Stepping Down ** Update 1 **

Since our original post on August 2, our race to the bottom has been continuing. Our low price leader is really starting to race now. Their new asking price is $515,000. That is a full $100,000 below their 2004 purchase price. Wow!

There’s a lady who’s sure
All that glitters is gold
And she’s buying a stairway to heaven.
When she gets there she knows
If the stores are all closed
With a word she can get what she came for.
Ooh, ooh, and shes buying a stairway to heaven.

Stairway to Heaven — Led Zepplin

Link to Live Performance Music Video

Link to Studio Version

Buying a property on Stepping Stone was supposed to be the Stairway to Heaven of home ownership. Right now the staircase seems to be leading to Hades.

The four listings which follow are identical floorplans for sale. It is your classic race to the bottom.

112 Stepping Stone Front112 Stepping Stone Kitchen

Asking Price: $629,900IrvineRenter

Purchase Price: $615,500

Purchase Date: 12/10/2004

Address: 112 Stepping Stone, Irvine, CA 92603

1st Loan $488,784
2nd Mtg. $122,196
Downpayment $4,520

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $406
Lot Size: –
Year Built: 2004
Stories: 3Rollback
Type: Condominium
View: Hills
County: Orange
Neighborhood: Quail Hill
MLS#: S496508
Status: Active
On Redfin: 17 days

From Redfin, “Great property – Great location, surrounded by mountain views, greenbelts and wide open spaces. Decorator colors, epoxy gar flrs, full bedroom/bath downstairs perfect for home office. French doors, front porch, totally move-in. All white kitchen with added cabinets and rear balcony with view. Large living room with fireplace and dining room. Each bedroom has it’s own bath”



As you can see, this was a typical 2004 100% financing deal (well a 99.27% financing deal). And I suppose this isn’t technically a 2004 rollback, yet, but with $14,400 in negotiating room, it probably will be. If this seller manages to get full asking price, and assuming a 6% commission, they still stand to lose their whopping $4,520 investment, and the bank will eat an additional $27,914.

Let’s see how the neighbors are doing…

91 Stepping Stone Front 91 Stepping Stone Kitchen

Asking Price: $639,800IrvineRenter

Purchase Price: $417,500

Purchase Date: 12/23/2003

Address: 91 Stepping Stone, Irvine, CA 92603

1st Loan $333,390
2nd Mtg. $62,510
Downpayment $21,100

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $412
Lot Size: –
Year Built: 2004
Stories: 3
Type: Condominium
View: Hills, Park or Green Belt
County: Orange
Neighborhood: Quail Hill
MLS#: S485936
Status: Active
On Redfin: 89 days

From Redfin, “Amazing ‘Mame’ award winning model * * Dramatic floorplan * * Enormous Great room/fireplace & large viewing Patio * * Gourmet Kitchen/ Granite Island * * Granite counter top with 6’splash * * Upgraded Dishwasher * * 3 huge bedrooms suites/ bathrooms * * ceiling fans in every bedroom * * Designer Paint * * surround sound * * Upgraded carpet and ceramic tile * * custom window coverings * * country club facilites-pools, spas, parks-tennis cts, * * Award winning Irvine schools * * Seller motivated. Will look at all offers. “

I guess the MAME (Major Acheivement in Marketing) award isn’t helping the marketing of this unit.

Enough with the asterisks already…



This unit is priced $10,000 higher, and it has been on the market almost 90 days. This strongly suggests the price is too high. This doesn’t make the asking price of 112 Stepping Stone look to promising.

How about this one:

131 Stepping Stone Front 131 Stepping Stone Kitchen

Asking Price: $645,000IrvineRenter

Purchase Price: approximately $250,000

Purchase Date: unknown

Address: 131 Stepping Stone, Irvine, CA 92603

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $415
Lot Size: –
Year Built: 2004
Stories: 3
Type: Condominium
View: Hills, Mountain, Park or Green Belt
County: Orange
Neighborhood: Quail Hill
MLS#: P575773
Status: Active
On Redfin: 86 days

From Redfin, “Gorgeous 3 Bed & 3 Bath Townhome. It is situated away from the street, View of Hills, Green belt, Park, Prime location. One bed/full bath on downstairs, large gourmet kitchen with solid granite counter top w/ full back splash, Upgraded ceramic tile, New Paint, Upgraded Lush Carpet, Relaxing Balcony w/ view. Assoc. pool, spa, BBQ , fitness center, tennis ct. Close to award winning Irvine school, village shopping center. Easy access to #405, #133 & #5.”

Yet another gourmet kitchen…



This seller is sitting on plenty of equity at this point, so they don’t seem too motivated. It is probably why they are in third place on the race to the bottom.

171 Stepping Stone

Asking Price: $650,000IrvineRenter

Purchase Price: approximately $420,000

Purchase Date: unknown

Address: 171 Stepping Stone, Irvine, CA 92603

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $419
Lot Size: –
Year Built: 2003
Stories: 2
Type: Condominium
County: Orange
Neighborhood: Quail Hill
MLS#: S471673
Status: Active
On Redfin: 195 days
Unsold in 90+ days

From Redfin, “Premier Quail Hill condominium with upgraded kitchen. Granite countert ops and stainless steel appliances, ceiling fans, hardwood floors, ceramic floors & berber carpet. Main level room can be used as an office or 3rd bedroom. Unit has large storage area in garage and spacious front entry porch. This unit is tucked away from traffic noise. Washer/Dryer/Refrigerater included. A must see!!!! Seller will consider all offers.”

Wow!!!! Four exclamation points. This realtor must be very excited about this listing.

As you can see, this unit is bringing up the rear on our race to the bottom. At 195 days on the market, perhaps the seller should consider lowing the price. The market is obviously not where this seller wants it to be.

Race to the Bottom

These races to the bottom are very revealing. You can see how the sellers financing terms and purchase price plays into their motivation and their asking prices. One of these units will sell eventually, and it will set the comps for the other three. I would guess a sale will take place under $600,000, but there are still some buyers out there who can get the necessary financing. These units are on the edge of the abyss of the financing picture. Units smaller and less expensive than this are not moving at all. Do you think one of these sellers will get lucky?

132 thoughts on “Stepping Down ** Update 1 **

  1. Rex

    Hey I really like your blog. I’m out today trying to expand the real estate community that is growin on Criteo. Would you like to try Criteo AutoRoll? I think it will be beneficial to showing you other real estate blogs where you can develop relationships.

  2. NanoWest

    None of these “homeowners” are serious about selling these units…..and they will not be serious for another 365 days or so. What will drive the prices down is when one of them with a lot of equity has to leave the area and they will price the unit in the $450,000 range(still too high in my opinion) to get a quick sale.

    The question is———at what price would create a sale in the next 60 days ?

  3. lee in irvine

    The fact that so many people were able to participate in this ponzi scheme with very little skin involved, will only add to the foreclosure time-bomb that is ticking away. They’ll simply take Jim Cramer’s advice, and walk away. They don’t have much to lose, other than a nasty mark on their credit report, but the benefits are no more bondage and much lower housing cost in renting.

    It will be interesting to watch the first listing. I would place about a 30 – 40 percent chance that this one will go back to the bank.

  4. caliguy2699

    What a difference a year made – the second owners bought in December, 2003 and have plenty of negotiating room in case they feel like lowering the price to actually get it sold, while the first owners who came along in December, 2004 are in trouble.

    Not sure how long it will be until we see condos appreciating by $212,400 in 12 months again…if ever.

  5. FamilyGuy

    Regarding Jim Cramer’s advise to “walk away” – that is truly the most asinine advice I have come accross yet about how to manage a down real estate market. I used to have a certain level of respect for the guy, now I see him for the idiot he is.

    It would take your credit as long to recover as it would the price of the home you just bought. Sure, you could walk away and try to time your reentry for maximum appreciation, but the premium you would pay in interest would offset any timing gains.

  6. IrvineRenter

    I think so many people will walk away that the ding to their credit will not be problematic for them.

    Right now our medical system is so messed up that people are often forced into bankruptcy if they get sick and don’t have the right insurance (or any insurance at all.) You often hear about “medical bankruptcies” as their own separate class. If you have a bankruptcy caused by our medical system, it doesn’t mean your are irresponsible with credit, so some lenders will give less weight to the bankruptcy in those circumstances.

    I wonder if you will start to see “real estate bubble bankruptcy” as a lesser form of bankruptcy in the future?

  7. EvaLSeraphim

    Ugh. What is the deal with claiming that those places have gourmet kitchens? Hello! Those are $300 basic ranges in those units. It’s more honest to call the location “Newport Adjacent” than it is to call those kitchens “gourmet kitchens.”

  8. IrvineRenter

    You’re assuming prices will recover in 7 years, and that is not certain.

    Also, bankruptcy may cause a small problem in the few years shortly after, but if you reestablish credit lines and pay promptly, lenders will not necessarily charge you very high rates for a full 7 years if you want to buy again. In fact, during the bubble, you could be a single day out of bankruptcy and still get 100% financing (and we wonder why lenders are getting burned.)

    I’m not saying Cramer is right, but he may not be totally wrong.

    The other advantage of bankruptcy which isn’t talked about is peace of mind. If you are sitting on a mountain of debt that is so large you could not possibly pay it off in your lifetime, bankruptcy removes that weight from your shoulders. You are limited for several years, but you are mostly limited as to what you can borrow. Bankruptcy doesn’t prevent anyone from living within their means and saving money.

  9. FamilyGuy

    On an emotional-level, I have a severe distaste for the concept of walking away from an obligation. It just goes to the core of my belief system. Admitedly, I’m probably allowing this to affect my opinion.

    On a purely financial basis, I understand what you are saying. And it does make the assumption that prices will recover in 7 years. It was interesting you pointed out that during the bubble you could file one day and qualify the next – but what about now with credit standards tightening? It would hurt you all the more if standards go up, which I think we would all agree that they should.

    My parents struggles to buy their first house, my grandparents struggled as well, and it was / is very tough for my family to afford our first house. But we will cinch the belt, and make it happen. Even if it takes two jobs, I will pay for the mortgage obligation I signed and in 20 years I will look back and feel a sense of pride. And you know what – there are many people out there like me, people that will do whatever it takes to pay thier mortgages.

  10. stickler

    Cooks are Gourmets, there are no such things as gourmet kitchens. Of course, i wouldnt expect a realtor to know that.

  11. IrvineRenter

    I admire your commitment and tenacity. We live in unusual times. It is sad when the formulas that used to work in previous generations are rendered invalid.

    There will be a lot of people who go underwater and just ride it out just like you plan to. Financially it may be better to walk away, but emotionally, it may not. You have to be true to yourself and your beliefs come what may.

  12. SawItComing

    OK, off topic but oh well.

    “I wonder if you will start to see “real estate bubble bankruptcy” as a lesser form of bankruptcy in the future?”

    I sure hope not. True, some people choose to file BK over medical bills but around 60% of these bankruptcies involve medical debt of less than $5k.

    “If you have a bankruptcy caused by our medical system”— No such thing, the system wont cause you to make poor planning decisions regarding your healthcare.

    I realize that nobody can adequately plan for a catastrophic illness, but how many of these people filing BK for medical reasons made poor decisions regarding THEIR health and financial ability to deal with it? Obesity, smoking, drinking, divorce, over extended mortgages, etc.

    We have the best quality healthcare in the world, how many conjoined twins from the turd world get separated in Canada or the UK? Our healthcare problem lies within the legal system.

    I can not understand why anyone would think that socialism, an oppresive system proven to fail over and over, is the answer.

  13. Cheeto

    There must be a mistake. Unit 131 was built in 2004 and sold for 250,000, when the unit built in 2003 sold for 420,000? There is an error there.

  14. 4runner

    This is just plain old wrong. Run the numbers– say the condo that you purchased for 600k$ goes down by 10%– that’s 60k$. How much money are you planning on borrowing before your difference in your interest expense is 60k$? Especially if you keep up payments on your credit cards/car loans– contractually, they can’t raise the rates on your existing loans if you are current on those loans. Your credit rating can fall through the floor and your car payment isn’t going to change so long as it is current.

    Hell– if a different lender is willing to give you a loan before your first unit forecloses, buy the condo unit next door for 540k$, let the first foreclose, and bank 60k$ in principal.

    Your loan agreement fully contemplates that a foreclosure may happen. In other words– you promised, gave your word, etc– that the lender will be able to foreclose if you stop paying. This is not “walking away from your obligations.” Foreclosure is part of the terms of your obligations set forth in your loan agreement.

  15. Cheeto

    I know this is a housing blog – so I appologize.

    To SawItComing: you obviously have never had do deal with a medical problem. This is not an unusual story: I had medical insurance (the only plan offered by my company) and when my daugher was born prematurly I ended up with $11,000 in medical bills (all legit – and per the sucky plan). I was able to pay – much of it on credit cards – but not everyone has as much available credit. I guess those people didn’t plan as well as they should have?

    Next time you have the urge to spout off about something you really have no knoledge about, don’t.

  16. ocbear

    Your statistics on each property should include 30 year financing at the asking price. 20% down, monthly payment and qualifying income. Then the craziness in todays market would be apparent on each property.

  17. Newport Renter

    Just like many people drink the housing always goes up Kool-Aid, I guess others keep drinking the, “We have the best quality healthcare in the world” Kool-Aid too.

    The Rand Corporation came out with a study that concluded that 60% of the care delivered in the US is sub-standard. 25% of the money we spend on private health care goes to “administrative costs”. (It’s only 4% for Medicare…aka, more dollars actually go to health care.)

    7 million Californians have no insurance. Half of all personal bankruptcy’s are caused by medical bills. Half! Do you realize how insane that it? Lack of insurance is the 7th leading cause of death in the US. For-profit healthcare maximized profit, not our health and they ration the care.

    The World Health Organization ranks the US 37th in the world for the quality of our care, and 55th for the fairness of our care. The USA is the only industrialized country in the world that does not have universal health care. Meanwhile, we are ranked 1st in health expenditure per capita in international dollars.

    Nobody ever complains that our fire departments and police departments are part of a socialist system. Maybe we should start profitizing those services too. Capitalism is always the answer…socialism never works!

    But this is a housing bubble blog…right?

  18. No_Such_Reality

    I think Cramers point was more along the line of don’t wreck yourself trying to save a ship that is going to smash on the rocks anyway.

    If you’re already 20% underwater or near it and you have a suicide ARM, you are not going to make the payments for the seven years or longer to get back to par and out.

    The old guideline was 28% DTI for mortgage and 33% for total DTI period. That got pushed to 40% based on teaser rates. And pushed to 40% for stated income, liar loans, where income was likely inflated.

    You look around and you see people holding $60,000, $70,000 or $100,000 a year in mortgage and tax payments after an ARM reset.

  19. kishore (renter)

    I noticed that the purchase price was 615k in 12/04 for one of the properties and 417k in 12/03 for one of the other properties. Did the price climb by 200k in just 12 months? Unbelievable.

  20. No_Such_Reality

    Looking at what 20% down would be is telling. It also leads to some interesting debates as to what the value of having $100,000 to $200,000 in a bank, treasury or stock investments are worth, let alone the piece of mind having $100,000 squirreled away when you run into a medical hiccup.

  21. FamilyGuy

    Assume a $400K 30 yr fixed mortgage under two rate scenarios:

    1. 6% financing rate yields a payment of just under $2,400 monthly
    2. 10% financing rate (this is a SWAG, if anyone has a more precise perspective, I’d be interested in knowing) yields a payment of around $3,500 monthly

    That is a difference of $1,100 per month, and is entirely a function of the interest rate. At that clip, it would only take you 4.5 years to rack up $60K.

    I don’t present this to be argumentative, just to highlight how much interest rates affect a monthly payment. (the Land Value 101 post does a great job of driving this point home) And it really may not make as much financial sense to “walk away” as Cramer puts it. You could certainly argue that 10% is a conservative estimate of equity decline, and that you might be able to wait a few years for credit to recover before obtaining a new loan and therefore the rate premium would be as high, but you get my point.

    Remind me not to loan you money – ; 0 )

  22. CalGal

    Cheeto – A similar situation happened to us. When my husband was in his 20’s (perfectly healthy) he detached his retina. The health insurance that he had at the time only paid 80% of his coverage. He didn’t have disability insurance and he was out of work for 6 months with the recovery. He was self-employed, so he didn’t get a paycheck while he was recovering.

    We were fortunate where we could both in with family members while we paid off the debt and got back on track; but not everyone has that luxury. We were renting at the time, so we didn’t have a mortgage payment to worry about (thankfully). One minute we were happy, healthy and financially stable – then in a flash we were in debt up to our eyeballs – no pun intended 🙂 Our medical debt was up to $20,000 at one time. That was A LOT of money for us.

    Life can change in a flash – literally.

  23. momopi

    I don’t think 131 Stepping Stone was purchased for $250k originally. When Quail Hill came on the market the lowest priced units were 1 bed condos or $250k, I seriously doubt the 3 bed condo went for $250k purchase price.

    I still remember the long lines of people trying to sign-up to purchase there at phase 1. I had considered picking up an investment property there but changed my mind after I saw the line.

  24. Irvine_Lurker

    I agree. I don’t think anything in Quail Hill ever sold for $250K (especially a 3 bd Townhome…)

  25. IrvineRenter

    I don’t know what this property sold for. I could not find any information in the property records database I consult. I based my estimate on the tax information shown on Redfin on the right side of the page. It could be wrong.

  26. Maverick

    Looks like someone saw Sicko and decided to regurgitate its sensationalist and skewed propoganda…thanks but no thanks Mr. Moore.

  27. Jim Jones

    IR, given that homes most likely will not appreciate beyond today’s values for a very very long time how much do you think the rent verses buy equation is going to impact people’s thinking? Why would anyone buy if their monthly costs were going to be significantly higher for many years to come verses renting a like property? I crunched some numbers on the Condo (conversion) I’m currently renting in Huntington Beach. I pay $1000 per month for a 750 sq 1 bedroom unit. These units in my complex are now going for 265k (and dropping) down from 360k in 2005. If they drop to 175k I’m still saving money by renting. 175k minus 35k down, 145k loan amount, $230 HOA fees, taxes., total monthly expense of $1265. If people adhere to the rent verses own equation I don’t understand why anyone would purchase in a non appreciating market when they can rent the same property for considerably less. Plus for larger puchase amounts if banks are going back to be requiring 20 percent down then on a 500k property you need to put up 100k. Assuming you have 100k for a down payment this money is now stuck in your house unavailable for investing. I don’t understand why anyone is buying now.

  28. lee in irvine

    “Regarding Jim Cramer’s advise to “walk away” – that is truly the most asinine advice”

    Under normal circumstances, I would agree with your statement. But because our nation’s real estate market is in such turmoil, and declining like never before, I think it’s probably a good idea to walk away if you’re in trouble and facing a re-set in your mortgage. Mainly because we’ve never seen a boom to bust cycle as massive as this one before in real estate. We don’t know how low it will go, or how long it will take.

    Besides, I agree with what IR hinted above. There are going to be so many people that are going to “walk away”, the creditors in the future will likely look at foreclosures differently during this time, than they did in the past. I’m not suggesting they’ll reward a pardon to these people, but I do think they will look at this time differently in the future.

  29. FamilyGuy

    You really have to consider taxes as part of the rent vs. buy scenario as mortgage interest is the #1 deduction.

    I don’t fully understand all the tax brackets stuff, but I always thought that a simple equation was $1000 in rent was the same as a $1250 mortgage payment.

    Anyone have a better approach?

  30. Jim Jones

    I assume there is no hard rule on this but aren’t any tax benefits wiped out by the property tax? So I expect that you can pay a little more on owning verses renting and still come out ahead. Anyone have any charts and graphs for us? Of course when you buy you still have your 20% stuck in the house and not working for you.

  31. Newport Renter

    Actually, I haven’t seen Sicko yet, but I have seen some interviews from Moore which is where I got the fire department and police department analogy.

    But you are right, the information I got was from those well known propganda machines…the World Health Organization, the Rand Corporation.

    You seemed to find it hard to understand how someone could want to see the US adopt universal health care like every other industrialized country in the world. I provided some information from what I believe to be credible sources. And your response…

    “Sensationalist! Propaganda! You must have gone to a movie of someone I despise!” Nothing wrong with honest discourse, even in a housing bubble blog. Show me how the facts that I presented are skewed…or present some facts of your own. Change my mind if you believe that I’m wrong. Or not… Either way, change is inevitable.

  32. socalhousingbubble

    Stickler, I was thinking the same thing.

    They could try “gourmet’s kitchen” and it would be a little closer to the mark, though quite awkward.


  33. Maverick

    Jim, you may not understand it, but most people don’t adhere to the “rent versus own equation” when they buy a home. Speaking anecdotally, my friends have generally followed this model, with minor variations: go to college, get a job, get married, buy a home, have kids. There is no “calculate rent vs. own equation.” Home ownership has a HUGE emotional component. It is better, or perceived to be better, for a family to live in a home that they own. There are various reasons for this, including increased stability, doing whatever you want with the property, no landlord checking in, no possibility of a rent increase (assuming you have a fixed rate loan), no possibility of the landlord selling the property out from under you or evicting you, and eventually paying off the mortgage and living rent-free in retirement. Also, there is a perception that living in a community with homeowners vs. transient renters generally results in a closer and tighter-knit community (compare the Newport Beach war zone and/or any of the apartments around UCI with places like Bonita Canyon, East Bluff, etc.). Again, these are merely perceptions (though perceptions, like stereotypes, are often based on reality).

    Your math makes sense, but at the end of the day, most of the people out there are not as price/value conscious as Warren Buffett and really don’t give a rat’s ass about having a few extra schillings in the bank when it means they have to put their life plans on hold.

  34. Major Schadenfreude

    “Right now the staircase seems to be leading to Hades.”

    Just pure comedy is what this is. You can’t beat this lunch time entertainment!

    Thanks IR!

  35. Jim Jones

    Maverick, I agree with most of observations. I previously owned a home in another state and really liked being an owner for all the reasons you mention. Of course I owned a SFH with a yard not, one of these condos with HOA associations, common walls, parking issues, etc etc. I think the reason a lot of us are looking at the rent verses own equation is because it’s so insanely out of balance right now in OC. If my only option is a condo and not a SFA then I’ll continue to be a lot more numbers focussed than if I could get into an SFA in a decent area down here.

  36. NanoWest

    The problem with the E-Loan calculation is that it does not include the 30% reduction in value of the home, it assumes appreciation of the property.

    I put in a purchase of 500K with 10 % down. versus renting for $ 2,500. With their assumption that the price of the house I would go up 100K it would save 50K by buying…….but if the price of the house goes down 100k, I lose 150K by buying !!!!!!!

  37. SmartMoney

    Maverick, you are right but you miss the fact that the this latest housing bubble so badly exploited what had previously been rock solid multi-generational advice (buy a house, stretch a little, make it beautiful, things will be good) and turned that very advice so completely against the people following it (at least in hedonistic, superficial, overcrowded parts of the country like OC) that ALL of the old rules are changing and the collective psychology IS shifting. I talk to young professionals ALL THE TIME now days who say “You would have to be an idiot to buy a home in Southern California.” They DO THE MATH.

    When the rules change completely because of the greed of flippers and high school drop outs who want incredible incomes with no meaningful effort, the masses change their behaviors. They learn. Some quicker than others, of course, but they learn. You WOULD HAVE TO BE AN IDIOT to buy a home in Southern California right now. The realtors will tell you: well, as long as you plan to be in it for 10+ years, you will be fine . . .

    The truth of the matter is you will probably be fine, if fine is good enough, but you will be SO MUCH BETTER if you wait an extra year or two and get almost twice the square footage or a dramatically better location for the same amount.

    I think the masses are starting to comprehend the kind of money being talked about here. For a few years in there they stopped caring about price, just appreciation rate and just getting a spot on the equity train no matter the price. That logic obviously did not work, and the speculators and fraudsters are slowly getting sifted out of the market (thankfully), but until they are ALL GONE, YOU WOULD HAVE TO BE AN IDIOT TO BUY REAL ESTATE IN OC . . .


  38. Honest

    Not me. It’s a short sale. I would hate to deal with this owner’s bank etc etc. Too much trouble if you ask me.

  39. buster

    Newport Renter – You are right on. Some people know little about capitalism, so they don’t understand that health care is, by its very nature, not a capitalist product. One of the core features of capitalism is “substitution.” If orange juice gets too expensive, people will drink apple juice. Demand for OJ goes down, demand for apple juice goes up, and prices move towards economic equalibrium. Health care doesn’t work that way. If you need a bypass operation, you can’t substitute knee surgery just because there are four orthopedists sitting around doing nothing. Since, in the macro sense, there is no substitute for a particular health problem (yes, I know, in the micro sense there are different treatments), health care does NOT have the features of a capitalist product.

  40. No_Such_Reality

    That’s the problem with all of the calculators. The assumption on home appreciation pretty much skews the numbers. You also have the rent increase numbers and the investment return % numbers too.

    But, in the typical Irvine area, where you can likely rent a $600,000 home for $2400/month, at 6.75% interest, 5% anual rent increases, 1.25% property tax ( mello-roos), assuming a 0% increase in the home value means you’d save $100,000 by renting for the next five years.

    Any loss on the home is gravy.

    That’s the key thing to remember, prices are so distorted above equivalent rent that you literally cost 1/3rd less to rent every month after taxes.

  41. IrvineRenter

    I would not trust any rent vs. own calculator from any website or any organization that makes money on the transaction. They will always be biased in favor of ownership.

  42. Greg Oranges, Quail Hill Community Assn., Presiden

    You want the TRUTH on real estate – contact a Realtor! – I saw 112 Stepping Stone yesterday and it is not bad – it is a short sale – good luck – Nothing compared to this one>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>You want a great property in Quail Hill – call me for a private showing of 91 Stepping Stone – it is deluxe! Best location and upgrades of any Casalon on the market. Buy a house and get a life!

    Greg Oranges
    First Team Real Estate

  43. Greg Oranges, Quail Hill Community Assn., Presiden

    91 Stepping Stone

    Award winning model****Enormous Greatroom/fireplace & large viewing Patio**Gourmet Kitchen/ Granite Island**Granite counter top with 6’splash**Upgraded Dishwasher**3 huge bedrooms suites/ bathrooms**ceiling fans in every bedroom**Designer Paint**surround sound**Upgraded carpet and ceramic tile**custom window coverings**country club facilites-pools, spas, parks-tennis cts,**Award winning Irvine schools**

  44. Greg Oranges, Quail Hill Community Assn., Presiden

    NO Joke and NOT spam

    signed IrvineOwner who is still buying BEFORE it the pricing goes UP!

  45. Observation

    While I may see some value as an entertaining site, the author of this recent article is using information from Redfin. The numbers do not take into account upgrades that were paid for by the original owners. Stating that these owners have 200,000 in equity may not be accurate. People need to be aware that these numbers are simply guestimates. Close, maybe. But not 100% accurate.

  46. Greg Oranges, Quail Hill Community Assn., Presiden

    REAL Bloggers Tell the Truth – all actives in Casalon!!!!!!!!!!!!

    As of 4:00 PM, August 2, 2007

    1 S488721 A 18 H T Q CONDO A 83 Vermillion IR QH 92603 889G2 CASA/C 3 3 3 2 1,553 2003 $699,000 78 v
    2 S497537 A 20 H T Q CONDO A 47 Passage IR qh 92603 890G2 CASA/B 3 3 2 2 A 1,582 2004 $650,000 16 *v
    3 P575773 A 8 H T Q CONDO A 131 Stepping Stone IR qh 92603 890G2 CASA/C 3 3 3 2 A 1,553 2004 $645,000 91 *
    4 S497191 A 5 V H T Q CONDO A 25 Seasons IR QH 92603 890G2 CASA/H 3 3 3 2 A 1,592 2003 $642,000 21
    5 S485936 A 12 V H T Q CONDO A 91 Stepping Stone IR QH 92603 890G2 CASA/F 3 3 3 2 A 1,553 2004 $639,800 94 *
    6 S496508 A 10 H T Q CONDO A 112 Stepping Stone IR QH 92603 890G2 CASA/F 3 3 3 2 A 1,553 2004 $629,900 23 *v
    7 S499303 A 6 H T Q CONDO A 63 Passage IR QH 92603 890G2 CASA/C 3 3 3 2 A 1,553 2003 $629,000 3 v

  47. Hope To Buy In Irvine Some Year

    Dude, what are you talking about?? For those who are working and not on some type of govt program medicare, etc, I can go to any doctor I want with different pricing. Same when I was in Asia, I got sick, you pay for great high quality service that is a fraction of the cost of the US.

    Also, I’d be careful asking for socialized medicine. My wife’s friend from Canada had to have her knee done 3 times (probably because the doctors are underpaid and overloaded), and had to wait like 6+ months for surgery, all because of socialized medicine.

    Perhaps a compromise would be best, those who are poor get it, those who are working or have $ can choose on their own. Then again if we continue to have illegals running in here year after year, it will become a drain on our country that is going to be soon completely broke.

    Anyways isn’t this blog about HOUSING?? Here’s a great link from Peter Schiff:

  48. IrvineRenter

    Well, thus far it is entertaining spam anyway.

    “signed IrvineOwner who is still buying BEFORE it the pricing goes UP!”


    There running out of land!!!

    You will be priced out forever!!!

    If this realtor can find a buyer here, more power to them…

  49. No_Such_Reality

    I do have a real question. How many homes in the Casalon development?

    There’s seven for sale, 5 are the same floor plan. Zillow shows two tools with “Make Me Move” prices listed on the site.

    Couple simple questions: home many homes in the Casalon complex these seven are in? How many homes sold in that complex last month? The month before?

  50. awgee

    IR – Please help me out. You know how dense I am. As I read them, the sales which the truthful realtor cited in the above post look to me like they closed in 2003 and 2004. Is this correct, and if so, what is the point that is being made? That homes sold for over-inflated prices and are now selling for less? Even a pea brain like me can figure that out.

  51. SawItComing

    Cheeto and CalGal, I think you illustrate my point exactly. Neither one of you said you went bankrupt over this. Yes I am sure it was a tremendous hardship and congratulations for seeing it through. However wouldn’t you both admit that the situations could have been better planned for?

    Cheeto, you state “(the only plan offered by my company)” Did you ever look for insurance on your own? I did and I cover my family with an HSA plan that I pay for. I took the time to sift through several plans to see what was covered and what the total out of pocket would be because as you have found out, the exclusions can be devastating. The information is there if you take the time to read it. You are correct, my family has been very fortunate healthwise but your use of term “spouting off” implies a lack of knowledge on my part and that is clearly not the case.

    CalGal, I hope he made a complete recovery. I agree $20k is a lot of $$. I too am self-employed. On the advice of my accountant I carry disability insurance. It is somewhat expensive but we do it. I am not speaking from a holier than thou standpoint because I actually do the things we are talking about. We budget our money carefully to make things work.

    It is positively foolish to believe that government agency can perform better than private industry..FEMA, Social Security, Public Education..etc.

    Oh, and Newport Renter: Where I live there are Fire Departments that are PRIVATE! Yes, you pay an annual fee for fire and rescue. The equipment is a few years old but well maintained and they pride themselves on the fact that their response times are better than in the incorporated areas.

    Lastly, although I have not read it from either of you, this blog is ripe with comments about idiotic borrowers who should have known better and not been so foolish in signing toxic mortgage notes and how any government bailout would frowned upon. Why is being responsible for your own healthcare any different?

    I am not trying to pick a fight, but just like auto insurance, you cant complain if you dont want to participate.

    I don’t want my wife to have to wait for hip replacement surgery for 4 YEARS like her grandmother in the UK did.

  52. Truthsayer

    Real bloggers tell the truth, eh? Your listing has been on the market for 93 days. What do you know that none of us do about what a great buy this is?

  53. Major Schadenfreude

    “call me for a private showing”


    I’m really interested in purchasing 91 Steppingstone, as I think it is a great deal and I can’t wait to grow my equity with it because I know the home will appreciate quite a bit over the next few years.

    Now, I’m a really busy guy, so can we please schedule the showing for 5:00 AM this Saturday?

    See you there!

  54. tonye

    I have to agree with FamilyGuy.

    And I’m a bit surprised with IrvineRenter… after all the argument that FamilyGuy is making is that homes should not be treated as a commodity, they should be treated as a home. There’s an intangible sense of relief when you own a house with a payment you can make.

    OTOH, rental properties can be treated as commodities.

    And flippers can just go to the Hades.

  55. tonye

    I’m on the Board of a TR HOA and we do not have any Real Estate agents on our Board.

    Thank God.

  56. IrvineRenter

    I have no idea what the point is. I commend you for trying to decipher this spam. I made no such effort.

  57. graphrix

    Quick Question aka Huh, Observation, Honest and Bill please pick one name to post comments with. Also name calling will not be tolerated. Consider this your first and last warning.

  58. IrvineRenter

    “There’s an intangible sense of relief when you own a house with a payment you can make.”

    Given that caveat, I agree. I would not sell my home after a 20% drop if I was comfortably making the payments on a 30-year fixed rate mortgage. I think Cramer’s advice is more relevant to those who are underwater and facing an unaffordable reset. Don’t throw bad money after bad.

  59. awgee

    Maybe those are the wishing, I mean asking, prices. Did he include the days on market for these listings?

  60. Kirk

    At first I was shocked at all the anti-housing propaganda perpetrated at this site, but then I read the comments. Socialized medicine. I’m guessing this site is run by Michael Moore. That would explain why you people are fantasizing about a housing “bubble”. You simply can’t stand that unfettered free markets work and have made people who participated wealthy. I bought my studio in 2006 for $925,000 and will post a comment laughing at all of you when I sell for $1.5M in 2009. Don’t get bitter over other peoples success. And as for socialized medicine, that’s worse than the socialized traffic signals jamming up traffic everywhere.

  61. IrvineRenter

    Click on the link to Kirk’s website. Those words were spoken by a PhD in economics from the University of Chicago.


    Kirk come back when you sell that studio for $500,000 in 2009 so we can laugh at you.

  62. Sue

    Lenders Broaden Clampdown on Risky Mortgages

    Lenders are tightening standards and “raising rates like crazy,” said Melissa Cohn, chief executive of Manhattan Mortgage, a New York mortgage broker. She said Wells Fargo & Co. is charging 8% for a prime jumbo 30-year fixed-rate loan that carried a 6 7/8% rate late last week. (Jumbo loans are those too large to be sold to government-sponsored mortgage investors Fannie Mae and Freddie Mac.) A Wells spokesman said rates are lower on loans made directly by the bank than on those through brokers.

  63. Maverick

    I think Kirk’s website (and his comment) is a parody of the right wing, ala Steven Colbert. At least I hope it is.

  64. mopar777

    Good song to be used for a future property:

    dream on
    dream on
    dream on
    dream until your dreams come true!


  65. IrvineRenter

    It is a great parody if it is indeed a parody. It is difficult to tell from his comments above if he is engaging in satire or if he is suffering from a severe kool aid overdose.

  66. tonye

    Which comes down to my notion that we have too many lawyers so that the US needs to lose a war that will not drag property values… the gov will get shot -there goes half the lawyers- and the laws will change -there goes the other half.

    How do we punish those that were reckless without taking down those who were not? And make no illusion even if you’re renting because if the economy goes south, we all get screwed.

  67. awgee

    Kirk – If you actually read more of the comments you will see that others here have made multiples of what you think you are making on your studio. And they have done it in re and by selling and recognizing market tops. Good luck, but I think your arrogance will not serve you well.

  68. tonye

    I figure they’ll have to introduce an A++ rating.. you know? The 5.0 GPA?

    So those of us who didn’t screw up (renters and responsible homeowners) get the superduper grade….

    Let’s see… right now perfect credit is 800… so maybe we could have a plusperfect score of 950? Use something like a 150 b”bonus” for not walking away with the herd.

    But remember, Cramer is a very rich guy. I should know, I use to email with him before he became famous and was a charter subscriber to

    He started back in 96 or so.

  69. tonye

    I prefer “Big Ten Inch”.

    A much, MUCH better song. 😉

    Last night I tried to tease her
    I gave my love a little pinch
    But she said now stop that jivin
    and whip out your big ten-inch

    Sure, it’s a bit childish… but I was a teenage when that came out I still love the song.

    Dream on was too much of a chic song.

  70. tonye

    Now this is truly NUTS…. to go to 8% for your prime borrowers with a down payment on a 30 year fixed jumbo.

    It’s a complete knee jerk reaction.

    The bank will end up screwing itself up because they will stop making money.

    I mean, one thing is to stop those crazy loans, the other one is to stop making any kind of loan. Which at 8% pretty much assures W&F will be out of the business for good credit buyers.

    I have a feeling the Fed will be lowering rates by 1/2 of a percent soon.

  71. Kirk

    Here we go with the classic “parody” smear tactic. This is typical of liberal socialfacists that get called out on their propaganda. Instead of having a rational debate, free of emotions, you attack the messenger in hopes of discrediting them so that people don’t find out the facts. THERE IS NO HOUSING BUBBLE!!! That is a fact. The only people getting hurt in the market are those that turned their backs on God. People that retain their faith in Him will come through just fine – more than fine in fact. They will turn a large profit. I’d almost feel compassion for you misguided people, but Jesus taught us to condemn those who are sinful.

  72. Stu

    Religion??? You are associating religion with the profits made from housing?

    So the devil is responsible for the bubble being burst? There must be a lot of people out there who have done some bad things.

    You have got to be kidding!!

  73. Patience

    I have had some experience with Mrs. Oranges, who is also a realtor. She was the agent in charge of renting the property I am in when I leased it. I signed the rental agreement and brought it by her office where she blithely starting filling in additional items and changing it AFTER I had signed it. So professional.

  74. Kirk

    Stu: I didn’t say anything about the devil. Don’t try to make me out to be some kind of nutcase. I, in fact, stated unequivocally that there is no housing bubble and that the only people getting hurt in the market are those that have angered God. If all these people suffer is a lost house then they got off easy.

  75. Kirk

    Awgee: What you call arrogance I call faith. Who are you to tell me that my faith is wrong? Your intolerance won’t serve you well.

  76. 306


    What is going on with the wackpack parade (Kirk, Oranges)..has there been an asylum escape in OC that I did not see on the news. Please block these idiots so we can get back to normal programming.

    Thanks man, and keep up the good work.

  77. graphrix

    It’s not something that would change if the Fed lowers rates. The secondary market is determined by investors and there is absolutely no demand right now. Wells is taking a gamble by trying to get 8% because they don’t even know if they will have an investor at that rate. They might not make any money because there will be zero demand at 8% but if they did the loan at 6.875% they would lose money when they would have to pay the investor to buy the loan. Even if rates were back down to 1% it pays better than the negative returns they are seeing in the mortgage market. This credit crunch could get very ugly and there will be many more like AHM that will shut down.

    There is a great discussion in forums here that has some great real time info. There are also some other discussions in which I think you opinion would add to. Hope to see you in there.

  78. Stu

    God, Devil, aren’t these just different sides of the same coin, doesn’t one come without the other? Sorry I apologize, I am not from the US and not up to date on the latest theology or the current religious fad.

    IMHO the link between religion and housing is very tenuous.

    Real estate agents make a lot of money from the sale of houses so I guess they must all go to heaven

  79. lendingmaestro

    Thanks for the Quail Hill updates. I rent over here and it’s a really nice area for families and pets.

    Unfortunately it is a rather newly built area, which means every single unit was purchased during the bubble. I think we’ll see Quail Hill values fall below their original purchase prices from the builder

  80. Cheeto

    Wow – the comments by Kirk only make it harder to tell if he is a parody.

    At any rate – I am going to see if I can link up Kirk with Jesus’ General

  81. GavriloPrincip

    Greg Oranges, I must say I’m impressed with your tenacity in reposting your strangely-punctuated listing notes here. [BTW, “6′ splash?” That’s a lot of granite!] Perhaps it’s an example of the old adage “there’s no such thing as bad publicity?”

  82. tonye

    What does God have to do with RE values?

    And socioliberalism?

    I think this fellow has been stealing some Holy Water and using it to make Holy Kool Aid. Definitely a no no… Everyone knows that the thing to drink is Holy Wine. A much better drink.

    Ever wonder why the Missions all had extensive wine making faciliites? Those padres never drank Kool Aid and never flipped homes. They went for the long term investment. 😉

  83. Kirk

    The surest way to tell that you’ve won a debate is when the other side starts with the name calling. Thanks for so clearly demonstrating that I’m right.

  84. Kirk

    I came here to alert people to propaganda and possibly save them some misery down the road and what do I get? Petty insults. Well, when a one bedroom is priced over $3M, all of you will look back and frown upon your folly. Maybe then you will start praying and enjoy the power – wonder-working power – that comes with faith. I only fear that I have gone against His word by trying to help the less fortunate.

  85. Cayci

    “Buy a house and get a life!”

    Seriously? This gets this guy business? I find it kind of offensive. I don’t own a house, and I have a mighty fine, full life, thank you very much.

  86. Cayci

    “Kirk come back when you sell that studio for $500,000 in 2009 so we can laugh at you.”

    LOL I’m laughing at him now.

  87. Mendelssohn

    Thank you for letting us know about Adrienne Oranges, the listing agent of 91 Stepping Stone.
    Her husband’s comments here did not do her any favor either.

  88. tonye

    When a one bedroom is worth over $3M… Hey… my 5 bedroom home in TR will be worth a real bundle.

    In any event, my 5 bedroom will always be worth a ton more than a one bedroom.

    What me worry….

    But I don’t drink Kool Aid.. too much sugar.

  89. Laura Louzader

    If Kirk is indeed in Chicago, he had to have bought that place in Chicago’s fabled Streeterville neighborhood, where the average net worth is about $25MM. This area is comparable to the Malibu Coast, so maybe the laws of gravity do not apply here.

    Kirk makes the mistake of believing that the miniscule sliver of the population that can afford this area are representative of the housing market as a whole. They don’t even represent Chicago. These people are more likely to pay cold cash for a dwelling and I daresay it’s easier for many of them to pay $5Mm cash for a place at No 1 Mag Mile than it is for the typical middle class Chicagoan to pay the nut on a $250K condominium in Edgewater.

    However, if “Kirk” is on a salary of, say, $250K or so, he might have made a very large mistake and could find himself behind it on the payments very soon. There’s a hint of smugness in his post that sounds a bit hysterical- did he buy his $925K studio apt. with a “liar’s” loan that is also an ARM with a reset this year? He sounds like he’s giving himself pep talks to pursuade himself he hasn’t made the mistake of his life.

  90. Laura Louzader

    I feel like a sucker.

    I didn’t THINK there was any such thing as a $925k studio condo in Chicago, even Streeterville.

    I went to Kirk’s site and it’s a great parody.

    He’s not a troll at all, but rather seems to be satarizing all the housing bulls. His comments are clearly meant to amuse.

  91. tonye

    I checked his site. I really don’t get it.

    What point is he trying to make? I don’t think it’s a great parody of anything, just a big idiot meandering and trying to insult as many as people as possible. There’s no discernible undertone of purpose.

    The closest I can think of is Jonathan Swift’s “A modest proposal”.

    Yet, Swift’s essay was a well written, piquant piece that is more in tune with Hunter S. Thompson that this clown Kirk.

    Perhaps National Lampoon’s “Dog Fishing in America” from 4/76 is closest… although I must admint that Dog Fishing was/is an extremely funny article and that P.J. O’Rourke is a genius.

    I dunno, I guess people living in trailer parks should not be allowed to run blogs on the internet.

  92. 4runner

    Run the numbers with the same example:

    600 k$ loan @ 6% interest vs. a 540 k$ loan at 10% interest.

    It looks like ~12 years before the outstanding loan balances cross.

    How long before the foreclosure is wiped off your credit rating?

  93. PLANE

    Greg Oranges…..real estate agents are an endangered species…..the TRUTH about real estate is that these sellers need to go For Sale By Owner. Why should they pay a Realtor’s commission when they have little or no equity? A 6% commission on these listings is $24,000… on earth is a Realtor’s services worth that amount? One of these owners should go FSBO and let the other listings drive traffic into the area. If they want to get on the MLS, use a transaction broker and avoid the heavy and UNEARNED commission fees.

    Another important aspect of this subprime mess that is not spoken of too often is how Realtor’s have been involved in it. Most people don’t know this but the average real estate broker also has his hands in on the mortgage. Whenever you see an “in-house” lender what you have is a lender who is either paying the broker to be there or they are giving them a portion of the profit for each mortgage sale. Real estate brokers who have these arrangements put tremendous pressure on their agents to use the in house lender. They even prohibit other lenders from soliciting their agents. Realtors like to say that they follow high standards and they avoid “steering” clients towards any particular vendor, but as a mortgage loan officer for the last 9 years I know this is a bunch of bull. I have never encountered a brokerage where a portion of the agents didn’t have their hands out waiting for some form of a kickback…….sponsor my open house ….pay for my marketing…..share your commission…..That is simply the way in it works in some circles. Just open the phone book and start calling brokerages and ask them if they have an “in house lender” or a “preferred lender” and you’ll see what I mean. RESPA prohibits agents and lenders exchanging ANYTHING of value but it does not prohibit brokers from this rule. Strange isn’t it? Don’t forget it, Realtors are part of this sub prime equation.

  94. Carl

    I contacted them and interviewed them as a potential agent to sell my home in Turtle Rock in 2006. Adrienne was the agent on my home when the previous owners bought it in 2000. I didn’t really like them very much so we went with other agents. They claim to be Turtle Rock specialists. Very apropos, I just got an email from them (I’m on their SPAMLIST) claiming that 2007 was their best year yet, even in the downturn. I find that extremely hard to believe.

    I think the volume dealers (like Tom and Barbara Nash) are probably still okay, but the house here-or-there types are liquidating.


  95. ElricSeven

    27 Vermillion sold and is very similar to these units. I bet it’s the lowest comparable in the neighborhood now. I don’t know how much it sold for, though.

  96. surfing in newport

    This is a much better calculator. You can change the assumptions all you want.

    A couple of caveats about the calculator:

    If you want to see what the rent vs. buy equation should be in normal times you need to make sure that inflation = house appreciation = rent increase. If you are looking at coastal property, maybe a inflation can be a little less.

    Also, technically you should use 100% financing and assume the same investment return rate as the financing cost. In the calculators, they always assume a lower investment return than mortgage interest, but that is wrong. You should use a risk adjusted return. This is especially true for the down payment. Think about it, if 100% is so risky, shouldn’t you also expect a higher rate of return for your down payment? Think about what you would require to give some else a 2nd TD mortgage for their downpayment.

    I also found the maintenance and insurance fee assumptions a little high for So. Cal. Remember, that these should be based on the replacement cost of the structure, not the purchase price.

  97. surfing in newport

    And don’t forget to blame the government for creating short term advantages to buying/selling a home: $500k every two years tax free and now a temporary change to the conforming loan limits.

  98. DeadBeatRenter


    Using this 10 percent number is just wasting bandwitdh and missleading the public that may see the example above…

  99. GavriloPrincip

    Carl said: “Very apropos, I just got an email from them [the Oranges] (I’m on their SPAMLIST) claiming that 2007 was their best year yet, even in the downturn. I find that extremely hard to believe.”

    Don’t believe it. I talked to Adrienne at an open house last summer and she said something to the effect of 2004 and 2005 were their best years ever, 2006 was much lower than 2005, and 2007 was looking even worse.

  100. momopi

    I seem to recall the lowest priced condo @ Quail Hill in phase 1 was $250k for 1 bed, so there’s no way that a 3 bed would’ve been purchased for only 250k.

    You could’ve bought a 2 bed + loft conversion (bathroom addition) to 3rd bed in Oak Park / Oak Creek for $250k in 1999, and Quail Hill was released after that.

Comments are closed.