Irvine Housing Blog

There is no distressed inventory.  There is destroyed inventory, there is mangled inventory, but there are no distressed sellers.

The bank short sale process is now becoming an automated no people interaction process where the bank look at the comps from the last 6 months and sets the price.

Take it or leave it.

Prices are not going to move lower until the banks are forced to acknowledge their non-performing assets.

If a seller is distressed, frankly, IMHO, they’re a fool.  What’s to be distressed about?

Hell, I’m a fool in hind sight for not grabbing a $2 million dollar home with a liar loan and squatting for two years and ripping out an extra million in tax free refi money and moving my wife and I to a cozy little retirement in Costa Rica.  No payment were necessary.  No payments are now necessary.  It’ll be a year before the bank really gets nasty and if you spend a little to fight it or limp it along once and a while, two maybe three years seems possible.

If you own a home, why are you paying your mortgage?

No, honestly, that’s a serious question.  If you own and don’t have significant equity, why are you making payments?

Um, this house was sold in Feb 2008, according to Redfin.  That is, the bank foreclosed on it in 2007, sold it in Feb 2008, and it’s now for sale again, apparently as a standard sale since they are asking more than they paid for it (the sold price was either $590k or $600k-the MLS and government records differ).  This is no longer a bank owned property and hasn’t been since Feb 2008.

“What are we going to do with all those homes?”

In premium areas with substantial job centers there is no problem.  It is a piece of cake to clear inventory in areas like Irvine.  Either a house is purchased with 100% cash at auction or a buyer quickly steps up with hundreds of thousands for a down payment. 

Take this house for instance.  It is priced at or below rental parity and it is only 10% off peak pricing.

The bottom 50% of housing markets with high umemplyment and too many homes have a serious problem.  The future is bleak for these areas.  Anything the government does to try to bailout these areas won’t help.  On the other hand any bailout for these areas further props up the premium areas.  Buyer incentives and low rates help premium areas while the bottom have continues to decline.

If mortgage rates fall to 4.0% this house will be at rental parity at peak pricing.

I checked my credit score the other day, then wondered “Why do I bother? Does it make sense to get a loan in the future?”

I made the mistake of selling while I had equity, and moving to the rental world. Should have HELOCed the place, bought Krugerrands, enjoyed 1-2 years of rent-free living, then become a Krugerrand-laden renter. My bad.

But it occurs to me that thrift and no debt, punished though they have been during the ‘00s, might now actually pay off. Recent mortgagors now look to be debt slaves, living with a sliver of positive equity - representing a little less than the principal they have paid down minus a small amount each year in a gradually deflating market.

And the more who think as I do, the worse the deflation will be.

Seriously, it looks as if those who eschew debt may enjoy a generation of vindication, as a shrinking debt load deflates all asset classes normally purchased with debt.

I wonder if this will become a positive-feedback loop: more people shaving off their debt, causing prices to drop, causing more to conclude that debt makes no sense, and so on.

Someday this war’s gonna start!

Why are there no men at the ass pool?

Bubble are rapid transfers of weath and not creation.  Bubble transfer weath from one area to another.  LV gambling doesn’t create weath, but moves it to LV from other areas. 

Real weath creation is by inovation of new discovery to make something, make something with less resources.  Much of “inovation” is just another term for confusing people—change for change sake or change to keep the weath transfer going.

“Real wealth creation is by innovation of new discovery to make something, make something with less resources”.

Yes, that is true, but we could add that it takes capital to apply the discovery to manufacturing something and getting it to its market.

We have many new technologies, technologies that could vastly enhance our efficiency, make use of new fuels (thorium, anyone?),and otherwise enhance our lives and render us truly productive once more, thus vastly increase our wealth. But we blew our capital and went deep into debt to sustain the unsustainable economy based on borrowing and buying ever bigger houses for ever greater multiples of income. We took the easy road of financialization and killed our industrial base. Our authorities are now asset-stripping what wealth remains to the population in order to sustain the old, fake economy based on borrowing and asset inflation, to the detriment of the new, innovative technologies that could be the foundation of a honest, productive economy.

I believe the banks are hesitant to foreclose on many of their properties because once they do and put them up for short sales, they can’t claim assets they have and then borrow against them.

For example, if the bank owns a mortgage on a 450k house, they can borrow against that. If they foreclose on that home and short sell it, they end up with a 250k asset to borrow against. There are a ton of individuals in San Diego for example who are months behind on payment but not about to be foreclosed upon.

We know how current stock market rally and some of the miners such as FCX, BHP, and few others ran all the way up to their bubble levels, while there was no real commodity demand. look at how these companies are sucking tits now.

Banks cannot and will not sit on it forever. If anything, the current financial reform will restrict speculative borrowing from FED discount window for trading, this is something that banks have been doing lately to show profits. Everyone at walstreet knows the real asset value of their portfolio, its just a matter of time. Most banks are illiquid and insolvent right now. This BS cannot go on for long, reason is simple, Europe is falling apart and US is next, with no appetite for US Treassuries, let alone MBS, if FHA tightens the min. downpayment terms watch how things fall apart.

I have been patient for 6-years, now I just need to stretch another 8-months to see how it pans out.

By the way, those who play stock markets, Elliott Wave folks have issued a stark warning for US Equities, Dow Jones to be under 1000 by 2016, 6-year downtrend started this month. The reason is implosion of Euro, Dollar, and failure of big banks and sovergin debts.  Watchout. I am shorting this market and making a killing.

On to house, I plan on getting into one shortly, even if I pay a premium. I am in commercial construction and unemployment is above 40% in this industry. With no hopes for improvement, not sure if I will be employed in next 8-months. I need to have means to stay for free and eat from unemployment checks. The only way to do it is to have a home where I can squat when the time comes.

I know if I lose my job I will get kicked out of my rental place, at least home ownership will keep me in it until the excess ahead of me gets cleared first.

Disclaimer: I’ve been out of the loop for at least 6 months, so feel free to take this with a grain of salt.

Are there not boatloads of properties currently for sale on Redfin? Are there that many foreign cash buyers and investors that can swallow all these?

If nobody else has called it yet, I’m calling the rest of 2010 the “price slide”, all downhill ‘til 2011 (based on increasing supply and decreased demand (fewer buyers).

ok. maybe I’m missing something on your numbers.

Purchase price of 719K = 623 in property tax and 60 for homeowner’s insurance?

Just closed escrow on a house for 170k and am paying 270 in prop tax and 60 in homeowners insurance.

Either I’m getting hosed somehow or IrvineRenter’s numbers aren’t right.