Newport Beach, Laguna Beach, CDM and Newport Coast Lead County in Price Reductions

John Lansner's blog has a good posting identifying the communities with the greatest price reductions on MLS. Newport Beach is number 1, with the greatest price reductions and Corona Del Mar, Laguna Beach and Newport Coast are all right up there. What does this mean? It means that real estate agents in these areas generally are listing properties at unrealistic asking prices. If no one shows up to pay the initial asking price, the market is forcing price reductions. Buyers should beware of asking prices given this hard data - the true value of these properties is likely to be far, far below the asking price.

1130 Summit Drive - Good Deal or Not?

Recently, 1130 Summit Drive was foreclosed upon and listed by its new bank owner. It is big, w/5 bedrooms, very nice inside, but no yard, on a very busy steep street and the house is all vertical - 4 stories up to the kitchen from the garage.

The bank wants $2.4 million - that's quite a steep price for a home in Arch Beach Heights, which is typically a low value area in Laguna Beach. Rumor has it that there were multiple offers a few weeks ago but even then the price didn't go that high. Now though, it looks like the house is under contract.

Oh yeah, the neighbor's house (1289 La Mirada St.), which is bigger and is uphill on a better and level street, was recently listed for $500,000 less. Not a good sign that 1130 Summit is worth anything near to the asking price, in my opinion.

What say ye? Is someone going to get a good deal or is the new buyer getting a load of trouble - a house that's going to sink underwater yet again in the future?

Dataquick October Numbers - Houses Above $2M in Laguna Overpriced

The October dataquick numbers are in and the median price is flat for Laguna Beach, compared to recent months.
The median single family home price in Laguna for October was $1.195 million, but this is down a whopping 36.4% from October, 2008.

The interesting thing is that while the median price has been flat in the recent months, the economy and the lack of good financing is just killing the homes priced above the median, for which one would borrow more than the current $729,000 conforming jumbo limit. Specifically, sales of homes above $2,000,000 have been frittering away to nothing as the year has progressed. No sales of these homes in October. None at all. This means that homes in Laguna Beach that are listed for above $2 million are SEVERELY OVERPRICED.

I wouldn't want to be a buyer of one of these homes earlier in the year - If I was, I would be listening to my home value deflating below the purchase price. sinking underwater......

Values Continue Crash in Crystal Cove - Buyers Remorse Part II

In an earlier post I wrote about the decision of a recent buyer of 18 Rockshore Bluff to pay $4.4 million. The value of this home was questionable, I thought. If it is that obvious, I wonder what kind of advice the buyer's agent gave to the buyer who was forking over $4.4 million.

Well, hold on to your hats. And hold on to your loan docs, Bank of America, for the $3 million mortgage that you wrote on 18 Rockshore. It is worth much less now, only months later.

2 Rockshore Bluff recently sold. For about $2.6 million. Practically identical house. Same 3800 square feet. Same killer view. The photo is from 2 Rockshore.

Let me get out my calculator. $4.4 - $2.6 = $1.8 million dollar loss in less than six months.
The B of A loan on 18 Rockshore? Already underwater. The buyer? Underwater. The agents involved? My guess is that they are laughing all the way to the bank.

Crystal Cove home values are going down big time. And there are many overpriced listings. Do the due diligence and research. Be careful out there.....

Coldwell Banker's MLS Listed Cartoon House Foreclosed Upon

I've written about the 940 Hillcrest cartoon house for a while now - how it was a Coldwell Banker listing priced at (hold your laughter) $2,800,000. The original MLS listing didn't even have a picture of the house, it had a nice fancy cartoon drawn house drawn over the present house.

This was the ultimate bubble listing. It wasn't about the house that existed in REALITY - instead the brokerage wanted everyone to buy into a fantasy cartoon house that only existed in the MLS. After all, that's where the value is - in pretend homes. Gee, thanks, Coldwell Banker.

Well, the sales tactics didn't work and its all over now. According to the new MLS listing that hit the system today, the property is now bank owned and priced at $937,800, roughly 66% less than Coldwell Banker's original price. I'm really happy for the buyers out there who didn't fall prey to the original list price.

Next time you see a Coldwell Banker listing, think of this one - how much do you really trust these people to present a property with a fair market price? I'll let the commenters answer that one.

Crystal Cove Home Values Continue Downward Plunge

During the bubble, many realtors lured buyers of Crystal Cove homes for $1000 per square foot. That price point was thought to be a rock solid value even well after the market started plunging downward.

Not so anymore. Awash in foreclosures, the asking prices on some Crystal Cove properties are squarely in the $600 per square foot range.

And the sale prices probably will be less than the asking prices.

Hello, $500 per square foot! A 50% decline. And more declines will come after the summer buying season fizzles to a close. Your agent won't tell you that, but I will.

Here are some of the properties:

1. 24 Sidra Cove; asking $665 sq/ft
2. 106 Sidney Bay Drive; Asking $690 sq/ft
3. 11 Secret Cove; Asking $746 sq/ft
4. 100 Sidney Bay Drive; Asking $616 sq/ft
5. 5 Secret Cove; Asking $574 sq/ft

UPDATE: All the above homes either sold in the $400 or $500 per square foot price area or didn't sell at all. (Dec. 2010)

3216 Tyrol - Pricing difficulties up in Top of World

I noticed 3216 Tyrol in the MLS - it is a house with Irvine views (no ocean) up in the Top of the World neighborhood. I like this neighborhood because it seems to be family friendly and is flat. The Tyrol house has been for sale since 2007 at various prices, I think from above $3,000,000 to just below $2,000,000. Just like many other Laguna Beach home prices, this one should be treated with a lot of caution.

It is hidden pretty well in the online listings, but this home's prior sale price was about $2,000,000 in 2006 - a prime bubble year. Notably, the home's owners appear to be real estate agents and I wonder how the prior sale data has been kept out of the MLS (redfin) and Zillow databases? Suspicious. Now that home values in Laguna Beach have retreated, in my opinion, to 2003 or so, this home's asking price is WAY overstated. I'd take 20%-30% off of the $2,000,000 prior sale price to arrive at today's value. I don't think this attempted home flip is going to work very well for the owners.

I've been in the house and it has great Irvine (meaning everything that is non-ocean for miles and miles) views, but its a duplex - the interior is chopped up and it just feels like a small house. The kitchen is small for an expensive house and there is a narrow, one bedroom unit on the first floor that isn't really usable for much other than renting. On the other hand it has great deck space, a huge garage, but no pool.

Update: This home has been withdrawn from the market.
Thoughts?

LA Times: High End Home Values Continue To Fall

This blog is about single family homes in Laguna and Newport. No matter what shape or size, they are all high end compared to the OC average home prices. In a recent article the LA times analyzed Dataquick's June statistics and the news on high end homes was not pretty:

"Although prices have firmed at the low end of the market, they are still falling in affluent communities, the home sales data released by MDA DataQuick on Wednesday show.

The high-end market did not suffer the rapid shock of subprime mortgage defaults and foreclosures that hammered the housing market's lower end. Sales stagnated as wealthier sellers held out for higher prices.

Now, however, some sellers "are realizing the market's not going to just bounce back" and are starting to sell homes for less than they had recently hoped to get."

Chapman Forecast - High End Home Prices Will Continue to Fall Well into 2010

Mr Blue's focus is on Newport Coast and Laguna Beach - properties well above the OC median price you generally read about in the media. The most recent data indicates that prices on Newport Coast and Laguna Beach homes most certainly will continue to fall almost all the way to 2011. Of course, the OC median price you may hear realtors talking about doesn't mean anything in Newport Coast or Laguna Beach, which are in the upper segment of home prices. The upper end prices have taken longer to start their plunge downward. Now that plunge is happening, as high end sellers cannot hold out forever with the hope of selling at a 2007 peak price.

The highest local authority in real estate in the OC is Chapman University's forecast, operated by Dr. Adibi. Just released, it says "Although our forecast suggests a bottoming out for median home prices, high-priced homes are still subject to further price erosions." If you buy, get a price that is below the present value of the home so you have a cushion to ride out the coming decline. That way you won't be upside down after owning for only a year. Good luck house hunting......

False Perceptions of a Turn Around

My favorite industry analyst, Ivy Zelman, has a good article in Builder magazine detailing the state of the market. Ivy basically says that there are some superficial indications of a bottom but that things will get worse.

Buyer's Remorse in Crystal Cove?

More data from Crystal Cove - 18 Rockshore just sold for $4.42 million after being listed for about $5 million. 18 Rockshore is a 3800 square foot, 5 bedroom home. Also, 16 Wharfside (3500 square feet, 6 bedrooms) sold in May for $3.1 million. A similar home at 7 Atlantis Cove sold in January for $3.2 million. All of these sold for hundreds of thousands less (or almost a million less) than the listing prices.

Time will tell and I'll certainly not wish anything bad on anyone, but in my opinion, these homes will take significant value hits as we go toward December, based on present trends. There are already Crystal Cove list prices in the low 3 millions that are poised to drop into the two million range and one home (20 Surfspray) up there by Rockshore is already listed in the mid 2 millions.

If I owned 18 Rockshore, I'd be needing "upside down" therapy right now. Not a good thing to need after just closing escrow. Any opinions about these values out there?

Crystal Cove Awash in Foreclosures

I've been househunting in Crystal Cove for a while now and I have also been carefully watching the foreclosure activity. Like anywhere else, a spike in foreclosure activity is likely to precede a drastic drop in home prices. The foreclosure activity includes recorded notices of default, trustees auctions and then the resulting properties are "bank owned."

Six months ago, there was only one property in crystal cove that had foreclosure activity. Three months ago or so there were five properties involved in foreclosure. And as of today, there are twelve, according to Realtytrac.com. This pretty much proves out what I've seen with the homes in Crystal Cove - home values are dropping fast. Homes that are priced high are just sitting there...... Some listings have drastically reduced listing prices as some owners have determined that it is better to get the home value now rather than lose more in the coming months.

How many of those "good" real estate agents have told our readers about this spike in foreclosure activity in Crystal Cove? If yours has, hang on to them - they really are paying attention to value indicators......

What Your Agent Won't Tell You About That Home You Want To Buy

Buying a home is not something people do very often. For this reason, most people rely on their buyer's agent for good advice.

Problem is - most agents will hide negative information from their clients because the agent wants that commission and wants it fast.

Take the Laguna Beach home market for example. Thanks to our friends at Trulia, the direction of home prices in Laguna Beach is readily apparent. Down. Down. Down. Down. Down.

The Trulia chart, with the red trend line I added, shows an amazing decline in median home prices in Laguna Beach. The decline shows no sign of stopping. The decline HAS NOT STOPPED.

You'd think every agent in town would be saying "If you buy, you should know you are buying a DECLINING asset. You know, like a car?" But, I'm guessing you have NEVER heard that from an agent. Right. I have only heard one agent even hint at this, and I know A LOT of agents. My conclusion is that greedy Agents are hiding important facts from buyers.

More likely, you've heard many agents say "Buying a home is a long term investment." These are the real estate agent code words for "You will lose money, and lose money quickly, but I won't tell you that."

Am I wrong? Or right?

Laguna Beach Slammed by Unemployment Spike

According to a recent OC Register story, Laguna Beach unemployment has swelled to nearly 6.3%.
This is an increase of about 700% since 1999. Downward pull on the normal single family home values in Laguna Beach? Yes. Middle class people caught in the unemployment wave? Yes.

Laguna Beach Median Home Price Tanks in April

The April dataquick numbers are in and things are still tanking for Laguna Beach home prices.
The median single family home price in Laguna for April was $1.16 million, down a whopping 31%.
May and June should pick up a little given it is the summer buying season.
The economy and the lack of good financing is just killing the homes priced above the median, for which one would borrow more than the current $729,000 conforming jumbo limit. This pressure will continue past any little summer jump and things will slide further as we go toward December.
If you put in an offer, make sure the offer price is low enough so that you don't end up holding the bag for these future losses.

Cartoon House - Now Asking $1.2M - Down 57%

In December 2007, I identified this listing as ridiculously overpriced at $2,800,000.
Nailed this one. At 940 Hillcrest in Laguna Beach, it hasn't sold and is now listed at $1,200,000, a whopping 57% reduction in asking price. Of course, that is still a lot for a CARTOON HOUSE.
Presumably, this property is being sold for the value of the lot. Nonetheless, I think the term CARTOON HOUSE fits in just fine with the snake oil most Laguna Beach and Newport Beach real estate agents are selling.

Barton Rollert of Coldwell Banker has this listing. Rollert's credibility is scraping bottom since the past listing for this property asked for $2,800,000, and obviously this was way, way off the real value.

Barton, can I buy your CARTOON HOUSE with CARTOON MONEY?

This shows how much trouble a buyer could get into by giving any weight whatsoever to a Coldwell Banker list price. If someone would have paid $2,800,000, or anything close, we now know that the buyer would have been stuck with at least a $1,600,000 loss based on the present list price.....

Laguna and Corona Del Mar Home Prices Crash to New Low

The show keeps going folks. Despite the typical "our town is immune" cheerleading from most local real estate agents, the Laguna Beach median home price slid to $1.14 million in March, down 30% since last year. The average Laguna Beach homeowner has lost about $30,000 per MONTH in net worth from home value decrease during the last year.

Glad I'm still renting while I'm in house hunting mode. My landlord could repave a mile of PCH with the dollar bills he loses in home value in only one month. Oh, yeah, while that bleeding goes on, I get to live in his fabulous house! Sounds like the new version of the American dream!

The "immunity" has turned into the full blown plague. Don't catch it!

Bye Bye 2626 Victoria Drive

We've watched as 2626 Victoria Drive has gone from an outrageously over-priced listing to a complete disaster for the owner, via a failed auction organized by local realtor John Stanaland of First Team Estates. Now the posted data shows that the property will be auctioned in foreclosure next week. Perhaps the banks will price it closer to the $1,500,000 the property could have fetched at the failed auction back in November, 2008. No one is immune to the drastic drop in Laguna Beach home prices.

Laguna Sales Crater - Laguna Beach Has 6.25 Years of Real Estate Inventory

Based on the latest dataquick reports (6 properties sold in Feburary), Laguna Beach has a huge inventory of homes for sale that would take over 6 YEARS to sell. (Redfin indicates 442 properties are on the market right now)

What does this indicate? More huge price corrections to the downside for Laguna Beach home prices. When nothing is selling, sellers must reduce prices or not sell. No one can fight the market direction. Buying a home now at the typical high asking price would be a stupid, catastrophic decision.

Honey, the neighbors undercut us by $500,000!

I've been following Crystal Cove home prices closely. There are some very disappointed home sellers in Crystal Cove. This probably goes under the category of "the market giveth and the market taketh away." Crystal Cove homes appreciated hugely in the bubble years.

Now is the time for the home values to give it up.

Take 2 Tideline Bluff, for example. Originally listed for $4.5 million, it has been reduced to $3.6 million. This about half way up the hill in Crystal Cove, where homes have been listed in the 4-5 million dollar range. Now, the price cut on 2 Tideline Bluff and the listing price on other homes have made it clear that the $4 million dollar days are gone for good.

Just down the street is 20 Tideline Bluff, listed at $4.8 million. This one is, well, pretty clearly over valued in view of this development. Yet Coldwell Banker is still trying to sell it at this price. What does that say for Coldwell's credibility? Thoughts anyone?

It should be appreciated that the neighbor's price cut really does nothing other than demonstrate that the true market values for these homes have gone down. If the values are down, they are down, no matter what the various asking prices. If either home were worth 4 million dollars, then someone would step up and pay it. Not going to happen because in reality the homes are not worth it.....

Ocean Views - $315 sq/ft in Arch Beach Heights!

I recently noticed that the house at 1420 Del Mar sold for only $832,500, about 50% of the original asking price. It is a 4 bedroom, 2640 square foot home with ocean views. I toured it a while ago.

That works out to $315 per square foot. This is about what Arch Beach homes were selling for in 2002 or 2001.

This is a price point that will attract buyers in Laguna Beach, yet there are plenty of sellers out there who are asking much more, hoping for an ill informed buyer to happen along and get suckered.

Luckily, no buyer gave any credibility whatsoever to the original $1.6 million asking price, as listed by Keller Williams realty. Sorry Keller, no morons bought your perception of "value".....

January Home Sale Prices Crater in Laguna

My prior post on January Laguna Beach home prices was based only on data through January 15.

Well, the last two weeks of January were ***MUCH**** worse.

When all the January numbers from Dataquick were in, the median home price in Laguna Beach was down to $825,000, a whopping 50% decrease over last year. This is single family home data only, and does not include condos.

You know that this means.

No one who is sane is buying any of the overpriced homes on the Laguna Beach MLS. The few sales that did happen? I chalk that up to the "moron" factor - ill informed buyers who have made catastrophic buying decisions.

There has been a drastic step change downward in the true home values in Laguna Beach. The median home prices in Corona Del Mar, Newport and Newport Coast also dropped like lead balloons.

Are there any agents out there who disagree? Sellers? Buyers?

January Sales Numbers Show Huge Price Declines in Laguna, Corona Del Mar and Newport Coast

The "immune" cities are not immune. Price have rolled over and are screaming downward. Lansner's blog has posted Dataquick numbers through January 15.

Laguna Beach median home price - down 23% to $1.176M
Corona Del Mar median home price - down a whopping 50% to $1.25M
Newport Coast median home price - down a whopping 57% to $1.88M

Buying anything but the cheapest condo in these cities carries with it a ton of down side risk. Losing $20,000 to $40,000 per month in home value is one realistic scenario. Any real estate agents out there with any comments? If you go to an open house this weekend, throw these numbers around for mild amusement!

Home Values Plummet in Supposedly "Immune" High End Cities

Recent data shows that home values in SoCal's high end communities only recently began dropping. But the drops are huge. The LA Times has a good article about it. One couple lost $400,000 in only a few months. Laguna beach home prices and Newport Beach home prices are following suit. Uninformed buyers are really at risk. Pound your agent for comps and analyze everything out there before you make an offer. Take the comps and SUBTRACT for the declining market to get to your offer price.

Chapman Forecaster Warns - Buying a High End OC Home Is A Mistake

Esmael Adibi is director of Chapman University’s Anderson Center for Economic Research. He has a stunningly accurate track record on predicting the housing market. He was early with a prediction that the O.C. housing market was in for a fall.

I had the pleasure of recently attending a meeting where Adibi was presenting. His presentation was very credible and based on sound analysis. His message? DO NOT BUY a higher end home in OC. These homes will fall a lot in the coming years. For a median price house, Adibi said to buy toward the end of 2009.

I'm standing by watching the Laguna beach home prices decline...........

South Laguna Comp - Big House, Big Lot - $500/sq. ft.

31401 Holly Street finally sold for $1,865,000. This is about a MILLION dollars less than the original listing price. When I was in the property at a time close to the original listing, I told the agent that the thing wrong with the price was .... the "2". As in it should sell for a price of a million dollars less that would instead begin with a "1". Of course, my comment was met with fake shock by the agent, who said something like "Why, this is a good deal even at the asking price! You have to realize what neighborhood you are in."
Uhhhh, yeah. Right.

In the end, it sold for about a MILLION dollars less than the asking price. I'll take my victory lap now. This is now great evidence of the fall in Laguna Beach home prices.

In any event, this is an ocean close/big house/big yard comp for $500 per square foot. It has 5 bedrooms, etc. Had some buyer trusted the outrageously high price originally sought by Coldwell Banker, they would have taken a $1,000,000 bath. Shame shame Coldwell Banker. Take note all.

2626 Victoria Drive Headed Toward Foreclosure

Bluemove documented the failed auction at 2626 Victoria Drive just after Thanksgiving of 2008. Now, Bluemove has discovered that, according to Realtytrac.com, a mortgage default for this property was recorded in early December. This is the first step of foreclosure and this is becoming a more common factor in Laguna Beach home prices.

The highest market price from the bidders at the failed auction was $1,500,000, but this was well below the price the seller would accept. If and when the bank forecloses, perhaps the home will sell for $1,500,000.