Irvine Housing Blog

IR, I would have to agree with you.  This is a great deal in Irvine at $3500 per month cost of ownership, closing for $360 per sq ft.  I could see you being proud to show this off had you bought it.  Maybe in a few years if your Las Vegas trustee flipping business coninues it’s great success.

I don’t see how this is rental parity.  We negotiated with a northpark owner for a bigger 4b for 2800 per month.  Didn’t end up moving as we are still debating buying but point is that this oak creek house will not get 3500. 

Also, remember that renters do not pay what buyers would for upgrades and backyards.  Imagine exact floorplan house with same interior and plane jane backyard- how much more would a renter pay on monthly basis for this with its great backyard vs same house without? For me its under $100 a month.

Right on IR. They did a great job up updating this house. Are you saying it sold for $815,000?
Oh, I just noticed the bit about a shoe closet holding 80 pairs of shoes. I think I have 10 pairs of shoes. I am confused about the stacked washer/dryer in a home that large.

I can’t believe all the people foaming at the mouth over this house.  It’s a 2200 sq ft Irvine tract house with some nice upgrades, if it really did sell for 815K it still has quite a way to drop in price.  When all is said and done I see this house coming down another 10 to 15% which puts it right around 675 to 700K.

Wow, I actually agree with the conservatives regarding dismantling the GSE’s. This is quite disturbing.

However, I think people are living in a fantasy world if they think this will keep the government from ever having to intervene in the housing market again. This whole mess was originally fermented in the private market and the GSE’s were forced by the government to sop up that mess. Regardless, the GSE’s would have been in trouble anyway since the non-GSE mortgage market pushed up home values so much that even a 20% down payment wouldn’t save people that bought from 2004-2008 from going underwater.

It’s worth noting that Fannie Mae had worked fine since it was established as a government agency in 1938. We privatized it in 1968. The former government agency started hiring lobbyists that pushed for relaxing the regulations over it. Not good. Even so, the company would still be okay if it wasn’t for the Credit Default Swaps used on the banking side of things. Those things are what really enabled this whole crisis.

I issued a $800k mortgage, but I got a Credit Default Swap from Bob that will cover any default. Bob’s got no money, but that’s okay ‘cuz he has a CDS from Jim that offsets his position. Jim also has no money, but he’s got a CDS from Bill that offsets his position. Bill has no money, but he’s got a CDS from Tim that offsets his position. And so on.

What could go wrong?

UE numbers disappoint, stock market rallies.  Egypt overthrown, market rallies. Inflation, huh?  I’m beginning to think UAE could be overthrown by radical Muslims, and the market would rally; an analyst might spin “this presents a rare opportunity to negotiate with a uniquely qualified group who bring fresh perspective to the table”. Dow 15K by January 2012?  Keep printing money. Housing price up, stock market up, everybody happy.

I don’t know Irvine as well as some of you out there but I have to agree with where’s the beef that this seems still high.
I bought last fall in Huntington B. a 2500 sq. ft townhome for under 600k. Just over a mile to the beach. Locked in a 4% rate. If you want to pay me 800k for mine I might consider it. Heck we have a full size laundry room, the 3 car garage and 4 bdrooms too.
I’ll take closer to the beach any day. (not to mention 200k less!)

Based on the current rental listings, this isn’t quite at rental parity, but I have to admit that prices in Oak Creek seem to be improving a lot. There are condos here with 35%+ haircuts. The SFRs aren’t there yet, but this particular sale looks like a nice comp killer. I like where things are headed.

This house is kind of expensive for a family without kids.

A small child will inevitably fall into the backyard pool.
The house is only 100 yards from the highway. A kid will always be sick because of pollution.

Irvine Co. reports sale of 1,200 homes

http://lansner.ocregister.com/2011/02/17/irvine-co-reports-sales-of-1200-homes/99937/

“Although the housing market may not have turned nationally, it has unquestionably returned in Irvine,” said Dan Young, president of Irvine Co. Community Development, the Irvine Co.’s homebuilding arm.

Dear Irving Renter (author),

First of all - this house is a very beautiful house!  However, at $815,000, the house is an absolute RIP OFF!  Sure, I would like to live there too, but cut the price in HALF, and then we can talk. 

You say, “With current financing conditions, this property would cost about $3,500 per month to own,” and “This is perhaps the nicest property I have seen transact at a price I thought was at rental parity.”  I say, “no way!”  Dude! Let’s think this through a little.  You list -$780/month equity “hidden in payment.” How about changing that to + $1,000/month minumum the poor sucker is going to lose on falling home prices.  You also list $102/month as maintenance. What planet did you say you write your blog from? 

You list the monthly cost of ownership at $3,520.  I strongly disagree.  I think the real cost of owning this house is more like $6,000-$7,500/month.  Wake up and smell the coffee, Dude!

Really? You want to dismantle GSE’s and feed them over to private banks? Wow! I cant believe it!

Now this. Imagine if this happens, and then banks turn around and start offering interest only loans again. It could very well happen here.  Banks are sitting on losing asset but they can always sell loans that collect interest only, I can bet you that we will see another spike in home buying spree pushing prices higher again.

Affordable homes should be offered to those who really cant afford. No reason for these loans to be over $417K that was original limit. 

I think we are going to see 40 or 50 yr and interest only mortgages very soon

Just to let you know, we in Canada do have the equivilent of Fannie/Freddie.  It’s called the Canadian Mortgage and Housing Corp. CMHC.  They insure most mortgages, and is one of the reasons Canadian house prices continue to rise.  It seems we are oblivious to what happened in the US, and must go down our own dismal path.
Here’s a link with some ongoing discussion:

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/02/cmhc-corrects-two-critics.html

and here is link to CMHC

http://www.cmhc-schl.gc.ca/en/index.cfm

Thanks so much for the blog and the information prsented.

You write .... The GSEs have strayed from their original mission, and now they are being used to support bloated house prices. They should be dissolved and their function turned over to private lenders.

I respond .... I’m sorry but as I write here Sunday night before the President’s holiday, I have some terrifically bad news for you.

In my linked article ... Exhaustion Of Quantitative Easing Starts The Mother Of All Bear Stock Markets ... I write that Peak Credit, has been achieved. Said another way the end of credit as it has been known has commenced; this being communicated by the topping out and/or falling lower of mortgage and investment securitization company Annaly Capital Management, NLY, as well as credit providers, WRLD, NNI, ASP, DFS, as well as in the fall on Bonds, BND, LQD, BLV, PICB, MINT.

Investors in the longer out, that is the greater duration corporate bonds, BLV, were deleveraged when the bond vigilantes seized control of the Interest Rate on the 30 Year US Government Bond, $TYX beginning in Septemeber, that is, just after Ben Bernanke suggested QE 2 in Jackson Hole.   

Except for possibly some samll private lending groups, mortgage lending will be coming to a screeching halt.

I go ont to write that the chart of the S&P, SPY, manifested three white soldiers, and a dragon fly candlestick, at the top of an ascending wedge; this is a terrifically bearish formation.

The S&P, SPY, will be forever falling lower on exhaustion of quantitative easing, as an Elliott Wave 3 Down commenced on Friday February 18, 2011 in the S&P, at a price of 134.53, as seen in the chart of SPY Weekly.The world has entered into Kondratieff Winter.

The emerging markets, EEM, and the BRICs, EEB, are cresting up into an Elliott Wave 2 High.

Brazil, EWZ, has risen to strong resistance, as has Brazil Financial, BRAF, and the Brazil Small Caps, BRF. Deflation in the Brazil Financials is taking Brazil down!

Quantitative Easing gave strong moneyness to investing in Brazil, but that inflation, and threat of capital controls has deleveraged investment out of Brazil and into US Financials, IYF, World Financials, IXG, and even the European Financials, EUFN, as is seen in the chart of Itau Unibanco Banco, ITUB, and the other financials, …. ITUB, IYF, IXG, and EUFN.

It’s reasonable to expect that the way is now down for the emerging markets, EEM, and Brazil, EWZ, India, INP, and China, YAO as well as oil laden Russia, RSX, as its chart shows that it has now fallen through the middle of a broadening top pattern. 

Oil, USO, manifested a massive harami and wave 5 completion at the first of the year and is now in an Elliott Wave 3 Down delveraging investment in both the airline stocks, FAA, and airline supply company, BE Aerospace, BEAV, which is also in an Elliott Wave 3 Sell Off.

Small Cap Energy Shares, XLES, became the swing trade of QE 2 investing. While QE 2 deleveraged the precious metal mining stocks, it leveraged the Small Cap Energy Shares even more than the overall Energy shares, XLE. The small cap Energy Shares, XLES, manifested a massive bearish lollipop hanging man candlestick and closed 2% lower.

A Elliott Wave 5 high was achieved in commodities, DJP, on February, 2, 2011 at 50.13.

QE Exhaustion caused disinvestment from agriculture commodities, JJA, the week ending February 18, 2011, resulting in disinvestment from agricultural industry stocks, MOO.

Exhaustion of quantitative easing has started the mother of all bear markets, and a failure of traditional carry trade investing, the US Federal Deficit, a soon coming municipal bond funding crisis, and a worsening of the European sovereign debt and banking crisis, will be the dynamos that will propel the world from the Age of Leverage and into the Age of Deleveraging.

The world is passing from The Age of Leverage characterised by sovereign debt expansion, currency inflation, credit liquidity, stability, stock and junk bond inflation, economic growth and expansion and prosperity …  and passing into The Age of Deleveraging characterised by failure of sovereign debt, currency deflation, credit ill-liquidity, instability, stock and junk bond deflation, economic contraction and austerity.

The primary money good investment will be ownership and physical possession of gold and silver.

I have enjoyed reading your website, and I hope as the economy dives you will continue to post articles.  So please keep up the faith and you take care.