What Your Agent Won't Tell You About That Home You Want To Buy

Buying a home is not something people do very often. For this reason, most people rely on their buyer's agent for good advice.

Problem is - most agents will hide negative information from their clients because the agent wants that commission and wants it fast.

Take the Laguna Beach home market for example. Thanks to our friends at Trulia, the direction of home prices in Laguna Beach is readily apparent. Down. Down. Down. Down. Down.

The Trulia chart, with the red trend line I added, shows an amazing decline in median home prices in Laguna Beach. The decline shows no sign of stopping. The decline HAS NOT STOPPED.

You'd think every agent in town would be saying "If you buy, you should know you are buying a DECLINING asset. You know, like a car?" But, I'm guessing you have NEVER heard that from an agent. Right. I have only heard one agent even hint at this, and I know A LOT of agents. My conclusion is that greedy Agents are hiding important facts from buyers.

More likely, you've heard many agents say "Buying a home is a long term investment." These are the real estate agent code words for "You will lose money, and lose money quickly, but I won't tell you that."

Am I wrong? Or right?

Laguna Beach Slammed by Unemployment Spike

According to a recent OC Register story, Laguna Beach unemployment has swelled to nearly 6.3%.
This is an increase of about 700% since 1999. Downward pull on the normal single family home values in Laguna Beach? Yes. Middle class people caught in the unemployment wave? Yes.

Laguna Beach Median Home Price Tanks in April

The April dataquick numbers are in and things are still tanking for Laguna Beach home prices.
The median single family home price in Laguna for April was $1.16 million, down a whopping 31%.
May and June should pick up a little given it is the summer buying season.
The economy and the lack of good financing is just killing the homes priced above the median, for which one would borrow more than the current $729,000 conforming jumbo limit. This pressure will continue past any little summer jump and things will slide further as we go toward December.
If you put in an offer, make sure the offer price is low enough so that you don't end up holding the bag for these future losses.

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.....

Laguna and Corona Del Mar Home Prices Crash to New Low

The show keeps going folks. Despite the typical "our town is immune" cheerleading from most local real estate agents, the Laguna Beach median home price slid to $1.14 million in March, down 30% since last year. The average Laguna Beach homeowner has lost about $30,000 per MONTH in net worth from home value decrease during the last year.

Glad I'm still renting while I'm in house hunting mode. My landlord could repave a mile of PCH with the dollar bills he loses in home value in only one month. Oh, yeah, while that bleeding goes on, I get to live in his fabulous house! Sounds like the new version of the American dream!

The "immunity" has turned into the full blown plague. Don't catch it!

Bye Bye 2626 Victoria Drive

We've watched as 2626 Victoria Drive has gone from an outrageously over-priced listing to a complete disaster for the owner, via a failed auction organized by local realtor John Stanaland of First Team Estates. Now the posted data shows that the property will be auctioned in foreclosure next week. Perhaps the banks will price it closer to the $1,500,000 the property could have fetched at the failed auction back in November, 2008. No one is immune to the drastic drop in Laguna Beach home prices.

Laguna Sales Crater - Laguna Beach Has 6.25 Years of Real Estate Inventory

Based on the latest dataquick reports (6 properties sold in Feburary), Laguna Beach has a huge inventory of homes for sale that would take over 6 YEARS to sell. (Redfin indicates 442 properties are on the market right now)

What does this indicate? More huge price corrections to the downside for Laguna Beach home prices. When nothing is selling, sellers must reduce prices or not sell. No one can fight the market direction. Buying a home now at the typical high asking price would be a stupid, catastrophic decision.

Honey, the neighbors undercut us by $500,000!

I've been following Crystal Cove home prices closely. There are some very disappointed home sellers in Crystal Cove. This probably goes under the category of "the market giveth and the market taketh away." Crystal Cove homes appreciated hugely in the bubble years.

Now is the time for the home values to give it up.

Take 2 Tideline Bluff, for example. Originally listed for $4.5 million, it has been reduced to $3.6 million. This about half way up the hill in Crystal Cove, where homes have been listed in the 4-5 million dollar range. Now, the price cut on 2 Tideline Bluff and the listing price on other homes have made it clear that the $4 million dollar days are gone for good.

Just down the street is 20 Tideline Bluff, listed at $4.8 million. This one is, well, pretty clearly over valued in view of this development. Yet Coldwell Banker is still trying to sell it at this price. What does that say for Coldwell's credibility? Thoughts anyone?

It should be appreciated that the neighbor's price cut really does nothing other than demonstrate that the true market values for these homes have gone down. If the values are down, they are down, no matter what the various asking prices. If either home were worth 4 million dollars, then someone would step up and pay it. Not going to happen because in reality the homes are not worth it.....

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?