Irvine Housing Blog

Nice to see you back!
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When I first saw the grey/white comments figure to the left of the comment button (who I think is new), it looked like he was making a big L out of his fingers.  The kind of big L for loser.  Then I looked more and I realized it was his arm and the thumb was on his palm.

Sometimes, my view of some of the financial decisions I’ve seen in re make me want to put out the big L.

This dump would not sell for 647K when credit was easier, and now the bank thinks it will sell for 700k when only a select few could qualify for this price?

This is pretty typical right now. I see many REOs in So Cal and just wonder WTF the banks are thinking. Every day/week/month that goes by means lower values for all homes.

The REOs are even tougher to sell. Many buyers just don’t like the stigma of it. They think the property is all effed up and maybe haunted or something.

Thats the beauty of having many REOs. They really help bring down the comps.

Speaking of “haunted”. This dump will scare about 100k out of your wallet just to get it livable.

OMG, not this house again! I remembered that $647k when I saw the new asking price. It is certainly in the running for the bottom end of aesthetics in Irvine. Yikes. Good luck to the bank or whoever selling this thing!

The Video link was not the house for sale. That was the video to the from one of the Manson Family murders.

Excellent choice of titles today, IR. Very karmic. And very appropriate. There is a big difference between livin’ large and rubbing salt. I would imagine everyone who reads this blog knows where they stand on that scale.

Bubbles and run with the pack mentality are fascinating topics and millions of words have been written about them. The one thing that makes this bubble particularly insidious is that its basis is the family home and all the accompanying emotions surrounding it. It’s happened before, just not on this grand of a scale. Ever since the Internet bubble began it was once again possible to become wealthy. If not wealthy, then rich, or at least well off. People became geniuses overnight. They bought tech stocks. If you weren’t “in,” you were so yesterday. Then, as if by magic, it was over. People had to give up daytrading on margin and go back to work. But, that was paper. An illusion. Everyone knows you can take a bath in the stock market. Win some, lose some. Right? Don’t take it personally. Business is business.

After a loss of a few trillion dollars in paper wealth, Alan Greenspan and his merry pranksters at the Fed decided it was time for a little (sarc) cash injection for dejected investors. Flooding the system with liquidy, fiat money became free! Nothing down! No income? No problem! Pick a card, er house, any house. It’s yours. And so the great American psychodrama that became the housing bubble began. Now the circle is becoming complete again as some watch in slow-motion horror and others watch with a major sense of schadenfreude (h/t to our own MS.)

Nobody likes being mocked. People resent being called stupid for not buying (literally) the hype. And that is what this was. All. Hype. I say “was,” as in past tense. This party’s over. But unlike taking a bath in the stock market, this pop is gonna leave a mark. The sheriff is piling up junk in FB’s former yards as we speak. People are losing their homes over this one. And as usual, the MSM missed it completely and are even now calling it a “subprime” problem, even as my IM blinks at me that a *rumored* full Fed emergency rate cut is too late, but on its way. 

For those of you who didn’t click on IR’s “Southern California’s Cultural Pathology” link in today’s piece, I urge you to go back and do so. He nails it pretty good.

Like a Rolling Stone indeed.

Having seen it,

I’d estimate 150K to 200K to get the problems fixed in totality.  You gotta have a lot of liquidity to think about buying this dump.

Just callin’ it like i sees it.

Chuck Ponzi
www.socalbubble.com

Just curious.  Do you know how much was paid for it in 1990, before it was HELOC’d to death?

I remmber when the prop first showed up here and I said the video looked like something out of the Blair Witch Project.

I was expecting to see someone standing in the corner kindof of frozen like, staring at the wall. Those of you who saw the movie know what I am talking about.

This is off topic but was wondering how people came up with the 160 times rent to estimate home value.

Thanks

I watched the video out of curiosity..for those of you who want to skip lunch, this is a great appetite suppressant.

Kris,
This article talks about the 160 times rent:
http://www.irvinehousingblog.com/2007/03/03/how-inflated-are-house-prices/

I’m dizzy!!!

So what did these people spend all the $$$$ over a 17-year period on?  Maybe all the advertisements they received in the mail each day to refi/equity line of credit, etc., they couldn’t resist the temptation to borrow.

We got made fun of in the past for not living the lifestyle our friends do.  They don’t want to hear it from us now…you know…the “we told you so.”  Now they are busy with 2nd jobs to pay down their debt, they are pissing in their pants right now.  Oh well, you get in line and take your chances.

Well, about two weeks ago I went to see Bob Dylan play at the orange county fair. I paid $250.00 for two seats that were way in the back. I really wanted to hear some of the tunes that I remebered from childhood….lay lady lay, blowin in the wind…etc.

Ol’ bob gets on stage and spends about 2 hours makeing funny sounds into the microphone…..needless to say I was very dissapointed. He did not sing one song in his old style…only farting sounds.

I am not sure what this has to do with housing but it is my 2 cents for the day.

Capital One Closes GreenPoint Mortgage, Idling 1,900 (Update1)

http://www.bloomberg.com/apps/news?pid=20601087&sid=adNNh.GiYu08&refer=home

That video is great. The staging company they hired provided actors to to show what the place looks like with people in too! Nice touch.

Treasury Bill Yields Fall Most Since 1987 on Money Fund Demand

http://www.bloomberg.com/apps/news?pid=20601087&sid=a675gM7_ZzL0&refer=home

Thornburg Sells Securities to Revive Home Lending (Update4)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNv4kpHqL78s&refer=home

Subprime Infects $300 Billion of Money Market Funds, Hikes Risk

http://www.bloomberg.com/apps/news?pid=20601109&sid=aEUtlgwzL_qc&refer=home

I see the Addams Family is back in business - or are these the Munsters? Was Uncle Fester behind the lens?

What’s truly awful is that these people thought a video clip was the right thing to do to “market their property.” The Realtor (from “Seven Gables Realty” - talk about delusions of grandeur) should be shot at sunrise for not enforcing the rudiments of “pick up your crap before you film anything.”

Even the family dog could be heard in the background - with someone “barking” at him to shut up. This is the only house I have seen that could only be improved with a quick visit from the Texas Chainsaw Massacre guy.

RRRIPPPPP!

Somebody’s hiring!

http://mortgage.freedomblogging.com/2007/08/20/somebodys-hiring/

One of the reasons THIS prospective buyer doesn’t like REOs is because not only is the property less likely to have been minimally maintained and/ or has been realled *ed up, is that you mostly CANNOT INSPECT THE PROPERTY PRIOR TO THE AUCTION.

I’d rather go after the ones that no one bid on at auction and/ or get listed with an agent, so I can inspect the place first. I’m interested in buying a HOME when the prices drop enough, and wouldn’t dream of buying something sight unseen no matter how low the price is.

There goes the neighborhood
As more subprime loans topple, even buyers with good credit see trouble ahead.

http://www.fresnobee.com/business/story/116213.html

Bidders snap up bargains at home foreclosures auction

http://www.pe.com/localnews/inland/stories/PE_News_Local_D_foreclosure20.3cd43b7.html

Wall Street Journal had an article of a retired lady that at one point had a fully paid house but because she used a HELOC to help a relative for something that I don’t fully remember and such relative was unable to payback the personal loan, now she was facing foreclosure and eviction, that was a really sad thing to read.

Hey the times are a changein

Slightly off topic but it speaks volumes about jumbo mortgage market:
Lenders and Brokers:Only focus on conforming!

I received this just now from INDYMAC. They are a large thrift based lender that does retail and wholesale…..

http://www.thegreatloanblog.blogspot.com/

Thanks!

Fannie Mae to skip August debt offering
Long-term funding not needed now, mortgage-buyer says in statement

http://www.marketwatch.com/news/story/fannie-mae-skip-august-debt/story.aspx?guid={AB7F6BE0-8766-4E14-B7C1-E8E88ED7FB96}&dist=hplatest

The lady in the Wall Street Journal article borrowed $1 million against her home to lend to a relative who had invented a fishing pole holder.  It wasn’t a big seller and now he can’t pay her back, so now she’s losing her home.  She’s 70 years old.

Reminds me of that quote regarding people in Carnegie’s book:

“...let us remember we are not dealing with creatures of logic.  We are dealing with creatures of emotion, creatures bristling with prejudices and motivated by pride and vanity.”

I didn’t read the article, but I can probably guess this lady is an old widow with sizeable assets and allowed a greedy family member who was likely motivated by The Big Idea (c’mon, a fishing pole holder?) to gamble away her basic necessity of shelter on a flimsy business plan.

Indeed this is an absolutely tragic story yet a perfect example of why loaning money to family is a bad idea.  I still cannot fathom the justification of risking a million dollars.  There’s other options to round up startup capital than to put your mother or grandmother out on the street.

Maybe I was reminded more by saying, “A fool and his money…” :-(

P.S. No knock to the show “The Big Idea with Donny Deutsch” was intended.

I thought the financial wizards would appreciate these charts and analysis from Countrywide on thei entire services portfolio:
http://thegreatloanblog.blogspot.com/

Here’s the link.  You could argue that a 70 year old technical writer who can actually earn enough to pay a
$8200 mortgage payment must be somewhat savvy.

http://online.wsj.com/article/SB118705311075996714.html?mod=homes_left_column_hs

[Insert foot into mouth]

Okay, so much for the defenseless granny theory—apparently I misinterpreted Rocker’s and Mary’s comments.

Thanks for the link, Sue.

I agree with everything you stated except the notion that Greenspan (or the FOMC) created the housing bubble. They lowered rates in an effort to keep the economy from sliding into depression after 9/11. Those events don’t seem so scary now, but at the time, nobody knew what the impact of such an attack on the U.S. was going to do.

Once the rate was lowered to such an extent and business began to get busy again, how do you prevent your adjustment from putting the brakes on the economy? I don’t see how we can find fault in a systematic and gentle rise in rates over the next 3 years.

We should keep in mind it is also not evil to take advantage of a low mortgage rate to become a home-owner. But indeed, it was the abuse of these low rates to buy multiple homes, and to buy for the purpose o reselling for profit and to buy with no documentation houses that were now clearly above realistic values where the evil really occurred.

So let’s not over-simplify things. I think the articles and forums on this site make a good case for many errors made by many folks in many areas.

I have seen worse properties than this. You never really know their situation, but it is almost always not a good one. I am sure alot of questions and “Whys?” are wondered when a home like this is in a nice community like Irvine.

Things to consider:

-Did someone have major medical problems? Mental illness? Huge bills?
-Job losses in their industry?
-Family tragedies that they never recovered from? (Suicide, murder, etc)
-Strained family relationships?

Not everyone really cares about having the ultra modern kitchen or wet bar and for some people, if the carpet is still attached- then that’s ok.

I remeber one REO property in Aurora,IL. This place smelled so bad, I needed to take a shower when I got home. There was junk everywhere, filth, they left two cats behind that crapped everywhere…

I found out the family had a business that failed because the husband comitted suicide, their son murdered someone so he is in jail for life, a few other things happened and the lady who owned it just gave up.

Sad. :(

I remember that this house was on Craigslist for awhile.  There was serious water damage in the garage, just below the balcony.  This is a very expensive fix and this also brings up mold issues.

John