Open Thread 8-1-2009

Today, I want to tell you about a new blog I came across recently that may be of interest to those who really want to understand real estate markets: Deal Breaker.

I wrote Land Value 101 long ago to describe how raw land parcels are valued. I found Deal Breaker which is a blog devoted to documenting the details of raw land transactions around Southern California. If you want to see what is happening in this market, it will provide you insight into what the builders and developers are doing and where they see the housing market going. We are just entering a phase of cleaning up the mess; properties are going for a small fraction of their peak valuations.


Here are a couple of properties that were taken off the market before I could profile them this week.

95 Costa Brava   Irvine, CA 92620  kitchen

Asking Price: $439,000

Address: 95 Costa Brava Irvine, CA 92620


Here comes the sun, here comes the sun,
and I say it’s all right

Little darling, it’s been a long cold lonely winter
Little darling, it feels like years since it’s been here
Here comes the sun, here comes the sun
and I say it’s all right

Here Comes the Sun — The Beatles

95 Costa Brava   Irvine, CA 92620  kitchen

Asking Price: $439,000

Income Requirement: $109,750

Downpayment Needed: $87,800

Purchase Price: $596,500

Purchase Date: 7/19/2006

Address: 95 Costa Brava Irvine, CA 92620

Beds: 2
Baths: 3
Sq. Ft.: 1,205
$/Sq. Ft.: $364
Lot Size:
Property Type: Condominium
Style: Contemporary
Stories: 2
Floor: 1
Year Built: 2006
Community: Woodbury
County: Orange
MLS#: S582516
Source: SoCalMLS
Status: Active
On Redfin: 4 days

Fantastic opportunity,Bowen court plan 3 detached condo with 2
bedrooms,2 1/2 baths,2 car side by side garage, nice sized patio,all
downstairs ceramic tile flooring and all upstairs hardwood
floorings,plantation shutters,just walking distances to Woodbury
shopping center and The commons and Woodbury elementary school.

146 Briarwood 45   Irvine, CA 92604  front 146 Briarwood 45   Irvine, CA 92604  kitchen

Asking Price: $500,000

Income Requirement: $125,000

Downpayment Needed: $100,000

Purchase Price: $575,000

Purchase Date: 5/8/2007

Address: 146 Briarwood #45 Irvine, CA 92604

Beds: 3
Baths: 3
Sq. Ft.: 1,400
$/Sq. Ft.: $357
Lot Size:
Property Type: Condominium
Style: Townhouse
Stories: 2
Floor: 1
Year Built: 1978
Community: Woodbridge
County: Orange
MLS#: P695630
Source: SoCalMLS
Status: Active
On Redfin: 7 days

Travertine entry begins your journey into a beautiful Bradford townhome
with pride of ownership. Remodeled kitchen w/granite countertops,newer
white appliances with travertine flooring. Scraped ceilings accent the
recessed lighting. Remodeled guest bath.Masterbath has travertine
countertop, master closet is walkin closet.Guest bath off kitchen with
granite countertops. Central air and newer furnace with newer ducting.
Steps to East Shore school. Driveway leads to 2 car garage with direct
access. Backyard has cement patio. Traverinte fireplace.Owning a home
in woodbridge gives you access to all pools,spas, tennis courts,
volleyball courts and parks as well as the Beaches and Lagoons in North
and South lake.

Not a bad description, although it overdoes the travertine (including one misspelling).

Back in February I profiled the holdings of the Emporer of Woodbridge in Everybody Wants to Own the World.
The owner of that empire traded today’s featured property. Back
on 7/25/2000, the Emporer bought this property for $243,000. He sold it
on 3/8/2007 for $575,000. While he owned it, he took out an Option ARM
for $357,000, probably to finance his ongoing operations.

The couple he sold the property to on 3/8/2007 have not done quite
so well. If they get their asking price, it will not be a short sale,
but their equity will be gone.

20 thoughts on “Open Thread 8-1-2009

  1. Freetrader

    What is a “detached condo”? Maybe it is a common terminology but it seems like a contradiction in terms.

    1. LC

      That pretty much describes most of Irvine’s single family housing, since along with you, the homeowner association and the Irvine Company have claims on your property. Some day, truth in disclosure laws will apply to Irvine.

    1. thrifty

      Disregarding the amount of land it sits on, how does a detached condo differ from a single family home of identical footprint?

      1. ockurt

        That’s a good question. We live in a detached condo and I was wondering the same thing.

        I think the amount of land it sits on has something to do with it, but also how TIC does the zoning.

        IR, comments?

        1. IrvineRenter

          Detached condos are fully detached homes, but they are configured in such a way that you cannot draw simple lot lines accessing a street. Most often this product has shared driveway access to the garages and shared sidewalk access to the front doors. This type of product provides the maximum yield for detached. We will see many of these going forward.

      2. John

        With a detached condo, you don’t own the land under the home, you own a share of the development. You also are responsible (usually) for the maintenance of your own home, including the exterior (siding and roof).

  2. thrifty

    Irvine Renter: a couple of questions:
    – It has been my impression over decades of buying homes that a price/income ratio of 3/1 is time-tested because it keeps reasonably conscientious wage earners out of trouble. Your ratio is 4:1 in all the homes you review. Why not 3:1?
    – Why would a builder choose detached over attached condos when it allows more units per acres; i.e., more profit per acre?
    Thanks. and congratulations again on the hole in one.

  3. newbie2008

    “American Property Enterprises has completed its acquisition of a 21 acre residential development site that it previously owned, after re-acquiring the site from the homebuilder that bought it. The site is approved for 210 triplex style townhomes, on a view-oriented hilltop location just southeast of the intersection of Interstate 15 and Rancho California Road in Temecula, California.”

    These looks as if they are completed lots at about $12000 per lot. That looks like $12000 per lot might be under the building cost to put in utilities and the roads. So the raw land cost went to zero dollars? The buyer will have a tax reoccurring property tax liability under new buyer(s) is (are) found.

    IR, What’s the cost for water, sewer and road cost in the IE? Not much of that will happening in Irvine with TIC.

    Anybody else getting phone messages seeking legal claims of bad water and air (cancer) around El Toro Base in Irvine? Any truth or just another scam?

    1. South County

      Water and sewer on average 6000sq lots in the IE can be done for 10K per lot. This is only water and sewer, no dry utilities and know curb/gutter, base and street paving. This number does not include any off sites like sewer lift stations, roads, water and sewer.

  4. Modguy

    I missed that post from back in February. Wow!, It’s now my favorite post. It has everything that could go wrong and did go wrong in one nice package… And ALL option arms loans too? Incredible!

    I bet his peers, clients and relatives thought he was a wealthy, big shot genius in 2006. A lot of them were probably jealous of his success.

    By the way, my guess is he started with one lump sum (saved up, or more likely a HELOC on his primary residence), then used it as down pymnt on the first investment; then HELOC’d that for the next; and so on 14 times. The “same” downpaymenr recycled.

    It would have been SO easy for banks to protect themselves by appraising other properties held by a buyer and not approving another loan unless there was equity left in each prior purchase.

  5. NewportSkipper

    There is no way that the emporer is underwater. Only 6 of the 15 properties were bought past 2004. I estimate he has around $200k in equity left. A big chunk of that debt is on the commercial lot in Huntington Beach which I’m pretty sure is leased to Toyota. He certainly doesn’t have an option arm on that one. And none of those seconds are neg am either.

    1. Freetrader

      Very funny skip.

      EVEN IF that were true, having $200k of equity on $12 million of debt equates to 1.6% equity — functionally bankrupt.

      But it isn’t true — a random sampling of several of the properties shows that they all appear to be underwater — even based on Zillow and assuming no sales costs. We are well below 2004 prices in Irvine now anyway, and besides, this dude has extracted all the phantom equity on the older props already. More fundamentally, the other piece of the equation is, forget about the FMV of the properties — this guy can’t generate the cash flow to service the debt, and he will have to liquidate, QED.

      I think it is good to challenge assumptions here on IHB, and don’t want to pile on the criticism you get, but there is a difference between asking reasonable questions and just making comments that don’t make any sense.

        1. Freetrader

          Why do you insist on arguing that the sky is red? Look at any of the properties Mr. Emperor of Irvine holds, and the debt on the property is greater than the property is worth. What is it you are attempting to prove, that you can get rich buying houses with no equity?

  6. Freetrader

    Um, maybe I am missing some inside joke here but is everyone intentionally misspelling “emperor” for some reason?

Comments are closed.