Old Asking Price: $513,000 or $507,000
New Asking Price: $479,000
Purchase Price: $486,000
Purchase Date: 6/9/2006
Address: 39 Spanish Lace, Irvine, CA 92620
From the listing:
“Truly better than any Model Home, owner spared no expense was planning to stay forever! Upgraded everything, Carpets, Tile, Paint. Kitchen has Stainless Steel appliances and custom backsplash. Recessed lights throughout, Ceiling Fan in Master Bedroom, Living Room is Prewired for Fan. Additional Cabinets added in Laundry Room, Closet Organizers in Master Bedroom Walk-In Closet. Desirable Street Front Location, Great Mountain Views from Private Front Balcony”
Notice there are no granite tops in this truly-better-than-any-model condo. Maybe the 80’s style white tile is the new black? Granite tops was so 2005. Who wouldn’t want the high-end white tile? After all, this flipper / home debtor / owner was planning to stay forever! Yeah, right…
I must admit, I have a particular prejudice against 1 bedroom apartments / condos selling for more than their rental value. The only reason any rational person would buy this unit is to make positive rental cashflow, or to save versus the cost of renting. Nobody wants to live in these units for more than a couple of years. This isn’t a house that you buy to live in for a long time. It’s transitory housing, and it always will be.
First Team’s website tells me my payment would be $2,564 a month (based on a $507,000 purchase price), the HOA is $150 a month, and the taxes are $464 a month, plus another $100 for insurance. The total cost of ownership is running $3,642 a month. Does anyone think they can get $4,000 a month rental on this place?
Let’s be real for just a moment. Buying a unit like this isn’t about being rational, it is about greed. There is no justification for the pricing of these units other than the buyer believes these units will rise in price forever. This is the “greater fool” theory on full display.
**** UPDATE 1 ****
The deterioration at the bottom of the market continues. Assuming a 6% commission, this flipper / long-term homeowner stands to lose $26,340.
**** UPDATE 2 ****
Now the loss would be $35,740. Thank you Mk9 for the heads-up.