Tell me what's wrong with society
When everywhere I look I see
Young girls dying to be on TV
They wont stop 'til they've reached their dreams
Diet pills, surgery
Photoshop pictures in magazines
Telling them how they should be
It doesn't make sense to me
Is everybody going crazy?
Is anybody gonna save me?
Can anybody tell me what's going on?
Tell me what's going on
If you open your eyes
You'll see that something is wrong
Crazy -- Simple Plan
Link to Music Video
When we start to look at property pricing through the post-bubble-burst lens, you see just how crazy these prices are. This property is going to require an income of somewhere between $150,000 and $200,000. If you make that kind of money, is this the place you were envisioning as your dream home?
Asking Price: $600,000
Purchase Price: $650,000
Purchase Date: 2/5/2007
Address: 3 Acorn #85, Irvine, CA 92604
1st Loan $520,000
2nd Mtg. $125,000
Downpayment $5,000
Beds: 3
Baths: 2.5
Sq. Ft.: 1,448
$/Sq. Ft.: $414
Lot Size: 3,000 sq. ft.
Type: Condominium
Style: Contemporary/Modern
Year Built: 1979
Stories: Two Levels
Area: Woodbridge
County: Orange
MLS#: S497736
Status: Active
On Redfin: 37 days
From Redfin, "Great looking condo, new gas stove and microwave, new kitchen cabinets and new title. Very clean and ready to move in!"
Short but sweet.
Is that the front door, or is that an exterior broom closet?
The white tile kitchen is very stylish, or at least it was in 1985.
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This is going to be a short sale, and I wouldn't be surprised to find the "owner," and I use that term loosely, has not made many, if any, mortgage payments. If the place is empty now, how likely is it than anyone ever lived there? If there was no owner occupant and no tenant, and the owner has two loans for $645,000, that is a major negative cashflow. Do you think he reliably made all the payments? Do you think he feels any particular obligation to pay the bank for the short sale? I am not holding my breath...
If this seller gets his asking price, and if the bank approves the sale, the owner stands to lose his $5,000 downpayment -- big deal. The bank stands to lose $81,000. It is any wonder we are experiencing a credit crunch?
Here comes the sun, here comes the sun,
and I say it's all right
Little darling, it's been a long cold lonely winter
Little darling, it feels like years since it's been here
Here comes the sun, here comes the sun
and I say it's all right
Here Comes the Sun -- The Beatles
Link to Music Video
I love that song. When I hear it it brings me back to the feelings of peace and tranquility I would feel on a spring morning overlooking a Northwoods lake...
WAKE UP!
The bear market is over! Rapid house price appreciation has returned! The winter is over, a new day is dawning, and everything is all right.
NOT.
Well, you would think all was well by the asking prices of today's WTF trio. The mentality of the herd was evident during the house price rally. No price was too high because someone would always pay more. Making a million dollars on the sale of your home was not a dream, it was an entitlement.
The market is thinning the herd a bit, but there are still pockets of bullishness that display such a callous disregard for reality that one has to ask, "WTF?" Today's grouping of three neighboring houses is one such display.
Rosegate Estates is a sub-neighborhood in Northwood Pointe which of course is a sub-neighborhood in the Village of Northwood. (When you are as elite as these people, you need to separate yourself from the riff-raff.) These homes are beautiful, and this neighborhood is very desirable. Is it $2,000,000 desirable? You decide...
Asking Price: $1,999,800
Purchase Price: $1,075,000
Purchase Date: 4/25/2002
Address: 1 New Dawn, Irvine, CA 92620
Beds: 5
Baths: 4.5
Sq. Ft.: 4,200
$/Sq. Ft.: $476
Lot Size: 9,500 sq. ft.
Year Built: 1998
Stories: 2
Type: Single Family Residence
Neighborhood: Northwood
MLS#: S491641
Status: Active
On Redfin: 73 days
From Redfin, "Stunning Rosegate Estate featuring 5BD/4.5BA, 3-Car Garage, Home Offic e, Butler's Pantry, Custom Library & Pebbletech Pool & Spa Plus Built-in BBQ! Beautifully appointed with Dramatic Cathedral Ceilings, Custom Tile Floors, Designer Carpet, Custom Blt-Ins, Integrated Speaker System & Home Security System! Gourmet Kitchen w/ Solid GRANITE COUNTERTOPS & Center Island * Blt-In Refrigerator * Viking 6 Burner Cooktop * Blt-In Desk & Walk-In Pantry!
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They knocked $200 off of $2,000,000. Quite a marketing expense. I suppose they could have asked $1,999,999.99.
So this property has doubled in value since early 2002? I guess all the rollbacks we have been seeing didn't impact the high end, right?
Asking Price: $1,999,900
Purchase Price: $642,000
Purchase Date: 1/13/1998
Address: 23 New Dawn, Irvine, CA 92620
Beds: 5
Baths: 5.5
Sq. Ft.: 5,045
$/Sq. Ft.: $396
Lot Size: 8,000 sq. ft.
Year Built: 1998
Stories: 2
Type: Single Family Residence
Neighborhood: Northwood
MLS#: S489401
Status: Active
On Redfin: 92 days
Unsold in 90+ days
From Redfin, "Rosegate in Prestigious Northwood Pointe. Desirable plan w/ dramatic curb appeal. Living room w/ vaulted ceilings, separate dining, one bedroom down + office. Gourmet kitchen open to family room. Master suite w/ retreat, master bath highly upgraded. Three secondary bedrooms upstairs + oversized bonus with bath perfect for private suite. Four car garages, tasteful upgrades, private yard and much more. Steps to schools, parks, pool, and minutes from shopping and freeways. Opportunity knocks!"
Opportunity knocks? For what, to be a greater fool or a bagholder? I will pass. Oh, wait, It has a gourmet kitchen. Where could I find another one of those in Irvine?
I wonder if the neighbor at 1 New Dawn used this property as a comparable for pricing. Notice the price is $100 lower? I guess neither one wants to give it away...
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This owner only wants to triple their money for 9 years of ownership. That makes sense. Houses should triple in value every nine years, after all wages did -- oops, maybe not. Perhaps I will buy it and sell it for $6,000,000 in 2016. A $4,000,000 profit could fund my retirement.
As always, I have saved the best for last...
Asking Price: $2,400,000
Purchase Price: $1,150,000
Purchase Date: 1/10/2003
Address: 46 New Dawn, Irvine, CA 92620
Beds: 5
Baths: 4.5
Sq. Ft.: 4,600
$/Sq. Ft.: $522
Lot Size: 10,000 sq. ft.
Year Built: 1998
Stories: 2
Type: Single Family Residence
View: Trees/Woods
Neighborhood: Northwood
MLS#: P587715
Status: Active
On Redfin: 47 days
From Redfin, "Magnificent home in elegant Rosegate Estate with beautiful architectur e featuring 5beds+home office & custom library, 4 car garage, and more! Soaring ceiling, wrought iron staircase, lime stone flooring & custom built-ins throughout the house give it a dramatic personality. gourmet kitchen with granite counter tops & center island over looks beautifully land scaped back & side court yard. Come and Show this stunning beauty of this home!"
Found another gourmet kitchen...
Do you think that justifies the $400,000 higher price?
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So this house has more than doubled in price since 2003?
So are these WTF prices? Can you create a reasonable set of circumstances which justifies these prices? I can't. I am completely dumfounded. The only conclusion I can reach is that all of these owners are participating in a massive greed off:
How high can we set our prices without embarrassing ourselves? Wait, we have no shame, how high can we set these prices -- period. Maybe if all three of us set our prices this high somehow it won't be as ridiculous?
I am still wondering if 23 New Dawn is angry with 1 New Dawn for undercutting their asking price by $100? After all, this is a race to the top, not a race to the bottom...
So if you think your life is complete confusion
Because your neighbors got it made
Just remember that it's a Grand illusion
And deep inside we're all the same.
We're all the same...
The Grand Illusion -- Styx
Link to Music Video
I find pretense very distasteful. There is a large subculture in Southern California that expends a great deal of money and energy trying to make other people think they are happy and successful. It is an illusion they cultivate within themselves.
Status is an internal perception about what people believe other people think about them. It has nothing to do with what other people actually do think about them (as if that mattered anyway).
For instance, I think the women on the Real Housewives of Orange County are soulless, gold-digging slags. My derision is only eclipsed by my disrespect for the way they live, what they believe, and what they represent. However, they think I, and everyone else who knows them through the show, believes they are something special, something to envy as if they really have it "going on." They have status. Not because people regard them highly, but because they think people do. But I digress...
For people who don't have the internal strength to base their self worth on what they believe about themselves, they end up basing their self worth on their perceptions of what other people think about them. Once they have given their power away to others in this manner, people will expend tremendous amounts of time, energy and money in a vain attempt to influence other people -- hence we have fancy cars, opulent houses, designer clothing, and all the other trappings of conspicuous consumption. In my opinion, this is a sickness (their mind control fails on me.) It is a consuming disease which fed on the borrowed money made available during the housing/credit bubble.
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Southern California's prosperity over the last 7 years has been The Grand Illusion. Our entire economy has been built on borrowed money; our collective self worth has been built on borrowed money. As the credit crunch takes hold and our economy contracts, it will not just be difficult on people financially, it will also be difficult on them emotionally because many people will be forced to abandon their illusions of wealth, prosperity and happiness. One day with their vanity stripped from them, some of the most pretentious will look in the mirror and see how pathetic and insecure they really are.
Asking Price: $624,900
Purchase Price: $572,040
Purchase Date: 5/29/2007
Address: 14222 Matisse Avenue, Irvine, CA 92606
Sales History
Date Price
05/29/2007 $572,040
03/11/2004 $535,000
04/18/2003 $410,500
06/07/1990 $231,000
Beds: 3
Baths: 2
Sq. Ft.: 1,381
$/Sq. Ft.: $452
Lot Size: 5,000 sq. ft.
Year Built: 1974
Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: Walnut
MLS#: U7003278
Status: Active
On Redfin: 39 days
From Redfin, "THREE BEDROOM TWO BATH HOME IN THE SOUGHT TRACT OF 'THE COLONY' THIS HOME IS IN ONE OF THE VERY BEST CITIES IN ORANGE COUNTY, IRVINE!! GREAT SCHOOLS, PARKS, CLOSE TO ENTERTAINMENT, TRANSPORTATION AND ALL THE GOOD STUFF. ASSOCIATION POOL AND MORE. THIS HOME IS BEING SOLD 'AS-IS' AND 'WHERE-IS' WITHOUT WARRANTY. COME HOME TO IRVINE TODAY AND START LIVING THE 'O. C. ' LIFESTYLE TODAY!"
Even the banks seem to have a CAPS LOCK problem.
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As you have probably noticed, we are starting to see an increased activity among banks to liquidate their REOs. Unfortunately, they are getting them faster than they are selling them. This is a trend that will likely continue.
Think back to the mass delusion that was the bubble: it was the Grand Illusion. People accepted the absurd as unquestioned truth. Does it seem reasonable that banks would continually offer negative amortization loans with 1% teaser rates; that it would be possible to refinance from one to another as each teaser rate period expired? Is it logical to think serial refinancing could go on forever? I had people tell me this was the new paradigm.
Is it logical to think that real estate can only go up in value? Do you remember the thought experiment in this post: How Sub-Prime Lending Created the Housing Bubble? Does it make sense that you could live off the appreciation of your house; that none of us would actually have to produce anything; that all we would have to do is own real estate to make a living? How can such silly beliefs make it into our collective consciousness? Are we so enamored with our fantasies of wealth that common sense can be ignored?
I don't have any answers for you. I never did drink the kool aid, so I cannot fully empathize with this system of belief. Each of you that suffered from these delusions, even for a brief time, will have to answer those questions for yourself.
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You will have to pardon my ranting and sermonizing today. Sometimes the insanity of it all builds up inside of me until it finds an outlet -- generally on this blog. Remember, I still have my Reservoir of Schadenfreude I am trying to empty.
This concludes another week at the Irvine Housing Blog. My motivation is strong, and my energy level is high, so I will keep on keeping on. I hope you come back next week as we continue to Chronicle ‘the seventh circle of real estate hell.’ Have a great weekend.
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The artwork was by Henri Mattise as a reference to the street name. I don't know who designed the cover of the Styx album, but the similarities in styles was an interesting coincidence.
I'm too sexy for my shirt too sexy for my shirt
So sexy it hurts
And I'm too sexy for Milan too sexy for Milan
New York and Japan
And I'm too sexy for your party
Too sexy for your party
No way I'm disco dancing
I'm too sexy for my car too sexy for my car
Too sexy by far
And I'm too sexy for my hat
Too sexy for my hat what do you think about that
I'm Too Sexy -- Right Said Fred
Link to Video
During the bubble, weren't we all so enamored with real estate that it was sexy? I imagine when the person who purchased today's property felt pretty as a Peacock when they bought it. After all, they were about to become rich beyond anyone's wildest dreams -- or so they thought. Fast forward 18 months, and their property is in repossession. I doubt that was a turn on.
Asking Price: $619,000
Purchase Price: $497,768
Purchase Date: 3/9/2006
Address: 5 Peacock, Irvine, CA 92604
Sales History
Date Price
06/06/2007 $497,768
11/17/2005 $630,000
04/17/2003 $386,000
09/13/1993 $198,000
1st Loan $472,500
2nd Mtg. $157,500
Downpayment $0
Beds: 3
Baths: 2.5
Sq. Ft.: 1,665
$/Sq. Ft.: $372
Lot Size: 2,720 sq. ft.
Year Built: 1975
Stories: 2
Type: Single Family Residence
View: Park or Green Belt
County: Orange
Neighborhood: El Camino Real
MLS#: S499390
Status: Active
On Redfin: 22 days
From Redfin, "Great value on gorgeous remodel! Granite counters, matching stainless a ppliances, french doors, fireplace, new carpet, custom paint, cathedral ceilings, central air, private courtyard and attached 2 car garage. All located on quiet cul-de-sac near association pool and jacuzzi. Low asssociation with easy walk to shopping and schools. No mello roos."
asssociation? Is that a ssstudder?
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In my opinion, this neighborhood is not very desirable. The properties themselves are spacious and the grounds are well maintained, but you have the high school on one side and a commercial center on the other. You could walk to Heritage Park, but you have to pass in front of the high school to do it. This neighborhood lacks the peacefulness and walkability of most Irvine villages.
Being a less desirable neighborhood, it would have been a prime target for flippers as properties could be picked up less expensively. It isn't hard to imagine the thought process of the flipper: "Buy a cheap property for no money down, and hold it for a profit. If it doesn't go up in value, who cares, just walk away." Unfortunately, this will probably work.
So here we have another 100% financing deal gone bad. What a surprise.
These dreams go on when I close my eyes
Every second of the night, I live another life
These dreams that sleep when it's cold outside
Every moment I'm awake, the further I'm away
These Dreams -- Heart
Link to Video
Everyone has dreams. We would all like to have unlimited money with no effort on our part -- kind of like buying a home was supposed to be during the bubble...
Today's property is clearly dreaming about the next rally where someone will be foolish enough to pay this WTF price. Of course, the market is moving the other direction, and every moment they are awake, their dream gets farther away.
Asking Price: $1,119,500
Purchase Price: $405,000
Purchase Date: 7/18/1996
Address: 4 Holly, Irvine, CA 92612
Beds: 4
Baths: 2.5
Sq. Ft.: 2,850
$/Sq. Ft.: $393
Lot Size: 4,876 sq. ft.
Year Built: 1974
Stories: 2
Type: Single Family Residence
View: Pool
County: Orange
Neighborhood: University Park
MLS#: P575451
Status: Active
On Redfin: 110 days
Unsold in 90+ days
It seems that this listing has recently changed to 'Hold Do Not Show' status. Here is the description from Redfin while it was up, "Beautifully upgraded Parkside home with pool and spa. Home has numerous upgrades including 18inch tile flooring, duel drawer dishwasher, granite countertops, custom cabinets in office, new stairway, new chandeliers, pool redone, new window to capture view of pool. Also, a built-in entertainment center, wet bar, french doors, lifetime warranted cement tile roof, surround sound, putting green, new mantel, new AC, furnace, ducts, & 2hot water heaters. And a master bath 'to die for'"
Sometimes a realtors colloquial manner comes off more uncouth than cultured -- And a master bath 'to die for'
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This is the only property for sale in University Park for over $1,000,000. This home is large, and they are asking a high dollars per square foot price. In short, this price is ridiculous (and I am happy to ridicule it.)
Do you get the feeling some of these prices are set because people just really like their homes? These people obviously have no real desire to sell their home, or they would have priced it somewhere in the realm of sanity. It probably is worth over a million dollars -- to them. The problem is that nobody else is going to agree.
Just in case you don't think this price is too high, let's see what you can get of similar size in University Park.
Price: $819,000
18 FOXGLOVE WAY
Irvine, CA 92612
Beds: 4
Baths: 2.5
Sq. Ft.: 2,682
$/Sq. Ft.: $305
Lot Size: 3,200 sq. ft.
Year Built: 1967
Stories: 2
Type: Condominium
County: Orange
Neighborhood: University Park
MLS#: U7002268
Status: Active
On Redfin: 83 days
Largest University Park Townhome: 2682 sq. ft. , 4 bedrooms and 2.5 baths. Pristine condition. Located on cul-de-sac. Vaulted ceiling. Light, bright, open floor plan. Walking distance to schools and stores.
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This property is almost as large, it is updated inside, and it is $300,000 less expensive. Hmmm...
Price: $719,900
30 OAK TREE LN
Irvine, CA 92612
Beds: 4
Baths: 2.5
Sq. Ft.: 2,700
$/Sq. Ft.: $267
Lot Size: 3,000 sq. ft.
Year Built: 1969
Stories: 2
Type: Single Family Residence
View: Park or Green Belt
County: Orange
Neighborhood: University Park
MLS#: S495329
Status: Active
On Redfin: 48 days
Great price for so much square footage. Seller is only the 2nd person to live here. Property needs updating, so bring your client who wants to make the changes for themselves and not live in somebody elses remodeling. Ceilings have recently been scraped, freshly painted and new carpeting installed. All termite work has been completed. Quiet location in University Park, backs to greenbelt, excellant association facilities and Uni High School.
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This property is almost as large, and it is $400,000 less expensive. It needs remodeling, but for $400,000, I bet you could do a fantastic job.
My conclusion: the price of 4 Holly is laughably silly. Therefore, we honor these sellers with our WTF Award!
