Tuesday, January 29, 2008

Enough Already with the BS!

Is it just me or has the mantra of local real estate agents taken on a more drastic tone that is intended to mislead home buyers? You've probably had the same experience - you go to an open house, ask about the price of the house and the bad market and you get an answer that is not on point and intended to distract you from the TRUTH, which is that the house you are looking at is probably worth less, possibly much less that the asking price. It is no secret that Laguna Beach home prices are down, down big, yet I've never heard a realtor actually say it.

Case in point. Michael Gosselin of Surterre Properties says in a January 15, OC Register article that "...there are some bright spots, too. In Laguna Beach, our median price for 2007 is actually up from 2006, albeit by just a small amount. Based on the MLS data, the median price in Laguna Beach rose from $1,655,000 to $1,700,000, or a little less than 3%." I'd like to see that data, Mike, because the media seems to be reporting a much different picture.

I checked Dataquick's December numbers posted by the OC Register. December 07 median price for a home in Laguna Beach is down a full 14% from a year ago. Up 3%??? Not. Down 14%. The most current numbers in a dynamic market can't be disputed. Even if somehow Mike was referring to the median sale price for all 12 months of 2007, he is still wrong. That number, while probably a meaningless indicator of the current state of the market, is also DOWN 4.4% per the OC Register and Dataquick. Again, comparing the median price for ALL of 2007 to ALL of 2006 really is not too close of an indicator of where the market stands TODAY. For that you want the Dec 07 median v. the Dec 06 median that shows a decrease of 14%.

What is that in money terms? Well, it means the owner of a median home would have lost over $150,ooo in 2007 - more than $10,000 per month!

Some "bright spot"!!!

Monday, January 28, 2008

31985 Virginia Way

Here's another retread that didn't sell in 2007. This place was bought for about $930K in 2003. Given property in Laguna has slid backwards to 2004 prices, there's no way this thing is a good deal at the asking price of $1,329,000. The lowest listing price was LESS in 2007 and it didn't even sell at that. Hello, bank, are we reaching? Do you all have calculators over there? Also, the house is located in South Laguna, where things have historically been less expensive.
The wood floors have got some wear and the stone work is kind off odd. There is no garage. There is no master bath. The bedrooms sure are small. PCH and its NOISE are mere feet away. The house feels small.

The extra bedroom with a "full" bath is so small it might as well be a closet. The bathtub is located in a tunnel up above floor level.

Really, the bathtub is in a tunnel.

Inside the house.

Really disappointing.

Tuesday, January 22, 2008

Zillow Index Shows 14% Decline for Laguna Beach

Hot of the presses:

The Zillow index for Laguna Beach shows a decline of about 14% year over year. For someone with a $2,000,000 house value as of last January, the value has declined a whopping $280,000 in 12 months. You can view the index here.

Think about it. That's a $23,000 or so loss EVERY MONTH for a year. Yikes!! ....and the trend is down. Look out below for Laguna Beach home prices. This could be good for Laguna Beach real estate agents, as lower prices eventually will mean more sales, and right now there are pitifully few sales.

Monday, January 21, 2008

31401 Holly Street, Laguna Beach - WTF?

This house gets the "Market Chaser" award. Remember back in the 90's there were sellers who just couldn't lower their price, only to reluctantly lower it too late, after the market had gone down yet again? These people slowly reduced their prices but never quite caught up with the market. The result? NO SALE and losses galore.

Well, 31401 Holly Street, Laguna Beach may be firmly going down that road. Listed for over 6 months, the owner recently cut the price from $2,900,000 to $2,700,000. I looked at the house last weekend. OMG is it just awful. The showing agent was quick to point out that it has a yard and a "great" location. The view is good, but that is counteracted by the closeness to PCH, which on Sunday sounded really loud from the house's deck. Not only that, the house needs maintenance badly and remodeling in a big way. And it smells. And it is dirty. And the quality of the decorative detail is not top notch. Not $2M material by a long shot. $1,600,000? Maybe. The way OC home prices are declining and the way Laguna Beach home prices are declining, I wouldn't look for this to sell anytime soon.

Good luck with that.

Tuesday, January 15, 2008

685 Nyes Place - Average with a good view

Last Saturday, I stopped into the open house at 685 Nyes Place.
Located high up on the hill, it had an impressive view, but that's about it. This is in the Arch Beach Heights part of town, waaaay up above the Montage Resort.
The kitchen was redone in a half-hearted fashion, with new cabinet fronts stuck on ancient cabinet bodies. The place has a less than inspiring design and really struck me as "cheesy tract home" in feel. Check out that cheesy sandstone slapped around the front door. Why dear, did Frank Lloyd Wright design this one? NOT!

The street out front has heavy traffic and is not flat so it is not very kid friendly. The outside decks hint at needing work, and a coat of new paint is trying to hide it. The house is vacant, so someone really should be motivated to sell.

At a listing price of $1.89 million, the house on 685 Nyes Place, Laguna Beach, strikes me as overpriced. What will it sell for? Given the trend in recent OC home prices, I 'm wondering why it would sell for anything near to the listing price. Get realistic! Good luck seller, you'll need it!

Sunday, January 13, 2008

581 Diamond Street Update - Foreclosure Confirmed

Had time Saturday for some open houses. I stopped at 581 Diamond even though it wasn't held open because I saw a legal notice on the front door. Sure enough, it was a foreclosure notice. So it is confirmed - it is a foreclosure seller who is trying to unload the property with an asking price more than $1,000,000 LESS than the prior sale price, which was only only last year. I wonder if this is a sign that banks will price cut much more this year, which will put severe downward pressure on prices on Orange County home prices and by default, Laguna Beach home prices.

Wednesday, January 9, 2008

Top of the World Sales (Or Lack Thereof)

I've listed some recent sales from the Top of the World (TOW) neighborhood. TOW is a highly sought after family neighborhood here in Laguna Beach. It is WAY up on top of the coastal mountains. It has flat streets and a great elementary school, perfect for kids riding bikes and for parents who walk their kids to school. Homes tend to be less expensive up in TOW, except for the homes that have a good ocean view.

In any event, look at the data. Almost NOTHING has sold in the last half of 2007. This tells me that the market value of the TOW homes is way, way below the asking prices. How far? 20% ?
30% ? Do I hear 40%? Maybe........

HOME SALES ON TOP OF THE WORLD: (address/sale date/selling price)
3175 Mountain View 7/07 $1,640,000.
3005 Mountain View 8/07 $1,422,000.
3174 Bonn Drive 2/07 $1,582,000.
2855 Chateau Way 3/07 $2,375,000.
2860 Chateau Way 3/07 $1,525,000
2861 Chateau Way 5/07 $1,725,000
2975 Chillon Way 2/07 $1,425,000
3335 Alta Laguna 7/07 $5,480,000.
28761 Top of the World 8/07 $1,100,000.
3271 Rimcrest Circle 7/07 $2,650,000.
2821 Ridge Drive 8/07 $1,550,000.
28911 Temple Hills 6/07 $1,400,000.
2265 Bridge Road (Pke) 5/07 $1,900,000.
2270 Park Avenue 5/07 $3,350,000

Saturday, January 5, 2008

My Buyer Bails Out

I found out yesterday that the house I am trying to sell in La Canada likely will fall out of escrow. The buyer grew nervous after septic tests were only partially successful. You see, La Canada doesn't have sewers, so septic tanks are an issue in every sale in the Flintridge area of town, which was where I lived.

Panic has not set in, though. In the four months I've been following the Laguna Beach real estate market, I'm more convinced then ever that prices will go down to the point where I can get a pretty good house without the need to sell the old house, which I can rent out.

Wells Fargo Economist - Buyer's Market in 2008

Lansner's blog has a pretty good interview with Wells Fargo economist Scott Anderson.

Here's a good quote from Anderson:

"The O.C. housing market is becoming more unbalanced by the day. This is evident in the glut of existing home inventories in the County. Unsold existing home inventories in Orange County hit 25.3 months at current sales rates. That is five times the level of inventories found in a “normal” housing market with rising home prices. The final nail in the proverbial coffin was the August and September financial turmoil, which is quickly morphing into a full-blown credit crunch."

You can read the entire interview here.

Tuesday, January 1, 2008

Severe Price Cut Shows Real Recession in Laguna Beach Home Prices

Happy new year(?)
The lack of many sales in the last half of 2007 has left BlueMove and everyone else without much information on the real valuation of Laguna Beach home prices.

Well, wonder no longer. Someone wants to sell and that someone is probably a bank that now owns 581 Diamond Street, Laguna Beach, California. A 4 bedroom, 4 bathroom, 2100 sq. ft. home. This home was just listed in the MLS.

Asking Price: $1,449,500
Prior Purchase Price: $2,144,641 (August 2007)
Prior Purchase Price: $2,600,000 (April 2005)

If the house were to sell at the asking price, the total loss from the peak would be about $1,250,000, including real estate commissions. If the home sells, it could show what it takes to actually sell a mid level house in Laguna Beach in today's market. Such a price, a 50% loss, is a wipe out, wash out and a blow up.

More to come on local listings. In the meantime, it is scary how fast prices are falling! OC home prices are going down.