The worst time to buy a house EVER

If you ask people when was the worst time in history to buy a house most would probably say 2006 or 2007. Those were terrible years to buy a house but I think today might actually be worse. In 2006 you still had prices going up in some areas and even if prices were not going up they were not cratering like today. In 2007 sales were at a standstill but prices were not falling much at least until late in the year (mostly because of the lack of sales). Today however you can buy a house one month and next month it can be worth 20% less. Today is the worst time in history to buy a house looking at month to month values. Sure prices have dropped on average 30% since last year but the rate that the prices are falling is increasing. It has slowed slightly for the "spring bounce" but come fall they will probably take off like jet.

Here's an example of what I'm talking about.
In May of 2008 a bargain shopper "snapped up" 4467 Cabot Drive in South Corona (Dos Lagos), the home is a 3 bed, 3 bath and it is 3413 s/f. He was probably all giddy at his apparent steal. You see this house was previously purchased in Dec 2005 for $1.045 million. He stole it for $560k after the bank took it back in Dec 07 for $753k. Sounds like a great deal, right? He bought it for 47% less than the previous owner. How can you go wrong?

Here's how. Fast forward 6 weeks since he closed and his neighbor (a bank) with the same floor plan has listed for $499k. 4455 Cabot Dr was last purchased in Sept 2006 for $975k, lost to the bank in early June for $621k and has just hit the market for 11% less than 4467 Cabot only 6 weeks after he closed. Sure I suppose it could go for more than asking but that is highly unlikey



Anyone thinking that this is just one case cherry picked might also take note that just up the street at 4365 Cabot Drive there is a 350 s/f larger home (REO) with 2 more bedrooms listed for $519k. All three of these homes back to the golf course so there is little difference in regards to lot premiums. The best lot is actually this last home. It sits near the tee box so getting peppered with golf balls is not the issue it is likely to be with the first two homes. (There is another one of these 3800 s/f 5 bedroom homes for sale for $529k just around the corner from the first 3 homes)



Knife catchers beware, currently the knives are razor sharp! With rising foreclosure numbers and home values still higher than traditional ratios the pressure is going to keep dragging the prices down. You can lose a lot of money in a very short time these days.

Another peek into Dos Lagos

Dos Lagos is another one of those trendy gated golf course communities so popular in South Corona. It was one of those tracts that was just inundated with flippers trying to make that big score. Some managed to pull it off and quickly flipped homes, some making nearly $500k in a matter of months. But those that did not get out quickly are creating a wave of REO properties that are taking prices down faster keg at a frat party.



For example there is 3041 Andana, which is a 4 bed, 3 bath home, 3414 sqft in size. The original selling price was not listed but these sold for between $800k and $900k depending on lot premium and upgrades (some were quickly flipped for up to 1.4 million). This home went back to the lender and they have listed it for $511,900 ( that's just an odd price...). There are several other similar homes and some slightly larger for sale in this tract and most are lender owned. Without knowing the original selling price it's hard to speculate on the loss. The tax value is $860k so the selling price must have been close to that. That puts the loss around 40% in two years.

There are smaller homes in the Dos Lagos tract too, but they are fairing no better. 4371 Altivo ln is a smaller home. It's only 2206 sq/ft and has 4 beds and 3 baths. This home sold new in late 2006 for $640k. The lender took this one back in early Feb and has it listed for $399k. A loss of $240k or 38%. But there is little chance of them getting it. Just a couple of streets over the same model home is for sale at 2939 Wild Springs for $287K. It says it needs a few repairs but you can do way more than a few repairs for the $112k price difference.

This for $399k?

Or this for $287K??

When will the banks get serious?

Enough history lessons, back to our regularly scheduled program.....

With all the competition these days and the mushrooming numbers of foreclosures you would think that the banks would price aggressively. Not always the case, in fact in many cases the banks are trying to make a few bucks by listing the properties for more than was owed.

I found this Countrywide REO in the Dos Lagos area of Corona. I'm not sure why Dos Lagos is as spendy as it is. The golf course sucks and the homes are on the worse side of the 15 fwy. The west side of the fwy is much nicer and so are the golf courses.

3041 ANDANA ST, Corona, CA 92883 is a 4 bed/3 bath 3414 sq/ft home. This is our REO. Countrywide took this back for $689k in July. Now the have it listed for $850k. I'm guessing there is a 2nd on this place and they are trying to get a few bucks for them. btw, this has been on the market for 2 weeks and still no pictures. What, the realtor is too busy? P-leeeze!

Problem 1 for them is....

2937 VERDINO CIR, Corona, CA 92883 this is the same 3413 sq/ft home. This one also backs up to the golf course. It does not indicate that this is a REO or short sale but this home was purchased in May of this year for $1.2M and is now listed for $800K. That my friends is a 33% drop in FIVE MONTHS! After fees this house is going to lose $448K in 5 months, assuming it sells at this price. That's going to be a hard nut because of what's behind door number 3.

Behind door #3 we have the former 3414 sq/ft model home from this development.

4467 CABOT DR Corona, CA 92883 This is the highly upgraded model home. It also backs up to the golf course. This home was purchased in Dec of 2005 for $1.045M. Our desperate seller says all offers considered, must sell in the next 30 days (a foreclosure in his future possibly). He has this bad boy listed for $739k. If he gets his asking price (better chance of me winning the US Open) he stands to lose $306k or approx 30% but at least he did it over 2 years.




For the life of me I can't understand why this Dos Lagos development is priced this high. Just because it's behind a gate?? Driving through the gate, are you sent through a spacial rift into Laguna Niguel? WTF, the area used to be a gravel pit, it's still surrounded by quarries with trucks going up and down the main roads all day. it looks like this tract is seeing a 30% drop in prices in only 6 months. How long before 50% or that 65% than Leo Nordine has predicted?