Irvine Housing Blog

I’m not sure how you could structure a direct homeowner bailout, especially given the shift in congressional power we are about to witness.

Perhaps cramdown legislation is passed, which would effectively give defaulted borrowers a way out if they want to go through bankruptcy.  Ultimately, it would likely prevent those who can still make payments from defaultig since they wouldn’t be able to get through the bankruptcy court.

The sold charts on Redfin don’t show a significant drop, at least not yet.  House prices in Irvine, for instance, are basically stable at $356/sq ft.  They have been at approximately that level for about a year, higher than the bottom of $335/sq ft in March 2009. Prices for condos are currently at $329/sq ft, with the absolute bottom being $323/sq ft in May 2009, with prices trading within a $12/sq ft span or so since March 2009.  Price trends in other cities are similar.

Existing home sales in Riverside are down 23.7 year over year.  Prices will soon follow.  Home prices in Riverside will be crushed.

23.7%

I noticed that in last 3 months the existing resale home market almost dead, this should relates to TIC is releasing quite a few new models in recent months, they are in general about 10% lower than the existing home prices but with much better interior design. Also, I checked a few time and even TIC/builders now has hard time to sell, especially model in Portola spring, so if you are a buyer, you can anticipate more incentive to come.
So I agree that Irvine existing home prices will drop another 10-15 % in a next few months. Even though I just bought a short sell as investment this month, which is about 10% lower than market prices, but what surprise me the most is that there are not too many bidders this time around, so with all cash offer, I have little problems to get it. However, I don’t regret, I sold one of my previous at the pick, and get it back with 65% of original price. If prices drop more, I can buy one or two more.

<quote>In other words it doesn’t help anyone to have millions of homeowners foreclosed on and thrown into the street.</quote>

I can think of one guy it would help: me.

I sold and turned renter when it became abundantly clear that housing was ridiculously overpriced and over-leveraged, and that I should not be in debt to 5x my annual income. In other words, I behaved like a rational actor, and a sane housing policy would reward me, punish kool-aid drinking sheep, and encourage moderation in purchasing behavior in the future.

These guys write as if sane market participants do not exist.

(this is in reply to awgee; the forum software won’t let me reply directly)

In Riverside, the numbers are even more dramatic, on the positive side.  The bottom for Riverside city houses was $111/sq ft during June/July 09.  Current price is $128/sq ft, basically steady since late May 10 (between July 09 and May 10, prices rose steadily).  I’m excluding condos because of how few there are in Riverside (fewer than one in ten Riverside sales is a condo).

I will call the bottom in 909 land after they turn the bulldozed homes back into farmland. The next big leg down will just destroy whats left of the IE`s home equity values. The good news is the 91 freeway will be very drivable in a few years without having to pay the insane toll fees.

WHAT homeowner bailout? Most of the 50 billions allocated for HAMP still sit unused in that pot! As is obvious now, the whole legislation was only supposed to delay foreclosures, to reduce the amount of foreclosured houses coming to the market. This was meant to stabilize the prices at a higher level in order to reduce the losses of the banks. As even administration officials admit now, the main purpose wasn’t to bail out a huge number of homeowners at all!

But since the amount of underwater properties is so much higher than demand, all this policy did so far is to prolong the misery. Stagnation at a low level, without a recovery in sight. It would have been better to simply let the prices fall to a realistical point where it would have made sense again for potential homeowners to buy. The uncertainty now, coming from the articifially created price level, the huge reservoir of foreclosures still waiting to hit the market, and the generally weak economy will keep demand low. Most rational people don’t want to run the risk of losing money with assets of questionable value and going into debt in a time of high job insecurity. And so this misery will continue.

Really, the whole way this has been handled so far has been a failure! But that was what the banks wanted. Because huge losses from foreclosured homes being sold at a realistic price would have ruined the banks “recovery”, and thus reduced the bankers bonus. And, of course, this had to be avoided at all costs!