As part of my Valentine's gift to my wife, I have asked her to show me her favorite house available for sale in Irvine. I told her it did not have to be realistically within our price range, it just had to be her dream house. If any of you have seen the video for The Secret, it does contain a thread of truth concerning goal setting and visualization of a better future. Although these things have no impact on a financial market, they can influence decisions in one's daily life that have a powerful synergistic effect leading in many cases to the achievement of the goals and aspirations of one's deepest vision. This post is my wife's vision board of the perfect house.
Now if I could just get each of the 3,500 daily readers to donate $3,336.85 to my downpayment fund, I could raise the $11,679,000 necessary to buy the house. I haven't quite figured out where I am going to come up with the $9,732 per month I would need to cover the property taxes, but according to The Secret, I don't need to worry about how these things will happen, I just need to focus on the vision of it happening. Perhaps I am a bit myopic, but I have a hard time seeing this coming to pass...
Tuscany inspired residence on one of Shady Canyon's largest and most private lots. One of the finest homes yet to be offered in one of the country's most prestigious private communities. This home features 5 large bedrooms, 6 full and 3 half baths, 3000+ square feet subterranean garage, commercial elevator and nearly 11000 feet of living area, huge pool and outdoor entertaining areas with multiple water features.
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Let's take a closer look at this property...
The view is fantastic. The rock outcrop provides an interesting focal point.
A great entertaining room with wet bar and big screen with beautiful wood inlays.
A modest room to hang out with the family. I particularly like how the indoor and outdoor spaces blend together by eliminating the separating wall.
This was one of my wife's favorite features. Again the distinction between what is an indoor space and what is an outdoor space is blurred. The swimming pool becomes part of the environment.
The pool and spa are spectacular.
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So there you have it, my wife's Irvine dream home. I must admit, I like her vision.
For those of you who want to work on your visualization skills this Valentine's day, I have a video for you: Kiss Me.
My guesstimate numbers, from Friday, were pretty close. It seems my math is coming in low for the NODs, but it is still within a 10% error margin. I will experiment with a new calculation for this month, and see if it comes closer to the real numbers. Also, my number for foreclosures will always be higher than DQ's numbers, because I include the homes that are bought by someone, other than the bank, at the auction.
One quibble I have, is Matt stated "To be sure, foreclosures account for a small percentage of total housing stock in O.C., which has increased by tens of thousands of homes since the last downturn of the 1990s." This is not true when you do the math. The owner occupied (keep in mind, DQ’s foreclosure numbers are for owner occupied housing) housing stock at the end of 1996 was 560,753, and in 2007 it was 614,815. The record foreclosure month was October 1996, with 674, and now the record is 802.
That is…
1 foreclosure for every 832 homes in 1996.
1 foreclosure for every 767 homes in 2008.
Any way you look at it, it is bad, it is really, really bad.
And, for the first five days in February there has been 580 NODs recorded (116 per day), 229 NTSs recorded (45.8 per day), and 189 trustee deeds recorded (37.8 per day). Keep in mind, February has 19 business days compared to January's 21 business days. So, while the monthly numbers may not be higher, or the same, they are still increasing.
Today, 40 homes went back to the bank at the Santa Ana court house, and 2 sold. Here are the 5 homes in Irvine that went back to the bank...
And... the big news of the day, (insert awgee snickering here), Slade's home went back to the bank for $1,282,500. It looks like the zestimate of $3.15mil is a bit high. I guess Jo's singing career is not going so well. And, for those who think we at IHB are completely heartless, and kill a puppy for every home sale, I sincerely hope his kid it doing well. Just remember... don't buy stuff you can't afford. You never know what life will throw at you.
I would like to thank tonye for suggesting this song and the Grateful Dead.
With the extreme leverage and volatility of residential real estate, it does cost a lot to win and even more to lose. It is a very important decision one should spend some time thinking about. Right now is a horrible time to buy, and here at the blog we watch each property as it comes into play. The game right now is to wait until your deal comes around...
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I profile Turtle Ridge frequently because the prices are so high, it is easy to find WTF listings -- they all are. This isn't to say Turtle Ridge does not carry a premium. It is a desirable neighborhood. This desirability is reflected in rental rates and amplified in house prices.
The two-bedroom market in Turtle Ridge will cost you $2,400 to $2,500:
Of course, Turtle Ridge wouldn't be Turtle Ridge if someone didn't think their rental was worth a fortune. Perhaps they are trying to cover half their mortgage payment...
The fundamentals of property valuation are the same for the high end as they are for the low end. The breakeven cost of ownership for these units will be near 160 (perhaps a bit lower due to high Mello Roos fees.) This puts the value of two-bedroom units at $384,000 to $400,000. The value for the entry level three-bedroom units would be $464,000 to $480,000. So what would you guess these properties are priced in the market?
Drastic 200K price reduction below market value!!!!!!Stunning turtle ridge home, completely remodeled throughout. Plank hardwood flooring, Travertine flooring in kitchen and all bathrooms. Master bathroom has custom travertine shower with designer sinks and hardware. Custom built-in closets and garage. Added recessed lighting, ceiling fans, crown molding and baseboards throughout home. Surround sound in family room and master bedroom. Garage also has granite flooring. Gorgeous and turnkey. Furniture optional, owners are very motivated!!!!!!! Must SELL!!!!!!!!!!!!!!!!!!!!!!!!!!!
This is the most incompetent listing I have seen in quite some time. First, how do you like the sideways pictures? This isn't a problem with Redfin. Look at the MLS logo in the corner. The pictures were put up sideways, and rather than correcting the error, the MLS logo was put on them, and they have been there over 90 days.
It really annoys me when a realtor tells me a property is priced below market value (and adds multiple exclamation points.) Market value is whatever someone is willing to pay. Unless someone comes in and pays $200,000 over asking price, the property is not priced below market. In fact, they will probably have to lower the price further to sell it, so it is still priced over market. What the realtor is really saying is "this property is priced $200,000 below the fantasy/wishing/WTF price the owners thought it was worth."
Furniture optional? Can I have the shirt off the seller's back?
Gorgeous Turkey...
Can you just feel the emotion (desperation) of the realtor holding down the exclamation point button on their keyboard. I don't have the patience to count them, but this must be a new record: Must SELL!!!!!!!!!!!!!!!!!!!!!!!!!!!
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One of the two 3 bedroom rentals featured above is identical to this unit, and it shares the same alley access. You can't get a closer comparable. The breakeven cashflow value for an owner-occupant would be $464,000 to $480,000 -- which is what they paid for the place in 2003. Unfortunately, it is about half of their asking price.
There are other comps in the neighborhood that are priced even higher:
California, preaching on the burning shore
California, Ill be knocking on the golden door
Like an angel, standing in a shaft of light
Rising up to paradise, I know I'm gonna shine.
My time coming, any day, don't worry about me, no
Its gonna be just like they say, them voices tell me so
Seems so long I felt this way and time sure passin' slow
Still I know I lead the way, they tell me where I go.
This could be the song of the guy who delivers the paperwork for a foreclosure...
Today's owner must have estimated a fair profit for their property; otherwise, they probably would not have gone out and borrowed more than they paid for the property. In context with the previous HELOC abusers we have profiled, today's seller is a minor leaguer. They are extraordinary in their ordinariness. They are stereotypical of many homeowner's behavior during the bubble. People really believed their home appreciation was free money they could spend as income because their house would go up in value forever. In hindsight, it is laughable and ludicrous -- and to some of use in foresight it was as well -- but to those caught up in the mania, it made perfect sense.
Irvine will not be savaged by subprime (other than the job losses.) Irvine will be devoured by its own consumption. As I demonstrated in What is Equity?, if you consume your equity or buy at too high a price, the inflation hedge is the only thing keeping you above water, and if you consume too much through bad loan terms or HELOC abuse, you will go underwater and you will be at serious risk of losing your house.
Today's seller bought in the upward trajectory of the speculative equity curve. Since they bought in 2003, they were too late to stay above water at the bottom of the trough; however, it might have been manageable if they had used conservative financing and not used their HELOC. Instead, they chose a different path, and now they are a short sale. This actually makes it easy to estimate their profit: they paid $830,000, and they borrowed $952,000, so the made $122,000 on the property. Of course, since they have recourse loans on the property, and they are a short sale, they have no protection from the lenders collections department. There may be a question as to how much of this "profit" they will be able to keep...
Magnificent turnkey gem nestled on ultra-premium lot on end of safe & quiet CDS! Gorgeous curb appeal thanks to contemporary styling + stone detailing & mature landscaping. Dramatic living room entry boasts nice hardwood flooring + custom lighting & French door access to patio. Stunning gourmet kitchen w/ rich European cabinetry, granite counters, backsplash, island & built-in range & hood. HUGE master suite w/ private bath & walk-in closets. Entertainers' yard.
Ultra-premium end lot? You mean the one backing on to Jamboree? safe & quiet? Have they no shame?
CDS? Collateralized Debt Servitude?
Magnificent Turkey...
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This property will probable look like a breakeven transaction when it finally sells. If they had used a 30 year fixed and avoided the HELOC, they probably would escape with some equity. As it stands, any assets they do escape with will be a target for their lender, although in the short term, they made $122,000. If this house sells for asking price and a 6% commission is paid, the lender stands to lose $106,940.
If you were the lender who had the second lien that did not get paid off in full, aren't you going after the money the borrower took?
Must be getting early, clocks are running late.
Paint my love a morning sky, its all cold.
Dawn is breaking everywhere, light a candle, curse the glare
Draw the curtains I dont care, but its all right
I will get by, I will get by, I will get by, I will survive.
I see youve got your list out, say your piece and kiss off.
Guess I get the gist of it, but its all right
Oh well anyway, sorry that you feel that way.
Every silver linings got a touch of grey
I will get by, I will get by, I will get by, I will survive.
Its a lesson to me, the ablers and the beggars and the thieves
The abcs we all think of, try to win a little love.
I know the rent is in arrears, the dog has not been fed in years
Its even worse than it appears, but its all right
What will be the silver lining in the housing bust? What will be the touch of grey? Right now, it is even worse than it appears, but its all right...
(The rent isn't in arrears, but the mortgage payments certainly are.)
Quail Hill is a great Irvine Village. It is unfortunate it was built during the later stages of the housing bubble because it will become Quail Hell for those who bought there. The discussion about housing is no longer about whether or not there was a real estate bubble: there was. The discussion now is about the depth and devastation of the crash which follows. The bulls will call the bottom every so often, and they will be consistently wrong until we ultimately hit bottom. I have made my case housing prices will fall back to fundamental valuations about 40% off the peak in Irvine. It might get worse. If prices do fall back to fundamental valuations, every buyer in Quail Hill will be underwater -- all of them. Think about that for a moment... an entire neighborhood where every homeowner owns a property worth less than they paid, and the vast majority owe more on a mortgage than it is worth. The last time that many were underwater, Noah built a boat.
What would it be like at the local shopping center when conditions are bad, and every person you look at is in financial distress? This is Irvine, so we probably will not see much urban blight or other outward signs of distress, but inwardly, it will be hell on earth. A touch of grey? I hope affordable housing is the silver lining...
The largest floor plan in Ambridge community with one bed and bath on main floor. Spacious living room with fireplace, dining area, all hardwood floor. Open kitchen with granite counters, large master suit, direct access to two car garage with full size driveway. Short distance to Laguna Beach, shopping, 405/133 Fwys.
Don't you love the picture of the garage door? That has to be the worst, most useless photo on the MLS.
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Look at this unit -- a 3/3 in a new Irvine neighborhood selling for $285 / SF. This is almost $100,000 off a 2004 price. As sales like this one set the comps, it will soon become apparent that every homeowner in Quail Hill is underwater. There will certainly be many who hold out for ridiculous wishing prices, but the fact is the market transactions are occurring at steep rollback pricing. If this selling comp killer gets their full asking price (which looks likely as they are in escrow) and pay a 6% commission, they stand to lose $127,500 on their 2004 purchase.
The first casualty reported by us in the Collage tract was 714 Timberwood. And yes, these are the actual pictures advertising this property. Kinda crappy huh? You really need to evaluate the smaller no-name real estate brokers/agents before you entrust them with your $500k+ sale.
On to the details:
Address: 1602 Timberwood, Irvine, CA 92620 (Northwood) Plan: 1267 sq ft - 2/2.5 MLS: S467201 DOM: 43 Sale History: 02/21/2006: $560,000 10/31/2003: $300,000 4/18/2001: $240,000 Current Price: $560,000
So what happened here? Well our flippers got in over their heads. They purchased in February 2006 for $560,000 using 100% financing. How common is this?!?!
What I find interesting here is that in the 2.5 years from the original sale in 2001 to the 2003, the price went up $60,000 (25%). And then in the next 2.5 years from 2003 to 2006, the price went up $260,000 (87%).
The buyer in 2003 put down about 27%. The flipper in 2006 put down 0%.
In a rapidly appreciating market (from 2003-2005), flippers used other people's money and made out like bandits. They were looked up to as 'real estate gurus'. My guess is the current seller wanted to get in on the game and not be left behind. Too bad for them. At the current asking price, they are facing a loss of about $33,000 (assuming 6% in selling costs). Oh wait! They didn't put anything down.. I suppose the lender (Fremont Investment & Loan) will be the biggest loser given that the private remarks state: "ALL offers need short sale approval from mortgage holder."
UPDATE #1 - February 5, 2008
Yes, it has been over a year since this property was featured. It looks like the property went back to the bank (La Salle Bank) on 5/25/2007 at a price of $484,358.
It was then listed as a REO on 6/5/2007 for $532,500. The price kept dropping over a few months and it finally sold on 12/27/2007 for $447,000 (~20% off the 2006 price).
There are some who do not believe we will have a big foreclosure problem here in Irvine. Orange County has already broken all previous records as has San Diego County. If fact, if you look at the chart, the rate of Notices of Default and Notices of Trustee Sale are well past the previous peaks and still increasing. There is no sign of leveling or stabilization. Things will get much worse.
Keep in mind, this is just the ARM reset problem. This is not considering the unique problems of Option ARMs and Liar Loans. Any one of these issues on their own has the capacity to flatten the housing market.
Notice how the foreclosure chart looks like the ARM reset chart with a 9 month lag period for the foreclosure process?
To my wife:
Unsold in 90+ days
