The Trees are Always Greener

In Irvine, the trees are always greener, and like Lake Wobegon, “the women are strong, the men are good looking, and all the children are above average.” After all, everyone wants to live here; which is, of course, why house prices will never go down in Irvine. Except maybe here…

Asking Price: $618,800IrvineRenter

Purchase Price: $645,000

Purchase Date: 4/25/2005

Address: 4661 Green Tree Lane, Irvine, CA 92612

Beds: 3

Baths: 1.75

Sq. Ft.: 1,560

Year Built: 1969

Stories: 1

Type: Condominium

Rollback

View: Other

County: Orange

Neighborhood: University Park

$/Sq. Ft.: $397

MLS#: S479186

Status: Active on market

On Redfin: 105 days

Unsold in 90+ days

On Redfin, “UNBELIVERABLE PRICE , VIEW OF GREENBELT , 3 BEDROOM 1.75 BATH OPEN CATHERAL CEILING LIVING ROOM W/ INVITED FIREPLACE, FORMAL DINING ROOM, KITCHEN WITH VIEW OF YARD AND GREENBELT. MASTER BEDROOM WITH PRIVATE PATIO. U. C. IRVINE, UNIVERSITY HIGH SCHOOL ARE CLOSED BY. THIS HOME WILL BE SOLD IN ‘AS IS’ CONDITIONS. CALL L/A FIRST BEFORE SHOWING. THANK YOU FOR SHOWING.”

“”UNBELIVERABLE” I don’t know if I believer it either. What is an INVITED fireplace? Did the fireplace seek permission to come visit? Is it staying? Nice to know things are CLOSED by. And thank you for the ALL CAPS as it makes the description it so easy to read… not.

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The lack of a second full bathroom is a problem, but there are no other factors working against this place other than the general market environment. This property is in a nice in-tract location very close to the school, the community park, and the large community pool.

This property has been on the market for 105 days at a price lower than its 2005 purchase price. The price will need to come down further to have a sale. If this seller gets their asking price, they will still face a loss of $63,328 assuming a 6% commission. The loss will probably be closer to $100,000.

The rollbacks have clearly gone past 2005, and we are now in 2004 territory. These rollbacks are getting easier to find.

New Mountain High

Now his life is full of wonder but his heart still knows some fear

Of a simple thing he cannot comprehend

Why they try to tear the mountains down to bring in a couple more

More people, more scars upon the land

John Denver — Rocky Mountain High

Link to YouTube Video

I found a listing with an American Flag to celebrate our nation’s birthday:

Sierra Nuevo Kitchen

IrvineRenterAsking Price: $1,435,000

Purchase Price: $620,000

Purchase Date: 3/15/2002

Address: 19502 Sierra Nuevo Road, Irvine, CA 92603

Beds: 4

Baths: 2.5

Sq. Ft.: 2,011

Lot Sq. Ft.: 12,000

Year Built: 1971

Stories: 1

Type: Single Family ResidenceWTF

View: Park or Green Belt

County: Orange

Neighborhood: Turtle Rock

$/Sq. Ft.: $714

MLS#: P585457

Status: Active on market

On Redfin: 1 day

New Listing (24 hours)

From Redfin, “WOW, magnificant dream setting with one of a kind lot. Over 1/4 acre of land in Turtle Rock. Accross from HOA park and pool. All new appliances, beautifully remodeled throughout. New windows and doors. Walk to award winning schools. This kind of house and lot are rarely available. “

Did you see that enormous lot? It was over 1/4 of an acre! WOW! That’s an estate, isn’t it. magnificant!

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Kool Aid Man

Are you kidding me? We have area comps going for less than 2004 and 2005 prices, but somehow this house has appreciated 131% since 2002. Even by Turtle Rock standards, $714 / SF is ridiculous.

For drinking way too much kool aid, for getting high on greed, and for having the nerve to list at an obscene price, the sellers at 19502 Sierra Nuevo Road win our WTF Award.

Happy Birthday

Happy Birthday America. Yes, I know it is a day early, but I didn’t want any of you to miss this listing because you were out enjoying your holiday activities. I would also like to wish this listing a happy birthday. It is more than one year on the market.

Sierra Roja Kitchen

Highest Asking Price: $2,100,000

IrvineRenter

Current Asking Price: $1,980,000

Purchase Price: $742,000

Purchase Date: 11/7/2003

Address: 5512 Sierra Roja Road, Irvine, CA 92603

Beds: 5

Baths: 4

Sq. Ft.: 3,600

Lot Sq. Ft.: 5,833

Year Built: 1970

Stories: 2

Type: Single Family Residence

View: HillsWTF

County: Orange

Neighborhood: Turtle Rock

$/Sq. Ft.: $583

MLS#: S446818

Status: Active on market

On Redfin: 369 days

Unsold in 90+ days

On Redfin, “Custom home rebuilt- High quality building materials include crown mouldings, stone flooring, Dramatic entry, Large Dining Room, gourmet kitchen, walk-in pantry, granite, stainless steel appliances, convection double ovens, stone work, recessed lighting, A/C and heating. Giant Master Bedroom, walk-in closet-fabulous bathroom forever hill view. .award winning schools (university high)NO MELLO ROOS-LOW ASSN $91.00/MO -OWNER ANXIOUS. .JUST COMPLETED”

I’ll bet the owner is ANXIOUS. Perhaps they could lower their anxiety by lowering the price a bit more…

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This listing needs to be nominated for the WTF Hall of Fame. I have never seen a listing that left me so perplexed, so speechless that my mind can’t even comprehend it…

I am in such shock, I can’t even find the energy for a rant…

I sit here staring at the computer, my mouth dropped in disbelief…

I see the asking price; I see the purchase price, and it just does not compute…

O

M

G

Is this listing for real? I need to check another source… Zip Realty… There it is… That is really the asking price…

(after 10 minutes to compose myself…)

I need to create a new category for this listing. What do you call a price that is even beyond WTF? This seller is clearly suffering from a kool aid overdose.

Kool Aid Man

This seller is locked in a housing bubble time warp. This listing hit the market on June 24, 2006, almost the exact peak of the bubble here in Orange County. It appears to be empty, so add a year’s worth of carrying costs to the investment cost. You would think after failing to sell for a whole year — a year which saw declining home prices — this seller might consider lowering the price a bit. Personally, I think it might be a tough sale even if the asking price were cut in half, but what do I know?

This is pure speculation on my part, but a couple of weeks ago when I profiled Turtle Ridge, there were a couple of new posters who seemed to take issue with my analysis. One of these posters has the same first name as the owner of this Turtle Rock property: Coincidence? Let’s judge by the comments.

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I wish to offer special thanks to JoonB who emailed me about this property, and to squareround for the complete pricing data below:

5512 SIERRA ROJA ROAD, Irvine, CA 92603**

Price Reduced: 10/17/06 — $1,850,000 to $1,795,000

Price Reduced: 12/05/06 — $1,795,000 to $1,749,999

Price Reduced: 03/27/07 — $1,749,999 to $1,685,000

Price Reduced: 05/10/07 — $1,685,000 to $1,625,000

Price Increased: 06/27/07 — $1,625,000 to $2,100,000

Price Reduced: 06/28/07 — $2,100,000 to $1,980,000

Del Mar Rollback ** Sale Update **

Sale Price: $655,000

** SALE UPDATE **

This house sold on 6/1/2007 for $655,000. This was one of our first identified rollbacks, and the sale price proves it. If the seller paid a 6% commission, they lost a total of $59,300.

As I had speculated below, the other property at 3 Del Mar has reduced the asking price significantly. This property likely will become a rollback as well.

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Del Mar Kitchen

Asking Price: $690,000

Purchase Price: $675,000

Purchase Date: 9/23/2004

Address: 8 Del Mar #4, Irvine, CA 92602

Beds: 3IrvineRenter
Baths: 2.5
Sq. Ft.*: 1,601
Year Built: 2002
Stories: 2
Type: Condominium
Neighborhood: Northpark
$/Sq. Ft.*: $431
MLS: S479457
Status: Active on market
On Redfin: 43 days

2006, gone! 2005, gone! We are looking at a buyer from 2004 who will be selling at a loss in Northpark. If our seller gets their asking price (unlikely) assuming a 6% commission, they will lose $26,400.

Rollback

From Redfin: “Move right in to this charming 3 bedroom 2 1/2 bath detached home. The gourmet kitchen has granite countertop and backsplash, cherrywood cabinets, built-in wine cooler and stainless steel appliances. There’s a fireplace and built-in media niche in the livingroom. The master bedroom has a walk-in closet and a jacuzzi bathtub. Relax and enjoy a cool drink in the comfortable low maintenance side yard. Convenient upstairs laundry. Stainless steel refrigerator and washer/dryer are included.”

This is a nice, updated property. It is still pretty expensive at $431 / SF, but it is a value relative to the pricing in Northpark. Compare it to this property:

3 Del Mar Front3 Del Mar Kitchen

Old Asking Price: $870,000

New Asking Price: $769,000

Purchase Price: $750,000

Purchase Date: 4/27/2005

Address: 3 Del Mar, Irvine, CA 92602

Beds: 3
Baths: 2.5
Sq. Ft.*: 1,813
Year Built: 2002
Stories: 2
$/Sq. Ft.*: $480
MLS: I703772
Status: Active on market
On Redfin: 55 days

This seller / flipper wants $180,000 more for a house that isn’t updated. Since this house is empty, and the comps are about to flatten him, I suspect this seller will find the motivation for some significant asking price reductions. Also, look out for it being offered as a rental — a sign of deep denial.

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David Lereah- Change of Heart?

May 2007 saw the reasonably-well publicized departure of David Lereah as “Chief Economist” of the National Association of Realtors. To understate the point, Mr. Lereah has been the object of plenty of attention in the housing blog community. Most of the attention was negative, and resulted from the frustration of repeatedly seeing and hearing him quoted in the mainstream media as something of an impartial expert regarding the condition of the housing market. Perhaps not surprisingly, Mr. Lereah tended toward the positive in his interpretation of housing sales data and future predictions, even when signs of weakness began to appear in the market. This must-see graph captures some of his better quotes, and when he offered them.

For those that didn’t explore the first link, Mr. Lereah published a book in early 2005 entitled “Are you missing the Real Estate Boom? Why home values and other real estate investments will climb through the end of the decade- and how you can profit from them.”

In 2006, this book was retitled “Why the Real Estate Boom will not bust- and how you can profit from it. How to build wealth in today’s expanding real eastate market.”

It is therefore interesting and amusing to see Mr. Lereah change the spin on his way out the door, and begin to apply some revisionist history. In this interview with Bob Brinker from early May, he even goes so far as to chastise the “speculators who strayed from fundamentals…and got us in trouble.”

David Lereah Interview

[audio:https://www.irvinehousingblog.com/wp-content/uploads/2007/06/DavidLereah.mp3]

If you want to skip ahead, his comments regarding Southern California arrive just after the 13 minute mark. Here are the highlights:

“L.A., San Diego, they are all out of whack right now. Prices got too high for the median household…there’s going to be a long period here, of recovery. Homesellers have been stubborn, they haven’t been reducing their prices as fast as their Northeast counterparts. Home sales are way down right now, and it will take price decreases- sellers lowering their prices- to bring buyers back to the marketplace. I suspect we’re not going to see any type of recovery there until at least 2008.”

While these decidedly negative comments may not sound particularly surprising to many of us, they are coming from the most prominent market cheerleader of the past several years, bar-none. The ‘soft landing’ holdouts may find this particularly sobering (and they should).

Despite this apparent dose of rationality, David still makes some bizarre remarks that are worth listening for:

  1. If speculators wouldn’t have come in to Vegas…

  2. Commissions are Commissions

  3. The baseball team the could save D.C. real estate

  4. Fingers and toes crossed, X2

Bob didn’t exactly give him a tough interview, but having David on the hook for more than a glib, obfuscated single quote was worth it to me.

It will be interesting to see how David’s heir apparent, Lawrence Yun, does carrying the torch as the market continues to correct, unwind, fall apart, or whatever you want to call it. Donning the skirt and waving the pom poms will require even more gumption in the months ahead.