Coto Housing Blog

There is speculation and debate about whether or when the Federal Reserve will raise the Fed Funds rate.  This post, “As Budget Deficit Hits Record High, Interest on US Public Debt Hits Record Low“, from Zero Hedge explains why the Fed can not raise rates without destroying the economy.

Yet the logical next question is what happens when rates start going up? It was as recently as September 2007 that we had a interest rate on marketable debt of nearly 5%. The plunge to 2.5% took just over a year. Even the mere mention of actual tightening will spring rates right back to 5%. What does that mean for actual outlays. Well: if indeed we are correct that total debt will hit $14.3 trillion in less than a year, it means the marketable debt will be about $10 trillion, and the incremental 250 bps of interest will mean about $250 billion of additional interest outlays a year, or half a trillion annually. That comes to about $42 billion a month. In January this amount would have been double the net withheld income taxes.

Bottom line, if the interest rates rise, the federal government will be even less able to pay the interest on our debt than it is now, and that non ability will become far too obvious, even to the masses who do not care to pay attention.

Do you remember the tale of the little boy who said the emperor wore no clothes?  I wonder if most in his day said he was a pessimist, or a doom and gloomer, or a naysayer, or a bubble blogger, or a permabear, or a …, fill in the blank.

cdcrez Uncategorized

2 Havenhurst

 There were 14 closed home sales in Coto in the month of February.  That is 2 less sales than last month and 5 more than February of last year.  The average sale price per square foot this February was $277; last year in February, it was $282.  Of the 14 sales this February, 5 sales were REOs and 2 were short sales, or half were distressed sales, the same percentage as last month and the month before.  Of the 14 sales, maybe 4 were estate sales depending upon how you define estate.  Those 4 sales were 30852 Via Colinas at $1,130,000, 4 San Miguel at $1,419,000, 12 Atherton at $1,850,000, and 2 Havenhurst at $2,050,000.

There have been at least 14 new Notices of Default since the we posted “January Sales and Other Numbers” until 2/23/10, one of which was filed by the CZ Master Association.   No properties went back to the bank since our January post.  2 NTSes were canceled between 1/26/10 and 2/23/10, and 2 properties went back into foreclosure that previously had trustee sales canceled, presumably because of loan modifications.

All the figures given in this and previous “Sales and Other Numbers” posts have been exclusive to Coto de Caza and do not and have never included properties in Wagon Wheel or other surrounding neighborhoods.  Until about 3 or 4 months ago the foreclosure stats were understated because we were not aware that in order to arrive at a complete list from Foreclosure Radar, we had to specify all the possible addresses folks may use for their Coto properties, such as Trabuco Canyon.  We now use the zip code, 92679, to filter our list and list all the properties within Coto, but we exclude those addresses in Wagon Wheel even if the address in Foreclosure Radar says Coto de Caza.  Our foreclosure lists were previously understated and they have never been overstated.

cdcrez Uncategorized

Meritage Sales

In Escrow

Active Listings

Sold

House Variations

Plans from 2700-3300 sqft.  Many include golf course views, and a few are on a lake.

Comments on sales

Sales volume was very low and dropped YOY.  Low/high/median dropped YOY, except the low sale in 2007 was lower than the low sale of 2008.  (probably a statistical anomoly)  Volume did not pick up with price drops.  2009 low sale was the last sale (Jan ‘10)

Comments on active listings

Single active listing at $800k is above 2009 high.

Comments on escrow

Active listing is priced 5% below house in escrow.  Both are roughly same square footage and both have golf course views.

Overall

The 2007 high is way out there.  This was the infamous home which caused Vicki and Jeana to supposedly lose their friendship.  Interestingly in going over this tract I came across an old CHB post.  I like the comment by one of our readers: “That home is a semi-custom home so the comps don’t apply, but I agree overpriced.”

I’m guessing when it was listed for sale, they believed as well that comps don’t apply.  They were probably told this when they bought the home at $1.65mil.  Now… in my honest opinion, when someone tells me “comps don’t apply” that’s a big red flag.  Once you say comps don’t apply, how do you price a house?  Surely somewhere there is a comp.   Comps do apply, because typically people don’t want to be the $1.6mil home in the $900k tract.  At some point you overdevelop a home and it doesn’t fit in and your return on investement beyond a certain point drops.  This is why comps do apply.

Even without that number, median sales are down 30%+ from 2007 to today and volume has dropped.  Dropping prices on dropping volume is typically not a good sign.  Now, having a home in escrow above last year’s median is a good sign… unless that buyer bought because they felt comps didn’t apply for that home either.

C Delroy Spuckler Meritage

Before you worry about went to hold or fold, choose the right table

A few days ago one of our readers mentioned we should focus less on blame and speculation and more on discussing advice on dealing with situations.  I haven’t figured out how to do that yet, but for a starting thread I thought, hey instead of focusing on the negative… (financial hardship) lets focus on the positive… buying a new house.  Let’s give them the advice BEFORE they are in trouble.

So… a friend walks up to you (because we are all friends here, right?) and asks your advice.  He/she says they are looking at buying  a house, and have never really done this stuff before.  They asked since you are a homeowner, how you decided on your budget.  (If we like your advice and people get into this, our mythical buyer will ask some more questions):

1. What sort of downpayment should I make?
2. How do I decide between a fix rate or adjustable loan?
3. When is an interest-only loan appropriate?
4. How do I figure out what payments I can afford?

Fire away CHB.  (Honestly, as much as this might be an “advice” thread, I’m more curious what our readers think and what is considered “The norm”)

C Delroy Spuckler Uncategorized

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Chantemar Sales

In Escrow

Active Listings

Sold

House Variations

3 Floorplans ranging from 1800 to over 2300 sqft.  Some homes have a golf course view.  A few back up to CDC Drive.

Comments on sales

Low/High dropped YOY.  Median went up slightly in 2008 over 2007 but on low volume, so its probably not statistically relevant.  (Unless someone cares to argue that prices went up in 2008)  Volume in 2009 was very high, spread evenly throughout the year.  2009 median sale was 10% below 2008 low sale, which probably explains the volume.   The 2009 low was the last home sold.

Comments on active listings

Single active listing is above 2009 median and approaching 2009 high.

Comments on escrow

Single home in escrow is near 2009 high close.

Overall

Same story…  prices dropped YOY, and in 2009 volume goes up.  Listings and escrow are above 2009 high.  This and the volume uptick might be a sign of a bottom, however the 2 lowest sales in 2009 were amongst the last 3 sold.  Tough to say what will happen.  With a single active listing it would probably be expected prices should go up… so I would guess pricing really depends on spring inventory refresh.

C Delroy Spuckler Chantemar

12 Atherton

Why am I showing a picture of 12 Atherton in an article whose title would lead you to believe I’m talking about the Estates?  Is it a mistake?

No.  I’m making a point.

12 Atherton closed at $1.85mil.

Today 31921 Apuesto dropped $1mil down to $7.9mil.  On February 19th, less than 3 weeks ago, it dropped another million.  That $2mil off.  Now, its easy to get numb to some of these large numbers.  So I thought I’d throw that picture of 12 Atherton up there for you to illustrate the magnitude of those price reductions, and how inexact of an art it appears that pricing a home in the estates is.

In one hand, you hold 31921 Apuesto in mid February.

In your other hand, you hold 31921 Apuesto today, along with 12 Atherton, and $150k in cash (for illustration purposes, assume its in a brief case full of unmarked non sequential bills).  The $150k could buy some nice granite countertops, eh?  No HELOC necessary.

At its current price, 31921 Apuesto is still almost $1000 per square foot.  Redfin doesn’t have complete data, but what it does have only shows a single house in Coto in the past 3 years selling above $1k per square foot, that being cdcrez’s abode over at 31951 Vinedo.  After that, the next highest sale is 22451 Avena at $833 per square foot. (for those of you not familiar with Avena, it was a pretty small home, and closed in the mid $2’s)  Now very few Estates have sold in the past 3 years, so whose to say what the proper price per square foot is for such a property.

But let’s pretend.

So what if Apuesto were to drop to Avena’s price model, it would be another $1.24mil.  To put that in context:

4 Tortoise Shell, closed at $1.23mil

Now, once you’ve got Apuesto and Atherton, its really a bit pretentious of you to be buying 4 Tortoise Shell as well.  Unless you are Tiger Woods and need some homes for your “fans”.

We were told we should have more advice threads.  Here’s my advice, skip 4 Tortoise Shell.  Given 31921 Apuesto has a sweet man cave, I would recommend you offer at 22451 Avena’s $/square foot and use that extra $1.24 mil to add some proper decorations to your man cave.

C Delroy Spuckler Los Ranchos Estates

Someday...

I’m about halfway done going through the tracts which have homes in escrow.   This all started out with a comment by CotoAgent about prices in Orange County going up, so I wanted to see what was happening in Coto.  When I started I didn’t know the answer.  As I started going through a few tracts the answer became pretty obvious.

While its interesting to look tract by tract, I also want to occasionally look at the “Bigger Picture” of Coto as a whole, since that was my goal.   I’m about halfway done I figured I’d compile some stats…

Tract Selection

I started in the south and moved north, as I said I would.   That just made it easier for me to make sure I hit them all, as was viewing things in redfin.  I only focused on tracts with a home in escrow for now.    I have no idea if either of these decisions biases my data. Just thought I’d say this in case anyone thinks I’m cherry picking tracts to serve some agenda. In all honesty I started with a question and methodology, and not an answer.

One Tidbit

Here’s the most interesting “meaningless trivia” I’ve found so far… (if people have others they want to see, let me know):  of the 14 tracts I’ve accumulated data on so far, in 8 of them the lowest sale since 2007 which was the most recent sale in that tract:

1. Oak View
2. Courante
3. Valle Vista
4. Tera Vida
5. Southern Hills
6. Glen Eagles
7. Chantemar
8. Meritage

Another stat I want to collect, but need some time, will be to see how the homes in escrow statistically compare to the low, median and high of 2009/10 for each tract… how many are above and below median would be interesting to me, I honestly don’t know the answer yet, I’ll grab it for my next writeup.  (The only reason I picked out this above stat was in typing up the comments on each tract I kept finding myself typing this statement, so I wanted to see how many it was)

Overall Sales

So in the above table, I really questioned if I should keep the high/low numbers. For a tract it makes sense, because it gives you an idea on product mix for a year (my idea being the low should tend to be lessor models, the high tending to be nicer models, and the median representing an average model). In the bigger picture, this captures 2 homes out of 200, so I don’t know what that really means.  As it turns out, it was useful…

Unlike in my tract data, I split out 2010 and 2009.  The reason I do this was to get a good comparison of 2009 vs. 2008, and to see what 2010 might look like.  On a tract by tract basis these were “onsy and twosy” sales, and were not statistically significant.  Over 12 tracts, its worth splitting htem out.

Looking at it, I guess the first thing which sticks out though is the low price of  current 2010 sales and homes in escrow is up sharply over 2009.  2009 vs 2008 it dropped, but 2009 vs 2010 its up sharply.  I’m guessing this is due to low end inventory drying out along with some price stabilization there.   I’ll have to collect data later to see how homes in escrow compare with 2009 median as a function of 2009 median, to prove this.

The next thing which sticks out to me is even though the low jumped, the median dropped both in 2009 and 2010. Since the 2009 median is closed price, and the escrow price is the asking price, one could expect once these sales close, the median will drop a few percent more.  If I lump 2010 closed sales and 2010 escrows together, the median is also $872k.  Looking at the high price for 2010, it seems to suggest at least a decent portion of the median dropping is due to more homes in the lower ends selling.

Next, volume. In the tracts we’ve looked at so far, volume was level 2009 over 2008, and up 25% in 2008 over 2007. Volume of the homes in escrow and closed, 2 months in, is 1/2rd of the 2009 sales.  So while prices on the mid to high end might not be recovering yet, volume is picking up on the lower tracts.

Comments

Overall, my original question was “what did prices in coto do in 2009″?  That’s what I’m after.  So far, 14 tracts in, I feel 13 of them had price decreases.  The 14th its debatable due to low volume.  I’d have to go back, but I guess some of the other tracts went down on low volume as well.  So we could argue 13, 14, 10, whatever… I think its pretty fair to say so far with the tracts I’ve looked at, the vast majority dropped in price 2008 versus 2009.  But I’ll keep going.

When I’m done with everything I’ll try to break trends down more by price range versus lumping them all together.  For now, since I’m not done, I just wanted to take a quick peak myself.

That’s about it for now… I’ll leave the rest open to discussion.  If there is data you want, let me know.  When I’m done with this series I’ll most likely publish my spreadsheet if people want.  (Its just not in a real useable state right now… as you all noticed I changed my format over a few posts, so I need to go back and make them all look similar)

C Delroy Spuckler Uncategorized

12 Shire

According to the owner of 12 Shire in this letter to the OC Register , dated March 8, 2010, the owner has received a loan mod and there is “no foreclosure on my house anymore.”  She also says, “I have been helping so many people save there homes, it is a difficult and frustrating process that I really wasn’t focusing on sales.”   “After I was denied back in January, after working with Wamu/Chase for 6 months, they said I didn’t fit the program, I am a fighter so I called my friend Jason Cougenhour at HUD, … ”

Here are a couple of quotes from the June 11th, 2009 letter, 8 months ago, from the same owner, “Mark, thank you for making me aware of a NOD (notice of default) filed on my house, I have successfully completed a loan modification with Zachary Scoggins and Art Moore! Thanks guys! Washington Mutual/Chase are committed to keeping families in there homes. Thanks President Obama and HUD’s Jason Coughenour.”

Are you all as confused as I am?  Do you think the OC Register reads its previous stories to see if its present articles make any sense?

According to Foreclosure Radar, the Notice of Trustee Sale is not showing as canceled, … , yet.  But, we will let you know of any status change.

cdcrez Uncategorized

My in-laws have solar panels on their garage roof to heat the water for the pool in their backyard, but my in-laws do not live in Coto.  Unless they are well hidden, roof mounted solar panels to heat pool water in Coto seem to be rare.  When walking on some of the trails in the hills surrounding Coto, one can see a few electrical solar panels and a maybe  a few water heating solar panels at ground level on the back property of some of the estate homes, and these seem to be rarer than roof mounted solar panels.  What’s the story?

First guess would be that there are some mighty restrictions on what a resident can mount on their roof or on the ground with the determining factor being what can be seen from off the property.  What are the rules concerning solar panels?  Honestly, who wants to look at rows of homes with ugly black panels on their roofs?  And at the same time, energy is becoming expensive and will become more so for our children.

What do you think of solar panels in Coto?  What do you think of visible solar panels?  How visible?

Are there any solar panels yet that look exactly like roof tiles?

(edit):  It seems that legislation has been passed on this subject and you can read about the California’s Solar Rights Act by clicking on the link.  The link is not the code or law itself, but rather an explanation of.

cdcrez Uncategorized

9 Jackson

Tanglewood Sales

In Escrow

Active Listings

Sold

House Variations

3 floorplans ranging in size from 2800 to 3200 sqft.  Some homes include golf course views.  I’m not familiar with the tract, but it appears to have been developed in 2 phases… 15 Williamsburg looks architecturally different than others in the tract, and interestingly states that it has no Mello Roos, whereas other listings do…?

Comments on sales

Wow!  What can I say… Stuck you said I would get bored and quit.  Here’s we go… a tract which shows prices going up in 2009.  Low, high and median price all went up in 2009 over 2008.     They are still below 2007,  but they went up.  The one interesting thing to point out is volume dropped by 66%.  I’m not sure with 2 sales I can make a strong claim of this being statistically relevant, but dammit… it went up.

Comments on active listings

All active listings aer above 2009 median price, and most are closer to the 2009 high price.

Comments on escrow

One home in escrow is below 2009 low and near 2008 low.  The other home is close to where most other homes are listed which is relatively near 2009 high price.  Both homes are the same square footage, same lot size and have a pool.  One house looks more updated than the other… to the tune of $180k in asking price.

Overall

We got our tract which shows prices going up in 2009.  I’ll let that be the followon for commentary.

C Delroy Spuckler Tanglewood