Where do you begin a tour of a $2.45 million house?
You begin outside, near the front of a wooded, 2-acre parcel, where a stone-bedded creek carries pumped water from the front fence down to an elegant koi pond. It’s one of the first things you see when the privacy gate rolls back and lets you roll in to 4823 Camilla Drive.
“It’s beautiful,” says Eric Markel.
Welcome to his baby – a six-bedroom, seven-bathroom, 6,977-square-foot home. It is one of Charlotte’s most beautiful houses – spectacular from copper roof to basement home theater – lovingly built in a desirable South Park neighborhood in 2003, when the city’s real estate market was in full sizzle.
But 4823 Camilla hasn’t sold. The $2.45 million house is now a $1.65 million house. The koi? “Long dead,” Markel says.
Multiple Listing Service data don’t provide information on which houses have spent the most time on the market, but at almost eight years, Markel’s house has hung on the vine longer than any home Realtors across Charlotte can recall.
Hat tip to kwaping for sending this along, from theU-T:
The developer of downtown San Diego’s largest residential highrise said today that it is giving up on trying to sell any of the 679 condos and is returning deposits to dozens of buyers who had been awaiting the close of escrow.
“We’re not able to meet the Fannie Mae or Freddie MAC or FHA requirements in this marketplace because we can’t get enough sales,” said Randy Klapstein, CEO of Pointe of View, developer of Vantage Pointe, which completed construction last year in the midst of the economic downturn.
“We’re not getting the traction we’d hoped for, and we don’t want our customers to stay in limbo, so it’s best to move on.”
It is now likely the East Village condo project will remain a rental complex for the foreseeable future, said Klapstein, noting that there are now roughly 200 renters, about a dozen of whom are buyers who were waiting for the sales contracts to be finalized.
“At this point, we’re going to continue renting,” Klapstein said.
Over the last several months, the Pointe of View loan has been marketed for sale, but no deal has been finalized yet. When asked whether it was possible that the condo project might be sold, Klapstein would only say, “It’s always a possibility.”
The developer is in the process of returning deposits to buyers, and purchasers who are living in the complex as renters have the option of remaining or working with the Pointe of View sales team to find a condo to purchase elsewhere in downtown, said Klapstein.
It was noted yesterday that 35% of the active detached SD listings in SD, but only 20% of the sales in the last 30 days are over $700,000. Are the higher-end sellers who have been on the market for over 90 days motivated enough to dump on price, causing a ripple effect below?
Or will higher-end sellers hold out, either due to high loan balances or high equity positions/low motivations?
Here is a review of the 100 active $1M+ listings in 92009 (23), 92024 (43), and 92130 (34).
(There just happens to be exactly 100 houses listed today at, or above $1,000,000 that have been on the market for more than 90 days in those three zips.)
The calculations were based on the original loan amounts, unless they looked like a neg-am which then 10% or more was added. Using the ranges as categories should give us a general feel for the equity positions, and potential for dumping on price. The first category describes the ratio of mortgage balance-to-list price, and if they were on a value range, the low end of the range was used:
# of $1M+ listings
1. Thirty have had no price reductions during their listing.
2. Another 17 have reduced their price less than $100,000.
3. Eight were marked as short sales (some with high balances were not marked)
4. One was an REO listing.
5. At least two were on the foreclosure list.
6. Twenty have been on the market more than 300 days on this listing.
What can we deduce? Only 30% to 40% of the current listings are in immediate trouble (those with less than 20% equity), and that’s only if they need to move for whatever reason. We can guess that the 47 who have loads of equity are likely to cancel unless they really need to move. The in-betweeners will make the difference between more sales at lower prices, or more stagnation. My guess is that less than half of these sellers are motivated enough to lower their price enough to sell.
Jeff Moorad, the lead owner of MLB’s San Diego Padres, has taken his home just outside Phoenix off the market. It was listed for $28 million in the fall.
“We decided it was best to stay on the sidelines for the time being” after re-evaluating the market, says Mr. Moorad. The 55-year-old former sports agent, whose clients included Manny Ramirez and NFL quarterback Steve Young, says he built the majority of structures on the five-acre property.
The Paradise Valley, Ariz., property includes a single-story, seven-bedroom main house and a guest house that total about 16,000 square feet. There’s a basketball court, tennis court and a palm tree-lined pool. Mr. Moorad’s family partnership bought the property in 2005 for $9.43 million. Ownership was transferred to Mr. Moorad and his wife, Jan, in 2007 for $13 million.
Mr. Moorad, who was chief executive of the Arizona Diamondbacks, put the home on the market after he bought the Padres and moved to La Jolla, Calif. Bob Hassett of Russ Lyon Sotheby’s International Realty had the listing.
The Del Mar City Council voted 4-0, with Mayor Richard Earnest recused, to try to sell its no-longer used Balboa property to pay off the remaining debt on the sentimentally valued 5.3-acre Shores Park.
Escrow closed on the $8.5 million Shores property in 2008, with the city paying the Del Mar Union School District $5 million through fundraisers, and financing the other $3.5 million. A balloon payment of roughly $3.25 million is due on Nov. 13, 2011, and the city wants to avoid paying it off through the general fund. Staff reports that the Balboa property, a 22,000-square-foot parcel with sweeping ocean views purchased in 1965, is an idle asset that generates no income.
The fundraising group, Friends of the Shores, raised enough money to make payments on the loan, $300,000 annually, through fiscal year 2008-2009. The city has contributed $92,929 this year through the general fund. Government code allows cities to sell off property as long as it provides a public benefit.
Depending on how much the Balboa property sells for, the money could also be used to fund other projects, such as a new lifeguard tower and safety center. That project is also currently in the fundraising stage.
The council adopted a process that would aim to avoid the sentiment of a “fire sale” of the Balboa property. As such, the city will set a minimum price, from which interested parties will submit a bid. At some point, Del Mar will use those bids as a starting point for a live auction, with live bids required to up the sealed bids by at least 5 percent. Given the economic climate, the council reserved the right to pass on the sale if the offer is not satisfactory.
While most of the public speakers spoke out in favor of selling the Balboa property as a way to retire the debt on the Shores property, the city received two protest letters. That upped the requirement of at least a 4/5ths vote, which the council achieved with its 4-0 vote.
Jacqueline Winterer, who sent a letter and spoke to the council, cited concerns of property values being too low to justify selling the Balboa lot and asked why the council had changed its mind after expressing a similar sentiment at a June 2009 meeting. She suggested selling a piece of the Shores Park to pay off the remaining debt.
Councilmember Crystal Crawford, however, said she believes the Balboa parcel’s uniqueness and the market of potential buyers would keep the price high, despite the recession.
“This was one of those safety nets and turns out to be the one that we’ve opted to pursue at this point,” she said. The council will later decide a minimum asking price, but did settle on a maximum $20,000 for a real estate consultant and a 2 percent commission for the buyer’s agent. Since the property must sell for at least $3.25 million to pay off the entire debt, 2 percent would come out to be at least $65,000 in commission.
EDIT: I think this example will end up surprising some of the old guard how the market has changed. They think they can start the auction at $3.25 million? Just because the City of DM has owned a prized parcel since the 1960s, doesn’t mean someone will pay what’s needed to pay off another debt. Pricing your real estate based on what you need, rather than approximating what the market will bear, has proven to be a poor predictor of what a buyer will pay in this market. The photo above shows a red house at the end of Balboa, but I’m still trying to track down the exact location (I think it’s a little further south, on the east side of the street).
A report on the Rosarito Beach/Baja California market, from the latimes.com:
There’s the gigantic Residences at Playa Blanca, which advertises “24-hour gourmet dining” and a “world class spa” on banners next to the highway, but which remains frozen in construction, scaffolds and pipes lined up on the grounds. The fortress-like condos at Las Olas Mar y Sol, which sit next to a steel skeleton structure, are surrounded by piles of trash.
Perhaps the best-known such flop is at Trump Ocean Resort Baja, a luxury hotel-condo project developed by Irongate Wilshire and PB Impulsores. Flamboyant real estate tycoon Donald Trump licensed his name to the resort, whose units sold for as much as $3 million in splashy pre-construction sales events.
But the project was never built. All that’s visible now is a fenced-in hole, faded pink Trump Baja banners waving in the breeze. Buyers, who are out $32.2 million in deposits, sued Trump and the developers last year.
Some observers say the downturn in Baja is just a temporary blip and buyers will come back soon. Rosarito Beach is on the coast, after all, and only about half an hour from San Diego. Prices on three-bedroom condos on the shore start at around $280,000, a fraction of what they’d cost in the U.S.
But the promise of cheap real estate just across the border isn’t quite as appealing when there’s plenty of it to be had in the U.S. too.
“What’s hurting us is that now you can buy a nice Vegas condo for $150,000,” Baja real estate agent Katz said. “We used to be that.”
JtR note: If your house isn’t selling, and you are thinking of renting it instead, base the decision on your encumbrances, and your ability to hold out. If you can have a positive cash-flow from renting, then great, consider the joys of being a landlord, and plan to hunker down for the long-term.
But the sellers who are highly-encumbered should sell now, because your selling difficulty will remain high in the short-term (next few years) due to:
a. Trying to sell a tenant-occupied property (they usually don’t show as well, or as easily).
b. Trying to sell a previously-tenant-occupied property (tune-up costs + monthly payments add up).
c. Any combination of lower prices or higher interest rates.
Sell for what you can get today, or risk selling after one (or more) of those impact you.
The country is finally starting to see some positive signs in the housing market. But don’t tell that to Treasury Secretary Tim Geithner, or the countless other Americans who still can’t sell their homes.
That was in February. By May, he cut the price $60,000 but still got no takers. A few weeks later, May 21, the home in New York’s Westchester County was reportedly rented for $7,500 a month.
“Mr. Geithner’s house is a textbook example of what is happening in the market here,” said Leah Caro, president of Bronxville-Ley Real Estate and president of the Westchester Board of Realtors. “Many sellers are bringing their houses on [the market], finding that they don’t have a buyer for it, making price adjustments in hope of luring a buyer into the marketplace. In the case of Mr. Geithner, he had to move. And renting was his best option.”
Many properties in the suburbs north of New York City are on the market both for rentals and sale, real estate agents there said.
“Sellers who are trying to sell their houses and may not be able to, have decided that getting some money every month is better than getting no money, particularly in the case of vacant homes or owners who are relocating,” Caro said.
And while $7,500 a month might seem a lot to rent Geithner’s 3,600-square-foot home that includes an eat-in kitchen with black granite countertops, it probably falls short of his monthly expenses for the house.
Records show Geithner and his wife, Carole Sonnenfeld Geithner, paid $1.602 million for the home in 2004. The couple have two loans totaling $1.25 million and pay about $27,000 a year in property taxes.
Scott Stiefvater of Stiefvater Real Estate in nearby Pelham, N.Y., said that rentals right now are surpassing the sales.
“The renters are coming in in droves. There are people coming in from Argentina, London, all over the country, all over the world and they’re coming to Westchester and they’re looking to rent before they buy,” Stiefvater said. “People are still waiting for the bottom and they just haven’t seen the bottom, so they don’t want to invest all their money in real estate yet.”
Some people are signing rental leases with the possibility of buying at the end of the rental term, he said. Other clients come in and try to see which of the sellers might be willing to rent, instead.
In that kind of market, it was probably wise for Geithner to rent. His last asking price was already $27,000 less than what he paid five years ago for the house. Add in any improvements he made to the home and a broker’s fee — up to $90,000 on a sale like that — and Stiefvater said he could be anywhere from $200,000 to $400,000 in the hole. That’s about the size of his down payment.
“I don’t think anybody’s in a position to say that he overpaid, or anybody overpaid, when he bought his house because market value is market value,” Stiefvater said. “Back in the those days, everybody was overbidding — I’m not saying overpaying, but overbidding — and getting into bidding wars and multiple offers escalated the sale prices to what I think was higher than market value.”
Stiefvater said renting was a “wise choice” for now.
“If the market continues to go down, as some are saying, and he loses his tenant next year and can’t find another tenant to pay him the $7,500 that he’s getting now … that’s a different story,” Stiefvater said. “The market is overflowing with similar houses and he’s not prepared to reduce his price to reflect the true market value.”
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