Monday, December 31, 2007

46% off and counting in Canyon Crest

6060 SPEYSIDE, Riverside, CA 92507 is a REO in the Canyon Crest area of Riverside. Actually, I'm not 100% sure this still qualifies as Canyon Crest. It's in the homes behind Raceway Ford up near the 215/60 junction (up near MoVal).

This 2962 s/f, 4 bedroom/3 bath home was built in 2001 and sold for $277,500. 5 years later it sells again for the unbelievable price of 1.1 million! I find myself shocked and amazed at that selling price. Yes, this house is on a large lot and it probably has a nice view but 1.1 milllion dollars for an average sized tract house in Canyon Crest. Of course the outcome of this transaction is all too obvious.... the bank took it back in October. They have it listed for $599,000. That's a whopping 1/2-million dollar loss in a year (or a 46% loss).

I can't believe this is not another case of mortgage fraud. Zilow has most of the homes on this street estimated at between 500K and 600K and we all know how accurate Zillows estimates are. Even at $600k this home is seriously overpriced. At $100 s/ft this home would be under $300k, I'll give him another $100k for the big lot ( 3/4 acre) and that is still under $400k which is what I think this home is going to end up being worth in a year or two.

Delusional seller of the year award

This home is the epitome of what is wrong with this market. It has a delusional seller asking a ridiculous price and it has been listed by illiterate Realtor that should have smacked the seller in the head when he heard his asking price.

The award for the most delusional seller in the IE goes to the guy trying to sell
5272 Dood ST, Mira Loma, CA 91752. Dood st... As in DOOD you are high if you think your house has gone up 544% since 1999.

This home almost qualifies as a real homes of genius award winner in addition to the delusional seller award. The home look like it was decorated as part of a haunted house or possibly a tacky 1960s theme restaurant. We can also give the Realtor (JAVIER ALVAREZ) an honorable mention for the ridiculous description. I've highlighted the spelling errors for your amusement.

All Caps, a multitude of spelling and grammatical errors and then there are the colorful exaggerations. Beautiful ranch style? What part exactly is beautiful? This lovely house will accommodate my GUESS (I guess I have no idea what he is talking about). What the hell is a "3 house barns stables"? I assume he means that there are two units and a barn but then again I don't speak realtor. That sure is a nice pool too, with its au naturale green water.

This guy picked up this gem in 1999 for $146k. Now, 8 years later he thinks this POS has gone up a whopping 544%. That works out to $81K per year. Who needs to work when your house is earning $81k per year? I would not even offer $146k for this thing today. It's a gaudy mess in a terrible area that is polluted by the Stringfellow acid pits. Not only do you have to fear for your life but your kids might grow another set of limbs. If none of that matters to you then you can pick up this little piece of heaven for $795k.

Sunday, December 30, 2007

The danger in buying new

As the housing market continues to decline more and more builders will start to offer discounts and incentives to move their homes. Many of these deals will surely entice buyers to take the plunge and purchase a home. Buying a new home does seem like a great way to go. After all, everything is new. You don't have to worry about the water heater exploding or a termite infestation. But don't get all googley-eyed, a new home purchase can be just as risky and in today's market it can be far more risky than buying an existing home.

Home builders will do whatever makes financial sense for the company. If that means packing up and leaving a development 1/2 built then that's what they will do. When that happens you can find yourself surrounded by empty weed filled lots and half finished streets (or worse).

Smaller builders might not make it. If your builder goes belly up, you can find yourself with a worthless warranty. Any problems with the home are now your problem. If you're home is half finished when the builder goes BK you could lose your deposit money.

Builders can change the home mix in a development. They might start off building 3000 s/f mini mansions in a supposed "upscale" development but if those stop selling you might find that they suddenly start building 1200 s/f starter homes. They can turn a townhome or condo block into apartments.

All of the above scenarios happened in the 90's bust. In fact the tract right across the street from me saw the builder go bankrupt and leave about a dozen homes 1/2 built. If you are looking to buy new I would stick with a larger builder. Try to find a development that is in it's final phase or close to being finished. I would avoid any new, large developments like the plague.

What will 2008 be like?

As we look back on 2007 I think we can all agree it was a very interesting year. There were many predictions made in late 2006, few of them were remotely close to hitting the mark. Most economist or organizations that offer these predictions have a financial interest in Real Estate market. This obviously drives them to publish forecasts that are heavily skewed in their behalf. I guess we can’t blame them for that but some of these predictions were made after it was obvious that the Titanic was going to sink. Some of them were so bad that you can almost picture Muhammed Saeed al-Sahaf (Saddam’s minister of information) standing up reading them.

  • In January 2007, the chief economist at the National Association of Realtors said, in regard to the state of the housing market, "The steady improvement in [home] sales will support price appreciation ... [despite] all the wild projections by academics, Wall Street analysts, and others in the media."

  • Former Federal Reserve Chairman Alan Greenspan and his successor Ben Bernanke, after reviewing home sales and mortgage rates in fall 2006, were hopeful that the market had bottomed out. "It may be too soon to say that it's over. It may not be too soon to say that the worst is over," said Greenspan in an October 2006 speech in Richmond, according to press reports.

  • In a November 2006 speech, Bernanke said he saw some "encouraging" signs in recent housing reports. "Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets," Bernanke said.

  • Ed Leamer, director of the UCLA Anderson Forecast predicts California real estate will remain sluggish for a long time — at least five years — but with little price deterioration other than the failure to keep up with inflation.

  • The California Association of Realtors forecast for 2007 was, “Now, the housing boom is over, with the slowdown expected to continue next year, according to a new forecast by the state’s real estate agents. The median price of an existing California home will decline 2% to $550,000 in 2007 from a projected median price of $561,000 this year, according to the California Assn. of Realtors. Sales are projected to decline 7% to 447,500 units from 481,200 this year.
  • New-home sales are forecast at 950,000 in 2007 and 981,000 next year, down from 1.06 million in 2006. The median new-home price should grow 1.7 percent to $249,600 in 2007, following a 1.9 percent increase last year. Housing starts will probably total 1.50 million this year and 1.56 million in 2008, in contrast with 1.80 million units last year. Existing-home sales are projected at 6.42 million this year and 6.66 million in 2008, compared to 6.48 million last year. The national median existing-home price is projected to rise 1.2 percent to $224,500 this year, following a 1 percent gain in 2006. “Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next,” Lereah says. “However, total sales this year will be fairly close to 2006 because last year started high and ended low.

2007 is in the bag. Mosts economists got it horribly wrong but there were a few that were close. Peter Schiff,
Nouriel Roubini and a few other well known economists did see the meltdown coming and were honest and brave enough to say so. In early 2007 they were primarily seen as tin-foil hat wearing crackpots. I doubt they are viewed with same skepticism today.

Of course, here at Housing Kaboom I am more concerned about my little corner of the universe. What goes on at a national level or in Florida, Arizona or Montana may not have any bearing on our little piece of paradise. We know that the IE is in the midst of the biggest real estate crash in it's history. Whether the numbers show it or not all you have to do is hit the streets or log on to Redfin and you can see how far the prices have fallen. The price declines are accelerating as are the foreclosures and the regular listings. The speed of it all has taken me a bit by surprise (I remember that last one and it was nothing like this). We have seen prices go up as much as 300% in the last 10 years, with most of that happening since 2003. How far will they fall? What will 2008 bring?

My predictions for 2008 are nothing more than "more of the same". Home prices will continue to decline as more and more REO's drag the prices down. Many more home owners will walk away from their homes as the values decline and their payments go up. Construction will slow and the builders will start building small homes on tiny lots in an effort to get the price point down around $200K - $300K. The high end homes will be hit especially hard ($600K-1M). Most of these were purchased by regular Joes trying to live the high life. Without the home ATM they are going to quickly run out of cash. There are not enough high income families in the IE to purchase those homes so the prices will quickly crash in order to attract buyers. I think this price point could easily see declines of up to 60%-65% off peak prices.

On the rest of the IE economy I think we will see something similar to what happened in the early 90's. Many of the new shopping malls that were built will see more and more business go belly up (Furniture/accessory and luxury type stores will suffer the most). Restaurants will start to close as fewer people will be eating out. Crime will obviously increase as more and more out of work construction workers start looking for easy cash elsewhere. Anyone remember how many homes were robbed in the early 90s? I do, and it was a lot!

That sure sounds like a lot of doom and gloom, doesn't it. Well, there are going to be some tough times ahead for a lot of families. Unlike many bloggers, I don't think we are in for the next great depression. I don't think we will see millions of people living in cardboard boxes under the 91fwy. Yup people will lose their homes, but they will move into apartments. Prices will come back down to normal levels and then people will buy again. Hopefully it happens fast, the sooner prices fall back the better.

I leave you with one of my favorite "prediction" clips for 2007. I think I saw the long haired freak working at Don's Used Car lot.....

Friday, December 28, 2007

Here's a cool clip from Suzy Orman

She says, "prices are back to 2004, but bid at 2002 prices"

Thursday, December 27, 2007

Somebody buy me this for Christmas

Here's a really bitchin house that I would just love to have. At a million bucks it's out of my price range by a factor of 2. Check out the freakin pool with the sunken bar. My buddies would never leave if I had this house.

1180 Cleveland WAY, Corona, CA 92881, This is a former model home up in the Amberhill area of Corona. the home is 4100/sf and has 6 beds and 4 baths (just what I'm looking for...). It says it was built in 2003 and purchased last in early 2006 for $1.4 million. Our current owner has been trying to sell it for the last 10 months. He started off at 1.55 million, raised it to 1.6 million, then reduced it to 1.3, then again to 1.1 then again in late October to $999,999. It's currently listed as a short sale. Heck if he sells it that's only a 30% loss. Not that bad considering most of the homes I post are running closer to 40%.

The Riverwalk has fallen in and is being swept away

Riverwalk is a development in western Riverside. It lies just north of the 91 fwy, off Pierce st (now Riverwalk Pkwy). The prices in this development up until very recently had been stuck in time. Unfortunately that time was mid 2006, so nothing was selling. Today I took another peak and noticed the prices are finally starting to move down. There are several homes listed in the $140/sf range. Unfortunately that's still way too high for this area and far better deals can be had elsewhere.

The leader in the race down is 4862 Streambay CT, Riverside, CA 92505, this home is 2732/sf and has 4 beds and 2.5 baths. The home sits on a puny4800/sf lot. This home sold new in 2002 for $320K (damn that seems like a lot for this home in o2). Then it sold again in 2005 for $555k. It's now listed as a short sale for $350. Darn near back to it original 02 selling price. If they can find a buyer and the bank goes for this (and it would be stoopid not to) that's a loss of $205K plus fees (37%).

Anyone remember this home? 11365 Lakeport DR was featured in a post about homes listed for ever. It's still here, now at 653 days on market and still with ZERO chance of selling at his current asking of $864k. It still has purple bathrooms!

His competition around the corner is 11356 Pondhurst WAY, is listed as a short sale at $549k. For those arithmetically challenged bloggers, that's a whoping $315K cheaper. Almost enough to buy home number 1.

So Riverwalk is finally starting to show some erosion. The Short Sales will probably soon turn into foreclosures. There are already a couple of REO's in this development but the banks still have them priced too high. There are much better deals in Lake Hills and Victoria Groves than here in Riverwalk. That's a little hard to reconcile as those a much nicer developments than Riverwalk. The only thing Riverwalk has going for it is easy access to the 91 fwy.

Wednesday, December 26, 2007

Lender owned.....for a year, and counting

I've often heard "banks aren't in the business of of owning homes". Hmm, if that were true you'd think they would have sold this off in less that a year.

11234 Evergreen LOOP, Corona, CA 92883, This 3 bed, 3 bath home of 2899/sf was taken back by the bank last year (2006). It was listed on 12/20/2006 for $589k. Check out this classic case of chasing the market down. Keep in mind that until the spring of 2007 homes were actually still selling fairly well in the IE. Had they priced this a little stronger in the spring they could have probably sold it as similar home were still selling as late as August in the mid 500s. It looks as though they have realized that they missed the boat. The last price cut brings this home into a price range where I think it will have a good chance if selling.

Price Reduced: 01/19/07 -- $586,900 to $560,000
Price Reduced: 02/17/07 -- $560,000 to $549,900
Price Reduced: 04/03/07 -- $549,900 to $535,900
Price Reduced: 05/04/07 -- $535,900 to $522,900
Price Reduced: 06/09/07 -- $522,900 to $506,900
Price Reduced: 07/04/07 -- $506,900 to $500,000
Price Reduced: 08/14/07 -- $500,000 to $490,000
Price Reduced: 12/18/07 -- $476,000 to $450,000
Price Reduced: 12/26/07 -- $450,000 to $370,000

Personally, I think this home is worth $300k tops and that's if the back yard was nice (which this ones is not). The area is just a little too far down the 15fwy to be practical. There are no stores, gas stations or anything else close to there. The tract is also getting pummeled by foreclosures and it has a high tax rate. It's certainly not on my list of places I would buy a home.

Tuesday, December 25, 2007

Monday, December 24, 2007

November numbers

Here's the latest chart from DataQuick. Riverside county numbers and numbers by city. As expected they are ugly. I don't like to read too much into these charts but they do give a general indication of where the market is going (as if we didn't already know).

Saturday, December 22, 2007

How to Sell Your Home in Black & White

I ran cross this video and found it damn funny.....

Friday, December 21, 2007

Realtard of the week

This week's Realtard of te week goes to Gail Copley of Evergreen Realty for the listing at
22997 Banbury CTMurrieta, CA 92562. This home is a nice 3700/sf 3 bedroom, 3.5 bath sitting on the 11th tee of Bear Creek Country club. Sales Price $1,029,000

Here's the listing description,

"Price reduced $100,000. This is the best deal in Bear Creek! Beautiful S. Story on 11th tee. Great lake , fairway and mnt. views. 3 fireplaces, sitting rm. in master, casita, custom cabinets, covered patio w/ viking bbq, refr. . Beautiful landscaping with many trees, fountains, firepit and more. Complete sprinkler and outdoor lighting systems. Over 30 trees, block walls, and a lot of grassy areas. Rear yard faces west."

Now most of this is not that bad by Realtor standards. But there are a few obvious realtardisms in there. Who else would abbreviate room (rm) or single (S). Commas, periods, slash marks and exclamation points galore. Caps in odd places. A lot of grassy, it's on a golf course, duh. But none of those are enough to qualify as realtard of the week. The line that clinches her the title is the second one "the best deal in Bear Creek!"

The "Best deal in Bear Creek"? really. So how far do we have to look to find a better deal?
Well, how about RIGHT NEXT DOOR!

22991 Banbury CT, Murrieta, CA 92562 This home is 3667/sf, 4 bedroom and 3.5 bath. From the pictures it looks to have a much nicer kitchen than home 1. It also sits on the 11th tee box of the golf course and the lot size is about the same. Listing Price, $699,000

I might have cut her some slack if this home had just come on the market but it's been listed for 3 months. It's been $300k less the whole time. Interestingly this home is actually priced quite well. Yes, it's expensive but it's a big house on a big lot on a private country club. It sold new in 2001 for $500k. At $700k that only works out to an annual increase of just under 6%. Slightly more than the typical rate of 4% but still within reason. This one's probably a steal if you can get it for $600k.

Wednesday, December 19, 2007

How's Norco holding up?

Last month I posted the sales by zip code. I was surprised to see Norco post a 12% increase in median over last year. The only explanation I can come up with is that the mix of homes selling was skewing the median. After looking around at the homes for sale it's very obvious that they are suffering the same decline as the rest of the IE.

Here's a couple of perfect examples.

3230 Crestview DR Norco, CA 92860. This is a 5 bed, 3 bath, 3500/sf house on a half acre lot (small by Norco standards). It's a newer home, built in 2005 and selling new for $914k. Now you can pick it up for a fraction of that. Still a large fraction though. But $669k is the current asking price. That's a loss of $245K or 27%

Just around the corner is 3197 Dapplegray LN, this home is 4 beds, 3 baths and 3082/sf. Also built in 2005 it sits on 3/4 acres. This one sold new for $660k then 19 months later it sells for $945k. Now the bank owns this and you can pick it up for "only" $599k. That's a loss of $346K or 37% from the last sale.

Yup, it looks like Norco different......

Some banks are getting a clue

here's a couple of example of banks that are finally getting a clue about the current market.

16247 Boxford CRK, Riverside, CA 92503 This home is in a decent part of Riverside. It's a KB Home, the tract was built starting last year and I believe they are still building them. Our feature presentation is 4132 sf and has 3 beds and 2.5 baths (seems kinda odd for the size?). This home was purchased new in Jan 2006 for $787K. (This must have been one of the first homes sold in this tract). Fast forward a couple of years and the bank takes the home back for $562k in early December. Normally they would have listed the home for at least what they are owed. But fear, desperation or maybe a small dose of reality has persuaded them to list it for the bargain price of $494k.
Total loss, $293K or 38% in two years.

16414 Ridge Field DR, Riverside, CA 92503 This is another Lake Hills implosion. This home is 4094 sf and is a 4 bed 4 bath. Purchased new in August of 06 for $965k (right at the peak). This poor sucker could not have purchased at a worse time. The bank in now the not so proud owner of this mini mansion. They took it back last month for $832k. They did not even bother trying to list it for anything close to what was owed. They listed it at $532,500. Good thing too, because there are 2 identical homes both listed at $530k. The bank has this listed for $300K less than the loan. That's a 36% loss to the 1st and a 100% loss to any 2nd lien holder ( we all know there was a second, right).

If this sells at $532 the loss will be $433K or 45%.

Even at these prices I think these homes are overpriced. They still don't pencil out using equivalent rental costs.

Let's take a look at home one.

$494k with 20% down and a 30 year fixed at 6.5% gets you a Payment of $2500.
Taxes and Mello Roos on this home is 1.8% or $740/mo
Add anothe $200/mo for insurance

Grand total (give or take a couple of hundred) is $3440.

The best you could hope to rent this home for is $2500. You would probably have a helluva hard time renting either one of these for anywhere near that considering they have dirt yards. Anyone that can drop $2500/mo on rent is smart enough to find a home with a nice yard. So this home still comes up roughly $1000/mo short. Even at 38% off this home is no where near it's actual "value".

This house would have to sell for $350k in order to break even renting it for $2500/mo.

Monday, December 17, 2007

Corona goes National, in a bad way....

The Wall Street Journal ran this piece about Corona. It's an interesting read

Here's some highlights, but I recommend you read the entire article. (Calle Canon Rd is in the Trilogy development).

The Oropezas arrived at Calle Canon Road in 2004. Corona appealed to them because of its quality of life and regional cachet. "It was labeled as the new Orange County," Mrs. Oropeza says. Public records show they paid $557,000 for a four-bedroom house and took out a $500,000 mortgage. Her husband is an area manager for an auto-parts retailer and she is a purchasing manager for a firm that sells dietary supplements.

As property values skyrocketed, they refinanced three times, most recently in late 2006, for $835,000, Mr. Oropeza says.

The couple say they used some of the money they pulled out of the house for home improvement, such as a backyard waterfall. But Mr. Oropeza says the bulk was used to pay off credit-card arrears. "We were in a vicious cycle of refinancing our home to get out of debt," he says. "We banked on selling the house, but that's where we failed."

The couple listed the house several times, even before the final refinancing, which raised their monthly payments to about $6,300. Earlier this year, they were asking $839,000 for the house. But it just sat. Elsie Cambone, the Coldwell Banker agent who had the listing, says prospective buyers were put off by the vacant home next door.

Meanwhile, Mr. Oropeza expected to be transferred to Texas, so the couple began house hunting there in 2006. In June, they bought a 3,600-square-foot home for $283,000 in the Houston suburb of Katy, Mrs. Oropeza says. "It was easy. We had good credit. The deal was done in seven days."

In the run-up to their move, she says, the couple lived off credit cards to "make sure we had cash for the house payments" in Corona. They packed up in June, and then took their 9-year-old son and 2-year-old daughter on a long-planned Caribbean vacation. They returned to Calle Canon Road, "got in our cars and drove to Texas," Mrs. Oropeza says.

Neighbors Ms. Lefranc and Mr. Saffold are dismayed over the Oropezas' departure and note that shortly before leaving, the couple bought a new Lexus. "I think they took money out of their house and split," Ms. Lefranc says.

Mrs. Oropeza says that she and her husband recently bought a Lexus and a Chevrolet Suburban with no money down. She denies that the family intended to abandon the house. The choice was straightforward, she says: "It was easier to keep the house in Texas than the one in California."

Sunday, December 16, 2007

Let's do the Time Warp again

Let's do the Time Warp again in Chino Hills. It looks like Chino has warped back to 2004. How long before 2003 prices start to show up again?

Purchased 5/2005 for $440k
For sale 10/2007 for $449K

2937 Crape Myrtle CRK, Chino Hills, CA 91709
This one requires a little extrapolation (guess at 2004 price)

Purchased 4/2003 for $310K
For Sale 2/2007, now at $399K ( He started at $509K)

Of course by the time these actually sell they might be at 2003 prices.....or 2002....or.....

I'm tempted

This is the first decent sub $500k property in one of the areas I'm looking to buy in. The home is in the size range I want, it has the right # of bedrooms and the lot is 1 acre, which is what I want. The only drawback I can see from the pics is that it's a 2 story home and I really would prefer a single story. If this were a decent one story I'd be tempted to throw a lowball at em.

18434 Pinecone LN, Riverside, CA 92504. The home is 3102 sq/ft and has 5 bedrooms and 3 baths. It was last purchased for $860K in Oct 2006. Just over one year later it is listed as a REO property for $499K. I don't know what the bank has into it but I would guess it's way more than $500K. At $499 this property has lost $360K in ONE year!. That's a 42% drop in value in a year.

I still think this property is overpriced, but it's getting closer to what i fell the prices should be in this area. I feel for the size of the home and the size of the lot it would be a decent deal around $400K (if the home is in good shape).

Finally, a home we can all afford

15263 Washington ST, Lake Elsinore, CA 92530

This is a 2234 sq/ft 3 bed 3 bath home, built in 1997. It's in a decent area and it sits on a nice sized 1/4 acre lot. It was purchased last in Feb 2006 for $490k. Now it's listed for $100K. I'm not sure if this is a realtor trying to get some offers and a bidding war going. Or if it's just a pissed off seller that's given up and listed it as a short sale for a price the bank will obviously laugh at.

Anyway here's a nice home listed for $100k, or $45/sf.

Thursday, December 13, 2007

The IE still 44.6% Overpriced

According to a new study be Global Insight the IE is still 44.6% overvalued. That's better than last year when they found us 65% overvalued. Of course the median price has declined about $70k from last year which is why we dropped.

Here's the article

Study Says 63% of U.S. Housing Markets Are Overvalued
Published Dec 11, 2007
A new study from Global Insight and National City analyzes house prices in America. Data shows that the majority of U.S. metropolitan areas remain overvalued despite falling home prices. Nearly one-third are considered 'extremely overvalued.'
Overvaluation continues to be the norm in Pacific Coast states, Florida and the Washington D.C. area, according to data from Global Insight.

Out of the 330 metro areas examined in its most recent quarterly study, 208 U.S. metros were marked as overvalued--117 documented an increase in overvaluation during the third quarter compared to the second quarter.

To determine what house prices should be, Global Insight considered interest rates, household income, population density, current and former house prices and historical data.

The 20 Most Overvalued Housing Markets

Metro Area 2007 Q3 Home Price Overvaluation
Bend, Oregon $320,100 70.0%
Atlantic City, NJ $273,700 64.4%
Madera, CA $291,600 62.3%
Merced, CA $248,300 56.6%
Prescott, AZ $237,600 53.6%
St George, UT $257,700 51.0%
Flagstaff, AZ $269,200 50.3%
Miami, FL $304,000 48.0%
Medford, OR $279,100 47.8%
Portland, OR $316,600 47.5%
Wenatchee, WA $263,400 47.0%
Bellingham, WA $305,000 47.0%
Ocean City, NJ $328,900 46.9%
Mount Vernon, WA $299,100 46.7%
Longview, WA $211,800 45.1%
Honolulu, HI $666,800 45.1%
Eugene, OR $251,700 44.8%
Riverside-San Berdu $329,600 44.6%
Bakersfield, CA $219,300 42.0%
Los Angeles, CA $512,900 42.0%

Source: Global Insight

Bend, Oregon, is the nation's most overvalued housing market according to the quarterly study. At 70 percent, Bend falls just ahead of Atlantic City, New Jersey, and Madera, California.

Other metro areas that dominated the list included cities in California, Washington, Arizona, Oregon and Florida. All of the cities in the top 20 were overvalued by at least 40 percent.

Home Price Corrections

Home prices have already begun to fall in overvalued (and other) metro areas. During the third quarter of 2007 prices declined in 171 out of the 330 metro areas analyzed in the survey. Eighteen of these areas documented declines of 10 percent or more.

Homeowners living in overvalued markets can expect additional declines over the next three years. The extremely overvalued markets (valuations in excess of +33 percent) are considered to be the markets most at risk for a steep price correction. Price corrections are generally defined as declines of at least 10 percent.

Areas that have experienced price corrections in the past 20 years have declined an average of 17 percent. The median duration of the correction is 17 quarters.

Wednesday, December 12, 2007

$80/sf in MoVal

I ran across this house tonight and I thought there must have been a mistake.

15645 Lucia Moreno Valley, CA 92551. This is a 3732 sq/ft home with 6 bedrooms and 4 baths. It's located down in the Moreno Valley Ranch area. This home sold new in 2000 for $218k and again in late 2005 for $510k. Now it's offered at $299K. This is probably a short sale although the add does not say that it is. $80/sf!

That's one ugly house btw. Curb appeal is not this homes strong point.

Here's another $80/sf home in MoVal.

13432 Athletics DR, Moreno Valley, CA 92555. This is not a bad deal. This is a nice looking one story home that is 2432 s/f and has 5 bedrooms and 3 baths. This home is only 3 years old. Pricing info is not availible but if I remember right these homes sold for just under $300k when new. This one is now listed for $195k! There is another home that is the same model as this one in this tract that is asking $432k! Wow, to be undercut by $237K has got to sting. But wait if you give a full price offer they will help with closing costs....oh, that should make all the difference.

Tuesday, December 11, 2007

Cucamonga taking on water

Prices in Rancho Cucamonga have been holding up a little better than "the other side of the tracks" Fontana. But you don't have to look very hard to find big losers.

7438 Bungalow Rancho Cucamonga, CA 91739, this 3536 sq/ft home of 4 bedrooms and 3 baths went back to the bank in MARCH. Ever since they have been dropping the price.

Price Reduced: 07/23/07 -- $699,000 to $669,000
Price Reduced: 09/10/07 -- $669,000 to $639,900
Price Reduced: 10/11/07 -- $639,900 to $609,900
Price Reduced: 11/14/07 -- $609,900 to $574,900
Price Reduced: 12/11/07 -- $574,900 to $549,000

The home was sold to the previous buyers for $845k in April 2006. So, they managed to hold the home for less than a year before the bank took it back. If that's not a first payment default it has to be close. The bank got it back for $721k so there must have been a second that has lost everything (I can't imagine they made a down payment because of how quick they lost the house). So if the bank gets it's asking price they will lose $172K. The 2nd mortgage holder probably loses the whole 2nd, which would have been at least $124k. This home is listed at 35% off the 2006 sales price for a total loss of nearly $300k (more after fees and taxes are paid).

03/29/2007 (Bank buyback) $721,122

04/03/2006 $845,000

09/15/2005 $767,000

Smoking the dream pipe

This is another Real Homes of Genius award winner.

3847 Ellis, Corona, CA 92879. This 3 bedroom 1 bath home with a whopping 854 sq/ft of living space can be your's for the amazing price of $450,000! Yes, that's right $527 a square foot to live in HOME GARDENS (the ghetto of Corona). Let's look at the sales history of this home. This baby was built in 1936 but Redfin only has history back to 1989.

04/03/2006 $370,000

11/06/2002 $143,000

03/01/1989 $80,000

The $80k paid in 89 is high, I bet you could have bought this in 96 for $50k. The $370 paid in 2006 is insane and the current asking price is beyond comprehension. Even with the "unpermitted" shack in the back yard (no doubt the old garage) this thing is not worth $100k.

$450k for a 70 year old shack in the worst area of Corona?? WTF are they thinking. For that kind of money you can drive over to Eastvale and get a brand new, huge home in a much better area. It's just amazing that these types of listings are still around.

It does have one thing going for it. It's only about 100 yards away from Angel's strip club!

Sunday, December 9, 2007

Realtard of the week award

The Realtard of the week award goes to....

Yolanda Sanchez of Olympia Realty, for this stunningly written but woefully inaccurate listing.

"Very beautiful turn-key property located in a very quiet neighborhood. Property has been well maintained and well kept. It has immaculate landscaping really shows pride of ownership. ."

Sounds pretty good right? I'm impressed that it's not in all caps, not an exclamation mark to be found and no misspellings. So why does poor Yolanda take todays award, well just look at the house.

Yup, that there is some immaculate landscaping!

Saturday, December 8, 2007

First cracks in "the Retreat"

The Retreat is another development in South Corona. Here's what the developers propaganda says about it.

A thousand-acre master planned community. An 18-hole Nicklaus Design private championship golf course. A private country club. A huge, exclusive, comfortable Clubhouse.

A private, gated, country club community. More than 500 Executive Home sites from five honored homebuilders. The traditional architecture of Southern California and the integration of indoor and outdoor living. With a deep appreciation and respect for the environment, nature, natural beauty, wildlife, health, wellness, and the good life.

The homes in this development were pricey. The low end started around $800k and they went up to over 1 million. The prices in The Retreat have been sticky, well up until recently anyway.
Cracks started to show a couple of months ago. A few REO's started to show up and then KB dropped the price of the new homes by over $100K. The REO's have been dropping the prices and there are now two under $700K, one of those is $625k.

8856 Gentle Wind Corona, CA 92883. This REO is the price leader as far as the bank owned homes go. This home is 3333 Sq Ft. 3 bed 2.5 on a 1/4 acre. The previous owner purchased this in April of 2006 for $975 and lost it to the bank one year later. The Bank has been trying to Unload this thing since April. Just take a look at these price reductions.

Price Reduced: 06/01/07 -- $849,900 to $834,900
Price Reduced: 06/15/07 -- $834,900 to $824,900
Price Reduced: 07/14/07 -- $824,900 to $809,900
Price Reduced: 09/13/07 -- $809,900 to $789,900
Price Reduced: 10/12/07 -- $789,900 to $624,900

So far the bank is $350k or 36% off the last sale!

The we have this desperate seller at 7772 Sanctuary, the listing says " Pre-foreclosure! VERY, VERY, VERY, VERY motivated." This 4150 sq/ft home was purchased new for $925 in Nov 2005. It's now listed as a short sale for $599k. This is also 36% off. Anyone think the bank will go for this? After looking at the first home they should but I doubt somehow that they will.

here's the price movement of the listing.
Price Reduced: 11/26/07 -- $799,000 to $699,000
Price Reduced: 11/27/07 -- $699,000 to $599,000

There are builders STILL trying to sell new homes in this development for upwards of a million dollars. Yet, here we have 2 properties selling for 36% off the last sale. With these listing it has got to be obvious that 40% off is the going rate for The Retreat!

Update, Norco Hills Comp Killer

Norco Comp Killer, this thread from a couple of months ago looked a an REO in the middle of a neighborhood of high end horse properties.

1453 PASO FINO , The bank took it back in July for $648k. They were looking to make a few bucks on this one and had it listed for $745k when the original post was written. (This home is a 4/3 and it's 3087 sq/ft.)

Here's the price movement on this one.

Price Reduced: 08/07/07 -- $950,000 to $825,000
Price Reduced: 08/27/07 -- $825,000 to $799,000
Price Reduced: 09/16/07 -- $799,000 to $790,000
Price Reduced: 10/05/07 -- $790,000 to $745,000


Well, next is now and it's been reduced another $85K. Our Comp killer is now listed for $660.

The price is getting closer to what these sold new for in 2003 but it's still not there. One or two reductions like that last one and this home will be a candidate for me to look at. The bank had a chance to get out of this house without losing any money. They took this home back in July. Actually they finished the paperwork in July, they probably got the home 2 or three months before that. Had they priced this home correctly 4 months ago they probably would have sold it. They are only into this home for $650k. They probably could have gotten that easily in July. But they tried to make $300k by listing the home at $950k.

There is one home that is going to make this one even harder to sell. 1626 Red Rock Norco, CA 92860
this 4 bed home is 3144 sq/ft and sits on a lot just over 1/2 acre. It has a pool, basketball court and a golf putting green. It's in a nicer area and it's priced $20k less. This home appears a far superior buy at a cheaper price. the home is bigger, the lot is bigger, and it has a pool.

Friday, December 7, 2007

Pulte cuts Stellan Ridge another $100k

Stellan Ridge is a tract of new homes in one of the best areas of Riverside. Most of the homes in this area are large estate type homes that have been selling from 1 Million to several million in the last few years. Pulte had initially planned of selling these homes starting at $1.4 million. I’m not sure if they actually tried selling any at that price but that is the price that was on local housing websites prior to the grand opening. The first visit I made to the development was in the spring of this year. Back then the homes started at just over 1 million. Plan 5 was the lowest priced home and it was selling starting at 1.058 million.

I’ve been watching this development since I really like the homes and the area. They’ve been cutting the prices every two or three months, offering incentive and other goodies. The latest price cut is about $100k. For example the plane 5 had been $825k and now it is $726K. They are also offering up to an additional $104k in savings (whatever that means).

I did not seriously think I would ever be able to afford one of these homes (probably still can’t). But at the rate they are dropping the price I see a glimmer of hope. Maybe they will read this and offer me one at $500k!

Tuesday, December 4, 2007

Sick-a-more Creek

Sycamore is a development in South Corona. Waaay South Corona, it's closer to Lake Elsinore than it is to Central Corona. This development is still under construction. Well, it's probably more accurate to say, it's not finished yet. I doubt there will be many more homes built unless the current market trend makes an about face.

There are currently a boat load (that's a lot!) of homes for sale in this development. Here's our current price leaders.

25138 Cliffrose Corona, CA 92883 this house looks like it's about 600 sq/ft from the front but the listing says it's 2655 sq/ft and 3 bedroom/2 bath. It looks like this was purchased Nov 2005, right at the peak of the market for $540k. After 2 years of home ownership bliss it's listed for $325K. That's a $215k loss (or 40%) in two years. That works out to a $8958 per month loss (plus the house payment and taxes). It easily cost this person $10K per month to live there. He could have rented a really really nice beach estate for that.

25035 Coral Canyon Corona, CA 92883, This home looks bigger than the last but it's actually smaller and it sits on a smaller lot too. This home is 2150 sq/ft 3 bed/ 3 bath. It was also purchased near the peak for $511k. This one also went up for sale after 2 years of ownership (see a trend? rate resets??). It's been listed for almost 6 months as the owner chases the market down. Here's a lesson on how to do it,
Price Reduced: 08/13/07 -- $549,000 to $534,900 (hope)
Price Reduced: 09/02/07 -- $534,900 to $524,990 ( still hoping)
Price Reduced: 09/22/07 -- $524,990 to $499,900 (oh no, we might lose a few $$)
Price Reduced: 10/17/07 -- $499,900 to $449,000 ( come on people, PLEASE)
Price Reduced: 10/23/07 -- $449,000 to $439,000 ( oh dear, there goes the credit)
Price Reduced: 10/27/07 -- $439,000 to $400,000 (WTF)
Price Reduced: 11/21/07 -- $400,000 to $350,000 ( I give up...)

Last but not least is the local village idiot. He bought 24975 Cliffrose ST in Feb this year for $775! You read that right SEVEN SEVENTY FIVE! This has got to be one of those Ochoa cash back homes. I just cannot believe someone was clueless enough to pay almost 3/4 of a million for this home. It went on the market today as a short sale for $449K. That would be a loss of $326K in 9 months. That works out to $36,500 a month this home lost. It lost the equivalent of a brand new BMW 328i every month since Feb.

Could have had 9 of these!

Signs of the Times

A few short observations from the last couple of weeks.

Where have all the sign spinners gone? Driving around last Saturday I noticed the sign spinners have vanished. Only a few weeks ago there were spinners every where. Some corners had 3 or 4 of them. Last weekend I didn't see any. Have the builders thrown in the towel?

Restaurants must be hurting. I have noticed that restaurants are much less crowded these days. I eat out 3 or 4 times a week so I do tend to notice when places are busy or slow. The last few months I've hardly ever waited to be seated. Last Saturday at 6pm we headed down to the Riverside Market Broiler with 14 people for dinner. I figured an hours wait with that many people, nope, we were seated right away! Market Broiler...14 people..Saturday night...NO WAIT!

Went to the Mall the Tuesday night after (7pm) the Thanksgiving weekend. I drove up to JC Penny and I asked my wife it it was closed. The parking lot out front was a ghost town. There were only 3 or 4 cars. When we walked in there was not a customer in sight. I could have fired off a gun in there and not disturbed anyone. The whole mall was like that. The kiosk workers looked like they were all asleep.

It's WAY easier lately to get a good tee time on Friday mornings or even weekends. Many of the courses are running specials to attract the few golfers that are still playing.

The Riverwalk Vista Development seems to be dead in the water. Does anyone know if they mothballed that development. The model homes were finished months ago but they have not put a stick up since. The website has also been scaled back and offers almost no information anymore.

Monday, December 3, 2007

Rent Vs Buy

A couple of threads ago there was some discussion about rental prices and such. The Press Enterprise ran this timely article yesterday. I've also mentioned a few times that I believed rents would come down due to the competition from f'kd owners that can't sell and decide to rent. The same thing happened in the mid 90's. When people could not sell for their ridiculous asking prices they rented thinking prices would go up "next year" this in turn created a glut of rentals and drove the price of rentals way down.

The Press-Enterprise

Unable or unwilling to sell their homes at declining prices, homeowners in Riverside and San Bernardino counties are converting them to rentals, glutting the market and causing rents to fall for the first time in years, according to Inland property managers.

Among the new landlords are investors who bought houses at peak prices and have watched their equity evaporate or homeowners who have relocated, leaving behind a house they can't sell.

There are so many Inland homes for sale, that even if no more come on the market, it will take more than two years to sell the houses available, according to the California Association of Realtors.

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Terry Pierson / The Press-Enterprise
Bob Berney and his wife, Rene, walk through their new rental home. Bob Berney, a 46-year-old general contractor, said a month ago he sold for $520,000 a four-bedroom house he bought in Riverside in 1998 for $190,000.

"People who can't sell their homes have two choices," said John Denver, owner of Perris-based John Denver Realty. "They can stop payments and let them go back to the bank or rent them out."

Most will take a financial loss as landlords, he said, because the monthly mortgage payments are greater than the rent they can get. Bill Santoro, owner of 1st Rate Rentals, a rental management company with properties throughout most of Riverside County, said the monthly shortfall averages $500. Denver said he is seeing some landlords taking monthly losses of as much as $1,000.

"It is a good time to be a renter and a lousy time to become a landlord," said Denver. He said in the past six months, the average time it takes to rent out a house in Perris has lengthened from two or three weeks to two months. Rents have fallen about 5 percent. He said the average monthly rent has slipped to $1,100 in Perris.

Denver said today a $300,000 house purchased with a 7 percent down payment would likely require a monthly mortgage payment of $2,500. The same house, he said, can be rented for $1,300 a month, "and the owner has to do the repairs."

Neither the multiple listing services nor California Association of Realtors track houses for rent. However, throughout the two-county region most property managers said they see a marked increase in for-rent listings. Lance Martin, broker-owner of Coldwell Banker Pioneer Real Estate in Moreno Valley, said his single-family home rental business has increased about 30 percent in six months and he estimated it could double in another year.

In the first six months of 2007, for-rent classified ads in The Press-Enterprise took up 35 percent more space than in the first half of 2006, said sales manager Lauree Sierra. Heidi Burns, real estate broker at GMAC Real Estate in Rancho Cucamonga, said the rental market is suffering from oversupply throughout the Inland Empire and most of Southern California.

'Nobody Was Looking'

Rob Dunn, 36, a commercial construction manager, said that a year ago he noticed construction work was slowing in California and took a job in Denver. He and his wife put up for sale the five-bedroom, 3,600-square-foot house that they had bought four years earlier in the Victoria Grove community of Riverside. He said they initially priced the house at $50,000 below market and between December and June they dropped their asking price from $700,000 to $620,000.

There were no takers.

"It wasn't a matter of what your price was. Nobody was looking," Dunn said. Finally, in June, they got their first offer. But it was contingent on the buyers selling their own house in Orange County, which didn't happen.

So 11 months after putting the Riverside house up for sale, the Dunns, who have already moved to Colorado, found tenants to rent their Riverside house for $1,975 a month, or about $500 a month less than the mortgage payment.

The Dunns' real estate agent said a year ago the same house would have leased for $2,100 a month.

Dunn said the cost of keeping the Riverside house has put the family in a financial bind. They have bought a much smaller house in Denver, rarely eat out and have no money for golf, skiing or health club memberships.

"We haven't been to a movie since January," he said, and his wife, an ultrasound technician, worked over the Thanksgiving holiday to help make ends meet.

Still, he said they feel they were fortunate to find a renter within two weeks. "I think we got extremely lucky," he said.

Luis Loucelis, 57, owner of a Riverside gardening service, said that two years ago he and his daughter bought a two-bedroom condo in Riverside for $235,000 that they could have sold 18 months ago for $315,000. It is now valued at $250,000.

He said after his daughter moved out of the condo, he was unable to lease it to cover the $1,435 monthly mortgage payment. So he said he is leasing it to one of his workers for $1,200 a month and making up the difference.

Story continues below
Bob and Rene Berney have moved into a five-bedroom Riverside house with a swimming pool that they are renting for $1,800 a month.

Loucelis said he figures eventually rents and property values will rebound. "You have to be patient, I think," he said. "If you panic and sell you can never recover your losses. I have to wait and just hope things will turn around."


The parallel downswing of the for-sale and rental housing markets has created an opportunity for Bob and Rene Berney, former homeowners who have become tenants.

Berney, a 46-year-old general contractor, said a month ago he sold for $520,000 a four-bedroom house he bought in Riverside in 1998 for $190,000. He figures that two years ago he could have sold the house in the high $600,000s but kept waiting.

"I snoozed. But I am still counted a winner in my book," he said.

Last week, the Berneys moved into a five-bedroom Riverside house with a swimming pool and city lights view that they are renting for $1,800 a month. They had persuaded the landlord to reduce his asking price by $200 in return for which Bob Berney promised to mow the lawn. Berney said the couple is expecting home prices to fall between 20 percent and 30 percent more, at which time they will pay cash for another, bigger house.

Dianna Bush, a property manager at 1st Rate Rentals, said in a year the rental market has flipped from one with too few homes to one with too few renters. She said a year ago it took an average of two to four weeks to lease a property and now it takes six to eight weeks.

Kevin O'Neill, director of property management for ReMax All Stars Realty in Riverside, said that office lowered rents by 5 percent to 10 percent in the last 90 days to be more competitive.

Rich Merlin, owner of Inland Empire Property Management, which handles rental houses in Riverside and San Bernardino counties, said he has begun to offer a half month of free rent on his listings. He said the rental market typically follows the for-sale market in down cycles. He recalled that during the recession of the mid-1990s landlords similarly were forced to use incentives.

Carla Lalonde, district manager in charge of Riverside and Corona for O'Neil Property Management, said she is seeing an increase in 30-day notices from renters who may be seeing an opportunity to shop for better deals. "There is a lot of product out there for people to pick from," she said.

"Most renters can live in a neighborhood they couldn't afford to buy in, particularly now."

Sunday, December 2, 2007

Dueling Neighbors in a race to the bottom

Tonights feature is a tale of two neighbors. Surely friends once but now locked in a bitter price war.
3342 Clearing, Corona, CA 92882 is a 3498 sq/ft home on a 1/4 acre lot up against the hills in Corona. Our current owner picked up this home in June 2006 for $746K. After only a year and 4 months of ownership it goes on the market. Hoping to escape without losing his shirt the poor fella lists his place for $739k. He must be some what aware of the market because he has been whacking the price on a regular basis.

Price Reduced: 10/18/07 -- $739,000 to $699,000
Price Reduced: 10/24/07 -- $699,000 to $675,000
Price Reduced: 11/14/07 -- $675,000 to $640,000

And one more gets him down to $599K.
That's would be a loss of $147K or just over 20% (plus fees) (As far as this blog goes that is hardly newsworthy).

Now for the neighbor only 6 houses away.
3372 Clearing, Corona, CA 92882. This is the same model and was also purchased in June 2006. This one was listed roughly about the same time as 3342 for $716K. He also tried to escape without losing his bollocks by listing at $735k. After seeing what his buddy down the block did to the price he lopped $155k off his asking price and is now the leader in the race to the bottom with an asking price of $580k.

I wish them the best of luck and may the best man win.

We have a winner!

A winner of the award for the biggest loss in the shortest time.

This home is a big-un up in the Lake Hills development (I know I seem to be picking on this development). It's 4576 sq/ft and sits on a huge lot of just over 1/2 acre. The big lot must be why the price tag was so high. It looks like it sold new in July 2006 for $918k. Then it sold again in Feb 2007 for 1.18 Million.

After only 6 months of ownership it goes on the market for $899k. That would be a loss of over $200k but after 30 days the price drops by another $300K!!! It's now listed for $599k
That is a loss of $518K or a 49.3% drop in value in 9 months (assuming it sells).