This WTF award winner just keeps on getting better. Now the property is now for lease at $25,000 a month! Anybody want to guess what the owner’s carrying costs are? Personally, If I were going to spend that kind of money on rent, I would take this beachfront property in Laguna Beach, but that is just me. I don’t know… Irvine tract home, beachfront in Laguna Beach… That is a tough choice…

Asking Price: $5,200,000
Purchase Price: $3,458,000
Purchase Date: 7/29/2005
Address: 25 Cobalt Sky, Irvine, CA 92603
Beds: 5
Baths: 5.5
Sq. Ft.: 5,700
Lot Sq. Ft.: 21,000
Year Built: 2005
Stories: 2
Type: Single Family Residence
View: City Lights, Mountain, Panoramic, Park or Green Belt
County: Orange
Neighborhood: Turtle Ridge
$/Sq. Ft.: $912
MLS#: S468569
Status: Active on market
On Redfin: 181 days
From Redfin, “There is no lack of high quality appointments evident as you survey th is gracious home of luxury. Each room opens onto a gorgeous courtyard creating an excellent flow, perfect for entertaining. Richly appointed kitchen & nook complete with elegant cabinets, beautiful center island with top of the line slab granite countertop & state of the art stainless steel appliances. A wine cellar for the connoisseur. Beautiful backyard complete with designer inspired pool & loggia perfect for your parties.”
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This property was first profiled at OC Fliptrack, but I wanted to revisit it because it is revealing of the mindset of sellers accustomed to a bull market. First, to put this price in context, lets look at the identical house available from the builder on the same street:

Price: $3,595,000
28 RESERVE
Irvine, CA 92603
Beds: 5
Baths: 5.5
Sq. Ft.: 5,699
Lot Sq. Ft.: 14,441
Year Built: 2007
Stories: 2
Type: Single Family Residence
County: Orange
Neighborhood: Turtle Ridge
$/Sq. Ft.: $631
MLS#: S451762
Status: Active on market
On Redfin: 317 days
Look at these two properties. They are almost identical. What would make one seller believe he could possibly sell his home for $1,700,000 more than an identical home on the same street, particularly when the lower priced home has been on the market for almost a year?
In a bull market, prices rise because bidders constantly raise their offers. Sellers can set a price, even a ridiculous one, and know they will eventually sell because the market will come to them. These are unique properties, so the supply is very limited. This seller has reasoned that the builder will eventually sell their home, then he will have the only property on the street available for sale. Buyers will have to pay his price. This mentality might have been successful in 2004 or 2005, but right now, it makes this guy look like an idiot — which he is.
The collapse of easy credit financing at 10 times income will stop this sale from ever occurring. Bidders simply will not be able to raise the money to buy this home. Yes, it is possible some very rich individual may simply pay cash for a home like this, but with many great estates to choose from for $5,200,000 why would they buy an Irvine tract home?
This is not exactly the worst place to be trapped by falling housing prices, but the seller should save himself the embarrassment of putting this house for sale at a ridiculous asking price. Maybe now that this post has humiliated him publicly, maybe he will take it off the market — I doubt it, greed springs eternal.
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Hope springs eternal in the human breast;
Man never Is, but always To be blest:
The soul, uneasy and confin’d from home,
Rests and expatiates in a life to come.
-Alexander Pope,
An Essay on Man, Epistle I, 1733