Asking Price: $888,000
Purchase Price: $855,000
Purchase Date: 11/24/2004
Address: 56 Shadowplay, Irvine, CA 92620
Beds: 4
Baths: 4
Sq. Ft.*: 2,492
Year Built: 2004
Stories: 2
Type: Condominium
Neighborhood: Northwood
$/Sq. Ft.*: $356
MLS: P571009
Status: Active on market
On Redfin: 6 days
When looking at the state of the Irvine residential real estate market, I am noticing two different segments of the market showing stress: small starter homes and condos, and new construction purchased since 2004. Below is a screen capture of Redfin’s map of homes available for sale in Woodbury and Northwood. The area in red highlight was built after 2004, and the area to the left is older construction in Northwood. Notice the larger number of for sale homes in the newer construction areas? This is opposite of what we should be seeing.
This says something about the current market: recent home buyers are concerned. Asking prices would indicate they are not panicking yet, but the number of homes for sale are showing their concern. Each of these homeowners is hoping a greater fool buys them out at breakeven during the spring buying season. When that fails to materialize, we should begin to see panic.
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{adsense}
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Giving hope to the FBs on this street is the recent sale of 58 Shadowplay, Asking $839,000, Paid $800,000 on 4/10/2007. It looks as if the original owner paid near $800,000 for this property as the assessed value was $812,940 which represents the original purchase price with some adjustment. This original owner lost the commissions ($48,000 @ 6%) and whatever carrying costs were put into the place. I hope the new owners are happy; despite the loss, I imagine the seller is happy.
The property at 56 Shadowplay is one of 3 properties for sale on this one spot of this one street. The others are not going to be so happy with the $363 / SF sale price of 58 Shadowplay:
62 Shadowplay, Asking $849,000, $396 / SF, Paid (unknown, assessed at $800,624), DOM 236
68 Shadowplay, Asking $850,000, $396 / SF, Paid $782,000 on 6/30/2005, DOM 49
Are our featured owners quixotically jousting with windmills, engaging in their own shadow play, or are they serious about selling. Since they are looking at a loss, I would say they are serious. If 56 Shadowplay gets the full asking price of $888,000, and assuming a 6% commission, this seller stands to lose $20,280. They will not like the loss, but better a small loss than being the bagholder for the big drop to come…
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P.S. Check this out Sichuan shadow play
It will become a race down hill by the end of the summer.
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This is the “gray” area in the Real Estate market. Those homes between $500k-$900k.
I can really see these types of homes in Irvine slide 15-25% over the next 18-24 months.
These Shadow Play homes will ultimately sale at the $650-700k level.
I can really see these types of homes in Irvine slide 15-25% over the next 18-24 months
I think it wil be worse than that.
Look at the for sale map on redfin, there are literally 10 homes of similar size/beds for sale within 100 yards of this place. A couple with identical floorplans. They say condo, they are just like a condo on the downside because identical units are available a few feet away get played against each other. The weakest holder breaks the chain and all the comps.
No_Such_Reality,
I have seen this before.
One lowers their price and sells. The rest resist, thinking they are “only waiting for one buyer”.
And they wait.
And they wait.
Sometimes months
Then, someone else drops so they can “cash out”. And it DOESN’T sell.
Several weeks go by and all hell breaks loose.
No one knows where the market is, and they all start chasing it down. That’s when short sales get to be very common. Look at Sacramento. The wall of sellers only resisted for so long before it broke.
Buyers have all the time in the world. Hell, I’d venture a guess there are only 1 or 2 buyers for these 10. Still, they wait
and wait
and wait.
Slow death by a thousand price reductions.
Chuck
http://www.socalbubble.com
Return to 2003 price is the first down leg
Well prices must be falling in neighborhood built prior to 2004 too. In North Park, 3 Walnut Creek (2805 square feet) was apparently sold at $985,000 (The listing price started at $1.2 million and final listing price was $1.098 mil.) That makes it about $350 per sqaure foot. However, it appears that same plans are still being listed higher (30 Calistoga) than this latest sale price and couple of them (7 Pacific Grove and 6 Sunnyvale) are apparently in escrow after being on the market for less than 2 weeks, Go Figure.
…”Notice the larger number of for sale homes in the newer construction areas? This is opposite of what we should be seeing.”….
one word…..FLIPPERS
The conservative families who have financial sense bought homes 5+ years ago. They also realize that you can only trade up so far, and property taxes are paid on the purchase price in CALI
I bet over 65% of those homes for sale in the newer areas are vacant.
I live in Quail Hill and it is a massacre waiting to happen. The development at the top of the hill is almost entirely vacant and for sale.
It’s by far the nicest area in Irvine; secluded and closer to the ocean. I’ll just spend my time drooling, and saving money for teh next three years. At that time, my million dollar house on the hill will be selling for 500k!!
OptimusPrime,
The floor is going to be less than “$650-700k level”. These are condos!
Somewhere … somehow, we lost our vision of reality as this ponzi scheme roared up the slippery slope of stupidity. Unfortunately in today’s economy, “$650-700k” for an apartment home in Bubble City USA is still stupid, and vastly overpriced.
We don’t know what the floor will be because so many factors are going to contribute to the decline … especially in Irvine, CA. where more than 1 in 5 workers is employed in the RE business.
At this point I’m not going to say anything is impossible.
I think we’ll see some action at $699K. The price drop will sucker some buyers in, then it’ll dry up again. Why? simple. There are limited number of people that can bring $150,000 to the table at closing and have $150,000 a year family income to keep the housing expense below 40% of their income.
Who is going to want to line up to put $150,000 down on something that just lost $150,000 of value in less than a year? Not many.
If they don’t put that much down, the debt coverage ratio goes out of whack. Want to put $70K down, great, hope you have $170,000 in income.
Less down? Only $35,000. You’ll need $190K year, that’s with 40% going to PITI. At 30%, $250K/yr. Hey, this is a condo right?
So OptimusPrime may be right, we’ll see a floor at 7. Then 6. Then 5. …
Ok ok….I didn’t want to be a “end of the world” prognosticator…
If all hell breaks loose…I can see $400-500k 🙂
NO_SUCH_REALITY :
Let me understand your numbers…
700K – 150K down = 550K mortgage
550K mortgage @6.5% = ~$3500 per month = $41,800 per year
41,800 / 40% = $104,000 salary…
unless of course you think someone with over 20% down making 150K per year should be getting a 10.5% rate.
or are there some outrageous HOA’s and melloroos?
bought_high,
u left out tax+insurance+hoa etc.
yeah but tax+insurance usually is equal to the tax break on the mortgage payment (at least at the beginning)
HOA is the killer of all condo/townhouse/gated communities. The fees only go up and never stop!
1915 AD Bond – $885.
Mello-Roos R2 – $622.
Mello-Roos R5 – $1160.
HOA (annual) – $1644. ($137/month – in Irvine? is that right?)
plus another $120 or so in misc charges on top of the 1.036% property tax.
I used 6.8% since that’s the current rate for a 700 FICO with 80% LTV. The 6.5% dried up and will likely carry points, which means bringing more money to the table.
You’re completely off track thinking HO/tax benefit cancel. The guideline for 30% of gross on housing is old & true and accounts for the mortgage interest deduction. This is just housing, keep in there’s other debts to look at for total DTI. Like a car payment. Child day care, student loan, etc.
“Freddie Mac, the second-largest source of money for U.S. home loans, plans to buy as much as $20 billion in subprime mortgages to help borrowers with poor credit histories avoid default and the loss of their homes.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSkm1PLyjMYA&refer=home
Is this the same as bail out ?
If this is true, all the waiting is just a waste of time.
I should just go ahead with 0 down, IO/ARM
What Freddie Mac is willing to do is just a PR piece. Just “buying” time. What makes you think a borrower who couldn’t pay a fix rate when the 30 yr was 5.50% could pay it now?
Same flavor different color 🙂
From the article:
“We have not sat down and talked this through in any substantive detail” with the Office of Federal Housing Enterprise Oversight, Syron said.
The sale of subprime mortgage bonds had grown to $450 billion last year …
20/450 = 4.4% Hey, good news, that’s only 0.4% below the current foreclosure rate.
Oh, wait, that 450B was only last year. 2005 was about the same …
One last quickie, let’s see how small of a spit Freddie’s plan is…
http://www.usatoday.com/money/economy/housing/2007-04-18-foreclosures-march_N.htm
Hmm, 149,150 foreclosures in March alone nationwide.
$20,000,000,000/149150 = $134,000 per foreclosee.
Since the median national home price is over $200,000
NSR:
OK with your numbers and no deduction benefit crap…
550K @ 6.8% = $3586 per mo. = 43K per year
43K + 7K tax + 2K other = 52K / 0.4 = 130K salary
at 30% you get 150K salary
But you seriously have to check your numbers on this statement :
At 30%, $250K/yr. Hey, this is a condo right?
699K price and 35K down…
664K @ 6.8% = $3740 per mo. = 52K per year
52K + 7K tax + 2K other = 61K per year / 0.3 = 203K per year
I had applied for this condo back to 2004, based on 6 samples I had, I found out the so call priority number setup is not by the first come first server. The number is TOTALLY based on the financial strength of the appliers. I guess internally Builders have some mechanism to determine this number.
Hence they order of the application form received is irrelevance. (Which they were said this is used to determine priority).
Since each phase the builder raise $15K – $20K, so the richer investors really undertaking the opportunity.
But you seriously have to check your numbers on this statement :
At 30%, $250K/yr. Hey, this is a condo right?
699K price and 35K down…
664K @ 6.8% = $3740 per mo. = 52K per year
52K + 7K tax + 2K other = 61K per year / 0.3 = 203K per year
Here. look at countrywide’s rate sheet. They used to be one of the prolific sub-prime/alt-a lenders. http://www.cwbc.com/PdfFiles/WLDBC%20CA.pdf
See that 95% line… 9.15%. That’s their current going rate for a 700 FICO on a 2/28ARM at 95%LTV.
The payment 644K@9.15% = $5414. 51
$5414.51 * 12 + $7000 prop tax + $2600 mello-roos/bonds +$1600 HOA = $76,000 (and change)
$76K/.3=$253.3 K
Okay, finance it 80/15/5. I doubt you’ll still get the 6.8% for first, let alone the 9.15% on the 2nd. Use them anyway, you grind the numbers and still get over $215K.
Or do a real quick and dirty when in newer Irvine, assume Prop Tax, Mello-Roos and HOA tilt in at 2%. It’s heavy, but fudges well for falling prices with set mello-roos.
The point isn’t to be exact, the point is to quickly get in the ball park and see that affordability even after this place loses 20% of it’s value still requires a $200K plus if not closer to $250K income unless you carry a big wad of money to the closing.
That’s why it’s called a tax break. You aren’t supposed to purchase a home hust for the tax benefit alone. It only helps you with your yearly tax charge, it doesn’t benefit your overall position.
If you are at 90% + CLTV then you are a renter. You are renting your home from the bank at a much higher cost out of pocket, and having yor credit report leveraged to the max.
yowzers!
it’s funny that some take the pride of ownership when bands indeed own their homes. go figure out how many r working for banks unknowingly
IrvineRenter,
I do find a small flaw in your argument for the newer sections, which are the newer Northwood areas and Woodbury. I’m in these areas all the time, and I live in the older area of Northwood (OldN) just to the left of where the map ends. One thing I notice is that the lots of these newer lots are tiny compared to older areas of Northwood. Which isn’t to say that the OldN lots are huge, but the new areas are just really, really small. And I believe they pack more condos into the new area. Most of the OldN to the left are SFH, not condos.
Because there are more residences packed into the new area, I believe that this partially explains why there might be a larger number of houses for sale. That being said, every weekend the newer area is flooded with open house signs, so I know that my theory cannot account for the vast number of houses up for sale.
Love the site and read it all the time!