Irvine Housing Blog

Do you really think this will be purchased with a 3.5% FHA loan?  I doubt it, it will be 20% down payment.  Do you have information that shows $500K 3BR in Irvine are being purchased with 3.5% FHA loans?  I doubt this is normal.

After all this, what fool would lend $500K at 5% for 30 years with only 3.5% down to these idiots? Oh yeah, the American taxpayer would.

With strategic defaults commonplace, market-based mortgage rates with 3.5% down should be more like 15% to reflect the risk. Mis-pricing assures that the crises will continue.

The median income of this zip code is $112K.

This is probably pretty close to the median home in Irvine.  It sold for $485K.

Looks like the median home is affordable to the median income.

This would put the price to income ratio for this area at 4.3.

This is very close to the price to income ratio of the 1990s bottom and interest rates are far less.

In 2009 this ratio was around 4.0, with 4.X% interest rates.

The photo you provide says: “We bought so much stuff ... had cosmetic surgery ... thank you Fannie Mae”.

Mortgage Equity Withdrawl has led to a surrel lifestyle.
 
Real Self Breat Implants reports that the average cost of for Orange County, CA (with 4 reviews provided) comes in at the national average of $6,600.

Dermatologists often refuse to accepts low end insurance policies and clients because they are all doing Botox and cosmetic surgery paid for by the FASB 157 Squatting Entitlement and abundant use of mortgage equity withdraw.

Here’s another kind of stimulus.

My landlord bought the condo I lease from him last year. He gets about $2,000 from me every month. He pretends to live in the unit so he can send his child to the local school since it is a good school district. Surprise, he stopped paying his mortgage…I’m guessing he is looking for a loan mod.

So, he’s getting $2,000 a month and paying nothing. He got the $8,000 tax credit. He doesn’t have to pay for private school. When will the media profile these types of scumbags? Instead, the media will always profile the cancer survivor and small business owner who is not paying his mortgage.

Why doesn’t the media profile someone like me? I make almost twice the median income in my town. I have $150,000 in savings for a downpayment on a house. I cannot afford a starter home in my town. My tax money goes to help my sociopathic landlords steal. If I stop paying the rent, I get evicted and my credit gets trashed even though my landlord is not paying on his obligation. WTF?

By the way, thanks for this blog IR. You are awesome.

This flip worked out flawlessly.
Bought on 3/17 for $385K, Sold 5/28/10 for $485K
$100K in 70days is a very nice return on your money.

The data suggests the second wave is coming. Rents in OC continue to decline.  Lower home prices are on the way, and a 50/50 chance of double dip recession.  Eurozone in trouble, China slowing, and more Gov. layoffs in CA. 

Just my .o2, but we could be entering a long period of deflation i.e., Japan.

Justice delayed is justice denied.

Continued govt sponsored theft by the banksters using the home squatters as cover.

The squatters benefits are massive vote purchases at $100 billion per years until the election is over.  The bankster bailout is at $3 trillion for 3 years, about 10 time more per year with no end in sight.  Time for those not receiving squatters benefit to rise up and vote all the Washington DC hacks out of office, but who to put into office that are not on WS payroll?  The CA RepublicRat primaries are examples of the choice between a liberal RINO and a more liberal WS RINO.  don’t get me started on the DemoRat primaries. Same old, same old with different names but the same end policies.

Interview with Robert Shiller….

http://money.cnn.com/2010/06/02/news/economy/shiller_housing_qa.fortune/index.htm?

excerpts:
Do the expanded roles of Fannie Mae and Freddie Mac in the mortgage market obscure the true state of the housing market?

The government has always used Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to subsidize housing. They buy and guarantee mortgages, which keeps rates low; and they have come to represent the enduring American value of home ownership.

Their increasingly large role in the mortgage market isn’t just making people wonder how much a mortgage should cost. People are increasingly asking why we subsidize home ownership anyway. What’s so good about owning a home that the government provides this function? Plus the limits on what are considered “conforming mortgages” have been raised so high that we’re subsidizing $900,000 McMansions. Why would we do that, and why would we want to teach people to expect extravagances to be subsidized?

It seems like after the past few years of bailouts, everyone wants the government to make life just like it was in 2006.

Perhaps, but this makes me worry about the way that people think about debt. There was a recent research paper that showed the moral obligation that people feel to pay their debts still exists, but that it’s weakening at the margins. Free markets and entrepreneurship depend on basic moral values like repayment, so this could be a problem that people are in conflict about this.

It seems to a person on the street that big bankers didn’t have to repay their debts because they were able to bribe the government to bail them out. This is making people very angry and could diminish that sense of moral responsibility that is so important for the success of the country. It also undermines the sense that in our society a rising tide should lift all boats.

When the poor are this unhappy it makes it politically impossible to support pro-growth policies because the voting population will not support any policy that threatens to leave some people behind and make others rich

Thanks for running these numbers IR. Believe it or not I was just thinking about this yesterday. How much of our “recovery”, specifically as consumers, has been subsidized by people no longer making loan payments (house or CC)?

Your $2B/mo in CA is a great estimate.

Problem is, I have no idea how much that is. Or what it relates to. I’m going to assume that very little of that “free money” is going to savings or investment. So is there some sort of monthly total for consumer spending, or some equivalent, to scale this $2B to?

I’ve never heard of this guy, but the tabloids are reporting on yet another celebrity who is choosing strategic default. The average Joe will undoubtedly become desensitized to the idea as this becomes more commonplace.

http://www.tmz.com/2010/06/03/chamillionaire-rapper-foreclosure-houston-texas-mansion

O.C. to lose 18,000 jobs in ‘10—Chapman

http://economy.freedomblogging.com/2010/06/03/o-c-to-lose-18000-jobs-in-10-chapman/33817/
——————————————————

My personal take: Considering the economic difficulties and the State’s state of affairs, I think home prices in Orange County and Irvine SHOULD be on average about 62% higher (1.62 multiplier), in nominal dollars, than they were at the last bottom in 1995. The 62% takes into consideration both inflation and the extra buying power due to the drop in interest rates from 7% to 5% on 30-year fixed mortgages.

I would even argue that prices SHOULD not even increase by 62% considering we are worse off economically than in the early 90’s.

Now, SHOULD does not mean WILL, especially when home prices are under the microscope of the policy makers… my 2 cents ($0.02)

400 days without paying your mortgage.  Must be sweet.  I would rent 2 Harleys and head for the mountains with my girl. But wait. Somebody (banks?) is keeping a tab on the amounts not being paid, right?

Does anyone else find it humorous that as a renter one would probably never cross the threshold of 60 days refusing to pay monthly rent(let alone 400 plus days) without getting drop-kicked Ray Guy style into the street by the loving landlord?

Say…why can’t banks show the same tolerance as landlords?  Oh that’s right. Bankers are supposed to be making loans and hitting the driving range by 3pm.

I don’t feel that bad about the squatters on the low end of the spectrum with a $50,000 mortgage.  It’s the multi-million squatters that bugs me.  There’s not much that can be done about the NPB with $3 million of HEW using a refinanced first, cause of the one action rule and membership in the club.  It’s likely that the multiple million HEW is being done on multiple properties by the club members.

Never miss an opportunity to reward the guilty of the club.

IrvineRenter,  You talk of moral hazzard with the borrowers and banks.  Morals.  It like talking about the hygiene of a wild boar.
Let’s see a graphes of
1. the time for FC sale (free ren) and principle $ and
2.  free rent time and % equility.

Like that the lower loan values will be FC quicker (4 months to NOD and 2 month for TS) and the muliple million club members will be over 2 years of free rent.

If I were a banker I would make it a point to foreclose as quickly as possible on at least a few mortgages and just let some of the older ones drag on longer.  When a family is looking at strategic default there is a large difference between getting to squat for free for 18months or rolling the dice on 33 months vs getting booted in the 3 month minimum.  The average is the same in both cases, but I’m guessing people would hesitate more in the second case.  Kicking a few people out as fast as possible would likely do a lot to convince people to keep paying if the money is there.

If one was to buy right now would you go with an FHA 3.5% down even with the 2.25% premium (which in some instances is financed too), or would it be better to put 20% down?
The low down payment seems to be a way of hedging your bet in case prices tank. If they did one could walk..err..I mean squat for a year or so and not lose much at all.
That’s not my intention but all these people working the system has got me thinking even though I could easily afford the 20% down on a good property.
Any thoughts?

My hat is off to the STRATERGIST! I can only hope more will become informed, and begin this process. Banks produce NOTHING! Now it’s their turn to get the shaft. This “holier than” BS, targeted toward the homeowner regarding morality! Now if that isn’t the pot calling the kettle. Don’t forget what caused the current crisis; banks, and insurance companies. The banks caused the meteoric streak in home prices. They were perfectly content collecting the interest that those hot air ballooned loans generated; now because of their greed, housing prices collapsed, yet they still feel justified in collecting interest payments based on bubble values? Well the “Strategic Defaulters” have called them - Thank You!

So true.  The guy I sit next to - who is delinquent on all debts - just bought a new iPhone.  Gotta have it, he said. 

Life is about running scams.  America is a nation of scammers.