Irvine Housing Blog

Hey IR, I live in Rhode Island but frequent your blog regularly because what is going on your coast is relevant to what is happening over here. I have directed many people to your site and will continue to do so as I believe it is one the few sources of knowledge and truth regarding the housing bubble, not to mention the shock and awe value I get out of some of the reads. Perhaps a future evolution of your product could include regional property analysis to broaden the appeal of the website?
Keep up the good work.
Happy Holidays!

Your website provides content-rule #1.

Advice for renters if landlord faces foreclosure

“This is becoming an all too familiar scenario for thousands of renters nationwide who have become the unintended victims of foreclosures. Banks are booting good tenants onto the streets with little to no notice after seizing a property from a delinquent owner, ignoring tenant leases.

In the most troubling cases, some families are forced into shelters for temporary housing because they have little savings to cover moving costs, first month’s rent and a security deposit at another apartment.

Fannie Mae this month pledged to change that with its new renter policy starting in January. The plan will allow renters living in foreclosed properties to sign new leases with Fannie while the property is up for sale, or give the tenants money to relocate. Fannie has yet to establish the length of the leases, and the amount of move-out assistance will vary by state and property.”

Article from the LA Times today…

Home prices expected to fall further in 2009

Growing unemployment, more declines in consumer spending and a particularly long and deep recession are expected to depress demand, economists say, with falling rents adding to the downward spiral.

Peter Y. Hong
December 27, 2008

Real estate experts who were troubled by a 10% drop in median home prices near the end of last year from the previous year probably were stunned by the 35% drop in values since then.

But that may be overshadowed by what they now worry lies ahead.

Growing unemployment, more declines in consumer spending and a particularly long and deep recession are expected to batter home prices even further next year, they said.

“As unemployment keeps rising, demand for housing softens. It will probably get worse before it gets better,” said Delores A. Conway, director of USC’s Casden Real Estate Economics Forecast.

And the ripple effect is pushing rents down, which in turn could put greater pressure on home prices and exacerbate the downward spiral.

Overbuilding in some areas and hard economic times have driven apartment vacancies up, and that is causing rents to stagnate or fall, Conway said.

In downtown Los Angeles, for instance, apartment rents were about the same in the third quarter this year as they were in the same period a year ago, halting the rise in rents in previous years, Conway said. In Hollywood, apartment rents fell 2% in the third quarter compared with a year ago, she said.

Data on single-family home rentals are less complete, but real estate agents in areas with numerous foreclosures say rents for houses are falling as the supply of vacant houses for rent exceeds demand.

Those falling rents could offset any boost to home sales from currently low interest rates and prices, economists said. For those able to qualify for mortgages and willing to buy a home, terms have become quite favorable.

At the end of November, Southern California’s median home sales price had fallen to $285,000, from $435,000 in November 2007. If median prices were to continue falling at that pace, they would be below $200,000 a year from now.

But even bearish forecasters don’t expect so severe a decline. More likely, prices in Southern California will settle in late 2009 at a level roughly 55% below their peak, said Christopher Thornberg, a Los Angeles economist.

That would amount to a price near $230,000, a level at which home prices would be roughly in line with incomes by historical norms.

The rapid drop in home prices this year has helped to bring previously inflated prices closer to normal levels. About 20% of Los Angeles-area residents could afford to buy a median-priced home at the end of September, according to a National Assn. of Home Builders index. A year before, only 2% could make such a purchase, based on area income levels.

The typical monthly payment for such a home in November would be just over $1,300, according to the real estate information service MDA DataQuick. That’s down from $2,049 a year earlier. Adjusted for inflation, the $1,300 monthly payment would be 37% below the typical payment in 1989, the peak of the previous real estate cycle, DataQuick reported.

Increased government intervention also may help to shore up home prices in 2009. One of the more aggressive measures would be a proposal to allow bankruptcy judges to order lenders to reduce principal and payments on troubled mortgages.

Supporters, including former U.S. Treasury Secretary Lawrence H. Summers, now a top economic advisor to President-elect Barack Obama, say such an expansion of bankruptcy powers would be a powerful tool to slow the flood of foreclosures.

UCLA economist Edward E. Leamer said further government action to stop foreclosures was essential for putting the brakes on falling home values.

“When you’re sick you need medicine for the disease, not the symptoms,” he said.

In housing, the disease is the deterioration of neighborhoods and home values as houses are foreclosed, abandoned and sold at greatly reduced prices, said Leamer, director of the UCLA Anderson Forecast.

He proposes creating a government agency to manage foreclosed or distressed houses as rentals for several years to keep the homes occupied until they recover some of their lost value.

“We need to eliminate vacancies and bring about their orderly sale,” rather than allow lenders to get rid of empty houses at fire-sale prices.

Funny how this fact based analysis is in direct opposition to the statements made by Tom Iovenitti (the President of Coldwell banker in OC) in the glossy real estate magazine included in the LA Times.  This guy’s weekly bullish statements are always disguised as analysis, but they seem to always ignore what the real economists are saying.  Is it just me or does anyone else feel that his statements border on being criminally negligent?

By this coming summer, the real estate market will be just as healthy as ever! There’s always a slowdown in the winter. After all, would you want to be sued because a potential home0buyer slipped on icy steps and broke their patella, or tibula rasa, or some other limb?
It’s just a temporary slowdown.

If anybody should be sued, it’s Irvine Renter, for being a wet blanket! A person could freeze to death, wrapped in one of those things!

Even the anti-spam word submittal brings us a harbinger of better times! Give me my harbinger with everything on it!

Man, I love Boston

RIP Brad Delp

Remember this one, 22 Honey Locust?

http://www.irvinehousingblog.com/blog/comments/columbus-lost/

Yes, being only a few tens of feet away from major power lines, this baby was also built on top of dirt contaminated with very permeable tricholoroethylene.

http://en.wikipedia.org/wiki/Trichloroethylene

Yet, after several months held as REO, it was sold to some knife-catcher recently for $20k over the bank’s asking price of $880k.  Maybe IPO or others could shed some light on the reasoning behind this seemingly irrational move.

http://www.redfin.com/CA/Irvine/22-Honey-Locust-92606/home/7201191

Closing prices in Irvine for December are up 1% over November and at right about the same level as September.

Maybe that Tom Lovenitti dude is correct?

Low inventory + less foreclosure activity + really low mortgage rates = flat prices

http://www.ipoplaya.com/iposhiller.pdf

Not real estate news…  This weekend I’ve been slogging thru the book “the black swan” which I heard about on the forums.  It’s about our inablity to account for the unpredictable.. e.g. the turkey who thinks humans are great because he is fed for 1000 days who doesn’t know what’s going to happen on day 1,001 (Thanksgiving) and how to avoid being that turkey.  (Borrowed from the library of course)

The reason I’m bringing this up is that the Pakistani ambassador was on TV the other night saying that Pakistan and India will not go to war because they are both democracies and modern democracies do no fight.  I’m thinking I should send him a copy.  Just because something hasn’t happened before is exactly why we should be worried that it could happen.

Cheers…

Not really related to Irvine housing other than the fact that the house is in Irvine and that there are some realy messed-up people out in the world.

http://news.yahoo.com/s/ap/20081228/ap_on_re_af/the_slave_next_door

I am in Guanzhou, china today….guess what, the orange county register real estate blog is blocked from view.

I think the sentiment is that the market will recover this year, however it’s still early days.

Sharon Hollas - Langley Real Estate

Have you considered asking for a column?  Either online or in one of the papers?  They are actually quite starved for content, and many of them have been laying off writers. 

You could probably get a few hundred per article.  Newspapers like people who aren’t fulltime employees.  If you don’t need a desk, an office, a health plan, or retirement arrangements, you might get the OC Register or the LA Times to bite.  If you just want to annoy the Times, then you would write for LA Weekly or the Daily News.

Real estate news to share?

Driving down Ventura Blvd in the San Fernando Valley yesterday, there were tons of for rent signs.  Both retail and office space available.  Several times the vacancy rate of a few months ago.