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no_such_reality
Participant877 ISLAND AVENUE #301, SD – Downtown, CA 92101**
List Price: $700,000 – $700,000Is this one of those posh places? I see the $657 HOA, but I don’t see fluff and fold in the HOA services.
Since the condo lists laundry as common facilty makes me think you’ll have to schlep out from under your exposed ductwork down to the laundry room.
Must be lifestyle, if you live here you don’t need a washer & dryer, you just send it all out to be dry cleaned or laundered.
ParticipantWell, my 1st experience with it was Detroit, circa 1990. I don’t envision lofts circling central park on top of tony hotels, I see Chicago’s projects.
Yes, there will be premium location. Those with unobstructed ocean views. The 2Bd place in Grande with 1600 sq ft may do well if the view is from the room, the photos look like their from the roof.
The 1bd, at a cramped 700 ft, is an efficiency apartment. in the end, it’ll probably be bought by the person who owns the Ocean view one to be used as quazi-live in maid’s quarters.
Those views aren’t great when over the next five years all you’ll be look at is other condo high-rises.
ParticipantSomeone isn’t telling the whole story and I suspect the fin advisor didn’t look closely enough to see the obvious BS.
The primaryhome has 1st, 2nd, and Heloc. $915K on $875K value (probably wishful value thinking)
The 1st and 2nd add to $816K. We’ll get back to this.
The Pinkdawn investment is a $400K with loan of $298K. It’s most expensive at $3159. That math doesn’t add up unless the loan is at 10%. That’s provided you assume taxes are in the $3159 and HOA fees of $300. Without taxes and HOA fess, it requires a rate of around 12.5%
The primary house is worse, that first and second at less than $3159? Means the primary and likely 2nd are both teaser or option ARMed. Combined, they are under a 2% interest rate not including taxes.
ParticipantDowntown is definitely a lifestyle destination.
Are there that many lifestyle consumers? Yes, I realize everybody thinks they are, but how many people are we really talking about? C-level in good sized companies that are in SD for business but live elsewhere, retired wealthy, wealthy to the point that they value the panche of a doorman more than $700/month?
If investors can’t use them as rentals, all the units need real owners.
If buyers are buying for “lifestyle”, they’ll want the prime units with the west ocean views unobstructed. That leaves 3/4s of the units with undesireable (city tower) views.
If the price goes down, the prestige factor of the lifestyle goes away.
At what % of current prices is it sustainable?
Participant4runner, I see a couple reasons why:
1. If the loans default too soon or the ratios in the MBS bundle gets out of whack, they come back to the originator. Hence, the OwnIt implosion.
2. Many of the larger banks (BofA, Wells, etc.) keep a portion of their loans and service the loans in the MBS after securitization.
3. Perceived lack of quality in the MBS bundles will drive the required interest rate up, either through coupon rate or discounting to increase the yield to recover capital losses. The banks can’t sell “$100M” of loans and only get $90M, the shareholder don’t like the impact on the balance sheet.
ParticipantThe Grande may be a nice building, but in the end, those one bedroom condos are not worth $100,000. Two bedrooms will be lucky to be worth $150K.
Maybe only $50,000 and $80,000.
Sadly, this thread kept my mind churning last night after going to bed. Is there a bunch of stuff included in the HOA? ( like GYM? Cable? etc.)
Maybe 4plex and some of the other landlords can help us out and figure out a model of how you could own these places and safely cover the required payments.
A quick check of Craigslist shows 65 properties listed when searching for Downtown max $1000 1B+. A massive 711 when removing downtown.
At a $50,000 purchase price, that little one bedroom with the $626 HOA, will have $42 in property tax, $249 in interest and another $40 or so in principle (not an expense). Not to mention the $10K down for 20% down. Total expense before you even start to manage or lease is $866/month. Add in some umbrella liability or insurance as a landlord for safety and you’re easily over $900/month which means any vacancy leave you upside down (before taxes)
Since downtown/gaslamp is a “destination” maybe you could take the 2bd room and use it as a vacation rental competiting with the hotels in the area. But still, that $663 HOA is devastating. What kind of occupancy would you need and what rate would you need to charge to generate cashflow? Maybe a 75% occupancy (year-round) on the weekends (Fri-Sat night) at $250/night? That would give you about $1625/month before vacation rental expenses (cleaning crew), management co. fees, etc. I don’t think that’s feasible. Hate to think about the where and tear for downtown partiers churning through though.
Other ideas? Can the numbers work for those properties in the Grande without a 90% price drop?
ParticipantThe scale of this is incredible: $1.2 billion worth of property
The scale makes me think they actually thought they were legit. Most crooks and almost everybody in the money business knows when you smack it that large, they will come and find you.
As others said, there’s no feeling sorry for anybody in this story. Not even the banks, they’ve known for years that appraisals are largely formalities.
I wonder if one of the changes we’ll see after the credit bubble bursts is banks insisting on using their own appraiser.
ParticipantThe scale of this is incredible: $1.2 billion worth of property
The scale makes me think they actually thought they were legit. Most crooks and almost everybody in the money business knows when you smack it that large, they will come and find you.
As others said, there’s no feeling sorry for anybody in this story. Not even the banks, they’ve known for years that appraisals are largely formalities.
I wonder if one of the changes we’ll see after the credit bubble bursts is banks insisting on using their own appraiser.
ParticipantPeople in Coronado won’t give their homes away, period.
They won’t sell their home for under a million when a run of the mill tract home stacked on top of each other inland where is 105 degrees fetch a $979,000.
ParticipantThe Grande may be a nice building, but in the end, those one bedroom condos are not worth $100,000. Two bedrooms will be lucky to be worth $150K.
The reason is bluntly simple. Even when you own it, the HOA fees are high enough that you’re basically renting it. The unit looks nice, but, it’s just a high rise apartment with a $626/month HOA. Add property tax of $80/ month on a $100,000 purchase and renting it $1200/month means you can’t cover the payments.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?lis…
The Park Place towers on Jamboree and the 405 in Irvine are in the same boat. They’re all sold… but there are never any lights one. One here, one there. So unless the owners is numbly rich, the HOA fees kill.
January 7, 2007 at 4:27 PM in reply to: Murrieta home debtor stripped house of equity, kitchen cabinets, and pool equipment? #42901ParticipantIf the pool equipment, kitchen cabinets are gone. You can bet the appliances and any decent most fixtures are gone.
That should $279k, not $579k.
Sadly, with REOs, this will be common place.
Participantthird – they will not and probably have not hit the “jackpot” a servicer usually is in touch with a homeowner as things in the foreclosure process progress
OCbuyer, good info.
The third point is kind of the crux of my question. If the loans that wall street want bought back are basically non-pays that the servicer hasn’t been able to collect.
If the Wall Street Firm with the MBS is trying to force OwnIt to take loan “A123” back, is the servicing firm still serving or is OwnIt expected to serve? Are they still collecting or have notices gone out to homesquatter that payments now go to OwnIT Mortgage? Does the servicer still have rights to conduct forclosure? How many of this issues will create easy techinicality blocks to eviction and foreclosure?
Somebody somewhere is going to be coming for the money, that I’m confident, but how long will it take to legally sort out who has rights to the money?. My question is basically three fold:
1. How quickly will the defaulting homeowner of A123 get the boot? IOW, will they get evicted on a pretty regular NOD default timeline or not? Highly dependent on the exact status of your loan. However, if you’ve already received a notice statement your loan was transferred from A to B and B is BKed…
2. With the attempted return of the loan to the originator for servicing and ownership, how long will it take for the legal owner of the property to complete foreclosure, REO the property and return it to marketplace?
3. If say, Morgan Stanley attempted to return “A123” from an MBS to OwnIt, but OwnIt hasn’t repaid the debt and went BK, who actually owns the loan A123? OwnIT? or Morgan Stanley?
My concern is a surge in properties going NOD and returned to the sub-prime originators that sprung up like poppies in the spring during 2003-2005, will those properties essentially fall out of the housing pool for two, three or five years as bankruptcy and ownership of the loan rights sorts out? Will confusion with loan ownership as MBS’s return loans and originators BK essentially drop homes into a legal blackhole were they can’t be bought for a few years?
More importantly, will a crafty home squatter be able to use California’s laws to delay eviction on technicalities or due process even though they are not paying because of uncertainty in whom should be paid?
ParticipantSales volume: -10% YOY.
Price: -7% YOY(As measured by median).Drying up liquidity will slow the price drop. The reason is people won’t be able to move up or out. They’ll get squeezed into staving off foreclosure. Also median has little reflection on the actual price drops on like for like or same model home.
I believe face value will hold strong to one digit losses, however the real price may be completely different as sellers rebate closing costs and other items.
Also, since I don’t know how REO sales show on median, I think they’ll be negliable until Jan-08. The REO will watch their property list bloom until that time.
Then again, maybe we’ll hit free fall. A lot depends REO, but I’ll start another thread for that.
ParticipantWithin the next 6 years, MTS, SANDAG and Caltrans will be building one of the first state of the art Bus Rapid Transit systems.
So six years of road construction.
Also, the orange line in SF Valley is one of those… it was plagued with problems
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