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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
The owner obviously paid for the bragging rights to the nicest house in Northpark Square. The only problem is it’s not gate guarded like the one north of Irvine Blvd.
So it’s not excloooosive.
Great video IR!
I have a question. What ever happened to housingtracker.net? That was a go to website once a week, and now it has not been updated in more than a month. Did a realtor buy it so people can’t see how much more asking prices have dropped? Does anyone know?
Thank you.
You can use
http://housing-watch.com/
for the same thing. It gets updated a few times a week. It’s a good chronicle of the slow death of housing price expectations.
I see that housingtracker.net tracks Orange County vs. housing-watch.com, which tracks Irvine specifically.
housingtracker.net says “Last updated 11/15/2008. Updates will now occur once a month on or around the 15th.”, so they’re not that late.
Thanks to you both for the site recommendations.
Ah, actually I see that if you click on Irvine, CA on housing-watch.com, it says “Irvine, CA and surrounding regions”, and then if you click on “surrounding regions” it says “Irvine, CA” is a proxy for “Aliso Viejo, Costa Mesa, Cowan Heights, El Toro, Foothill Ranch, Irvine, Laguna Beach, Laguna Hills, Laguna Woods, Lake Forest, Newport Beach, Newport Coast, Orange, Santa Ana, South Laguna, South Main, Tustin”.
Weird.
Are both websites taking thei info from realtor.com?
If so, at least for Nashville, TN, they are completely erroneous. GNAR (greater nashville area real estate) produces its own website with all info for Nashville and does not agree with Realtor.com at all. http://www.gnar.org/08mlsmonthly.htm
I wonder just how accurate Realtor.com is for other areas as well.
Thank you
I’m going to go with he’s selling because he has too. Maybe he’s in the real estate mortgage business or worked at Lehman Borthers. In other words, the sale at a loss isn’t really driven by market issues, but personal ones.
As for the house… nice yard. NOT. I’ve seen townhouses with more green.
I think he’s selling because he is SMART. This isn’t a million+ property, and if he can get a greater fool to mitigate his loss, do it.
Smart people know when to cut their losses.
Maybe we should have a fill in the blank game.
“The conventional wisdom in real estate is to buy the most desirable properties in the most desirable neighborhoods because those properties _________”
Have the highest commissions
Generate the largest referral fees from mortgage brokers
Allow the realtors to meet the richest people, or those with the largest credit lines.
satisfy my need to smugly look down at you over my prada bi-focals and say “I live in the nicest house in Northpark Square”.
maybe a divorce?
Finally a home in the area that I would actually pay $600,000 for.
Wait 18-24 months. You may get your chance.
Is this the Mad Max scenario? That’s the one I’m hoping for as well. Your $600K price might be possible, but I would say your time frame is not realistic. I am ready to get the leather outfit, chains, and mohawk… bring it on!
24 months sounds realistic to me. The worst decline for Irvine prices will be in 2009. The worst is already over in places like Corona… dollarwise anyway.
If enough people lose their jobs and salaries decline enough anything is possible I suppose.
Like it or not, I think if this house is selling for $600K in 24 months we will be in Great Depression 2. There is just too much leveraged against these losses.
I am prepared for this, and maybe it would be a good thing.
Let me try to make this sound a little more reasonable as a $600k house in 2010.
$600k = $176 per square foot for this house. It is currently for sale at $379/sf.
The house was purchased for $1.365 million in late 2004. It missed the peak by ~18 months. Previous sale price 12/31/02 was $768k. The 2004 sale was 78% higher than 2002. Over the same time period, the Case Shiller price index went up 51%.
1. Did the first owner in 2002 get a great deal? Or did the current owner who bought in 2004 overpay? Could be either. If you assume the 2002 price was a market level deal, $600k would have been the March 2001 price for a comparable house. I’ll bet a lot of people here think Irvine will make it back to 2001 prices.
2. Unless there is a new bailout for jumbo loans, someone who wants to buy this will have to pay substantially more in interest than for a conforming loan. They will also have to pay a higher rate than the current owner. According to bankrate.com, in late 2004 jumbo interest rates were around 5.5%. At the moment they are at about 7%, with much tighter underwriting standards than 2004. Interest rates have only a moderate correlation with home prices, but it certainly isn’t helping this house fetch a high price.
Even worse, that 5.5% nominal rate was about 2% real interest rate at the time of purchase. The 7% nominal equates to 8%+ real interest in a deflationary environment. It won’t stay deflationary forever, but an 8% real interest rate to buy a depreciating asset should worry anyone with a real downpayment and a 700+ FICO score. If they have half a brain, they will wait.
3. At amounts near the 2009/10 jumbo conforming limit of $625,500 + 20% down ($781,875), this house will get a lot more attention. At the FHA limit of $625,500 + 3% down ($644,845), it would get additional attention from people with less than 20% down.
4. There are brand new houses for sale in Irvine for less. Go to villagesofirvine you’ll see moderately comparable stuff around $1-1.1 million. Add in the flood of future REOs in the pipeline from option ARMs and job losses, and you have an awful lot of upcoming competition for buyers.
In summary, I find $600k quite plausible for this in 2010. I think $800k or less is very likely.
Given what we can tell from the listing, the current owner seems bright (selling before they lose all their equity) and responsible (no heloc, no short sale). I hope he/she finds a buyer and rents for a couple of years. Then, the could buy a similar house for ~ half what they paid in late 2004.
The point I’m trying to make is that it doesn’t matter that the $600K Price makes more sense than the current asking price.
That asset was leveraged many times over and if all assets like that are sold at $600K we are in financial doomsday.
As a side note, Calculated Risk has some good holiday travel reading:
http://www.designs.valueinvestorinsight.com/bonus/pdf/T2_Housing_Analysis.pdf
Summary of all the issues at play, with a lot of nice graphs—thanks for that.
Slide 5 says it all. 2007 Borrowing power increased to 8.9 times versus 1995 borrowing power of 3.0. That’s an impressive 3times increase in relative house prices.
Consider that salary only increase by 30% and you have the correct present borrowing power to be 4 times 1995 borrowing power. Which factors in for a 55% drop in real estate prices.
Hey IrvineRenter,
Interested in doing a topic on borrowing power? It would be valuable information to know about the bubble and would help future buyers recognize a reasonable purchase price.
Dejnov.
The more I have studied the issue, the more I think it is just the lenders and bondholders who might be in a doomsday position. Government entities that depend on property taxes will be in a bad position, but mostly rolled back to ~2001 revenue levels in the short term.
Seeing home prices back at prebubble levels is sustainable. Trying to prop up prices is a black hole.
People who purchased after 2002 who can bail with some equity should. Otherwise, they should be prepared to be in their houses for a long time, bring money to the table to move, or arrange their finances to minimize the effect of a foreclosure/short sale.
...so it’s only the banks, bondholders, and governement that is in a doomsday scenario… wow, i feel much better now..what about everyone else who levered off this crap, like the pension funds, corporate debt holders, and companies who profited off HELOC spending… and also joined the leverage party of the asset bubble?
totally agree—-50% haircut is what I am expecting as well-
If the price can double in 2 years, it can drop in half in 2 years. What makes housing loans better than stock loans, is the borrower needed 0 down in the past, then take out money, then can walk away or now renegotiate the principle. For normal people, stocks will get a margin call and total lost, unless your a wealth contributor or some special hedge funds or investment bankers. Housing loans make normal people into special people (as long as they taken out all equality and more).
This one probably will bottom out near the 2002 price of $780k because of all the upgrades inside and outside.
I don’t know, from the overhead the house takes up most of the lot and for $1.2 mil I would want at least my own pool or a tennis/B-ball court.
I hesitate to speculate what this house will go for after the collapse but it wouldn’t be over $1 mil. At least it’s not furnished from Ikea.
whats wrong with ikea? is that socal pathology talking? is ikea too cheap for u?
I think the original poster was just trying to point out that Ikea furniture, while reasonably nice looking, isn’t the typical furniture one would find in a house priced above 1 million dollars. Ikea funiture is middle-class to maybe upper middle-class and not the type of furniture wealthy people buy. The standard demographic for someone who ones a million dollar house.
Dejnov.
It has a big lot, compared to the neighbors. They are close to the community pool too. I think the furniture is staged, and the backyard decorating is a turnoff.
IR says “This makes me wonder why this owner is selling. I believe prices will continue to drop, and most readers here do as well, but that is not the consensus opinion of the general population. Most people in this owner’s circumstances would not try to sell their property at a loss.”
Well, they put a lot of their own money down. I think they want to recover as much as they can.
Here is an insight from the investment world. The people most sensitive to problems are people who invest in bonds. They only get a little upside from a company doing better after they bought the bonds (e.g. if the bonds are upgraded to a higher rating their price might go up a little). However, a company doing much worse could lead to large drops in bond prices, defaults, and in many cases little or no value for the defaulted bonds.
If you had an investment where you saw very little upside, a ton of downside, and you could still get out, what would you do?
Because this owner appears to have saved or invested before buying, they might also have business reasons for wanting a good credit record. For a sole proprietorship, I could see a foreclosure being a giant handicap over the next few years.
That brings up another potential reason for selling. Lost job or problems with a business they own.
I like your speculation; I think you’re likely correct.
I would consider selling right now to avoid further loss, but our costs are near rental parity and there’s NO WAY I could convince the Mrs. So we’ll just continue to chase the market down with our boring fully-amortizing fixed loan. At some point the principal balance will meet the value… Some day…
For any relative newbies here on the blog, you may have seen references to “IPOs data” or “IPOs spreadsheet”, and wondered what people were talking about.
I was a blog regular for quite some time, but spend most of my time in the forums now. I track the sales prices of Irvine (and some Tustin Ranch) properties via a website, www.ipoplaya.com.
The price data is posted there, along with copies of the MLS listings, in the form of a calculation of the Case-Shiller index value for each sale in the city. This price tracking is perhaps the most up-to-date indicator of home price trends for the city, especially now that I am tracking properties across most of the size spectrum.
Anyways, just wanted to clear up any confusion for those that have questioned recently…
No one would take a loss unless they had no choice which is why we still see houses so high here in Irvine. Most likely this persons job is in jeopardy. Most likely from the banking/mortgage sector. How else could he have afforded this home.
A lawyer could still find work same as a doctor. Or he could be a business man with a troubled business.
This is just the beginning as more job losses forces many to sell.
Seriously, is there any chance that lawyers will fall on hard times in a severe recession or depression? When there is no shortage of lawyers, and when none do anything to contribute to the total productivity of a nation, with only a percentage necessary for legitimate disputes, there may be a severe drop in the demand for legal services. Sure, disputes will be more bitter against a backdrop of dwindling resources, but there will be less economic activity, hence fewer disputes and fewer people with the resources to pay lawyers to resolve them.
Bankruptcy lawyers will probably do OK.
The contrary is actually true. In good times, people doing business with each other don’t want to “rock the boat” in disputes, but when times are rough they will jeopardize the business relationship to get their full share.
Also, when you use “lawyers,” you really mean “litigators.” I think something like just 10% of attorneys are involved in litigation.
I take umbrage with the idea that lawyers don’t contribute any value. They protect you from risk and uphold the law. Keep you out of jail when you’re innocent. Put miscreants in jail. Corporate lawyers negotiate deals for the manufacture and sale of products. Patent attorneys file patents to protect inventors’ ideas. “when none do anything to contribute to the total productivity of a nation.” Gosh, the statement is so dumb it’s breathtaking.
Ideally, yes….lawyers will theoretically do all those great things you listed. Or they will help someone else screw you.
The idea that lawyers/bankers don’t contribute because they don’t build anything is dumb, but it’s not that uncommon. It’s an idea espoused by Martin Sheen’s character a number of times in the movie “Wall Street”, so it’s not an uncommon belief. The whole idea relies on an overly simplistic conception of how the economic system works and a lack of comprehension of the complexity of the contractual system upon which our economy is based.
It’d be great if we devise a way to eliminate the need for lawyers and bankers and allocate them to “productive” pursuits, but that’s simply not the case, nor is it likely to ever be the case.
And, yes, lawyers, particularly in finance, real estate, capital markets and M&A, are taking it on the chin during the recent slowdown, but law is a cyclical business and things will turn once the economy does.
“The conventional wisdom in real estate is to buy the most desirable properties in the most desirable neighborhoods”
I’ve never heard that. I’ve always heard “buy the LEAST desirable properties in the most desirable neighborhoods”
Yep, me too. But, one wonders if the readers of this blog are less in tune with the “conventional” wisdom.
The least desirable property in the most desirable neighborhood would have the greatest appreciation potential, but the most desirable property in the most desirable neighborhood has the least potential for losing value. Many conservative investors are more focused on capital preservation than gains through appreciation.
Well, at least that is the theory…
I need data!
I don’t know where to get home purchase transaction histories. Where do people on this blog get this data? I would also like to get data on rents for “equivalent” houses: $/sqft*month.
In the absence of this data, I can’t easily tell if a particular market is inflated. (I get the sense that this data may hidden so that buyers don’t get to make informed decisions… that way, they have to depend on real estate agents.)
I’d like the data so I can choose between moving to one of several different cities: I don’t want to spend months researching each city, I just want some raw numbers I can plot.
Surely readers of this blog (and the writer of the blog?) would support a potential home buyer in their quest to make an informed decision.
For Irvine, I’ve been trying to track closed sale history, including mortgage amounts, from MLS listings for the past year. I’ve set up a website to view here: <url=http://www.irvinerealtorsite.com/IrvineDowns.xls>http://www.irvinerealtorsite.com/IrvineDowns.xls</url>
Don’t know if the link will work, but you’ll see the url.
fail.
www.irvinerealtorsite.com/irvinedowns.xls
double fail
http://www.irvinerealtorsite.com/IrvineDowns.xls (case matters aside from the host name)
Thanks, IrvineRenter.
Do you have any recommendations on how to get data on Boston or Philadelphia or Altanta or Seattle? I’m in the early stage of a job search where I’d like to take quality of life into consideration early on. I’ve got a decently long list of possible destinations.
I did manage to find some data from
www.domania.com
but they wanted me to be very specific about where I was looking—I had to give an address and they gave me transaction histories for houses in a few block radius. They also only gave me 50 hits, which reached back only until 2003 for this one neighborhood.
Any other ideas would be greatly appreciated.
Thanks.
priced_out:
You can also check out the Seattle Bubble blog.
www.zillow.com
Ths short answer (sans data) is that every market is inflated relative to the prospect of unemployment and salary declines on the horizon.
How can an individual or business make any informed decisions / investments in a climate where basic commodities fluctuate at an insanely volatile pace? You either have to be in cash equivalents or have a short term time horizon with your strategic positions. A home purchase is the opposite of both.
Who knows what rule change will be made next year that would impact any decision you make today. Trust has been eliminated.
This is a nice house, purchased with conservative financing by someone with wealth. I suggest that he/she might be selling because they are moving up—perhaps they found a custom home in Shady Canyon or an ocean view in Newport Coast they like, at a price that seems too good to be true. They negotiated a killer deal, went into a escrow, and now need to sell their current home. They are willing to lose some of their downpayment because they’ve “made it back” in terms of seller concessions and price reductions on their new house.
Just speculation, but it might answer the question why someone who doesn’t need to sell at an out of pocket loss would choose to do so.
Maybe I’m blind or crazy, possibly both, but the kitchen photo you posted doesn’t match what is currently on Redfin.
Looks like a pretty nice place. I can’t say where it’s going to end up in the future but in the short term I bet this guy gets his asking price for it.
That’s a weird looking foosball table. I’ll stick with my Tornado.
You are right. I inserted the wrong image. Nice catch.
Cher on the wall in dressing area? Is she the patron saint of closets?
There is a property on 6 Roseleaf in Northwood Pointe that just sold in September for $1.25M and is on the market again for $1.295M. Sounds like buyer’s remorse to me…
You should contact the owner and interview him for your blog. Get the story behind the numbers.
Wonderful Information. Thanks for sharing.
They are retiring and probably either moving down or closer to the grandkids. The pictures http://www.customestateflyers.com/?fuseaction=player.mls&defaultSize=600&id=vt20081119001 indicate the kids are grown. Its my guess he is a lawyer.