Birds of a Feather Flock Together, or so the saying goes. In Woodbridge, crazy asking prices are where the birds roost — 2 Mallard and 30 Bluejay.

Asking Price: $1,299,900

Purchase Price: $875,000

Purchase Date: 10/21/2005

Address: 2 Mallard, Irvine, CA 92604

Beds: 4

Baths: 2

Sq. Ft.: 2,077

Lot Sq. Ft.: 7,150

Year Built: 1976

Stories: 1

Type: Single Family Residence

View: Park or Green Belt

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $626

MLS#: S491397

Status: Active on market

On Redfin: 19 days

From Redfin, “MOST BEAUTIFUL & UPGRADED SINGLE STORY HOME EVER, COMPLETE REMODEL CUS TOM KITCHEN, BATHS, BEDROOMS, YARD, ON ONE OF WOODBRIDGES’S PREMIER STREETS, SELLER SPENT $300,000 IN IMPROVEMENTS. ONE OF A KIND LOCATION. ACROSS FROM ARBOR PARK, STEPS TO LAGOON.”

Do realtor’s keyboards have the caps lock jammed? And who writes this stuff:

“The most beautiful… ever?” Never ever in the history of mankind has a better home been built? Wow! I have to see this one… Not.

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$626 per square foot in Woodbridge? There are only two other homes I could find asking more than $600 / SF: a previous WTF winner Melodylane, or Out-of-Tune? and 55 Lakefront which is actually on the lake (Not that it is worth the price, but at least you can make the case). This house is not on the lake, and is, in fact, adjacent to some condos — not a strong selling point. The renovation is well done, and the house is beautiful inside. With the improvements, perhaps this seller will get out at the $875,000 he paid for it. As for the improvements; well, I hope he has enjoyed them…

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Asking Price: $829,000

Purchase Price: $433,500

Purchase Date: 11/4/2002

Address: 30 Bluejay, Irvine, CA 92604

Beds: 3

Baths: 2

Sq. Ft.: 1,549

Year Built: 1976

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $535

MLS#: S489221

Status: Active on market

On Redfin: 34 days

From Redfin, “Newly remodeled and decorated patio home. Custom mouldings, windows, l ighting and hardwood flooring. New concrete roof, heating and air conditioning. Beautiful kitchen and master bath. Newly landscaped yard with barbeque. “

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This seller obviously did not get the memo on the state of the market. It takes a lot of denial to believe your house doubled in value since late 2002. Why would you buy this small 3/2 for $829,000 when you could go down the street to 10 Bluejay and get a large 4/3 for $839,000? Realistically, this house could sell today for $350 / SF which would put it at around $550,000. This would get the seller out with a small profit after commissions. The price will do nothing but drop from there. A year or two from now, this seller probably will be underwater.

If you were this seller, do you sell now and take a small profit, or do you hold on and wait for the market to provide your asking price? I suppose it depends on whether you want to sell in 2007 or in 2027.

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I hope you have enjoyed Woodbridge Week. Come back next week when I will profile… Oh, I don’t know, I will figure it out this weekend. So many properties, so little time…

Apparently there are still people in Woodbridge who didn’t read Monday’s post Houses Should Not Be a Commodity. There are four knife-catchers I found while looking through the MLS listings on Redfin. There may be more.

One thing that puzzles me is the lack of pictures. You would think people trying to make a quick $100K would at least take some pictures of the properties they are peddling.

Asking Price: $535,500

Purchase Price: $500,000

Purchase Date: 12/14/2006

Address: 1 Cedarglen #29, Irvine, CA 92604

Beds: 3

Baths: 1.5

Sq. Ft.: 1,123

Year Built: 1976

Stories: 2

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $477

MLS#: S470156

Status: Active on market

On Redfin: 173 days

Unsold in 90+ days

From Redfin, “EXTREME HOME MAKEOVER. End unit townhome with extra windows and easy access to parking in the heart of Woodbridge. Private corner with nice size rear yard. Laminate wood flooring throughout. Near shopping, restaurants, theaters and North Lake with it’s pools, tennis and much more. Rehab includes new heat and a/c”

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I call BS on the “EXTREME HOME MAKEOVER;” unless, of course, you like the color pink…

At 173 days on the market, I don’t think the renovation was as successful as this knife-catcher had hoped.

Knife Catcher #2:

Asking Price: $740,000

Purchase Price: $629,000

Purchase Date: 3/29/2007

Address: 52 Shearwater, Irvine, CA 92604

Beds: 3

Baths: 2

Sq. Ft.: 1,448

Lot Sq. Ft.: 3,994

Year Built: 1979

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $511

MLS#: S489742

Status: Active on market

On Redfin: 25 days

From Redfin, “Beautifully remodeled single story detached home located at the end of a cul-de-sac that features scraped ceilings, new sliding glass door leading to a patio area with a relaxing fountain and newly fenced private yard. New recessed lighting, new neutral paint, carpet, tile flooring, custom closet organizers, remodeled granite countertop kitchen with new appliances, updated bathrooms. Newer roof, new garage door, all new double pane tinted windows!! Lots and lots of new.”

I didn’t realize “new” was an object one could have lots of…

Here is another would-be commodity trader who just signed up to be a bagholder. I have to give all these knife-catchers respect for having courage; of course, I imagine that respect won’t mean much to them in bankruptcy court.

Knife Catcher #3:

Asking Price: $599,900

Purchase Price: $490,100

Purchase Date: 4/30/2007

Address: 17 Seawind, Irvine, CA 92604

Beds: 2

Baths: 2

Sq. Ft.: 1,058

Year Built: 1984

Stories: 1

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $567

MLS#: P579402

Status: Active on market

On Redfin: 30 days

From Redfin, “Beautifully upgraded home in Woodbridge near the lake. Highly upgraded with hardwood floor thru entire house, tile floor in the bathroom, granite counter top, crown & base moulding, just painted, private spa in the backyard. Walk to lake, park, and lots lots more!!”

IMO, this is also a WTF award candidate. This buyer overpaid for what they have, and now they think they can turn around and sell it for $100,000 more. This unit does not see the lake, it isn’t on a park, it is a nondescript, tiny tract home in the middle of Woodbridge — for sale in a declining market. WTF is this seller thinking? This is a perfect example of the “buy and hope” strategy of the truly foolish speculator. This knife-catcher will really bleed.

If you don’t think this seller overpaid, compare it to the listing below.

And finally, a knife catcher of a different sort — bank real estate owned (REO):

Asking Price: $394,500

Purchase Price: $423,597

Purchase Date: 4/30/2007

Address: 87 Firwood #42, Irvine, CA 92604

Beds: 3

Baths: 2

Sq. Ft.: 1,150

Year Built: 1978

Stories: 1

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $343

MLS#: U7002379

Status: Active on market

On Redfin: 19 days

From Redfin, “OUTSTANDING LOCATION IN THE CITY OF IRVINE. THIS IS WOODBRIDGE! THE UN IT FEATURES THREE BEDROOMS AND TWO BATHROOMS. ASSOCIATION POOL AND SPA. OUTSTANDING SCHOOLS. CLOSE TO SHOPPING, TRANSPORTATION, ENTERTAINENT AND EMPLOYMENT. DO NOT MIS THIS ONE, THIS IS ONE OF THE BEST VALUES IN THE CITY! SUBJECT IS SOLD ‘AS-IS’ AND ‘WHERE-IS’ WITHOUT WARRANTY.”

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This looks like a bank property as they tend to put the “as-is” statement in their listings. Did you notice the price? A 3/2 under $400,000 in Woodbridge. Now that is a comp killer.

It is easy to get angry over the behavior of the commodity-trading knife-catchers. If they were not a fixture of the real estate market, some family might have been able to buy one of these homes at a better price. The time to be angry at these flippers is past, for the next several years we can simply enjoy the schadenfreude as these Donald Trumps are going to get their comeuppance. I don’t think any of us will be sad to see it happen.

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Asking Price: $609,900

Purchase Price: $610,000

Purchase Date: 2/16/2006

Address: 169 W Yale Loop #1, Irvine, CA 92604

Beds: 3

Baths: 2

Sq. Ft.: 1,520

Year Built: 1976

Stories: 1

Type: Condominium

View: Park or Green Belt

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $401

MLS#: S480117

Status: Active on market

On Redfin: 95 days

Unsold in 90+ days

Craigslist

From Redfin, “BEAUTIFUL SINGLE STORY JEFFERSON MODEL ON CORNER LOT WITH SPACIOUS BACK AND SIDE YARD. RECENTLY UPDATED WITH SCRAPED CEILINGS AND NEW CARPET. ACROSS FROM STONECREEK ELEMENTARY AND STEPS TO RESTAURANTS AND WOODBRIDGE CENTER. WALKING DISTANCE TO ASSN POOL, PARK AND LAGOON. * * * * * * * * * * * * * * * * * * * * NEW CENTRAL AIR UNIT INSTALLED * * * * * * * * * * * * “

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As you can see, this seller was either a very short term homeowner or a flipper. They spent some money renovating the property, but none of it is apparent in the property photographs. Since they are asking for their purchase price back, their loss would be the 6% commission plus whatever they spent on improvements, probably around $60,000, although I wouldn’t be surprised if they had to take a significant price reduction to get out.

This week I will be doing a series of posts on Woodbridge. It is one of my favorite Irvine villages. Prices are dropping here as well (although there were several knife catchers hoping that will change). I will profile three different rollback properties, a group of 4 knife-catchers, and two WTF properties to finish off the week. I hope you all enjoy it.

There are so many overpriced properties in Turtle Ridge, it is difficult to establish where the market is and what is beyond a wishing price into the WTF-were-you-thinking price range. I have three candidates for you to consider today.

Asking Price: $1,420,000

Purchase Price: $904,500

Purchase Date: 8/30/2004

Address: 52 Sweet Bay, Irvine, CA 92603

Beds: 4

Baths: 2.5

Sq. Ft.: 2,460

Year Built: 2004

Stories: 2

Type: Single Family Residence

County: Orange

Neighborhood: Turtle Ridge

$/Sq. Ft.: $577

MLS#: S479350

Status: Active on market

On Redfin: 95 days

Unsold in 90+ days

From Redfin, “PRICED TO SELL. LISTED BELOW COMPS! Popular Fiore Plan 1 ‘Tuscan Farmhouse’ w/ designer carpet, custom paint, and more. Located on quiet Cul-de-Sac St. w/ south facing Sunny & private back yard patio/grass area. Large Gourmet Kitchen has granite countertops w/ gourmet appliances, Butler’s Pantry & Large Pantry. Dramatic Cathedral ceiling in Entry Foyer & Formal Living Room. Large Master Suite w/ large walk-in Closet. Great School System, Exclusive Guard Gated ‘The Summit’ at Turtle Ridge.”

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This is the first WTF award winner that actually claims to be below comps. We recently documented 2 low-end properties and 2 high-end properties about to sell below their 2004 and 2005 prices, but somehow this 2004 property has appreciated 50% and it is still below comps? Give me a break.

This would be good example of “cherry picking” your comps — if there truly are other comparable properties which establish higher selling prices. Given the other properties we know are on the market for less than purchase price, do you think someone is going to pay this asking price. Is this just a wishing price or is it in another category?

How about this property:

Asking Price: $1,900,000

Purchase Price: $1,164,500

Purchase Date: 4/9/2004

Address: 50 Cezanne, Irvine, CA 92603

Beds: 5

Baths: 4.5

Sq. Ft.: 3,660

Lot Sq. Ft.: 9,200

Year Built: 2004

Stories: 2

Type: Single Family Residence

View: Hills

County: Orange

Neighborhood: Turtle Ridge

$/Sq. Ft.: $519

MLS#: S469746

Status: Active on market

On Redfin: 168 days

Unsold in 90+ days

From Redfin, “Beautiful 3 yr old home in the prestigious Summit, guard gated comm of Turtle Ridge near the lovely Newport Coast. French Country style home features a gated, compound type entry w/ courtyard separating main house & two casitas. Deluxe gourmet kitchen w/ granite counters, SS appliances & lrg center island. Lots of upgrades incl custom paints, marble & hardwood floors. 4 Fireplaces. Huge back yrd. Resort style amenities incl family & adult pools, clubhouse, fitness ctr, tot lot & gorgeous views.”

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Do you think this property appreciated 63% since 2004? at 168 days on the market, I don’t think the market does either…

And now, for our weekly dénouement, I give you (drum roll please…)

Can you identify the $3,195,000 tract home on this street?

I guess they all are…

Asking Price: $3,195,000

Purchase Price: $1,539,500

Purchase Date: 5/26/2004

Address: 25 Garden Terrace, Irvine, CA 92603

Beds: 5

Baths: 3.5

Sq. Ft.: 3,700

Year Built: 2003

Stories: 2

Type: Single Family Residence

View: Catalina Island, City Lights, Coastline, Hills, Ocean, Panoramic, Pool, Other

County: Orange

Neighborhood: Turtle Ridge

$/Sq. Ft.: $864

MLS#: S492404

Status: Active on market

On Redfin: 8 days

From Redfin, “This is just a beautiful home in the popular Botanica tract of Turtle Ridge. Perfect entertainment home with built in BBQ, outdoor fireplace, pool and spa. Oversized lot with sweeping views of the ocean and city lights. Master bedroom walk in closets have been expanded for maximum storage. Too many upgrades to mention in this gorgeous custom home.”

WTF!!! An Irvine tract home for over $3,000,000! This is no estate, this is not a one-of-a-kind property: this is an Irvine tract home. This is double what they paid 3 years ago. How can this seller possibly believe someone would pay this price, particularly when 26 Hedgerow — a nearly-identical, adjacent house on the next street — is selling for less than its purchase price? How can prices double every three years? Will someone pay $6,400,000 for this place in 2010? Do this seller and this realtor have no shame? Again, I am dumbfounded and speechless: this must be a WTF award winner.

Pardon my rant, but someone needs to say “enough is enough.” We have all become so accustomed to these ridiculous asking prices that our outrage is gone. There is no shame in it any more. These people deserve the public humiliation and ridicule this blog provides.

You know, when this is all over, and we look back at the ridiculous prices asked and paid during the bubble, the collective insanity will be apparent to all. Dr. Housing bubble has a great series of posts on “Real Homes of Genius” where he profiles decrepit shacks with asking prices that are truly WTF. Properties in Irvine come in different flavors, but some things are the same: the stupid greed of market participants during a bubble is laughable no matter the quality of the property involved.

I hope you have enjoyed our series of posts on Turtle Ridge. Have a good weekend…

Asking Price: $599,000

Purchase Price: $760,000

Purchase Date: 6/23/2006

Address: 131 Talmadge, Irvine, CA 92602

Beds: 3

Baths: 2

Sq. Ft.: 1,752

Year Built: 2003

Stories: 2

Type: Condominium

County: Orange

Neighborhood: Northpark

$/Sq. Ft.: $342

MLS#: U7002421

Status: Active on market

On Redfin: 4 days

From Redfin, “OUTSTANDING ASSOCIATION WITH A GUARD GATED COMMUNITY! IN THE HEART OF NORTH PARK IN THE MOST SOUGHT AFTER CITY OF IRVINE. THIS HOME FEATURES THREE BEDROOMS AND TWO BATHROOMS, ASSOCIATION POOL AND SPA. OUTSTANDING SCHOOLS AND PARKS. CLOSE TO TRANSPORTATION, SHOPPING, ENTERTAINMENT. .. THIS HOME IS IN THE TUSTIN UNIFIED SCHOOL DILSTRICT. HOME IS BEING SOLD ‘AS-IS’ AND ‘WHERE-IS’ WITHOUT WARRANTY. “

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You have to love properties like this one. A flipper who timed the market top perfectly walked away from this nightmare and left the bank holding the bag.

In our analysis posts, we discussed the theoretical possibility (probability) of foreclosures leading to lower prices. We haven’t seen much of it to date to demonstrate how it works. Here it is.

In the past, a property like this one would have sold in a day at above asking price. There would have been no negative impact to the neighborhood comps. Right now in the markets, there are few buyers, and those who are buying are putting in cautious bids. There will probably be no bidding war for this property. This transaction will be very telling of where the market is today, and where it is heading.

It still takes some form of exotic financing to buy this property. I doubt many families with a $171,000 annual income with an $85,000 downpayment are rushing out to buy this place. Somebody making $85,000 a year utilizing a huge DTI ratio will take out a 10 year I/O, buy this place, and spend the next 10 years underwater eating Ramen Noodles.

However it goes down, this will be a comp killer. All those sellers holding on to a breakeven wishing price just got clobbered. As each distressed homeowner succumbs to the terms of their exotic mortgage, they become another foreclosure. Each foreclosure reinforces the previous low comp and drives a dagger into the hopes of other neighborhood sellers.

This is how it happens: one foreclosure at a time.

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I would like to say a special thank you to Purplehaze for tipping me off to this property.