Sunday, October 10, 2010
Sales crazy at Palermo
Positively Palermo reported earlier that since June, buyers from Canada have snatched up at least four or five residences here. But that's only part of the story. By our count, at least 11 condos have been sold in the past 90 days, are in escrow, have offers in short sale transactions, or one case may have been taken off the market for rental. Two other condos also appear to be in the sales process, but it's unclear. Our real estate sources report that numerous sales have been all cash and some units have been sold after only brief listings in the MLS. They also report that the condition of the unit, its location in the complex, size of the private back yard and whether there's a spa are beginning to be factors, rather than just price. Right now, there's not much left. The two-bedroom A model unit at 3533 Penny Lane, near Enterprise Way, was just listed. The status of the two-bedroom D model at 210 Enterprise is unclear, as it was posted as a foreclosure but apparently hasn't been listed for sale on the Internet for more than a year. Miss Penny Lane says: The rest of the world is waking up to the fact that, despite the problems with our management company, we live in the best community in Palm Springs.
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This is somewhat mixed news for homeowners seeking to increase home values and subsequently equity. The "all cash" buy at 3563 Penny Lane is a case in point. The property was listed for an already disappointing price of $186,000--even for a foreclosure that's low for this development. But a cash buyer swooped-up the property for $168,000--and it has a spool (spa + pool). So glad we'll have neighbors, but gee, such action does not really help the cause. Cash buys only further depress prices.
It's great news that these are being sold. Period. The high number of all cash sales - which may or may not depress the sales price - doesn't bother me at all. In fact, the high number of all cash sales is a big endorsement of the community - people are putting their own hard-earned money down, instead of tricky loan deals or putting hardly anything down. It's an investment in the community. Great. We need more of these individuals instead of the flippers who has no concern about the community.
The logic that someone gets a loan they can't afford or can't keep up, so that bad loan inflates the sales price, is somehow a good thing for the community is all the wrong kind of thinking. It's what got the us into this economic mess in the first place.
VPM has rented to new people on Melody and Sandy who are illegally parking, right off the bat. Were they told the rules? The police had to be called on the new Sandy Point tenants for loud noise. Village Property Management, please respond.
There is no question that cash buys at extremely discounted prices, depress values. These are the "comps" real estate agents and buyers use to make offers. Just because a person pays cash, doesn't mean they WON'T flip the property. This is especially true of an international buyer. They have no particular allegiance to Palermo or any other development in the U.S.. They are taking advantage of an opportunity. Whether they choose to keep or sell remains to be seen. If you were an international buyer who paid cash and could make 40K overnight in a flip, what would you do?
..."numerous cash sales" is slight hyperbole. There have been 4 cash sales: 3697 Quiet Side: $148K; 235 Sandy Point: $162K; 3563 Penny Lane: $168K; 248 Sandy Point: $169K--all international buyers. And note the similarity in cost for 3 homes. The damage to values is done. These cash transactions now form the pricing basis as "comparables" for future sales.
So, let's pray that all these cash buyers DO flip, take the cash and run. That way, values/prices will FINALLY rise at Palermo....along with...well, you know...our spirits!
With all due respect and concern for buyers who purchased their Palermo homes in 2007, 2008--we now know those prices were artificially inflated. Actually, what we're seeing now in terms of pricing is more realistic and affordable. Inflated or not, folks who can afford their mortgages and love their homes, probably need not anguish over this. However, if the LTV (loan-to-value) on your home is really out of whack, then working with your lender to modify the loan truly makes sense and is worth a try. It is going to be a very long time before values rise to the dizzingly, disastrous heights of '07-'08!
Four all cash sales sounds like a lot to me!!!!! The 11:42 p.m. post is wrongly leaving out the other sales, which also will form the "comparables" - namely one that went for $235,000 this month. It doesn't matter long term anyhow because the real test will be when non-distressed sales come online - homeowners just selling, not through short sales or foreclosures.
I think we've hit bottom. There was a bidding war on one unit, and then the second bidder pulled out.
I say anyone who puts all cash down is WELCOME. - an investment in Palermo. The so-called comparables only matter if you are trying to sell right now, so no big deal for those into it for the long haul. Better to get these foreclosed units snapped up with good, solid buyers with resources. And speaking of the long haul, we need some people with that mind set on the HOA board, not just non-resident investors who are using up our reserves.
Comps matter to both buyers and sellers. Appraisers determine the market value of a home for the lender based on comps which do affect BOTH buyers and sellers. Short sales, foreclosures& REOs, are included in the pool of comps appraisers use to determine market value for both buyers and sellers. As both an investment and a home, market value ALWAYS matters, whether or not you think about it in those terms or not and whether or not you are selling today or tomorrow. Otherwise, what would be the difference between renting and owning. If by owning, no value/equity is ever accrued or if it remains depressed for a long period time, where is the investment value. And with congress eyeing the mortgage interest deduction, i.e., eliminating it, owning residential real estate becomes an even less attractive asset.
There are aspects to owning that go beyond the value/appreciation/equity--money. However, there are apparently thousands of folks who do not feel those aspects of owning (intangibles such as pride of ownership, etc.) trump the money. Thousands of foreclosures, short sales, & REOs (some right here at Palermo), were people who "walked." They could afford to pay the mortgage, but to them the declining value of their home had placed them so far under the cost and pricing of their mortgage that they were losing money with every mortgage payment. Morally, some folks think this is not right. Others justify "walking" on a mortgage, or simply "handing over the keys to the bank" is justified given that values were artificially inflated. These folks were not duped into getting mortgages they could not afford--they have simply determined that the declining value of owning, is NOT a good investment for them at this time. Value matters more to some than others--apparently, a lot more!
There's so much interest in Palermo right now. Some renters now are looking to buy as well. People willing to put down all cash is a great sign of the long-term health of the community. I'd take some lower comps for now instead of an HOA board that seems to be made of investors who'd leave if they could get their investments back and are using up reserves rather than think long term. We have a three member board (when there should be five) and they are refusing to appoint any permanent home owners to the board as they use up reserves. This situation is a problem and the long-term owners must act.
The Group of 3 (HOA board) are investors who aren't thinking for the long view? Interesting. So they are eating reserves and not worrying about the long range finances? Why? Because the bank account later on don't matter? Why do they not put a full time homeowner on board? Scary.
I've met several of the new home owners that have purchased homes and moved in or are in the process of moving in and they are friendly and responsible people that we should all welcome to our community. So nice to see these wonderful vacant homes filing up with good neighbours.
To "Hi Neighbor," I agree 100 percent. Th new people moving in are wonderful. Palermo is getting better and better with each foreclosure and short sale that goes through. One sticking point still is how Michael Heath at VIllage Property Management is renting out some units. The new renters on Sandy Point had the police called for jam session and are parking in the street. Another new brand renter on the west side of Melody is parking their big vehicle sticking out into the street, and they've put out ugly planters in violation of the rules. Heath says he goes over ALL this stuff with his renters.
Re: Troubling renters--Go to the source. If renters managed by VPM are unruly and not obeying the HOA conditions, contact Michael Health directly. Every renter receives from VPM a packet of documents which includes the HOA CC&Rs and a separate sheet detailing the rules for parking.
Do we have a written document of the HOA rules? Most condo associations have a one or two page document covering all the basics...trash pick up, dumpster rules, outside plants, double parking, noise, guests, etc. It's a great little item to have so no one can say they didn't know the rules. Heres' another question: If a renter is caught in the act, i.e., leaving an old soiled couch by the dumpster when moving out, can the HOA have Michael Heath deduct the cost from the the renter's security deposit and reimburse the HOA for the removal? Sarah
I think its a disgrace how for so long out of 5 board seats, 2 were shady Enterprise and 3 were investers that are not even Palm Springs residents much less Palermo residents. Now we are down to 2 HOA members wo do not reside in Palermo, and one management company not based in Palm Springs. As VPM has renters sign off on the rules, then why are renters immediately violating the rules and it goes on month after month, ad nauseum?? MH lives here and can see who does what. So frustrating...
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