Archive for July, 2008
July 31, 2008
As I suspected, my previous blog elicited many comments, some agreed, some did not. There were a few different areas that I wanted to go into, but wanted to remain focused and to the point. No tangents in this here blog. Later yesterday evening I went in to shoot Lary King Live and as luck would have it, they talked about the exact same thing that I wrote about. King had a full panel of experts that included Ben Stein, economic columnist for the New York Times Paul Krugman, CEO of 1-800-CashOffer, Jeremy Brandt, Author of “Girl Get Your Credit Straight,” Glinda Bridgforth and star of the Bravo television show “Flipping Out,” Jeff Lewis. As you can imagine, it was quite the heated discussion. All seemed to agree with what I wrote and many of your comments, some were even harsher than Mr. Leykis or Mr.Beck.
People are saying we are in a economic recession because of the housing crises…umm, no no no, we are in a housing crisis because of greed. Many are not aware or don’t realize or simply don’t want to admit that you can have a strong economy and have a bad housing market and vice-versa. It is possible that one can have nothing to do with the other. What is happening with the housing market was bound to happen regardless of how the economy is. It is a cyclical market and is going to experience ups and downs in both good and bad economic times.
A good example of this would be Orange County. An area that can boast of having one of the largest economies in the world, has experienced up to a 45% decrease in both sales and housing prices in some areas. For the entire county as a whole, sales are down 26% from this time last year and the median home price is down 23% from this time last year, according to Dqnews.com. To note: The 92649 area code of Huntington Beach has experienced a staggering 57% decrease in sales…OK, that just may be the recession 
July 31, 2008
As you may know, Anaheim’s Stadium Lofts condo development on Saturday held what it loftily termed “The Event,” aimed at moving 58 unsold condos (the complex has a total of 390 units) at dramatically discounted prices (e.g., a one-bedroom loft reduced from $341,000 to $243,000; a 2+2 for $403,000 instead of $535,000).
In my post on Tuesday about Anaheim, I wondered how “The Event” had gone, and one commenter gently suggested that someone should quit wondering and just pick up the phone and ask. So on Tuesday, I talked with Todd Bousman, Stadium Lofts’ marketing and sales project manager. It turned out that the developers had issued just issued this news release about The Event.
Stadium Lofts had asked potential buyers to stop in the office and get prequalified in order to be allowed to line up on the day of The Event. The developer asked that no one line up until 6 p.m. Friday, but, according to Bousman, people started arriving and milling about at around 11 a.m. Friday. About 35 people spent the night lined up outside.
As of Tuesday, Bousman said The Event had resulted in sales contracts for 68 homes — more than the number originally put up for sale. There was such high interest, Bousman explained, that Stadium Lofts decided to release 10 more unsold units to meet demand.
It’s unlikely that all of the 68 will close escrow, Bousman noted; typically about 10 percent fall out. Will that percentage be higher in today’s tight-credit environment? But even if 10 percent fall out, that’s still 50-plus condos sold that weren’t sold previously.
Bousman said the bulk of buyers were parents helping their children buy a home or buying a place to live for their college-age youngsters. There were also some empty-nesters. One couple came all the way from Vancouver, Canada. (Click here to read the OC Register article on The Event.)
What can we conclude from this? One, that these folks think they’re getting a deal. Two, price means everything in this market — price it right, and people will buy. These people must have thought the prices were right. And three, this Platinum Triangle development might really be working for Anaheim. People like the idea of having a self-contained community with lots of amenities nearby, and with Anaheim GardenWalk, Downtown Disney, the Big A, and Disneyland/California Adventure within walking or short driving distance, that’s what this area delivers.
What do you think? Did these people get a deal?
Recent Redfin posts:
Foreclosures: Taking a Hard Look at Both Sides of the Issue
Laguna Hills State of the City: Real Estate Market
Reality Check: Irvine Condo and Detached Home Stats, July 2008
Orange: Big Price Drops
July 30, 2008
What’s happening with the foreclosure market has caused quite the mess in California and the nation at large. This misfortune of many folks losing their homes has spun the Federal Government into a “let’s save the people type of mode.” But here is something that is really scary, there are quite a few people out there that believe that these individuals in foreclosure should not be saved. Yes, as harsh as it sounds and is to some extent, many folks, particularly hard to the right conservatives, put the blame solely on the buyers. I have heard many conversations, seen several interviews and have read quite a few articles where people just aren’t buying into the whole predatory lending deal. “You should have read the fine print,” many have stated. I am not saying that I am one of these people. I do have sympathy for the massive amount of people that have lost their homes, but this blog is here to say there are those that don’t.
Glen Beck, of CNN Headline News is one of those people. “Using public money to help out a private situation is insane,” stated the host of his own radio and evening news show. For people that understands government and the economy, they will find some level of truth to his statement. (Side note: He also feels that Barack is a Socialist, there is some level of truth to that as well.) Of course, Glen Beck is a right-wing type of fellow and thus his remarks are not too surprising. Never the less, his views are widely shared.
Tom Leykis, (small L Libertarian and registered independent) controversial radio talk show host of the “Tom Leykis Show,” is one of the most financially savvy individuals around (and a certified genius) and you could not pay him to give an ounce of sympathy for people who are losing their homes. “They’re all idiots, they should have paied a real estate lawyer to read over their contracts if they did not understand them.” The problem with this statement is that it is highly idealistic and does not take into consideration that real estate lawyers cost a pretty penny and the buyers may not have been able to afford one, especially during an already financially strapped time.
The whole issue boils down to greed on both sides of the fence. Hungry and greedy real estate agents and brokers not being 100% truthful to their clients. And the clients knowingly biting off more than they can chew. Better judgment should have been used by both parties as they made these real estate transactions, because now, in the end, everyone loses.
Now to our good friend, Mr. George W. Bush, who as of today signed into law a bill that aims to boost our struggling market and provide a fail-safe Fannie Mae and Freddie Mac, according to CNNmoney.com. The bill is twofold: 1. To offer affordable government-backed mortgages to homeowners at risk of foreclosing on their homes. 2. To bolster Fannie and Freddie with a temporary rescue plan and a new more stringent regulator. Ironically, Bush promised to veto the bill as of last week, but decided to sign at the last minute. He still is opposed to one aspect of the bill though - giving aid to states to buy foreclosed property. Hmmm, go figure.
July 30, 2008
With all this talk of bottoms, plateaus, and leveling out of the local real estate market I thought I would take a look at the numbers and see what story they tell us about the state of the Laguna Hills real estate market.
Days On Market
It turns out that the inventory in Laguna Hills is on the up and up. It’s gone from a low around 120 in January to about 134 now. While it’s an increase, we’re still only talking about 14 additional houses. I didn’t even post the chart because it looks scarier than it really is! The other good bit of news is that the average days on market has leveled and stayed level for about three months. The disheartening part about it is that the average days on market is that it’s sitting just over four months. That’s an awfully long time to sell your home. With the number of foreclosures out there, the competition to sell is steep and sellers will have to take drastic measures in order to remain competitive.
Median Price
Speaking of some of those drastic measures, one look at the median prices shows just what measures need to be taken - price it right. The median price of the home on the market in Laguna Hills sits right around $777k. This is by far the most surprising number of them all. At the lowest the number dipped to about $755k. To see an incline is shocking.
Looking at these numbers many might jump to say that we’ve hit the bottom, but given all things I’m reluctant to say so. The median price does seem to be increasing but with a market as small as Laguna Hills, the simple sale of some larger homes (say Nellie Gail) can really skew the data. In fact, a quick glance shows that in the last three months there were over 10 of the $950K Nellie Gail homes sold - many in June and early July.
I think these numbers only affirm what I’ve been discussing a lot lately we’ve hit a plateau of sorts, not the bottom. There’s a little stablization in the market and we’re not facing the full on free fall that we experienced for the last twelve months. But there’s still a lot of sorting out to be done. There’s a long way to go so we’ll have to see where the road takes us.
July 29, 2008
I was just having a conversation the other day about how the two major natural disasters that Southern California has to deal with are fires and earthquakes. Well today we just experienced that latter and boy was it a shaker. I have lived in So Cal for most of my life, so quakes are nothing new to me. Although, I must say this one had me a tad bit concerned. I lived outside of the Los Angeles area for eight years and I often heard people say ” I could never live out there [California] too many earthquakes.” Of course, they have their own set of natural disasters to deal with, but found a way to justify a Nor’ Easter over a little ground movement. Hey, give me a little ground shaking any day over a hurricane. Ironically enough, the ground started to move just as I sat down to begin this blog, so I thought, hmm, why not find a way to incorporate that. When looking for a place to live in Southern Cali, there are many things to take into consideration, but the thing about earthquakes is that they can happen anywhere in the southland, so it makes it difficult to gage. Where as fires are more prone in certain areas. The 5.4 quake that was centered in Chino Hills will certainly do little to stop folks from buying in Southern California, especially the more desirable areas such as Newport Beach. The biggest effect that earthquakes have on the market is earthquake insurance, which is very expensive, but optional. There is no indication why people sold these homes in Newport Beach, but I have a strong hunch it was not because of the earth moving beneath them.
200 Paris Ln: sold for $583,000, 1 Bed, 1 Bath, 975 SQ. FT. Condo style/built in 1989
2418 Holly Ln: sold for $850,000, 3 Beds, 1.5 Baths, 1,179 SQ. FT. Residental style/built in 1954
2518 Margaret Dr: sold for $875,000, 4 Beds, 2 Baths, 1,701 SQ. FT. Residental style/built in 1954
2101 E. 15st: sold for $625,000, 3 Beds, 2.5 Baths, 1,596 SQ. FT. Condo style/built in 1990
35 Ocean Vista: solf for 1,047,500, 2 Beds, 2.5 Baths, 2,276 SQ. FT. Condo style/built in 1981
3605 W. Balboa: sold for 1,169,000, Beds and Baths not listed, 1,659 SQ. FT. Residential style 1959
610 Clubhouse Ave: sold for 1,190,000, 2 Beds, 2 Baths, 2,500 SQ. FT. Residential style/1972
547 Tustin Ave: sold for 985,000, 2 Beds, 1 Bath, 1,391 SQ. FT. Residential style/built in 1947
July 29, 2008
Not surprising analysts and mavens alike, the California foreclosure problem escalates. Both Dataquick and Foreclosureradar.com recently released numbers that paint a dismal picture on the state of foreclosures in the Golden State.
Dataquick’s stats and analysis indicate that we might be hitting a plateau as the numbers are starting to stablize a bit. On first read I was reluctant to agree, but they also noted, “Most of the loans that went into default last quarter were originated between September 2005 and November 2006.” Also noted was the fact that multi-loan mortgages peaked near the end of 2006. This means we’re starting to near the end of the timeline for the dicier loans and seeing the fall out as prices increase.
I am anxious to see what happens, however, when the more appropriate, but still risky loans with 5 year-arms come up to expire in 2010 and 2011 and the home values still have not recovered. We might see Round II then.
Worthy of Noting
- Orange County Sits Mid-Level: According to Foreclosureradar.com Orange County does not lead the pack in the state for foreclosures. Instead, the county actually saw a 2% decrease in foreclosures from May of ‘08. But don’t get too excited yet, when compared to June of ‘07 foreclosures are up 247% .
- Less People Are Recovering: Dataquick reports a year ago, just over half the people facing foreclosure were able to stay in their home, the numbers are getting less hopeful. “Of the homeowners in default, an estimated 22 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe.”
- It’s Hitting Home: The Foreclosure Factor is undoubtedly taking a toll on the markets. “Foreclosure resales have emerged as a significant market factor, accounting for 40.0 percent of all California resale activity last quarter. A year ago it was 5.4 percent.”
July 29, 2008
I can’t help thinking that Anaheim is a hot destination these days. For one thing, its baseball team, the Angels, has the best record in baseball. In fact, on Monday they beat the world-champion Boston Red Sox for the sixth time this year in seven attempts.
For another, Anaheim’s boundaries are the most inland of all of the O.C., and the recovery is moving east to west, like a Santa Ana wind. That means there could be bargains to be had here.
I’m hoping we can find out what went on last weekend at “The Event” at Stadium Lofts. Did they sell those drastically discounted units? I wonder if they’ll ever tell us. If it went well, probably. But if it didn’t, they’ll probably decide not to comment.
But a look at Anaheim homes for sale shows there are some deeply discounted homes out there. Will they come down any more? Hard to say, but other homes in the area are going for more.
1421 E. Romneya Drive, Anaheim 92805
$325,000
4BR/2B/1,774 square feet ($183/foot)
Days on market: 27
Year built: 1956
Lot size: 7,786 square feet
History: Sold for $601,000 in January 2006; sold in May for $1,000 — meaning it’s bank-owned. A neighboring home on the same street sold in February for $446,500.
1422 E. Willow Street, Anaheim 92805
$420,000
3BR/2B/2,250 square feet ($187/foot)
Days on market: 47
Year built: 1955
Lot size: 9,087 square feet
History: Sold for $600,000 in April 2006; now bank-owned. A nearby home sold for $499,500 this month.
2240 E. Vermont Ave., Anaheim 92806
$433,000
4BR/2B/2,130 square feet ($203/foot)
Days on market: 2
Year built: 1972
Lot size: 5,096 square feet
History: Sold for $650,000 in September 2006. Now bank-owned. A home on the same street sold in March for $425,000.
1009 W. Karen Place, Anaheim 92805
$499,900
5BR/3B/2,471 square feet ($202/foot)
Days on market: 19
Year built: 1962
Lot size: .27 acres
History: Sold in April 2006 for $870,000; now bank-owned. The asking price was reduced nearly $100,000 this week. Looks like this house is in fine shape. A home a third of a mile away sold for $585,000 in March.
Recent Redfin posts:
Who’s Got the Lower I.Q.? Wells Fargo or These Owners?
Vacancies Run Amok: Past Sales in Huntington Beach
The Irvine Market Report: Detached Home Stats, July 2008
Neighborhood Spotlight: Aliso Place
July 29, 2008
Orange sellers are taking stock and deciding it’s time to shed some dollars from their price. Check out all these reductions in Orange. However, even after these reductions, I have to say that many of these properties are still a little overpriced, in my mind. If had to pick a couple that I did think were a good value it would be La Veta Park, Olympia Way, and Quail Lane.
611 S La Veta Park Cir #130, Orange 92868; 1 bed/2 bath; 600 sq ft condo; Reduced to $141,900 (original list price was $157,900) [down $16,000 or 10.1%]
2295 N Tustin St #71, Orange 92865; 2 bed/1 bath; 891 sq ft condo; Reduced to $214,900 (original list price was $239,900) [down $25,000 or 10.4%]
621 W Fletcher Ave #6, Orange 92865; 2 bed/3 bath; 1,540 sq ft condo; Reduced to $360,000 (original list price was $410,000) [down $50,000 or 12.2%]
211 N Olympia Way, Orange 92869; 3 bed/2 bath; 1,693 sq ft house; Reduced from original price of $410,000 to $369,000 [down $41,000 or 10.0%]
960 N Handy St, Orange 92867; 3 bed/2 bath; 1,600 sq ft house; Reduced to $424,900 (original list price was $514,999) [down $90,099 or 17.5%]
426 N Esplanade St, Orange 92869; 3 bed/3 bath; 1,866 sq ft house; Reduced from original price of $455,000 to $425,000 [down $30,000 or 6.6%]
522 N Rancho Santiago Blvd, Orange 92869; 4 bed/2 bath; 1,695 sq ft house; Reduced from original list price of $499,900 to $449,900 [down $50,000 or 10.0%]
2215 E Martha Ave, Orange 92867; 3 bed/2 bath; 1,630 sq ft house; Reduced to $451,000 (original list price was $650,000) [down $199,000 or 30.6%]
2761 N Kennedy St , Orange 92865; 4 bed/3 bath; 2,316 sq ft house; Reduced to $479,000 (original list price was $730,000) [down $251,000 or 34.4%]
3411 E Vine Ave, Orange 92869; 5 bed/2 bath; 1,864 sq ft house; Reduced to $499,999 (original list price was $650,000) [down $150,001 or 23.1%]
121 N Quail Ln, Orange 92869; 4 bed/3 bath; 2,577 sq ft house; Reduced from original price of $639,900 to $599,900 [down $40,000 or 6.3%]
July 28, 2008
Interested in 100% financing? Well, read on for a how-to guide on “getting 100% financing in this market.”
Take a trip with me into the heart of Santa Ana… Get off Interstate 5 at First Street and head west. Make a left on South Flower Street. Go about five blocks and then make a right on West Camile Street. You have arrived… welcome to the street of housing woes, where bad judgment meets financial misfortune. I’ve posted about this little street numerous times before (Camile St in Santa Ana - A Warning Bell of Things to Come? and Sold Homes on Santa Ana’s Streets of Woes come to mind). Last year, the OC Register claimed that the 900 block of Camile Street had one of the highest rates of subprime mortgages in the nation. The result was an onslaught of foreclosures and nice people losing their homes.
Sounds pretty dismal, huh? Sounds like not many homes would be selling here… unless they are super cheap distressed properties, huh? Well, not so! Would you believe Mario Gomez and his family just bought a three-bedroom for $625,000? Would you believe Wells Fargo gave them a loan for it? If not, then you clearly have not read OC Register columnist John Gittelsohn’s article from Friday (”$625,000 house on a street wrecked by subprime loans?“).
Per the article, according to loan documents, the purchase price was $625,000, with $125,000 down and $500,000 financed by Wells Fargo. Well, according to Gomez, no money was put down, his loan is 100% financed, and the purchase price was only supposed to be $500,000. He says someone else, not him, paid the $125,000.
I have a hard time picturing some masked super hero floating around paying down people’s loans. If he is out there, please send him my way! So, if not a super hero, who was it? Well, while there’s no paper trail, it’s pretty clear, to me, who was the culprit. Let’s hear about what Gittelsohn has to the house and the seller Sergio Praslin, manager of Asset Disposition Venture Capital LLC:
“A year ago, the house at 920 W. Camile St. in Santa Ana was bank-owned, deserted and tagged with gang graffiti, a symbol of how the subprime lending bonanza had blighted a city block.
In October, the house sold at auction for $304,500, little more than half what a buyer using 100-percent subprime financing paid in 2006.
Today, 920 W. Camile has been renovated, repainted and floored with faux marble.”
Add to the flip job, the fact that Praslin said to Gomez, “No money, no problem,” as well as promising an extra $30,000 and a 52-inch LCD TV, you’ve got something suspicious. Gittelsohn talks about how Praslin was able to get his buyer:
“For the seller, the advantage of paying the down payment was getting Wells Fargo to cover the $500,000 mortgage – as much or more than the house would fetch on the open market.”
So, who made the bigger blunder here, Gomez or Wells Fargo? Gomez, who now has buyers’ remorse and never did get his 52-inch LCD TV, seems to have not fully understood what was happening. He just says, “We wanted a place with three bedrooms.” Well, for three bedrooms, he could have gotten this one just down the street for only $245,000. Now, I don’t know if it comes with a 52-inch TV, but I would think you’d be saving enough to be able to go out and buy your own. I just can’t believe there are buyers out there so clueless to what’s happening with the housing market… and so trusting. Along with the $30,000 to pay the first three mortgage payments, Gomez also thought Praslin would cover the property taxes and insurance (about $7k per year). As if the wheeling and dealing behavior from the seller wasn’t enough to raise a red flag, what about when Gomez went to sign escrow papers and saw the purchase price of $625,000 and that “someone” had paid a $125,000 down payment. This wasn’t odd to him? He saw that it was wrong, but still signed the papers. Now, he’s stuck with a loan for $500,000 ($2,760 monthly payment fixed for 10 years). God forbid he or his wife lose one of their jobs, they’ll surely be headed for foreclosure.
Now, let’s not forget about Wells Fargo. A big bank who would seem to have their act together. They won’t refinance me and I’m not even trying to buy a house for $625,000 worth $250,000. Just think, in October the very same house was valued at $304,500. Less than a year later, the value doubles while surrounding houses drop. Unless they painted the walls with gold or something, I can’t believe the sellers poured over $300,000 into upgrades into this place. So, why did they give these two a loan? Were they duped into believing that a 20% down payment showed the owners wouldn’t take a hike later? Was their appraiser totally off? Were they just plain blind? I mean, anyone with an internet connection can pull comps on that street and clearly see they have no business financing a house for $625,000 here.
Very, very strange indeed.
July 28, 2008
Huntington Beach Pier
Past sales nationwide are looking a tad bit slow these days and Huntington Beach is no exception, with the average house in H.B. sitting on the market for 114 days, according to Altosresearch.com. The amount of vacant homes available for sale nationwide currently stands at 2.2 million, this has remained unchanged from last quarter, according to the Census Bureau. Not surprisingly, California is home to many of these vacancies. Dean Baker, co-director of the Center of Economic and Policy Research, says “The west has been hugely hit by the collapse of the California housing market, that’s ground zero of the meltdown.” These past sales provide some good insight into the H.B. market.
7351 Coho Dr: sold for $382,000, 2 Beds, 1 Bath, 873 SQ. FT.
9531 Flounder Dr: sold for $450,000, 3 Beds, 2 Baths, 1,176 SQ. FT.
8222 Katherine Dr: sold for $542,000, 3 Beds, 2 Baths, 1,009 SQ. FT.
8772 Grant Dr: Sold for $525,000, 3 Beds, 1.5 Baths, 1,010 SQ. FT.
9852 Argyle Dr: sold for $247,515, 3 Beds, 1.5 Baths, 1,100 SQ. FT.
19745 Keswick Ln: sold for $320,000, 3 Beds, 1 Bath, 1,120 SQ. FT.
19132 Tigerfish Cr: sold for $615,000, 2 Beds, 1 Baths, 896 SQ. FT.
19132 Bushard St: sold for 470,000, 3 Beds, 2 Baths, 1,176 SQ. FT.
8742 Lauder Cr: sold for $640,000, 4 Beds, 2.5 Baths, 1,624 SQ. FT.
