We like to start off the week with an analysis post, but those posts are time consuming, and this week I was pretty busy. If you need a fix for your analysis habit, try this link to Saturday’s post: The Nature of Market Reversals.
Over the last couple of weeks, I have been featuring a great many rollbacks because I wanted to give you a feel for the deterioration of the market. I have several more coming this week. However, I would like to start the week with a taste of kool aid.
Asking Price: $799,000
Purchase Price: $595,000
Purchase Date: 12/17/2004
Address: 5242 Burgundy Circle, Irvine, CA 92604
Beds: 3
Baths: 2
Sq. Ft.: 1,237
$/Sq. Ft.: $646
Lot Size: 6,000 sq. ft.
Year Built: 1970
Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: The Ranch
MLS#: S492007
Status: Active
On Redfin: 37 days
Sale Price $595,000
1st Loan $476,000
2nd Mtg. $119,000
From Redfin, “Beautiful, well-maintained 3 bedroom, 2 bath family home in The Ranch with very rare private pool and spa! Located on a small cul-de-sac, it backs up to a greenbelt with no neighbors behind. This one has had it all done! Remodeled kitchen and updated bathrooms. Fresh paint, tiled flooring and mirrored wardrobe doors. Double paned windows and exterior doors throughout and a new roof. No Mello-Roos or mandatory HOA dues. Great location! Close to parks, schools, freeways and shopping.”
Notice the sparing but regular use of exclamation points…
“This one has had it all done!” Sounds like the description of a Coto De Caza gold digger…
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$646 per square foot in The Ranch. WTF?
I consider this in the lesser category of WTF homes as I merely laughed when I saw it. I wasn’t left completely dumbfounded. It is still absolutely ridiculous, and I can’t figure out what metric the seller might have used to come up with their asking price, but there probably is some rationale for it — irrational though it may be.
Here is my guess:
I suspect they pissed away $80,000 on improvements, took a few trips and bought a few cars on their HELOC, and the negative amortization built up. Further, they have to pay a sales commission, and they have to make a profit, so add it all up, and they need $205,000 more than they paid. I guess it is perfectly rational after all.
Isn’t that the way real estate is supposed to work? Isn’t every form of irresponsible financial behavior supposed to be cured by never-ending house price appreciation? I imagine they were assured it worked that way when they bought the place.
Is the insanity of this mindset apparent to you? If not, you need to stop drinking the kool aid and join us in the reality-based community.
Just in case you don’t think this price is obscene, let’s look at some properties in the neighborhood.
Price: $775,000
Irvine, CA 92604
Beds: 4
Baths: 2
Sq. Ft.: 2,125
$/Sq. Ft.: $365
Lot Size: 0.28 acres
Year Built: 1971
Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: The Ranch
MLS#: S470252
Status: Active
On Redfin: 198 days
Unsold in 90+ days
Rare one story home with four bedroom in Irvine school District. Back to Yale with orange, lemon, grape fruit trees in the yard. Perfect for retirement. Remodeled kitchen and bathrooms with granite counter tops, new electric build in range, travertine and light hardwood flooring. Two fire places with glacier glass deco in Living and family room. New roof, new slate patio, with storage shack and RV parking. No association due and low tax. Large master bath has both shower and tub. New exterior paint
Nice pictures…
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This property is almost twice as large, it has another bedroom, and it costs $20,000 less. Hmmm…
It has also been on the market forever, and it is in danger of becoming a 2005 rollback. I imagine the price is at the breakeven level once a commission is figured in, and it is not selling which says the price is too high. If this property is priced too high, where does that leave our seller on Burgundy?
How about this one…
Price: $699,000
Irvine, CA 92604
Beds: 4
Baths: 2
Sq. Ft.: 1,620
$/Sq. Ft.: $431
Lot Size: 6,511 sq. ft.
Year Built: 1971
Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: The Ranch
MLS#: S484138
Status: Active
On Redfin: 94 days
Unsold in 90+ days
Cute single story with lots of potential. Great opportunity to move in to the Ranch at this price!!Owner added square footage (all Permitted) buyer to verify. Now currently 4 Bedrooms plus a Den.
Compared to our seller on Burgundy, this home is 40% larger, has an additional bedroom, and is $100,000 cheaper. All that, and it has been on the market over 90 days without selling, so it is overpriced as well.
Perhaps I am piling on, but here is another…
Price: $769,000
5232 SKINNER ST
Irvine, CA 92604
Beds: 4
Baths: 2.5
Sq. Ft.: 2,167
$/Sq. Ft.: $355
Lot Size: 6,240 sq. ft.
Year Built: 1972
Stories: 2
Type: Single Family Residence
County: Orange
Neighborhood: The Ranch
MLS#: P585401
Status: Active
On Redfin: 24 days
Beautiful home in Ranch. Mirrored family room wall, oversized backyard and giant family room. No mello roos, no association dues, low taxes. Walking distance to school, close to freeways. Must must see!!!
The exclamation points are back. Hurray!!!
This house is twice as large, has an additional bedroom, and it costs $30,000 less.
In short, our seller on Burgundy is not going to get $799,000. I would speculate they would be lucky to get $599,000 based on the comparables above and how long they have been sitting on the market.
For being completely clueless in their pricing, the sellers at 5242 Burgundy Circle win our WTF Award!
