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Posted by on Jun 22, 2012 in Bubble-Era Pricing, Bubbleinfo TV | 26 comments | Print Print

Bubble-Era Pricing

Remember this REO listing in La Costa Greens?

It sold for $1,348,000 when new in 2005, but after the bank foreclosed in 2009, they listed it for $891,000 – which sparked a bidding war and it eventually closed at $990,000 on 11/5/09.

It just sold again yesterday…..for $1,300,000 cash.

BTW, I just renewed my alternative web address,


  1.!!! I like it; hilarious!

    Congratulations, you win one free internet today!

  2. Love the URL! I can’t believe that price. That’s insane.

  3. Not a problem unless is was purchased with nothing down by a 35K per year pool cleaner.

  4. The 2005 price was for no landscaping which looks significant for this house.

  5. bubble time again?

  6. One word: aberration.

  7. I included this because it is more than a one-off sale, it is continuing a trend – and this is Carlsbad, not Carmel Valley where the last example was. The last three sales on this side of the street:

    4,342sf: $1,400,000 6/2011
    4,745sf: $1,100,000 8/2011
    3,727sf: $1,126,000 8/2011
    4,745sf: $1,300,000 6/2012

    That is a remarkable run for big, boxy tract houses in the San Marcos school district with $375/mo. in fees and virtually every other house around them is cheaper.

    But forget my one example – the real story are the 321 sales over $1,100,000 in the last 5 months, an incredible testimony that the rich people aren’t waiting.

    You can’t call that an aberration.

  8. More and more pockets of crazy popping up fer sure, from one end of the state to the other.

  9. I’m saying homes selling for 2005 prices, all cash, is an aberration; you can’t say it isn’t. I wonder how much of this is fueled by the ludicrously low rates… not the example in your post, obviously.

  10. Its not Aberration.
    Its the New Normal … and this time Strong Hands are at Play with all cash and almost cash deals.
    It would be interesting to see the NCC market after December 2012.

  11. The all-cash was just a choice at the time of purchase – the buyer could have easily financed a couple of hundred thousand to take advantage of the low rates and then it wouldn’t be an aberration.

    People are crazy to finance small amounts though – why risk geting foreclosed when you have a majority equity position?

    What do you make of the 321? You can’t just shrug that off, can you?

  12. Let’s face it, 09 to 11 was the time to get in. Especially these “over built McMansions” of the bubble era. The prices on these really went down hard because they were mostly concentrated in new locales as well as the significant speculative activities during the bubble. These products are unlikely to be replicated in any significant quantity from this point forward within the county. This does contribute to the rapid rise in value.

    The fact that this is an all cash transaction speaks to how weak the dollar is and less about the possibility we are looking at formation of another bubblicious run.

  13. I don’t think this is irrational exuberance 2, but I do think most of these cash buyers are fearful and feel they need to put their money into something tangible/real. IMO, we are still not at a bottom in the RE market.

    Let’s face it, the economy is not getting better and the global financial system is on the edge of a cliff. I have no investment in the stock market right now, but I do have a large amount of barbarous yellow and silver rocks. I am hoping to diversify with an RE purchase at some point in the near future.

  14. So the new normal is all cash for 2005 prices? Funny, because that isn’t typical of the transactions I’ve been watching.

    I never said anything about the 321, and I don’t know why you keep bringing it up. Yes, it’s an interesting stat (assuming they didn’t sell for large discounts), but it has nothing to do with my original statement. Show me that the majority of homes are selling at close to peak pricing for all cash and I’ll admit that I was dropped on my head as a child.

    I agree with your statement about financing 100%. There is already enough risk at play in the market without the unnecessary addition of leverage.

    Today I learned that the word “aberration” gets people pretty riled up.

  15. I see it all over Carlsbad, aka…the quieter, rural-like northern Carmel Valley. One one my tract just closed at 1.225(all cash), for exact same plan we paid low 900’s late in 2011. Now a neighbor 2 doors down, same plan listed for high 1.3’s. This is in Aviara…now check out this Bay Collection close this week.

  16. I’d never pay 100% cash at today’s rates. IMO, the best move is to borrow as much as you can at <5% tax deductible over 30 years. Plenty of arbitrage opportunities already available at that coupon, and they'll only get better.

    The blog is looking awesome as ever, Jim.

  17. Thanks The Blur, good to see you again!

    I don’t think anyone is getting riled up, just disputing the idea that this is the only house selling for close-to-peak pricing.

    The definition of aberration, from

    1. the act of departing from the right, normal, or usual course.

    2. the act of deviating from the ordinary, usual, or normal type.

    3. deviation from truth or moral rectitude.

    4. mental irregularity or disorder, especially of a minor or temporary nature; lapse from a sound mental state.

    5. Astronomy . apparent displacement of a heavenly body, owing to the motion of the earth in its orbit.

    Maybe #4 or #5 are applicable? 😆

  18. Thanks doughboy for Heron, here are two others that sold above their peak purchase price. All were new, and I’m sure had significant improvements in between, but buyers are paying what they think it is worth today:

    SP = $980,000 3/05
    SP = $1,090,000 6/12

    SP = $1,196,500 10/07
    SP = $1,265,000 6/12

    Just a few, but these aren’t in Carmel Valley – this is Carlsbad, where these are the high-enders. I’m not saying we’re back to peak pricing, there were far more that sold for less than peak.

    But interesting data for those who said that we’ll never see peak pricing again in his lifetime (me), or at least another 5-10 years.

  19. Remember, rich people (if they didn’t inherit it) got rich in the first place for a reason. Maybe you should follow their investment examples?

  20. That’s an outrageous price. I can’t believe someone would pay $1.3M for that! A terrible floor plan, awful backyard, subpar schools…and it’s just a box in a tract neighborhood. Not close to the beach.

    That needs to be around $1,000,000. I sense another price discovery for these big tract homes. There are just too many of them and let’s not forget, this is NOT Carmel Valley!

    In CV, this would be understandable. In San Marcos schools? In Carlsbad? Outrageous.

  21. And think about what $1.3M can get you elsewhere. I can go on over to the second-coming of Nantucket and get me a big, box tract home…that’s basically new. They’re nice homes, you can WALK to the beach, you’re in Encinitas schools.

    You can pick one up for $1M or just above and get upgrades from there. People have done nice work.

    Why that, for $1.3M, is better than an upgraded Nantucket home for the same price is beyond me. San Dieguito schools, west of 5…nicer finishes….beach close.

    What am I missing? Some sort of fraud going down on this deal? Now, Magnolia Estates…that I can see justification for $1.3M-$1.5M. But for this?

    I’m just blown away.

  22. Markets are local. I looled at a nice place in West Petaluma today that’s priced at $10 more than it sold for in 2002 and they would look at a lower offer. I also checked out “Burbed” which has a couple of SMALL homes on a 14K sq ft lot for $8.9MM.

  23. I forgot to mention the Gallagher Ranch in MArin, 330 acres with a $3k sq ft home and outbuildings, asking $5.5MM and they’d take $5MM with a smile, just gorgeous. 14500 Petaluma Pt Reyes Rd for those that are curious.

  24. Housing can’t go down people. Buy now!!!! Unless of course we follow Japan’s post bubble prices.

  25. I’ve been helping (part time) relatives prepare their some ocean view Carlsbad home to eventually sell for the last few years. Looks like waiting will payoff for them.

  26. Wow….these people have forgoten the bubble lessons so soon. So this time things are different again ?

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