Irvine Housing Blog

Inventory Panic

.Video from our friends at the South OC Tracker.

There has been a lot of talk about the declining inventories. Inventory has been declining, and sales have been increasing, but prices have also been dropping because many of the sales are REOs going at "fire sale" prices. Increasing volume and decreasing prices is not the sign of a market recovery, it is a sign of market panic. Some lenders holding these REOs are trying to clear their books while there are still buyers to be found willing to pay our still-inflated prices. However, many lenders are not, and there is much more REO inventory out there than is widely known.

The Irvine Housing Blog now has a subscription to ForeclosureRadar.com. Their service is a good place to get a "heads up" and buy a foreclosure before it hits the market. I use it to find properties along with Redfin. I want to share with you an observation I have made while looking for properties to profile: many of the REOs are not listed yet. While looking for a house to profile for today's post, the first four properties I found on foreclosureradar were not listed on Redfin. These included 105 Mission, 9 Timberline, 14952 Greenbrea, and 11 Bull Run. There are more. What are the lenders doing with these? In all likelihood, they are simply overwhelmed with the number of homes they own, and nobody is actively managing them or trying to secure their disposal. Someday, they will. So how many distressed properties are there in Irvine?

Red is bank owned, blue is scheduled for auction, and green is in some stage of preforeclosure. If you want to find out more, go to ForeclosureRadar.com.

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Asking Price: $650,900

Income Requirement: $162,725

Downpayment Needed: $130,180

Monthly Equity Burn: $5,424

Purchase Price: $870,000

Purchase Date: 12/20/2006

Address: 3732 Claremont St., Irvine, CA 92614

THIS IS THE SOUGHT AFTER CITY OF IRVINE! THE HOME FEATURES ROOM FOR ALL THE FAMILY, FIVE BEDROOMS AND TWO AND ONE HALF BATHROOMS ON ONE OF THE LARGER LOTS IN THE AREA. YOU WILL ENJOY ALL THE BEST THINGS THA LIVING IN IRVINE PROVIDES; SCHOOLS, PARKS, SHOPPING AND ENTERTAINMENT. COME HOME TO IRVINE AND START LIVING THE 'O. C' LIFESTYLE TODAY.

THIS IS THE SOUGHT AFTER CITY OF IRVINE! Do you get the impression this was written by someone from out of state?

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This property has a strange history. The buyer put down $175,000 of his own money when he paid $870,000 taking out a $695,000 loan. He then defaulted starting with the third payment, and the lender foreclosed on the property for $734,453 which is the total of the loan plus outstanding payments. The property records show a trustee sale amount of $593,550. I suspect there was an 80/20 involved and the lower amount represents the surviving first mortgage, but it is not clear. The buyer is out his $175,000, and the lender is not going to recoup their money either. The total loss on this property after a 6% commission, assuming they get their asking price, would be $259,000.

We generally profile 4 or 5 properties a week, and lately the average loss has been $200,000 to $250,000. We are documenting $1,000,000 a week in lender losses. It it any wonder the banks are in trouble?

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Panic on the streets of London
Panic on the streets of Birmingham
I wonder to myself
Could life ever be sane again ?
The Leeds side-streets that you slip down
I wonder to myself
Hopes may rise on the Grasmere
But Honey Pie, you're not safe here
So you run down
To the safety of the town
But there's Panic on the streets of Carlisle
Dublin, Dundee, Humberside
I wonder to myself

Burn down the disco
Hang the blessed DJ
Because the music that they constantly play
IT SAYS NOTHING TO ME ABOUT MY LIFE
Hang the blessed DJ
Because the music they constantly play

Panic -- The Smiths

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