2626 Victoria Drive Headed Toward Foreclosure

Bluemove documented the failed auction at 2626 Victoria Drive just after Thanksgiving of 2008. Now, Bluemove has discovered that, according to Realtytrac.com, a mortgage default for this property was recorded in early December. This is the first step of foreclosure and this is becoming a more common factor in Laguna Beach home prices.

The highest market price from the bidders at the failed auction was $1,500,000, but this was well below the price the seller would accept. If and when the bank forecloses, perhaps the home will sell for $1,500,000.

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?)

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....

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.

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!