Fine Spanish Lace – UPDATE #2

Spanish Lace Kitchen

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

Beds: 1IrvineRenter
Sq. Ft.*:
Year Built:
$/Sq. Ft.*:
MLS: S477287
Active on market
On Redfin:
56 days

Redfin, Zillow, FirstTeam

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.

Spanish Lace Painting

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.



The painting is No. 1 (Spanish Lace), 2006, Mixed Media, by Charles Dwyer


**** 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.

24 thoughts on “Fine Spanish Lace – UPDATE #2

  1. Bob

    First even the MSM tells us prices are down (perahps except in LA) so buying in 06 and selling in 07 means don’t insult us by expecting to get more than you paid.

    Second, I can rent a 3 bedroom, ocean view, gated community home with more than 2,300 square feet and it’s own back yard for less than $3,500. So rental on this place — try $1,500 maybe $2,000 and yes you are right the only reason anyone would buy this place is for a temporary situation and as such paying a price that is much more than rent just does not make sense.

    But then I am expecting people to be past the denial state and real estate agents to do the hard work up front to get sellers to price realistically. It is about as likely as expecting the poplulation at large to suddenly join a gym, actually go and get our country’s weight issue under control. It just isn’t going to happen without someone forcing people to act in a rational and responsible manner.

    Of course when this unit does not sell, and the agent does not get a commission and the agent is not able to eat, we may get both a price decline and a solution to our country’s weight problem…..;)

  2. mah

    I actually love the painting.

    Side Note:

    Despite what the Orange County Register says, how can rents increase as our real estate dependent economy bleeds thousands of jobs, and outflow migration expands? Answer; It Can’t!

  3. anony

    “Desirable Street Front Location”

    oh yes i just love to hear cars and motorcycles drive by! as well as the lack of privacy! can i pay a premium on this lot? sheesh

  4. RogerSmith8080

    The “Own It” feaver of the last 5 years. Buy it now because it will only go up in value. Only Senior Citizens would even consider a one bedroom apartment for life and most of them perfer a two bedroom.

    Which leaves you with just single college students and first time renters that can not afford a two bedroom place which are both transitionary owners. I should know my first apartment was a one bedroom condo rental. The renter bought the place cheep, lived there for about 5 years, now rents it out. Why would a transitionary owner want to buy a place that they could rent for half the price? More correctly buy a place they will ultimatly sell in 5 years. Answer is they would not, this place is overpriced you can not even rent it out without unless you cut the price by 1/2.

    Remember all those apartments they turned into condo’s? I wonder if they can go the other way and sell a bunch of condo’s to rent out as apartments. Does it go the other way? Probably not.

  5. biscuitninja

    Roger, no it does not, especially in Irvine. As mentioned on here many times its about 50-100% overpriced for most places. But hopefully that will change in time.

  6. Mr Vincent

    From the outside, this building looks like “The Projects” built for Section-8 housing. It is quite unattractive.

    The inside is done up nicely and almost looks like it is staged. I mean, I could never keep my place that clean and orderly looking.

    The real issue I would have is if this is the type of condo where you are either living above or below someone. Looking at the pic of the building, it appears that way. What kind of sound insulation materials, if any, were put in between floors?

    If I ever bought a condo, the first thing I would do is find out what construction materials and design were used. I think those metal and concrete high-rises probably are a better bet in terms of wanting to actually live in that type of place without hearing your neighbors.

    Also, I always wondered what would happen if you live below someone and the people’s plumbing above starts leaking, lets say while they are out of town. Is there a drain to prevent water from coming down into your unit?

    This place is in Woodbury, and I think at one time, Woodbury was the biggest development in the country. I think it may be too big for its own good. I prefer a smaller development.

    I say this place is worth 175k. Really, im serious! Actually, I would have said its worth 150k, but I give it an extra 25k because of the garage.

  7. k.o.

    I live right by Woodbury, and I honestly don’t know why its winning some BS “master planned community of the year” awards. I mean, its nice and in Irvine, but the layout of the whole village just feels so odd. There’s no parking, and the homes there are quite ugly, in my opinion.

    Maybe I just think people in this development are snooty, since the street Bryan, once it hits Woodbury, turns into “Long Meadow” or some overly suburban fantasy street name.

  8. momopi

    The rental value on this unit is prolly $1800/month. It’s got lower HOA’s but the asking price is way too much. I see custom paint and upgraded appliances, but nothing really… expensive. Some crown moldings would’ve made the place look better though.

    Mr Vincent:
    If the unit above you had a water leak or toilet overflow, the water will seep down to your ceiling. You’d get either a roundish brown water stain, or a long “stripe” shaped one running across the ceiling. The drywall on the ceiling will prolly bubble/crack a bit and pieces will fall on your floor.

    Assuming the problem is taken care of quickly, the water will dry out and any surface mold that has grown will go into dormancy. If the condo is less than 10 years old, you can call the builder and they’d send an inspector over.

  9. momopi

    p.s. I don’t recommend buying multi-story properties painted white or white-ish on the outside in dusty areas. As dirt accumulates the exterior apperance goes to pot. If the property is new, most HOA’s will attempt the cheap solution of pressured water wash first, then give up after couple of times and paint it over with a darker color. Just speaking from personal experience.

  10. MarkusArelius

    Wow, this “greater fool” crap is more prevalent that I first believed.

    Another interesting question would be, how much longer can this warped belief system continue? Prices for single family homes where I live (Lake Forest) are not yet declining substantially. 3 bed 2.5 bath SFs are still positioned at $650 to $700k.

  11. renter

    Bob said it best. Please don’t insult our intelligence. How can you ask more than the 2006 price, when everything you read everyday points to major problems in the housing market? Is there a doubt that housing prices have peaked? The title should have been “Retarded Thinking”.

  12. SoCalwatcher

    “How can you ask more than the 2006 price, when everything you read everyday points to major problems in the housing market? Is there a doubt that housing prices have peaked? The title should have been “Retarded Thinking”.

    Simple: Raise the price this year to lower it to last years price and still make a decent profit.

    Kinda like department stores that raise prices and then have “a sale”.

  13. renter

    Simple: Raise the price this year to lower it to last years price and still make a decent profit.

    That’s not enough, and most people with a brain will realize that. Also how do you make a profit by lowering to last year’s price? In this case the owner bought on 6/9/2006. Even if you lower it to that price you still lose in commissions and the cost of ownership for 6 months. I must agree with IrvineRenter here. He didn’t say it in so many words, but this is pretty dumb.

  14. Tom

    BTW, there is a big difference between “positive cash flow” and “making a good return on your money”. I often read people talk about positive cash flow like it is the determining factor for whether or not a property is a good investment. Positive cash flow is much dependent upon the amount of leverage used. Investments should be compared de-levered, so it is an apples to apples comparison. When broken down, as the recent Fidelity research paper points out, real estate is not half the good investment most people think it is.

  15. lendingmaestro

    Rents increase every year to adjust for inflation. I can forsee the demand for rent to increase if home buying slows and people get foreclosed on.

    The Irvine Co must be betting the farm on it. It blows my mind to see places like The Village (next to Spectrum). There also completing another complex on the corner of MacArthur & Main and they are beginning to break ground on a new site next to Quail Hill.

    They’re either smoking crack or psychic..

  16. No_Such_Reality

    When occupancy is 97% it’s easy to build more high-density apartments. You do just what IAC is doing, build a new place, make it the flagship and jack rents 20% in it.

    A one bedroom in The Village runs just short of $2000/month.

    The village is a 1550 unit apartment complex. It is a small town by itself. At an average rent of $2000 and 95% occupancy, that’s $3,000,000 a month.

    I’m guessing the rents have a lot of downward flexibility before IAC reaches their cost structure.

  17. LAEF2


    I think we should point out a lot of the people are trying to unload these POS but don’t have the $$ to go short. Many of the second time buyers just doubled down and put the money back in to the market.

    So, I’d say most people CAN”T lower the price. They have to ride it down.

    Basically there will be fire sales on all the REO stuff eventually.

  18. gec518

    A friend of mine that works for IAC said they have slowed down considerably on the rent increases for renewals. They were jacking rents as much as 10% last year. He said they are lucky to get a $25 increase in rent for renewals right now. They must be hurting a little on those occupancy levels.

  19. No_Such_Reality

    At a Million dollars, you should be picky. You should also negotiate the commission. The fact that many are still blissfully providing 6% commission is in indicator IMHO, that million dollar homes aren’t million homes but still just a housing tract commodity in SoCal.

    the equivalent “million” dollar home in the rest of the country is over in Shady Canyon.

    I’ve seen the top end of the market be hot for a while, how long it goes is a good question. How well it holds is another question. Look at Quail Hill and those $1.5 Million dollar homes are surrounded by $800/$900 homes, which are surrounded by $700 homes which are comingled with those stupid 1/1 condos the TIC built.

    I know that’s what I want two blocks away from my million dollar home is a condo complex of upside down slumlords.

  20. Dr. Housing Bubble

    Irvine is a unique city. In terms of all the master planned communities it does serve a purpose and certain people are attracted to that. There is some cult following behind the Irvine Company and how they manage and distribute parcels of land. But at $1 million dollars for most single family homes, it does not compute with economic fundamentals. Even in an affluent area like Irvine the median income is around $80,000 per year. After taxes you are looking at $5,000 take home a month. Consider the $1 million dollar starter SFR and your monthly nut is close to $6,000 and this is with a suicide no-doc mortgage. Also, what about all those New Century Financial folks in Orange County? This is one of many operations going belly up in the OC.

    I’ve been to Quail Hill many times and it is nice. But $1 million nice? I’m not sure about that. I think all of us are exhausted about hearing the tired old line of “well it’s Orange County.” It is the Popeye response of economics. Prices are high because they are. Well if that is their logic, prices will fall because I said so.

    Dr. Housing Bubble

  21. socalhousingbubble

    1135 sq ft. That certainly is a monster 1 bedroom, but why?

    For reference, this is only 82 sq ft smaller than Clarendon’s 3-Bedroom plan #1 (which is admittedly ridiculously cramped). I agree with IrvineRenter. If it doesn’t have a second bedroom, who cares.

    It would make a great $1800 rental.


  22. Owen

    Bob, you said:

    “Second, I can rent a 3 bedroom, ocean view, gated community home with more than 2,300 square feet and it’s own back yard for less than $3,500.”

    Where? I am interested.

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