Newport Coast

Hmmmm homes peak in Socal in 1989-90 and values were nearly 50% off their highs in 1994-1995. they didn't even get back to their inflation adjusted values until nearly 2000.





A 30 year fixed mortgage is a good inflation protector, but homes are not like other commodities. Inflation has very little direct effect on upward home prices because the majority are not purchased with cash. Homes are mostly financed. Lenders will begin to INCREASE rates in order generate the same amount of return for a given loan amount. Higher interest rates put DOWNWARD pressure on prices.





It happened before, it will happen again. During the last boom rates were not as low as in 2003-2004 when we saw the lowest rates ever. I am sure you'll get buying interest when prices fall back to 2003-2004 prices, definitely. This doesn't mean the price decline stops though.
 
Although one puzzling thing about the Plan 1 Tides, the amazing home, is the lack of a pantry or butler'sarea next to the kitchen. There literally is no storage area other than cabinets for all the stuff people usually store for cooking the big fancy dinners in the gourmet kitchen. It reminded me of an auditorium without a backstage area; the kitchen looks great but there's no place for the cook's stuff.
 
Yes. Some of these designers (architects?) would be wise to consult with people who actually cook rather than interior designers when designing a kitchen. I have been in some kitchens that were pretty showpieces, but made no sense from a practical standpoint.





That said, if you are living at The Tides, I doubt you are doing your own cooking.
 
<em>Watch out, Eva, he may be having a different reaction to that "man cave."





</em>Damn it! That comment almost made me spit out my drink. Thank gawd there wasn't any gold in that cave, or we would be in a world of hurt.





Anyway, sell4u, your posts are greatly appreciated, and I hope our snarkiness doesn't scare you away. Man... I miss NIR. But, if you look at Fecamp at $850k it is already at a 2001 inflation adjusted price at $775k, but homes soared beyond inflation, so it makes it seem like it isn't that much of a change. Will homes get to 2001 inflation adjusted prices in NC? Abso-freakin-lutely! Will all homes in NC drop their prices to 2001 prices? Hell no! But, there will be homes priced at 2001 inflation adjusted prices in NC. It is only a matter of time. There will be no buying frenzy, because the rational of all the homes in NC going to 2001 prices is a ridiculous idea and will never happen, but that doesn't mean there will be 2001 priced deals will not be out there.





It sucks, and many homeowners like myself, have come to the conclusion that there will be some serious comp killers out there. In fact, I have a friend currently placing offers in my "hood" and if he gets a home, he is rolling back to 2001/2002 prices when adjusted for inflation. I mentioned this to another friend, who said, "yeah, but it is in a neighborhood of $1mil dollar homes", and I said, "not any more". No one is immune, not me, not you, and there are idiots out there that should never have bought a home.





BTW, I think LM is right, rates will go up and push prices down further. It happened before, low rates in 93 and a call for more ARMs, higher rates in 94, 96 and 96, which had lower prices and more foreclosures.





In the 90s, NC was delayed for two years and the price went from the high 600's to the high 400's. Waiting paid off for TIC, and people camped out and bought up the homes like crazy. Will that happen again? Prolly not, but Orchard Hills is beginning to sound ironically similar to NC. Mmmm... thank gawd for teh blogs. OH has my name all over it.
 
I think there is one other thing that will affect pricing, and that is the return to rational demographics. When prices were accelerating 20% per year, everone wanted in, and things such as association fees and Mello-Roos be damned.



Incomunities such as NC, those fee's and assesments are paying for things taht are great if you have a family - new schools just down the street, playgrounds, pools, and such. My wife and I want to have kids, and find these type of expenses can be worth it for the goods delivered.



However, if you have no kids, or your kids are about to leave the nest, and your property isn't appreciating at 20% per year (more like 3 - 4% per year over the next 8 to 10 years - I'm factoring in that we are probably not ready to start going up again), then are you really willing to pay those costs?



I think we will see a return to the owner occupied, family home - and there is only so much that demographic can afford, which will push down prices.
 
"Aren't like 95% of the homes in NC owner occupied?"



I would say less. NC is home to a lot of homeowners who have a 2nd home in Newport Coast that live say in LA, other states, or countries. whether it be a condo, sfr, or a place in Crystal Cove.



I don't have the percentages, but I would guess a lower number than that.



The rental market has also picked up substantially in the last couple years. Good amount of renters right now in NC.
 
Bumping this back up because I'm curious what has been going on down there. I know some people who own in one of the nicer sections of Newport Coast and from what I can tell they are HELOC'd pretty heavily. They're getting ready to list their home in the next few months.



What's the news on the streets down there? Is Newport Coast still holding it's value relatively well or has it begun to free fall yet?
 
I think sellers are not marking down very much. That said, check out www.hotpads.com for the foreclosures. There are a notable number that have at least an NOD filed.



In fact, per HotPads, there is an NTS filed on a $9,986,165 home on Skyridge.



Let's see, in "Old" Newport, there are two preforeclosures on Balboa Island, one on Lido, and one on Harbor Island Drive.
 
Well... I checked the Nef Cortez foreclosure lists and if the Skyridge home I mentioned above is the same one I found on Nef's list, then the auction was yesterday. There appears to be something odd about the numbers, though. The loan in default was for $12,700,000. The assessed amount was $2,283,418. Is this a case of HELOC abuse? Had there been a sale, the assessed amount should have been higher. Or is it something else? The owner of record is Foundations LLC, and the beneficiary on the trust deed is Magnolia Place LLC.



The minimum bid on this $12M+ loan? $9,986, on a delinquent amount of $15,002.



<a href="http://www.nefcortez.com/home-files/Foreclosures/Archives/OC-TS/OC_TS_Report_04-21-2008.pdf">Am I misreading this?</a>
 
I am still of the opinion that the high-end coastal properties are going to crash very hard.



First, the degree of detachment from fundamentals is even beyond WTF. There are GRMs of 400 or more on most properties.



Second, many knife-catchers flocked to these areas under the delusion that prices cannot fall there.



Third, many nouveau riche pretenders bought beyond their means and are likely to go into foreclosure adding fuel to the fire.
 
[quote author="IrvineRenter" date=1210726644]I am still of the opinion that the high-end coastal properties are going to crash very hard.



First, the degree of detachment from fundamentals is even beyond WTF. There are GRMs of 400 or more on most properties.



Second, many knife-catchers flocked to these areas under the delusion that prices cannot fall there.



Third, many nouveau riche pretenders bought beyond their means and are likely to go into foreclosure adding fuel to the fire.</blockquote>




Great News!

Finally, it?s about time the market purges all those pretenders to make way for the real heirs to the throne.

What kind of time frame are we looking at, six months to a year?
 
[quote author="tenmagnet" date=1210727050][quote author="IrvineRenter" date=1210726644]I am still of the opinion that the high-end coastal properties are going to crash very hard.



First, the degree of detachment from fundamentals is even beyond WTF. There are GRMs of 400 or more on most properties.



Second, many knife-catchers flocked to these areas under the delusion that prices cannot fall there.



Third, many nouveau riche pretenders bought beyond their means and are likely to go into foreclosure adding fuel to the fire.</blockquote>




Great News!

Finally, it?s about time the market purges all those pretenders to make way for the real heirs to the throne.

What kind of time frame are we looking at, six months to a year?</blockquote>


The high end will probably be the last to fall. I doubt you will see real deals until 2010. These owners are the most sophisticated in obtaining and managing their debt. They will have the most holding power before they succumb. That being said, they will still succumb as they have taken on too much debt. You can only borrow from Peter to pay Paul for so long.
 
[quote author="IrvineRenter" date=1210727913]

The high end will probably be the last to fall. I doubt you will see real deals until 2010. These owners are the most sophisticated in obtaining and managing their debt. They will have the most holding power before they succumb. That being said, they will still succumb as they have taken on too much debt. You can only borrow from Peter to pay Paul for so long.</blockquote>


I was thinking 2-3 years. Here's a bellweather. Pull up redfin and type Lido Isle for neighborhood. You'll get a map showing Lido, a bit of Balbao and a small horseshoe shaped island (Linda Isle). 7 of the 100 homes on Linda are for sale. Average asking price $12,000,000.



In the last three years, only 5 homes sold on Linda Isle. Average price around $6M.
 
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