The long awaited implosion of the North Korean towers at the Marquee is happening as envisioned. There is a race to the ground, and no floor in prices is in sight.
Today’s featured property is being offered for 53% off its purchase price.
Asking Price: $349,900
One more community profile at the Irvine Homes Blog: Quail Hill.
I first wrote about these towers in Equity Inferno and most recently in $16,805 Monthly Equity Burn. In the Equity Inferno post, I ran a rent versus own calculation and estimated rental parity at about $325,000 with a $2,800 rent. With changes in interest rates and rental rates, this number is now about $350,000 which is today’s asking price.
Does that mean I recommend this place? No. Values will likely decline further because the fate of these units is not to be owner occupied–these will mostly be rentals. Cashflow investment levels, even at these very low interest rates are about 25% further down. If you buy these units at rental parity, you need to be prepared to be trapped there for many years as prices drop to cashflow investor levels and stay there indefinitely.
Today’s featured property is being offered for 53% off its purchase price. So what makes me think values will decline even further? Perhaps it is an inventory issue. There are 7 properties for sale under $500,000:
I was going to link to the entire inventory in these two buildings, but there are too many. I would not be surprised to see an 80% turnover of these units in foreclosure with a bottoming price near $250,000, perhaps lower if there is overshoot.
Asking Price: $349,900
Income Requirement: $87,500
Downpayment Needed: $70,000
Monthly Equity Burn: $2,916
Purchase Price: $740,000
Purchase Date: 5/15/2006
|View:||Panoramic, Park or Green Belt, Trees/Woods, Has View|
|On Redfin:||87 days|
The location of this unit is one of the best in complex, does not back
to any Street or Fwy, larger patio with view of green-belt & trees.
Euro cabinetry, granite counters, stainless steel appliances,rich
cherry wood floors, floor-to-ceiling windows, marble walls, travertine
floors in baths,custom shower & tubs. Wonderfull association
amenities, 24-hour concierge,billiards room,meeting
room,pool,spa,BBQ,play area,fitness center,men’s/women’s change
rooms,24-hour closed-circuit camera building surveillance,impressive
The mortgage records on these properties are difficult to sort through (they unit numbers are not given), so I was unable to locate the mortgage records. With an asking price 53% off, someone is eating a big $hit sandwich. If this property sells for its current asking price, and if a 6% commission is paid, the total loss on the property will be $411,000.
With all of the defaulting owners and crashing prices, I cannot help but wonder what the fate of this place will be. Will the services be cut back and the $1,150 HOA fees reduced? Will this be converted to low-income housing? Will lenders loan on units in places like this? I don’t see the end game here, but I am pretty confident this place will never be what it was advertised to be.