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Rain, Sweet Rain

Sep 7th, 2007 by IrvineRenter 

Motley CrueYou know I'm a dreamer
But my heart's of gold
I had to run away and hide
'Cause I couldn't go home
Just when things went right
Suddenly it all went wrong
Just take this song and you'll never feel
Left all alone

I'm on my way
I'm on my way
Home, sweet home
Tonight tonight
I'm on my way
I'm on my way
Home, sweet home

Home Sweet Home -- Motley Crue

Link to Music Video

" Just when things went right, Suddenly it all went wrong" The ode to the 2005-2007 homebuyer...

There are some neighborhoods in Irvine that are so charming, you really need to go see them. This is one of those. I took many pictures here for my community profile on Irvine’s Woodbridge. The houses are small, but very well kept, and there is not a garage door to be seen. Add a white picket fence, and you have the American Dream -- except for the prices of course...

15 Sweet Rain Front15 Sweet Rain Kitchen

Asking Price: $688,888IrvineRenter

Income Requirement: $172,222

Downpayment Needed: $137,777

Purchase Price: $699,000

Purchase Date: 5/31/2006

Address: 15 Sweet Rain, Irvine, CA 92614

1st Loan $559,200
2nd Mtg. $69,900
Downpayment $69,900

Beds: 3
Baths: 2.5
Sq. Ft.: 1,571
$/Sq. Ft.: $439
Lot Size: 3,780 sq. ft.
Type: Single Family Residence
Style: Other
Year Built: 1980Rollback
Stories: Two Levels
Area: Woodbridge
County: Orange
MLS#: P585358
Status: Active
On Redfin: 69 days

From Redfin, "Outstanding Location! Inside Loop, backs to greenbelt, full driveway. Away from freeway noise, near park, pool, schools and lakes, walk to all amenities. Remodeled kitchen with hardwood cabinets, granite counter tops and mewer appliances. Updated powder room and guest bath with top of the line fixtures! Laminate wood floors, dual pane vinyl windows, French doors, textured ceilings. Custom speakers through out the house, extra storage spaces, No zero lot line (opportunity to add windows!)"

I want those mewer appliances. I hear they purr like a kitten.

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These people bought at the peak, so they are being a bit optimistic to think they are only $11,000 underwater. If they manage to obtain their full asking price, they stand to lose $51,445. They have $69,900 in equity to lose, so there is a small amount of negotiating room before this becomes a short sale, assuming they haven't HELOCed or used an Option ARM. Unfortunately, the price is too high as evidenced by the over 60 days on the market. They are probably going to become a short sale.

Inferno

William Blake - Dante's Inferno, Whirlwind of Lovers

Thus concludes yet another week at the Irvine Housing Blog. Join us next week as we continue to chronicle Irvine's journey to ‘the seventh circle of real estate hell.’


Posted in Price Rollback

Downpayment Blues

Sep 6th, 2007 by IrvineRenter 

AC/DC PowerageI know that it's evil
I know that it's got to be
I know I ain't doing much
Doing nothing means a lot to me
Living on a shoe string
A fifty cent millionaire
Open to charity
Rock 'n' roller welfare

CHORUS:
I've got holes in my shoes
And I'm way overdue
Down payment blues

Get myself a steady job
Some responsibility
Can't even feed my cat
On social security
Hiding from the rent man
Oh it makes me want to cry
Sheriff knocking on my door
Ain't it funny how the time flies

Down Payment Blues - AC/DC

Link to Music Video

Every once in a while, I come across a song that really captures the real estate bubble. How many fifty-cent millionaires out there bought homes with 100% financing so they could put the house to work for them and do nothing?

I think of all the people utilizing 50% DTIs: steady job, can't feed the cat, hiding from the rent (interest) man, Sheriff knocking on my door (REO)...

Now that the bubble has burst everyone has the downpayment blues. The horror of it. Getting a house will actually take sacrifice. The house will require an income rather than provide one. Do you think anyone will really want a house under these conditions?

3811 Claremont Front3811 Claremont Kitchen

Asking Price: $750,000IrvineRenter

Income Requirement: $187,500

Downpayment Needed: $150,000

Purchase Price: $823,000

Purchase Date: 12/26/2006

Address: 3811 Claremont St, Irvine, CA 92614

1st Loan $658,400
2nd Mtg. $164,600
Downpayment $0

Beds: 5
Baths: 2.5
Sq. Ft.: 2,586
$/Sq. Ft.: $290
Lot Size: 5,166 sq. ft.Rollback
Type: Single Family Residence
Style: Contemporary/Modern
Year Built: 1970
Stories: Two Levels
View(s): Park or Green Belt
Area: Westpark
County: Orange
MLS#: S502078
Status: Active
On Redfin: 14 days

From Redfin, "Beautiful 5 bedroom executive home in desireable West Park. Large, corner lot with highly desired floorplan. Wonderfully remodeled kitchen with silestone counters, newer cabinets and appliances; wood floors in living and dining areas; scraped ceilings are accented by crown molding and recessing lighting; Anderson windows installed throughout. Walk to parks, pool, tennis, club house and schools. Motivated sellers- Call today for private showing. submit all offers."

A well-written MLS description. Amazing. Of course, there is a misspelling (desireable) and a sentence starting with a lower case letter, but there are no unnecessary capital letters, and no exclamation points. COOL!!!

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Asking less than $300 / SF in Westpark? That is progress. When properties like this one get down under $200 / SF, we will be getting near the bottom.

Do you think these sellers really are motivated given that they have zero dollars into the transaction? Since they are selling after only 8 months ownership, I conclude this was a flip gone flop. The bank is looking at a $118,000 loss after a 6% commission.

The holders of second mortgages on properties here in California are getting wiped out. I can't say I feel bad for these lenders. Downpayments were one of the last barriers to entry into the housing market. The providers of these second mortgages were in large part responsible for allowing would be homeowners who are not responsible enough to save for a downpayment access to the housing market. This was supposed to be a good thing. However, since people with no money in the transaction don't care about defaulting, these second mortgage holders are bearing the brunt of the housing price decline. The grand experiment of increasing home ownership rates through eliminating downpayments has failed spectacularly.

Downpayments are back, and they are here to stay. The entire market has a severe case of Downpayment Blues.


Ridin’ The Storm Out

Sep 5th, 2007 by IrvineRenter 

REO SpeedwagonRidin the storm out, waitin for the thaw out
On a full moon night in the rocky mountain winter.
My wine bottles low, watching for the snow
Ive been thinking lately of what I'm missing in the city.

Ridin' The Storm Out -- REO Speedwagon

Link to Music Video

Have you been feeling like we on this blog are Ridin' The Storm Out? I do. Does anyone remember the final scene in Terminator? Sarah Conner is told by a gas station attendant that a storm is coming. She responds, "I know" with a deep reflective look of someone who has seen the future Armageddon. Can you relate?

We have broken an important psychological level for pricing in Quail Hill. Today's property is a bank REO that went for under $500,000 a few months ago. It is back on the market now, and the bank isn't even trying to get above the $500,000 mark.

212 Dewdrop Front 212 Dewdrop Kitchen

Asking Price: $499,000IrvineRenter

Bank Purchase Price: $477,000

Bank Purchase Date: 6/8/2007

FB Purchase Price: $551,000

FB Purchase Date: 6/30/2005

Address: 212 Dewdrop, Irvine, CA 92603

Beds: 2REO
Baths: 2.5
Sq. Ft.: 1,200
$/Sq. Ft.: $417
Lot Size: -
Type: Condominium
Style: Contemporary
Year Built: 2004
Stories: Two Levels
Area: Quail Hill
County: Orange
MLS#: S502633
Status: Active
On Redfin: 7 days

From Redfin, "BANK OWNED !!! Stunning 2 story Townhome with lots of top notch upgrades. Quiet interior street, large living room, dining room, guest bath downstairs, courtyard patio entrance, 2 car attached garage. Walk to Park, Playground and Shopping. Resort living !!"

Is being BANK OWNED something to get excited about? I guess it is worth ALL CAPS and three exclamation points!!!

What are top-notch upgrades? Are there bottom-rung upgrades?

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Bear with me on this conjecture, but based on the REO purchase price, I am guessing this was an Option ARM that exploded. The primary mortgage should have been 80% of the original purchase price or $440,800. If the bank was willing to bid $477,000 at a foreclosure auction, this likely represents the outstanding balance on the first mortgage. Only an negative amortization loan with a low teaser rate would grow by $36,200 over two years.

Negative Amortization loans -- great innovation... Not.

Judging by the description, there is a realtor involved in this transaction. If the bank gets their asking price, and if they pay a 6% commission, they stand to lose $81,940. Although when you think of the other costs involved with the foreclosure, the real loss was likely much higher.

BTW, Do you like our new REO symbol?


Posted in Real Estate Owned

Summer Breeze

Sep 4th, 2007 by IrvineRenter 

Summer BreezeSee the curtains hanging in the window
In the evening on a Friday night
A little light a-shining through the window
Lets me know every thing's all right

Summer breeze, makes me feel fine
Blowing through the jasmine in my mind
Summer breeze, makes me feel fine
Blowing through the jasmine in my mind

Summer Breeze -- Seals and Crofts

Link to Live Performance Video

Link to Studio Version

This property was previously featured in June: Woodbridge Knife-Catchers.

A reader has been watching this property and has emailed me with some juicy details I want to share with you today.

17 Seawind Front17 Seawind Kitchen

IrvineRenterOld Asking Price: $599,900

New Asking Price: $549,000

Purchase Price: $490,100

Purchase Date: 4/30/2007

Address: 17 Seawind, Irvine, CA 92604

Beds: 2
Baths: 2
Sq. Ft.: 1,058Knife Catcher Award
Year Built: 1984
Stories: 1
Type: Condominium
County: Orange
Neighborhood: Woodbridge
$/Sq. Ft.: $519
MLS#: P594916
Status: Active on market
On Redfin: 15 days

From Redfin, “Beautifully upgraded home in Woodbridge near the lake. Highly upgraded with hardwood floor thru entire house, tile floor in the bathroom, granite counter top, crown & base moulding, just painted, private spa in the backyard. Walk to lake, park, and lots lots more!!”

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This unit does not see the lake, it isn’t on a park, it doesn't even have a yard, it is a nondescript, tiny tract home in the middle of Woodbridge — for sale in a declining market. WTF?

WTFWell, this unit was purchased by a realtor. Perhaps business is slow this year? Not long after she put this unit on the market for $599,900, a comparable property at 29 Whitecloud came on the market for $599,000. This unit is 30% larger than 17 Seawind, and it is overpriced as well. Not daunted by the competition, our kool aid addicted realtor actually raised her price to $605,000. WTF?

When both properties languished on the market, the owner of 29 Whitehead lowered their price to the current $569,000. So how does our realtor/flipper/knife-catcher respond? She raises the price to $610,000. WTF?

Well, as you might imagine, neither property sold and they were pulled from the market in order to reset the "days on market" number. Now they are both back for sale, and they are both still overpriced.

At least this realtor has something to do. She can sit in her homedebtor's prison each weekend running an open house. Perhaps she finds some leads on some other overpriced stucco boxes she can fail to sell?


Posted in House Flips

Honey, I Lost the House

Sep 3rd, 2007 by IrvineRenter 

Bitter Reality

Since it is a holiday, I thought we could try something a little different.

When I first saw the cartoon above, I could imagine the final scene played out in millions of households across America as the bubble deflates. At some point, it will become painfully evident to each family that they are about to lose their home. It will not be a happy moment.

How do you feel about that? Sad, mad, glad?


Posted in News

Home Sales Data thru 8-27-2007

Sep 2nd, 2007 by IrvineRenter 

Median sale price

Sales volume

ZIP

code

Prev. 4 weeks

% change

from 06

Prev. 4 weeks

% change

from ’06

92602

$850,000

10.4%

19

-38.7%

92603

$865,000

-17.6%

32

-5.9%

92604

$630,000

-3.8%

24

20.0%

92606

$727,500

-3.0%

20

-4.8%

92612

$685,000

3.4%

43

79.2%

92614

$531,000

-11.5%

11

-62.1%

92618

$590,000

-3.7%

22

22.2%

92620

$750,000

-9.0%

58

-1.7%


Posted in News

Flipper is a Whale ** Update 1 **

Sep 1st, 2007 by IrvineRenter 

Originally posted March 22, 2007.

He's back. The same house; the same price. Still no chance...

Mahogany FrontMahogany Kitchen

Asking Price: $2,299,500

Purchase Price: $2,050,000
Purchase Date: 5/23/2006

Address: 29 Mahogany Drive, Irvine, CA 92620

Beds: 7IrvineRenter
Baths: 6.5
Sq. Ft.*: 4,200
Lot Sq. Ft.*: 12,000
Year Built: 1996
Stories: 2
Neighborhood: Northwood
$/Sq. Ft.*: $548
MLS: S478955
Status: Active on market
On Redfin: 6 days

Redfin, Zillow

Does anybody remember the TV show about the dolphin Flipper? In the world of sea mammals, whales are bigger than dolphins, and in the parlance of Las Vegas, Whales are the biggest of the high rollers. The flipper of this property is a whale. Who else would try to flip a $2,050,000 property? Assuming a 6% sales commission, if he gets his $2,299,500 asking price, he will make a profit of $111,530. Not bad for simply owing real estate for 10 months. Isn't 15% "in the bag?" This guy isn't greedy, he is only looking for 10% or about 1% a month. Unfortunately, the market seems to have moved the other direction at about the same speed.

Our whale may have some difficulty with this one. He bought right at the peak, and Zillow thinks his property is only worth $1,756,674. Not good if you are trying to convince someone you need to get $550,000 more than that. What does Zillow know anyway? Tract homes in Irvine should be going for over $2,000,000. It's the new paradigm.

.Flipper

They call him Flipper, Flipper, faster than lightning,
No-one you see, is smarter than he,
And we know Flipper, lives in a world full of wonder,
Flying there-under, under the sea!


Posted in House Flips
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