Irvine Housing Blog

Wow, note to self, check to see if first post appeared before cursing the computer and rewriting after error message.

People live in NYC too.  And in Paris.  And in London.  Are you gonna tell me that their intrinsic value should be the same as Scottsdale?

Actually the downside in RE is greater in Vegas and AZ than in Southern California.

Our prices were so much higher here that it was more difficult to play the multiple flipper thing…  The percentage of “investors” in Vegas and Phoenix was much higher than in SoCal.

IMHO, the price hit in the higher priced RE areas will be due to the 100LTV Option Adjustable Mortgage “homeowners” not the flippers nor the “subprime” borrowers.

For the record.  I “owned” my townhouse in Tucson prior to moving to Phoenix.  I bought before the price run-up.  Sold at the peak.  Walked with a nice profit.  So when you go making statements like “some guy renting an apartment in Phoenix” as though I am some second rate citizen; don’t assume it is because I “cannot” buy.

I never even followed house prices until I decided to move to Phoenix when I realized that my townhouse “value” had balooned.  I am one of the winners in the scheme yet I cannot say I am really proud of that.

I considered buying in Phoenix and then when I saw how ridiculously priced the houses were I started doing more research and found blogs like this that helped me fill in the missing pieces of the puzzle.

For Ipo and Tonye to make statements like “chillin with the coyotes” is a pretty ridiculous sterotype.  I read that and thought to myself “wow, that’s pretty ignorant”.

Will all the hedge fund bonus boyz have to give back all the $200MM bonuses and the 49,000 sq ft mansions and 500’ yachts they bought with them, as well?

I mean, they SHOULD. These were the people who profited from this rampage, and if the rest of us have to deal with a skittering economy, rampant inflation, and incredibly tight lending standards for reasonable mortgages, as a result of the insanity and criminality of the “boom”, even though we may or may not have participated, let alone profited, then why should the people who profited the most be permitted to keep their ill-gotten gains?

Geez, I was off the computer for 3 days and missed all the good stuff!

Someone comments re: banks foreclosure bids:  “They bid the amount of their loan because then they can carry it on their books at the full loan amount and, thus, not take an immediate write-off. If the loan were $720,000 and they bid $600,000, they would carry the (depreciating) asset at $600,000 instead of $720,000 and have to take an immediate $120,000 write off.“

Actually, the banks need to take the charge-off that fiscal quarter in which it is foreclosed to write the properties to market values.  The accountants look at REO valuations, there’s no luck hanging out a year or so without writing this stuff down!  But banks base REO valuations on appraisals or updated brokers’ opinions of value, and when the market falls as fast and furiously as it has, the valuations are based on lagging data.  Also, the vast majority of foreclosures are through the biggest banks (smaller banks have been out of SFR mortgages for years except the thrifts) - they are still trying to find staff to handle the sheer volume of REO’s they are dealing with.  Yikes.  Which is why you’re seeing writeoffs and additional loss provisions piling up.  The banks are and will be giving back the profits they made on these products over the last few years through the losses they are taking now.

Interesting point. I’d hadn’t really thought about the extent to which speculation in Arizona and Vegas was driven by Californians instead of just locals.

Still, as prices will drop everywhere to get in line with actual income levels, you can still just earn more money in places like Irvine, other parts of the OC, and LA than you ever will in AZ or PA. That won’t change even as the cost of housing drops, and people will continue to pay more, on a relative basis, to live near those economic hubs. Regardless of any of those debatable factors that make a place “special” (and I would personally maintain there is *nothing* special about PA but that’s just me) you will always be able to earn more money in parts of California than you can earn anywhere in AZ or PA. That means the homes will always be worth more, on a relative basis (not current level crazyiness), and you can’t just compare a tract home in one location to one in the other. It’s apples and oranges.

Yeah, I guess I hadn’t thought of how much the speculation across the southwest (AZ, Vegas) was driven by Californians. Probably to a large degree, just like you say. Interesting point.

Still though, prices in places near economic hubs where you can earn more money will always cost more (even if they shouldn’t cost anything close to what people think they’re worth now), and regardless of weather or any of those other soft factors that make an area “special” you can just earn more money in parts of the OC or LA than you can anywhere in AZ or PA. Prices have to drop everywhere to get in line with income levels, but income and prices will always be lower in Arizona.

My house is on the space coast, Florida.  We just paid off our house.
No way could we buy our own house, even at the reduced price I think we could get for it now.  Even if we put 50% down.

eeeeewwww.

tonye,

ummm, I was talking about the assertion from Laura that this would not sell ANYWHERE for less than $200K.

I disagreed.

That is all.

I see a lot of discussion about land and it’s value in this thread.

I am willing to accept there is a land premium in the OC; however I question how developers used this land during the irrational exuberance years.

Let me explain….

When I go to open houses it is amazing to see how many houses / condos are crammed together with pathetic “yards”.  I’m sure anyone who has ever attended an OC open house has felt at least a little claustraphobic.

We all know the actual houses (materials, construction, etc) are not worth very much…. just look around the US to see how much comparable houses go for…..

Will developer’s decisions to cram houses hurt the OC?

When will people decide:  “Land premium? for what?  this ridiculously small lot… that has another ‘detached’ house on all 4 sides.“

So….. OK, I’m willing to accept OC land is worth more.  Why do people want to live on top of eachother though? 

You can’t just take lot size and multiply a premium $ / sq. ft to get the value….. you need to consider how that lot of land was developed… that effects the value…

Exactly!

That’s exactly the point I have been trying to make and the constant mantra that this question elicits is this “it is different here” as the “irvine premium” crowd unleashes a salvo of groupthink.

The point that they are really making is that people in Irvine are willing to sacrifice savings accounts, retirement, etc in order to stretch themselves in order to live on this sacred land.

Doesn’t wash with me, but we’ll see.  These house prices are going to drop like a rock in the next couple of years so we’ll see who has the last laugh.

Reynolds -

You are correct.  We had a huge speculation influx of California residents snapping up homes in AZ as “investments”.

People in CA have been inflating their house prices for almost 10 years now.  Your economy has to pay people on average 10K-15K more there just to keep people from moving out due to economic pressure.

As a result, there are a lot of screwed people in AZ how bought at California prices which are now correcting.

I chose to rent rather than play that game.  Looks like I won that debate.

I have to chime in here and say that while I AZ’s original estimate of $200k for this home is low his larger point about the continuing refrain of the “Irvine/OC premium” is still inflating perceptions.  Yes, there are lots of jobs there.  Yes, many of them pay well.  But not that well and not enough of them.

I think other interesting thing is this premium for communities.  As a native California who never lived in the OC it’s somewhat humorous to me to see so much made for a “house in the foothills” versus the “gang ridden older OC communities”.  To me, it’s not that much different.  It’s still OC where, for the most part, people who can’t afford San Diego or want to commute to their job in LA live.

There’s no doubt that newer, better planned communities that effectively eliminate some economic classes of people will command more money*.  That’s a no brainer.  But how much more?  And how long will those communities be able to maintain their “integrity”?  After all, let’s be honest, it’s that economic sieve that separates them from the other places (and age of the buildings of course).

My point here is that saying a home like this can rent for $3k a month because of where it is is a pretty slippery measure of value and not one intrinsic to the property in any way.  These things change over time.

As well as the economic upheavals we’re now enjoying there are going to be some other interesting challenges to these communities as time marches forward.

*And I’m not advocating for the qualities that make up these communities, only pointing out the obvious.  What makes these communities “desirable” is the lack of economic diversity amongst it’s inhabitants, little else.

Gentlemen all -

Let’s change the discussion for a moment.  Let me posit this:  none of the home “owners” could afford these houses then or now.  We are simply at a price level that is completely unprecedented.  A buyer can only afford what the bank says you can “afford” unless you are a 100% cash buyer.  If median income in Irvine for a homeowner is $100K (for the sake of argument) they can onlyl afford 3-400K home based on proven historical banking / financial standards.  How does anyone believe or make a logical case for median home prices in the $6-700K range? 

Do you really believe that every one in OC makes $250K / year?  Many do but, I’m certain that it is not the standard.  And most importantly, very few people have the cash to pay these prices.  The BANKS are the ones that determine what you can have and afford.  If they give money away to anyone with a pulse and provide 100% financing with NegAm loans based on no documentation then many people can afford $6-700K prices but, if you have to have 20% down with proven income then you find that people can afford 3-4 times their income (provided they have good credit) in a home.  This means that we are looking at a very large regression to a 35 year mean. 

Let’s discuss… I would like to know what do you make and what do you have?  Could you sell house to yourself at these prices?

Sing it loud and proud tonye!  Yeah, I get tired of hearing about how someone’s log cabin in timbuktu cost $3 and a pair of used underwear as well… 

I live in Irvine, work in Irvine, and will buy my next house in Irvine so IRs blog is very “close to home” for me.  I don’t think I’d hang around near as much if I was shoveling my friggin’ driveway in flyover country or chillin’ with the coyotes in AZ.  I do find the insights of some of our out-of-state brethren useful at times and often entertaining as well.  The “my god that apartment thousands of miles away from me in some city I have never visited before should be worth $100 max!!!“ is a waste of web server storage space.

This is evergreen plan#3, a plan 4 just sold for $690K, with 300sf plus feet big than this one. and a plan 2 also just sold for $640K.

Based on these two houses, this reasonable prices for this house should be around $670K.

California has a very nice desert—out around Palm Springs…perhaps people should not go all the way to Phoenix. Anyway, people adjust. I know folks who will pay money to sit in a sauna. “Ëveryone wants to live here” == crowded beyond beleif. AZ is a beutiful state, and I am not surprised that it is filled with many CA transplants.

Finally, the common wall cuts the price of this place by at least 33%. Look at the prices in Foothill Ranch for similar. $739k is WTF++.

Irvine is more like Naperville, in almost every way. Sometimes I slam it too hard, but it does look great when you drive around. Big palm trees. Very nice place really. Just not in the same league as Winnetka.

And too bad prices are crazy everywhere. Very sad that Chicago gets more like LA, and not the other way around.

It’s true, their collateral assets are shrinking.  It’s also true that they are having to put more debt on the books (ex. SIV buybacks, credit card defaults etc).

If it was just a matter of meeting reserve requirments, then the overnight lending spread between banks wouldn’t have been going up much.  Since it’s been going up, that’s hording.

That’s horns silly.  the devil has HORNS.

Because he is horny.  See that movie with Al Pacino.

No, no.  They get credit for the amount that they are owed plus atty fees and costs.  I think they have to produce a small check for clerk’s fees and doc stamps.  I haven’t bid at a sale for a bank since the early to mid 80s, but I remember the paralegal in charge handing me a check, in the neighborhood of 50-100 dollars.

Once there was a bidding war, and a vulture was upping the bidding by 100 a pop, the minimum bid increase, and everybody was getting really bored, so somebody who just wanted to speed things up raised the bid by a bunch.  Both previous bidders shut up, and the guy says, no, no, I didn’t really mean it!!  I don’t have the money!!  And the clerk just accepted that and went back to the bidding with the vulture and bank, the former went up by reasonable amts after that.

I don’t remember who won; I remember the bidding, because it almost never happened.

“Many many REOs featured on this blog had similar profile as this one.“

Then perhaps the price-drops aren’t as bad as portrayed on this blog.  Perhaps things aren’t so bad after all!

Or perhaps in a year or two, a 21% drop will seem mild.

Time will tell.

I saw one in north Evanston that had a 5-car garage, and the garage fronted on Sheridan Road.

I was walking back down to Rogers Park from the B’hai temple in Wilmette on a fine summer day, and I gaped at that garage for a long time. It seemed not to belong there, but it looked as old as the 50s vintage house to which it was attached. I didn’t know Evanston let anyone build a garage like that.

Yes, I love Winnetka and think it is one of the loveliest suburbs in the world, but Irvine has better weather, and CA in general has spectacular scenery unmatched almost anywhere else. So, while I prefer the Chicago area to any other, I can see the attractions of other places, especially those that don’t get down to 5 degrees with a wind chill of -40.

And, much as I love Chicago, I believe our prices are insane, and so does everyone else because sales are very slow. I won’t repost the link for the ugly Edgewater bungalow for $998K. Suffice it to say that in every neighborhood and suburb, the prices are in extreme overshoot relative to the area’s incomes and rentals.

Yes, St. Louis, which is a moderate-priced metro area.

This place would sell for at about $350K in Webster Groves, my mother’s suburb. Even her 60-year old, 1600 sq ft. 4 bed 2 bath that needs lots of work would sell about $225K (30% off peak prices) and it doesn’t have granite in the kitchen (to say the least)

Could you even build it for $200K?

Maybe in some Detroit or Cleveland suburbs a property like this would sell so low. I was cruising out of state listings to see how other locales stacked up against Chicago, and I saw a 1920s-vintage apt of rare beauty and incredible craftsmanship, 2000 sq feet of herringbone parquet floors ,exquisite millwork,and incredible built in cabinetry, 3 beds, 2 baths, in Shaker Heights for $140K at the peak. You could not touch a place like this for less than $400K in Chicago, or $275K in St. Louis.

But then, you think, if I lived in Cleveland, would I even be employed? So $140K is perhaps a little over-the-top for that location.

If I’m not mistaken isn’t Arizona in the midst of it’s own massive correction? I don’t have the numbers in front of me either, but isn’t income in Arizona, with the exception of Scottsdale and maybe a couple other places, a good bit lower than that of Irvine? I know in my profession, law, the pay at top firms in Irvine is about twice that of top firms in Phoenix. Maybe not the best way to come at it but legal salaries tend to reflect billing rates, which reflect the size and profitability of the local economy.

I have found that the single women in the most expensive neighborhoods are significantly more annoying.

When moving to an expensive neighborhood, it seems best to BYOG.

Our bank (major bank, which still appears rather stable) checks in with us periodically to see if we might want to buy something soon.  We are their favorite potential type of buyer: money for a down payment, excellent credit, long term customer, virtually no other outstanding debt. 

We checked the last rates they offered vs bankrate.com.  Suffice it to say that there are umm, some big discounts on 30 year fixed jumbo loans to be gotten. 

Regarding affordability, it’s easy to watch things become more affordable.  We have been able to save about $35,000 a year aftertax by not being homeowners and renting instead.  That piles up really fast if you actually invest it. 

Potential buyers should try the following experiment.  1. Find out how much more you would have to pay if you bought the home you would like at its current price.  2. Try saving the difference between rent and ownership costs for 6 months.  3. If you can indeed live on that without too much discomfort, you can own a home.  4. By the time the experiment is over, you’ve probably some money toward the downpayment, and the prices have dropped 7-10% in those 6 months.

“2. The picture hides the fact that this home has a common wall with its neighbor and NO back yard, yet it is legally classified as a single family home.“

I missed that, but looking at the first photo, it’s completely obvious now.  See that white vertical trim?  That’s probably the wall demark. Just to the right of it is the left edge of the stoop for the 2nd house.  This is a townhome.  2100 sf townhome.  Argh.

If I had showed up thinking it is a SFR, I’d be pissed because it’s a townhome.

I was just saying that I think the prices will be that way soon enough with or without intervention.

If boycotting something is your idea of fun then have at it.

AZ, I don’t think you get my argument. I agree right now the prices are high because of irrational exuberance (which you happen to call pyramid scheme). We both agree from that perspective. Also, you **have to expect** an increase in Phoenix housing price when CA housing price increases as well during this bubble (that’s why they call it bubble…duh!). It’s not a localized one but a nationwide phenomenon. Think of it as when PG stock price going up and so too will KMB stock price if macroecon condition favors consumer non-cyclical products because they both compete in the same category.

By saying “Just don’t cash in your fake equity to buy an “investment” home in Scottsdale which does affect me.“, you’re basically pricing yourself out forever because of this mentality. Buy when the macroecon condition makes it right to buy. Don’t buy into that 4x salary argument crap since there are other macroecon conditions that do affect housing prices one way or another….as a matter of fact, inflation is a bigger factor that you think. 4x salary, if I’m not mistaken, was taken from the 70s (yeah, if I’m wrong in this argument…sue me). Well, do you remember the interest rate back then?

Go contrarian after the knife stops falling and people still have fear of the RE market. Real estate is not worthless wallpapers like the tech bubble back in Y2K.

Right now, the knife is still gravitating towards Earth…...

Flagstaff is wonderful!  Love it!

I’m not really interested in arguing about where the best place to live is.  It’s meaningless.

I think that a lot of the arguments being made for the “Irvine Premium” sound very similar to the “it’s different this time” argument that people made to justify forever house price increases.

Like I said, if you guys all want to keep the Pyramid scheme going in CA; fine.  Just don’t cash in your fake equity to buy an “investment” home in Scottsdale which does affect me.  If the sides were flipped, you all would be whining about it too.

Also 125 degrees is a bit of an exaggeration.  118 is usually about the hottest day of the year.  But summer will usually average between 110 to 115.  Still pretty hot, but not 125.

Yes.  And as directly relates to you tm, the more expensive the neighborhood you live, the more attractive women will be interested.

“In time I believe that won’t be necessary.“
Neccesity?  Who said anything about neccesity?  It just sounds like fun to me.

Consider the possibility, the banks are not hoarding.  Rather, they are meeting reserve requirements as a result of shrinking assets.

Well, I gotta differentiate myself from that other Chris but I agree with what that Chris said as well.

You pay a premium for your location. Phoenix with 125 degrees in the summer (at least that’s what I have heard from folks who were from there) is desirable for a lot of folks…NOT!

AZ, with Irvine housing price falling, do you actually expect housing price in Phoenix to hold up to the point where both market would be equal? Think of it this way: stock prices and valuation of several companies that compete in the same category would all fall with a macroecon condition that dictates a recession. However, the so-called bluechip company’s stock price and valuation will hold up better than those other so-called also-ran companies.

Unfortunately, and I hate to burst your bubble, Irvine/OC and other coastal areas throughout US are the bluechip companies for real estate while Phoenix is the so-called also-ran (you can argue whatever you like, but I can’t argue the fact that CA has a higher population and higher real estate price than AZ). Sure, the coastal area housing prices are going down now because of “irrational exuberance” that was formed somewhere between ‘01 and ‘07 but that phenomenon also existed throughout the US. By saying “$1 mill? I can get blah blah blah in snowland county, nowhere”, you’re basically saying the equivalent of “shoot, why the hell should I pay $$$ for Proctor and Gamble when I can pay the same amount for x numbers of Kimberly Clark”

“Fake equity”? Sure, when CA hits 125 degrees F in the summer. But what will that leave Phoenix with?

Oh yes, location carries status. Living in an expensive areas carries cachet just like driving an expensive car or wearing expensive clothes. It will help you get chicks (or dudes) too, although perhaps not the best life partners. And yes, California seems more status-driven than most places in the country.

(1) The images of OC on TV are a cruel insult perpetrated upon us by the LA based media.  I would love to see a reality show called “Batos Locos of East LA” or “South Central Friday Night Fights” or “Yuppies of the West Side”... you name it.  I think the New Testament says something about throwing rocks and glass houses.. .but the clowns in Burbank either follow the Old Testament or are heathens on their own…

(2) Location does affect your social standing.  This is true regardless of time and space.  That is, in Ancient Rome some hills had more status than others.  In some islander tribes, the chiefs live in the center of the village in the biggest house.  Face it, those are the facts.  “Location, location, location” is possibly the only truth in the RE mantra.

What do Nashville, Detroit, Chicago and Vegas have to do with the property values in Orange County?

It irks me to no end when people start to pontify and issue fatwahs or our property values based upon the price of noodles in Kyoto.

And, did you notice that AZDavidPhx lives in an apartment complex?  What experience does he have with real estate values?

Come on folks, I can see how IR knows real estate prices because he has stated that at some point he wants to get a house and he’s PO’d about the damn bubble ( as most of us are, homeowners or not ).  Others around here are renting homes so they understand the market.

But someone renting an apartment in Phoenix and telling us how much our property values should be?  Based upon perhaps the number of lizards in a desert ravine after a summer monsoon? 

Folks, get a clue.  Property values are local and they reflect local conditions.  There are macrodynamic factors too, which is why a dump in Costa Mesa is worth more than a chateau in Iowa…  but overall please stop ponticifying on property values and lifestyle choices.

Jeez….

“You can say that “Oh well its CA and so many people want to live here - it’s high demand”, but that’s nonsense.“

It’s a variation of the everybody wants to live here.  Well, they don’t. 

However, 3.1 Million people do.  That’s the population of OC.
Riverside county has another 2.1 Million.  San Bernardino County adds another 2.0 Million people.

Now of course, not all the people in San Bernardino want to live in OC.  Those in Big Bear or Victorville, probably want to live out their.  Many of the rest, live there for affordability reasons. A fair percent, I suspect, would live in OC if they could, particularly the areas that are newer and safer, than the old gang ridden portions of the County.

The secondary reason is also fairly simple. Jobs. Not income, raw jobs.  Pull up, Monster.com, Dice.com, your favorite job board and do a job search for the kind of job you want and compare how many you find within a commutable distance from Irvine compared to Phoenix, the whole Metro area.

So, yes, the prices are not sustainable, but due to the number of people that already live here and continue to want to live here, there will be a slight premium.

This home, in the mid-west may be fairly ‘median’.  Then again, it may not.  It’s newly built, barely eight years old.  If you hit the newly built out suburbs of Minneapolis, this house, granted would have a yard, but would also weigh in with a $450K+ price tag.

Does the bank show up with cash too?  What do they do?  Bring in certified checks or do they have a Brinks truck parked near by?

lendingmaestro,
I have a question for you.  If fraud was indeed occured here, does the lender do anything to recoup the loss from the people who set up and close the fraudulent transaction?  A straw buyer, to me, is someone who could be totally clueless.

(1) It is obvious why the non HOA is cheaper.  It doesn’t have granite on the kitchen counters, only white tile.  In an HOA community the Board would clearly write you up for that failure to keep the property values up.

(2) You got to be very careful about what the “powers” of the HA are.  The Davis Sterling Act that got passed in California tightly controls the Board of Directors to ensure that it does not abuse it’s “powers”.

(3) Often time the HOA Board is loaded with control freaks and nazis ( I should know, I’m the only non-nazi in my Board ).  The CC&Rs and ByLaws may or may not give much power to the HOA.  Indeed, the older HOAs granted very few rights to the HOA Board.  Ignorant homeowners will jump when the Nazis at the Board tell them to, but smart homeowners who read their CC&Rs just laugh their heads off and walk away.

(4) Many people in Irvine grant powers to the HOA that are in the realm of the City.  For example, if you keep a car on blocks in your driveway for more than three days all you gotta do is call the cops and they will start the process to have the car moved away.  They will notify the owner and if they don’t move it then they’ll tow it away.  The HOA has nothing to do with this at all.

(5) Many “fines” levied by the HOA Boards are bogus.  Not only do they often not even have the power per se -using sheer intimidation- but the Davis Sterling Act may have made obsolete/illegal many of the powers granted by the CC&Rs.

The bottom line is not to assume that the HOA has a lot of power.  The nazis and control freaks like to think they do, but in reality all they’re doing is bullying people around.

As I said, I should know.  I deal with such imbeciles often.

While I agree that it may make sense for a bank to take a small loss and end it at the auction, typically banks don’t do that.  They look to mitigate loss in a more methodical way - it is difficult to accurately assess the value of a property in a repeatable way prior to the auction. 

Also, as of a few months ago banks were selling many OC foreclosures above the auction price (like this one is trying to do).

2008 is projected to be another down year for real estate.

Banks might get tired of holding all this depreciating real estate and just fire-sale it in 2008.

This place featured today is looking worse and worse to me.

1. Based on what I read here today, it was purchased at one point using straw buyers. It became an REO.

2. The picture hides the fact that this home has a common wall with its neighbor and NO back yard, yet it is legally classified as a single family home.

3. This “paired home” concept, or fad is a really stupid idea the more I think about it. I would not want any part of it. It is just another attempt to be able to use less land and tell you your getting a single family home.

This place already has a little bit of a shaded past and it was only built in 2000. I think it has bad luck.

Earlier I stated that I thought the market value was 455k. I know its a good location and gated from what I read here, and thats the reason I give it that high of a value.

It’s been very interesting and informative reading the varying opinions regarding location. Great topic, btw!  I don’t know about the mentality in other parts of the country but as a single male living in the OC, I’ve often wondered if location is a form of social currency here. Is your social value to some degree is predicated on where you live?  Would living in Newport Beach provide me with a higher social value/ status than living in Irvine? These are questions I’ve frequently asked myself. The establishment (media) seems to vigorously promote this. The Real Housewives of OC show constantly showcases the “Coto lifestyle”. So much so that living in Coto has been infused into their sense of self and who they are. It seems that the social conditioning is stronger here than in other parts of the country.

That reminds me of my time in Denver eons ago.  Thank God those easterners think that Colorado and Arizona are The West and stop there.

We already got too many New “Yorkahs” in Encino and the West Side.  We can’t handle more people, please… keep your Yankees out East, on the other side of the Colorado.

As the Eagles said… “They came from Providence, out in Rhode Island…“.  Yep, they come West and wreck our Paradise.

For all I care, we should have sent John Wayne out to Arizona like 30 years ago and he could have shot up all them first wave yankee immigrants so that no more would think of coming West of Laramie.

And oh…. IMHO, the only place to live in Arizona is Flagstaff.  But that’s just me.  Phoenix is simply over the top HOT.

Or nude.  Been there, done that.  Still can’t get the images out of my head….  I really like having 400 feet between me and my closest neighbor.

If you had bought any property 30 years ago in Carlsbad, you’d have made at least 30 times your money….

In Florida it is customary to bid $100 by the bank.  It reduces the amount of doc stamps the bank has to pay.  Therefore, I don’t think there are Federal Tax implications.  There used to be some bankruptcy implications or implications that there was unfairly low amount bid, but after a few flurries those concerns seem to have gone away.

All the courthouse vultures know that the $100 bid is from a bank, and have already checked the file to see what the amount owed is.  Usually they don’t bother to bid unless they want to outbid the bank.  But it is possible that a vulture will try to bid half the amt of the mtg and see what happens.  The vulture could conceivably call up the foreclosing atty and see what bidding instructions the atty has.

Virtually all the foreclosures in Miami are going back to the bank.  That used to be the case always in Miami, then there were bidders during the bubble, and now we are back to square one again.

In time I believe that won’t be necessary.

Vail is heaven on earth.  I contemplate moving back to CO so I can ski there again.

My friend’s dad made a small fortune in real estate there about 15 years ago, but I have no idea what the market is like these days.

They aren’t making any more mountains.

That’s what we call fraud.  This was a straw-buyer transaction.  The buyer walked away from the purchase with cash back from the seller.  He/She than probably defrauded a renter out of several months of rent while not paying the mortgage.

The Lender bids the loan amount because it satisfied the investor and prevents a true rating of the CDO.  AH HA! 

This allows whatever derivative that was backed by the asset (the home value) to be paid in full without negative impacts.  What does this mean?  The crap sold on wall-street that was backed by this house’s value gets to die a pristine rated death.  It looks as if the debt was satisfied, but we all know that it hasn’t been.

Hehahehaheha

Well said AZ, incomes have to go up or prices have to fall.  I believe it really is that simple now that the financial sector has been raped and pillaged.

Also, I didn’t mean to imply that all of the equity was false.  If you sold, and realized the gains, then I tip my hat to you.  What I was stating is that a lot of people, who think they are wealthy, will soon be in for a wake up call which rivals that of Neo when he woke up in The Matrix.

Shek-  you would do well to avoid Woodbridge!  I was cited for not painting my gate the appropriate shade of white.

That’s true.  Key point being “those needing a loan to purchase”.  If one didn’t need a loan to purchase (ie. can pay all cash - which is mostly nobody), it’s more affordable.  But if you need a loan, it’s hard as the banks are all hording cash to cover the current and coming foreclosures, etc. so they are charging anyone (ie. other banks, homebuyers, etc.) more if they will lend to you at all.

Lender anxiety: Discounts at foreclosure auctions

http://latimesblogs.latimes.com/laland/2007/12/lender-anxiety.html

Lenders are clearly becoming anxious to avoid taking on more real estate owned (REO) assets,“ ForeclosureRadar founder Sean O’Toole said in a press release.  O’Toole called the discounting trend a “sea change” in the banks’ pricing strategy.

“We were surprised by the magnitude of the discount and even more surprised that most of the homes went back to the bank with no investor bidding in spite of the price cut,“ he said.

Example: A Stockton home with an underlying foreclosed loan of $419,000 was recently auctioned with an opening bid of $240,000—a discount of 42.8% from the bank’s investment—and still attracted no bids, O’Toole says.

He says the percentage of foreclosed homes now being discounted at auction is 66%, and the average lender discount is $48,000—up from $9,000 at the beginning of the year.

Indeed, excellent points to consider skek.  In terms of buying in a lower price, I used those particular examples because the non-HOA home sold for $360K in ‘99 while the one on Pollena went for $440K in 2002.  Homes in the non-HOA area in that size range were in the $400K+ range by 2002 so there was very little purchase price differential.  Some five years later, there is a considerable price differential, probably $100K+ between the two homes.  The non-HOA house is only a few years older, but has not held up as well as other West Irvine properties.  I think the HOA and facilities/amentities they provide and maintain is another reason Northpark values have continue to hold up well relative to other areas.  NP has very expensive association dues…

Integrity..please.  It might have came off funny that in one sentence he enjoys the calmness and in the next he enjoys roaring an engine through the calmness but thats about it.  To make a statement regarding integrity or ethics from that is just rediculous.

Whats with all the stereotypes today?  $200 jeans, crazy mentality, californians are healthy, fake malls…its friday people, relax.

What about the dead kittens?

You know, I quite honestly, tend to agree with you.

Don’t ask me how I am from AZ, but I much prefer cold weather to hot weather.  I really cannot stand the hot summers here.

However!  I find that I am quite in the minority on this issue!  People actually do come here for the weather.  Some people actually like the heat.  It is the strangest thing, but I find it constantly.

Apparantly a great deal people in the northeast grow tired of shoveling driveways for 20 years and come out here and think they have found paradise.

We also get a lot of retirees who prefer the warm climate.

Might not be for me.  Might not be for you.  But that doesn’t really make me (or you) superior them…right?

that should be “preset” architectural guidelines.

No argument here.  In moderation, HOAs are positives.  I especially like the community centers, pools, etc. 

But—without knowing the cost of those HOAs—to what extent do the HOA dues offset the higher property values?  Plus, some people put a premium on the freedom to do with their property as they please (we’ve got a few absentee landowners in our neighborhood, but by and large, our property values are fine).  That’s especially important if you want to remodel a house in your distinct style (which, of course, has its pros and cons, depending on your style!).  Many HOAs won’t let you depart from present architectural guidelines.  Finally, presumably, the non-HOA homeowners bought in at a lower price, so that offsets the lower property values when they sell.  In exchange, they get the same house for less money.  Also, it remains to be seen what happens to the HOAs if and when they start facing budget issues—do they raise dues (and impose an additional tax on homeowners) or do they abandon services (and dilute that premium on property values)?  Given your experience, it seems like a crapshoot whether any particular HOA can remain financially solvent in the long term.

I’m not arguing against HOAs in all instances—like I said, I’ll probably end up in one the next time I move—I just think that they have the potential to be taken to an unhealthy extreme.  In short, I don’t want to pay $500 per month to give neighbors with too much time on their hands the ability to fine me for leaving my trash cans on the street too long.

What most people don’t realize is the fully 80% of the state of Arizona is actually part of Hell!  100 days a year above 100 degrees = MISERY.

http://www.wrh.noaa.gov/psr/general/history/index.php?page=100deg

That said I’ll take that over 200+ days of rain Seattle, 6 months of snow Minneapolis, 100% humidity Houston, etc.  So on the balance there are worse places than Phoenix! I know, I know, it seems almost unimaginable.

Let’s be clear on the reason why Phoenix is growing.  Cheap land.  Why is the land cheap?  Cause its SO DAMN HOT! Honestly, I am surprised they don’t have to pay people to live in AZ, like they do in Alaska.

Hi Diana -

I have never been to TN.  I definitely need to visit sometime.

I have spent quite a bit of time this year in Oklahoma City doing work for the Air Force base there and it is like an entirely different community. 

The house prices there were pretty much unaffected by the masses or debtors in the other states.

In places like these, the house-price topic never even gets brought up.  You don’t this “my house is bigger than yours” status competition.

That part of the country is wonderful.  I would consider living around there someday but for now most family is in AZ and work/school are good so I will be here awhile longer.

aaaaaahhhhhhhhh, that’s what makes it so much more attractive. now I get it.

Let me give you an example from my neck of the woods:

Here’s our first home, in a non-HOA part of West Irvine, where property values did not rise nearly as much.  It’s a 2500 sf 4/2.5, rather basic, but not an eyesore:

http://www.redfin.com/stingray/do/printable-listing?listing-id=1332995

Similar home, in Northwood Pointe, with a HOA of course, which helps keep the neighborhood selling at a premium:

http://www.redfin.com/stingray/do/printable-listing?listing-id=1292399

Another similar home, much closer to the non-HOA West Irvine place, listed for almost $200K more:

http://www.redfin.com/stingray/do/printable-listing?listing-id=1051840

There isn’t much difference between all these homes, and yet the first one is priced considerably lower.  They are all within a mile or so of each other.  The homes in this area, without the HOA, have always sold for lower.  The neighborhood doesn’t look as good, has less amenities, etc.  Most 2500sf Irvine places are probably worth $800-850K in todays market.  To be able to pick one up for $700K shows a little bit of the difference between HOA and non-HOA neighborhoods…

Chris - I liked your analysis.  The only thing that you forgot to mention in the equation was “income”.

I did not see you mention anywhere that house prices need to come back down to reality with average incomes of the people nearby.

You cannot support a market where all homes cost 500K when half the people in the community earn less than 84K per year.  It doesn’t work without “creative financing”.

AZ,

don’t sweat it. people always want to believe their home is better than everyone elses, & should command a premium.

guess what? I live in Nashville, TN & I think it’s one of the best cities ever. The people are sweet & helpful. I live 20 min away from my work during regular times throughout the day, & 30 min away during the 5 o’clock traffic. The winters are mild & we still get snow. The summers are mild & there are days when you don’t need to turn on the air.

& yet, the ratio here, historically, is not 160. nope, more like 110-120. right now, in a outgoing sellers market, we’re at 140.

& I am just fine with that.

I will never take pride in saying that my home will never be worth less than half a million just because everyone wants to live here.

What I find so amazing, personally, are some of the righteously indignant comments about how it is so absurd that a property in Irvine, CA might actually sell for a price that is affordable by a household earning the median