Irvine Housing Blog

NO “The truth [LIE] is, most people buy homes because they need a place to live”  The guy needs to go back to the stats.  85% of condos in Miami bought as non-resident investments!!!  Just like with the bubble, it is useful to break statistics out in bubble vs. non-bubble areas.  If 1/3 of all US home sales are to non-owner occupants, what is the percentage in the bubble regions?  Easily over 1/2.

A lot of buyers bought as investments they never planned on living in!  Some only had a mild trend toward renting.  Look at the flipping new construction.  You sign to buy at construction start, and then sell when construction completes.  You take almost no risk…well, almost none.

One possible macro-economic “justification” for principal reduction is mobility. The housing bubble created a vast misplacement of workers. Whatever industries and localities actually expand and create a sustainable recovery it’s not going to be in housing and finance, and it’s unlikely to be in the bubble areas. Thus jobs created may not be where the underwater homeowners are.

Thus one could argue that for the good of the economic recovery, we need principal reductions and/or extremely expedited low-consequence short sales such that workers can freely move for better employment.

My sister and sister-in-law in the Bay area bought a 2 bedroom house in 2005 in an nice area of Oakland that’s so far held up relatively well. Down maybe 20%. But that still wipes out their downpayment such that they’d need to inject cash to cover transaction costs. They’ve finally after 15 years of dealing with overly high cost of living and scarce job opportunities and high costs to visit family back east, come to the conclusion that they should give up and move back east, where my sister would be easily employable at a better job than she has now and my sister in law might stand a chance of getting a more than 15 hr/week librarian job where governments and universities aren’t quite as strapped.

But they can’t move yet. Not until more amoritization brings them back above water, and that’s assuming no further falls in price.

Yes, they bought somewhat foolishly (in that it didn’t occur to them that prices would crash such that they could have waited for a lower price), it only made sense because house-rents were so high, and my sister was eligible for a subsidized loan at like 3.5% (30 year fixed). So while rents were high, it was only cheaper than renting under absurdly low interest rates. They do have that absurdly low rate, and amoritization is fast under that rate. But still, them moving sooner and both getting jobs better suited to full employment and use of their skills? Wouldn’t that be a net economic good?

In case anyone thought Orange County was affordable… it’s not…

$129,850 income needed to buy O.C. home

The median income is quite a bit less than that. Only unsustainable financing terms make it appear affordable.

It’s apparent this family didn’t spend that $388K on furniture. Sheesh.

Hey David…we just had another earthquake!
9:45AM

Most people did buy house to live-in, but maybe 30% were “investors” and flipper who borrowed to get 2 or more houses.  That drove the prices up for the rest.  More mortgage, taxes, rent, etc.

The same old excuses.  John got away with it, so I should also get away with it.  John being the banksters and I being the borrowers.  Time to claw back the money from John to replay the real victims, the taxpayers.  Since the banksters control both the D and R parties and the borrowers with media support will yell the loudest for more bailouts, I don’t think the govt will do the right thing.

Tim when to Vegas as a high roller for 4 years and lost 2 million, so is lossing his house.  Are the taxpayers going to cover this bets, so he doesn’t lose his house and have his kids on the street?

Now replace the word “bank” for “Vegas.”

BTW,
Your Metro house appreciation from 2000-2008(or is the date 2006?), indicates that for for most locations pre-2000 purchasers, they are still ahead of the game.  Gain rate > Loss rate. 

Best locations are in physically desirable areas—vacation destination type settings with jobs.

Is anyone else bothered that this house would cost about 150K in most other areas of the country?

Interesting article on CnnMoney today. Not only will HELOC abusers be taxed on the money they stole, but serial refinancers will be too. Only initial purchase money loans will be exempt from tax on forgiven debt…until 2012, and not in California.

Forgiven debt on vacation homes and investment property is taxable also, as is any amount of forgiven debt over $2M.

http://money.cnn.com/2010/04/08/pf/taxes/taxes_mortgage_debt/index.htm

A realtor I know just had to go up to Reno and find a specuvestor to sign off on a short sale. He blew his parent’s inheritance on rental duplexes in the mid 2000’s and is now a boozer living on the street.

We forget that Heloc’s were PURE CASH not taxed INCOME—-not earned income just percieved future equity that popped.

While the rest of us who pay rent from earnings PAY the real tax burdened here because we pay from earned/taxed dollars.

I totally agree you take out any kind of loan you owe it back.

a Loan is a loan—-

You can reduce the interest rate string it out into future years but paying back any kind of loan should STICK—-

These remods only forgive the heloc’s while punshing us renters who did not recieve any tax free money into being the ones who actually work and pay for their greed.

The foreclosures also forgive the Greed. The best thing would be to change the loan but not the price. Pushing it onto the tax payers backs is why our debt is so high—

Everytime you read this board you wonder why would any one buy here? The system is so corrupt from all aspects. IR is right this is the biggest ponzi scheme EVER.

The property is listed at $745,000. Trulia reports that the median sales price for homes in ZIP code 92614 for Jan 10 to Mar 10 was $487,000.

The property could end up a REO; I wonder if FHA, that is one of the GSE’s will have title; they may try to force it back to the lender that facilitated the loan.

If it becomes a REO it will be added to the nation’s stock of vacant homes, which is about 13% of total; and the $487,000 value written off to greed, dissipation and debauchery; and property taxes accrued for quite some time.

Given total mortgage equity withdrawal was $388,800, it’s as Irvine Renter relates: the net cost of ownership was less than zero. This was very shrewd on the part of the borrowers. I have been very nieve about such investing.

Soon the stock market will be tumbling lower, and employers laying off, and US Treasuries will go unsold, so another Depression will be unleashed, and then property values will relly fall; all of this goes back to the repeal of the Glass Steagall Act in 1999 by a Senate vote of 92 to 8, which broke down the firewalls of financial protection that were established in 1932.

What kind of loans? Heloc’s?

LOS ANGELES – A Bel-Air mansion owned by Nicolas Cage has found no takers in a foreclosure auction.

The opening bid for the actor’s 12,000-square-foot home was $10.4 million, but there are $18 million worth of loans on the property.

The Tudor mansion boasts six bedrooms, a central tower, home theater and an Olympic-sized pool. The house reverted to the foreclosing lender at Wednesday’s auction in Pomona.

Even though he’s one of Hollywood’s highest-paid stars, Cage has money troubles. He owes millions in unpaid taxes and in January his foreclosed home in Las Vegas sold for nearly $5 million.

Cage sued his former business manager in October for $20 million, claiming the man’s advice led him toward financial ruin. The ex-manager says Cage is a spendthrift.

Whoops, wrong day.  Here it is again, sorry for the dupe: Totally unrelated AND off topic but IR, I noticed you were interested in this on the weekend: Saturn’s Strange Hexagon Recreated in the Lab.  IR Feel free to delete this note.