What a difference three years makes:
This owner had to be anticipating that the finished homes would sell for $1 million-plus.
Lot for Sale
by Jim the Realtor | Jun 11, 2009 | Jim TV | 27 comments
27 Comments
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In this market, an empty lot has to be valued at damned near zero.
Agreed, plus the owner has been through four checks with the city to get his tentative map, and still doesn’t have it. How much more will the new owner go through, both time and money, before being able to build?
The end product should be priced around $225-$250/sf tops, and not sure how the new owner could build for much less.
Owner-user may be the most likely buyer.
In this market, an empty lot has to be valued at damned near zero.
Oh, how I wish. You’d think, eh? But, sadly no. I’ve been land shopping for a loooonnng time. Logic would dictate that they ought to be giving lots away, but apparently the owners of most are in a position to sit things out for the next…what 5 – 10 years…..until demand gets pricing back up to where they want.
That was great! It’s the value of perception.
Wheel in a prefabricated home and lay a little grass! Booyah lol.
Enjoy Barry Ritholtz audio.
http://thehousinghelix.com/2009/06/11/interview-barry-ritholtz-bailout-nation-fusion-iq-the-big-picture-blog/
The view of the powerlines at 0:30 makes it look like some place overseas.
I love the white noise 😀
I walked past that house dozens of times growing up. Gorgeous view, crappy neighborhood. Schools are good, as is the view, the rest of the resources are poor. Bad shopping, bad restaurants, no sidewalks, loud, dangerous area for kids and pets.
I almost nailed a sleeping dog on that porch while delivering the Sunday Times 40 plus years ago.
Place was probably worth less than 15k then.
There are two nice looking craftsman homes also on Magnolia that were recently built. One’s currently back on the market. I walked around them last summer when they were finished and looked in the windows. Seemed nice with decent yards, but they must be near this lot, as all I could hear was the freeway, like Jim said.
And I can’t imagine paying anywhere even $250k for ANY size lot in that neaighborhood (where I could hear the freeway).
can you say oops!!!!!Nice view of power lines.Lucky to get 300k.They got drunk on kool aid.
If you try real hard traffic sounds just like surf.
Man, if i were the previous owner I would have sold to this sucker for $1.5m but carrying back $500k with an I/O 5yr ballon loan. The sucker would have jumped on it because it reduced his down payment. Now I’d be preparing to take back my property and still have $1m in my pocket.
“Man, if i were the previous owner I would have sold to this sucker for $1.5m but carrying back $500k with an I/O 5yr ballon loan. The sucker would have jumped on it because it reduced his down payment. Now I’d be preparing to take back my property and still have $1m in my pocket.”
And the bank that loaned the other 900K would’ve been fine being the second mortgage holder? Really?
arizonadude-I was actually surprised Jim didn’t mention the powerlines in the video.
And the bank that loaned the other 900K would’ve been fine being the second mortgage holder? Really?
Sure, why not? $1.35m financed 90% of the actual loan represents pretty much the same exposure except the borrower would have been far less over leveraged on debt.
half off from peak?
sounds about right.
I’m sorry, but a decent lot is never worth “zero”. Jim’s points about the mapping/title are certainly red flags, but you can see the ocean, and that’s not going anywhere. (The ocean, not necessarily the view.)
What’s this worth? No clue. But, its worth something if the concerns can be cured.
I’ll amend.
Tough to make it pencil if you’re a spec builder.
If you built one-story, you wouldn’t get the biger view, so two-story required. That means you’re targeting families, so 3,000sf would be about right, and at $200/sf in costs you have $600,000 into each house.
You’ll have a very long concrete driveway at $5/sf, a half-acre’s worth of landscaping, unknown soft costs just to break ground, and transactional costs on both ends.
Plus a nervous market ahead. I would not be dreaming like others nearby of selling these for a million-plus. If you can, great, but currently you don’t see anybody doing it.
Hard to fathom spending all that money, taking all that risk, to maybe make $100,000 per house. A couple of bad breaks and that’ll be $10,000 a house.
I have been talking to some banks about NOO investment property.Everyone is pretty much at 20% down or up to 30% in some cases.Then get prepared to bend over and take a bunch of so called lender fees.I miss angelo mozillo already.
700k is too high. Damn that dirt is noisy!
My point when I said it’s worth zero is basically Jim’s point-in the current market, there’s basically no way to make a profit here, therefore there should be no buyers at any price. If nobody wants to buy an item, that item is worth zero.
The thing is – lots like this have two types of buyers: spec builders and owner builders. Spec builders are hibernating for the most part. Finding an owner looking for a lot to build custom on – that is your market right at the moment for dirt. You might get a view out of that lot, but the freeway noise makes it rather undesirable from a buyer perspective. Plus, building two-story to get a better view presents a handicap to that owner buyer, who is likely older and keeping aging knees in mind.
The dirt just isn’t worth what they are asking under current conditions unless an elusive owner buyer shows up and sees potential despite the freeway.
“Sure, why not? $1.35m financed 90% of the actual loan represents pretty much the same exposure except the borrower would have been far less over leveraged on debt.”
The same exposure, when in one scenario the bank is the first lienholder, and in the other they’re the second? Not exactly.
What ArtElectric just said…
We would love to buy a lot and build our own home, but the numbers just don’t work right now. By the time we finished our rather modest home, the amount of money put into the project + lot would far exceed what we could get back out.
While we intend to live in our home for the rest of our lives, we do not want to start out underwater, because a buyer/owner should **always** have a contingency plan in case something happens and you need to move sooner than expected.
It’s true — lots are worth very little in a declining or stagnant market.
This has more potential as a hotel, if you had decent road access from Highland.