I hear the bells

Saying Christmas is near

They ring out to tell the world

That this is the season of cheer

I hear a choir

Singing sweetly somewhere

And a glow fills my heart

I’m at peace with the world

As the sound of their singing fills the air

Oh why can’t every day be like Christmas

Why can’t that feeling go on endlessly

For if everyday could be just like Christmas

What a wonderful world this would be

I hear a child

Telling Santa what to bring

And the smile upon his tiny face

Is worth more to me than anything

If Every Day Was Like Christmas — Elvis Presley



In many ways blogs are uniquely personal things. The personalities of the contributors and commenters shapes the conversation and gives the blog a personality all its own. The Irvine Housing Blog is a community — a community of like-minded individuals (and recovering kool-aid addicts) who have come together to make sense of the very unusual events we have witnessed in our housing market.Balance

There are a number of great housing and real estate blogs. Calculated Risk is one of the finest, and the discussions over there are very cerebral. Quite honestly both Calculated Risk and Tanta are more intelligent and more experienced than yours truly. I go to their blog frequently to keep up on the evolving nature of the intellectual discussion of the issues surrounding housing. However, residential real estate is an emotional issue as well. A heady discussion of real estate matters is a useful part of the discourse, but the emotional aspect is equally important. This bubble we are living through was not created by logic or fundamentals: it was a perfect example of irrational exuberance.

Discussing and expressing the emotional side of the bubble is part of my mission as a blogger. I know I am not the only one with a Reservoir of Schadenfreude.Balance scales I must confess that I enjoy going over to Housing Panic and reading the unbridled emotional release you find there. I couldn’t maintain the level of intensity Keith does and stay sane, but there are times when letting loose is appropriate, and Housing Panic is a place to do it.

Some people come to this blog for the analysis; some come for the schadenfreude. We welcome both groups. Some would like this blog to limit itself to analysis, and some would like nothing more than daily doses of schadenfreude. When I write for the blog, I want to express myself fully. I do not want to ignore my emotions nor do I want to discard my intellect. More of one side or the other may come out during any given day, but over the course of time, I hope I achieve a balance in my posts just as I hope to achieve a balance in my life.

Life is about balance; it is about being aware of your intellectual and emotional intelligences and being able to manage both. During a financial mania people allow their emotions to override their intellect, and the results are not pretty. It is only through the interplay of the intellect and the emotions that we can gain a deeper understanding of what really happened in the Great Housing Bubble.

Zen Garden


32 thoughts on “Balance

  1. Gray

    Schadenfreude can be a sweet relief from the dire consequences of the crisis, but some empathy for those honest housebuyers who got fooled into an irresponsible financial adventure would be good for a balance, too. Not all of those mortgage borrowers of the last years are flippers (at least, I hope so). The last example for instance didn’t really look like the investment of a real estate gambler.

    It would be interesting to learn more about such cases. How did people get into the mess? Didn’t read the small print and relied on what agents and borrowers told them? Got no clue that their mortgage rates could actually be higher in the future? Or an extraordinary event that ruined their calcualtion? Of course the privacy of those people should be respected, but wouldn’t it be possible to send a notice that the property will be featured here? Some owners might want to present their side of the story, and I’m sure there is much to be learned form this..

  2. lawyerliz

    I really like the personalities here. I know you want the blog to grow, and if it hadn’t, I wouldn’t be here, but if it gets too big, then that interplay will go away.

    Calculated Risk is awesome, but since they don’t allow others to form threads, IHB will always have an advantage over them.

  3. NoWow!way

    My kids will be graduating from college starting next year. They’ve been reading your blog since I suggested it to them during recent conversations about buying a home in Irvine.

    Thanks for taking the time to make this blog such a success.

  4. covered


    Excellent point about the emotionalism that accompanied this housing bubble and crash as opposed to a stock market bubble and crash. In both cases, participants want to believe in the hype and look for affirmation to justify their participation. In every case, this involves the bashing of critics and doubters all the way up the spectrum from being called stupid, a “doom and gloomer” to an all the way accusation of being called “anti-american.” Just look back a mere 90 days ago on this very blog at the FBs and deniers comments and attacks.

    I read this blog and Calculated Risk (and a couple of others) because I’m interested in hearing the truth from industry insiders rather than the extremely lame propaganda and legitimate stupidity offered by what passes for the traditional news media. You know, the paid MSM who claim[ed] “there is no housing bubble” to “it’s just a subprime problem and it’s contained” crowd. The “Baghdad Bobs” of teevee.

    The takeaway I have learned from all this is that there really is a large contingent of people out there who “can’t handle the truth.” Blissful ignorance is a lifestyle they either chose, were born into or fell into by default (pun intended.) Besides the extreme challenge of the oncoming credit crunch, perhaps more alarming is we still have these types with us, some in positions of power. That is unsettling. Refusal to admit glaring problems and mistakes only prolongs the pain.
    Will enough people snap out of their trance in time? One thing I would bet on…a lot of the bliss is gone from the ignorance.

  5. William E. Jones

    There is a long article in Slate Magazine today about how New York City is heading into the tank and the rest of the country is soon to follow. The decline in financial services is hitting high-wage employers in the finance sector – Bear Stearns, Citicorp, and some of the law firms that did the legal work for the subprime securities.

    Funny…it seems like only yesterday that I heard that New York was “recession proof” and the price of Fifth Avenue Apts. was setting new records every week. How times change!

    Rumor is that Citicorp may lay-off 40,000 people.

  6. Alan

    I have a new topic for you.

    A few years ago I was at an economic presentation on the application of game theory to economics. The premise was that in any transaction, there is never equal knowledge so that the seller can get a higher price if he has greater knowledge and vice versa. Before game theory, buyers and sellers were presumed to have equal knowledge and market equilibrium was set by value only.

    My supposition is that in past-bubles, pre-internet and blogs, the sellers (realestate agents) had the upper hand in knowledge and were able to slow the price decent because of buyer ignorance whereas in this bubble, the internet has empowered buyers with greater knowedge of true vale, thus prices will fall much more rapidly than anyone would have expected that if the internet hadn’t existed.

    I wonder what your thoughts are.


    A blog like this cannot be impartial. It has a duty to hurt the sensibilities of the NAR types. You’re also driving away readers with a constant barrage of Elvis.

  8. MalibuRenter

    Here’s the thing about Citi and Bear. They both went much further into subprime than their competitors. Some of the other banks did much less. A few did none at all.

    Of course, most banks do plenty of things besides subprime mortgages, or mortgages in general. The competitors who are in good shape will be getting more and more market share, and can much more easily pull out the best employees from Citi and Bear. The real rainmakers in places like corporate takeovers are seeing their bonuses cut, even though they had nothing to do with mortgages. Furthermore, much of their bonus was in stock options, which are now worth much less.

    Compare this year’s returns to date for JPMorgan (-4%) and Bank of America (-15%) to Citi (-37%) and Bear Sterns (-38%).

  9. tonye

    I like Elvis

    “Hold me tender, hold me near, while I buy this house.
    Cause I know, that in a year, that I will flip it out.
    Hold me tender, hold me tight, for that 100LTV,
    And in a couple of years, we’ll be rich. all your dreams fullfilled,
    With a Cadillac, a Mercedes and a plasma Tee Vee”

    Well, I figure that’s what he’d be singing today…. or perhaps

    “And his momma cries…
    ‘Cause another foreclosure went down
    in the Northpark Ghetto”

    Go on Elvis. I have the 200 gm virgin vinyl reissues from Classic Records. When I play them, it’s like Elvis in the house.

  10. ExOCernowinMT

    As a former UCI student and resident of Irvine and Costa Mesa (84-86), I sure enjoy reading about the bubble in OC real estate from the safety of MT. While I do enjoy reading the all posts here, your post today about balance got me thinking about balance in coverage. All the house posts seem to be examples of things that won’t sell or will only sell at some point in the future for a horrendous loss. What about a few posts on things that do sell? Surely there are some stories there too.

    Houses are selling in OC and Irvine now. I can see that from the statistics. Are all the people buying knifecatchers? Are there recent sales (say 6 months) that would already be underwater? Are the only people selling those who purchased pre 2001, missed the top and want to get out while the getting is still reasonable. Any good stories on houses that were and stil are a bargain?

    A few posts on some sales might provide balance and insight on what is going on by approaching the analysis from the other side. It would I think also provide a defense to critics against charges of excessive negativity.

  11. IrvineRenter

    We are the counterbalance to all the NAR spin in the market.

    I generally post updates on the weekends showing what happened to properties in old posts. The vast majority have been taken off the market without being sold.

    Most of the sales in the market are REOs or high-end knife catchers. The only people able to obtain financing right now are the highest earners with the best FICO scores.

  12. IrvineRenter

    One of the reasons a market crash takes so long is because of people’s emotions. Each and every homeowner in the market must accept the truth before it will all be over. The reason is simple: each homeowner hoping for the market to come back to bail them out is another unit of supply overhanging the market preventing any appreciation. All of the overhead supply must be cleared from the market before prices can rise. Capitulatory selling is the only way to clear out the massive inventories of houses bought at the peak. Selling, particularly at a loss, is even more emotional than buying. Each bagholder must do this in their own time.

  13. tonye

    MT? Is that like Montana… something like the “Private Idaho” for those who don’t care for the LAPD retirement plan?

    “I may be moving to Montana soon.
    To become a dental floss tycoon”

  14. Matt Mc95

    The one thing that IHB does better than any other blog is truly tell this incredible story one house at a time.

    Sure, I also check out CR and HP for the reasons given, as well as other listing-by-listing blogs for other markets, but you always find a real story to tell.

    I used to teach creative writing, and always stressed that the only way to tell a story is through concrete examples. Thanks for working so hard to brings us a great story every day–and adding a soundtrack to boot!

  15. ExOCernowinMT

    Yep. After OC, I moved to Tucson, then straight North to Montana. Arrived in 1988 and have never turned back. I found l liked space, wilderness and the self reliance and friendliness of the West. Just for some perspective, my home is 7000+ sq ft, it is on 20 acres and a stream runs through it. We have two ponds, deer and I watch the pheasants from my window as I eat breakfast. All this within 25 miles of Montana’s biggest city, Billings.

    Based on what I see, I could not trade it for the cheapest condo in Irvine without putting in some cash.

    All I miss is the ocean.

  16. Major Schadenfreude

    That is an interesting observation to which I agree.

    This will be the first housing bubble where we can witness the long, drawn-out train wreck in real time. Before, people were more cogniscent of the prices in just their immediate neighborhood, receiving the information through the grapevine. Now we observe the data points accurately and remotely from our own computers. Perhaps if enough people view the debacle in this manner, this might temper the enthusiasm during the next run-up.

    But then, perhaps not!

  17. Diane

    I enjoy reading your blog. You have great analysis, logic and plain old common sense. I live near Irvine, so I like that your blog is local.

    I also enjoy Housing Panic. Great humor. Keith is hysterical, but he also makes a lot of sense.

    Thank you for such an informative website. I have learned a lot.

  18. FairEconomist

    Balance is good. It’s the combination of heart and mind that makes the best decisionmaking.

    You also do an amazing job balancing the housing stories with entertainment. I don’t know how you come up with a good frame for almost every story, every day, but you do! Oh, and you can keep up with the Elvis as long as you want.

  19. CK

    Thanks for all your work, IR. IHB is a great place to get a balance of all opinions out there, and your posts are one of my first stops every morning — IHB has secured the rank of #3 on my favorites (right behind google and espn). Since finding this website about a year ago, I have been and remain firmly planted right in the middle of bear (out of logic) and bull (because I want a damn house!) — but have never felt that I did not fit in here. You and everyone at IHB do a great job of informing without being too critical or condecending. Thanks again, and keep up the great work.

    Happy Holidays!

  20. MalibuRenter

    For those of us who are serious students of bubbles, the web is having two effects relevant to prices and transaction volume.

    1. People with a strongly negative view on housing are much easier to find. Many of them are articulate, with plenty of data and analysis to back up their positions.

    2. You can get to so much data, regarding so many places, that it is easier to make your own informed judgments.

    The combination of these leads to one of the factors critical to a strong downturn: a majority of people forming strongly negative expectations of returns.

    I think home prices should come down considerably. It is probably good for them to come down fairly quickly. I am hoping that places like the IHB don’t stay permanently bearish. At some point, housing will be fairly prices once again.

  21. patientrenter

    I second all the plaudits from the other posters, IR.

    You took a little flak when you wished us all readers some enjoyment from guessing a seller’s traits from her home’s photos. But you’re right, you and I and many other responsible people who refused to buy at insane prices are entitled to enjoy a little schadenfraude. It’s only human. The people who bought 10 years ago certainly enjoyed a little pleasure on the way up, and you and I and the others like us deserve to enjoy it when the pendulum swings just a little in our favor again.

    I hope you keep up the superb work of highlighting what’s for sale at a discount. By the way, I too am very curious to know what’s actually selling. You say it’s mostly REOs and knife-catchers. What % of sales do you think are REOs now? Of the non-REOs, how many are priced aggressively like an REO, and how many are full-priced? I wish someone with access to that info, and some interest and time, could begin to sort that out for us non-RE outsiders stuck with our noses pressed to the glass.

  22. zoiks

    Yeah the buyers of yesteryear were crying and bleeding out their poor sobbing hearts at us priced-out bitter renters while their zilly zestimates kept climbing to the stratosphere. I think they shed a tear or two between the HELOC that paid off their credit cards and the HELOC that bought the Hummer H2 and the high-def TV.

    Now I’ve got the world’s tiniest violin belching out a sad song just for these poor FBs. I’ll try not to kick down the Open House signs on the way out. 🙂

  23. HAL

    I’ve been a daily reader of this blog for nearly a year (thanks are in order to Piggington which indirectly linked me to this site). And while every post is great and informative, this one in particular resonates with me. Why? Because of the nature of balance.

    Though “technical” in background, I’m interested in the human psychology that has fermented this bubble. Perhaps I was naive, but I kept asking myself why would people keep paying these ridiculous prices for housing in Irvine? And with these dangerous loan terms? Little did I know of the human psychology at play.

    This real estate bubble reminds me of my weekend trip to the Magic Castle. Magic is all about illusion, deceiving your eyes if you will. But in the end, the fundamentals (physics) will explain there is no magic. Just trickery. Isn’t that the way these exotic loans played their hand? Many have been deceived and will pay a hefty price.

    As for resonance, it is always refreshing to get a “refresher” from IR. Case in point, houses should not be commodities.

    It was written, or so I think, on this blog about the perfect storm. The question I raise is how big will the devastation be, on a human side of the equation, when this storm finally passses and balance is restored?

  24. tonye

    Time for a reality check, eh?

    The earliest homes in Irvine were put in place in ’68, before there was a City.

    If you drive through TR you will see quite a bit of variety and quite a bit of rebuilds on top of that. Sure there were tract homes in the beginnning but the original models offered quite a few variations and floor plans.

    Of course, if you go to Bommer Canyon you will see true custom homes as well.

    Don’t judge Irvine based on Northpark and Westpark.

    I think you got too carried away there.

  25. tonye

    Ay! People paid ridiculous prices EVERYWHERE.

    I would imagine that the prices in Moreno Valley and Victorville were more out of whack that in Irvine.

    So, folks, be realistic and don’t get too carried away. This problem went everywhere, not just in our little slice of Paradi$e, eh?

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