Irvine Housing Blog

Holy…...  415 square feet?  That’s just insane!  Who would voluntarily buy and live in a place like this?  Oh, that’s right… Irvine is ‘different’.
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This may be a great place to buy for a storage box. IR could you run the calcs. to see what the GRM is when compared to the “public storage” units offered in Irvine.

Ok. This is cracked. While the unit may be coming closer to rental prices, it is still way over priced. Lets say you tracked the traditional increase in housing due to inflation. I am not great at math and maybe someone here could do real numbers, but if I estimate around 3% inflation for 10 years, I will round it up to $2000 per year, a unit like this would have likley increased in value to around $78,000….more than half of the current offering price.  Am I wrong on this?

Even the Irvine target per SF price of $300 generates a price of $124,500.

Prisoners at least don’t have to pay taxes, HOA fees and Mello Roos. What does that run for this puppy?

A thousand clams rents you a 415 square foot crap-shack.

No wonder people are leaving town.

That’s just insane.  Wow.

That is also one of the reasons it is difficult to compare home prices in Irvine to other areas of the country. Rents here are very high, and they do support home sales prices higher than elsewhere—just not as high as they are now.

News flash:

If something looks like an apartment….. it is an apartment !?!?

Sounds crazy right?

Condos will be worth dirt at the bottom.  Nobody in their right mind should put money down and buy a condo…that is exactly like an apartment but with higher monthly payments. 

A Single Family Home has some emotional and self esteem value to it….( I know that is pseudo realtor talk, but let’s face it there is some truth to it ) However… a condo that looks like an apartment?  That’s a simple and cold decision, you should never pay more for an apartment.

When condos are worth dirt the whole “trade up” market falls apart.
The house of cards falls apart.

1.03^10*57,500=77,275.  You slightly overestimated the inflation-adjusted cost.  If you use 5% annual increases—which might be more fair, given rent inflation, etc.—it’s $93,661.  Round up for an asking price and $99,500 seems about right.  At that price, it wouldn’t be too bad to buy for your kid who is a UCI grad student, right?

The condo market relies on scarcity or the illusion of scarcity.  That’s why NYC and Es Eff haven’t been hit much, yet.  Once buyers lose the belief that they need to buy now, or be left out, then you’re left with rental value—and that will come to NYC and Es Eff, too. 

One other difference with Single Family Homes is that you actually own land.  The land has an intrinsic value separate from the house.

The NYC condo market always baffles me.  You could be right, but I would be shocked if that condo market fell apart.  I think there is legitimate scarcity in NYC.

However a studio condo / apartment in Orange County?  WTF?

This box is worthless as a purchase for a place to live. Even a little old lady on SS would not want to deal with someone living above her in a place built in 1977. Meaning paper thin walls.

The assoc dues of $196 will also be a turn-off to many single people on a budget. Thats too much to pay for “meandering streams”.

For anyone thinking as buying this as an investment - dont! Sorry to those who have to read what I wrote before but I must repeat it here: Never buy any place that you yourself would not live in because someday you might have to.

I think its worth about 80k if some sucker wants to buy it. But if you can only afford that amount then you might as well rent until your situation improves.

There is a psychological value to land associated with a detached home, but there is no intrinsic value.

http://www.irvinehousingblog.com/2007/07/16/land-value-101/

Land is a commodity, and land approved for residential house construction is a commodity market for lots.

Maybe a little off topic, but IrvineRenter’s copy editing critique reminds me of when a friend of mine told me that her real estate person included “laundry shoot” in the list of features in her home.

My storage unit runs me $200/month for 150sf.  This isn’t quite cheap enough yet to buy it for that…

Unfortunately this place is nowhere near UCI.  It’s alarmingly close to the Groves though, Irvine’s retirement mobile home park,

No mello roos on this ancient place.  Taxes at list would be around $150/month.  Interestingly, the 2005 supplemental tax paid is unpaid still.

On a side note, I found another big auction for homes coming up.  Only one Irvine property, a 1500sf condo:

http://www.hudsonandmarshall.com/calendar.asp

scarcity in sf is no illusion.  it’s a tiny market where no more than a dozen units sell in a given day, and only half of those are in a desirable part of town (i.e. north of 280 and east of 19th ave).  also, unlike irvine/tustin, there is no el toro just waiting to dump another fifty thousand units onto the market.  the same goes for manhattan - building is extremely expensive in every way.

i think those are considered standard in texas.

“pull!”....  *boom*

“rinse!”

$433/sqft is hardly a “deal” when there is inventory out there in Irvine selling for sub $300/sqft

there IS intrinsic value to an SFR with a view of the ocean in a wealthy part of the world, or to a variety of other prestige locations, e.g., nob hill in SF, mulholland in LA, midwtown manhattan, georgetown in DC, the gold coast in chicago, etc.  of course, these are all tiny slivers of the larger market, but the existence of millions of gallons of grape juice doesn’t mean that there’s no such thing as fine wine.

have these values been wildly inflated as part of the general credit bubble?  of course.  but people will always pay the premium for these addresses, and this premium will always absorb inflation in the long term.

It’ll be interesting to watch those markets as more and more corporations decide to home base their employees instead of maintaining large towers.  IBM, Bestbuy, Cisco, etc.  all moving more and more people home everyday.

i don’t think SF’s value is contingent upon the proximity of those jobs in the slightest - oracle, hp, cisco and google’s HQs have always been very long hauls down the penninsula.  sf proper has consistently lost thousands of jobs over the past 20 years in the city proper (chevron, many finance jobs, etc), and it makes no difference to the value of a haight victorian.

GRM of 100-120 puts the price at $100-125K.

I find it interesting that the cheapest property in Irvine, while tiny, is not a complete shithole. I would not want to live there now, but when I was in college it would have been fine (I’m talking about the quality of the place, not the price!)

I think in most cities the cheapest properties are going to be places where I would never, ever, want to live. Must be an indication of just how wealthy Irvine is.

This is a discussion I have a lot of interest in.

SF and NYC might fall some, but I don’t think they will fall in line with even the inflated rents in those metro markets.

The OC is definitely not SF or NYC.  However the OC is also not downtown Indianapolis or Cleveland. 

Is there a middle ground?  To me this is highly debatable and an interesting conversation.  Is this OC Market of the 80s and 90s comparable to todays OC market?  It’s clear the OC is no longer orange groves.

San Francisco has increasingly become a bedroom community, more and more people who are choosing to live there, commute out of the city. Its residential population growth has been kinda flat. Someone tell that to the builders of three residential skyscrapers within 2 blocks of my office, one of which is to be the highest west of Chicago…

Office space is relatively inexpensive. During the tech boom office rents got ridiculous; then they crashed; now they’re something resembling ‘normal’ but who can tell anymore.

This.

This says more about Irvanites core values.  If Irvine was such a great city, then Irvine should have some minimum unit size zoning requirements.  Was this really sold as a condo from day 1 or was it an apartment conversion?  The former mayor of HB went to prision for illegal condo conversions.

Oh and no dishwasher (couldn’t fit it in).  If you buy this you have to wash your own dishes!

More precisely I am interested in how the distribution of wealth in a region (annual income distribution and savings) combined with housing supply impacts the price to income ratio of a region.

Have there been studies on this?

I would rather live in a diverse city with many types of housing rather than one which was exclusively McMansions to price out the undesirables.

Square footage prices vary across size ranges.  You can’t compare the price per sf on a 400sf unit with the price per sf on for instance a 2000sf unit.  Price per sf is not linear.  It goes up the smaller the unit size is.  Yes, things are selling for $300 per sf but not under 1000sf, likely probably not under 2000sf either…

This placed probably peaked in value at $225-250K.  It’s off by around the same 20% that other places have fallen.

Certain metropolitan areas are unique because they often have excess job creation causing imbalances with their housing supply. This has certainly been the case in NYC, but as was pointed out above, SF has been shedding jobs and population growth is flat. If the supply of housing is permanently capped by lack of available land and stringent zoning regulations, prices rise to the ability of incomes to support them, and eventually the pressures on income harm businesses and stop the cycle. At some point, job growth is slowed because of the cost of housing. SF is a perfect example. When businesses have to pay someone $200K a year to afford to live in the city, it makes more sense for them to move their operations out of town where they can pay someone considerably less. Now while all of this is going on, the false believe in perpetually appreciating real estate sets in and causes house prices to be bid up beyond the ability of income to support prices. At some point (which appears to be now) prices must fall back in line with incomes.

How about when you compare 2 houses, one with more land than the other?

IR,

I agree, prices will drop to fall in line with incomes.

But how does the distribution of income impact the housing equation and the price to income bottom?  I also think the supply of SFRs is a factor.

Do you think baseline price to income ratios can grow over time in a desirable area (I think this qualifies) if the rich get richer and the poor poorer?

I don’t claim to know the answer to this; but I’m curious about what you think….have you read any studies that discuss this issue?

Doesn’t look like there’s room for a microwave either.

If by “moving operations out of town” you must mean leaving the area entirely, because just like in OC, people will commute pretty far. Employers don’t compensate people for the cost of living, they pay them what they need to attract talent. Metropolitan areas benefit from a ‘network effect’, when there’s already a pool of talent available, it’s arguably more beneficial that relocating to a cheaper location but which you’ll have a hard time finding talented people to fill the jobs.

Wikipedia Foundation just moved from a cheap area of Florida to the Bay Area for this very reason.

There have been studies on this issue, but they are inconclusive because the price to income ratio fluctuates so much based on irrational exuberance (to quote Robert Shiller who was quoting Alan Greenspan.)

Anecdotally, I would look at places like Santa Barbara or Carmel where house prices are inflated well beyond local incomes due to the presence of old money and wealthier retirees. If you have a higher than average percentage of your population with large amounts of cash, you can get higher house prices. However, these places are the exception rather than the rule.

You can also look at the Japanese experience where they really do have a lack of available space causing pressures in their housing market. They built an enormous real estate bubble, and despite the shortage of land and dwelling units, real estate prices dropped by 2/3 over about 15 years. The Japanese proved that no amount of savings or wealth can support a housing market when prices become untethered from incomes.

My college dorm room was more spacious and nicer than this place.
Even if I’d gone to UCI, don’t think I’d want my parents buying this for me to live in. An Avenue One high rise condo maybe

(warning, sarcasm below)
400 sq. ft.?  If you want a spacious 20 x 20 like Hiro Protagonist, why not just rent a storage spot?  Be less than $300 per month, never gets too hot or too cold here ....

Housing prices in SF are high because rental prices are high. I lived (rented) on Nob Hill for a year. Just finding an apartment during the tech boom was considered lucky, it didn’t matter what the rent was. When we moved out after one year, the rent went up over 25%.

Anyway, the point is, that rents and housing track each other because they are subject to the same supply and demand pressures. (there are some slight differences in how they go up/down due to tax policies, but I’ll get to that later). That is why looking at the GRM is a good yard stick to determine housing prices if you want to be a value investor. However, it is important that the rent and the house price are for comparable properties. Just like in the stock market, one shouldn’t confuse the PE ratio for a small tech stock with say an IBM or Target.

Given that you find comparable properties, the GRM to use should probably be different based on the expectation of how long the typical owner will own that piece of property. This is why I favor smaller GRM’s (130) for condo’s and much larger GRM’s for houses (200).

So why don’t prices fall as fast in Turtle Rock as they are in Ladera Ranch and why don’t prices fall as fast in the RE market as in stocks? My theory is that there are factors that push people when they sell one house to move into another. These could be tax issues (if you have more than 500K capital gain on the sale), or simply the inability to rent a place that everyone in the family will be happy with in that neighborhood. So, if you have a large supply that people are not forced to sell (e.g. Turtle Rock and not Ladera Ranch) and you are still generating demand (from people having to move from other areas), the mismatch in supply and demand is not enough to force rapid decreases in the selling price. However, as long as the inventory levels continue to grow, there will be more and more pressure to lower prices, even in neighborhoods like Turtle Rock. It may take more time, but it will happen.

The flight of businesses from urban cores to suburban fringes is well documented. Businesses can move their operations and save 40% on their rent while maintaining their employment base. This happens all the time. This is how Irvine and OC got an employment base to begin with. We were the fringe market to LA 30 years ago. These businesses also find it cheaper to attract new talent because people can find more affordable housing within a reasonable commute from the new employment center. For instance, a business moving out of LA to OC 20 years ago could still keep their LA based employees, and also attract new employees who might find less expensive housing in San Clemente. Not every business can do this, but most can.

Why?

I never understand comments like this.

I would much rather live where in a city with mostly large nice houses than one with a mix of trailers, ramshackle houses, and such.

I don’t know what the intent of your comment was but I personally don’t have a problem separating my family from the “undesirables”.

Was that sarcasm? My sarcasm meter’s not reliable.

I don’t like the water feature at that complex, no fish.  If they had made it into a koi pond then I might have considered it years ago.

Back in late 1990s I was looking at this studio condo in MV for $85k.  I wanted to buy it just for the lake pass, so I can go trout fishing.  As long as the rental income breaks even with the mortgage, I can care less how big/small the place was, as long as my tenant understands that I get to keep the lake pass and not him/her.  ;p

There seems to be a smaller rent that goes like this: you rent out a room in a house the buyer can’t really afford.
Heard of $500/mo. or $800/mo. to rent a room in various places.

surfing in newport - per the Turtle Rock vs. Ladera fall rates ... there is the “plankton theory”

http://latimesblogs.latimes.com/laland/2007/04/the_bill_gross_.html

Yes, that works too. But I picked Ladera Ranch and Turtle Rock as examples because both have a lot of homes in the > 1 million dollar range. Ladera Ranch is way off from the peak while Turtle Rock is not.

Regarding the high-rise condo, yes.
The dorm room was nice and spacious, unfortunately had to share it with another person.
My roommate and I would hang a tie on the outside door handle to indicate that we were with a female, the collegiate version of a do not disturb sign.

Undesirables to Irvinites are those who can’t afford to live in McMansions - students, young couples, singles, seniors… I’ve got a neighbor who is a teacher, another is a firefighter, my across the street neighbors worked for the newspaper, but they sold their house to someone who is in the Coast Guard. Not everyone has an MBA or a lawyer and zoning these people out of sight is to society’s detriment.

And their homes are certainly not ramshackle. Our neighborhood is beautiful, but in Irvine terms, it would be sniffed at.

Wow, big drop in mortgage rates today…  5.125% with zero points and low closing costs on a 30-year fixed conventional.  10-year yield is way down again today so 5.0% with zero points might be doable tomorrow.  There is a huge spread between jumbos and their conventional counterparts.  Looks like over a full point.

Adjustables took an even bigger dip.  I am looking at up to 7/1 I/O conventionals all under 5%.  3/1 I/O might be 4.50% tomorrow.

For all you homeowners out there, it’s time to take advantage and refi while the stock market is getting pounded.

If this sale is close to rental equivalence, that would indicate to me that rentals are currently priced too high.

Surfing in Newport,

I like your analysis.

Since there are always knife catchers in the market, there will always be some inventory absorption. If areas like Turtle Rock do not show a great deal of mortgage stress (like Ladera Ranch is experiencing,) the supply entering the market may be absorbed by the available knife catchers preventing that neighborhood from reaching parity with rents. This phenomenon may occur in the most desirable neighborhoods because the few knife catchers will be concentrated there.

Realistically, rather than seeing a blanket GRM over an entire area, you will see lower GRMs in undesirable areas and higher GRMs in the desirable ones just as you described. I hope that doesn’t come across as an endorsement of knife catching as the only way to get into a nice neighborhood. I still think this debacle is so large that every neighborhood will get knocked down to at least rental parity and many will go much lower.

Rent control and restrictions on new building limit supply in NYC, which artificially inflates prices.

I am with ex-tangelo on this one. I like a diverse neighborhood. Not that I want criminals and vagrants where I live, but seeing people in all walks of life and from varied cultures is refreshing and interesting.

The big difference between now and 2003 is the number of people who will be able to qualify for the mortgage. Very low rates should stimulate some buying, but with so few qualifying and so much inventory, it may stimulate a tiny bounce but the crushing weight of inventory will stifle any rally. Also, the spread to jumbos will continue to hurt OC. Since jumbos are concentrated in bubble markets experiencing very high default rates, I would not be surprised if this spread stays high to compensate for the increased risk.

That works, because no one in college would ever steal a tie.

I understand now, I thought you were going off in some “I have (insert favorite downtrodden race here) friends” direction.

You are correct; not everyone has an MBA or is a lawyer and thank goodness for that!

IR,

Not sure I would call it knife catching…maybe knife passing

I wasn’t arguing for different GRM’s based on neighborhoods, only that you are careful that you base GRM’s on comparable properties. Different GRM’s reflect factoring in the transaction cost for buying and selling property over different number of years. You could get different GRM’s in different neighborhoods based on desirability, but I think that is captured in how long you expect to live in the house. If you think desirable neighborhoods represent a finite supply (schools, coastal location, etc…), then you might factor in prices rising greater than inflation…which I think is your point, so in that case it does make sense…but even that is somewhat constrained by the distribution of wealth. Not sure how to factor that in correctly without making some wild assumptions.

For example in the nice family neighborhood of Harbor View Homes in Newport Beach, you could get original in 2001 for ~750K, now it’s 1.5M. In 2001 you could find rentals for $3,000, now you find rentals for $3,900 (and still vacant after 1 month). The $3,900 rental is actually comparable to houses selling for 1.7M. So, in 2001 the GRM was 250, now it’s 435…something has got to give.

The obvious explanation is that Ladera Ranch is recent (construction started in 1999 according to Wikipedia) and Turtle Rock is much older.  So obviously, Turtle Rock has more residents that bought at lower prices and have more conservative mortgages than Ladera Ranch residents.

So you’d expect the credit crunch to hit Ladera Ranch harder, cause more sales, and drive the prices down there first.

Although, the asking prices in Turtle Ridge are still so high…

I don’t see how this could not be a conversion. 

I used to live in a historic neighborhood that had only recently become fashinable again - in the 60s and 70s some of the old houses were torn down for apartments. Some nice apts, some crapola.  Interestingly, part of the reason the area became attractive again (aside from location and historic housing stock) was all the cool shops, which would never have survived without the denisity provided by the renters.  So - benefits of diverse neighborhoods even when you extend that to the dreaded renter class.

WASHINGTON (Reuters) - The chairman of the Senate Banking Committee is working on a plan to set up a company to buy distressed home loans at currently discounted values and help fund new mortgages.

In a letter to Senate Majority Leader Harry Reid released on Wednesday, Sen. Christopher Dodd said he envisioned an entity with an initial capitalization of $10 billion to $20 billion that would buy distressed mortgages and pass on the “discounts ... to homeowners in the form of new, lower-balance mortgages.”

Those new mortgages would either be insured by the Federal Housing Administration or backed by Fannie Mae and Freddie Mac, he said, two government-sponsored enterprises which buy mortgages.

“The difference between the old mortgage and the new mortgage would be sufficient, after initial capitalization, to fund the program and cover possible losses,” the Connecticut Democrat said in the letter.

“The new mortgages would be new 30-year fixed-rate mortgages, ensuring long-term stability for homeowners and housing market,” he added.

Dodd’s proposal is aimed at helping millions of Americans facing the risk of foreclosure.

This should help in reducing the number of foreclosures.  The banks have written down the value of the loans.  The Government buys the loan for the discounted value, and then gives the homeowner a new loan at the discounted amount.

I think his point is less about market support from interest rates, and more about the fact that homeowners have an opportunity to refi at extremely low overall rates.  You can do so with Countrywide, who will now allow you to refi repeatedly (sp?) at no additional costs should rates continue to fall (and they will).

I do believe your point about the lack of refinancing capabilities is an important one.  10% down/equity is a pretty big number for any homeowner who bought at or even near the peak.

Why do people like Irvine so much?  People with families I would assume (schools? safety?).  I have some friends who live down there (for work) and they are bored senseless; always coming up to Los Angeles on the weekends.

I’ve been seeing asking rents come down up here, and West Los Angeles makes Irvine look cheap.  Is the same thing happening down there?

Thank God my taxes are going to help distressed FBs.  Go USA!

What a f*cked country we live in.

I was an original buyer of a one bedroon unit here, purchased in Oct 1978.  I paid $45,995.  Sold a year later for $70,000.  Thought I was a real tycoon.
This was originally constructed as an apartment project and was converted at completion.
It has absolutely NO sound proofing.  When the downstairs unit closes the kitchen cabinets, it reverberates throughout the upstairs unit.  It is frankly uninhabitable.  If the downstairs unit engages in any normal activity, the adjoining unit suffers.  The Irvine cops spent a lot of time mediating noise complaints among neighbors.  I often wonder what the Irvine police stats are for noise complaints there in comparison of other dense developments.  I bet its the winner, hands down.

I don’t know…

Don’t like this at all…

This gives the homeowner speculators and banks a free ride..  the banks lose a little money but get to make it up on fee’s and tax writeoff’s and homeowners get to stay in their homes w lower payments w no penalty, not even a hit on their credit.

I don’t think it will fly w the public, morally you can’t reward bad behavior.

I’d rather see Mr. Mozillo be convicted of fraud and in Federal prision.

Exactly, with effective zoning laws this place would not have been allowed to convert to a condo because it wouldn’t have met minimum size reqirements and stayed a studio apartment.

Yes, these interest rates are a great opportunity for homeowners with good credit to refinance and lock in a 30-year fixed. Anyone contemplating staying through the downturn should take advantage.

The price difference between Harbor View, TRidge, TR and Ladera Ranch highlight three important factors on what will be the bottom price (IMHO).

(1) The close closer to the ocean, the higher the price.  Homes near the ocean always fetch more money per square foot because the weather is much nicer and there’s no smog.  The area is more desirable.

(2) New construction ( since 2001 ) was overpriced to begin with when compared with existing homes.  So new construction has a lot farther to drop.  At some point, “new” and “old” construction reaches price parity, specially when the “old” construction is well maintained and has larger lots.  We’re not talking East LA here, we’re talking OC and Coastal LA.

(3) Price pressure and supply on new areas is much greater since a greater percentage of the owners are in troubled loans and unable to refinance.  The pressure to sell is forcing the supply of homes to balloon and this is driving prices down.  Even if the fed forces the “reset rates” a bit lower, many of these people were overextended to begin with and will not be able to afford more than their teaser payments.  Compound this with the “refinance” market being closed to those who are upside down and you have a perfect storm.

(3B) Price pressure in established neighborhoods is nowhere as great.  Indeed, the recent move by the Fed may actually increase the refinance rates ( 5% fixed anyone ) because the majority of owners have plenty of equity even if the market were to crater.  Also, the supply of homes for sale may actually shrink as homeowners may decide to stay put, thus stabilizing supply and demand.

Turtle Ridge is an interesting issue here.  So is Newport Coast.  These are pretty new areas and are in desireable places.  However they got caught in the many, TRidge being the newer is in worst shape.  As I’ve noted earlier, it is my belief that TRidge will reach parity with TR at some point,  It simply made no sense to have those McMansions with absolutely no lot and only two garages priced 50% above larger homes in nearby TR.  And those condos? 

So, TRidge should be happy that TR is actually not for sale -pretty much.  And, of those homes in TR for sale, I happen to know of two that are on simple fishing expeditions.  They are listed but in no hurry to sell. 

That’s what happens when there is no financial pressure.. the selling price stays firm.

Ladera Ranch and all those lands that got built recently, Quail Hill?  Oy Vey…. “vat a buncha schmucks”....

My wife and spoke about this last night.

I think I’ll wait to refi.  Even if the market craters, I can afford to see the market drop to under $200 per square foot and still have a 30% reserve.

As a prudent homeowner, I’m kind of getting pissed off.

A number of our neighbors sold their homes and moved up to TRidge.  Then the started driving even fancier cars.  If you go down to Uni High you see kids driving brand new Bimmers….

These people did not become rich overnight… so I figure they were playing the RE game.

Now you tell me the Gov. is gonna give these assholes a free pass?

With MY tax money?

That being the case, I want the gov to buy out my 30 year mortgage and give me another one for 300K less.

Heck, when you think about it.  The Gov would be better off “helping” people like me.  Because I’ll go on a shopping spree with those 300K that will send the economy into a growth phase.

New Magnepan speakers, new Hondas, new clothes, you name it.

Helping those idiots who overextended themselves and keeping them in their big homes is not gonna get them to start spending money.

I say enough…

Commodities have intrinsic value.  IR, I think you’re off-base on this one.

I agree with your observation and I think it relates to a larger problem for Irvine.  The developers got carried away during the real estate bubble.  They shifted from building the types of housing products the community needed, to those that could make the most money—fueled by flippers and speculators.  As a result, I think Irvine is over-built with condos, townhouses, attached homes and exceedingly cramped SFRs.  Once this all shakes out, those types of products will probably fall well below rental parity because they are so undesirable to owner-occupiers and there is a limit to how much inventory the investor community can/will buy—at least in the short term.

I grew up in the midwest where people had wide streets and big yards.  Irvine has always seemed so Stepford to me, even compared to surrounding neighborhoods.  My beef with Irvine has always been how much of it is just so undesirable at any price.

I’m looking at a 15-year fixed conventional at 4.5% with no points from my bank. They have already dropped rates two times in the past three weeks or so.  30-year fixed at 5% with 0.015% in points. Closing costs aren’t the best, but isn’t that why you stiff the seller with them?

Why can’t the guvment just stay out of this? The market is working just fine, by tightening up credit and foreclosing like a madman. If the guvment wants to help out, they need to prosecute all the fraudulent hucksters involved. This just invites needless moral hazard.

Frankly, at this point, I’d rather pay a lower purchase price and take a higher interest rate—I can always refi into a lower rate but I can never refi into a lower price.  I’m thinking that these rates are simply going to delay the price reductions that need to happen and prolong the correction, perhaps even creating a higher bottom.  I’m with the European Central Bankers: Let the markets shake out and hold the line against inflation.

The Europeans will soon have to follow.

The Euro is getting overvalued and that will start to hurt their own domestic output.

20% appreciation from ‘98 to ‘05 - Whoah!

The property taxes and HOA are enough to be a decent rental amount per month, never mind anything in addition!

That is until they find out its purpose.  Then it is removed by a prankster.

I meant to say 20%/year appreciation.

Tonye, the only flaw in you analysis is that TR is superior to TRidge and Quail Hill.  Why don’t you just come out and that TR is better than Shady Canyon while your at it!.

TRock is old, old, old.  And though there are parks, there is a dearth of shopping.  The little center on Univesity with the IHOP is god-awful.  Most of TRock is attached units including ludicrously price duplexes, and all those pink condos at TRock Point.  The homes around Concordia are nice, but virtually indistinguishable from any construction projects completed in the late 80s and early nineties.  The homes by the Turtle Rock park (which are virtually built on the street), are nothing special not too mention built with a quickly dating design. Other than the few view high-end homes off Ridgeline TRock is Woodbridge on a hill.  Oh, and Broadmoor is El Camino on a Hill!

You have touted lot sizes, however by all measures lot sizes in Irvine are lacking across the board.  If you want to talk lot size how about Nellie Gail, were the lots are measured in acres not square feet.

I know you believe this fantasy about old homes being of higher build quality, and that all new areas are built with balsa wood and syrofoam.  In reality, all homes depreciate, and the old they are the higher the real dollar cost of depreciation.

For the record, I like Turtle Rock!  I think it is the fourth best development in Irvine.

Tonye, read my post above.  You can get a loan from Countrywide and continue to refi no-cost on future rate declines.  It prevents you from having to try an bottom-tick the market.

The older parts of Brea are like this.  Income mix of residents, but all have well-kept yards.  A lot of pride.

Back in the late ‘90’s I was thinking I would “start out” there.  However prices shot up and you know the rest of the story…

The complex next to my condo started as apartments and was ‘converted’ to condos.  I went to look at them for fun.  My recomendation is stay away!  Builders use a completely different set of standards for building apartments vs condo’s.  The quality just wasn’t there, it was built as cheap as possible to maximize rental income.  This is as bad as buying an ex-rental car.  I would lobby my legislator to require full disclosure by the listing agent ‘condo - converted apartment’ on all listings.

Another way to make this comparison is to ask:  If you could live in any house in Irvine for free, which would you choose?  What about your second choice?  etc.

I would bet that the order for most people goes Shady, TRidge, QH, and TRock.

CW, I think you’re confusing “emotional” and “intrinsic”.  A commodities value is entirely predicated on the relative scarcity of the item.

Too much work.

I do want the government involved.  I don’t want my street filled with a bunch of foreclosures, with boarded up windows and vandals.  I don’t want people thrown into the streets because they can’t make their payments.  And, I don’t want people standing in bread lines because the housing bust destroys the entire economy.  So,  Sen. Dodd, I’m behind you 100%.

For $300k you could get this:
http://www.marklevinson.com/products/details.asp?prod=no40

this:
http://www.marklevinson.com/products/overview.asp?prod=no51

A few of these:
http://www.marklevinson.com/products/overview.asp?prod=no436

some of these:
http://www.enjoythemusic.com/superioraudio/equipment/1006/midmonth/analysis_audio_amphitryon.htm

this:
http://www.sonyxbr.com/KDSR70XBR2.htm

...and you haven’t even spent half of it.  I’m sure I’m missing something.

Couldn’t agree with you more.  If the guvment wants to “help” why doesn’t it convert the FB’s loans into lower fixed rates amortized over say 50 years?  This way these folks are not needlessly kicked out of “their” homes.  Along with a longer term loan maybe one of the requirements would be a common sense class where these folks can be taught to read….things like loan docs….

sorry to bump this to the bottom, but the nesting here gets muddled:

“Now while all of this is going on, the false believe in perpetually appreciating real estate sets in and causes house prices to be bid up beyond the ability of income to support prices. At some point (which appears to be now) prices must fall back in line with incomes.”

WRONG WRONG WRONG!  In honor of the batsh|t crazy rally we had an hour ago on wall street, let me reiterate - fundamentals are NOT everything!  some assets attract values which have NOTHING to do with their quantifiable utility.  is this the exception?  yes, of course.  but is it crucial to understanding real estate valuation?  god, yes.  asset inflation is a reality, and even with the apparent bear in housing (which is really a function of credit markets more than anything), it is quite probably a phenomenon here to stay, at least here to stay against what is now just a memory of what the dollar was before the shrub administration.

certain assets, like real estate, will resist the pull of fundamentals in terms of equivalent rental value in the context of the continuing exponential growth of money supply.  all of this excellent analysis misses the point if we forget a few basic facts:

- dollars are not ‘money’ in any historic sense (a durable store of value)
- the cliche of ‘they’re not making any more’ is true is some cases, i.e., they’re not allowing builders to make new and/or denser units in many desirable locations
- our society is becoming more and more radically divided between the extremely rich and everyone else, and they can and will invest in real estate, warping valuations far beyond normal expectations of what should be ‘affordability’
- our current construct of what constitutes ‘money’ has NOTHING to do with economics, and EVERYTHING to do with politics.  when 15% of the incomes can afford the median house, that isn’t an economic phenomenon, it’s a political phenomenon, and the average american is far too stupid and/or programmed by economic orthodoxy to see it.

*steps off soapbox*

don’t let the fun of seeing an empire built on greed and lies collapse (moody’s just dropped indymac, by the way) obscure the fact that when the dust settles, they won’t be giving away nice spots to live, but they will be printing enough dollars to stack to neptune and back each and every day to placate the AARP zombies who will be more politically powerful than ever.

I spent a good bit of time working on refi today.  I’ve got a lender willing to lock me at 4.75% on a 3/1 I/O right now with zero points. 

The best Countrywide would do, and they have my 1st right now, is 5.125% on the same loan program with zero points.

They appear to be willing to lose interest revenue vs. match another lender…

Escrow alert, bad location property in Westpark with 279 DOM made it into escrow:

www.ipoplaya.com

No No No.  Wheat has a value because people eat it.  Steel hs value because people build things with it. Gold has a value because people are stupid, etc. etc.

Being a commodity means the product is undifferentiated and their should be no economic profit in producing or selling that item.  It does not mean that commodities have no intrinsic value.

OK Mr. social liberal..

But what about consequences, most of us demand some sort of punishment for irresponsible behavior.  So out of fear for temporary neighborhood blight you are willing to raise your own taxes and give the wrongdoers a get-out-of-jail free card?

I’ll tell you what really causes blight…

Unemployment and job losses as industry tanks and relocates to China.

Unless Sen Dodd puts in some ramifications clause to punish the people he’s helping so that they don’t get off completely scott free (like bumping up their tax bracket for say 30 years) me and millions like me will hate him for his efforts.

Dude, I don’t even know how to respond to this.

1) You should give Warren Buffet advice, because he’s strictly a value investor and you should tell him about all the opportunities that he’s missing.

2) If something can’t go on forever, then eventually it will stop. (approx. quote from the video linked to a couple of days ago)

businesses aren’t assets in the same sense that a house is, and i’m sure that warren would agree that all he is doing is absorbing inflation, just more artfully than most.

Countrywide rep just told me to go with the other lender as it was a great deal and she couldn’t touch it…

Fundamentals are not everything, but they are the “thing” that stops the fall of prices in bear markets. It has been this way in financial markets since the dawn of time. The rest of what you wrote sounds like the BS Gary Watts would come up with. Are you ghost writing for him?

riddle me this, IR - what are the ‘fundamentals’ behind a bar of gold, a ‘61 stratocaster, or a rothko painting?  all 3 have tripled in value since 2002.  why do you think that is?  has the dividend/yield grown nicely?

Really.

Those people the gov. wants to help can barely make the payment at the teaser rate.

OTOH, for those of us who can afford our rates, if they lowered our payment 40%... and if they gave a nice 25K to those who already owned their homes… and if this were to lower rentals..

Jeez… if I had $1000 bucks in a my pocket to spend every month on STUFF without affecting my savings….. WoooHooooo

We’d even be able to afford to buy things made in the USA, not China.

So what is some buffoons lost their homes… at least they’d find that rents somehow went lower.

Now that’s a plan.  help the responsible ones by lowering the overall cost of real estate and put some money to cover for the loss of value to those who already own it clear.

Suddenly, hey…. new cars in TR.  Lots of rentals in TRidge.

What’s 3/1 I/O.  I’m afraid my understanding of mortgages is simple.  We used to have plain fixed 30 and 15 years and 30 year adjustables with a cap tied to LIBOR or something like that.

I dont know much about the location, but the house looks nice. Like the big yard, dark floors and all the rest except the front of the house looks a little boxy, but thats a minor quibble.

11 grand per year in prop taxes. I hope these people have money.

Commodities or other speculative investments which do not generate cashflow have no fundamental value. Investments which produce regular cashflow (or rent savings) do have a calculable fundamental value based on the income stream discounted by a risk-adjusted interest rate. Some cashflow generating investments are tethered more strongly to their fundamental valuations than others. For instance, bonds tend to track their cashflow value relatively closely whereas equities rarely trade at their cashflow value. Housing is an asset that used to almost exclusively trade at its cashflow value until irrational exuberance loosened the tether 4 decades ago. You can make the argument that housing may be trapped in an endless boom and crash cycle now that irrational exuberance has taken hold, but at the bottom of each cycle, fundamental valuations will return.

“I don’t want people thrown into the streets because they can’t make their payments.”

Whatever, we are not talking about throwing blind and disabled people living on SSI out on the streets, we are talking about people w loans of $2-4K month paying neg am, interest only who can afford those payments but not the fully amortized payment of $4-6k month.

These people will find an apartment to rent for the same or less than what they are paying on their interest only mortgage and will be better off.  If you can’t afford the house, you can’t afford the upkeep and your neighborhood will decay more slowly if you let them stay because of deffered maintenace (roofs don’t get fixed, painting doesn’t get done).  Eventually all the foreclosed houses will sell at a lower price and your neighborhood will recover just fine.

Goody-goody people like you give people like me extreme aggravation.

Maybe you just mean this specific studio is worthless but I get the impression that many commenters here think any studio is worthless. Unattractive to most, yes. But they exist and there is a market for them. (Soundproofing is a separate issue and can be a problem in any multi-unit building, not just studios. IMO, if a minimum level of soundproofing isn’t in the building codes, it should be.)

In any case, there are definitely people in Irvine that do live in such places. I’m not sure if in this list a studio is only a 1-room home, because I’ve seen 2-room homes that are also studios because the kitchen counts as a separate room.

Rooms in renter-occupied apartments in Irvine, California:
  * 1 room: 1,254
  * 2 rooms: 3,596
  * 3 rooms: 4,098
  * 4 rooms: 5,259
  * 5 rooms: 3,548
  * 6 rooms: 1,554
  * 7 rooms: 643
  * 8 rooms: 324
  * 9 or more rooms: 223

Rooms in owner-occupied houses in Irvine, California:
  * 1 room: 133
  * 2 rooms: 888
  * 3 rooms: 2,003
  * 4 rooms: 2,855
  * 5 rooms: 5,660
  * 6 rooms: 6,327
  * 7 rooms: 5,478
  * 8 rooms: 4,273
  * 9 or more rooms: 3,074

in ‘79 I bought a used stratocaster in excellent condition which I think is pre-CBS, I’m not sure.

I still have it in the closet.

Any idea what it’s worth today?

“...our society is becoming more and more radically divided between the extremely rich and everyone else, and they can and will invest in real estate,”

If this was 2000 I would agree with you, but your problem is that you are looking in the rear view mirror.

The “AARP zombies” will NOT be investing in real estate anymore. They will move on to other pastures.

I have had my thinking cap on for a while trying to figure out whats next. So far I am considering that 5 years from now, the new bull markets may be in things like alternative energy and stem cell treatments.

Thats the fun part, trying to figure out the next big thing. I will tell you this though - it wont be real estate.

Philanthropy.  The boomers will be facing their own mortality and feeling no small amount of guilt for the self-indulgent and superficial lives they’ve led, so they will look for opportunities to endow academic, research and charitable organizations in order to cleanse their consciences and preserve their legacies.

There is a bull market in alternative energy going on right now. And California is at the center of it.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/17/BUHTUGFJM.DTL
“California scores nearly half of North American green tech capital”

Investments in North America and Europe since 2001:
2007 $5.18 billion
2006 $3.6 billion
2005 $2.5 billion
2004 $1.8 billion
2003 $1.7 billion
2002 $899 million
2001 $714 million

IR,
bonds are a classic example of the dynamic I’m talking about - do you think in the light of every commodity under the sun at least doubling in price since ‘02 (alongside many other assets), the 4% ten year notes have averaged in the period since really reflect the pace of inflation?  or is there something else happening - piles of dollars from places like china and petrosheikdoms chasing whatever assets they can stuff under the mattress?  does the demand for the asset actually serve to make the cashflow at least somewhat irrelevant, and the expectation of inflation a complete afterthought?

alan, post the serial # if you’re really interested.

sure, other sectors may well be hotter, perhaps much hotter than real estate.  and i won’t argue with the ultrabearish scenario where real estate in the usa is much like japan in the 90s.  it could happen.  but, ultimately, the baby boomer electorate will print the dollar into such confetti that the inflationary wave of the past 5 years will seem like a rather lifeless warm-up act.  ANY asset which absorbs inflation will be a huge winner relative to cash.  look at the current presidential race - all of the candidates are scrambling to come up with the largest $ value for a ‘stimulus package’.  and that # is just a ‘free’ gift to the taxpayers - the actual bailout # for the likes of indymac will inevitably be much larger.

also, IR, that wasn’t what happened 4 decades ago - what happened was that the US dumped the BW arrangement (actually 3.5 decades ago), beginning the pure fiat era.

It’s a 30-year mortgage with the rate set for only the first three years.  The I/O means interest-only…

All lenders has a big midday repricing for the worse.  I missed locking 4.75% by an hour or so.  The loan I wanted is now 5.125%.  It was a no brainer at 4.75%, not any longer…

I have a 73 strat worth about $2000, you can check your serial # here to find the actual age

http://www.axecollector.com/guitars.html

The borrowers that receive help should not benefit further. i.e. When the taxpayers save them from foreclosure, they shouldn’t be allowed to sell the home in 15 years and retain the profit.  The government should keep a lien on the property and keep a large portion, if not all, for the treasury.

Well, well, well. Stanley Streamwood Strikes Again.

That whole Lakepines area is such a hole, it’s like downtown Santa Ana in Irvine. I wouldn’t live there if you paid me. Imagine the feeling of moving in here and paying that $196 dues check every month. Incredible. Might be a good place for sending the Taiwanese kid so he can go to Northwood High.

Let’s bulldoze “Tha Pines” Please!

Let’s go Anteaters,

I see what you are getting at. I have harped on the problems of inflation many times.

“does the demand for the asset actually serve to make the cashflow at least somewhat irrelevant”

In speculative markets, yes, this is true. In fact, this is what drives all speculative markets. I am making a distinction between cashflow “investment” and speculation. Houses should not be a commodity—that was an entire post of mine.

http://www.irvinehousingblog.com/2007/06/25/houses-should-not-be-a-commodity/

Houses have become a commodity, and that is why the tether to fundamental valuations gets so stretched. I do not believe houses can become permanently detached from fundamentals and behave as a pure commodity because the market is too large, and too many of the transactions are based on financing which is in turn based on income (or at least it is supposed to be.) The fallout from the housing bubble is going to reveal just how bad things can become when houses become commodities, and I would not be surprised to see legislation to curb this activity in the aftermath of the crash (i.e. lending limits based on income.)

But what about the borrowers who still pay without gov assistence.  How do you morally justify creating 2 classes of borrowers?

The answer is you can’t.

That’s why this measure will be opposed by us hard working types who believe in personal responsiblity and smaller goverment.

Mark,

I have played with the ideas you are floating. Check out this post and tell me what you think.

http://www.irvinehousingblog.com/2007/04/16/how-homedebtors-could-avoid-foreclosure/

You are also using instrinsic and fundamental value interchageably. This is an error.  Commodities have no fundamental value (PV of cash flows), however they do have instrinsic value (value determined by supply and demand).

Regardless you seem to be using “commodity” in the perjorative related to phyiscal commodities, under the assumption that assets that do not generate cash flow have no intrinsic value (See above)

What is the value of your drinking water?  What are you willing to pay to may sure you have water?  It is INTRINSICALLY valuable.  Oil produces energy and has considerable cost related to extraction, there is an intrinsic value based on the productive power of energy.  Copper has value, it is used extensively to build and wire.  Commodities are the stuff that make up your world.

Don’t you just feel like a schmuck for being honest, upright, and sane, Tonye?

I know I do. I mean, who knew, while I was sitting on the sidelines waiting for some rollback in prices lo these 6 years, that all I had to do is write some absurd number in the “income” field on the mortgage app, and I could own a $600K condo that the Feds, or my idiotic state government, would do anything to keep me in, just to prop up the loan portfolios and the TRILLIONS of dollars worth of derivatives based on them.

HUNDREDS of trillions of dollars, actually- layers and layers and layers of leverage, one great big 100 story leverege pyramid of credit default swaps and options on the swaps and calls on the options and inverse floaters and whatever, many hundreds of times larger in dollar amount exposure than the original pile of overpriced and over-collatoralized moonshine mortgages. It adds up to this, that one $500K mortgage on a place with a fundamental value of barely $200k, is collatoralizing about $50 million worth of debt and related swaps & floaters & other extremely creative financial products.

But I’ve stopped expecting fairness or justice in this country. Our Dem candidates can surely take the temperature of the electorate and know how the proposed bailout angers the bulk of the population, but they no longer care what we think or want.

They care what their big donors want, and those overwhelmingly want to keep on getting their $150MM bonuses and 40,000 sq ft houses in the Hamptons.

Both the Repugnants and the Dummycrats will continue to vote to trash our currency, destroy what remains of the credibility of our financial markets, and reduce the run of the population to ragged poverty.

The righteous will die just like the wicked, or even faster, because the wicked will just spin off another scam, like gold or something.

We will all be standing in soup lines in another 3 years, savings and prudence notwithstanding.

I cannot convey to you how deeply bummed, and scared, I am right now.

You must not have visited the apts. in Woodbridge lately then.  There is a wide mix of cultures there.  There are 3 singles below us sharing an apt. and a couple with a baby across the parking lot, not to mention all the single parents around and the 3 cab drivers. But we are all apt. dwellers which I guess according to ex-tangelo’s description makes us all undesirables. I have never really felt any animosity though from our “desirable” neighbors in the houses.

A bit OT but I thought IR and everyone else would enjoy a bit of redacted quotes from a relitter flyer I received today (bet it is just a repo of standard marketing fare sent by NAR). 

In the flyer the realitter cites some guy from the Washington Post Writers Group as an “expert” on re (what a writers group knows about Re is beyond me) and he claims “many positive economic factors are propping up re.”

But it gets better when the realitter goes on to blame the current downtrend on “cataclysmic press coverage boardering on the irresponsible.”

She claims that potential buyers will realize that not just price should determine the purchase of RE!  (before they said price always goes up so now I guess RE industry is saying price does not matter).

Personally I am tempted to email this shrill and let her know in my view her card is boardering on the irresponsible.  Afterall she does say she is a “professional.”

thx for the link. Very interesting.

Wouldn’t that be fabulous!!

tonye - A TR place just went into escrow…  10 Delphius.

I agree with both of you… this is a good time to refinance if you can.  I’m planning to pay my note down another 70K and then I’ll qualify for a solid 30 yr fixed conformig note and take a point or more off my existing rate.  That said, I believe IR is correct - many or most won’t qualify for an refinace mostly b/c they have no equity in their property anymore (if ever) and they have little or no money saved to put into a down payment.  I have a colleague trying to refinance (move from an ARM a year away from reset to a 30 yr. fixed) and they tell him he can qualify but, only if he brings $140K to the table… and his payments will go up $1,100 / month.  That’s a tough break and why I keep saying that I think the down payment issue will be the biggest killer as most save nothing.  :(

Interesting thoughts on the’zero coupon bond’ for the balance of owed equity going to the bank / lender.  Of course it will never fly… just more ‘creative financing’ to drive prices higher.  From a functional perspective it’s no different than an ARM with different terms i.e., pay less now and pay more later as costs accrue.  I also believe nothing could be worse for this to happen in an election year.  There will be so much politcal ‘hay’ and grand standing with these housing issues that nothing will get done until far too late in the process.  And further, if history is any guide the govt will come in to ‘help’ and put regulations in place the further prolong any recovery - following the govt’s law of unintended consequences.

Interesting thougts Mr. Vincent.  I agree with you.  The next wave / bubble will not be RE but, it very well could be alternative energy, biotech, new medical / aesthetic treatments for the retired or any services (recreational or other) for the burgeoning group of retirees.  Just ask yourself what will be the biggest societal pain points or drivers over the next 5, 10, or 20 yrs. 

Energy conservation / green technology, anything and everything moving toward digital health care services and technology seem to be reasonable bets.  Also, global growth is likely to continue to put pressure on commodities in the long run.  What do you think?

Well.. I’m in the market as I have owned my home for eons and I rebuilt it in the late 90s rather than move.  So I have a brand new home, with very good quality materials (30 amp romex, 300 AMP panel, structured electrical, data and video wiring, extra large copper, high quality fixtures, better quality studs, etc….. all the stuff that you will not get from one of those mass market builders.

And because of Prop 13 my RE taxes are ridiculous.

So, OTOH, I can see where propping the value of all RE helps me.

However, the way they’re doing it won’t help the economy because it will only help the people that are strapped and are the most financially irresponsible to begin with.

If they gave the money to those of us who can afford to spend it, then the economy would kick start, the fake equity would disappear and we’d have a very healty market where 95% of the people would have money to spend.

But no… the fix is to help their buddies and in the meantime to destroy the value of our currency and devalue our net worth. 

Most americans don’t care yet, but in the long run I think you’ll see Walmart buy American again because many parts of this country will be down to Third World Status.  Just wait when they start to get Guatemalan and Bangladeshi tourists in St. Louis and the Grand Canyon.  Ooops…. they got money?

In the meantime we’re borrowing out of our 401Ks to invest it in something sane.

My company’s 401K is run by Citibank and the loan was very easy -still.  My wife’s is run by Fidelity and not only do they offer the crappiest investment options but they force a lot of paperwork.

Incredible.  They want our 401K funds to pay to prop up Wall Street while the rich folks have their money in Euros.  And now they want my tax dollars to prop their house of cards.

Time to move to Guatemala.  Si?

Cheap dollar = more foreign investment = more jobs for us.

American workers provide more output for a dollar’s worth of investment than any other place on Earth.

http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Press_releases/lang—en/WCMS_083976/index.htm

“With US$ 63,885 of value added per person employed in 2006, the United States was followed at a considerable distance by Ireland (US$ 55,986), Luxembourg (US$ 55,641), Belgium (US$ 55,235) and France (US$ 54,609).”

But then I don’t mind working for the Bangladeshis or Dubais or Guatemalans. I’ve already worked for the British (twice) and Japanese (twice) and for Americans, and everybody’s money pays the rent.

It might make a nice meth lab.

How is a very real physical limit to expansion in NYC an “artificial” inflation of prices?

This boomer feels no guilt!  Nor have I lived a superficial life.

Why should I, through my taxes, have to “help Americans facing foreclosure” when I myself am a non-wealthy, moderate-income person struggling to accumulate a downpayment for an honest mortgage on a reasonable place that is now foreclosed to me because of prices inflated by crazy lending?

People who are foreclosed will not be homeless. They can do what I have been doing for 30 years- PAY RENT. Sure, the dwellings they rent will be substandard compard with the ones they “bought” with their dishonest loans.

But if it’s good enough for me, it’s good enough for them.

I’ll pay a portion of my taxes to keep totally helpless, disable people in extremely minimal housing so they won’t be on the streets.

But I deeply resent being taxed to help people who are often way better off than I am, stay in homes they should have know they couldn’t afford to begin with, in order to keep prices inflated at levels where I can’t hope to buy.

Manipulating the market to help the deluded and dishonest only harms the honest, moderate-income potential buyers like myself, by keeping the bar to ownership artificially high while subsidizing fraudsters and liars.