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Today’s L.A. Times is reporting that the St. Regis Monarch Beach in Dana Point is close to being foreclosed – their third mortgage of $70 million is in default:

http://www.latimes.com/business/la-fi-numonarch10-2009jun10,0,7571143.story

An excerpt:

Business is so bad — and funding so expensive — that hardly any hotels are being sold these days, and most are now worth 50% to 80% less than at the peak, said hotel broker Alan X. Reay of Atlas Hospitality Group in Costa Mesa.

Just this week, Sunstone Hotel Investors Inc. said it would turn the trendy W Hotel in downtown San Diego over to its lenders, part of a growing trend that Reay said was a “bloodbath.”

The St. Regis — which has several restaurants, a golf course and a private beach club — has been hit by a steep drop in bookings, according to the people with knowledge of the situation.

Built by the Makarechian development family of Newport Beach, the property is current, for now, on two other mortgages totaling $230 million on the 400-room hotel and golf course, these people said, speaking on condition of anonymity because of the sensitivity of the situation.

People wonder about today’s homebuyers – how are they affording these prices? 

Most are using a larger down payment.

A check of the tax rolls showed 91 sales of Carlsbad SFRs in May.

Down payments:

All-cash = 9

50-99% = 8

30-49% = 22

21-29% = 11

20%  = 21

0-19% = 20

Total = 91

Seventy-one of 91, or 78% of the buyers used at least a 20% down payment.

Hopefully with homeowners having more skin in the game we’ll see more stability in the future.

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Those that were selling were an interesting group:

Bank-owned homes = 19

Sold less than loan amount (non-REO) = 17

These amounted to 40% of the total, and if you take out the ten brand-new homes, 44% of the resales were either bank-owned or short.

Here are a few examples of those that sold:

7332 Circulo Papayo

5 br/4.5 ba, 4,225sf

Fees = $340/mo.

SP: $1,157,500  6/05

SP: $830,000  5/09

This had listed in September for $975,000, and eventually followed the market down.  We had seen this one in February -  http://www.youtube.com/watch?v=a7tmiDrRj8g

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6836 Citrine

4 br/4.5 ba, 4,913 sf

Fees = $588/mo.

SP: $1,332,000  5/06

SP: $855,000  5/09

This backed to Alicante, the main artery street, and had quite a slope in back.  It had a number of offers, and had fallen out of escrow a couple of times – but still sold over the list price of $849,000.

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7153 Tern

4 br/3.5 ba, 3,510sf

Fees = $159/mo.

SP: $1,400,000  4/06

SP: $825,000  5/09

This probably surprised some folks at the bank – they had listed for $929,900 at the end of December, but it didn’t sell until they got the list price down to $829,900.  The loans had been $1,260,000.

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3267 Sitio Tortuga

3 br/2.5 ba, 4,053sf

Fees = $446/mo.

LP: $925,000  2/09

SP: $750,000  5/09

KBHome’s model home in the Dolcetto tract in La Costa Ridge.  It must have been a long road home, this was built in 2006.  Still marked pending too.

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6959 Goldstone

3 br/2.5 ba  2,766sf

Fees = $466

SP: $977,500  5/06 (new)

SP: $725,000  5/09

Another in La Costa Greens that had to be disappointing for the sellers, although this looks like it was a corporate relocation. 

Their remarks: WOW! YOU WON’T BELIEVE YOUR EYES JUST REDUCED TO $799,000!!! THIS HOME IS BEAUTIFUL!!!!!   Upgrades galore, completely landscaped front & back! Experience La Costa Greens at it’s best! Simply GORGEOUS INSIDE & OUT! Attention to every detail! EXQUISITE limestone, travertine & custom distressed hardwood flooring throughout! FABULOUS relaxing master suite w/retreat room on 1st level, INCREDIBLE 2nd story gameroom! Corporate Owned.

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5450 Los Robles

3 br/2 ba, 2,522 sf

Fees = $0

SP: $625,000 3/02

SP: $1,000,000 5/09

Some ocean view from upstairs in this older (1976) home in Terramar just a block from the beach.  This wasn’t on the open market, but the price still feels like retail, and keeps my hopes alive that this neighborhood might survive the coffee bet.

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Of all the 91 reviewed that had previous sales prices from 2002 and 2003, there weren’t any that sold for less than 2003.  There also seems to be somewhat of a floor around the FHA limit of $697,500, it’s just a matter of how much house you get, and what location, for $700,000 to $800,000.  I think we’ll see many more of the over-4,000sf McMansions slide into this category.

A previously-successful developer takes on an ambitious beach project, pours millions of his own dough into it, hires a sales team but doesn’t offer the homes on the MLS, and then runs into untimely delays, cost overruns, and a bad economy.

Don’t you lower the price and get out?

Calls to the sales office during business hours went unanswered – does anyone know how much they are asking?

La Jolla is the crown jewel of San Diego’s Gold Coast – and where the real estate market has always been among the priciest (and craziest) in the county.

Let’s tour this 1,841 sf house in Bird Rock, built in 1960 – it’s listed on the range $1,675,000 to $1,775,000, and already has an accepted offer. The other house is the cheapest of five oceanfront homes ON THE STREET for sale from $6 million to $24 million:

This is the debut of my new Sony Webbie – thanks to Stephen for recommending!

This is my 25th year in the business.

I received my real estate license at the end of 1984, and moved to San Diego to start selling real estate.  Interest rates had just come down to 13% – I thought I had better get in while the getting was good!

Recently I was on Mission Gorge Road (on the north side of the I-8 freeway from SDSU), and stopped at the place where it all got started for Jim the Realtor:

I have a couple of other clips coming that’ll continue the story.

The folks over at Crescent Del Sol Estates invited us back for a tour:

The home featured in this youtube tour is offered at $2,900,000 – the other list prices range from $2,800,000 to $3,100,000.

Speaking of new-home-tracts-who-have-followed-up-after-seeing-themselves-featured-here, remember the Emerald Estates tract in on Sapphire in Carlsbad? The one where they had sold seven, and had the other seven in foreclosure?

They called to say that the bank has cancelled their foreclosure proceedings.

HT to shadash for sending this in, from WaPo:

The rush of capital into the banking industry over the past month is allowing firms to postpone the painful process of selling devalued mortgages and other troubled assets, a step many financial experts still consider necessary to fully revive lending.

The Federal Deposit Insurance Corp. said Wednesday that it would suspend indefinitely the launch of a program to finance investor purchases of banks’ troubled loans because few companies were interested in selling. A related Treasury Department program to finance purchases of mortgage-related securities remains on the drawing board months after both were announced with fanfare.

The FDIC decision marked a victory for the banking industry, which has argued that such a program would transfer profit from banks to investors at public expense. It also showed the limits of the government’s ability to impose its will on the banks. Regulators generally cannot compel firms to sell assets, and the inflow of private capital has undermined the argument that the banks must take urgent steps to get healthy.

But FDIC Chairman Sheila C. Bair said yesterday that the best course for banks, and for the broader economy, remained a combination of raising new capital and shedding old problems. She said that the FDIC would continue to prepare to help banks sell assets.

“It is preferable to get them to sell assets in combination with raising capital in order to get the banks to be in a better position to start lending again,” Bair said in an interview. “Getting them off the books is a cleaner posture for the banks.”

Fifty financial companies raised almost $50 billion from private investors in May, more than in the previous six months combined, according to analysts at investment bank Keefe, Bruyette and Woods.

The surprising success defied widespread predictions, including by senior government officials, that investors would be scared away by the unpredictable magnitude of eventual losses on troubled assets. It has also dramatically reduced the need for additional federal investments in the largest banks. The 10 companies identified by federal stress tests as needing deeper reserves against losses must submit plans to the government next week, but it is likely that only two, Citigroup and GMAC, will require additional government aid.

Link to full article:

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/04/AR2009060404436.html?nav=rss_business

Back in 2000-2001, there were some of us long-time real estate people that thought we were due for a downturn.  Historically the market ran its full cycle every ten years, and 1990 was the previous peak.

But thanks mostly to the 1997 rule that allowed homeowners to be exempt from capital gains’ tax on their first $500,000 of profit (if they had lived there two out of the last five years), the market kept rolling.

The mortgage industry, led by Countrywide, started pushing the more exotic loan programs, first the interest-only in the 2001-2003 era, then the option ARMs from 2003-2005.  This extended the euphoria, beyond its normal life expectancy.

Yesterday’s graph by IHS Global Insight showed the ‘normalized value’ line continuing straight up, without any natural downturn/correction. 

But the market was already getting overheated by 1999 or 2000 just due to the amateur speculators who were empowered by the 2-out-of-5 rule, and by year 2000 they were already onto their second flip.

A ‘normalized value’ estimation should include what should have been some sort of downturn early in the decade – this chart has an additional red line to approximate what might have been normal, if it weren’t for the wacky chain of events that artificially spurred the market.

We’ve seen it happening over the last few months, and Mozart noted that the third-tier list prices keep rising.

According to housingtracker.net, the third tier median list price today in San Diego is $875,000, which is 13% higher than TWO MONTHS AGO, and 33% higher than January, 2008.
(link to housing tracker)

Here’s an example of the optimism on the street. I don’t blame the guy for trying, but it sure seems like the odds are stacked against him:

There have been 21 closings this year of houses over $1,000,000 in Carlsbad, about 4 or 5 per month. There are 130 for sale, or a two-year supply – plenty for everyone!

From the Associated Press:

WASHINGTON – Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission’s civil lawsuit, filed in federal district court in Los Angeles, also accuses Mozilo of illegal insider trading.

Countrywide was a major player in the subprime mortgage market, the collapse of which in 2007 touched off the financial crisis that has gripped the U.S. and global economies.

Mozilo, 70, is the most high-profile individual to face formal charges from the federal government in the aftermath of the crisis.

Civil fraud charges also were filed against Countrywide’s former chief operating officer David Sambol, 49, and ex-chief financial officer Eric Sieracki, 52.

The trio “deliberately misled” Countrywide shareholders, SEC enforcement director Robert Khuzami said at a news conference at agency headquarters. While they painted a picture of robust performance, the real Countrywide was “buckling under the weight” of soured mortgage loans, he added.

Mozilo “was actively taking his own chips off the table” by selling his shares to reap nearly $140 million in illicit profits, Khuzami said.

Link to full article:

http://www.msnbc.msn.com/id/31108985/from/ET/