Irvine Housing Blog

The cost of ownership is $2600 per month for a 2700 square foot home with a yard in Irvine?

Ring the bell !!!
If you still have a job and your income has increased you are now a winner.

If not, thanks for playing the game.  Better luck next time.

The house has seven bedrooms?  I guess if you have six kids this is the place for you.  Or maybe a frat house or a boarding house.  Rent out each bedroom for $500-800 a month and I guess you could make a profit.

I’m not sure why you are amazed that they paid $800k in 2004.  Redfin’s “Nearby Similar Sales” indicates it’s worth almost that much ($778,453) today.

We keep hearing about the coming foreclosure wave for months now (probably years), but yet the foreclosures are not here. What makes you think that this time it is different?

I am waiting to buy in Irvine/Tustin Ranch for a few years now, but the prices are still at unbelievable high levels. In 2007 I thought I am going to buy in 2008/2009, then in 2008 I thought I am going to buy at the end of 2009, and here I am in April 2010 and I haven’t bought yet because prices are still too high.

I guess my question is what is different this time than last time(s) when everybody was convinced that the foreclosure wave is forming, it is going to be huge and is hitting soon? Is it because the Fed has stopped buying MBS? Is it because that BofA guy said that BofA will increase foreclosures? Is it because HAMP/HAFA etc have failed? Is it because the tax credit is ending? Is it because of a combination of all these factors?

Is this another tactic by banks to increase foreclosures for 1-2 months to make the government launch another stupid program to save the nation?

Beds: 7
Baths: 3 full 1 part baths
Home size: 2,770 sq ft
($252 / sq ft)

Why go to Europe for a vacation when you can live in Irvine.  These European style bedrooms will take you to Europe with the tiny hotel room feeling.

Buy before your priced out of the market.
If the interest rates goes up, the sale price should go down and monthly mortgage payment will go up a little and RE taxes down.  I would rather leave with my debt settled than doing a walkaway with either loss downpayment or leaving fellow taxpayers holding the bag. 

Note: I wrote taxpayer and not the bank, because the banks are just transferring the bad loans to the Fed, who transferrs the bad loans to the taxpayers.

Scotty, Beam me up.

This is what I don’t understand:

When people stop paying their mortgages, who absorbs the month-to-month loss on the nonperforming loans?

If it’s the MBS investors, then won’t they demand the bank or loan servicers to foreclose?

If the loan is on the banks’ balance sheets, then why don’t we hear them loose more?  (maybe they’re making up the loss with profit from other business?)

Another question:

This house went into auction.  If nobody bid, then it belongs to the bank, right?  So how come it still belongs to these people (the owner)?

Side question for IR.

We own a strip mall and now own a small plot of land next to it. We want to expand the parking lot. Do you know any good contractors that do paving/parking lot work?

The lot is near USC.

Thanks in advance if you can help with this.

Greenspan Passes The Buck on Financial Crisis.

Blames “the Congress” for encouraging so much homeownership.

Claims that the Fed “warned” of subprime mortgages but apparently did nothing because “the Congress” would have “clamped down” on them.

Since when does the Federal Reserve answer to the Congress now?  I thought the whole reason for not auditing them was to preserve their Holier Than Thou Independence so they can make those politically unpopular decisions.

How can this little lemming take ZERO blame for himself?  Yes, the economy was destroyed by a flood of easy money rushed into the system that we created from thin air but it’s not our fault for not keeping the politicians sober.  It’s not our fault for pouring all that alcohol and getting everybody drunk as a skunk.  The drunks should have exercised sober thought!  Don’t blame the bartender!

What are the things Irvine city council members really concerns: Great park, Great park and Great park. In last two elections the spot light is Great park. Do not surprise if next election’s topic still Great park. Maybe city council members should ask Irvine company for next election theme so they know what to do for the election.

IMHO, the major problem now for Irvine is too many zone conversions with too many new 4th floors apartments allow to be built after the master plan is set (a beautiful back door strategy). This cause traffic congestion and over-clouded school.

The excuse of conversion being allowed is the demand. But I am afraid its just too much $$$$$ for Irvine company to take, I image from zone conversion, Irvine company may make more than $1 billion in last of few years and I am not sure what benefits council members can get from this.

IMHO, from now on, any zone conversion needs to be approved by majority of Irvine home owners. Otherwise, at least 50% of the amount money that IAC make from zone conversion should inject into Irvine school district and Irvine city.

With the exception of Northwood, The whole area East of the Santa Ana Fwy is a mess. 

They started to build homes alongside the “proposed” tollway back in ‘90 but the homeowners were not told that the nearest on ramp would require a toll… I remember seeing the model homes and the implication was that the toll would be to go “over the hill” not down to the Santa Ana Fwy (for which there is no connector road either…).

To make matters worse they went nuts since Y2K building homes up there.  Which even with Beckman HS is straining the school systems, huh?  The traffic sucks, the density is terrible, some of them are not even in Irvine, but they call themselves “West Irvine”... even though they are NE of Irvine… WTH.

IMHO, we should change their phone area code to the 909 (except for Northwood… is it still 714 out there???).

It’s gonna be carnage, prices will indeed come down to earth, but you know what?  By the time we see carnage in West Irvine it will be Armageddon in the rest of the area.

Jeannine Aversa, AP Economics Writer, On Wednesday April 7, 2010, 3:07 pm
WASHINGTON (AP)—A Federal Reserve official says the Fed should start boosting interest rates “soon,” warning that delay could eventually unleash inflation. He does not specify when it should act.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, in a speech in New Mexico raises concerns about leaving rates at record lows for too long. He suggests the Fed soon start moving its key rate—now near zero—toward 1 percent.

When rate increases are delayed, “the outcome too often is greater inflation, significant credit and market imbalances, and an eventual financial crisis,” he says.

Hoenig, a member of the Fed’s interest-rate setting committee, opposed the committee’s pledge at its past two meetings to hold rates at record lows for an “extended period.”

The utter unfairness and morale hazard is painful to watch. If I were to stop making mortgage payments, my servicer would ask me politely to continue, and if I failed to comply, they would be forced to ask me politely again. If one of my kids skipped their rent, the sherrif would be assisting them to the street.Great post SGIP!

Very well written, thank you. My favorite line (which I might have to borrow) “as I observed the housing bubble go from OMG to WTF”

I think the shadow inventory nationwide is much larger than anybody has considered and we might get your ‘How Star Wars IV Should Have Ended’ ending.

” Greenspan: ‘I was right 70% of the time’ – CNNMoney.com “

Like saying “I was right 1 out of 9 times having my neighbor’s kids playing Russian Roulette.” 

Did he have a significant amount of his money at risk?

SGIP, very funny but educational.  Loan modification to back-end the payments.  $1430 premod to $838 postmod for x years.  Are they modifying the loans into 2 loans one for a trustee sale on the primary loan and a second loan to go after the other assess later?  If so, the unsuspecting home owners are walking into a TRAP.  Like Esau selling his long-term birthright for a quick meal.  But at least the “owner” can pay some rent and squat longer.  The banks can unload the non-preforming loan the Fed.  Welcome to the dark side.

Thanks for your articles; they are consistently insightful; I do have two comments.

You relate: “There is a reason we have a foreclosure process: when people stop paying, we need to get them out of the property and recycle it to someone who will pay for it”. My reply: the foreclosure process will not make properties available at an affordable price; so the homes will go vacant; statistics show that nationwide vacancy is at 13%; it will be going up.

And you relate: ” I reasoned we would have an orderly foreclosure process that would bring must-sell inventory to the market and lower prices. It never occurred to me that lenders would simply not foreclose on people and allow borrowers to squat. It didn’t seem possible. I am not terribly surprised by what lenders have done, but I don’t see how it solved their problem.”

My reply is that not foreclosing solved a very big problem that being a loss on the income statement reducing their balance sheet capital. Under the interpretation of FASB, the banks have been able to carry the loans at mark to fantasy, not mark to market. In the last year the Ben Bernanke Portfolio, that is Financial Revenue Shares, RWW, ETF increased 96%; today it turned down 0.4% as the stock market has now turned from Bull to Bear now that the Fed’s Quantative Easing has ended and a new financial quarter begun and Moody’s Downgraded $1.9 Trillion Of Subprime RMBS. 

So yes, now, the Banks, as you have reported will start foreclosing and short selling; but the economic downdraft that is coming is going to be another Great Depression; and Los Angeles is going to be an epicenter of economic desolation as its debt was downgraded just today; the net result is going to be very little house buying and a lot of empty houses.

I know that a lot of OC residents don’t care to hear about prices in other areas of the country, and compare any place between the coasts to Detroit…

But prices are at levels where buying can make sense in other parts of the country.

I’ve been following this blog for a couple years now to give me some insight about what the economy was likely going to do.  If I just looked real estate in OC, there is NO WAY I could be willing to buy a house right now.

Fortunately I am not in CA. I just bought a 2800 sq foot house on 1/3 of an acre, 3 bedroom 2 full, 2 1/2 baths, 5 car garage, covered porch, full basement.  granite, stainless steel, and ceramic kitchen, built in 1995.  Cost was less than $118 per square foot.  That is less than the construction price alone.

This is not in Detroit, but in Columbus OH.  Which is a bit grey in the winters for my preference, but it is certainly not Fargo cold.  We have a diversified job base, a major university, good airport, reasonable crime rate and schools, and a large number of bike paths, parks, and resevoirs. 

A spike in interest rates would hit the value of my new house, but it can’t realistically reduce it too much when it already costs less than replacement value even ignoring the cost of the land.

I can’t see increased foreclosures in the big 5 really hurting my values in the long run, so bring it on.  The sooner we work our way through that mess the better.  The only reason I like extend and pretend is that it helps squeeze a little more money out of the people who overextended themselves, which reduces the cost to banks and taxpayers.

Totally unrelated AND off topic but IR, I noticed you were interested in this on the weekend: Saturn’s Strange Hexagon Recreated in the Lab.  IR Feel free to delete this note.