Irvine Housing Blog

“But the total amount of debt on a home cannot exceed 80 percent of its appraised value, and any proceeds cannot be used to pay off other debts.”

Doesn’t matter.

For the property to “appraise” in the first place, some shmo had to first come in and “set the comp” armed with a stated income option arm bullshit ninja loan.

Then, the homeowner could still cash out and go on an ARM fueled spending spree *as long* as they weren’t paying off other debt.

They could still freely cash out, buy a boob job/take a vacation/new car/granite/yada yada yada.

Just couldn’t pay off the other debt.  You know…like the smart ones that paid off student loans that are non dischargeable in bankruptcy.

Seems like Texas has perfected the debtor enslavement game.

I’ve checked out Austin RE quite extensively during the bubble and I can tell you that it’s wildly overpriced also.  Just check out their condo market.  That’s always the tell tale sign.

More places than you realize were in “bubble mode” just due to lax lending and low interest rates.  Hell…even St. Louis is still in a bubble.

TX has had housing boom/busts, but they follow the oil boom/bust periods, making them somewhat sensible (if income is boom/bust & home prices track income, then home prices boom/bust).

I think CA-FL-AZ-NV bubbled most because they had stories to go with it.  If you take out non owner-occupant home purchases, the bubble, especially in SoFla, does not inflate as large.  Places where homes were viewed more as investments were the most prone to bubbles.

I read a comment somewhere that pointed to something Keynes wrote about the great depression.  It talked about the property bubble in FL.  I thought, the more things change, the more they stay the same.

The bigger they are, the harder they fall.

The big bursts were in the “hot” areas.  West coast, FL and then the cancer grows outward.

It almost seems like places and vincinites that had a TV series had the housing bubble.

A hot job market adds fuel to the fire, even if the job market is fueled by creative bookkeeping.

Limited supply and increased housing demand are the two factors.  Govt and cartels can limit the supply.  The demand is harder to control and highly dependant on available jobs, available credit and people’s perceptions on the area and cost.  Irvine was way out in the sticks and now a good place.

If the bad loans were unforgivable personal liabilities of the bankers, they would not of made that many bad loans.  The WS bankers are not stupid, they know they could pass the bad loans on to someone else and they did.  We’re the stupid ones to accept the arguement than the bailout with retention bonus are necessary.  We’re paying for it with a jobless recovery and selling our children into indentured servitude via endless US federal debt and high cost of housing.

One quibble I have with that article is the following statement:

“And when a borrower refinances a mortgage, it’s illegal to get even $1 back. Texas really means it: All these protections, and more, are in the state constitution. “

This is misleading to the extent that most readers will think that the Texas constitution is somehow similar to the US Constitution.  In fact, the TX constitution is a much more malleable document; one that is frequently amended and reads more like a code.  Citing the presence of these provisions in the constitution as evidence that it ‘really means it’ somewhat undermines the credibility of the author’s other contentions.

Perhaps someone with more expertise can speak to the ‘it’s illegal to get even $1 back’ line.  As far as I know (and my experience here is very thin) that is not true, provided that the loan otherwise conforms with the 80% requirement.

I think one policy we might want to look at here in California is “reassess on refinance?” - if you’re going to harvest some appreciation from your home, you should pay taxes on the appreciated basis. At the very least that could help mute the community impact of some of what’s going on in places like Riverside.

The state gets all the sales tax revenue from the spending related to cash-out refinance, but the local jurisdictions, which bear much of the impact of foreclosures, don’t share in the benefit.

I realize that changing Prop 13 will be a challenge. In Orange County, it’s a non-starter. That’s a place where politicians join the John Birch society to go after the middle of the road vote. But other provisions of Prop 13 are already becoming widely recognized as difficult, such as the two-thirds supermajority to pass a state budget, and I suspect it might be possible to chip away at it somewhat.

I’ve thought there was a lot of good sense in most of Irvine Renter’s “How to prevent the next bubble” ideas, in particular the “buy whatever whacky financing you like but you qualify based solely on the traditional 30 fixed 20% down” notion. Perhaps something like this could blunt some of the excesses when the next bubble inflates.

There was also an interesting comment on CR talking about this Texas article. 

NY imposes a 2.5% lein transfer tax on re-fi’s.  That at least prevents the frequent, low volume refis.

Amazing, amazing… Stock market just keep going up and up..

Long time ago, we were told this will be jobless recover. And now in order to create new jobs
So Fed keep rates to 0% and just keep printing money.
The problem is no matter how much money Fed print, it will still be jobless recovery because of globalization with cheaper labors all over the world.
The implications of printing money are debt, debt and more debt. But the stock market can soar indefinitely before it crash again.
Having half of my money in the stock market, I will closely observe any clues that when that day comes.
My predictions is that day may come very soon but I will hold on for now.

A lot of old stock theories that need to be rewritten with today’s stock market.

We need to look at bigger scale that relate to Obama’s 2012 election supported by Fed policies, impact of globalization, US trillion dollar debt to China and strategies that US try to get away with the debt and how China will prevent and flight back.
It is a complicate issues that but at the end China will win and US will lose. In short that China is controlled by one party and US has two parties with every four year an election.

My feeling is that the Politian and Wall Street tries to let us believe that that are plotting some conspiracy theories for the US that try to let China’s Yuan currency soars and meanwhile withdraws the money printed so that it can reduce the debts (and that time market will crash).
But this is all too simple mathematics for everyone, so it cannot success. But maybe that is what Obama try to let other believe it will do this but it actual just try to print more money to pump the economics and that our children will pay back more.
So the stock market is unpredictable now, as long as we keep the rate to 0% and we keep borrow more and more money from the world, the stock market can keep going up. And the tricky part is this will eventually hurt us very badly when the market is crashed. (we may find the country is actually owned by other countries)

I used to live there.

Its called Rainbow Ridge and the whole area is infested with subterranean and drywood termites.

If you decide to check out the property, make sure you look at all exterior wood trims especially those that follow to the upper wood deck.

I remember when these sold for $350k back in 2002.

These were among the first residences in TR.

~Misstrial

Thanks for the article, it gives me an understanding of why the bubble formed and grew and grew.

Looking at the chart in the article, apparently large number of people “gamed the system” with mortgage equity withdrawl beginning right after the repeal of the Glass Steagall Act in 1999, and continued right up to the market top in 2006 to 2007.

I was too nieve to even think of doing such a thing. 

You relate: “We created our own monster, and we have the power to slay it. I simply don’t see the desire.”

Well, we are at another stock market top, and another terrific fall is coming; only this time there is no Federal Reserve resource left to bail anyone out.

So the monster is going to destroy life, liberty and investment of all type. I suggest that one buy gold to preserve one’s wealth.

I have an off-topic question: Is it better to try to sell a home when it’s vacant, or when it’s furnished (assuming that the furniture is nice)?