Wednesday, April 02, 2008

Weeds Surround Monterey Village

The weeds have started growing around Monterey Village. Curiously, they appear to be growing on city property. The grass strip on the opposite side of the street looks great:

According to a thread on Elk Grove Online (reg required), it looks like the developer normally picks up the tab for street maintenance while the subdivision is under construction, and Parks takes over once construction is complete. Since the whole subdivision is in foreclosure, nobody knows who is in charge.

Luckily, the fire department will mow the weeds in a few months once they become a fire hazard.


Wadin' In said...

This is off the topic, but a follow up on a previous subject from last year. 1053 Smith Way in Folsom.

SacRealStats bloggers will remember this house was a New Century Mortgage buyback about 9 months ago. It it the MLS then and got press time here, because some bay area real estate agent listed it at "best offer over $350,000" and "to be sold promptly" or something similar.

It is a 3100 SF home and the listing price was setting the bottom at that time, nearing $100/SF. I drove out to look at it that day, and called the agent to put in an offer. He never called me back after multiple calls.

I have been periodically following the saga to update all of you. It never sold. Today, the owner is listed as "Morgan Stanley Abs 2006-nc5". It probably belongs (in part) to the Norwegian municipality that purchased $12 million of RMBS securities with their city's reserve funds, but I digress. It appears to be serviced by Countrywide and appears on their web site (a recent listing)

Today, the house is listed for sale for $514,900 as an REO. In July, 2006, New Century arranged an 80/20 $760,000 loan to Olga Zagarenko. I am guessing this was a cash back mortgage fraud acquisition and Olga probably got $100,000 and walked. It was a sign of the times, October 2006. Olga bought from a guy named David Johnson, a single man. Hmmmm. Seems pretty frothy. He paid $466,000 in October 2004.

The house backs up to a very busy East Bidwell Avenue and is not a desirable property from that stand point. It could be a decent rental. Let's look at that factor.

It might rent for $2,000/mon. I think it has improvement bonds (Mello Roos) of about $120/mon. In order to get any sort of resonable return on that house, you could pay approximately $310,000-$320,000. $100/SF seems to be about right for rental properties these days (assuming rents do not drop in the next few years).

Thus, a $760,000 mortgage arranged by New Century and sold to Morgan Stanley, who packaged it and sold it off to your pension fund, may eventually sell for about $310,000 in the not too distant future. Morgan will take a $450,000 write down, plus lose another $50,000 on fees, deferred HOA, bonds and taxes. That loss is passed on to you. Remember, none of these loans had impounds for these items (more Smartest Guys in the Room shenanigans). Now you know why the NY secondary market is in gridlock. Their RMBS assets may be worth about $.33 on the $1.00!!

It will have taken over 18 months to unwind the deal and the real price drop ($466,000 in 2004, to $310,000 in 2008) will be 34%. And whoever buys the property will be faced with a very long holding period before they see any potential appreciation. The listing price today of $514,900 is irrelevant to the market. I will keep checking back and keep you all informed of the final sale price, when it happens.

I am predicting a sale in the $300,000 to $350,000 range in the winter of 2008. Countrywide will have to go thru a series of price cuts to get any action. If they whack off $25,000 every 2 weeks, they will get to the market by June or so. Allowing for a contract by August, they may finally close the deal in October.

It is a fascinating time.

Buying Time said...

Thanks Wadin....I had noticed it was back on the market as well, and was wondering what the heck was going on since I thought it was sold in 2007.

patient renter said...

Wadin': I'd been interested in that home as well, since it's close to my hood.

2k a month for rent would normally be a pretty audacious assumption, though I've noticed recently that many Folsom rental listings are asking completely outrageous rates.... gotta pay the mortgages.

... said...

Check out this quote from a ZIllow senior VP (from OCR Lasner)

"In short, the median sale price is generally not a very reliable indicator of home value changes over time. The reason for this shortcoming is that it conflates two independent characteristics of the housing stock – changes in home values and changes in the mix of homes sold – when we really only want to measure one characteristic – changes in home values. "

My god, they discovered statistics

Max said...

My god, they discovered statistics

In other words:

median goes up = TIME TO P-A-R-T-Y!!!
median goes down = don't panic! There's a rational explanation for this!

... said...

he, he , he

I really wonder the training and background of the number crunchers there.

I want to get my national real estate statistics, from a group of people that include a trained statistician, maybe someone who took some college stats classes AND someone with a legitimate real estate background, maybe a licensed appraiser or broker or investor with history. Not just from a bunch of software hacks, data miners and Excel drivers looking for the next IPO. Is that too much to ask from Zillow?

patient renter said...

Oh, well if the median is worthless, I guess I should ask how the average price/sq. foot (aka, the bang for your bucks stat) looking lately?