When I introduced WTF-Were-You-Thinking Prices, I said to qualify for this award, the price needs to be beyond market and beyond wishing prices. To obtain the WTF award, the price needs to be so high that I actually laughed to myself when I saw it.

To illustrate what I meant, this post will illustrate 3 properties: One is for sale at a realistic price in today’s market (a price which still makes me want to Laugh Out Loud); one is for sale at a wishing price that has no chance of happening (the Oh-My-God price), but at least it represents some tethering to the market; and the final one is so high, so far outside of the market that you have to scratch you head and ask, “WTF?” (you all know what it means…)

.

.

.

LOL Property:

Asking Price: $439,000

Purchase Price: $392,000

Purchase Date: 3/10/2005

Address: 15 Lakepines, Irvine, CA 92620

Beds: 2

Baths: 1.5

Sq. Ft.: 1,204

Lot Sq. Ft.: 868

Year Built: 1977

Stories: 2

Type: Condominium

County: Orange

Neighborhood: Northwood

$/Sq. Ft.: $365

MLS#: P575387

Status: Active on market

On Redfin: 28 days

From Redfin, “Large Two Bedroom Townhome with Full Bath Upstairs and Seperate Sink in Master Bedroom, 1/2 bath Down. Fenced Patio. Fireplace in Livingroom. Smooth Ceiling. Ceiling Fan. Storage in Attic, Wood Floor, Community Offers Tennis Courts, Two Pools, Walking Distance to Schools, Northwood High School, No Mello Roos, Must See.”

.

.

I don’t think they will get $365 SF for this place, but it is still within the realm of possibility. There is a major lack of buyers, but those that are buying may be willing and able to pay that price.

OMG property:

Asking Price: $519,000

Purchase Price: $407,500

Purchase Date: 6/22/2005

Address: 123 Lakepines, Irvine, CA 92620

Beds: 2

Baths: 2.5

Sq. Ft.: 1,204

Lot Sq. Ft.: 828

Year Built: 1977

Stories: 2

Type: Condominium

View: Water

County: Orange

Neighborhood: Northwood

$/Sq. Ft.: $431

MLS#: S488096

Status: Active on market

On Redfin: 16 days

From Redfin, “UPGRADES EVERYWHERE! MUST SEE! Granite countertops, beautiful cabinetr y, stainless appliances, slate tile, fireplace, all new window coverings, all new baths & fixtures w/ jetted tubs! Fresh paint, slate floors, cathedral ceilings in master, walk-in closets w/ organizers, additional loft-great for office or storage. Canopy on patio provides a perfect retreat to enjoy the lake view! Too good to pass up!”

.

.

The only difference I can see between this unit and the one being offered for $80,000 less (almost 20%) is the upgraded kitchen. Do you think that is worth $80,000, or is this seller clinging to a wishing price? I might have even given this seller a WTF award, but he was outdone by his neighbor…

WTF Property:

Asking Price: $570,000

Purchase Price: $365,000

Purchase Date: 12/1/2004

Address: 224 Pineview #266, Irvine, CA 92620

Beds: 2

Baths: 1.5

Sq. Ft.: 1,204

Lot Sq. Ft.: 804

Year Built: 1978

Stories: 2

Type: Single Family Residence

View: Water

County: Orange

Neighborhood: Northwood

$/Sq. Ft.: $473

MLS#: P574560

Status: Active on market

On Redfin: 33 days

From Redfin, “RESORT LIVING, OVERLOOKING STREAMS. BRIGHT & SPACIOUS 2 SKYLIGHTS FIRE PLACE, GARDEN WINDOWIN KITCHEN, 1 CARPOT & 1SPACE, NORTHWOOD HIGH, NO MELLO ROSS, ASSOC POOL, TENNIS, NEWPAINT.”

This guy must be smoking that CARPOT, or maybe he was sniffing the NEWPAINT. Whatever his malfunction, this price is ridiculous. Why would a realtor even take this listing? There are no upgrades here. The kitchen in the picture appears to have white tile from the 80’s. Here we have a unit being offered for sale for $131,000 (30%) more than an identical unit — an identical unit which is probably also overpriced. He even managed to price higher than another crazy neighbor. How would you even come up with that $570,000 number? I am dumbfounded. Maybe the new litmus test for the WTF award should be a complete sense of confusion on my part as to what the seller was thinking? WTF?

Asking Price: $649,800

Purchase Price: $732,000

Purchase Date: 12/6/2005

Address: 49 Concierto, Irvine, CA 92620

Beds: 2

Baths: 2.5

Sq. Ft.: 1,850

Year Built: 2005

Stories: 2

Type: Condominium

View: Mountain, Park or Green Belt

County: Orange

Neighborhood: Woodbury

$/Sq. Ft.: $351

MLS#: S487805

Status: Active on market

On Redfin: 19 days

From Redfin, “Exquisite Woodbury Townhome w/ Courtyard Entrance & Beautiful Mtn. Views featuring 2 bd/2.5ba PLUS DEN, 2-car attached Garage & Sun Splashed Patio! Upgrades include Tile Flooring * Designer Carpet * Custom Paint * Upgraded Cabinetry * Integrated Speaker System in Living Rm. * Custom Window Treatments including Plantation Shutters & French Doors! Sparkling Gourmet Kitchen has Vaulted Ceilings * GRANITE COUNTERS w/ Tumbled Travertine Backsplash * SS Appliances & French Cabinetry! Enjoy Resort Style Amenities!”

We know this isn’t 19 days on the market because Zovall listed this property as a comparable for sale in his post Treo – What’s Flippin’ in Woodbury – UPDATE #1. The property was listed for sale at $725,000 on November 6, 2006, so that 19 days is more like 190 days.

.

.

This property’s owner has a mailing address for a different property also in Woodbury, so I assume this is a flip gone flop. There is a first mortgage on the property for $585,000, and no second, so this shouldn’t be a short sale. Basically, some foolish buyer will get to negotiate this flippers loss. The starting loss amount is $121,188, assuming a 6% commission.

Stop and ponder that for a moment… This property has lost over 20% of its resale value in 18 months. This flipper put $147,000 of his own money into the deal, and he is going to escape with $25,000 if he is fortunate. Leverage is a beautiful thing when an asset is appreciating, but it is an unmitigated disaster when values move in the wrong direction. This guy better sell soon before it becomes a short sale.

Hey, It’s a jungle out there.

Speaking of concerts… I used to love these guys…

Welcome to the jungle

We got fun ‘n’ games

We got everything you want

Honey we know the names

We are the people that can find

Whatever you may need

If you got the money honey

We got your disease

Chorus:

In the jungle

Welcome to the jungle

Watch it bring you to your shun n,n,n,n,,n,n,,n,n,n,,n,n,,n knees, knees

I wanna watch you bleed

Welcome to the Jungle – Guns N Roses

Link to orginal concert performance.

Asking Price: $600,000

Purchase Price: $499,000

Purchase Date: 5/20/2004

Address: 10 Melody Lane, Irvine, CA 92614

Beds: 2

Baths: 2

Sq. Ft.: 971

Lot Sq. Ft.: 3,240

Year Built: 1980

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $618

MLS#: S479850

Status: Active on market

On Redfin: 65 days

From Redfin, “Charming Cottage Home! Sought After Single Level Detached Home In Woodbridge Community. Bay Window Overlooks Greenbelt. Living Room Has Cathedral Ceiling & Fire Place. Extra Features Includes: Central Air, Ceramic Tiles Floors In Both Bathrooms & Kitchen. Enjoy Living In The Beautiful Woodbridge Community With Access To Both Lakes & Lagoon.”

So here we have an outside-the-loop tiny cottage asking over $618 / SF. WTF is this seller thinking? Perhaps they have had too many friends over…

.

.

What would you think if I sang out of tune,

Would you stand up and walk out on me.

Lend me your ears and I’ll sing you a song,

And I’ll try not to sing out of key.

Oh I get by with a little help from my friends,

Mmm I get high with a little help from my friends,

Mmm I’m gonna to try with a little help from my friends.

With A Little Help From My Friends — The Beatles

It is said that speculative manias like the one gripping our housing market are a form of mass insanity. I have speculated it is a manifestation of Southern California’s Cultural Pathology. Whatever the truth, the results of herd mentality can be seen in our local housing market.

Asking Price: $639,800

Purchase Price: $183,500

Purchase Date: 2/2/1995

Address: 29 Marsala, Irvine, CA 92606

Beds: 3

Baths: 2

Sq. Ft.: 1,070

Lot Sq. Ft.: 2,975

Year Built: 1995

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Westpark

$/Sq. Ft.: $598

MLS#: S483960

Status: Active on market

On Redfin: 36 days

From Redfin, “Desirable End of Cul-De-Sac Private Location. Single Level. Highly Upg raded with Hardwood & Designer Ceramic Tile Flooring, Upgraded Wall-to-Wall Carpeting, Tile Kitchen Counters, Microwave, Dishwasher & Oven Included, Plantation Shutters, Custom Drapes, Window Blinds, Mirrored Wardrobes, Rollup Garage Door, Vaulted Ceilings, Recessed Lighting, New Custom Paint, Built-in Entertainment Center and Large Private Backyard”

Two bedrooms, 1000 SF and they want $598 SF? WTF! They didn’t even update the old white tile with granite tops.

.

.

(No Pictures Available, but it is identical to the other two listings)

Asking Price: $599,900

Purchase Price: $595,000

Purchase Date: 12/16/2005

Address: 15 Marsala, Irvine, CA 92606

Beds: 2

Baths: 2

Sq. Ft.: 1,000

Year Built: 1995

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Westpark

$/Sq. Ft.: $600

MLS#: S489460

Status: Active on market

On Redfin: 1 day

From Redfin, “Single level detached home with 2 private yards. Cathedral ceilings, p lantation shutters, designer carpeting, travertine flooring in the kitchen. Living room with fireplace. Mirrored wall in living room. Mirrored wardrobe doors and built-in shelves in closets.”

IMO, this is the buyer / flipper / seller who started this mess, but more on that later…

Asking Price: $619,900

Purchase Price: $227,000

Purchase Date: 5/25/1999

Address: 6 Marsala, Irvine, CA 92606

Beds: 2

Baths: 2

Sq. Ft.: 1,000

Year Built: 1995

Stories: 1

Type: Single Family Residence

County: Orange

Neighborhood: Westpark

$/Sq. Ft.: $620

MLS#: S483966

Status: Active on market

On Redfin: 36 days

From Redfin, “BEAUTIFUL TWO BEDROOMS AND TWO BATHROOMS SINGLE STORY DETACHED HOME IN WEST PARK 2, LOCATED IN A QUITE AND INTERIOR NEIGHBORHOOD. LAMINATE WOOD FLOORING IN LIVING ROOM, DINING ROOM, AND KITCHEN. PLANTATION SHUTTERS AND NEW CUSTOM PAINT, THROUGHOUT THE HOUSE. NICE BACKYARD AND SIDE YARD, VERY OPEN FLOOR PLAN. SHORT WALK TO SCHOOL, THREE ASSOC. POOLS AND SPA, TWO TENNIS COURTS AND PARKS. TWO CAR ATTACHED GARAGE.”

ALL CAPS IS REALLY ANNOYING! This is another tiny, 2 bedroom unit where they didn’t bother to update anything.

Let’s look at these three properties and see what we can determine. First, the $600 SF pricing is ridiculous. Most of Westpark is priced in the $400s per SF, and even the overpriced smaller products are in the low $500s. There is no justification for thinking $600SF is a good price. For the same $600,000 asking price, one could buy 37 Alcoba, 1407 SF, 3/2. For $500,000, one could by 6 Marbela, a 1083, 2/2. Both of those Westpark properties give much more for much less, and they have been on the market for over 280 days. So why do the sellers on Marsala believe they can get $600 SF?

Perhaps this is an instance of setting one’s own comps. The seller at 15 Marsala paid almost $600 SF at the end of 2005. I would imagine when the other two properties went on the market last month, they used 15 Marsala as a comparable, and they figured their properties must be worth $600 SF.

Are you starting to get a sense for how the “greater fool” theory operates? 15 Marsala was a fool when they paid $600 SF at the end of 2005, now they and two of their neighbors (dumb, dumber, and dumberer) all need to find a greater fool to buy them out.

For their collective greed and stupidity, for believing their little neighborhood is “different,” and for setting their prices 20% to 30% above the market, all three sellers on Marsala get our WTF Award.

Asking Price: $429,000

Purchase Price: $495,000

Purchase Date: 6/04/2004

Address: 34 Springacre #5, Irvine, CA 92614

Beds: 2

Baths: 1.5

Sq. Ft.: 1,362

Lot Sq. Ft.: 1,348

Year Built: 1980

Stories: 2

Type: Condominium

County: Orange

Neighborhood: Woodbridge

$/Sq. Ft.: $315

MLS#: P557313

Status: Active on market

On Redfin: 119 days

Unsold in 90+ days

Sale Date 04/30/2004

$/Sq. Ft. $363.44

Sale Price $495,000

1st Loan $396,000

2nd Mtg. $74,250

Lender Cal Coast Mtg Corp

From Redfin, “Welcome home to this exquisite end unit, in the sought out community o f Woodbridge. Built in 1980 and completely upgraded in the past 2 yrs. Marvel @ the detail put N2 top of the line flooring, recessed lighting, cabinets in both baths & the kit, stainless steel appliances, jack & jill bedrooms with dual sinks, no stone left unturned, it is an absolute must 2C! Enjoy the ambiance of a cold winter night around a cozy fireplace or the privacy of tanning on your own private sun deck. Short Sale!”

I think this realtor has been sending too many text messages…

.

.

The theory has been floated by some that these short sales are deliberately priced low to generate interest and create a bidding war. In the heyday of greater fool market psychology this might have worked. At 119 days on the market, the bidding war is off to a slow start. This is priced about $40,000 lower than more recent comps for smaller units. It is $80,000 below comparables of similar size. At this price point, that is nearly 20% off!

It has to be hard for sellers to maintain denial when a property can be priced 20% below comps and sit on the market for 119 days. I don’t have the asking price history, so maybe this was a recent drop, but it still sits there unsold. It goes back to the point I was making in the post The Day the Market Died, the lower end of the market is dead — there are almost no resales at any price. The builders get to cheat with financing incentives, etc., but resellers have to find qualified buyers with downpayments: none are available.

.

.

Every time I saw this address, I kept hearing the theme song to Green Acres in my head. Click the link and enjoy.