The high end has benefited from a lack of supply and low sales volumes. With lenders proceeding with foreclosure faster, we are starting to see the inventory we have been waiting for.
Irvine Home Address ... 28 WOODS Trl Irvine, CA 92603
Resale Home Price ...... $2,049,900
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Occasionally people in Government tell the truth. Usually this is a gaffe, but the Trustee in charge of the TARP program has written a well-researched and accurate report on the miserable state of the TARP program. I am impressed.
Today's featured property is a ridiculously priced Northwood tract home. I am not impressed.
Irvine Home Address ... 2 BLUE SPRUCE Irvine, CA 92620
Resale Home Price ...... $1,249,000
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Investment Value
The United States Department of Labor Bureau of Labor Statistics measures the Rent of primary residence (rent) and Owners' equivalent rent of primary residence (rental equivalence). They make this distinction because a house has both a consumptive purpose and an investment purpose. The consumptive value is measured by rent or rental equivalence. There is legitimate financial reason to pay more than the rental equivalence price. The normal rate of house appreciation–not the unsustainable kind witnessed during the Great Housing Bubble–can provide a return on investment. The source of this added value is the leverage of mortgage financing and the hedge against inflation obtained through a fixed-rate mortgage. The investment premium, which is about 10%, is less than most people think.
The rental equivalence value is the fundamental value of real estate, and it is also its consumptive value. This value can be easily measured as demonstrated in the previous section. There is an independent investment value that can also be measured and added to the consumptive value to arrive at the maximum resale value of the property. Investment value is derived from two sources: the increase in property value through appreciation and the long-term savings over renting caused by inflation. These two components are measured separately to demonstrate how they function and how much each of them is worth.
Since the return on investment generated from residential real estate occurs in the future, a discounted cashflow analysis is required to determine the net present value of the future returns. Calculating net present value sounds complex, and manually going through the calculations is quite cumbersome, but electronic spreadsheets make this an easy task. The concept is simple: how much money would investors put in an investment today if they knew the rate of growth and the cash value to be realized in the future. For instance, if investors put $100 in a bank earning 5% interest, they would have $105 at the end of the year. Net present value looks at the situation in reverse. If investors knew they would receive $105 at the end of the year and the market interest rate was 5%, they would be willing to pay $100 for it today. Similarly, the investment value of residential real estate is the value today of an amount of money to be received in the future either through sale or savings on rent.
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This weekend's featured property is an REO where the lender failed to drop their opening bid and grossly overpaid for the property.
Irvine Home Address ... 88 STEPPING STONE Irvine, CA 92603
Resale Home Price ...... $519,800
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Today's featured property is part of a growing trend toward Trustee Sale flipping as lenders finally foreclose on many defaulting owners.
Irvine Home Address ... 73 West ARDMORE Dr Irvine, CA 92602
Resale Home Price ...... $528,000
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Congratulations to Option ARM borrowers for costing lenders more in losses than subprime borrowers! Today's featured property is one of a number of two-bedroom condos sporting a wide range in asking prices.
Irvine Home Address ... 14 WILDFLOWER Irvine, CA 92604
Resale Home Price ...... $295,000
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The Government and Federal Reserve are scheduled to remove their market props soon. Do you think it will happen on schedule?
Irvine Home Address ... 5054 ALDER Irvine, CA 92612
Resale Home Price ...... $420,000
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