I am a fan of the single-story homes built in the 70s. When I am ready to buy, I will take a good look at properties like this one.
Asking Price: $659,000
Address: 29 Morning Dove Irvine, CA 92604
{book4}
Adventure seeker on an empty street,
Just an alley creeper, light on his feet
A young fighter screaming, with no time for doubt
With the pain and anger can't see a way out,
It ain't much I'm asking, I heard him say,
Gotta find me a future move out of my way,
I want it all, I want it all,
I want it all, and I want it now,
I want it all, I want it all,
I want it all, and I want it now,
I Want It All — Queen
As I have stated before, I do not plan on buying in this market environment, but I see properties I would like to own all the time. Today's featured property has many of the characteristics I want in a home in Irvine.
I like Woodbridge, particularly the north side inside the loop near the lake. This property is outside the loop, but it is in one of the few areas outside the loop built out as single-family detached homes. The walk to a really nice park with a large pool is less than 100 yards (there is a path between two houses).
The house is on a corner lot, and although it is near enough to get road noise from the arterial streets, it does not back onto them (Woodbridge has more road noise from the arterials than other Villages because there is no wall. The hedge is useless.) I give it a "B" for location within Irvine.
I like this single-story floorplan. At a little over 1,500 SF, it isn't huge, but it is large enough to comfortably accommodate a family. This floorplan and the many variations of it have been built in Woodbridge and the communities to the north that were constructed in the 70s.
I am not sure when the plan was last built, but it isn't likely to ever be built again because it probably does not meet current fire codes. The exit from the master bedroom is a window onto an atrium space. These spaces are often enclosed by later construction leaving no secondary point of egress from the master bedroom. I doubt this is still allowed.
Single-story homes become more desirable with age. There are not many retired people living in the three-story condos popping up in the new Villages. A smaller home like this one can accommodate a young family as well as a retired couple. If you go through your life cycle without buying the McMansion, you could live in a house like this for life.
One of my favorite features in the house is this seating area off the main living room. I would use this space. I don't watch much TV, but I do read many books and work on the computer. In the evenings, I would hang out in here with a book or a laptop and be very comfortable. Late night, when the house is quiet, this would be a great place to unwind and enjoy the fire.
I must be a throwback to the 70s. I find utility in this space that disappeared from home design 30 years ago. Perhaps if I get one of these houses, we can have an IHB fondue party on my new whisky barrel table.
After dining, we can kick back in the groovy living room.
We can play some albums or spin a few 45s…
Then play video games…
Asking Price: $659,000
Income Requirement: $164,750
Downpayment Needed: $131,800
Purchase Price: unknown
Purchase Date: 8/21/1984
Address: 29 Morning Dove Irvine, CA 92604
Beds: 3
Baths: 2
Sq. Ft.: 1,538
$/Sq. Ft.: $428
Lot Size: 5,452 Sq. Ft.
Property Type: Single Family Residence
Style: Contemporary, Ranch
Stories: 1
Year Built: 1977
Community: Woodbridge
County: Orange
MLS#: S587361
Source: SoCalMLS
Status: Active
On Redfin: 7 day
This is the home you have been waiting for . Beautiful single level home in a fabulous corner location with upgrades galore…new paint, carpet, scraped ceilings, wide crown mouldings, recessed lights, new steel roof and the list goes on. The kitchen has been totally remodeled with white cabinets, granite counters, stainless steel sink and added pantry with pull out shelves. The family room is adjoining the kitchen and has wall of glass and built-in entertainment center with frosted glass fronts. The back yard is very private and features flagstone laced patio with patio cover and built-in BBQ. Run, dont walk… this home wont last long!!!
Run, dont walk… this home wont last long!!! Silly me, I was going to drive, but if running is better…
These homeowners have been in this house for 25 years. Do you think they paid off their mortgage? The property records show $544,000 worth of first and second mortgages — no HELOCs. They already spent their house.
I want that one — Little Britain
I want that one — Little Britain
Tihnking more about people who ‘spend their house’ and relating it to family experiences, it highlights a largely unmentioned benefit of a high savings rate. If you spend right up to your max or beyond, when a bad event comes (note, when not if) you go to loans.
If you have a high savings rate, the first thing you can do is reduce your savings. You can do that and potentially add 10% or more of income before you need to tap the savings you have. It seems to me to be classical Keynsianism for families – save in good times, deficit spend & don’t save in bad – smooths consumption.
I always understood Keynesian economics to be spend in good times, deficit-spend in bad.
Just sayin’…
-Darth
Idiot planners can’t even spell the bird’s name correctly. It is MOURNING dove. Sheesh.
The word “mourning” doesn’t connotate a happy, kool-aid loving place to live. I guess Wisteria Lane was already taken.
Plus what’s a “steel roof”? That might get very hot in the summer.
I have seen steel put over a shake roof. The firemen have a hard time putting those fires out since the water never gets to the fire under it.
I am a fan of the single-story homes built in the 70s.
Me Too! However, this home is surrounded by delinquent home-debtors. Virtually every neighborhood in The OC has many people who have bitten off more than they can chew. This is no time to buy … prepare for the next big step down.
6 Meadowgrass, Irvine, CA? – more info »
$650,000 4 bed 3 bath
“This property is a Pre-Foreclosure. The homeowner has missed at least one payment and may be willing to sell this home at an attractive price, in order …” realtystore.com
7 Morning Dove, Irvine, CA? – more info »
$460,000 3 bed 2 bath
“This property is a Pre-Foreclosure. The homeowner has missed at least one payment and may be willing to sell this home at an attractive price, in order …” realtystore.com
Blue River, Irvine, CA? – more info »
$397,500 4 bed 3 bath
“This property is a Notice of Default. This is the initial document filed by an attorney or trustee on behalf of the foreclosing lender that starts the …” realtytrac.com
125 W Yale Loop, Irvine, CA? – more info »
$572,000 4 bed 2.5 bath
“This property is a Pre-Foreclosure. The homeowner has missed at least one payment and may be willing to sell this home at an attractive price, in order …” realtystore.com
1 Park Vista, Irvine, CA? – more info »
$412,000 2 bed 2 bath
“This property is a Pre-Foreclosure. The homeowner has missed at least one payment and may be willing to sell this home at an attractive price, in order …” realtystore.com
Golden Star, Irvine, CA? – more info »
$139,000 4 bed 3 bath
“This property is an REO (Real Estate Owned). This is the final step in the foreclosure process. Ownership has reverted to the lender. …” realtytrac.com
12 Santa Rida, Irvine, CA? – more info »
$782,400 0 bed 0 bath
“This property is a Pre-Foreclosure. The homeowner has missed at least one payment and may be willing to sell this home at an attractive price, in order …” realtystore.com
Blazing Star, Irvine, CA? – more info »
$619,742 4 bed 3 bath
“This property is an REO (Real Estate Owned). This is the final step in the foreclosure process. Ownership has reverted to the lender. …” realtytrac.com
Blazing Star, Irvine, CA? – more info »
$752,585 4 bed 3 bath
“This is a Notice of Trustee Sale property and will go through an Auction process. The distressed owner was unable to find a promising buyer to cover the …” realtybargains.com
Del Cambrea, Irvine, CA? – more info »
$607,690 3 bed 2 bath
“This is a Notice of Foreclosure Sale property and will go through an Auction process. The distressed owner was unable to find a promising buyer to …” realtybargains.com
In the astute observations from Shadow Inventory in Orange County people were asking how many of these were in Irvine. This list of properties provides a glimpse into one small neighborhood. Thanks.
Oh, I like them too! That’s why I really like Westpark I, that Irvine neighborhood that so many people trash. I have been secretly hoping that I could get a SFR in that neighborhood, but I just don’t think the prices will ever get low enough for me. We’ll see.
I think Westpark is mostly two story homes.
The beauty of a single story, SFH in Irvine is the potential of putting a second floor on it.
Not all HOAs are that friendly… gotta watch out for view lots, but it leverages the cost of the land.
A two story home is already tapped out, a single story with an attached garage can usually be pushed out to more than twice the size without covering more of the lot.
There are lots of advantages to a single story house all by itself. No stairs to climb is the major one. Also, it eliminates the requirement for a half bath downstairs-less things to clean or leak. Plus, the wasted square footage from both of the above can be used for other uses. All of the above means that, all things being equal, a single story house should be worth more on a per square foot basis than a two story.
Two-stories have some advantages too. The biggest one for me is the heating/cooling cost per square foot will be lower with a two story. My 4100sf house would be brutally expensive to heat if it were a ranch. Probably not such a big deal in Irvine, since the weather is always perfect. Also, climbing stairs is good for you! Unless you’re very old, if climbing a flight of stairs is such a burden to complain about, then you probably need the exercise even more. My grandpa always insisted on ranches, since my grandma didn’t like to climb stairs, even long before they were old. She became obese, and ended up in a wheelchair for the last 10 years of her life. Maybe a flight of stairs would have kept her in better shape?
How often is this info updated? I know the Del Cambrea property already went through auction and sold at around that price.
Anyone care to guess what this home might sell for were it on the market in one year? In two? I drove by this exact place last weekend and am always dreaming of what pricing will hopefully be in just a couple more years.
At current interest rates, this is a $550,000 house. At 8% interest rates, it is a $425,000 house.
IR – totally with you on the ranch homes – and I love that sitting area!
Sometimes I don’t get your valuations – $550,000 would be an income level of about 100K – is this the home someone making 100K should have – someone slightly over the average? If so, then what is an average home – this seems very average to me and therefore seems like it should be around 300K.
A single-story detached home in Irvine will go for above median pricing. We do not have a sea of ranch houses like some of the older LA suburbs.
I do see this as the home of a household making about $100,000-$110,000 a year — or at least it should be…
This brings up the interesting point of incomes vs. the diversity of housing.
Doesn’t the availbility of high-density housing and apts drag down the median? Seems like the std deviation is more important than the median (in both home size and incomes), IMO.
Income levels will rise to the relative level of desirability in the region. This actually raises the median. High-wage earners competing for desirable properties will bid up prices in the most desirable areas. The market is the arbiter of debates over desirability.
Desirable areas tend to have more stretched finances because people will “reach” to buy in better neighborhoods. The net is that people accept less bang for their buck in housing — sometimes much less.
We have all joked about buying a McMansion somewhere else instead of a small condo in Irvine, but most of us live here in Irvine and accept a less desirable property to be in the community.
Diversity of housing is more about quality of community life. It is the intangible that sets one nice collection of homes apart from another. It is generally more desirable to have a broad mix of housing stock in residential areas to appeal to different income levels. When a community gets segregated — even by income — it doesn’t work as well.
It is about the standard deviation. You need to have properties at the tail in each direction. Here in California, we rarely get the tail to the low end. During the bubble, we mostly built McMansions outside of OC. You end up with neighborhoods of all the same demographic and very little variation around the mean.
If you build very similar homes, the neighborhood starts out similar. Over time, the homes and people start to vary more and more. Some homes are neglected. Others are expanded, even replaced.
Some people stay in their homes until they die. Others move frequently.
One of the most interesting differences in Dallas vs LA is that in Dallas people are more likely to value being near others who are like them. In LA, they are more likely to value being around a mix of people.
thanks for the thoughtful response, IR.
you have correctly carved out the percentage of rented units in the last ‘bomb’ dropped on this site (the %age of FCs).
I guess it just gets under my skin a bit when someone looks at the median income and then draws an assumption about the median home price.
the # of IAC units alone is enough to skew the median, let alone the # of condo properties that have sprouted up.
the complexion of the properties being built has shifted from high density to ‘ultra-high’ density, if there is such a thing. reference great park/el toro. reference east woodbury. sure, they’re aiming for a conforming price point – but again, that will impact the median income numbers.
and sure, people trade down in home size to live in desireable areas — but they also will rent in Irvine vs. owning elsewhere. that also has a dragging effect on median income.
I believe the std dist of home values and incomes is on city-data.com, both by zip and by region…
“I guess it just gets under my skin a bit when someone looks at the median income and then draws an assumption about the median home price.”
The assumptions are not bad if they are consistent. Check out the post I did on 1997. The relationship between income and median home price was alive and well back then. In fact, I would argue that the reason it bottomed at 4-times income rather than 3-times income is because of the impact of college-student “households” in the mix.
good point on consistency.
but if the mix of housing changes — and IAC builds more units, doesn’t that also need to be factored?
again, I’m back to std deviation and aligning the std deviation of both incomes and home values.
there are some zips in LA county that reflect a decent balance. I think I live in one – the median household income is $110k, median home price is in the low $400k range. Sounds right to me… but that’s because I know there is a dearth of multi-family and apts. And in looking at the std deviation on city-data, it’s a similar curve on the income dist vs. the home value dist.
With so many baby boomers retiring, single story is going to be in demand. Old people often have a hard time with stairs.
Imho, it’s fair enough to have a 2-story home and install a chair lift. When I look at 2-stories, I try to focus on those with a straight run of stairs from top to bottom for this future potential reason.
You know, looking at the comps on Redfin, this house by the ppsf looks like it should be in the range of 570-590k.
Plugging $580k into your calculator, I come out with a TCO of ~$2500/mo.
Zilpy shows rentals of 3bd’s go for ~$2400/mo.
Wouldnt that suggest that we’re near rental parity?
This makes me think that as a renter I might actually WANT high interest rates.
425,000$ is getting close to the point where I could buy the house in cash outright. Not really planning on that kind of strategy, but it’s something to consider.
There’s a certain threshold of interest rates where further interest rates don’t matter anymore for those with enough cash on hand.
I think as a buyer you absolutely want to buy in a high interest rate environment. It is very likely you will be able to refinance a high mortgage rate into something lower in the future. You will never be able to renegotiate the home purchase price.
Back in November of 2008, I wrote The ARM Problem. The MSM is starting to pick up on the issue:
Interest Only Loans: Another Time Bomb
As Exotic Mortgage Resets, Payments Skyrocket
“I’m praying for another boom,” said Mr. Moller, 34. “Otherwise, we’ll have to walk.”
Experts predict a steady drumbeat of defaults over much of the next decade as these interest-only loans mature. Auctioned off at low prices, those foreclosed houses could help brake any revival in home prices.
Interest-only loans are not the only type of exotic mortgage hanging over the housing market. Another big problem is homeowners with “pay option” loans; in many of these loans, principal balances are actually increasing over time.
Still, interest-only loans represent an especially large problem. An analysis for The New York Times by the real estate information company First American CoreLogic shows there are 2.8 million active interest-only home loans worth a combined total of $908 billion.
The interest-only periods, which put off the principal payments for five, seven or 10 years, are now beginning to expire. In the next 12 months, $71 billion of interest-only loans will reset. The year after, another $100 billion will reset. After mid-2011, another $400 billion will reset.
John Karevoll, a longtime senior analyst for MDA DataQuick, sees the plight of interest-only owners this way: “You’re heading straight for a big wall and you can’t put the brakes on.”
““I’m praying for another boom,” said Mr. Moller, 34. “Otherwise, we’ll have to walk.””
This is the biggest fear the powers-that-be have right now. If ordinary Americans walk away from their mortgages in large numbers — something I think is likely — the losses will be staggering.
It will be a painful period but is presumably necessary to get back to a situation where homeowners have ‘skin in the game’ and aren’t just effectively flippers with no equity.
how does a boom help him.?
even if a boom shhots up prices he only gets to zero equity.
if he sells as zero equity, then he has to rent a place later.
Sure his credit is in better shape, but, if he walks now
he can rent cheap, and spend 2 years rebuilding his credit
and when it’s better and he’s saved some money, he can
buy again at the bottom.
IR, amazing how my blood pressure still spikes after reading about such people.
“I understand I took a risk,” Mr. Janis said. “But I did not anticipate that the real estate market would go down 30 percent.”
This attitude is pretty amazing. By the time these guys got their loans, real estate in SoCal had been going up in value by more than 20% per year for several years. Use your brain… if wages aren’t going up, and you’ve gotta go with a nonconventional loan to own a home, of course the market is going to crash!
“The bailout is not trickling through to help many of us who have worked hard, under very difficult circumstances, to keep paying our bills,” Mr. Janis said
In other words, “I wish the government would step in to help those of us who work hard and did nothing wrong…. the victims.”
And finally…
“The Mollers bought in 2005, paying $460,000 for their three-bedroom, thousand-square-foot house. A quick refinance a few months later supplied cash to pay debts.”
In other words, they had no business buying that house. This family might be the nicest family in the world, but all I conclude after hearing their story is that they are the posterchild for the knuckleballs that drove this market. If homeowners bought within their means, the housing prices would have had to come DOWN to attract buyers.
These victim stories do wind me up. Even the most sympathetic story falls apart when HELOC abuse is introduced.
Family faces loss of home amid health crisis
Check out Kelli Hart’s story that came out this weekend.
While one obviously feels bad for anyone with a terminal illness, you have to wonder what the owner’s illness has to do with anything else that has happened to them. The timeline is: 1.) they bought a house in 2002 for $430,000, then proceeded to HELOC abuse an average of $70,000, at least, annually over the next five years or so (that house sure was a good little earner for them). 2.) Then in 2008 or so their 5 year ARM reprices (as they had known for five years that it would) to a level they cannot afford, 3.) they stop making payments and hire a financial advisor and a laywer, and 4.) Mr. Kempff is diagnosed with a terminal illness. Mr. Kempff is 65 years old. Didn’t it occur to him, before he became ill, that maybe paying down the mortgage a bit might be a good idea, at his age?
I notice also they seem to be claiming ‘lack of sophistication’ or something like that, but that doesn’t prevent them from going out and hiring lawyers and financial advisors to try to keep the house. They seem to think that a reduction in principal is due them – as if they never spent the money they took out of it. The only thing atypical about these people compared to other HELOC offenders is that they still have an incredible sense of entitlement — “I’m a college professor, damn it, you can’t take MY house away from me” while most of the HELOC abuses who get in their position slink away into the darkness and count themselves lucky with the cash they stole.
You have to wonder what the hell they were thinking when they went to the press with their story. Shall we all pitch in raise some cash for them?
I posted yesterday about an American-Iraqi couple looking to move to Irvine from a small midwestern town. I got a few snarky responses, including this gem from PartyPooper:
“That makes sense.
One Iraqi couple your father knows are looking to retire to Irvine when prices come down more.
Therefore, there is a large pent-up demand for immigrant professionals to buy in Irvine.
With those logical skills, you should work for the government.”
I don’t live in Irvine. I’ve never been to Irvine and I didn’t know anything about it until I ran into this blog a few years back. Moreover, I grew up in the same midwestern town as the Iraqis (and yes, they may have been Persian, but I’m pretty sure they aren’t). So when my Dad mentions their plan out of the blue, and tells me the their reasoning, I thought this was relevant to the conversation on this board. How do an Iraqi couple decide on Irvine? Obviously, they’ve heard a lot of about it from family, friends, etc. AKA, others that might live there or want to live there and therefore affect the housing prices in Irvine.
Of course it’s anecdotal. How could it be anything but anecdotal? Does that make it irrelevant or demand personal attacks on my logic abilities? Or do those attacks reflect more about the people making them, than me? I’m just trying to add a potentially valuable bit of info.
And yes, it makes me want to slink away and not post anymore. I wonder if PartyPooper or Darth Ferret were part of the reason AZD left? I wonder if commenters like this will be the ruin of the IHB?
I would say this: with your social skills, PartyPooper, you should work for the government.
Don’t let comments upset you. Your astute observation added to the conversation. I suspect Party Pooper’s comment was a reaction to the endless stream of people who post the conventional wisdom of how foreign cash buyers will save the market. That isn’t the point you were making.
I live in University Park where there is a strong Middle Eastern contingent, mostly Persian. I can see why an Iraqi — or anyone escaping a war-torn environment — would be drawn to a community of expatriates in a city with a reputation for safety.
Another interesting factoid about University Park; in addition to the Persians, there is a concentration of Orthodox Jews because of the proximity to their Synagogue (they walk to service on Saturdays). Apparently, the two groups get along better in Irvine than they do in the Middle East.
IR,
That comment about Jews and Persians getting along sounds anecdotal…
Not really. I live in TR and we got lots of people from all places. I got Farsi neighbors, Armenians, Old White people, Indian, Chinese, Japanese.
The most interesting thing is that my new next door neighbors are Armenian. The old buffoons on the other side of the street are Turks.
They haven’t killed each other yet, which I think means a lot. However, I would help my armenian neighbor anyday should he ever decide to exile the turk.
Nothing about race or culture.. it’s all about the HOA. 😛
The armenian couple is very nice and reasonable.
The turk on the other hand is a complete moron, imbecile and paranoid beyond belief. His house was TP’d once (his daughter was at Uni then) and he called the cops AND accused me of doing it.
I was adviced by my attorney neighbors _and_ the cops that I could sue him for slander.
See, race and creed are irrelevant in Irvine. It’s all about the HOA.
I enjoy your stories…
Was just kidding about “anecdotal”, referring back to PartyPooper’s comments. Guess it didn’t play.
look for tonyE
;-D
http://latimesblogs.latimes.com/sports_blog/2009/09/enough-is-enough-bring-back-nfl-football-to-la.html
If I remember the 2005 “MIRAGE” theory correctly, it went something like this:
Moneyed
Immigrants
Rich
Ancestors
Generous
Expatriates
They were supposed to appear in 2006 and 17% was supposed to be “in the bag”.
Good times, good times.
Abroad: “I wonder if PartyPooper or Darth Ferret were part of the reason AZD left?”
Glad you mentioned my name; gives me a reason to reply.
Using an anecdote as causal evidence was EXACTLY what you were doing. Here’s what you said, lest someone sympathize with your proclamations of innocence: [Abroad’s father in the Midwest] “mentioned that professor friends of his—originally from Iraq (25 years ago)—are looking to retire in, wait for it, Irvine CA. Evidently, there’s a large Iraqi community in the city.
It sounds like there is a built up demand to live in Irvine from immigrant professionals with substantial savings.”
WTF?! (no pun intended re: home prices) How do you get to the 2nd paragraph from the first? Especially since most Iraqi’s see themselves as having as much in common with Persians as they do with Canadians.
I didn’t see the need in the other thread to disparage your logical abilities or limit your career options to gov’t jobs, but I did feel you were sufficiently off-base to say: “what I do not see is how any of this will have a substantial impact on housing prices. The desires of a random bit of anecdotal evidence isn’t worth much to those looking for reason and direction in this illogical housing market.”
-Darth
Treasury to Encourage Short Sales
September 8, 2009
American Banker
By Kate Berry
The Treasury Department plans to announce financial incentives for servicers to pursue short sales and deeds in lieu of foreclosure for troubled homeowners who do not qualify for the Obama administration’s loan-modification program.
In a short sale, a home is sold for less than is owed on the mortgage, whose holder accepts a discounted payoff. It is often considered less costly than a foreclosure.
Under the Treasury plan, which is expected to be announced this month, servicers would get a $1,000 “success fee” when a short sale is completed, according to short sale experts who have been briefed on the policy. The home seller would receive up to $1,500 to assist with relocation expenses, similar to the “cash for keys” programs that various servicers offer.
Treasury officials are working with an advisory committee to determine how to accommodate the holders of second liens, which have been a big hurdle to completing short sales. Much of the debate around short sales is centered on whether the holders of second liens will receive a fixed amount or a percentage of the short sale price.
“Second liens have been a considerable problem for short sales,” said Matt McCabe, the president of Loan Resolution Corp., a Scottsdale, Ariz., company that helps lenders work out defaulted mortgages.
Currently there is no uniform policy for banks to accept a payoff for a second lien in order to complete a short sale, McCabe said.
Many of the largest banking companies have adopted their own internal policies, which vary. For example, in March, Bank of America Corp. adopted a new policy requiring that 5% of the short sale proceeds go to pay the second lien in situations where there is no equity available, particularly for standalone home equity lines of credit. (B of A’s old policy required that 10% of the balance of the home equity loan be paid.)
A Treasury spokeswoman, Meg Reilly, confirmed Thursday that a directive on short sales will be issued this month but she declined to provide details.
In April, Treasury said it planned to offer incentives for short sales the following month, but the policy has taken took longer to implement.
so between now and whenever they decide to actually roll something out, do you think SS’s will come to a standstill? Or will banks decide they like their own policies better than the uncertainty of what might come.
says me, 6 weeks into a short sale contract…
I don’t care about the $8k it was never in my calculations, but I would like to move into our new home before Christmas… Too much to hope for.
Maybe that policy would mean something in more normal markets? Everything IR profiles seems to involve a loss of $100k ++. Is $1k going to tempt a bank to do anything differently than now?
Buyer power is new reality of housing market
Not here in Irvine yet…
The American dream of homeownership is still attainable. Buyers just have to deal with a new set of realities.
A year after the collapse of the housing market triggered the financial meltdown, lenders are demanding more money up front, high credit scores and proof of income. Paperwork must be in perfect order. Patience and persistence are required. And don’t even bother asking about a subprime mortgage.
It’s a vastly different set of rules from earlier this decade, when home prices soared and mortgages were easy to come by.
In some ways, it’s a return to the standards that emerged as the World War II generation bought its first homes in the suburbs: Buy what you can afford. Stick to a 30-year, fixed-rate mortgage. View your home as a place to live, not as a piggy bank.
For people trying to sell their homes, the standards are different, too: Be patient and maybe even lower your asking price, because the balance of power has swung strongly to buyers.
Housing bubbles have happened before and, experts warn, could happen again. Already, home sales and prices are rising slowly, helped by tax breaks for first-time homebuyers. But real estate agents, mortgage brokers, economists and homebuyers across the country say they’ve noticed a shift in attitudes that they expect will last for years.
‘From boom to reality’
Real estate agent Scott Patterson hits the gas and weaves his black Mercedes-Benz across three lanes of Interstate 95 near Plantation, Fla., holding his iPhone with one hand and the steering wheel with the other.
He is rushing to meet with potential buyers of a condo with an ocean view. When he arrives, he turns on lights and opens doors in the four-bedroom place. The prospective buyers, a couple from Venezuela, walk around, ask a few questions — and leave.
Business may be up in South Florida, but the power has shifted to the buyer. And price is the key. “If you’re not getting showings, you’re overpriced,” says Patterson, an agent with Esslinger Wooten Maxwell Realtors Inc.
The record number of foreclosed homes on the market gives buyers even more leverage. “They can afford to wait,” says David Baran, a broker with Prudential Preferred Properties in Chicago.
Michael Davies and Nicole Anzia of Washington, D.C., a married couple in Washington, got caught in their first bidding war when they bought their two-bedroom condo in 2003. The seller fielded eight bids within five days of listing. The couple waived an inspection to clinch the deal and paid $372,000.
That was tame compared with what happened when they sold the condo two years later. They listed the property on a Thursday for $479,000 and held two open houses. More than 100 people showed up, and 11 bids were waiting for them by Tuesday. The final price: $605,000. The buyer waived the inspection, too.
When they tried to sell their home this May, things were different. They listed the house at the purchase price and received just one bid. The negotiation process took longer, and they sold at a $21,000 loss. The buyer demanded an inspection.
“We don’t feel like we went from boom to bust,” Davies says. “We felt like we went from boom to reality.”
Lenders ‘want to know everything’
Jim Sahnger, a mortgage broker in Jupiter, Fla., still chuckles over one borrower three years ago who landed a mortgage with no down payment and two foreclosures and a bankruptcy in his past.
Now, lenders pore over bank statements, tax returns and job histories. The average mortgage application today starts three times thicker than what it was at the start of the housing boom, and often gets thicker as the process drags on.
Sometimes all the extra documentation still isn’t enough. Sahnger recently had a customer with a good job and a 20 percent down payment who couldn’t get a mortgage because the lender said there were too many delinquent mortgages in the neighborhood.
“Now, they want to know everything about the buyer,” Sahnger says. “It’s a true and full underwriting process on every particular loan.”
It is common to require a down payment of 20 percent — sometimes more. And it is virtually impossible to get subprime mortgages, which were written for people with poor credit histories and helped cause the meltdown when the interest rates jumped and borrowers defaulted. In 2005, one in every five mortgages was considered subprime. This year, it’s less than 1 percent.
Another category of risky loans, Alt-A mortgages, which required little or no documentation of the borrower’s financial health, have plunged to $3 billion this year from $400 billion in 2005.
Why would anybody ever buy any property without an inspection, unless one is just buying raw land (or a tear down)? That is just one thing one should never waive, no matter how hot the market is.
I think that we will see a lot more of those fashionable wooden barrels as time goes on.
http://camelsnose.files.wordpress.com/2008/10/brookings-hobo-day-barrel.jpg
Oooh that picture.
What’s the hole in front of the barrel for?
He better not roll on the barrel, it might hurt. ;-D
Love the groovy pics, IR. Crazy that stuff cost so much back then.
And I do love these single story homes in Irvine. Hard to find, especially with decent square footage unless you want to spend a bundle, like in TR. Westpark has a few, but they can be quite small. In fact, my parents neighbors bought one and recently expanded it (Promenade tract)
I agree, it’s a great house. Too bad they priced it about $200K over market, and $300K over what would be reasonable.
The house I rent is almost identical to this in Northwood. Too bad I have to leave because the owner has to move back. Sniff…
“I like this single-story floorplan. At a little over 1,500 SF, it isn’t huge, but it is large enough to comfortably accommodate a family.”
It is a great size to raise a family in. You will know just what your kids are doing because they are doing it right next to you.
I agree that it is a good size for the long haul also. If you don’t have to downsize, you can save the real estate fees and you can get the most benefit from Prop 13 also.