High-end housing inventory will take a decade to clear

Sep 19th, 2011  
by IrvineRenter  in Library News

Astute Observations

Astute Observation by John CPA JD
2011-09-19 10:35 AM

When the bank takes the house back there are probably already at least one or two years of back property taxes that they must pay. Then the bank hast to start paying the property taxes.  Usually, the smart banks do not take back the property until they are ready to sell it, and then the purchaser pays all the back property taxes. When the bank takes back the property, then they also have to pay for all the maintenance costs and home owner association costs as well.

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Astute Observation by IrvineRenter
2011-09-19 11:16 AM

Yes, the cashflow drain on this property is costing the lender about $5,000 per month. If anything prompts them to lower their price to move the property it will be the ongoing cashflow drain.

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Astute Observation by octal77
2011-09-19 12:30 PM

I follow Turtle Rock closely and I am amazed how
current prices are stuck at bubble levels.

(i.e. 135 Starcrest which just came on the market)

How the logjam will finally break is anybodies guess but perhaps it will be an all cash (self financed) buyer who will negotiate a sale well below current trend.

That single sale will, of course, force neighborhood comps lower.

Perhaps at that point the banks will realize they have to sell?  Comments?

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Astute Observation by wheresthebeef
2011-09-19 02:03 PM

Turtle Rock will be a tough nut to crack!  None of it was built during the bubble and many of the longtime owners have mountains of equity.  Then you have the top notch schools, desirable location west of the 405 and relatively large lots compared to newer construction. 

TR has become a move up neighborhood.  There are many people waiting to jump in at the first sign of any price declines…the same can not be said for many other Irvine villages.  Put all these things together and you have super sticky pricing.

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Astute Observation by Anonymous
2011-09-19 06:41 PM

TR seemed to dip when the stock market took a big dive in 2009, but came back up when the stock market came back up.  Perhaps it was a downpayment and getting qualified for a loan thing that dipped it for awhile.

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Astute Observation by winstongator
2011-09-19 12:40 PM

The bigger the loan, the longer to foreclose

Mortgage debt of more than a half-million dollars seems to get lenders to look the other way for an extra month compared with those who owe far less, according to a North County Times analysis of foreclosure records.

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Astute Observation by IrvineRenter
2011-09-19 01:16 PM

That is exactly why the high end isn’t moving yet. Lenders are doing everything they can to delay taking these huge losses.

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Astute Observation by winstongator
2011-09-19 02:03 PM

I don’t think it’s the size of the loss that matters.  I’ve seen condos that sold for $200k during the bubble go for 20-40k.  It doesn’t take many losses like that to get to $1Mil, and there were a lot more of those loans made.

I think it is more financial savvy.  The bigger the loan, the more likely an occupant will ‘lawyer-up’, or at least file for loan mods.  I think you also had more people who were working the mortgage system in that price range.  People heloc’ing to buy other props & other bubble-era schemes.  You’d have to control for occupant behavior to really see if it was bank behavior causing the observed difference.

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Astute Observation by Honcho
2011-09-19 09:27 PM

“The bigger the loan, the more likely an occupant will ‘lawyer-up’, or at least file for loan mods.”

Granted, I have been out of the legal side of this for a while now, but I saw just the opposite.  The individuals we saw filing these lawsuits against my clients were very unsophisticated.  They were really being taken advantage of by lawyers who saw a chance to exploit them further.

Things certainly may have changed as far as who is lawyering up in the last couple of years, but the legal precedent certainly has not. There was a fairly big ruling for the banks/lenders/servicers a couple of weeks ago out of the 9th Circuit that backs up everything I was seeing on the front lines of this was all breaking loose a couple of years ago. This ruling may (or may not) have something to do with the recent uptick in foreclosure activity.

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Astute Observation by winstongator
2011-09-20 03:37 AM

I was speaking ignorantly.  But you can still have far more lawsuits from lower priced homes, and still have a much larger percentage of defaulters on higher priced homes suing, because there are so many more lower-priced homes.  The exact numbers would make the difference.

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Astute Observation by Anonymous
2011-09-19 06:50 PM

If there is a large downpayment (like in your graph above), then perhaps there is no loss to take.  Certainly some missed mortgage payments and taxes, but with a high percentage down, when the bank finally sells, might do just fine.

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Astute Observation by winstongator
2011-09-20 03:38 AM

If the bank were going to do ‘just fine’, then they would have sold already.  Banks do not want to hold non-performing assets.  They shed them as fast as they can…barring how they might impair their overall accounting.

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Astute Observation by newbie2008
2011-09-19 04:52 PM

It looks like the buyer/borrow was responsible and had a sizable downpayment.  Too bad, expedited for forecloser?  FC in TRidge seems to be much quicker than NPB and NPC.

Only $1080 per month for MR and HOA! Why did the bank FC so soon?  It only makes sense if the bank can charge for the carry cost against the downpayment after the FC.  Can the banks do it? Are lenders limited by the auction price? 

amount owed to borrower = auction price - loan - late fees - FC fees.

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Astute Observation by Anonymous
2011-09-19 06:37 PM

More short sales bring new scam: flopping
In ‘flopping,’ a home is purchased by insiders at a steep discount, then immediately sold for a big profit.

http://realestate.msn.com/more-short-sales-bring-new-scam-flopping?GT1=35010

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Astute Observation by Swiller
2011-09-20 08:01 AM

Business as usual. Remember, rich people are compassionate and want YOU to succeed, aka “trickle down theory”.

The only thing trickling down are our tears. Flush the Bill of Rights? CHECK
Flush the Constitution?  CHECK

Have the average Joe applaud the rich getting richer while they suffer loss and blame their neighbor.  CHECK

Voting for the same parties expecting different results?  CHECK

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Astute Observation by Insider
2011-09-20 02:02 PM

You mean like this:  http://www.redfin.com/CA/Newport-Beach/1967-Port-Ramsgate-Pl-92660/home/4718456

The penultimate sale was an insider short sale.  The last sale was the arm’s length sale.  It was alleged at the time that the original owner and the short sale owner were in cahoots to get the short sale approved using misleading comps and then flip the property quickly before the short sale showed up on the public records, splitting the profits.  As you can see, they seemed to pull it off.  I’d love to see the bank pursue these clowns for their brazen fraud.  ALLEGEDLY.

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