I am sure we will see average 50% declines. Bleak job market and future of businesses look pretty bad right now. No doubt there will be lots of more foreclosures from people who will lose jobs and then their homes and this would be sad for all, even those who are on the sidelines waiting to buy as when the time comes sideliners may not have a job. Looking at the prediction from US Economic Bureu on Recession, this one would be worse than two previous ones, 1987 included.
My question to you is, will there be a dead cat bounce? If yes, when and how long will that last?
Posted by NanoWest on 04/08/08 at 04:25 AM
IR,
I think that your down payment and monthly income requirements may be off here…....
Posted by FairEconomist on 04/08/08 at 05:14 AM
Is it really accurate to say it closed for 40% off when the sale is at a foreclosure auction? Nobody’s bidding at FC sales these days so it’s just the funny money number the effective mortgage holder wanted on the books. The investment company obviously thinks it’s worth more and it’s already on backup offers at the asking price. Admittedly the asking price is 30% off a fairly standard or even somewhat low bubble price (344/sq. ft.) so it’s still quite a drop.
“I think that your down payment and monthly income requirements may be off here…....“
Yes, they were.
“Is it really accurate to say it closed for 40% off when the sale is at a foreclosure auction? Nobody’s bidding at FC sales these days”
The reason nobody is bidding is because prices are dropping and values are not there. The sales price is the sales price. The CDO trustee is hoping they can find someone to pay more who will use conventional financing, but ordinarily, every flipper in the area would be making the same bet.
Posted by AZDavidPhx on 04/08/08 at 05:20 AM
1999 rollbacks would not surprise me at all.
Posted by george8 on 04/08/08 at 06:38 AM
Can this one on the I5 get $2500 monthly rent? GRM of 160 will work out to be $400k.
I think the answer is ‘no’. I gotta think the top of the rental market for this sort of housing is 2000-2200 a month. Somebody might pay it, but I’m not sure why.
Posted by IrvineCommuter on 04/08/08 at 06:57 AM
I rent a 3br SFR with large yard for $1950 in El Camino, my house is on the east side of walnut, better location than this condo. So I guess, the fair rent for this condo is around $1800.
Posted by movingaround on 04/08/08 at 07:02 AM
Thank you for a little dose of Prince this morning - such a great song!
Posted by ChrisR on 04/08/08 at 07:15 AM
IR,
Where are we now with the median price in Irvine compared to your graph?
Nice post. If it’s any indication of where things could be headed in Irvine, most of the props coming on to the market in South County right now are either a) owners who have held for 8+ years; b) REOs; c) prices 20-30% off peak pricing, 30%+ for less desirable small condos. I don’t see it being as severe in Irvine, but it’s like a train wreck you can’t keep your eyes off down in South OC.
Posted by Surfing in Newport on 04/08/08 at 07:29 AM
Any chance of doing your median graph with 3 lines: your earliest prediction, the prediction last month and the current prediction. I find it helpful to look at how predictions are changing overtime.
Posted by Olivia on 04/08/08 at 07:35 AM
IR,
I don’t like having to croll back to the top of the “home” page in order to click on the link to read the comments.
Posted by skek on 04/08/08 at 08:10 AM
caliguy,
I’m surprised you think South County is doing better than Irvine. My understanding was the opposite—that South County is getting hit harder. What makes you say that?
Posted by David on 04/08/08 at 08:26 AM
irvinerenter
To show that rougue lending practice still exist I would like to send you a pdf attachement of an offer I received yesterday. How do I send that attachment to you?
You can email me at irvinerenter@irvinehousingblog.com
Posted by Jim Jones (aka angry renter) on 04/08/08 at 09:10 AM
I understand that"clear thinking” was not the norm during the bubble but I still have a hard time understanding why anyone would purchase a property like this to live in at any price.
Classic substandard 70’s contruction. This place screams crappy apt. Yet it seems the market was teaming with properties just like this that people willingly agreed to purchase and live in. I didn’t understand it then and I certainly don’t understand it now. Owning a home is a huge responsibility\obligation with some sigificant potential downsides. Did they all think they only had to live in a rat hole like this for a short time and then they could ride the bubble up to something nicer?
Posted by William Jones on 04/08/08 at 09:16 AM
This property looks depressing…I don’t care what price they’re asking for it. I would need an extra strength dose of Prozac to live here.
Posted by biscuitninja on 04/08/08 at 09:26 AM
Just a side note:
Be careful when putting up ANY Prince music, he has a tendency to go after ANYBODY for displaying his copywrited stuff. Its stupid and very annoying. In fact he’s hurting his own fan base… but ...
good luck
-bix
Posted by houseonlegs on 04/08/08 at 10:30 AM
$400,000 is a lot of money for this place, really think about it $400,000….for that?
Posted by freedomCM on 04/08/08 at 11:04 AM
I think that IrvineCommuter is correct. A 30 year old condo less than 1 block from the constant noise of the 5 fwy would have a hard time renting for more than $1800, and I would guess closer to $1600. In addition, not many parents would want their kids living right next to all the noise and pollution, if they have a choice, so you are most likely to attract an investor/landlord as a purchaser.
That suggests a FMV is $1700 x 120 = $200k.
of course, figure in $200/month HOA and the age of the place might require assessments on top of that for repairs, and you could argue that it is
$1500 x 100 = $150k.
I guess we’ll see if this offer holds, or if it falls out…
Posted by Trustee on 04/08/08 at 11:58 AM
thats actually an MBS trustee, not a CDO Trustee.
Posted by xy31 on 04/08/08 at 12:32 PM
IR:
It may be somewhat of a reach to argue that banks will continue to write off huge losses based on observations in Irvine. I remember you stating yourself that RE markets are segmented. While Irvine will see huge losses (maybe up to 50%), other market segments may not experience such huge declines.
“will there be a dead cat bounce? If yes, when and how long will that last?“
Short-term fluctuations are hard to predict. If we see any bounce, it will likely end by early fall.
“It may be somewhat of a reach to argue that banks will continue to write off huge losses based on observations in Irvine.“
Given that we have only seen the tip of the iceberg, and given that most REOs in Irvine aren’t even on the market, I would say there are still significant bank write-downs yet to occur.
Just really wondering how some people price these homes in Irvine - it’s just all over the place. Like this one:
176 GROVELAND Irvine, 92620 $699,000
That’s F@#*-in 1400 sq ft.
Posted by David on 04/08/08 at 01:06 PM
I know that even in lower priced markets there is more than 40 percent drop. I know of a case where they bought a house in Queen Creek, Arizona where the prices are a lot cheaper than Irvine. The house was bought in 2005 and similar models went for $275 K at that time. Now it has dropped close to 50 percent (last sale of the same model was $143K) in value.
Skek - I think I was being unclear. I was trying to say that I don’t see Irvine being as bad as South County.
Yes…South OC is not so good these days..about 50% less sales than at the same time last year.
Posted by skek on 04/08/08 at 01:56 PM
Thanks, caliguy. I think I misunderstood you.
Posted by Chris on 04/08/08 at 03:31 PM
I’m afraid that we may see a 50% drop soon since banks are not willing to lend money to people buying a, gasp!, *depreciating* property.
That’s right folks. Real estate is no longer considered an appreciating but rather a depreciating asset. However, unlike a vehicle, a house will have its intrinsic value which will never be taken away even at its lowest point. We all have to live in an abode right? We can’t all be renting now, can we
At what price is that lowest point and when will we hit it (if ever)? Well, if I can answer that question, I wouldn’t be working for a paycheck in Silly-con Valley, would I
Posted by Chris on 04/08/08 at 03:34 PM
BTW, IR, from Redfin, this property is now in Backup Offer Accepted status.
Perhaps you can help us by keeping track of the sales price on this puppy if it goes through.
Thanks IR.
Beds: 3
Baths: 3
Sq. Ft.: 1,639
$/Sq. Ft.: $244
Lot Size: -
Type: Condominium
Style: Contemporary
Year Built: 1977
Stories: Two Levels
View(s): Has View
Area: El Camino Real
County: Orange
MLS#: P627777
Status: Backup Offers Accepted
On Redfin: 21 days
Posted by Genius on 04/08/08 at 05:17 PM
ochomehunter’s comment reminded me of something:
Not sure if anyone brought this up yet, but the Fed is shooting all of their bullets trying to bail out the financials; the people who f-ed up in the first place. When the job losses come and businesses close; some of them as an indirect result of bad decisions by the banks and investment groups (and the government) who will keep them propped up and how? When the banks get bailed out but the rest of the economy dies what will happen? Will people finally be outraged? These are the things I’m curious about.
I’m not curious where home prices will be anymore; that’s obvious. Not that I had much doubt since about 2003.
Posted by Quincy k on 04/09/08 at 06:23 AM
freedomCM-
You…are clueless. When and if this condo sells for 150-200k, the global banking system would probably collapse and your hoarded dollars would become worthless.
May I suggest you start reading the financial blogs for a better grasp of the current situation instead of babbling on about things that cannot be allowed to happen.
Some of you guys on these housing blogs are absolutely clueless on what is going on right now. The Fed, along with all the other FCB’s, are trying to save the System. 120 GRM’s or double digit treasury yields will not be allowed to happen again for these exact reasons.
And no, I am not a bitter homeowner. I cashed out in 04 and 05.
Posted by Lee in Irvine on 04/09/08 at 09:04 AM
Per the Feds, Orange County now leads the nation in job losses.
From the Register:
Job stats from federal employment counters show that Orange County lost 19,100 jobs in the year ended in the third quarter, the worst rate of job loss among the nation’s 328 largest counties.
http://ocbiz.freedomblogging.com/
Posted by rkp on 04/10/08 at 09:16 PM
Is it just me or is there only 1 comment showing up for this entry from Jim Jones?
Posted by rkp on 04/10/08 at 09:19 PM
wierd - i had to post a comment to read all the other comments.
Posted by ochomehunter on 04/08/08 at 12:05 PM
Irvinerenter,
I am sure we will see average 50% declines. Bleak job market and future of businesses look pretty bad right now. No doubt there will be lots of more foreclosures from people who will lose jobs and then their homes and this would be sad for all, even those who are on the sidelines waiting to buy as when the time comes sideliners may not have a job. Looking at the prediction from US Economic Bureu on Recession, this one would be worse than two previous ones, 1987 included.
My question to you is, will there be a dead cat bounce? If yes, when and how long will that last?
Posted by NanoWest on 04/08/08 at 04:25 AM
IR,
I think that your down payment and monthly income requirements may be off here…....
Posted by FairEconomist on 04/08/08 at 05:14 AM
Is it really accurate to say it closed for 40% off when the sale is at a foreclosure auction? Nobody’s bidding at FC sales these days so it’s just the funny money number the effective mortgage holder wanted on the books. The investment company obviously thinks it’s worth more and it’s already on backup offers at the asking price. Admittedly the asking price is 30% off a fairly standard or even somewhat low bubble price (344/sq. ft.) so it’s still quite a drop.
Posted by IrvineRenter on 04/08/08 at 05:18 AM
“I think that your down payment and monthly income requirements may be off here…....“
Yes, they were.
“Is it really accurate to say it closed for 40% off when the sale is at a foreclosure auction? Nobody’s bidding at FC sales these days”
The reason nobody is bidding is because prices are dropping and values are not there. The sales price is the sales price. The CDO trustee is hoping they can find someone to pay more who will use conventional financing, but ordinarily, every flipper in the area would be making the same bet.
Posted by AZDavidPhx on 04/08/08 at 05:20 AM
1999 rollbacks would not surprise me at all.
Posted by george8 on 04/08/08 at 06:38 AM
Can this one on the I5 get $2500 monthly rent? GRM of 160 will work out to be $400k.
Posted by no_vaseline on 04/08/08 at 06:40 AM
George:
I think the answer is ‘no’. I gotta think the top of the rental market for this sort of housing is 2000-2200 a month. Somebody might pay it, but I’m not sure why.
Posted by IrvineCommuter on 04/08/08 at 06:57 AM
I rent a 3br SFR with large yard for $1950 in El Camino, my house is on the east side of walnut, better location than this condo. So I guess, the fair rent for this condo is around $1800.
Posted by movingaround on 04/08/08 at 07:02 AM
Thank you for a little dose of Prince this morning - such a great song!
Posted by ChrisR on 04/08/08 at 07:15 AM
IR,
Where are we now with the median price in Irvine compared to your graph?
Posted by caliguy2699 on 04/08/08 at 07:20 AM
Nice post. If it’s any indication of where things could be headed in Irvine, most of the props coming on to the market in South County right now are either a) owners who have held for 8+ years; b) REOs; c) prices 20-30% off peak pricing, 30%+ for less desirable small condos. I don’t see it being as severe in Irvine, but it’s like a train wreck you can’t keep your eyes off down in South OC.
Posted by Surfing in Newport on 04/08/08 at 07:29 AM
Any chance of doing your median graph with 3 lines: your earliest prediction, the prediction last month and the current prediction. I find it helpful to look at how predictions are changing overtime.
Posted by Olivia on 04/08/08 at 07:35 AM
IR,
I don’t like having to croll back to the top of the “home” page in order to click on the link to read the comments.
Posted by skek on 04/08/08 at 08:10 AM
caliguy,
I’m surprised you think South County is doing better than Irvine. My understanding was the opposite—that South County is getting hit harder. What makes you say that?
Posted by David on 04/08/08 at 08:26 AM
irvinerenter
To show that rougue lending practice still exist I would like to send you a pdf attachement of an offer I received yesterday. How do I send that attachment to you?
Posted by lendingmaestro on 04/08/08 at 08:27 AM
This place is an absolute hell-hole of a dump.
Posted by IrvineRenter on 04/08/08 at 08:54 AM
David,
You can email me at irvinerenter@irvinehousingblog.com
Posted by Jim Jones (aka angry renter) on 04/08/08 at 09:10 AM
I understand that"clear thinking” was not the norm during the bubble but I still have a hard time understanding why anyone would purchase a property like this to live in at any price.
Classic substandard 70’s contruction. This place screams crappy apt. Yet it seems the market was teaming with properties just like this that people willingly agreed to purchase and live in. I didn’t understand it then and I certainly don’t understand it now. Owning a home is a huge responsibility\obligation with some sigificant potential downsides. Did they all think they only had to live in a rat hole like this for a short time and then they could ride the bubble up to something nicer?
Posted by William Jones on 04/08/08 at 09:16 AM
This property looks depressing…I don’t care what price they’re asking for it. I would need an extra strength dose of Prozac to live here.
Posted by biscuitninja on 04/08/08 at 09:26 AM
Just a side note:
Be careful when putting up ANY Prince music, he has a tendency to go after ANYBODY for displaying his copywrited stuff. Its stupid and very annoying. In fact he’s hurting his own fan base… but ...
good luck
-bix
Posted by houseonlegs on 04/08/08 at 10:30 AM
$400,000 is a lot of money for this place, really think about it $400,000….for that?
Posted by freedomCM on 04/08/08 at 11:04 AM
I think that IrvineCommuter is correct. A 30 year old condo less than 1 block from the constant noise of the 5 fwy would have a hard time renting for more than $1800, and I would guess closer to $1600. In addition, not many parents would want their kids living right next to all the noise and pollution, if they have a choice, so you are most likely to attract an investor/landlord as a purchaser.
That suggests a FMV is $1700 x 120 = $200k.
of course, figure in $200/month HOA and the age of the place might require assessments on top of that for repairs, and you could argue that it is
$1500 x 100 = $150k.
I guess we’ll see if this offer holds, or if it falls out…
Posted by Trustee on 04/08/08 at 11:58 AM
thats actually an MBS trustee, not a CDO Trustee.
Posted by xy31 on 04/08/08 at 12:32 PM
IR:
It may be somewhat of a reach to argue that banks will continue to write off huge losses based on observations in Irvine. I remember you stating yourself that RE markets are segmented. While Irvine will see huge losses (maybe up to 50%), other market segments may not experience such huge declines.
Posted by IrvineRenter on 04/08/08 at 12:38 PM
“will there be a dead cat bounce? If yes, when and how long will that last?“
Short-term fluctuations are hard to predict. If we see any bounce, it will likely end by early fall.
“It may be somewhat of a reach to argue that banks will continue to write off huge losses based on observations in Irvine.“
Given that we have only seen the tip of the iceberg, and given that most REOs in Irvine aren’t even on the market, I would say there are still significant bank write-downs yet to occur.
Posted by Tigasulo on 04/08/08 at 12:42 PM
Just really wondering how some people price these homes in Irvine - it’s just all over the place. Like this one:
176 GROVELAND Irvine, 92620 $699,000
That’s F@#*-in 1400 sq ft.
Posted by David on 04/08/08 at 01:06 PM
I know that even in lower priced markets there is more than 40 percent drop. I know of a case where they bought a house in Queen Creek, Arizona where the prices are a lot cheaper than Irvine. The house was bought in 2005 and similar models went for $275 K at that time. Now it has dropped close to 50 percent (last sale of the same model was $143K) in value.
Posted by caliguy2699 on 04/08/08 at 01:41 PM
Skek - I think I was being unclear. I was trying to say that I don’t see Irvine being as bad as South County.
Yes…South OC is not so good these days..about 50% less sales than at the same time last year.
Posted by skek on 04/08/08 at 01:56 PM
Thanks, caliguy. I think I misunderstood you.
Posted by Chris on 04/08/08 at 03:31 PM
I’m afraid that we may see a 50% drop soon since banks are not willing to lend money to people buying a, gasp!, *depreciating* property.
That’s right folks. Real estate is no longer considered an appreciating but rather a depreciating asset. However, unlike a vehicle, a house will have its intrinsic value which will never be taken away even at its lowest point. We all have to live in an abode right? We can’t all be renting now, can we
At what price is that lowest point and when will we hit it (if ever)? Well, if I can answer that question, I wouldn’t be working for a paycheck in Silly-con Valley, would I
Posted by Chris on 04/08/08 at 03:34 PM
BTW, IR, from Redfin, this property is now in Backup Offer Accepted status.
Perhaps you can help us by keeping track of the sales price on this puppy if it goes through.
Thanks IR.
Beds: 3
Baths: 3
Sq. Ft.: 1,639
$/Sq. Ft.: $244
Lot Size: -
Type: Condominium
Style: Contemporary
Year Built: 1977
Stories: Two Levels
View(s): Has View
Area: El Camino Real
County: Orange
MLS#: P627777
Status: Backup Offers Accepted
On Redfin: 21 days
Posted by Genius on 04/08/08 at 05:17 PM
ochomehunter’s comment reminded me of something:
Not sure if anyone brought this up yet, but the Fed is shooting all of their bullets trying to bail out the financials; the people who f-ed up in the first place. When the job losses come and businesses close; some of them as an indirect result of bad decisions by the banks and investment groups (and the government) who will keep them propped up and how? When the banks get bailed out but the rest of the economy dies what will happen? Will people finally be outraged? These are the things I’m curious about.
I’m not curious where home prices will be anymore; that’s obvious. Not that I had much doubt since about 2003.
Posted by Quincy k on 04/09/08 at 06:23 AM
freedomCM-
You…are clueless. When and if this condo sells for 150-200k, the global banking system would probably collapse and your hoarded dollars would become worthless.
May I suggest you start reading the financial blogs for a better grasp of the current situation instead of babbling on about things that cannot be allowed to happen.
Some of you guys on these housing blogs are absolutely clueless on what is going on right now. The Fed, along with all the other FCB’s, are trying to save the System. 120 GRM’s or double digit treasury yields will not be allowed to happen again for these exact reasons.
And no, I am not a bitter homeowner. I cashed out in 04 and 05.
Posted by Lee in Irvine on 04/09/08 at 09:04 AM
Per the Feds, Orange County now leads the nation in job losses.
From the Register:
Job stats from federal employment counters show that Orange County lost 19,100 jobs in the year ended in the third quarter, the worst rate of job loss among the nation’s 328 largest counties.
http://ocbiz.freedomblogging.com/
Posted by rkp on 04/10/08 at 09:16 PM
Is it just me or is there only 1 comment showing up for this entry from Jim Jones?
Posted by rkp on 04/10/08 at 09:19 PM
wierd - i had to post a comment to read all the other comments.
Posted by Houser on 08/25/08 at 12:12 PM
What will this blog be about when this is over?