Irvine Housing Blog

Irvine’s The Ranch

Another Irvine village which is not widely known is The Ranch.

The Ranch is bounded by Yale Avenue, Irvine Center Drive, Jeffrey Road and the railroad tracks. It is north or Woodbridge and East of Deerfield. The communities of Windwood, Deerfield and The Ranch form a gradient of decreasing housing densities and increasing house sizes. With the exception of the condominium complex of Smoketree, the Ranch is almost exclusively large, single-family detached housing.

There is a mixture of one and two story houses. This one is your typical "American Dream" home with a white picket fence.

The main entry off of Irvine Center Drive features an attractive greenspace park.

There are not many parks or amenities in The Ranch. The main greenspace features of the community are the preserved windrows which have been used to link the various neighborhoods together with the central park and recreation space.

The preserved hedgerows gave the community instant maturity.

The pathways are attractive and inviting.

These are large, mature eucalyptus trees.

All the greenspace corridors lead to the central park area.

The greenspace is large, but it is not used for formal sports activities.

.

.

There is another park on the east side of The Ranch separating it from Smoketree.

There is another children's tot lot.

Between the houses and the railroad tracks is a wide buffer for power lines which is used as a bike trail.

This sets the homes a considerable distance away from the railroad tracks.

Large houses are common in The Ranch. Perhaps not this large...

The houses all display pride in ownership.

There is a variety of architectural styles.

I liked this one with its boulder landscaping.

The wide lots permit houses with elevations wide enough not to be dominated by a three car garage.

The Ranch is a perfect village for a homeowner who wants a large home on a large lot with minimal park facilities and a no mello roos or HOA fee. This neighborhood is atypical for Irvine in that regard.

Irvine's The Ranch: a great place to live.
.

.

Foreclosures Lower Prices

Asking Price: $599,000

Purchase Price: $760,000

Purchase Date: 6/23/2006

Address: 131 Talmadge, Irvine, CA 92602

Beds: 3
Baths: 2
Sq. Ft.: 1,752
Year Built: 2003
Stories: 2
Type: Condominium
County: Orange
Neighborhood: Northpark
$/Sq. Ft.: $342
MLS#: U7002421
Status: Active on market
On Redfin: 4 days

From Redfin, "OUTSTANDING ASSOCIATION WITH A GUARD GATED COMMUNITY! IN THE HEART OF NORTH PARK IN THE MOST SOUGHT AFTER CITY OF IRVINE. THIS HOME FEATURES THREE BEDROOMS AND TWO BATHROOMS, ASSOCIATION POOL AND SPA. OUTSTANDING SCHOOLS AND PARKS. CLOSE TO TRANSPORTATION, SHOPPING, ENTERTAINMENT. .. THIS HOME IS IN THE TUSTIN UNIFIED SCHOOL DILSTRICT. HOME IS BEING SOLD 'AS-IS' AND 'WHERE-IS' WITHOUT WARRANTY. "

.

.

You have to love properties like this one. A flipper who timed the market top perfectly walked away from this nightmare and left the bank holding the bag.

In our analysis posts, we discussed the theoretical possibility (probability) of foreclosures leading to lower prices. We haven't seen much of it to date to demonstrate how it works. Here it is.

In the past, a property like this one would have sold in a day at above asking price. There would have been no negative impact to the neighborhood comps. Right now in the markets, there are few buyers, and those who are buying are putting in cautious bids. There will probably be no bidding war for this property. This transaction will be very telling of where the market is today, and where it is heading.

It still takes some form of exotic financing to buy this property. I doubt many families with a $171,000 annual income with an $85,000 downpayment are rushing out to buy this place. Somebody making $85,000 a year utilizing a huge DTI ratio will take out a 10 year I/O, buy this place, and spend the next 10 years underwater eating Ramen Noodles.

However it goes down, this will be a comp killer. All those sellers holding on to a breakeven wishing price just got clobbered. As each distressed homeowner succumbs to the terms of their exotic mortgage, they become another foreclosure. Each foreclosure reinforces the previous low comp and drives a dagger into the hopes of other neighborhood sellers.

This is how it happens: one foreclosure at a time.
.

.
I would like to say a special thank you to Purplehaze for tipping me off to this property.

Edington Terrace Trifecta

We have a first today: a property that is a flip, a knife-catcher and a WTF award winner -- the kind of property that really makes this hobby fun.

Asking Price: $1,890,000

Purchase Price: $1,485,000

Purchase Date: 2/27/2007

Address: 18991 Edington Terrace, Irvine, CA 92603

Bedrooms: 4
Full Baths: 2
Partial Baths: 1
Square Feet: 2,831
Lot Size: 9,000 Sq. Ft.
Year Built: 1970
Listing Date: 06/09/07
On Market: 2 days
Type: SFR
Status: ACTIVE
MLS #: P582554

1st Loan $1,000,000.00
2nd Mtg. $250,000
Lender -- Americas Wholesale Lender

From ZipRealty, "'spectacular view of city lights and mountains'. This hard to find turtle rock terrace home has 4 bedrooms, 2.5 baths all on one level. This is the model 70 presidential home. Enjoy the city lighs view from the master bedroom, living room & family room. This house is at the end of a single loaded street with only 6 houses. As an additional bonus, take the pull down ladder to the attic and view all the storage space. This house is ready for you to put your own creative touch on it."

.

.

Lets take a look at the rest of this home:

So here we have a house built in 1970, and it hasn't been updated since then -- unless perhaps the white tile kitchen was an 80's update. How about the exposed white brick living room, or the paneling and yellow carpet upstairs. This property is a joke.

I will give these sellers credit for having enough sense to recognize this when they said in the description, "This house is ready for you to put your own creative touch on it." In other words, you have to do the renovation. So what have these people done to warrant the $405,000 price increase? Are they such savvy buyers that they purchased this property that far under market? These people paid $524 per square foot, and they are asking $667/SF for the property. This is insane!

I have to admire the delusional thinking. They put $235,000 of their own money into this transaction, and they plan to walk away with $640,000 after six months. That is a great internal rate of return (near 600%). It certainly would be better than 5% at the bank. Of course, I think they will be lucky to get out before this becomes a short sale, but only time will tell.

So what about the comps? We happen to have a great comparable property:

Price: $1,498,000

19041 GLENMONT TER
Irvine, CA 92603
Beds: 4
Baths: 2.5
Sq. Ft.: 2,605
Lot Sq. Ft.: 8,670
Year Built: 1971
Stories: 1
Type: Single Family Residence
View: City Lights, Peek-A-Boo, Trees/Woods, Other
County: Orange
Neighborhood: Turtle Rock
$/Sq. Ft.: $575
MLS#: S483106
Status: Active on market
On Redfin: 61 days

From Redfin, "Elegant & Sophisticated Style! Det. Single Level on Oversized Corner L ot, Popular Plan 60 w/ a Gourmet's Dream Kitchen, All new Stainless Appliances, Custom Cabinets & Granite Counters. Extensive Upgrades incl. new Tile flooring, new Dual-Paned Vinyl Windows & Doors, new Roof-Furnace-AC, Upgraded Electrical systems, Custom Fireplace Mantle, Remodeled Powder Room, All new Shower-Tubs w/ Intricate Tile Inlays & More! Pool sized yard w/ view offers total privacy. Quiet, single loaded cul-de-sac street."
.

.
Does the front elevation look familiar? These houses are nearly identical, and they are so close together than the Edington Terrace house actually looks over the roof of the Glenmont Terrace house. Is the view worth $400,000 extra (plus renovation costs)? In my opinion, the Glenmont Terrace house is overpriced as well (it is priced $200,000 over its 2005 purchase price), but as a comparable, it clearly establishes Edington Terrace is in WTF territory.

Turtle Rock appears to be the last bastion of kool-aid drinkin' maniacs. When I look around at listings, most are priced in the $500/SF range. There are a few over $600/SF, and they have been on the market for a long time. There is nothing I can see to justify the price this flipper paid much less the $405,000 extra they want for the property. I am dumbfounded, and being so means they have truly earned today's WTF award.

.

I would like to express a special thanks to JoonB for alerting me to this property.

Deodar of Destruction

Asking Price: $380,000

Purchase Price: $515,000

Purchase Date: 10/12/2006

Address: 23 Deodar, Irvine, CA 92604

Beds: 2
Baths: 2
Sq. Ft.: 1,000
Lot Sq. Ft.: 2,800
Year Built: 1976

Stories: 1
Type: Condominium
County: Orange
Neighborhood: El Camino Real

$/Sq. Ft.: $380
MLS#: S485757
Status: Active on market
On Redfin: 40 days

From Redfin, "Single story home in a corner lot overlooking a huge greenbelt. Beautifully remodeled throughout. This is an as is short sale."

.

.

This short sale price will probably not be approved by the lender as it is too far outside of their loss limitation guidelines. It is probably priced this low to entice bids in order to give the bank an idea of where the market will be after they take the property back in foreclosure. The bank will lose money, but they will follow their guidelines for loss mitigation which will not permit a 30% haircut after a little over 7 months.

In my opinion the real story here is probably in the sale history:

Sales History
Date Price
10/12/2006 $515,000
10/27/2005 $465,000
08/01/2000 $218,000

It appears to me the buyer on 10/12/2006 was a straw buyer bailing out the 10/27/2005 buyer. The $515,000 sales price, after a 6% commission, would net this seller $20,000 -- enough for a payment to a straw buyer and/or the person who arranged the sale. This is pure speculation on my part, and the previous seller may simply have gotten lucky, but when you see a short sale after 7 months, it is probably a first-payment default fraud. This may be a flip gone flop, or it may be fraud, either way this never should have transacted at a price over $500,000, and its next transaction (after the bank buys it at a foreclosure auction) will likely be less than the 2005 price.

The sellers who will really be displeased by this whole mess are the neighbors. The above sale won't feed their fantasy price, but then again, they probably will ignore its significance as an aberration, drink some kool aid, and deepen their denial.

.
13 DEODAR
Irvine, CA 92604

Price: $565,000

Beds: 3
Baths: 2
Sq. Ft.: 1,178
Lot Sq. Ft.: 3,035
Year Built: 1976
Stories: 1
Type: Condominium
County: Orange
Neighborhood: El Camino Real
$/Sq. Ft.: $480
MLS#: P579755
Status: Active on market
On Redfin: 7 days

.

19 DEODAR
Irvine, CA 92604

Price: $585,000

Beds: 3
Baths: 1.5
Sq. Ft.: 1,517
Lot Sq. Ft.: 2,112
Year Built: 1976
Stories: 2
Type: Condominium
County: Orange
Neighborhood: Orangetree
$/Sq. Ft.: $386
MLS#: P572471
Status: Active on market
On Redfin: 49 days

The Reservoir of Schadenfreude

Why do we get so much pleasure from failed flips? I can think of no other human endeavor which has engendered so much pleasure in the misfortune of others. In my opinion, the outpouring of schadenfreude we are seeing as the housing bubble deflates is a mixture of Greek tragedy and bad karma. In short, bubble participants should have seen it coming, and they are getting what they deserve.

Schadenfreude is not a spiritually uplifting response. Most religious traditions would counsel us against it. In Buddhist teaching, people are taught to cultivate feelings of compassion for the misfortune of others -- feeling empathy and sadness for the slings and arrows of outrageous fortune when they impact another. The near enemy of compassion is pity: it masquerades as compassion, but it has an element of separateness which detracts from the sense of Oneness with all things. Joy is good: Sypathetic joy, the joy in the happiness of another, is another pillar of a spiritual existence. However, joy in the misfortune of another -- schadenfreude -- is not a skillful behavior leading to happiness. Even knowing that, many of us feel this joy anyway. Why is that?

I recognized financing terms were creating artificially high prices early on. By 2004, I was telling people I knew this was a problem which would cause a market crash. I can't tell you how many people looked at me like I was crazy. "Real estate always goes up," I was told. "The government would never allow prices to crash," I was told. "If you don't buy now you will be priced out forever," I was told. You know the intoxicated language of those who imbibed the kool aid. If these statements had been offered in a defensive manner of someone who is being made to realize they made a serious mistake, I could have felt sympathy for them. I would have been able to disarm their defensiveness and helped them see the light. However, what I generally got was a smug assuredness of someone who truly believed they were right and I was wrong; not just was I wrong, I was a stupid, cowardly fool who did not have the brains or the courage to take the free money being given out.

During the bubble rally, those of us who chose not to participate were labeled as "bitter renters." We were labeled as envious of the good fortune of homeowners as their property values rose, as they took on insane amounts of debt, and as they learned to finance a lifestyle well beyond their means. This was undoubtedly true for some, but in my opinion, this is not the primary reason so many derive so much pleasure from the misfortune of those now suffering from declining property values.

These same people who chided us for being envious actually wanted us to be envious: they wanted us to know they were the winners in our competitive society; they wanted us to view them as superior. This need to feel superior is undoubtedly a manifestation of Southern California’s Cultural Pathology, but it more than that. This act of putting themselves above us created a separation which prevented us from feeling sympathetic joy for their good fortune, and it will prevent us from feeling compassion for them when they fall.

.

.

In our collective unconscious which manifests in our dreams and our mythology, water is often symbolic of our emotions or our emotional state. Have you noticed people are often categorized as deep or shallow? If you are in debt you often feel "underwater," etc.

Anger is much like water: if not given an outlet, it will fill a reservoir until it reaches a breaking point and is expressed in a flood of emotional rage. Each encounter with a pathologic, kool-aid drinking housing bull over the last few years has added to this reservoir, and reveling in failed flips is an outlet for this pool of toxic emotional waste.

There is an element of tragedy in every disaster, but financial bubbles are some of the most interesting because they are completely man made. They are created by the individual decisions of buyers who are motivated by greed, foolish pride, and a false sense of security. Each of these people should have known better. Many of them were warned of their impending doom and chose to go down the path to the Dark Side.

Newton's Third Law states, "For every action, there is an equal and opposite reaction." The Law of Karma states, "For every event that occurs, there will follow another event whose existence was caused by the first, and this second event will be pleasant or unpleasant according as its cause was skillful or unskillful." Do you believe the behavior of buyers over the last 4 years has been skillful?

Whether it is Newton's Third Law, Karma, or a Calvinist form of retributive justice, as this bubble deflates, all the participants in this bubble are about to experience a great deal of hardship. Like many of you, I will enjoy their suffering until my reservoir of schadenfreude is emptied. For the sake of my own personal spiritual well being, I hope this happens soon so I can get back to feeling compassion for my fellow man.

Jungle Love

We are the Irvine Housing Blog. I know we have all been enjoying the failed flips and ridiculous asking prices, but there is much more to see in our housing market. I came across this property in my perusing the market, and I thought you might find it interesting.

As you may have noticed, music and video tends to pop into my head while writing these posts...

Jungle love its drivin me mad
Its makin me crazy

Steve Miller - Jungle Love

Price: $659,900

14871 LARKSPUR CIR
Irvine, CA 92604

Beds: 4
Baths: 2
Sq. Ft.: 1,400
Lot Sq. Ft.: 5,500
Year Built: 1971
Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: El Camino Real
$/Sq. Ft.: $471
MLS#: S484245
Status: Active on market
On Redfin: 49 days
Fixer-upper

"SECLUDED, very PRIVATE location at end of cul-de-sac on single-loaded street. New carpet. One bedroom being used as den. Needs some TLC, but great deal with no HOA and no Mello-Roos. Family room was an add-on"

.

.

• I would start with a weed whacker.
• I suspect it hasn't been painted recently.
• Secluded? Yep. Private? Yep. Jungle? Yep.
• No HOA. No kidding!
• Is that the house or a shed?

What is your reaction?

Irvine’s Windwood

Irvine is full of neighborhoods both big and small. One of the relatively unknown small neighborhoods of Irvine is Windwood.

The neighborhood of Windwood is bounded by Culver Drive, Irvine Center Drive, Harvard Avenue and the railroad tracks. It is really a transitional neighborhood buffering what was the Tustin air base from the residential core of Irvine. It is too small to have a wide variety or products, and its proximity to the railroad tracks and the large Culver Plaza commercial center made it an ideal location for high-density condos and apartments.

One of the apartment complexes is Windwood Glen. This complex has 1, 2 and 3 bedroom flats. There are no garages or in-unit laundry facilities.

Another complex is Windwood Knoll. This complex has 1, 2 and 3 bedroom flats and townhomes larger than Windwood Glen. There are no garages or in-unit laundry facilities.

An ownership community called Windwood Townhomes.

There is also a neighborhood of single-family detached condos.

This one is attractive and well kept.

The park facilities are very good. There were plenty of children at the park, probably due to its proximity to the apartment complexes.

Windwood even has its own tennis center.

There is one of those multi-stop exercise pathways weaving through the community.

The real hidden gem in Windwood is Flagstone Park. It is a large green, open space behind the housing against the railroad tracks.

As you can see, you can have a large open lawn all to yourself.

There is also a bike trail along the railroad tracks.

The walking trail inside the community is wide and winding.

There is an unusually sharp turn in the main collector street, Deerfield Drive. Sometimes it is sharper than drivers realize. The planners of Irvine have made mistakes.

One of the best features of Windwood is Culver Plaza.

The newly renovated food court has a selection of fast food outlets and a coffee shop (the recipe for a successful urban plaza).

The landscaping separates the eating area from the parking lot.

There is a definite Asian influence at this plaza with several of the business names reflecting a tie to the orient.

The Sam Woo Restaurant.

Windwood will probably not attain the notoriety of other neighborhoods in Irvine, but it has something unique to offer its residents. The preponderance of transitional housing will mean few people will identify with the community and consider it their "home," but its vibrant commercial center and well-maintained facilities make for a comfortable existence.

Irvine's Windwood: A great place to live.