Category Archives: Lake Forest

Lake Forest Market Update – January Sales Report

January closed sales in Lake Forest, California were less than December, but still better than January 2008.  A total of 39 homes and condos closed this year, versus only 20 last year, an improvement of 95%!    

Single family homes :

20 homes closed escrow in January.  Foreclosures or short sales were 14 of the 20, so 70% of the sales were “distressed”.  The average price came to $498,512 ($270/square foot).  The *median was $473,500. 

The least expensive single family home in January was reported in the MLS as closed at $310,000 although when checking the title records, it shows a sales price of $330,000 with a $326,701 FHA loan.  (?)  I am only guessing, but the seller must have paid some closing costs and the buyer’s loan amount includes the upfront mortgage insurance premium along with some other closing costs.  The other possibility is that the listing agent made a typo when entering the closed price, and hasn’t corrected it.

The most expensive home sold in January closed at $795,000 ($245/square foot.)  It had been on the market since 4/07/08 and had been reduced 8 times from $919,900 down to $799,900 when it finally sold.  If the seller had priced it correctly to begin with, he would have saved 8 months of interest payments, taxes, insurance, and HOA dues, which I calculated to be worth a little over $30,000!

Condos & Townhomes:

19 condos or townhomes were closed in January.  Foreclosures and short sales made up all but one of them, so 95% of the January condo sales were “distressed”!  The average sales price was $209,350 ($194/square foot) and the median price was $210,000. 

The least expensive condo was a 2 bedroom with 944 square feet that sold for over list price ($124,900) at $133,000 ($141/square foot).  The buyer put down 20%, so I am guessing that he is an investor who will rent it out.  With total payments (PITI+HOA) of less than $950/month, that investor should have a positive cash flow of $150 – $200 each month.  

The most expensive condo sold also happened to be the only condo that was not distressed.  It had 3 bedrooms, 2 1/2 baths and a 2 car garage and sold for $345,000 ($252/square foot) after 75 days and a 10% price reduction.  I found it interesting that it only took 10 days at the corrected price to attract the final buyer!

 *The median is the price where 1/2 of the homes sold for more, and the other half sold for less.

Homes in Lake Forest California: MLS Extremes

Of the 204 active homes in the Lake Forest California MLS today, there are 37 that are bank-owned (REOs), 107 that are offered as short sales (subject to lender approval), 47  that (I think) are over-priced, and 13 that are in the range to sell within the month. 

The current average list price in Lake Forest is $418,441 at $265/square foot and has been on the market for an average of 109 days. 

Out of curiosity, I sorted all the active properties in Lake Forest to check various highs and lows.  Here are the extremes at the far ends today: 

  • The least expensive home is a one bedroom condo offered at $107,500. 

 cheapest

  • The most expensive is a large re-built home on the lake front at $1,650,000.  This house also has the most square feet of 3850, the most baths with 5, and is the newest built in 2006. 

 Most Expensive Home in Lake Forest

  • The smallest property is a one-bedroom condo of 610 square feet, priced at $162,000. 

Smallest 610 sq ft

  • The highest price per square foot ($562) is another lake front home  priced at $1,295,000. 

 Most Expensive per square foot

  • The lowest price per square foot ($138 ) is a 2 bedroom condo at $140,000, which is a short sale. 

 Lowest $/square foot = $134

  • The oldest listing came on the market in October 2007, and is a short sale.  The price started at $485,000 and is now down to $420,000.   (This is a classic case of “chasing the market down”.)

 Oldest listing

  • The one with the most bedrooms of 6, is a short sale and listed for $375,000.

Most Bedrooms

If you would like to check my statistics, or do your own research, please click this link to  Search ALL the homes for sale in the Southern California MLS  (there must be at least one that you like!)

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Thanks for visiting!

Vicki Lloyd

Foreclosed Homes in Lake Forest California

Bank Owned Home

The foreclosed home inventory in Lake Forest has been running between 43 and 49 homes for the most of the last year, but today, there are only 33 REOs (bank owned) homes on the market.  The majority of them are condos, and the average list price is $318,700 ($232/square foot.)  They range in price from $116,600 up to $599,900. 

 

The highest priced REO in Lake Forest today, at $599,900, has been on the market since March, and has had the price reduced twice, but not enough to generate the excitement that would make it sell.  Located in a good neighborhood, with 4 bedrooms, a bonus room, and a pool, the price seems ok for the current market, but it is vacant, dirty, and needs just enough work to scare many buyers away.  My guess is that it will eventually sell in the $475,000 to $525,000 range.   

 

In the last month, 39 REOs have closed escrow, with 21 of them selling for an average of 6% over list price after only 13 days* on the market!  The other 18 sold for an average of 96% of final list price, after 58 days on the market. 

* The “days on the market calculation” is often overstated for these properties, because many of them require 7 days of market exposure before they will even look at offers, then they allow another 3 – 5 days for potential buyers to raise their offers to “highest and best.”)

The trustee sales, where lenders actually take back the properties from the previous owners, have slowed considerably in the last 3 months.  As an example, a typical schedule will show 135 properties on the daily foreclosure sale list, but at the last minute, only 10 of those properties will actually be sold or taken back, and the rest will be postponed or cancelled.  

Of the properties where the foreclosure sale was cancelled, some were refinanced by a new lender, some were sold at a short sale, and a few were brought current by catching up the late payments.  The properties that were  postponed, are partly due to the new California law requiring lenders to document that they have attempted to work with the delinquent borrowers, or to some institutions being so overwhelmed with bad loans that they just can’t get them all done.  (I also believe that some institutions are holding back, waiting to see what the government bailout will do for them.)

Related posts:
Buying Homes from the Bank
You Want to Buy a Foreclosure?

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Before You Buy in an HOA!

This photo has nothing to do with this post - I just liked it!

This photo has nothing to do with this post - I just liked it!

If you are planning to buy a condo, or a house in Lake Forest, Mission Viejo, Rancho Santa Margarita, or other South Orange County area, there is a good chance that you will be buying in to a home owners’ association (HOA).  If that is the case, make sure you read over all the HOA documents soon after you receive them.  These are usually provided to you during the escrow process, and you will normally have 5 days after receiving these to either approve them, or cancel the purchase and get your money back.

What should you look at, or what should you look for?

Start with the budget. This will show you the items that are expected to be paid each month by your dues.  Some budget items can be expected to go up almost every year – like costs for electricity, water, utilities, gasoline, insurance, and most labor.  Also, look at the year-to-date actual financial statements to see how they compare to the budget.  Have there been unexpected or substantially over-budget expenses?  Is the income (from dues) under the budgeted amount?  If there have been a lot of foreclosures in the association, the unpaid dues from those homes will have to be written off, and the shortfall will have to be made up by an increase to the next year’s dues budget.  By law, in California, the HOA dues may be increased by the board of directors by up to 20% without a vote of the homeowners.  If a 20% increase is not enough to cover any shortfall, a “special assessment” of up to 5% of the annual budget may be declared by a vote of the board of directors.  Most associations publish their new budgets in November for the following calendar year, and the new dues assessments go into effect in January.

Review the Rules. Most HOAs have rules that address many areas of your life.  Putting a basketball hoop on your garage, or a portable one in the driveway, may be restricted.  Do you have a boat or RV?  Many HOAs require that they not be visible from any other property or from the street, or that you may only park your RV in front of your house for the time it takes to load or unload it after a trip.  Also, if you drive a commercial vehicle, know that there may be restrictions on keeping that in your driveway.  Do you work from home?  Some associations will not allow any kind of manufacturing or retail types of businesses, or will restrict the hours that you can operate.  What kind of pets do you have?  Chickens, ducks and pot-bellied pigs are often outlawed, and some associations put a weight limit on the size of dogs that are allowed.  Read over the rules and make sure there aren’t any that you can’t live with!

Architectural Guidelines. Before you plan that room addition, front porch, patio cover, or major remodel to your new home, find out what is likely to be approved by the architectural committee.  If you want to add a 2nd story, or change the exterior look of the home, find out before you buy that it will be allowed!

Meeting Minutes.  The minutes from the Board of Directors’ meetings will tell you what is going on in the Association.  Much of the time, the minutes are quite routine and boring, but check to see what issues are coming up at board meetings.  Are neighbors fighting about something?  Is the association failing to enforce the rules?  Are they anticipating discontinuing any services, or upgrading any of the commonly owned facilities?  Are there any lawsuits threatening the Association?

Buying a home that is part of an association means that you are buying ownership in that association.  Do your homework – You need to know what you are buying!

Lake Forest Market Conditions

Lake Forest prices now start at $95,000 for a one-bedroom bank-owned condo. It previously sold in 2005 for $260,000 using 100% financing (probably using a “liar loan” without any income documentation!) I seriously question the wisdom of anyone paying that much for a property this size, as you could have rented it for less than $1000/month at that time, instead of taking on a mortgage, taxes, and HOA dues which probably came to a total of close to $2000/month.  This unit has been on the market now for 9 days so far, and I expect it will take a little while longer to find a buyer who wants it and can also afford it using today’s more traditional standards to qualifying for a loan.

The total number of bank-owned homes in Lake Forest today is 45, and they have an average price of $326,000 at $232/square foot.   

Total active homes on the MLS in Lake Forest is currently 287, with only 97 of them available as traditional “non-distressed” sales with a seller who can answer an offer without having to wait for a bank to approve the price.  Of those, there are 30 condos and 67 single family homes.  Prices of the single family homes begin at $459,000 and go up to $1,695,000.  

For buyers who are hoping to pick up a “deal” on a foreclosure property, it is critical to be fully pre-approved in advance and to be educated about the values.  Many of the foreclosure listings are coming on the market priced very low compared to other properties.  They may be in almost any condition, ranging from totally dirty and damaged to pretty nice “move-in” condition.  Alert agents and buyers are finding them and making offers almost immediately.  I have had several experiences where my buyer submitted an offer the first day on the market, then, after waiting for 3 or more days, the bank’s agent asked all the buyers to re-write their offers at their “highest and best” price.  This strategy has created an “auction-fever” environment that leads to the home selling for substantially more than the original list price.  If you plan to make an offer on one of these undervalued properties, you need to carefully review the comps, and make your best offer based on your perception of what it will really cost you to make the home comfortable for you!

Lake Forest Condo Breaks the $100K price barrier!

Bank owned condo in Lake Forest listed at $95,000

Bank owned condo in Lake Forest listed at $95,000

The condo pictured above just came on the MLS this morning with a list price of $95,000.  It is a bank-owned foreclosure, with one bedroom, approximately 685 square feet and described as “needs work.”   For an owner-occupant, with a 3% down payment and an FHA loan, the payments on this could be under $1000 per month, including the mortgage, taxes and current HOA dues of $260/month.  This is priced $20,000 less than the next cheapest unit in the city, which is also bank-owned in the same development.   This may be another example of a lender pricing agressively to generate quick activity and multiple offers, so it may end up selling for more than the asking price. 

This condo was previously purchased in August 2005 for $260,000 using 100% financing.  According to the records in the tax database (not totally up-to-date, but all I have to go on), there are 392 units total in this condo association, and at this time 32 of them are in some stage of foreclosure.  There are also 17 foreclosed units that have sold this year, 4 that are in escrow, and 14 others available today on the MLS.   

Potential buyers need to know that when the level of foreclosure activity is this high in an association, there is a very real probability of HOA dues increasing to the maximum allowable (20%) limit, and possibly additional “special assessments” to make up for all the dues that went un-paid while the property was in the foreclosure process. 

Once a lender forecloses on a property, they become responsible for paying the HOA dues and fees until it is re-sold, but the many months of dues payments that the prior owner didn’t pay, were wiped out in the foreclosure sale, and the HOA simply lost that revenue.  The budget of a condo HOA usually includes all the maintenance and taxes for the common areas, trash service, as well as funding the reserves to replace roofs, resurface the streets, the insurance and maintenance of all the buildings.  These costs aren’t expected to decline, and most aren’t optional that could be eliminated.   

Before buying a unit in an HOA where there has been a lot of foreclosure activity, take a good look at the HOA budget along with the latest financial statements so that you know what you are taking on!

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Lake Forest Market Report – June 1, 2008

Based on the levels of inventory, it looks like we are shifting back toward a seller’s market in Lake Forest! When the ratio of active listings to sales, or new escrows gets down below 6 months, it has generally been considered a market that favors sellers.  This doesn’t mean that prices are likely to rise soon, but that it is more likely that a buyer will take action sooner when a well-priced property comes on the market.

While there are still many bank-owned homes coming on the market, many seem to be getting more agressive with the pricing right from the start.  There are now 38 active REO listings, 53 REOs in escrow, and 25 that have closed in the last 30 days.  Assuming an average escrow time of 6 weeks, the 53 properties in escrow, indicate a pace of about 8.5 sales per week.  At that rate, the 38 actives would be gone in less than 5 weeks, if no new ones came on the market!

The short sales are the hardest to evaluate due to the fact that each seller, lender, and listing agent is unique. Many of the currently listed short sales will not qualify due to some circumstance of the seller, and will eventually become foreclosures.  Many of the listing agents who take the short sale listings are unqualified, and don’t really understand the process.  Most of the lenders are understaffed and overwhelmed, and not capable of responding to the best offers in a timely manner, so many of the buyers who made offers on these homes will drop out or buy something else by the time the lender makes a decision.  At this time, there are 148 properties listed as active short sales in the MLS, with 30 currently under contract, and only 7 that have closed in the last 30 days.

For homes that are neither bank-owned or short sale status there are a total of 135 on the active market, with 42 in escrow, and 20 that have closed in the last 30 days.  The active inventory ranges from $179,400 up to $1.8 million, and the average is $635,000. For those that have closed or are currently in escrow, the time on the market is an average of 60 days.  (Hint: if your home has been on the market for over 60 days without an offer, take a hard look at your price!)  For “non-troubled” homes, the inventory is very thin in many size and price ranges.  I just witnessed a home that became available on Friday afternoon, with instructions that it could be shown beginning Saturday morning, and by Sunday morning, the status had changed to “Pending.”  In my opinion, this was priced right at the level that the market now dictates – not the “testing” end, or the “give-away” end, but right where it attracted attention from the buyers who were ready to act.