The damage is done You've had all your fun The party's begun The enemy has won
One phenomenon of the Great Housing Bubble we have not talked much about is the collapse of all the real estate empires. Many people who really got caught up in the bubble rally bought multiple properties. Why wouldn't they? If one property can throw off enough income to support a family, why not buy two or three of them?
One of the statistics about the housing bubble that always astonished me was how much prices went up relative to incomes. From 2001-2005, a period of 5 consecutive years, the median house prices went up an amount equal to the median income each year. According to DataQuick, in 2001 the median was approximately $335,000, and in 2006, the median peaked at $723,000. This was a $388,000 increase in the median income in 5 years. That averages to almost $78,000 a year. The median household income ranged from $72,000 to $84,000 during the same period. Any homeowner who was unemployed from 2001-2005 had a house making the median income for the area. With mortgage equity withdrawal, the appreciation could be converted to income, and a typical homeowner could live as if their home was another breadwinner. In fact, this was better than making the median income because there is no income tax withholdings on mortgage equity withdrawal. On an after-tax basis, the house was earning $110,000 gross. No wonder home ownership was in such high demand. Where do I sign up for my free income?
As one might expect, people were signing on to get as much of this free money as possible. Today's featured property is one of two houses previously owned by the same couple. They put no money down, extracted as much appreciation income as possible, and then let the properties go into foreclosure when prices quit going up. It is a classic example of predatory borrowing.
Well you know I dont get off on workin day after day I wanna have some fun while Im here I play the game when its goin my way And theres nothin like a party when its kickin into gear
As some of you may have noticed, we are planning another IHB party on January 7, from 6:30 - 10:00 at JT Schmids at the District. Everyone had a great time at the last gathering in November, and we hope to make these gatherings a regular occurrence. I will have books available if anyone is interested.
Baby, its a party as long as youre there Its a party, party, party!
The IHB has grown into a large community and a successful website. It happened by accident rather than by design. Zovall wanted a successful website. I just wanted to write. Neither of us had a grand vision for creating a website visited by over 3000 people a day (well, perhaps Zovall did...) It is funny how things kind of "just happen." The Irvine Housing Blog has a page rank of between 4 and 6 (the rankings are somewhat volatile), and an Alexa rating of around 50,000 (this puts us in the top 50,000 viewed websites on the internet).
I did not have a full appreciation of what we accomplished until I started to market the book. I have been exploring all the methods of internet promotion people use to peddle their products and promote themselves. Just getting a hundred people a day to visit a website is a difficult task, and some people (including myself) resort to paying for the traffic.
One of the more interesting methods of generating publicity I came across is article marketing. I did not realize there was this whole world of consultants and guru wannabes writing little articles being posted all over the web. One of the most popular of these sites is EzineArticles.com. It is one of the top 250 websites according to Alexa. It is full of articles written by people trying to direct traffic back to their websites. It is fascinating to explore just to see who these people are and what they are trying to accomplish.
Anyway, I got into the act myself. Since I already had 90,000 words put together for a book, and two years worth of blog posts to draw from, it was relatively easy to chunk almost 200 short articles to publish on these article websites. I hope tp accomplish two things: 1. Drive traffic to the Great Housing Bubble book sales site without paying for it, and find new readers for the IHB. If this marketing campaign is successful, we may see some new faces in the comments. I suspect many of these people will be real estate trolls. Most of the real estate articles on these article marketing websites are realtors trying to generate internet business. Needless to say, my point of view on the real estate market will stand in contrast to most of the articles these directories have posted. It will be interesting to see if any of these people follow the trail of breadcrumbs back to the IHB.
Below the fold is a list of all the little articles I wrote to distribute on these sites. These will go out to the rest of the article marketing websites over the next 6 months. I have them scheduled to go out one per day until they are all distributed.
Does anyone have any real estate news they would like to share?
Dr. Housing Bubble has done a great series on ridiculously overpriced properties that are so awful that one has to wonder WTF the buyers were thinking. He titled these posts Real Homes of Genius. It is a great series because the images and the prices hit you on a guttural level. Intuitively, you just know something is wrong. It doesn't require any intellectual analysis of comparative rents or anything else to immediately realize these properties are ridiculously overpriced. If there was ever an undeniable proof of the housing bubble, it was properties like these.
We don't have many Real Homes of Genius in Irvine, although today's featured property is about as close as we get. Someone has managed to fit 4 bedrooms into 1,230 SF adjacent to I-5. There is nothing desirable about this property, and the huge price reductions are showing this truth.
From all of us at the Irvine Housing Blog, we want to wish all of you happy holidays.
So this is Christmas And what have you done Another year over And a new one just begun Ans so this is Christmas I hope you have fun The near and the dear one The old and the young
A very merry Christmas And a happy New Year Let's hope it's a good one Without any fear And so this is Christmas For weak and for strong For rich and the poor ones The world is so wrong And so happy Christmas For black and for white For yellow and red ones Let's stop all the fight A very merry Christmas And a happy New Year Let's hope it's a good one Without any fear
For those of you taking a break from your Christmas activities to surf the web, I thought I would share with you a listing with a few strange listing photos.
One of the best plan 2 in Centennial Tract by California Pacific Homes
to come on the market. A True Turnkey 4 Bedroom charmer! Relocation
forces this Pride of Ownership to come on the market. Located in one of
the premium inside street on an oversized lot. Entertainer's delight
backyard w/extensive stamped concrete & matured tropical trees.
This desirable and popular floorplan features: Formal Living &
Dining Room, a separate Family Room w/cozy stone fireplace adjacent to
family kitchen. Hardwood Floors throughout downstairs, designer custom
paint, custom baseboards, upgraded recessed lightings, extra storage
under the stair case & ceiling fans in all bedrooms. Private Gated
Community with own private central park, Sport Court, Jr. Olympic Pool
& Tot Lot & Family Oriented activities. Centrally located in
the #1 Safest City of Irvine, close to Fwys, award winning schools
& awesome shops. Don't miss this one!
How many times must a man look up Before he can see the sky?
How many days must a property be on the market before an owner realizes he has priced it too high? Usually after 60-90 days a realtor will sit down with an owner and have the "your property is overpriced" discussion. What discussion do you have after 180 days? or 1 year? And what discussion do you have after 1000 days?
I have never seen a property stay on the market for over 1000 days. It is pretty rare to see one on the market for over a year. Are there people out there who just list their house for a vanity price and keep it perpetually for sale? I suppose you see some of that on Zillow with the "make me move" listings, but it isn't common on the MLS. Is there a limit to how long a property can be for sale?
How many years can a mountain exist Before its washed to the sea?
Today's featured property has been profiled before. Back on May 25, 2007, this property had already been on the market for 437 days. I would see it now and again when scanning for properties on Redfin, and I was always amazed that it was still on the market.
Fill my eyes with that double vision No disguise for that double vision
What is the premium for a detached product? There certainly is one. I would pay more for a similar product that does not have a shared wall, and so would most buyers. You have a greater sense of privacy with a detached unit, there is less noise, and there is something about being able to clearly identify a specific object as
"mine," that you cannot obtain from an attached condo. Intellectually,
you might know there are property lines at the walls, but when you look
at an attached condo, you see one massive building you only own a part
of. It is not as emotionally satisfying. The question is how much is this premium?
Someone could probably do a study of the property records and come up with some aggregate estimate. I imagine it would be something like 10%-20%, but I have no data. An internet search brings up a number of studies in the UK housing market, but I found nothing referencing the United States. Whatever the actual number is, I suspect it is far less than 100%. Today we have two featured properties in Westpark. One is a 2/2 attached short sale being offered for $299,900, and the other is a 2/2 detached being offered for $599,999. Do you think the seller of this second property has any chance of selling it? I don't.
