Lantern Light
You Light Up My Life -- Debby Boone
If you are renting and waiting for prices to drop further, properties like this one light up your life. Of course, if you are trying to sell and get what little equity you have left out of the property, it doesn't feel quite the same. Today's featured property is a rollback on a 2004 purchase, and after 243 days on the market, it probably hasn't rolled back enough.
This property is part of the market segment that will totally collapse next. The low end of the market has already been obliterated and is beginning its slow decline to the bottom. The owners of properties over $500,000 are still clinging to the hope that the jumbo loan market will come back and allow buyers to finance the sums necessary to purchase them. It isn't going to happen. Most properties requiring a loan in excess of $417,000 plus a downpayment are sitting on the market. There are few buyers who can either obtain the financing or truly afford it. The lenders are requiring people to prove they make enough to afford the payments. Most can't.
Asking Price: $570,000
Income Requirement: $142,500
Downpayment Needed: $114,000
Monthly Equity Burn: $4,750
Purchase Price: $610,000
Purchase Date: 8/26/2004
Address: 8 Lantern, Irvine, CA 92618
| Beds: | 3 |
| Baths: | 2.5 |
| Sq. Ft.: | 1,340 |
| $/Sq. Ft.: | $425 |
| Lot Size: | - |
| Property Type: | Condominium |
| Style: | French |
| Year Built: | 1999 |
| Stories: | 2 Levels |
| Area: | Oak Creek |
| County: | Orange |
| MLS#: | U7004532 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 243 days |
 Unsold in 90+ days |
|
Nice size backyard for entertaining? If you like to entertain on a tiny patio.
What makes a bath a "great bath?"
When this property was purchased in the summer of 2004, the owners put 10% or $61,000 down. They did not refinance or otherwise extract equity from the property. Right now, they probably wish they had. They behaved responsibly, and they will probably end up with the same credit problems as the irresponsible who got to spend all that free money. If this sells for its asking price, the total loss on the property will be $74,200. The owners will lose their $61,000 downpayment, and the lender will be out $13,200. If these people are as responsible as their history suggests, they may pay the lender off. Morality has a cost. How much would you pay?
.
So many nights I sit by my window
Waiting for someone to sing me his song
So many dreams I kept deep inside me
Alone in the dark but now
You've come along
You light up my life
You give me hope
To carry on
You light up my days
and fill my nights with song
Rollin' at sea, adrift on the water
Could it be finally I'm turning for home?
Finally, a chance to say hey,
I love You
Never again to be all alone
You light up my life
You give me hope
To carry on
You light up my days
and fill my nights with song
You light up my life
You give me hope
To carry on
You light up my days
and fill my nights with song
It can't be wrong
When it feels so right
'Cause You
You light up my life
You Light Up My Life -- Debby Boone
“When this property was purchased in the summer of 2004, the owners put 10% or $61,000 down”
“The owners will lose their $61,000 downpayment, and the lender will be out $13,200.”
Some of the principal of the loan figures to have been paid off over the 4 years, otherwise this would be a short sale?
Depends on the loan type of course. Do we know if this is interest-only? Payment Option ARM? Since they put 10% down, maybe it was a fixed rate?
For a 30 year fixed loan of $549,000 @6%, they would have paid off just over $30,000 in principal over 4 years. If they get full asking price, they walk away with a few $.
If it were to sell for its asking price… Big IF.
You don’t pay off much principle in the first 4 years of a 30 year loan, but yeah 2.367% of the loan amount should indeed have been paid. So it’s not a short sale yet.
On the other hand it’s also not a sale yet either.
3 bedrooms and 2.5 baths in 1340 sqft? That’s insane! And it shows. The kitchen looks as if it was designed for Tokyo. The living room is barely big enough for a couch and a flat screen TV is a necessity not a luxury. You don’t pay over $400 sq/ft to be cramped.
Thanks for showing us an example of the middle tranch that will get hit next, IR. In D.C. this stuff is already down around $400k, but from the comps it looks like it should be down around that to sell in Irvine too (right now). And while at that price I gulp and say not on my life, if it were down around $175 sq/ft or $235k, I’d be squealing, “mine, mine, mine! I love it!”
The kitchen looks as if it was designed for Tokyo
Agreed. Ye gods, I had a studio with a bigger kitchen than that.
I totally agree.
In my ideal world, city planning departments would set minimum size requirements for new construction. My preference would be 950 sq ft - 1 Bdrm; 1,350 sq ft - 2 Bdrm and 1,700 sq ft - 3 Bdrm.
That would be sweet! Too bad they’d make up for it with 6 foot ceilings…
It’s hard to imagine in this market anyone paying more than $450K for a 1300 sq ft condo.
The rents in this neighborhood range from $2,500 to $2,700. A 160 GRM puts the value at between $400,000 and $432,000.
IR, do you think 2500-2700 will hold? I don’t think so.
I think the national economy and the local economy are in deep shiite. Long term shiite. The deleveraging that is necessary during a bust to clear the way for its own recovery is being resisted heavily.
Invest carefully.
You sound like you’ve read Soros’ last book. Scary things…
Soros the man scares me more than any recession.
Agree totally.
Seriously?
$2500 to rent that?
As Pink Floyd once said, “Ya gotta be crazy, gotta have a real need”
“As Pink Floyd once said, “Ya gotta be crazy, gotta have a real need” “
Wow! Thats an awsome track! Dogs !
One of my favorites!
This BUDS for YOU !
and a 120 GRM puts it in the $300,000 to $325,000 range.
So the $100,000 question is will rent-savers step in to save the mid-tier.
and the $64000 question is will the $2500-$2700 rents hold.
$209-242 $/sq ft. I think it might go lower than that, in spite of the GRM.
Our rent in a TIC property is $1940, and is not going up, on our renewal. I don’t think 2500-2700 rents are going to hold.
That condo looks like it belongs to a Flatlander.
“The lenders are requiring people to prove they make enough to afford the payments.”
No! Say it ain’t so!
“...Most properties requiring a loan in excess of $417,000 plus a downpayment are sitting on the market. There are few buyers who can either obtain the financing or truly afford it...”
I would add, that of the buyers that can truly “afford” jumbo mortgages: 1) most are already in homes and not interested in upgrading/downgrading in this environment, or 2) are renting or owning and sophisticated enough to understand the trajectory of this market and therefore choose to watch the carnage from the sidelines.
Good point. I hope this is true.
This place is WAY overpriced. As mentioned many times on this board I think (actually know anecdotally), that rents are falling. $2700/month for a tiny attached condo, spitting distance from the I-5 is ludicrous.
By way of comparison, I about the same in a 50% bigger SFR in QH.
We just rented a 1942 sft house (5000 sqt lot) in Westpart (built in 1996). And it is $2850. No way for this place to get 2700.
You want some serious HELOC abuse? Here ya go (in Costa Misery):
2005 Kornat Dr., Costa Mesa
4/3 2742sqft
Purchased in ‘87 for 183k.
Zestimate: 791k.
Defaulted on 845k.
Status: set for auction, date unknown
Net extraction: 662k (at least). I see no sign that it was put up for sale. Something tells me they owe the tax assessor as well.
As to the question of a “great bath” as in all questions of real estate, it quickly becomes subjective but in my opinion, a great bath is one where you are joined in the bath by Selma Hayek.
Seriously? Selma Hayek? That’s the best you could do?
LOL!
Yeah, no thank you. I’ll take my “great bath” sans Selma.
That’s fine. More Selma for me :D
Haters.
Jeez I’m at work here. If someone walks in my office they’ll think I’m on a pr0n site.
Nice image to brighten up a slow work day, tho. This site could use more b00bs, definitely.
Wait until congress passes the foolish housing bill...time for this credit crunch to last a little longer as the banks and poor credit worthy homeowners are allowed to hang on a little bit longer....at the taxpayers expense of course.
Isn’t the new bill going to raise the jumbo limit to almost 700k?
If you’re referring to raising the limit of conforming loans to $700k+ in certain markets, that has been said and done. It made little difference so far as I can tell.
The upcoming $300 billion dollar bail-out will make it past the senate but Bush has sworn to veto it. We’ll have to wait to see what actually happens.
My money is on no veto. The threat is actually over it NOT including changes to the FHA the administration wants (which, if Bush vetoes it, they still won’t get, so it’s a bit of an empty threat) and over $4B in community grants to allow cities to buy and rehab foreclosed properties. Bush is just trying to be relevant as a lame-duck and be able to get up in front of a press conference and claim that Congress did what he wanted them to do. However, his long history of trying to take credit for things he opposed (such as campaign finance reform and the formation of the DHS) suggests that it’s an empty threat.
The bailout WILL pass, looking mostly like it does now. Not saying that’s a good thing, but it is a thing.
The rent can/will fetch $2500. I know two families who rent on Cherrybrook and Lantern, both 2 bedrooms, for $2500. One family is from Korea, the husband works for some cell phone company. The other from Japan, works for Yamaha.
For Japanese and Koreans, $2500 a month rent is a joke. Their cost of living is WAY higher than ours, so they are prob. thinking they got a pretty good deal. They prob. paid that much living in a one bedroom 500 Sqft apt. back in their home country.
May as well queue the rest of the “Asian immigrants will keep real estate from deflation” arguments. They’ve obviously been so valid in the past. /sarcasm
Fannie and Freddie were authorized in Feb to do Jumbo loans, but they havent been well recvd by the market. They are too restrictve and expensive. There was a bloomburg story about this on Tuesday…
“Morality has a cost.”
This has nothing to do with morality. Going broke is not immoral. It’s not illegal. It doesn’t make you a bad person.
It does, however, carry its own special punishment which can be worse than any mere ‘sin’ or ‘crime’. It’s bad for your credit (i.e. reputation).
I assume that when houses like this start dropping in price, it is going to push the lower-end stuff down even further. Correct?
COULD be, but I’m actually guessing the causal chain is working in the reverse direction. The true pain has been more at the bottom end of the market, and that’s been a drag on the middle and upper ends as people can’t afford to move up. Also, these “middle” properties were much less likely to be subprime borrowers. We’re getting into the option ARMs in the middle.
I think the lower end is going to keep dropping, mostly because the fundamental drivers of affordabilty, jobs, are dropping like flies in CA Unemployment is up 1.1% in 2 months, and that hurts the lower end market most. Moreover, those who might want to buy in the lower end are getting rejected by banks, who are now demanding 10% down (if not 20%) even from those with good credit.
I think a lot of Irvine has been coming down because the free money spigot got turned off. But the general order of one of these things (correct me if I’m wrong, someone) is low-middle-high.
Ah yes, Debby Boon, “You light up my life”. Had that song sung @ my wedding in 1980. I was so young, so stupid, it lasted 2 years. Less than this buyer held this stupid mistake....a painful mistake....mine was too....I on the other hand have fully recovered and am better for, hopefully they could say the same someday....
No wonder this place has been sitting so long...the seller’s asking price is nowhere near market price...say, maybe around $100k less.
But, this market’s changing daily!
Dear Irrenter,
Can you please analyze the effects of the infamous $300 billion proposal on housing market? Thanks a lot.
In my humble opinion, the conforming-jumo loan limit of $729,750 was one of the dumbest ideas to come out of 2008. What a totally worthless and pointless piece of garbage.
It was pretty stupid up until a month or two ago when the rates finally dropped. If you have the 20% down, good credit, and lock in a 30 year fixed it can be a good deal.
It was made so that the banks would be enabled to offload more of their bad loans onto the taxpayers. I’m not sure if I would assert that it is a dumb idea - it’s certainly evil, assuming you’re on the same side of the fence as me.
In the end it’s all the same; wealth is graded on a curve so where my tax money goes doesn’t necessarily make me richer or poorer. I just don’t like the fact that certain people have the privilidge of being immune from market risk.
will my neighborhood drop too? i hope so. it’s still about 1MM for a nice 2 bedroom home built in the 1960s.
http://smdistress.blogspot.com/2008/06/sunset-park-buyers-want-refunds-too.html
Yeah, prices are still insane up here in west la county. They’ll drop severely at some point, but when that will happen I have no idea.
Good gawd even I can take better pictures than these guys with my cheap camera. X_X
Why take the photos at night? Why not during the day time with all the curtains open?? Do these guys not care if it’s sold? 240+ days and they couldn’t find 1 sunny day to update the photos?
Besides being over-priced, the property lacks a real drive way, which kinda sucks. The small yard is nice though.
Texas Real Estate Slump Lets Mexicans Take It Back
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alUJZgGm4GUI
“A rising peso and an economy growing faster than the U.S. have given some Mexicans the buying power to take advantage of the housing slump in Texas, which the U.S. annexed in 1845 after Texans gained independence from Mexico nine years earlier.”
Redfin says “The most recent listing for this property has gone off the market.”
Does this mean that sellers realize IHB is the kiss of death?