There is a group of nervous home sellers who are trying to sell their homes for enough to pay off their mortgages. Some of these were buyers toward the end of the rally that paid too much, and some are owners who bought earlier but mortgaged themselves into the same precarious position. They are wise to try to sell now if they can get enough to pay off their debts and save their credit. Today's featured property is an owner who extracted much of their equity, but they still have some room to maneuver before they go underwater. In my opinion, there feeble price reductions have not shown the aggressiveness necessary to move this property before the market leaves them underwater, but I guess they don't want to give it away.
The high end of Irvine's resale market peaked in early 2007 largely due to the availability of 100% financing to people with good credit. Once this form of financing was removed, so was all support of the inflated prices. Today's featured property is was a $1,050,000 property at the peak. The fact that it went into foreclosure in just over a year strongly suggests some fraud was involved. In order to avoid prosecution for fraud, the straw buyer must make at least 2 payments. Based on the timing of the foreclosure, it certainly appears as if the buyer made two payments then simply stopped and let the property go back to the lender in a foreclosure.
There have been some rumblings about the declining inventory numbers and the slight uptick in sales in Irvine. Perhaps it is signaling a bottom in pricing? This doesn't seem likely, particularly with the Alt-A and Prime ARMs due to reset over the coming few years. The fact remains that REOs continue to enter the market, and they continue to drive prices lower to find buyers. Until that stops occurring, prices will not stabilize much less appreciate. Today's featured property is 35% off its 2005 purchase price, and the lender recently reduced the price drastically to find a buyer.
