and even more to lose
You and me bound to spend some time
wondering what to choose
Goes to show you don’t ever know
Watch each card you play
and play it slow
Wait until your deal come round
Don’t you let that deal go down
Deal — Jerry Garcia.
I would like to thank tonye for suggesting this song and the Grateful Dead.
With the extreme leverage and volatility of residential real estate, it does cost a lot to win and even more to lose. It is a very important decision one should spend some time thinking about. Right now is a horrible time to buy, and here at the blog we watch each property as it comes into play. The game right now is to wait until your deal comes around…
I profile Turtle Ridge frequently because the prices are so high, it is easy to find WTF listings — they all are. This isn’t to say Turtle Ridge does not carry a premium. It is a desirable neighborhood. This desirability is reflected in rental rates and amplified in house prices.
A three-bedroom house will cost you $2,900 to $3,000 for entry level:
Of course, Turtle Ridge wouldn’t be Turtle Ridge if someone didn’t think their rental was worth a fortune. Perhaps they are trying to cover half their mortgage payment…
The fundamentals of property valuation are the same for the high end as they are for the low end. The breakeven cost of ownership for these units will be near 160 (perhaps a bit lower due to high Mello Roos fees.) This puts the value of two-bedroom units at $384,000 to $400,000. The value for the entry level three-bedroom units would be $464,000 to $480,000. So what would you guess these properties are priced in the market?
The degree of overvaluation is stunning…
Income Requirement: $218,750
Downpayment Needed: $175,000
Monthly Equity Burn: $7,291
Purchase Price: $480,000
Purchase Date: 5/16/2003
Address: 43 Bower Tree, Irvine, CA 92603
|Lot Size:||1 Sq. Ft.|
|On Redfin:||124 days|
Unsold in 90+ days
Drastic 200K price reduction below market value!!!!!!Stunning turtle ridge home, completely remodeled throughout. Plank hardwood flooring, Travertine flooring in kitchen and all bathrooms. Master bathroom has custom travertine shower with designer sinks and hardware. Custom built-in closets and garage. Added recessed lighting, ceiling fans, crown molding and baseboards throughout home. Surround sound in family room and master bedroom. Garage also has granite flooring. Gorgeous and turnkey. Furniture optional, owners are very motivated!!!!!!! Must SELL!!!!!!!!!!!!!!!!!!!!!!!!!!!
This is the most incompetent listing I have seen in quite some time. First, how do you like the sideways pictures? This isn’t a problem with Redfin. Look at the MLS logo in the corner. The pictures were put up sideways, and rather than correcting the error, the MLS logo was put on them, and they have been there over 90 days.
It really annoys me when a realtor tells me a property is priced below market value (and adds multiple exclamation points.) Market value is whatever someone is willing to pay. Unless someone comes in and pays $200,000 over asking price, the property is not priced below market. In fact, they will probably have to lower the price further to sell it, so it is still priced over market. What the realtor is really saying is “this property is priced $200,000 below the fantasy/wishing/WTF price the owners thought it was worth.”
Furniture optional? Can I have the shirt off the seller’s back?
Can you just feel the emotion (desperation) of the realtor holding down the exclamation point button on their keyboard. I don’t have the patience to count them, but this must be a new record: Must SELL!!!!!!!!!!!!!!!!!!!!!!!!!!!
One of the two 3 bedroom rentals featured above is identical to this unit, and it shares the same alley access. You can’t get a closer comparable. The breakeven cashflow value for an owner-occupant would be $464,000 to $480,000 — which is what they paid for the place in 2003. Unfortunately, it is about half of their asking price.
There are other comps in the neighborhood that are priced even higher:
Turtle Ridge has a long way to fall…