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kev374
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If it was your house, and you wanted to sell, would you list it at $400k, since you don’t wear rose colored glasses?Nope, I would look at other listings in the immediate neighborhood and undercut them by $100,000. That is IF I needed to sell. If I didn’t NEED to sell, I wouldn’t even bother listing it in this market. If you check the DOMs on ZipRealty (I check everyday 😉 most homes are just languishing on the market. The competition between sellers is WAY TOO FIERCE to be so passive, list high and “try” to see if you can get that price! Not going to work!
A friend had an open house in Lake Forest the other day, the guy is cheaper than the cheapest listing in that area by $25,000 and still NOBODY, not one soul showed up to see his home, and it’s a beautiful 3bd home too 😉
It’s become a different market overnight and requires a different way of thinking, that is all I’m saying with my point about the dellusional seller 🙂
ParticipantJJ, my overvaluation is based on economic fundamentals not on comps. It’s based on the trendline for the last 20 yrs. It’s based on the fact that there are absolutely no supporting factors to support the 120%+ price appreciation for the region in the last 6-7 yrs. And last but not least, it is based on the fact that carrying costs for a mortgage are approximately twice as much as renting the equivalent property 😉
Time to pull off the rose colored galsses and realize a few things:
1. most people in these properties couldn’t afford to buy their own homes again at today’s price levels, that says a lot about the situation we’re in.
2. Without the use of exotic lending there are virtually no first time buyers in the market at today’s prices. Exotic lending is rapidly dying.
3. Upgrade buyers are wiped out because of #2. If they can’t sell their own home, they cannot move up…it’s a chain reaction.
4. Loss of Real Estate jobs (30% of OC jobs), increasing interest rates, ARMs resetting with foreclosures starting to skyrocket, tighteing of lending standards (#2), more job loss due to recession caused by sharp contraction in spending (no more HELOC money)…how is all this going to bode for the future of home prices?
These are severely aggravating factors and many people are saying everything will be allright, does that make any sense?
With all these factors how is a $755k asking price sensible as a “good starting point” as you say? Especially when the seller in question here has a HUGE cushion to lower prices? It just demonstrates absolute stupidity and greed and yes that makes them dellusional.
ParticipantI’ve been thinking about the same points you made in your post. It’s foolishness to pay a 300-400% premium for nothing, it’s insanity.
I’m expecting a total meltdown in SoCal RE, if not I’ll be packing my bags as well. I am in IT so Austin or Atlanta is what I am eyeing. I’ve checked wages there and it’s about 10% lower than SoCal, so imagine THAT! Earn 10% less but enjoy a 50% lower overall cost of living…sounds enticing enough. I do love the beach though but with the money saved I guess I could just take 2 extra vacations each year 😛
Also wanted to mention that although TX has high property taxes there is no state income tax so that’s a 9.3% savings right there!!!
February 9, 2007 at 8:35 AM in reply to: Considering Buying in Temecula – Can’t afford OC – ??? #45006Participantdon’t do it. The drive will completely ruin your life. Friend of mine bought in Corona, in a year his home was up for sale because he was going crazy spending hrs in traffic each day…this was a year ago and it’s still on the market while he rents here in South OC. Renting is the most cost effective and flexible option right now that WILL let you sleep at night. If you own you’re locked in and that is a FAR worse situation to be in considering uncertain times ahead.
Also consider the fact that even $300 or $400k is a HUGE commitment on conventional lending terms. The availability of literally free money through exotic lending has caused most people to become oblivious to the actual commitment a $400,000 loan requires. If there is a recession ahead it could mean getting yourself into a big financial obligation at the wrong time.
Participantwait until fundamentals somewhat make sense, i.e. median income can qualify for a 20% down, 30yr fixed at the tried and tested 28/36 ratios and rents are somewhat in line with mortgage payments. I’m not saying you should try to time the market and wait for the absolute bottom but somewhere near it where things start making sense economically is good enough 🙂 Currently it means waiting for roughly a 50% drop in the median price to around $300k or so. Trust me it will happen because the economic fundamentals only support that price point and sooner or later equilibrium has to be reached.
Yes, the upcoming crash is going to send shockwaves through the economy but I recall Newtons law here – every action has an equal and opposite reaction, we have had tremendous boom times without any justification for it, now we have to endure the hangover of an equal magnitude.
ParticipantAre these stats taking into account savings made via 401k contributions? Also with low interest rates and high taxes, saving make no sense. After inflation and taxes on interest income, especially in the high brackets, the value of your money saved steadily declines.
Here in CA anyone who makes over $45k/yr pays almost 10% in taxes, add a 25% federal tax to that and 35% of your interest income is wiped out right there. If you earn 4% in savings that is reduced to 2.6%. Add 3% inflation and you get -0.4%/yr.
Participantare you joking? I know Realtors who have been in the business for 20 yrs and are crying right now because not a soul is showing interest in anything. One realtor told me that business is so dead he hasn’t seen it this bad ever…another one in Vegas that I know said he is ready to get out of the market because there is 18 months inventory (27000 units) right now and rising and says the Vegas market is about to experience a crash of biblical proportions due to the madness of the last few years.
I suspect a similar crash for SoCal as well.
ParticipantWealthy is all relative. Someone making $100,000/yr and has $50,000 in the bank is very wealthy compared to the guy earning minimum wage and $100 in savings.
Participanti’m guessing Laguna Niguel has monster mello-roos? In this case no factor needs to be added to the purchase price to compensate for development since mello-roos more than makes up for that.
Participantyes, we can’t forget the fraud (liar lons) too.
THe thing that boggles my mind is that people just can’t think rationally when it comes to home values because they get their emotions into it.
We have to ask ourselves WHAT caused the price to spike up so drastically. So through this forum and other blogs we have discussed it at length – exotic lending, speculation, and fraud. The analogy is like boiling water, as long as there is heat the water boils, turn off the stove and it cools down to room temperature. Remove the demand caused by artificial parameters of the last few years and the prices will re-align to reflect demand caused by actual market fundamentals like income and affordability.
It’s such a simple concept yet so many people refuse to believe it because they just can’t handle reality.
Others argue the market will flatline…well, it can’t. Sooner or later people will NEED to sell. Sooner or later those Option ARMs will reset. Sooner or later speculators and others will have to foreclose because they can’t hold the property any longer. It’s common sense!
Participant30041 Monteras St, Laguna Niguel, CA 92677
similar sq footage, 3bd/2.5ba SFR sold for $415k on 6/2003, you may be right about 500-550k as the 2004 comp.
why do you say $375k is unlikely? the current asking price for this property is $644k which is around the median price in OC. Are you implying that the median price in OC will hit bottom at $450k? I seriously doubt it.
Historically median prices have always aligned to 2.5 times median income and about 3 times in premium markets like OC. At the median being somewhere around $70k in South OC I see the median aligning back to around $200-250k or so.
ParticipantThe ZipRealty price appreciation graph:
I have not checked actual comps in 2004 but I think it would be fairly easy to check sales histories.
It’s not like I care if the sellers laughs right now because they will be crying pretty soon because I for one believe this deck of cards is going to come crashing down in the next 2-3 yrs 😉 The current home values have all been based on hot air (exotic lending, speculation etc.) and that can only end one way.
ParticipantI shot a question to the realtor about this property:
I may be interested in this property at the 2004 price level, around $375,000. If the seller is willing to negotiate then get back to me, otherwise I’m not interested, no hard feelings 🙂
24466 SUNSHINE DRIVE, Laguna Niguel, CA 92677
Bedrooms: 3
Full Baths: 2
Partial Baths: 1
Square Feet: 1,500
Lot Size: N/A
Year Built: 1996
Listing Date: 09/27/06
On Market: 108 days
Type: SFR
Status: ACTIVE
MLS #: S460226
Asking price: $644,900
Last sold for: $315,000 on 08/23/00What do you think the seller will do? I feel there is a fair chance prices MAY rollback to pre-2002 levels so this property may end up $320-330k after all is said and done, I thought $375k was the highest I could go without exposing myself to serious risk.
Participantmore bleeding:
5749 PORTAGE, Yorba Linda, CA 92887
Bedrooms: 3
Full Baths: 2
Partial Baths: 0
Square Feet: 1,152
Lot Size: 6,000 Sq. Ft.
Year Built: 1980
Listing Date: 11/01/06
On Market: 72 days
Type: SFR
Status: ACTIVE
MLS #: P546279List: $439,000
Last Sale: 4/6/2005 for $450,000EASY COME, EASY GO!
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