Wow, IR,

Napalm Death?  My respect for you has risen another notch!  Great choice.

How about Confused by Death Angel to symbolize the buyers that are out there right now?

A 3 storey house with only 1750 sq feet?  It looks bigger than that.  When I was first married, we lived in a 2 room apt at the top of a 3 storey townhouse.  Tres cheap.

House can be afforded by, what?  10-15% of the households in Irvine.

I like the look of this house, however.  Wouldn’t buy it for even 20% off the asking price.

We make way over the national average, and couldn’t afford it even with 20% off and 30% down, so I think you guys have very far to fall.

IR,
Thanks for that clear and concise case study.
It really makes the point. It was an interesting find, too. I’d like to see part II of the case study as your predictions come to pass in the coming months. 

I have no idea what is in the picture:

Any one has some clue?  Is it a countertop for those on wheelchair?

Here’s a comparable rental for $3,200

http://realestateservices4.california.remax.com/listings/ListingDetail_r4.aspx?LID=41782682&RFRSKNID=85&#a;Top;At 160:1 GRM, the selling price should be 512,000. So still another 16% to drop, or a total of 40% off the peak. However, it is now below 200:1 GRM so I think we will see this sell at only a slight discount from the asking price.

When I first saw this house, I was like “wow”, I like the look of it from the outside.  But once you are in the house, it’s more like LOL-OMG-WTF reaction.  The floorplan layout of the house is so f**k up that it doesn’t make sense at all.

maybe it’s supposed to be a desk/kitchen workstation-type thing? one that couldn’t have a computer, obviously. whatever it is, it looks awful.

I think that rent is a wishing price. Last spring one of these was being offered at $2500 a month.

In another photo it looks like Countrywide let them take the dishwasher. 

Graced by a comment from the ever wonderful Belle Waring.  IHB, you have arrived!

I don’t know…there is no outlet anyway near this “unique feature.”

$2500 is too low. IAC 3 bedroom 1300 sf in Turtle Rock goes for $2900. But given the risk of renting from a flop lord, I think it needs to be closer to $3,000. There are 3 bedroom Quail Hill condo’s going for close to $2,500, but at 1,300 sf, not 1,800 sf.

A 3 storey house with only 1750 sf - tough challenge to have any decent floor plan.

Not even a house, a condo ... regardless of what the realtor wrote in the listing.

Did you see the hobbit sized bath tub?  I’d have to fold myself in three places to get into that thing.

You got to love the “bowling alley” garage. I suppose the only car you can own is a Mini Cooper.

I rent a 1600+ s.f. condo in Turtle Rock for $2500.  So, $2900 for 1300 s.f. sounds rather extreme.  And, my condo is in very nice, recently remodeled shape with decks.  I also recall seeing a nearby house for rent last year for $3200/mo.

Rents are in a smaller bubble than housing prices.  There is a double whammy coming for housing in SoCal, falling prices and falling rents.

At $3200, this 3 bedroom would put the median Irvine family in poverty as a renter.  The median family in 2006 had an income of $103K.  When rent exceeds 30% of gross income, the ability of a family to build wealth is eliminated.  Even at $2500/month this place will put the median family on the border for poverty inducing rent.

That’s on the 2006 inflated income and family income.  I suspect 2007 will show a contraction of income.  Rents are already showing weakness.

It may be that they really didn’t “give up” $150K. If they bought their previous home for $200K in, say, 2002, and then sold it in 2005 for $400K, it was all bubble money to begin with.

Wow, $10,063 a year on taxes. No wonder the people walked away. $1018 a month with HOA. Champagne prices on six pack packing.

BTW, I live in close quarters, and when it is hot, we leave all of the windows open. Now, it seems, that smoking is an outdoor activity, and you can’t pick your neighbors. Keep that in mind when decide to buy a place like this. Or just leave the AC running.

Don’t you know Bag End demands premium pricing?

That looks like the desk niches that were so popular in kitchens a number of years back.

The cabinetry in this place looks like it is one notch above the cheapest rental-grade garbage you can get. The drawers look as though they don’t fit correctly, and their panels are loosening up- were probably just glued on.

I’m appalled at what calls itself luxury these days. Here in Chicago, I wonder just how far over $1,000,000 a 2-bed condo downtown has to be before you get a built in cooktop and ovens, instead of a medium-grade Frigidaire or GE shoved into a niche; or before you rate truly custom cabinets.

Just more evidence that Quail Hell is in for utter obliteration.  They’re sitting on the beach staring out at the ocean as it is getting sucked out.

IR you didn’t even mention all the typos; pricacy, seperate, grantie coutners, shcools

Or, if you can take an attached condo, in a slightly less nice area, 112 Stepping Stone is 3 br/3ba 1553 sq. ft. for $515,000 ...

http://www.redfin.com/stingray/do/printable-listing?listing-id=949542

I see it is Ivy Wreath plan.  I toured one of the Ivy open houses (not this unit), the floor plan was rather unique - lots of half a flight up to one room, half a flight up to another room type of thing.  Acutally, rooms rather like leaves on an ivy plant as you wind up & up the stairs.  Seemed good for roomates who like their privacy, but not great families with kids or older people who dislike stairs.

http://www.quailhillhomes.com/ivywreath/index.php

I don’t think is it awful.  Theoretically you could write bills or plan menus on the desk.
Also I think the left hand drawer is pulled out a little, rather than being ill-fitting.

Nobody remarked on the wainscotting or backsplash
or whatever it is, above the granite backsplash.

I think the little row of houses is so bad that it’s good.  So stupid it’s amusing instead of ridiculous.

IHB posted a property with the same floorplan for close to a million dollars not too long ago, I wonder if that one is still on the market, I think it was on tall oak as well.

I suggest reading the post once without the music playing, and then read it again with the music. And maybe take a look at the picture of the kitchen cupboards/desk.

I also wonder if this is a new trend with Countrywide. I hadn’t been familiar with them doing a whole lot of deeds in lieu in the past. But maybe it’s a sign of more people offering them, too.

I have been to this property, back in December. It was listed for sale at $699,000 then. A sweet little neighborhood in Quail Hill. But as we walked up the courtyard path, we heard people yelling, screaming, slamming doors, things crashing. I commented to my friend, “This courtyard is too noisy.” She said, “Actually, all the noise is coming from 116.” She was right. Too scared to interrupt the angry screamfest to tour the inside, I have called 116 Tall Oak the Bad Karma House ever since.

Looks like they stripped the house of all kitchen appliances before they left.

Not to mention all the window treatments…

Good point!

Yikes - Neighbors like that can really affect your quality of life.  I’d easily walk away from that one.

What’s with the suggestive spam entries?  Mine for this post is “work69” (insert bevis&butthead;laughter here).

I saved this listing as I think this place probably has already had multiple offers and might possibly be in escrow already.  I’d bet it sells for list or very close to it…  I think we’ll see it sold within no more than 45 days.

fencewalker—It wasn’t the neighbors. The noise was coming from the family that was living in the unit I was about to look at—the one profiled today, 116 Tall Oak.

And for any newbies that don’t wander over to the forums, once this place sells you can see the closing price at www.ipoplaya.com.

End of shameless plug…

I see one outlet on each side, about a foot away….

I think you’d have to see it in person to determine if it’s worth $615,000. I believe it’s been stripped and trashed.

Even if it does go for list, it won’t help the other three properties on the street any.

Too far away and too high up to be used for a computer, charging device or anything practical.  I generally like the kitchen desks as a feature in my GOURMET!! kitchen, but this one looks like it was awkwardly placed to fit around the pre-determined window placement.  Not well designed at all.

Agreed on that IR…

TRidgeRenter - absent major structural type damage, someone will view the price as a “steal” and even if they need to pump $25K into to get it up to snuff, they’ll probably still feel good about it…  Appliance and window coverings is nothing given a $600-700K price tag.

You gota think the supply of knife catchers will dry up at some point.  I’m sure ipop is right and this will sell but still leaves me scratching my head and wondering “why?”

This guys neighbors must be just ready to kill.
This REO will take 20% right off the top.
And in another year more than likely another 20%.
These 3 story units are the “cream” for the builder to get as much as they can on a plot of land. But now they will be at the front end of the “High End Condo” collapse.

30-year fixed rates at 5.625% have a way of motivating the knife catchers… 

Long-duration ARMs can be had for 5.25% as well.

Many buyers have been awaiting the day when prices would decline materially and that day has come.  They probably think there isn’t much further to go.  They have no idea that five Irvine homes per business day on average have been receiving notices of default for the past 3-4 months.

Interesting place.  Curiously designed and decorated and clearly almost no upgrade investment is evident.  Moreover, it does appear that the former occupants cleared-out with appliances in tow.

IMHO - the former “owners” were smart to offer Deed in Lieu and walk away from their $150K as I think that was the best possible outcome.  I don’t know for certain but I believe Deed in Lieu helps preserve what little may have been left of their credit rating as no foreclosure goes on record, only perhaps missed payments and a NOD, if even that much.  Did anyone check other loan data on the property?  I wonder if they had a HELOC and pulled their downpayment cash out previously.

Precisely. These are the types of REO’s that are and will be the ticking time bombs in the neighborhoods.  I think it will be much much worse in the bubble communities like this one, Woodbury and Northpark II as they were completed and/or sold during the height of the bubble.  They sold at the highest possible prices and were financed with the riskiest products with above normal speculative activity.

The sad part is they will drag other neighborhoods into the chuck-hole with them.

I think IR is wrong about the down payment.  The buyer put $1700 down it appears to me, yes $1700.  $758K purchase on 6/13/05 with a 1st of $606,300 and a stand-alone 2nd of $150K.  Both loans through “Accubanc Mortgage”.

There was a refi just 6 months later (or maybe the loans got sold, I’m not sure) on both 1st and 2nd.  The value of the 2nd went up to $151,600 meaning the owner had a whoppin’ $100 worth of skin in the game…

Looks like a smart speculator made a great chunk of change on this property.  Bought from builder in 2004 for $528K and flipped for $758K just 15 months later.

Ipo, I was just about to post the same comment as you after looking at the public records and seeing the 12/05 1st and 2nd mortgage data.  Looks like the former borrower got the last laugh.

Off topic but funny at all, I got a notice today in the mail from etrade (postmarked 4/10) that effective 4/8, my home equity credit line was completely suspended, no further advances, because an internal property valuation revealed the collateral value had declined.  I have NO balance outstanding on the $715,000 line of credit and have not used it since inception; spouse and I have over 800 FICO’s based on a check last month; the line originated in mid- 07, at which point I estimate the house value had already dropped about 10% off its peak.  No doubt the value of the home has dropped further (in Laguna Beach)but it’s not like they have an appraisal from mid/late 06 on file.  I called raging mad.  The only option to get ‘reinstated’ is to pay for an appraisal and submit it to them for consideration.  I am outraged…why not just lower the credit line to rebalance to a 75% LTV based on their ‘internal valuation’ ?  While I only have the line for emergencies, to render it useless is unbelievable.  I will be double checking Reg Z.  In the meantime, does anyone have contacts at the OC Register or LA Times ?  This is more egregious, than the other ‘suspended HELOC’s’ stories I have heard out there since it removes the line entirely.  So much for there being a difference between underfico’d/overleveraged borrowers and conservative ones!  anyone else get this e-trade letter ?

Sitex did not pick up the second mortgage. I was surprised this was not a 100% financing deal. If your data source shows a second, I am somewhat surprised the second mortgage holder accepted the total loss with the deed in lieu. I suppose they didn’t have a lot of alternatives.

FATAL FLAWS! I just rented near this place, so went over tonight for a look/see…

1) You can NOT get a standard-sized car into the garage! The driveway is too narrow to allow a 90-degree turn into the narrow door (1-car-wide “tandem” garage). Not enough room to back-up and re-try either. A small car (BMW-3-series) likely would make it. My Dodge Magnum was hopeless.

2) No room for trash cans in the garage. Your choice, car or trash-can (garage too narrow for both).

3) The “office over the garage” has *no* toilet.

4) The compressor/evaporator for the garage-a/c is *on the upstairs porch* really bizarre.

Positives: *Really quiet” neighborhood; Quail Hill Village Center a neato/close place.

Neutral: (I suppose) very dense on-street-parking (doesn’t *anyone* use their garages for cars?)

That’s amazing.  You should create a forum topic on this and copy and paste the story.

http://calculatedrisk.blogspot.com/2008/04/heloc-nonsense.html

You should read the calculated risk posting on this.  Think about it from Etrade’s perspective given the beating they received at the hands of Wall Street, they probably aren’t sure they want to expose themselves to this risk any more.  And they probably have an automated valuation system that told them your home was no longer worth the risk given the lack of liquidity at your price-point in the real estate market.  OTOH, I might ask them for some consideration on the closing costs.

I was thinking the same…gotta figure out how to do it and i will!

1st and 2nd holders are listed as the same so there wasn’t a conflict.  Good for the lender, better for the homeowner right?  Lender saves some bucks on foreclosure process and still gets the property back to market and recover as much as possible.

It is becoming quite common to pull lines.  This was on Marketwatch today:

http://www.marketwatch.com/news/story/wachovia-others-cutting-unused-home/story.aspx?guid={7098988D-81D9-4CE7-884B-CF412B8CC7E6}&dist=MostReadHome

It’s for this exact reason I maxed my tiny line a few months ago and have the funds sitting in a money market right now.  I had a zero balance as well and now have $99.9K on it…

I totally understand e-trade’s rationale of reducing the line limit (I was formerly a bank regulator and a credit risk manager and consider myself reasonably understanding of banks’ situations)...but to just say, hey, no advances, even if you have 0 outstanding ?  If they really did an internal evaluation or even just obtained an AVM and cut it back another 20% to estimate a value, then all they’d have to do is add ‘one more column to the spreadsheet’ to do the easy math to calculate a new line limit (geez, they could whack the June 07 value 30%, and at 80% LTV, I’d still have a substantial size line).  How hard is that?  I will definitely check out calculated risk’s posting on this; thanks for recommending.

I had a $50k heloc w wells fargo back in 06, I wanted to increase to $100k and wells gave me grief, citi came in and offered me a no fee $400k line w lower interest.  wells refused to match so I switched.  I used 50k, thought I needed a little more at the time and paid it back but I’m supprised that citi hasn’t come back and decreased my line yet.

Yeah, my spouse and I considered that a few months ago too- but with MM at sub 4% and paying interest at P - 0.5%, we figured it was a wash. As we were fortunate enough to have already set aside liquid assets for our needs, we just figured no big deal if the HELOC got cut back, as it was for truly a worst case scenario.  We thought maybe a few hundred thousand cut-back, but not this!  And here’s some more irony - we previously had a $500,000 HELOC with E-trade (we only upped it last year because they continually offered to do so at no charge, so we figured, fine! go ahead).  BUT e-trade did a new line instead of changing the balance on the old one, and never closed the $500,000 HELOC until just last month, after repeated calls from us letting them know it had not been closed.  I could hear the angst in the voice of the last person I spoke to at etrade about this, as she clearly realized that my spouse and I could have drawn on both lines of credit fully and they would not have figured it out until, uh, the $1,200,000 and change was out the door! While that would never happen because operating in good faith and with integrity is just how my spouse and I do business, it’s too bad not everyone/every company feels the same.

This place was purchased for 528k in ‘04 from the builder huh?  Well that’s where these prices are going.  2004 was already in the bubble, the builder made damn good money too I bet selling for 528k.

banker,

what if the value of your home drops 50-60%.  Would any part of the HELCO still be abovewater?

I can’t blame etrade for doing what they are doing.  Your HELCO in a declining market is a big risk.

If value decreased 50% from June-07 appraisal of $1,600,000, there’s more than $250M on a HELOC that is still ‘above water’ (I figure that’s about 60% below peak value).  Since E-trade has likely run an updated/annual credit report on customers, it could easily filter those with extremely strong credit (if they don’t trust FICO’s, they could do it the old fashion way, and filter total revolving and instalment debt to identify those customers that have low balances and no delinquencies in the last xx years).  Wouldn’t that be a better risk management approach than losing all remaining credit worthy customers that are left and being left with nothing but junk in the portfolio ? 

BTW, I have personal experience being severely ‘underwater’ on a house here in So Cal in the mid-90’s, as I’ve posted about previously on IHB- how i handle credit hasn’t changed - I just pay my bills, on time, now as then.  I am all for personal financial responsibility.

I went to some open houses in this development.  The prices at the time seemed to be really high, yet there was a lot of interest and a lot of sales activity at the time.  I asked one of the sales ladies:  What kind of buyer are these mostly selling to?

She then tries to tell me that it is empty nesters and families.  And “anybody, really!”  Like it was universal appeal.

What I remember is that those stairs were definitely not friendly for older people, young children or anyone with a disability.  I think the stairs may have been calculated in as part of the square footage too?  Anyways a lot of stairs.  And anonymous is right, these things are best for roommates who wanted privacy. 

I saw a group of three professionals who were buying one of these things together.  The idea was to buy it, let it appreciate and then sell so that each would have equity enough for their own places, next.  None of them had any children as a complicating expense.

Basically these things needed three incomes to support the payments.  Housing was so high back then.