Merry Christmas

Merry Christmas from the Blue Move household! Be it renter or owner, we all should be thankful for the people in our lives and everything else, for that matter. To the right you will see a Christmas card drawn by by son, done in the sand right here in Laguna Beach. Forget about all the economic analysis and OC home prices for today and enjoy those around you!

Have a festive holiday!

Fanta-sea Listing of the Week

UPDATE: After being listed for 3 years, this home was withdrawn from the market at the end of 2010.

Given the state of the RE market in Laguna Beach, this listing at 1177 Temple Hills Drive floored me. $3.7M for a 2bd house built in 1933 that comes with a "legendary cactus plant." Is it a cactus plant that blooms gold bars?? No? Ok, is the cactus planted on top of an underground vault filled with gold? No? Uhhh, I don't get it. Views of the ocean? Yes, but then again, most ocean view properties I have been following are languishing and subject to repeated price reductions.

The lot is large - 16,000 sq. ft. but still I predict that this house will sell for no where near the listing price, if it sells at all. If there is an open house, I will try to get a picture of the cactus!

Million Dollars Off!!!

As the week winds down, one highlight was a few days ago when one agent emailed me that one of the Newport Beach (CA) MLS listings was now "One Million Dollars off". How great is that? Sure the asking price on a particular house has nothing to do with its real present value, but after the last 5 years it is just refreshing to get emails from RE agents with desperate language. One Million Dollars Off. I was smiling all day. There must be more where that came from.

And you know what else? That house likely still is overpriced!! It won't sell even at the present "one million off" price. I do have to give the seller credit though, as many other sellers are making the mistake of slowly chasing down the market prices but never quite taking enough of a price reduction to get their house sold. Net result - a long slow painful path of price reductions when the house long ago could have sold if priced right at the time. Yes, sellers have inertia. Big Inertia.

Here's to a happy holiday season for all and to good house hunting in 2008!!

Flip Fantasy

Here is some local flavor of note. 1035 Coast View Drive just came on the market, almost exactly a year after it was purchased for $1.6M.

The new price?? A whopping $2.35M. I'll try to look at the house in person soon, but from the looks of the MLS pictures, little more was done than some fresh paint, new wood floors, bathroom redos and a new kitchen. Given that prices have gone DOWN in Laguna Beach since 2006, me thinks this asking price is pie in the sky, but we'll follow this one and report back in the future.

Being generous and assuming that the remodel added $300K in value, then at most it would be worth $1.9M, but......some would say that the $1.9M should be discounted because the market has fallen. How much of a discount? 20% would result in a $1.52M selling price. Stay tuned.

Stats Show Crash in Upper End Laguna Beach Housing

Average price per square foot is a good indicator of market trends. Per our good friends at Trulia.com, Laguna Beach is showing a -46.5% DECLINE in average price per square foot as compared to earlier in the year. It is an Orange county home sale!

Specifically, from August - November 2007, the average price per sq. ft. for a 4 bedroom house in Laguna Beach dropped to $647 from $1,210 in June-August of 2007. You can see the stats here.

Thud. Negative 46.5%. Huge decline. Huge trend. It's like the day the earth stood still for sellers in Laguna Beach. The houses I have been monitoring have shown this trend to be true. Of the 4 bedroom houses I've watched, none have sold, and some have been withdrawn from the market. With some analysts predicting a worse 2008, I wonder how low it could go! Orange county home prices show no sign of stopping their slide.

Flip Flop

Another data point on OC home prices. I hit a few open houses last weekend up in the area of Terry Road, the neighborhood by Nyes & PCH. I went into an open house and asked "What ever happened to the house for sale over at 2800 Terry?"

The agent at the open house said that the house had been taken off the market. Must be waiting for the spring selling season in hopes of getting an offer.

I looked at the house from the outside and it certainly looked empty. The last asking price on the MLS was about $2.5M, which is very high for the neighborhood. The entire neighborhood has inconvenient beach access and suffers from PCH traffic noise. The next time you get OC quotes on comps from an agent, take them with a grain of salt if they are before October!

The house is new, but it is pretty vanilla inside - scattered on three floors and really lacking in design energy or excitement. Methinks it won't be going anywhere fast in 2008.

Prime Beach Properties Roll Back To 2005 Prices

Blue Lagoon is a condo complex located just to the north of the Montage resort, between PCH and the beach. A look at the listings reveals price rollbacks to 2005 levels:

15 Blue Lagoon - Listed at $1.69M; Purchased 9/05 for $1.69M

4 Blue Lagoon - Sold $970k; Purchased 8/05 for $1.05M

Is this the bottom or just the first cracks in the Laguna Beach housing market?

Key Analyst Reports This Downturn Will Be Worse Than 1990s

In the November issue of Builder magazine, Ivy Zelman reports that "I firmly believe that this housing recession will substantially reduce consumer spending in 2008 and 2009. I also believe that this downturn is much more severe in many markets than the 1990–1991 housing recession and is much wider in scope." Zelman is a highly respected housing analyst who warned of the current housing market woes well in advance. You can read the article here.

Zelman also reports that consumers have lost complete confidence in housing, and that "recent results speak to the severity of this downturn. Sales have nearly disappeared in many metro markets." Given that Laguna Beach is more linked to consumer spending than other OC areas, I wonder if it will get hit the hardest. The first things to go when consumer spending tightens are second homes and luxury vacations.

Ouch, that sounds like us, right here, right now.

Canary in a Coal Mine

In the old days, coal miners would take a canary into the mine as an early warning system - the bird would pass out if the air couldn't sustain life, giving the miners an early warning to get out of the mine. Laguna Beach real estate is no different.

Witness our own Laguna Beach Canary, 2616 Victoria Drive. Bought in March 04 for about $1.5M, it now sports an astounding $4.3M price tag after an extensive renovation. I doubt this flipper spent more than $1m on it, but in any event, it has been listed 51 days already. It is in an awesome location quite close to the beach, but it lacks the common area amenities found in local gated neighborhoods. Given prices in LB have slid back to 2005 or so, I'm wondering if this one will sell at something like $2.2M-$2.5M.

Stay tuned for our canary watch! In the meantime, keep an eye on Laguna Beach homes for sale!

Chapman Economists Predict OC Recession in 08 and 8% Loss in Home Prices in 08

The OC, normally a solid job engine, is headed for a recession in 2008, according to economists at Chapman University. Chapman economists Esmael Adibi and Jim Doti have been predicting job growth in Orange County for 30 years. They say job numbers will turn negative starting in the second quarter of 2008 and stay negative in the third quarter. That qualifies as a recession, according to Chapman’s definition. “There is little doubt that the economy is hurting from the demise of real-estate related activity,” the economists write. “It is clear that construction and financial activities are the weakest sectors of the economy followed by trade, transportation and utilities which are indirectly affected by the housing market.”
Most importantly, they also foresee an 8.1 percent drop in the median price of a resale single-family home in 2008. Applied to a Laguna Beach home bought today for $2,000,000, that would mean a $160,000 loss in one year. Scary for homes in Laguna Beach.

You can view the story here.

Huge Resale Losses in Laguna Beach

Cal State Fullerton professor Michael LaCour-Little has done a study looking at recent sellers of O.C. homes who sold for less money than they paid. (And that’s losses without transaction costs figured in.) Laguna Beach was the top lower in Orange County with a staggering average of about $577,000 per money losing home sale.

He also found that 37.6% of all sales he tracked resulted in a loss and typical ownership tenure of losers was two years.

These deep losses weren’t the most startling result to LaCour-Little. Rather, he was startled by how the size and scope losses grew as the year progressed. For example, losing sales were slightly more than 20% of deals tracked in January but nearly 70% in October. “I didn’t expect to see so much of a time trend,” LaCour-Little said.

You can get the full story here.

Fanta-sea Listing of the Week

Look at this Laguna Beach property that was just listed. Yes it.... is a ..............cartoon. A $2,800,000 cartoon. As shown, the cartoon shows what a house would look like IF one was built using the approved plans that come with the property, located at 940 Hillcrest Drive, Laguna Beach.

I haven't driven by to see if the property is an empty lot, but the current owner purchased the property in October of 2006 for $1.45 million. Well now, since the seller has approved plans, there must be some added value, right? Of course!

Even though prices in Laguna have been diving, this property is priced at $2.8M!! That's right, those plans must be worth at least $1.35 MILLION DOLLARS! A seller's fantasy land? Time will tell and I'm betting there will be plenty of time to tell as this listing may languish.