Open House This Weekend

Do you want to go see a $550,000 house asking $800,000? You have your chance this weekend. Don’t miss it!

The featured property is having an open house from 1-5 on Saturday. Go look at an overpriced short sale that has no chance of selling.

53 Waterspout Kitchen

Asking Price: $799,900

Address: 53 Waterspout, Irvine, CA 92620


Open Letter to a Landlord — Living Colour

Now this house is full of fear
For a profit you will take control

Remember back about 6 months when there were very few properties at the mid or high end showing any distress? It wasn’t that long ago that people had convinced themselves that only those poor people in Santa Ana with bad credit had housing problems. The more desirable areas were somehow immune. It is becoming increasingly obvious that there is real distress at the high end. Why else would people be selling at a loss? Nobody wants to.

High end properties just sit there. Sellers attach a wishing price to them, and they sit. There is no jumbo financing to speak of, and if it were not for people putting 25% or more down, we would have almost no transactions in the above $629,000 loan range.

The high end short sales are telegraphing tomorrow’s REOs, and we are seeing many more of these come onto the market. Knife catchers get all excited, and some even bid over the ask. Nobody seems to notice that these short sales and REOs are not short in supply, and their ranks are projected to grow as ARMs continue to reset.

Today’s featured property is a high-end short-sale asking 20% off its peak purchase price. Considering it will drop 40% of more from the peak, it is not a particularly good price, but the banks are lining up knife catchers who have enough cash to absorb the next $250,000 in losses. Do you want to volunteer?

53 Waterspout Kitchen

Asking Price: $799,900


Income Requirement: $199,975

Downpayment Needed: $159,980

Monthly Equity Burn: $6,665

Purchase Price: $1,011,000

Purchase Date: 12/2/2005

Address: 53 Waterspout, Irvine, CA 92620

Beds: 4
Baths: 4
Sq. Ft.: 2,700
$/Sq. Ft.: $296
Lot Size: 3,704

Sq. Ft.

Property Type: Single Family Residence
Style: Mediterranean
Year Built: 2005
Stories: 3+
Area: Woodbury
County: Orange
MLS#: S563747
Source: SoCalMLS
Status: Active
On Redfin: 4 days

Gourmet Kitchen Award

Gorgeous 3 story Portisol model 3ARX in Prestigious Woodbury. Model
perfect home features gourmet kitchen with Viking Appliances and
Granite Countertops, Custom Paint, Plantation Shutters, alarm system,
upgraded sound system throughout. Main level bedroom with bathroom can
be used as den. 3rd Floor Bonus Room features tons of extra storage.
Backyard is entertainer’s delight with Built-in BBQ. Short sale subject
to lenders’ approval.

This property was purchased on 12/2/2005 for $1,011,000. The owner used a $808,000 first mortgage and a $203,000 downpayment. On 3/28/2006 he opened a HELOC for $102,600, and on 3/29/2007 he opened another HELOC for $200,000 gaining access to most of his downpayment. Hopefully for him, he took out the money.

I doubt a lender will approve a sale below $808,000 (or whatever the remaining balance is on the first mortgage). Citibank has the HELOC that is going to get wiped out. Why would they agree to the short sale? If it is a 100% loss, they might as well sell the debt to someone else to try to collect it. They have nothing to lose.

I hope you have enjoyed this 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.



Now you can tear a building down
But you can’t erase a memory
These houses may look all run down
But they have a value you can’t see…

This is my neighborhood
This is where I come from
I call this place my home You
call this place a slum
You wanna run all the people out
This what you’re all about
Treat poor people just like trash
Turn around and make big cash

We lived here for so many years
Now this house is full of fear
For a profit you will take control
Where will all the older people go?
There used to be when kids could play
Without the scourge of drug’s decay
Now our kids are living dead
They crack and blow their lives away

got to fight
You’ve got a right
To fight for your neighborhood!

Open Letter to a Landlord
— Living Colour

61 thoughts on “Open House This Weekend

    1. ockurt

      “Looks like a nice home for a great price.Every think so good.”

      Nice grammar and punctuation!

      You must be a realtor.

  1. kevin

    I like the way you describe those knife catchers
    “…but the banks are lining up knife catchers who have enough cash to absorb the next $250,000 in losses. Do you want to volunteer?”.
    People do think the interest rate cut a good opportunity to buy. I have to spend time explaining this to my wife.

    1. longtime reader

      The interest rate shouldn’t matter. What matters most is your monthly payment (principal + interest). If you buy at with a 8 percent interest rate and you can afford the monthly payments, then you have an advantage, because you can refi at a lower rate in the future.

  2. NoWowway

    Apparently they like to cook. The only pictures shown were a cluttered kitchen and an outdoors BBQ. And the obligatory outside shot of the front.

    3 stories. Only ONE association dues of $105/month. It is insane that this was ever considered a million dollar plus house.

    1. maliburenter

      An accepted offer on a short sale usually means the owner has accepted it, but the bank hasn’t yet done so. Backup offers are usually accepted by the owner because it can take so long to get bank approval that the first potential buyer backs out, or finds loan standards have moved since they made the offer.

    2. LC

      A backup offer accepted? An accepted offer is not a backup offer — a backup offer is what you get after you have an accepted offer. This is some funny business.

  3. Texas Triffid Ranch

    Last night, my wife had dinner with my in-laws, and they were asking about our plans for buying a house “one of these days”. Now, their house was paid off about fifteen years ago, so they haven’t had any reason to keep up with the current market. That said, they brought up both the first-time owner tax credit and the current interest rates, and noted that it seemed as if the housing market was stabilizing. My wife’s description: “When I told my mom about ‘dead-cat bounces’, she nearly shot chili out her nose she was laughing so hard.”

    If we don’t say it often enough, IrvineRenter, thank you for your advice and analysis. Without your valuable assessments of the situation in your neighborhood, the rest of us wouldn’t be able to see the reality behind the “there’s been no better time to buy” gibberish. In Dallas, we’re finally starting to see some of these houses that have been up for sale for two years being marked “For Sale Or Lease”, but it’s awfully slow, and the owners are still waiting for the boom to come rushing back.

  4. Black Swan is Alive

    Try to get a Jumbo Mortgage these days?

    From Bloomberg News

    Feb. 20 (Bloomberg) — Luxury homeowners are falling behind on mortgage payments at the fastest pace in more than 15 years, a sign the U.S. financial crisis that began with the poorest Americans has reached the wealthiest.

    The top five U.S. jumbo lenders — Chase Home Finance LLC, Bank of America Corp., Washington Mutual Inc., Wells Fargo & Co. and Citigroup Inc. — originated a combined $55.3 billion in jumbos in 2008. They lent just $4.3 billion of that during the last three months of the year, according to Inside Mortgage Finance.

    1. maliburenter

      Wait til you see the Q1 2009 figures. Not only are underwriting guidelines tighter, more homes are no longer jumbos because of price drops. Even the ones that are far above conforming limits are getting cheaper.

      If the conforming limits don’t move down in 2010, way more homes in LA/OC will qualify. I’ll bet that a lot of homes in Malibu will be available for the jumbo conforming + 25% down price range (just under $800k). We’ve got a few homes 60% off peak,

    2. tonyE

      We’ve just applied for one of them conforming jumbo loans.. towards the low end of the range.

      LTV is 40% based on two comparable homes that just sold within a month very near us.

      We got quoted just over 5%.

      Of course, they wanted pay stubs, W2, 1040s, bank statements, 401K statements (*), IRAs, home insurance… our credit rating is over 740 each… I mean, they wanted what I figured would be normal to get a loan.

      (*) Moved our 401Ks into bond funds on January ’08. ;-D

    1. Lee in Irvine

      If these two banks are allowed to drift into the abyss, with no one knowing what is going to happen to them, the Dow will soon paint a 6 handle, followed by a 5 handle.

      Either nationalize them, or remove the assets and dilute the shares further, BUT GET ON WITH IT! The stock market is screaming for answers, NOW!

      That tax cheating Timothy Geithner, knew the exact problems before he was confirmed. He was instrumental in TARP.

      What’s the hold up?

      1. Walter

        Here in the US we believe in free enterprise. Nationalizing banks is something only done in communist countries.

        Now everyone look the other way and don’t notice that these banks have taken so much TARP money, they are virtually nationalized already.

        1. Phil

          So you are willing to pump money into these bank without getting equity stakes? Sounds more communist to me than the option of having the government getting something in exchange for all the money that is being pumped into these banks. The goverment owns 8% of Citi? With all the money they put into this black hole they (we, the taxpayer!)should own 90%!

      2. SeattleDave

        Although I agree with your assessment concerning what to do with the banks, I cannot agree that we should do it to assuage the stock markets. If we nationalize the big banks (and I think we should), it should be for sound financial reasons, and not to prop up the Dow. Too much of what I see coming out of Washington, from both the Bush and Obama administrations, seems to be to try to prevent further declines in the stock and housing markets. Both should be allowed to decline to a natural, sustainable level. Trying to prevent declines only delays the inevitable.

        1. Lee in Irvine

          Certainty does not = propped up Dow. The uncertainty of not knowing what’s going to happen is amplifying the problem. The problem is only being reflected in the Dow, which is a forward looking mechanism.

          To remain ambiguous about these rotten banks is just stupid.

  5. loan modification

    This really is a great time for first-time home buyers like myself, the only problem for me is my area of Florida hasn’t been hit as hard in the foreclosure crisis which is a mixed blessing.

    No major economic downturn for the present time, but also no opportunity to pick up a drastically reduced home for pennies on the dollar, unlike this horrible listing above.

    1. MrMike

      Really?! (not sarcastically). What part of FL are you referring to? Epcot? (Ok, that was a little sarcastic-sorry could not resist)

  6. LVRenter

    Can I hijack the post for a moment to ask a basic economics question?

    Seems to me we have had three pretty major periods of recession in this country in the past 30 or so years.
    We dug out of the bad times in the 70’s with a combo of Regan tax cuts and defense spending (maybe 80% due to tax cuts 20% defense spending?)
    We dug out of the bad times of the mid 90’s with the dot com bubble (90% phony 10% legit?).
    And we dug out of the post dot com bubble/ 9/11 recession with a real estate bubble (100% phony BS).
    I guess my question is, is there any evidence in the past 30 years that we have the capacity to actually climb out of the mess we are in without the aid of a fake economic bubble?
    I am in retail (restaurant owner), so I would like to see some sort of light at the end of the tunnel, but so far all I see is more carnage.
    It would be nice to wear Realtor glasses and grab onto anything and say “see we are at the bottom, all up from here”. But it is not happening and I really so no hope of any industry in this country turning us around for some time.

    1. Irvine5

      Absolutely everything that has happened so far and the gov’t response to it has identically mirrored unfolding of events in Japan when their late 80’s mega RE bubble imploded. It is ironic that Obama invokes not wanting to repeat the ‘lost decade’ when his very actions repeat what the Japanese gov’t did to provoke the 10-year recession. (propping up inflated asset prices, pumping billions into banks, socializing losses etc). The only way to shorten this recession is to let asset prices reset to fundamentally supported values. Unfortunately this would take a lot of political courage (as well as a lot of fortitude by the American public) and is thus highly unlikely. It has been my feeling that the only way out quickly would be to invade Canada and commandeer their natural resources.

      1. Walter

        One problem, the cost of extracting oil sands is now below the price of oil on many projects.

        So that leaves us with letting asset prices reset to fundamentally supported values. The sooner this happens the better. I have been waiting to buy a house since 2004.

      2. SeattleDave

        The actions of the Obama administration so far have been exactly as you say. However, cut the guy some slack. He’s only been in office a little over a month. Did you REALLY expect him to nationalize Bank of America in week two and solve the housing crisis in week three?

        1. Irvine5

          The problem is that there is no ‘solution’ that will make everyone happy. I just wish that he would use his immense political capital to look the American public in the eye and say “look, we had a 7 year economic orgy but now it is over, we all need to tighten our belt, retool for the future, give up our precious entitlements, and live within our means.” Instead we get “hey, it is the other party’s fault, you are all just victims, don’t give up your fantasy.”

          Also, if he could show at least a little understanding of economics and history I would feel a little better.

          Don’t get me wrong, I still have faith in him!

          1. SeattleDave

            I agree that you can’t make everyone happy. However, I’m not sure that Obama has the necessary “political capital” to really level with the American people like you suggest. He ran a campaign on a platform of change, and he has all the political capital he needs to effect those changes he outlined. And if he really thinks that we collectively need to “take our medicine”, then he should have talked about that during the campaign, in order to prepare us for that bitter pill. But if he would have said during the campaign “look, we had a 7 year economic orgy but now it is over, we all need to tighten our belt, retool for the future, give up our precious entitlements, and live within our means.”, then I’m not sure that he would have been elected.

            I don’t think that most Americans are interested in taking any bitter medicine in order to cure our ills.

          2. tonyE

            Yeah, keep dreaming.

            And Obama will cure cancer too.

            If I ever saw one guy cruisin’ for a bruisin’ that’s Obama.

            Until he kicks Pelosi and the Democratic leadership in the US Congress out of the way, there’s no way Obama can do jack.

    2. Laura Louzader

      The real reason that we dug out of the downturn of the 70s was the discovery and rapid exploitation of the rich oil deposits of the North Sea.The oil price shocks and shortages of the 70s put our economy in the tank and created horrific political problems.

      Reagan and Thatcher both got a free ride because a critical liquid fuel shortage became a glut. Clinton also benefited enormously, and Bush sailed through his first term on a sea of cheap oil.

      Now the North Fields are depleting rapidly and so is every other major oil field in the world. They are being replaced by smaller and smaller discoveries every year. The free ride is over. Enjoy the temporary downturn in oil prices while it lasts, for we are being set up for critical shortages as one drilling and recovery project is canceled because they are not profitable at under $70 a barrel.

  7. Irvine5

    My wife and I walked around Woodbury yesterday to look at the available houses for sale. We found five, all vacant. However looking at the flyers and at the listing prices online it is clear that full reality has not yet set in. We have been waiting for three years to buy here and it looks like we will have to wait at least one year more. The obstinance just will not relent.

    The good news is that our lease expired and we are now month-to-month at the same rate. We can move at any time so we’ll keep circling.

    As I’ve said before our trigger is a 3BR, 2,200 sq ft house for $450k.

    1. tryingtobuy

      Irvine 5, I could not agree more. I am renting and waiting to buy as well. Time and time again I see homes listed for 10% 20% more than what they were paid for in 2005 and 2006. The brokers take the listing and blame the seller each time. The houses sit, go off the market ( it’s in escrow I’m told) and then re appear a month or two later as a fresh new listing, same old WTF price. I will continue to wait for gravity to take effect.

    2. WaitingInIrvine

      > As I’ve said before our trigger is a 3BR, 2,200 sq ft house for $450k.

      I’d love to see this happen, but do we think it actually will in Irvine? How new of a place are we talking as well?

    3. zubs

      If Irvine falls down to 450k for a 2,200 sqft house, then imagine what the dow is like. Dow would be around 5500…

      everything coincides.

    4. tonyE

      I think the “newer” Irvine Villages: TRidge, Quail Hill, Woodbury will be less elastic in pricing because they got less history to go on and their initial to market prices were WTF to being with.

      Whereas you got history in TR, Woodbridge, UP, Westpark, Northpark, etc… and people know what prices were in ’03, when those areas were being sold _below_ the WTF prices in the new areas… there’s absolutely no one in Woodbury, et. al. that is a long term buyer with tons of equity and the ability to sell their house at a realistic price and still make money.

      Hence, what you see in Woodbury et. al. is a catastrophic event about to unfold. EVERYBODY in those places is now -or soon will be- underwater. Once the reality sinks in, or the banks walk in, those entire places will come down to equity with the older villages.

      To buy in TRidge, QH, Woodbridge today is to be a Knife Catcher of The Highest Order.

      Those are scary places.

      BTW, did you see the web page for Hannu Reddy’s realty. Hannu Reddy is (was?) Mr. TRidge. His page now is mostly about RE in India.

      The dude really knows how to pick them… Bangalore and so on are having their own RE Armageddons.

  8. lunatic fringe

    Not too long ago I was saying that the bottom will be in when the 1st group of knifecatchers went into foreclosure. Now I’m beginning to think that the bottom will be in when the 2nd group of knifecatchers go into foreclosure.

    Ugh, so depressing…

      1. tonyE

        But… interest rates are VERY low right now. If they stay low then the payments will remain reasonable even when purchased at today’s “depressed” prices.

        Once things start to settle down, you can expect rates to go up and so even with lower prices the montly payments will stay about the same.

        You know what I find REALLY SCARY? People who bought at those scary prices with Adjustable loans CAN”T AFFORD their loans being reset at today’s low interest rates.

        What is the normal reset for say a 700K adjsutable loan today? 5%, 9%?

  9. LC

    Pack a picnic, and drive out to San Jacinto — where newer houses are going for $42 sq ft. That works out to about $159,900. It’s about a hour’s drive from Irvine.

    1. LC

      Keep in mind that Irvine is about a half an hour’s drive from Irvine. (Just try driving anywhere in that town, and you will know what I mean.)

      1. Irvine_Lurker

        I drive in Irvine all the time. It takes me 10 minutes to get to work. 10 minutes to JWA. I got from Irvine to Laguna Beach yesterday in 15 minutes.

        Maybe you meant to “just try riding your bike anywhere in that town”? When I ride my bike to work it takes me 30 minutes.

        1. tonyE

          Ever try to drive from TR/UCI/UP to the Tustin Marketplace at 5:30 PM midweek?

          Forget Jamboree… Culver is a nightmare.. Then you got traffic spilled over on University Drive, Michelson and Alton. Harvard gets clobbered. Main is a mess.

          The traffic around the two 99 Markets is always a mess… much worse during rush hour.

          I usually don’t go further East from the CVS at Alton during the evening commute. Thank God for the Trader Joe’s and In’N’Out on Campus.

        2. ockurt

          Irvine_Lurker, if you’re driving around town during off-peak hours you can get where you want to go pretty quickly but on-peak is a different story unless you live super-close to your destination.

          1. Irvine_Lurker

            Say what you will about Irvine but it is a well-planned community and traffic flows here better than just about any town in Southern California. As for getting around during rush hour, there is usually more than one option. The 10 minute commute that I mentioned is during rush hour and it’s from Northpark to Sand Cyn/Alton and I can go three different ways. Jeez, 3 freeways bisect Irvine, there are tons of bike paths, there are two train stations (I am counting Tustin). Irvine is full of transportation options. I have sat on Crown Valley trying to get to Ladera Ranch and I’ve sat on Beach Blvd. trying to get to H.B. – I’ll take the Irvine commuting options any day. /rant

          2. ockurt

            I agree with you but as you know driving from Northpark to Alton/Sand Cyn is not that far that’s why it only takes you 10 min.

            Yes, Crown Valley thru MV and Ladera is miserable so is Beach…I’ll take Irvine any day too! 🙂

  10. ockurt

    Decent house but I wouldn’t pay $800k for this place considering the small lot and the fact it’s out in the Irvine boonies.

    1. tonyE

      Irvine boonies… I love it. ;-DDD

      Ever driven way out to Portola Springs… you better pack the cooler.

      I’ve lived in Irvine since ’87 and I never knew anything existed on the other side of the Santa Ana Fwy. OK.. I knew about Northwood because we got lost there once when they opened the Tustin/Irvine Marketplace.

      Let’s not even talk about West Irvine. I used to think that was like half way to Moreno Valley.

      1. ockurt


        Yeah, I’m not a big north of the 5 guy myself. Doesn’t even seem like Irvine. I’ll pay the extra $ to live near the IBC and the coast.

        Irvine has gotten so big in the past few years it’s scary. I read it’s the biggest city by geographical area in the OC now (surpassed Anaslime)

        P.S. Love the Moreno Valley comparison…temperature-wise seems similar in the summer.

  11. freedomCM

    Those are million dollar sardines?

    Just another marker of the craziness. $1M buys you a three story (who wants to live in a three story?) with almost zero lot lines/yard. And way the F out there.

    Sorry for all the Irvine faithful, but if this doesn’t drop below $200/sf, nothing will.

    1. irvine_home_owner

      My parents called it the Boogie Man Room.

      They would probably be arrested for that today… and I could appear on Oprah.

  12. dilbert dogbert

    Irving Renter,
    If you ever run out of crazy to write about just hop up north to the areas below San Francisco on the west side of the bay.
    This house would go in an instant as the comparables are really dismal in that price range. In fact everything at that price and below is dismal.
    We have abandoned looking below SF west and are ready to make a major live style change by looking in the Auburn area where we can get horse property for the same asking as a piece of junk in the Mid Penn area.
    Small late 40’s 2bed 1bath, 1car garage flipper fixers on small lots asking 500 per sq ft. Yikes!
    When will reality strike?

  13. Bitter Renter

    Thanks for the trip down memory lane with the Living Colour song, but note that the video owner doesn’t allow embedding.

  14. newbie2008

    $300 per sq. ft is lower than 6 months ago, but still $100 or more too high for stable market (income to debt ratio).

    On TRidge and TRock foreclosures seem to have dropped off in the last 6 month. Some TRidge foreclosurers were going for 25% off the extreme high, but had very poor floor plans and were trashed (mostly cosmetically). The higher end ones were still in goog shaped but some with really poor floor plans. Banks were not much into offering at a discount.

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