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.

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.

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.

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.

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.

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.............

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?"

Flip Fantasy

Here is some local flavor of note. 1035 Coast View Drive just came on the market, almost exactly a year after it was purchased for $1.6M.

The new price?? A whopping $2.35M. I'll try to look at the house in person soon, but from the looks of the MLS pictures, little more was done than some fresh paint, new wood floors, bathroom redos and a new kitchen. Given that prices have gone DOWN in Laguna Beach since 2006, me thinks this asking price is pie in the sky, but we'll follow this one and report back in the future.

Being generous and assuming that the remodel added $300K in value, then at most it would be worth $1.9M, but......some would say that the $1.9M should be discounted because the market has fallen. How much of a discount? 20% would result in a $1.52M selling price. Stay tuned.

Flip Flop

Another data point on OC home prices. I hit a few open houses last weekend up in the area of Terry Road, the neighborhood by Nyes & PCH. I went into an open house and asked "What ever happened to the house for sale over at 2800 Terry?"

The agent at the open house said that the house had been taken off the market. Must be waiting for the spring selling season in hopes of getting an offer.

I looked at the house from the outside and it certainly looked empty. The last asking price on the MLS was about $2.5M, which is very high for the neighborhood. The entire neighborhood has inconvenient beach access and suffers from PCH traffic noise. The next time you get OC quotes on comps from an agent, take them with a grain of salt if they are before October!

The house is new, but it is pretty vanilla inside - scattered on three floors and really lacking in design energy or excitement. Methinks it won't be going anywhere fast in 2008.

Canary in a Coal Mine

In the old days, coal miners would take a canary into the mine as an early warning system - the bird would pass out if the air couldn't sustain life, giving the miners an early warning to get out of the mine. Laguna Beach real estate is no different.

Witness our own Laguna Beach Canary, 2616 Victoria Drive. Bought in March 04 for about $1.5M, it now sports an astounding $4.3M price tag after an extensive renovation. I doubt this flipper spent more than $1m on it, but in any event, it has been listed 51 days already. It is in an awesome location quite close to the beach, but it lacks the common area amenities found in local gated neighborhoods. Given prices in LB have slid back to 2005 or so, I'm wondering if this one will sell at something like $2.2M-$2.5M.

Stay tuned for our canary watch! In the meantime, keep an eye on Laguna Beach homes for sale!