Penny Lane
Penny Lane - The Beatles
Whenever I hear the Beatles song, Penny Lane, I think of Irvine. An idyllic little world of perfectly manicured landscapes, and perfect little houses beneath the blue suburban skies. I have written before about the English neighborhood in Northwood that is a particular favorite of mine. If there is a "Penny Lane" environment in Irvine, you will find it here. Today's featured property is located in this little enclave, and it now the private Hell of Washington Mutual.
Asking Price: $499,000
Income Requirement: $124,750
Downpayment Needed: $99,800
Monthly Equity Burn: $4,158
Purchase Price: $645,000
Purchase Date: 10/19/2006
Address: 128 Trellis Lane, Irvine, CA 92620
| Beds: | 2 |
| Baths: | 3 |
| Sq. Ft.: | 1,200 |
| $/Sq. Ft.: | $416 |
| Lot Size: | - |
| Property Type: | Single Family Residence |
| Style: | Cottage |
| Year Built: | 1998 |
| Stories: | 2 Levels |
| View: | Fields, Hills, Mountain, Orchard/Grove |
| Area: | Northwood |
| County: | Orange |
| MLS#: | S539996 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 2 days |
Absolutely stunning... how stupid the lenders were during the bubble.
Today we get both HELOC abuse and 100% financing. The property was purchased a little after the peak for peak pricing. The owner used 100% financing, and in early 2007 they managed to get a HELOC for $69,000 over the value of their second mortgage. They made $69,000 for simply signing some papers. They put no money into the transaction and took out $69,000 six months later. I have to say, if lenders are this stupid, they are getting what they deserve. Washington Mutual made all three loans. For the record, if this property sells for its asking price, and if a 6% commission is paid, the total loss for Washington Mutual will be $244,940.
I have yet to move my banking from Washington Mutual. It is too much of a bother, and I am under the insured limit on all my accounts. I do hope they don't go under, but if they were this stupid with their underwriting, they will reap what they sow.
.
In Penny Lane there is a barber showing photographs
Of every head he's had the pleasure to have known,
And all the people that come and go
Stop and say hello.
On the corner is a banker with a motorcar,
The little children laugh at him behind his back.
And the banker never wears a mac
In the pouring rain, very strange.
Penny Lane is in my ears and in my eyes.
There beneath the blue suburban skies
I sit, and meanwhile back
In Penny Lane there is a fireman with an hourglass
And in his pocket is a portrait of the Queen.
He likes to keep his fire engine clean,
It's a clean machine.
Penny Lane is in my ears and in my eyes.
A four of fish and finger pies
In summer, meanwhile back
Behind the shelter in the middle of the roundabout
A pretty nurse is selling poppies from a tray
And though she feels as if she's in a play
She is anyway.
In Penny Lane the barber shaves another customer,
We see the banker sitting waiting for a trim.
And then the fireman rushes in
From the pouring rain, very strange.
Penny Lane is in my ears and in my eyes.
There beneath the blue suburban skies
I sit, and meanwhile back.
Penny Lane is in my ears and in my eyes.
There beneath the blue suburban skies,
Penny Lane.
Penny Lane - The Beatle
I don’t think that Washington Mutual will go under. However, considering both HELOC abuse such as this and its heavy overexpansion in the late Nineties, it’ll probably make a good target for another bank to assimilate it. In fact, the way things are going (considering that Wells Fargo is still buying radio advertising for home equity loans), I suspect a lot of apartment renters will see their management switch seven times in six months, as the banks that got the complexes due to default themselves go under and have their portfolios assumed by another bank that’s ready to die. It’s 1990 all over again.
“I don’t think that Washington Mutual will go under.”
You can never be too safe. That’s why I’ve pulled out 5 of my teeth to get to the gold fillings in case this situation worsens. Unfortunately, they were filled using amalgam and my dentist says it will cost about $5,000 to get the teeth replaced with implants. I offered him 5 Liberty Dollars, but he wouldn’t accept them. In another month the liberal fool will be begging me for 1 Liberty Dollar – I’ll pay him half that.
5000.00? Try 25,000.00 dollars to replace 5 teeth. Dental costs are so inflated!
Actually, there is a FAR greater chance that WaMu will go under than somebody taking it over.
No one, and I mean NO ONE, is going to take over a bank these days when that means you are adding billions and billions of questionable loans on your books.
Only way any bank is going to be taken over is if the government has deemed that the bank is too big to fail and arranges an orderly take over by greasing the wheels like they did with Bear Sterns.
The problem is no bank, even WaMu is big enough to get that kind of action from the government. Which is exactly why IndyMac was shut down instead of taken over.
You’re probably right, come to think of it: after all, the big bank mergers in the last twenty years mean that you have a huge gap between the giant banks and the little “Let’s put on a show!” banks that are opening all over the place. The little guys can’t afford to buy something as big as WaMu, and big ones like Wachovia and BofA have enough shit on their plates without getting another heaping helping from someone else.
Pay him in old silver coin instead. Maybe some pre-1940 liberty dimes!
WaMu is toast ... it’s just a matter of time.
I agree.
IR, I found many people who don’t understand the FIDC rules. Even the people who worked at my bank!
You mentioned that “I am under the insured limit on all my accounts.” I hope you know it’s NOT your accounts that are insured up to 100k, but only each depositOR… (SSN.. person.)
Each account you have open is NOT insured up to 100k. Only each person.
You can have multiple accounts under your name. But you are only insured up to 100k combined.
exactly what I was going to say.
each person @ each bank is insured up to 100K.
you can have 100K @ 4 different banks & be insured to 400K.
but if you have 4 different accounts @ the same bank, you are only insured to 100K
Well, there are some exceptions to this general rule.
All of an individual’s individual accounts combined are insured up to $100k.
However, you can get additional insurance coverage in the form of joint accounts.
Here’s an example of a married couple:
Husband has a total of $125,000 in individual accounts held in Husband’s name. (These individual accounts will be insured up to $100,000; $25,000 will be uninsured)
Wife has $110,000 in individual accounts held in Wife’s name. (These individual accounts will be insured up to $100k; $10k will be uninsured)
Husband and Wife hold a combined $250,000 as joint owners in joint accounts in both of their names. (These joint accounts will be insured up to $200k; $50,000 will be uninsured).
In this scenario, Husband and Wife would be insured up to $400k. $85k would be uninsured.
The FDIC has a calculator that you can plug in the amounts and types of all of your accounts at one institution to see how much of it will be covered.
http://www4.fdic.gov/EDIE/
Sorry…meant to also indicate that all of Husband and Wife’s accounts are at a single financial institution.
So it is possible for a couple to have up to $400,000 insured at a single bank.
Keep in mind that there is a $100,000 limit for an individual holding funds in a joint account.
So for example, if Husband owns a joint account with his kid (or with his mistress), because he’s already hit the $100,000 coverage limit in his joint account with his wife, the entire joint account with the kid or mistress will not be protected, even if the account is under $200,000…or even under $100,000.
I highly recommend using the FDIC’s calculator to confirm your coverage.
This is incorrect. The rule states 100k per SSN.
Unless you have more than one SSN, this is impossible. The only excepting are retirement accounts which allow 250k per SSN.
Joint Accounts:
These are deposit accounts owned by two or more people. If both owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $100,000.
If a couple has a joint checking account and a joint savings account at the same insured bank, each co-owner’s shares of the two accounts are added together and insured up to $100,000, providing up to $200,000 in coverage for the couple’s joint accounts.
Example: John and Mary have a $220,000 CD at an insured bank. Under FDIC rules, each person’s share of each joint account is considered equal unless otherwise stated in the bank’s records. John and Mary each own $110,000 in the joint account category, putting a total of $20,000 ($10,000 for each) over the insurance limit.
straight from the FDIC:
If you and your family have $100,000 or less in ALL of your deposit account"s” at the same insured bank, you do not need to worry about your insurance coverage—your deposits are fully insured.
I wouldn’t get change for a dollar at Washington Mutual.
Don’t short WaMu this time.
Wall St will kill this FAT pig three times.
So it about time for WaMu to rebound.
But if will fall again in next 4-5 months again.
At the end of game, WaMu is just another IndyMac.
$500K for a 2 bedroom, that backs up against a major road, that’s almost to corona…WTF.
Despite the cathedral ceilings, that’s a really compact house. I can’t figure out from the pictures how it’s all connected… Anyway $416/sq foot? No thank you.
It is however an excellent illustration of the price run-up of the bubble:
May 27, 1998 $177,500 —
Apr 16, 2001 $250,000 12.6%/yr
Jul 01, 2003 $410,000 25.1%/yr
Apr 02, 2004 $505,000 31.8%/yr
Oct 19, 2006 $645,000 10.1%/yr
Sold every couple years for near $100k gain or more. Yikes.
One could offer $250k for this. There is no backyard to speak of. It’s next to a fire zone, so you may have to evacuate on a regular basis. It’s relatively small, although not too bad for a small family so I’m not going to take size as a big minus. I think $250k is very fair looking at the pre-bubble prices and the fact it’s in an undesirable area with no yard.
Politrix- you must have missed it in the MLS description—but this house has a HUGE WRAP AROUND yard. That’s why it’s important to hire a knowledgable realtor when you sell your home, so that they can point out these important features!
Ha. Yea. That’s worth 3% of the sale price. Remembering to note the backyard. That’s some good realting there, Lou.
I’d say that the $250k is what it would be selling for today if we didn’t go thru WTF for the last 8 years. It’s a STARTER home. get married, have a kid and then upgrade when it’s time to have the next kid. Nowadays in Irvine these “starters” have become your home for raising 2-3 kids. Nobody has enough room for more than one kid so they turn half of their garage into a closet and use up the guest parking places with their other car. It’s pretty sad when starter homes prices are even a joke.
I have been selling real estate in Bend Oregon since the recession in the late 70s and early 80s. We may be headed there again! Fuel prices and inflation will be the main problems.
Please keep us informed on how things are going and your insights. I think what you have experienced over the years and prediction of future trends would be very valuable to us. Thx
P.S. Perhaps you can open a post in the forums, under Jim Johnson.
Since HELOC is a recourse loan, so the loss maybe smaller if they can hook a knife catcher soon.
I have not seen IPO commenting lately, but if he is around I would like to ask him the following: by comparison with earlier dates, it seems that the hitting-pending activity has slowed down since the news about IndyMac, FNM and FRE became a MSM main topic (late last week). Is this true, or maybe IPO is too busy to update his web page?
I also think that I am seeing a new wave of significant price reductions in ZipRealty listings for Irvine (SFH). Could this be related to the bad financial news of lately, or am I conditioning myself?
I was driving around on Sunday and saw what seemed to be the folks or 4 Rainstar vacating the property. Later I saw that the ZipRealty listing of the house had a new Foreclosure tag. Pretty sad.
I’d say someone will buy this house for $400K. To quote someone famous, “Stupid is what Stupid does”. That is pretty unbelievable, how much this house was used as an ATM. Your right, WAMU should get what it deserves. I don’t think they will fail though, they are too big of a consumer bank, like B of A. The govt. will find some way to bail them out. Because if a big consumer bank like WAMU fails, it will be panic in the streets.
Half a million bucks for an apartment sized shack in the hottest part of Irvine. Uhhh, better check that sticker price people, this isn’t Newport Beach.
Banks like WaMu are going to get their asses handed to them and I am going to laugh (and have to find a new free checking account at another bank of course
You are so smart. Amazing.
Do people really keep ~$100k in bank accounts? I guess I’m kinda crazy, but I’d rather have it somewhere that gives a decent return.
My husband and I ripped our money out the stock market earlier this year, then spread the $ around various banks. The interest is horrible (~3.5%) but is better than losing it on Wall Street. None of the account balances are higher than $95k so that we can collect a years worth of interest and still be completely insured. Eventually we’ll be 1st time buyers with this moola.
I realize our situation isn’t the usual scenerio, but yeah, there are people out there with mountains of cash.
Ironically, I don’t feel bad for anybody out there who lost their fortunes in Indymac. If you have large amounts of money like that then you should be aware of the FDIC rules. They were simply being complacent.
“I don’t feel bad for anybody out there who lost their fortunes in Indymac.”
Yeah, me neither. I think loss of a large chunk of your life savings is fair and just punishment for being complacent. Fortunately, people like garbler and grabasnorkel are never complacent, so there’s no need to worry about just desserts.
I don’t feel bad for the grandma that gets run down by the drunk driver either. Grandma’s clearly being too complacent.
WTF
1200 sf, far from the ocean, no lot.
jeez, it looks nice, but how much nicer than it looked in 1998?
why won’t this small house/condo fall back to ~$200k?
$200K sounds about the right value for this.
1998? Be realistic.
I would comp this one closely to the IAC detached apartments at Woodbury Place—- except this is a more desireable location. The cheapest those rent for is $2500. Using IR’s 160 formula, that would place this one right about $400k. Which sounds just about right in 2008.
And BTW, those who are saying this property is not desireable because its the “hottest part of Irvine” or “almost to Corona” clearly don’t understand much about the hierarchy of Irvine neighborhoods. Please realize that being 5 minutes from the surf is not exactly the primary factor for most who choose to buy in Irvine.
Using the realistic investor 100X multiplier you get $250,000.
That’s before the rents fall and they are already falling.
CK - I am curious about why people prefer this part of Irvine. I live in Newport, but consider this part of Irvine undesirable due in part to its distance from the ocean, but mostly because it is not that close to the major areas where people work (i.e., South Coast metro area and the Newport Center area - the areas in which most people I know work).
Although the distance in miles from these places isn’t too far, the street traffic can be pretty frustrating.
I’m not being sarcastic at all - I’d truly like to know why this area is a place people consider “better.”
Mel - primary reason for the premium is Canyon View Elem and Northwood HS. Both of these schools are very highly regarded even in the IUSD hierarchy. Northwood is even starting to overtake University as the HS of choice in many circles.
Don’t get me wrong…I work in South Coast Metro and live in Westpark because of the very reason you cite, and because the WP schools are perfectly fine. But to deny there is a premium attached to Northwood Pointe would be disingenous.
I live in Portola Springs and actually chose this part of Irvine ove the “closer to the water” locations for several reasons. One is that I like being close to the protected areas. The view is amazing. It is pretty much untouched land. You can look out there and pretend this land was never corrupted with packed housing. The rolling hills go on forever. Also we get less traffic congestion than the UCI area and “closer to the water” areas. I also feel this is more centrally located when it comes to traveling between north and south OC. We are close to the toll road. You just hop on and off. It takes 12 min to get to work using sidestreets - the office is near the Market Place. I laugh when people talk about it being “hotter” here. LOL! I am originally from Yorba Linda. It can be a good 10 degrees hotter there than here even in Portola Springs. I have also lived in the I.E. for 5 years and you don’t know what hot is until you have spent some summers there. We’ve got it great here in Irvine. Also I love the schools in this area. Westwood Basics Plus is awesome for my kids and I’m looking forward to Northwood H.S. Hope this helps. If you have any questions let me know.
I’m with you Mel. I’ve lived in Newport for years. I’m thinking of moving to Irvine now that I have a family. It seems that given the distance from John Wayne and the ocean, this area is desireable simply because it is relatively new. What happens in 20+ years when the newness fun factor wears out?
I’m still undecided as to what area of Irvine is “better.”
Value the comments.
I just can’t get over that they actually say this place has a “huge” yard. WTF?
I better go withdraw my $352.29 from WaMu….
I work right next to Wamu in Irvine. Holy ghost town. A couple years ago, they’d have these giant BBQ’s on that big lawn on campus and we’d walk over and partake. Everyone just assumed we were new hires. (Whoever said there’s no such thing as a free lunch didn’t know squat about social engineering.)
Now there’s entire sections of their campus that are deserted.
According to Mish, they have massive Alt-A exposure (WMALT 2007-0C1). If that’s the case, audios WAMU.
There’s no such thing as a free lunch, but the best lunches are the ones that somebody else pays for
So you’re a thief as well as a pseudo-intellectual. Nice.
What a cute little cottage…for half a million dollars. What kind of crack do they smoke in Irvine?
Irvine Renter,
What area are you talking about? Where in Northwood?
“I have written before about the English neighborhood in Northwood that is a particular favorite of mine.”
This location - backed up onto Portola - is pretty bad, IMO. Kind of a lunar landscape. I really think that the threat of developing the old base will keep housing values low in that part of Irvine for a while.
Huh? This place sits directly across Portola from the former avodcado orchards, which will become $1M+ Orchard Hills in the next 5 years. The only old bases in the area are the Tustin MCAS and El Toro, and those are both miles from this home—- and both of which are in some stage of residential development.
You mean the $1+ vacant lots in Orchard Hills in the next 5 years. Who is going to start a new development in Irvine? Who will loan them the money? Who will have any money left to buy anything? The housing crash has barely started, and stocks have even further to fall.
I have been into this same plan in this neighborhood. It is really small even for a single person. Second floor ceiling feels a bit low. The “loft” is really small and narrow. I think Ipop’s masterbedroom’s walk-in-closet is probably bigger. Not a lot of window on the first floor. The wrap-around yard does not give you any privacy because your front and side are open to the “back” of the house in front of you. This is a courtyard design in a shape of a “U”. Two at front, three in the back and this floor plan is in the back right corner. I will say the ambience of the entire neighborhood is nice. It reminds me of an English countryside
Notice that they have to tell you it is a stand-alone home, and not a duplex or a condo unit, since it’s so small.
$499K? They’re dreaming. Even at the now lofty $300/sf Irvine sellers get if they are lucky, this would be $360K. $250K sounds more realistic, and that will seem a high a year from now.
And get your money out of Washington Mutual. The IndyMac people are NOT having fun, and the FDIC won’t be able to cover very many more large bank failures.
Rediculous WTF pricing. HELLO!!! Northwood is not Turtle rock. I predict it will sell for $390-410K.