Hey, it looks like some of that MEW actually was put back into the house! That is refreshing to see as well!

yeah, I think we were about to OD on schadenfreude…

I would like to ask the owners of this house the following questions:

Is your current income “184,875?”

“Would you be able to afford your own house today if you were in the same financial position that you were in back in 1997?”

“Is it fair that someone else should have to leverage themselves 3x more than you did just to grant you a windfall?”

Say whatever you want about inflation.  254,000 dollars was a lot of money back in 1997 and it is still a lot of money now.  Incomes have not gone up THAT MUCH. 

Certainly not enough to justify these house prices.  We are just a lot more accustomed to seeing these outrageous sticker prices these days that they seem “normal” making 1997 looking absurdly cheap.

I see no reason why this place is worth a penny above 300K.

I like the backyard and the added “casita” on the Sierra Roja House.  A $500,000 loan for a Turtle Rock house is not that unreasonable.

Wonder what rental parity looks like in OC with unemployment at 10-11%?  Or higher.  $140/sf is my suspicion.

I stroll over to North Berkeley one of these mornings to check the “Au Pair” index.

We can only hope that someone takes care of it while it’s waiting to sell.  Speaking as a horticulturalist, I read about the back yard full of exotic plants and nearly screamed.  I’m sure that the owners took great care of the plants, but if the house is sitting empty, they could be looking at upwards of $10,000 worth of cycads and fruit trees that shrivel and die due to lack of care.

Yeah, I know, I know, it looks as if I’m worrying more about the plants than the people.  I’m looking at this as a purely financial concern.  When you look at a lot of the extras that get put into houses for legitimate uses of HELOCs, most people forget that these require a lot of maintenance.  I’ve seen a lot of pictures lately of houses with monster swimming pools, where the pools were neglected so long that any new owner will have to repaint to get rid of the algae stains.  I’m seeing those fruit trees and cycads, which aren’t cheap in the first place, that were cared for and cherished until the house was taken away, and all of that is potential house value that’s vaporizing as the trees die from neglect.  The banks sure as hell don’t have the resources necessary to keep things up, and they’re usually lucky if they have someone come in to mow the lawns who doesn’t girdle everything with a gas-powered weedeater because he Simply Doesn’t Care.  That’s also money that’s wasted, and I speak from experience that dead, neglected, or ragged trees and shrubs will kill a sale as fast as a swimming pool full of frogs and snakes.

I am glad to see your column getting the recognition it deserves.  I just wish that Paulson, McCain, et al. would read it before it is too late (if it isn’t already so).

It is the belief that the resale value of the house justifies the amount of the loan that created this mess. People are supposed to pay off their mortgage notes, not add to them as their house values increase.

Ha, good one.  I actually laughed out loud (bitterly).

I would suspect that in a cheaply built 40-year-old tract home you would have to do quite a bit of updating.  In my opinion, it would make more sense to get a tax deductible loan at a low fixed interest rate rather than pay cash.

McCain admits to not being able to use a computer so it doesn’t look like he will be able to enjoy this blog.

Paulson seems to be coming around now, he’s talking about buying prefered shares in banks, something that makes a lot more sense then these reverse auctions for “distressed” CDOs.

Astute observations? Ho-kay, that leaves me out!
I’ll just get on my HELOC-Davidson and ride off into the sunset. If it won’t start I’ll just coast down the Dow. It’s all downhill from here, folks!

IR, From Marketwatch article today.

“In fact, many wealthy Americans thought the weak housing market was an opportunity to buy, according to research released earlier this year by the Harrison Group, a market research and consulting firm.”

http://www.marketwatch.com/news/story/even-wealthy-nervous-about-buying/story.aspx?guid={2D343547-67DD-42E0-A790-5CAF4A2A4580}

I told my wife it is only a matter of time as wealthy and trade up buyers stop buying over-priced housing. Even billionaires make mistakes.

I know that there were many people who used their HELOC’s for frivelous things - expensive cars, vacations, etc.  BUT, there is also another side to this whole story and that is the massive price inflation that has gone over the past 10-15 years for things like cars (normal regular ones), car repairs, healthcare, insurance, and college.  In one sense I can see how people felt they needed to use this money in order to just to provide their family with the things they need to be healthy and successful in life.  Now, I know we can argue that college is not “necessary” to survival, but personally I would rather not live in a country where it is so expensive that it is only accessible for the top 3% of the population income wise - and same with healthcare.

Other life necessities inflated for the same reason that housing did, because of easily available and aggressively promoted credit.

And everything else inflated BECAUSE housing did. My own landlord tells me that it is now impossible to acquire a large multifamily building in my area because the cap and multiples are just too high for the kind of rents you can fetch for the places. Additionally, as property values inflated, taxing authorities seized the opportunity to puff their takings and hiked the taxes accordingly. Here in Chicago, large (more than 12 unit)rental properties are classed as commercial property and taxed at the highest rate, and commercial taxes have TRIPLED in the past 8 years, driving rents in front of them to the point where it is now impossible for anyone making less than $25K a year to afford a 1 bed rental of any quality, no matter how low, within the city limits of Chicago.

This credit debacle started setting up in the 1990s. However, it really gained steam post 911, when the current administration decided to make debt creation and asset inflation the centerpieces of its economic policy, given that we had nothing else to base economic “growth” on, as another point of policy was to do everything possible, mostly tax incentives, to drive manufacturing offshore.

Why did America decide to commit suicide? I mean, WE ARE SUICIDAL. Why ARE we suicidal? For we saw, decades ago, a time coming just such as this were this country to continue to lose commerce and manufacturing while depleting its natural resources- a time when the only way to “create wealth” would be to create “wealth” out of thin air by means of asset inflation and credit creation, the last resort of every faltering post-industrial empire in history, just before it fails totally.

There is some truth in what you are saying, but it is still Ponzi Scheme financing being used to justify a sense of entitlement to things one cannot really afford.

On college being “necessary:”
Unfortunately, it almost is. Plenty of employers won’t even look at you without a BA, when the skills for the job don’t even vaguely require the skills a higher education is supposed to provide. Why does one need a BA to be a cubicle slave? As a professor, I can tell you that TOO many people are getting a college education. And we give it to them because we have to…without it, nobody will hire them to do anything besides flip burgers.

In my experience, as I have know realtors and how they work.  The most important thing for them is to get the “listing”  They will say and do whatever it takes.  Even though they know that the house will never sell for the amount that a homeowner wants they will originally list it for that price, of course after about a month they will approach the seller and say “we have to lower the price, we are not getting any action”  It is a well known technique that many agents use.  They know that a lot of homeowners are emotionally attached to their home and theirs is the “best” and they should get their price.  As far as the rich buying right now, believe me they didn’t get their money by being stupid.  I happend to know some very wealthy business people, and they got out last year before christmas, both stocks and housing, they knew when the party was over.  Looking back now I wish I would of went with them, (stock market) Keep your cash safe, liquid, check the news on your banks everyday, If you are looking to buy, start looking now, before the herds roll in, then when it is time to buy you know what to do.  Go on all the banks reo websites, there are thousands of listings, prices are dropping.  Example: Apple Valley, 3bd 2ba 1560sq ft. $68,000, 19000 sq lot, this is chump change.

Why does one need a BA to be a cubicle slave?

Because our high schools are doing squat - and why, because we are soooo focused on those that are not succeeding in school that we ignore and dumb down those students that are successful.  The children that behave enough to learn are forced to sit through all the down time brought about by those kids who need more attention.  Both types of kids have needs.

I also taught at a university - the skill levels (or lack of) are simply astonishing.

There needs to be options for people who cannot be rocket scientists - options in which they can support themselves in a manner appropriate to our great nation - that doesn’t mean driving porsche.  And, we shouldn’t have to pay $50,000 for a BA degree just to be able to get a survival job.

Anybody with a well-oiled pr machine is trying to blame this mess on “THE POOR” and “THE BLACK”.(how original) One need only take a casual glance at places like Ft.Lauderdale….or North Dallas…or IRVINE to know this is’nt true.Thanx IR.Keep the reality chex coming.

can someone explain “monthly equity burn” to me? i am an atrios reader who has come over (or back) this week. i don’t understand that figure.

Monthly equity burn is the amount of money a homeowner losses each month due to the falling market prices for real estate. It is calculated based on the idea that prices will drop 10% a year for the next two years (they will probably drop more). The reason I have converted this to a monthly figure is because most buyers focus totally on their monthly costs without regard to how much they are actually paying for the house. This monthly equity burn should be figured in to their calculations because it will be coming out of their downpayment equity for the foreseeable future.

Certainly not spoken by a person who has a special needs child.

The only reason there is any focus on lower performing children is because it brings down the overall test scores of the school.

Trust me, the smart children are being well taken care of.

We have 1997 prices…on the DOW.

“because we are soooo focused on those that are not succeeding in school that we ignore and dumb down those students that are successful.”

Are you sure? What happened to A.P. and remedial corses? My sister graduated H.S. in ‘07, and she had a bunch of A.P. classes. I doubt there were many trouble makers in there holding her back. Your complaint sounds like a radio talk show gripe, and doesn’t match with reality as I know it.

You should just include a link on the equity burn so people can click on it and have it pop up a window that explains what it means.

This question comes up a lot.

Took the words right out of my mouth.

This house is $160k anywhere other than coastal CA, maybe less now that markets are in freefall.  What’s the Irvine premium again? 2x? 3x?  Even at 4x it’s still overpriced by $100k.

Wanna watch this one on your radar IPO?  I’m curious what it sells for, if it ever does.

I’ve been noticing that realtors description of houses are getting better and better.  Have you noticed this?  No more ALL CAPS and a lot of exclamation points.

Is this because of this blog?  Have you criticized realtor writing skills so much that they have improved?

Or are you still seeing the same crap descriptions in Irvine?  There are probably more Irvine realtors reading this blog then you think.

It it like the snake eating it’s own tail.

Baby boomers lived it up, pushed up the national debt.

Baby boomer kids buy houses they can’t afford, borrowing the money via schemes cooked up from Wall Street to borrow from the boomer’s pensions and 401Ks.

Baby boomers see their retirement disappear.

Baby boomer grandkids are gonna get the short end of the stick though ... don’t get to live it up first ...

That is absolutely not the only reason - there have been numerous lawsuits requiring huge amounts of money spent on special education - where does that extra money come from - regular education. 

I certainly do not think that children with special needs don’t deserve what they get - nor do I believe they are getting all they should.  And in fact, I actually do have a special needs child and I am huge advocate for special needs rights.

perhaps your reality could be expanded by spending some time working in a public school

Observation does not equate fact.

The original poster is correct, our high school system is currently a complete failure. Search on Google and compare the average education you can get at our high school system verses those in most other countries in the world and you will be very surprised at how poorly we are doing.

The fact that in California high school seniors are complaining that they must pass a test made for a 7th grader is an indication of the current state of our educational system

Actually, I too have noticed an improvement in the descriptions. As for why… Maybe we are having an impact. I can just see a homeowner telling the listing agent, “Don’t write something so stupid that it is ridiculed on the IHB.”

Anyone notice that they have stopped saying :

“Come home to live the <B><I>OC Lifestyle<B><I> today”

<>

Preview/Edit

Help Me Help Me

I have an OT question that someone here may be able to answer.  What is the drive like between Huntington Beach and Irvine?  Also, what is the best value in terms of price to proximity to a good surfing beach if someone were to want to surf in the morning, but was employed in Irvine?  I’m fine with renting for the next couple of years or so.  Thanks in advance, and sorry for derailing the conversation.

The joke about the 405 freeway is that it takes 4 o’ 5 hours to go home during rush hour.  At least on the radio.  I hear of delays every day. 
It’s not that horrible once you get used to teh OC lifestyle - parking on the freeway from 5pm to 6pm. :D
(Luckily, my drive is from Santa Ana to Irvine, so it’s ‘only’ 20 to 30 minutes)

You might be able to take PCH (highway 1) instead, but I’ve never driven that route during rush hour.

My suggestion: check out the sigalert website over the course of a week to figure out best and worse traffic times.

(I save 10 minutes by shifting my work schedule to 8:30am start time instead of 8am.  but i’m blessed to have that luxury)

I’ll probably be working from 10:30am - 7:30pm if that makes a difference.  We have really flexible hours in my industry.

I live really close to the 405 up here in LA, but I’m only 3 miles from work so even on surface streets my commute is about 10 minutes.  It scares me when I drive by it during rush hour.  Traffic into the valley is chaos everynight, I can’t imagine why anyone would do that commute everyday.  I’d rather slit my wrists.

LOL thats like saying Welfare money is comming out of tax breaks that rich people should be recieving.

By the way, I have nothing against smart people, some of my best freinds are smart people.

“There needs to be options for people who cannot be rocket scientists - options in which they can support themselves in a manner appropriate to our great nation…”

How about brokering mortgages?

Oh…nevermind.

Someone who truly desires an education is going to recieve it. We cant keep blaiming the schools because children are lazy or dont care about Algebra and Earth Science.

so then where is the money coming from when the need exceeds the special education budget??  - obviously you don’t know the answer.

It is not the fault of the school at all - they are barely keeping their heads above water.  It is the fault of our societal belief that nobody should be held responsible for their behavior - it comes down to the parents and their expectations that “others” should be responsible for educating their children.

Ok, why do you think that?  IrvineRenter thinks this place will end up around 500k…

What do you mean?

If both are entitled by federal law to the same education how is one party being shorted?

Becuase per individual it cost more to educated someone with downs syndrome, Autism or blind?

Tell me how I am wrong when it is a “right” spelled out specifically in Federal Law?

You just made my argument.

The “right” is to an appropriate education - appropriate is where things get hung up.  Many parents of special needs children have taken school district to task and won with regards to the needs of their children - some results being valid in my opinion - other completely extreme. 

Because there is only limited money allocated for education when the needs for special education exceed the special ed budget the rest of the money must come from the general fund - which in turn shorts the general ed. students.

When did you ever hear someone being concerned about the special needs of the gifted child - gifted children don’t really even have any rights like a special needs child. 

What about the child who loses valuable class and teacher time every single day because of the disruptive child - is that an appropriate education for the first child - all depends on your perspective.

Not related to Irvine Housing but nevertheless relevant:

http://money.cnn.com/2008/10/08/real_estate/financial_crisis_pulling_out_of_home_sales/index.htm?postversion=2008101016

ok, I’m done here - you make no sense at all camsavem

I did not want to come right out and demonize the Boomers But I agree with you somewhat.

However the boomers did do a lot of good things so it’s a bit of a catch 22 I think.

“Student” is from the Latin verb studere, to be eager for.

Hey all, after this week’s crisis, you can think of it this way:

Before the crisis: 1 million dollar is not enough

Now: 1 million dollar is rich

<~~**CoMe HoMe tO lIvE**~~ @^@ iN oC lIfEsTyLe @^@>

I don’t believe that the rollbacks are going to stop at the 2003 prices. 

It was valued around 300K back in 2000.

They could always sell houses.

Oh…nevermind.

I would not want to be employed in the financial sector right now.

“...if they sell today, they will probably walk away with $200,000.”

If they sell now, they can buy the same house again in 2 years for what they walked away with.

Huntington to Irvine would be less than 45 minutes average commuting time. I have done Huntington to Lake Foest in less time showing up to work at 8:30 AM.

Hopefully the next knife-catcher will bake the costs of replanting into the sale price.

UCI to Bolsa/Bolsa Chica… 
9:30 AM. 25 min. Northbound on the 405 from Culver to Bolsa.

6:30 PM. 30 min. Southbound on the 405 to SR73 getting off Bison and driving through UCI

The traffic the other way, though, is much heavier.  In the mornings I see heavy southbound traffic from Bolsa to Euclid/harbor.  In the evenings the traffic is stop and go from way south of the 73 all the way up to Bolsa.  I assume it’ll take you 35 min in the morning and maybe 45 min in the evening.

Assuming you’re going to John Wayne… any further and then you’re hosed because the 405 is heavy in the evening on the stretch from the 55 to University.