What's going into escrow - Irvine and maybe some Tustin too

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<p>This is hysterically funny, but can somebody explain why I should care about home ENTERING escrow?</p>

<p>The only ones that matter are the ones that CLOSE escrow - why in the world would you care about entering? I mean, I guess if nobody ever fell out like it used to be, maybe, but these days isn't it kind of pointless?</p>

<p>Here's my example:</p>

<p><a href="http://www.trulia.com/homes/California/Orange/sold/5368648-2017-E-MOUNT-VERNON-AVE-ORANGE-CA-92867">http://www.trulia.com/homes/California/Orange/sold/5368648-2017-E-MOUNT-VERNON-AVE-ORANGE-CA-92867</a></p>

<p>2017 East Mount Vernon Avenue, Orange CA 92867</p>

<p>Currently listed at $450K, this house has been in and out of escrow three times in 20 months. Twice over $600K, once at $525K last August. It hasn't closed yet. There are 10 homes on this street that are either real inventory of 'phantom' inventory that is for sale but not currently listed. And this is a fairly short street!</p>

<p>Again, why do I care about escrow entrants?</p>
 
<i>"Currently listed at $450K, this house has been in and out of escrow three times in 20 months."</i><p>


I do not know why you would care, but Ipop cares because for him, this is three sales, and recent sales are most material to him.
 
<p>"Again, why do I care about escrow entrants?"</p>

<p>I'm tracking sales, for my personal benefit, hopefully from escrow to close... Personally, I care much more about closing prices and if transactions appear to be experiencing distress, i.e. falling out of escrow, having long delays, etc.. You and others here seem to make the basic assumption that when homes go into escrow and that it is quite common for them to fall out and go back on the market. I am curious if that is actually true.</p>

<p>Looks like 4 out of the first 6 properties that went into escrow since I started watching have closed. If 66% of the escrow entrants are indeed closing, then I would expect homes entering escrow to be a good leading indicator of market sales activity. </p>

<p>I'm curious if you see anything in my sample, which admittedly is only probably about 25-30% of the Irvine inventory, that suggests the chance of an Irvine home entering escrow going back on the market is significant. I've only been able to find 2 of 35 total, less than 6%, that have fallen out... That doesn't seem like a very large number to me. Maybe smaller places fall out of escrow more frequently? Maybe getting to escrow in other parts of OC mean less? I don't really know about areas and I really only care about what is happening in Irvine (and secondarily Tustin) as this is where I expect to buy sometime over the next 6-18 months.</p>

<p>Some people, likely in a similar situation as myself, have been very thankful and appreciative of the data. For whatever reason, they seem to find it useful. To those of you that have emailed me as such, I appreciate the support...</p>
 
<p>For any would-be buyers interested in Northwood Pointe, I finally got the pricing on a place on Blue Spruce that went into escrow back in December. Never saved the redfin on it, but it went for a disappointing $365 per sf:</p>

<p><a href="http://www.ipoplaya.com">www.ipoplaya.com</a></p>

<p>Sale price was only 6% or so less than the previous sale of the same plan (Lexington plan 2) back in March 2007... NW Pointe has been holding it's value very well (as compared to a number of other Irvine areas) up to this point. </p>

<p>So much for IPO buying in NW Pointe. As of today, I would actually have been better off buying in NW Pointe in 2006 or early 2007 as my smaller home has fallen further in whole dollars than these more expensive larger places... An odd twist, but the decline in house prices is actually making it less affordable for me to buy in certain areas. Sucks to be a move-up buyer right now. </p>
 
ipop,





I have been noticing the same trend: the high end is holding up relatively well but at extreme valuations. I suspect there will be a dam breaking effect with these properties, and their values may drop suddenly and violently, probably in 4th quarter 2008.
 
<p class="MsoNormal">I’m still waiting for the high end to burst as well. Hopefully, IR is correct and we’ll start to see some big declines soon. Would have liked to see the sale price on Blue Spruce quite a bit lower as well. I’m interested in 1 New Dawn, which I think is also located in Northwood Pointe.Great home, unfortunately, the seller is still holding on to their unrealistic wish price. </p>
 
I have been tracking single family homes larger than 2400 sq ft at Quail Hill, Northwood, Turtle Ridege, Northpark, and Woodbury via a realtor provided real time MLS link for the past year plus. Though there has been some distressed properties, in general the prices have been holding up just like you all have noticed. Also, I haven't seen unusually large number of listings either in the above mentioned communities. Back in April of 2005, I visited every resell homes larger than 2500 sq ft in Northpark. I can tell you the number of homes for sell at that track is more than the number of resell homes today in Northpark. Just some facts, I am not trying to argue any points here.
 
<p>Don't worry, all it takes is some REOs to get things going...</p>

<p>http://forums.irvinehousingblog.com/discussion/1596/quail-hill-foreclosures/#Item_28</p>
 
<p>It's going to take much more inventory to make that happen IR IMO. There just isn't enough on the market in NP and NW Pointe to make the declines significant. With relative few properties, there seem to be enough cash laden or very high income types to grab the ones that have gone on the market. The volume of REOs in those areas has been immaterial. You can see the effect of greater inventory on places like NW II, where there are plenty of larger/nicer properties competing with each other as well as other more premium areas of Irvine...</p>

<p>Anecdotally, I stopped by an open house in NW Pointe this weekend. Property was on Wedgewood, asking over $1.1M for 2900sf. Interestingly, the owner was a mortgage guy that worked at Wachovia. He was pushing Wachovia's option ARM product to make the place seem more affordable. I suspect the curtailment of his income stream probably has him/them on the market. Maybe it will take some further job losses and real recession to bring these larger, nicer properties into alignment with the declines across the rest of Irvine?</p>
 
21 Carriage, Irvine CA - short sale property

On enquiry with the agent, Chris Merritt, we were told that the property has 6 offers on it and the best offer is very close to the selling price i.e. within $10k of the asking price. I wonder how people like this agent sleep at night when the market reality suggests that it is difficult to get AN offer. Most agents rely on the invisible 'spread' between what they THINK the buyers know and what they think they know - the overbearing assumption being that buyers are stupid.
 
ipop,





It doesn't necessarily take REOs in a specific neighborhood to drive prices down. If properties in nearby neighborhoods drop significantly (Northpark) people will not put in bids on the properties in the non-REO neighborhoods. At that point, transaction volume would have to fall to zero or sellers would need to lower prices. I think this phenomenon will happen in Turtle Rock and perhaps in some other Irvine neighborhoods. The degree of distress will largely determine transaction volumes, by comparables in nearby neighborhoods will actually set the values.
 
<p>From my very personal experiences, the people I know and observe in Irvine in general are more down to earth and financially more conservative than people in Ladera Ranch, Coto, etc. Several people made comments about that rich people won't want to live in Irvine. They go to Newport, Coto, etc. I agree! Why? It is probably considered "you made it", if you have a newport or Coto address. So people are more likely to strentch themselves to move to those "rich" area. </p>

<p>Secondly, I have observed that there are a lot fewer luxury cars parking in front of those million plus homes in many of the Irvine Communities than similar priced homes at Coto and Ladera Ranch.</p>

<p>Also, I have noticed that there are a lot less number of my neighbours are in the RE or RE relatived business in Irivne. In my old neighbourhood, 5 of the 10 neighbours are in real estate business, and most of the moms are stay home moms. So when the RE business goes down, they suffer; when the husbands get laidoff, family has no income. In my new neighbourhood street of more than 10 homes, all but one are two income families. There is only one in real estate. This trends goes on a on, and I know it is not uniquie on my street. </p>

<p>So why this matters? I have a feeling the relatively conservative behavior in Irivne will contain the "explosive foreclosures" that some of bloggers are hoping and praying for. Or at least that is I am hoping for! </p>

<p>Again, only time will tell. </p>
 
<p>Haze - As the former president of my HOA in West Irvine, I have had some dealings with Mr. Merritt along with all the other realtors that focus on West Irvine. As far as agents go, he actually tends to be one of the straighter shooters IMO. Of late, it seems he has been bringing properties online at close to current market prices. </p>

<p>While he probably doesn't have six offers, it is very possible he does have multiple offers on the property and is working them against each other. I would say market for the place right now is indeed in the high $600K range. The realtor down the street from me also works West Irvine pretty heavily and he does have multiple offers on one of his properties as well... $695K list is 10% less than the mid 2005 last sale price putting list price into 2004 territory. </p>

<p>I think the last comparable SFR in West Irvine sold for $810K. That was on Millgrove in the Sheridan tract. It was nicer, better located, etc. and closed in December. Frank Agahi has two 2200sf 4/2.5 places in Sheridan in escrow now at around $700K or low $700s. If at the time Millgrove closed, say Carriage was worth say $50-75K less, a couple of more months of depreciation would land it in the $675-700K range. I'd be willing to bet that Carriage is in escrow before the end of February.</p>

<p>Merritt sold an attached 1900sf place on Waterman in December for $695K and a detached 1600sf 3/2.5 REO in my tract, the Wisteria, went for almost $600K in December.</p>

<p>I have to respectfully disagree that it is hard to get an offer in this market. Houses priced realistically get attention. I think the offers are much more rationale in terms of pricing as would-be buyers are being careful and looking for a deal. There are less than 1000 homes on the market in Irvine right now. Year-over-year inventory is only 10-12% higher. Mortgage rates have fallen considerably from the same time as last year... It's sure to get worse as more and more REO inventory hits the market and discretionary sellers decide to list, but there just isn't a ton of inventory in the 2000sf and bigger to pick from right now, especially when you consider a good chunk of what is listed has fantasy pricing.</p>
 
Ipo, Thanks for your elaborate posting. Definitely helped me to get a more realistic perspective of the West Irvine market. You have a point with the fewer choices and lower inventory levels. Unless inventory levels spike and/or REOs take toll, it looks like the market for 2k plus sq feet homes is sitting pretty insulated right now - in West Irvine.
 
<p class="MsoNormal">Ipop,</p>

<p class="MsoNormal">If you like Northwood Pointe, why not go after 29 Lynnfield. It’s a little smaller than 26 Wedgewood but I think it will sell into the mid to low 900K range. </p>
 
irvine123,





I think your observations about Ladera Ranch are right on. Also, since their HOA fees are so high and the property is relatively remote, they are in for a major drop there.
 
"I have been noticing the same trend: the high end is holding up relatively well but at extreme valuations. I suspect there will be a dam breaking effect with these properties, and their values may drop suddenly and violently, probably in 4th quarter 2008."



Do you not think there will be a sweet spot in the mid to high end for nice sized SFR? Seems more and more small condos are being built in irvine, if the proportion of condos to good sized sfr is too high, I have to imagine there will be a high demand for them.



I have no idea the number of newer 2400+ sq feet homes that have been built in the last few years, i'm just speculating, but if its a small amount, I could see them holding up for quite a long time, while the rest of the market gets killed and people realize paying 700k for a townhouse is stupid.
 
<em> I think your observations about Ladera Ranch are right on...they are in for a major drop there</em>





Yep, and I would argue that the big drop has already begun. It's not necessarily reflective as much in all the prices because much of it was built during the bubble, and sellers don't have much wiggle room - so you see a lot of wishing prices. The comps are already being really destroyed in the lower end, and the high end is feeling the weight as well.
 
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