I just got an inkling of someone who’s sitting on the exact house I want. They are in BK and holding off for two more months before the bank kicks them out.
So, that gives us two months to prepare our house for sale. If I can collect 700K, heck 600K, I’m outta here.
We looked through the MLS and there people with the exact plan home that I want to buy and they are in denial. They “upgraded” their homes with 10K of granite and want 100K for that. I think when this one home hits the market reality is gonna hit some people in the face.
Meanwhile, we noticed that very few homes in my size -2700 sq ft- have moved. That’s because people want 1.4MIL and up.
Now we come in…. we price our home at 1.2 and we should be able to sell it. A smaller home up the street with a very nice renovation and 2000 sq feet ( realtor lied and listed it at 2200) just sold for 950K. Our kitchen is larger and better, our location is much better, we have rebuilt the entire house, etc… so it should not be hard to sell.
Very few homes in TR with 5b/3ba. Very few.
Posted by Hmmmm on 03/14/08 at 03:22 AM
This house is nice. I think I will fly out to Ca and buy this one. I will bring my sledgehammer and smash every bit of granite in the house. I have come to despise that material. If we ever redo our kitchen…no granite.
The power lines are a bonus. No rear neighbor and open space behind the unit. add 10% lot premium. ——-
Posted by AZDavidPhx on 03/14/08 at 04:30 AM
The best way I have seen this scenario be described so far is:
“Heads - I win. Tails - the bank loses.”
See can see all the flippery upgrades with the granite counters, jetted whirpool tubs, GE Monogram appliances, etc.
The only thing missing is a vibrating bed that takes quarters. Maybe today’s seller should consider it. It is a very competitive market these days.
Posted by AZDavidPhx on 03/14/08 at 04:34 AM
Agree 100%.
Granite counters; the ultimate staple of the housing Ponzi. The Scarlet Letter that all the bubbly homes must bear.
Posted by mav on 03/14/08 at 05:16 AM
IR,
When do you think you will finish the book?
Are you going to try to publish it in peak housing mania with predictions for the future?
Have you decided if you will be an anonymous aurthor?
Posted by ET on 03/14/08 at 05:34 AM
How much of if any of that second mortgage was necessary? I bought in DC in late 1999 a house much small in size and cost and put $10,000 down. Holy Hannah.
Can I just say the banks deserve to loose that much money - companies that stupid and greedy deserve to get slammed. Too bad those that were involved in those particular transaction won’t be forced to personally pay up so that the company recoup some of it’s money.
Posted by ice weasel on 03/14/08 at 05:44 AM
Once again, I think the issue of “honor” and morality doesn’t come into it. It’s not that I feel that way personally. Personally those issues are vitally important to me. They are me. But in a business sense, you’re a sucker if you fall into that trap. Banks gave away money. They have no business whine about it now. They, like the homeowners, shouldn’t complain about losing money. You gambled. You played the game. You lost. Game over.
Here’s one example from Atrios this morning.
A few days ago…
“NEW YORK (Reuters) - Bear Stearns Cos Chief Executive Alan Schwartz on Wednesday dismissed recurring speculation that the investment bank faces a cash crunch, saying it has hefty cash reserves that have remained little changed this year.
Schwartz, in a televised interview on CNBC, also said he is comfortable with the range of analysts’ earnings estimates for the fiscal first quarter ended Feb. 29. Results for the quarter are due next week.
“We don’t see any pressure on our liquidity, let alone a liquidity crisis,” he said.”
This morning…
“NEW YORK (AP)—JPMorgan Chase says that in conjunction with the Federal Reserve Bank of New York it will provide temporary funding for Bear Stearns.
The funding will be provided as necessary for up to 28 days. During that time, JPMorgan Chase will also help Bear Stearns find permanent financing.
Bear Stearns says its liquidity significantly deteriorated over the past day and the temporary funding will help it continue operating normally. The investment bank added there is no guarantee any permanent strategic alternatives will be successful.”
Only suckers are honest where business is concerned. It may be an indictment of a number of things but it’s true nonetheless. So my point is, “honor” doesn’t play into the contract. Yes, in a better world, we would honor contracts, we would be honest but the simple truth apparent anyone with the consciousness of a snail is that’s just not the case. Honesty and honor get you nothing.
If anyone wishes to dispute I welcome the discussion and I would to be proven wrong. I doubt it will happen though.
Posted by ice weasel on 03/14/08 at 05:46 AM
Apologies, the last line should read, “If anyone wishes to dispute this I welcome the discussion and I would love to be proven wrong. I doubt it will happen though.”
Posted by Pianist on 03/14/08 at 05:50 AM
I’m feeling the urge to defend granite. Some of us that cook a lot, in my case daily, find it very easy to keep clean. You don’t have to worry about hot pans burning it, you can roll piecrust and biscuits and pizza crust directly on it, you never have to replace it, and I just like the looks. I know some people prefer Corian surfaces, but I prefer granite. Tile is too apt to stain in the grout lines, even if you are meticulously clean in the kitchen, plus, I worry about bacteria growth in the grout. Formica just isn’t as durable, although it is much less expensive.
I should have a draft complete by the end of the month, but it will takes months to get published. It will be much like the posts on this board with a discussion of the history and circumstances that created the bubble along with predictions for the future. The great thing about publishing now is both the media attention the issue is getting plus there is a natural follow-up book as the future becomes history.
I don’t think I will publish anonymously. At this point, my anonymity is mostly about protecting my family from some disgruntled homedebtor going postal. My snarky attitude probably doesn’t sit well with many. I never imagined the blog would become so popular and my ramblings so widely read. I don’t want fame or notoriety, but there is no compelling reason to remain anonymous once the book comes out.
Posted by no_vaseline on 03/14/08 at 06:04 AM
The concept IR is trying to describe is called a “sunk cost”.
http://en.wikipedia.org/wiki/Sunk_cost
The answer to both questions is the same - adios. Provided you were aware enough to realize that this outcome was a real possiblity.
Posted by George8 on 03/14/08 at 06:08 AM
IPO, if you can get today’s featured house for $800k-$825k, will you jump into it. Doest it fir your long term housing need?
Come on! You have a fairly large nice house and not only is there no back yard, but there are no side yards either.
And to build right across the street from power lines…thats a no no. This area looks more fitting as an industrial complex with heavy construction yards or something. It does not have that community look or feel to it.
Its too bad, I like the concept of driving into a garage that is set back like that. The area next to the garage is great for washing the car etc. But the tiny lot and power line etc make it to where I would never even consider this house.
Posted by anotherrenter on 03/14/08 at 06:29 AM
Good point. I think the more apt comparison to the 90s would be that a) prices would not have run up so far, and b) along the same line, with 20% equity stake at purchase, the number of homes with zero equity left would be much lower.
Posted by Priced_Out_IT_Guy on 03/14/08 at 06:33 AM
I’ll take an autographed copy.
Actually, I’ll take four or five. I want to give them out to my friends and family.
I’m glad to see that all of your hard work on this blog is going to materialize into a single physical volume so that more people can become educated on the real estate market.
Since we don’t get Real Estate 101 or Personal Finance 101 in California’s current educational curriculum, resources like this blog are invaluable to many of us who are just getting started in life and are the most impressionable to real estate fallacies and commercial advertising campaigns spouting “buy now, buy now and get the respect you deserve from your peers, buy now with no money down or get priced out for ever!”
Just another note about the backyard. You can see that there were no elevations set for this tract. Look at the pic of the backyard and every other house next to this one has windows looking into it.
I know its not possible to have 100% privacy but this is very bad and another reason I would not touch homes like this.
Posted by Surfing in Newport on 03/14/08 at 06:34 AM
To enter into a contract with the intention of not fulfilling the terms of the contract is called fraud. The behavior is both immoral and illegal. It just happens that it’s difficult to prove, so it’s rarely prosecuted.
If I’m not mistaken, a stated income loan still requires you to state your income and debts. They just don’t check. To lie on the application is called fraud and it’s immoral and illegal. The fact that people were encourage to do so by the mortgage brokers is very disturbing (but not surprising). The most effective way of dealing with this problem would be to go after the mortgage brokers and throw them into jail. This would discourage the behavior in the future.
To buy a home and then have the value of home decrease so much as to be worth less the loan and then using this as an excuse to walk away is not fraud and I wouldn’t even consider it immoral. You are exercising your rights under the contract and will pay the penalties associated with that exercise.
To offer a home loan to individuals that requires them to either sell the home in the future or make significantly more money is the most troubling aspect of the housing mess. To then offer such loans based on stated income does nothing but invite speculation in the market.
Of course, if you use the behavior of CEO’s as the benchmark, most of the people profiled in this blog should be considered angels. No wonder you seem confused about honor and morality.
Posted by mark on 03/14/08 at 06:35 AM
The key issue in your poll questions is that the “...payments were double the cost of a comparable rental…”
I think this is a sliding scale. e.g. 200% the cost of renting equivalent = walk away; 150% the cost of renting equivalent = must weigh all the facts and forecast (The key fact being how affordable is the home for you? Less than 20% of your gross to PITI?); 120% or less the cost of renting equivalent = stay put if PITI is affordable.
Posted by Newport Trojan on 03/14/08 at 06:39 AM
As a stone importer, it kills me to hear granite getting such a bad name. It is a beautiful material with alot of practical qualities as listed above.
I guess the phrase “too much of a good thing” could apply to it during the flipping mania.
What really irritates me though is when these jack@$$ people use the wrong material in the wrong areas. I had a friend tell me they were installing Jerusalem Stone in their kitchen as countertops because his wife loved the material and didn’t want anything else. I explained to my friend that since it is a limestone, it will soak up anything spilt on it like a sponge, even with sealing. He spent the next couple of years playing coutertop cop with his guests.
Personally I wish people would just get creative with the material selections they use, instead of going with the safe standards. Maybe it isn’t the use of granite, but the use of the same granite everywhere…very stepfordish if you ask me.
Posted by BD on 03/14/08 at 06:51 AM
Hi IR -
Congrats on the book!! I look forward to reading it…will you sign a few copies for your fellow bloggers?
It is funny how in business you are trained to ignore sunk costs, but emotionally, on a personal finance level, it is very difficult to do.
Posted by buster on 03/14/08 at 07:07 AM
The money you save will help pay for your brain tumor removal operation after living under the high voltage power lines.
Posted by buster on 03/14/08 at 07:13 AM
Another deal breaker is you have to sign a promise not to grow fruit or veggies in your yard. The land is highly contaminated, so they put clean topfill to “seal” it. But if you eat anything grown on this toxic dump, you’re gonna grow another set of ears.
Just the kind of place where I want my 2-year old daughter playing. I guess it’s OK if I take away all her toy shovels…
Posted by Stilldoubtful on 03/14/08 at 07:31 AM
Also the property tax rate is 1.8%. Great, bad enough you are paying 899k for it, but will you also pay 18k a year in property taxes.
Where is the money for all of this?
All these homes are going to crash, because people just aren’t making the money to buy these homes.
Posted by ipoplaya on 03/14/08 at 07:53 AM
At list, the prop taxes would be more like $16K to begin, but still a huge chunk of cash to outlay to high massive power lines right outside your front door…
Posted by tenmagnet on 03/14/08 at 07:54 AM
Where are the power lines you guys are talking about?
Are they invisible?
This house is pretty nice.
In particular, I like the flooring and kitchen.
The reason it’s priced at $899K is due to VOC location.
Posted by ipoplaya on 03/14/08 at 07:54 AM
Let her keep the shovels buster, just don’t let her dig down more than a couple of feet!
Posted by ipoplaya on 03/14/08 at 07:57 AM
No power lines for me George… I’d rather pay $1M and have low mello roos, like in NW Pointe, vs. this the power-line POS with $6500 in non-deductible MRs.
You got the power lines overhead, the trash facility a few blocks down, fronting to Warner with only a 6’ wall between. It’s horribly located IMO.
Posted by Emma Anne on 03/14/08 at 07:57 AM
I am not a fan of granite either, and all these kitchens look so much the same. I wonder if a lot of people will be tearing out pergraniteel in a few years because it looks so *dated*.
Posted by norcal_to_socal on 03/14/08 at 07:58 AM
There is a comedy called “The Castle” about an australian family losing their house to gov’t through eminent domain. Of course the house sits right next to the airport AND high voltage power lines. Seems almost similar to the VoC situation….
two quotes:
Darryl Kerrigan: “Dad, he reckons powerlines are a reminder of man’s ability to generate electricity.”
Farouk (their neighbor talking about the home assessor): “He say plane fly overhead, drop value. I don’t care. In Beirut, plane fly over, drop bomb. I like these planes.”
http://www.imdb.com/title/tt0118826/
Posted by ipoplaya on 03/14/08 at 07:59 AM
ten, the power lines run along Warner right between this house and Warner. When you open the front door and look out, your view is massive high voltage lines…
Check out the satellite photo ten. You can see the shadows cast by the towers that hold the lines… Look just below the words “Warner Ave.”
Posted by hb on 03/14/08 at 08:19 AM
What baffles me is the continual touting of the “planned” community concept. What kind of “planning” places residential property adjacent to enormous electrical towers?
Crappy planning, I would say.
Congrats on the book!!
Posted by AZDavidPhx on 03/14/08 at 08:22 AM
To enter into a contract with the intention of not fulfilling the terms of the contract is called fraud.
Indeed. Many 30 year mortgages have been signed by home-debtors whom had no intention to pay the value of the note.
Instead, the majority figure that there would be another greater fool in line the pay it off for them.
900K for a median house? No problem! Not like I am going to be the one to have to work off that 900K. Someone else will just take out a bigger loan when I sell! Brilliant!
Sucks for the guy at the of the chain who has to pony up!
Posted by lendingmaestro on 03/14/08 at 08:24 AM
Well, most people who are walking away now never intended to, so you can’t say it was premeditated fraud.
‘Nanke is speaking right now about the problems with brokers. They were unregulated. It’s going to be kind of difficult to go after them ex post facto.
Posted by lendingmaestro on 03/14/08 at 08:26 AM
Indymac is toast.
Posted by AZDavidPhx on 03/14/08 at 08:26 AM
I’m sure granite is fine in terms of practicality. It’s the socially negative connotations that turn me off.
The derision cast at it is more of a slam of the flipperishness of gamblers who would install a granite counter top in a kitchen and then proclaim that the overall value of the house has been increased by 100K.
Posted by tenmagnet on 03/14/08 at 08:26 AM
I was scanning the photos expecting to see power lines planted like a tree in front of the house.
Yeah, looks like they’re on Warner, close enough I guess.
Posted by AZDavidPhx on 03/14/08 at 08:33 AM
It does have low 79.00 HOA dues!
Posted by Chuck on 03/14/08 at 08:33 AM
This may indeed be a nice, albeit overpriced, house - the listing descirption makes it sounds nice - but the pictures are some of the worst I have seen in a while. If a house has all of the wonderful features that the realtor lists in the description don’t you think she’d want more than 3 dark pictures that look like they were taken in a cave? Buy a flash bulb, please! If I were the owner/seller I would renegotiate my real estate commission….
Posted by Chuck on 03/14/08 at 08:36 AM
Oh wow, I just caught the listing price typo. $139 million. Very funny….
Posted by tenmagnet on 03/14/08 at 08:37 AM
I have a MM account there that’s paying me 4%.
Do you think I should pull it?
Countrywide is offering 3.75%
Gets worse from there.
Posted by AZDavidPhx on 03/14/08 at 08:39 AM
Perhaps part of the “plan” is that there will be a certain “element” of “buyer” that will not care.
Similar reasoning tends to explain the Valley Forge “planning” that goes into building houses 6 feet apart from each other.
Posted by former_irvine_resident on 03/14/08 at 08:40 AM
I never had granite before and love it. The pattern and coloring are quite unique and make our kitchen look wonderful. I also like that it hides spills too so it always looks clean even when it’s not.
What cracks me up is the inappropriate use of granite as mentioned. Some of the pictures I’ve seen in the homes profiled are a joke. It’s the old lipstick on a pig analogy…
Posted by AZDavidPhx on 03/14/08 at 08:41 AM
They are all dropping.
Mine is down to 4% now too. Down from 5% around December.
Did you see Bears Sterns stock today? Down about 40% right now.
Posted by Dan on 03/14/08 at 08:41 AM
I thought the no-fruit-zone agreement was to prevent fruitfly/vermin infestations. I doubt the EPA would allow these turkeys to build on toxic ground, even with 24” of “topfill”.
Buster, do you have documentation to back your “highly contaminated” claim?
Posted by buster on 03/14/08 at 08:43 AM
Stay under the $100k FDIC limit. We have a sizable CD at IndyMac from last fall: 5.85%. Too bad it matures in six more months….
Posted by FairEconomist on 03/14/08 at 08:44 AM
You wonder? Has there ever been a decorating fad that didn’t look dated in a few years?
Posted by former_irvine_resident on 03/14/08 at 08:45 AM
Price per square foot: $46,342 ROFLMAO!
That’s a good one!
Posted by Kelja on 03/14/08 at 08:53 AM
How many to go? How many financial giants are saying today things are hunky-dory and tomorrow they go down in flames. The beginning of a financial storm, the biggest we’ve seen, is here. But its only the start.
Today Bear Sterns, tomorrow?
Protect yourselves good people.
Posted by AZDavidPhx on 03/14/08 at 08:53 AM
True. You can’t say it was pre-meditated.
IrvineRenter likes to kick around “The road to hell is paved with good intentions” - which is exactly the problem.
Our culture has adopted an entitlement mentality when comes to house prices and mortgages. This has also been described as a “social contract”.
House “owners” feel entitled to sell their house for more than they paid.
House “owners” expect that the buyer of their house will be more than willing to take out a larger loan than they (the seller) did.
The result of this Ponzi is that when everyone is drinking the kool-aid, all participants are willing to take out a loan for any amount that the bank is willing to gamble on them.
We can all pretend and tell ourselves that we fully intend to make good on our mortgages - but the vast majority just want to make payments for a few years and then move on with some cash in hand. Look no further than the “move up” crowd. How many of the move-uppers pay off their house before moving up? Any? None? Zilch? Not many either way.
Posted by ochomehunter on 03/14/08 at 08:57 AM
I agree with you, but honesy is one single most thing that not everyone has and people who are honest have different set of priorities and they find happiness in being honest. Dishonest people find happiness elsewhere. At the end of the day when you look in a mirror and and think about bad things you have done and good things you have done, bad things make you feel guilty.
Posted by ipoplaya on 03/14/08 at 09:02 AM
Buster is right Dan. VoC is built on the old base and there are disclosures when you buy there related to a toxic groundwater plume. You are warned not to plant fruit trees and of course, never to drink the groundwater…
See the bottom of page 3 on this for the marketed version:
This might be a steal at this price in year 3008, or 5008?
Posted by AZDavidPhx on 03/14/08 at 09:10 AM
Not necessarily.
Every dishonest person whom I have ever encountered was an astute Doublethink practitioner. Able to make themselves believe that they were not dishonest.
They sleep way better than the honest people.
Only people with an honest conscience can feel guilt. If you have an honest conscience, you are most likely an honest person.
Posted by tenmagnet on 03/14/08 at 09:11 AM
Yeah, I have a 5mo. CD at Wells Fargo that matures in April.
The new rate they’re giving me is 2.75%, ouch!
Posted by Dan on 03/14/08 at 09:14 AM
I almost bought one of Lennar’s “budget” 1-bedroom condos for $468,000 last summer—the ones that have a stunning view of the concrete and asphalt recycling plant across from the river that was filled with shopping carts and mattresses…
And then I found this place.
Thanks for the follow-up IPO.
Posted by skek on 03/14/08 at 09:22 AM
Excellent call by whoever suggested Eddie Grant!
Posted by Lucy on 03/14/08 at 09:27 AM
Sorry to jump in with my legal education, but there is no such thing as “premeditated fraud” or “non-premeditated fraud.” In legal terms, fraud is always intentional. If there was not intention to deceive/misrepresent at the time of the contract - then no fraud. I would just call it stupidity.
Posted by skek on 03/14/08 at 09:31 AM
I was surprised that people answered the two poll questions differently. Seems to me, maybe you kick yourself a little harder if you’ve lost your own money, but stay or go, the answer should be the same in both circumstances.
As for me, I was one of the few who said I would stay regardless because I love my home. If I can afford the payment, it wouldn’t matter what the house was worth or whether I was underwater. I’d view it differently if I was a flipper.
Posted by c-ril on 03/14/08 at 09:39 AM
IR,
Can you work on publishing it by yourself to get it out faster ? do you need help ? We can pre-order !
Now, if the book sales are successful, you’ll get your down payment ahead of time ? Will you buy your dream house in 2009 then ?
Posted by ipoplaya on 03/14/08 at 09:52 AM
Thanks skek. Twas me… I always think of that song when I drive around the Irvine side of VoC.
Posted by ipoplaya on 03/14/08 at 09:57 AM
That song sounded good in my little mini-truck with two 20” Fosgate woofers in my home-built speak cabinet.
I still can’t believe I was pushing 500 watts and eight speakers in a tiny ‘84 Nissan ST P/U. Surprised I can hear anything today…
Thornberg says so cal will correct 40% from the high. With every day, I agree more and more.
Anyone buying a home now is asking for trouble.
Posted by Surfing in Newport on 03/14/08 at 10:18 AM
Actually, you should answer the two questions differently. In the first case you are a 25% price increase from making any money. In the second any price increase will make you money (okay ~30 and 6 percent if you include commissions). Remember that home ownership is like an option and even underwater options have some value. Then add in the cost due to the hit on your credit score, the cost of moving, etc…. and you could get a significant (and rational) reason for differences in the response.
Personally, I would have bailed before I lost all my money and had to make a choice between future negatives (credit score) and current savings.
Posted by CapitalismWorks on 03/14/08 at 10:22 AM
By definition a Fad will look dated. A more interesting question is, what styles have remained attractive through time? Aesthetics. I think there are plenty examples of arhictectural design that have demonstrated persistent appeal over time.
Posted by ipoplaya on 03/14/08 at 10:42 AM
Hilarious… 5-year ARMs are cheaper than 3-year ARMs:
That’s funny, somehow I pictured you driving either an IROC Z or Vette. Not sure what exactly a mini-truck is, is that a lowered truck?
Posted by AZDavidPhx on 03/14/08 at 11:06 AM
Agreed. I like that: “buyer stupidity”. Unfortunately, “buyer stupidity” has allowed stupid buyers to laugh all the way to the bank for the last decade.
Posted by skek on 03/14/08 at 11:09 AM
Good point, Surfing. Thanks.
Posted by Lost Cause on 03/14/08 at 11:12 AM
That is the beauty of a blogger book. You start out with a built in audience/customer base.
Posted by Lost Cause on 03/14/08 at 11:16 AM
Now imagine a scenario more typical of the early 90s. You have put 20% down, so you have $227,608 of your own money in the property.
That property would cost $227,608 in the early 90s.
Posted by Lost Cause on 03/14/08 at 11:19 AM
Very emotional home.
Yeah, totally depressing.
Posted by Newport Trojan on 03/14/08 at 11:34 AM
Don’t even get me started on the valuations of these “improvements” on the HGTV shows! The value is what the market is willing to pay. I can’t understand why people do all these improvements and don’t sell their home, but want a number on their equity gain. How about ....1 bazillion.. who cares. You’re not moving so why don’t you just put in what you want because you want it to look your way. The mentality of these people amazes me.
The more I think about it you could probably determine how many buyers had any real intentions of owning their house for an extended time, 7 to 10 yrs, by their granite color choice. The more beautiful grained granites and marbles require a more personal feel to the decor, versus the beige carpet, neutral walls and almond mauve granite tops. Not many people pick rainforest green or norweign rose as countertops because it would stand out and look horrible against a neutral decor. In the photos, most of the counterops are cut from 5-7 colors and I laugh when I see them because it is so obvious what they were doing…or they are just bland people.
Posted by Lost Cause on 03/14/08 at 11:35 AM
Honesty and honor get you nothing.
Who needs things.
Posted by ipoplaya on 03/14/08 at 11:45 AM
Yup, lowered truck. Had a 4” drop on it… Did the drop myself in the garage. Talk about a crappy suspension…
Had a ‘69 Camaro SS before that but the gas expense was killing me. It had a bad head gasket and would burn a quart of oil every week.
Posted by lawyerliz on 03/14/08 at 12:28 PM
I don’t like granite.
But I note that after a fad expires, wait enough time and it becomes quaint and charming. If the execution is high quality with high quality materials.
Check out the office. A granite-topped desk… Raaawwwrrrr!
All the granite must have been the reason this house lasted one day on MLS. It just went into escrow today.
Posted by lawyerliz on 03/14/08 at 12:33 PM
I sent a little quarterly payment money in to the IRS for Secy withholding. I felt like writing “Bear Stearns bailout money” on the bottom but I didn’t.
Actually, Bear will probably be merged and a lot of the crooks will at least get fired even if they don’t have to do the perp walk.
Personally, when I look at much of the new product out there, I see dressed up boxes. I think the 00’s will look very dated in 10-20 years. I really like the architecture of the 1980’s and the houses in Westpark; however, Westpark did not differentiate the product enough, and the sameness of the neighborhoods is a major turnoff.
I have a contact who is a published author with a major publishing house. I am hoping that will get the manuscript in front of the right people. If not, I will explore other options including self publication.
Posted by lawyerliz on 03/14/08 at 12:42 PM
I actually was close to this position in 82-85 or so. We put down 21% and the house promptly went down 10%. We liked the house, and could with a tad of difficulty afford the payments, so it never crossed our innocent little minds to do anything but keep paying the payments.
Also, tho our street was filled with houses, most of the rest of the development wasn’t. Nowadays I would worry myself to death about it, but at that time we liked all the vacant lots for the kids to run around in and we shot off model rockets there.
It never crossed my mind that the development wouldn’t be finished. Took quite a while, but it was.
Posted by skek on 03/14/08 at 12:48 PM
I’d stay away from self-publication at all costs. There’s no money it and it has a definite stigma in the industry.
Posted by IrvineResident on 03/14/08 at 12:50 PM
for best avilable CD rate, check these out:
http://bankdeals.blogspot.com/
http://www.fatwallet.com/forums/finance/682884/
best one out there is 4.90% for 12-17 months CD
Posted by Surfing in Newport on 03/14/08 at 12:59 PM
Are you serious about the 80’s? I find the OC Mediterranean style so repulsive I don’t think I could live a neighborhood full of it, let alone own one. The 00’s at least went back to some classic spanish/california styles. Good floor plan and functional style = lasting value. Pasted on style = dated look in only a few years.
Posted by tonye on 03/14/08 at 12:59 PM
We put CaesarStone, which is man pressed quartz. IMHO it looks better than Granite and wears better.
From a cook’s standpoint I agree that grout less stone and stainless steel are best. Stainless steel counter tops are the best from a hygienic and cooking point of view but they lack the warmth that stone gives in a residential setting.
When we rebuild our next house I want to look into concrete counter tops.
Granite is very easy to clean, no grout to stain, it is hard “as a rock” (joke) very hard to chip or crack, like tile. Now stainless is another matter, hard to keep clean, and very hard to clean.
Posted by tonye on 03/14/08 at 01:10 PM
I voted to walk on the 100LTV but stay on the 80LTV.
It’s more than just the equity, it’s also the times.
Why? Simple. Today, many people live in neighborhoods that went through a very serious bubble driven by very cheap money. Many people are gonna walk or BK when the actual price of their homes hits. That is, people bought into the “low monthly payment”, not the astronomical price of the home. It’s your typical car salesman deal.
End result? Entire neighborhoods will crash in price. Big time. Many sellers at the same time. So, if you have no money in play, you might as well walk and take a seven year credit hit.
Back in the 90s it was different. We didn’t have such a broad and deep bubble and not so many people were underwater in their loans. The value of homes stood at some reasonable price in reference to planet Earth and so folks figured out it was better to stay and not lose money in the long run. There were not so many homes for sale ( OK, Moreno Valley did ) and so you could sell and not ruin your credit - but leave behind gobs of money.
I guess the story here is that the Financial System got Long Term Capital Management’d out. Their models assumed that people would hold onto their houses no matter what but failed to take into account that home ownership is home OWNERship. If the “owner” has absolutely no sweat equity ( as in working to raise the down payment ) then they have no equity stake in the property.
So why would people indenture themselves to a financial drain forever when they can walk out and in seven years start anew?
A no brainer.
Posted by tonye on 03/14/08 at 01:18 PM
My wife’s Credit Union gave us 5% on our CDs.
Big thanks to Ipo for helping work out our 401K hedge.
Posted by tonye on 03/14/08 at 01:24 PM
OK, so people are walking… so what?
I just got an inkling of someone who’s sitting on the exact house I want. They are in BK and holding off for two more months before the bank kicks them out.
So, that gives us two months to prepare our house for sale. If I can collect 700K, heck 600K, I’m outta here.
We looked through the MLS and there people with the exact plan home that I want to buy and they are in denial. They “upgraded” their homes with 10K of granite and want 100K for that. I think when this one home hits the market reality is gonna hit some people in the face.
Meanwhile, we noticed that very few homes in my size -2700 sq ft- have moved. That’s because people want 1.4MIL and up.
Now we come in…. we price our home at 1.2 and we should be able to sell it. A smaller home up the street with a very nice renovation and 2000 sq feet ( realtor lied and listed it at 2200) just sold for 950K. Our kitchen is larger and better, our location is much better, we have rebuilt the entire house, etc… so it should not be hard to sell.
Very few homes in TR with 5b/3ba. Very few.
Posted by Hmmmm on 03/14/08 at 03:22 AM
This house is nice. I think I will fly out to Ca and buy this one. I will bring my sledgehammer and smash every bit of granite in the house. I have come to despise that material. If we ever redo our kitchen…no granite.
The power lines are a bonus. No rear neighbor and open space behind the unit. add 10% lot premium.
——-
Posted by AZDavidPhx on 03/14/08 at 04:30 AM
The best way I have seen this scenario be described so far is:
“Heads - I win. Tails - the bank loses.”
See can see all the flippery upgrades with the granite counters, jetted whirpool tubs, GE Monogram appliances, etc.
The only thing missing is a vibrating bed that takes quarters. Maybe today’s seller should consider it. It is a very competitive market these days.
Posted by AZDavidPhx on 03/14/08 at 04:34 AM
Agree 100%.
Granite counters; the ultimate staple of the housing Ponzi. The Scarlet Letter that all the bubbly homes must bear.
Posted by mav on 03/14/08 at 05:16 AM
IR,
When do you think you will finish the book?
Are you going to try to publish it in peak housing mania with predictions for the future?
Have you decided if you will be an anonymous aurthor?
Posted by ET on 03/14/08 at 05:34 AM
How much of if any of that second mortgage was necessary? I bought in DC in late 1999 a house much small in size and cost and put $10,000 down. Holy Hannah.
Can I just say the banks deserve to loose that much money - companies that stupid and greedy deserve to get slammed. Too bad those that were involved in those particular transaction won’t be forced to personally pay up so that the company recoup some of it’s money.
Posted by ice weasel on 03/14/08 at 05:44 AM
Once again, I think the issue of “honor” and morality doesn’t come into it. It’s not that I feel that way personally. Personally those issues are vitally important to me. They are me. But in a business sense, you’re a sucker if you fall into that trap. Banks gave away money. They have no business whine about it now. They, like the homeowners, shouldn’t complain about losing money. You gambled. You played the game. You lost. Game over.
Here’s one example from Atrios this morning.
A few days ago…
“NEW YORK (Reuters) - Bear Stearns Cos Chief Executive Alan Schwartz on Wednesday dismissed recurring speculation that the investment bank faces a cash crunch, saying it has hefty cash reserves that have remained little changed this year.
Schwartz, in a televised interview on CNBC, also said he is comfortable with the range of analysts’ earnings estimates for the fiscal first quarter ended Feb. 29. Results for the quarter are due next week.
“We don’t see any pressure on our liquidity, let alone a liquidity crisis,” he said.”
This morning…
“NEW YORK (AP)—JPMorgan Chase says that in conjunction with the Federal Reserve Bank of New York it will provide temporary funding for Bear Stearns.
The funding will be provided as necessary for up to 28 days. During that time, JPMorgan Chase will also help Bear Stearns find permanent financing.
Bear Stearns says its liquidity significantly deteriorated over the past day and the temporary funding will help it continue operating normally. The investment bank added there is no guarantee any permanent strategic alternatives will be successful.”
Only suckers are honest where business is concerned. It may be an indictment of a number of things but it’s true nonetheless. So my point is, “honor” doesn’t play into the contract. Yes, in a better world, we would honor contracts, we would be honest but the simple truth apparent anyone with the consciousness of a snail is that’s just not the case. Honesty and honor get you nothing.
If anyone wishes to dispute I welcome the discussion and I would to be proven wrong. I doubt it will happen though.
Posted by ice weasel on 03/14/08 at 05:46 AM
Apologies, the last line should read, “If anyone wishes to dispute this I welcome the discussion and I would love to be proven wrong. I doubt it will happen though.”
Posted by Pianist on 03/14/08 at 05:50 AM
I’m feeling the urge to defend granite. Some of us that cook a lot, in my case daily, find it very easy to keep clean. You don’t have to worry about hot pans burning it, you can roll piecrust and biscuits and pizza crust directly on it, you never have to replace it, and I just like the looks. I know some people prefer Corian surfaces, but I prefer granite. Tile is too apt to stain in the grout lines, even if you are meticulously clean in the kitchen, plus, I worry about bacteria growth in the grout. Formica just isn’t as durable, although it is much less expensive.
My granite was paid in ca$h, not HELOC’d.
Posted by IrvineRenter on 03/14/08 at 05:53 AM
I should have a draft complete by the end of the month, but it will takes months to get published. It will be much like the posts on this board with a discussion of the history and circumstances that created the bubble along with predictions for the future. The great thing about publishing now is both the media attention the issue is getting plus there is a natural follow-up book as the future becomes history.
I don’t think I will publish anonymously. At this point, my anonymity is mostly about protecting my family from some disgruntled homedebtor going postal. My snarky attitude probably doesn’t sit well with many. I never imagined the blog would become so popular and my ramblings so widely read. I don’t want fame or notoriety, but there is no compelling reason to remain anonymous once the book comes out.
Posted by no_vaseline on 03/14/08 at 06:04 AM
The concept IR is trying to describe is called a “sunk cost”.
http://en.wikipedia.org/wiki/Sunk_cost
The answer to both questions is the same - adios. Provided you were aware enough to realize that this outcome was a real possiblity.
Posted by George8 on 03/14/08 at 06:08 AM
IPO, if you can get today’s featured house for $800k-$825k, will you jump into it. Doest it fir your long term housing need?
Posted by Mr Vincent on 03/14/08 at 06:14 AM
Yeah, I’m kindof a granite whore myself. Its everywhere in my place.
Posted by George8 on 03/14/08 at 06:14 AM
Fed is ultimately buying all the junk collateral from BSC using JPM as window only. And, who back Fed? I guess - we the tax payers.
Posted by mav on 03/14/08 at 06:15 AM
I think you are right about the anonymous part…. I was only joking way back when…. I don’t think it’s necessary.
I’m looking forward to the book. Are there going to be extras that are not on the blog?
It would be cool if there was an LCD page in the book to show all the you tube videos.
Posted by ConsiderAgain on 03/14/08 at 06:16 AM
I totally agree with you and your defense of granite. I also paid cash for my 85 sq ft of tier 2 granite at $63/sq ft installed.
Not all bubble purchase/flipper indicators are bad.
Posted by Mr Vincent on 03/14/08 at 06:24 AM
900k for a detached condo?
Come on! You have a fairly large nice house and not only is there no back yard, but there are no side yards either.
And to build right across the street from power lines…thats a no no. This area looks more fitting as an industrial complex with heavy construction yards or something. It does not have that community look or feel to it.
Its too bad, I like the concept of driving into a garage that is set back like that. The area next to the garage is great for washing the car etc. But the tiny lot and power line etc make it to where I would never even consider this house.
Posted by anotherrenter on 03/14/08 at 06:29 AM
Good point. I think the more apt comparison to the 90s would be that a) prices would not have run up so far, and b) along the same line, with 20% equity stake at purchase, the number of homes with zero equity left would be much lower.
Posted by Priced_Out_IT_Guy on 03/14/08 at 06:33 AM
I’ll take an autographed copy.
Actually, I’ll take four or five. I want to give them out to my friends and family.
I’m glad to see that all of your hard work on this blog is going to materialize into a single physical volume so that more people can become educated on the real estate market.
Since we don’t get Real Estate 101 or Personal Finance 101 in California’s current educational curriculum, resources like this blog are invaluable to many of us who are just getting started in life and are the most impressionable to real estate fallacies and commercial advertising campaigns spouting “buy now, buy now and get the respect you deserve from your peers, buy now with no money down or get priced out for ever!”
Posted by Mr Vincent on 03/14/08 at 06:34 AM
Just another note about the backyard. You can see that there were no elevations set for this tract. Look at the pic of the backyard and every other house next to this one has windows looking into it.
I know its not possible to have 100% privacy but this is very bad and another reason I would not touch homes like this.
Posted by Surfing in Newport on 03/14/08 at 06:34 AM
To enter into a contract with the intention of not fulfilling the terms of the contract is called fraud. The behavior is both immoral and illegal. It just happens that it’s difficult to prove, so it’s rarely prosecuted.
If I’m not mistaken, a stated income loan still requires you to state your income and debts. They just don’t check. To lie on the application is called fraud and it’s immoral and illegal. The fact that people were encourage to do so by the mortgage brokers is very disturbing (but not surprising). The most effective way of dealing with this problem would be to go after the mortgage brokers and throw them into jail. This would discourage the behavior in the future.
To buy a home and then have the value of home decrease so much as to be worth less the loan and then using this as an excuse to walk away is not fraud and I wouldn’t even consider it immoral. You are exercising your rights under the contract and will pay the penalties associated with that exercise.
To offer a home loan to individuals that requires them to either sell the home in the future or make significantly more money is the most troubling aspect of the housing mess. To then offer such loans based on stated income does nothing but invite speculation in the market.
Of course, if you use the behavior of CEO’s as the benchmark, most of the people profiled in this blog should be considered angels. No wonder you seem confused about honor and morality.
Posted by mark on 03/14/08 at 06:35 AM
The key issue in your poll questions is that the “...payments were double the cost of a comparable rental…”
I think this is a sliding scale. e.g. 200% the cost of renting equivalent = walk away; 150% the cost of renting equivalent = must weigh all the facts and forecast (The key fact being how affordable is the home for you? Less than 20% of your gross to PITI?); 120% or less the cost of renting equivalent = stay put if PITI is affordable.
Posted by Newport Trojan on 03/14/08 at 06:39 AM
As a stone importer, it kills me to hear granite getting such a bad name. It is a beautiful material with alot of practical qualities as listed above.
I guess the phrase “too much of a good thing” could apply to it during the flipping mania.
What really irritates me though is when these jack@$$ people use the wrong material in the wrong areas. I had a friend tell me they were installing Jerusalem Stone in their kitchen as countertops because his wife loved the material and didn’t want anything else. I explained to my friend that since it is a limestone, it will soak up anything spilt on it like a sponge, even with sealing. He spent the next couple of years playing coutertop cop with his guests.
Personally I wish people would just get creative with the material selections they use, instead of going with the safe standards. Maybe it isn’t the use of granite, but the use of the same granite everywhere…very stepfordish if you ask me.
Posted by BD on 03/14/08 at 06:51 AM
Hi IR -
Congrats on the book!! I look forward to reading it…will you sign a few copies for your fellow bloggers?
BD
Posted by rtlguru on 03/14/08 at 06:56 AM
All the upgrades are standard on lennar homes.
Posted by fencewalker on 03/14/08 at 06:59 AM
Adjacent power lines = No Deal!
Posted by IrvineRenter on 03/14/08 at 07:05 AM
It is funny how in business you are trained to ignore sunk costs, but emotionally, on a personal finance level, it is very difficult to do.
Posted by buster on 03/14/08 at 07:07 AM
The money you save will help pay for your brain tumor removal operation after living under the high voltage power lines.
Posted by buster on 03/14/08 at 07:13 AM
Another deal breaker is you have to sign a promise not to grow fruit or veggies in your yard. The land is highly contaminated, so they put clean topfill to “seal” it. But if you eat anything grown on this toxic dump, you’re gonna grow another set of ears.
Just the kind of place where I want my 2-year old daughter playing. I guess it’s OK if I take away all her toy shovels…
Posted by Stilldoubtful on 03/14/08 at 07:31 AM
Also the property tax rate is 1.8%. Great, bad enough you are paying 899k for it, but will you also pay 18k a year in property taxes.
Where is the money for all of this?
All these homes are going to crash, because people just aren’t making the money to buy these homes.
Posted by ipoplaya on 03/14/08 at 07:53 AM
At list, the prop taxes would be more like $16K to begin, but still a huge chunk of cash to outlay to high massive power lines right outside your front door…
Posted by tenmagnet on 03/14/08 at 07:54 AM
Where are the power lines you guys are talking about?
Are they invisible?
This house is pretty nice.
In particular, I like the flooring and kitchen.
The reason it’s priced at $899K is due to VOC location.
Posted by ipoplaya on 03/14/08 at 07:54 AM
Let her keep the shovels buster, just don’t let her dig down more than a couple of feet!
Posted by ipoplaya on 03/14/08 at 07:57 AM
No power lines for me George… I’d rather pay $1M and have low mello roos, like in NW Pointe, vs. this the power-line POS with $6500 in non-deductible MRs.
You got the power lines overhead, the trash facility a few blocks down, fronting to Warner with only a 6’ wall between. It’s horribly located IMO.
Posted by Emma Anne on 03/14/08 at 07:57 AM
I am not a fan of granite either, and all these kitchens look so much the same. I wonder if a lot of people will be tearing out pergraniteel in a few years because it looks so *dated*.
Posted by norcal_to_socal on 03/14/08 at 07:58 AM
There is a comedy called “The Castle” about an australian family losing their house to gov’t through eminent domain. Of course the house sits right next to the airport AND high voltage power lines. Seems almost similar to the VoC situation….
two quotes:
Darryl Kerrigan: “Dad, he reckons powerlines are a reminder of man’s ability to generate electricity.”
Farouk (their neighbor talking about the home assessor): “He say plane fly overhead, drop value. I don’t care. In Beirut, plane fly over, drop bomb. I like these planes.”
http://www.imdb.com/title/tt0118826/
Posted by ipoplaya on 03/14/08 at 07:59 AM
ten, the power lines run along Warner right between this house and Warner. When you open the front door and look out, your view is massive high voltage lines…
Posted by IrvineRenter on 03/14/08 at 08:05 AM
Does anyone think this property in Laguna Nigel is worth $139,999,900?
http://www.redfin.com/stingray/do/printable-listing?listing-id=1558269
Posted by ipoplaya on 03/14/08 at 08:07 AM
Check out the satellite photo ten. You can see the shadows cast by the towers that hold the lines… Look just below the words “Warner Ave.”
Posted by hb on 03/14/08 at 08:19 AM
What baffles me is the continual touting of the “planned” community concept. What kind of “planning” places residential property adjacent to enormous electrical towers?
Crappy planning, I would say.
Congrats on the book!!
Posted by AZDavidPhx on 03/14/08 at 08:22 AM
To enter into a contract with the intention of not fulfilling the terms of the contract is called fraud.
Indeed. Many 30 year mortgages have been signed by home-debtors whom had no intention to pay the value of the note.
Instead, the majority figure that there would be another greater fool in line the pay it off for them.
900K for a median house? No problem! Not like I am going to be the one to have to work off that 900K. Someone else will just take out a bigger loan when I sell! Brilliant!
Sucks for the guy at the of the chain who has to pony up!
Posted by lendingmaestro on 03/14/08 at 08:24 AM
Well, most people who are walking away now never intended to, so you can’t say it was premeditated fraud.
‘Nanke is speaking right now about the problems with brokers. They were unregulated. It’s going to be kind of difficult to go after them ex post facto.
Posted by lendingmaestro on 03/14/08 at 08:26 AM
Indymac is toast.
Posted by AZDavidPhx on 03/14/08 at 08:26 AM
I’m sure granite is fine in terms of practicality. It’s the socially negative connotations that turn me off.
The derision cast at it is more of a slam of the flipperishness of gamblers who would install a granite counter top in a kitchen and then proclaim that the overall value of the house has been increased by 100K.
Posted by tenmagnet on 03/14/08 at 08:26 AM
I was scanning the photos expecting to see power lines planted like a tree in front of the house.
Yeah, looks like they’re on Warner, close enough I guess.
Posted by AZDavidPhx on 03/14/08 at 08:33 AM
It does have low 79.00 HOA dues!
Posted by Chuck on 03/14/08 at 08:33 AM
This may indeed be a nice, albeit overpriced, house - the listing descirption makes it sounds nice - but the pictures are some of the worst I have seen in a while. If a house has all of the wonderful features that the realtor lists in the description don’t you think she’d want more than 3 dark pictures that look like they were taken in a cave? Buy a flash bulb, please! If I were the owner/seller I would renegotiate my real estate commission….
Posted by Chuck on 03/14/08 at 08:36 AM
Oh wow, I just caught the listing price typo. $139 million. Very funny….
Posted by tenmagnet on 03/14/08 at 08:37 AM
I have a MM account there that’s paying me 4%.
Do you think I should pull it?
Countrywide is offering 3.75%
Gets worse from there.
Posted by AZDavidPhx on 03/14/08 at 08:39 AM
Perhaps part of the “plan” is that there will be a certain “element” of “buyer” that will not care.
Similar reasoning tends to explain the Valley Forge “planning” that goes into building houses 6 feet apart from each other.
Posted by former_irvine_resident on 03/14/08 at 08:40 AM
I never had granite before and love it. The pattern and coloring are quite unique and make our kitchen look wonderful. I also like that it hides spills too so it always looks clean even when it’s not.
What cracks me up is the inappropriate use of granite as mentioned. Some of the pictures I’ve seen in the homes profiled are a joke. It’s the old lipstick on a pig analogy…
Posted by AZDavidPhx on 03/14/08 at 08:41 AM
They are all dropping.
Mine is down to 4% now too. Down from 5% around December.
The banks are pinching pennies big time.
Are we going to see 3% 6 months from now?
Posted by IrvineRenter on 03/14/08 at 08:41 AM
Did you see Bears Sterns stock today? Down about 40% right now.
Posted by Dan on 03/14/08 at 08:41 AM
I thought the no-fruit-zone agreement was to prevent fruitfly/vermin infestations. I doubt the EPA would allow these turkeys to build on toxic ground, even with 24” of “topfill”.
Buster, do you have documentation to back your “highly contaminated” claim?
Posted by buster on 03/14/08 at 08:43 AM
Stay under the $100k FDIC limit. We have a sizable CD at IndyMac from last fall: 5.85%. Too bad it matures in six more months….
Posted by FairEconomist on 03/14/08 at 08:44 AM
You wonder? Has there ever been a decorating fad that didn’t look dated in a few years?
Posted by former_irvine_resident on 03/14/08 at 08:45 AM
Price per square foot: $46,342 ROFLMAO!
That’s a good one!
Posted by Kelja on 03/14/08 at 08:53 AM
How many to go? How many financial giants are saying today things are hunky-dory and tomorrow they go down in flames. The beginning of a financial storm, the biggest we’ve seen, is here. But its only the start.
Today Bear Sterns, tomorrow?
Protect yourselves good people.
Posted by AZDavidPhx on 03/14/08 at 08:53 AM
True. You can’t say it was pre-meditated.
IrvineRenter likes to kick around “The road to hell is paved with good intentions” - which is exactly the problem.
Our culture has adopted an entitlement mentality when comes to house prices and mortgages. This has also been described as a “social contract”.
House “owners” feel entitled to sell their house for more than they paid.
House “owners” expect that the buyer of their house will be more than willing to take out a larger loan than they (the seller) did.
The result of this Ponzi is that when everyone is drinking the kool-aid, all participants are willing to take out a loan for any amount that the bank is willing to gamble on them.
We can all pretend and tell ourselves that we fully intend to make good on our mortgages - but the vast majority just want to make payments for a few years and then move on with some cash in hand. Look no further than the “move up” crowd. How many of the move-uppers pay off their house before moving up? Any? None? Zilch? Not many either way.
Posted by ochomehunter on 03/14/08 at 08:57 AM
I agree with you, but honesy is one single most thing that not everyone has and people who are honest have different set of priorities and they find happiness in being honest. Dishonest people find happiness elsewhere. At the end of the day when you look in a mirror and and think about bad things you have done and good things you have done, bad things make you feel guilty.
Posted by ipoplaya on 03/14/08 at 09:02 AM
Buster is right Dan. VoC is built on the old base and there are disclosures when you buy there related to a toxic groundwater plume. You are warned not to plant fruit trees and of course, never to drink the groundwater…
See the bottom of page 3 on this for the marketed version:
http://www.villagesofcolumbus.com/media/images/LEN-VOC328_M-Flyer2.pdf
Posted by George8 on 03/14/08 at 09:09 AM
This might be a steal at this price in year 3008, or 5008?
Posted by AZDavidPhx on 03/14/08 at 09:10 AM
Not necessarily.
Every dishonest person whom I have ever encountered was an astute Doublethink practitioner. Able to make themselves believe that they were not dishonest.
They sleep way better than the honest people.
Only people with an honest conscience can feel guilt. If you have an honest conscience, you are most likely an honest person.
Posted by tenmagnet on 03/14/08 at 09:11 AM
Yeah, I have a 5mo. CD at Wells Fargo that matures in April.
The new rate they’re giving me is 2.75%, ouch!
Posted by Dan on 03/14/08 at 09:14 AM
I almost bought one of Lennar’s “budget” 1-bedroom condos for $468,000 last summer—the ones that have a stunning view of the concrete and asphalt recycling plant across from the river that was filled with shopping carts and mattresses…
And then I found this place.
Thanks for the follow-up IPO.
Posted by skek on 03/14/08 at 09:22 AM
Excellent call by whoever suggested Eddie Grant!
Posted by Lucy on 03/14/08 at 09:27 AM
Sorry to jump in with my legal education, but there is no such thing as “premeditated fraud” or “non-premeditated fraud.” In legal terms, fraud is always intentional. If there was not intention to deceive/misrepresent at the time of the contract - then no fraud. I would just call it stupidity.
Posted by skek on 03/14/08 at 09:31 AM
I was surprised that people answered the two poll questions differently. Seems to me, maybe you kick yourself a little harder if you’ve lost your own money, but stay or go, the answer should be the same in both circumstances.
As for me, I was one of the few who said I would stay regardless because I love my home. If I can afford the payment, it wouldn’t matter what the house was worth or whether I was underwater. I’d view it differently if I was a flipper.
Posted by c-ril on 03/14/08 at 09:39 AM
IR,
Can you work on publishing it by yourself to get it out faster ? do you need help ? We can pre-order !
Now, if the book sales are successful, you’ll get your down payment ahead of time ? Will you buy your dream house in 2009 then ?
Posted by ipoplaya on 03/14/08 at 09:52 AM
Thanks skek. Twas me… I always think of that song when I drive around the Irvine side of VoC.
Posted by ipoplaya on 03/14/08 at 09:57 AM
That song sounded good in my little mini-truck with two 20” Fosgate woofers in my home-built speak cabinet.
I still can’t believe I was pushing 500 watts and eight speakers in a tiny ‘84 Nissan ST P/U. Surprised I can hear anything today…
Posted by fencewalker on 03/14/08 at 10:02 AM
Seriously?! That is shocking, I had no idea.
Posted by Mr Vincent on 03/14/08 at 10:03 AM
Thornberg says so cal will correct 40% from the high. With every day, I agree more and more.
Anyone buying a home now is asking for trouble.
Posted by Surfing in Newport on 03/14/08 at 10:18 AM
Actually, you should answer the two questions differently. In the first case you are a 25% price increase from making any money. In the second any price increase will make you money (okay ~30 and 6 percent if you include commissions). Remember that home ownership is like an option and even underwater options have some value. Then add in the cost due to the hit on your credit score, the cost of moving, etc…. and you could get a significant (and rational) reason for differences in the response.
Personally, I would have bailed before I lost all my money and had to make a choice between future negatives (credit score) and current savings.
Posted by CapitalismWorks on 03/14/08 at 10:22 AM
By definition a Fad will look dated. A more interesting question is, what styles have remained attractive through time? Aesthetics. I think there are plenty examples of arhictectural design that have demonstrated persistent appeal over time.
Posted by ipoplaya on 03/14/08 at 10:42 AM
Hilarious… 5-year ARMs are cheaper than 3-year ARMs:
http://www.mtgcapital.com/ratesheet-interestonly.html?state=ca&rs=interestonly&r=1
Posted by tenmagnet on 03/14/08 at 10:51 AM
That’s funny, somehow I pictured you driving either an IROC Z or Vette. Not sure what exactly a mini-truck is, is that a lowered truck?
Posted by AZDavidPhx on 03/14/08 at 11:06 AM
Agreed. I like that: “buyer stupidity”. Unfortunately, “buyer stupidity” has allowed stupid buyers to laugh all the way to the bank for the last decade.
Posted by skek on 03/14/08 at 11:09 AM
Good point, Surfing. Thanks.
Posted by Lost Cause on 03/14/08 at 11:12 AM
That is the beauty of a blogger book. You start out with a built in audience/customer base.
Posted by Lost Cause on 03/14/08 at 11:16 AM
Now imagine a scenario more typical of the early 90s. You have put 20% down, so you have $227,608 of your own money in the property.
That property would cost $227,608 in the early 90s.
Posted by Lost Cause on 03/14/08 at 11:19 AM
Very emotional home.
Yeah, totally depressing.
Posted by Newport Trojan on 03/14/08 at 11:34 AM
Don’t even get me started on the valuations of these “improvements” on the HGTV shows! The value is what the market is willing to pay. I can’t understand why people do all these improvements and don’t sell their home, but want a number on their equity gain. How about ....1 bazillion.. who cares. You’re not moving so why don’t you just put in what you want because you want it to look your way. The mentality of these people amazes me.
The more I think about it you could probably determine how many buyers had any real intentions of owning their house for an extended time, 7 to 10 yrs, by their granite color choice. The more beautiful grained granites and marbles require a more personal feel to the decor, versus the beige carpet, neutral walls and almond mauve granite tops. Not many people pick rainforest green or norweign rose as countertops because it would stand out and look horrible against a neutral decor. In the photos, most of the counterops are cut from 5-7 colors and I laugh when I see them because it is so obvious what they were doing…or they are just bland people.
Posted by Lost Cause on 03/14/08 at 11:35 AM
Honesty and honor get you nothing.
Who needs things.
Posted by ipoplaya on 03/14/08 at 11:45 AM
Yup, lowered truck. Had a 4” drop on it… Did the drop myself in the garage. Talk about a crappy suspension…
Had a ‘69 Camaro SS before that but the gas expense was killing me. It had a bad head gasket and would burn a quart of oil every week.
Posted by lawyerliz on 03/14/08 at 12:28 PM
I don’t like granite.
But I note that after a fad expires, wait enough time and it becomes quaint and charming. If the execution is high quality with high quality materials.
Posted by ipoplaya on 03/14/08 at 12:28 PM
Oh you are going to love this one AZ:
http://www.redfin.com/stingray/do/printable-listing?listing-id=1558108
Check out the office. A granite-topped desk… Raaawwwrrrr!
All the granite must have been the reason this house lasted one day on MLS. It just went into escrow today.
Posted by lawyerliz on 03/14/08 at 12:33 PM
I sent a little quarterly payment money in to the IRS for Secy withholding. I felt like writing “Bear Stearns bailout money” on the bottom but I didn’t.
Actually, Bear will probably be merged and a lot of the crooks will at least get fired even if they don’t have to do the perp walk.
Posted by IrvineRenter on 03/14/08 at 12:34 PM
Personally, when I look at much of the new product out there, I see dressed up boxes. I think the 00’s will look very dated in 10-20 years. I really like the architecture of the 1980’s and the houses in Westpark; however, Westpark did not differentiate the product enough, and the sameness of the neighborhoods is a major turnoff.
Posted by IrvineRenter on 03/14/08 at 12:37 PM
I have a contact who is a published author with a major publishing house. I am hoping that will get the manuscript in front of the right people. If not, I will explore other options including self publication.
Posted by lawyerliz on 03/14/08 at 12:42 PM
I actually was close to this position in 82-85 or so. We put down 21% and the house promptly went down 10%. We liked the house, and could with a tad of difficulty afford the payments, so it never crossed our innocent little minds to do anything but keep paying the payments.
Also, tho our street was filled with houses, most of the rest of the development wasn’t. Nowadays I would worry myself to death about it, but at that time we liked all the vacant lots for the kids to run around in and we shot off model rockets there.
It never crossed my mind that the development wouldn’t be finished. Took quite a while, but it was.
Posted by skek on 03/14/08 at 12:48 PM
I’d stay away from self-publication at all costs. There’s no money it and it has a definite stigma in the industry.
Posted by IrvineResident on 03/14/08 at 12:50 PM
for best avilable CD rate, check these out:
http://bankdeals.blogspot.com/
http://www.fatwallet.com/forums/finance/682884/
best one out there is 4.90% for 12-17 months CD
Posted by Surfing in Newport on 03/14/08 at 12:59 PM
Are you serious about the 80’s? I find the OC Mediterranean style so repulsive I don’t think I could live a neighborhood full of it, let alone own one. The 00’s at least went back to some classic spanish/california styles. Good floor plan and functional style = lasting value. Pasted on style = dated look in only a few years.
Posted by tonye on 03/14/08 at 12:59 PM
We put CaesarStone, which is man pressed quartz. IMHO it looks better than Granite and wears better.
From a cook’s standpoint I agree that grout less stone and stainless steel are best. Stainless steel counter tops are the best from a hygienic and cooking point of view but they lack the warmth that stone gives in a residential setting.
When we rebuild our next house I want to look into concrete counter tops.
Posted by desmo on 03/14/08 at 01:05 PM
Granite is very easy to clean, no grout to stain, it is hard “as a rock” (joke) very hard to chip or crack, like tile. Now stainless is another matter, hard to keep clean, and very hard to clean.
Posted by tonye on 03/14/08 at 01:10 PM
I voted to walk on the 100LTV but stay on the 80LTV.
It’s more than just the equity, it’s also the times.
Why? Simple. Today, many people live in neighborhoods that went through a very serious bubble driven by very cheap money. Many people are gonna walk or BK when the actual price of their homes hits. That is, people bought into the “low monthly payment”, not the astronomical price of the home. It’s your typical car salesman deal.
End result? Entire neighborhoods will crash in price. Big time. Many sellers at the same time. So, if you have no money in play, you might as well walk and take a seven year credit hit.
Back in the 90s it was different. We didn’t have such a broad and deep bubble and not so many people were underwater in their loans. The value of homes stood at some reasonable price in reference to planet Earth and so folks figured out it was better to stay and not lose money in the long run. There were not so many homes for sale ( OK, Moreno Valley did ) and so you could sell and not ruin your credit - but leave behind gobs of money.
I guess the story here is that the Financial System got Long Term Capital Management’d out. Their models assumed that people would hold onto their houses no matter what but failed to take into account that home ownership is home OWNERship. If the “owner” has absolutely no sweat equity ( as in working to raise the down payment ) then they have no equity stake in the property.
So why would people indenture themselves to a financial drain forever when they can walk out and in seven years start anew?
A no brainer.
Posted by tonye on 03/14/08 at 01:18 PM
My wife’s Credit Union gave us 5% on our CDs.
Big thanks to Ipo for helping work out our 401K hedge.
Posted by ipoplaya on 03/14/08 at 01:29 PM
I’ll give ya $900K for it tonye!
Posted by ipoplaya on 03/14/08 at 01:30 PM
$1M if you carry $100K of paper back @ 5%...