Login
Subscribe
Recent Comments
- zovall on A Review of The Field Tract at Lambert Ranch
- Lee Campbell on Uncovering the History of the Secret Garden
- Kelja on Uncovering the History of the Secret Garden
- Sylvia Walker on Irvine Housing by the Numbers - May 2012 Update
- Casual Observer on Irvine Housing by the Numbers - May 2012 Update
- Astute As It Comes on Open House Review: 35 Bella Rosa
- Sylvia Walker on Open House Review: 35 Bella Rosa
- Darin on Open House Review: 35 Bella Rosa
- Sylvia Walker on Investors Are Busy in Irvine's Low-End Housing Market
- Casual Observer on Investors Are Busy in Irvine's Low-End Housing Market
Recent Posts
- A Review of The Field Tract at Lambert Ranch
- Open House Review: 34 Redwood Tree Lane
- Uncovering the History of the Secret Garden
- Closed Sales from 5/10/2012-5/16/2012
- Open House Review: 52 Secret Garden
- Irvine Housing by the Numbers - May 2012 Update
- Paired Living with Privacy in Woodbridge
- Beige Ruth Sisters
- Closed Sales from 5/3/2012 to 5/9/2012
- Open House Review: 35 Bella Rosa
Categories
Archives
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- Rest of archives
Browse Homes
Irvine Homes
- Airport Area Homes
- El Camino Real Homes
- Northpark Homes
- Northwood Homes
- Oak Creek Homes
- Orangetree Homes
- Portola Springs Homes
- Quaill Hill Homes
- Rancho San Joaquin Homes
- Turtle Ridge Homes
- Turtle Rock Homes
- University Park
- University Town Center Homes
- West Irvine Homes
- Westpark Homes
- Woodbridge Homes
- Woodbury Homes
Newport Beach Homes
- Newport Coast Homes
- Crystal Cove Homes
- Corona Del Mar / Spyglass
- East Bluff / Harbor View Homes
- Lower Newport Bay / Balboa Island
- Balboa Peninsula Homes
- West Bay / Santa Ana Heights
- West Newport / Lido Homes
Other Cities
- Aliso Viejo Homes
- Anaheim Hills Homes
- Brea Homes
- Costa Mesa Homes
- Coto de Caza Homes
- Dana Point Homes
- Huntington Beach Homes
- Ladera Ranch Homes
- Laguna Beach Homes
- Laguna Hills Homes
- Laguna Niguel Homes
- Lake Forest Homes
- Mission Viejo Homes
- Orange Homes
- Rancho Santa Margarita Homes
- San Clemente Homes
- San Juan Capistrano Homes
- Santa Ana Homes
- Tustin Homes
- Villa Park Homes
- Yorba Linda Homes
Contact
.(JavaScript must be enabled to view this email address)
Foreclosures
Housing
- Talk Irvine
- IHB Forum Archive
- OC Housing News
- Coto Housing Blog
- Housing Kaboom
- Patrick.net
- Housing Chronicles
- Housing Doom
- Dr. Housing Bubble
- Manhattan Beach Confidential
- Burbed
- SoCal RE Bubble Crash
- Professor Piggington
- Real C'ville
- Westside Bubble
- Bubble Meter
- Portland Housing Blog
- Sacramento Land(ing)
- OC Register Blog
Econ/Finance/Other
- Calculated Risk
- The Big Picture
- Economist's View
- Mish's Blog
- Matrix
- Bakers' Stock
- ML-Implode
- Eschaton
- Best Mortgage Rates
- Crackerjack Finance
Latest REOs
- $199,900 :: 3125 Watermarke Pl, Irvine CA, 92612
- $349,900 :: 10 Greenleaf 16, Irvine CA, 92604
- $439,900 :: 61 Olivehurst, Irvine CA, 92602
- $889,900 :: 14 Upland, Irvine CA, 92602
- $429,900 :: 56 Great Lawn, Irvine CA, 92620
- $465,000 :: 212 Garden Gate Ln, Irvine CA, 92620
- $329,000 :: 1006 Terra Bella, Irvine CA, 92602
- $579,900 :: 8 Star Thistle, Irvine CA, 92604
- $750,000 :: 69 Lakeview 6, Irvine CA, 92604
- $499,900 :: 84 Deermont 51, Irvine CA, 92602
Perhaps some knife catcher might snatch this one up given it’s size and a pool. If I were them I’d drop the price another $100k and hope like hell it sells fast.
I hope somebody likes living in a prison camp. Houses on the outer edge of a sharp curve get the Searchlights (oops, I mean headlights) panning through their windows all night long. I guess it’s not such a big deal if you (and your entire family) work nights.
I’d ask for a $100,000 discount so I could “tastefully” board up all the front windows, maybe paint fake ones on the plywood. Oh, I’d need another $100,000 to erect a concrete and steel barrier to stop the speeding truck from ending up in my living room when they miss that curve.
Good observation. I’ll have to remember to avoid houses so situated.
They paneled the refrigerator with the cabinet panels… OMG. I’ve seen this before, but not usually with the stark white ice-cube thingy standing out and all the white edges so obvious.
At least from the renovations it sounds like they put some of this money back into the house. Hard to say how much. The former family room bedroom looks really depressing though.
To me, the pattern of borrowing looks like a series of credit card payoffs. The big jump in 2004 was probably to pay for some of the renovations. They were probably spending about $15,000 to $20,000 a year more than they were making and paying it off periodically. Many people who do not budget well fall behind $1,000 to $1,500 a month when unexpected bills come in. Of course, most people become more disciplined when they hit their credit limits. With the housing ATM, they never hit the credit limit, so they never needed to become financially disciplined. It looks like some bad habits are deeply ingrained. When their credit cards are cut off, and the housing ATM is tapped out, these people will need to make significant adjustments in their lifestyles and in the way they manage money. I hope they are prepared.
A couple years from now I’d like to see many books written about this period’s effect on the families caught-up in the mania. I’m interested in what they were thinking and how much beyond their means the were living. I’m also interested in their struggle to adjust after the boom.
IrvineRenter did you have a look at this weeks business week front cover, “the subprime wolves are back” please read and let us know your thoughts, I cant imagine the government is letting this happen.
The story can also be read at:
http://www.businessweek.com/magazine/content/08_48/b4110036448352.htm
I would especially be interested on IR’s take on this statement:
“The federal guarantee creates an incentive for banks to buy FHA loans and bundle them as securities to be sold to investors. This is happening as the securitization of subprime and conventional mortgages has largely ceased.”
Cessation of securitization of subprime loans I understand, but in his plan for avoiding future bubbles, IR had characterized securitization of conventional mortgages as a necessary part of mortgage funding, so I’m curious if the above statement is true, and if so, how it squares with that.
The frontage of this house (including the hideous use of the green paint) shows an equal lack of aesthetic sense, IMHO.
I agree with Forbear, $750K is not chunk change. It takes a substantial down payment plus a pretty good income to take on this much burden. And in the volatility of these economic times, no one feels that certain about the future. People are still living in the past where homes like this were selling for upwards to a million bucks.(Remember the $100K asking price spreads? How absurd was that?) So $750K seems like a bargain price but it is still way overpriced for the average working class stiff. This market has a long, long, long way to go to get over that kind of thinking.
(That’s “chump change”.)
$256k in 1991 = $407,068.19 in 2008 according to the BLS. Add to that 1991 was still a relatively high point in the last housing boom.
$410 - $82k down = $328k loan ~= $2500/mo
Thats about the right PITI for a couple making $100-120k/yr - which I find pretty doable in a good area of OC.
We still have quite a ways to go here folks.
the purchase, according to the post, was 1994, not 1991. the cpi jumped about 10% in those three years.
otherwise, agree with most everything else. CA was/is particularly dangerous just because the prices so badly outpaced the incomes. that’s not exactly a new insight or sentiment on this site, of course.
reading comprehension—
$256k in ‘94 = $374,107.21 in 2008.
94’s income multiplier ~= 4.9
4.7 is the historical OC median*, so even $374k for this house (HALF of its asking?!) is a tad high compared to historical norms.
* http://spreadsheets.google.com/pub?key=pGy0BQU1PZ9And2KJvInRJg
big diff between 374K and 408K in terms of tapping median incomes.
that’s probably an excellent guess for the range this bottoms at, though that may be as much as ten years away.
I remember when a suggestion of 374K for a house like this would result in an instant blog-flogging and horse laughter from the bulls. How the times have changed.
Useful reference, that spreadsheet—thanks for that. I wonder how the 2007 numbers would compare.
How many other toys besides those two jet skis were financed by the house?
Is this really HELOC abuse? It appears at least some (maybe more than some) was actually put back in the house through additions and improvements. In theory, that’s what HELOCs and HELs are for. (You know: Bank lends you money based on value of house, you improve said house, house now worth money. Everyone happy.)
I don’t know this neighborhood, but maybe the additions/changes actually added something to the house vis a vis the other houses in the neighborhood.
Now whether they had enough income to actually pay all these loans is a big issue, and speaks to common sense, but I would much rather see a house with HELOCs that went to the house instead of their boat.
If they had taken out only one HELOC or done only one small refinancing, I might think this was only spent on the house. However, the pattern here suggests most of this money was spent on other things.
Even if every last dime went back into the house it would still be abuse.
If at the end of every month the owner could not afford the payment it was abuse.
My parents bought in 1987 and their interest rate was in double digits. The only time they refinanced their home was when rates went down enough to make it worth their while.
They eventually refinanced into a 15 year fixed because of rate drops.
Every other repair or upgrade came out of “SAVINGS”. They added a whole new room without a HELOC. They saved and when they had enough they stated the addition.
There is a difference between need and want. These people did not need a new kitchen or granite counter tops. They wanted them.
To take on that much debt because you want something is abuse.
You forgot that some people will do a HELOC to REBUILD their home instead of MOVING.
Once the house is complete, then you refi the first and HELOC into a new first.
The end result is that you get the tax savings of Prop 13 and a new house.
This works for people who:
(a) like their neighboorhood.
(b) need/want a newer/bigger house.
We’re on our to way $140/sf.
And it still may not be enough. Meanwhile, Paulson’s making noises about returning to the trough for the rest of the money. I’m waiting to hear the sound of scaffolds, gallows, and guillotines being built on the Washington Mall.
That’s awesome!!
I see the WOT post has inspired you to greater heights of photoshop-art!
(or shown off all your best work so you can’t repeat it…) The dice-man billboard was my previous favorite
AZ’s Dictionary says
newer? ?/nu, nyu/ Show Spelled Pronunciation [noo-er, nyoo-er] adjective
–adjective 1. Used, etc.; having but lately come or been brought into being but too proud to say “used”.
–adjective 2. Metaphoric Lipstick smeared onto a pig as to divert attention from an object’s state of usedness.
-example 1.
Tony: This house rocks! It has newer granite counter tops! I will totally pay an extra 100K for that alone!
Bob: Wow Tony, do you really want to spend that much to buy a house that has used granite counter tops?
Tony: They are not “USED”, Bob - they are “newer”.
Bob: That’s B.S, Tony. Those counter-tops are “USED”. To say that they are “NEW” is just like taking a pig and smearing lipstick all over its mouth in order make you think it is pretty.
Tony: Now you are just being ridiculous, Bob. I didn’t say “NEW”! I said “NEWER”. There is a difference!
Bob: Yea, Tony! The difference is that one is “USED” and the other is “NOT USED”.
Tony: Yea! But the newer is only slightly used!
Bob: Then just keep it real and say “SLIGHTLY USED” rather than “NEWER”.
Tony: Because I am too much of a snobby little prick to buy anything that is “USED”! The seller is entitled to a handsome profit on his countertops so I will conjure up an Orwellian device in my mind to forget that they are used and have no regrets about paying a bloated price to the seller for his used countertops!
Bob: FINE, then don’t buy the house if you have a problem with used counter tops!
Tony: FINE!
Bob: FINE!
LOL!!
Nice card, AZDave. This price is basically 2005 pricing. As we can see, we are in the midst of an economic collapse, not in the middle of the real estate boom of 2005. They managed to do some nice remodeling—it looks good, but cheap—a good value, but they probably paid top dollar. The holidays are not a good time to be selling a house. I don’t know when prices will drop, but it is sure taking a long time. People seem to have enough money to ride this out.
Unfortunately, I think that the worst of the economic crisis is still in front of us.
The masses have not been out of the denial stage for very long. The presidential election has also complicated matters and given false hopes to many. We are in a transition period at the moment. A calm before the storm.
The real panic is not going to begin until our new president is in office and his policies fail to meet the instant-gratification expectations that have been placed on him.
About the same time, many of these Option-ARMs are going to be coming home to roost (and nobody in the media is even talking about these yet).
My prediction is that things get very bad toward the end of next year. So much money has been lost. Future generations are going to be paying for our granite countertops and our Escalades and even our Ipods now the Citi has been saved. And the vast majority of people do not care. It’s not very inspiring.
The way out of the problem is to start paying off debt. Start putting out the anti-debt ads on TV. Make it “not cool” to live in debt.
I think people would care if they felt they could do something about it. Unfortunately, even if you make a lot of money, understand finance, and work at a major bank, you have pretty limited ability to change the course of events. You can save a few people, but being an aware observer on the Titanic doesn’t mean you can help everyone.
I agree—we’re all powerless to control macroeconomics and the stupid monetary policies the government has foisted on us. People care, but can’t do anything to protect themselves, beyond hoarding money—which will be inflated away anyway.
IrvineRenter, are you sure that the song you should have used wasn’t the Sex Pistols’ “Great Rock ‘n Roll Swindle”?
IR: I enjoyed meeting you yesterday at Jumpin Jammin. You looked surprised to be recognized. But you shouldn’t be: those of us who come here often think of you as a local celebrity! Have a great Thanksgiving.
It was nice meeting you too. And yes, it did surprise me to be recognized in public. That is the first time it has happened. I hope you have a great Thanksgiving too.
IR—How do I get an autographed copy of your book? Now that you are a celebrity!
If you want one, email me, and we can work out the details.
I am surprised that no realtor has recognized him.
Interesting property, the area you have profiled is actually nice but many of the old houses are jazzed up using heloc’s. The lots are large with sufficient room for additions. 22 carver was sold a couple of months back. it was beautifully upgraded overall, a sun room was added and the 1500+ sq ft property became 1800 sqft. Zillow priced it based on the new sq ft and it sold for 660 or 670k. The owners were lucky to get it sold within a couple of months of listing(i think).
These days i have seen a couple of properties with inflated sq footage. houses that are actually 1600 sq ft are labelled as 1800 and Zillow automatically prices it higher…its not a scam but a nice way to get the these sites to increase the estimate of the house.
there’s a 30% gap between zillow and cyberhomes in some cases in cowan heights at the moment. zillow has been drinking some serious cyberkoolaid. i wonder if this is a conspiracy between listing agents and county tax officials?
Zillow is having a hard time chasing the market down. It’s obvious that the people who designed its value-approximation algorithm did not take declining market into the consideration.
It’s most likely making all kinds of assumptions including market-stability and prices-never-go-down logic, and probably the magical wine-bottle 4% per year appreciation entitlement, etc, etc.
They need to add in some adjustments to the 2000-2006 prices that apply corrections for the housing bubble. They also need to use income data to gauge the area.
It looks like all they do is simple comp compares without adjusting for the boom. It would be quite a shocker to people if they changed the algorithm to use income data and made assumptions like only spending 25% of income on housing.
Either way, their model is ridiculous and it does nothing but give sellers false-impressions of what their homes are worth.
Did anyone see that crazy stupid OC lady interview on Suze Orman’s show last night? They showed vidoe of her home, (looked like it was an over done, zeolous house in Quiall Hill. I mean she had plasma tv’s in the back yard. Right next yo her pond sized “swimming pool” LOL! I’m trying to find the video.
This lady had upgraded her mcmansion to the hilt. Had maxed out everything. Not to mention having over 200k in credit card debt.
Even though her husband’s income was 9k a month, they were still behind on their bills by 10k!
When Suze told her that she “owns” nothing, the lady scoffed at her!
Ha! Love Suze Orman. I have this episode recorded on my DVR but haven’t watched it yet. I’m looking forward to checking it out tonight. Thanks for the head’s up!
I remember walking into one of those homes in Quail Hill back in 06’ just before the real hit to the market and the agent said don’t come in unless you are interested we are asking 1.45 nothing less.
I laughed to myself and said you wish. Those high end homes with high mello roos and HOA’s are going to sit.
Another one priced closed to 2 million was a mortgage broker spilling out all kind of deals he could get for us on his house because he was moving up. I thought sure you are—you are getting out.
2 out door plasma TVs, diamonds on the credit cards, monthly income $9,000, monthly debit $19,000. All this and no brain anywhere in sight. If she had been on SNL nobody would have laughed because NOBODY is that dumb. Great clip if you can find it!
Hey, a couple of days ago, i think I saw an ad for your book on Calculated Risk. By the time I realized that I wanted to look at it, the ad was gone.
I have been running adwords ads for about 6 weeks now. Keep going back, and you will probably see it again.
They have a link to your blog, why not a link to your book?