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.

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!

Awesome Chart - What Year Have LA Home Values Rolled Back To?

This chart was part of the Anderson Forecast presentation at UCLA.  LA home values are at a level similar to that of January 2004.

After 3 years, Laguna Beach Mansion Sells for 2003 Price

1302 Skyline, a very high end french country farmhouse style mansion, sold in September for about $3,675,000. The home features 4 bedrooms and 4000 square feet of highly upgraded living spaces.

This home has been for sale on and off the MLS since 2007. One of those old listings was for 5,995,000 by James Ardery of Prudential California Realty. In my opinion, this seller lost millions by not competitively pricing the home in the first place. A competitive price long ago could have resulted in a sale, but instead the home sat on the market while home values sunk even lower.

The home was last purchased in August, 2004, for $4,400,000. The more recent sale price in September 2010 is probably equivalent to what the home would have sold for in 2003 or even 2002! This tells you where the luxury home market is on the OC coast.

What does this mean? If you are buying a home, try to determine what it would have sold for in 2003 - that is one indicator of the home's value today, despite the listing price.

Cartoon House - Now Asking $1.2M - Down 57%

In December 2007, I identified this listing as ridiculously overpriced at $2,800,000.
Nailed this one. At 940 Hillcrest in Laguna Beach, it hasn't sold and is now listed at $1,200,000, a whopping 57% reduction in asking price. Of course, that is still a lot for a CARTOON HOUSE.
Presumably, this property is being sold for the value of the lot. Nonetheless, I think the term CARTOON HOUSE fits in just fine with the snake oil most Laguna Beach and Newport Beach real estate agents are selling.

Barton Rollert of Coldwell Banker has this listing. Rollert's credibility is scraping bottom since the past listing for this property asked for $2,800,000, and obviously this was way, way off the real value.

Barton, can I buy your CARTOON HOUSE with CARTOON MONEY?

This shows how much trouble a buyer could get into by giving any weight whatsoever to a Coldwell Banker list price. If someone would have paid $2,800,000, or anything close, we now know that the buyer would have been stuck with at least a $1,600,000 loss based on the present list price.....

Ocean Views - $315 sq/ft in Arch Beach Heights!

I recently noticed that the house at 1420 Del Mar sold for only $832,500, about 50% of the original asking price. It is a 4 bedroom, 2640 square foot home with ocean views. I toured it a while ago.

That works out to $315 per square foot. This is about what Arch Beach homes were selling for in 2002 or 2001.

This is a price point that will attract buyers in Laguna Beach, yet there are plenty of sellers out there who are asking much more, hoping for an ill informed buyer to happen along and get suckered.

Luckily, no buyer gave any credibility whatsoever to the original $1.6 million asking price, as listed by Keller Williams realty. Sorry Keller, no morons bought your perception of "value".....

January Home Sale Prices Crater in Laguna

My prior post on January Laguna Beach home prices was based only on data through January 15.

Well, the last two weeks of January were ***MUCH**** worse.

When all the January numbers from Dataquick were in, the median home price in Laguna Beach was down to $825,000, a whopping 50% decrease over last year. This is single family home data only, and does not include condos.

You know that this means.

No one who is sane is buying any of the overpriced homes on the Laguna Beach MLS. The few sales that did happen? I chalk that up to the "moron" factor - ill informed buyers who have made catastrophic buying decisions.

There has been a drastic step change downward in the true home values in Laguna Beach. The median home prices in Corona Del Mar, Newport and Newport Coast also dropped like lead balloons.

Are there any agents out there who disagree? Sellers? Buyers?

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.

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....

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.

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?

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.

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.....

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!

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.

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?"