Saturday, October 13, 2012

More Buyer's Remorse in Crystal Cove

The real estate market picked up during the summer, not really in price appreciation, but in the number of sales. That doesn't mean that buyers don't need to be careful.  Some buyers lost big time.

Take for example 22 Sidney Bay in Crystal Cove, which sold for $2.249 million at the end of June.  Although the listing made a big deal of the "ocean," the dining room and living room at what would be the ocean-facing end of this home have huge sit down views of .....

a brick wall.

That's right. Practically speaking 22 Sidney Bay has no ocean view because of the house located behind it.  The inside is very nice, though, and i suppose that is what sucked the buyers in.

All this is not so bad until you come to know that 27 Atlantis Cove then sold for about the same price -- $2.350 million.  Not so bad?  No, it is bad.   27 Atlantis Cove is a bigger home with a HUGE ocean view. No brick wall view.  A big ocean view from the kitchen and living room in a Crystal Cove home is worth about $500,000.

Did the buyers of 22 Sidney Bay overpay by $500,000?  Probably.  Especially when you consider 11 Secret Cove, which is the same size with practically the same no-ocean view. It sold for $1.892 million.  11 Secret Cove closed about a week before 22 Sidney Bay - did the Sidney Bay buyers know about this comp that was priced more than $350,000 less? I doubt it!!

Buyers need to be careful out there - do your own research and don't assume your real estate agent is keeping you informed.

Monday, September 3, 2012

Home Values Down Again in Laguna, Newport Coast

I have been hearing some real estate agents lately hyping the market (again).  Don't believe it, at least in Newport Coast and Laguna Beach.

The latest housing numbers for sales during July 2012 have just been released and have been published by Dataquick, a reliable source.  Guess what?  The median price numbers show a continued plunge in Laguna Beach and Newport Coast.  The takeaway? Buyers in Laguna Beach need to be careful that they are not paying too much for a home that is declining in value every month.  Corona Del Mar is showing a resurgence - up a lot from the dog days of last summer.

July is the height of the summer buying season, when things are strongest.  It will be downhill to December in these markets.  In my opinion, the buyers of this summer could lose more on their home values as we get closer to December.  More buyers remorse on the horizon.....

Here are the numbers:

The highlights:
Laguna Beach:
Only 40 homes sold, median price down 5.7% to $1,375,000.

Coronal Del Mar:
only 19 homes sold, median price UP 49.2% to $1,750,000.

Newport Coast:
only 13 homes sold, median price down 8.1% to $1,590,000

Sunday, July 29, 2012

Cyrstal Cold

Crystal Cove?  More like Crystal Cold.  What do you mean, you ask?  Simple.  The geography of Crystal Cove - a hillside close to the ocean -  results in a microclimate of cold temperatures and sometimes fog.  In my opinion, that cold ocean breeze just dominates. Even during sunny summer days.

Have you ever looked at the beautiful real estate listing photos of the back yards in Crystal Cove overlooking the ocean?  It would be easy to assume that these homes would enable a perfect warm California beach lifestyle.  Think again.  Good thing for the real estate agents and sellers that you can't tell what the temperature is from a photo.  What good is such a backyard if you need a heater to enjoy it or just stay indoors to avoid the cold?  This isn't the recipe for a very good place to have a vacation home, unless you want to vacation in August.  The winter months in Crystal Cove are pretty cold.  The California lifestyle is build around the outdoors and warmth.  Not easy to align this ideal with my views about Crystal Cove.  

I've been to numerous open houses in Crystal Cove and not once has any agent mentioned this to me.  

In addition to the frigidity problem, there are other things a buyer would want to know about Crystal Cove.  So let's get into a review of Crystal Cove.
First, for an super upscale neighborhood, it doesn't have many amenities.  Sure it has a clubhouse with a gym and a pool.  But the clubhouse has no bar or food service.  Huh?  Further the neighborhood doesn't really have many events that would be a draw.  There is one Saturday concert in the park each summer featuring a local band (there used to be more).  There is one other barbecue in the park during the summer.   Other events at the clubhouse typically draw only a small crowd and are nothing special.  For parents, the association doesn't even run "parent's night out" programs where parents can drop the little ones off for a few hours at the clubhouse.  They do run a Christmas program for the kids, movie nights for kids and parents, as well as an Easter egg hunt at the park, but again, these are pretty run of the mill type events.

Wednesday, May 23, 2012

More Buyer's Remorse - Laguna Beach

Tracking the value of houses that have recently sold helps me determine where the market is going.

841 Diamond Street in Laguna Beach recently listed for $2,699,999.

It was bought in June 2010 for $2,850,000.

This represents a loss of about $6300 per month in value, assuming the house will sell for its asking price, which is doubtful, in my opinion.

If the house sells for less, say $2,550,000 or $2,400,000, that represents a loss in value of $12,000 and $18,000 per MONTH since the last sale.  This does not even include the mortgage interest cost in any monthly payments, which could DOUBLE the loss.  It might even sell for way less than $2.4M - stay tuned.

Renting this house in 2010 clearly would have been better than buying it.  But real estate agents don't make that much commission off of rentals, so why would any given agent tell you that renting is better?  The difference in commission in my opinion creates a conflict of interest and an incentive for any given agent to focus on the sale or buying of a home, as compared to a mere rental.  When is the last time you have even heard an agent at an open house even say the word "rent?"  Why say anything that would prevent that all important home sale?

In my opinion, property valued at above $1,500,000 continues to see monthly losses in Laguna Beach and Newport Coast.  Buyers should be really careful.  An asking price listed by a real estate  agent may have no sound basis.  I have run into that numerous times.  Calculating what a home's value would have been in 2001 or 2002 is the best way to avoid overpaying.  Be careful out there!