Maybe I know WHY landlord wants to dump the house

[PerryChase]

Look at history. The 1990s had declines beginning in 1990 through 1996 and the boom of the late 1980s was small compared to have we had recently. Temecula will be hammered hard.

Like jg said, as humans, we are bound to learn and re-learn all the mistake we previously made.

[temeculaguy]

Thanks Temeku, I appreciate the research and I agree with your opinions, so if they roast you, they will be roasting me too. Right or wrong this this next purchase will be my primary home with a miniumum stay of at least 6-7 years, probably much more so I look at it a little differently than I have with investment properties. I know what I want, where I want it and what I want to pay. For the past 12-18 months these things didn’t line up and I am just too stubborn to do anything other than a 20% down fixed loan that is under 28% of my monthly income. Just in the last month they are starting to line up with my income and downpayment numbers so hard part has started. Six months ago I told myself I would wait until prices hit a certain number and thought it would take a year or two but it is happening quicker than I guessed. Sure I will take more house than I really wanted or have even a lower payment. my next marker is PITI at 25% of my gross, but when that hits I will be here even more, using piggington as my alcoholics annonymous, giving me support to keep riding it out. At some point it will just be greed on my part and I think you will end up being correct, that 300-350 will probably be that point. Incidentally 300 is 4x median income for the zip code, which would be the low end of a historical graph, yet in line with 2003, seems possible.

[FormerOwner]

how many of you here think that a 1900 sq ft home in Harveston will fall below $350k??

Considering the monthly rent for those houses vs. the property taxes/mello roos and HOA dues, low to mid 200’s is where the cost of owning approaches the cost of renting. Anything over that is betting on future housing price inflation.

Also, those houses were selling for 280K in 2003 – that wasn’t very long ago and that was already half-way into the boom phase of the real estate cycle.

Another 100K price drop and maybe I’d buy one myself!

[Bugs]

Assuming the area reached parity to the long term trendline in 2001 (neither overvalued nor undervalued relative to the trendline), we could reasonably expect a slightly higher value in 2007 because of inflation and CPI increases.

These homes were apparently built after 2001, so I took the liberty of looking at some sales data of homes of similar size on small lots within a mile or so of these neighborhoods during the 2001 period. So we’re talking about homes built in 1999-2001, of 1,800 – 2,200 SqFt in size, and on small subdivision lots.

The sales data I saw ranged in price from about $220k-$250k during the year. For reference, these homes peaked out in the low $500k range and are now selling in the $460k range, so I don’t think they’re too far off in terms of value from the house we’ve been discussing all along. The neighborhood includes mostly larger homes so I think it might be a touch superior to the neighborhood we’ve been discussing.

One clarification I would ask is whether 23109Vcs rental home is a condo unit or a home on a subdivision lot. I didn’t reme,ber the address so I couldn’t look it up. If it is a condo unit by ownership then the value would probably be a little less relative to the homes I was looking at.

Anyways, assuming a 2001 value for the 1999 home in the middle of that range at $240,000, the value today at the trendline would be just under $280,000. This would be the “fair” price for that home today, and would probably hold up well over time. I’d anticipate the fair value for 23109VCs rental home to be a little less than that right now.

Of course, the market corrections so far have always overshot the mark dipping into undervalued territory, so it is not beyond the realm to think that it could return to the original value of $240k.

Bottom line here is that 23109VCs rental at $300k might be a reasonable gamble if he doesn’t mind being underwater for a few years. At that price the advantages of the financing might make up for the possibility of further price declines. At an 8% interest rate, the payment on $240k is $1,749/month P+I, whereas $300k @ 6% is $1,789. A $350,000 sale price would put that payment at $2,087/month, not counting taxes and insurance, Mello-Roos and HOA.

It just bears repeating here that the difference between $350,000 and $240,000 is $90,000.

[temeculaguy]

Goin on a limb, 280-300 for turnkey condition, plus or minus 30k for ups or downs (ups would be location, upgrades, downs would be location or thrashed brown lawn repos that need work and suffered long vacancies/neglect. broad spectrum 250-330. Harveston is in 65k median zipcode and 5x median is 325, 2003 was the actual high time before run up was artificially extended by pardigm shift in lending so 2003 will be the return numbers. If 2003 had ended as the high point as history normally would have it four years later actually back at 2003 prices with no real nominal loss in value but an inflation adjusted drop five years later. Harveston may do a little better because they are newer and more energy efficient plus born into the heloc era most will have some money sunk into upgrades that even during a downturn still add value. Even in a repo I’ll pay more if the flooring, counters and appliances are upgrades vs. the crap I’m gonna rip out day one. Final answer, 280 for that exact house, good as it gets. Vegas should post odds or mark burnett makes it into a reality/game show, I’m down for $20 on 280

[temeculaguy]

I posted before i read Bugs’ post, we were only 11 minutes apart and I took about fifteen minutes to check things, get wine and do math with wine. So I wasn’t copying and can save the “copy a friend” lifeline for another time. Plus bugs is a lot smarter than I am. Sticking with 280, final answer, plus the stuff a mile from harveston is older and was built much cheaper, those tracts on the other side of margarita were larger but lower end.

[TemekuT]

temecula guy:

I do have access to the MLS. I am a RE Broker but not active in the business. I lived in O.C. during the 1989-1995 downturn and kept an eye on Temecula. I heard lots from relatives and friends in the business out here in Temecula. I am fiscally conservative (because I’m also a CPA) and although I hesitate to give an opinion, here goes:

In no way do I think that prices will revert to a level where the average house price is $200K in Temecula. FYI, that 200K price point was average in late 2000/early 2001 for an 1800 sq. ft. 3/2. I think the less nice or more desperately needing to be sold houses you have listed in Fairway Classics could hit 300K at the trough, which is about what they sold for in 2003. I think there will be some form of government bailout to prevent the entire U.S. housing market from crashing. In a way that’s too bad for those of us who played by the rules and with integrity, but on the other hand if there’s a severe crash we will all be affected financially…kiss your 401K goodbye!

Remember that the average price now is based on a substantially larger house than in 2000. And remember that prices for the exact same house within a tract will vary due to amenities. No matter how much we laugh about “pergranteel”, buyers will pay more for a more luxurious home. What do you prefer, builder white 4 x 4 tile, or verde butterfly granite?

Regarding the houses you listed: I do the best I can on the MLS to ascertain indebtedness. The total loans can be difficult to decipher. I would know 100% accurately if I ordered a broker’s package from the title company. I’ve gotten pretty good at sifting through and getting the numbers. On some, I think a non-exercised Heloc may cause it to look like there is indebtedness in excess of the asking price.

33288 Alagon – 174 DOM, first sold 12/22/03 @ $318,500, current indebtedness is $402,500, asking $445,000.

45269 Almora – 97 DOM, first sold 03/23/04 @ $321,000, last mortgage total was $495,000, lender took back at $421,676 (probably just the 1st), vacant, asking $429,000.

45260 Escalon – 83 DOM, first sold 10/20/03 @ $288,000, current indebtedness is $451,600, asking 425,000.

33312 Alagon – 86 DOM, first sold 12/24/03 @ $296,000, current indebtedness is $260,000, vacant, asking $414,000.

45337 Escalon – 119 DOM, can’t get first sold price, Lender owned First Franklin Tenancy by Entireties & transferred at $389,581, last mortgage prior to foreclosure was $460,000, asking $403,900.

I think if you wait a year or two you will have lots more choices in the $300-350K range. I don’t think you should buy yet. I also don’t think Temecula will be as brutally affected as other areas in the I.E.

Now the rest of you Piggington people, please don’t roast me for my opinion!

And this P.S. to the Harveston guy – you are suffering from “analysis paralysis” and lack of cash. Don’t buy yet – rent for $1400K and if your landlord sells it, rent somewhere else in Harveston. Frankly, if you don’t have the downpayment, you shouldn’t buy! Save your money and wait until you can afford to buy.

[temeculaguy]

Wlecome back old friend, I noticed in my search for under 400k in 92592 zip that there are now 3 car garages again. I think this one just joined us in the sub 4 lounge, probably couldn’t get anyone to ask her to dance in the 4-5 room.

http://www.immobel.com/personal/1_3_1/listingDetails.do?featured_int=0&c_mtype=res&searchId=0&minprice=1&c_type=&xml=1&serverId=0&rpp=15&c_year-built=&c_garage=&la=EN&cu=USD&ssid=0&per=mrmls&c_zipcode=92592&c_city=&st=2&maxprice=400000&back1=%2Fpersonal%2F1_3_1%2FsearchResults.do&of=18092256

I counted three of them today, but I wasn’t counting before so thay may have been there before. The one above and the other two were built during the last down cycle and suffer from the same low end features plus the mid nineties disease of high bedroom count without supportive sq.feet. All three were long in the tooth compared to their peers and looked to have original circa 1995 freebie appliances, counters and floors. But hell, welcome back anyway, I’ll wait for the better looking younger sister from generation heloc but it’s nice to see the three car models back at the party.

Temeku, your post got bumped back down, so if you didn’t see my thank you above, I appreciate the insight, think you are right on with your analysis

[23109VC]

wow. i just checked my post and there were some seriously well thought out replies. THANK YOU.

350k is pretty much as low as i can get the owner to sell at. i checked records and that is his note value. at that price he sells to me, gets his money, pays his first, and walks away. the purchase price was 450k…and whatever cash he already put down is already gone…this sale woud prevent more cash comignt o the table,and prevent a short sale for him.

as far as harveston being a “nicer” area with more fixed up homes.. from my observations, a LOT of the homes in harvestorn wwere built by Lennar as “ei” homes, so they were more fully upgrraded by the builder…. almost al had granite, upgraded cabinets, upgraded fixtures, sinks, paint, etc. there are some that are not, but more that are. this home is NOT a condo. small lot yes, but it is a free standing home.

one factor to consider additionally, and while im no expert..they do say location location location…

here are some of my thoughts that make me think that while the home may drop on price further, it may fare better downt her oad tha some homes hwer.e.. this home is not “on” the lake, but walking distance to it. walking distance to the lcubhouse/pool. it is also one of the very few homes in harveston that has a priate backyard that does not back up to a street or another house. it backs up onto a greeenbelt. so the lot may be small, but the backyard does not have some mega two story 5 feet over my fencelne peering down at my yard… nto that that adds value..but the home did sell with a 10k lot premium vs other similar homes that were not on this side of the street…

downt he road, if i went tos ell, i’d have aleg up on some of the other homes in this area.

but ifprices fall to 280k…and i pay 350k… yeah, that’s a lot of money to be underwater….

[temeculaguy]

23109, It can be a condo by the way the land is owned and not neccesarily if it is attached. Maybe someone else knows why they do this but it is common when the lots are real small, perhaps a way to get some rules changed and have the houses closer or streets smaller. The five houses above that I posted links to, 2200-2400 sq ft, front yard, back yard, driveway, not attached but they are condo’s, just looked at some new ones last week, same thing. Doesn’t bother me but it does change things slightly. It’s not perfect, but if you go on zillow and float over the various tracts, if zillow doesn’t draw lot lines around houses, usually that is because they are condos. I checked that in harveston and it wasn’t drawing the lines. One of the other will probably be able to say for sure.

[Bugs]

If you give me the name and the hundred block of the street in question I can look those properties up and see whether they’re subdivision lots or part of a condo program. I looked up some sales referenced earlier in this thread and those were condos; that’s why I asked the question.

Condominiums are a form of ownership, not construction. For instance, in an own-your-own mobile home park, the pads they’re buying are usually owned as condominiums, whether there’s a mobile home on them or not. I’ve appraised industrial lots and retail pads owned as condominiums; I’ve appraised lots of freestanding office and industrial buildings that were owned as condominiums and I’ve appraised entire residential projects copnsisting of detached single family homes.

Some of the clues that your project may or may not be a condo project include the following:

– Really small lots; 5,000 SqFt or less

– Unfenced rear yards or fenced areas that don’t seem to correspond to what the lot dimensions would be.

– Private Streets that are less than 40 feet in width.

– Dedicated parking areas for guest parking spaces.

– Clubhouse, pool and other significant common elements for the project. This one isn’t always limited to condo projects but subdivision projects with them are relatively few.

– HOA dues in excess of ~$60/month

[23109VC]

it’s not a condo. they are SFR’s, detached. I checked the property records, tax assessor records etc. NOT a condo.

I know what you mean about some places that “look” like houses but aren’t. lennar built a development a few miles from harveston up Winchester called Griffith park, or Griffith Place..somethingl ike that. i thikn they call them “courtyard homes”. each structure is freestanding…no shared walls..but they are ON the property lines, and they share driveways….”guest parking” spaces, like a condo. they look/feel like condos in size and the “crammed” in feel..but yet they are “free standing”. they are condos.

Sausalito in Harveston are houses. you own the house and the lot. albeit the lots are on the small side, you still own it.

Despite a lot of you who are telling me NOT to do it, we are leaning toward buying. $350k for a 1900 sq ft house that is loaded with upgrades, in a nice community, in a good part of temecula, with a good location w/in harveston… no hassle of moving, (while my wife is pregnant), we can still get 100% financing, and the sller wil pay ALL our closing costs…

i don’t see these homes hitting high 200s. i think the worst it will get is 300-325k. i could be totally wrong..but if i’m right, and that’s the worst it gets, i’m not really doin that badly.

we have actually thought of bying it for 350k and then immediately listing it for sale at 440k…. and maybe being able to flip it to some sucker. 🙂 if we can’t sell it, we’ll happily stay.

[AK]

We should be cheering for you … you’re buying at 350K and setting new comps for the neighborhood, which establishes a trend and helps all of us in the long run!

Good luck in your new home. You found a place you like at a price you can afford and with realistic expectations, which is what we’re all about.

[gn]

23109VC,

From all of your previous posts (in another thread), it’s fair to say that the market price for that house is $380k – $400k. This means that you’re getting a $30k – $50k bargain, which, under normal circumstances, is not bad.

>> i don’t see these homes hitting high 200s. i think the worst it will get is 300-325k

Given the fact that there were a lot of recent RE fraud activities in Temecula/Murrieta & that the bubble is just starting to burst, it would be a big surprise in that house “bottom out” at $300k 🙂

Your “cushion” of $50k will last you until sometime in 2008.

Good luck ! You’ll need it.

[Chrispy]

Go ahead and buy – just stop posting for Chrissake. Lots of people have given you good input, go do what you have to do and get back to us in six months to a year and let us know how it worked out.

For now, this subject has been done to death on this and other threads. As my dad would say – “Do something, even if it’s wrong!”

[Author]

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