535,000 Ways to Lose Your House
Fifty Ways to Leave Your Lover -- Paul Simon
There are many ways people lose their houses. Borrowing two and one-half times what you paid for it is one method unique to the Great Housing Bubble. Perhaps I am just naive, or perhaps it is because I had never lived in a bubble market prior to moving to California, buy I had never heard of mortgage equity withdrawal for anything other than necessary home repairs and improvements. The whole idea that one could or would add to a mortgage to pay off other debts, buy consumer goods, take vacations or supplement one's lifestyle is an alien concept. In fact, I did not realize how common this behavior was until I started studying what went on during the bubble. I am still astonished every time I see a property like today's.
Asking Price: $535,000
Income Requirement: $133,750
Downpayment Needed: $107,000
Monthly Equity Burn: $4,458
Purchase Price: $195,000
Purchase Date: 8/15/1988
Address: 7 Skipper, Irvine, CA 92604
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,000 |
| $/Sq. Ft.: | $268 |
| Lot Size: | 2,720 Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Contemporary |
| Year Built: | 1976 |
| Stories: | 2 Levels |
| Area: | El Camino Real |
| County: | Orange |
| MLS#: | S531617 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 92 days |
 Unsold in 90+ days |
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When I first saw this property, I was prepared to write a post on how owners with a great deal of equity are in a position to drive prices lower because there is nothing stopping them from lowering prices to find the market. Since this owner has lowered his asking price $90,000 since May, he has been behaving like an owner with a lot of room to maneuver. Little did I know...
Listing Price History
| Date | Price |
| May 07, 2008 | $625,000 |
| Jun 12, 2008 | $598,000 |
| Jul 09, 2008 | $575,000 |
| Aug 06, 2008 | $535,000 |
This property was purchased during the frenzy of the late 1980s. The owners paid $13,000 more than a flipper paid 8 months earlier. The property records do not show the amount of the original loan; however, it does show a refinance in 1998 for $180,800 which was probably when the values came back enough for the owners to refinance their original loan. In 2002, they refinanced with a $195,000 first mortgage and got their first taste of kool aid. It must have been good. A couple of weeks later they opened a $50,000 HELOC. They were relatively conservative borrowers until May of 2005 when they took out a $381,700 first and a $185,000 HELOC pulling out some serious cash. In December of 2005 they took out an Option ARM with a $552,000 balance. It had a 2.75% teaser rate. They also took out a $68,000 HELOC. The total debt on this property is $590,000 -- which explains their initial asking price. The total mortgage equity withdrawal exceeds $395,000.
Another day, another Option ARM/HELOC implosion.
I hope you have enjoyed this week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
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The problem is all inside your head, she said to me
The answer is easy if you take it logically
Id like to help you in your struggle to be free
There must be fifty ways to leave your lover
She said its really not my habit to intrude
Furthermore, I hope my meaning wont be lost or misconstrued
But Ill repeat myself at the risk of being crude
There must be fifty ways to leave your lover
Fifty ways to leave your lover
Just slip out the back, jack
Make a new plan, stan
You dont need to be coy, roy
Just get yourself free
Hop on the bus, gus
You dont need to discuss much
Just drop off the key, lee
And get yourself free
She said it grieves me so to see you in such pain
I wish there was something I could do to make you smile again
I said I appreciate that and would you please explain
About the fifty ways
She said why dont we both just sleep on it tonight
And I believe in the morning youll begin to see the light
And then she kissed me and I realized she probably was right
There must be fifty ways to leave your lover
Fifty ways to leave your lover
Fifty Ways to Leave Your Lover -- Paul Simon
