Sunday, October 14, 2007

clueless sellers

How long does it take for a seller to come to the realization that their home is hopelessly overpriced? Does it take weeks, months or is it going to take years. Will they just give up and let the banks have it? It just amazes me how many homes I find that are identical floor plans with similar feature yet they are priced continents apart. Do the real estate agents really think a home has any hope of selling when there is a twin down the block for $150K less.

Here's a perfect example of this insanity;

26885 Winter Park PL, Moreno Valley, CA 92555 This is a newer home in Moreno Valley ranch. It's 2764 sq/ft 4 beddroom/3 bath. It's nicely upgraded with granite and nice cabinets, but all the homes in this tract are as it was standard from the builder. The home was purchased last year for $469k. Our seller has consumed mass quantities of kool-aid and believes that his meal ticket has gone up $94k in a year. Oh yea, I'm not making this up!

The first problem he has is his neighbor down the street at 26955 WINTER PARK PL who did not partake in the magic kool-aid and has his identical home priced to sell at $390k. That's $86k less than he paid for it last July. It does not say this is a short sale so the seller is looking to escape before reality sets in with the rest of the IE. Two sellers, two identical homes on the same street yet they are priced $180k apart.

The 2nd problem for seller #1 and also a problem for seller #2 is the much bigger home just down the block that the bank is trying to unload for $407k. This 5 bedroom home is nearly 1000sq/ft bigger than the other 2. Which would you buy, the cheap smaller home at $146 a sq/ft or the bigger home at $108 sq/ft?

To add to the insanity a builder (pacific homes) is putting up more homes just up the street from these. Those homes start at $516k and got to over $600k. WTF are they thinking. They should be cutting the prices like mad or they are gonna be stuck with a tract of new homes and no buyers.


OrientalPearlsNet said...

I guess they (Pacific Homes) needs to start high so that they can say they have discounted so much later? BTW Thank you so much for putting up such a great blog. I know a lot of people including me were looking for a blog on IE, and finally you made such a great one! Does not sound like it leaves you a lot of time to play golf though with such an informative blog with all the substantial materials that you have been providing. Thanks again.

golfer_X said...

En contraire, I played 36 holes today. 18 at San Juan Hills and 18 at Tijeras Creek. I played decent although my putting was not on (as usual). Thanks and glad you like the blog.

Anonymous said...

Hey thank you very much for this blog it is very informative ? how long do you think it will take for prices in the i.e high dessert to low dessert to come down to 1999 prices. I want to jump back into the market some people think it will bottom 2011 or 2012 I want to purchase no more than 1700 sqr feet
something built after 1995.When it bottoms what do you think about victorville or adelanto.Also please monitor victorville and adjacent. JORDATO@YAHOO.COM

golfer_X said...

Your guess is probably as good as mine on how far prices will fall and when the will bottom out. Personally I really doubt they will go back to 1999 prices. Prices had only just started to recover in 1999 from the previous bust. The crazy increases did not start until after 2002. Personally, my gut feel is that prices in the IE will go back to somewhere near those 2002 prices. That would reflect about a 50% decline from the peak levels that we saw in early 2006. I think it will take until 2009 or 2010 to get back to those prices. It could happen faster but the real estate market tends to operate in slow motion so it's likely to take a couple of years. Don't be too concerned about missing the bottom. Again, the market tends to move slowly, both up and down. When prices do start going up again they will not move at anywhere near the speed they did in the last few years. They will creep up at 2%-5% per year.

Sit back, relax and save as much as you can. Getting a loan is going to stay hard and having a nice down payment will really help. It also helps avoid PMI (mortgage insurance) which can run a few hundred a month.