‘Cause I’m trying and trying to walk away But I know this crush ain’t goin’ away-ay-ay-ay-ayy Goin’ away-ay-ay-ay-ayy
The low end in Irvine is starting to catch up to the low-end declines in other markets. There is no end in sight to this carnage. In many other markets, the low-end condos have already fallen to cashflow investor levels, and there is even overshoot in some bad areas (which some may argue isn’t overshoot). In Irvine’s market, many of these condos are just starting to reach rental parity. They will fall much further.
Our real estate market is currently being supported by knife catchers with cash; the downpayments are large by historic standards. There is a finite number of people with large cash downpayments, and this number is dwindling with each purchase and continued asset price deflation.
A healthy real estate market cannot be supported by cash buyers; there simply is not enough to them to buoy a market. Eventually, the low end of the market must stabilize and these properties must appreciate. It is only once there is appreciation at the low end will buyers have a source of additional cash to ignite the chain of move-ups necessary for a self-supporting housing market. Unless there are move-up buyers with significant equity, there can be no sustained market rally.
The low end of the market has not stabilized, and pricing would suggest it is not near stabilizing levels. First, prices must stabilize, then there must be appreciation over time, only then will there be move-up appreciation equity available to sustain the market. It is one of the many reasons that real estate markets do not form “V” bottoms but instead slowly change directions in an elongated “U” shape.
One of the lowest priced 1 bedroom 1 bath condos in Irvine. Single
level condo No Stairs, Safe, Secure and Great Private Quiet Corner
Unit. Beautiful Mantle on Fireplace in Spacious Living Room, Formal
Dining Room. Crown Moulding Throughout. Sliders to Large Balcony from
Master Bedroom and from Living Room. Kitchen Breakfast Bar overlooks
Living Room and Fireplace. Master Suite with Two(2) Sink Vanity. View
of Tree Tops and City Lights at Night. Inside Laundry Room off Kitchen.
Security Bldg with Intercom, Elevator and Underground Garage Parking.
Handicap Access. HOA Provides Water(heating),Gas, Trash, Maintenance,
Pool, Spa, Lighted Tennis, Basketball Courts, Work Out Room and Tot
Lot. There are 3 High Rise Bldg-This Is The Third One-Closest to IVC.
If It Were Not For The Title Case, I Would Say It Was A Good Description.
{Adsense-ir}
This property was purchased on 7/13/2005 for $340,000. The owner used a $271,920 first mortgage, a $67,980 second mortgage, and a $100 downpayment. Well, she does have some skin in the game. It is much less than my security deposit, but she is invested…
On 2/1/2007 she refinanced with a $320,000 Option ARM with a 1% teaser rate and a $40,000 stand-alone second. Thankfully, she pulled out an extra $20,000. She might have lost her $100 downpayment otherwise.
Total property debt is $360,000.
Total mortgage equity withdrawal is $20,000.
If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $172,940. That is a substantial loss on a 900 SF 1/1.
BTW, I would like to call your attention to the newest blog in town: Irvine Homes. Erika Chavez of the OC Register is now writing a daily blog on Irvine real estate. We welcome the additional attention to Irvine this blog will bring, and I would like to wish Erika the best of luck with the new venture. I found it interesting that despite the talk of increasing sales rates, Irvine is still showing less sales this year than last. I look forward to more posts from Erika.
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.
🙂
{book2}
I hung up the phone tonight Something happened for the first time deep inside It was a rush, what a rush
‘Cause the possibility That you would ever feel the same way about me It’s just too much, just too much
Why do I keep running from the truth? All I ever think about is you You got me hypnotized, so mesmerized And I’ve just got to know
Do you ever think when you’re all alone All that we can be, where this thing can go? Am I crazy or falling in love? Is it real or just another crush?
Do you catch a breath when I look at you? Are you holding back like the way I do? ‘Cause I’m trying and trying to walk away But I know this crush ain’t goin’ away-ay-ay-ay-ayy Goin’ away-ay-ay-ay-ayy
Today’s post began as an email exhange between me an OC Progressive. He has analyzed the impact of the loss of mortgage equity withdrawal on the local economy. What he found is remarkable.
In trying to follow local politics here in Orange County,
I’ve been looking very closely at local government budgets, and there’
s one trend that seems to be emerging rapidly. We’re seeing a
precipitous decline in local sales tax revenue. And this is not going
to be a temporary problem, but rather one with serious long term
impacts.
I was absolutely floored by OCTA’s fiscal review that showed a
difference over three years, in the projection of revenue from sales
tax, that lowered the 2009-2010 projection of sales tax countywide by
19% over their previous projections. (This was a difference between
projections, not between actuals, but both current and previous
projections were based on solid actual numbers and best case
projections).
The decline in sales tax has two components, and one will not recover. What nobody seems to be picking up is the relationship between the mortgage bubble and the collapse in California sales tax.
Calculated Risk has consistently posted graphs and reports that show Mortgage Equity Withdrawal (people taking money out of their
houses) as a percentage of disposable income. If you read the Irvine Housing Blog,
you’ll see example after example of folks who used their house as an
additional income from 2000 to 2007, turning debt into tax-free income,
frequently in the range of 50,000 a year. The phenomenon peaked in Q4
2006 when MEW was nine (9)% of disposable income nationwide, and 6% of
consumer spending. A year later, it had only dropped by around 20%.
Now it’s essentially cut off because no one will fund the loans
anymore, and no one will even fund the credit card debt that was
routinely paid off with visits to the house ATM machine.
Because Orange County in particular, and California, in
general, have housing prices so much higher than the national average,
and because we were at ground zero for the origination of the new
mortgage products, my guess is that mortgage equity extraction in the
OC may have been as much as twice the national average as a percent of
disposable income, meaning that up to 18% of the county’s disposable
income, and 12% of the taxable sales, were coming from MEW.
So
sales tax revenue money fell off a cliff in fiscal 08-09, although the
lag in reporting and balancing reports is making that truly apparent
only now. Last September the drop-off was in the six per cent range. Costa Mesa is now reporting a 12% year over year decline in sales tax for 08-09.
John Chiang just reported that “sales taxes continue to be hammered by
diminished retail spending across the state”, with an 11.8% year to
year drop-off in March. (And March sales might have borrowed some high
ticket sales in advance of the April 1st sales tax increase!) If you
dig down into the details of this Rockefeller Institute report,
you’ll see that a national decrease in retail sales tax reported by the
Wall Street Journal is actually a phenomenon driven by the real estate
bubble states of CA, FL, and AR. Double digit sales tax losses in those
states pull the national “average” loss of 6.2% down to 3.2%.
It’s hard to figure out how much of the decrease is a result of a
general economic slowdown, and the huge job losses, and how much is
based on the end of MEW, but my observation is that nobody is even
factoring in the disappeared MEW as a part of the problem, and local
and state electeds seem to think that normal cyclical patterns will
reassert themselves so that retail sales will revert to the mean,
Therefore, current assumptions and 2009-2010 budgets at every level
may be underestimating both the current and future drop-off in sales
tax revenue.
Instead, it’s more likely that a significant chunk of our
retail sales (let’s say 10% when compared to FY 2006-07) are gone
forever because of the collapse of MEW, and the jobs in local retail,
restaurants and services are following the jobs in finance, real
estate, and all the affiliated jobs that supported the refinance
industry. There are always lags, especially with small business owners
who are reluctant to throw in the towel, but we already have far more
retail than we need, and much of it is unprofitable.
Because of the budget preparation cycle, and the lagging
revenue information, local budgets for 08-09 were based on retail
sales for Q1-Q4 2007, so cities are drawing down reserve general fund
balances at a rapid rate, leaving very little flexibility for ensuing
years. Mid-year revisions didn’t cut expenses fast enough, so as
budgets are finalized and the retail sales numbers for FY 08-09 receive
real visibility, you’re going to see a series of bad choices.
This will hit transit first and hardest, where local transit
funds come from a 1/4 cent tax, and we’re looking at devastating
impacts in bus and transit systems in Orange County and across the
state.
Effects of sales tax collapse varies dramatically from city to
city and agency to agency based on the share of property tax that local
governments get, which is a bizarre calculation made when prop 13 went
into effect, but the overall effects are dire. Property taxes, whose
gross receipts had been going up around 6% a year, based on the 2%
increase for existing properties, and huge gains for resales. My guess,
more pessimistic than most, is that property tax revenue will now be
decreasing in the 2% per year range as property values drop by 50% and
reappraisals slowly move through the assessors’ systems, with some
additional problems with non-payment. Hotel taxes, which are a big
income source for many cities, are plummeting with the general economy.
Even stable sources like business license fees, franchise frees, and
utility taxes are dropping, so there are no positives to balance out
the drop in sales tax.
Given the way that local politics work, and the incredible
power of public safety unions, my gut feel is that very few California
cities will react quickly enough taking the steps they need to balance
their budgets, and that the Vallejo bankruptcy is a precursor to a wave
of municipal failures. It’s going to hit hardest, first in the places
where we’re already at depression level unemployment numbers, with no
new jobs in sight. Look at a city like Merced that has a 10 million plus gap in a 40 million dollar budget for next
year, after budgeting to dip 4 million into reserves to balance the
08-09 budget, and you’ll get a feel for how deep the cuts are going to
be. Merced anticipated a 7% drop in sales tax, and saw close to 19% in
the the fourth quarter of annual 2008. And there are fine points that
people don’t get. Merced will not only burn through the reserves that
they thought could carry them for five years, but they’ll also lose the
$800,000 or so of revenue that they used to make in interest on the
reserves.
Merced’s an extreme case, but it’s just a little earlier than
a city like Huntington Beach, which is now looking at a shortfall of at
least 6 million in revenue for the 2008-2009 fiscal year.
Every local government is going to be facing double-digit cut
backs in budgets for 2009-2010, and even worse cutbacks in 2010-11 if
their projections are too optimistic, and they get hit with substantial increases in PERS contributions that year.
Obama’s stimulus funds are patching a huge hole in the state
budget, but aren’t going to fill the problems with local funding
shortfalls.
All of the cities are applying for a part of the ONE BILLION
DOLLARS (cue Dr. Evil) that Obama has pledged to maintain local law
enforcement, but that’s divided over three years, and may pay for
5,000 cops nationwide, maybe 500 in California or an average of one
for every one of California’s 458 cities and 58 counties. Innumeracy
reigns at the council dais sometimes when elected officials are
grasping at straws.
We’re going to see an extreme makeover of local government.
Some revenues will recover very slowly. Other revenue, like the phony
money that was coming from the housing ATM, are just not coming back.
Local governments have grown used to steadily increasing
revenues, and have planned accordingly. Now they have to hit the reset
button.
Extreme makeover time!
{book2}
There you have a detailed and data-based analysis from someone who pays careful attention to these issues.
So what do you think our local governments are going to do? I suspect we will see a large number of municipal bankruptcies. A recent court decision concerning the Vallejo, California, bankruptcy allows the City to void its union contracts. When local tax revenues went up dramatically during the bubble, much of this money went to union wage and pension agreements. Now that this revenue is gone, probably permanently, cities will have difficulties meeting these obligations. I expect we will see more bankruptcies and union contract cram downs.
At some point, the reality of the permanent loss of MEW is going to set in on both homebuyers and government officials. When homebuyers realize it, there will be serious withdrawal pains from kool aid intoxication. When government officials realize it, there will be ugly political battles that will likely end up in court battles.
The fallout from the loss of mortgage equity withdrawal has yet to be fully felt and realized. It will be another shock to Californians.
Beautiful Home in Quiet & Prime Location of Woodbridge(near
Woodbridge North Lake). Fabulous floor plan with spacious bedrooms,
Fantastic Up grade Wood Floor. Located at the End of a Cul-De-Sac
street. Perfect for Kids!! 4-Bedroom-Single-Level In Woodbridge.
Random capital Letters?
Two exclamation points.
This property was purchased on 2/26/2003 for $460,000. There was an inter-family transfer on 6/14/2007, but this did not impact the financing on the property. When the property was purchased, the owner used a $413,540 first mortgage and a $46,460 downpayment.
On 2/25/2004 she opened a HELOC for $58,800.
On 4/12/2004 she refinanced the first mortgage for $426,300.
On 3/24/2005 she opened a HELOC for $230,000.
On 8/16/2005 she refinanced the first mortgage for $650,000 with an Option ARM with a 1% teaser rate and got a HELOC for $55,500.
Total property debt is $705,000.
Total mortgage equity withdrawal is $291,460 including her downpayment.
If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $108,100.
From now on, when you see these $300,000 mortgage equity withdrawal numbers on typical Irvine properties, you will have a good idea of the impact that had on our economy, and you will also see the impact the loss of this money will have moving forward.
{book7}
i was lying on the grass on sunday morning of last week indulging in my self defeats my mind was thugged, all laced and bugged, all twisted round and beat uncomfortable three feet deep now the fuzzy stare from not being there on a confusing morning week impaired my tribal lunar-speak and of course you can’t become if you only say what you would have done so i missed a million miles of fun
i know it’s up for me if you steal my sunshine making sure i’m not in too deep if you steal my sunshine keeping versed and on my feet if you steal my sunshine
Turtle Rock is the one neighborhood I least expect to see dramatic price declines; however, this does not mean it is not immune to the pressures of the market.
I have been battling with recession stress lately. Unemployment in
the residential real estate industry is somewhere between 50% and 80%.
It is difficult to keep your spirits up when all you hear about are
layoffs. Sometimes it is good to relax and remember…
The secret of life is enjoying the passage of time Any fool can do it There aint nothing to it
It is not as easy as it should be in times like these.
Nobody knows how we got to The top of the hill But since were on our way down We might as well enjoy the ride
Turtle Rock is one of the original Irvine Villages, and it has a large number of long-term homeowners. There should not be as much toxic financing here as in other villages, but as we have seen on previous posts, there is plenty of HELOC abuse causing problems. Prices here will fall, but it should not be as catastrophic in Turtle Rock as it will be in Turtle Ridge.
This is a pretty home. At least the knife catcher who buys here can enjoy their gilded cage.
The finest home for sale today in Turtlerock Pointe. See the pictures and slide show for proof.
Short and sweet–perhaps a bit too short.
I wonder if this owner reads Shakespeare, “Beware the Ides of March”
This property was purchase on 3/15/2006. The owner used a $500,000 first mortgage, and a $700,000 downpayment. He may be pissed about this loss, but this is certainly not a distressed sale. Kudos to him for recognizing it is a good time to bail.
If this property sells for its asking price, and if a 6% commission is paid, the total loss to the homeowner will be $307,940.
I know it shouldn’t make a difference, but I do feel bad for the people that lose their own money. We can speculate that it was appreciation from a prior sale, and it might be, but it is still a lot of money to lose. Bummer.
{book5}
The secret of life is enjoying the passage of time Any fool can do it There aint nothing to it Nobody knows how we got to The top of the hill But since were on our way down We might as well enjoy the ride
Isnt it a lovely ride Sliding down Gliding down Try not to try too hard Its just a lovely ride Secret O’ Life — James Taylor
Many people seem to think the housing market will recover when the economy does. The economy is not the cause of problems in the housing market, and economic recovery will not save the housing market.
The rollbacks keep getting going further back in time. We are now seeing rollbacks of 2003 pricing more frequently.
I was just guessing At numbers and figures Pulling the puzzles apart
I want to let you in on a little secret; all market prognostication is guesswork. Many people looked at the same puzzle pieces I did and came to different conclusions. For several years, oracles like Gary Watts were right with their bullish predictions, and for a time, I was very incorrect in my bearish outlook. The bearish sentiment has been running very high on the blog lately. Most of this bearishness is justified because market conditions are pretty grim; however, we must always keep in mind the possibility that we are wrong.
OK, I considered the idea…
and rejected it…
Prices will still fall. It is pretty hard not to be bearish when you see 2003 rollbacks in 2009. I will note that economists who project overshoot of price fundamentals due to unemployment and foreclosures are guessing. Everyone can look at the same data and determine where affordability lies. The rest is guesswork. Some of these guesses will be good, and some will not. There is less science there than most prognosticators would like to admit.
{book2}
When the housing market peaked back in May of 1990, the economy was doing fine. It was not the economy that caused prices to peak; it was buyer exhaustion and financing limitations just as caused our most recent market peak.
The economy did suffer in the early 90s, but the problems did not not begin until well after the housing market peaked. In fact, scholars have argued that the Housing is the Business Cycle. The problems with the economy of the early 90s were rooted in a loss of disposable income because homeowners were overextended on their mortgages, and the money they should have been spending in the local economy was instead going to debt service somewhere else. It is a problem we will face going forward as well–unless the foreclosures wipe out the debts of most homeowners. Unfortunately, that would require wiping out most homeowners financially. There are no good solutions.
The other problems with the economy, including the defense industry layoffs, came after the market was already in trouble. These made matters a bit worse, but the layoffs of the early 90s were not the cause of the poor housing market. Prices dropped for 7 consecutive years from 1990-1997. The recession lasted less than one year.
Recessions do serve to make a bad market worse, but they are not the cause of housing market crashes, and the end of the recession does not signal the end of a housing market crash. As you can see from the chart above showing unemployment and recessions, the recession of the early 90s saw a peak in unemployment in 1993. Employment improved from 1993-1997 while house prices continued to drop.
In short, to paraphrase Jim Carville, the campaign manager for Bill Clinton in 1992, it’s NOT the economy, stupid.
GREAT VALUE!!! HIGHLY SOUGHT AFTER PRINCETON TOWNHOMES IN UNIVERSITY
TOWN CENTER WITH AWARD-WINNING SCHOOLS FOR ALL LEVELS. THIS 2-STORY,2
BR,1 1/2 BA COMES WITH A DESIRABLE FLOOR PLAN THAT IS FEATURING BRIGHT,
SUNNY, AIRY & SPACIOUS WHICH ALLOWS A NICE COOL BREEZE DURING
SUMMER TIME & A VIEW OF SKYLIGHT AT NIGHT. LOCATED NEAR
UCI,SHOPS,THEATERS, FREEWAYS,RESTAURANTS,FASHION ISLAND & APPRX.10
MIN. FROM THE BEACH. WALK OR BIKE TO NEARLY EVERYTHING.IDEAL FOR
EVERYONE:INVESTORS,COUPLES, SINGLES,KIDS AND/OR STUDENTS. THE HOUSE
OFFERS HIGH VAULTED CEILINGS;AN OPEN OVER-SIZED LIVING ROOM W/FIRE
PLACE; A FORMAL DINNING AREA; 1/2 GUEST BATH DOWNSTAIRS & AN INDOOR
LAUNDRY ROOM. A GRAND SIZE PATIO FOR ENTERTAINING OVERLOOKING A TREE
TOP & WOODLAND VIEWS. CURRENTLY A GARAGE IS BEING USED AS A
WORK-OUT STUDIO. ALL BEDROOMS ARE UPSTAIRS. MASTER HAS WALK-IN CLOSET;
2ND BEDROOM IS AWAY FROM THE MASTER WHICH OFFERS PRIVACY FOR ROOMMATE
PURPOSES. YOU GOT IT ALL!!! LOCATION, LOCATION + VALUE AND FUN!
That description is so bad, I don’t know where to start.
ALL CAPS
Three exclamation points can be found in multiple locations.
If this is so highly sought after and desirable, why is it leading the charge for lower prices?
DINNING?
…IS FEATURING BRIGHT,
SUNNY, AIRY & SPACIOUS… what? There is a list of flowery adjectives and no noun being modified.
A VIEW OF SKYLIGHT AT NIGHT. Does that mean you cannot see the skylight during the day?
IDEAL FOR
EVERYONE:INVESTORS,COUPLES, SINGLES,KIDS AND/OR STUDENTS. How can a property possibly be ideal for everyone?
LOCATION, LOCATION + VALUE AND FUN! It must be an amusement park. Yippee!
There is more in there to pick on, but I have had enough…
This property was purchased on 12/9/2003 for $413,000. The owner used a $330,400 first mortgage, a $82,600 second mortgage, and a $0 downpayment.
On 9/21/2004 he refinanced with an Option ARM with a 1.25% teaser rate for $425,000.
On 11/10/2004 he opened a stand-alone second for $97,000.
Total property debt is $522,000.
Total mortgage equity withdrawal is $110,000.
If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $164,800.
{book6}
Tell me your secrets And nurse me your questions Oh, let’s go back to the start
Running in circles Coming up tails Heads on the science apart
Nobody said it was easy It’s such a shame for us to part Nobody said it was easy No one ever said it would be this hard
Oh take me back to the start
I was just guessing At numbers and figures Pulling the puzzles apart
Many realtors like to blather on about pent-up demand. The reality is our market has an enormous amount of pent-up supply due to hit the market 6-12 months from now.
Pent-Up House — Sonny Rollins: jazz violin maiko live!
Despite the news headlines of a real estate bubble and economic
termoil, many sellers believe their properties have appreciated since
they paid peak prices. They are asking, “What Bubble?”
Denial comes in many flavors. One of the more interesting forms of denial is exhibited by those sellers who are completely oblivious to the price crash. Either these people are completely ignorant to what is happening, or they are willfully ignorant and believe the problems all around them do not apply to their property. If I had to guess, I would lean toward willful ignorance as the most likely explanation.
The market for mid- to high-end homes is like playing the lottery. There are very few sales occurring at these price points because people are no longer being given huge loans, and they will not be any time soon. With mortgage financing going back to qualifying people for amounts they can afford to pay back with their real income, the only sales at the high end are buyers with enough cash to close the deal. There are very few of these people relative to the number of sellers out there. The few lucky sellers are cashing in a lottery ticket funded by a knife catcher.
The 92603 Zip code shows the extreme dissonance between asking prices and selling prices in today’s market. According to DataQuick, the median sales price in 92603 at the end of March was $638,000. According to Redfin, the median asking price is $2,190,000. Someone explain to me how that is supposed to work.
Let’s employ a bit of logic here. Median sales prices reflect what people are paying in the market. Even with super-low interest rates and plenty of kool aid, buyers in this zip code are only bidding prices up to the low $600s. Buyers are not going to raise bids any time soon because that would require toxic financing which isn’t going to be available, probably ever again. If buyers are unable to raise their bids, sellers must either lower their prices, or there will be no transactions. The extremely light transaction volume reflects this reality.
If there were no distressed sellers in the market, transaction volume could fall to near zero, and prices could stay artificially inflated indefinitely. The current asking prices in the market act like an informal cartel. With the huge incentive to cheat by lowering price to capture a knife catcher, prices would come down eventually, but it would be an agonizingly slow process. However, the reality in our market is that there are large numbers of distressed sellers whose properties will be on the market 6-12 months from now (See The Foreclosure Onslaught Continues for nice graphs). Prices will fall.
Now that all the foreclosure moratoria have been lifted, lenders have been sending out notices of default to all the people who defaulted over the last 6 months who were not entered into the process. Months ago, I wrote a satirical piece titled, Moritorium on Defaults Announced. The point of the writing was to demonstrate the absurdity of foreclosure moratoria. The problem isn’t foreclosures, the problems is borrowers who default. Stopping foreclosures does not stop defaults; what is does do is create a backlog of foreclosures as people default and live in their houses rent free.
If you look at the flowchart above, many properties are at the notice of default stage. In 90 days, most of those borrowers will be given a notice of trustee sale. As soon as 21 days after that, the property may be scheduled for foreclosure auction. Then depending on the backlog of REO and the lenders staffing, these properties will be prepared for sale in the open market. From the time of the notice of default until the property is offered for sale in the open market takes 180 days or more. Since this process was restarted in earnest in April, look for the first of these REOs to hit the market in October.
When you think about it, the lenders really hurt themselves by delaying 6 months. The flood of REO to hit the market this fall and winter could have been arriving on the market today when there are more active buyers. Instead, the REO that should be hitting the market now is going to be added to the numbers due to hit this fall naturally. The result is going to be an enormous influx of supply just as demand is starting to wane due to the end of the prime selling season. Supply will overwhelm demand, and the mid- to high-end market will see a big leg down in pricing just as the low end did during the fall and winter of 2007-2008.
The ARM reset schedule has always shown a 2-year gap between the subprime wave of foreclosures and the second wave from the mid- to high-end foreclosures. The defaults from the second wave began early, and they have been exacerbated by the weak economy. This would have had the effect of shifting this wave forward in time and smoothing it out, but instead, the government and lenders embarked on a program of foreclosure moratoria that pent up this supply into another large wave.
Perhaps on a national level, the moratoria may have helped do some workouts and save a few marginal borrowers with conforming loans, but locally, our jumbo-dominated market with extremely leveraged borrowers is not eligible for these workouts. The ARM reset wave may have been lessened on a national level, but here in California, we will see the full brunt of the second wave of the foreclosure crisis.
** One of the Best Location & Most Beautiful Estate in Turtle Ridge
** Magnificent Pano. View from City Lights to Shady Canyon ** Premium
Pie Shape Lot at the end of Cul-de-Sac ** Every Espect of the Home has
been Crafted with the Utmost Attemtion to Detail, Unique Material and
Finest Workmanship Both Inside and out ** 6 BR 5.5 Baths + Library +
Media RM & Bonus Room ** Extra Lrg. Formal Dining RM &
Breakfast Nook * Gourmet Kitchen w Oversized Center Island, 2 Built-In
Refrigerators & Wine Cooler.. & More ** Marble, Granite
Hardwood Floor, Plantation Wood Shutters, and Custom Mirrors ..etc. **
Imported Drapes, Crown Moldings, Euro. Style Cabinetry, French Doors 4
Car Attached Garage w Epoxy Floor ** Luxuriou Resort Like Landscaping
for Relaxed & Entertainment ** Fully Automatic Salt Water pool
& Spa ** Oversized Gazebo, Outdoor Fireplace, Fire Pit ** Natural
& Flag Stone Throughout the Yard ** MUST SEE ** Awards Wining
Schools.
In English, we use this thing called a “period” to end sentences. The double asterisk only works in realtorspeak.
Why Is This In Title Case?
Pano. Do you think the writer did not know how to spell panoramic?
Espect? Luxuriou?
Utmost Attemtion to Detail? Where was the attention to proper spelling?
And this is a description for a $5,400,000 home…
One of the problems with cul-de-sac lots is the difficulty with orienting the front of the house to the street. This house might have a fantastic front elevation, but since it needed to be twisted to fit on the lot, the presentation from the street is of the side of the house with an ugly garage prominent to the visitor. Just what everyone wants in a $5,400,000 showpiece.
When I put the income and downpayment requirements, it was tongue-in-cheek because most buyers of properties over $2,000,000 pay cash. If you can truly afford a property that opulent, you don’t need to borrow. However, during the bubble, lenders will willing to loan people multi-million dollar sums to purchase properties. Today’s owner was one such borrower.
This property was purchased on 4/25/2006 for $4,311,500. The owner used a $3,131,000 Option ARM first mortgage and a $1,180,500 downpayment. Can you imagine a $3,131,000 Option ARM? If WAMU was making loans like that, it is no wonder they collapsed. On 3/2/2007 this owner opened a $700,000 HELOC.
Of course, the financing data doesn’t matter because this seller is going to make another $1,000,000 or so on the appreciation since the peak in mid-2006… Yeah, that is going to happen…
This seller is not alone in the dreams of post-bubble appreciation. I came across these properties that have also appreciated since the owners bought at the peak:
There are plenty of others. The uptick in sales activity is starting to bring out the organic sellers and their WTF asking prices. Everyone wants to hit the appreciation lottery. They better cash in their tickets this spring and summer.
New Listing (24 hours)
