Login
Subscribe
Recent Comments
- Lee Campbell on Uncovering the History of the Secret Garden
- Kelja on Uncovering the History of the Secret Garden
- Sylvia Walker on Irvine Housing by the Numbers - May 2012 Update
- Casual Observer on Irvine Housing by the Numbers - May 2012 Update
- Astute As It Comes on Open House Review: 35 Bella Rosa
- Sylvia Walker on Open House Review: 35 Bella Rosa
- Darin on Open House Review: 35 Bella Rosa
- Sylvia Walker on Investors Are Busy in Irvine's Low-End Housing Market
- Casual Observer on Investors Are Busy in Irvine's Low-End Housing Market
- irvine_home_owner on Tustin, but Irvine Schools
Recent Posts
- Uncovering the History of the Secret Garden
- Closed Sales from 5/10/2012-5/16/2012
- Open House Review: 52 Secret Garden
- Irvine Housing by the Numbers - May 2012 Update
- Paired Living with Privacy in Woodbridge
- Beige Ruth Sisters
- Closed Sales from 5/3/2012 to 5/9/2012
- Open House Review: 35 Bella Rosa
- Investors Are Busy in Irvine’s Low-End Housing Market
- Artist in Residence: Turtle Rock Glen Townhome
Categories
Archives
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- Rest of archives
Browse Homes
Irvine Homes
- Airport Area Homes
- El Camino Real Homes
- Northpark Homes
- Northwood Homes
- Oak Creek Homes
- Orangetree Homes
- Portola Springs Homes
- Quaill Hill Homes
- Rancho San Joaquin Homes
- Turtle Ridge Homes
- Turtle Rock Homes
- University Park
- University Town Center Homes
- West Irvine Homes
- Westpark Homes
- Woodbridge Homes
- Woodbury Homes
Newport Beach Homes
- Newport Coast Homes
- Crystal Cove Homes
- Corona Del Mar / Spyglass
- East Bluff / Harbor View Homes
- Lower Newport Bay / Balboa Island
- Balboa Peninsula Homes
- West Bay / Santa Ana Heights
- West Newport / Lido Homes
Other Cities
- Aliso Viejo Homes
- Anaheim Hills Homes
- Brea Homes
- Costa Mesa Homes
- Coto de Caza Homes
- Dana Point Homes
- Huntington Beach Homes
- Ladera Ranch Homes
- Laguna Beach Homes
- Laguna Hills Homes
- Laguna Niguel Homes
- Lake Forest Homes
- Mission Viejo Homes
- Orange Homes
- Rancho Santa Margarita Homes
- San Clemente Homes
- San Juan Capistrano Homes
- Santa Ana Homes
- Tustin Homes
- Villa Park Homes
- Yorba Linda Homes
Contact
.(JavaScript must be enabled to view this email address)
Foreclosures
Housing
- Talk Irvine
- IHB Forum Archive
- OC Housing News
- Coto Housing Blog
- Housing Kaboom
- Patrick.net
- Housing Chronicles
- Housing Doom
- Dr. Housing Bubble
- Manhattan Beach Confidential
- Burbed
- SoCal RE Bubble Crash
- Professor Piggington
- Real C'ville
- Westside Bubble
- Bubble Meter
- Portland Housing Blog
- Sacramento Land(ing)
- OC Register Blog
Econ/Finance/Other
- Calculated Risk
- The Big Picture
- Economist's View
- Mish's Blog
- Matrix
- Bakers' Stock
- ML-Implode
- Eschaton
- Best Mortgage Rates
- Crackerjack Finance
Latest REOs
- $199,900 :: 3125 Watermarke Pl, Irvine CA, 92612
- $349,900 :: 10 Greenleaf 16, Irvine CA, 92604
- $439,900 :: 61 Olivehurst, Irvine CA, 92602
- $889,900 :: 14 Upland, Irvine CA, 92602
- $429,900 :: 56 Great Lawn, Irvine CA, 92620
- $465,000 :: 212 Garden Gate Ln, Irvine CA, 92620
- $329,000 :: 1006 Terra Bella, Irvine CA, 92602
- $579,900 :: 8 Star Thistle, Irvine CA, 92604
- $458,500 :: 3 Ultimo Dr, Irvine CA, 92620
- $398,900 :: 191 Lockford, Irvine CA, 92602
1). If only the realtor had inserted the word “like” before “totally”. This would have been the most awesome description fer sure.
2) On scoring I’m not sure this is a D? That they never withdrew above 2004 price isn’t - relatively - that excessive. I’d go for C
I debated that one to myself as well. It is hard to give them more than a C, but since they did withdrawal almost a quarter million dollars, it is hard to imagine this was simply paying off a few credit cards.
Just out of morbid curiosity, can you tell that they actually used the HELOC? Ludicrous as it may seem for Californians, could they have opened a line of credit but not actually tapped it?
That is true. It is possible this particular HELOC was not tapped out.
Usually, I find these at the end of series of smaller refinances or they are terminated by a stand-alone second so I am confident they were used. This one might not be.
If the final HELOC is not used, then these borrowers earn a C. They still increased their mortgage and used an Option ARM, so they don’t deserve better than a C, but perhaps the D is too harsh.
IrvineRenter what are you suggesting? Isn’t it obvious that the quarter MIL was spent on medical bills? Irvine housedebtors are clearly experiencing an uneven distribution of medical bill hardship. The equity withdrawal combined with a socio economic class with no access to health insurance is a problem in your community. I would like to see more posts that address Irvine’s health problems and a little less smarminess. Thank you.
I’m surprised this quote never got trotted out during the bust:
I won’t fail. I’m not afraid.
You will be. You… will… be.
Do homes built in 2002 already need to be remodeled - totally?
Most definitely in a makework cicrclejerk tail wag the dog economy such as ours. It’s all about workfare for the masses.
It’s like when someone asks me how the streets are here in AZ - I tell them “Great! The second that we finish building them we rip them out and do it all over again! Brand new streets everywhere all the time!”
This is how it works in economies that equate progress with “growth” and spending. We get a whole lot of unproductive activity and wasteful spending.
Its also interesting/coincidental that a $900k listing price is basically the max price to get a conforming 80% LTV loan. If you go for say a $1m listing price and you seek 80% LTV financing your affordability declines significantly Now over a certain sales price ($2.0m?) I’m not sure the spread between jumbo and conforming matters that much given the buyer pool at those prices. In any event with the wider spread on jumbos it seems like there will be a world of hurt coming in the market for houses like that that were probably in the c. $1.2-1.5m range at the peak of the market.
FYI, current listings have this house valued at $1.08M and recent sales value it at $1.07M.
It’s no wonder the sale is pending. Probably for a higher price. It would be great to see a list of all high end homes profiled here and what they eventually sold for compared to blogger comments.
I say we start with a house that PlanetReality sold to some sucker in 2007 or 2008. Perhaps IrvineRenter could stage a virtual reunion where the buyer can come on here and talk about how well their purchase has worked out and how grateful they are to PlanetReality for getting them in before being priced out forever. We could look at the purchase price and compare it to recent purchases and see just how well they have done.
PlanetReality please send a list of your 2007 and 2008 sales to IrvineRenter so we can begin at once.
the 900K is an interesting number for a couple reasons:
1) this is the cutoff point (in traditional lending) between the top 2% of earners (as per Obama’s definition) and the rest of the country
2) looking at sold homes nationwide (on zillow) this is the price point for the top 2% sold. Oddly enough it is more like the price point for the top 5% of listings
I think the 900K needs to drop closer to 750K in order to restore order and allow for moderate future growth. Maybe a large round of foreclosures over the next 2 years will help facilitate the decline of the magic 900K.
Believe it or don’t, the autocomps seem to show that this house is currently worth closer to $1.05 mil than $900k. (For a million dollars I expect to not be able to pass the Grey Poupon through the bedroom window to my neighbor, but welcome to Irvine.) It was also on the MLS for a whole day (with one photo and a one sentence description), so I suspect this was some realtor shenanigans-they have a favored client who got this for ~15% less than the going price, screwing over the bank. Of course, it looks like the bank might not be falling for this and plans on foreclosing eventually anyways.
But in the case of recourse HELOCs, the second may eventually get something out of a foreclosure. They can pursue the borrower. Whereas in a short sale there’s the issue of whether or not they not only allow the sale but also release the debt. It’s my understanding that the actual releasing of the debt may or may not happen, and some former owners may sign off on the sale without this key provision from both lenders.
Or do I have this all bungled?
Are there any publicly traded debt collection companies? That is going to be a growth industry. There is no way that the financial world is going to let that opportunity pass by. Heloc and 2nd mortgage debt will be sold for pennies on the dollar, and someone will profit by managing to collect on some of that debt for dimes on the dollar.
“There is no way that the financial world is going to let that opportunity pass by.”
You are correct. It will be a simple two step process and this is how it will be implemented:
Step 1: Bank/Wall St. firm will bribe legislators to create a situation where gains are privatized and losses are socialized.
Step 2: Bank/Wall St. firm opens a division under a different name; something which conveys patrician prudence, like, “Berkshire Financial”. Business plan is then executed and all the players will make money except for the taxpayer.
Its quite simple, really.
“In short, holders of second lien mortgages are screwed.”
It would mess up this really nice play on words though.
Thanks for this on HELOCs.
Today most decent single-family homes with 4 beds and 2 bath are priced at $600k-$650K. Putting down $150K means you’ve got to get creative in terms of financing the remainder. After you get a conforming $417K 1st mortgage, lenders try and sell you a HELOC for the remainder rather than lump buyers into a conforming jumbo loan (that comes with a higher rate). If you pay off the HELOC early, there’s a fine of $150 to $500, but the rate of interest is low.
I spoke to a lender yesterday in OC because I’m interested in buying a home around $625K, put $185 down. Maybe take a $417 (4.875%) plus a HELOC of $23K (4.5%). I joked with him over the phone about getting extra cash for some granite counter tops and a trip to Tahiti for my wife. Although I would only intend to use $23K of the line of credit to finance the bit over $417K, I thought it was interesting that he reminded me that the lender would be approving up to $80K of HELOC for me, so “you’d have $57K to do those things!”.
I mean, I don’t see any of the stated income BS going on here (maybe it still is?), but I think it’s funny that the HELOC’s are still promoted as a mortgage financing tool to circumvent the confirming loan limits in an overpriced market, with the good old fashion up sell as if “it’s free money!” to go crazy with.
You can make a toast to the FHA on your trip to Tahiti with you wife. Oh, and if things don’t work out, just default on the loans, hang in the home for a couple of years. I’m sure the gov’t will have some loan plan for you when need to buy another home because, afterall, we can’t have home prices falling. There are too many boomers who are retiring who need to transfer that debt to younger people for whole ponzi scheme to keep working.
Some validation for IR and some egg on the face of those who doubted him.
http://www.calculatedriskblog.com/2010/04/san-diego-surge-in-foreclosures.html
I was gonna post this but you beat me to it.
IR, congrats.
BTW, for those that followed IR since ‘06, San Diego was the first to fall (the vanguard, you might say). Let’s see if this plays out again.
Let the blood bath begin !!!
Maybe Irvine prices can fall back to 2009 levels.
Planet Reality,
If this all plays out like I’m expecting, you will have many angry former clients who you sold a bill of goods to. I guess you can always tell them to rent their place out (because it’s at rental partiy) while they have to live in a low budget apartment somewhere.
I personally can’t wait for the next wave to hit. Crow will be the main course…and there will be plenty to go around.
Just wait until this pool of bubble money finally dries up. Irvine represents a huge SLURPING sound. With each signed contract, imagine a big SLURP and BELCH as the monster claws back some buyer’s paper wealth.
PlanetReality can make himself feel bullish with the big down payments if he bends over and stuffs his head in the sand while ignoring the state’s pending bankruptcy, increasing unemployment, businesses fleeing the state, etc. Some boomer ate the neighbor kid and now has 500K to throw down to live the rest of his life in debt so all is swell as far as PlanetReality is concerned. He doesn’t care about the seeds being sown down at the bottom end to enable his clients. Sad.
The best part is that I am a bear.
You guys are so far off the plane of reality that you view me as a bull, and a realtor no less LOL.
Predicting relatively flat prices with slowly rising interest rates is bearish. You guys live in this fantasy land which doesn’t allow you to see that.
You are being bullish. You are exhibiting the same type of magical thinking that 06 bulls were engaging in when they proclaimed that bubble prices were done rising and we had now reached a plateau - everyone who bought was safe.
Prices then proceeded to collapse.
You are making the exact same argument for Irvine and when the negative prices influences are brought up for discussion you start waffling and hand waving about the plane of reality.
If you are not a realtor then you are most likely a house debtor. You obviously have some influence that has left you in a state of denial that is a reality to you.
For reals? You need to get laid badly. Your fantasy of me is far from reality.
Predicting Irvine house prices 5 years from now as either 5% less, the same, or 5% more is bearish. It’s freaking hilarious that you see this as a bullish view. Keep in mind I have healthy doses of government intervention and interest rates slowly rising baked into my forecast.
Let’s not forget current rental parity in Irvine—- SHOTS !!!!
Planet Reality,
When you say “Predicting Irvine house prices 5 years from now as either 5% less, the same, or 5% more is bearish.” I think this is the best case scenario that prices remain relatively unchanged…that’s bullish. Even the biggest bulls will concede that there will be no significant appreciation. A bearish view would be that prices might be lower by ~20%.
I guess it all depends on how you see things. I’m just questioning your bearish stance.
Irvine prices are currently more in most segments than they were at the beginning of 2009.
I didn’t expect that, did you?
To answer your question, no one expected prices to be higher today than they were in 09.
However, it’s all attributed to the government constantly injecting morphine into a severely wounded patient. Something will give sooner or later as the morphine doses becomes less and less. When you look at the big economic picture, there is just too much bad news out there…and that is reality.
So PlanetReality, what kind of income gains are you baking into your forecast over the next 5 years?
As we burn off this bubble money in the current market, the down payments are going to start getting smaller and smaller. Some other source of money is going to have to be found in order to keep the music going.
Are income gains going to prop up the downpayments? How long will it take the average Irvine resident to save up 500K the hard way?
With rising interest rates, 0 appreciation is your best possible outcome. How is the moveup crowd going to make up the difference?
Something has to give and you are in denial. You think the bubble prices can stay now “just because”. Keep your head in the sand.
“0 appreciation is your best possible outcome”
That’s funny because you are already wrong. There has been positive appreciation in Irvine year over year.
Dude, bottom line, even 5% growth over 5 years is bearish and I don’t expect that. It can easily happen and is a viable scenario given current rental parity. Your head can’t see burried in sand.
“To answer your question, no one expected prices to be higher today than they were in 09.”
I pointed out here at least six months ago that house prices in Irvine clearly had bottomed and were rising.
http://www.redfin.com/city/9361/CA/Irvine
Change the graph in the middle to houses only (condos are doing somewhat worse), and the bottom was on Feb 16th, 2009, at $334/sq ft (sold figures). The current price is $355/sq ft, or about the same price as in late Sept. 2008.
This trend has been obvious for many, many months now to anybody who bothered to look at the actual statistics.
There has been positive appreciation in Irvine year over year?
Then why is it that when I go over to Zillow and bring up the charts for houses sold in the last 30 days, I do not see this year over year appreciation that you are talking about?
From what I am seeing - your houses are selling at ‘05 prices. This is not year of year appreciation as we are now in 2010.
Many of the houses selling were bought a long time ago.
What kind of income gains are you expecting will make up for this as it burns off?
Do you have a non hot air answer?
Geotpf - do you know what a dead cat bounce is?
No worries - the ‘average’ Irvine resident is a wealthy Asian with a huge cash downpayment. Everyone else is priced out forever!
AZPHX - I have agree, your perma-bear stance does appear to shine through. Deadcat bounce or not, the market did rise last year and a +/-5% price change is neither bullish nor bearish by definition.
Permabear? That’s nonsense. I am just looking at all of the pieces of the puzzle and have concluded that the price rise is not justified by rising incomes or improving unemployment. Therefore, it is not sustainable and is going to correct as the bubble money gets SLURPPED up and downpayments get smaller as buyers come to the table with less and less paperwealth from their previous abode.
‘Permabear’ is just a veiled ad hominem used by people with no argument.
It doesn’t take advanced arithmetic to figure out that it will take a 120K household roughly 10 years of hard disciplined saving to save up 500K for a downpayment. I do not believe that you have enough of these types of savers to step in and take over for houses that are no longer appreciating 100K per year.
With interest rates going up there is obviously nowhere but down for your prices to go.
The +/- 5% is just a number that PR is pulling out of thin air to masquerade as being bearish because he is trying to convince himself that his investment is not about to plunge in value.
5% growth over 5 years is bearish. Get real.
If people are trucking wheelbarrows full of cash around to buy groceries a la post WWI germany, then we will see house prices rise because the dollar took a beating.
any amount of appreciation in a downcycle is pure noise.
no amount of money can fight free market forces long term
how ‘bout perma-fundamentalist?
Why would an all cash buyer purchase when money is so cheap?
Cash really becomes king when rates are double digit and also when DTIs become tighter.
Yes this means YOU foreign cash buyers. Unless you are buying with the intent of avoiding a hyperinflation scenario, in which case a bit of leverage would be healthy, just stop already.
9/10ths of 1 million dollars to live 300 yards from a freeway…. but the schools are great!
Price does not compute. How this property is “worth” that much is beyond me.
HELOC lenders in 2004-2007 created some real turds of loan products out there. Zero to minus 1 percent margin HELOC’s (hellow -0- percent borrowing what with PRIME where it is…) Graduating available balance HELOCS - rising available credit automatically granted if an Automated Value Model said your home appreciated, and of course the ever popular Stated/Stated options put so much money into so many peoples hands without restraint. I’d guess most California HELOC portfolio’s are worth under 5c to the dollar. Wells (Wells/Wachovia) Chase (WAMU) and BofA (BofA/Countrywide) are stuffed to the gills with these loans but no likelyhood of repayment.
Would be interesting to see if anyone had the time what 2005/2006 company data says on their HELOC originations for each named bank above. Assume some were sold, a few were never used, but most are completely worthless today.
My .02c
Soylent Green Is People.
SGIP,
Then the loans are back stopped to 80 cents on the dollar by the Fed for some investors, the “bad” loans are worth far more than the 20 cent to 60 cents on the dollar that the investors are paying for them. I’m not in the group to qualify for purchasing the back stopped loans or non-back stopped loans. For the Fed and govt, some people are just more equal than the others.
Very funny “Debt Star” feature you had last week. We’re having an stellar recovery in the stock market with prior record job loss and “great news: the net job loss rate is decreasing, new jobs are being created” mantra.
Your “9/10ths of 1 million dollars to live 300 yards from a freeway” observation is changed to easy access to the freeway in RE speak.
“If the first mortgage takes any loss at all, the second mortgage is completely wiped out.” I know a woman in Florida that concluded her property value with respect to her first mortgage was hopeless, but once the decision to stop paying the first was reached, had no problem paying the second, while also paying down credit cards and student loans. Something of an odd choice, but with foreclosures taking considerable time to implement, some borrowers have both extra cash flow and enough integrity not to default on every possible debt.
Gentlemen All -
Prices will grind lower until we get to real equilibrium due to rising rates. And they will rise. Look at Greece. Desire for housing is not demand for housing. If we just go back to a 7 or 8% rates over the next 5 years prices will decline in today’s dollars by 20+%. BTW, at our current run of deficit spending (10% of GDP) by 2015 we will be spending close to 1Trillion$ a year in debt service. Rates will rise maybe indefinitely. This will put constant pressure on housing. And don’t forget rising tax rates for all successful people.
For a million dollar home it’s a TOLLWAY, not a FREEWAY.
Come on, have some sense. We don’t to give the poor people a free ride near the McMansions in Irvines’ Moreno Valley
The Invincible cartoon would be more accurate with the banksters/Foolishis lenders standing, the HELCO abusers as their attach dogs and the taxpayers and pension funds being beaten by the banksters and bitten by the HELCO abusers.
The banksters are being made whole by the bailout and stimulus packages. The HELCO abusers are already whole with the cash-out saved or spend. Plus a bonus of 2 years free rent. The free rent is available only because the banksters want to indirectly bill the govt for the free rent via bailout and to keep prices high for another round of bad loans. Why should the banksters change their behavior (issuing bad loans) when they are financially rewarded for that behavior?
The bailout package is working. Notice the inflation on raw materials? At the retail level, regular prices are a little bit lower, but not much great huge discounts for the prudent shoppers. Retail food prices are down, but the wholesale is below cost for most of the farmers and ranchers. They will be driven out of business and the prices raised at that point. A new spin on “cattlegate.”
If each of the big HELOC banks has ~$100B in “assets”, how much will they lose per year? 10%/year ($10B) for 5 years each?
If the whole sector is expecting “only” $30B in profits, how does that play out? and what about the CRE?
Can anyone tell me how these biggies will survive?
freedomCM
Answer: None. The bad loans are being remaded into GSE loans. The banks will only be service providers, i.e., working for a fee on each transaction. The question is how much will the taxpayers be losing?
Alternatively, some of the private banks spin-off’s that purchased the bad loans have been back-stop for loss. However, since the loans were purchased at a much lower cost than the back stop value, they essentially have a govt back profit center. For me to purchase the loan, you pay up front. If the loan pays I win. If the loan fail, you lose and I win. All animals are equal. It just that some are more equal than others.
They will survive because the government is going to print as much money as it takes in order to make them whole.
We are going to see massive inflation in this country at some point in the future. They can spin all they want right now about how printing a trillion dollars hasn’t caused any price inflation as of today. The real cost is going to show up later and the government will blame it on the weather, the improving economy, China, OPEC, etc. It’s much easier than raising taxes - better to steal people’s money in silence while the people are distracted by Tiger Woods social life.
Let’s see: level to rising house prices, rising DOW, some commodities up, and “the deflationary winds are still blowing hurricane force”.
Fundamentally, it looks to me as if the deflationary, free market, economic contraction is marching straight against inflationary winds blowing hurricane force.
‘WaMu Lenders sang “I Like Big Bucks”’. (They changed the words to Sir Mix A Lot’s “Baby Got Back”, jumped on a stage, and tossed play money into the air.)
http://www.politico.com/news/stories/0410/35779.html
“I like big bucks and I cannot lie / You mortgage brothers can’t deny,” sang the WaMu rappers.
Oh my favorite part was the mock funeral for Countrywide. Get it?! A funeral! Because they KILLED them! So funny I forgot to laugh!
I vote that we take the asshole who came up with that skit and let him go dig up IED’s in Iraq.
What a disgrace.
Thanks for an insightful article.
Stephen Bernard and Tim Paradis of Associated Press report that stocks soared today on earnings from Intel and JPMorgan Chase; the latter announced a $3.3 billion profit, and Huffington Post reports http://tinyurl.com/y27b7ns that the bank still owes the US taxpayer over $41 billion.
What I call the Ben Bernanke Portfolio, the ETF, RWW, RevenueShares Financials, rose 3% today and 65% in the last year http://tinyurl.com/y65eol8
The article Option ARMs Get Set To Explode, Much More Pain in 2010, 2011 http://tinyurl.com/ygh8olk makes for an interesting read.
As I read the comments, I observe so much optimism about home buying and future real estate prices in Irvine.
I expect a soon coming economic crash which will likely come from a liquidity evaporation where people will not be able to obtain funds in money market accounts, mutual funds, brokerage accounts and the like, due to a lack of buyers stepping forward to buy assets when prices are quickly falling. Needless to say, real estate prices will drop like lead. I rent.
As a Star Wars fan and former loan underwriter (left the industry in 1994) I want that Debt Star made into a poster. It’s too funny!