Irvine Housing Blog

I don’t know if you can count the foreign buyers out.

Bank of Japan says they are willing to buy ETFs and real estate investment trusts to do quantitative easing.
http://ftalphaville.ft.com/blog/2010/10/05/360571/qe-wars-japan-edition/

If one central bank is willing to do it, why not another? If I were China, buying American hard assets would look a lot
more appealing than buying US Treasuries.

“The worst part is that they probably don’t realize they did anything wrong. I imagine they think they were behaving responsibly”

How is that….

They took out a loan they knew they couldn’t ever pay back.  That’s not wrong.  If they couldn’t afford the payments, they shouldn’t have borrowed the money.

Did they spend their HELOC money on that atrocious furniture? This is one of the most badly decorated houses I’ve ever seen, topped only by the condo decorated in pink and white and gold you wrote about a couple of years back.

If they want to sell this place, they should empty it out and have it professionally staged.

How do we get a handle on the number of FCB’s there really are?  Anecdotally there appears to be a lot of them purchasing in Northwood.

I think realtors that hold the position prices are going up should be required to participate in the deal - meaning their commission should be deferred for a year - if prices go up they receive the commission, if they don’t they don’t - The buyer is putting their money on the line - if the realtor is going to take a position then they should as well - if not then they should keep their opinions neutral. Nice way of saying no one is interested in a position from someone with an incentive.

Sparky- I like that idea. I’m so sick of writing offers and having agents trying to convince me their listing is worth 5-10% more than the recents comps.

So what are these foreign cash buyers doing with the homes?  Are they buying the homes because they are moving to the US?  Buying them as 2nd homes for when they are here on business or vacation?  Or they buying the homes as investments?

Obviously there is no one answer, it depends on the buyer, but what seems to be the common reason?  I sort of put the options in decreasing order of stability.  If someone is bringing a big check to live in Irvine, then that sort of demand is good… somewhat limited because how many green cards are we really giving out?  But it is at least real demand.

If it is for a vacation or business home, that is a ok, at least it is not necessarily speculation, it is just a choice of what to do with their money, and as long as they use the house, it may be worth it to them to keep it even if prices or rents drop.

But for either renting or speculation, that is pretty weak… all it will take is a currency swing or seeing that appreciation isn’t there and they might start wanting to dump the asset and go.

It won’t be the first time the foreign buyers were late to the game and overpaid for hard assets.

Flyover country doesn’t have FCBs, so the concept is somewhat foreign to me.

Renting the mansion out to boarders ...

http://www.tampabay.com/features/humaninterest/mansion-proves-to-be-more-than-a-roof-over-their-heads/1125350

A while back you did some neighborhood profiles.  I’m wondering if you could udpate them or talk specifically about some neighborhoods such as Quaill Hill, Turlte Ridge, Northpark, etc.

HELOC Syndrome is the phenomena where those taking out mortgages leverage their indebtedness to obtain mortgage equity withdrawals which finally results in borrower bankruptcy.

Yen Carry Trade Syndrome is the phenomena where the ruling class in Japan encourages continual leveraging of borrowed funds to make global investments which finally results in a Zero Interest Rate Policy causing currency debasement and soaring commodity prices and eventual worldwide debt servitude.

Japan in a unilateral action, went nuclear in the currency war that started September 15, 2010, when it intervened in the currency markets and sold Yen.

Today, October 5, 2010, Japan took the ultimate action: In a unanimous vote, the Bank of Japan’s nine-member policy setting board set its interest rate at zero, in an attempt to stop the rise in its currency and to appease political dissent with ongoing deflation.

EconomicPolicy Journal relates that the Bank of Japan announced that it may buy J-Reits and J-ETFs as well, in an attempt to appease Japanese politicians who relate they have had enough of deflation.

Shaun Richards relates: “In addition it stated that it would look at establishing a temporary 5-trillion-yen ($60 billion) fund to purchase various financial assets such as government securities, commercial paper and corporate bonds in an attempt to stimulate the economy by lowering longer-term interest rates or what are more commonly called asset purchases or Quantitative Easing. The central bank will offer another 30 trillion yen ($359 billion) through its loan program.”

The Euro, FXE, jumped to 137.85; the Yen, FXY, rose to 118.91; and the US Dollar, $USD, fell lower to $77.81, as currency traders went long the EUR/JPY, which traded up to 115.08, seen in the chart of FXE:FXY, trading at 1.16, causing the Nikkei 226, ^N225, Japanese shares, EWJ, EZJ, as European shares, VGK, UPV, and the most speculative of assets, to rise strongly.

It is quite a stunning thing when a central bank goes to zero; the central bank of Japan in effect became the unitary, and sole provider of capital and money in Japan crowding out all bank lending.  It has in effect integrated banking and government into a state corporate combine; and effected a bloodless coup, establishing state corporatism, that is state corporate rule over the people of Japan.

The bank of Japan became Financial Regulator and Seignior, that is Credit Boss, overseeing money, lending, credit banking and, investment in Japan.

The currency traders and the central Bank of Japan, have “scorched the investment skies” and have taken the “global currency war”, to an all new level, with the result being the US Dollar, $USD, going down in flames. The Yen Dollar ETF, JYN, like the Yen, FXY, rose. 

And gold, $GOLD, became ever more, the sovereign currency and storehouse of investment wealth.