I just came back from an economic seminar put on by the California Association of Realtors. They have some interesting projections for the next few years. basically they feel the current wave of foreclosures will peak later this year. It sounds like these foreclosures are the sub-prime loans in trouble. These ahve primarily impacted lower priced homes. The next wave of foreclosures is starting now and should come to fruition over the next couple of years. These loans are known as ALT-A loans (100% financed) Liar loans (stated income) and other more exotic loans. Car's economist feels we may be nearing a bottom on lower priced homes (say $300,000 and under) Sales trends seem to support this. In many areas where foreclosures have been huge the numbers of sales are up drastically. Most homes are in a multiple offer bidding situation down the hill if they are priced aggressively.
Homes priced over $500,000 may have the worst problems ahead of them. The super high end homes have remained stable this past year, however the market is straining. and prices are falling. CAR projects home sales to increase about 8% with a corresponding 19% decrease in prices this year. The drcrease will come largely at the expense of the higher priced homes...
Real estate is very much a local scene. Howeve,. In older established neighborhoods, prices are far more stable than in newer neighborhoods. Looking at this trend, the high end properties in Lake Arrowhead should come down this year, especially those homes built after 2002. Many local Arrowhead agents feel the market is more stable since these are second homes for amny folks. It remains to be seen how far this economic slump will impact the higher eschelon of society. The signs are troubling to say the least. We have the whole Madoff nightmare. The NBA has several tems under severe financial strain. Endowments at major universities are down. I read the Annie Leibovitz, the famed photographer has signed away the rights to some of her work to cover expenses. (:-( http://www.usnews.com/blogs/alpha-consumer/2009/3/5/annie-le
So I think bargains are ahead. What do you value in a vacation home? You are considering your costs carefully? What are the costs you incur by waiting to purchase? (Emotional, esthetic, relationships, family fun, financial, spiritual, etc)
BTW, I'm not in your price range, however my furniture just arrived this week and I'm totally stoked!! We've been sitting on pillows and eating off moving boxes. Now at least we have a dining table and couch. Yippee!
I love just gazing out the windows at trees. We decided to forego having a television set so it's bird and squirrel vision for us. I caught a glimpse of a mountain lion this week in the distance. Really cool stuff!
BTW, I should have a PDF version of the economic news in a week or two. Drop me a line if you'd like to have a copy. I think it would be too long to post here.
I just want to stop by and encourage you to buy in Lake Arrowhead. My husband and I bought our second home up here in 1999 and it's the best thing I ever did. Be sure and buy in the Woods, so you have access to the lake.
I've been up this week to "supervise" the boat launch.....which really means, sit in the sun on the boat. It's a great lifestyle or getaway.
The asking price is only an asking price. The SALES price is determined by what a buyer is willing to pay and a seller is willing to accept at any given time. Try not to stay optimistic when offering 10%-20% below asking price. Your Realtor should help support your offer with supporting comps from the last 30-45 days which should be included in your offer. If you need any help don't hesitate to ask me.
CAPRE Real Estate ~ Lake Arrowhead Division
i have thought about looking at foreclosures. i guess i need an agent somehow connected to that part of the market. the agents i have spoken with do not show that type of home to me. i suppose i should prod them in that direction. it sounds like you found a great place. your place doesnt seem to match the description of foreclosed homes i hear from agents (totalled, poor locations, lower end, etc etc)
responding to kathy, i found a lake arrowhead agent site with data showing the july yoy decline for lake arrowhead at 32%. dataquick in april showed 40% decline.
Given that the house is 4bd/3BA that is less than 7/10ths of a mile from the lake, I feel that I not only paid fair market price for a bank foreclosure, but I got one hell of a deal considering the house and the neighborhood that it is in. The owners prior to the bank sunk at least $400K into the place, remodeling it and restoring it to vintage status. I ended up buying their dream home for dirt cheap; I was in the right place at the right time with one smart cookie for an agent.
When the appraisal came back at $335K, I attributed it to a bank employee appraiser who merely took a look at the map and didn't consider topography. What I mean by that is that if you look at the area on a map, it's only 10-15 miles from the Victor Valley area that leads the nation in the amount of foreclosure properties per square mile. However, there's quite a bit of mountain in between Apple Valley and Lake Arrowhead. The bank's mistake was my gain.
Also, the $365 fair market price was arrived at using the bank's appraisal guidelines (i.e., looking at the map to the close foreclosure-dense area). I wasn't going to go above the $365K price and was prepared to walk if necessary. But having paid more an $130K over what I initially was in the market for, I am confident that I'll make that money up and double my investment in less than 10 years.
To make a long story short, if you decide to make an offer look at it from a fair market price based on comps and not a price that appeals to the seller. I walked away from a deal where the sellers were convinced that their selling price (which was 600% over fair market price) was in fact a fair market price. It actually was the greater fool theory price.
Good luck! There are deals out there but you have to (a) have a realistic view of what your money will buy and (b) a firm idea of what "fair market" is for your part of the mountain.
The bottom line is as home is only worth as much as a buyer will pay.
No matter what is happening in the rest of California--Lake Arrowhead will always have
COMFORT It is truely like a little heaven on earth. It is a retreat less than an hour from most of so cal but is nothing like the rest of So. Ca.
here's my thinking:
1. re: the 800/600K home issue, i simply looked at the following:
a) last sale price and amount of work done on the house since that time. for example, we were going to make an offer on a place in lake arrowhead. it last sold in late 06 for 740K then listed in early 08 for 970K (and not much work was done on the place). certainly 06 was the peak down the hill and probably close to the peak up here. i would think a price significantly less than 740K would be a proper end price. on top of that the house has wood shingles that will prob need to be replaced. if i suggested making an offer for 600K i think the realtor would either argue or refuse. this happened with several houses we considered making offers on.
b) prices down the hill (dth) v. up here. i have heard from a few realtors that prices up here lag dth. if this is true i would expect prices to continue to fall up here for a bit even after dth bottoms out. i can see prices falling substantially up here over the next year. first in the spring when a bunch of houses come back on the market, then in sept if they are not selling (kind of like in 2008). historically most houses up here were cheaper than their dth counterparts (in decent areas).
c) as a project in early 2008 i took _initial_ list prices of all houses between 600K and 1M. i got this data from a realtor from the local mountain mls. for all houses that sold i figured the % difference between list and sold price. the difference in early 2008 was 17%. this also does not factor in listings that are "freshened" by taking off mls and placing back on at a dif price.
i would think that regardless of dom etc one can determine a peak month and price, if they are willing to make some assumptions or choose a specific metric. for example, lots of areas show housing price trends as median price. certainly that can be done for the mountain area. i would bet that the median price is falling right now, which implies that there was a month where it peaked. i have actually found this data on zillow etc but was hoping for something a little more substantial, like dataquick, so any tips on that would be appreciated. it sounds like you are saying that since it is a closed system up here i won't be finding this data any time soon.
ultimately, you are right, we just need to figure the price we think a house is worth and make an offer at that price. of course, to make an offer we will be working with a realtor and that realtor will probably argue with us about our methodology for determining our offer price, basically thinking we are unrealistic/cheap.
also, interesting that you ended up getting the house for around 25% off list price, which is about the same % diff as 800K/600K.
thanks for taking the time to respond!
What are you basing your information on with regards to $800,000 homes seeming like they should be priced at $550-600K? Is this a personal opinion? Based on facts or wishful thinking? I'm not judging, just curious. I think an offer within 10% is valid, however this is definitely not the case with agents up the hill. I contacted one fellow about a home listed for $230K which had been on the market for months to see if the seller could entertain $160k-180K. The agent said no way. (They are still on the market 4 months later)
Marketing times in Arrowhead average 6 months to a year for most parcels. This holds true regardless of price it seems. If the home is priced right and in a great location they are selling within days even in this slow market. Since marketing times average 6-12 months your thoughts peak price and peak month don't make much sense. If you like the property make the offer that makes sense to you. So what if the seller gets mad. If they do, write a new offer or move on to the next property.
BTW, the home we bought was listed for $199K originally, then reduced several times. We paid 160K with the bank paying 13k for repairs and another 3200 for closing costs