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Update: This home has been withdrawn from the market.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

False Perceptions of a Turn Around

My favorite industry analyst, Ivy Zelman, has a good article in Builder magazine detailing the state of the market. Ivy basically says that there are some superficial indications of a bottom but that things will get worse.

Buyer's Remorse in Crystal Cove?

More data from Crystal Cove - 18 Rockshore just sold for $4.42 million after being listed for about $5 million. 18 Rockshore is a 3800 square foot, 5 bedroom home. Also, 16 Wharfside (3500 square feet, 6 bedrooms) sold in May for $3.1 million. A similar home at 7 Atlantis Cove sold in January for $3.2 million. All of these sold for hundreds of thousands less (or almost a million less) than the listing prices.

Time will tell and I'll certainly not wish anything bad on anyone, but in my opinion, these homes will take significant value hits as we go toward December, based on present trends. There are already Crystal Cove list prices in the low 3 millions that are poised to drop into the two million range and one home (20 Surfspray) up there by Rockshore is already listed in the mid 2 millions.

If I owned 18 Rockshore, I'd be needing "upside down" therapy right now. Not a good thing to need after just closing escrow. Any opinions about these values out there?

Crystal Cove Awash in Foreclosures

I've been househunting in Crystal Cove for a while now and I have also been carefully watching the foreclosure activity. Like anywhere else, a spike in foreclosure activity is likely to precede a drastic drop in home prices. The foreclosure activity includes recorded notices of default, trustees auctions and then the resulting properties are "bank owned."

Six months ago, there was only one property in crystal cove that had foreclosure activity. Three months ago or so there were five properties involved in foreclosure. And as of today, there are twelve, according to Realtytrac.com. This pretty much proves out what I've seen with the homes in Crystal Cove - home values are dropping fast. Homes that are priced high are just sitting there...... Some listings have drastically reduced listing prices as some owners have determined that it is better to get the home value now rather than lose more in the coming months.

How many of those "good" real estate agents have told our readers about this spike in foreclosure activity in Crystal Cove? If yours has, hang on to them - they really are paying attention to value indicators......

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.....