16 Comments

16 Comments

• humm says:

  November 19, 2006 at 1 pm

  The past year has been very interesting in the south county condo complex that I live in. Late in the summer of ‘05 there were about 12 units for sale (110 are in the entire compex). Two are still for sale (with 4 price reductions), some have sold and a few let their listings expire and did not relist. The ones that sold were the carraige units which are 2 bedrooms so they were under $500K. The larger 3 bedroom/2 story units last summer were thought to be worth around $580-$600K now one is for sale for $475, there have been 3 price reductions and it’s been on the market 159 days! People just don’t see the need to jump in the market immediately since the appreciation rate is not so rapid so I think sense that condos scare people right now because their size can be constraining so who wants to feel like they could be trapped in an investment that could depreciate and be too small down the road?
• dr fill says:

  November 19, 2006 at 8 pm

  condos are the proverbial canary in the coal mine-
  soon to resemble the rats jumping from the ship
  syndrome

  as frank said- and now the end is near and so we
  face the final curtain–
• perrik says:

  November 19, 2006 at 8 pm

  Older condos in Anaheim Hills that are 1500 to 2000 sq ft are going for $300-$350 per sq ft all day long.

  Newer smaller condos that are 1400 sq ft under are running $325-$375 per sq ft.

  The $400-$450 mark they were at has shattered within the last 60 days

  My prediction of $235-$285 per sq ft by end of 2007 still looking good.

  The used home price per sq ft discounts are running the condos into the ground.

  I have actually run across 1 or 2 homes that have broken the sub $300.00 mark. Larger homes.

  Always break it down by the sq ft folks. Let’s become sophisticated buyers again.

  Maybe even fixed loans will be used again.

  You know the loan that doesn’t add $2,000.00 per month back on your principle because your making the min payment on that extremely average house.

  What a generation.

  The devil will come a knocking some day for that contract you signed.

  Take a poll on how many parents of this new generation did it with an ARM or interest only loan.

  Have a great day!
  Sliding Hills.
• Chris says:

  November 19, 2006 at 10 pm

  In 1999, I was trying to buy a 3 bed, 2 bath 3rd floor condo in Huntington Beach. The asking price was $155k. Of course, this was before anyone thought of real estate, and especially condos, as some kind of a momentum market where offering under the asking price was like stealing the seller’s baby.

  Anyway, I offered $150k. The agent called me back 20 minutes later and told me it sold for $160k. That turned out to be the first offer by the other buyers. I couldn’t believe it. They offered $5k MORE than the seller was asking! What fools, I thought.

  Well, the joke was on me as I sat on the sidelines and watched that condo jump to now $485k.

  Now, just in the last couple weeks, my wife and I decided we have enough money saved and it’s time to start looking for a home. No one actually WANTS a condo. They’re the home of last resort because you’re priced out of the HOME market. Sloppy seconds.

  We’ve now put two offers on two separate homes that we thought were more than adequate. Both homes have been on the market for a couple months and both with no offers. We come and offer no contingincies with 50% down and pre-qualified for the rest. We offered $50k under the first home’s asking price and $75k under the second.

  Both refused. Actually, the second wasn’t even returned.

  Now in a declining market where each of these homes have increased almost 300% in some 6 years, you’d think that it would be worth taking the $50k under to just bail on the home.

  Friday I found out why both were rejected. I got title reports on both and both owners had recently refinanced their homes for almost 90% of the value. But that value was 6 months ago. Now, both are just about at par value with the debt on each. So, apparently both have no ability to lower their prices because of the sales costs. Adding $50k to that puts them way underwater. I guess the question now becomes what did they both do with the loan proceeds? Is it gone?

  The reason I bring this up is because I subscribe to a service that gives me the daily notices of default in the county. Most are condos. And what’s amazing is the debt level on these things. I go to Zillow and check what Zillow says each is worth and I compare it to the debt level. I would say that nearly 8 of 10 are either fully indebted or OVER debted on the property. Obviously they have no way to get out if they get into trouble financially. They have to default because they can’t afford to sell.

  With so many so in debt, will that level of debt contain the values? What I mean is, if say 60% of a condo complex, or home tract for that matter, had either bought within about 20% or so of the current market price, or even have borrowed up to the current market price, will that have an effect of making it that many of these sellers won’t be willing to sell under what they either paid or are sitting in debt for?
• perrik says:

  November 20, 2006 at 12 am

  Chris, why can you not wait. You are holding the money, they are not. I’m not going to assume.

  Don’t worry about the past. Some day I’ll tell you about losing money. You won’t feel so bad.

  But sometimes things happen in life we don’t plan for.

  The pressure will start breaking these people down. Specifically young families or couples that have never had this experience.

  This market is like the Titanic. It was so massive it took some time before many people even had a clue it was sinking.

  It is now sinking.

  Wait till at least into the 1st qtr of next year.

  Sliding Hills of Royal Ridge.
• humm says:

  November 20, 2006 at 2 am

  You are right on Chris - I see the where I live people who bought at the right time, have seen 200K in appreciation and cannot take an offer 10K below their asking price because they are so heavily leveraged (this was admitted to me by one neighbor- I’m not guessing). One unit was listed in summer ‘05 and did not sell so they relisted 2 months ago (same asking price and it still sits). If they had shown some restraint, they should have 200K in their pocket to move up and on but instead they are trapped.

  I have been thinking this whole time that the breaking issue in this RE cycle is the people who refinanced several times. I guess it’s still a game of wait and see…
• NanoWest says:

  November 20, 2006 at 11 am

  Sliding Hills,
  I am with you on your price prediction…..it may take a year or two. In irvine, a year ago condos were all listed above 400 per sq. ft.. Now, there are lots of places in the 360 - 370 range. Without the extra incentive of an annual 15 - 20% increase in values, there are a lot, lot less buyers out there.
• Ultrabear says:

  November 20, 2006 at 1 pm

  If home prices per sq footage were included on the MLS, people would have a better idea of the value of the home. There are so many condos in South O.C. that are selling for $300-$500K, and they are advertised as “affordable” because they are selling for far below the median. But the truth is exposed when you compare the sq. footage. You will find that the 1bd., 700sf condo selling for $325K is $464/sq. ft. Then when you see a a 1600 sq ft. condo selling for 519K, but it is $324/sq. ft., you get a better idea of the value you are getting for your money. Don’t go by the price! Absolutely look at the cost per square footage. You’ll discover that condos are actually a shoddy deal. Don’t get taken.
• bepatient says:

  November 20, 2006 at 5 pm

  “LEVELING OFF” LOL! That’s the new RE buzz word! I’ve been hearing that from my realtor for the last 5 months and I am so glad I didn’t buy 5 months ago!
• patently_patient says:

  November 21, 2006 at 12 pm

  NanoWest,

  $/SF is not the true factor. the smaller the place, the greater the cost/SF will be. Most condos you see in the 1 bd size are in the high 400’s to low 500/SF. Also, add on the fact that many of these condos have association dues. So, you see a 650SF condo selling for 315K and the association dues are 285/mo. This equals about 47.5K in lost, non tax write off buying power.

  I noticed a sale transaction recently. 636SF condo for 302K. Assoc dues about 285k. Translated into true net cost (not including tax bene’s) about $549/SF.

  I love how people look at the price/SF only. If i find a place 50/sf less, but it is on a busy street, with 400 other units in the complex, doesn’t seem like a great deal to me. Beware the $/SF scenario. Doesn’t tell the true story. Apples to apples, my friend.
• Patiently_impatient says:

  November 21, 2006 at 1 pm

  nano,

  as an additional comment on your desire to show the $/SF in the MLS. This would just make people’s “estimates” of
  the true SF lower to decrease the $/sf . As an example. The canyon point condo conversions in aliso viejo list one of their 1/1ba
  condos for 834SF. If you actually measure the place, you’d note they included the balcony and outdoor storage/water heater
  space in the SF (you can be sued for that). Actual net is about 712SF. The one I saw was listed for 339,900K. So, is it $407/SF or $477/SF for the same exact
  condo? Hmmmm….Add on $35/SF for the real cost of association dues and the 15k for purchase of a garage and you’re at a nice
  cost of about $533/SF.

  What’s more scary is they give brokers 5% co-op so your real estate agent can sell the “great value” to you.
• bepatient! says:

  November 22, 2006 at 7 am

  I wondered about the sq ft. I see the same models in the same complex with 5 different sq. ft. listed. I noticed that a lot of realtors are rounding up quite a bit on the listings. Is this legal? It makes me mad because I really want to know EXACTLY how many sq. ft. I am getting for my money! This should be illegal!!! It’s false advertising! What’s the penalty for this - I want to know. How do they get away with that? I asked my realtor and he said oh, they just round up! Almost 100 sq. ft in some cases.
• th says:

  November 22, 2006 at 10 pm

  OK, I need to correct you Sliding Hills, arms and interest only loans do not add anything to principal. Only option arms do that, and they only do that if you only make the minimum payment, which is typically 1%.

  Having been a loan processor over the last few years (and with a husband who happens to own a mortgage company), only a small percentage of people I’ve seen actually have option arms. The people that do have them generally are self-employed with fluctuating income. They pay the minimum one month and double the next month.

  Also, for those loans, the lender actually qualifies you based on the full PITI payment, not just the 1%. So if you can’t afford that, you don’t get the loan. With stricter lending standards, it’s not as easy to qualify for those loans as you might think.

  If you still insist on paying p&i to make yourself sleep better at night, you can also get a 40-year fully amortized loan.

  There’s also 50 due in 30. So when it’s time to retire in 30 years, you can downsize and retire with a little help from your 30 years worth of equity! I don’t think that sounds as risky as many would have you believe.

  I just have to defend the financial products out there because they are there to help all of you. I guarantee you, no lender is looking to make a bad loan just to have to take the house back from the borrower. Lenders are there to lend money, not buy houses.
• sir rants alot says:

  November 25, 2006 at 7 pm

  th– hello most lenders sell there loan portfolios thus they could care less if they
  default- they want the money they make for
  doing the deal- period
• Rich Runyan says:

  January 16, 2007 at 9 am

  Canyon Point Condos on Oakgove Drive in Aliso Viejo are listing a one bedroom at 1037 SF. The actual living space is 792, and the padio and storage unit that hold the hot water heater is 110. Which makes the one bedroom Vista’s only 902 SF. How can they sell them for 1037? So far I have notified 5 others who have purchased the Vistas and all buyers are pretty ticked off!