Coto Housing Blog

22962 Sonriente Trail

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The following data is for sales of $1,200,000 or more in Coto de Caza.  The only reason the data is cut off below $1,200,000 is because I just happen to have a data base for that particular set, getting a more inclusive data set of all sales would necessitate me asking for another favor, and the info on 165 sales in this particular data set took me five days to compile.  That’s enough for me.

There were 165 home sales of $1,200,000 or more in Coto de Caza in 2004.  Of that 165 homes, 54 homes have been sold again.  Of the 54 homes that sold, 1 is a REO and has not resold or been listed, 1 incurred the same amount of debt as the 2004 sale, 25 incurred less debt than the 2004 sales, and 27 incurred more debt than the 2004 sales.   Of the 24 that incurred less debt, 2 sold for cash, and 4 were sales of REO that had been purchased in 2004 and went back to the bank.

A mortgage broker friend of mine, (yes, he admits to being my friend), gave me his estimates on the types of loans that were brokered in 2004 and after.  He said that Option ARMs did not come into vogue until 2005, so most if not all the ARMs on properties below that were funded in 2004 are plain vanilla ARMs.  Interpreting his estimates, most of the homes that were bought in 2004 and resold in 2005 have Option ARMs with minimal underwriting standards, and an even greater percentage of those sold in 2006 and 2007 were funded with Option ARMs and no underwriting standards.  At the end of 2007, everything changed so that presently 95% of properties sold are funded with 30 year fixed rate loans instead of ARMs, although Delroy’s and my observations are  that most of the homes being purchased in the upper end market are still being funded with ARMs, but with 30% down.

The rest of the data will be regarding only the 111 homes that sold in 2004 and have not resold, and will include the most recent loan info only.  Ex. If a home sold for cash in 2004 and the owners took out a loan in 2006 and still own the home, the data presented will show them as having a loan.  The data as presented shows the most current status of loan information I have access to.

There are 108 homes that sold in 2004, are currently owned by the same owner as who bought in 2004, and have a mortgage. Of the 111, 3 were probably paid for with cash.  I say probably because the data base I use includes loan information, and so does not include loan information on cash sales, nor does it specify that the sale was cash.

Of the remaining 108 with mortgages:

• 3 have a mortgage status that is unavailable to me.
• 21 have never been refinanced or had an additional loan taken against them.
• 1 was refinanced for an amount equal to the principal left after normal amortization, although it 3 reset for thirty years.
• 2 were refinanced for the original principal amount and reset to thirty years.
• 81 (77%)  refinanced or took out additional loans for more than the original principal amount.
• 69 (66%) took out 2nd mortgages or refinanced 2nd mortgages after their 2004 purchase.
• 9 have only a fixed rate 1st mortgage with no adjustable rate loan of any sort.
• 83 (79%) have an ARM 1st mortgage
• 9 have 3rd mortgages.

The reset dates of the current ARMs are as follows:

• 2004 – 1
• 2005 – 4
• 2006 – 5
• 2007 – 1
• 2008 – 1
• 2009 – 31
• 2010 – 7
• 2011 – 11
• 2012 – 6
• 2013 – 1
• 2014 – 8
• 2015 – 5
• 2017 – 2

Let’s now look at their CLTV.  ( Mom, CLTV or Combined Loan To Value is the ratio of the total amount of loans to the value of the property.  Ex. If the house is worth $100,000 and the total loans equal $75,000, then the CLTV is 75% and the homeowner has 25% equity.  If the house is worth $100,000 and the total loans are $125,000, then the CLTV is 125% and the homeowner is underwater by 25%. )  Also, the amount used for combined loans in these calculations is based on the original amount of the most current loan and does not account for amortization or negative amortization

Of the 108 homes that sold in 2004 and have the same owners and for which I have access to the loan or cash info:

• 3 have Combined Loan To Value percentages of 0%.
• 6 have CLTVs between 1% and 50%.
• 10 have CLTVs between 50% and 75%.
• 27 have CLTVs between 75% and 100%.
• 32 have CLTVs between 100% and 125%.
• 22 have CLTVs between 125% and 150%.
• 7 have CLTVs of 150% to 175%.
• 1 has a CLTV of 191%,

which would mean that 57% are underwater not accounting for neg am, sales commissions, and closing costs.  My observation is that there is a heck of a lot more negative amortization than amortization on properties purchased in the last 6 years.