Big price reduction to start the new year. The price dropped from $560,000 to $495,000. Prices are plunging…
Ain’t been round since you know when
Christmas time is here again
O-U-T spells “out”
Christmas Time is Here Again — The Beatles
New Asking Price: $495,000
Income Requirement: $140,000
Downpayment Needed: $112,000
Purchase Price: $605,000
Purchase Date: 4/27/2006
Address: 24 Salton #63, Irvine, CA 92602
Sq. Ft.: 1,400
$/Sq. Ft.: $400
Lot Size: –
Year Built: 2002
Stories: Two Levels
On Redfin: 22 days
From Redfin, “Upgraded home with new marble flooring and travertine bathrooms is turnkey. Beatiful balcony. Top rated school district. Great school district.”
We have another nominee for the worst picture on the MLS…
When you read the word “turnkey,” do you read “turkey?” I do.
Today’s property is a typical profile of an FB. She bought right at the peak with 100% financing. We can speculate why — real estate always goes up, etc., but the main reason is because she could. Some lender provided 100% financing and allowed her to obtain the property, so she bought it. Now she is at least 10% underwater, and more likely 20% by the time a knife-catcher is found. If she gets her asking price, the lender stands to lose $78,600.
Yesterday, we had a great discussion on the morality of short sales. I believe we set the record for the most comments on a blog post. There was a wide variety of opinions, and no consensus was reached. Regardless of what anyone thinks about the morality of short sales, we are likely to see a great many of them over the next several years. Each short sale will represent one less potential buyer in the marketplace due to ruined credit, and one more loss for a lender which will serve to tighten credit even further. Both factors will push prices even lower which will in turn create more short sales and foreclosures: a classic downward spiral.
Our real estate finance market is broken. It is so full of fraud, corruption, and unstable loan products, they only way forward is to blow up the system and let the chaos clear out the garbage. I have said it many times on this blog — 20% down, 28% DTI and 30-year conventional mortgages will be the norm. It is the only mortgage product known to produce stable housing markets where people do not default in large numbers. All the innovation and experimentation in the mortgage industry has proven a dismal failure. The problems we are seeing in the markets were self created. There was no outside event, no “unexpected” downturn in the economy, no surprise for anyone who cared to look and see the signs. The credit crunch is not like a random asteroid strike, it is the entirely foreseeable outcome of the activities of the industry itself. Just like the Great Housing Bubble is a direct result of the fallacious beliefs fostered by the real estate industrial complex and acted upon by the masses, the mortgage fiasco is the direct result of the foolish actions and unstable loan products peddled by the lending industry. They are about to reap what they sow, and the harvest will have more chaff than wheat.