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.
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).
For those who are forum members, then you are probably familiar with the foreclosure thread. For those that are not members, I recommend you join, as there are some great topics, even beyond housing. But, in that thread, I try to update it to show what is happening with the foreclosure numbers, both in OC as a whole, as well as Irvine. Anyway, the idea of sharing these stats on the main blog were suggested, and I will be posting them periodically. I would like to do it every day, but I can't say I will always be able to find the time. I will do these posts in the evening, so that everyone can enjoy the post of the day.
For those that are not familiar with the process, or the abbreviations, here are the basics...
NOD = Notice of default. This is the first stage, and it is recorded 90 days after the first missed payment.
NTS = Notice of trustee sale. This is the second stage, and it is recorded 30-90 days after the NOD. This is posted in a newspaper, like the Irvine World News, and lists the time and place of the auction, the address, the NTS amount, and various other legal info. It has to be published for three weeks.
Trustee sale/REO = back to the bank, or someone bought it at the auction. This is the final stage, and it is when the owner loses the house.
What a way to start the new year, but with record NODs and foreclosures!
NODs 2156, or 103 per day, and an increase of 18.7% from last month.
NTSs 1185, or 56.4 per day, and a decrease of -3% from last month.
Trustee sales 824, or 39.2. and an increase of 18.1% from last month.
Just how bad are the trustee sales? Comparing the worst month on record in 96, there was 1 foreclosure for 832 owner occupied homes in OC, and in 2008, it is 1 foreclosure for 746 owner occupied homes.
How about adjusting for household population? Will it look better that way? In 96, there was 1 foreclosure for 3903 people, and in 2008, it is 1 foreclosure for 3706 people. Well... it looks like it is worse than even the worst month on record. Considering NODs are double than what they were a year ago, and nearly double from the average of last year, then I suspect it will only continue to get worse. Since the ratio of NOD to foreclosure is about 50%, then 2008 could bring a month with a 1000+ foreclosures. This is starting to get really ugly, really, really fast.
Yesterday, 41 homes went back to the bank at the Santa Ana courthouse. Some of the lenders still do not get it, and they are holding tight to what the NTS amount is. However, there are many lenders that do get it. There are more, and more lenders discounting the minimum bid $100k-$200k below the NTS amount.
My favorite foreclosure of the week, went back to the bank for $1.65mil, with a NTS amount of $2.11mil, a $460k discount from the amount owed on the loan. I thought Newport Coast, and the high end was immune? This place is so new, that zillow only has one satellite photo of a completed home, and that is if you click on west.
There weren't any homes that went back to the bank in Irvine yesterday, but this one in Tustin Ranch did for $882k. It sold for $610k in 2001, and then someone shut off the ATM.
Today there were 22 homes that went back to the bank, and one condo on Fairview in Santa Ana sold for $102.5k, but it sold for less than half of the NTS amount of $211.5k. This must have been a scratch and dent lender, or an IB who bought a mortgage pool for $0.30 cents on the dollar, and they still made a profit.
This week two homes in Irvine went back to the bank. 16 Salton #65, for $545k, and 106 Kazan St., for $292k. Currently, there are 44 homes in Irvine scheduled for the auction, from Monday to 3/20/08. More will be added, and some will get canceled, but we will see how it goes. There are a bunch in Quail Hill, including a big one with an NTS amount of $1.5mil. Finally, there are four homes in Woodbury scheduled for the auction, including one on Rising Sun, just across the street from the pool.
I hope everyone enjoys this post, as well as those to come. Comments, questions, and suggestions are welcome...
When you feel all alone
And a loyal friend is hard to find
You're caught in a one way street
With the monsters in your head
When hopes and dreams are far away and
You feel like you can't face they day
Let me be the one you call
If you jump I'll break your fall
Lift you up and fly away with you into the night
If you need to fall apart
I can mend a broken heart
If you need to crash then crash and burn
You're not alone
Because there has always been heartache and pain
And when it's over you'll breathe again
You'll breath again
Quail Ridge at its Best. Gorgeous unit with granite counters in kitchen, ceramic tile and breakfast bar. Cozy fireplace in living room with built in media niche. Ample storage. Great location and close to shops and toll road.
Do you like how they carefully staged the garbage can in front of this very ugly front elevation? Judging by the shadows cast from the condos on the other side of the street, this ally/street must feel like a concrete valley.
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When I first came out with my predictions of a 40% decline in the median home price early last year, I knew it would take a long time for prices to drop down to those levels. Many bloggers saw the credit crunch coming because of the onslaught of defaults are REOs, but I must admit I have been surprised by the speed of the correction since the credit crunch has taken hold. Today's unit is priced 23% below its peak purchase price from less than a year and a half ago. The mortgage history on this property is unclear. There appears to have been a straw buyer in May 2007, but there is little information on this sale. It is difficult to tell who is losing here, but if this property sells at its current asking price, and there is a 6% commission paid, the total loss from the peak would be $179,494. That is a lot of money to lose on a 2 bedroom condo.
The damage is done
You've had all your fun
The party's begun
The enemy has won
Walking off a cliff again
You've used all your tricks
Your lies don't stick
You don't want to admit
You're done
Walking off a cliff again
Walking Off a Cliff Again -- The Mint Chicks
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Isn't this what the market is doing: Walking off a cliff again? The realtors have used all their tricks, and their lies don't stick, and the sellers don't want to admit, the market is walking off a cliff again.
Today, I am introducing a new line in the property data: Monthly Equity Burn. Since prices have dropped more than 10% in the last year, and since this trend will likely continue for the next 2 years, anyone who buys now will see a 10% per year decline in the value of their property. If you divide this 10% by 12, you arrive at the monthly loss of equity any buyer will endure for the next 2 years. Look at it as part of the cost of ownership, or call it "equity evaporation," but it is the reality of our market, and buyers should be educated to its presence and its effect.
Light and bright unit, this one is clean and ready to live in. Bring the bank an offer today.
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The lender is really getting killed on this one. The owner (bank renter) lost their $8,000 downpayment, and assuming the bank gets their asking price and pays a 6% commission, the total loss on the property will be $215,094 of which the lender will lose $217,094. Look at the size of this rollback: the asking price is 29.5% off the 2005 purchase price.
Here is a 3/2 in Irvine with an attached, 2-car garage going for $272/SF. Does $200/SF seem so far away?
Beyond the horizon of the place we lived when we were young
In a world of magnets and miracles
Our thoughts strayed constantly and without boundary
The ringing of the division bell had begin
Along the long road and on down the causeway
Do they still meet there by the cut
The grass was greener
The light was brighter
With friends surrounded
The night of wonder
Encumbered forever by desire and ambition
Theres a hunger still unsatisfied
Our weary eyes still stray to the horizon
Though down this road we've been so many times
Are those who bought during the rally encumbered forever by desire and ambition? Will their hunger go unsatisfied? Our market has gone down this road many times, but each time the grass is greener and the light is brighter. Like moths to the flame, the greedy get consumed by the market's hunger. In our long night of wonder many will long for the simplicity of youth.
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Today's rental price comparison is not for the same property, but it is for two identical properties in the Northwood Pointe village of Lanes End. The for-sale property is an REO we profiled on a number of occasions with the most recent being The English Garden ** Final Update **. The bank has relisted the property at a market price designed to move the house. As we will see, it is still overpriced relative to value, but it is a significant step forward for market affordability.
Beds: 2
Baths: 2
Sq. Ft.: 1,050
$/Sq. Ft.: $467
Lot Size: -
Type: Single Family Residence
Style: Other
Year Built: 1998
Stories: Two Levels
View(s): Hills
Area: Northwood
County: Orange
MLS#: S513519
Status: Active
On Redfin: 44 days
From Redfin, "Quiet interior location in Northwood Pointe Cottage in Lanes End. Charming curb appeal! Cozy fireplace with attached garage. Walk to Blue Ribbon Schools, Association pool, tennis and parks."
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If the rental rate is appropriate for this "median" home then the market here is only overvalued by about $120,000 or 30%. That is real progress from the peak price paid for this unit which was about 60% to 70% over rental value. Of course, that means we are only at the halfway point for the correction in this neighborhood, but we are getting there...
She's a brick----house
Mighty mighty, just lettin' it all hang out
She's a brick----house
The lady's stacked and that's a fact,
ain't holding nothing back.
She's a brick----house
She's the one, the only one,
who's built like a amazon
We're together everybody knows,
and here's how the story goes.
You don't see much brick in Irvine. This property has a brick facade on part of the structure, a brick wall and a brick walkway. I think the architecture is rather attractive... She's a brick----house...
Beds: 3
Baths: 3.5
Sq. Ft.: 1,887
$/Sq. Ft.: $379
Lot Size: 4,848 sq. ft.
Type: Single Family Residence
Style: Contemporary
Year Built: 1983
Stories: Two Levels
Area: Woodbridge
County: Orange
MLS#: U7005149
Status: Active
On Redfin: 5 days
From Redfin, "WOW, THIS IS THE CITY OF IRVINE! ENJOY THE OUTSTANDING SCHOOLS, THE BEST PARKS AND THE BEST LOCATION IN ORANGE COUNTY. THE HOME FEATURES THREE BEDROOMS AND TWO AND ONE HALF BATHROOMS, DESIGNER TOUCHES THROUGHOUT. A PRIVATE POOL AND SPA, AND PLENTY OF ROOM FOR ENTERRTAINING. .. COME HOME TO IRVINE AND START LIVING THE ORANGE COUNTY LIFESTYLE TODAY. "
WOW, THE CAPS LOCK IS STUCK.
ENTERRTAINING?
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If the bank has to cut their price $15,000 to sell this property, it will be a summer 2003 rollback. Welcome to 2008 where 5 years of appreciation has now been wiped clean...
This is a nice property. It is in Woodbridge, on a corner adjacent to a park. It is not too small, and it has a yard large enough for its own swimming pool. I don't see many negatives here, and I certainly don't see any reason this should be a 2003 rollback, other than the conditions of the market. I can't help thinking the original buyer overpaid in 2003, but real estate always goes up, right? We will keep an eye on this one and see if a knife catcher gets it below its 2003 price.
O Holy night, the stars are brightly shining
It is the night of our dear Savior's birth
Long lay the world in sin and error pining
Til He appeared and the soul felt it's worth
A thrill of hope the weary world rejoices
For yonder breaks a new and glorious morne
Fall on your knees
O hear the angel voices
O night divine!
O night when Christ was born
O night divine!
O night, O night divine!
And in His Name, all oppression shall cease
Sweet hymns of joy in grateful chorus raise we
Let all within us praise his Holy name
Christ is the Lord!
Their name forever praise we
Noel, Noel
O night, O night Divine
Noel, Noel
O night, O night Divine
Noel, Noel
O night, O holy Divine
Beds: 2
Baths: 2.5
Sq. Ft.: 1,824
$/Sq. Ft.: $288
Lot Size: -
Type: Condominium
Style: Other
Year Built: 2005
Stories: Two Levels
Area: Woodbury
County: Orange
MLS#: S515272
Status: Active
On Redfin: 3 days
From Redfin, "Great 2 level condo located in Woodbury!! Very open and spacious with large rooms throughout. Family kitchen, wood and stone tile floors, living room with fireplace, seperate laundry, and private courtyard entry are just some of the features of this home. Close to everything Irvine has to offer!!"
Two exclamation points? I thought three was the standard?
seperate?
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Sales History
Date...................Price
05/29/2007 $605,032
09/08/2005 $679,000
I assume this is an REO. Interesting that it took them 6 months to list it. If they get their asking price, assuming they originally loaned $679,000 and they pay a 6% commission, the total loss would be $185,594. Notice this asking price is 22.6% off the peak sales price. Yikes!
There is a reason for the credit crunch: lenders are losing money. Lenders don't like to loan money when people do not pay them back. The more they get burned, the more conservative they become. As they get more conservative, fewer people qualify for loans and loan amounts decline. This in turn puts more people underwater makes refinancing that much more difficult and causes even more bank losses. It is a classic downward spiral. This is why credit will not loosen any time soon. There are people out there who believe the credit crunch is a temporary thing that will pass soon. It isn't, and it won't. In fact, it is likely to spread to other forms of borrowing as the situation continues to deteriorate.
So what does all this mean, and how do you prepare for it? Basically, it means borrowed money will not be widely available, and what is made available will be more expensive. If you live a life without credit dependency, the credit crunch will not impact you much. If someone takes away something you do not use, it doesn't harm you much. However, if you are like most Californians and you are addicted to credit, you are in for some struggles.
The best thing you can do to prepare for the upcoming deepening credit squeeze is to stop using credit. Pay off what you have and stop using it. If you don't, you might find your interest expense increasing dramatically, and you will find yourself subject to the whims of your creditors. There is no freedom when you have debt. The next thing you can do is to start saving money. Things could get very bad, particularly locally. We have already seen waves of layoffs in the real estate industrial complex, but this could easily trigger a wider slowdown in the economy and put people in related fields out of work. It could be you. Save now, and you will be prepared to weather the storm.
Well, way up North where the air gets cold
There's a tale about Christmas that you've all been told
A real famous cat all dressed up in red
And he spends the whole year workin' out on his sled.
It's the little Saint Nick
little Saint Nick
It's the little Saint Nick
little Saint Nick
Just a little bobsled, we call it Old Saint Nick
But she'll walk a tobogan with a four speed stick
She's candy apple red with a ski for a wheel
And when Santa hits the gas, man, just watch her peel.
Today's property was purchased on 10/16/2006 for $869,000 and sold at auction on 9/27/2007 for $682,763. These are not asking prices, these are actual transaction amounts. That is a 21.4% loss in less than one year, and that is not including any transaction costs.
Beds: 4
Baths: 3
Sq. Ft.: 2,150
$/Sq. Ft.: $344
Lot Size: -
Type: Single Family Residence
Style: Other
Year Built: 2000
Stories: Two Levels
Area: Northpark
County: Orange
MLS#: S514361
Status: Active
On Redfin: 9 days
From Redfin, "Charming home in guard gated community of Northpark!! Main floor master suite with large oval tub, enclosed shower, and dual sinks. Upstairs bedrooms with walk-in closets. Kitchen with breakfast bar plus seperate dining room. Spacious laundry room with deep sink and cabinets. Nice patio in side yard. The many association amenities iclude pool, spa, barbeque, sport court, tennis and more. Close to parks, golf, dining, and shopping at The Market Place"
Only two exclamation points? The realtor must not be excited enough about this listing for the standard three exclamation points.
seperate, iclude... I routinely misspell separate, but then again, I take the time to use a spell checker...
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From the ownership records, it is not clear if this is an REO or a flip. The new owner is an LLC suggesting it might be a flip attempt, but the low asking price relative to the purchase price suggests this LLC may have been formed as the REO holding entity. In either case, the 21.4% loss may actually get larger. In a normal foreclosure situation, the first mortgage holder, who usually has an 80% loan against the property, will go to auction and bid the loan amount. If they are the highest bidder (lately they have been the only bidders,) they end up with the property. The price may need to fall further to find the real market. If this property sells for less than its purchase price, it really reflects a larger loss on the original sale.
In a small market correction, a property such as this one that comes up for sale at an auction generally does not go back to the bank. Since the bank is only going to bid 80% of the original purchase price (the amount of the first mortgage,) there is usually someone who thinks the property is worth more than what the bank is willing to bid and buys the property. The bank does not care because they got their loan money back, and if the speculator is correct, they can make a few dollars in the deal. You know the market is in bad shape when banks bid 80% of original purchase price and get the property. You know the market is in really bad shape when nobody even bids against the bank (which has been happening regularly.)
So where is the Irvine market right now? 15% to 20% off the peak. We have documented numerous cases of properties with asking prices 15% -20% off the peak, and today's property is a recorded sale at 21% off the peak. It is hard to argue with the data.
This has been another eventful week at the Irvine Housing Blog. We had two days of well over 100 comments in a lively conversation. Come back again next week as we continue to Chronicle ‘the seventh circle of real estate hell.’
I want to leave you this week with a picture of me -- at least how some of the bitter homedebtors see me.
I received an email from a reader providing more information on this listing:
Here is the deal on this property: Mr. Windfall Profits purchased the property for $330,000 direct from Shea Homes in Jun-2003. Just 14 months later, Ms. Greater Fool purchased the property for $500,000 in Aug-2004. Ms. G.F. encumbered the property with $475,000 in debt at the time of acquisition. Ms. G.F. apparently needed some money (new Mercedes lease? tropical vacation?), so she refinanced in Aug-2006--a $480,000 first and a $128,000 second, for a total of $608,000 in debt.
When Ms. G.F. refinanced, her original loan would have been paid off, enriching her with a whopping $133,000 in cash.
Ms. Greater Fool sold the property in Jul-2007--but unfortunately for the lender this was not sold by a grant deed, it was sold by trustee's deed! Deutsche Bank Trust Co America is the recorded owner at a price of $505,138. It's on Redfin for $469,900. With a full price offer and 6% in sales commissions, the total lender loss from the Aug-2006 refi will be $166,294 or 27%!
It is Black Friday today...I wonder what Ms. Greater Fool is doing with all that cash?
I am wondering the same thing. If I had just walked away with that much of the banks money, I would be very thankful...
I close my eyes, only for a moment, and the moment's gone All my dreams, pass before my eyes, a curiosity Dust in the wind, all they are is dust in the wind. Same old song, just a drop of water in an endless sea All we do, crumbles to the ground, though we refuse to see
Dust in the wind, all we are is dust in the wind
[Now] Don't hang on, nothing lasts forever but the earth and sky It slips away, and all your money won't another minute buy.
Dust in the wind, all we are is dust in the wind Dust in the wind, everything is dust in the wind.
The recent fires have reminded me of the helplessness of man to confront forces larger than himself. Many homeowners are hoping the FED or somebody can save the housing market. The forces in play are much larger than anyone can control. We are all powerless to change our real estate market, including the FED. All we can do at this blog is keep people informed of its progress, and hopefully keep of few readers from watching their hard-earned money consumed by the market or dissipate into the ethers.
Beds: 2 Baths: 2 Sq. Ft.: 1,200 $/Sq. Ft.: $417 Lot Size: - Type: Condominium Style: Townhouse Year Built: 2003 Stories: Three or More Levels Area: Quail Hill County: Orange MLS#: P606334 Status: Active On Redfin: 1 day New Listing (24 hours)
From Redfin, "END UNIT TOWNHOME W/ DIRECT GARAGE ACCESS IN 'QUAIL HILL' PRICED FOR IMMEDIATE SALE. FORMAL LIVING RM W/ FIREPLACE, UPGRADED DISTRESSED HARDWOOD FLOORS, GRANITE KITCHEN COUNTERS, BALCONY, PEDESTAL SINK IN GUEST BATH, INSIDE LAUNDRY AREA, NICE SIZE BEDROOMS. SUPER MOTIVATED SELLER WILL MAKE EVERY EFFORT TO WORK WITH YOUR QUALIFIED BUYERS. SUBMIT!!!"
CAPS LOCK, AGAIN.
SUBMIT!!! Sounds like a line from a bad bondage video...
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Check out the sales history:
Sales History Date Price 07/24/2007 $505,138 08/26/2004 $500,000
This is actually a 2004 rollback and the second REO we have seen prices below $500,000 in Quail Hill. The first might be written off as an anomaly, the second is an ominous sign. At what point does this become identified as a trend?
Just in case you forgot why we are seeing all these REOs.
New Listing (24 hours)
