REO vs Developer in El Cajon

[garysears]

A few months ago I speculated about the results if distressed sales in a condo conversion complex started competing directly with the remaining unsold developer inventory. It looks like that very scenario has happened.

Alder Woods Condos at 1423 Graves Ave, El Cajon started releasing units in late 2005 and is still attempting to sell the last phase. I previously posted under this thread:

http://piggington.com/alder_woods_condos_el_cajon

First, an update to the sales data. Originally the prices showed fairly dramatic declines and I felt confident calling a 13% decline from peak. The last few sales for each floor plan made me expect further significant declines in the near future. I was wrong. It turns out the developer was a pretty good marketer and managed to create an increase in prices for the third phase. Somehow buyers continue to be found who don’t apparently do much research.

One note about the prices. It is impossible for me to tell exactly what the latest places really sold for. The most current flyer I picked up in late July advertised up to $20,000 in down payment assistance and “upgrades”, up to 6% max. I simply don’t know if the closed sale prices reflect the discount. I suspect they do not. It could be the developer is trying hard to make prices look firm for the sake of previous buyers.

The following graphs show the prices since my last post in red:

1bd/1ba 597 sf http://i20.tinypic.com/28u6zd0.jpg
2bd/1ba 745 sf http://i24.tinypic.com/33vnot2.jpg
2bd/2ba 801 sf http://i20.tinypic.com/14d0n4h.jpg

Over the past few months I have wondered how units continued to sell for higher prices. It has been especially amazing considering the recent dramatic reductions across the board in El Cajon condo prices. You can currently get similar places under 200K quite easily. Should I attribute the sustained high prices to uninformed first time buyers too lazy to even look at the MLS? I don’t see anything about the complex that makes it worth significantly more than other places nearby. Someone feel free to correct me if you think otherwise. Just down the street you can get a remodeled 800sf 2bd/1ba REO for $160,500 or $172,000.

Price reality has been held off long enough for the developer to unload most of the units. Some of the remaining inventory is listed on the MLS. Units 112, 113, 114, and 202 appear to be brand new from the developer. The advertised 2bd/1ba units are listed for $269,900 (113,114). The 2bd/2ba units are $284,900 to $294,900. I guess you need to take another 6% “discount” into account. These last units are supposedly the best in the complex as they are nearer the pool and worth a premium.

But now all of the sudden the developer has to compete with distressed inventory in the same complex that first sold just two years ago. A recent MLS search revealed two short sales and the first REO. #239 and #226 appear to be short sales and #127 is a 2bd/2ba REO for $253,900. This eventual sale will be the first unit to really put downward pressure on prices here. I’m wondering what happens when it sells before all the remaining new units.

So now that it has begun in earnest I make a prediction: The developer will soon cut prices hard and unload the rest. One year from now all the developer units will be sold and resale prices will be in the high $190,000s max for the 2bd/2ba. We shall see. It is starting to get entertaining.

[garysears]

Update Time.
It’s going on 7 months later and it appears the developer is winning. There is evidently a bottomless pool of stupid buyers out there. The lack of ability to do basic research is unbelievable, especially considering how easy the internet makes it.

Check out the last 5 sales of the 2bd/2ba units:
#104 2/2 801 $289,900 10/15/07
#127 2/2 801 $200,000 11/29/07
#106 2/2 801 $289,900 12/05/07
#226 2/2 801 $200,000 04/08/08
#221 2/2 801 $261,400 04/22/08
(source: San Diego County Assessor Website)

From my original post, note that #127 was an REO listed for $253,900, and someone bought it a month later for $200,000.
But then less than a week after that sale someone paid $289,900 for a “new” one from the developer.

Four months went by without any sales, and then #226, an REO or short sale, sold for $200,000. Again, two weeks after that sale someone paid $261,400 for the identical place!

Today there is another 2bd/2ba REO (#230) in the complex listed for $131,300! Even more astonishing, the listed date was 4/22/08! That is the same date someone paid $261,400 and only 2 weeks after the REO or short sale price of $200,000! There is nothing quite like paying double what you should have. I’ll take an instant 50% loss please. I am further astonished that any bank would make that loan.

For the past six months I’ve been wondering why the developer continues to have the sales office manned. Now I know why. Because people really must just come in off the street and pay full asking price without doing any market research first. Wow.

There continue to be a few attempted short sales in the 165-170K range. But I’m starting to think the developer will get an exceptionally high price for all the remaining units, given the recent sales. I wonder if anyone else will pay double the market value in the next few months.
Unlike Ditech.com I don’t believe that “People are Smart”. Maybe Ditech.com made that loan.

[garysears]

Update Time.
It’s going on 7 months later and it appears the developer is winning. There is evidently a bottomless pool of stupid buyers out there. The lack of ability to do basic research is unbelievable, especially considering how easy the internet makes it.

Check out the last 5 sales of the 2bd/2ba units:
#104 2/2 801 $289,900 10/15/07
#127 2/2 801 $200,000 11/29/07
#106 2/2 801 $289,900 12/05/07
#226 2/2 801 $200,000 04/08/08
#221 2/2 801 $261,400 04/22/08
(source: San Diego County Assessor Website)

From my original post, note that #127 was an REO listed for $253,900, and someone bought it a month later for $200,000.
But then less than a week after that sale someone paid $289,900 for a “new” one from the developer.

Four months went by without any sales, and then #226, an REO or short sale, sold for $200,000. Again, two weeks after that sale someone paid $261,400 for the identical place!

Today there is another 2bd/2ba REO (#230) in the complex listed for $131,300! Even more astonishing, the listed date was 4/22/08! That is the same date someone paid $261,400 and only 2 weeks after the REO or short sale price of $200,000! There is nothing quite like paying double what you should have. I’ll take an instant 50% loss please. I am further astonished that any bank would make that loan.

For the past six months I’ve been wondering why the developer continues to have the sales office manned. Now I know why. Because people really must just come in off the street and pay full asking price without doing any market research first. Wow.

There continue to be a few attempted short sales in the 165-170K range. But I’m starting to think the developer will get an exceptionally high price for all the remaining units, given the recent sales. I wonder if anyone else will pay double the market value in the next few months.
Unlike Ditech.com I don’t believe that “People are Smart”. Maybe Ditech.com made that loan.

[garysears]

Update Time.
It’s going on 7 months later and it appears the developer is winning. There is evidently a bottomless pool of stupid buyers out there. The lack of ability to do basic research is unbelievable, especially considering how easy the internet makes it.

Check out the last 5 sales of the 2bd/2ba units:
#104 2/2 801 $289,900 10/15/07
#127 2/2 801 $200,000 11/29/07
#106 2/2 801 $289,900 12/05/07
#226 2/2 801 $200,000 04/08/08
#221 2/2 801 $261,400 04/22/08
(source: San Diego County Assessor Website)

From my original post, note that #127 was an REO listed for $253,900, and someone bought it a month later for $200,000.
But then less than a week after that sale someone paid $289,900 for a “new” one from the developer.

Four months went by without any sales, and then #226, an REO or short sale, sold for $200,000. Again, two weeks after that sale someone paid $261,400 for the identical place!

Today there is another 2bd/2ba REO (#230) in the complex listed for $131,300! Even more astonishing, the listed date was 4/22/08! That is the same date someone paid $261,400 and only 2 weeks after the REO or short sale price of $200,000! There is nothing quite like paying double what you should have. I’ll take an instant 50% loss please. I am further astonished that any bank would make that loan.

For the past six months I’ve been wondering why the developer continues to have the sales office manned. Now I know why. Because people really must just come in off the street and pay full asking price without doing any market research first. Wow.

There continue to be a few attempted short sales in the 165-170K range. But I’m starting to think the developer will get an exceptionally high price for all the remaining units, given the recent sales. I wonder if anyone else will pay double the market value in the next few months.
Unlike Ditech.com I don’t believe that “People are Smart”. Maybe Ditech.com made that loan.

[garysears]

Update Time.
It’s going on 7 months later and it appears the developer is winning. There is evidently a bottomless pool of stupid buyers out there. The lack of ability to do basic research is unbelievable, especially considering how easy the internet makes it.

Check out the last 5 sales of the 2bd/2ba units:
#104 2/2 801 $289,900 10/15/07
#127 2/2 801 $200,000 11/29/07
#106 2/2 801 $289,900 12/05/07
#226 2/2 801 $200,000 04/08/08
#221 2/2 801 $261,400 04/22/08
(source: San Diego County Assessor Website)

From my original post, note that #127 was an REO listed for $253,900, and someone bought it a month later for $200,000.
But then less than a week after that sale someone paid $289,900 for a “new” one from the developer.

Four months went by without any sales, and then #226, an REO or short sale, sold for $200,000. Again, two weeks after that sale someone paid $261,400 for the identical place!

Today there is another 2bd/2ba REO (#230) in the complex listed for $131,300! Even more astonishing, the listed date was 4/22/08! That is the same date someone paid $261,400 and only 2 weeks after the REO or short sale price of $200,000! There is nothing quite like paying double what you should have. I’ll take an instant 50% loss please. I am further astonished that any bank would make that loan.

For the past six months I’ve been wondering why the developer continues to have the sales office manned. Now I know why. Because people really must just come in off the street and pay full asking price without doing any market research first. Wow.

There continue to be a few attempted short sales in the 165-170K range. But I’m starting to think the developer will get an exceptionally high price for all the remaining units, given the recent sales. I wonder if anyone else will pay double the market value in the next few months.
Unlike Ditech.com I don’t believe that “People are Smart”. Maybe Ditech.com made that loan.

[garysears]

Update Time.
It’s going on 7 months later and it appears the developer is winning. There is evidently a bottomless pool of stupid buyers out there. The lack of ability to do basic research is unbelievable, especially considering how easy the internet makes it.

Check out the last 5 sales of the 2bd/2ba units:
#104 2/2 801 $289,900 10/15/07
#127 2/2 801 $200,000 11/29/07
#106 2/2 801 $289,900 12/05/07
#226 2/2 801 $200,000 04/08/08
#221 2/2 801 $261,400 04/22/08
(source: San Diego County Assessor Website)

From my original post, note that #127 was an REO listed for $253,900, and someone bought it a month later for $200,000.
But then less than a week after that sale someone paid $289,900 for a “new” one from the developer.

Four months went by without any sales, and then #226, an REO or short sale, sold for $200,000. Again, two weeks after that sale someone paid $261,400 for the identical place!

Today there is another 2bd/2ba REO (#230) in the complex listed for $131,300! Even more astonishing, the listed date was 4/22/08! That is the same date someone paid $261,400 and only 2 weeks after the REO or short sale price of $200,000! There is nothing quite like paying double what you should have. I’ll take an instant 50% loss please. I am further astonished that any bank would make that loan.

For the past six months I’ve been wondering why the developer continues to have the sales office manned. Now I know why. Because people really must just come in off the street and pay full asking price without doing any market research first. Wow.

There continue to be a few attempted short sales in the 165-170K range. But I’m starting to think the developer will get an exceptionally high price for all the remaining units, given the recent sales. I wonder if anyone else will pay double the market value in the next few months.
Unlike Ditech.com I don’t believe that “People are Smart”. Maybe Ditech.com made that loan.

[EconProf]

BobS
This info is a real challenge to those of us who believe most people tend to make informed choices on the biggest purchase of their lives. It would be interesting to talk to owners in the parking lot or pool area to get some direct insights outside of your data points. Owners always have an opinion on prices in their complex, so it could reveal something else going on.
Keep us informed.

[EconProf]

BobS
This info is a real challenge to those of us who believe most people tend to make informed choices on the biggest purchase of their lives. It would be interesting to talk to owners in the parking lot or pool area to get some direct insights outside of your data points. Owners always have an opinion on prices in their complex, so it could reveal something else going on.
Keep us informed.

[EconProf]

BobS
This info is a real challenge to those of us who believe most people tend to make informed choices on the biggest purchase of their lives. It would be interesting to talk to owners in the parking lot or pool area to get some direct insights outside of your data points. Owners always have an opinion on prices in their complex, so it could reveal something else going on.
Keep us informed.

[EconProf]

BobS
This info is a real challenge to those of us who believe most people tend to make informed choices on the biggest purchase of their lives. It would be interesting to talk to owners in the parking lot or pool area to get some direct insights outside of your data points. Owners always have an opinion on prices in their complex, so it could reveal something else going on.
Keep us informed.

[EconProf]

BobS
This info is a real challenge to those of us who believe most people tend to make informed choices on the biggest purchase of their lives. It would be interesting to talk to owners in the parking lot or pool area to get some direct insights outside of your data points. Owners always have an opinion on prices in their complex, so it could reveal something else going on.
Keep us informed.

[garysears]

April 2009 Update

I’ve posted about this particular complex in 3 different posts regarding El Cajon condos.

If interested, see also:

http://piggington.com/el_cajon_condo_blowout_27_in_8_months

and

http://piggington.com/alder_woods_condos_el_cajon

I added this post here to show that the REOs have finally defeated the developer. I noticed last month that the sign on the fence along the 67 that used to advertise the release of the final phase is now advertising leases. That leads me to believe the developer has pulled the remaining unsold units from the market and is now renting them out. Or maybe they are still trying to sell them as well. I haven’t checked to see if the sales office is still open.

According to their website they are still selling:

http://www.alderwoodscondos.com/index.html

Recent 2 bedroom prices on the MLS are around 100K.

1423 Graves Ave #215 (2/1) $98,500
MLS 090010793

1423 Graves Ave #140 (2/1) $105,000
MLS 090004367

Last recent sale I can find on the county assessor website is:

1423 #164 GRAVES AVE $134,500 sold 01/05/2009
(note this is a 2 bd, 2 ba)

I get the feeling that even though prices are down around 2/3 from the peak there is still significant downward pressure. I’m thinking prices in this complex are likely headed into the 80ks or lower. If I were still interested in condos my offer would probably be in the 70Ks.

[garysears]

April 2009 Update

I’ve posted about this particular complex in 3 different posts regarding El Cajon condos.

If interested, see also:

http://piggington.com/el_cajon_condo_blowout_27_in_8_months

and

http://piggington.com/alder_woods_condos_el_cajon

I added this post here to show that the REOs have finally defeated the developer. I noticed last month that the sign on the fence along the 67 that used to advertise the release of the final phase is now advertising leases. That leads me to believe the developer has pulled the remaining unsold units from the market and is now renting them out. Or maybe they are still trying to sell them as well. I haven’t checked to see if the sales office is still open.

According to their website they are still selling:

http://www.alderwoodscondos.com/index.html

Recent 2 bedroom prices on the MLS are around 100K.

1423 Graves Ave #215 (2/1) $98,500
MLS 090010793

1423 Graves Ave #140 (2/1) $105,000
MLS 090004367

Last recent sale I can find on the county assessor website is:

1423 #164 GRAVES AVE $134,500 sold 01/05/2009
(note this is a 2 bd, 2 ba)

I get the feeling that even though prices are down around 2/3 from the peak there is still significant downward pressure. I’m thinking prices in this complex are likely headed into the 80ks or lower. If I were still interested in condos my offer would probably be in the 70Ks.

[garysears]

April 2009 Update

I’ve posted about this particular complex in 3 different posts regarding El Cajon condos.

If interested, see also:

http://piggington.com/el_cajon_condo_blowout_27_in_8_months

and

http://piggington.com/alder_woods_condos_el_cajon

I added this post here to show that the REOs have finally defeated the developer. I noticed last month that the sign on the fence along the 67 that used to advertise the release of the final phase is now advertising leases. That leads me to believe the developer has pulled the remaining unsold units from the market and is now renting them out. Or maybe they are still trying to sell them as well. I haven’t checked to see if the sales office is still open.

According to their website they are still selling:

http://www.alderwoodscondos.com/index.html

Recent 2 bedroom prices on the MLS are around 100K.

1423 Graves Ave #215 (2/1) $98,500
MLS 090010793

1423 Graves Ave #140 (2/1) $105,000
MLS 090004367

Last recent sale I can find on the county assessor website is:

1423 #164 GRAVES AVE $134,500 sold 01/05/2009
(note this is a 2 bd, 2 ba)

I get the feeling that even though prices are down around 2/3 from the peak there is still significant downward pressure. I’m thinking prices in this complex are likely headed into the 80ks or lower. If I were still interested in condos my offer would probably be in the 70Ks.

[garysears]

April 2009 Update

I’ve posted about this particular complex in 3 different posts regarding El Cajon condos.

If interested, see also:

http://piggington.com/el_cajon_condo_blowout_27_in_8_months

and

http://piggington.com/alder_woods_condos_el_cajon

I added this post here to show that the REOs have finally defeated the developer. I noticed last month that the sign on the fence along the 67 that used to advertise the release of the final phase is now advertising leases. That leads me to believe the developer has pulled the remaining unsold units from the market and is now renting them out. Or maybe they are still trying to sell them as well. I haven’t checked to see if the sales office is still open.

According to their website they are still selling:

http://www.alderwoodscondos.com/index.html

Recent 2 bedroom prices on the MLS are around 100K.

1423 Graves Ave #215 (2/1) $98,500
MLS 090010793

1423 Graves Ave #140 (2/1) $105,000
MLS 090004367

Last recent sale I can find on the county assessor website is:

1423 #164 GRAVES AVE $134,500 sold 01/05/2009
(note this is a 2 bd, 2 ba)

I get the feeling that even though prices are down around 2/3 from the peak there is still significant downward pressure. I’m thinking prices in this complex are likely headed into the 80ks or lower. If I were still interested in condos my offer would probably be in the 70Ks.

[Author]

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