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Update: This home has been withdrawn from the market.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