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Latest REOs
- $199,900 :: 3125 Watermarke Pl, Irvine CA, 92612
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- $439,900 :: 61 Olivehurst, Irvine CA, 92602
- $889,900 :: 14 Upland, Irvine CA, 92602
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Lenders don’t capitulate. They never will. There is no comparison between a lender and an inndividual housedebtor.
Not even close.
The housedebtors tolerance for pain is directly dictated by his/her bank account/income.
The bank, on the other hand can pick and choose the who, what when where and why of the individual foreclosures.
Haven’t we all seen the location flaws of many of the homes Irvinerenter profiles? The banks are gonna sell off the turds first and when they are GOOD and READY, they might sell you a decent house…for a premium.
The bank never loses. Never.
“The bank never loses. Never.”
i guess WAMU didn’t lose like the USA didn’t lose in ‘nam
Yeah, no bank ever foreclosed and sold at a loss. I don’t even know why they have “recourse” in those states that allow it. Why would they need that, since they never lose? Waste of legalese, if you ask me.
And certainly no bank ever found itself loaded up with devalued assets. Never in recorded history. That’s the reason no bank has ever foundered. You see, because a bank is self-interested. As a result, the things that interest it always come to pass. They pray to the Universe, per the Secret, and they just win. Suddenly a buyer shows up who will pay the big bucks. Or suddenly the ever depreciating asset becomes an amazing income producing thing, transformed as if by Captain EO himself. And all those public entities preparing legislation to penalize them for letting properties go to pot—they just stop or repeal all that.
Count on it.
“It shouldn’t be too surprising that REO departments are understaffed and inefficient. Who at the bank is going to get kudos for spending a lot of money to accelerate their loss recognition? Of course, lenders would be better off if they quickly resolved their REO and get what’s left of their capital back. But they won’t see it that way.”
the sooner a bank realizes what’s going on is a race to the bottom, nothing else, the better off they’ll be. restated, first one to sell all their shadow inventory wins.
the good news is, all it takes is one to want to shore up their books and maximize while paying less in holding costs in the long run.
I gotta say that $265k for a 1 bedroom apartment with dated fixtures, stained carpet and cheap tile countertops is still about $125k too high.
I know right..
This dated 1 BR in Irvine, with $500 per month in HOAs and mello roos has a post bubble market value of $265k? Rental parity with 20% down.
Can’t you feel the devastation? That is truly devastating.
20% down? You do realize this is a crappy little 1 bd 900 sqft apartment/condo right? So would you, a ‘sane’ person put down over $50K just so you can claim that it is at rental parity?
Dude the PMI is 7% the $50k every year plus the mortgage rate on the debt. Yes in Irvine this crappy $265k 1 BR is at least a 20% down. Less than 2% of loans in Irvine are FHA. Compare that to Vegas, I double dog dare you.
I couldn’t give a crap about Vegas (or Irvine for that matter, it sucks ass!). It’s the fact that someone, anyone with half a brain, would put down $50K on this 1 br when you could easily get a bigger, better home somewhere else. You can’t say it’s the schools this time either, since this is a 1Br.
Oh, on another note, you are spending a lot of time here so things must be very bad at the CAR/NAR Department of Propaganda (i.e. the Lie Machine). You need to find a real job.
Nice job responding to the economic facts like a man.
What facts? That someone who thinks that it is smart to put down $50K on a 900 sq ft apartment, instead of using that money for a full sized home? Fact is, this is a money loser if they took your advice.
@eat that - so wrong on many levels. So right on the emotional one. It is insane to put 50K down on this piece of dung, BUT, look at all the other fecal homes bringing in 1 million or more just to live in Irvine. It’s all about “belief” from Jesus to Bernanke, with no “belief” it becomes “worthless”. Property is only as desirable as people BELIEVE, and man, there are hardcore fundamentalists in Irvine let me tell you!
At rental parity this is a decent buy for a single professional. You say to use your money “to get a real home”, you must NOT live anywhere near here as a “real home” will cost you about 3x the cost of this real estate offaling, er offering.
Well, you do realize that there’s more to life than Irvine in southern California? I mean, you CAN live elsewhere and be happy.
Still cheaper to Rent from the IAC than to own this POS. Those HOA fees are insane. This place was $ 435K at the hight of the bubble. I would bet this place makes it all the way down to about $175K when all is said and done in a couple more years. Love the long “2 Car” Garage. I dislike these weird 3 level “Townhomes”.
You think so? $265K with a 20% down would yield a monthly cost of ownership of around $1350 per month even with the high HOA.
While this tri-level with 2 car garage may be crappy, you don’t get this for $1350 a month with the Irvine Co
Reality why don’t you buy this place since it’s such a smoking deal. I swear you must be one of those annoying realtors who will say anything to keep your income stream coming.
Just like everybody else was saying, anybody who puts 50K down on this POS is insane. This is not a place anyone would stay for an extended period of time. And it still has further to fall…
Just happen to live in an IAC in Quail. I have about the same Sq/Ft. 1 level. Attached Garage.
All Granite in Kitchen. All new Appliances. Outside Laundry with big machines. Fireplace.
Double Sinks in the Bathroom. Built in 2004.
$ 1600 a month.
That $1350 is going to put some Down Payment cash at risk too. Rental Parity means nothing when your buying a depreceating asset class in comparison. Adios Down Payment cash.
Fair enough but I believe “eat that!” had a point. How many people currently paying $1500 a month for a unit like this have the $50k sitting around for the 20% down? I would imagine few to none. So the circle of people who would rent this place and the circle of people who have the cash sitting around for the down payment are two circles that do not overlap. Is that really rental parity?
Just curious, i am looking at some IAC rentals, is yours all furnished? IAC published the unfurnished apt (rates and floor plan) and their weekly special, is there any negotiation room on IAC rentals? For furnished, they said the rates are not on the net and are quoting from US$120/nite for a 2 bedroom (900-1000 sq ft). For that price, i can probably rent a whole house. just curious to know what people’s experiences are with renting from IAC in the current environment. Thanks
their current specials are the latest, and there isn’t much negotiation on that price. any $ off of list for that month varies for each property.
you can ask them to throw in an extra perk (i.e. painting accent walls), or change the lease terms (length) outside of the norm with property manager approval. they change every month and expire at the end of the month, based on how many move-outs and vacancies they have.
no idea with furnished vs. unfurnished. seems cheaper to just get some slightly furn. off craigslist if not rent (rent to own?) it elsewhere.
2 car garage, 2 bath, 1 br? talk about ridiculous layout. but hey, you can let one fly on just about any level.
this appeals to a tiny slice of the population in Irvine. plus you can probably buy one just like it in Newport Beach for the same, and not be saddled with the stupid HOA.
Okay PR, I hate to feel like I’m picking on you but…
Vast majority of 1bd rental in Irvine seems to be around $1300-1500/mo for a nice complex (e.g. 1bd, 830sf in Toscana averages $1350). At $265K with 20% down & $500 HOA, a purchase comes out to around $2300/mo.
How is that rental parity? You’d be paying $800-$1000 more per month, plus your $60K “investment” is getting no return. Wondering if you know what rental parity means?
Rental parity in Irvine means it’s old, dated & ugly
I’ll pay the expense for you to take a rudimentary math class.
The finest night community college of your choice.
Demeaning sarcasm does not improve the strength of your argument; in fact, it reveals how weak your argument really is.
You should have spent the time validating the math and proving what is reality.
I calculated the monthly costs using a 20% down standard loan the same way IR calculated using an FHA loan in the post…total monthly comes out to $1470, not quite $1350 as you stated previously.
You get $1320 if you simply calculated the principal and interest using a 20% down and took out the PMI and kept everything the same. I think somebody needs to pay for their own rudimentary math classes.
Why would there be PMI on 20% down?
“Affordable housing is no longer part of the American Dream. Lenders have usurped the American Dream by forcing everyone to take on huge debts to get an education, a car, and a house.”
The upper half of college tuitions should be crashing any day now.
The upper half of car prices should also be crashing any day now.
That Manhattan beach real estate will be in free fall as well.
It will be great when this happens so that we ALL can afford them. These price increases keep humming along. Don’t worry though it won’t be long before any poor shmuck can afford a million dollar house. It will only take an armful of gold or a tanker truck of oil. Let the liquidation of 90% of America continue.
Cars are the anomaly in that group (houses, college, etc.), aren’t they? I understand stretching dollars to buy the “best” college or house, but a car?
And yet inflation in higher end cars far exceeds the inflation rate. Inflation in all higher end goods far exceeds the inflation rate.
There must be a bubble right? or is there something else going on hmmmmmm
“These price increases keep humming along.”
Remember everyone, in the year and a half or so since Planet Reality began telling us how misguided those with a bearish view on Irvine prices were, this condo has fallen in value 20%.
Oh, it’s so noted. And he knows it. While he dribbles sarcasm about the lack of devastation, the simple consolidated numbers are all the rebuke required.
The gap between the classes continues to widen.
There are more discretionary dollars at the upper end chasing premium goods and services.
My belief (and I have no skin whatsoever in any OC RE) is the number of rental units in Irvine skews the median household income dramatically downward.
As discussed a few days back, the areas around Irvine have much more pronounced corrections. Even when the “shadow inventory” comes online, I believe there will be enough interest in owning Irvine RE to retain a stupid premium over renting.
1) Rental prices are low because IAC’s massive supply
2) Enough folks from north & south OC plus IE pine for a commute reduction and a nice nabe (“the schools” is a red herring - there are great schools to be found in backwaters like Temecula, Walnut and Santa Clarita).
So: my grand unified theory of the Irvine housing premium* is that it attracts residents at two basic price points: the working professionals, who rent and the $200k+ crowd, which owns. The supply of the latter is finite but Irvine finds a way to extract this crowd from points far and wide.
*Caveat: the standard deviation in the household income data is required to prove the theory.
“...Buyers can sit on the sidelines longer than lenders can remain solvent…”
Buyers “can,” but “will” they?
Probably not. When people become emotionally motivated to buy, they buy. On the margins, many will be demotivated by the prices and chose to rent instead which will serve as a long-term drag on demand.
“Buyers “can,” but “will” they? “
Depends… If the buyer is married to a nagging,
high maintenance wife, who wont spread her
legs for him, until he buys her a house.
Not necessary to talk like that Johnny.
Yea, let’s not let the truth get in the way of the discussion Johnny. Maybe you hit a nerve with Sue? LOL!
I’m with Sue, a little decorum here would be nice. (And I am a male)
In Sue’s defense, she didn’t deny the validity of the comment.
Yes, that comment was over the top. I usually don’t censure anyone unless they call names, but that comment made me cringe as well.
how about ApocalypseFuck posts about eating NAR people or grinding them into beef patties yesterday?
even as a joke…
Buyers who haven’t already emotionally capitulated are increasingly becoming conditioned to the new reality of “real estate blows” (the mirror opposite of the psychology during the rise). So—I think—the emotional triggers for buying will be more tempered that usual.
Couple that with more of a scarcity of cash/credit with first time buyers than previously experienced, and possible move/unemployment risk aversion on the 2-4 year horizon and the emotional desire to buy—even with a modest financial advantage of $100-$300 monthly—might not be enough to coax a buyer who figures with prices dragging and even sliding a little bit, there’s really not a strong need to do so. And next year looks better than this one. Even if I’ve been saying that for years. It just keeps being true. So I just keeps being renter.
I really thought hard about during the last month. But then I looked at the graphs and woke up.
10 years to clear the NYC metro market?
15 years to clear Boston?
I read on CR yesterday that the REO delay after NOT in NYC metro is now 900 days. That’s almost three years!
Who would pay $2k/month to live in outer Irvine if you could squat for three years in NYC?
The reason NYC metro is at 900 days is banksters are refusing to foreclose in Manhattan, because that’s where they own and it would negatively affect their own equity. So, they have made the choice for their companies to specifically not foreclose in their area so as not to negatively impact their personal net worth.
Yes. Their behavior is entirely self serving.
Nit pick alert: the “I want home prices to fall, and I want to see the banks go bankrupt.” image (Darth Maul? I stopped watching the Star Wars films before the end/beginning) is just wrong. It just isn’t an evil dream any longer. I think it needs to be a fine, wholesome image of Dorothy, or an “everyman” Henry Fonda type.
I don’t even live in CA these days, but I can tell you that the buyers are definitely motivated here, where $500K asking prices abound in zip codes where median household income is $75K.
The catch: motivation is a necessary but not sufficient condition for purchasing. Buyers just don’t have the income and down payments to qualify at even today’s slightly tighter lending standards.
The banks, though more than willing to offer their backlog of foreclosures at WTF prices, aren’t suicidal, so they’re not offering money to folks who can’t afford these homes, and the FHA requires at least a shocking 3% down.
Plenty of motivated buyers; few actual buyers.
The Kool-Aid has not worn off, but fat lot of good it’s doing for sales. My newest neighbor offered 80% of asking for the cheapest listing within a several-block radius, and after a few attemps to negotiate, more out of pride than anything, the seller accepted.
Even with willing buyers and cultural attitudes that place renters just above meth-using pedophiles on the social ladder, Denver can’t find enough qualified buyers at these already-reduced prices.
I believe there will be more investment and first-time buyers as prices drop another 10%, as long as the FHA stays in the picture, but I think this will merely prolong the agony. There are just too many people waiting to sell at every price point along the way down. From boomers who have to sell, to people who bought at the top because they feared never being able to afford a place, there is a growing line at the exit.
Financial reality is ahead of buyer sentiment. We have at least 15% further to fall here, and it will take at least 5 more years. We have buyers galore, but not at these prices.
There wouldn’t.
How I calculated:
$1,081 ... Monthly Mortgage Payment
$230 ... Property Tax (@1.04%)
$100 ... Special Taxes and Levies (Mello Roos)
$55 ... Homeowners Insurance (@0.25%)
$0 ... Private Mortgage Insurance
$239 ... Homeowners Associates Fees
==========
$1,705 ... Monthly Cash Outlays
-$103 ... Tax Savings
-$276 ... Equity Hidden in Payment
$93 ... Lost Income to Down Payment
$53 ... Maintenance and Replacement Reserves
==========
$1,471 ... Monthly Cost of Ownership
and how I think Planet Reality calculated:
$1,081 ... Monthly Mortgage Payment
$230 ... Property Tax (@1.04%)
$100 ... Special Taxes and Levies (Mello Roos)
$55 ... Homeowners Insurance (@0.25%)
$0 ... Private Mortgage Insurance
$239 ... Homeowners Associates Fees
==========
$1,705 ... Monthly Cash Outlays
-$120 ... Tax Savings
-$333 ... Equity Hidden in Payment
$16 ... Lost Income to Down Payment
$53 ... Maintenance and Replacement Reserves
==========
$1,321 ... Monthly Cost of Ownership
(basically I’m assuming PR didn’t change tax savings, amortization and lost income to down payment).
MBA National Delinquency Survey Loan Count
Q2 2007 Q1 2011 Change Seriously
Delinquent
Prime 33,916,830 31,897,319 -2,019,511 1,859,614
Subprime 6,204,535 4,180,219 -2,024,316 1,109,848
FHA 3,030,214 6,285,254 3,255,040 511,620
VA 1,096,450 1,366,455 270,005 62,720
Survey Total
44,248,029 43,729,247 -518,782 3,572,679
Looks like the delays are working—the bad loans are being transferred from bank prime and subprime to the FHA, i.e., taxpayers will take the hit for the bad loans. Give it another 10 years and 80% of the bad loans can be transferred from the banks’ liability to the taxpayers’ liability. Bend over.
That graph from Calculated Risk is waaay off in timing IMHO - it’s taking a lot longer than that to reach capitulation, we are by no means there yet.
Here in the Bay Area, in most places you’d actually want to live, we are NOWHERE NEAR rental parity.
I’ve seen many “run of the mill” apartments in Tustin and Irvine that look nicer. What’s the antithesis of a chef’s kitchen? I’m not even sure most upright vacuums could navigate that so wonder nobody’s buying it. Why downgrade into a declining asset (albatross) at roughly the same price as rental parity?