Irvine Housing Blog

I seriously doubt the sellers are motivated by any sense of ethics.

Their money is lost no matter what they do. If they can sell now they’ll at least salvage their credit. If they can’t sell then they’ll walk and their credit will be trashed. It’s as simple as that.

Sale History & Tax Info Sale History
04/26/2006: $443,000
12/02/2003: $337,000

ZEstimate is 342.000

WHAT?  This place is total crap! I wouldn’t live here if you paid me.

woah.  this is kinda weird.  I’m not joking either.  I really wouldn’t…

OMG AZ, That is hysterical !  Well done.

25, AZ is jk when he’s says it’s a deal…..his snark didn’t translate well.

Check this out.

http://mrmortgage.ml-implode.com/2008/06/30/mr-mortgage-engineering-the-housing-bubble-through-monthly-payments/

Mikee, I’m with you.  Without excusing the other participants in this fiascos, banks are supposed to be the experts in mortgages.  How about that OA chart above?  The banks thought people would be paying more than the minimum?  On what planet?

They started to become popular in 2002 but were in full force by 2005-2006.

Banks are stupid.  They are NOT experts, they are stupid.  They stupidly created a commission structure which encouraged this sort of nonsense.

Now they are stupidly dragging things out and not being creative, as they have to be, if they don’t intend to throw in the towel.

There are times that you should just sit things out.  Banks will never do that.  For me, this is a replay of the late 70s/early 80s only much worse and with inexplicable low interest rates.  That will change.

Here they go again with this median resident median income mumbo jumbo.

Who are you to tell me what I can and cannot afford?

It all depends on your definition of ‘affordable’.

Perhaps, my definition of affordable is that which consumes 90% of my take-home salary and forces me to moonlight as a burger flipper at In-And-Out for 4 nights a week.

As long as the monthly payment can be made, it must be affordable by definition.

Those of you with your right-wing conservative values and ‘traditional financing’ dinosaurs need to get with the times.  You would be best off keeping your opinions to yourselves and not try to force your beliefs on those around you.

Check this out.

http://www.irvinehousingblog.com/blog/comments/edgestone/

Let’s not forget that A LOT of home buyers are emotional about the process. Heck, pretty much everyone is….I know that I am (and that awareness helps me to go home and think about it more). So, pricing it high actually makes sense, in that, in this market, you are NOT going to get an offer higher than what you ask for, but could easily get a low-ball offer. Assume this seller is actually willing to accept $350K. By pricing it at $389, the knife-catcher that thinks that they protect themselves against the market by buying something at 10% off will make an offer for the seller’s reservation price. And MAYBE some fool comes in and their Realtard convinces them to offer $375. Also, if they don’t get any offers, they can lower the price, thus triggering new update emails and signalling to buyers that they are possibly more serious about making a deal than the folks who have stubbornly kept their price high for 9 months.

However, you’re right, in that by pricing it high, they risk losing buyers to the other nearby properties on the market for less. It’s a tradeoff that can be made. And, that said, it’s very likely that they’re asking for as much as they are just so they can avoid the short sale and ding to their credit. (Can someone who knows say whether the size of that ding is the same, regardless of whether you short the bank $1 or $100,000?)

This $373 HOA dues hits me hard too. I wonder if this can rent $1800/month?

because ppl are only paying minimums monthly, they are owning the banks more and more each month.  once this debt hits a percentage, say 110%. their low intro period ends early.  so this wave of ARM resets will come early.  all these ARM loan borrowers all bought their homes at the peak.  they are all fvcked up.  or will be

Joe,

What is the purpose of your site?  Just to show a map of available rentals?  Are you just pulling the info from craigslist?

I’d love if you could also include the Ventura craigslist in your data.

I think there’s still a lot of landlords who don’t know about craigslist yet.

Joe,

Are you planning on adding search features in your site? Look at this web application for starters; http://www.azyla.com/realestate/

Search features and additional properties would be nice, I was disappointed not to see homes like that in my area.

Joe

The site is good but when i specify particular location (e.g. Irvine, CA), it should show rentals available only in that city not based on the map.

Good work…

Believe it or not, your calculations are far too rosy for an option ARM-bomb owner. Your $2698 payment is just the principal/interest on a $450K loan at 6% over 30 years, a standard fixed 30 year term.

Here’s how an option ARM becomes a financial time-bomb:

1) Interest rate bumps up much higher (by several points) on a loan for which the buyer very, very likely was barely able to afford the minimum payments in the first place.

2) Negative amortization - the low ‘teaser’ rate is not even paying the full cost of the money borrowed, the difference is added to the principal until a certain figure (110% for instance) of the original principal is reached, then the buyer must start paying down the principal as well.

3) By this time, let’s say two years have elapsed into the 30 year term. So now not only are you talking about a higher interest rate on 110% of the amount originally borrowed (which, let’s remember, has only increased and has not had even one penny paid towards it), you are talking about doing it over a 28 year term, not 30 years. That doesn’t sound like a great difference but all these numbers add up. Again, remember that during the first two years the principal increased, not decreased; so instead of having to pay something less than $450K over 28 years (the first two years of a conventional 30 year fixed don’t pay down much principal), you are talking about paying nearly $500K over 28 years.

Let’s go back to your scenario. Compare a conventional 30 year fixed @ 6% for $450K: payments of $2800 a month. A scenario more like yours would result in payments of $3050 a month (approx). OK, not the end of the world to most people but when you are talking about someone who was barely able to pay half that with the ‘teaser’ rate and suddenly their payment doubles…

who said slavery doesn’t exist anymore?

http://en.wikipedia.org/wiki/Adjustable_rate_mortgage#Option_ARMs

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

Right. Option-ARM is nick-named “Pick-A-Payment” Loan… a.k.a. deferred interest / Neg-Am.

...and you qualify for the loan based on the minimum payment, not the actual interest rate. I forgot what the percentage of OC home loans were option ARM, but it was very big. There is a whole lot of hurt that’s going to happen in the current $1-2 million dollar price range.

It means the rebate checks are being put to good use!

The people you refer to will have little effect other than to provide liquidity on the ride to the bottom.

Actually, I don’t see this as much of a problem as you think it to be. This person will tie up his money (and some banks’) in a depreciating asset that won’t have a positive rate of return. This makes his choice basically a ‘dead’ investment and removes extra money from the money supply (the bank who loaned him money).

To truly have a contraction in any asset a large percentage of dead money in that asset helps. It removes that money from being leveraged. In a highly leveraged economy, like ours, the removal of excess leverage allows asset prices to drop.

Dejnov.

The real estate bubble put such social pressure in some vulnerable people to OWN a property at all means, effectively making ownership fashionable, they didn’t want to be left behind in the very subjective social advancement measure, you are IN if you “own”, you are OUT if you rent, people focused only on the positives of owning and ignored the negatives of buying an overpriced house, probably some of them feel that now they can finally achieve their goal and buy, at the same time some of them that bought 2-3 years ago, are regrettably saying to themselves: what I was thinking?!?

The prices will come back down to what people can pay.  It will take some time for the system to flush out all the funny money that has propped it up for the last 10 years.

Be patient.

I got approved for a loan and fully intended to purchase. I put my logic hat on and decided to rent for another year or two because of people like your friend who were will to pay the asking price or more. I was the person offering 390k for homes listed for $550k. People like your friend were offer $575k.

The RE’s tried to convince me I was missing out on a GREAT deal…I took my pennies and ran away.It has do do with what one feels is a good deal over paying by more than 20% is not a “deal”.

When I said “wow, that’s expensive” he just replied “Well I just feel that I’ve been waiting forever”.

I know exactly how your friend feels because we did the same thing and we were in a rental that was WELL below market value. It sucks for me because I still get the new listings and see homes that might have been better or just paid less for something similar. My husband doesn’t care ‘cause he doesn’t see the details of our market. He is really happy and I do like living here more than our rental, but I never would have given up the rental we had to pay market rent for this house.

What gives me hope about the market continuing to fall is that it may fall far enough for us to pick up a rental property or perhaps rent this place out and buy ourselves an even better house for the same amount of monthly outlay.

msv,

I am interested to know what kind of financing your gym buddy is getting to purchase that Woodbridge house.

Maybe Lendingmaestro can give us an update on what the lending practice is like lately. (i.e. only loans with 20% down, full doc, 28/33 DTI are going through OR something less stringent?  Hopefully, OPTION ARM is no longer available to the public…)

It really comes down to this.  All of these people whom you know that are “waiting”.  Are they actively saving and putting away large sums of money?  Or are they just planning on putting down a few thousands dollars and assuming that the easy financing is going to come cheap (it will not)?

If you look at the savings rate of the USA, it seems unlikely that there are great numbers of people out there right now who are putting away large sums of money to put down on a house.

It is all going to come down to the first time buyer.  Prices will stop where the first timers can afford financing and bring cash to the table.  The rest of it is just current mortgage owners swapping equity back and forth.

The friend that you mention who feels like he has been “waiting forever” is just the typical fence sitter turned knife-catcher.  He wants it and he wants it now. 

As with all things, after a few months of mortgage-ownership, he will realize that thrill of having a house has fizzled and the reality that he is throwing his money away will then set in.  Too late.

AZDavidPhx,

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