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.”
NEW YORK – The real estate market’s troubles are hitting close to home for Treasury Secretary Timothy Geithner.
After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn’t sell and recently rented it out instead, according to real estate agents familiar with the deal.
Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation’s top economic official.
A few weeks after the asking price was dropped to $1.575 million, the home was rented for $7,500 a month on May 21, said the agents, Scott Stiefvater of Stiefvater Real Estate and Debbie Meiliken of Keller Williams Realty New York.
Although $7,500 might seem like a lot of rent, it probably falls a bit short of the monthly mortgage payments on the Geithners’ two loans totaling $1.25 million, plus $27,000 a year in property taxes.
Records show Geithner and his wife, Carole Sonnenfeld Geithner, paid $1.602 million for the home in 2004.
“There are people who just cannot come down off their asking price because they just cannot afford to lose $200,000 or $300,000, so they’re saying, ‘Let me just put a Band-Aid on it temporarily,'” Stiefvater said.“Losing a couple of thousand versus $5,000 or $6,000 a month, that’s a lot better.”
Here’s the link to Zillow for interior photos of his house:
@mikesimonsen @Milehighmilede1 Probably worth noting that according to our latest report at @Attomdata, 90% of borrowers in foreclosure have positive equity - many have more than 25% equity. During the last cycle most borrowers in foreclosure were underwater on their mortgages. Big difference.