One that wont make me sick
One that wont make me crash my car
Or make me feel three feet thick
I want a new drug
One that wont hurt my head
One that wont make my mouth too dry
Or make my eyes too red
One that wont make me nervous
Wondering what to do
One that makes me feel like I feel when Im with you
When I’m alone with you
I want a new drug
One that wont spill
One that dont cost too much
Or come in a pill
I want a new drug
One that wont go away
One that wont keep me up all night
One that wont make me sleep all day
I Want a New Drug — Huey Lewis and the News
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Right when I start to think sellers are accepting the reality of the new market, I come across a listing that makes my jaw drop at the greed and clueless irrationality of my fellow man. Today’s seller needs a new drug because they have clearly overdosed on the kool aid…
Asking Price: $1,395,000
Income Requirement: $348,750
Downpayment Needed: $279,000
Monthly Equity Burn: $11,625 at least
Purchase Price: $860,000
Purchase Date: 3/26/2004
Address: 1 Lorenzo, Irvine, CA 92614
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,601 |
| $/Sq. Ft.: | $536 |
| Lot Size: | 8,670 Sq. Ft. |
| Type: | Single Family Residence |
| Style: | Contemporary/Modern |
| Year Built: | 1987 |
| Stories: | Two Levels |
| Area: | Westpark |
| County: | Orange |
| MLS#: | S517499 |
| Status: | Active |
| On Redfin: | 44 days |
One of largest entertaining back yards in community. Low HOA fee. Highly artistic customized upgrades with oak wood cabinets and granite counter tops through out, stainless steel appliances, cove & recessed lighting in the kitchen & 1st floor BR, wine rack in kitchen. 18’X18′ travertine flooring, wood & carpet flooring, Granite shower walls, frameless glass cover enclosure of master BR shower, 3 French door openings in Living room & 1st floor Br, 2 French doors in family & living Rooms, Granite counter top with top grade grill for built in private B. B. Q. Built in out door granite bar. Professional Landscaping.
How many times does the word “granite” appear in this listing?
.
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It has been demonstrated on the blog over and over again with listings all across the spectrum of housing that we are in a market decline, and pricing is back at 2004 levels for those few properties that are actually selling. But no, this property is different, this property has increased in value over 60% during the last 4 years. Forget the fact prices have dropped almost 20% from the peak; it is as if that never occurred. This property has been appreciating at 15% a year just like it did during the height of the bubble when they bought it. 
Do these sellers have their heads in the sand, or is it somewhere else? The cognitive dissonance is truly remarkable. It takes courage to put a listing price out there like this. This price clearly insults the intelligence of every buyer in the marketplace. Aren’t they worried about insulting potential buyers? No wait, I suppose potential buyers should be worried about insulting them with a lowball offer, right? This property would be fortunate to sell for what they paid for it. Can you imagine their reaction if they got an offer for what it is worth in today’s market? What would happen if they got a real lowball offer for perhaps what this place will be worth at the bottom — I’m guessing 50% off their asking price? Anyone want to go mess with them? It is the only buyer interest they are likely to see at this listing price.
.
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That concludes another week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
🙂
They probably have HELOC that they are feeling entitled to transfer and have someone else pay off for them.
I also like the “low HOA fee” sales pitch. If you are spending 1.4 million on a house – who gives an F about the HOA fee. Compared to your mortgage payment any HOA dues are going to be chump change on that sucker
These sellers are going to chase the market back into 2002 shortly. Be sure to do a follow up on this property at the end of the year.
—–
AZ,,,,,,
You comment about theHOA is too funny.
I lived in Northwood for about 5 years and I saw something that sort of made me laugh. They had a guard gate, but decided to install automated gates that require a scanner sticker for extra security. Each home got two free stickers and had to pay about 50 dollars for extras. There was this guy at the table where they were giving the scanner stickers out……..driving a $100,000 car. He was upset that he had to pay the extra 50 dollars for his third car…….clueless.
Can you believe that on a $1.4 Million house, one of the first comments made is that it has a low HOA fee? Give me a break. Do any of these realtors have half a brain? Like anyone coming up with the scratch for a house at this price would care about that. No wonder this market has gotten to be such a mess with these idiots at the helm.
I like how the polls with questions about price levels show a nice bell curve. This really tells where the perception of market value is at.
The owners are not as greedy as you accused them to be. Instead of asking appreciation of 15% a year, they are only asking 13% increase compounded a year since 2004.
This beautiful house may be going down in value for now, but by 2028, it will be worth several millions….when medium household income in Irvine will be over one million.
Exactly.
You can tell who the posers are when they drive 100K vehicles and complain about spending 50.00 on something like that.
They are stretched a little thin on the finances and turn into a foaming at the mouth penny pincher when the little odds and ends come up that need to be paid for.
Maybe he needs to get rid of the car so he can afford the little things like security stickers.
It’s just a lame Jedi mind trick.
Attempt to set up a mirror and blow some smoke at you.
Just like how the description is filled with the word “granite” over and over again.
There is nothing that logically makes this house worth 1.4 million dollars so they have to fill the description with a bunch of fluff to make your subconscious think “upgrades” and “discounts” while your active subconscious tries to parse the unreasonable sticker price.
Like the “low” HOA fee is going to distract you from the outrageously “high” fee of paying the mortgage on this house. You would have to be quite the weak minded fool.
I guess when you are desperate to sell something, you just throw a bunch of S at the wall and hope something sticks.
I’d probably put a little more effort in describing the non-granite related features of this property. I’m guessing there are none.
They forgot to mention a the lifetime supply of baseballs/softballs included courtesy of the field next door.
This house has a great lot. It makes a great left field ball stop.
I’m with the majority placing this puppy back down in the 600K range.
Even at 600K – that’s a pretty expensive house!
I’m not going to comment on this until Ipop makes a case for the house being a steal for just a few hundred grand less…
Sorry Ipop, I had to.
Did I read correctly? The interior description says 1 common wall. For a anything over $1 million, I refuse to share a wall with my next-door neighbor, no matter how nicely their kids play the piano.
I think it mostly depends on where you feel the fair price is and how that relates to the bottom.
I think 2003 prices are fair and should be the bottom. However we could easily over shoot that and get to 2002 or 2001 prices….. and when you start playing that game who knows…. it’s starts to be speculation just like speculating the peak.
Other potential snark….
“Does it come with all this beautifully matched furniture?”
“Hey, someone splattered paint all over the walls in a few places.”
“Is that an oversized outdoor grille/kitchen/granite/bar in your pocket or are you just happy to see me?”
“Does the miniature backyard come with a miniature dog?”
“Nothing says ‘million-dollar-estate’ more than sliding, mirrored closet doors.”
“Oh I see you scored a bunch of those big tacky, gold leafed mirrors when they were on sale at Costco too!”
“I’ll give you five hundred bucks cash money right now for whatever is under that blue tarp.”
“Was Home Depot out of big chandeliers when you bought yours?”
“This built-in desk here in the hallway sure is useful. I mean, how many times have you said, ‘I can’t wait to write this down until I get to the office four steps away. Thank god there’s a desk right here where I need it!'”
“You know, I actually think the tacky, white wire shower storage thingie says a lot about the design of this bath.”
“Water Feature!”
I noticed at Costco in Tustin Field that they have on display a big bin of Travertine Tiles!!!!! for sale.
I hope I got that right in real-a-speak 😉
Travertine just went costco status.
Well, market value perception of the generally bearish readers of this blog, anyway. I should think it isn’t a very representative sample of the population.
Let’s see… $133.11 a square foot makes $346,219.11. Still listed for less than $500,000 in 1998.
Carl –
Tell that to the people trying to sell houses right now.
They need all the support they can get!
Yup. When a burger, fries, and coke at ‘N and Out costs 50.00.
Damn!
Just when I sank my life savings into Travertine research and development!
Travertine living rooms freak me out.
Am I supposed to put patio furniture in my living room or something?
When I clean do I just hose everything down?
Forgive me for reposting this from yesterday, but IMHO it warrants discussion. Here’s what I said:
And djd responded with
I understand that the equity transferred could come from multiple sources, but in the modern usage, the way it’s relayed in media (quoting homebuyers in a bind, for example) there is very often a reference to sitting on a cheaper property like a condo long enough for it to appreciate (like a couple of years) so they can have a downpayment on a larger property.
Typically, there is little or no downpayment, and very little (if any, or gasp even negative) payment of principle. In fact, from what I’ve seen, the plan is usually to only own the cheaper condo for a couple of years, so even their salaries are in general not going to be that much higher. (The buyer will have the idea that their home will appreciate faster than their salary anyway, so the salary thing is kind of moot.) Therefore my scenario represents the plans of many recent homebuyers.
You see it in the quotes of articles on THBB all the time: “I bought this condo so I could work up to a SFH in a couple of years, now I can’t sell, boo hoo.”
Because of this, I think it’s a modern myth, this idea that what you do is buy a cheaper property (like a condo), let it appreciate, and then use the equity to put a DP on a more expensive property. My example above shows that this acts more as a property “anchor” than a property “ladder”. I’m quite convinced there are a great deal of people that think that way, and I haven’t seen this thinking addressed.
Are you talking about that SWEET paintball target practice artwork in the office?
They must have spent at least couple grand on that masterpiece.
“Hmmm! Splotchy paint everywhere!! Marvelous!”
Why pay for a real painting when you can pay for someone’s bad acid trip.
It sold for 540k in 2000. That is what I would pay for it.
AZ, many sellers in Irvine aren’t having a problem selling their places. Lots of escrows I see are on places on the market for less than a month… One that I was going to go check-out this weekend got into escrow in five days. I thought I would end up throwing them a 15-20% below list offer if I liked the place but poof, it’s gone before I could even tour it.
If a seller has a decent place and they are embracing the pricing reality of this market, they are moving property. More and more recognition of this is leading to an increase in sales. Things will only sell at 2004 prices if sellers are willing to go that low.
If the property featured today was listed at $899, it would be in escrow in less than a week…
Sorry weaz, this one is stupid crazy WTF. No argument from me there… I hate corner locations. The lot is big, but this is over-valued by $500K.
This place has either been for sale or sold at least 5 times in the last ten years. I wonder what is wrong with this house.
Maybe Ipop is on his way to check out the house right now.
Yeah, I am not big on corner lots either. I feel like the hosue is too exposed and lacks privacy.
I try to stay out of old Westpark I Mr. Vincent. It’s too Don Johnson for me… I lived the 80’s and don’t need any daily reminders of it.
Your analysis is flawed.
The equity used to be built up by paying the principal, sort of a forced savings program, with +- contribution from price apprecation. If your paying $400/month in principal then after 5 years you have another $20k you can you add to your original down on your trade up. When houses were $300k 10 years ago that’s nearly another 10%.
If the current price represents a peak, and we are expecting up to 50% reductions from the peak at the bottom in say 2012 that puts it right where most people seem to guessing. So there is some logic here.
As long as you have enough equity in the house, owning a house is a hedge against housing bubbles. Basically if you have a house with at least 20% (and now 25%) equity, you can move anytime you want without worrying about whether houses are more or less expensive. Basically, if the housing is overpriced, you end up paying too much for the transaction, but the rest is a wash. This hedging made a lot more sense when you needed to roll over the sell of one house to a purchase of another within a year.
But now with the 500K capital gains loop hole for couples there is going to be a stronger incentive to cash out gains and wait for the next bottom. So we should see housing become more like a tax preferred investment. Speaking of which, if housing becomes more volatile because of the changes in the tax laws, that would mean that down payment requirements will have to go up. So instead of making housing more affordable, the government tax treatment might actually make it less affordable.
Yeah, I’m sure my analysis is flawed, but is so because it reflects the thinking of many homebuyers today. That’s kinda my point. People routinely talk about “moving up” after a couple of years, this at a time when few put much of a down payment and most opt for interest-only. Very little chance of payment equity existing on their “starter condo”, and little chance their income will have gone up enough.
I literally think people have come to depend on appreciation equity to fund their “move-up” purchases, and my whole point is that’s flawed thinking.
Nothing like owning OC Mediterranean (yes this is actually a style) to make you feel like you’re at the strip mall everyday 😉
My thought about this latest gem is to do with the realtor. How does this listing benefit the realtor? How does either the owner or the realtor rationalize the comparables in the neighbourhood?
Picture the listing sales person approaching the owner with a plan to lower the price; owner asks, Well how much do you think we should lower the price? Realtor responds, Lets start at say a 650k drop. What happens next would be a classic IHB moment starting with the now famous three letters…….WTF.
We are still at a point in this lousy economy where there is demand for housing at the right price. People who are sellers should get real about pricing before its too late.
In the 1990s housing bust, it reached a point where there was simply no-one there to buy a house at almost any price. That point has yet to be reached now, but it is on its way.
I think what your example is missing is the gain from leverage and the differential appreciation rates during a rally.
http://piggington.com/another_bad_month_for_the_case_shiller_hpi
At the bottom of the link above, Rich Toscano has constructed a graph of the rally and fall of three different price strata. The low end appreciates at a faster rate than the high end in a rally — or at least it did in the last one. This would allow equity transfer to provide a move-up without additional income.
Also, leverage makes all the appreciation profit and greatly magnifies its effect. I know a guy who bought a house in 2004 for $850,000, and he transferred $600,000 in equity from his last house keeping the $1,600 a month payment on a 30-year fixed he has had for over 20 years. His debt has increased as each move-up restarted the amortization schedule and declining interest rates allowed him to borrow more, but he still has the same housing payment he had on a starter home he bought in the early 80s.
Right now, it is clearly a property anchor, or cement shoes, buried alive, or any other image of deadly immobility you want to conjure up. In fact, the equity evaporation of this bubble will likely wipe out the accumulated equity of the working lives of most OC residents. Consider the example of the guy I mentioned above: he accumulated $600,000 in equity by conservative financing and property appreciation over 20 years; if his house drops in value $400,000 — which it probably will before prices bottom, he will have lost 2/3 of his accumulated equity because the percentage drop he endured was on a more-expensive move-up home. Everyone who traded up in the late stages of the rally is going to experience this supercharged depreciation.
What if all the lenders wanted 25% down for jumbos? That would make it a lot harder to sell…
http://biz.yahoo.com/bizj/080228/1597695.html?.v=1
You can’t move up unless your income moves up. Period.
Say you buy a house for 400k, You put 20% down and finance 320k. Now 4 years later you feel the itch to “move-up.” You sell your home for 650k, and cash out on your down payment, and keep the additional 250k.
In order to “move-up” you’ll need to buy a place for say 750k. You put down your gain on sale of 250k, original 80k DP, AND an additional 20k. You now have a 400k mortgage instead of a 320k mortgage. Do you see where this is going?
The 80s rule. Why not get a nice Ferrari to park in front?
http://online.wsj.com/article/SB120415357135797887.html
“If the property featured today was listed at $899, it would be in escrow in less than a week…”
Yep, this the last chance for this seller to get out at breakeven or perhaps a little above, and they will blow it. In Houses Should Not Be a Commodity:
https://www.irvinehousingblog.com/2007/06/25/houses-should-not-be-a-commodity/
I wrote: “People who bought in the enthusiasm stage [1994] come up to their breakeven price and face the same decision our greed stage buyers faced earlier: sell now or hold out for a rally. Even though there is reason to fear, most will not sell here. They will regret it later, but they will hold on.”
When we moved to Irvine in late 2000 we really wanted a bigger place but couldn’t afford it at the time based on our income. Things turned out really well for me the first few years and we considered moving up, but at that point the bubble was well under way and it made no sense financially even with our bubblicious equity.
Between the sales commission for the Realtards, closing costs, and the increased property taxes it just wasn’t logical. We were comfortable although a bit cramped but couldn’t justify taking on an increased debt load just to have a few hundred more square feet.
So to this point about the ‘property ladder’, it may make sense when you are going from a condo to a single family home. But once you have a place big enough to raise a family comfortable the only place to go would be unreasonable to reasonable people. Fortunately for Realtards there are a lot of unreasonable people in Irvine.
I’m trying to understand why people hate corner lots so much. It seems to me that in SoCal, a corner lot is the only way you do get some privacy, as in you don’t have neighbors on every side of you staring down into your yard. Plus you get two sides of nice landscaping instead of just one small strip dominated by a garage. I would certainly take this house over any of the boxed in neighbors (of course for 1/2 the price).
I voted a price of 700K to 799K but only if the owner did it today, right this minute. But I don’t think he’ll be drinking any of the bitter medicine soon enough.
Played tennis last night with a fellow who lamented on falling home pricing. We live in the Carlsbad/Encinitas area. He said homes in his neighborhood had been going in the $850K and up range. House nearby was foreclosed on and listed by the bank for $599K but eventually sold at $525K.
A 38% haircut. A steep drop with will be replicated many times with increasing steepness.
I find people driving expensive vehicles increasingly laughable. 90% of the time the vehicle is leased, all the way down from the ostentatious Bentley to the silver X5 to the shiny new lexus with GPS nav.
It doesn’t matter what income bracket people are in: they always want more than they can afford, and if they can’t stretch far enough to get a loan for the vehicle, they’ll rent *cough* lease it.
Unless you got a huge break on your tax return from the section 179, I can’t think of a quote-un-quote asset that depreciates faster…
“It’s just a lame Jedi mind trick.”
ROTFLMFAO!!@#$
Dude you made my day… =P
Perhaps one of the assumptions behind all our expectations of future prices for homes in OC is that apart from market correction, people will start learning from their mistakes and start living within their means. I do not think this will happen very soon here in California. The So Cal Social Pathology (as illustrated on this blog) of spending up to or above one’s means has got people habituated. Frequently, savings is not a part of the whole financial equation. This ties into people continuing to catch the falling knives in the current market. But again time will tell, just my 2 cents.
I agree with a ’04 roll back price of $850K on this one.
This house is painfully overpriced at $1.395M especially given pricing of other homes in the surrounding area.
I know, this one is special (aren’t they all).
On the plus side, backyard looks nice and spacious.
However, the way it’s situated seems like there’s very little privacy from neighbors.
I’d rather have nice quiet walls next to my house vs. a bunch of modified exhausts cruising past my bedrooms. Not sure how you get privacy from a corner when everyone and their mother drives and walks by…
“I agree with a ’04 roll back price of $850K on this one.”
I dunno… Do you think they put $550K worth of granite in this house? I imagine rock-climbing could be doable with that much granite.
http://www.bloomberg.com/apps/news?pid=20601087&sid=arFDNXdz_IKY&refer=home
“There is no growth in consumption except to keep up with price increases,” said Chris Low, chief economist at FTN Financial in New York. “Consumers are clearly hard-pressed to maintain their standard of living and are cutting back.”
and yet…
“The savings rate dropped 0.1 percent for a second month. A negative rate suggests consumers are drawing down savings to maintain spending. “
Thanks for the article link, Stupid.
I have no doubt that there are bargain-hunting shoot-yourself-in-the-foot knife catchers buying houses right now.
The seller has to price WAY low to get them to fall off the fence.
Lots of sellers are hanging on to their nonsense prices (like today’s seller) who are not going to be able to pull it off.
The bell shape will drift down as time progresses.
People perception of home value adjusts to new lower pricing.
You forgot to add that the nice corner lot gets lots of traffic on two sides. Oh, there’s the bonus that with headlights shining across the front of your house every time someone turns down the street at night, your electricity bill will be lower. Think of it as big disco lights dancing across your bedroom all night. Combined with the “low HOA fees,” this place is a bargain!
Exactly.
The term “home equity” has been redefined by bubble participants.
Home equity used to be the amount of money you paid down your mortgage by.
Nowadays – people think that it is synonomous with “home value appreciation”.
The masses think that a house creates its own equity out of a vacuum and they need not do anything other than make the monthly interest payments to the bank.
With that kind of thinking – why not take out interest only loans, variable rates for only a couple of years and then plan on the next greater fool to be dumber than you are.
No way.
By the time the correction is finished, 850K will require too much skin in the game for most people to afford this place.
It’s doable today while some pre-2002 buyers still have some bubble equity to throw in the toilet and move-up into this place.
In a couple years though all of the fake equity will be PFFF though and without creative financing this place will not find buyers at 850K.
Oh I know, I know, I know IR. Pick me, pick me. granite = 4
I getting to not like granite and stainless steel anymore – to me it’s becoming the harvest gold and shag carpet of its times.
Your right, too much granite is an understatement.
Don’t know how they restrained themselves from decorating every inch of the house including the walls with it.
I saw that, too. The house looks completely detached to me. Maybe the idiot Realtor meant the outdoor wall between this house and the property next door.
I’m surprised it wasn’t described as an estate. These days, anything with over 8000 sq ft lot is an estate!
SDChad — I bought a corner lot for those vary reasons back in 01 — to get a bigger lot and what I perceived was more open space and privacy. It definitely has that, but the tradeoffs are traffic noise (being at an intersection) and the fact that you get a lot of street parking, trash, etc. along your side yard.
I’m not saying I wouldn’t do it again — but this time I’m looking at the pie shaped lots you typically find at the end of cul-de-sacs. They seem to offer some of the same advantages and minimizes the problems of a corner lot. I’m also trying to find lots on single loaded streets with no rear neighbors.
“…property anchor, or cement shoes, buried alive…”
I like the first two analogies, but not the third. “Buried alive” assumes no out, and there’s always an out, your credit just gets killed.
I’m certainly stuck in my Irvine home for the foreseeable future, but that’s why we bought something less than 2.5x our income, and something we could live in for 10 years.
Then it would look like Magnum PI owned it.
Tom Selleck was the man, star of the show, got all the babes and an SC alum to boot.
Fortunate to have such a great role model growing up as a young boy.
Sorry, let me clarify the $850K was what I presently believe it would go for.
I voted $500K at the bottom.
I’ve given up trying to caclulate how the average consumer/American will respond to this and other crisis. I just don’t understand anything about people who spend every dollar earned and use credit for the rest. How can I forecast their future behavior when I don’t understand their current behavior?
Yesterday Wells Fargo issued classifications for more than 200 housing markets. LA/OC was classified as “severely distressed” and therefore the ltv limit was reduced to 75%.
My question is, do you think the fact that a large bank, Wells Fargo, calls your Irvine market “severely distressed” will affect the psychology of the market? It’s one thing to hear it from some stranger on web board but when the bank tells you you are living in a “severely distressed” area that’s bound to get your attention.
Exactly what I am looking for too skek. A nice piece of pie on the buld of a culdy.
The one in really tried to get in the summer was exactly that. There were no neighbors directly behind. Just parts of their yards and the street from another development beyond. Argh I loved that yard!
Need to be able to edit these things… bulb fumble-fingers IPoop.
Just use the in-stock
Love the action in the markets today. My bond funds are happy…
Sure would be nice to see the S&P at 1200 soon.
Yeah, you’re always a slave to your mortgage! Just pay that $hit off and live like nobody else!
IR: thanks for this listing, I live practically next door to this one in virtually the same unit (sans granite and other upgrades) for 3K a month rent. These homes are 1980’s time capsules with now-dated cathedral ceilings that waste a lot of upstairs space. You come in the front door and have a 25 foot ceiling — for what, to show off all that drywall? You could have inserted another upstairs bedroom or at least expanded on what was there because the bedrooms (other than the master) are smallish since the half the upstairs space is donated to the cathedral ceilings for the downstairs living room. What a buffoon this seller is, there is a house a couple of blocks away listed for 800K (I note that the 800K listing has languished on the market now for months) These westpark homes are all pretty much cookie cutter copies of each other, salmon tile country, my homeland. This area of Irvine is very much ESL country so maybe the seller figures he can get some fool arriving from the far east with mucho cash to waste. good luck on that one.
Thought this was funny so I thought I’d share.
Was on RealtyTrac looking at a property in Tustin that recently received a notice of default. Googled the owners name and found that they did a testimonial on this site:
http://www.freeby30.com/ya.php
Guess the program didn’t work out so well for them huh?!
Uhm, you said you were an IC and recieved 1099. You can write off a good chunk of a leased vehicle.
Long time reader, first time poster…
Has anyone noticed that these are the same guys who were selling that boxy looking home AKA – the jewel of irvine at 2 Angell, Irvine
?
http://www.trackmy.com/flyer@listings.fwx?R_SRC=HS&R_MLSNO=S517790&R_PUBLICID=0000302816
Great catch greedy flipper. I think we can consider the question IR posed to be answered: “Do these sellers have their heads in the sand, or is it somewhere else”? Since it is well documented (even in the OC Reg) that the braintrust behind 2 Angell had their head up their a$$ — we can understand 1 Lorenzo much better.
Wasn’t 2 Angell an aging house on a corner lot which was dressed up and listed for $1.4M? These guys have an m.o.
Bah. Only pay it off if it makes good financial sense to do so.
If you can borrow for 30 years and pay an after-tax interest rate of 3.75 to 4.00, in the long run a person could very well be better served having those dollars invested in the stock market vs. paying down principal. Historical market after-tax market returns are better than 4%…
I’d rather be a slave to my mortgage and accumulate more net worth overall vs. pay it off early.
Realtor comments to this would be the following, take your pick
1) this is irvine, people from other parts of the county are ready to buy here so prices will not fall a lot.
2) this is irvine, there are people within irvine ready to pay 50% down and buy.
3) This is irvine, there are so many people waiting on the sidelines that a 3-5% drop will prompt muiltiple offers on a house.
4) OC consists of many ‘undesireable’ parts where the price drop is larger, irvine is not “severely distressed” .
5) if you have good credit then you dont have any problems.
May be irvine is like Chuck Norris…
If the comps start falling below 2003 then then we might expect the death thores of the phrase ‘This is Irvine’ catch phrase…till then This is Irvine 🙂
You don’t have to price it “WAY low” get a buyer.
I just sold a property (not in Irvine, but an area where there has been 15% correction) and all I had to do was underprice comps by 5%.
The property was gone within 3 weeks.
If you are the lowest comp, you will sell, even in this market.
Are the 18′ x 18′ tiles featured in this home on sale? I think 2 or 3 of those should be enough for most homes.
Just coppied from Lasner
(http://lansner.freedomblogging.com/2008/02/29/oc-real-estatefinance-jobs-off-10-from-peak/ ) Total reported OC job losses so far 46,000 or 3% of the empolyed working stiffs were let go in the last year. How about starting a new poll on the bottom in employment?
Job slice Last mo. Vs. Peak Vs. Peak
Construction 98,700 -11,700 -10.6%
Construct buildings 23,300 -1,800 -7.2%
Heavy construction 8,100 -1,100 -12.0%
Specialty trades 67,300 -8,900 -11.7%
Lending activities 37,600 -17,500 -31.8%
Bank lending 18,500 -500 -2.6%
Non-bank lending 14,100 -10,400 -42.4%
Lending support 5,000 -8,700 -63.5%
Other finance 10,800 -1,700 -13.6%
Real estate/leasing 38,400 -1,200 -3.0%
Real estate 31,900 -1,000 -3.0%
Leasing 6,500 -2,000 -23.5%
Bldg. services 32,600 -800 -2.4%
Building supply 11,400 -1,300 -10.2%
Farm 5,100 -5,300 -51.0%
All real-estate related 234,600 -26,400 -10.1%
All other O.C. jobs 1,262,700 -25,700 -2.0%
All O.C. jobs 1,497,300 -46,500 -3.0%
And yet the unemployment rate in OC has only gone from 4.3% in July to a whopping 4.4% in January 2008.
A .1% climb in seven months…
Correct me if I’m wrong (just an expression, I have no doubt you will correct me no matter what I write) but unemployement only counts people who file for unemployment. If people lose jobs and pack up and leave that wouldn’t figure in. The total employed base will be more important in determining housing demand than the unemployment number.
“It sold for 540k in 2000” So what? It’s 2008, thats 8 years of inflation. What cost $540000 in 1999 would cost $684211.60 in 2007. http://www.westegg.com/inflation/
Pluse the market HAS got up. Even if it goes down allot it won’t go back down to 2000 prices.
I just bought a 2008 X5 with all the extras. $80K I didn’t lease. I paid cash. Don’t hate.
There are two unemployment figures:
1) Jobless claims – people filing for benefits
2) unemployment – which is a survey that counts people out of work and that are actively looking for work. So it doesn’t count under employment and it doesn’t count those that leave the work force.
Granit and stainless is the Sh!t. If you can afford it.
That’s what I did, on a Florida scale.
I’d buy that house right now for 700K. You’ll never see it go down to 600k because of serious buyers like me.
George8 your 100% right.
These homes were going for $210K ( or so ) when new in 1986. We toured them but there was a lottery so we bought a fixer upper in TR instead ( for 200K ).
Now, I voted for the $700K to $799K. However this is what it will take to sell it this year.
Well maintained/rebuilt homes in TR today of the same size are selling in the mid 900K range ( selling that is ) with low ball offers in the 900K range. So, I figure there’s no way in hell that Westpark can be priced like TR. These people are fools or desperate.
I would expect that my chateau in TR ( bigger, rebuilt and newer than this Dan Johnson pad) will end up running $750K at the bottom… so I think this place will end up in the mid $500Ks.
You’re right about how the stats are computed Al.
Personally I think the unemployment rate and wage growth figures will be larger driver for Irvine real estate prices vs. the total employment base.
Irvine is a more premium area of OC. As long as the more white collar people are keeping their jobs and their wages are going up, Irvine will draw buyers (relative to other areas) willing to take on real estate risk.
The loss of $15 per hour construction jobs or loan servicer jobs doesn’t have much of a direct correlation to the Irvine median IMO.
Or put it this way, as compared to Irvine, you will find many more homes with big pickups with shiny silver toolboxes in the bed parked in the driveways of HB, Fo V, etc. houses. I think the job losses so far in construction and financial services have hit non-Irvine areas much harder.
Thank you for the observation on the sampling here on IHB. While this is a fun little community, I think we need to remember that the 517 votes (as of 2:30pm) represents something like 0.3% of the Irvine population. And we don’t know how many times AZDavid voted. This is a bear blog, no matter what it says on the “newbies start here” disclaimer.
Even the forums are heavily weighted toward the prevailing mentaility — Over 50% of all 38,700+ comments were made by just the Top 20 posters — with over 25% of all comments made by just the Top 5 posters. So yes, IHB is a fun little distraction….But I don’t know if representative of the prevailing sentiment in Irvine.
HAHAHAHA… someone said that to me.. “i haven’t checked the prices lately, but this is Irvine… yada yada yada… its not depreciating “
IPO — you do realize you are about to be flogged for saying “Irvine is different”. I’m starting to think you like the abuse…
BTW, you know I agree with you, brotha.
HAHAHAHA… someone said that to me.. “i haven’t checked the prices lately, but this is Irvine… yada yada yada… its not depreciating ”
i think someone posted about this before.. but substitute “Irvine” for “NYC”, “London”, “Paris” etc.. then maybe that sentence will make sense to me. Even then, those big cities had some amazing housing boom these past 10 years
Someone has to be the Bull CK. Although I’m not a Bull, just one by relative comparison to the typical Uber Bear, the abuse helps me forget and fight the home-buying urge that is ripping through almost every fiber of my being…
Some days, I just think we should pull the trigger and roll the dice so we can get on with our damn lives. I know you know that frustration too. It sucks to be patient when you can afford the unaffordable and see people still buying.
and thats where it will sell for at the bottom, did any one hear about Wells F declaring CA a F*ed up state (severly distressed) and requiring 25 (yes twenty five) percent down on Jumbo loans. and that is including OC. 😯 😯
People are still optimistic in the OC including some on this blog, 200 per SF here we Cooooooooome
Westpark mike, watch out for that knife you’re going to catch 😆
“you do realize you are about to be flogged for saying “Irvine is different””
And before anyone does flog me, Irvine IS differenet or at least has been to date.
You want proof, look at the OC housing inventory based on January sales and today’s inventory:
Aliso Viejo – 8.62 months inventory
Anaheim – 13.79 month inventory
Fo Valley – 9.3 months inventory
Garden Grove – 16 months inventory
Huntington Beach – 13.76 months inventory
Mission Viejo – 16.94 months inventory
Rancho Santa Margarita – 11.75 month inventory
Santa Ana – 17.5 month inventory
Irvine is around 7.5 months worth, likely the lowest in the entire county… Irvine has 50% less months inventory than most other OC cities. Irvine has way less months inventory than Newport Beach, Newport Coast, Corona Del Mar, Laguna Beach, etc.
Yes, OC is cratering, but unfortuately Irvine has not yet.
I didn’t really understand the whole subprime mess until I read this…
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1
Just hold on until the end of the year, IPO. I am betting we shed another 25% by the end of 2008 (that’s why I just signed another lease through 12/31). Certainly there will be continued drops after 1/1/09 — probably through 2011. But a good majority of the pain will be absorbed in the early 2009 pricing — and we can get on with living our lives. And don’t worry, whatever paper losses you incur from 2009 – 2011 will surely be gobbled up in the next bubble, which will probably start cooking around 2015…right about the time credit scores start rebounding on the foreclosures from this bubble.
This is California, and anyone out here thinks the general public will have learned anything from this last bubble and it won’t happen again is indeed drinking kool aid.
Actually had both in the house I sold about a year ago. When I buy again, it won’t be a deal breaker if it doesn’t have it….
Don’t forget a lot of industries have been seeing pretty steep pay increases the last few years, and even this year.
The software and engineering fields have been quite rewarding and seem to continue to be so. Irvine’s always had a slow and steady growth of tech companies.
Cool I’ll take it off your hands in three years for $25k…actually, no I won’t. BMW’s rarely last that long.
Dow down 315 points. So ends another bear rally.
Will we see another or are we too close to the precipice now?
It’s good to know there are still some knife-catchers lurking about…
Wow! We must all have the same realtor!
I think you are right on track, Silly. But I am in a very small minority here. While Irvine is certainly going to feel pain right along with the rest of the county, it indeed has many atributes that will buffer it from the battering many places nearby will get. The schools are probably the top reason, with the fantastic master planning and central location closely following. There are a lot of people who like to mock everything Irvine is and stands for from places like Arizona — but apparently there are at least 200,000 people who think it is worth the premium….and that’s all that counts.
I’ve set my watch to see how long it takes for a reply of “but…but…but the median income is $84,000!!” Yeah, the median income is $84k if you roll up all HS and UCI kids working PT at Target and In-N-Out, who should not be considered in “homebuying population” income numbers. One thing which seems obvious (just look around) is that Irvine has a much larger % of younger “underemployed” people who likely dilute reported W2 incomes.
I’d be surprised if IUSD doesn’t have layoffs. It wasn’t only 1st year teachers that got notice of non-renewal of their contracts. Some teachers with 3-4 years experience in the district, but not yet tenured, were also not offered a contract for next year.
Funds have been super tight at IUSD already. My wife and I are supporting her classroom in terms of supplies. They need Scotch tape, their aren’t any funds to get it, so the tape comes from the ole Family De IPO…
No one and no community will avoid the impacts of the housing collapse. Some will fare much better than others but, they will all suffer to some extent or another. Property tax revenues are going to kill some communities – some CA cities will absolutely take bankruptcy. We are in a long cycle de-leveraging process for RE – meaning that the business models built on 100% financing and other “creative schemes” are gone – obliterated. Like all major market events, I believe we will likely well overshoot fundamental equilibrium / support for housing prices. This means that I believe we could likely see 2000 or prior prices. This problem that began with housing is now a credit issue and is spilling over into all aspects of business. To complicate things further (read perfect storm) inflation and global demand for commodities is going to force the FED to reverse course very quickly and drive rates even higher (BTW, the fed has lowered rates by 2.25% in the last year and mortgage rates are UP).
If this is a serious recession then forget 2000 prices and look out below. Seriously, ask yourself what you can afford if you have to pay 20% down? Also, if we have a serious recession… is your job really safe? Mine isn’t….
Now what can you afford?
BD
That’s median HOUSEHOLD income…thus counting all people per household, including the part-time Target and In-N-Out crowd.
“My wife and I are supporting her classroom in terms of supplies. ”
That we cut off supplies to the most defenseless recipients when money is tight is sad.
I believe the household income is above $100k, but appreciate your comments. How many students attend UCI? Do their incomes roll up in the Irvine number — assuming they have an apartment and address off campus? I assume their “household” would have a pretty low income, supplemented by the Bank of Dad? This is an honest question I tried to ask a couple of weeks ago, but got nothing other than “its the same way the gov’t has been counting it for years”. I don’t much trust the any of the gov’t counting methods these days.
All I’m is saying is I don’t run in an elite crowd — but I don’t know ANY households around here who are at just $85k, or even $100k. But then again, I don’t see any black swans circling overhead either — but I know most folks on IHB do. So I’m the weirdo here. I’ll embrace that.
I can tell you that were I live you’d be on welfare if you only made 85K a year per household.
Even the retirees with their paid off mortgages make more than that.
There are statistics and there are lies.
I thought “No Child is Left Behind”? That’s what Bush said.
When a district as heavily supplemented by the community as Irvine still relies on good people like IPO to buy tape, I shudder to think what things must be like in somewhere like LAUSD. That is truly sad. All this housing debate aside, we should all be thankful that we have the means to give our children an environment like Irvine to grow up in.
I don’t know if she’ll continue to do it day in and day out if IUSD cuts significantly from her program. There are three teachers handling 50 or so moderate to severely challenged kids in her section at Uni.
If they cut one of those teachers, the load falling to the two remaining teachers would be incredible… It that were to happen, I’d suggest shejust take a year or two off and stay home with the kids. That kind of stress just wouldn’t be worth the incremental income. About half her take-home pay goes to our nanny.
Well…. it will be down to sending checks to the school district and the Irvine Co. giving more money.
We did this before. 200 bucks per kid is peanuts.
I just hate it when I think how the state school dole from our taxes is calculated. Most of OC is “rural” so we get less money.
Meanwhile you got the LAUSD wasting money like they had a printing press.
I work for the MIC and the neocons are keeping us very occupied.
My wife is fine too.
Life is good. Maybe they’ll repeal the law banning french fois gras from force fed geese…. What a stupid law. I’d hate to have to drive to LV to get our fois gras.
If your wife works at Uni why do you want to move to the flatlands beyond? She’s already in Paradi$e…. 😉
“…whatever paper losses you incur from 2009 – 2011 will surely be gobbled up in the next bubble, which will probably start cooking around 2015…right about the time credit scores start rebounding on the foreclosures from this bubble…”
The rationale and knowledge expressed in IHB comments is not the norm. Average people will anchor 2005’s prices in their minds and will always think a return to those prices is right around the corner. So if and when lenders allow borrowers to reach again, the cycle will reverse, yet again.
http://www.ocregister.com/news/districts-unified-state-1990103-district-million
More at link:
Massive teacher layoffs loom across Orange County
School districts plan to terminate more than 1,590 instructors, slash arts programs, boost class sizes and reduce bus services should state cuts materialize.
……………………………………………….
I like it better when Silly posted it.
🙂
Si.
Best ever episode: The Sun Also Rises. He kills the Russian officer who tortured him and the boyz in Vietnam in the end. They don’t make TV like that anymore.
I would caveat that huge in that you better be working with a top fee only planner, preferably one with a CFA (CFPs are dimea dozen). The reality is that the vast majority of people lose money in the market. Very few have the discipline or knowledge to follow a long term investment plan. Their house is their best bet for long term appreciation. Yet many of these sheeple followed ipop’s plan (and I suspect most lack ipop’s financial acumen). Schadenfreude smorgasbord.
OOps.. I gotta quit skimming so fast 😉
Has this blog been discussed here?
http://blog.franklyrealty.com/2008/02/va-short-sales.html
The most recent story is one about Short Sales actually being fake listings. It is a ploy by banks to keep the homedebtors paying a few more payments, all the while the banks have forclosure insurance that they cash in on = hardly any short sales at all out there that are legitimate.
Every $150K one-bed condo in Chicago has granite and steel.
Even I am getting tired of it, and I used to love it.
But granite really is about the best surface you can use on a kitchen counter, except for, perhaps, reconstituted stone. It is a natural material that wears well, cannot, is great to roll out pastry on, and incorporates no petroleum products. It is far better than marble, which is too soft and easily damaged by cooking oils and cleaners for the kitchen.
The steel is great, too, but in a white kitchen, white appliances and pale countertops go better.
the neocons are lame ducks. the new admin will have different priorities regardless of who wins (better hope for the republicans, dems will really downsize you). our country is running huge deficits with an economy in recession. I’ve seen defense layoff’s before and they arent pretty.
i wouldn’t be so glib and I’d be putting some money aside for a rany day if were you.
Perhaps Wells is simply seeking to diversify their loan portfolio. Ever think of that?
Thanks for the comments. I’m still not accustomed to living in an area where such small lots are commonplace. I’m currently renting a place on a 9,000 sqft lot and that seems to be a decent size even with neighbors on both sides. I definitely have to agree with the pie shaped lots at the end of cul-de-sacs.
Unbelievable, sellers are all too stubborn right now.
Ipoop: “Irvine is around 7.5 months worth, likely the lowest in the entire county… Irvine has 50% less months inventory than most other OC cities. Irvine has way less months inventory than Newport Beach, Newport Coast, Corona Del Mar, Laguna Beach, etc.”
According to realtor.com, inventory=993. Checking under “Market Conditions” (in the same site), it says closed sales in December were 81. (Not giving January for some reason.) That’s 12.26 using December sales. That would put it higher than Aliso, FV, or RSM. Granted, sales in Feb may be higher, but not that much higher.
To have higher TOM than RSM would be a real slap. RSM is cratering like nobody’s business.
In short, I think your 7.5 month figure is bogus. I think 10-11 would be more accurate. Would be nice to see where you got your numbers from, though.
“All I’m is saying is I don’t run in an elite crowd — but I don’t know ANY households around here who are at just $85k, or even $100k. But then again, I don’t see any black swans circling overhead either — but I know most folks on IHB do.”
Why don’t people just look things up?
Wikipedia, quoting from census estimates: “According to a 2006 estimate, the median income for a household in the city is $84,270, and the median income for a family is $103,604.”
http://en.wikipedia.org/wiki/Irvine,_California
I know plenty of people who live in Irvine who don’t make 85k. I’ll bet you most of the realtors ain’t making that kind of dough right now. I think some of you folks have really gulped down the Kool Aid, beer bong style.
I have a five-year old BMW subsidiary British-built car. That’s two strikes against reliability. It must have fallen apart two years ago.
Oh, and it has a Chrysler engine. Third strike. It must have fallen to pieces on the drive home from the dealership.
Yes, inflation has probably doubled the price. Perhaps you are rigt.
Here you go zoiks:
http://www.dqnews.com/ZIPOCR.shtm
Irvine had 135 sales in January. Guess I was indeed wrong – it’s 7.35, not 7.5.
I’ll patiently wait for my, “Oh IPO, you are right, sorry for doubting you and calling your stuff bogus, I don’t the what the heck I was thinking”…
Simple math is usually a pre-req for my CFO gig.
$1.4 million for half a duplex in Irvine? Are they crazy?
We bought patio furniture and put it in our living room when we bought our house.
What? Real furniture is expensive. Don’t you play The Sims?
median income is calculated the same any where in the country, Irvine will fall more than near by cities IMO as it went up more than other cities. thats why one of the most famous websites I follow is called IRVINE housing blog. 😆 and yes incomes in Irvine do not support housing prices.
Here you go zoiks, I made it easier on you to sort through all those troubling numbers:
http://www.ipoplaya.com/229inv.htm
I used January sales figures (likely to be lower than Feb) and current inventory per homeseekers.com.
See, Irvine really is different.
Look at the premium that people pay for Irvine schools. No way is it in line with reality. And look at the mediocre spending on these overcrowded trailer parks. It was in the OC Register today.
It will be nice to know that the priorities are no longer murder and pillage.
PS — How about that John Mc Cain? He made sure that Boeing did not get the $35 billion contract that Airbus is getting.
OK, Ipoop, you were right. Does that get you your affirmation for this week? According to dqnews it was 129 sales for January.
But you have to admit my surprise at a 50% increase in sales from December to January. I noticed realtor.com used the term “closed sales”. I wonder if the more recent data at dqnews includes sales that fall out of escrow. That’s a legitimate gripe.
When I look up my home town, Costa Mesa, on dqnews it says 31 “sales” for January. Then, realtor.com says the “closed sales” was 23, also for January. I know for a fact the dqnews numbers include new home sales as well, which is not reflected for the most part in the realtor.com inventory numbers which were used for the TOM numbers.
So, I still think your number is bogus, by the way, but you can have your affirmation if it makes you feel better. You can just say it’s Dataquick’s fault.
And you’re right, Ipoop, Irvine really is different.
If you bothered to look at your own data source (dqnews) it said Irvine had the highest rate of sales price depreciation (-24.78%) of *all* the cities you listed. And you were the one that chose the listed cities!
Care to address that little omission in your “Irvine is Different” Kool Aid fest?
thanks zoiks. i needed a little affirmation… appreciate it.
no argument about Irvine prices. what goes up big and fast must come down, sometimes big and fast too.
my original contention on this thread is that Irvine will draw buyers, not that prices will stop dropping. also, that the job losses to date in construction especially, have likely had a much greater impact on other areas of OC vs. Irvine.
maybe it’s just that the whole mess hasn’t yet filtered up to Irvine? maybe foreign money is supporting home sales here? i don’t really know. when in my simple calc the average for a city is 16 months inventory and Irvine only has 7 and change, that tells me that places are selling here better/easier/faster for some reason (i assume it’s not because I live in this wonderful city) and prices aren’t likely to drop as fast here in the near future…
Comment by 25w100k+
The software and engineering fields have been quite rewarding and seem to continue to be so.
I thought that these professions are currently subject to overseas outsourcing and possibly falling wages. And venture capital investment is flat.
Hello IR –
One of the things that has always seemed interesting to me is the make up of our blog. Have you ever considered polling the visitors / bloggers (spelling?) about their financial and educational status? It might be interesting to see what people make and do professionaly that spend some time here. just a thought…
I always secretly wonder this very set of questions when I see million dollar plus asking prices on a home – “what do they do?” “Do they really make $300K plus a year?” The downpayment part seems more doable. I’m a saver so $200k is a lot of money but, it’s doable if you just plan and stay focused for some time. Are there really that many people that are making 300/400/500+ a year? who will these people sell these homes too?
BD
That’s fine, Ipoop. But I’d still like you to address your “OC is cratering, but not Irvine” bit, vis-a-vis the fact that depreciation was “highest” in Irvine among the cities you listed.
Second, I’d like you to tell me why it’s more valid to use dq’s sales numbers against the NAR’s inventory, when the dq numbers include non-MLS sales, and *might* include sales that don’t complete. I’ll make it short: I think 10+ months inventory is correct, not 7+.
Just want to know who this fits in with your “Irvine is Different” thesis. Does it dispute? Was your argument non-sequitor? Does the thesis still hold up?
Address these and you can have loads of generous free affirmation from me.
No idea about what’s in either set of numbers, but surely the same differences would exist between cities in the sets?
Maybe it is 10 months worth in Irvine, but that would likely mean it is 20 months everywhere else. The data presented was to support the trend/idea/conclusion that Irvine is a premium OC location that does attract buyers relative to many other OC cities. Differences between the data sets will adjust the numbers for every city in likely the same direction, not just Irvine, so I would still draw the same conclusion.
Maybe, but that would depend on how much new home inventory exists and is being sold in the different cities. That’s why it’s just better to use the NAR numbers. Sure, Irvine could be *a* premium location, but not *the* premium location.
So still, it’s not different. And it’s cratering like the rest of OC.
Even when we lived in our brand new condo on Irvine, I didn’t know anyone making less than 100K.
Shameless plugs aside, mmg is right. Even with a dual-income family making more than 200k per annum (a rare occurrence even for Irvine) , cannot support even the most modest of Irvine SFH at todays pricing.
This house belongs to a realtor who has an architect for a brother. He has been buying/remodeling/selling at WTF prices. This particular house has been sellling at this price since 2004. The dark wood is a give away.
Why can’t parents spend $10 to buy some supplies for their own kids? It is not too much to ask. People are feeling way to entitled lately. We need a real crisis to snap people back to reality.
Nice try. This contract team was lead by our neighbors at Northrop and the planes will be built in Alabama. Biggest thing working against Boeing was the overhang from the procurement scandal, not John McCain.
That calculator is based on the CPI index which is bullshit. The government uses the data they want and exclude other data in order to underpay social security and other entitlement programs.
When the government says inflation is 0.02% in order to inflate GDP numbers from the NGDP to try and convince people the economy is growing it is a sham. Inflation is much higher than that. its more like -5% last year, its a freaking recession.
Listen to Bernacke, “core inflation” excludes food and gas and that Joe Blow the average should not be worried, WTF, we all buy that, of course prices are inflating 10-15% or more. the government is obfuscating it all.
The housing market is going to be inflated to death with more money to bail out the banks. Housing depreciation will stop because dollars will be so ubiquitous that bubble prices will return and just go higher. We will all be renting homes from Arabs eventually.