The Matador — Johnny Cash
Watch out for the raging bull market! Like a matador, you will need to dodge the stampeding bulls as they put in multiple offers over the ask. The matador kills the bull in the end. The market will do the same. There is still a lot of bullishness in today’s market, despite the obvious signs of a catastrophic price collapse. The bullish behavior is a sign that we are nowhere near the bottom, for as many authors and songwriters have noted, “only fools rush in where angels fear to tread.”
Over the weekend, there was a brief discussion of contrarian thinking and investment. I will buy when market sentiment is very negative as will many who come to this blog. There is a huge difference in that kind of contrarian behavior and that being displayed by the knife catchers of today’s market. To believe that a market will suddenly change directions when fundamentals do not support prices and momentum is strongly downward is not contrarian thinking, it is just plain foolishness. When our housing market really does bottom out, market sentiment will be very bearish. Nobody will be drinking the kool aid and believe in rapid price appreciation and people who buy homes will be looked on as being foolish. Of course, when fundamentals of price and rent are in alignment, the purchase will not be foolish, it will be financially prudent not because of rapid appreciation but because it saves money versus renting. Right now, buyers really are foolish, but public opinion doesn’t realize this yet. Once public opinion embraces the foolishness of buying real estate, we will be near the bottom. Until then, expect to see each property that leads the market lower to attract multiple offers and enter escrow quickly. As Forrest Gump noted, “Stupid is as stupid does.”
Income Requirement: $124,750
Downpayment Needed: $99,800
Monthly Equity Burn: $4,158
Purchase Price:
$262,000
Purchase Date: 4/11/2000
Address: 94 Almador, Irvine, CA 92614
Beds: | 3 |
Baths: | 3 |
Sq. Ft.: | 1,407 |
$/Sq. Ft.: | $355 |
Lot Size: | – |
Property Type: | Condominium |
Style: | Townhouse |
Year Built: | 1989 |
Stories: | 2 Levels |
Area: | Westpark |
County: | Orange |
MLS#: | S536944 |
Source: | SoCalMLS |
Status: | Backup Offers Accepted |
On Redfin: | 10 days |
convenient location!! Near shopping, parks and Irvine award winning
schools. Highly desirable open floor plan. Custom paint. Cozy living
room fire place. Recessed lighting in all hall way areas. Hard wood
flooring throughout. Upgraded stainless steel kitchen appliances.
Oversize Master with walk in closet. Master bath features dual sinks
and overhead skylight. Move in condition! Priced below market value!
Show and sell today! MORE PHOTOS AND VIRTUAL TOUR TO BE ADDED SHORTLY!
Notice they forgot the granite when putting in the pergraniteel.
Quiet, peaceful and
convenient location!! I call BS on that one. This property is within 100 yards of the 405.
How many exclamation points can you count?
Remember when many of the properties we profiled were 100% financing deals gone bad? Those are still out there, but I have been seeing so many HELOC abuse properties lately that I can’t help but cover them. Today is another sad story of a couple who drank the kool aid and spent their house. Perhaps they will reflect on this fact while they are in their new rental…
- The property was purchased on 4/11/2000 for $262,000. They put 5% down ($13,100) and borrowed $248,900.
- On 8/1/2001 they sipped the kool aid with a $255,000 refinance.
- On 2/7/2003 they refinanced for $252,000. At this point, kool aid intoxication had not taken over.
- On 8/15/2003 they refinanced for $308,000. Yummy kool aid…
- On 12/18/2003 they opened a $20,000 HELOC.
- On 11/20/2004 they refinanced for $368,000. The kool aid was free flowing.
- On 5/3/2005 they took out a $50,000 HELOC.
- On 11/2/2006 they opened a stand-alone second for $140,000.
- On 10/4/2007 they refinanced for $545,000. That was only 8 months ago. Did they make any payments?
- The total mortgage equity withdrawal is $296,100. They only put $13,100 of their own money into the deal.
One of these days, I am going to put the cash outflows and inflows into an Excel spreadsheet and calculate the internal rate of return on their “investment.” The money was stretched out over 7 years, but the amount they got relative to the amount they invested was pretty good. Of course, their credit is trashed, but they will never again in their lives find an investment that pays like that one did. The lingering memory of all that easy money is what keeps the bulls (fools) rushing in to deals like this one.
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The crowd is waiting for the bullfight Matador
My final fight the place is packed once more
But Anita won’t throw me a rose this fight
The one she wears is not for me tonight
She’s watching now with her new love I know
Walk proud and slow
Be strong and sure give the crowd a show
They want blood you know!
You’re still their idol as you were before
Kill just one more!
Remind Anita, you’re the greatest Matador
The time has come, forget Anita in the stands
Be a tall and strong and brave and noble man
Be better than you’ve never been before
Make this your greatest moment Matador
She’s watching now with her new love I know
Walk proud and slow
Be strong and sure give the crowd a show
They want blood you know!
You’re still their idol as you were before
Kill just one more!
Remind Anita, you’re the greatest Matador
The Matador — Johnny Cash