I had business at the Orange County Courthouse this week, and I got to witness some foreclosure auctions taking place. It is a fascinating process. I hope to go back with a video camera and capture some of the proceedings to display here.
It is a little strange when you walk up to the courthouse and you see this group of people huddled around an auctioneer. There are people walking in and out of the courthouse on other business, and the auction takes on a street-performer atmosphere, an unusual sideshow distraction.
I did hear from some experienced auction buyers that some of the professional players have pulled back from their activities recently. Apparently, we are not the only ones paying attention to the news of shadow inventory and ARM resets and recasts. The professionals know they are buying and selling in a declining market, and there is much fear that they will be caught holding inventory in a quick and merciless drop.
I have profiled a number of properties on this street: in May of 2009 I featured 14 Desert Willow in Desert Willow Did Not Fall, on April 30 of 2009 I featured 30 Desert Willow in Nine Months as REO, and in July of 2007 I featured 28 Desert Willow in Weeping Desert Willow. Today we are moving one more house down the street and featuring 26 Desert Willow.
Columbus Grove was the first Irvine neighborhood to see a collapse in its mid to high end pricing. There are many theories as to why this happened, and many readers who believe it is because the neighborhood is not desirable. I believe it was something else.
Lennar starting building and selling in this community near the peak. Since these properties were new, they sold at WTF price levels. Since Lennar did not want to try waiting out the market, they continued to build and sell during the early stages of the credit crunch. Their continued production of must-sell inventory drove prices down quickly.
One can argue that prices would not have dropped as much if the neighborhood was more desirable, but even in desirable neighborhoods, they are still subject to short-term fluctuations of supply and demand. Columbus Grove is a classic example of what happens to any neighborhood when large amounts of must-sell inventory is dumped on the market. This will be the fate of all mid- to high-end neighborhoods as the defaults continue and the REO piles up.
Highly desirable Plan 3, the largest Alexandria model within the
Columbus Grove community in Irvine. This spacious Tudor home features 5
bedrooms plus a Den , 4 bathrooms & $$$$$$ in upgrades! Open floor
plan including: High volume celling,Dining room,Butler’s Pantry,Euro
Style Kitchen w/ a huge center island, Great Room with fire place and
Media Niche, covered patios,Master Bedroom with Retreat, and gas
burning fireplace . Upgrades include:European Medallion, granite slab
counters,S.S.GE Monogram appliances,wrought iron stair rails,
Travertine floors on 1st level, built-in media Niche, Multi-zone
speakers,8-jet,jacuzzi tub,Crown & Base Molding
throughout,plantation shutters,Built-in Closet system & custom
paintings, cherry-wood cabinets, French doors, recessed lighting,
garage cabinets, 2 Bay Garage w/epoxy floors, maintenance free lawn
hardscape front &back yard,fire pit w/bench, spectacular water
feature and built-in BBQ island. Ideally located with parks &
Tustin District nearby.
Highly desirable? Do I need to be told this? Is anyone going to go see a listing because the realtor says it is highly desirable?
$$$$$$ in upgrades! Poor saps wasted their money.
Someone paid $1,349,000 for this property on 4/28/2006.
Sometimes when I see these peak prices, I am dumbfounded.
Three years later almost to the day, the property was purchased at auction by a flipper for $742,500…. Does anyone else feel a schadenfreude dose coming?
If this flipper can manage to sell for asking price, and if a 6% commission is paid, the total profit will be $149,560. Good luck with that. Do you think he will get it?
I hope you have enjoyed this week at the Irvine Housing Blog. Come back next week as we
continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
Another dream that will never come true Just to compliment your sorrow Another life that I’ve taken from you A gift to add on to your pain and suffering Another truth you can never believe Has crippled you completely All the cries you’re beginning to hear Trapped in your mind, and the sound is deafening
I have profiled a number of properties that were over-improved for the neighborhood. One of the more recent was You Must Be Joking back on April 1. There is also that monstrosity in University Park. Everyone believed that no matter how much you paid or how much you spent on improvements, someone would come along to pay even more to make you a flipping genius. It doesn’t work that way.
{book4}
Profiles like this are important because people need to see that the flipping craze of the Great Housing Bubble was an abberation. That is not how the housing market works. The Home and Garden channel is not going to chronical many of these because their ratings depend on people believing it can be done (they have done a few shows like this). Personally, I think these shows would be well served by showing the complete train wrecks where people lose $250,000 or more after busting their butts improving a home. I would tune in to that, and so would many readers here.
Newly completed AMAZING addition and remodel from top to bottom. Well
thought out floorplan features 2 master bedrooms, one on each level in
addition to 2 spacious secondary bedrooms on main level. Gorgeous
kitchen with granite counters, 42′ refrigerator, double oven, gas
cooktop, walk in pantry and remote controlled skylight. Custom casings,
baseboards and crown moulding throughout. Loft area on upper level is
perfect for home office/tech center. Large, open living area leads out
to extra spacious patio. Gated front courtyard. Every room is wired for
Cad 5 computer hook up. New vinyl dual glazed windows and doors, new
plumbing, new electric, new heating, insulation and central air
system…. too many extra’s to list…hurry on this one! Steps to
association parks and sport courts.Walk to shopping, close to 405 Fwy,
University High.
How can an addition be AMAZING?
That oil painting effect on Photoshop is becoming more common. realtor see, realtor do?
Figuring out what is happening with this property is very difficult as the property records are incomplete. The property was purchase at the peak on 7/28/2006 for $595,000. The buyer used a $416,500 first mortgage, a $100,000 HELOC and a $78,500 downpayment. It is likely that this guy actually put $178,500 down and opened the HELOC to fund the renovation.
He must not have though much about his chances for success flipping this beast:
Foreclosure Record Recording Date: 07/30/2008 Document Type: Notice of Sale (aka Notice of Trustee’s Sale) Document #: 2008000362192
Foreclosure Record Recording Date: 04/28/2008 Document Type: Notice of Default Document #: 2008000197601
Here is where it gets strange. There is no foreclosure sale recorded. On 2/3/2009 — more than a year after the owner stopped making payments — the property was transferred via a Quit Claim Deed to a woman. There is no record of the sale amount or what happened to the mortgages. It seems most likely that the woman bought this property at a foreclosure auction by outbidding the lender. If this is what happened, then this is a flip for profit. Good luck with that.
Does anyone think this is a particularly good time to flip properties in this price range?
I hope she finds her knife catcher before these prices sever her hand….
I know the breakdown Everything is gonna shake now someday I know the breakdown Tell me again am i awake now maybe You can find the reason that no one else is living this way
I wanted to profile this property because I find this listing phenomenon amusing; typical homeonwers who have borrowed themselves to oblivion offer their homes for sale at a prices that would pay off their debts and advertise that it is not a short sale.
It is a nice bit of denial fantasy, but most of these properties will not transact at price levels where they will not be short sales, particularly as these mid to high end properties when prices really start to drop. This property and others like it do not show up as distressed inventory, but this property will be sold in the next 24 months either as an open market sale, a short sale, or a foreclosure. The owners spent their bubble equity by doubling their debt. It is likely that they cannot afford the debt service, and they will eventually give up. This is must-sell inventory, so it is just as distressed as those properties that fit the traditional definition.
Not a short sale or foreclosure! Traditional sale! Beautiful two-story
home nestled in a quiet cul-de-sac in the sought after community of
Woodbridge. Very well maintained & clean. Laminate floors
downstairs & Berber carpet upstairs installed only 2 years ago. New
stovetop & dishwasher. Vaulted ceilings with skylight in living
room. Atrium with fountain adjacent to family room. Landscaped
wrap-around backyard with small pond. Minutes to 5 & 405 freeways.
Walking distance to North Lake.
This property was purchased on 7/26/1991 — near the peak of the last bubble — for $350,000. They endured being underwater for about 8 years before we inflated the Great Housing Bubbble. When prices started going up, they finally got to enjoy the fruits of their homes labor: HELOC money.
On 07/06/1999 they opened a HELOC for $50,000.
On 06/06/2003 they took out a new loan for $277,000. This may have been a refinance of their first mortgage. The records are not clear.
On 4/20/2004 they opened a HELOC for $275,000.
On 3/10/2006 they opened a HELOC for $250,000. At this point, there is no conclusive evidence of MEW.
On 8/3/2007 they refinanced with a $630,000 with a 1-year ARM. OK, now we know they took out the money.
Total debt is $630,000.
Total mortgage equity withdrawal is $280,000 plus their downpayment.
These owners more than doubled their mortgage just as most homeowners I see who are selling their homes now. In fact, as prices start to fall, the percentage of distressed properties will pick up quickly because there will be fewer and fewer of these properties who think they can ask for an amount that will pay off their mortgages.
Highly desirable Plan 3, the largest Alexandria model within the
