Sales of Family Homes Approaching Standstill in Laguna Beach

If you follow the market, you already know this. The market is getting slower and slower and slower. Less sales. Many listings of family homes are retreads of failed 2007 listings. High prices and no takers. (and I'll say that the few takers near asking prices are simply misinformed or completely uniformed buyers)

Trulia.com's Feb-April 2008 home data for four bedroom homes shows only 5 selling during that period. In 2007, 11 four bedroom houses sold during the same time. This is about a 68% decrease from 2007. Another indicator that big price drops are ahead - sooner or later, more people will want to sell and laguna beach home prices will drop further.....

Existing Home Prices To Continue Decline Well into 2011

Ivy Zellman is Mr. Blue's favorite housing analyst. She's got Wall Street cred and a track record of predicting things that will happen. Tells the home market future, she does.

In her most recent article in Builder magazine, entitled False Hope, Ivy says the worst is yet to come and, most significantly, existing home price declines will continue into 2011. This is quite different from the local Laguna Beach real estate agents, most of who are talking upturn this year. Of course, most couldn't hold a candle to Ivy, so I listen with amusement. I feel sorry for their clients who may put their life savings on the line buying a house for the wrong price. Ivy knows her stuff. And this stuff says Laguna Beach home prices will continue to fall.

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.....

New Repo on 926 Van Dyke

Here's a pic of the inside of the a Van Dyke Street home in Laguna that I saw on a foreclosure list. Looks like an old house, but it could be nice. It is a 4 bd and only 1600 sq. ft. The old listing on the MLS only had one picture of the property, so I bet the place is not too pleasing to the eye.

This home was listed last year for $1.699M and was previously bought in 2005 for $1.350M.
The minimum bid required for the auction is over 1.5M, so this one will soon be owned by Washington Mutual, the lien holder. My hunch is that this home comes back on the MLS at $1.1M. I'll try to take a look at it after it comes back on the MLS.

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!

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.

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.