Turtle Ridge High-End Rollback

**** NEWS FLASH ****

A special thanks to Irvine Wanna Be for alerting us to the sale of 35 Hidden Trail (details below) for $1,910,000 on 5/31/2007. There was a 5% commission for a total loss of $435,500 plus carrying costs. Ouch!

26 Hedgerow Kitchen

Asking Price: $1,750,000IrvineRenter

Purchase Price: $1,800,000

Purchase Date: 3/28/2005

Address: 26 Hedgerow, Irvine, CA 92603

Beds: 5

Baths: 4.5

Sq. Ft.: 3,611

Year Built: 2003

Stories: 2

Type: Single Family Residence


County: Orange

Neighborhood: Turtle Ridge

$/Sq. Ft.: $485

MLS#: U7001742

Status: Active on market

On Redfin: 48 days





This is a nice home in a great neighborhood. Perhaps in the comments some of the bulls can explain why it is selling for less than its purchase price?


Hidden FrontHidden Inside

Asking Price: $2,150,000IrvineRenter

Purchase Price: $2,250,000

Purchase Date: 7/13/2006

Address: 35 Hidden Trail, Irvine, CA 92603

Beds: 4

Baths: 4.5

Sq. Ft.: 3,675

Lot Sq. Ft.: 6,243

Year Built: 2005

Stories: 2

Type: Single Family Residence


View: City Lights, Ocean, Panoramic

County: Orange

Neighborhood: Turtle Ridge

$/Sq. Ft.: $585

MLS#: S446750

Status: Active on market

On Redfin: 365 days

Unsold in 90+ days

From Redfin, “Corporate Relocation. Outstanding panoramic view – city lights, ocean. Highly upgraded with hardwood floors, crown molding, plantation shutters, custom built-ins. Main floor master bedroom. Extra large bonus room. “



First, I would like to wish this listing a happy birthday: it has been on the market for one full year (Ooops! this listing expired yesterday. Sorry for the dead link). Do you think it might be overpriced? I don’t know if this really is a corporate relocation or if anyone is on the hook other than the seller, but a $2,250,000 home sitting empty is burning a hole in someone’s pocket.

If this sellers gets this asking price — which seems pretty unlikely after a year on the market, they still stand to lose $229,000 after commissions. If you add a year of carrying costs and the price reduction this will need to actually sell, this seller is probably looking at a $500,000 loss. In my opinion, that is a lot of money.

As you can see, the high end is not immune from the pressures of a falling market. There is no safe harbor from the storm brewing in our housing market. Last fall, and earlier this spring, there were sales occurring in the most desirable areas of Irvine showing some price appreciation. This is a natural “flight to quality” you see at the beginning of any bear market. If asset prices are declining, and you have to park your money somewhere, you want it in the best asset you can find. Unfortunately, in a real bear market — like we are about to experience — there is no place to hide. The market is like the tide raising or lowering all ships, and as Warren Buffet noted, “You don’t know who’s swimming naked until the tide goes out.”


124 thoughts on “Turtle Ridge High-End Rollback

  1. lee in irvine

    You are absolutely correct, no community or home is immune from the inevitable train wreck.

    BTW, tidbits from Bloomberg yesterday:

    June 20 (Bloomberg) — The worst is yet to come for the U.S. housing market.

    “It’s a blood bath,” said Mark Kiesel, executive vice president of Newport Beach, California-based Pacific Investment Management Co., the manager of $668 billion in bond funds. “We’re talking about a two- to three-year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock market and corporate profit.”

    Hey WaWa, is this guy a “doomsayer”? Sucker!

  2. Mr Vincent

    The latest buzzword realtors are using in listing descriptions is “nestled”. I am sure there are other new buzzwords as well.

    I am noticing that the number of days on market has dramatically increased for most areas of so cal. I sold my house in 2005 and it took two weeks to sell. It was quite stressfull keeping up appearances during the listing period. I can’t imagine the stress some of these sellers are going through now.

    2 million for better-than-average homes just aint going to work anymore. Looks to me like the low-end homes got hit first and now the high-end might suffer even more in the next couple of years.

  3. oc-conservative

    On a more positive note, jobless claims today climbed to a 2 month high. And California had the largest rise in claims applications, an increase of 10,333 that was atttributed to higher layoffs in trade and service industries.

    “Overall economic growth slowed to a lackluster annual rate of 0.6 percent in the first three months of this year, the weakest performance in four years. However, growth is expected to have rebounded in the current April-June quarter to a rate of 3 percent or even better.”

    I highly doubt April-June will show >3% growth. Gas prices and interest rates were both at their highs during this period. So fat chance for >3% growth.

    We are on pace for a housing-led recession and negative GDP before the end of this year.

  4. SoCalwatcher

    They gotta mow the driveway on that second one. I am not paying $2m for a jungle.

  5. IrvineRenter

    “Looks to me like the low-end homes got hit first and now the high-end might suffer even more in the next couple of years.”

    That’s how it tends to go down, particularly if there is a credit event. The low-cost and less desirable properties are impacted first, which causes the median to continue to drift higher while sales volume plummets. Finally, the drag of the low-end hits the high-end because the chain of move-up sales grinds to a halt.

    If it weren’t for all the foreclosures about to hit the market because of the exotic financing, prices could remain artificially elevated for some time, but instead of a slow, “sticky” drop, we are likely to see a couple of steep declines followed by a slow bottoming process over the course of several years.

  6. IrvineRenter

    I have an acquaintance who works in mortgage who told me his company put out an email telling all the salespeople that they must make 5 sales a month, or they would be fired — attached was an application to Burger King.

    If that wasn’t bad enough, the next day they put out the same email with an attached application to McDonalds.

    That must have been great for company morale.

  7. JoonB

    If I were paying that much for a house, the kitchen better well be a “gourmet kitchen”. This house definitely doesn’t fit the bill. The countertops are the white bathroom tile. If you look at the refrigerator, it looks like an apartment frig.

  8. Janet

    Just curious – since many here say there will be many more years of decline to come, does that mean you will keep your families in rentals for the next ten years? Twenty years? I hate apartments – everything about them. Crappy rental houses aren’t much better. Plus you have to move when you are told. Where’s the joy??? Such a dismal prospect.

  9. Janet

    Oh – one more thing: Since many passed-up housing back in 2000 when rates were also at 40 year lows, does that mean you’re waiting for homes to go back to 1990 prices (to account for the cost of higher rates)? Does the market have to make you whole for 15 years of bad decisions???

  10. oc-conservative

    I bought in 2000, sold in 2005 and started renting, and plan to buy later this year 2007. If the market is just getting cremated, then maybe I can manage to hold off until 2008. Getting 2004 prices (or better) would be ideal for me, as my interest earned in the bank has basically paid for rent this whole time, and getting that additional rollback in price would be great.

    But it’s gonna happen for me. I share your sentiment on renting, especially when you have a family.

    Mentally, I’m preparing myself for a 20% additional drop after I buy and not even break even for 5-10 years. I would hope to at least be able to get the home reassessed lower sometime during the slump.

  11. IrvineRenter

    If choosing between a rental and losing several hundred thousand dollars, yes, I will chose to rent.

    Rental houses are not all “crappy.” I am very happy in mine, as it is very nice and updated.

  12. Janet

    oc conservative: the blasphemy! You have to rent because it (might) be cheaper in the long run. How dare you spend your money on your family’s happiness.

  13. Janet

    Irvine Renter: congratulations on your situation. It’s not always that way. When I sold in Turtle Ridge, but my new home wasn’t complete, I had to rent for 4 months. We got a 1700 sq. ft. condo at $3300 per month. To say it was plain is to be kind. It was excruciating dealing with an amateur landlord as well. All-in-all a horrible time.

  14. lee in irvine

    Does the market have to make you whole for 15 years of bad decisions???

    A: NO ~ Many of us were in Collage or High School 15 years ago.

    Why should we buy a vastly overpriced asset that is now depreciating.

    The percentage of sellers that are selling their homes for less than they paid has more than doubled since November.

    The way I look at it, for every dollar I now spend in rent, I probably save 3-6 dollars in the future cost to buy a home. All by simply waiting. We now hold the cards.

  15. IrvineRenter


    I hope you continue posting, although I suspect you will get frustrated when you can’t convince all of us to go buy a house.

    Your “straw man” arguments are very amusing:

    Rates were not at 40 year lows in 2000. That did not happen until 2003:


    Nobody has suggested waiting until 1990 prices are here because we all know prices won’t drop that far. It is an amusing attempt to make us look foolish by suggesting we believe something we don’t.

    Those of us who are renting did not make 15 years worth of bad decisions; however, those who bought over the last 4 years did make a bad decision, and the market will not make many of these people whole again for a very long time.

    From the manic tone of your posts, I would guess you are either a starving realtor or mortgage broker, or a homeowner who is watching their fantasies of riches in real estate evaporate before your eyes. For whatever the reason, you seem to have a strong emotional attachment to the idea of real estate appreciation. It is too bad that is probably not going to work out for you as you hoped.

    In a post yesterday, you said you sold your Turtle Ridge home last year. You should be rejoicing that you got out at the top of the bubble.

  16. Janet

    Irvine Renter – I’ve said several times I bought again. I’m not starving, but thanks for your concern anyway.

  17. WaWaWeeWah

    He sure sounds like a doomsayer!

    p.s. Claim Jumper called, they said no more free refills on family treat night! Olive Garden might be a better option!

  18. buster

    Personally, I’d rather be a renter. I’m an owner now (no, not in trouble, bought the place in 1987). BUT — If I had been smart like some people I would have cashed out in 2005, put my money in T-Bills, and waited out the crash. By inertia, I’m sitting in a place that’s OK but not great. If I were renting, I could move anywhere I want with just the interest on the T-Bills (ie, free rent). Renters are the winners right now.

  19. WaWaWeeWah

    What would you guess from the manic tone of Lee’s posts?

    In all seriousness, you tend to look at real estate through a macro lens and in the real world it does buyers a disservice to look at it that way. As you noted yesterday, you can go to Turtle Ridge today and find two similar homes, one priced more than $1.5m more than the other. Prices right now are all over the place. So basing your decision to buy a home on the macro trends in the broader market (i.e., attempting to time the market) doesn’t make much sense, given that you will only be buying a single home.

  20. lee in irvine

    Okay, now let’s see: The Bear Stearns Hedge Fund that’s now in question, controlled a net of 13 billion in assets (mainly mortgage back securities), with only 660 million in equity. That’s a 20 to 1 leverage. I’ve read stories in the WSJ that some to the riskier hedge funds were leveraged at 50 to 1. All this leads me to believe that we have not seen a bottom in the subprime/alt-a mortgage debacle. Much more pain is coming.

    These hedge funds have played a huge part in this housing bubble and the Orange County subprime ponzi scheme. It’s gratifying to see the fat cats on WS pay for this. BAG HOLDERS

  21. lee in irvine

    WaWa (aka The Prognosticator)

    The opportunity cost on a 1.5 million dollar Turtle Ridge home is at most $6,000 a month, yet the monthly obligation is more than $12,000 a month for most people buying today using a conventional 30 year fixed, with 10-20 percent down.

    Isn’t it stupid to pay more than double the cost to buy a depreciating asset, when you can rent it and pocket 50 cents on a dollar?

  22. lee in irvine

    Yes … I’m a little angry! Why? Because the irrational home buying public has bid up homes to unsustainable levels, and now I have to continue to sacrifice while they bitch and complain about their depreciation assets.

  23. Mark

    “…however, those who bought over the last 4 years did make a bad decision…”

    I’ll try to defend my decision. I bought last month in Columbus Square, after holding out for 3+ years not wanting to jump into the frenzy. We found a place we loved and could (however statistically unlikely) live in for 10 years as the OC market corrects downward. Our DTI is 29% but considering tax implications is near 21%. So we’re paying a 10-15% premium for what would be its current rental value.

    It’s still going to hurt over the next few years seeing a paper loss growing, but if the downturn gets ugly, I’ll sell at a loss and upgrade into a bargain.

  24. lee in irvine

    One more point, all in all, I’m really conflicted on this issue. I’m angry because the RE market became stupid at the ideal time in my life to buy, however, I’m happy to see prices decline, and RE activity in a simi-free-fall.

    I feel sorry for the children that will become victims because of their parents foolish decisions. Lots of lessons will learned from this. Lesson number one: Real Estate doesn’t always go up.

  25. No_Such_Reality

    Let me think, I can pay for a year of rent on a nice 3 bedroom house in Woodbury or I can pay the tax and HOA on this place…

    That makes it pretty easy to minimize.

    As for your other comments, if you’re looking at a crappy rental, that’s your fault. There’s plenty places that are fixed nice, new cabinets, floors, counters, appliances with owners looking for reliable stable tenants.

    As for moving, I’ve always found that with a private landlord, if you are consistent with paying your rent on time, they virtually beg you to stay and only when the market rent has moved way beyond your rent to they ask “how you’d feel about a little raise”.

  26. carl


    I found a WTF attempted flip in my old stomping grounds of the Turtle Rock Broadmoor. Check out 18811 TABOR DR Irvine, CA 92603 on Redfin… new today. My goodness, are they smoking crack? They want a $250k profit in two months… and the property backs to Culver. That is the kiss of death in the Broadmoor.


  27. IrvineRenter

    “In all seriousness, you tend to look at real estate through a macro lens and in the real world it does buyers a disservice to look at it that way.”

    How is it a disservice to warn people they are going to buy the most expensive asset of their lives and it might depreciate significantly? That is a disservice to whom exactly?

  28. tonye

    There’s more than looks in this sale

    Until a few months ago, those home abutting Culver were being clobbered by the construction along Culver. No one wanted to touch them. So the values were in the cellar.

    The construction finally ended. The City of Irvine built new walls and most of these homes gained a big chunk of backyard, as much as 15 feet.

    It’s possible that this home was bought out from an stressed seller and now that the backyard has been completed and the construction finally abated the prices are floating back up to a more reasonable price.

    You can hardly take those homes along that stretch of Culver as typical of the Broadmoor because they’ve had specific problems ( road construction ) for the last year and a half.

    Hope that helps.

  29. carl

    I agree, but the entire time I lived in the Broadmoor the Culver backing homes were not as desirable, because of the noise. I hardly think completing a backyard in two months is worth $250k! Even the homes that back to Turtle Rock Dr. are not as desirable as the inner homes.

    I do hope there is more than meets the eye year, as so many Broadmoor homes have been sitting and sitting, or being withdrawn.

  30. lendingmaestro

    First off, who says that I have to rent an apartment??? I can find beautiful homes for rent between 4k-6k a month. Why in God’s green earth would I shell out 10k + a month plus taxes and insurance????

    The tax deduction argument is foolish, and we’ve all posted on how people are duped into believing they should buy a home to save on taxes. The property taxes you pay dwarf your interest paid income tax deduction.

    I’d rather rent in the same community and have the homedebtors around me pay for my roads, schools, parks, and public safety!!!

    Keep working hard homedebtors!! My kids need an education!!

  31. IrvineRenter

    In a normal RE market, this would actually be a good play. In this market… well, I have my doubts.

  32. mino2126


    Since you do such a great job with your postings on here could you please give us all insight as to why you are actually blogging here?

    For the most of us, we use this forum to discuss our bearish outlook on the housing market with facts, articles, and personal experiences. You on the other hand, from the postings I have seen, have added little or no value with your sarcastic postings. IMO I think you are a bitter homeowner who has just realized that your “wasting your families money” on a square stucco box financed by a ticking bomb.

  33. WaWaWeeWah

    lee (aka Claim Jumper Connoisseur) — your conclusion is correct but it’s based on faulty assumptions. I can pick numbers out of the air too. Calling real estate a depreciating asset is like calling the stock market a depreciating asset.

    IR — it’s a disservice for the same reason it’s a disservice to tell people not to buy stock in Microsoft because of your belief that the Dow Jones is overpriced. And your use of the word “might” is disingenuous, since all of your posts imply, if not state as a factual certainty, that homes are going to depreciate significantly.

  34. Masterofdamoney

    Janet is obviously a realtor. I would bet almost anything on it.

    She uses realtor buzzwords in almost every post, focuses on ’emotional content’ rather than looking at the logical outcome of events that are in motion.

    She has a dog in the fight. Bank on it.

  35. WaWaWeeWah

    What’s the point of having a discussion if everyone shares the same opinion? Isn’t that more like a mutual stroke session? Or group therapy for bitter renters?

  36. Irvine Wanna Be

    If I am reading the info on MLSAlliance correctly, I think this house was sold for $1,910,000. Looks like closing took place on 5/31/07.

  37. SmartMoney

    Could not have said it better. Rentals can be AWESOME, beautiful places with everything you could ever want, and flexibility on top of that. Others handle everything from maintenence to paying the taxes, and they eat all the losses, which is EXACTLY what you want in a market correction.

    Plus you can put all your savings from the sale of your home into a place that gives a RETURN, not an annual loss. That return can easily cover your rent (mine does), and you can live a joyful, peaceful, stressfree time in the ideal place, and love watching your net worth exponentially grow rather than erode away. Then, when the fundamentals work again, if you want to own a home, you have quite the selection at incredible prices.

  38. lee in irvine


    My assumptions are based on typical scenarios. Yes, a typical home that would sale for 1.5m in Turtle Rock would rent for about 6k per month. And yes, the carry cost on a 1.2-1.35 million dollar 30 year jumbo mortgage in Turtle Rock, including taxes, mello roos, HOA’s, etc, exceeds $12,000 a month.

    What’s so hard to understand about that?

    Now, If I’m renting a nice home in Irvine that’s presently declining in value, and my cost are fixed, would it be smart to buy that home and double my monthly cost, while at the same time increase my debt load on a deprecating asset. That’s what your suggesting. LoL

  39. awgee

    We sold in Aug of 2005 and last summer, while in between rentals, we took advantage of not having to pay rent, mortgage, property tax, utilities, etc. etc., and took a two month vacation in one of those huge motor homes traveling accross the US. I doubt we could have taken such a great vacation if we had a mortgage, et al, to pay. We live a beautiful rental home in a wonderful neighborhood with great schools. There is nothing “crappy” about our house and it is much less expensive than a mortgage would be for the same property. And we are making a killing on the invested money we got from the sale of our home. Making money is alot more fun than watching one’s home depreciate and watching one’s equity slowly evaporate. My experience is that the greatest difference between leasing and being a mortgage debtor is I have alot more free time on the weekends.

  40. SmartMoney

    And some of us were in middle school 15 years ago, but still made better decisions that a lot of adults in the last 3 years . . . (wink).

    lee is exactly right: time is on the side of the folks who got out or never got in.

  41. awgee

    Why do you assume a family is not happy in a rented home? I suggest that my family’s hapiness does not depend on us owning/mortgage debting a home. I think it quite sad for anybody whose family’s happiness depends on any supposed difference between renting and haivng a mortgage.

  42. Masterofdamoney

    Okay, I just pulled up this property on tempo.

    It has indeed been sold for $1,910,000 on 5/31/07!

  43. SmartMoney

    WaWa, the housing market is what economists often call “inelastic.” It tends to be much less volitale than stocks and moves in a fundamentally different way than stocks. Though California is abnormally volitale with some sharp historic climbs and falls, as a generally rule housing tends to maintain its trends for long periods of time. Here in Irvine, it is almost Biblical with seven years of plenty followed by seven years of famine. It actually is almost easier to predict, though toxic financing and unexpected changes make it nearly impossible to time it EXACTLY, the general trends are very recognizable, oft repeated, and lost quite a long time.

    So yes, for years a home in OC will be a depreciating asset, and it is fair to call it that and fair (and a public service) to point that out to people making financial decisions. Obviously, it is also helpful to include disclaimers like “These are forward looking statements; while there is mathematical basis for all conclusions, past performance is not necessarily indicative of future performance” and so forth. I think in a houing blog, that disclaimer is implied. IrvineRenter is actually very restrained and quite careful to use words like “might” when I would be more inclined to say “as mathematically inevitable as the cycles of day and night or the seasons of the year.” (wink)

  44. IrvineRenter

    If you believe an asset is going to depreciate, and you can make a coherent argument as to why that would be the case, withholding that information would be a disservice. Disseminating that information is a service. If it were not, people would not come to read this blog.

    People are free to accept or reject the arguments based on their merits. Most people are intelligent enough to make their own decisions. By your reasoning, people should not be exposed to the information necessary to make an important financial decision for reasons which are not too clear. Perhaps you can expand on why having this information is a problem?

    I suspect it seems like a disservice to you because you desire a different outcome.

  45. awgee

    I like Janet’s postings and learn from them in much the same way I learn from nirvinerealtor’s postings. I think one can learn almost as much from misinformation and the presentation of it as one can from hearing the truth. Also, listening to folks helps one discern the stage of the present re cycle. Obviuosly the euphoric stage is over and we are deep into the anxiety stage. Some have already moved into denial, re. wa wa’s posts.

  46. IrvineRenter

    “What’s the point of having a discussion if everyone shares the same opinion?”

    I like to have posters with different opinions as it does make for more interesting posts. The threads this week have had plenty of comments with much discussion.

    It would be nice; however, if the comments from both sides were a bit more constructive and had fewer petty snipes going back and forth.

  47. Janet


    I have posted as a:

    1. Seller in 2006
    2. Buyer in 2007
    3. Renter in between.

    I’ve described my personal experiences regarding all 3.

    Just because you don’t agree with my personal observations, you want to be rude and run me off.

    What a jerkoff.

  48. Masterofdamoney

    35 Hidden Trail.. looks like they took a pretty massive loss!

    No sign of it being a short sale, so they must have lost their OWN money on this one….

    Also looke like it was a 5% commish deal, not 6%. 🙂

  49. Darin


    You ask a seemingly interested question (I presume it’s sincere and not rhetorical) “why are you actually blogging here?”

    Then, you conclude that what Janet has to say has contributed has “little or no value”.

    If I asked anyone a question and included the fact that their opinion doesn’t matter, would I really want a response? How about you mino2126?

  50. IrvineRenter

    So they lost $435,500 plus carrying costs? If you can confirm that, I will update the main post.

  51. awgee

    Wow, those folks in Turtle Ridge must feel awful when they find out what comparable properties are selling for.

  52. Cayci

    I rent, and I currently love my rental townhome. It’s great. It was spotless when we moved in, so if anything is crappy it’s because I spilled a drink at a party or something. When we moved in, I asked if it would ever be for sale and was told that “no, this is set aside as rental only.” So there will be no one telling me when I’ll move. However, the reason I asked is because I hate moving and I figured if I could just buy the place then I could just stay. The rent has gone up $100 total in 4 years, and it’s still below market rates.

    And I have no children to worry about…just myself and my husband. We will not have children until it makes economic and personal sense, so maybe someday. And as of right now we COULD buy, even with a fixed rate mortgage, but we see what’s happening and are not interested anymore. It will take a great house at a great price to get me to spend my down payment money and pack up all of my belongings.

    I also don’t think I’ll have to wait 10 years. Where are you getting 20 years from? I kinda giggled at that one. If DINKs like us don’t see the numbers working out for a house 20 years from now, Orange County will have bigger problems than housing.

  53. Cayci

    “Does the market have to make you whole for 15 years of bad decisions???”

    Um, I was 12 in 1990.

    I was a senior in college in 2000, and I’ll turn 30 next year. I’m now a professional making 6 figures and saving my money. I don’t think I made any terrible decisions in the last 15 years. I used to be mad that I wasn’t born earlier, but I’m okay with it now. It’s kinda fun to watch now that it’s all turning in my favor.

    Please remember that this has gone on long enough that some of us who were too young (or hadn’t built up their career yet) to participate in the beginning are now productive members of society.

  54. mino2126

    Darin to answer your question:

    “If I asked anyone a question and included the fact that their opinion doesn’t matter, would I really want a response? How about you mino2126?”

    If you read my post carefully I did not say anything about her opinion not mattering. If anything I challenged her not to be so sarcastic in her responses and maybe other bloggers on this site would take her postings more serious. Responses like so “oc conservative: the blasphemy! You have to rent because it (might) be cheaper in the long run. How dare you spend your money on your family’s happiness.” add no value to any argument and IMO reduces your credibility.

    Thanks for the compliment…I have been called alot worse in life. But hey this Jerkoff is going to wait out the market as most of the technical fundamentals like DTI ratios, exorborant appreciation, and foreclosures are all painting a very dreary picture. And yes I miss you too.

  55. lee in irvine

    I totally agree w/IR. I love the debate, however, I can’t stand it when someone starts the personal snipes. It just goes back and forth.


    Why not just come clean and disclose your true identty. You’ve repeated the same nonsense you used on Lansner’s Blog under another ID. You use the same techniques — slash and burn.

    Stop the deceptions and defend your position without trolling.

  56. zovall

    You’re right!

    Originally priced at $2,499,000 on 6/21/2006 and sold for $1,910,000 on 5/31/2007.

    That’s a HUGE loss!

  57. No_Such_Reality

    Sounds like a good decision Mark. If you have the comparable rent to within 15%, and you house is obviously within your affordable range, the intangiables of location, hassle, control is justifiable.

    It’s relatively rare to find anything in Irvine anywhere near rental rates.

  58. IrvineRenter

    AAPL is showing signs of weakness. I would wait until the price breaks below the 20-day moving average and closes there.

  59. IrvineRenter

    “Just because you don’t agree with my personal observations, you want to be rude and run me off.

    What a jerkoff.”


    Crying victim and being abusive in successive sentences is classic internet troll behavior. It is obvious, transparent and unwelcome. Please stop.

    If you have something constructive to add to the conversations on this board, please do. If you do not, please don’t.

  60. MMG

    20% loss, one year on the market, ouch.
    so much for the high end. I guess the sellers were lucky to find a GF and lose only 20%. they will be very glad a couple of years from now when the new GF loses another 20% at least.

    Got 435,500 to lose?

  61. mino2126

    Corporate Relocation Question:

    I know that many times when companies need to relocate employees for one reason or another they will buy their house from them and then attempt to sell it off. Now if 35 Hidden Trail is really a Corporate Relocation sell how does the company account for the loss on it’s books? I would assume maybe an expense b/c I don’t think they could carry it as a depreciating asset or appreciating asset. Anyways just a curious question.

  62. lee in irvine

    Oh my, 435g’s … that’s a lot of scratch! My-My, that’s enough money to buy a brand new loaded 911 turbo, matching gold Rolex’s for you and the little lady, send the kids to Stanford, and still have enough money to pay for the ultimate Maui family vacation.

    $435,000 … oh geeze, that’s got to hurt! Right in the belly!

  63. Janet

    Oh Janet, you are sooooo right, it is soooo dismal a prospect, I could never get me myself to do it, dear.

    Oh dear, oh dear!

  64. Adam

    January 2005, my wife and I both relocated to Irvine from the Midwest due to job transfer (we both work at the same company). Tomorrow is my 33rd birthday and as prodigious savers / investors we’ve enjoyed watching our net worth explode in recent years.

    Do I wish we were here in the 90’s to take advantage of a beaten down real estate market and later ride a wave of loose credit to enourmous equity? Absolutely! However, the fact is I graduated high school in 1992 and was focused on continuing my education.

    Now that I am ready to settle down and grow some roots, I am unable to make the numbers justify buying a house. Yes, I hate renting and I hate moving even more, but I hate losing money worst of all.

    The point is I haven’t been on the good side of any bubbles in recent memory (including the tech bubble) because I haven’t been in position to. It is like my life is out of sync. with the rest of the world. I have yet to take advantage of generational low liquidity. Reading blogs such as IrvineRenter’s and Chuck Ponzi’s helps me keep my sanity. A special thanks goes out to those fellas for the education and entertainment they provide! Thanks.

  65. SmartMoney

    The philosophical question is “happiness return on investment.” I could buy a new house right now, and it might bring my family 2 units of additional happiness over renting (probably not, though, as owning has its downsides, too, and they get a lot of happiness out of seeing money NOT disappear), but it would cost me hundreds of thousands more in taxes, interest, insurance, maintenence, and fees, tie up money I have right now invested in ways generating hundreds of thousands of dollars in returns, and the kind of house I would buy would lose hundreds of thousands of dollars before the market stabilizes again.

    2 units of happiness in exchange for SEVERAL hundred thousand dollars, when I could buy them exotic cars, expensive clothes, extended vacations, and much more for 1,000 units of happiness and still have more money in the end for a happier retirement to boot.

    I’ll buy another house the very moment the hedonic calculus results in greater happiness owning versus renting. That day is a long ways off, though.

  66. Janet

    Oh dear, life is sooo tough, dealing with landlords!

    Me myself, I loooove to deal with amatuer real estate agents.

  67. lendingmaestro

    If there are sellers out there that just want to dump a property and take a half-mil loss, imagine what banks will begin to do as REO’s swell in their portfolio’s.

    The homes are just non-performing assets. When they get heat from their investors on wall street (meaning hedge funds, institutional investors) they’ll start dumping like crazy.

    We’re talking millions upon millions of dollars tied up in real estate. With that kind of money and rates rising across the globe, a bank will stop at nothing to unload!!

    Fire sale Fire sale!! Let the fun begin, and remember to let me help you with your purchase financing 🙂

    Refi’s are screaching to a halt like Dale Earnhardt at the Daytona 500 (ok that was bad). We’ll be making an all-out purchase push by year’s end. I am sure that other banks will be doing this as well. Anyone else have an opinion??

  68. Sue

    I’m so tired of people telling me I need to buy a house because I have kids. They like their rental. They like their lifestyle. They’re happy kids. It’s about time and doing stuff with them, not buying more stuff that makes them happy.

    How is buying a house in a market about to fall, and losing all the future college money going to help them? I just don’t get it.

  69. tonye

    A lot of the homes in the Broadmoor have not been as upgraded as they have been in the Sierras.

    There are original and other very long term (25++ year) homeowners who think they can charge as much for a homes that are but one light remodel from the Brady Bunch Era as others that have been torn down and completely rebuilt.

    Those are the expectations that are being busted.

    I should know, I’ve been in my mini chateau for over 20 years but there’s probably only five walls and ten feet of drywall that are original.

    Personally I’d love to buy a 1600 sq foot in the inner side (I’m along TR Drive) for 700K or less, tear it down and build me a nice 3000 sq/foot house. But then my taxes would more than double. 😛

  70. tonye

    I have a financial question…. I used to invest in CMOs in the early 90s.

    Is the payment for a

    $1MIL, interest only, 5%, adjustable

    comparable to a

    $700K, 7% fixed for 30 years?

    When I used to invest in CMOs we looked into monthly payments and length of contract (tranches) to calculate the face value (discount) of the contract.

    I figure CMO investors might want to change the terms of the mortgage by having a lower face value with a higher interest rate and a long term guaranteed term.

    Sort of like a

    $700K, 7%, 30 years fixed,
    with a $300K prepayment penalty for five years,
    with a $200K prepayment penalty for the next 15 years.

    Figure that will keep those who want to live in their homes making the same payments for a long time, will keep the CMO investors making the same money, the banks happy.. And it will also normalize the market so that it makes sense to purchase properties for income.

    You know… a “normal” market.

    Oh… sorry about the true real state flippers. They’ll get screwed.

  71. EvaLSeraphim

    I would like to congratulate you fine folks at the Irvine Housing Blog. It appears that you have your first confirmed sock puppet in Janet / Irvine Wanna Be. You’ve arrived!

  72. graphrix

    My oh my how the times have changed. It was just last year that we were the angry and bitter bears. Clearly we have entered stage 2 and now it is the angry and bitter bulls.

    “A great deal of intelligence can be invested in ignorance when the need for illusion is deep.”
    Saul Bellow

  73. WaWaWeeWah

    I said you were doing people a disservice by advising people to look at the decision to buy a home through a macro lens. I didn’t say you should be prevented from offering your opinion on anything (most of what you offer is “opinion,” not “information necessary to make an important financial decision”).

  74. IrvineRenter

    No, we offer a lot of information, and our opinion on how one should act on it.

    Your attempts to discredit what we do on this blog are feeble. I suggest you read The Anatomy of a Credit Bubble to see the synthesis of information and opinion in action.

  75. DisplacedOCer

    So the house sold for 1.9million, what do you think the first offer from the buyer was? 1.7, 1.8? Or perhaps maybe the buyer offered 1.9 and the seller said SOLD! Lowballing by 20% and sold, maybe 25% below asking is a good starting offer these days.

  76. awgee

    Could wait for the technicals, but what about sell the news? The darn thing hits the stores on the 29th.

  77. what da dealio

    I realize this is Turtle Ridge post; however I wanted to see if anyone in the biz had the inside scoop on 55 Bethany in Turtle Rock:


    Granted, it does back to Turtle Rock Drive, however it is on a decent sized lot for this neighborhood at 6500+ sq ft. I believe it was originally listed for 899K earlier this year (looks like it was pulled off the MLS and relisted) and has been discounted to 829K but many comparable homes in this neighborhood have been selling for much more very quickly while this one continues to sit.

    It looks fishy to me since there have been 3 sales transactions since 2003. It this house haunted or in need of a new foundation or something? I believe the atrium was closed in so it is not up to code, but that seems like a relatively minor problem to fix considering what the other homes are selling for despite recent market conditions.

    What da dealio with 55 Bethany?

  78. No_Such_Reality

    CMO: Collateralized Mortgage Obligation

    Tonye, I see how that works for the tranche holder, but what relief would it offer a homeowner?

    Tranches are bought for their cash flow (yield), that cash flow comes from only one source the home buyer. It comes in the form of mortgage payments or balance pre-payment.

    From the home owner does it matter if your loan balance is $700,000 or $1,000,000 if you still can’t sell for fifteen years without paying the million and your payment is still $4500/month?

    The balance is the problem if you want sell.

    The payment is the problem if you want to keep.

  79. tonye

    I figure that if the homeowner could make the payment on the interest only 4% for 1MIL he may still be able to make the payment on the 7% for $700K.

    A big part of the problem today is that mortgages are being fully indexed and people who went in with this teaser rates can not afford the fully indexed payment. And you get the perfect storm of too many homes on sales -lower prices- and foreclosures brought by higher interest rates -even lower prices.

    That is, someone who’s making a 4% on a $1MIL can NOT pay a 7% on a 1MIL.

    What’s in for everyone?

    (1) The homeowner who does indeed mean to stay, gets to stay put without being forced to sell. Of course, he gets stuck in the house with that mortgage for 20 years -unless some special circumstances occur -death, job transfer….

    (2) The investor still gets his money and a longer term investment.

    (3) The prices of homes does go down, but to a more realistic level. A soft landing.

    (4) The speculators get taken to the woodshed. They deserve it, iMHO.

    All in all, we get a return to a more normal market driven by supply and demand of homes, NOT by pure speculation and greed.

    The flip side is a far collapse which is bad for everyone.

    Imagine, even the bears do not want to see a collapse to ridiculous prices because then the banks will want 50% interest. Which means than the bears won’t be able to afford even a 100K property.

    Do you understand where I’m coming from? I figure this would be a soft landing that will remove the flippers from the equation. Speculation driven bubbles are bad for ALL homeowners who look at their homes as a home, not a pure investment.

    Those who own homes get locked in.
    Those who want in can’t.
    Those who don’t give a shit, go 100% and sell in a year or less.

    Now, I always thought that our tax laws were built about home ownership being good… not about speculation on homes.

  80. Irvine Soul Brother

    Are there multiple “Janet’s” on here or does she just have multiple personalities?

    Somebody fill a brother in.

  81. carl

    I used to live about six houses down from Bethany. I don’t this the last sale was real. THe same people live there now. They bought the property in 2003 I think and upgraded it. It is actually quite nice inside. THe problem is that it is very small, and it is overpriced even at 829k. I sold my 4 bedroom, 2000 sq-ft house on Catowba for 890k. These clowns are looking for too much.

    The owner in a mortgage broker… I hope he’s not in over his head.

    And yes, the atrium is closed in. It looks like a freaking torture chamber in there. Otherwise the house is lovely inside.

  82. Irvine Wanna Be

    It also looks like 26 Hedgerow, Irvine, CA 92603 has been approved for a short sale. Perhaps, Zovall or Masterofdamoney can confirm also.

  83. No_Such_Reality

    I know where you’re coming from and I agree, an implosion is bad, not sure how bad, however, a soft-landing, may actually be worse. It essentially locks in the past hyper inflation into reality. Homes have appreciated 3X in six years. With housing being often 1/3rd of ones expenses, we’ve just forced inflation to 10%+ and locked it there.

    The investor, doesn’t actually get thier cash flow. The cash flow the mistaken buyers need to maintain is the teaser rate. Adjusting the principle so payment remains the same is just extending the teaser rate for 30 years. If my initial capital investment was $1M, why would I agree to accept below T-bond rate returns?

    The sellers are locked in, I don’t think that’s good.

    The big difference, I don’t see item 3. IF the sellers are all locked in, inventory dries up, prices won’t return to a normal level, they’ll remain artificially inflated. All the drivers to sell are gone, in fact, for many there are substantial penalties. As potential seller, what could possibly be better than knowing 3/4s of you Turtle Ridge neighbors are locked in and can’t sell for 15 years without a $200,000 penalty. Woohoo! I don’t have to worry about competition.

  84. No_Such_Reality

    Don’t get me wrong Tonye, I give you credit, it’s clear you’re trying to come up with a solution that won’t slash and burn every couple that was just trying to buy a home to live in while leaving the speculators to roast.

  85. Turtle Rock Home Owner

    Actually, 55 Bethany is vacant right now. I believe the owner upgraded to a bigger home up the hill in January. What do you think this house is worth right now?

  86. tonye

    (1) I assume a 30% decline in prices from the peak.

    (2) Not everybody is locked in. I would assume that more than 95% of all homeowners are NOT locked in because they have plenty of equity to beging with.

    (3) Yes, some new areas will be locked in for awhile, but that’d be better than seeing their home prices crater.

    (4) Now, per TRidge… yep you may have a point, but then it isn’t like TRidge is the only place around… Buyer might want to buy into TR, Shady Canyon, Newport Beach… After all, TRidge is fairly small compared to the neighboorhood.

    (5) So, say you’re the only one in TRidge that’s able to sell… I don’t think their prices will bounce back for a while anyhow, but think, if the market were to bounce up more than the original selling price then the homeowners who took advantage of the “refinenance help” would be willing to pay the prepayment fee and they’d walk away with cash. So in the mid to long term that would put a cap on price appreciation. Given a 30% decline, that would be also a 30% cap. Of course, if too many of them tried to get out at the same time, the prices would drop and there would be a return to normal.

    So, all in all, I think it’d work. Flush out the pure speculators, help the homeowners who got over their heads and keep the banks happy.

    Oh, yeah of course, sure, anyone who plunked a lot of equity in their home and wasn’t in financial trouble would be able to sell at just around their buying price… for almost no loss… but, hey! They put a big payment down so they’re the ones that don’t need help.

  87. carl

    I haven’t been to Turtle Rock in 6 months… I didn’t know it was vacant. I sold my house a little below market in 2006 (in order to move it) at the insane price of $445/ sq-ft. So, since 55 Bethany is 1600 sq-ft, it should in no way be more than 700k. I think it should be less, since 1. My house was upgraded too (not quite as nice as 55 Bethany, but pretty good) 2. I was on an internal street (55 Bethany backs to Turtle Rock), and 3. I was a 4 bd, and 3bd are just not as practical.

    So I say it could probably go for 700k. I suspect in a couple of years it will be less. Everyone has their own doomsday scenario here, but honestly, my feeling is it will go back to 2003/2004 prices (after inflation losses will be worse of course). So, my personal guess is it will go down to 340-360 / sq-ft in the Broadmoor or maybe a minimum value of 550k or so. That would certainly get me to come back to Turtle Rock.

  88. zovall

    Thanks for the info Irvine Wanna Be!

    The private remarks on 26 Hedgerow do state “Short sale has been approved!BANK WILL REPSOND TO OFFERS IN 72 HOURS. “

  89. tonye

    They also show the wrong schools. Bonita Canyon and Rancho.

    Uugh! No pictures, wrong schools….

  90. tonye

    I sold a Plan 1 (3b/2Ba) on 2002 for $435K.

    I bought it as a wreck, fixed it up very well with high quality materials (roof, water heater, new kitchen, new bathrooms, new HVAC, garage doors, lights, ceilings, tile, carpet, windows, etc..)

    The idea was to keep it as a long term rental but circumstances didn’t work out (I hate dealing with renters) so we sold it.

    That house sold recently for $725K (yeah…) and it looks nicer than this one. So, figure this house should run about the same, tops.

  91. No_Such_Reality

    CMOs may have been what they invested in, but the root of that problem again, is leverage. They’re getting Margin call and, like many, no money to cover the margin call.

    Tonye, by preserving FBs, I’m not following how the market is still going to correct 30%?

    Basically, I’m of the impression, a severe correction to fundamental value (rent/price, price/income, carrying cost/income) will be more cathartic and better for the market long term than attempting to sustain and soft-land the market.

    I also think it will be better for the economy to crash land the market than soft-land. Soft landing will drive us into stagflation. A crash landing will hurt for the next twelve-twenty four months and the bulk of the damage will be focused into speculators. More importantly, a crash landing will allow RE economic engine to restart.

    Housing that is and will continue fallow will be allowed to return to the market during and after the crash landing, with a soft landing, I suspect, like San Diego, we will continue to see the banks delaying and dragging their feet as foreclosures pile up a 600 units a month. A crash landing puts housing back at value. It will free units to be cash flow invested and used as rentals putting a mild correction to SoCal’s rental affordability problem.

    The crash landing in effect frees money from our income stream. It also puts the housing & construction industry back to work building homes at normal rates instead of grossly inflated rates and puts the mortgage, bank and other industries back to work. A soft landing, will leave all of those frozen for a years if not a decade.

    In the end, yield pigs get slaughtered. Mortgage banker pigs get slaughtered for writing junk paper. Specuvestors get slaughtered. and unfortunately, the nice couple that bought out of fear of getting priced out by 20% annual gains will get slaughtered if they can’t afford their loan and if they can, they’re stuck with their house for years.

  92. tonye

    I suppose that letting the free market handle this has some merit. If the crash could be controlled to the RE markets.

    But it was also the free market that saw us going this way. And like the OC bankrupcy, the CMO/CDO market has managed to ensnare a lot of people who invested in it via complex (and for the piggy hedge funds, leveraged) investments.

    And I’m afraid that if the market starts to crater it will take with it a lot of wealth. Not just the RE itself but the CMO/CDOs.

    And a lot more.

    I mean, why should investments that have nothing to do with the RE market be affected? Why should a company that has a good business plan and a growing backlog be affected because of rising interest rates due to a bunch of RE pigs?

    If only the right pigs could be slaughtered then things would be fine. But if this blows up even the RE permabears will be killed along. I figure that RE permabears are not uberbears and have all of their money in cash…Yes RE is overvalued and there’s a lot of speculation but if you’re sitting on some reasonably safe nest egg while renting expecting to buy in when the market craters… and then the entire market craters… well you ain’t got no money for no real fault of your own.

    So, I figure that if this gets out of control there will be a lot of political pressure to put an end to it. And I think the Feds will indeed step in and patch the market while the speculators get hosed.

    And, as a rule of thumb, I don’t trust the Gov. to do the job. So I would hope that someone does something to help the people who indeed are over their heads.

    And I still don’t understand your point. The only stagnation will be to those who are lucky enough to be able to afford the “30% depreciation” mortgage payment on their house but get locked in.

    The majority of the market still functions fine. Pretty much we can start at a 30% discounted number or so.. Perhaps in the case of TR this number might have to be lower… I guess you could take the last two years off the books and restart from there.

    True, not free market and it sort of smacks like Marxism. But then JDR did something similar in ’29, eh?

  93. DfromCA

    From redfin looks like, house prices are rising!!!

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  94. what da dealio

    Was this a Paseo street house? I have not seen any detached SFRs in Turtle Rock sell for below 750K in the last 2-3 years.

  95. tonye

    My rental house was on Saginaw, in the Broadmoor. Remember that I sold it in ’02. Well before the current mania. Yep, I probably walked away from 300K but I just couldn’t handle the intrusion of renters in my own life.

    The other homes are also all in the Broadmoor. The Paseo homes are not detached.

  96. Burn baby burn

    I have been renting for 5 years, married the whole time. I have no problem renting, and i am someone sitting on $5M in cash. i currently rent a $4M house for about $7,000 per month. hell I’ll rent this house as long as the fool who owns it will let me. Most high end properties rent for about 2% of value or less. the cost of owning, after taxes, insurance, and interest payments (or forgone interest in my case) is about 8%. So the way I figure it I am making about a quarter of a million a year renting. I lost out a few years ago, but am making a bundle back now. No need to screw up the plan by paying $4M for something that will go for $3m in 18 – 24 months. oh and by the way, if I prices dont come down, yes i will rent for another 10 years. I can still always rent for drastically less than the cost of owning because all these fools who own these houses have brainwashed themselves into thinking a 2% yeild on their asset is a good deal when in reality it is a good deal for me, the renter).

  97. tonye

    Are your 5MIL in cash? With your attitude they better be.

    If the RE market craters, then those properties may only be $1MIL.

    But your $5MIL portfolio might only be worth $800K because it’s gonna be hard to contain a crash in the RE market from affecting interest rates and other financial markets.

    This ain’t like the NASDAQ, because RE partnerships were not investing in tech IPOs. And the NASDAQ bubble was small compared to the “paper wealth” in RE.

    Today you got large RE investments that have very large ownership of RE mortages…. Worse, MUCH worse you got these idiots who are on margin big, big time.

    Now, normally, we’d just laugh at those clowns that are constanly on margin. Didn’t they learn from year 2000? But noooo, of course they didn’t and this time they’re in a position to do a lot more damage to the overall financial state of the country.

    Again, I don’t think that the bubble was good and I didn’t make any money off it since to me my home is my home, not my investment. But I’m concerned that the danger to the economy at large may be greater today than it was in FY2000.

  98. awgee

    Asset bubbles are not good or bad. Asset bubbles just are or aren’t. There are those who lose from them, those who do not lose or gain, and there are those who take advantage of them.The cause of the size of today’s bubbles is a moral issue. The cause is the extreme credit expansion and contraction caused by the Federal Reserve and politicians who desire and are successful at transferring middle class wealth to the already wealthy.

  99. WaWaWeeWah

    I guess one way out of a losing argument is to call the opposition’s point “feeble” and cite to a self-authored and highly opinionated thesis. LOL.

  100. graphrix

    Wawa – Would you care to show us where the facts state otherwise? I’m serious I’d like to see the facts that would prove IrvineRenter’s “opinions” to be wrong.

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