Irvine Housing Blog

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.

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

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

It might make a nice meth lab.

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.

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?

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?

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.

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.  :(

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

Wouldn’t that be fabulous!!

thx for the link. Very interesting.

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.”

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.

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 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.

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/

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.

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.)

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!

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.

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

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…

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.

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.

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.

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

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.

“...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.

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?

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

“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.

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 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.

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.

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.

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?

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?

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

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.

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)

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.

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.

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

www.ipoplaya.com

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…

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.

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....

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.

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%.

Too much work.

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

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.

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.

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…

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.

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

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.

I meant to say 20%/year appreciation.

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

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!

The Europeans will soon have to follow.

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

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.

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.

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?

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.

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

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…

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.

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”....

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.

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.

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.

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.

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

What a f*cked country we live in.

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?

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.

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.

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.

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.