WTF "Lot Value" Pricing in the Port Streets, Newport

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Chuck_IHB

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Like others on this blog I have been following the "family" neighborhoods in Newport Beach. Today I saw a new listing for a home in the Port Streets that is listed for $1.495 million. http://www.redfin.com/CA/Newport-Beach/1939-Port-Edward-Pl-92660/home/4720073



I initially thought ok, good, another example of prices slipping down from the crazy levels we have seen in this area over the last few years. Still not low enough, but moving in the right direction. Then I saw the agent's description in the listing: "<u><em>One of the best locations in Harbor View Homes. Plans have been approved for a beautiful custom home on this highly desirable lot just 3 doors from the greenbelt. This property has been listed at lot value as the existing home is in serious disrepair. "</em></u> Some idiot apparently bought this for over $1.5 million less than a year ago and never got around to fixing it up.



$1.495 million is "lot value"? Crazy, especially since some other homes in the area have dropped below this price and they don't appear to be in "serious disrepair." One of my favorite listings is the little house on Port Laurent that has been hanging on since 2007 trying for a sale at $1.445....



Anyone out there have any predictions for what a basic 4 bedroom house in the Port Streets will go for a year from now?
 
[quote author="Chuck" date=1236833252]

Anyone out there have any predictions for what a basic 4 bedroom house in the Port Streets will go for a year from now?</blockquote>


One year from now? I'd say around $1.1mm.



By market bottom? Under $900k. Maybe even around $800k.



Despite what everyone in Newport Beach wants to tell you otherwise, the incomes just are not there to support $1mm+ prices on mediocre 4BR houses.
 
[quote author="Chuck" date=1236833252]Like others on this blog I have been following the "family" neighborhoods in Newport Beach. Today I saw a new listing for a home in the Port Streets that is listed for $1.495 million. http://www.redfin.com/CA/Newport-Beach/1939-Port-Edward-Pl-92660/home/4720073



I initially thought ok, good, another example of prices slipping down from the crazy levels we have seen in this area over the last few years. Still not low enough, but moving in the right direction. Then I saw the agent's description in the listing: "<u><em>One of the best locations in Harbor View Homes. Plans have been approved for a beautiful custom home on this highly desirable lot just 3 doors from the greenbelt. This property has been listed at lot value as the existing home is in serious disrepair. "</em></u> Some idiot apparently bought this for over $1.5 million less than a year ago and never got around to fixing it up.



$1.495 million is "lot value"? Crazy, especially since some other homes in the area have dropped below this price and they don't appear to be in "serious disrepair." One of my favorite listings is the little house on Port Laurent that has been hanging on since 2007 trying for a sale at $1.445....



Anyone out there have any predictions for what a basic 4 bedroom house in the Port Streets will go for a year from now?</blockquote>


I do not have any facts on this property, but will give you my take.

If the present owner bought for $1.5 mil, they may owe $1.475mil or some other outrageous amount.

Why try to sell for less than what is owed, no matter what is realistic? If realistic is $1mil, why would they start off listing at $1mil? After all, as soon as the deal is less than what is owed, the "owner" has no skin in the game, hence no motivation to sell.

And I doubt if the "owner" did not get around to fixing it up. I would guess that they had every intention of building a new spec home, and they may even have experience spec building in Harbor View, but what local bank is making C&D loans for spec homes right now?

My prediction is that one year from now the Port streets will be priced less than they are now. And the year after will be less than that.
 
the neighboring houses went for $500k to $800k in the mid 90s, depending on size, etc.



personally, i think that they will return to those nominal prices within two years or so.
 
[quote author="awgee" date=1236842485]



I do not have any facts on this property, but will give you my take.

If the present owner bought for $1.5 mil, they may owe $1.475mil or some other outrageous amount.

Why try to sell for less than what is owed, no matter what is realistic? If realistic is $1mil, why would they start off listing at $1mil? After all, as soon as the deal is less than what is owed, the "owner" has no skin in the game, hence no motivation to sell.

And I doubt if the "owner" did not get around to fixing it up. I would guess that they had every intention of building a new spec home, and they may even have experience spec building in Harbor View, but what local bank is making C&D loans for spec homes right now?

My prediction is that one year from now the Port streets will be priced less than they are now. And the year after will be less than that.</blockquote>


1.542m purchase price, 729k first, so 813k down.



1.650m "construction" loan. Pretending they used the construction loan to pay off the original, 729k first, they extracted their 813k down plus an additional 108k. Since construction loans are usually full-recourse, I'd say they have a problem if they sell for less than 1.650m.



If the 1.650 was not used to pay off the original first mortgage, total extraction would be 837k, not including their downpayment.



Current owners appear to be renting another home in the port streets, so I figure this was to be a legitimate teardown/rebuild/move in deal. I wonder what happened?





Sale Date: 07/09/2008



Seller Name: ****



Sale Price: $1,542,000.00



Mortgage Amount: $729,000.00



Mortgage Loan Type: CONVENTIONAL



Mortgage Term: 40 YEARS



Lender Name: UNION BK/CA NA



Recording Date: 08/04/2008





TRANSACTION INFORMATION



Transaction Date: 12/24/2008



Type of Transaction: SUBDIVISION/NEW CONSTRUCTION



Mortgage Amount: $1,650,000.00



Interest Rate: ADJUSTABLE INT RATE LOAN



Lender Name: JP MORGAN CHASE BK



Lender Address: 1111 POLARIS PKWY COLUMBUS, OH 43240-2031



Construction Loan: CONSTRUCTION LOAN



Construction Type: SALE IS FOR NEW CONSTRUCTION



Refinance Loan: LOAN TO VALUE IS MORE THAN 50%
 
[quote author="freedomCM" date=1236847616]the neighboring houses went for $500k to $800k in the mid 90s, depending on size, etc.



personally, i think that they will return to those nominal prices within two years or so.</blockquote>


Calculating the bottom price is easy, take the peak price and multiply by 1/3rd.
 
well, maybe for the median-ish priced houses (which went up ~250%), including some overshoot.



the high end (which clearly this is) "only" went up ~200%, so it might be closer to half.



but I won't argue much with your 1/3 prediction...
 
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