Here is an interesting post that has some in depth analysis of why you will shortly see a ‘false bottom’ in San Diego. Not Irvine I know but I suspect alot of the same analysis will apply.  We may see some markets begin to show stabilization which will cause more shouting of ‘green shoots’ on CNBC but really the assessment should be the buyer should still remain very wary.

http://www.fieldcheckgroup.com/2009/06/04/6-5-beware-real-estate-false-bottoms/

The owner did pay $73k over the previous purchase price, after only 5 months.  Maybe that was a remodel/flip, but you can estimate the cost of the work done and figure out how much profit you’re playing the flipper.  People thinking that paying well over what the previous owner paid was ok, or even smart is something that fueled the bubble.

Also, the price has been changed. Now up to 360k. I don’t think that helps the rental parity any.

299k is way too low, this is Irvine you know.

The owner nearly gave it away below $300k a week ago. Now it is going to sit and sit….

Another case of “freeway close” meaning “the freeway is in your damn backyard”.

Well, if this place had a backyard…

I fixed the title of the post. I don’t know where I got Woodbridge :(

Somehow, as I’ve watched similar condos in Norco and Corona drop to $130 a square foot, and ones in Riverside selling at $100 a foot, I’ve become convinced that the real price of OC condos like this is in the $200 per square foot range.

As the employment situation keeps deteriorating, there just aren’t enough people with enough income to support the rental prices and home payments that these units require.

I guess Obama isn’t going to save us after all:

Obama ‘Affordable Refinance’ Program Off to Slow Start

“Early results of the program have underwhelmed Wall Street analysts. “From the very beginning, our view was that HARP would not help as much as expected,” says Derek Chen, an analyst at Barclays Capital. “Having said that, so far the program is even more muted than what we expected.”

The Treasury Department says that 12,710 loans have been completed and delivered to government-controlled Fannie Mae and Freddie Mac under the program, though tens of thousands of loans are still in process.”

These programs, like the various moratoria, were pushed through hastily, and address a very narrow range of loans, and almost none in California.

I talked to a friend who has all of the qualifications I would include in a loan modification program, but they were nowhere close to qualifying.

It’s like qualifying for a first time home buyer program or affordable housing program, where you can’t have too much money or too little money, can’t make too much or too little. Another friend who does both development and mortgages showed me that it was virtually impossible for anyone to actually comply with one local first time homebuyer program.

Meanwhile, the state has given away most of their 100 million fund of $10,000 tax credits to first time homebuyers. It’s a gift to people who were already buying a new home, and won’t create a single new job, but under our broken state system, one legislator traded his vote for this waste of tax funds.

I feel sorry for the owner.  He was a “responsible borrower” who wasn’t gaming the system.  Too bad the govt and banks only help the ill-responsible.

Shevy just forwarded me this email sales pitch. Shevy’s comment to me: “Unbelievable———this is what should be regulated….”

Subject: NO DOWN PAYMENT IS BACK!

100% Financing is back!

The H.O.M.E. Program is now available to First Time Homebuyers throughout Southern California.

There is No Down Payment required and the Seller can pay all of the Closing Costs.

Your Buyer does not need to have any money at all!

We offer a 30 Year Fixed Rate without Mortgage insurance (lower payment than FHA).

This is 1 loan not a 1^st /2^nd combination.

Minimum credit score is 620.

No cash reserves are required.

Income limits as high as $140,000 per year.

We will be advertising this program in the local News Papers, Penney Saver, Homes For Sale magazines, and Direct Mail to Renters. We anticipate a substantial response and since we do not sell homes we will need to build a Realtor Referral Network to help the Homebuyers find a home.

For program information or to be part of our Realtor Network please call or email today.

I look forward to hearing from you soon.

Kevin McRae
1(888) 655-5000
Hightechlending Inc
24655 Monroe Ave #102
Murrieta Ca 92562

Needless to say, we will not be trying to get on his preferred realtor list….

The Building Industry Association—of which I am a member—has convinced the legislature that every new home built generates $16,000 in State tax revenue; therefore, this tax credit is actually a net positive for the State.

You know, if we just build another 10,000,000 homes, we could solve the State budget crisis….

Condos in Riverside are down to $89 a foot on average and dropping fast, according to Redfin.  But there are very few condos in the city due to the very large number of small, older, inexpensive, traditional houses.  (Right now Redfin is showing 999 houses for sale and only 76 condos.)

WOW..  how true..
I think Peter Schiff said, “If you’re in a hole, stop digging”.. 
We must save not spend ourselves out of this situation.. 
Maybe..  if we really “Believe” it is the best time ever to buy a home, it WILL BE… 
Pass me the Kool-Aid…

The only real bailout Obama can offer to us is job, job, job, and lots of jobs.
Without jobs, the only form of housing people can afford to keep is government-subsidized housing, totally.  Not principle reduction.  Not interest rate adjustment.  None!

Local home price declines at 15-month low

http://tinyurl.com/mru3jd

Agreed.  Forget the loan modification programs, the tax credits, and shoveling money into zombie banks—just create jobs, so people can earn decent wages and buy what they need with them.  Perhaps one thing they might buy would be—a HOUSE!

Why is this guy selling? I don’t know if I would like to be living so close to I-5, but if he did not refinance he can probably rent it out and cover most of his costs. Maybe he just needs the money or is moving out of town.

Yes the guy (or gal) is selling at a loss - but He/she lived there in 2004, 2005, 2006, 2007, 2008 and now some of 2009 and a bit of 2003. How much of a loss would he have made if he’d simply rented the unit. His credit probably isn’t trashed. He’s probably not a dead beat. Lets suppose he rented the place out rather than living in it him/her self - then that is direct income to put towards the cost of the mortgage. It may not have been the worlds greatest investment, but its not the utter disaster you guys seem to think either. With all these I deserve a house I can’t afford buyers, renters have had to pay through the nose for somewhere to live. How is this guy any worse off than any one who’d simply rented - and before you say opportunity cost - bear in mind he didn’t put his opportunity money into the stock market and get hammered there… its not even a 100K of loss for about 5 and a half years of rental usage.

Let’s see.  What would be the typical monthly rent for a similar condo/apartment?  Multiply that times 66 months or so, and see if that figure is more or less than the purchase price minus the selling price minus commisions minus 66 months of HOA fees minus taxes minus repairs minus insurance minus closing costs.  (I’m assuming he lives there-if he rented it out, he certainly didn’t make his monthly expenses with the rent.)  I’m going to guess renting would have still been a much better bet than buying, but 66 months’ worth of rent is nothing to sneeze at.

A relative bought a house in 2007 for $550,000. He explained that the home had sold for $185,000 in 1991, $370,000 in 2003, and was now offered for $550,000 in 2007. This, in his view, proved that it was a good investment.

I didn’t ask if, since he was the one paying the $550,000, that data point should be dropped from the wonderful upward curve he was plotting.

It was 750 sq. ft. with a 1-car garage.

Roll with the punches, I say!

My last unfulfilled wish from my days as a 4-year-old boy is to drive a bulldozer. Such a building program would create jobs on both ends, in both the assembly and tear-down of more stucco boxes.

I would love to spend a couple of years as a Caterpillar jockey.

You’ve said all along that these products would never go away.  If, after all the revelations about toxic ARMs and 100% financing, people still sign up for these programs, I’ll have to agree that the human race is 80% composed of idiots.  90% if most of the loans made with this program (and others like it) are in California, Nevada, Arizona and Florida.

So what’s the catch here?  Is Kevin McRae planning to TELL you “no money down” and then give you a contract to sign that is different from what he is saying and hope you sign it without reading it?

Is he hoping you’ll come in, and then he’ll say “sorry, you don’t qualify” and try to get you into something else?

If the loan program he is advertising does not exist, what’s his hook?

You may just have your wish:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html

Minus 66 months of interest payments on the mortgage.

So many people forget how much of the monthly payment is NOT a principal payment.  Interest is the same as renting from the bank.

This guy is NOT part of the “I deserve a house” crowd, T.  The reason we feel sorry for him is that he did what NO one did.  He is worse of than a renter, because he did the smart thing!  He saved up, put more than 50% down, didn’t take money out for shipping trips at South Coast Plaza, and because everyone else did, he stands to lose a ton of hard earned money.  We can reason why he is “no worse off” but the reality is, this system that has been created to reward those who abuse it, vs. those who honor it is only going to convince those sitting on the fence that it just doesn’t pay to do things the right way.  That is the saddest part of this mess!  These are the people that should be put out there as GOOD examples and what TO do!  Sadly, the public at large will view this guy as a chump, or explain away why it’s not THAT big of a deal, and high five those that that “beat the system” that my children and I will be funding for AT LEAST decades!

With a purchase loan, they can stop paying after 1 payment and live there for 1 to 2 years rent-free and only loss their credit score (the house was never theirs in the first place).

Say 1.2x for taxes x 12M x $2000 per month = $24,000 of “alternative income.”  Not too bad for filling out some forms.  Who’s the idiot now?

Jenyfurg,  The cost to dig out of the bailouts will be with your grandchildren.  The fun with spending money that you didn’t work for (i.e., debt) is instant gratification without sweat.  It’s like a drug, hard to break the habit once you’re hooked.  The govt is just a big bunch of people with a big credit card that’s paid by someone else, the taxpayer.

Ever hear about the woes of “group think?”  It’s what created every bubble… and it’ll probably create the anti-bubble mentality which will sadly price many cult-follower renters out of the market.  Ironically, the Jownstown cult after which drinking “cool-aid” phrase was coined, was built in an off-the-map location in Venezuela, not in the US.  He couldn’t have pulled his scheme off in the well-informed, cosmopolitan localities of the US.  On second thought, in Redlands, CA, or the MidWest.. maybe.

When I bought my home I thought it was too expensive.  I bought cheaper than I could afford, and saved during the years.  Nearly a decade went by in my 15-year mortgage and it’s nearly paid off, my interest obligation to the bank is just $40K.  What seemed daunting at first is now a joke obligation.  Would I have gained as much capital renting over the years?  How about the my irreplaceable life quality?  Most homeowners don’t buy with hopes of getting rich - that’s the mentality of idiots.  They buy to pay themselves the rent (amortization of a 15 year mtg) they’d otherwise pay monkeys at the Irvine Company.  They buy to one day be mortgage-free, otherwise you just CAN’T retire in California.  Trust me, Irvine Company will not let Irvine rents collapse - they’re notorious for leaving units empty than reducing rents.

Don’t drink the cool-aid of MidWestern Scarcity Mentality - live up your lives while you can, responsibly!  Don’t buy in my tract if you can’t afford it - I insist.

Jenyfurg
This guy is NOT part of the “I deserve a house” crowd - agreed. So what?

The reason we feel sorry for him is that he did what NO one did.  - wrong. He bought an over valued asset, in a rising market. For many years, what he did was the correct thing to have done.
Many people did the same. Many people - like this guy - tempered the risk associated with the over-valuation by putting down big deposits. We don’t hear too much about these guys because its not the californian way. They are outnumbered by the people who risked little skin in the game.

The I deserve a home crowd pushed up the prices for everyone - including renters. I’m a renter. I know I paid a lot more than 20K a year in rent for the last 5 years… money I wouldn’t have had to pay if rents hadn’t been pushed up so high.

He is worse <off> than a renter, because he did the smart thing!  He saved up, put more than 50% down, didn’t take money out for shipping trips at South Coast Plaza, and because everyone else did, he stands to lose a ton of hard earned money.

Numbers please. His expectations profile may be different… but every penny of my hard earned rent got ‘lost’ every month. How is he any different? He lost equity because he didn’t sell at one of the right times. I lost equity because I put my money into rent and the rest into the stock market. Thats life. Stuff happens. I didn’t buy an over valued house. I bought an over valued stock, or mutual fund, or a cd that didn’t keep up with inflation. Why is it that YOU expect that someone who buys a house should always come out ahead - especially if they put down a big down payment? Don’t you know about interest payments required? Don’t you know about commissions and closing costs? Yet you expect that someone that puts down a deposit is entitled to come out ahead from buying a home that gets older by the day.

We can reason why he is “no worse off” but the reality is, this system that has been created to reward those who abuse it, vs. those who honor it is only going to convince those sitting on the fence that it just doesn’t pay to do things the right way.
Any system that gets created is going to be abused/used to the advantage of those looking out for themselves. You are so wrong in saying that the system was created to reward those who abuse it. Correlation does not imply causation. It absolutely does not pay to do things the right way - when you can get paid so much more for being dishonest - think about this…. If I buy a home and never pay for that home, I don’t have to pay the taxes on the money I just stole from the lenders. I don’t even have to pay the money back - at some point they will take the home back. ALl it will have cost is a hit to my credit record. Californians have shown themselves to contain a dishonest and irresponsible minority. We the majority let these people get away with dishonesty. These people didn’t even think this scam up on their own - they were helped by realtors and politicians. You’re responsibility as a voting (or not) californian, is for letting them get away with it. Don’t whine to me about how unfair life is or that people trying to do the right thing might be regarded as chumps. Your kids will get the bill for this crap, because you collectively didn’t do anything to stop it… and implicitly, you believe that if you buy a home, and make a decent down payment, that it should go up in value.

btw - its not too late to put a stop to this mess happening from here on out. Just change the system.

Nice article in Barron’s online today with a couple of notable quotes:

1. “If mortgage rates are sustained near 5.5%, home prices potentially could fall another 25% to 30%, says Ronald Temple, Lazard Asset Management’s co-director of research.”

2. “Temple estimates that every one percentage-point decline in home prices could tip roughly another million households into negative equity—“

Right now, a little over 20% of all mortgages are underwater.

Did anyone notice the property was listed at $360 on June 6th, not $299?  Seems this blog’s price has cobwebs on it.  The owner increased the price shortly after listing it, probably b/c they got more offers than they knew what to do with.  I find some agents are doing that - creating a bidding war situation in Irvine.  It’s not a fair or honest practice, and it’ll probably still sell below market price.  At $360, it’s not looking as pathetic a case anymore.

Special request:  This blog post came out on the 12th, and the price was already $360 on the 6th… can we please get accurate information on this blog?