The heart is a bloom

Shoots up through the stony ground

There’s no room

No space to rent in this town

You’re out of luck

And the reason that you had to care

The traffic is stuck

And you’re not moving anywhere

Beautiful Day – U2

We are running out of land. There’s no room, no space to rent in this town. You’re priced out forever, you’re out of luck — or so you thought. The market is stuck and houses are not moving. Don’t worry, it’s a beautiful day…



When Zovall first started this blog, he profiled many attempted flips. As 2006 gave way to 2007, there were fewer and fewer people making the attempt. Today, we have one complete with a WTF asking price. But what do we know. The seller is a realtor, and realtors know more about housing than we ever will…

211 Lonetree Front211 Lonetree Kitchen

Asking Price: $729,000IrvineRenter

Income Requirement: $182,250

Downpayment Needed: $145,800

Purchase Price: $639,000

Purchase Date: 1/17/2007

Address: 211 Lonetree, Irvine, CA 92603

First Mortgage $510,900WTF

Downpayment $128,100

Beds: 2

Baths: 2

Sq. Ft.: 1,500

$/Sq. Ft.: $486

Lot Size: 1 sq. ft.

Type: CondominiumKnife Catcher Award

Year Built: 2004

Stories: Three or More Levels

View(s): City Lights, Hills, Mountain, Has View

Area: Turtle Ridge

County: Orange

MLS#: L25056

Status: Active

On Redfin: 18 days

From Redfin, “Beautiful Dramtic Corner Town Home! No One Lives Below or Above, Double High Ceiling! Lots of Windows, Light, Warm Open Floor Plan, Highly Upgraded, Gorgeous Hardwood & Slate Floors & Seagrass Carpet, Slate Fireplace Surround, Designer Paints, Fabulous Designer Kitchen, Stainless Kitchen Aid Appliances, Concrete Counters! Loft Landing Office Area With Mountain, City Lights View. Master Suite With Walk In Closet Wth Mirrored Door. Enchanting Ceiling Fan, High Ceiling Master Bath. Covered Patio Off The Living Room. Laundry Room, Double Car Attached Garage with Built in Closets( Not Tandem) Community Pool, Spa, BBQ. Across Street, Park with Tennis Courts, Many Sports Fields and Activities.”

What Is The Deal With Title Case Writing? I guess it is more Dramtic.

What is Seagrass Carpet? Do you eat it, mow it, or smoke it?

Concrete Counters? Do you prepare your food on the sidewalk?



Kool Aid Man

I guess we should not be too surprised. Turtle Ridge is the last place in Irvine where the kool aid is free flowing. Apparently, this seller has not seen the recent developments in Newport Coast. The high end is not immune, and people are simply not willing to pay ridiculous prices for Irvine tract homes. This seller wants over $700K for a 2 bedroom condo. WTF! I guess it is under $500 / SF, so it must be a bargain, right? If she gets her sales price and pays a 3% commission (she would make the other 3% as listing agent), she stands to make $68,130.

This will be a real test of your sales abilities. Good luck with that selling price, you are going to need it. Feel free to contact us if you succeed. I will post an update.

BTW, Trooper posted this hilarious video in our forums. Enjoy…


167 thoughts on “Lonetree

  1. djd

    “Concrete Counters?”

    I think they’re rather attractive in coloring and pattern. The thickness is a bit high for my tastes, though – looks like a couple of inches?

    This might be an attempt to one-up the granite countertop: granite is too common these days, we’ve got to do something to distinguish ourselves!

  2. AZDavidPhx

    Concrete counters! Don’t be like those unhip trailor trash who are still using granite. Granite is SO yesterday.

  3. awgee

    99% of the time I do not care if someone flips a property or lives it for thirty years. I like to think I don’t care if someone doubles their money in 60 days on a leveraged deal with OPM. But, this just ticks me off. This flipper is saying “bug off” to the market and reality, and I hope they get their a__ handed to them.

  4. AZDavidPhx

    Also figure they will have to hand over roughly 11K of their 68,000$ capital gain to the IRS making their net profit 57K. Then subtract the costs of all of the upgrades that they supposedly put in making the return even less. Figure they spent maybe 7K on upgrades brings it all down to 50K. Not a bad return for a single year. Not sure it was worth the 128K ante on the magical exit-strategy.

    Might have been wiser to take that 128K down payment and leave it in a 5% money market account for 10 years.

    Make more money in the long run essentially risk free. But then again, that would not be the instant gratification American way.

  5. ex-tangelo

    Actually concrete was trendy in the early nineties. My sister put it into her kitchen. You can stain it whatever color you like… The disadvantage is that it does stain, easily. You have to keep sealing it. Well, you’re supposed to regularly seal granite, too.

    I have a plastic counter (something resembling Corian, but some other brand). I’m too busy to fiddle with that stuff.

  6. George8

    It is a beautiful 2/2 condo in a nice community. It is almost like in paradise. Someone may want to rent it for $4,500/month. 4,500×160=$720K. So, the asking price is quite reasonable if it can rent for $4,500/month.

  7. crucialtaunt

    You’re kidding, right? Who would pay (other than if they were being scammed or completely clueless) $4500 for a 2/2, 1500 sq ft.? THis is not Park Avenue…

  8. AZDavidPhx

    Maybe when burger flipping starts paying 100.00 an hour.

    The home does look pretty nice; however, the photographs have obviously been professionally staged.

    Even Zillow’s horse-manure pie in the sky estimates of this property averaged to 619,500$.

  9. zornundo

    Concrete might be cheaper than granite, but otherwise it is a solid alternative in the mix of countertops. The kitchen looks ok. The cabinets are good, but I am not sold on the tile backsplash all around. I am also befuddles by the way the wood flooring is angled. That is a very odd choice.

    I quess this realtard is just delusional and doesn’t want to accept that they paid to high, put too much money in, and still wants to sell at a gain.

  10. AZDavidPhx

    I’ll start caring about counter-tops when someone invents one that magically cleans itself off.

  11. ex-tangelo

    I have a bone to pick with the idea of all these “amenities” these listings gush about. Exercise room? Pool? Barbecue? These are all so last century.

    How about something I’ll /use/? Like a soundproof children’s bedroom. An extra four hours of sleep a night. (Time *is* a discriminatory male construct, you know. )

    And cake. There’s got to be cake.

  12. zornundo

    The flipper was too busy watching Flip This House, Flip That House, etc and drank the kool-aid!

    I’m really hoping they keep updating some of the older shows and even have new shows where people get fooked up the a$$!

  13. George8

    I just searched all listings within 1/2 mile of this pretty 2/2, it is actually priced competitively. Every other listing is priced over $500/sf. Now, let us be in the owner’s shoes just for a second, if you want to be in paradise, pay up.

    This may not be Park Ave., but it is TR in Irvine, it is the next best thing to Newport Coast.

  14. zornundo

    The capitalization scheme on this listing is just plain awful. Either MAKE IT ALL CAPS or use what you learned in elementary school. Caps At The Beginning Of Each Word Is Too Sucky To Read And I Give Up After One Sentence. Or did this realtard go to skool for special ed realtardS?

  15. zornundo

    Ok, found one thing that does making this listing read better: if you imagine Captain Kirk reading it, at least you can laugh and smile while doing so.

  16. Mr Vincent

    This is a pretty nice place, but in 1994 there were also a lot of nice places that would not sell. That’s what happens in a crash.

    I hope the seller gets out quick because things are getting worse each month.

    500k, and I am not lowballing here. 500k is alot of money.

  17. FairEconomist

    Yeah, this isn’t a WTF price for Turtle Ridge. Knifecatcher, probably, but $500/sq. ft. isn’t an unusual asking price there.

  18. zornundo

    I don’t hate them at all. I am slightly annoyed with realtors that can’t bother to use plain English when writing the property description. If they’re trying to sale something for this much, they should at least put more effort into it. At least they took many decent photos of the property for the listing.

  19. AZDavidPhx

    That’s what the concrete counter tops were missing. A cheese platter and a couple bottles of cheap wine.

    I guess they are marketing this house toward the blue-collar of Irvine.

  20. exhuming mccarthy

    I live in the Silverlake area of Los Angeles, and have seen almost no pricing changes in this area, or other parts of LA I am interested in buying at some point (Echo Park, Silverlake, Los Feliz, Miracle Mile, Venice). Do you think these areas will start seeing decreased pricing? If so, when?

    Thanks. Also, do you have any recommendations of blogs tracking LA area housing?

  21. AZDavidPhx

    500K seems pretty generous for this place.

    I’m not going to call prices anymore since it was annoying everyone, but 500K is definitely more than I would be willing to spend on this place.

    Might take awhile to save up the 20% 100K down payment (OUCH!).

    As long as you have some bubble money from your previous home you could probably “get in” to this one. Doesn’t strike me as a “move up” home though.

  22. Mel

    This is definitely not the next best thing to Newport Coast in my opinion. In Irvine – maybe. But certainly not considering many of the other areas of Newport. I’d argue that Turtle Rock is more desirable for many people than Turtle Ridge. Even though the houses are older, many of them actually have back yards, a concept almost completely lost in Turtle Ridge, especially for these 2/2s.

  23. Mr Vincent

    Welcome back AZ, we missed you (well, some of us did).

    I think its perfectly fine to give your estimate of whats its worth. Too many posts that try to use math to compare rent/own ratios and its mostly rubbish because owning a home and what you pay for it is part finance and part emotion. For this reason I never try to link rental costs to ownership costs. Just my opinion based on my experience folks.

    Anyway, I gave this a value of 500k because of something you do not know about Irvine. You see, Irvine’s streets are paved with gold and because its close to Newport Coast, you must pay a premium. Wouldn’t you want to live near Kobe?

    Ok, just kidding around here. But I AM trying to be realistic with the price and only a depression will bring this down to below 300k IMO.

  24. IrvineRenter

    Prices will come down everywhere. The high end is showing more strength right now because people with downpayment money and high FICO scores are the only ones able to obtain loans. The weight of the declines in surrounding areas will eventually take its toll on the better neighborhoods.

  25. AZDavidPhx


    I would certainly expect the streets there to be paved with gold considering how much money is flowing through the spigot.

    I knew it wasn’t just granite counter tops! Thanks for the clarification.

    I agree completely. Say what you think it is worth. High or low.

    I personally like reading what other people would be willing to pay.

  26. ipoplaya

    Hey min. wage in CA went up over 6% for 2008. The In N Out guys will be lining up to by in TRidge soon!

  27. shhhhh

    Personally, I enjoy reading opinions on pricing. However, I think that these opinions could be broken down into smaller pricing units to promote more effective conversation:

    1) House interior/exterior (including upgrades) – Anyone, anywhere can provide valuable opinions on the worth of this part of the sale

    2) Yard Size/HOA amenities – Perhaps only locals (or veteran IHBers) can provide opinions on this part of the house, considering yard space is a premium in Irvine

    3) Location – Definitely reserved for locals (or former locals) only. How can anyone outside of So Cal provide how much this is worth?

    As an example, I would pay $350K for this house. Here is my breakdown:

    1) House interior/exterior: $150,000
    2) Yard Size/HOA: $0
    3) Location: $200,000

    I think that a break-down like this will calm price opinion conversations on this blog.

    Any thoughts?

  28. ipoplaya

    I agree with that $500K or so valuation in today’s marketplace. I suspect it could rent for $3000 given 2/2 1200sf apartments in the area going for $2700 or so.

  29. BD

    IR, I think you were the one that said don’t confuse housing ‘desire’ with housing ‘demand’. This has never be more true. Nearly all people have what they have (cars and home) because the bank SAYS YOU CAN HAVE IT. Unless you are a 100% cash buyer, financing is still required and the banks have been burned enough. My contention is that the high-end ($1-2M) will ultimately suffer worse in percentage terms than the low end because there will be no move up buyers who can get reasonable financing with their stated income. What a joke stated income. These people were either lying to the bank to get financing or to the government to avoid taxes. Why else could they not just make their tax return available?

  30. zornundo

    Woo! Got my pre-approval on a 5% 15-year fixed! I haven’t paid to get my FICO score, but I used the FICO estimator at bankrate.com and it estimated mid-700’s. Foreclosed property, here I come!

    I’m looking at an REO property and I called the listing agent. I was asking how much wiggle room there might be in this property and he said the bank may be willing to drop the price anywhere from 11-15% off the list. So what’s going on here? Would the bank really deal that freely just to get rid of the property?

  31. Alan

    “Strength” or are high end sellars just more resistent dropping their prices this early in the cycle? Looking at sales data.. (from Lasner, most recent) OC has 4600 properties priced 750k or higher w 250 sales/month for properties in this price range.

  32. someone

    TLC has new verisons where flippers actually lose money! I saw one about a Costa Mesa house where the flipper ended up selling for less than he paid for it and he put $90,000 into it…

  33. AZDavidPhx


    The people doing most of the buying right now are the ones who bought before the boom (10+ years ago) and are now cashing out. These people still have quite a bit of bubble equity to blow.

    They will move up; their equity will evaporate; they will be stuck.

    Eventually nobody is going to be moving up.

    Once this happens, sellers will have to lower prices in order to price back in the first time buyer. Lower prices on starter houses mean that the people moving up have less money to spend which is going to drive down the high end prices.

    It’s inevitable. Give it a couple years. This is just the beginning.

  34. AV Paperboy

    Wouldn’t the assessed value not move higher until the 2008 tax year if current owner purchased 01/2007?

  35. AndrewIrvine

    I’m most interested in the “Enchanting Ceiling Fan.”
    Oh, beautiful ceiling fan, how you enchant me and make me forget that I paid three quarters of a million dollars for this 2-bedroom condo!

  36. ex-Tangelo

    Ironically, ‘In N Out’ is the best-paying burger-flipping job in the fast food industry.

    “The restaurant chain […] is one of the few fast-food chains in the United States to pay its employees significantly more than state and federal mandated minimum wages – $10 dollars per hour in California as of January 2008.”

    And it’s headquartered in Irvine. Wheee!

  37. Alan


    NY has Wall Street, Goldman Sachs
    Seattle has Starbucks & Microsoft
    San Jose has Google
    The Valley has porn
    Hollywood has Hollywood
    Anahiem has Disneyland

    IRVINE makes burgers!!!!

    Go Irvine

  38. AZDavidPhx

    Flop This House 2008 Edition

    Year bought: 2007
    Sale Price: 700,000$

    Upgrades: 20,000$
    Depreciation: 200,000$

    Year flopped: 2008
    Sale Price: 500,000$
    Realtor commission: 30,000$

    Net profit: -250,000$

  39. ugh


    That knife catcher thingie is in my home town, about 500 yards from my house.

    It’s a waterfront sculpture. It’s call the Spirit Catcher.

    Carry on…

  40. buster

    Well, I guess the wishing prices are officially toast. Bloomberg reports that the big boys are selling for FORTY CENTS on the dollar. Yup — and that’s the pros like Lennar, etc. And, according to Bloomberg, they “are lucky to get it.”

    But then, what do Lennar and Bloomberg know compared to this genius Realtard?

    Oh, sorry, I forgot. Irvine’s different.

  41. AZDavidPhx

    I personally prefer my diamond counter tops. They don’t scratch and no sealing is required.

    Much more economical.

  42. bought_high

    might need to check your down-payment and income requirements – they are not you usual multiples.


  43. ipoplaya

    Every bank is different zorn. All depends on how much they have, what their financial situation is, the day of the week, etc. Banks owning property in Irvine have not been willing to sell for less than loan value as a general rule. Many of their list prices have been WTF. Seeing more realistic pricing come out now.

    On a related note, CFC foreclosure listings in CA have jumped. I see over 4000 in CA alone. That’s 1000 more properties than they had in the late summer… If they are really having cashflow problems, maybe they’ll start dealing to get some funds rolling in?

    Unfortunately, the full current market value of all their holdings in CA is just a speck on their financial radar in terms of cashflow. Their quarterly spend on SG&A is $1.6B. The property they hold is probably worth a quarters operating expense to them…

  44. ipoplaya

    Irvine has tacos too… One of the reasons I live here is because Del Taco has its HQ in OC. FEED THE BEAST!

  45. crucialtaunt

    Just think about this – For qualifying to rent at $4500 the landlord will require income of 3X, or $13,500 per month, or $162,500. Here’s a sampling for what’s available in Turtle Ridge on Craigslist

  46. Purplehaze

    “The five stages of grief
    Another bear on the panel was Barry Ritholtz, chief executive of market-watcher Ritholtz Research. He placed the real estate slump in the framework of Elisabeth Kübler-Ross’s five stages of grief: anger, denial, bargaining, depression and acceptance.

    Ritholtz said we’ve just about worked through the denial stage, which was exemplified by the National Association of Realtors first saying there was no housing slump, then that it would be contained (the soft landing scenario), and then that it would be limited to housing.

    Now, said Ritholtz, “We’re in the bargaining stage,” where he said we’ll promise to never speculate on real estate again if God will only let us sell our properties now.

    Next will come depression and finally acceptance. “That,” said Ritholtz, “is when you should start to buy again.”


  47. tenmagnet

    Please check out the second link ipop posted.
    It’s 52 Gingerwood.
    There’s a zebra carcass plastered on the wall.
    Nice touch and quite inviting!
    Combine that with the appeal from the deer antlers, polar bear rug and this one will move fast.

  48. ipoplaya

    Hum, doesn’t look like TRidge commands a rent premium like it has a home value premium. 2/2 for $2600-2700 and 3/2 for $2800-3000. That is practically the same as West Irvine…

    At least one of the for sale listings is also up for rent:



    Let’s see, $699K or rent for $2800. Even if you had the 20% down, you’d still lose out on a cashflow basis every month vs. renting. If they are willing to offer it up at $2800 as a rental they should be smart enough to drop their price to at least $599K. At that price you could probably at least break-even on a cashflow basis vs. renting.

  49. lendingmaestro

    These new condo units reflect the people themselves. All flashy on the outside, trim, clean , and neat. But inside it is a hollow, cheaply built box with no personality whatsoever.

    Seriously, the pictures clearly show you that these buildings are made of paper mache as quickly as possible. The term “cookie cutter” certainly applies.

  50. ipoplaya

    SAN FRANCISCO (MarketWatch) — Fed Chairman Ben Bernanke telegraphed in a much anticipated speech Thursday that more rate cuts are on the way.

    Old Bernie and the boys are going to do what they can to minimize any recession… Not sure how much they can help, but lower and lower mortgage rates will have to stimulate housing demand.

    If I could get a 30-year fixed jumbo at 6%, I’d have no qualm with borrowing $500K to buy a place in the $950K range. Hell, let it fall to $700K in a few years. I’ll be there for 20-30 years so I wouldn’t give a damn.


    The “enchanting” ceiling fan caught my attention as well. Does it put one in hypnotic state of being where the dream of a half million dollar apartment, I mean condo, backed up to a busy street surrounded by close neighbors in the glorious city of Irvine take over your consciousness? I want one of those “enchanting” ceiing fans. Can anyone tell me where I an find one?

  52. AZDavidPhx

    You don’t like being welcomed home by the hind end of a zebra?

    You just lack sophistication and overall manliness.

  53. ice weasel

    While I love to join in the fun there is always an initial sensation where I’m a bit taken aback by some of the negative comments on many of the houses posted here. Oh yeah, many of them are ugly, butt-ugly. But this one isn’t bad. The photos are reasonably well done and while it’s grossly over-decorated, it’s still probably broadly appealing.

    That said, I choked on the $486 per square foot.


    I have a feeling somebody is getting something in Irvine that they didn’t get when I used to live sort of nearby. $486? Seriously, for a condo? Almost three quarters of a million dollars for a 1500 square foot, 2/2 condo in Irvine? Does it come with a massage therapist? Free food? Free cable? Slaves? Something?

    I’m just curious to hear, from the locals, about the culture in Irvine. And I say this with almost no sarcasm, I’m looking for information, but what do all these millionaires do in evening? On weekends? Someone please tell me about something other than elementary school scores and how bad the neighborhoods are in other places. Or (and her comes the sarcasm) is $486 per square foot justified merely because you’ve priced out the riff-raff?


  54. Purplehaze

    Do you smell fraudulent, greedy, superficial, inwardly hollow (thanks lending maestro) folks? Well no smoke without fire, so I am sure that is the kind of people inhabiting Irvine AKA Utopia (bad things do not happen here).

  55. Purplehaze

    Reminds of the movie “The Village” by Night Shyamlam, maybe one day the people of Irvine will step out and see that it is all in their head and it is all created by the Realtards and their own greed and excessive pride.

  56. Stupid

    re: evenings – eat in, wash your own car. Open windows when it’s hot because there’s no money left to pay for air conditioning…

  57. 25w100k+

    To give you some rational on the price this is a great area. Right behind turtle rock, a stone’s throw to fashion island (big shopping center and industry center) etc.

    Definitely on the fringe of the ‘nicest’ neighborhood in both Newport and Irvine (newport coast and shady canyon, respectively).

    Now, another thing that makes turtle ridge so desirable is the view. I drive right over the 73 every week and its gorgeous. I’d love to have a view like that.

    My turn to play big bear. I don’t see the view from the pictures. My guess is there is barely a view, or they are outright lying and they mean the ‘neighborhood’ has a view.

    Even with a nice view, if we put the rest of irvine at around 300 a square foot for a newer, nice home, I doubt a view commands THIS much of a premium. Maybe 350 a square foot, maybe a bit more.

  58. CapitalismWorks

    It looks like my prediction, correction the markets prediction, that LIOBR spreads would normalize. Ted Spread down 30 bps from the beginning of the year currently around 117 bps. What does that mean? It means mortgage rates are coming down.


    That is what the Fed can do. I still predict we will see all time lows on mortgage rates in the next 12-18 months. For those of you with short memories all-time lows on 30-year fixed were 4.75 comforming and 5.25 jumbo. And, before anyone pipes about about credit availability, long way to go, etc. Please look at the page linked to above, and consider that Bernanke is planning on at least another 125 in cuts.

    The net result is a higher bottom.

  59. IrvineRenter

    I see you are still optimistic that you will not go underwater. In your “higher bottom” scenario do these interest rates become permanent, and do they become available to enough people to absorb the huge inventory and increasing number of REOs?

  60. ex-Tangelo

    What is selling for $.40 on the dollar? Their stock price? Their homes? The mortgage bonds backed by homes?

  61. ex-Tangelo

    The Fed funds rate can affect the market for mortgage rates, but there’s not a direct relationship, and over the short term there can be a complete disconnect.

    For example, see this graph. The Fed raised it’s rate from 1% to 5% over more than 2 years; the market rate for mortgages hardly moved at all.


    Here’s a longer term graph. Over the long term there is a stronger correlation.


  62. George8


    I used Zip to search. I did a poor job and missed these few. Thanks for correcting my error.

    Now looks like this owner is being outrun by other guys chased by a huge bear (market).

  63. Patience

    Yes! Yes! Why doesn’t Albertson’s sell yellow cakes with chocolate frosting? Are they being paid off by Betty Crocker?

  64. Patience

    Yes! Yes! Why doesn’t Albertson’s bakery sell yellow cakes with chocolate frosting? Are they being paid off by Betty Crocker?

  65. Genius

    There are places not far away from here where $350 commands an ocean view. The drive along the 73 is nice, but I would rather look at the water.

  66. bigmoneysalsa

    No way this gets $4500. You can find SFRs in Newport Beach proper or Laguna Beach all day long with that budget.

  67. bigmoneysalsa

    Wow, I wish my time was so valuable that it wasn’t worth it to wait a couple of years and save $250K. Must be nice.

  68. tonye

    Egawds! What a bunch of pleistocene taste buds you folks all have.

    In’N’Out does NOT make burgers…. it makes the most delicious Protein Double Double with grilled onions… or for my son the animal four by four with grilled onions.

    Nothing else compares.

  69. tonye

    Homes in Turtle Rock with a view of the ocean (yep, there are) go for around 550 per square foot or more.

    These are homes, mind you. With reasonable yards, plenty of rooms, a garage and low HOAs.

    TRidge is wildly out of whack.

  70. ex-Tangelo

    I was about to say How should I know, there aren’t any in the Bay Area… Then I looked them up to see where the nearest one was, and holy cow, there’s one next to the Walmart. Then I was all like, Walmart? When did one of those show up? What next, Hooters? (looks it up) Oh Jesus Christ. It’s RIGHT. NEXT. DOOR.

  71. CapitalismWorks

    IN BULK, not pipsqueeks. The article references Morgan Stanley buying up entire complexes at that price. Don’t worry boys YOU won’t even get this pricing (unless of course you have a couple hundred million to spend).

  72. ipoplaya

    They can disconnect, i.e. Fed rates and mortgage rates, but that is not usually the case. The Fed has been dropping rates and mortgages have come down in general. 30-year conventionals have eased over half a point since the summer. More easing by the Fed should mean even lower interest rates.

    IR – Yours is the million dollar question. If rates get low enough, the volume of potential foreclosures would be impacted and a higher bottom could result. We aren’t at 20% down and 28% DTI yet. As rates come down, the 28% DTI will be easier and easier to hit. I think its a bit of race to see if credit rates can get down low enough before lenders really start pricing in higher and higher premiums for risk.

  73. camsavem

    What if you paid 250K for your house six years ago and now it would sell for 500K netting you 250K in profits plus whatever principal you paid down?

    The people that will buy this type of property are just transfering equity from one place to another so for them it does not really “cost” them what you think.

  74. CapitalismWorks

    IR, apparently you believe I am like every homeowner in your imagination – Shaking in my shoes about price drops-. Well, don’t worry about me. Conservative financing, ample income, and an equity position of nearly 200% over mortgage value at peak pricing provide more than enough cushion. Yes, I bought early enough.

    Am I worried about price drops at all. Hell No. I love ’em. I am licking my chops waiting for this thing to hit bottom. What am I afraid of? A huge decline in mortgage rates, combined with legislative action, serving to induce a sideways market for the next 5 years as commodity and wage inflation raise the fundamental support to something that justifies current pricing.

    As for the REOs. I know these are a central tennant in your forecast as they will continue to overburden the market with supply. If rates continue to fall, then more and more homeowners will have financing options that they can live with. That means that the full measure of the Credit Suisse ARM reset graph does not result in the enormous growth in defaults predicted.

    I fail to understand your point about permanently lower rates… You must recall that inflation is always running in the background. Wages are growing, population is growing, prime land is being used up (remember I proved this with the example of NB building over the last decade for all of you infinite land morons). All the Fed has to do is keep things from sliding off the table, and magically in a few years the fundamentals support a higher intrinsic value.

    Now I will say that I was wrong wrong wrong on my prediction of a 15% drop from off-peak pricing. We have blown through that number already. IR, your 40% figure looks quite accurate. I am trying to figure out what would prevent us from getting there.

  75. ipoplaya

    I wouldn’t be saving $250K bigmoney because I already own. If my move-up house goes from $950K to $700K my existing home goes from $600K to $450K. With my buying and moving today vs. at a potential bottom, I’d be foregoing perhaps a $100K net improvement.

    That’s $3900 per year after-tax @ a 6% mortgage rate. For $4K per year, I’d rather have the bigger house today and be in a neighborhood where I intend to live for the next 20-30 years. My oldest will be starting kindegarten in less than two years, and I’d prefer he start in the school where he’ll continue on until junior high and go to school with neighbor kids he’ll be going to school with for many years to come.

    Hell, being able to shoot hoops in the driveway is worth $4K per year in my book.

  76. Alan

    OC mails out assessments in Aug., 1st payment was due by Dec 10th., the buyer would have gotten a supplemental assessment for the difference between 639 and 442 for the time between 01/07 and the end of the 07 tax year. So the increased assessment would have been picked up.

  77. ipoplaya

    Bond yields move for many reasons. Today, in spite of promises of lower Fed rates by Bernie, yields spiked as money flowed back into equities. The bond market will start to price in expectations of further rate cuts though so the 10-year should keep trending down…

  78. ipoplaya

    SAN FRANCISCO (MarketWatch) — Bank of America is in advanced talks to acquire Countrywide Financial, possibly stepping in to save the struggling mortgage lender, The Wall Street Journal reported on Thursday, citing unidentified people familiar with the matter.

    Nice… Friggin’ CFC still owes my company $15K on an invoice sent in September. Hopefully BOFA does buy them so we can get paid.

  79. charlesH

    yes, that is typically how people afford higher end homes. the problem now is that very soon if not aready one can’t sell the house they bought for $250k six years ago for any thing like $500k.

  80. ipoplaya

    Exactly tonye, I need to buy to have the darn backyard. Or rent I guess but I just can’t convince the wife to become a renter.

    My backyard is around 12 ft. deep except in one area and what teeny tiny space I have is used up by a kid’s playset…

  81. CapitalismWorks

    Tonye, i don’t disagree with you often, but I must say TRidge is nice that TRock. The only reason I say this is TRidge is way way newer. There is a lot of older overpriced garbage in TRock trading solely on the name.

    Not saying TRidge isn’t overpriced mind you.

  82. ipoplaya

    Crap I should have loaded up on CFC yesterday. I thought about it when it crested below 5 but I was just too chicken. It was blinking wildly at my on my streamer… If BK was really in the cards, that $4.75 could have been $1.00 per share in a heartbeat. Argh. $10K of CFC yesterday would be $16K today… Sure looks like they’ll announce a deal around $8/share for an acquisition.

  83. buster

    Capitalism – Then they’ll flip them for 12.50% profit, yielding the individual buyer a net price of 45% from the asking prices a couple months ago. Unless, of course, you think Morgan Stanley wants to sit on 5,000 condos for a few years — NOT. It’s a big flip with a big fish and everybody wins (except the neighbors who saw all their equity vanish in a blink of an eye and are now bankrupt because they owe far more than the new reality price).

  84. IrvineRenter


    That is the first time I have heard you agree with my more gloomy outlook on the market. Your posts have always been either searching for or predictive of a higher bottom. Being a homeowner, it seemed to me you were looking more for avenues of denial than a greater degree of accuracy. If have been mistaken, I apologize.

  85. Alan

    What’s wrong with eating in

    I’m really into the cooking channel now, Alton’s my hero..

    I eat much better, food tastes better when it’s homemade.

    What’s the point of those granate counters… show

    BTW.. real chef’s prefer charcoal, gas grills don’t generate enough radiant heat and are for sissy’s

  86. Alan

    That bet could have gone either way, I would have thought BK was more likely than a buyout. It aint’ over till the Tan Man (fat lady) sings.

    Taking risks like that was ok when you were single IPOP, now with a wife and kids; there is no difference between betting on CFC’s future or the ponies.

    At least at the track, your outside, you get to walk around so there’s some exercise and they have a bar.

  87. IrvineRenter


    Thing is, if you sold now and bought back in 2 years, you could pocket that $250K. Your wife must have quite an aversion to renting to pay that price.

  88. TurtleRidgeRenter

    The ceiling fan over the bed is so that you can wake up in the morning like Martin Sheen in Apocalypse Now and go: “Turtle Ridge. Sh***t. I’m still in Turtle Ridge.”

  89. mark

    I love how you forecast with such certainty. Can you tell me where S&P 500 will be two years from now too?

  90. Alan

    After the virus kills everyone in 09, leaving only Will Smith alive there will be no S&P to worry about.

  91. Alan

    Just tried to short some CFC on Etrade, I’m betting that BofA ends up with it at 6 or less…

    Etrade said.. “shorts are not allowed as we are unable to borrow any of this security (CFC)”

  92. TurtleRidgeRenter

    When I look at that Lonetree property, all I see is a big painting and window treatment project. Brown, brown, brown walls. Roll-up blinds and cheesy curtains on the windows. And a strange 1970s diagonal choice on the dark wood floor. How much $$$ would it cost to turn this thing into a light and airy space to live in?

  93. mark

    I don’t think a rational homeowner should be too concerned about the price decline, assuming they bought a home well within their means. If you own a home in the Irvine area, sure you’re losing equity, but that home you didn’t want to stretch for when you bought, is coming back within your grasp.

    I don’t want to “upgrade,” but if we see price declines of 40%, I may bring cash to the closing table (to account for negative equity) and buy something more upscale.

  94. Alan

    Actually, I was cool w price declines during the early 90’s even though my equity mostly evaporated because I went to the county 4 times for property tax reductions and I wasn’t planning on selling so I just got a lower tax out of the deal. OC isn’t great on lowering your aprasial, you have to pay the tax then file an appeal and it takes nearly a year to get your money back.

    Now of course, my property is apraised at less than half the peak, so I wouldn’t be getting anything out of this decline.

  95. tonye

    Comes back in some ways to how much equity you have today, what type of loan you got, your own financial state and how much you want to move.

    For example, it would take us four or five semi truck to move us out of the house and this would call for the Mother of All Garage Sales.

    Then we’d do it again in two more years?

    Plus, our Prop 13 RE tax is so low that the market would have to drop 80% from the peak to match what we pay…..

    So, perhaps those 250K are not that real. If they were, most homeowners would have sold their homes in ’05 and ’06.

    As we’ve discussed, your home is not necessarily your sole investment.

  96. tonye

    I beg to differ. I think TRidge is far more crowded that TR and it’s far more overpriced.

    Just because it is newer, it make look nicer TODAY… but given the quality of construction in the rush during the last ten years, I doubt those homes will look half as nice as TR in ten years.

    Overall, I think there are always junkers everywhere that ride the coats of names and their neighbors. But overall, I think that the “older established” neighborhoods will suffer far less because they are nowhere as overpriced as the newer ones.

    I have been in some of those homes with a view and trust me they are head and shoulders above that ersatz italian crap in TRidge. These homes look like the traditional SoCal coastal homes, with well laid out plans and some have views to kill for.

    They are not McMansions and they feel more open than that newer stuff. Sure, there are the Brady Bunch residences here and there, but by and by, if you can find one such, buy it.

    IMHO, older homes were built with less pretense and more quality.

  97. ipoplaya

    I know, I know IR. I have been trying to convince her to sell since my neighbors bailed at $730K. I told her we could sell then, rent for bigger place for a couple of years, and buy the place our neighbors paid $1.2M in Woodbury for $900K at bottom. KKKKKHHHHHAAAAAANNNNNNNN!!!!!! – classic Shatner reference of immense frustration for any that don’t get it.

    She is totally old school and believes whole-heartedly in home ownership. She fears a price out, i.e. what if we started renting and prices went up and we couldn’t buy again? She has a number of friends making decent money that the bubble priced out and doesn’t want to be like them… Nevermind what her Econ grad, CPA, MBA, CFO husband says!

    It’s quite crazy. She trusts my judgement enough to have me manage her father’s entire retirement nest egg (bonds and gold for many months on his IRA) but not heed my call with regards to selling and renting.

    I have to console myself with the fact we are saving at least $100 per month for every $100K decline in home prices mostly via lower prop taxes. Too bad mello roos don’t fall as values drops as well.

  98. tonye

    Oh.. that house. I know the area. I think that house is attached on one side, so it’s technically a townhome, I guess. And yet, that area doesn’t feel as crowded as TRidge, QH, etc…

    Note the lot, though. It’s 8500 sq feet. However, I think there are restrictions on what you can build on the lot and the neighbors can see into it.

    And, even then, they are asking for 450…. which when you think about, in nowhere as overpriced as the stuff on the other side of the Santa Ana Fwy….

    We looked into that area back in ’87. But we decided we’re rather get a zero lot home than an attached one.

    Besides, I love sunsets, and those homes are on the NE side of the hill. Which means the sun sets over the hill and gets darker earlier. Not my cup of tea. I prefer to sleep in.

  99. CapitalismWorks

    No problem IR. You were correct in your take on my adjusted outlook, it has gotten more gloomy. Happy to eat some crow on this one.

  100. CapitalismWorks

    We should chat. I had the same debate with my wife and prevailed. We are selling now (guess which house in Irvine ;). After this thing sells, we will rent. And yes, I am priced well below all recent comps!

  101. ex-Tangelo

    Dude. It’s not a house, it’s a home. That your kids are growing up in. Height marks on birthdays in the doorframe. The built-in bookshelf she learned to climb on and scared the crap out of you. The tree you planted on his 5th birthday. Things like that. More important than money.

  102. ipoplaya

    I might make another run at the wife in a few months. My problem was she was about ready to deliver our 2nd child when I first broached the topic, and in full blown nesting mode. The next time I tried to convince we were barely past the dreaded colic phase and overall sleeplessness associated with newborn baby so the thought of showing our place was painful. Now that little #2 is over a year old and much easier, a summer move to a rental might not be too bad. My only shot is probably bartering with a “you don’t have to work summer school this year if we sell and move”… I suspect will indeed be selling by summer, just not sure if the move will be to rental or a purchase.

  103. ipoplaya

    Excellent point ex-Tan. Something I personally often lose sight of… Thanks for the smack around.

    Not only were the kiddies born into our home, I proposed there back in 2001 before the builder had finished it. While I could do it to save the mega bucks, I think it would be very difficult for my wife to leave a home with considerable sentimental and emotional value to be “rootless” in a rental.

  104. ipoplaya

    SAN FRANCISCO (MarketWatch) — Credit-card company American Express Co. said Thursday it “is seeing signs of a weaker U.S. economy” that is impacting its cardholders’ ability to make purchases and pay their bills. As a result, American Express said in a statement that it will take a pre-tax charge of approximately $440 million in its fourth quarter, due to a combination of lower spending and higher delinquencies and loan write-offs. American Express shares fell nearly 6% to $46.02 in after-hours trading. American Express is one of a number of credit-card companies suffering through the current credit crisis. Also on Thursday, Capital One Financial Corp. said it is lowering its earnings outlook for fiscal 2007, and raised its loan loss reserves.

  105. awgee

    “IN BULK, not pipsqueeks. The article references Morgan Stanley buying up entire complexes at that price. Don’t worry boys YOU won’t even get this pricing (unless of course you have a couple hundred million to spend).”
    Two or three years ago, Sir John Templeton was being interviewed by a Florida newspaper and he said that he thought re prices would decline 90% from their peak. He must be one of those infinite land morons.

  106. awgee

    Ted spreads did not narrow because of anything the Fed did or because of some fantasy arbitrage dreamed up by a Fed governor. It narrowed because the ECB printed $400 billion to $500 billion and gave it to the Euro banks.

  107. ipoplaya

    ice, I’m not a millionaire yet, but my household net worth is well past halfway to that mark, and what we do in the evenings is hang out with our kids. Watch them play outside. West Irvine is a newer area so there are tons of little kids… Eat in or at least bring home reasonably priced take-out. Weekends? Taking the kids to karate, or kids gym, or endless b-day parties. Reading lots of books with them. Shopping, Costco, Target and Old Navy. Forget Fashion Island. Lots of little home improvement projects I do myself. This weekend’s agenda, add to the closet organizer I installed in one of kid’s closets and replace the last of those hollywood vanity bathroom lights we still have. Light fixtures are cheap, easy to put up, and definitely help spruce up a room.

  108. IrvineRenter

    Thank you. I corrected the post. I copied those from a previous post and forgot to update them.

  109. No_Such_Reality

    Makes me even happier with my 1500sf dual master 2.5 bath townhome w/ 2 car garage for $1900 that’s barely a mile from the beach in HB.

    I’m not sure what the target market is for this unit? It’s only two bedrooms. A single parent? An ‘urban’ single professional that wants a guest bedroom? A young couple looking to instantly out grow the unit with the first child? Maybe the infamous DINKs. Downsizing empty nesters?

    Irvine’s amenities and major pluses, schools, etc. are geared towards families. I wonder if the rent premium will hold for what is primarily a single’s unit.

  110. CapitalismWorks

    TED spreads should trade more on the dollar injections than Euro injections. And yes both the ECB and Fed will continue to inject capital (or whatever else the market needs) until the LIBOR spread normalizes with a TED spread between 30 and 50 bps.

  111. ex-tangelo

    No_Such_Reality: I’m not sure what the target market is for this unit? It’s only two bedrooms. A single parent? An ‘urban’ single professional that wants a guest bedroom? A young couple looking to instantly out grow the unit with the first child? Maybe the infamous DINKs. Downsizing empty nesters?

    *counts people in my home*

    *counts number of bedrooms*

    Me: Honey! We forgot and had too many kids! We gotta put one of ’em up for adoption!

    Her: Again?

  112. awgee

    Why would you bet me? I didn’t say it. If you want to bet, bet Sir John. And when your making your bet, maybe you want to ask him if he is an infinte land moron, since you seem to find it necessary to disparage those you disagree with.

  113. No_Such_Reality

    Tangelo, do you really think the many couples with two children are looking for a $700,000 two bedroom?

    I can understand a family of four in a 3 bed. Even a family of five. But once you exceed one per bedroom beyond the couple, most are in a make do situation.

    A couple with one child will be fine, provided they aren’t planning a second. Or an accident.

  114. Gray

    Hmm, I don’t think so. I guess we agree that this isn’t the home of a female, and no straight male would “decorate” his office space with drawings of nude male bodies, right? Or use so much of red and pink colors. Imho this is the home of a gay male who, defying a widespred cliché, has no taste at all.

    Btw, is the “bar” supposed to be the living room? Horrible. And what’s the point of having a dining table one floor above the kitchen? It will hardly ever be used there. And all those dark, depressing colors – a nightmare. This is obviously one of those cases where the “taste” of the homeowner will have a severe impact on the market value of the house.

  115. Gray

    Oops, I got confused. The living room seems to be the area on the first floor, that leads to the dining room. Must have happened because the bar disturbs me so much. Especially that monster of a long, low table, build of glass and I-don’t-know-what. This makes Jess’ wagon wheel table (in “When Harry met Sally”) look like a design masterpiece! Really, who in his right mind would “design” or buy such an eyesore? Eek!

  116. Gray

    Btw, pls note that the agent describes the interior as “designer-inspired”, emphasizing the fact that the proud homeowner (a “senior exec”, for heaven’s sake!) did this to the house himself. It’s not probable to think the builder protested much, as long as the money was ok. Well, the results are showing. Good place to improvise a “haunted house” on halloween.

  117. CapitalismWorks

    I find the infinite land argument particularly egregious. I am disparaging the sentiment. Though I can see how people who believe it would be bothered!

  118. ipoplaya

    Hey Cap. Forgot to tell you yesterday, but good luck on the home sale… Hope you find the craziest of knife catchers.

    Do you put the all important granite counters in?! We started prepping for sale last year so of course we added crown (for way cheap), granite (pretty cheap), and painted.

  119. tonye

    (1) Wife Happy….. agree wholeheartedly. That’s worth a couple of million in the bank.

    (2) You got your two little kids and like the place. Making the payment. Hey, enjoy life.. The kids are about to go into preschool, later Kindergarten, etc.. At that point I agree with your wife, it’s your HOME and it has a ton of memories.

    (3) My wife and I will no entertain moving until our kids are out of High School at the very least.. and then we’re only entertaining the Windward side of Oahu ( maybe Leeward…) or the Naples neighborhood in Long Beach. Right on the canal.

    (4) Those 250K sound good, but it will rip your life out. When you got little kiddies that’s an issue. My kids handprints are on the garage, this is our first and only house, I have memories of the house, I know where the studs and electrical lines are… yaddah, yaddah. Know what I mean?

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