Sunday, June 8, 2008
I visited some open houses (5 single family homes) over the past weekend in Lake Forest, California.
Many of the homes I viewed were completely and utterly outside my realm of affordability - which pretty much sums up all single family homes for sale in Lake Forest today, despite numerous foreclosures and a certain degree of home price corrections as a result. But hey, I thought it would be interesting to view a few of the local homes that were for sale in the nose-bleed pricing stratosphere ($700 - $900K) and also find out what some of the realtors or maybe some homedebtors had to say.
Here are a couple of observations (since a realtor was present inside each home during the open house). There were no homedebtors present from what I could tell.:
-All 5 homes were single family's in Lake Forest with 4 bedrooms and 2.5 baths or more. All had been on the market for 1 month or more. All had been subjected to price reductions of varying degrees.
-4 of the 5 realtors mentioned "increased local sales activity in Lake Forest" and "all-time low prices for the area" for single family homes. One agent used the phrase "there are some great bargains out there".
- 4 of 5 realtors mentioned that "now is a great time to buy". 2 said that phrase exactly to me. When I asked why they thought it was a good time to buy, they cited the historic high appreciation of home values here, good schools of Saddleback School District, access to local convenience stores, no mello roos in Lake Forest, and the recent price declines.
One realtor told me an interesting story suggesting that in Orange County the trend is that "we always have 5 years of an up market and 3 years of a down market".
- One realtor promised that the home he was selling for $899,000 today (marked down from $900K) would be worth $1.4 million in another 4 years.
- 3 of the 5 realtors expressed their opinion that the "the market has bottomed out" or probably has bottomed out.
- 2 of the 5 realtors said the market would bottom out this summer. One then back-pedaled and said "it'll bottom out by around September 15 at least.....but don't hold me to it."
- At one of the open houses, the realtor mentioned to me that he would cut his sales commission by one-third of a percent (but that he would have to clear it with his partner first). That owuld be 0.33%. Given the sale price of the home ($799K), this would be about $2,600 in potential commission savings for the buyer.
- One realtor acknowledged my entrance into the home but decided to continue a loud and boisterous converation with another client about her failure to convince her lender to "make a deal" about the new rate on her condo ARM loan. He then proceeded to explain to her what a short sale was and that he had a visitor and would need to call her back later.
When the above realtor got off the phone, he introduced himself and then told me about his clients' problem (did not mention her name), an elderly woman who can't afford the "new payments" on her condo. The realtor proceeded to say that he didn't understand why lenders don't work a solution out with their customers on these ARM loans. Then he decided to ridicule his client referring to her by saying "some people are just stupid".
- One beautiful 4 bed single family home I visited was for sale for $899,000 in a lovely Lake Forest cul de sac. Really terrific home. Was previously placed on the market for $915,000. Even though I stated to the realtor that I was just perusing and not serious about buying right now, the realtor said he was very sure he could talk the owners down to $879,000 but that the sellers would not go below $840,000!
I thought to myself, holy shit, the sellers may be screwed as it is with the fucked up housing situation of OC, but the realtor they've decided to hire is feeling footloose and fancy free about leaving plenty of cash on the table. If there is a case to be made for people to pay realtors an hourly wage instead of a flat % off the sales price, this realtor was poster material.
I left the last home really hungry and thinking about stopping by a local Pollo Loco restaurant for some lunch.
I then decided no. What I really needed was to take another shower.