Renovations are not Riches
Changes - Yes
Many people during the bubble took out HELOCs and extensively renovated their properties. Historically, interior property renovations add $0.70 for every dollar spent. Exterior renovations add $0.50 per dollar. It was not uncommon to see property listings touting $200,000 in renovations to justify a $500,000 price increase. It isn't the renovations that were adding value to property; it was the financing that was inflating it. There were several properties in Irvine that were torn down to a single wall and rebuilt from the ground up. Those that attempted this kind of extreme home makeover in 2007 did not fair to well.
We first profiled 2 Angell, Irvine, CA 92612 in February of 2008 when it first came on the market. The flippers who were trying to sell this property took a $600,000 house, rebuilt it, and asked $1,469,000 for it. I was thinking they might get lucky to get $1,000,000. Now the property is back on the market for $1,199,000.
Today's featured property is another total redo. It is an interesting story of renovation gone awry.
Asking Price: $999,000
Income Requirement: $250,000
Downpayment Needed: $200,000
Monthly Equity Burn: $8,333
Purchase Price: $640,000
Purchase Date: 4/7/2005
Address: 1 Whitney, Irvine, CA 92620
| Beds: | 5 |
| Baths: | 5 |
| Sq. Ft.: | 3,990 |
| $/Sq. Ft.: | $250 |
| Lot Size: | 7,020 Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Mediterranean |
| Year Built: | 2007 |
| Stories: | 2 Levels |
| Area: | Northwood |
| County: | Orange |
| MLS#: | S504153 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 375 days |
 Unsold in 90+ days |
|
For someone who really must sell a property, they didn't put much effort into the MLS listing.
This property was purchased for $640,000 on 4/7/2005. The original structure was completely replaced by a new, much larger home. On 6/9/2006, the owner opened a HELOC for $170,250. This probably did not cover the full cost of the renovation. On 1/12/2007 he refinanced the first mortgage for $1,200,000. He promptly put the house on the market for $1,789,000 and watched it sit there for a year.
Listing Price History
| Date | Price |
| Sep 06, 2007 | $1,789,000 |
| Dec 10, 2007 | $1,699,900 |
| Mar 07, 2008 | $1,450,000 |
| Apr 24, 2008 | $1,200,000 |
| Sep 11, 2008 | $999,000 |
Every 90 days, this seller lowered the price another $200,000 and chased the market as it fell even faster. He might have got out for enough to pay off the debt if he had cut the price early, but this was supposed to be a ticket to riches, not a backbreaking labor for chump change. Of course, now, he is either going to have to write a big check at the closing table or accept a serious credit hit. If this is the man's primary occupation, it is a very difficult choice to make...
.
Im moving through some changes
Ill never be the same
Something you did touched me
Theres no one else to blame
The love we had has fallen
The love we used to share
Weve given up pretending
As if you didnt care
Change changing places
Root yourself to the ground
Capitalize on this good fortune
One word can bring you round
Changes
Changes - Yes
these sheeple with their amazing urge to spend on redecorating—i never understood that passion. if i can sit down in a chair and sleep on a mattress—i don’t even have a box spring—why upgrade? they work fine.
but a great hungry mob of jerks out there want to top each other with furnishings costing in the five digits. what an incredible era of waste and foolishness it has been. thank you greenspan. thank you boomers. thank you first-time unmarried house buyers. thank you for giving us a new dust bowl.
It’s all about keeping the lie going. These hustlers all go by the same playbook.
1.) Load up on a bunch of stuff that people don’t need, yet believe that other people WANT.
2.) Smear that lipstick all over the pig until nothing is left uncovered by Pergraniteel. Make sure that the levels of Pergraniteel are at least 50% higher than all other houses on the block.
3.) If the neighborhood competition of Pergraniteel levels are too saturated then start calling things “custom” such as “custom paint” or throw in the word “french” here and there.
Sooner or later you’ll snag a live one who will be more than willing to hand over his 1 million IOU’s. Just remember it is always about keeping up the appearence.
Hey AZ, stop insulting Palin on your point #2
Don’t forget the wifeys. It’s 50% haircut along with alimony and child support if you fail to heed their advice on renovation/redecorating/whatever.
I’m late to the party, but I feel compelled to say this:
This is the ugliest fucking house I’ve ever seen.
I apologize. I can’t even say it nicely. Really, this is an abomination. I shudder to think of what it might look like on the inside.
It’s not that bad.
A must read:
How Fannie and Freddie weren’t reined-in
http://news.mobile.msn.com/en-us/articles.aspx?afid=1&aid=26695074&pg1=1
Read it now. It is getting pulled out from the servers.
Basically when the music is rocking, the drinks are flowing and everyone is having a good time, who cares when the parents are coming home.
Even the foolish kid that threw the party can’t stop it at that point.
Well, the parents have come home and it is time to clean up the mess.
Looks like someone was getting paid for that one.
My first impression of the exterior is that it has a prison watchtower. The little windows in high blank walls don’t totally dispell that idea.
Have they blocked the garage door? Is that where they put the last vestige of a lawn?
Of course inside it might be really grand and well done. The $1.8 million has got to be hiding somewhere.
Funny that you mention the prison watch tower effect. Where have we seen similar architecture before?
I saw a prison watch tower as well.
So, it must be a prison behind.
I probably felt like a prison with all that debt.
I think the exterior photo makes the property look more like a castle. You can play Romeo and Juliet on the front walkway and balcony, and since this appears to be a corner lot you could build a moat to keep out angry collection agents and bank officials. Add a couple of spiked columns and some gargoyles to the roof-line and you could have a nice reproduction of the tower of Cirith Ungol in Lord of the Rings.
Perhaps AZ can photochop something up
Great comment!
Every 90 days, this seller lowered the price another $200,000 and chased the market as it fell even faster. He might have got out for enough to pay off the debt if he had cut the price early
Where was the savvy market analysis that would have allowed this thing to have been (possibly) sold a long time ago? This is WTF marketing - an arbitrary $200k off every so often - to do what? To attract what kind of attention?
If this was the guy’s primary business, he’s just blown the whole thing by not understanding the marketing and selling aspect. No interior pictures….. Hmmmmmm…. what all does that look like on the inside?
Anyone else envisioning the “Kron Kastle” where there were exposed plumbing and electric conduits on the inside of the house, despite the looming exterior full of oversized stones, bricks and other heavy building materials?
That is just sad.
It looks like today’s seller is learning about theory of the free lunch. Pay close attention kids - do not become like these people.
The market has apparantly decided that we have enough used-house peddlers and lipstick-on-a-pig hustlers.
Let the seller go out and find a real job now.
Renovating old houses and re-selling them for a profit is a perfectly noble way to earn a living - however, at the very least, take on the risk yourself.
If you want to build over-done, over-the-top, self-grandiose, million dollar starter castles for people earning 150K then be a big boy and finance it with your own cash rather than using a mortgage equity Ponzi scheme to fund your enterprise.
But no, of course, we could never expect any of these Tycoons to put up large sums of their own money. No, we will just make them risk their holy credit rating and then bail the bank out with tax payer dollars when they default and walk away.
Tuscany-styled home? I know Tuscany. That is a San Gimignano-ish tower grafted onto a glorified stucco box. UGLY.
Alan,
The lawn grows in little concrete squares. You can drive on ‘em.
(Not like the Sunday real-estate section photos of new houses where they throw sod over the whole driveway and put potted shrubs in front of the doors.)
OK, I see it now. And my temptation is to walk by with a dog and let him fertilize the lawn. Bad me, stop thinking that way!
Agree - this ain’t any Tuscany architecture that I’ve come across. If it were selling for $1.8 million, they might bother to sue for defamation, but I guess it won’t be worth their while. A cultural casualty of the housing bubble too.
I’ve always loved those towers and minarets on McMansions, much in the same way you love that guy your friends invite to their parties who sticks his head in the fishtank and then somehow manages to puke on the ceiling. It’s love when it’s someone else’s misfortune, not yours. Here in Dallas, I regularly go by one that, and I’m not kidding in the slightest, looks like a miniature version of the Disneyland Castle, complete with little banners waving off the minarets, and it’s still not the tackiest house in the whole overpriced neighborhood.
Of course, we all know the real reason why these places have those idiotic towers. This is so the owners can lie above the masses and take out the bank agents sent to repo the house. One good sniper rifle, and every neighborhood can have its own Charles Whitman when the economy really goes to hell.
Too modern.
I was thinking crossbows with flaming arrows or maybe even raining down some good old fashioned boiling oil to ward off the Barbarians from breaching the west gate.
They should have installed a small moat and filled it with coolaid and bankrupt realatards.
The stable door is too low to allow most horses access; a bad remodel.
Deja-Vu
In the early 90’s I knew an ER doc who pulled the same stunt in PV, thinking he could be a real estate developer. Then the downturn hit. Ultimately sold his property at a loss and had to declare BK.
This time around, people are just walking and not have to BK. I find that appalling, these people should pay the price and not skate buy with a slap on the wrist temporary credit hit.
Almost 4,000 square feet, built in 2007 for under $1M.
Are you kidding?
Those numbers look very good.
It’s unfortunate the house lacks overall appeal. Either that or the two pictures don’t do it justice.
There are more and better pictures of it on Zillow. The street view is telling. It so doesn’t fit in with the rest of the dated Northwood neighborhood… Betcha those neighbors really loved those owners, NOT!
Ipop,
Thanks for the assist, more pictures on Zillow
Agree, it sticks out like a sore thumb in that old neighborhood.
Look it 10 Whitney across the street on the map, build in 79.
Nasty!
almost bought the house facing that wall back in 2005. glad we didn’t. it definitely doesn’t fit in to the rest of the neighborhood, but we’ve been looking forward to an Open House just to see what they did inside.
no open house yet.
I happened to pass by “2 Angell, Irvine, CA 92612” few days ago. It is also avilable for rent for 7000$/month (per fatwalletdeals.com).
I guess the carrying cost is that much not the rental value.
As a wannabe home owner in OC I pour over email MLSs every day and never take a property seriously that only shows a couple of drive-by photos. You realtors are wasting your time if you don’t at least sneak up to a window and get a couple of shots of the inside. Also, I need to see the back yard- but don’t think I don’t know what you’re doing when you fog up the border of the photo so I can’t see the 4 other homes staring in on the “entertainers dream yard”. I don’t want any surprises when I show up to check it out so just tell it like it is….. “typical OC overpriced house built in the 80s. No AC, high mello roos and high HOA dues. Your neighbors are RIGHT on top of you and will hear EVERY argument that you and your spouse have. Also, there is a 15 year old learning the drums next door. Your living room IS your TV room and your bedrooms will not fit a bed AND a dresser and your CLOSETS are tiny. By the way, you are not allowed to have company park on the street overnight. WELCOME HOME!!!!!!!!!!”
exactly!
it pushes house buyers away while it brings more home buyers, I don’t even want to waste your valuable time, other than that, don’t call every Friday at this time, treat your customers nicer like your siblings then you will sell. you never understand no one wants to give you his or her euity right now
Wow Waterdog,
I think I sense just a hint of frustration. Your property description needed more CAPS and misspelled words to be legit though.
Wow, this is truly a McMansion, how’d they get permit approvals? Looks like they don’t even have a real driveway, that house is sooo cramped in that lot size, which means you’re even closer to your neighbors than before. Uh no thanks.
just an fyi, 1 whitney is in an area without either Mello Roos or HOA dues… and no HOA to approve or disapprove of this.
i think the city just loved the idea of higher property taxes enough to approve most anything.
Classic, classic mistake of overbuilding for the neighborhood.
Makes you wonder what happened to the “Master Planned Community” concept. Greed!!
Was just musing about the 2 Angell property…
http://www.redfin.com/CA/Irvine/2-Angell-92612/home/4697876?src=blg_irvine&utm_source=irvinehousingblog&utm_medium=blog&utm_nooverride=1
Listing Price History
Jul 12, 2008 $1,199,000
Jul 28, 2008 $1,469,000
Aug 01, 2008 $1,199,000
Dear Diary,
I think I’ve figured it out! Apparently, lowering my price causes people to think the price might continue to go lower. Anyway, I’ve let the old listing expire. Now I can show up fresh at the current market price. Smart, huh?
July 28, 2008
Dear Diary,
I think I’ve figured it out! The market is tanking and people are looking for the rebound. Well, I’ll give it to them, I’m going to raise the price to what I deserved in the first place! They’ll see that the price is going up and will want to buy now before I raise it again!
August 1, 2008
Dear Diary,
I hate that Irvine Housing Blog. The idea of this custom-built property being based on some kind of rental price fundamental like it was a tract home or something! Outrageous! Who do they think they are!
I’m lowering my price to what I originally listed, that’ll tell everybody that I am absolutely not going to go any lower! The best part is, now my original listing price looks like a steal!
I live in this tract and it’s a very nice neighborhood, but this house is totally out of scale. This is not a neighborhood of competitive snobs; in fact what makes it nice is that its perfectly normal and middle-class. Furthermore, the fact that it’s on a corner lot and looms over the street makes it’s size seem even worse
This house looks like it belongs to some South American drug kingpin.
“Say hello to my little friend!!!!”....
I think (from the front) the left side of the house is actually on the street & there is almost no driveway. Wow! Didn’t think the City of Irvine would allow that… Don’t you have to get permits?
AWWW come on guys… the watch tower is so charming! I agree, there should be a mote
What was the article about? It was pulled off before I got a chance to read it.
Ok all, this is more of a macro-news instead of Irvine specific but, nevertheless, is still related.
http://www.bloomberg.com/apps/news?pid=20601213&sid=aJs41o1Rt_uk&refer=home
I think it is the perfect home for an Italian opera singer.
Wait a bit here…. we torn our home down to studs and rebuilt it, but we didn’t do it because we’re flippers.
No, we’re very long term owners and we needed a larger house, so it was cheaper to tear the old 1800 sq foot home and build a new 2700 house. We like the location and Prop 13 is our friend. Also, quite a few of the homes around us have/are doing the same thing so the scale of the home is nowhere our of scale.
As in anything, if you rebuild as a flipper you take a big risk and perhaps the quality won’t be there. But if rebuild with cash and plan to stay then you’re in a different ball game.
BTW- my house is modest on the outside, but inside I got 1600 feet of Cat5 and 500 feet of RG-6… besides the fact that my electrical wiring is “structured” too. ;-D
So, don’t put all of us “extreme remodelers” or as I think it’s more proper “rebuilders” in the same pot.
go wireless/cat5 so yesterday
Irvine will need a museum to mark the Great Housing Bubble of the early 2000s, won’t it? The city should probably buy this for that purpose and charge an entry fee to see the bloody mess. The watch tower will come in handy, probably will need one more in the rear.