Irvine Housing Blog

I can’t understand why a 1 bedroom condo has 2 bathrooms. Furthermore, it’s only 1 floor.

Like we really need to go pronto!

Interesting article in today’s NY Times about renters now buying now that prices have fallen enought to own using conventional financing.  I’m not sure these markets are quite at rental parity but clearly when we have affordability for the median buyer of the median house we are getting closer to bottom.

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While her friends ran up credit card debt and bought show homes beyond their means, Taina Goldman saved for a down payment. She moved back in with her parents, sharing a room with her young daughter, ate in and worked two jobs.

“I don’t live dangerously,” said Ms. Goldman, 42, a nurse. “You can’t live on ‘what if.’ ”

Now, she is reaping the rewards. She and her daughter recently moved into a three-bedroom, two-bathroom ranch-style house, with a pool, after putting 20 percent down and persuading the seller to cover most of her closing costs. She paid $187,000 for a house that sold in July 2006 for $370,000.

Full article link below.

http://www.nytimes.com/2009/04/03/us/03florida.html?hp

Thanks for voting on the gold poll.

One of the reasons that I am looking in S Cal, specifically Irvine, is there is no mosquitoes.
Please tell me you are just joking.

Are 1% teasers interest only?  At that point the loan in no way resembles a mortgage.  There should be quantitative experiments or simulations that show how that type of financing affects prices, and how the removal of that hits them on the way down.  The interest only amounts to < $300/mo, which won’t rent you much.

Hi Irvine Renter,

I am curious about the income requirement for this condo. I am currently making 85,000 with 1 child and another on the way. $300,000 still seems like a huge commitment. Do you base your requirement on the assumption there are no kids and and no car payments? Financial literacy is not my strong point, though I was smart enough to disregard my wifes advice to jump on the bandwagon and buy somthing we could not afford. I simple man terms cna you describe how this works out? Thanks

This post is for all those (previous) bears who are tempted to buy a little box like this one, because they think we’re near a bottom.

Many people think that Ponzi financing will come back ... even some bears believe it’ll eventually find it’s way back.

Here we have one little condo, and look at the damage ~

If this property sells for asking price, and if a 6% commission is paid, the total loss will be $162,440; although, the actual lender loss will be much higher.

Folks, this is one little tiny spec of space dust in the cosmos.  It’s hard for anybody, including the bears, to put their arms around this problem.  In the coming months, lenders are gonna experience 7 figure losses as we see this train wreck work it’s way up the food chain.

Thornberg mortgage was one of the prudent super jumbo lenders.  They actually did underwrite their risk (at least much more than Citi, WaMu, Countrywide, etc), and yet they were forced into bankruptcy.

I guess what I’m saying is Ponzi scheme lending (free money) ain’t coming back anytime soon.  It just ain’t gonna happen.  And once you fully understand this, you realize just WTF kinda calamity Orange County is facing.  It’s very easy for me to draw a line right back to pre-Y2K pricing.

Throw all the historical, fundamental models out the window, this is going to overshoot to the downside.  We are gonna see a generational bottom in real estate, and we are no were near that bottom.

Lee:

Is your base-case assumption still 1997 prices, or is it now worse?

Speaking of mosquitoes, I’m not a photoshop expert, but it looks to me like the window in the photo you ask about has a screen on only one side and that’s why it looks a bit funny.

I’d like to point out that Mello Roos taxes are attached to this property and the HOA fee/S are about $250 a month.  That’s a chunk of change every month, imo.  Too high price/square footage - especially if you average in the monthly fees associated with living there every month.

I was too busy to comment on the thread earlier this week on College Park and the absolute thrashing it took here. That’s MY ‘hood and you all were brutal.  IMO, it is nicer than the goings on in old/comparable Culverdale, that was also featured this week. Some people don’t need “brand new” to feel good about themselves.  Some of us really like the bigger yards, the “big-enough!” living space, the mature landscape, the NO MELLO ROOS and HOA fees under $50/month.  We also have competition approved association pools so that our neighborhoods can join and participate in the Irvine Swim League (home of champions like Amanda Beard and Jason Lezack and others…)every summer for recreation and competition.

Not every millionaire drives a Bentley.  Some would rather have something that is modest and economical in order to free up cash for other pursuits. 

~Just saying

IR, rental parity moves when rent goes down, IMO it is only good to buy when price meets value where the bottom comes up.
correct me if I am wrong
SideLiner

That outside picture is very deceiving. If the condo is one story then it’s the 2 windows on the right of the picture. Not the 2 story with the pretty balcony. Right?

If you are not a homeowner, you’re out of the market. 

If you have sold a home you don’t own, you’re short the market.  This is quite uncommon in real estate.

If you currently own a home, you are long on housing.  If you have a mortgage on that house, you have a leveraged long position.

If this was the stock market and you had borrowed to buy stock which declined in value, you could be facing a margin call.  The housing market would be anarchy if people who though real estate always went up had to make margin calls when the market value of their homes went below the outstanding loan values.

Analysis from Radar Logic claims that “On average, the 25-MSA composite price for motivated transactions was 36% lower than the composite price for other transactions between January
2008 and January 2009.”

http://www.radarlogic.com/research/RPXMonthlyHousingMarketReportforJanuary2009.pdf

I’m wondering if this strikes anyone else as odd.  While I would have no problem at all accepting that REOs sell for less than comparable houses down the street, 36% difference seems too high.  Sure, you usually have to put in new grass, and often have to replace appliances and some fixtures.  REOs range from pristine never lived in to completely trashed.  Still, you have to do a LOT of damage to get rid of 1/3 of the home price.  In many areas, the total construction value is only 1/3 of the sale price, the rest is the land.  In such areas, you could bulldoze the house, or burn it to the ground, and it would sell for 1/3 less than an untouched home next door.

Perhaps Radar Logic has some sort of sampling problem, like the REOs also are more likely to be in bad neighborhoods, be smaller, etc.

Any thoughts?

watching housing price is like watching stock market, seeing all these housing going down makes me feel good that someday I might be able to afford one.  $300,000 for a 1 bd room condo is still too much, but its going towards a price where people can eventually afford =)

When government want housing to be affordable, why is that they don’t realize that low price is pretty much the only way to make housing affordable?

Am I reading this right?  So if he/she has a 1% Interest only loan.  The payment would be $295.50 a month?

How much would a the NegAm payment be then?

Without HELOCs to tap for vacations, braces for the kids, college tuition, house fixing, cars, boats, etc. people are, at some point, going to tire of putting all of their income into paying off a mortgage.  Many people assumed that appreciation (here comes HELOC abuse) and/or an increase in pay was only a few years away, so they went for the most or near the most that they could borrow.  Without those HELOCs, the house starts looking like the ball and chain that it is, unless one is not saddled with a huge mortgage (and even then it sometimes can become quite a money pit).  The Bernanke/Paulson/Geithners of the world could not care less about “saving” anything but a) their jobs and their OWN house values; and b) Wall Street and the elite/oligarchy running the show’s fraud of stealing from us taxpayers.  More time has to pass, but ultimately, I don’t see the bankers/financial elite winning this battle.

I am so surprised people who live in the high HOA and mello roos are not protesting a decrease in these very high rates. You have to wonder if all the homeowners are paying?

Trying to sell your home with such high fees has got to hurt.

And to NoWowway having any kind of home here in Irvine is still considered a wow factor compared to most of the OC.

Don’t sweat the old house people wish they had a shack here.

The last ten years Irvine’s head is so large that bubble has yet to be penetrated to any extent.

You are safe—-

Hey just what Woodbury needs, 140 new-build homes on the plot formerly planned to be the phantom Woodbury Middle School:

http://www.woodburyhoa.org/show_file.php?id=20760

Remember when the promise of a community middle school helped seal the deal for parents of children approaching the ages of 11/12.  Guess what, you can forget it - your kids will be commuting to Sierra Vista - hope you have someone available every day to drive them back-and-forth as bussing is out of the question.

How will all these new homes affect the 100’s of Woodbury homeowners straining to stay afloat?  I have to tell you that the tenor of the conversations at the community park is getting very ugly.  I don’t understand why I can’t sell my house for enough to cover my mortgage, isn’t that my right?  sigh, I just nod in sympathy, these are not bad people, just people who never understood the financial decisions that they were making.

Does TIC think that they are going to sell these new homes for 700k - $1MM, really?  If they price them to sell then all of the current homedebtors are toast.

How can I concentrate on these astute financial comments when a sexy video of the great Robert Plant is posted. Give a gal a break!!!

Heard a very interesting story on a podcast of public radio’s “Marketplace” yesterday.  From http://marketplace.publicradio.org/display/web/2009/04/01/pm_new_staging/:

[...]
Mark Suckerman thought he got a good deal when he bought this home recently for just $480,000. Turns out, though, it wasn’t all good.

SUCKERMAN: “It is a nice neighborhood. But there’s no kids playing in the street, you don’t hear lawn mowers going. I mean, there’s nobody here.”

But Suckerman says there were people barbecuing next door when he came to the open house, and he even met them when he came back for a weekend tour. His family moved in last Tuesday, and the neighbors’ houses were empty.

SUCKERMAN: “So who were those people?”

Who those people were were actors. Hired to play neighbors in an increasingly cutthroat real-estate market, where “staging” a home now means much more than just putting out fancy deck furniture and baking cookies.
[...]