvious fact that there was an enormous amount of real HELOC abuse happening at this property.
Posted by IrvineRenter on 05/09/09 at 09:28 AM
The purchase price of the property in this post seems to be very important to you. Why?
Take a look at the mortgage records. You can speculate on what was land and what was improvements. It doesn’t really matter.
These owners took out a huge amount of HELOC money and spent it, and now the taxpayers are going to eat the bill.
Posted by Lee in Irvine on 05/09/09 at 10:16 AM
Does anyone, and I mean anyone know of another asset that has had this kind of rock-solid performance?
Paradigm shifting corporations. For instance, Apple Electronics and their iPod, and iPhone. But unlike real estate (which I consider a commodity), Apple has changed communication and the distribution of media forever.
Paradigm Shift
AAPL 2001 = $10-$15
AAPL 2009 = $129.19 <—Fridays Close
Ponzi Scheme
Newport Villa 2001 = $1,341,000
Newport Villa 2009 = $6,500,000 <—Asking Price
Posted by bill shoe on 05/09/09 at 10:31 AM
I can’t really wrap my mind around the $5 million haul. When IR profiled the first $1 million HELOC abuse in Irvine, AZDavid posted the great Austin Powers graphic with the “One MILLION Dollars” quote. The picture was perfect because it was simultaneously accurate and over-the-top. Now the same picture would simply be trivial. I don’t really have a feel for what $5 million dollars is, but if AZDavid has no corresponding picture then it must be pretty big.
Hey, has anybody considered that maybe this homeowner simply has a lot of medical bills?
Posted by Lee in Irvine on 05/09/09 at 10:35 AM
The stress test was a media event, orchestrated by the big banks ... literally.
Per the WSJ after Friday’s close in the markets:
Banks Won Concessions on Tests
Fed Cut Billions Off Some Initial Capital-Shortfall Estimates; Tempers Flare at Wells
The Federal Reserve at the last minute significantly scaled back the size of the capital hole facing some of the nation’s biggest banks, following days of intense bargaining over the stringency of the stress tests.
When the Fed last month informed banks of its preliminary stress-test findings, executives at corporations including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were furious with what they viewed as the Fed’s exaggerated capital holes.
Posted by IrvineRenter on 05/09/09 at 10:56 AM
People used to float the medical bill meme, but when I started posting these day after day, it became obvious to everyone that there are not that many catastrophic medical conditions not covered by insurance to explain the spending.
Can you think of a chronic medical condition not covered by insurance that requires $7,000,000 worth of periodic treatments?
Posted by Geotpf on 05/09/09 at 11:00 AM
I think we have established that at least some of the money from the loans have gone into improving the property (that is, there was absolutely no house at the beginning and now there’s a 7,300 square foot one). That is, they didn’t actually walk away with $5.6 million and change; there were construction costs (of an unknown amount) spent here as well. Of course, I doubt they spent much more than a million on construction, so they did still make quite a haul.
The only thing that doesn’t jive with that theory is that the house is listed as being built in 2001, but the first mortgage wasn’t issued until 2002. Maybe the buyers originally paid cash to build the house as well? If you can drop $1.3 million in cash on a lot, you might be able to pay for the construction costs out of pocket as well.
Posted by tonyE on 05/09/09 at 11:13 AM
Yeah…. but the fact that the cost of the house and land was likely $3M makes the $7M sale price a bit less outlandish. It’s likely that the first two rounds of mortgages were to finance the construction of the house and the wrap up the whole affair.
I mean, the owners want a 130% profit over what the house would have been worth when new back in ‘03.
So, those other houses going for just under 5MIL are pretty much getting close to 03 prices.
Given the economy, this home should sell just below 5MIL not 7MIL. And someone will take a financial bath.
Posted by tlc8386 on 05/09/09 at 11:45 AM
I wouldn’t be surprised if this house didn’t belong to someone in the business—RE or a banker ect.
There was an old saying for every one person here in the OC two were licensed RE agents—-lol
Posted by Craig on 05/09/09 at 11:47 AM
$5 million dollars is about 45 seconds worth of spending under Obama’s proposed budget.
Posted by nefron on 05/09/09 at 12:55 PM
Thank you. That was driving me nuts. Missing the forest for the trees.
Posted by CA on 05/09/09 at 02:05 PM
Hahah…holy cow, I know those two real estate agents on the right. I used to work with the guy in the middle and met his wife (on the right). They’re pretty nice people, and he obviously was doing better in his RE job since he left his well paying pharmacy job to do this full time back in ‘06.
Posted by Mr. Yuk on 05/09/09 at 03:26 PM
Did you ever meet their son’s two dogs?
http://www.irvinehousingblog.com/forums/viewthread/679/P350/#65797
http://www.irvinehousingblog.com/forums/viewthread/679/P375/#66758
Posted by Chris on 05/09/09 at 03:43 PM
“Are the main stream media just dumb or lazy on the lack of follow through on the borrower and what happened to the money?”
You forgot the speed of Fast Money with the talent of a box of parrots can get you nowadays.
<table style=‘font:11px arial; color:#333; background-color:#f5f5f5’ cellpadding=‘0’ cellspacing=‘0’ width=‘360’ height=‘353’><tbody><tr style=‘background-color:#e5e5e5’ valign=‘middle’><td style=‘padding:2px 1px 0px 5px;’>The Daily Show With Jon Stewart</td><td style=‘padding:2px 5px 0px 5px; text-align:right; font-weight:bold;’>M - Th 11p / 10c</td></tr><tr style=‘height:14px;’ valign=‘middle’><td style=‘padding:2px 1px 0px 5px;’ colspan=‘2’>CNBC Financial Advice</td></tr><tr style=‘height:14px; background-color:#353535’ valign=‘middle’><td colspan=‘2’ style=‘padding:2px 5px 0px 5px; width:360px; overflow:hidden; text-align:right’>thedailyshow.com</td></tr><tr valign=‘middle’><td style=‘padding:0px;’ colspan=‘2’><embed style=‘display:block’ src=‘http://media.mtvnservices.com/mgid:cms:item:comedycentral.com:220252’ width=‘360’ height=‘301’ type=‘application/x-shockwave-flash’ wmode=‘window’ allowFullscreen=‘true’ flashvars=‘autoPlay=false’ allowscriptaccess=‘always’ allownetworking=‘all’ bgcolor=’#000000’></embed></td></tr><tr style=‘height:18px;’ valign=‘middle’><td style=‘padding:0px;’ colspan=‘2’><table style=‘margin:0px; text-align:center’ cellpadding=‘0’ cellspacing=‘0’ width=‘100%’ height=‘100%’><tr valign=‘middle’><td style=‘padding:3px; width:33%;’>Daily Show<br> Full Episodes</td><td style=‘padding:3px; width:33%;’>Economic Crisis</td><td style=‘padding:3px; width:33%;’>Political Humor</td></tr></table></td></tr></tbody></table>
Posted by Chris on 05/09/09 at 03:44 PM
Ok…try this:
http://www.thedailyshow.com/video/index.jhtml?videoId=220252&title=cnbc-financial-advice
Posted by Alan on 05/09/09 at 03:50 PM
“Can you think of a chronic medical condition not covered by insurance that requires $7,000,000 worth of periodic treatments?”
Shopaholicism?
Egomania?
Posted by norcal on 05/09/09 at 04:13 PM
Gambling?
Incompetent day trading?
Drugs?
Posted by norcal on 05/09/09 at 04:17 PM
OK, who ARE those people in the PRE-TEND RE ad mockup? If you were Jim the Realtor you’d name names. Not that you have to be Jim….
Posted by JoeF on 05/09/09 at 05:19 PM
If you doubt that they spent much more than a million on construction, you simply don’t know anything about custom home construction. $137 a sq. ft. won’t build much of a starter tract home in Visalia, much less a home like this.
My guess is about $350 to $400 per sq, in 2001, so 2.5 mil plus to build.
Posted by IrvineRenter on 05/09/09 at 06:39 PM
I don’t know who they are. Their image popped up on a Google Search for Newport Coast. I thought it was too good to pass up.
Posted by Freetrader on 05/09/09 at 07:09 PM
Maybe the owner is Steve Austin, the bionic man.
Posted by Geotpf on 05/09/09 at 08:20 PM
Never built a million dollar home before, so I guess I don’t. Now I do.
Posted by CA on 05/09/09 at 08:51 PM
http://www.marlenedietrichrealestate.com/195908.html
here ya go everyone
Posted by Mike G on 05/10/09 at 01:31 PM
The people in Orange County, and in particular in the beach communities, are in complete denial that this same purging must happen in their neighborhoods.
Foreclosure—it’s not just for Moreno Valley anymore!
Posted by alan on 05/10/09 at 01:56 PM
IMHO I don’t think this was a pretender, the MO is most consistent with small company or individual builder/land speculator. They are a higher form of flipper since they buy the raw land, put a custom home on it, live there for a year or two then sell at a huge profit. In this case, since the builder was unable to sell for a profit they hocked the property to the hilt and gave it back to the bank. I know someone who tried this Palos Verdes back in the early 90’s and when real estate busted back then he had to declare BK. Of course, you couldn’t get 100% cash out financing back then, otherwise he would have made out OK as these builder/land speculators will.
Posted by lunatic fringe on 05/10/09 at 11:13 PM
$137 a sq. ft. won’t build much of a starter tract home in Visalia
That is simply bullshit. I’ve actually built tract homes near Visalia and construction costs run about $60 per SF for a tract builder. However, custom is a different ball game entirely and I could see $200-$300 per SF fairly easily. Unfortunately there isn’t much in the way of pictures for this home so it’s hard to guesstimate a cost per SF.
Posted by Phil on 05/11/09 at 05:56 PM
Is not so hard to figure out who owns the property and speculate their story after using “the google” on “the internets”.
The husband is in the IT industry and the company he founded at one time was very successful but then started to go downhill and ended up selling it to a big competitor in 2005.
Posted by SacBoomer on 05/11/09 at 06:16 PM
Narcissistic Personality Disorder?
AHCU?*
*A**hole, Chronic, Undifferentiated