Southern California Real Estate Bubble Crash Blog

This post and future ones like it are dedicated to those homes that have been waiting for a buyer for close to a year. This is my little corner of schadenfreude over overpriced homes. Because, when it comes down to it, a house will sit on the market for a year for only one reason, the price is not right for its defects.

The gem that we have today is a classic pepto bismol house in San Clemente. Perched on the southernmost tip of Orange County, where the koolaid flows freely and the only thing that disturbs the cool ocean breezes is the flattening housing market coming to a screeching halt in late 2005. Some sellers and their agents failed to realize what was happening and decided to wait out the “dance along the bottom” by retaining their high priced house. I estimate that when this listing was taken in December 2006, it would have sold within days at $825K. At this point in the market, I estimate it would take 3 months if listed at $699K and execute somewhere in the $650K range if marketed well. This is why chasing down the market is a bad idea. The home is 2 stories with almost 2200 sq feet.  And, with an initial listing date of 12/10/2006, it is now 376 days on the market.

Note to self: Showing a rear shot as the initial image is a bad marketing idea.

Not only does this house have a crazy color to it, but you are greeted at the listing by a shot of the rear of the house. Is this really its most redeeming quality? A buyer might ask themselves… if this is the best I can expect, what am I in for?

If you own this home, why would you allow your agent to introduce the listing with this image? People are expecting to see either 1. the front of the house, or 2. The view. People are buying one of these things. Either of them is to impress their friends. If you can’t impress your friends with the rear view, then impress them with the initial drive-up. If both of these are crappy, then at least get a shot of your granite countertops and cherry cabinets. If all else fails, use your agent’s image. This listing screams “crappy house”. The price screams “I’m a big shot”. When these two cause cognitive dissonance in your target, you’re sure to NOT sell the house.

If this hasn’t wetted your appetite, consider the following picture:

It might be useful to consider that the caption on this picture is “There’s room for a table in this Kitchen!”.

You don’t say.

I guess you COULD call that a table, but it seem so lonely there with that single chair. And, frankly, if there’s only room in the kitchen for this table, where is my family going to sit.

Which comes to my next point. How much would you be willing to pay for a home where only I could eat in the kitchen?

Well, the market has spoken according to the price reductions:

Price Reduced: 02/20/07 — $875,000 to $845,000
Price Reduced: 05/21/07 — $845,000 to $835,000
Price Reduced: 07/25/07 — $835,000 to $825,000
Price Reduced: 08/31/07 — $825,000 to $799,000
Price Reduced: 10/02/07 — $799,000 to $789,000
Price Reduced: 11/07/07 — $789,000 to $779,000

So, with now more than a year on the market, and nearly $100K lighter, you’d expect this to just fly off the shelf, right? Consider for a moment that in San Clemente, you can also get a 2700 square foot house built in 2001 for the same price in Rancho San Clemente (also no Mello-roos) Or, you can get a 2800 square foot detatched condo on the golf course for 80K less. You could also get a 2400 sq foot house in the capo section of Dana Point for $115K less. These are just current values available during Christmas time. So, what will values look like next year when the mortgage meltdown reaches fever pitch?

There’s also the issue of the road noise:

I hear that road noise sounds like the ocean and that you get used to it. I can attest that when I lived by a road about this size that I never got used to it and can’t imagine how you could ever get the roar of engines out of your mind while sleeping.

You might ask what the best part of this listing is? After all, it is priced about 100K above current market values, backs to a noisy road, and has attempted to chase the market down for more than a year, what could be scaring buyers away?

The listing says it all:

Submit all offers on this home that is a cosmetic fixer.

Tell me, why would someone want to pay filet prices for hamburger?

Either way you look at it. Happy Birthday, Socal.