Carried Away with the House

705 Carriage House Dr.

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Asking Price $3,500,876 ::: Sq-ft 5,755
Purchased Price $1,953,500 ::: Lot Size 25,157
Purchased Date 07/24/2002 ::: Beds 5
Days on Redfin 4 ::: Baths 6.5
$/Sq-ft $608 ::: Year Built 2002
20% Downpayment $700,175 ::: Area SantaAnitaOaks
Income Required $875,219/yr ::: Type SFR
Est. Payment* $17,700/month ::: MLS# W08004196

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

This beautiful property is located in the “exclusive guard-gated community of Anoakia Estates” up in the Santa Anita Oaks area. Too bad they want $3.50MM for it when they paid just $1.95MM five and a half years ago. That’s the same as making over $240k/yr after taxes except you didn’t have to do anything but maintain the property.

Purchase Price $1,953,500
Purchase Date 7/24/2002
1st Loan $1,300,000
Downpayment $653,500

HELOC Date 6/2/2005
HELOC Amt $550,000

Combined Mortgage $1,850,000

These folks actually put down a good size downpayment when they purchased the new home in 2002 for just under $2MM. Interest rates were low so 30-yr amortized monthly payments were probably manageable even for a loan of this magnitude for someone making about $400k/year. Fast forward 3 years and the banks were essentially giving out free money with artificially low rates and option loans so the owners pulled out a $550k HELOC based on the expectation of never ending double-digit growth.

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Fast forward another 3 years and their bubble finally popped. They realized that interest rates won’t stay low forever, banks aren’t giving away free money anymore and southern California real estate prices are going for a great big dip. Or perhaps their option loan HELOC rate reseted and they didn’t want to make those payments anymore. Either way, they’re looking to get out and make some good money while they’re at it.

If they get this mansion-sized asking price, they would make over $1.3MM after 6% commission. I understand certain communities, especially gated ones in the hills, normally command a slightly higher premium, but don’t you think $608/sqft is a bit extreme? Even if a move up buyer could put a whopping $700k down payment from their previous sale, they would have to make around $875k/yr and be able to make $18k/month mortgage payments (excluding property taxes, HOAs, maintenance etc). Oh yeah, and they have to prove that they actually make that much so dirty money doesn’t count.

Who’s ready and willing to put down $700k cash and take on $22k/month carrying costs for the next 30 years to own this house? Any takers?

5 thoughts on “Carried Away with the House”

  1. SBG,

    Did you see the headline of Lowest Equity since 1945?

    Hmm. This housing bubble has just started a few months back. It won’t be over for at least a few more years when the psychology starts to turn. When the pendulum swings to the opposite extreme, I’ll pick up a property or two. My guess is at least 2010.

    The latest 10K filing on Countrywide stated that 71% of its option ARM borrowers are paying the minimum. Wait till it resets the next 18 months.

  2. Yes I saw the headline and I’m not surprised. More of these record-breaking headlines are going to come over the next couple of years.

    I’ve been saying it for years, but the best time to buy is when prices have been falling (or flat) for years and everyone around you is saying that buying a house is the worst thing you can do. I agree that the correction will take years and we probably won’t see pre-crash housing prices for at least a decade or more.

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