patrick.net

Normally I wouldnt think Alamo would discount that heavily, but the town currently has the 2nd most discounted homes in the entire bay area. http://blog.redfin.com/sfbay/

The area also seems to lack buyers with cash to pay such high prices for homes. I believe many people in the area are in the RE business (builders, brokers, loan ppl) who do not have stable incomes and cannot afford their mortgages anymore nor can they qualify for loans due to banks being very strict for jumbo loans requring proof of steady income.

Another thing happening in the area is high end and boutique retail and services (big luxury spa) going out of business after being here for only 1 year. Clearly people dont have the money right now to support these types of stores. I would assume the same w/ the housing.

Seriously, I have always really liked you and your posts, but this has turned ridiculous, as you are obviously not reading (or comprehending) my posts, or purposely trying to twist my words and start an argument.
For the first time since the crash, we are seeing a few homes come on the market for nearly 50% haircuts in prime and desirable areas. This is merely the beginning of the crash of the high end market. I nowhere claimed a 50% drop in the Lamorinda market overall. However, I do see this eventually.
So what? This is a BIG deal. Sales prices drive further price drops, and as comps get lower banks lend less money, and buyers lower price expectations. It’s a slippery slope that has just begun.

Some Guy says

I’m about done talking to you, Tude, but I have to say you are making very little sense. All I said was I do not think we are now at 2000 price levels nor anywhere near 50% off in the area that the OP is referring to.

To which YOU RESPONDED WITH: “Wow, people on this site trying to make excuses for the recent radical drops”

Now you are furiously backpedaling and basically saying you agree with me. O.K., if you agree with me, then don’t say I’m “making excuses” and “taking the blue pill”. I’m just saying don’t be a jerk and then try to play the victim. You know I’m right about the Orinda market, and this thread was about whether an offer for a house at pre-2000 price is realistic. Period. So if you agree that is not a realistic offer, then quit arguing with me. There are two sides to every issue, and you seem to be on both of them.

I'm not back peddling at all, and you are still not really reading what I wrote. And I DO NOT agree with you. I DO think pre-2000 is a realistic offer. If they don't take it, or some other buyer pays more, just keep waiting, because we are ONLY AT THE BEGINNING of the drops in the high end.

I think Alamo might be considered a different market than Lamorinda. The prices in Alamo are overall a bit higher w/ more room to come down than Lamorinda especially in the entry level. There are several homes in the 800-1MM range in Lamorinda, whereas a year ago, these homes were priced at 1MM+ no matter what the size or condition. I still think even 800k for a 1500sqft house is overpriced by 150-200k, but at least they arent trying to price them at 1-1.2MM like last year. Alamo has no SFH listed under 1MM which is why the price cuts are more severe in that area I think.

I sincerely hope the schools are as good as they say they are because I really cannot see any reason to live in this area (outside of giving my husband a 10 min commute to work). It is hot as hell, and a lot of the shopping and amenities are going out of business. This area is like the midwest. I really cannot see why the prices are so high. Some areas are very pretty, but many streets are very average, middle class suburbia. Nothing special.

samsmom says

Alamo has no SFH listed under 1MM which is why the price cuts are more severe in that area I think.

http://www.redfin.com/CA/Alamo/126-Golden-Ridge-Rd-94507/home/956156
http://www.redfin.com/CA/Alamo/110-Mountain-Canyon-Pl-94507/home/1680390
http://www.redfin.com/CA/Alamo/1884-Green-Valley-Rd-94507/home/1201741
http://www.redfin.com/CA/Alamo/16-Orchard-Ln-94507/home/1280714

It's a start...

Lafayette by the numbers: 61 homes in foreclosure (NODs, NOTS, bank owned) to 124 currently for sale. I'd say there's plenty of pent up supply in the pipeline. Admittedly, much of this is in the sub $1million range, but there's a couple of properties in foreclosure around $1.5 million. Honorable mention to 48 Sterling Way; it was foreclosed on June 12 for $1,023,338 (5 bedrooms 2500sq.ft.).

Actually some guy, I Joined: Tue Aug 21, 2007 9:14 am. You used to be a little nicer to me, I am hurt.

How come those foreclosures arent showing up on the MLS yet?

" 80% of Lamorinda homes are still wildly overpriced, and 80% of those are just sitting."

I recall the same back in 1995-96. Fully completed construction off Fremont and 85 near Cupertino/Sunnyvale border with a BD rep. taking names as a few of us inspected the homes
and the names on the list were shorter than the inventory he was caring. No waiting list no multiple offers and the rep had prices struck out and replaced with 10% discounts. The price i saw for these homes
ranged from 170-189K. The same homes at their peak boom years were fetching 800-900K.

This too will repeat it self.

It seems like every house I look at that is listed for 1.2-1.5 sold for around 300-400k in the 90's. They are all trying to make a cool million off their house. Many of these homes look like they are only worth 600-700k tops in todays dollars.

If we look back from 1991 to 1997, inflation went up only 50% over a near 20 year period.

"I really cannot see why the prices are so high."

Your here for the California gold rush! In the mean time others are trying to enrich themselves off you.
In short you are being ripped off. Be educated and becareful, we have landsharks !!

some guy, I don't think you are a kool aid drinker, I am merely getting frustrated with this conversation. Maybe we both are coming to the same conclusion, just in a different way. My point to this entire argument is no matter what this particular house sells for right now, pre-2000 prices are coming. IMO people with time and money might as well just throw out lowball prices, wtf do you have to lose? I have been shocked at some selling prices recently, you never know when someone will bite on it, and IMO we are getting closer and closer to a time when houses will crash down to earth in all markets. So, ANY offer is "realistic". And to be fair, I have also been shocked at what some people are still paying! But why let a few idiots, or a handful of people with more money than sense, lure you into buying a 1.3 million dollar house when your gut (and wallet) says you should only pay 950k? It's not like there's some sort of SHORTAGE on the high end!

IMO, the sprinkling of drastic discounts in prime areas is a sign of things to come. Every month we are seeing things in the real estate market that person after person said would never happen. Wages are being cut and unemployment skyrocketing, and the state is going bankrupt. Unless one has 10million in the bank I think they would be insane to finance a 1 million+ house. What on earth is the hurry?

This is what needs to be undone when it comes to 2000 prices.

Homes today are still priced for the next round of dot.com millionaires.
BusinessWeek: November 29, 1999

McDonnell has sold everything from condos to mansions here for 15 years. But never has she seen the kind of action that has been erupting lately. The combination of stock-option millionaires and a small supply of homes on the market has created epic bidding wars and skyrocketing prices. Median home prices, already among the nation's highest in San Mateo and Santa Clara counties, are up 23.7% and 15.9%, respectively, over the past year. But in some desirable enclaves, the stats are so amazing that, well, I'll just use the abbreviation NAT from here on to signify "Not a Typo."

I mean to write... If we look back from 1991 to 2007, inflation went up only 50% over a near 20 year period.

But why didnt prices go down after the dot com bubble burst? They continued to rise. Prices across the bay area all seemed about the same back in the early to mid 90's. Average middle class ranch homes 1800-2400 sqft were selling for 350-450k. Now people want 1.2-1.4MM in most areas w/ good schools.

I realize that location is important - ya'll live where there are (were) plenty of jobs - actually still are as compared to my area. There are a little over 100k people in our entire county. But the homes you describe, 1800-2400 sqft, are selling for around $150-250k depending upon acreage, etc. At the height of the bubble my house was about $325k, now its around $180k.

I honestly can't figure out how any of you manage to buy out there. My $40-$50k salary here would be $60k there, still not enough to live on.

Wow.

Some Guy says

samsmom says

But why didnt prices go down after the dot com bubble burst?

Government meddling.

The government meddled back then?? How?

EllieMae,

Here is a perfect example of a small 1950 sqft ranch house in my area selling for over 1MM. This place just sold in May:

http://www.redfin.com/CA/Lafayette/497-McBride-Dr-94549/home/1459103

It is truly disgusting that someone would pay upwards of 8k per month to live in that crapbox. I dont get how people can be so stupid or have such low standards.

whoa! Granted, the place seems a bit over priced to me, but CRAPBOX? REALLY?
Here's the virtual tour of the crapbox. Wow, wouldn't want to live THERE!? What a crappy area and a disgusting house! I mean, how on EARTH could anyone have such low standards for themselves!?
http://c.vrguild.net/c/stnd.pl?U=0901292100034343

Reasonable or unreasonable, at this stage in the game it doesn't hurt to give it a go. Except that you might actually wind up with the house. And THEN you've joined the ranks of the FBs! :D

Tude...I looked at the photos you posted. OK maybe crapshack is a little harsh, but the house is pretty average and I still think for the price it sold at...it is still overpriced by 300k. Based on those photos and the size...I would think it should be 800-900k.

Getting closer to sub 1mil and sub 2000 in Alamo, and were still in prime selling season, oooops

Roundhill with a golf course view
http://www.redfin.com/CA/Alamo/2614-Roundhill-Dr-94507/home/1745864

This just a little over the expected rate of inflation
http://www.redfin.com/CA/Alamo/83-Amanda-Ct-94507/home/718420

Wish I had the funds to snap something up in Lamorinda or Alamo in 2010+

And down down DOWN go the comps!
http://www.redfin.com/CA/Alamo/2795-Miranda-Ave-94507/home/901456

Are you sure that last one is down? It's a slightly bigger lot, but a much smaller house at $516/sq ft versus $350/sq ft and $480/sq ft. As far as comps go, one could argue it is up.

You definitely can afford more house than me, but my rule of thumb was if I found a decent house that was selling at 2003 prices I would go for it. Your house would have to go down to 1.1mm to meet my criteria.

By the way, I finally opened escrow on a house for 435K in Rowland Heights, CA.

Sales History
2003 430K
2006 600K

It's not the most sophisticated way of determining when to purchase, but it works for me. I'm not greedy or want the lowest offer, I just want something I can afford at a fair price.

Good Luck

camping says

Are you sure that last one is down? It’s a slightly bigger lot, but a much smaller house at $516/sq ft versus $350/sq ft and $480/sq ft. As far as comps go, one could argue it is up.

In the higher end areas IMO prices are what is going to matter. People are buying the lot, location, school district, etc more than sq ft. Isn't that what we keep being told we "should" do? Overall prices and ability to buy/finance will drive down prices for all homes.

Lot's of people like myself would much rather pay a higher sq ft price for a smaller home on a large lot in a nice neighborhood for a cheaper overall price (both purchase and carrying cost).

Smaller homes often have a slightly higher per sq ft cost than a larger home. It was explained to me that living areas vs. size/number of bedrooms, along w/ lot size is the determining factor.

That's the whole 'magical formula' that realtors claim you need them to accurately assess for you. Really, those things are pretty specific to individual buyers, however. Some people are happy with their monster houses on postage stamp lawns as they never go outside. Others love a tiny house on a giant lot.

Lot sizes in heavily developed areas come down to 'can it be subdivided'. If you can subdivide a lot, it's worth a large premium. If you can't, it still gets a premium, but you've cut out the developers from the interest group and so you won't get the same degree premium.

Interestingly, a remodeled/newish house on a large lot that could be subdivided gets less of a bump than a tear down because the developer is going to make money on building and selling the houses, so they want a large lot as cheaply as possible, so they typically go after older/decaying homes on large lots first.

Right now, buyers expect a master suite. Homes without them are going to struggle. Buyers also want new kitchens (they always want that) so you're not getting top dollar without them. What's different is it used to be that putting in a new kitchen would get you more money when you sold, but not enough to cover the cost of the renovation. So buyers were pleasantly surprised at newer kitchens. It's again swinging back to renovations not getting you more money than you spent, so eventually buyers will go back to not demanding new kitchens, but the glut of granite and SS houses out there now will keep them demanding it for awhile. 3/1 unupdated houses are going to struggle in this market, big lot or not. They will probably be the ones leading the decline down.

Tude says

camping says

Are you sure that last one is down? It’s a slightly bigger lot, but a much smaller house at $516/sq ft versus $350/sq ft and $480/sq ft. As far as comps go, one could argue it is up.

In the higher end areas IMO prices are what is going to matter. People are buying the lot, location, school district, etc more than sq ft. Isn’t that what we keep being told we “should” do? Overall prices and ability to buy/finance will drive down prices for all homes.
Lot’s of people like myself would much rather pay a higher sq ft price for a smaller home on a large lot in a nice neighborhood for a cheaper overall price (both purchase and carrying cost).

When you say "comps" the first two are not in the same ballpark as the last one you posted. Someone looking to buy or sell a 2200+ sq ft house is not going to view the last one as a "comp" because it is not comparable. People looking for a 2200+ sq ft house wouldn't give a crap about the price of a 1300 sq ft house. It's either too small for them or needs additions to bring it up to a livable size for that person which then drives the price up again.

Yes, but will the bank lend someone in the same neighborhood 500k++ more money for a house with another 600-800 or so sq ft? Probably not. Not while prices are on the decline.

Race to the bottom! 2000+ sq ft, even cheaper!
http://www.redfin.com/CA/Alamo/134-Canyon-Vista-Pl-94507/home/1625224

and another!
http://www.redfin.com/CA/Alamo/110-Mountain-Canyon-Pl-94507/home/1680390

Every day another few more in Alamo at sub-1 mil...

It depends on the actual comps. I doubt a bank would use the third property as a comp since it is not one.

Do a search on Trulia for sold homes in Alamo. #1 - in June, not one sold for $500+/sq ft, thus the 3rd property you listed is still high based on sold homes. #2 look at the ones that sold for $1M+. They all are 2k and 3k sq ft. Unless they were all cash purchases, banks lent money for these larger houses. The only one that sold for less in June was $750k and is 1590 sq ft. To me, they seem to be different classes of houses and not comparable.

Those last two are much better indicators.

Tude,

This should tell you about prices you posted...

May 27, 2009 Price Changed $995,000 -- EBRD #40407414
Apr 29, 2009 Listed $1,045,000 -- EBRD #40407414
Dec 13, 2005 Sold $1,145,000 10.9%/yr Public Records

Jun 18, 1997 Sold $475,000 0.0%/yr Public Records
Nov 13, 1992 Sold $474,000 -- Public Records

seems to me this one is fairly priced at 550K. so that would be 50% off even today.

Awww! Warm fuzzies all around!

Tude - get a grip. Nobody here has said prices aren’t falling.
We were talking about the house the OP posted, 2425 ALAMO GLEN Dr. That house is 3,521 square feet, not 2000 square feet. It sits on a .46 acre lot. It sold in 2000 for $1,075,000. Yes, the house you posted is cheaper. That is because it is much smaller and sits on a smaller lot. Perhaps there are other factors as well. Your other selection sold for $920,000 in 2004, close to the peak. It sold for less in 2004 than 2425 ALAMO GLEN Dr sold for in 2000. It has ALWAYS been worth less than 2425 ALAMO GLEN Dr. So it is not surprising that it now has a lower asking price than 2425 ALAMO GLEN Dr.
Yes, we all know house prices are falling. It was in all the papers. What is at issue here is whether a pre-2000 offer price is reasonable. It is not.

GET A GRIP? How about you get a grip? Alamo and the surrounding area is at the beginning of a freefall. The house he posted is pretty unique, and to many I am sure is ugly, it's not typical Alamo and will have limited buyers. Almost every day homes are coming on the market in that area at lower and lower prices.
I completely and totally think the offer is realistic, why not? It's still above what I believe houses will will valued and listed at a year from now, that owner should be thrilled!
And you want to talk comps, all concerned about sq footage?
How about this property then?
http://www.redfin.com/CA/Alamo/361-Tracy-Way-94507/home/899356
Or this one?
http://www.redfin.com/CA/Alamo/25-Kemline-Ct-94507/home/1651775
Or we have this one with almost 5000sf, an acre lot, and views that is less money with price cuts
http://www.redfin.com/CA/Alamo/18-Ardendale-Ct-94507/home/1641391
Sorry I just disagree with you. IMO 950k for the house the OP posted is more than a fair offer.

>>We’ll skip that and enjoy the bonding moment.

Bubble-sitters of the world, unite!

Bap33 says

Dude !!! we agreed on something!! Seriously, this site has shown over and over that leftys and rightys agreed on the house bubble issue.

Hey, that's true! Never thought of it that way, but it's something that really does unite across the political divide. Maybe there should be a single-issue anti-bubble party that gets people elected to stop the bubble-mongering and doesn't touch the other issues.

elliemae says

I realize that location is important - ya’ll live where there are (were) plenty of jobs - actually still are as compared to my area. There are a little over 100k people in our entire county. But the homes you describe, 1800-2400 sqft, are selling for around $150-250k depending upon acreage, etc. At the height of the bubble my house was about $325k, now its around $180k.
I honestly can’t figure out how any of you manage to buy out there. My $40-$50k salary here would be $60k there, still not enough to live on.
Wow.

Ellie, your point comes close to home for me. You speak in terms of acreage? Bwaa-haha ha. Only people with acreage here are so far away it might as well be Texas, or so rich they don't have to work. I won't quote my salary but I went from the top 5% income in my previous town in the flyover land, to just above median income in my current zip code - that was with a 20% raise. So a 20% raise out here translates to a 50% pay cut in my disposable income when bubble prices were in effect. The idea that an IT manager can't afford a decent little house on a decent little lot in a clean safe neighborhood is what made it clear to me there was a bubble. My argument is and has always been you can just look at what people actually earn relative to house prices and you'll see where the SF bay area is a total mess. In every other medium or lower density place on earth house prices are in line with 3x or less the median yearly income in an area. Median income $50k, median house $150k. It's rough but a good rule. Here in SF area, it's always been a little more - if you can buy a decent house for 3x median income in your zip code, out here it might be at 4x, maybe 4.5x due to a number of factors. In parts it is on the high-ish side because of more density. But let me remind folks 'the bay area' is a HUGE amount of land. Ok, SF proper is very dense but San Jose ?? 45 miles south and land stretching out for miles and miles? During the housing bubble San Hosey was fully up to 10x median yearly income, no lie, and still is in some areas, all due to option ARM, no doc, no money down, prices always go up, kool-aid madness.