here's a story of three identical homes. Two were bought near the peak and one was purchased a couple of years before the peak.
Our most recent purchase is 1645 MONTE MAR ST, Corona, CA 92881, This 3486 sq/ft 5 bedroom home was purchased Feb 06 for $913K. This gave the original owner a healthy profit of $439k (less fees) in only 2 1/2 years. Yea, no bubble here! After only a couple of years the current owner has decided to sell and is seeking $999k. Looks like he did not get the memo about the bubble popping. (sorry no pics yet). This is another Realtard that just listed this home when there is an identical model home around the corner listed 30% less. WTF??
Just around the corner but on a better lot is 3940 Via Miguel ST, Same house but on a better lot (no house behind) and it has a nice canyon view. The back yard is well landscaped and it has a pool and hot tub. This guy picked up his home in June 05 for $850k. This gave the original owner a payday of $370k in just 17 months. He has listed his home for the ambitious price of $860k.
The problem for the first two homes is an original owner at 1686 Anacapa CRK. This home has the best lot of the three. It sits on a cul-de-sac with a nice canyon view out the back. The back yard does not have a pool but it's nice with a bbq, fire pit and patio. This guy only paid $450k back in 03. He should have plenty of equity unless he refi'd and cashed it all out. He missed the big paydays the first two original owners got but if he can get his $699k asking price he still stands to make a healthy profit. Obviously the first two have no chance of selling with this home priced $300k and $250k less than the other 2. Sadly this home has almost no chance of selling either. There are similar homes nearby for far less. I think this home will need to come down another$150k to $200k before it has a chance.
Just for kicks lets take a look at what you would need to buy this home at it's current price and using traditional lending standards.
Price: ...................... $699,000
Down payment needed... $140,000
Required income.......... $175,000/yr (yea, the IE is full of couples making $175k/yr)
financing $560k 30 yrs at 7% (ave jumbo rate) = $3725/mo
Taxes in this home 1.8%, 12,600/yr .............$1050/mo
Total monthly payment would be approx $4975. Which is fine I guess if you are making $175k/yr. Even at that level of income this home would eat up a large portion of their take home pay though.