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.
Uggg.

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.

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

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.

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!

Summer Recap - Risky to Buy

Time for a summer recap on the housing market from Newport Beach to Laguna Beach. 
Bottom line is that it was a terrible summer for home values in these areas, especially Newport Coast and Laguna Beach.  Sales fell flat compared to last summer, which was itself less than fabulous.  Sale prices are declining, as are the number of sales.  You can hear a pin drop for the lack of homes selling.
In my opinion, buying a property at this time is very risky.  The main risk being that the property you buy continues to go down in value, losing you 10's of thousands of dollars a month. Of course, you won't hear that from your real estate agent, who is hungry for a commission..........

Summer Buying Season Flops - Beach Town Home Values Continue Downward Plunge

Normally, a lot of homes sell in the summer buying season in the OC beach towns.  Not this summer.
The OC Register just reported that the number of sales and the median price in the OC beach towns is down.  The median price is down 7.8% and the number of sales is down 5.3%.

What does this mean to potential buyers?  It means that home prices are going down and, as a new owner, you will lose value on your new home, month in and month out.  The median price and lack of sales will put downward pressure on home values.  The lack of sales could be interpreted to mean that there are many overpriced home listings on the market. Buyers need to be very careful.....

These 12 Real Estate Stats Scream One Thing

Interesting article posted by Terran on Talk Irvine: http://www.wallstreetdaily.com/2011/05/26/cme-real-estate-prices/?source=patrick.net#content

The bottom line:

"Whatever you do, though, don’t rush to buy residential real estate. As I’ve hopefully demonstrated by now, prices are headed one way from here – down. So even though local markets differ, chances are you’ll get an even better deal the longer you wait."

Laguna Beach continues to sink, just like the broader, declining market...

South Laguna Comp Check - 2 South Portola - 37% off Orginal List

South Laguna is far off the beaten path.  It is thankfully free of tourists compared to the rest of Laguna Beach, but for those of us who work, the drive takes almost as long as traveling from the office to San Clemente via the toll road.  

Historically, real estate in South Laguna has been much cheaper than the rest of the town.  Come the bubble, that difference more or less disappeared, and the asking price of most homes in South Laguna still reflect this bubble valuation. 

Anyway, enough of the history, how about a comp in South Laguna's 3 Arch Bay? Let's get down to it and talk about 2 South Portola.

I think the takeaway here is that an older family home on the primo beach side of 3 Arch Bay sold for about $750 per square foot and that list prices should be viewed with healthy skepticism by buyers.  2 South Portola ended up selling for about 37% less than its original asking price of $3,250,000.

2 South Portola is a rather nice 5 bedroom/3 bath.  Per the listing:  "Traditional Three Arch Bay home with ocean and sunset views. Vaulted ceilings, fireplace, view deck, open floor plan and enclosed sun porch. The most wonderful and charming Lower Three Arch Bay home. Close to beautiful beach."  You can view the MLS listing at here.

Original List price: $3,250,000
Listed: September, 2008 (yeah, about 1000 days or so on the market!)
Sold: May, 2011
Selling Price: $2,050,000
Selling Price/List: 63%

So, what kind of a rollback does this represent?  2 South Portola sold in May, 2005, for $2,500,000, so this most recent sale price represents, say, a mid or late 2003 price.  If you are trying to value a property in Laguna Beach to determine how much to offer, try to figure out what it was worth in 2003 and you should be on the right track.

Buyers be careful out there. Lots of homes have wildly overpriced asking prices.

Home Robberies Shock Crystal Cove Residents

The relative calm of Crystal Cove was shattered recently by two bold home robberies.

You know those imposing gates and guard shacks that drive the association dues toward $700 per month in Crystal Cove?  Apparently, these amenities are of limited effect in keeping crime out.

Rumors are flying about the crimes and while it may be the talk of residents and at local real estate offices, no one apparently is eager to publicize this in the news because it could further depress Crystal Cove home values.  The rumor is that two homes on Sidney Bay Drive were "cleaned out" by robbers using trucks.  Virtually everything is said to have been taken.  One of the homes was for sale.  It is unknown if the other home was a vacation home or if the residents were simply away from their home.   In Crystal Cove, many of the homes are vacant or used sparingly, so there are less neighbors who can report suspicious activities - apparently allowing the robbers to clean out entire homes, furniture and all, without being noticed. Fortunately, no one was hurt.

Comp Check - North Laguna Modern Luxury - $601 Per Square Foot

Its often tough to sort through comparable sales data when you are trying to decide how much to offer on a home.  Here's something that could be of help - 535 Dunnegan Drive recently sold for $601 per square foot.  It is a high end, custom,  4 bedroom, 4000 square foot north Laguna Beach home - so it is a good benchmark.

You can see the entire listing for 535 Dunnegan here.

In the past month, it has become apparent that the high end market (over $1,000,000) in Laguna Beach is really dead.  This means values will continue to go down.  Look for the price per square foot to be in the $500's by summer - another 10% decline.  Buyers who overpay are really asking for huge losses.  Be careful out there.

January 2011 - California Home Price's Biggest Fall in 14 Months

As you can read here in the Orange County Register, California home prices fell in January on a year-over-year basis for the fourth consecutive month, according to real estate tracker CoreLogic’s math.  Certainly looks like we are firmly in a housing double dip.  Buying a house now is buying a depreciating asset - one that loses money every month.

CoreLogic’s latest reports shows ..

• The last time California prices were falling at a faster rate was 14 months earlier — November 2009, when year-to-year depreciation ran 4.78 percent.
• National index declined on year-to-year basis for the sixth month in a row: off 5.7 percent vs. January 2010. Declined 4.7 percent in year ended in December.
• Orange County? Prices down by 3.25 percent in year ended January 2011 vs. dip of 4.29 percent in previous month.

Mark Fleming, chief economist with CoreLogic, said, “A number of factors continue to dampen any recovery in the housing market. Negative equity, which limits the mobility of homeowners, weak demand and the overhang of shadow inventory all continue to exert downward pressure on housing prices. We are looking out for renewed demand in the coming months as the spring buying season gets underway to hopefully reduce the downward pressure.”

Coldwell Banker Fail - Coldwell Quietly Closes Office In Laguna Beach

Coldwell Banker quietly closed its Laguna Beach Office on North PCH.  This reflects the Laguna Beach home market, which is sinking as well.....Buying a high end home in Laguna Beach is buying something that will lose value, month in and month out for the foreseeable future.

CnnMoney - Housing Double Dip Near

According to CnnMoney.com, the recent housing data indicates a coming double dip in home values.  Not wise to buy a home right now if you can wait .......just sit back and let the market bring down those prices for you!

January Home Sale Data Shows Continued Weakness in Laguna Beach

The latest housing numbers for sales during January 2011 have just been released and have been published by Dataquick, a reliable source.  The median price numbers show a continued plunge in Laguna Beach, while Newport Coast has posted a good increase. 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.

I doubt home values in Newport Coast are actually going up - the median price increase probably is likely to more sales of discounted high end homes as compared to a year ago.  More high end homes than low end homes sold in January in Newport Coast as compared to last year.  Less high end homes sold in Laguna Beach and Corona Del Mar, as compared to low end homes.

The highlights:
Laguna Beach:
only 27 homes sold, median price down 16.7% to $1,020,000.

Coronal Del Mar:
only 12 homes sold, median price down 12.5% to $1,570,000.

Newport Coast:
only 11 homes sold,  but median price up 11.2% to $1,890,000

The changes in the median price statistic probably indicate that the mix of homes sold has changed.  When the median price goes up, that indicates more higher value homes have sold as compared to lower priced homes. 

Crystal Cove Sale Trend Points to Huge Declines By Summer 2011

If the trend for Crystal Cove White Sails homes continues to next May, the price per square foot will be in the $500 range - down from the $800 range today.  This means huge losses for any new buyers and existing homeowners. Chart below.

Yet Another Recent Buyer Burned in Crystal Cove as Values Continue Crashing

 
28 Cruisers Bluff sold in June 2010 for $5,195,000.  And its value today? - Recent comps show a sagging market that has crushed the value of this home.  When someone loses a million dollars in home value after owning a home for only six months, there probably are some lessons learned and some important trends that a buyer should become aware of.   More detail below.

Crystal Cove, long resistant to falling home sale prices because its owners could simply afford "not to sell" is now at the tip of the deflating housing bubble in Orange County.  Of course, you won't hear this information from any real estate agent, but that's why I'm here - to make sure you get more than the positive fluff you may hear at open houses.

28 Cruisers Bluff had been languishing on the market for more than 700 days - being originally listed for sale in September, 2008.  It is a White Sails model with great ocean views, and 4 bedrooms in 5000 square feet on a large lot.  The White Sails models are all more or less the same kind of tract built homes.  The June sale price works out to $1039 per square foot.  This house was last sold when it was new in January of 2005 for about $3,300,000.  Common sense would put its value closer to that sale price than the listing price of the languishing listing.  But we don't need to postulate about the value - we have comps:

Three other White Sails homes have recently sold, both about 5000 square feet in size.  2 Gondoliers Bluff sold on November 8 for $4,100,000 ($820 per square foot.).  36 Gondoliers Bluff sold just 8 days later for $4,074,000 ($823 per square foot.). Then 6 Cruiser's Bluff sold in December for $4,150,000 ($756 per square foot.)

You can draw your own conclusions on the impact on the value of 28 Cruisers Bluff.  In my opinion, that home has lost more than 20% in value in about 6 months.  This is a huge loss, a million dollar loss. Buying an expensive house that is rapidly losing value is a bad idea!  A proven, bad idea.

In the $2.5-5 million price range, I believe there is a larger trend of Crystal Cove home values decreasing about $100,000 to $200,000 per month.  Buyer beware.

The main purpose of this blog is to focus on the importance of valuing a property accurately and discounting the fluff that is common from buyer's agents and listing agents.  When I point these things out, I'm not making  fun of any buyer - I feel for them, but I want to help that next buyer avoid the same mistake.

Dataquick November Stats Show Double Dip - Home Market Sinking

According to reputable real estate statistics company Dataquick, Southern California home sales fell in November to the second-lowest level for that month in 18 years, reflecting the weak economic recovery, a dormant new-home market and tight credit conditions. High end home sales are especially weak, but the median price paid for a home rose above a year earlier for the 12th consecutive month, though November’s gain was the tiniest yet.  Buyers be careful out there - factor future home value declines into your offering prices!

OC Home Prices Falling - Double Dip Confirmed

More evidence that Orange County home values are on the decline once again! This year’s price rally has faded, according to the OC Register.  If you are a home buyer, keep in mind that you are buying a declining asset and you will lose value every month, on top of your mortgage payment.  Renting is far superior at this point in time.

This data comes from CoreLogic, whose Orange County slice of its nationwide home price indexes shows local values falling at a 2.56% annual rate in October.
It was the second month of year-over-year declines following eight consecutive increases. Before that upswing, the CoreLogic index for Orange County had fallen 37 straight months on a year-over-year basis.

High End Listing Prices Too High - Increase in Price Reductions - OC Register

Buyers, another reason not to trust those high end list prices in Orange County - most were way too high and are being reduced by a whopping 10% compared to last year. Yet high end home sales are still stagnant. This means that even the reduced list prices are far above the real market values of these homes. Buying a high end home entails a risk that you will pay way too much and be left holding the bag. Can you say "poof, there goes your downpayment?"
For more info see the OC Register here.

Forecast: Calif. home prices to drop 9.9%

The OC register reports - Real estate trackers from FiServ and Moody’s Economy.com forecast that California home prices will fall 9.9% in the year ending in June 2011 — fourth biggest drop across the nation.  Essentially, all meager gains from June 2009-2010 will evaporate......