I recommend the video above. It is a classic 2008 recap.
This year, 2008, was the year the world came to recognize that we have a huge economic problem caused by housing. As with all crises there was denial by everyone at every turn, and this denial is still going on. The latest nonsense meme is that low interest rates are going to solve the ARM problem: bull$hit it may even make it worse.
I received a sign that the general public is moving from denial to fear in Irvine. Some people I know that bought in late 2007 are selling their starter home because they see prices going down. Just a couple of months ago, they were determined to hang on to both properties as “investments.” When even the most kool aid intoxicated start to see the fall in prices as an ongoing trend, and when these same people start to sell out of fear, the market is entering a new psychological stage.
Psychological Stages of Bubble Market
Today’s featured property is a 1/1 in Turtle Ridge that is showing significant distress. Apparently Turtle Ridge is not immune after all.
You take the weight off me Honey when you knocked on my door I gave you my key
Does anyone remember Pepe le Pew? He was the happy-go-lucky French skunk who fell in love at every opportunity. Unfortunately, he smelled so bad that none of the objects of his affection wanted him around.
HELOC abusers must have been very happy-go-lucky during the bubble. They had few limits on the money they could spend, so there was plenty of reason to bounce around oblivious to the damage they were inflicting on everyone else. The stench of their pilfering is only now spreading a pestilence on the economy. Most probably have no idea what they have done, and they are probably too self-involved to care. I imagine their only real concern is their inability to sustain their Ponzi Scheme lifestyles.
Today’s featured property has been profiled before. It was a WTF award winner back in mid-2007. The owner was asking $900,000 for this place. Today we will learn why.
The damage is done You’ve had all your fun The party’s begun The enemy has won
One phenomenon of the Great Housing Bubble we have not talked much about is the collapse of all the real estate empires. Many people who really got caught up in the bubble rally bought multiple properties. Why wouldn’t they? If one property can throw off enough income to support a family, why not buy two or three of them?
One of the statistics about the housing bubble that always astonished me was how much prices went up relative to incomes. From 2001-2005, a period of 5 consecutive years, the median house prices went up an amount equal to the median income each year. According to DataQuick, in 2001 the median was approximately $335,000, and in 2006, the median peaked at $723,000. This was a $388,000 increase in the median income in 5 years. That averages to almost $78,000 a year. The median household income ranged from $72,000 to $84,000 during the same period. Any homeowner who was unemployed from 2001-2005 had a house making the median income for the area. With mortgage equity withdrawal, the appreciation could be converted to income, and a typical homeowner could live as if their home was another breadwinner. In fact, this was better than making the median income because there is no income tax withholdings on mortgage equity withdrawal. On an after-tax basis, the house was earning $110,000 gross. No wonder home ownership was in such high demand. Where do I sign up for my free income?
As one might expect, people were signing on to get as much of this free money as possible. Today’s featured property is one of two houses previously owned by the same couple. They put no money down, extracted as much appreciation income as possible, and then let the properties go into foreclosure when prices quit going up. It is a classic example of predatory borrowing.
Well you know I dont get off on workin day after day I wanna have some fun while Im here I play the game when its goin my way And theres nothin like a party when its kickin into gear
As some of you may have noticed, we are planning another IHB party on January 7, from 6:30 - 10:00 at JT Schmids at the District. Everyone had a great time at the last gathering in November, and we hope to make these gatherings a regular occurrence. I will have books available if anyone is interested.
Baby, its a party as long as youre there Its a party, party, party!
The IHB has grown into a large community and a successful website. It happened by accident rather than by design. Zovall wanted a successful website. I just wanted to write. Neither of us had a grand vision for creating a website visited by over 3000 people a day (well, perhaps Zovall did…) It is funny how things kind of “just happen.” The Irvine Housing Blog has a page rank of between 4 and 6 (the rankings are somewhat volatile), and an Alexa rating of around 50,000 (this puts us in the top 50,000 viewed websites on the internet).
I did not have a full appreciation of what we accomplished until I started to market the book. I have been exploring all the methods of internet promotion people use to peddle their products and promote themselves. Just getting a hundred people a day to visit a website is a difficult task, and some people (including myself) resort to paying for the traffic.
One of the more interesting methods of generating publicity I came across is article marketing. I did not realize there was this whole world of consultants and guru wannabes writing little articles being posted all over the web. One of the most popular of these sites is EzineArticles.com. It is one of the top 250 websites according to Alexa. It is full of articles written by people trying to direct traffic back to their websites. It is fascinating to explore just to see who these people are and what they are trying to accomplish.
Anyway, I got into the act myself. Since I already had 90,000 words put together for a book, and two years worth of blog posts to draw from, it was relatively easy to chunk almost 200 short articles to publish on these article websites. I hope tp accomplish two things: 1. Drive traffic to the Great Housing Bubble book sales site without paying for it, and find new readers for the IHB. If this marketing campaign is successful, we may see some new faces in the comments. I suspect many of these people will be real estate trolls. Most of the real estate articles on these article marketing websites are realtors trying to generate internet business. Needless to say, my point of view on the real estate market will stand in contrast to most of the articles these directories have posted. It will be interesting to see if any of these people follow the trail of breadcrumbs back to the IHB.
Below the fold is a list of all the little articles I wrote to distribute on these sites. These will go out to the rest of the article marketing websites over the next 6 months. I have them scheduled to go out one per day until they are all distributed.
Does anyone have any real estate news they would like to share?
Dr. Housing Bubble has done a great series on ridiculously overpriced properties that are so awful that one has to wonder WTF the buyers were thinking. He titled these posts Real Homes of Genius. It is a great series because the images and the prices hit you on a guttural level. Intuitively, you just know something is wrong. It doesn’t require any intellectual analysis of comparative rents or anything else to immediately realize these properties are ridiculously overpriced. If there was ever an undeniable proof of the housing bubble, it was properties like these.
We don’t have many Real Homes of Genius in Irvine, although today’s featured property is about as close as we get. Someone has managed to fit 4 bedrooms into 1,230 SF adjacent to I-5. There is nothing desirable about this property, and the huge price reductions are showing this truth.
From all of us at the Irvine Housing Blog, we want to wish all of you happy holidays.
So this is Christmas And what have you done Another year over And a new one just begun Ans so this is Christmas I hope you have fun The near and the dear one The old and the young
A very merry Christmas And a happy New Year Let’s hope it’s a good one Without any fear And so this is Christmas For weak and for strong For rich and the poor ones The world is so wrong And so happy Christmas For black and for white For yellow and red ones Let’s stop all the fight A very merry Christmas And a happy New Year Let’s hope it’s a good one Without any fear
For those of you taking a break from your Christmas activities to surf the web, I thought I would share with you a listing with a few strange listing photos.
One of the best plan 2 in Centennial Tract by California Pacific Homes
to come on the market. A True Turnkey 4 Bedroom charmer! Relocation
forces this Pride of Ownership to come on the market. Located in one of
the premium inside street on an oversized lot. Entertainer’s delight
backyard w/extensive stamped concrete & matured tropical trees.
This desirable and popular floorplan features: Formal Living &
Dining Room, a separate Family Room w/cozy stone fireplace adjacent to
family kitchen. Hardwood Floors throughout downstairs, designer custom
paint, custom baseboards, upgraded recessed lightings, extra storage
under the stair case & ceiling fans in all bedrooms. Private Gated
Community with own private central park, Sport Court, Jr. Olympic Pool
& Tot Lot & Family Oriented activities. Centrally located in
the #1 Safest City of Irvine, close to Fwys, award winning schools
& awesome shops. Don’t miss this one!
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