The REOs are rolling through the higher end of the market – the 7,500sf REO around the corner on Poco Lago just closed for $2,318,332 on Dec 21st, yet others keep hoping.
The REO in the second clip of the video is to the right on this map, plus two others are for sale out of the six:
This is a dramatic example because of the price point, but this is how the REOs are impacting neighborhoods everywhere. By under-cutting the exuberance of other less-motivated sellers, it makes them look like a deal, but is that enough to get them to sell?
In a conservative market I think you’re going to see buyers wanting to snuggle up to the recent comps more than ever, which means this $3.25-er (second home in video) might need to get into the 2s before selling, since the 7,500sf REO just closed for $2.318. Or because it’s a single-level, will buyers shrug off a two-story comp and pay what’s needed to get it?
Youtube video around the RSF Farms area:
Aw crap! The one time Jim shows us a huge home theatre room, and it’s too dark to see anything! 🙂
It was big enough for 10-15 people – I’ll get you a glimpse of it.
Nice house.
Your question Jim, at the beginning of the video, says it all — are affluent homeowners comfortable and able to make payments despite unemployment, slow-to-dead business environments and drops in equity, or is there pent-up selling demand? Here in coastal LA, I am not seeing many for sale signs, and certainly no desperation (as compared to 1992-ish where sellers sometimes hung huge banners across their homes. I have ‘no horse in the race’ as the saying goes, just observing.
Those are beautiful houses! Just need a wife and three kids first! Huge. 1% property tax is going to be 30K a year too. Little dark but the last couple videos have had gray sky.
The home for sale at $10.995 across the street was purchased for cash in 05 for $8.5, relisted 15 months later for $12.725 and has been on the market ever since. And with the cost of a movie night for 4 think of the money you can save having a home theater like the on in the REO. Pictures to follow and the next door neighbors have a baseball filed in their back yard too!!
I shouldn’t be, I grew up in North County, but I’m shocked seeing that aerial map. Those multi-million dollar mansion are built almost on top of each other. Sure, the homes are huge but there’s almost no lot. It’s the same kind of cramming together I would see in a $500k Irvine community. I just cannot wrap my brain around spending a minimum of $3M and still being able to see in my neighbors windows. It’s bizarre.
My guess closing about $2.5 million.
A lot of not very special house. I was thinking it looked like a 2 million dollar home at first, but it does go on forever. Maybe somebody wants it at that price.
It has size, but no “WOW!!!” factor. And I wonder about the build quality during the peak housing market frenzy.
Every time I watch a video of one of these monster square footage homes, all I can think about is how much it would cost to furnish the thing. I’d bet you’d spend $50k on window treatments alone, if you were really going to do it justice.
Wow! Someone will get a great buy on home #2 (I think it is outstanding and appears to be in excellent condition). I suspect these were strategic defaults (second or third homes???). JtR, can you tell us the background?? By the way, Happy New Year and thanks for providing the best continuing education course available.
Art – Rule of thumb I used on furnishing large homes in our portfolio is about 10% of the price. However, with this lower priced market I would think it would have to be 15%+, or $500k+/-.
I did notice that although the appliances are there, they took all of the hanging light fixtures which could easily top $25k in this big house.
I built/sold a house in a RSF golf club in 2006 for $4mm (6,600sf) and the buyer spent $450k for window treatments, furniture, etc for his fit/finish. That home is probably worth $3mm today but the furnishings would still cost $450k.
Yep, I agree that these homes are just too large — I did not want to start off a new year’s post with a negative. But, what ARE we gonna do with all these enormous homes?
” But, what ARE we gonna do with all these enormous homes?”
Homes like these are not for “we”. For people who can afford them with a solid down payment, the 450K for furniture is like dirt under their finger nail.
Still think home prices in CA are going down this year. When the unemployment stops, I’ll reevaluate. Think of all those government employees loosing their jobs with salaries 150K+. Of course, they are not big boys enough for these homes shown today — which is what Jim was hinting.
From the previous post’s comments, when I was asked about the market still being hot:
9.Yes, market is still hot, just a lot smarter than it used to be. If this house hits the market at $1.5 or under, it’ll get snapped up.
How about the house on Poco Lago – when we were first there I said that I thought it could slip under $2.0, and it closed for $2.3+ with a $1.3 down payment.
There are plenty of high-end buyers, and they are a patient bunch. We’ll see lots of examples here this year – stay tuned!
The other day someone asked me how many houses sold over $2.5 in 2009, and I guessed it was roughly a dozen a month. There were 168, paying an average of $905/sf.
Threadjack alert:
Hey Jim, get a load of the folk over at SDCIA “271 flips in 2009 – Who is this guy?” http://sdcia.websitetoolbox.com/post?id=4144237
They all claim to be active investors over there and they seem to worship certain posters over there but hardly any of ’em know who Mr. Mann is.
Sorry this is late but I thought it funny/strange.
LOL, they are all spec homes. They are 9K sqft instead of the typical 3K.
Why oh why would someone build a 10K sf house and then sandwich what should be a spectacular main entrance between a bunch of garages??
I love my car toys as much as the next guy, but move those garages over to the side!!
They could have easily built a 4 or 5 car garage over to the left side of the entry and left the right side with a peek of the pool or at least easier access to the back yard.
These are very nice homes, but they are not in the best area of RSF. Not in Fairbanks, or the Covenant, the Farms, Del Mar CC, Bridges, or even a gated area. These types of homes will lose the most value in RSF.