Irvine Housing Blog

I was also surprised by that… when doing my taxes after buying my first home for about that amount, 2 years ago.  I was expecting a whopper of a refund, but did the math and found myself owing a few K as well as owing the state of CA under-withholding penalties.

FWIW, the realtor never made any statements implying that the purchase was an investment or even financially wise.

Isn’t that what question 12 currently says?

“2. If you have a 30 year fixed rate loan at 6% interest, how much of the principal will you have paid off after 15 years?  __under 25%, __25-35%, __35-45%, __45-55%, __over 55%.

A.  25-35%.  At the end of 15 years, at 6% you would have paid off 29.4% of principal.  At 5% interest, you would have paid off 32.5%.  At 7% interest you would have paid off 26.6%.”

I follow the rental market in Huntington Beach where I rent now. All I can say is that the inventory of rentals on CL is going up substantially. My bet is we will see dramatic drops in rent over the next two years…...10 to 15 percent.

Hi George. I think I’m well placed to answer your question.
I currently rent a “luxury” townhome in Foothill Ranch. The similarities to my place and this featured property are very close indeed. I’m at 1400 sq.ft, 2bd/2.5 bths, attached 2-car garage etc.
I am paying just over $2200/mo. for our place.  At a GRM of 160 that puts the sale value of this joint closer to $355K or $400K at a generous 180 GRM.  Clearly the “owner” is still K-A intoxicated and the realtard is mailing it in.  $600K asking price isn’t just grossly overpriced it’s flat insulting. Even the $495K sale price in 2004 was a joke but hey ... a fool and her money are soon parted. This chick is just betting the next fool is right around the corner. Dare to dream honey, dare to dream!

This is true.  If you use the median income of $60k for a CA couple, they pay $3276 in CA income taxes. 

At 1% property tax, their property tax deduction is $2000.

So, $10,740 + $3276 + 2000 = $16,016.  The portion over the standard deduction is $4616.  At at 25% tax rate, that’s a net federal tax reduction of $1154.

With over $16k spent on mortgage payments and property taxes, that’s a small mortgage interest deduction.

Somehow, I get the feeling that the house has had multiple agents, because each and every one gave up in disgust at the owner’s delusions.  I’ve been watching this game of musical chairs with one property near my house:  the owner bought a horribly overpriced older house, started renovations, and then “accidentally” knocked out the supports during the gutting so he could build a McMansion in its place.  Unfortunately for him, he couldn’t get the loan nor the permits for the new house, so now he wants to take his toys and go home.  Problem is, he’s still paying off a mortgage for what’s essentially an empty lot with an obscenely expensive stone wall around the front and sides, so he’s been advertising for the last year to find someone dumb enough to pay that much for that small a space.  Three agents and counting, and I suspect that he’ll go through more realtors than there are stars in the known universe before he finds someone dumb enough to buy at the rate he’s asking.

There is so much wasted space with staircases that it must feel very tiny. However, it is Turtle Ridge in Irvine, so it must be worth at least $600K… Not.

“How exactly does one fit 3+ stories in 1400 sq ft?”

Picture living on a ladder.

Well. If you count the attached garage as a floor ... voila, three stories!  Referring to my earlier post response to George8, my current rental is a townhome, 1400 sq. ft. with the garage beneath my main floor. I dunno if they describe it as a 3 floor or merely 2 floor with attached garage. I suppose I should check.

Point is, I have a garage, main floor and then the bedrooms on the top floor. Stacked as it is, it could technically be described as a three story townhome.

In order to obtain the tax benefit you must be spending money on interest. It is NEVER a good idea to spend a dollar to save a quarter. Everyone who tries to concoct a reason why the HMID is good forgets this basic fact.

The personal exemption is free. It costs you nothing. Spending a great deal of money on interest in order to give up something you are given for free doesn’t make sense (or cents).

The home mortgage interest deduction makes interest less painful, but it is still a pain.

Pay off your mortgage. You will be better off.

I am in a house with no mortgage.  It’s so great not to make a monthly payment.  I highly recommend it.  Don’t worry about returns on other investment.  The peace of mind is priceless.

idrnkurmlkshk,

I might make a different decision if I had a 3brm condo that I could raise a family in and could live in indefinitely than if I was living in a 2brm condo.

Since a 2brm could truly be too small for a family with girl and boy children, I may want to save on the side for my next downpayment instead of having all my money tied up.  My fear would be that I may need to rent the small condo rather than sell and borrowing against it may not be possible.

Basicly, if I knew I would be moving, rather than wishing for a move up opportunity, I would plan to have the most flexablity and options.

idrnkurmlkshk - I don’t mean to muddy the waters for you but one other thing to consider is what to do with your “extra cash” as it were. I agree with those who say sit tight, maybe add an extra payment to principle each month to accelerate your pay-off.  It is always better to own something outright, regardless of it’s future value than to be making payments on something ... regardless of it’s future value.

HOWEVER, if you can find some stable and lucrative municipal bonds to invest your extra wampum into, that might prove a better hedge against inflation than simply paying down your mortgage. A financial advisor friend of mine mentioned that he had seen some muni bonds, I don’t know which ones, offering 6% return. That’s pretty solid AND muni bonds are tax deductible!

One last thing, you are only about 8 years or so into your 30 year amortization schedule.  I’d dig that schedule out and see how much of your current and near future payments are going to interest and how much to principle. If more is going to principle than interest, you may consider just paying the normal monthly payment as you are incrementally improving your situation. It is also good to know where you stand in the amort schedule when considering refinancing.  The further along you are, the less sense it makes.

Something is off.  I’m guessing either it’s really $1800/mo or $18000/yr.

Thanks.  Feel free to have your friends try this and see how they do.  I personally would have missed a couple of these questions before doing all of the research, and I’m a housing nerd.

I would LOVE to see some of these questions on the CA Real Estate Exam.  I also think it is a good list of things for prospective homeowners to know.

Don’t worry. Unemployment will lead to more home price drop, foreclosures, and bank closures.

If only we have an ETF to track unemployment/jobless claims….it’ll skyrocket by now.

“I believe interest rates should be more like 8% to compensate the banks for the risk.”

Someone suggested to me that the government should cap credit card rates because they are too high.  I told him that since the risk of non-payment was so great, they seem right to me.  Also, I would rather see the users of credit pay more to recapitalize the banks.  Consider it a user fee. 

It burns me everytime I hear someone say that our economy runs on credit.  Who thought that was a good idea?

Excellent point that I was making to anyone who would listen that last few years.  I kept saying price is STILL a major factor when buying anything, especially your house!  Instead, all these fools fell in love with “low monthly payments” and never once considered the actual COST of the damn thing.

I said exactly the same thing ... I’d rather buy a house for $300K and pay 10% interest than the same house for $600K and pay 5% interest. Why? Same reasons you list, not the least of which is property taxes and all other assessments based on the sale price. (And of course the actual monthly payment on $300K vs. $600K) The real benefit is as you stated, if interest rates go down then BINGO ... ole Jed’s a millionaire!!!  Refi and you win both ways! Low home price AND lowered rates.

How did this country get so stoopid?  :-D

People believe homes appreciate and provide a return better than the rate of inflation. They don’t.

However, there are many investments that have historically proven to provide returns in excess of inflation. Malibu Renter detailed them in his analysis.

I am not sure what exactly you are trying to mock, but, as usual, it reflects on you.

“Kids are very expensive, and unless you hit the jackpot and they all get a ROTC scholarship they cost even more of a bundle to get rid of ( priced UC lately? ).”

Back in the 70’s, I went to Saddleback. Cost was $5 health fee and books of less than $100 per semester.  Then I transferred to Fullerton for $100 fee and books still at less than $100 per semester.  Sometime later someone got the bright idea that students should shoulder some of the cost of their education through loans.  Now it looks like what happened with housing, if you add more credit, it allows them to charge more.

For the amount we pay in taxes, IMO, there should be a opportunity for a free or almost free higher education.