How much underwater could you live with?

Most of the readers of this blog are interested in buying a home. I'm wondering how much of a drop in value can you live with? I know 3 people that have bought homes since late last year. All of them thought the market was at the bottom. Obviously it wasn't and all 3 of them now have homes worth less than they paid.

Home #1, purchased in Late Nov for $485k. Two recent sales of identical homes $424k and $440K. This buyer has already seen his DP money vanish and then some. If he had to sell he'd be looking at an additional loss of around $30k after fees. He's not selling but I know he is uneasy about his new home being worth 50K less than he paid for it 8 months ago. Plans for a pool are now on hold.

Home 2, Purchased in Jan for $235k. Recent listings/sales of similar homes are priced from $199k to $229k. His 10% DP is probably already lost. A forced sale would also leave him in a pickle. He's not worried since his payment is less than his rent was. Working at the post office his job is probably pretty safe so he should have no worries.

Home #3, They closed in Feb for $360k. Recent listings and sales for similar sized homes are in the $269k to $329k. Nothing over $320k has closed in the last 2 months. They don't seem too concerned which is scary since I know they are only planning on staying in this house for around 5 years. These folks actually think this house is going to go up in price in that time frame. I suppose it's possible, just like it's possible that earth will stop rotating next week. They seem oblivious to the fact that they are now at least $50k under water.

I plan on being in my next place 20+ years so for me being 10% or so underwater is no big deal. I can live with that. But could I live with 20% or 30%? Dunno, doesn't sound like much when you say 20 or 30%. But that's around $100k for the homes I'm looking at, factor in interest over the loan and it's closer to $300k. I know some of the houses I was very interested in early last year are now worth far less than they sold for. One home I liked sold for $525k. Recent comps sold for $420k and $415k. Kinda makes you take a step back, huh!

Obviously a lover of the arts.....

This isn't a delusional seller post (although he is). I was looking to make such a post when I ran across this home. The home is at 9130 Hunt Rd in South Corona. I see it when I play Trilogy Golf Club. It sits on a hill behind the 12th hole. This house has been on the market for ages. It first listed in Jan 2008. He's been dropping the price but with an asking price of $2.2M he will need to make some serious price cuts before this place gets any interest. It's a nice property but he's probably at least 50% too high.

But the reason I picked the house is the decor. It's not horrid or anything just some of the paintings caught my eye. Like the Mona Lisa for instance, that is hanging in the living room. Or Washington Crossing the Delaware by Leutze, that is hanging over the fireplace. And if you look closely you will see another pic of George on the wall across from that (looks to be a copy of the one by Gilbert Stewart).

I dunno why, but those paintings just made me chuckle.




Finally, Happy Birthday to Mrs. X, who turns 29 for the 14th time tomorrow.

Are the flood gates cracking open??

Are the flood gates cracking open? In the last 3 days there have been more new listings post in my search area than there was in the last month. I'm hoping this is an indication that the banks are finally starting to release that inventory they are supposed to be sitting on. I will contain my enthusiasm for a while just to see if this is a fluke week or not.

Smoking the dream pipe......

Time for another delusional seller post.

12710 Canyonwind Rd is in the Orchard Estates tract off La Sierra blvd in Riverside. This is a nicer tract with most of the homes being built between late 80's and late 90's. This one says it was built in 2001, which seems odd since there is a sale listed in mid 2000.

The home is big and has all the bells and whistles. It's almost a poster child for over-upgrading. It has an awesome pool, it's own sand beach area (real sand), a pond, a fake grass golf hole, a theater, a trendy kitchen and built-ins galore. It's really a beautiful house, even if over cooked a bit. The house is 4799 s/f with 6 bedrooms and 4 baths. It sits on a nice 3/4 acre lot too. It has everything except a reasonable price.

I was looking at a very similar home about 6 months ago in the same area. Granted it was not as nice as this but it wasn't far off. Asking price of that one was $499k. There are two nearby homes listed in the mid to high 500s. Again they are not nearly as nice as this home and they are a bit smaller. But how much is all that stuff worth? $100k?, $200K? to some folks it's not worth anything. Who needs a pond, that sand beach just attracts the neighborhood cats to the biggest litterbox in Riverside. A theater, that's cool but it's mostly just a waste of space. Let's face it anyone who puts a theater in their house is just trying to impress their friends.

So what do you think he is going to get for his home? (keeping in mind the comps are in the $500k to $600k range. Actually, Redfin shows nothing selling for over $530k in this tract in the last year.

Would you like to see what the delusional owner thinks his version of Xanadu is worth? Brace yourself and swallow any liquids you may have just sipped. This dude thinks he can get $1.6 Million! Yes when the highest sale in the last year in his tract is $530k this guy asks for TRIPLE that. Who says hope is dead?

Low	mid	High
Zillow	$404,670	$493,500	$537,915
Eppraisal	$355,117	$417,785	$480,452
Cyberhomes	$319,869	$355,410	$408,721

We salute you, over upgrading-delusional seller guy. for without you, I would have nothing to write about tonight......