Thanks for all of your e-mails and tweets and comments about last week’s follow-up story on our Staggering Swindle investigation. A few good questions have come in, too, and I’ll take a stab at answering them in a few blog posts.
Some of you were stunned at this line about Sommerset Villas, one of the Escondido complexes:
The 26 units previously owned by McConville’s straw buyers that have resold as foreclosures have sold, on average, for 71 percent less than the purchase prices in 2008. And some have been worse: A 480-square-foot studio apartment that sold for $265,000 in 2008 sold in October for $47,000 — an 82 percent drop.
A couple of readers e-mailed me to ask if there’s anything unusual about that, or if that’s just how much condos have dropped in price in Escondido.
Great question.
Between 2008 and 2009, resale condos dropped about 17.5 percent in price in 92026, the ZIP where the two Sommerset projects are, according to real estate statistics tracker MDA DataQuick. The median price paid for a condo dropped by 16 percent in the San Marcos ZIP code where Westlake Ranch is located.
So the drop has been more pronounced at the units tied up in the scam. Here’s how they’ve fared, on average, broken down by complex:
Sommerset Villas: 71 percent drop
Sommerset Woods: 57 percent drop
Westlake Ranch: 61 percent drop
Why are the drops be so much more pronounced than the rest of the market?
Remember, the prices McConville’s buyers paid in 2008 had sales prices that were much higher than market to begin with. Here’s a bit about that from our investigation’s Part One:
On July 3, 2008, Norman Johnson became the owner of two condos in Westlake Ranch for $375,000 each. Both were 931 square feet with two bedrooms. A resale condo the same size in the same project sold a few weeks earlier for less than half that price — $180,000.
It’s not unusual for a new unit to sell for more than a resale condo. But especially in last year’s market, there’s no logical explanation for a $200,000 difference, said Roger Lopez, a local real estate appraiser.
— KELLY BENNETT