San Marcos Price Reduction

[ocrenter]

I have been giving sdrealtor a hard time at the other topic “Median Price Down in North County” by showing the following two properties:

xx7 VIA DEL CABALLO, San Marcos, CA 92078
Bedrooms: 4
Baths: 3
Sq ft: 2,358
Listing Price: $550,000 – $599,876
Last Purchased: Dec 03 $460,000

and comparing the asking price of the first home with the sale price of the second home.

xx5 Via Del Caballo, San Marcos, CA 92078
Bedrooms: 4
Baths: 3
Sq ft: 2,358
Mar 06 $625,000

There was a lot of back and forth about lot premium and lot size and upgrades to try to account for the $75,000 in price difference in two homes with the same sqft and same floorplan.

All of that, I believe, is now rendered completely pointless because of this new development. As of today 4/25/06, there has been additional price drop down to $539,000 on the first home. Why? Because this home is currently in pre-foreclosure.

If you recall, this home was purchased for $460,000 in 12/03. A look into the loan doc’s indicates a 80/20, zero down loan. Assuming a 2 year fixed loan on the 80% portion, this means this person just experienced a reset of his mortgage 12/05. After 3 months of paying at the higher rate, he is defaulting and going into foreclosure.

To avoid foreclosure, all he has to do is keep lowering the price until someone bites, and this can get as low as $490,000 for him not to lose money on this sale. What would the sale of a home at $490,000 do to comps in this neighborhood? Let’s not even go so low as that, what would it do to the comps if he gets a buyer at the current reduced pricing of $539,000.

The next question of course is: what happens if there’s another foreclosure in the neighborhood and the owner decides to slash prices? Well, we shall see, as xx7’s neighbor xx2 has now just entered into pre-foreclosure this month, we’ll see if xx2 throw their hat into the ever expanding San Diego Inventory of homes for sale.

[sdrealtor]

You are right..it’s pointless….the house will sell for what it is worth in today’s market just like the other nicer one did. A $490 comp would change things quite a bit while a 539K would have very little impact. BTW, the current owner is the second owner and bought in 12/03 right as the market began exploding higher by the day.

[powayseller]

I was trying to follow the other post, and it seemed the houses were basically equivalent. A drop to $539K is a 10% drop, and is signficant. The impact is huge, both in reducing median numbers (gee, eventually the data will show what we know is happening) and in reducing future listing prices.

[ocrenter]

Correction on the home that just enter’d pre-foreclosure, it isn’t xx2 Via Del Caballo, it’s xx1 Via Del Caballo. Looking at the loan docs looks like we got ourselves another 80/20 piggyback loan back in 3/03 for $422,000 for the 2445 sqft model. They refi’d in 8/04 for $450,000. (did it thru Ameriquest, that should sound some alarms).

So these guys also have equity to burn up and escape unscathed. If the xx1 guys can get their home sold in the $500’s, look for $480,000 as the magic number for them.

If you use the interactive map feature of ziprealty, you’ll end up with 12 homes for sale in this tract. The smallest model is the 2172 sqft homes, average asking price is currently $560,000. These two foreclosures are going to be interesting to watch. If we actually have a 2358 sqft selling for $490,000 and a 2445 sqft selling for $480,000, the slide in these 2172 sqft homes are going to be tramendous.

[jabrwoki]

hey ocrenter ,

Cool analysis. BTW, where do you get personal info such as loan docs for each home !

thanks

[sdrealtor]

FYI, The 625K sale is clearly an outlier. Comps in the last 6 months for these homes are 571K, 572K and 585K. The are 3 homes currently in escrow. All have value range price…550 to 585, 579 to 599 and 579 to 609. It’s reasonable to assume that they will close with 1 to 2% of the previous comps. There are currently 12 homes for sale (that’s *%&$’in alot!) with asking ranges between 550 and 640. The one that you are referencing has a range of 539 to 579. They are trying to appear as the most attractively priced home on the street and are hoping the next offer comes to them. I’d be surprised if they sold for the 539 and a comp around 540 would have little impact on the others. A comp of 500 would. BTW, I listed and sold a home nearby that was much nicer than these for a little more and it sold in about 1 week at a fair price for all. These homes should be 550K or less.

[ocrenter]

once you are in foreclosure your info is open to the world. I got those from realtytrac.com.

[jabrwoki]

thanks !!

[jabrwoki]

Here’s another in the same zip code (92078) (though in a nicer neighborhood) in foreclosure.
1168 CALISTOGA WAY, san marcos, ca92078
Can you get any info on its history ?

thanks

[North County Jim]

I saw this one yesterday. Not only a foreclosure sale but listed as a fixer-upper. This house is less than three years old!

Note the lack of interior photos in the MLS.

[powayseller]

This property is listed as Sold 2/6/06.
Sales Price: $640,389
Prior doc info:

Recording Date 8/12/2004
Lender Name First Franklin Financial Corp
Price $720,000
1st Loan Amount $569,800
2nd Loan Amount $142,450

You can get a membership to RealtyTrac for a few bucks a month.

[jabrwoki]

The current asking price seems to be $619k. Of course as Jim mentioned there is only one photo of interior (kitchen) that too recently added. There are also some caveats (to buyers) on staying away from a unfinished deck LOL.
powayseller, membership seems to be $39.95 per month (a bit steep for just browsers) but probably justified if you are serious about buying right now.

[North County Jim]

It appears “sold” in this case is a euphemism. The property was deeded to the foreclosure trustee on 2/6/06.

As for the sales price of $640k, I’ll leave that to those more knowledgeable.

The former owner looks like he went on a buying spree in 2004. The recorded documents index shows seven default notices in 2005.

[sdrealtor]

hardly a buying spree. Guy bought house in August 2004 that he couldnt afford (i.e. 100% financing) and greatly overpaid at absolute peak of market. Guy realizes mistake and puts back on market in December 2004 trying to get out. House sits on market for more than 1 year because he cant sell at a loss. He didnt have any money to begin with. House gets foreclosed and lender takes an 80K bath. Coming soon…..house sells around 600K and lender gets another 80K bath.

[North County Jim]

Maybe just a matter of semantics but I would characterize taking title to five properties in the county in a four month span as a buying spree.

However, the real point of this guy’s story is how many more are in the same boat.

[Author]

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