How NOT to Lose at Least $500,000 in 2009

As we enter the new year in this receding real estate market, it is hard to predict when the turn around will come. But....one thing I can do after following the Laguna Beach and Newport Coast real estate market for over a year is offer my opinion on what NOT to do.

So here's some invaluable advice that could save you $500,000 in 2009 if you are planning to buy in Crystal Cove, CA.

1. Do NOT buy 100 Sidney Bay Drive for the asking price of $2,495,000. In my opinion, this condo will be worth less than $2,000,000 some time in 2009 (if not now).
Jacquiline Thompson is the listing agent and it is listed on Redfin.com as a condo, not a detached single family residence. The neighboring property at 106 Sidney Bay Drive was, according to realtytrac.com, repossessed in 2008 on a mortgage having a value of roughly $150K less. What does this mean? The market has gone down since then. There's no way in my opinion that 100 Sidney Bay is worth more. Look for 100 Sidney Bay to sell for less than $2,000,000 in 2009, in my opinion.

2. Do NOT buy 88 Sidney Bay Drive for $2,488,888 - it is in the same club as 100 Sidney Bay Drive. Look for the value of these condos to go down significantly in 2009, in my opinion. The same could be said for the other homes in Crystal Cove - they could be positioned for a major hit in 2008, some losing a million or more dollars.

Laguna Beach Median Home Price Tanks in November

Dataquick's latest numbers are out in the OC register and on www.dqnews.com.
The drop in Lagnua' median home price is quite astounding. It is now $970,000, down a whopping 47% from last year. To all of those people who thought high end areas were "immune" - here is your dose of reality. I've skipped open houses for the last 3 weeks and am glad I didn't buy a home last year - my losses would have already been staggering. Happy holidays to all out there. Peace.

2616 Victoria Drive Buyer Pays too Much....Loses At Least $1,000,000 in a Few Weeks

We've written about 2616 Victoria Drive before - It recently sold for about $3,000,000. At the time we were very skeptical that the buyer overpaid.

Now, with the auction of 2626 Victoria showing that a completely new house just 2 doors away drew a maximum bid of only $1,500,000, the value of 2616 Victoria Drive has been shown to be shockingly lower.

So in sum, in my opinion, the damage is as follows:
1. The buyer of 2616 Victoria Drive has just lost more than $1,000,000 in a few weeks. That was a fantastic buying decision.
2. Gee, I want to use the same real estate agent who advised the buyer on the value of this house! NOT! (Does anyone know more about this transaction gone wrong?)

Top Of The World 37% Price Reduction

Top of the World (TOW) is a great family neighborhood in Laguna Beach. It is located far up on coastal mountain adjacent to downtown Laguna Beach. It features its own sought-after elementary school located right in the neighborhood. Home values in TOW have been impacted in a big, big way.

Take 3241 Rimcrest Circle, Laguna Beach, for example. A 2400 square foot home in pretty good condition. Listed for sale at about $1,600,000, it sold for only $1,009,000! This is a huge 37% drop from the listing price to the sale price. Laguna Beach home prices continue to weaken in a big way, as evidenced by this sale - at only $420 per square foot.

2626 Victoria Drive Auction Report - Seller Won't Accept Highest Bid

I took some time off today to wander down to the auction being held at 2626 Victoria Drive. I went because I wanted to gauge in real time what is happening with the Laguna Beach real estate market. This home was on the MLS at a reduced asking price of about $2,500,000. After the auction failed (see below), the listing price was cut by $300,000. Call me strange but I got a kick out of the auction.

The auction took place at about 1:20 pm inside the house. About 20 bidders looked on. The seller couldn't have asked for a more perfect day - the strong sun was sparkling off of a wide swath of the Pacific ocean - all viewable from the front deck. It was an uncertain atmosphere, with the bidders eyeballing each other and not quite knowing what to expect.
From the general appearance of the bidders and the cars they drove, I could tell that most bidders were fairly affluent.

The auctioneer first covered the terms of the Auction. The the winning bid had to pay an additional 6% buyer's premium, had to put 10% down by this Monday, and had to close escrow in 30 days. No contingencies were allowed for a winning bidder to obtain financing. The advertised reserve price was $1,900,000. I didn't check the auction disclosure for the square footage of this 3 bedroom house, but I'd guess it was about 1500 square feet. Not big.

The auctioneer tried to make a big deal out of his opinion that people would be getting one heck of a deal. He started bidding at $5,000,000 as somewhat of a joke. Silence.
He went down to $4,000,000. More silence.
He went down to $3,000,000. More silence.
He went down yet again to $2,000,000. More silence!
He went down to $1,500,000 and got a hit. One of the "Internet" bidders seemed to have placed a bid. Was it a real bid? I have no idea.

Having a starting point, the auctioneer went to $1,600,000 and did his auction lingo in that price range for a while. This was met with silence from the crowd. No one bid. The auctioneer then singled out a person in the crowd - "Sir, you are interested in this property, aren't you?"
To which the gentleman replied "Not at this price." Priceless!!!

The auctioneer, having absolutely no success in getting any other bids, announced that the action was over and that there was no winning bid because the reserve price hadn't been reached. All expectations were deflated and the bidders dispersed into the sunny Laguna Beach afternoon.

I'd say the owner of 2626 Victoria Drive can't face the reality that his home is really worth $1,500,000. It probably will be worth less next month! This shows me that Laguna Beach home values are a LOT lower than the asking prices. Only a moron would pay anything close to the asking prices of most of the properties currently listed in the MLS. In some coming posts, I'll detail some actual moronic buying decisions and how these buyers have lost huge amounts of money in very short times. Until then, enjoy the weekend and any open houses you attend.

2712 Highland Owner Prices Aggresively and Gets Buyer

2712 is located close to Victoria Beach and has good views of South Laguna. It's a large family sized home that appears to be very nice and very contemporary. Rather than price this property at the same high prices of other Laguna Beach home sellers, this seller decided to go in with a lower price. This strategy likely avoided months of languishing on the market and the home moved before the current credit crisis and economic downturn. In hindsight, this was a brilliant strategy.

It all worked for the seller. The property quickly sold for $1,875,000 - very close to the asking price. This sale goes a long way to shedding light on Laguna Beach home prices.

Other homes in this area are listed at prices over two million dollars. Yeah....good luck with those......

Close Escrow...and Lose $500,000 (Or more!)

We've written about 2616 Victoria Drive, recently sold for $3,000,000. Now that a neighboring house (2626 Victoria Drive) is being auctioned with a reserve price of less than $2,000,000, it looks like the buyer of 2616 Victoria has lost a least a half a million dollars in value. Not bad.

Buy a house and loose a half a million dollars.

In a month or so.

Bad decisions can be disastrous. In my opinion, buying 2616 Victoria for $3,000,000 was a very very bad decision.

I wonder what the buyer's agent advised the buyer? Does anyone smell malpractice?

Upside Down in Lagunita - A Million Dollar Buyer's Mistake?

Lagunita is a gated community of about 60 homes on the ocean side of Pacific Coast Highway in South Laguna Beach. It is north of the Montage Resort and approximately across PCH from Ruby's Diner. Most of the homes are pretty dated, but some have been rebuilt. Victoria beach is really close.

In 2007, 4 Lagunita was sold for about $4.6 million. At the time, I was amazed anyone would pay this much for a small house that was NOT on the beach. A recent sale of a large modern home at 36 Lagunita for only $4 million could really lead someone to question the present value of the much-smaller and older 4 Lagunita property. We also know that Orange County home prices have cratered this year.

4 Lagunita is a 2 bedroom home with a small pool and a killer view. All that is well and good - but $4.6 million good? I wonder what kind of advice was given by the buyer's agent. How do you think the value has changed in 12 months? Of course, there is no real answer until there is a sale of the property. If you think the true value of this property is now, say, $3 million, then the buyers have lost about $1.6 million in 12 months. This is more than $100,000 per month and more than $3,000 per day!!!!

The home is now listed for rent on the MLS for $28,000 per month - yeah, good luck with that....

Wave of Foreclosures Washes Up in Victoria Beach

The flippers are collapsing near Victoria Beach, along with Laguna Beach home prices. Check out 2626 Victoria Drive, Laguna Beach. I was in this home not long ago, when it was listed at $3.2M. Now it is listed at $2.49M and it is listed on Ziprealty as a foreclosure. In this environment, I will be surprised if it even fetches $2.oM.

A few blocks away is 2938 Rounsevel Terrace, Laguna Beach. This is a new 3 bedroom home now owned by the bank. This is another house that was listed way up in the stratosphere, but now is listed by its bank owner at $2.35M for an "as is" sale. I wonder what the contractor didn't do before he left. Nothing like buying a two million dollar house that "needs work." I expect this one will languish and go for under $2M.

2616 Victoria Drive "Sells" ??

2616 Victoria Drive has been documented on Blue Move for a while now. A really small house with a good view and beach close, this home started out almost a year ago at an astounding listing price of about $4,300,000. After about a year on the market and repeated price reductions, the home shows as "sold" for $3,000,000. This at a time when at least one other redone home on the same street is listed for $500,000 less? Does someone smell something fishy here? This does not fit with the clear trend in Laguna Beach home prices. Hmmmm.

I researched the "buyer" of 2616 Victoria. It is a living trust located in Las Vegas. Let's look at the seller - a living trust located .....where else....but....Las Vegas, Nevada. Was this just a transaction by the seller between two trusts to effectively end up with a refinance? Let's watch this one now and see if it goes repo!!!

Bank Struggles to Unload 1435 Cerritos

1435 Cerritos, a large family sized house back in Bluebird Canyon has been for sale for a long long time. It is listed on two MLS systems for $2M and $2.2M. These are newer listings - there is at least one older listing that goes way back - 6-8 months or more. The house then was laughably priced at $3M. It is big, but it really isn't that nice inside and left me with the impression that it was remodeled in some kind of ad-hoc fashion.

During all this time, a the home was subject to repo proceedings, which finished recently. The house, purchased in late 2004 for $1.5M, is not worth in my opinion much more than that now due to the retreating market. 2004 values are common in the OC and you can find 2004 home prices in Laguna Beach. Another reason it may not be selling is that it is in an area that has suffered at least one landslide in the past. Only a few houses away at 1413 Cerritos Drive, there is a GIGANTIC GAP on the downhill side of the street where a family sized home slid down the canyon in 1998. It was disturbing to me to see the downhill side of the upper front yard had sunk and tilted downward. Careful with this one, buyers.

The bank lowered the listing price briefly to try to get some offers, but I don't think that worked as the house still remains active. The listing agent was probably trying to bait some bidders into raising their bids. Looks like that didn't work. Perhaps the listing agent can give us an update.

22% Discount on Skyline Drive ....and No Sale

Take a look at 1345 Skyline, a pretty nice house on a street with a great view. It has 3200 square feet and four bedrooms built in 1997.

On the market for a hefty 518 days, it was pulled from the market. The original listing price being pitched by Coldwell Banker Residential Real Estate was $3,200,000. Good thing some moron didn't bite because the price was reduced, reduced again and reduced yet again. In the end, the asking price was down to $2,495,000, which is about a 22% reduction. I've been inside this house during my househunt - it is very nice but it wasn't suitable for my family.

Of course, this house didn't sell at $2,495,000 and thus is worth less than that. How much less? I'd guess at least $100,000 less, but no one really knows how much less. Just like many other family sized homes in Laguna Beach, this one didn't sell and there are not very many, if any, comps available for a buyer to consider. This is another indicator on Laguna Beach home prices.

OC Home Price Implosion Makes News in Europe

So, today I'm sitting in Dusseldorf Germany having breakfast and reading the International Herald Tribune. What do I see but an article about USA real estate that focuses right in on the OC! The collapse in the OC is international news! Given the pain in the stock markets, I expect Laguna Beach prices for family homes (not on the beach) to continue to slide downward.......

What a Month

All, again sorry for the inactivity. Good news though. Three days before all of this financial craziness I managed to sell (close of escrow) my prior home. The escrow craziness and a year long adventure to try to sell this house is over with. Now onward with the home shopping!

Isn't it interesting that the stock market has dropped back to a 2004 level? This reflects almost exactly the housing market, which in price terms has dropped to a 2004 or even a 2003 level. It is almost as if the disappearance in value from the real estate market has been matched by the loss in value of the USA stock market. Coincidence? Or linkage? I think linkage.

Price Cuts (33%) Spread to Temple Hills Drive

Mr. Blue has been watching 1645 Temple Hills Drive for quite a while.
This house was pretty nice and had a great view.

But it didn't sell until after it was marked down a huge $1,000,000.
The original asking price was almost $3,000,000 and it sold in June for slighly less than $2,000,000. Boy, Surterre Properties sure did misprice this home!

And finally, why would ANYONE pay the asking price for an obviously distressed property? The buyer bid the asking price in June 2008.
Does this sound like malpractice by the buyer's agent? Thoughts?

ESCROW!!!!

Joy joy joy. My house north of LA is in escrow and hopefully will close soon! only 10 more days until all contingencies are lifted and I'm outta there!!!!

Laguna Home Sales Continue Slide

Dataquick's latest numbers are out for July. The number of properties sold in Laguna Beach is down 8% as compared to last July. Last July was not a good selling month and the market has slid even lower than that. This is a down indicator during what otherwise should be the peak of the typical selling season. The volume decrease is an irresistable market force that will drive prices lower. And prices have gone down for family homes - stay tuned for a post on this. All of t his does not bode well for the second half of 2008. Lookout below!

2616 Victoria Drive Update

There have been a lot of comments on this house on the blog.
It still appears to be listed at $3.7M. Someone claimed it was under contract but the listing still shows active so I think someone thought better of buying this small little Euro Box.

It doesn't compare well to the competition. For example, 170 Dumond is virtually brand new and is BIGGER and is in the same neighborhood, yet can't appear to fetch the much lower asking price of $2.89M.

Also 2626 Victoria Drive, brand new and BIGGER and has more parking and hasn't sold in over TWO years and has a listing price of $3.25M.

Even closer to the beach is 2670 Victoria at $1.8M. It is about the same size but older.

There you have it, three good reasons why the asking price for 2616 is a way way out of line. I wonder what the sales pitch is at the open houses for this property? How about "you really should buy this just because we have priced it so high - it is very exclusive, you know!"

1283 Starlit Drive - Another 11% reduction in price

This blog long ago identified the overvalued remodel at 1283 Starlit Drive - deep in Bluebird canyon. Well, the seller just reduced the price by $100,000 to $800,000. Considering it was bought in 2007 for $1,100,000, the asking price now represents about a 30% decrease. This is merely a comparison of the asking price and the last sale price. If (and when) the property sells for less, the real reduction will be even more. And this doesn't include the flipper's remodeling expenses.

Family homes in Laguna have slid downward big time. 1283 Starlit is Exhibit A.

Update: This home sold in April of 2009 for $835,000.

Back N Blue

Hello all. I must apologize for not blogging in a while. You see, I've been looking at the inside of many aircraft cabins, all of which were zipping across the globe. I've been above the Artic circle. Many times. I had the pleasure of being in O'Hare airport while an evacuation was attempted due to a tornado warning. Yes, the food is no good, the wine is lousy on the airlines and it certainly is great to be back in the OC. A quick look at the Laguna Beach listings reveals mostly the same old tired listings. Looks like a few fools have bought, but most people are wisely watching the market slide downward. Let the blogging begin anew!

1315 Dunning WTF Nuked by Next Door Comp Killer

1315 Dunning, back in the peaceful part of Bluebird Canyon, recently went on the market for $1.95M. It is the lower house shown in this picture.

Don't look next door...

1315 Dunning's listing says "This completely remodeled craftsman home is a masterpiece."

Hardly. I've been inside and its very very average.

Don't look next door.....

The listing goes on trying to make ordinary something more: "Offering hand hewn hardwood floors, Gourmet kitchen with stainless steel appliances and much more. "

Don't look next door, the listing agent hopes!

Why? Next door at 1325 Dunning sits the upper house in the picture. This home is also a "masterpiece." Its a DEAD ON COMP. Sold January 17. Sold for ONLY $1.35M.

When I was inside 1325 Dunning, the agent showing the house played dumb about the neighborhood until I said "That house next door, it looks familiar."

Dread on the agent's face.

I continued "I think it sold for a loooooot less, about 1.35 million." I could almost hear the agent thinking "oh no, an informed buyer - I won't be able to sell the house to this one."

In the end, she stammered "Oh, yes...but it was a short sale." I asked "wont the appraiser look at it? It could have sold for more if it was worth it?" She could do nothing but agree and hope that I would leave quick and not infect other buyers with the truth. This agent showing the house was not the listing agent.

So there you have it. A WTF price on Dunning from listing agent Shauna Covington. What's she thinking? It must be "I hope a moron shows up with an offer." I would think that most people would agree that the listing price does not reflect an honest valuation of this property. I wouldn't put my name and reputation at risk by putting a rediculous price on this listing. Buyer beware of Laguna Beach home prices.

Sales of Family Homes Approaching Standstill in Laguna Beach

If you follow the market, you already know this. The market is getting slower and slower and slower. Less sales. Many listings of family homes are retreads of failed 2007 listings. High prices and no takers. (and I'll say that the few takers near asking prices are simply misinformed or completely uniformed buyers)

Trulia.com's Feb-April 2008 home data for four bedroom homes shows only 5 selling during that period. In 2007, 11 four bedroom houses sold during the same time. This is about a 68% decrease from 2007. Another indicator that big price drops are ahead - sooner or later, more people will want to sell and laguna beach home prices will drop further.....

Existing Home Prices To Continue Decline Well into 2011

Ivy Zellman is Mr. Blue's favorite housing analyst. She's got Wall Street cred and a track record of predicting things that will happen. Tells the home market future, she does.

In her most recent article in Builder magazine, entitled False Hope, Ivy says the worst is yet to come and, most significantly, existing home price declines will continue into 2011. This is quite different from the local Laguna Beach real estate agents, most of who are talking upturn this year. Of course, most couldn't hold a candle to Ivy, so I listen with amusement. I feel sorry for their clients who may put their life savings on the line buying a house for the wrong price. Ivy knows her stuff. And this stuff says Laguna Beach home prices will continue to fall.

Flipper Smackdown - 1283 Starlit Drive

1283 Starlit Drive was featured on Bluemove in February. It is a somewhat remodeled home located way back in bluebird canyon with no ocean view.

My sage advice then? I said I was waiting for the $900K offers to roll in. I think the seller is a reader - today the listing price was lowered to .....$899K.

This is $400K lower than the original asking price, of $1,299,000, which is a 30.8% reduction.

The last purchase price, in 2007, was $1,100,000, so even if this home sells, the seller will see a big haircut.

This is the latest evidence that true market values are much less than most list prices in Laguna Beach. Laguna Beach home prices still have some settling to do.

Major Comp Killer in South Laguna - Pre 2004 or 2003 Prices Have Arrived!

32039 Virginia Way sold on April 8, 2008 for a paltry $1,125,000. Nice ocean views, 4 bedrooms and 2,650 square feet.

Activate Calculator.

WOW, that's $425 per square foot.

Not only that - the last sale price was $1,500,000 in April of 2004. That's right. The new sales price is LESS than 2004's sale price.

Ocean close in Laguna. How can similar homes now appraise for more? They can't. It will be an interesting summer. Laguna Beach home prices continue to spiral down.

Next time you see a real estate agent, ask him/her about this sale. Of course, they probably will claim ignorance. Give a client an accurate picture of the market? Not likely.

Laguna Beach Home Price Market Slides Back to Mid 2004

The March home sale prices for Laguna Beach have been put into Zillow's Zindex market gauge. The results? More decline.

If you track the present value back via the horizontal line, then go down to the time scale, you can see that the fair value in Laguna beach has rolled back to June, 2004. Many houses in Laguna are not selling. Why? They are priced much more than June 2004 values. Not good news for homeowners, but either they want to sell or they don't - it is that simple.

50 Percent Decline In Laguna

Arch Beach Heights is a good family neighborhood in Laguna Beach and has some of the lower end homes that were inflated during the bubble.

Take 947 Acapulco for example. It is a pretty much common 3 bedroom long narrow 2 story ABH home.

Present List Price: $1,049,000

Last Sale Price: $2,100,000 (July 2006).

The math is easy - if the seller (I assume a bank) gets the asking price, the total loss will exceed $1,100,000, including a 5 or 6% real estate agent commission.

This is a HUGE haircut - more than a 50% price reduction. And.....I'm thinking that this house may not even sell for less. $900K? $800K? There may be more value loss coming soon.....

New Repo on 926 Van Dyke

Here's a pic of the inside of the a Van Dyke Street home in Laguna that I saw on a foreclosure list. Looks like an old house, but it could be nice. It is a 4 bd and only 1600 sq. ft. The old listing on the MLS only had one picture of the property, so I bet the place is not too pleasing to the eye.

This home was listed last year for $1.699M and was previously bought in 2005 for $1.350M.
The minimum bid required for the auction is over 1.5M, so this one will soon be owned by Washington Mutual, the lien holder. My hunch is that this home comes back on the MLS at $1.1M. I'll try to take a look at it after it comes back on the MLS.

Luxury Comp Killer - 304 Weymouth in North Laguna

You may have seen this home for sale since April of 2007 for $3,200,000. I visited this house and it was really modern (which I liked) and really spacious with top of the line everything. Architectural quality.

Well, it just sold in January for only 2,425,000. This is only $638 per square foot and a whopping 25% less than asking price. Homes in North Laguna generally are more expensive, so this means a house like this in South Laguna should sell for less. Similar lux homes in the 4000 sq. ft. range are a good fit for this comp.

This home also shows that buyers shouldn't lack courage. Figure out what something is worth and make the offer - regardless of the dream asking price set by the seller and their real estate agent!

30% Markdown In Laguna Beach

1089 Miramar Street. Our early march price indicator. Do houses speak to you? This one should - and it should say something like "You are nuts if you buy a house in Laguna Beach and pay more than a 2004 price, because you will lose money starting the day you move in."

Miramar was listed in August of 2007 for $1,549,000 and is in Arch Beach Heights, a nice area.
Several months and markdowns later, the asking price has been reduced to $1,150,000.

This is a $400,000 reduction (about 26%) and the place is not sold, so the ultimate selling price could well be less than 30% below the original asking price.

But wait, there's more.

The Miramar house was bought in May, 2005 for $1,195,000!! The flippers put additional money into it ($100K?) and now are all but guaranteed to sell the place for much less than the 2005 purchase price! With a 6% commission and assuming a $100K remodel, the loss could top $250,000!!! Laguna Beach home prices are coming down, and fast.

What Shoud a Buyer Offer These Days In Laguna Beach?

The chart above is the updated Zindex showing the decline in Laguna Beach home prices and how the market now reflects October 2004 price levels. AND IT IS GOING DOWN RAPIDLY.

A buyer these days has to operate without a lot of good information. Some buyers are lucky to be experienced in the market and do not have to rely on a real estate agent to spoon feed selected information. There aren't a lot of comps and most listing prices are wildly high. What amount should one offer? How far under asking price is justified?

I've been looking at the market on the "rollback" principle. That is if a market indicator has decreased to the same level as a point in the past, say 2004, I will make offers on a home based AT MOST on what that house would have sold for in 2004.

With that said, look at the latest Zindex for Laguna Beach. It has decreased to the point where it has rolled back to about October 2004. So my operating rule of thumb will be to make an offer based on the market price of a property slightly before October 2004.

Blue Lagoon Update

Condo complexes are great market barometers. There is enough sales history to see some trends that may reflect the broader market in the local area.

Blue Lagoon is a rather old condo complex with good amenities such as tennis and pool, located between PCH and the beach just north of the Montage Resort.

In any event, we reported on 15 Blue Lagoon late last year. What's up with it? It is still for sale, now priced at a reduced $1.599M. This is $100,000 less than it's 2006 purchase price. Factoring in a 6% commission, the actual sale price realized by the seller will probably be at least $200,000 less than the 2006 purchase price.

This property has been listed for nearly a year.

Other Blue Lagoon units have recently come on the market and some of them are flips where the units were upgraded and relisted on the MLS. We'll see how they do. I often walk through Blue Lagoon and the whole place seems rather dated, run down and the units don't even have garages. Multi million dollar units with car ports? Yes. Here. In Laguna Beach.

Open House Carnage in Newport Coast

We decided to check out some open houses in Newport Coast a few Sundays ago. I witnessed a crazy situation, but more about that later.

One of our purposes was also to see how many kids are in the neighborhoods in the area. We want to get into a neighborhood that has a lot of kids so our kids have some playmates. Anyone have thoughts on Newport Coast for that?

In any event, we stopped at the house at 8 wayside. It turns out that it is a disappointingly small two story house given its $3.79M asking price. The view was nice.

But get this.

I come out of the house to get back into my car...and...

The owner of the house is out front with the garage door open and his Ferrari PINK SLIP out, trying to SELL his car to somebody. Sell Sell Sell, economic times must be tough at 8 Wayside. I think I'll just wait for this one to go REO before I even think about making an offer. (In my mind, it is a $2M house.)

We saw a few kids out and about in this neighborhood, but only a few. This did not inspire confidence.

Why I Can't Live in Irvine

In the last few months, my family has had considerable debate about where to live. Community, schools, location, etc.

There's one thing I can't stand. Homeowner Associations that get out of control. There's a well meaning kid in Northpark in Irvine who's been singled out by some people who clearly are deranged and have too much time on their hands.

I'd welcome his family as neighbors any time, with one blue van or even two.

I've always been reluctant for some reason to consider living in the over-regulated stripmall sameness of Irvine. Now I'm firmly decided - avoid Irvine!!!!!

Read about it here.

1283 Starlit Drive - Another Member of the Laguna Beach Desperate Flipper's Club

Bluebird Canyon is a nice part of Laguna Beach. 1283 Starlit Drive is located well inside the canyon and was just listed. Too bad that it is a just finished remodel that has hit the market waaaaay tooooo late.

Purchased for $1,100,000 in early 2007 before the bottom dropped out, the asking price is now a hefty $199,000 more, totaling out at $1,299,000.

The listing comes right out of the box with a desperate plea: "Seller will carry!! Beautiful home remodeled, 4bed 1 bed converted to family room /office. 2 full bath one story,shows very well,great for large family or roomates. Has seperate entrances. Wood floors, newer carpet and tile,ceiling have been scraped,formal dinning room, fireplace in living room. Many fruit trees in yard, very private. Open floor plan. Please call listing agent for special financing detail. "

So let me get this straight. I should pay $200,000 more in a DOWN market for some wood floors and scraped popcorn ceilings??????? The listing photos DO NOT show the kitchen, so I'm wondering if the old kitchen is in this minimal remodel. But sure, I'll pay the listing price anyway - because the "Seller will carry". Easy loans just like the good old days means I don't care what the purchase price is. Let the good times roll!!! Yeeee-haaaaah! Booooo YAAAAA!!!! Sign me up!!!!!!

Seriously. I'm wondering when the $900K offer comes in.............

Bluemove Exclusive - "Sell my Rolex to make the house payment"

My family frequents Ruby's on PCH in south Laguna. Some nice local tidbits were heard there this weekend. One family was discussing home mortage issues. A man of the heretofor well-off family declared: "I think I'll sell my Rolex to make the next house payment." "I might be able to buy another one in five years." My, my, doesn't that inspire confidence in the local house market. Buying I will not do.

By the way, Ruby's is an awesome place for families with kids. They have big booths and the staff takes orders quickly, so that food is delivered before the little ones get bored. Also, the paper car models that are given to the kids are fun little diversions that preserve mommy and daddy's time to enjoy a meal outside of the house. Hats off to Ruby's.

This is yet further buzz that supports the grim picture that real estate values in Laguna Beach are sinking fast. Laguna Beach can't fight the market and swim upstream - just like Orange County home prices are sinking, so goes moneyed Laguna Beach.

Desperate Laguna House Flippers

Below are some 3 bedroom or larger homes that strike me as flips gone wrong or about to go wrong, especially since Laguna Beach home prices are spiraling downward:

2867 Terry Road - Asking $1,895,000, bought it for $1,850,000 in 2006. Listed for almost a year. This house is a small 3 bedroom, but it is nice. No yard though and really close to PCH noise.

954 Miramar St- Asking $1,099,000, bought for $1,000,000; listed in 2007 and recently relisted to make it look "new".

31371 Monterey St - Reduced to $2,050,000, bought for $1,400,000. I visited this one this weekend and they are eager to sell - further price reductions likely on this one. This house sits right above PCH - a very noisy location. The renovation stopped at the doors - there are some ocean decks that are in bad shape - a sign of financial distress.

1914 Upper Rim Rock - Asking $1,980,000, bought for $1,500,000 and about $200,000 spent on remodeling. Listed for over 100 days. The predictor says......watch for a price reduction.

454 Broadway - Asking $1,549,000, bought for $999,999. Listed for over 100 days. Ditto - price reduction soon. Broadway street is the 133 highway - this is a bad location.

645 Buena Vista Way - Asking $3,850,000, bought for only $200,000 less. Listed for 148 days. Can you say "watch for the repo man?"

2616 Victoria Drive Update

Reality is setting in down on Victoria Drive - in over 100 days on the market it has not sold and the asking price has been reduced to just shy of $4,000,000. The price has a long way to go down, however, as this house doesn't compare well to other beach close homes in gated communities that are beach close, with community amenities and parking. This house, while nice, is small and has neither.

Looks like Laguna Beach home prices and Orange County home prices as well continue to slide.

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"!!!

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.

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.

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.

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!

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.

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

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.

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.