patrick.net

Can't hurt. IMO prices will drop to 1999 levels (or below) so your offer seems in line with where prices should go. Now good luck convincing sellers of the fact that the party's over. People will resist as much as they can as they still think their house is worth 06/07 prices.

In the mid-late 1990s my FIL's girlfriend sold this house on 10 acres for 1.5 million
http://maps.google.com/maps?q=serenity+ct,+alamo+ca

Prices have just begun their decline in Alamo and Lamorinda.

Oh and as far as offers, I would start just making lowball offers if you have the cash. If they say No, move on.

WOW! 10 acres? How big was the house? So much retail is going out of business in Walnut Creek and Danville which tells me people really dont have cash to spend on anything right now, and unless you have 20% cash to put down on the house, it is very difficult to get a jumbo loan. I also heard using stock options for a down payment is no longer an option for securing a jumbo loan.

Im not sure if Lafayette and Orinda are still holding up over Alamo. Both areas have great schools, but Lamorinda is a bit better and closer to SF. I really dont know much about Alamo other than the neighborhoods are very beautiful with slightly newer larger houses in general then Lamorinda.

I'd like to lowball as much as the next guy, but you do have to be logical. #1 why would they accept $950k? If the current listing is $1.3M, they would likely drop it to $1.2M first, then $1.1M, etc. There's no reason for them to chop $450k in one swoop. Your gap unfortunately seems too far at this point in time. #2 If your offer is less than what they paid, there are a few things to consider. How much do they have left on their mortgage? If they have been refinancing or paying off the mortgage very slowly, they may still owe around $1,075,000. If that's the case, they will have to decide which is better, foreclosure or shelling out $125k (for your $950k offer) just to be able to sell their house.

Plus, they are likely losing 6% (~$60k) to the agents. Putting their loss at $185k.

samsmom says

WOW! 10 acres? How big was the house? So much retail is going out of business in Walnut Creek and Danville which tells me people really dont have cash to spend on anything right now, and unless you have 20% cash to put down on the house, it is very difficult to get a jumbo loan. I also heard using stock options for a down payment is no longer an option for securing a jumbo loan.
Im not sure if Lafayette and Orinda are still holding up over Alamo. Both areas have great schools, but Lamorinda is a bit better and closer to SF. I really dont know much about Alamo other than the neighborhoods are very beautiful with slightly newer larger houses in general then Lamorinda.

The estate was 10 acres with a 11,000sf custom French/Plantation style home. The house was featured in Architectural Digest . It had sweeping views of Mt Diablo from one side, and the Danville range on the other.

camping says

I’d like to lowball as much as the next guy, but you do have to be logical. #1 why would they accept $950k? If the current listing is $1.3M, they would likely drop it to $1.2M first, then $1.1M, etc. There’s no reason for them to chop $450k in one swoop. Your gap unfortunately seems too far at this point in time. #2 If your offer is less than what they paid, there are a few things to consider. How much do they have left on their mortgage? If they have been refinancing or paying off the mortgage very slowly, they may still owe around $1,075,000. If that’s the case, they will have to decide which is better, foreclosure or shelling out $125k (for your $950k offer) just to be able to sell their house.

A rare horse property in Briones is supposedly under contract last I heard. They were asking 2.25M, sales price supposedly 1.6M.

It's all just starting to crash, literally just in the last few weeks. The high end is DEAD.

There are 5 properties in Happy Valley for less than a million. More and more homes are coming on the market in Lamorinda for less than 800k, some dipping in to the 500s. Tice Valley in Walnut Creek has more and more on the market.

Maybe at the very top end in Alamo/Diablo people will try to hold out longer and longer, but at the end of the day comps, people needing to sell, and less people unable to buy these homes will bring those prices way down.

I know contractors/builders and investors in that area, they are hurting and see the writing on the wall.

http://www.redfin.com/CA/Lafayette/3812-Happy-Valley-Rd-94549/unit-B/home/832755
http://www.redfin.com/CA/Lafayette/1072-Via-Alta-94549/home/1460218
http://www.redfin.com/CA/Lafayette/1170-Camino-Vallecito-94549/home/1836991
http://www.redfin.com/CA/Lafayette/3959-Cowan-Rd-94549/home/902136
http://www.redfin.com/CA/Lafayette/1075-Upper-Happy-Valley-Rd-94549/home/1627081

The fact remains, we are only at the very, very beginning of the upper end crashing, yet properties are already appearing in the desirable areas at early 2000s prices, some at 50% discounts, and we are in prime selling season!

<a href="/post/16448#comment-647594" rel="nofollow">Tude says</a>
A rare horse property in Briones is supposedly under contract last I heard. They were asking 2.25M, sales price supposedly 1.6M.
</blockquote>
Maybe there were special circumstances involved there. Kids inherited property and just wanted to sell it asap. People moving and didn't want to deal with issues from afar. Another possibility, (I don't know if this really works), is that someone could list a place at a ridiculous level and then come down a huge amount so that the buyer thinks they are getting a 50% discount, when in reality, the list price was extremely inflated. Comps would obviously clear that up.
In the present situation, the house has been sitting for sale for 75 days with only 1 drop in price...there's a reason for that. The seller doesn't need to sell quickly or can't drop the price. That means either you wait for the seller to come to the realization that he is overpricing it or the bank forecloses and sells it at whatever price they can get.
Put yourself in the seller's shoes. If you had a house to sell would you put it at $1.4M and then when 1 offer comes in at $950k, would you jump at it? No, you would either wait or drop it slowly, right? Even getting $1M over $950k is still $50k extra.

Wow, people on this site trying to make excuses for the recent radical drops (like somehow the properties aren't worthy, what about location is everything? Or it's just some one off event out of desperation, lol)...and for properties listed at previously unheard of prices sitting on the market for months. Reminds me eerily of people talking about the entire Bay Area market not too terribly long ago...

I know this market well, the writing is on the wall. Insiders know it, but most people just prefer the blue pill.

There's actually a great blog on the front page for tomorrow, there's a lot of pent up supply as well.
http://www.financialarmageddon.com/2009/06/waiting-for-godot-in-the-real-estate-market.html

If you read my post carefully, I wrote that I would watch the house sit all summer, with maybe 1-2 more price drops...say down to 1.15MM. If it is still for sale in Sept/Oct, which will mean it has been on the market around 6 months, I will make my offer starting at 950k. By then, they will be desperate w/ no offers and at least make a counter offer back to me. If they sell the place, oh well. I know there are a ton more houses on the market, and Im sure I will find one I like as much or more.

They need to sell the place due to a divorce. I dont know how much they owe on it...if anything. It is unfortunate they chose to divorce during a major downturn in the RE market, so Im sure they know they wont get an ideal price for the house.

Most homes around here have more modern finishes like granite and spa bathrooms. This house doesnt have that, plus it is a unique property only appealing to certain tastes, which I happen to like...even though it isnt neccessarily the most popular.

Anyway, I think it is worth a shot. This area is being heavily discounted right now...plus that other house went from a list of over 2MM to a sales price of 1.2MM that is a huge price break. Agents around here are nowhere near as optimistic/condescending as they were last year. They are much more open to making low offers. The worst that can happen is the seller says no.

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.