Want to see how to really destroy the neighborhood comps? How about lowering an asking price nearly 20%…

Address: 1714 Timberwood Drive, Irvine, CA 92620

Old Asking Price: $499,000

New Asking Price: $429,000

What Goes Around… Comes Around — Justin Timberlake

What goes up must go down, and what goes around comes around. Markets move in cycles, and although they can trend for significant periods of time, all price trends eventually reverse. Real estate markets usually trend for very long periods, and we are only 2 years into what is likely to be a 6-8 year decline. We are nowhere near the bottom. I imagine most people with toxic financing who need to refinance really don’t want to think about it. It is probably making them sick, and they can’t believe it is ending this way. They are shocked it is going down. As Justin Timberlake points out, “What Goes Around… Comes Around.”

Today’s property is part of the ongoing carnage in the Collage complex in Northwood. We have profiled this neighborhood before. It is one neighborhood in Northwood showing serious distress. The featured property is a toxic financing victim (and we even have a new graphic to go with it.) The owner purchased in early 2006 with an 80% first mortgage which was a 1% Option ARM. There is a 10% HELOC, which was probably used as purchase money, and a 10% downpayment. Two years on, and the payments are rising, the values are dropping, and the owner is walking. What a surprise…

Asking Price: $499,000

Income Requirement: $124,750

Downpayment Needed: $98,800

Monthly Equity Burn: $4,158

Purchase Price: $596,000

Purchase Date: 2/22/2006

Address: 1714 Timberwood Drive, Irvine, CA 92620

Is that the kitchen in the background or a closet?

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If this seller gets their asking price and pays a 6% commission, the total loss on the property will be $126,940. The owner will have lost their $59,600 downpayment, the second mortgage holder would lose their $59,600, and the first mortgage holder would lose $7,740. Of course, since this was a neg am loan with a 1% teaser rate, the loss on the first mortgage will likely be much higher. Gotta love that toxic financing…

This neighborhood is a mess. The unit at 1520 Timberwood is a bank REO, and it is dragging down the comps. It is currently offered at $303/SF which is significanly less than the other properties for sale nearby, including this one. The REO is going to make it impossible for the other sellers because their buyers will not be able to get a large loan (Does anyone remember this oldie? Your Buyer’s Loan Terms) In short, the other sellers are pwned. 1512 Timberwood was purchased last August about a week before the credit crunch hit (if this was a flip, it was a really stupid one.) The buyer paid $520,000, and now they are hoping to get out at $470,000. Then there is the truly delusional seller at 800 Timberwood hoping to get $400K for a 1 bedroom condo. WTF? Are there any buyers out there who are that stupid? I hope not.

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Don’t want to think about it
Don’t want to talk about it
I’m just so sick about it
Can’t believe it’s ending this way

What goes around, goes around, goes around
Comes all the way back around
What goes around, goes around, goes around
Comes all the way back around
What goes around, goes around, goes around
Comes all the way back around
What goes around, goes around, goes around
Comes all the way back around

What Goes Around… Comes Around — Justin Timberlake

This property went back to the bank on 1/10/2008 for $850,719. It was sold on 2/28/2008 to a couple who spent $789,000. They took out a $700,000 first mortgage, and they took out a $50,000 second on 4/14/2008. They now have $39,000 of their money into this property. Are they in it for the long haul? Or do you think they will abandon ship when the value of this drops down to about $600,000?

Dream if you can a courtyard
An ocean of violets in bloom
Animals strike curious poses
They feel the heat
The heat between me and you

How can you just leave me standing?
Alone in a world thats so cold? (so cold)
Maybe I’m just too demanding
Maybe I’m just like my father too bold
Maybe you’re just like my mother
Shes never satisfied (shes never satisfied)
Why do we scream at each other
This is what it sounds like
When doves cry

Touch if you will my stomach
Feel how it trembles inside
You’ve got the butterflies all tied up
Don’t make me chase you
Even doves have pride

When doves cry
When doves cry (doves cry, doves cry)
When doves cry (doves cry, doves cry)

Don’t cry (don’t cry)

When Doves Cry — Prince

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How do you explain to your children the family has to move out of their house? How much of an emotional toll does a foreclosure exact on a family? There are many reasons Houses Should Not Be a Commodity, but this one of the most important that does not involve money. There are those who are innocent victims of this mess. Who weeps for the children or for the pets?

Asking Price: $789,900

Income Requirement: $197,475

Downpayment Needed: $157,980

Purchase Price: $1,000,000

Purchase Date: 6/22/2005

Address: 5 Morning Dove, Irvine, CA 92604

Hot Buy in Irvine. Home features a large backyard, recessed lighting, skylights, inside laundry room, a living room with a fireplace. 2 bedrooms have been added making this home feautre 6 bedrooms (permits unknown). Hurry and don’t miss this great opportunity.

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This listing really caught my eye. I came across this property by checking out foreclosureradar.com. The asking price is 21% off the purchase price in 2005. If this seller gets their asking price and pays a 6% commission, the total loss would be $257,494.

Lately, I haven’t even been interested unless the loss in measured in 6 figures. If I were more ambitious, I would add up the documented losses in the blog posts. I imagine the total is in the tens of millions just here in Irvine. No wonder the major banks are taking multi-billion dollar write downs. I suspect there is some crying on Wall Street…