The summer wind, came blowin' in from across the sea
It lingered there to touch your hair and walk with me
All summer long we sang a song and then we strolled that golden sand
Two sweethearts and the summer wind
Like painted kites, those days and nights, they went flyin' by
The world was new beneath a blue umbrella sky
Then softer than a piper man one day it called to you
I lost you, I lost you to the summer wind
The autumn wind and the winter winds, they have come and gone
And still the days, those lonely days, they go on and on
And guess who sighs his lullabies through nights that never end
My fickle friend, the summer wind
Summer Wind -- Frank Sinatra
Link to Music Video
Today, I am coming out of the closet: I am a Frank Sinatra fan. I have been carrying this secret shame since high school. When everyone else was blasting some obnoxious noise from their car stereo for all to hear, sometimes I would roll up my windows and crank Frank Sinatra. I am so white.
Back to the song...
Isn't the market like a fickle summer wind? Doesn't everyone have fond memories of great summer selling seasons gone by? So what happened in 2007?
Asking Price: $550,000
Income Requirement: $137,500
Downpayment Needed: $110,000
Purchase Price: $622,000
Purchase Date: 7/6/2005
Address: 3 Pearleaf, Irvine, CA 92618
1st Loan $400,000
Downpayment $222,000
Beds: 2
Baths: 2.5
Sq. Ft.: 1,508
$/Sq. Ft.: $365
Lot Size: -
Type: Condominium
Style: Mediterranean
Year Built: 2000
Stories: Three or More Levels
Area: Oak Creek
County: Orange
MLS#: S506892
Status: Active
On Redfin: 30 days
From Redfin, "Absolutely Pristine Detached 2 BDRM + LARGE LOFT w/ Elegant Upgrades in Gated Oak Creek! Enjoy the RICH HARDWOOD FLOORS * NEW CARPET * HUNTER DOUGLAS SILHOUETTES * PLANTATION SHUTTERS & CUSTOM PAINT! Fantastic Floor Plan has 1st Floor Bdrm/Bath * Spacious Family Room w/ Terrace * Dining Rm * Spacious Kitchen w/ Corian Counters & SS Appl * Main Floor Laundry Rm & Pituresque Backyard! Enjoy the Award Winning Schools & Resort Style Amenities!"
Todd Muradian is probably the best realtor in Irvine. When we did Irvine Realtor Ratings 7-8-2007, Todd had the largest number of sales in Irvine.
Even the best still have issues with their CAPS LOCK sticking INTERMITTENTLY.
What is Pituresque? Is this place a Pit?
A bit slash happy, and fond of asterisks, but only 2 exclamation points...
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If this seller gets their asking price, they stand to lose $105,000, assuming a 6% commission. Will they get it?
The selling season has past. Fall is here, Halloween is coming, and the winter doldrums are right around the corner. Buyers are hard to find. Good luck.
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The falling leaves drift by the window,
the autumn leaves of red and gold,
I see your lips, the summer kisses,
the sunburned hands, I used to hold.
Since you went away, the days grow long,
and soon I'll hear old winter's song
But I miss you most of all, my darling,
when autumn leaves start to fall
Autumn Leaves -- Frank Sinatra
Link to Music Video -- must see if you miss fall color
Oh, it's a long, long while from May to December
But the days grow short when you reach September
When the autumn weather turns the leaves to flame
One hasn't got time for the waiting game
September Song -- Frank Sinatra
Link to Music Video -- Duet with John Denver
As the busted 2007 summer selling (listing?) season has transitioned to a paralyzed fall market with persistently high new and resale inventory, the fact that Orange County real estate can decline in price is no longer deniable. The precipitous drop in sales creates a serious conundrum for most homebuilders: they have to balance the need for cash flow with the desire to maximize profits (or at least minimize losses) on their investments in land purchases and in-process construction. The homebuilders working with TIC have the significant added wrinkle of not fully controlling their own pricing.
Since the fear of being 'priced out forever' has convincingly departed prospective homebuyers, many have accepted the proposition that remaining in a current home or renting might not be such a bad thing after all, at least until some more of the price excess is eliminated. The term "wait and see" is showing up in more and more mainstream media (MSM) real estate stories referring to the position of buyers in this standoff. Interestingly, I've heard with increasing frequency anecdotal suggestions that since transaction numbers are so low, perhaps so many buyers are now on the sidelines that once prices show any sign of stabilizing, everyone at once will come rushing in to purchase and it will be off to the races with happy days and increasing medians all over again. This is the "pent up demand" theory. Although it shouldn't be a big surprise to hear realtors make this comment, some relatively rational colleagues and friends of mine have also wondered this out loud.
Well, my analysis of news in and around Irvine developments shows that this is almost certainly not going to happen. I would argue that any pent up demand is being countered with similar, or probably more, pent up supply. Many of these have been discussed on the forums, but here is my working summary of projects that are imminent and/or postponed. All will contribute to pent up supply in the months and years ahead:
Woodbury East- John Laing's Celadon bravely opened on schedule this summer, but the originally-scheduled (late summer 2008) debut of California Pacific's Sienna came and went, and William Lyon's Ivy models look complete but are standing by, currently promised as January 2008.
Above- William Lyon's Ivy: "bold" attached product. Are the salespeople keeping themselves occupied watching satellite TV?
Above- California Pacific's Sienna detached condos, models still under construction...laid out like Decada and its predecessors. Is it my imagination, or did they manage to place these even closer together?
In Woodbury, CalPac's Andalucia single family homes appear delayed ("early 2008" the letter says), but I'm not sure of what their original opening date might have been.
Orchard Hills- This entire development, originally slated to begin sales in late 2007, is officially postponed more than a year to 2009. Don't be surprised if the opening is not early 2009 or the delay goes even longer. The Orchard Hills Apartments opened this summer, and do not appear to have incentives, so they may be leasing better than I predicted. The retail shops also opened on schedule, but how long will they be willing to pay TIC lease rates without progress building the community that was (presumably) supposed to be their primary market?
You can see more discussion on Orchard Hills here in the forum or here in a previous blog posting.
The Great Park (former El Toro MCAS)- Lennar has become rather quiet regarding progress and planning at the Great Park; apparently enough so to cause questions on behalf of the City of Irvine as to whether they are still committed to the original proposals. Keep in mind that Lennar won the bid for this property at the apparent peak of the market, in mid-2005.
LA Times Lennar Delay
"In Irvine, Lennar's plans to build thousands of homes around the planned Orange County Great Park have been pushed back, and the city has not received an updated timeline from the developer since 2005.City officials said Lennar had projected that it would have 781 homes for sale by next year, though the developer said it vowed only to have that number of home sites ready for construction.A plan unveiled by Lennar last summer to nearly triple the number of homes from 3,625 to 9,500, while cutting back on commercial space and adding 400 acres to the park, hasn't even been discussed with city officials."
The Orange County Business Journal(registration required) quoted company officials as saying "I don't think anyone has seen the bottom yet...[but] Lennar will be ready when the rebound comes" in reference to the housing market and their Orange County plans.
The new Village of Stonegate, north of Woodbury, has two signs from CalPac: Palmeras and Mirasol. I couldn't find any details about either. One or both could even be apartments.
The grading and laying of utilities at Stonegate appears not too far behind similar work at Orchard Hills.
In the Villages of Columbus, William Lyon's Mirabella luxury townhomes and Ainsley Park paired homes are "Coming soon." From the brief description on the VOC website, it appears Mirabella is the Columbus Square successor to Kensington Court. Interestingly, they list a higher starting price point than Kensington Court (Columbus Grove, Irvine), which seems implausible given the change in the market and Tustin address.
For a good recap of Irvine project planning, see Zovall's zoning map post.
A few interesting nuggets of industry rumor: Lennar is reportedly contemplating an end-of-year auction for at least some of their properties at the Villages of Columbus. Their end of fiscal is November, so this would likely occur in the next 30 days if true. Also, The Irvine Company is floating proposals for some kind of post-sale price guarantee to try to coax buyers off the fence. Details are very sketchy, and even if true, timing is unknown.
So the bottom line question should be: Will the buyers waiting for the market to get worse outlast the sellers waiting for the market to get better? For the sellers to win that battle, it assumes plausible the argument that the market is capable of postponing itself back to prosperity. Don't bet on it.
You must remember this
A kiss is still a kiss
A sigh is just a sigh
The fundamental things apply
As time goes by
As Time Goes By -- Frank Sinatra
Link to Music Video
Frank had it right, didn't he? Fundamental things apply.
(Click on either image below to enlarge)
From Goldman Sachs...
From IrvineRenter...
It is one thing when some crackpot bubble blogger says the market is overvalued and due for a fall. It is quite another when Goldman Sachs, one of world's largest investment banking and securities firms, says the same thing.
Anyone think Goldman Sachs is full of it?
Goldman Sachs report on California House price valuations -- PDF File
This house became an REO on 9/27/2007 for $607,901. It is now back on the market for $625,000.
Asking Price: $690,000
Purchase Price: $729,500
Purchase Date: 11/21/2005
Address: 14712 Sweetan St, Irvine, CA 92604
Beds: 4
Baths: 2
Sq. Ft.: 1,480
Lot Sq. Ft.: 5,543
Year Built: 1970
Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: Walnut
$/Sq. Ft.: $466
MLS#: P576515
Status: Active on market
On Redfin: 36 days
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You have to wonder how badly this seller wants out when after 36 days, the realtor hasn't even bothered to upload any pictures or write a description about the property. Realtor negligence aside, here we have a 2005 property offered for less than purchase price. If the seller gets their price, minus a 6% commission, they stand to lose $80,900.
It wasn't long ago, you could count on your house making you an amount equal to the median income each year. Now, houses seem to have gotten lazy, and they are costing owners the median income each year in depreciation. I am glad I didn't work for nothing last year...
Not so, no there's no sellout
You ain't got enough ducats to shell out
Well I'm in front, and yo I feel great
Check out the story to the glory of the real estate
[Sen Dog]
Yeah, roaches come in but they don't come out G
Don't come on the Hill
That's right
Get off the Real Estate
Get off the Real Estate
Get off the Real Estate
Get off the Real Estate
Real Estate -- Cypress Hill
Link to Music Video
If you don't like rap or lyrics with numerous 4 letter words, don't click on the links above.
I wonder if the sheriff becomes too busy to forcibly evict people if they will contract with gangsta rappers? Get off the Real Estate!!!
Asking Price: $610,000
Income Requirement: $152,500
Downpayment Needed: $122,000
Purchase Price: $500,000
Purchase Date: 6/7/2005
Address: 53 Bridgeport, Irvine, CA 92620
1st Loan $350,000
2nd Mtg. $50,000
Downpayment $100,000
Beds: 2
Baths: 2
Sq. Ft.: 967
$/Sq. Ft.: $631
Lot Size: 3,500 sq. ft.
Type: Single Family Residence
Style: Other
Year Built: 1984
Stories: One Level
Area: Northwood
County: Orange
MLS#: R711202
Status: Active
On Redfin: 14 days
From Redfin, "2 BR, 2 FULL BA, 2 CAR GARAGE WITH OPENER & 2 REMOTE CONTROLS. LOTS OF UPGRADES INSIDE & OUT. SEE FOR YOURSELF. SELLER MOTIVATED. LIVINGROOM, MASTER BEDROOM HAVE CATHEDRAL CEILING, TILED KITCHEN FLOOR & EATING AREA. JUST A FEW MINUTES FROM THE FWY & EASY ACCES TO THE 5,405 & 55 FWY. CLOSE TO SHOPPING CENTER & SMALL STORES. * * * * * * * * * * OPEN HOUSE!!! THIS SAT & SUN, OCTOBER 27 & 28 FROM 12-4:00 PM. * * * * * * * * * * "
CAPS LOCK
Wow, the garage comes with two remote controls. That must be handy.
Is that R2/D2 in the kitchen or did they go out of their way to stage present their garbage can?
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Here is your chance IHBers. Let's all put on our IHB shirts and go see this open house. If we don't go there, nobody else will because this property doesn't have a chance of attracting any lookyloos with this asking price. $631/SF? WTF? This property would be lucky to sell for $425,000 in this market. $610,000 is a ridiculous fantasy. Maybe when this doesn't sell, we will see it pop on on Craigslist with a $3,800 a month rental rate. That is what they would need to get to justify this asking price.
You have to wonder why this seller or this realtor even bothers...
Greed: it will consume you.
So ends another week at the Irvine Housing Blog. I hope you have had a good time with us. We will bring you more next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
:)
Watch out
You might get what you're after
Cool babies
Strange but not a stranger
Im an ordinary guy
Burning down the house
Hold tight wait till the party's over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house
Burning Down The House -- Talking Heads
Link to Music Video
I was reading Mathew Padilla's Mortgage Insider Blog yesterday when I came across a comment from one of the market bulls who stated "If the tragic SoCal wild fires destroy many homes, there will be a huge housing shortage. Inventory will be falling rapidly... it is a fact. Sales inventory will be absorbed by many looking for shelter. It is fortunate there are homes for sale, but I don’t think there are enough. Hopefully, the available supply does not run out before all get a new residence."
Hundreds of homes have been damaged, and someone has died due to these fires, and someone actually looks at this event as a positive event that will help out the value of their home. I guess if bulls get desperate enough, they can solve the excess inventory problem by burning down the houses.
Back to our collapsing housing market...
Just in case anyone still thinks the high end is immune, today's property is another Shady Canyon rollback.
Asking Price: $3,199,000
Income Requirement: $799,750
Downpayment Needed: $639,800
Purchase Price: $3,680,000
Purchase Date: 7/28/2006
Address: 32 Prairie Grass, Irvine, CA 92603
1st Loan $2,628,000
2nd Mtg. $500,000
Downpayment $552,000
Beds: 6
Baths: 6.5
Sq. Ft.: 5,227
$/Sq. Ft.: $612
Lot Size: 0.38 acres
Type: Single Family Residence
Style: Spanish
Year Built: 2004
Stories: Two Levels
View(s): Pool
Area: Turtle Rock
County: Orange
MLS#: S508234
Status: Active
On Redfin: 16 days
From Redfin, "If there was anything else that could have been done to this property it would have been done. Rich Granite, Distressed Hardwood, Stainless Steel, Wrought Iron, Imported Fabrics, flat screen technologies, and peaceful fountains have been meticulously woven together to complete this turnkey masterpiece. Perfectly located on one of the largest lots in the Sycamores this home is a must have for an entertaining lifestyle. 6 bedroom suites means no one has to go home. Come See"
If there was anything else that could have been done to this property it would have been done. WTF?
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If the seller gets their asking price minus a 6% commission, they stand to lose their entire $552,000 downpayment, and the bank stands to lose $120,940 for a total loss of $672,940.
I wonder if it would turn out better for them if they burned it down?
Today is gonna be the day
That they're gonna throw it back to you
By now you should've somehow
Realized what you gotta do
I don't believe that anybody
Feels the way I do about you now
Wonderwall -- Oasis
Link to Music Video
Do the lyrics of that song speak about going through short sales and foreclosures? One thing is certain about housing right now: nobody feels the same way they did about it 2 years ago...
Asking Price: $550,000
Income Requirement: $137,500
Downpayment Needed: $110,000
Purchase Price: $665,000
Purchase Date: 9/12/2005
Address: 43 Ardmore, Irvine, CA 92620
1st Loan $532,000
2nd Mtg. $66,500
Downpayment $66,500
Beds: 3
Baths: 3
Sq. Ft.: -
Lot Size: -
Property Type: Condo/Co-op
Area: Out of Area
County: Orange
MLS#: 07-229191
Status: Active
On Redfin: 2 days
From Redfin, "Short Sale! Seller must sell. Bring all offers. High ceiling. Olympic size community swimming pool. Close to shopping mall. "
High ceiling? Is this the only positive feature the realtor could mention? Does it make you suspect it is a complete dump?
This is perhaps the smallest kitchen I have ever seen.
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Yet another deep, deep rollback. If the property sells for its asking price assuming a 6% commission, the total loss is $148,000: the seller stands to lose their $66,500 downpayment, and the 2nd mortgage holder stands to lose their $66,500, and the primary mortgage holder stands to lose $15,000. Ordinarily, the primary mortgage holder would foreclose rather than take a loss, but for $15,000, they should take the deal and count their blessings. It will be more expensive for them if they foreclose. Alas, since the system is broken, the loan servicer will foreclose and collect their fee, and the mortgage holder will absorb an even greater loss.
Hmmm... Maybe there were reasons we had banks hold their own mortgages in the past...
