I would like to be the first to say that the new graphic is REALLY graphic!

Ewwwww!

OK, so what is their deal with red? And if you are sitting on that red couch, aren’t your eyes maybe 5 feet from that 50” screen? Isn’t that a little much?

I really like that house.  I doubt it will get to $650,000, that would be $212 / sq. ft. Maybe it will drop to $250 / sq. ft. I would probably jump on it at that price.

I really like this house ... it pretty much meets my needs, and with a price tag of $650,000, I would buy it ... if it were located South of the 405, instead of North of the 5.

I have been meaning to bring up the concept of “resort living” ever since I have been redoing some of our landscaping. Its very expensive to have resort living landscaping! 

Some people need resort type property for important guests and to impress business contacts.  Well-heeled folks who like the Newport Coast, Shady, Coto, Nellie Gail, come to mind. Most people, however, don’t “need” it.  And I think in the longer term, many simply cannot “afford” it.

Who among us would travel to a resort and stay there, at resort prices, for several years?  Well, resorts are lush because they attract people who will pay top dollar for (usually brief) visits.  The costs associated with resort living is divided among many visitors who are paying top dollar for their stays. If you actually OWN the resort living, then you are paying those expenses, over and over again each day that you live there.  By yourself and on your own.

This is a beautiful home.  I was disappointed that the promised special spa and water features were left out of the pictures.  I love looking over resort landscaping and admiring the beautiful planning that goes into selecting just the right hard and soft scape for yards that belong to these beautiful homes.

I like to take trips to actual resorts.  Staying in those little casitas with their own pools and patios to view the nightly sunset over some ocean is so decadent and fun!  But I can only afford to do that every once in a while.  I certainly cannot add all those features to my own Irvine property all at once if I am going to take yearly vactions - money here has to be prioritized. I understand the desire to put in all these lovely features into yards right away and all at the same time.  I just have not mastered how to work all that into a normal budget here.  In fact, that place looks to be a lot more costly to heat/cool than my own home.  And I think paying several hundred dollars for monthly energy costs is substantial.

HOA, Mello Roos, inflationary gas and food, water and power to run pools/spas/water features, price rises in health care, climbing utility prices, etc…

A million point three for a home in the flatlands of Irvine just doesnt match most of the demographics and “real” qualified buyers imo.

Graphic sucks.  I think message would be just as clear if you had a pic with someone juggling knives or something.

Yes, I actually find the fake blood disturbing enough that I have to avert my eyes. I know, I’m a wimp. I think you should replace it with the teddy bear dumb waiter to represent the fantasy of riches that is proving to be nightmare.

“I am amazed none of our major banks has declared bankruptcy yet.“

Welcome to bank accounting—even though the money was gone the day the loan was issued, the loss isn’t “realized” until they actually foreclose and then sell the property (or until closing of a short sale).  I suspect this is why so many foreclosures aren’t being marketed and short sale closings are dragged out for months—the banks are trying to delay having to report the losses until they can “afford” to (i.e. after raising enough capital so the loss won’t technically make them bankrupt).

“I am amazed none of our major banks has declared bankruptcy yet”

One or two of them might do straight bankruptcy.  There will be more takeovers and consolidation.  However, as someone who works in banking and has followed the housing bubble since 2004, there are some safeguards which are surprising.  1. For most banks, mortgages are only one of their products.  Their credit card poortfolios are generally profitable.  Their auto loans portfolios are generally profitable.  Until recently commercial real estate was profitable.  2. Many banks got rid of most of the mortgage risk by securitizing.  3. A surprising number of the junk loans were paid off.  I am looking for the citation, but about 1/2 of 2005 vintage subprime loans were refinanced or the homes were sold.  4. The loan portfolios had a decent tolerance for defaults before they lost money.  5. Mortgage insurance handled the first 20% of loss in many cases.  However, I still don’t understand how the PMI firms are solvent. 

It is my personal opinion that banks’ worries are somewhat misplaced.  Their real worries should include: mortgage insurers going bankrupt; rising short term interest rates hurting margins on all of their retained fixed rate loans; counterparty risk on their credit default swaps; and merger risks. 

The merger risk is especially threatening.  Regulators encourage a solvent bank to take over an insolvent one, where the target did dumb things.  Then, the consolidated bank has to fix problems with loans that have already been made, with a declining volume of new loans.  The consolidated entity has more risk in the wrong places than the acquirer, has a lower growth rate, and has employees from the acquisition with the wrong skills and specializations (origination rather than workouts, real estate rather than something else like credit cards).

I have nothing meaningful to say, but I have to say, those Global knifes are really sharp and nice to handle. 

I would recommend play knife catching with duller knifes.

Kanchou, I also have some Global knives and they can be dangerous.  Perhaps our knifecatchers should get some steelcore mesh cutting gloves.  I wear them when using really sharp knives.

When a bank takes back a home, it impacts their reserve ratio, and makes it more difficult to do business.

JMHO

I believe they (at least the big one’s) are trying to spoon feed the market with just enough comp killers to allow for an orderly decline, but it’s obviously failing.  The banks are very concerned about destroying the values in neighborhoods because of the damage it will cause for them in the future.  Most of the asshats that run the banks, are fully aware that negative equity causes more REOs than financial distress.

Either way, the banks are losing control of the situation.

I jsut got an email from William Lyon Homes with the typical, “this may be the best time in the last couple of years to buy a home”. I guess if you only look at past results, then maybe yes.

2005 - Home prices skyrocking. Maybe okay to buy a flip property, but not a home.
2006 - RE market is falling apart
2007 - Significant falling prices, but still high.
2008 - Many prices already at Pre-2005 levels or lower.

using that backwards-looking logic would explain why some are jumping into the market, but really when I think for every month I can hold off it will save my on the purchase price, I’d rather think I’ll wait for a “better time” to buy.

I’ll take my resort landscaping in the form of our association pools and parks.  That way the cost is subsidized…

I think the graphic could do without the blood for sure.

/Users/Mike/Desktop/knife catcher.jpg

I like this one better.

http://contrarycanary.blogspot.com/2007/12/knife-catching-is-for-carnies.html

Sorry this is the correct URL.

Not a bad house, but I really don’t care for these lots.  For $1mil I’d like to have a view of something other than just my neighbors’ houses.  That would be the deal breaker for me.

I like when they keep garage doors away from the front elevation.  I’ve always been curious if there was a term for this.

I have seen a reference to this style as Porte-Cochere

As somebody who wants to enter the housing market, but doesn’t have much for a down payment, I think it would be good if the PMI companies went out of business and the whole PMI factor disappeared.

I would think that if PMI went away and banks required 20% down from everybody, housing prices would remain reasonable for most buyers.

HOUSING BAILOUT INTERNAL DOCUMENTS RELEASED!!!

Somebody got a hold of a document for Bank of America execs dated March 11, 2008. Funny how this Banking “discussion” document looks just like what Sen. Chris Dodd is pushing through the congress as a bailout for the housing bubble.

http://www2.nationalreview.com/dest/2008/06/20/bofa.pdf

If I recall correctly, isn’t B of A acquiring Countrywide? And isn’t Chris Dodd one of the “VIP” members at Countrywide with a loan rate of 4.25% oh his million dollar plus home?

Boy our government is crooked. It’s too bad they aren’t a reality T.V. show. That would be the most watched show in history.

Why don’t we all plan a march on Washington and throw out the trash that makes our country look bad to the rest of the world?

Yes, I was wondering about the viability of putting tropical plants in a low rainfall environment that is having yet another drought. If they manage to put a dent in the illegal migrant population, the cost for the gardeners to keep it all green, clean and tidy will go up too.

Keep on watering with kool aid perhaps?

I say keep the blood.  It better represents the carnage we are seeing…

I have been meaning to bring up the concept of “resort living” ever since I have been redoing some of our landscaping. Its very expensive to have resort living landscaping!

Resort landscaping? Some nice resorts are located in the desert with native plants, and it looks great. Nothing like fake “Tropical” backyards in SoCal using too much water and energy. Let the “well heeled” along the “Newport Coast” go visit the Jungle Cruise.

Interesting read. I just gave the document a quick once-over and it is of course yet another example of “privatize profits, socialize losses”.

I wonder if it’s a genuine BofA internal doc meant to be used as public policy or just a wishful thinking presentation?

BofA isn’t of course a Wall St. firm but they all swim in the same scummy pond, just not the same end. To me this simply represents the financial geniuses trying to figure out how to stick Joe Taxpayer with the bill and not get caught holding the bag.  Frankly I’m against any bailout. Sure I worry about all the folks losing their homes but I doubt they gave a damn about me while they were bidding up prices and they sure don’t have any compunction about my taxes being used to remedy this mess.

In the end, any plan that attempts to address the falling market merely delays the pain and ultimately fails to accomplish it’s goals. Not only does it fail but it would serve to set housing at artificially inflated levels, clearly not in line with the free market principles these same “wizards” are always espousing when a whiff of government regulation wafts in the air. Curious behavior.

Let me tell you how I manage resort living, and still have tons of money, and no maintenence or landscaping worries.

I go to a resort—once a year. It is a great way to see how the other half lives. Yes, it is very expensive, but I only do it once a year, not 24/7/365.

There’s more wisdom in your words than meets the eye. I will typically take the wife and kids down to Dana Point to the Ritz Carlton to just hang out at the beach or pool and then take in a nice lunch at the restaurant. The wifey will sometimes get a spa treatment if she’s feeling particular to it. Resort living without paying for the resort!

mmm Poison.  <3 IR.

you’re a perfect example of why I believe that prices - even in ‘special’ places like Irvine - will fall below ‘reasonable’ levels (but not for at least two or three more years). Once we get past the irrational knife-catching, buyers will be conditioned to continue to wait, and wait, and wait some more because there’s always a better bargain to be found. Seller capitulation by 2010 will make today’s prices look as extravagant as 2006 prices look today. It’s the same conundrum which happens to retailers who have too many ‘sales’.

IR’s recent chart which tracked the knife-catching bounces from the last RE crash, captured my thinking perfectly. Irrational depression follows irrational exuberance as surely as night follows day. The bad news is, we ain’t there yet; not even close. What we’re experiencing now is merely the approach of dusk, metaphorically speaking.

JMHO…

I agree.

In fact, I’m willing to wait indefinitely. 

At this point, prices in Richmond CA have come down something like 25-50%.  Or more.  Too bad it’s the murder capital of California.  And that the schools suck.

But I can buy, right now, with 50% down.

Within about 3 years I will be able to buy in El Cerrito or Albany with 50% down.  Very good schools.  Nice neighbors.  Ok, a little dyky in Albany, but still.

5 years, San Fran should be in reach.  Not sure I ever want to pay San Fran taxes though.  Not for any price.  Ludicrous.  Actually, a couple of neighborhoods in SF are in reach right now with 20% down, but again, I prefer discretionary spending over being saddling with debt.

Didn’t Mick Jagger say something like “Why buy when you can rent?“

The process just seems absurd.