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!