What Was He Smokin'

Some people claim they are merely victims of bad market timing. But how bad can timing really be? How about purchasing a tiny condo a few days before subprime imploded; that would do it.

113 Rockwood view

Asking Price: $299,900

Address: 113 Rockwood #30, Irvine, CA 92614

{book}

Everybody Must Get Stoned — Bob Dylan

They’ll stone you when you’re trying to be so good
They’ll stone you just like they said they would
They’ll stone you when you’re trying to go home

Did you see that our governor thinks we should debate pot? Schwarzenegger: Time To Debate Legalizing Pot. Even MSN is getting in on the story. A budget cure: Marijuana taxes? With the Conservatives being thrown out of power in Washington, I suppose anything is possible…

The owner of today’s featured property was either stoned, or drunk with kool aid when this deal went through. New Century Financial had not fully imploded when this deal happened, but problems with subprime were front page news in the first quarter of 2007. It wasn’t a good omen for making this a successful flip.

Ignorant investing is common. Most people know very little about the markets they invest their money in. This is not necessarily a bad thing, if this money is trusted to competent professionals, but when people go it alone, the results are often a disaster.

To make money in real estate (or any speculation for that matter), you must have a sense of current value, and what buyers will be willing and able to pay in the future in order to make a profit. The extent of valuation and due diligence during the bubble was minimal; most people just knew real estate was going to go up because it had been for a long time. There was no attempt at valuation or any consideration for how or how much future buyers were going to pay. People bought because it was a sure thing.

Anyone with a moment of forethought would have questioned whether it was a good idea to buy a low-end condo while subprime was imploding. Since subprime was the primary funding mechanism of this market strata, a problem with the subprime industry was going to be a problem with the entire bottom tier of the market. This isn’t rocket science or complex discounted cashflow analysis, this is just common sense.

When people invest without a plan, they stand to lose money. If you are talking about a stock purchase of a few thousand dollars, the results may be painful, but not catastrophic. When you are talking about a piece of real estate priced at $479,000, the results can be disastrous. it certainly was in this case.

113 Rockwood view

Asking Price: $299,900

Income Requirement: $74,975

Downpayment Needed: $59,980

Monthly Equity Burn: $2,500

Purchase Price: $479,000

Purchase Date: 2/23/2007

Address: 113 Rockwood #30, Irvine, CA 92614

Beds: 3
Baths: 2
Sq. Ft.: 1,117
$/Sq. Ft.: $268
Lot Size: 2,500

Sq. Ft.

Property Type: Condominium
Style: Other
Stories: 1
Floor: 1
View: Park or Green Belt
Year Built: 1980
Community: Woodbridge
County: Orange
MLS#: S567180
Source: SoCalMLS
Status: Active
On Redfin: 49 days

WOW! A RARE FIND! GREAT PANORAMIC PARK VIEW! DIRCECTLY ACROSS FROM
BEAUTIFUL PARK & SWIMMING POOL. CLOSE TO THE LAKE. EXCELLENT FOR
WATCHING YOUR CHILDREN PLAY. GROUND LEVEL W/ WRAP AROUND BACKYARD W/
PATIO. THIS HOME IS SPECTACULAR W/ NEW CABINETS AND COUNTERTOPS.
UPGRADED CARPET AND BEAUTIFUL CEILING FAN IN THE DINING ROOM AREA. VERY
CLEAN! A MUST SEE!

ALL CAPS

What is the deal with “W/”? This abbreviation–which isn’t proper–saves exactly two characters. What is the point?

Despite the words, there are only two useful pieces of information contained in that description: (1) the unit has a view of the park, and (2) it has new cabinets and countertops. Everything else is garbage.

As with most properties purchased during this era, this was a 100% financing deal, so I suppose this flipper wasn’t that foolish; he only risked his credit score. This property was purchased on 2/23/2007 for $479,000. The owner used a $383,200 first mortgage, a $95,800 second mortgage, and a $0 downpayment. If this property sells for its current asking price, the bank will have lost $197,094 in just over 2 years. From the lender’s standpoint, that is serious equity burn…

I hope you have enjoyed this week at the Irvine Housing Blog. Be sure
to come back tomorrow as I explore HELOC Abuse Newport Coast Style, and
come back next week as we
continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.

🙂

{book3}

They’ll stone you when you’re trying to be so good
They’ll stone you just like they said they would
They’ll stone you when you’re trying to go home
They’ll stone you when you’re there all alone
But I would not feel so all alone
Everybody must get stoned

Everybody Must Get Stoned — Bob Dylan

100 thoughts on “What Was He Smokin'

  1. Lee in Irvine

    Not trying to be political here … but …

    Did you see that our governor thinks we should debate pot? Schwarzenegger: Time To Debate Legalizing Pot. Even MSN is getting in on the story. A budget cure: Marijuana taxes? With the Conservatives being thrown out of power in Washington, I suppose anything is possible…

    Actually IR, you don’t have that quite right. The conservatives have not been in control in California in a very long time. Also, the reason why Schwarzenegger is talking about legalizing pot, is because they look at the opportunity of taxing the hell out of it. Why? Because the state of California has spent itself into insolvency. Why? Because the state of California is run by one political ideology … and it ain’t the conservatives. Just saying …

    BTW, I think they should legalize Pot, however, I personally hate the crap. I tried it less than 5 times, and each was a result of peer pressure. But if people want to set around, wasting their lives smoking weed all the time, so be it … knock yourself out.

    1. IrvineRenter

      Drug laws are also enforced nationally, and Conservatives under the Bush Administration were raiding pot dispensaries in California. Under that national regime, it isn’t likely that any state would have decriminalized or legalized marijuana.

      I find the historic parallels between the pot argument and the alcohol argument from the Great Depression interesting. On March 23, 1933, President Franklin Roosevelt signed into law an amendment to the Volstead Act known as the Cullen-Harrison Act, allowing the manufacture and sale of certain kinds of alcoholic beverages. On December 5, 1933, the ratification of the Twenty-first Amendment repealed the Eighteenth Amendment. When FDR took office, he had control of Congress just as Obama does now. The Conservatives of his day, the ones who passed the Eighteenth Amendment, were out of power. Since this was also the bottom of the Great Depression, there was a similar need to generate tax revenues to provide goods and services from the Government.

      1. Lee in Irvine

        I know IR. I was just commenting on what you said about weed being legalized now because conservatives have no power.

        The state is insolvent, and looking for a new tax base … legalize weed. They’re not doing it right now to promote a progressive agenda, or stick it to the powerless conservatives. They’re gonna do it to get more money from us.

        I think the state is in serious trouble, and needs new direction, otherwise we’re all f**ked. As long as hippies control the agenda of the state, we have no hope.

        As I said before, I think they should legalize it. We all know that booze causes more problems in society than weed.

        BTW, I don’t think Obama would do anything to stop it if California legalized pot.

        1. Chuck Ponzi

          I’m against using pot. I’m not against legalizing it.

          Why should the underworld reap the profits of something that is available anyway? Why should we spend so much of our police departments’ budgets fighting what is so prevalent? Why should we be locking up people for possessing something that is available on the street, in subprime boardrooms, and college campuses? At some point, you learn that pissing into the wind only gets you wet.

          I don’t think anyone should use it, but to spend so much time and money on a problem that is completely lost? Seems like a waste of time and money. Take that money and use it to fix our aging infrastructure.

          If anyone remembers, Rep. Paul suggested this back in the 80’s because we were “losing the drug war” and my parents and their cohort nearly ripped his throat out. (F&*King hypocrites)

          Chuck Ponzi

          Chuck Ponzi

          1. Chris

            Well, if you *legalize* it, you have to *regulate* it like tobacco.

            Otherwise, you’ll have hemp farms all over the place 🙂

            Plus, that’s how you get a huge tax windfall….regulation.

        2. Henry Bayer

          The argument to win over law enforcement toward legalization is to ask them: When was the last time you had to physically subdue someone guilty of simple marijuana use? Odds are, they never have. Ask them for the last time they had to fight to arrest a drunk, and they will look at their watch.

      2. zubs

        Legalizing pot & taxing it has a two fold benefit for California. The money from taxes, and the money saved per pot prisoner.

    2. lowrydr310

      But if people want to set around, wasting their lives all the time, so be it … knock yourself out.

      But if people want to set around, wasting their lives all the time, so be it … knock yourself out.

      But if people want to set around, wasting their lives all the time, so be it … knock yourself out.

      1. Lee in Irvine

        I completely agree, but come on now. Most of us know people who are pot-heads in 30’s and even 40’s. Pot is the most unmotivating drug on earth.

        “Hey Bud, pass me the Doritos”

        1. lowrydr310

          I don’t use it, and to be honest I’m not quite sure if I support its legalization, but I don’t like stereotypes. I know a lot of the pot heads who behave as you describe, however I know more who are quite the opposite; hard-working productive members of society.

          Compared to alcohol users, the pot smokers don’t cause nearly as many problems. Plenty of seemingly peaceful people get transformed into monsters when under the influence of alcohol, while I have never seen that happen to a pot smoker.

          Wait a minute, what the hell does any of this have to do with Irvine housing?

      2. AZDavidPhx

        That’s un-American. Our daddy in government is supposed to protect us from ourselves.

        Let me ask you this, pro-weeders –

        Just WHO is going to pay for all the extra healthcare that these potheads will need when they develop diabetes from all the extra sugar that they consume from all those brownies? I certainly am not going to pay for their poor judgement!

        This is a very slippery slope that you “personal responsibility” bulls are putting out there.

        The next thing you know, you will be legalizing things like prostitution, gambling, etc and whatever other type of victimless crime you can conjure up!

        1. Chuck Ponzi

          David,

          I won’t disagree with you. I would hope that we could get support for initiatives like we have for the anti-smoking push we have.

          Smoking has declined considerably in the US since that time. Much of it is a cultural shift. It seems to be very effective.

          Go to Europe and it’s like the US in the 70’s and 60’s. Everyone smokes. And dies, and the government pays for their healthcare, and they’re going bankrupt. I’m not making a point, just rambling.

          We would have a lot of savings in many areas by legalizing pot. I wonder out loud if we would squander it like all other windfalls or spend it wisely?

          Education is the key to reducing consumption. Any decriminalization of pot should have that at its core. Teach it in the schools, make it uncool and only the fringe will do it.

        2. tacoshark

          So you want a socialist government to tell you how to live your own life? Its wierd becasue I hear everyone crying about how socialist America has become and then in the same breathe folks want control over others and sign up for their HOA just to do that (HOA’s are roots of socialism in this country).

    3. stevepdx

      The mythical “conservatives” are always nowhere to be found when it hits the fan. All the conservative pundits place the blame on faux conservatives that have ruined the movement. Buck up and take responsibility for the mess your movement has created.

  2. Tim

    Lee,

    I disagree with you, but there is little more that I find distasteful on the internet than political debates in blog comments and message boards.

    Thus, I write merely to note that when you say someone has something wrong, you would do well to make sure that you have it right.

    IR wrote: “With the Conservatives being thrown out of power in Washington”

    Then, you ‘corrected’ him by asserting that he was wrong because: “The conservatives have not been in control in California in a very long time.”

    Take that for what little it’s worth.

    1. Lee in Irvine

      I know what IR was saying …

      IR alluded to lack of power with conservatives (in Washington) as a possible reason to legalize weed. That’s a distraction, and I corrected him … the REAL reason why the state is talking about legalizing weed, is actually because the state in insolvent and they’re looking for another big tax base. Ding ~ “Legalize pot”.

      Why is the state insolvent? Because there’s not balance. It’s run by one political ideology, hellbent on utopia. In fact, we now work for the state.

      Just saying …

      1. IrvineRenter

        Read my comment above. I was referring to the National political scene.

        The “real” reasons for passing any legislation are always complex and always present. Both the reasons and the resistance to these reasons comes and goes with the political winds. The economic justification for taxing pot is becoming more viable at the same time the resistance is evaporating politically. If there is ever a climate where pot might be legalized, it is the current one.

        BTW, I really don’t care. I don’t see myself generating much tax revenue for the State; I would lose my ambition to write for the IHB…

        1. nefron

          Lee, don’t suggest that “hippies” are spending this state into oblivion with some social agenda. Sorry, you’re conveniently forgetting about all of the money that goes into the pockets of fat cat businessmen, farmers, lobbyists and politicians in this state. EVERYBODY has their hand in the taxpayers’ pockets in this state. I just get sick of conservatives with their sense of entitlement to run this country and be in power because they think they know better than anybody else how to run the government, and then be all self-righteous about being self-made millionaries. Yeah, they know how to make money all right – steal it from the middle class and screw everyone else.

          1. AZDavidPhx

            conservatives with their sense of entitlement to run this country and be in power because they think they know better than anybody else

            How can they not know better how to run things? They have God, the bible, Rush Limbaugh, and Sean Hannity telling them how things ought to be.

            People who do not have that kind of foundation to fall back on spend way too much time having to think about things and figure out solutions and conclusions on their own. We don’t have time for that right now. We need unified canned solutions and douchebag radio talk show jockies to lead us from their golden microphones.

          2. Lee in Irvine

            Lee, don’t suggest that “hippies” are spending this state into oblivion with some social agenda

            And why T-F not? Hate to tell you this, but that’s exactly what the hippies are doing in Sacramento.

            BTW, I don’t care about the poli-ticks … I care about getting business done … smart efficient business. I think too many people vote with their hearts, instead of their brains … that’s how we got a C-student president from Texas.

          3. Jwinston2

            “I just get sick of conservatives with their sense of entitlement to run this country and be in power because they think they know better than anybody else how to run the government,…”

            Contrary to liberals not believing they are entitled? How about I am sick of everyone thinking they are entitled.

            You suggest that social agendas are not the cause of many of our current state insolvency issues but I see a lack of evidence supporting this statement. Do you have evidence that suggest that this is not the case?

          4. AZDavidPhx

            I think that there is a point with the conservatives being more guilty at the moment.

            Look at the arm-chair generals who have been posturing all this “secession” mumbo jumbo. It’s definitely the conservative side that is spewing it and it rings a tone of whom they feel is entitled to rule.

          5. Jwinston2

            Secession means “conservatives with their sense of entitlement to run this country and be in power because they think they know better than anybody else how to run the government?”

            I am sorry but I do not follow how this makes conservatives guiltier? Both sides have felt entitled along with the population; neither is more or less responsible for this mess unless you really believe that ones excrement smells like roses.

    1. Architect Dave

      My guess is more toward the “having them forgiven” idea… but then again, once your bookie cuts you off, somehow the money you owe him finds its way into his hands thru any means possible! Forced frugality!

    2. AZDavidPhx

      The banks are circling the wagons and slashing credit lines before people get a chance to spend them up and default.

      I’ve heard that credit card companies are dropping limits below a person’s balance and then raping them with ‘Over Limit Fees’.

      1. Hank

        I can confirm that – Bank of America has done that to me. I am currently in the process of paying it all off (it should be zero by now) and will inform them to close my account as I now intend to never, ever do business with those (CENSORED) ever again!

      2. Passerby

        Agreed. BofA just lowered the available credit on a card of mine by over $20K. I don’t even carry a balance from month to month and I have no outstanding debt.

        A friend is in the Over Limit Fee mess you described. Mortgage is eating them alive and they are already living on their credit cards. Ouch.

      3. Gemina13

        Too true. Bank of America did that with my credit card, and I got the letter informing me of their decision three days later. It was supposed to be my only credit card. Now, when I pay it off completely and shred it, it will become the last credit card I owned.

      4. Henry Bayer

        If the interest rate is too high and you can live without further borrowing, follow my girlfriends experience: She called the bank, turned on the sob story and the water works. They converted her to a 5 year fixed interest loan at 4 percent in return for canceling her card. Worked with two banks.

        1. Hank

          Actually, most banks and credit unions should have this option available. It’s called a credit card consolidation loan. Also, if you’ve got a 401K with a loan option (and a stable job) you can pull a loan out, pay off your credit card and pay the interest on the loan to yourself. It will be more than any fund out there is paying. Take that, BoA!

          1. zubs

            according to the bank stress test, BoA is the biggest loser out of the 19 banks requiring over 30 billion dollars. Ofcourse your credit limits got cut.

      5. OrangeTimes

        Same here.

        BoA reduced my credit limit from 15K to 8K saying that ‘based on history of card use, i may not need that high limit’. Based on history they should have gone to zero as i never use their card and will not use in future.

      6. WaitingToBuyByAndBy

        My wife and I have FICO scores of 789 and 790 and Bank of America recently sent us a “Changes to the terms of your agreement” that ups the variable interest rate from 8.75% to 14.something. We declined the terms and canceled the card.

        I’m going to look into the credit card consolidation mentioned above. Thanks!

        By the way, when I got my first real credit card, I always thought that if I closed the account, I’d have to repay the total amount right then and there. If you are one of those people that thinks that, call your credit card company. They will probably tell you that closing your account simply means you can no longer use it for purchases. Everything else stays the same (monthly payment, late fees, etc.)

    3. Blueberry Pie

      I got a letter from the IRS the other day. It says I owe $900 from 2007 due to a $3000 forgiven debt. (I’m honestly not even sure what that’s for, so I’m going to dispute it.)

      My point is that it looks like there are definitely going to be some people getting some nice tax bills from their forgiven debts on their foreclosed houses.

    4. Chris

      Well, let’s see how this will help the economy. We had a kool-aid mentality on credit back in the last few years. So far, job losses and bank cakewalk….ummm….sorry….I meant stress test looked pretty promising.

      Last month, job losses were at 539k. So expectation in May would be less than that figure. I doubt it’ll be less but we’ll see.

  3. IrvineRenter

    Paul Krugman telling it like it is:

    Stressing the Positive

    “What we’re really seeing here is a decision on the part of President Obama and his officials to muddle through the financial crisis, hoping that the banks can earn their way back to health.”

    1. AZDavidPhx

      What we are seeing is a complete joke; I recall predicting before the election that Obama was going to be just as worthless on economic policy as the previous gang of hooligans and so far I have been proven 100% right.

      We have business as usual, just with a new “more likeable” guy.

      In terms of rhetoric, Obama kisses our ass with sympathy and populism; he tells us how “choked up with anger” he is over bonuses, and we all wolf it down like a freshly fried batch of KFC.

      Then when it comes to actually doing something, we get a complete lather, rinse, repeat over the last administration with the same old shell games and malarky to bamboozle us in order to maintain the status quo for their masters.

      I have not seen a single policy that differs from what I would have seen from the last crowd who was in charge. Sure, they put on a little dog and pony show for us and promised to tax away all those bonuses – but big deal; that is just populism.

      I am talking about real policy like telling people to stop being pigs. Telling people to learn to live with less and save more. Telling people to think wisely before going into debt. I’m talking about curtailing the gambling mentality of the pricks on Wall St and banking executives and letting them earn a normal salary like everyone else and stop treating them like superstars.

      Everyone is still too big to fail.

      Fauxhomeowners are still “victims”.

      Personal responsibilty is still shirked and favor of relying on big brother to look out for you.

      They are trying to manipulate us into continuing a debt-consumption lifestyles by buying overpriced housing and vehicles.

      I have said from the very beginning – if the banks are so screwed and need capital then maybe they should trying giving people some incentive to save money like paying more than a piddly 0.995% interest on a money market account or certificate of deposit. But no, it’s much easier to go to the government t*t and cry for more milk.

      But boy oh boy did we sure show those Republicans who their daddy is! We tossed them out into the doghouse and asked them how they liked them apples! All the while, a new band of crooks took their place while “we the people” celebrate our Democratic triumph.

      Yay.

      1. Lee in Irvine

        Washington and Sacramento corrupt people. The best answer is to make sure you vote against all incumbents during every election cycle.

        If it were up to me, it would be ONE term for all politicians, and then your (fat) ass would be out of there. No more of this setting up business in jeri-rigged congressional seats, kissing babies in the front door, then paying off buddies in the back door.

      2. AVRenter

        Boy do I get all hot-and-bothered when AZD starts talking about buckets of KFC. Push me over the top and throw in some “drool” and “slobber”, AZD.

        1. AZDavidPhx

          LOL

          Haven’t you ever heard the phrase “Always leave them wanting more?”

      3. Major Schadenfreude

        “All the while, a new band of crooks took their place while “we the people” celebrate our Democratic triumph.”

        Of course there hasn’t been any shift in policy.

        The same people are in power: The banks!

  4. AZDavidPhx

    I got a laugh out of the “EXCELLENT FOR
    WATCHING YOUR CHILDREN PLAY” sales pitch.

    I guess the listing agent thinks that a 1100 square foot condo is an ideal place to raise a family.

    1. Dave

      And the family can also enjoy the great air quality, seeing how it’s right next to the 405 freeway…

      1. Geotpf

        The closeness to the freeway is a much worse problem than the fact it’s 1,100 square feet.

    2. Chuck in Newport

      I was bothered by the suggestion that it’s OK to let your kids run wild outside in a next-door park (and swimming pool? alone? Or a lake?) while you’re inside the house doing other things, but (I guess) can glance at them occasionally through a window. No knock on Irvine or this place, but is anywhere really THAT safe? In this day and age, is anyone really going to bite on that as a selling point for a place to live? Maybe Mayberry RFD was such a place?

      1. Sue in Irvine

        Those condos are right across the street from a large park and a life guarded pool. Kids can get in the pool alone with a Woodbridge Assoc pass if they are over a certain age, maybe 10. It’s a fairly nice and safe area. It’s very popular in the summer. But, those condos are old and basically look like apartments. The rest of the neighborhood are houses and some townhouses. My townhouse is about 1/2 mile from here. The lake and lagoon are about a mile away.

      2. Emily

        Get a grip. Lots more children are killed as passengers in cars than are killed playing in the park next door. Going outside and playing is actually a good, healthy things for children to do.

        1. Chuck in Newport

          Glad I didn’t have you as my parent, Ms. laissez-faire. No one would ever argue that “going outside and playing” is not “healthy and good” in and of itself, nor did I. Go ahead and risk your children’s life, but I for one am glad you weren’t parenting me.

          1. AZDavidPhx

            Chuck – you are way off on this one. Think about the lawsuits that you can file when your little crumb-snatcher gets creamed by an Escalade while running across the street?

            Living in Irvine, you know that the odds are pretty good that the person who runs you over has something worth going after.

            When you are done bankrupting the driver and collecting all their toys, you can go after the city for not having appropriate signage or crosswalks. Figure that you can sue the city for 100 million dollars and then round up an inept jury and ask them to compromise by finding Irvine 10% at fault (that’s fair isn’t it? Just a measily 10 percent, come on); collect your 10 million and call it a day.

            The possibilities are endless. Stop trying to enforce your morals on the rest of us.

            Let the children be!

          2. camsavem

            You don’t know anything about her, all she said was playing outside was good and you refer to her as a bad parent?

            I guess if you lived in Midway City, your screen name would be “Chuck in Midway City”, LOL

            You couldn’t pay me to live in Newport Beach.

          3. Chuck in Newport

            You missed it as well. Playing outside is fine. Re-read what I said. And her saying “get a grip” did challenge me to set it straight about avoidabl risks, at least in my opinion. And finally, if you don’t want to live here, please don’t. Find somewhere you like.

          4. Chuck in Newport

            Thanks David. Absolutely right. Iwish things like that didn’t get to me – -I forget that the rules for most people on blogs are: well, no decorum or civility required.

          5. camsavem

            Because someone says “get a grip” you can insinuate that they are a bad parent?

            How are they even related to each other?

            It is easy to see by your statements that you are an alarmist so I think saying “get a grip” is an appropriate reply.

            Still not sure about how “get a grip” has anything to do with you calling her names, saying she is “putting her children at risk” and twice saying you are glad she was not your parent.

            So please enlighten us all to the risks of “children playing outside”

          6. camsavem

            LOL, you called her names, said she was a bad parent and are playing it like you “took the high road” LMAO

            Everything is better in Newport.

        2. Gemina13

          No joke. I used to skate around the neighborhood, walk to the grocery store several blocks away, and my school “commute” was often an 8-block walk. I grew up in Chicago, so that “commute” often included walking along snow-buried sidewalks. Somehow, I survived. Hoocoodanode?

          Now kids can’t do anything or go anywhere unless they’re shipped by SUV or watched over 24/7 by overanxious parents. I pity them; they’re losing out on the best part of childhood–getting out of the parental cocoon and learning to do things for themselves.

      3. camsavem

        Whatever dude, why would that bother you? You never played outside at any age growing up without being watched over?

        Run wild?
        In this day and age? LOL

        I cant go outside because of the evil strangers, the pollution from the freeway, the killer rays from the sun, the swine flu, the bird flu, SARS, other kids with germs, lead paint, unsafe tap water,peanuts, trans fat,on and on and on.

        Not sure how we all survived the 70’s.

    3. Emily

      I don’t know what the agent thinks, but 1100 square feet right next door to a park doesn’t seem like an impossible place to raise a family to me. We can’t all have 5,000 square feet on an acre lot, you know.

      1. AZDavidPhx

        We can’t all have 5,000 square feet on an acre lot, you know.

        Definitely not if you choose to live in an area with artificially inflated housing costs.

        I didn’t say it was impossible. I just said it wasn’t exactly ideal. The listing agent used the word “EXCELLENT” in the description regarding those who have kids. If I had kids, I wouldn’t walk into this apartment and be immediately overcome with ideas like “THIS IS PERFECT FOR US! THERE IS A PARK OVER THERE”.

        1. Gemina13

          Not to mention that, at 1100 sq. ft., you don’t have to ask if the bedrooms come with walk-in closets. The bedrooms ARE the closets. If you can fit one person and a dog inside one, good luck.

          In college, I shared a 600 sq. ft. apartment with three friends. It had two bedrooms, one bathroom, a “living room”, and a kitchen. In six months we were ready to kill each other. With a family of three or four adults, 1100 sq. ft. is just bearable–but if two members of the family are juveniles or teenagers, good God, what a nightmare. The only way this condo is “good for families” would be if that family was made up of two humans and a pet.

          1. camsavem

            Amazing. I grew up with a family of 4 in a 900 SF 2/1 in Torrance. Sure we had to wait for bathroom time etc., but I never gave anything else a second thought.

            To hear everyone talk these days we were white trash, living in a shit hole and should be upset that we didn’t have more money and space.

            Me and my brother used to spend our days at the park, riding out bikes and playing UNSUPERVISED sports. In the summer time we would take the bus or ride our bikes to the beach ALL BY OURSELVES and spend the entire day there.

            How the hell did we ever survive? Not once did we get kidnapped, raped or beat up.

            Nothing but good, fun memories, I can’t imagine not having those experiences growing up.

          2. Geotpf

            Um, 600 is about half of 1100. If you stuck eight people in this condo (twice what you did in 600 sq ft), it would suck as well. But it would be fine for four (husband, wife, two kids).

            As long as each kid has their own bedroom, they will be okay. It’s when you get two kids sharing one bedroom that you’ve gone too far.

            I should note that here in Riverside, 1,100 is typical for an older 3 bedroom, 2 bath place-although those are houses, usually with large yards (although the park in this case is a decent substitute). There are tens of thousands of these things here. I’ve seen 3 bedroom houses with as little as 900 sq ft, and then you are getting into the “the bedroom is also the closet” sort of thing. But 1,100 is fine.

          3. AZDavidPhx

            camsavem –

            I think that you are reading into it a little too much.

            Nobody is calling you anything or degrading anyone.

            It’s a completely different time in the present; look at all the massive overbuilding that has been done over the last 20 years of larger and larger houses. There is way more selection available today.

            The point is why would this 1100 SQ FT apartment be IDEAL when 1500 SQ to 2000 SQ FT detached houses are a dime a dozen?

          4. camsavem

            Perhaps, but I am also stating another opinion. When you take the “price” out of the equation (because everything is overpriced) what is an appropriate amount of space for a small family? I bothers me when people make comments like “only a fmaily of hobits would be happy there” etc., because there are many people that would love to have a lot of these places.

            I guess on a personal level, I find it rather shallow to equate happiness with the amount of living space, car you drive etc., Don’t get me wrong, no one wants to live in a one room mud hut without basic utilities, but these places are a far cry from that.

            They are also in a very nice city, with good schools and virtually no crime. I think for 95% of the worlds population all of these places would be an upgrade.

            Just trying to add some perspective.

          5. Geotpf

            It’s ideal if you can’t afford the larger house.

            (Well, ignoring the freeway a football field’s worth away.)

          6. AVRenter

            As a hobbit myself I find it particularly offensive that anyone would say I would be happy in this dump.

          7. camsavem

            It was funny until you called someones home a “dump”. Would you really say that? Seriously, if a freind of yours lived there, you would call there house a “dump” in a public place?

            Wow, you must be special.

          8. Gemina13

            I grew up in 900 sq. ft. apartments, but it was just my mother and myself. We weren’t middle-class either; Mom worked in plating factories and machine shops until her eyesight went kablooey. And she loved to take people in. She liked the extra company. It drove me nuts.

            I could handle 900 sq. ft. by myself. But I’m not keen on living with other people. And yes, we spent loads of time outside; I went skating, swimming, and walked to the library or mall in the summer when I didn’t have a summer job.

            So for me, it’s not about being too poor to afford the space. It’s about going out of my everloving mind if I have to share too much of it.

          9. AVRenter

            No, it was funny after that too. The subtlety of it just went over your head, which is amazing considering how high your pulpit is.

      2. wheresthebeef

        I think our new generation is still confused about the adequate square footage to house and raise a family. My old place in Huntington Beach had barely 1500 sq ft. (4 small bedrooms). However, you could comfortably raise a family with 2 to 3 kids there. I remember growing up in several apartments…I never once thought that we were living inadequately.

        That’s one thing that got us into this mess. Every young family thinks they need 2500+ sq ft to raise a family. People do just fine with half that.

      3. Geotpf

        I agree. 1,100 square feet in a 3 bed/2 bath is enough to raise up to two kids, IMHO. Three kids or more is probably pushing it, though.

  5. cara

    From the other “Lake Forest” i.e. north shore chicago:

    (see patrick dot net for the link, askimet didn’t like me linking it here)

    Debi, a Lake Bluff resident and real estate agent who preferred her last name not be included in this article, has experienced the steps that lead to foreclosure firsthand. She bought her brick ranch home in 2003 with 5 percent down and renovated it with about $100,000. “Then the real estate market was escalating. So this was like part of my retirement plan,” she says. Then in 2006, she saw a slowdown in her industry and decided to sell her home. She started with an asking price of $599,000. But it didn’t sell. So she kept reducing it.

    Meanwhile, her income dramatically declined, from six figures in 2005 down to around $20,000 in 2007. Then in the spring of 2008, her three-year adjustable-rate-mortgage payments increased by $1,000. “So here I am then by July going, ‘OK, I’m done. I can’t make my mortgage payments,'” she recalls. In October, she received a foreclosure notice. Now the house is on the market for $435,000. If she sold it at that price, she could pay off her two mortgages and break even.

    As Debi lowered and lowered the price on her home, she started to fret about the value of her neighbors’ homes. “They’re going to kill me for reducing the price of my house again,” she worried. But fortunately, her neighbors have shown only compassion.

      1. Major Schadenfreude

        LOL! Love it! The smiling unicorn, pretty realtor cheerleader, the joker…just hilarious!

      2. Chris

        Ask Benny boy for help. He seems to be pretty good at throwing trillions of worthless Washingtons down the drain.

  6. Mitoman

    If I rent all 3 rooms out, I would probably get $2000 a month. HoA + Monthly burn will still eat me alive without living in it. I still dont think this one is worth it, if it drops to $200,000, then I might be interested in buying it.

    1. newbie2008

      You’re using the more traditional appoarch to value a property. The traditional approach used net rent (after property, taxes and insurance) as a quick rule of thumb.

      A foreclosure proof location is where all homes are owned free and clear. Only foreclosure will be tax foreclosures.

      Times have changes, I grew up in L.A. burbs becasue it was cheaper than the city. Played in the swamps across the street. That’s before they were called wetlands. No old trees. Most people had 5 or 6 people in a 1400 sf 3 bedroom house. No one was scarred by living in a small house.

  7. ockurt

    Beware Crisis’ Next Wave: Option ARM Foreclosures, More Debt Defaults
    Posted May 08, 2009 01:15pm EDT by Aaron Task

    Along with the reaction to the stress tests, the upbeat response to Friday’s jobs report is evidence of our collective “disaster fatigue,” says William Black, an Associate Professor of Economics and Law at the University of Missouri – Kansas City. “Every day is bringing a disaster. [539,000] jobs lost is a catastrophe but now we think ‘that’s not so bad.'”

    An optimist would say Black is missing the improving trend in the labor market: Although the unemployment rate rose to 8.9%, its highest level since 1983, April’s 539,000 job loss was the smallest since October and compares favorably to March’s decline of 699,000, February’s 681,000 (both revised) and January’s 741,000.

    But Black’s point is the improvements are, if not illusory, then certainly transitory. He foresees bad loan “shoes yet to drop” that will be like “Imelda Marcos’ closet in an earthquake”:

    Commercial Real Estate: This is already on Wall Street’s radar screen but future losses could account for a big chunk of the government’s stress test estimate of $599 billion of future bank losses.
    Option ARMs: These “pick-a-payment” mortgages will lead to “waves of foreclosures” starting next year in the “hundreds of billions of dollars,” he predicts.
    Credit Card Debt: With unemployment rising and home equity loans unavailable to most Americans, this is a “major problem that’s going to take down major lenders,” he says

      1. Bitter Renter

        Nice to see a recently produced graph on Option ARM recasts — would be great if someone would produce one for O.C.

  8. ockurt

    From the OC Register (gasp!)

    Realtors see ballooning Calif. house-price drops

    May 8th, 2009

    The California Association of Realtors’ housing forecast now calls for a 28.4% drop in the median price of a California house.

    That compares to a projected drop of just 6% originally expected when the association first unveiled its 2009 forecast in October.

    In its revised forecast, the association predicts that:

    The median house price will fall to $248,000 in 2009. In October, CAR expected the price to fall only to $358,000. The projected drop comes on top of a 38% price decline in 2008, when the median fell to $346,400, down from $560,300 the year before.

    House sales, however, are projected to be much better than expected back in October, with 550,000 houses sold statewide this year.
    That would be a 25% increase from 2008, when 439,800 houses sold.

    The revised sales outlook is pretty good considering that the state was down to 347,000 sales a year in 2007.

    The 550,000 sales is revised from an earlier projection of 445,000 houses sold.

    1. AZDavidPhx

      Who is going to be snapping up all these houses if CA can’t fix its unemployment conundrum?

    2. Blueberry Pie

      Even CAR is expecting to prices to drop further than previously estimated?

      Does that mean the median will even drop lower than their predicted number? Wow.

      1. ockurt

        That’s especially bearish considering who it’s coming from…I hope it doesn’t get that bad…

    1. AZDavidPhx

      That story is linked on Patrick.net today.

      The author is tool and self-aggrandizing ad nauseum; a legend in his own mind. There is nothing romantic about being a programmer at all.

      The software to slice and dice the mortgages could have been done by any half-competent programmer. I’m sure that he was surrounded by financial voodoo experts who fed him all the information that he just turned around and modeled in computer code.

      I definitely agree – he was at the right place and time. Enjoy your lotto winnings and have fun farming your oysters.

    2. thrifty

      Regardless of the motivations of the author, this article explains very well and in lay terms the origins and unfolding of the mortgage mess we find ourselves in now. About a 15 minute read and worth every minute.

  9. WaitingToBuyByAndBy

    IrvineRenter: “What is the deal with “W/”? This abbreviation—which isn’t proper—saves exactly two characters.”

    You are correct the abbreviation saves but two characters. However, consider the frequency of use. The abbreviation was used three times, that saves 6 letters.

    True it is not classy to use abbreviations in a written description, but depending on the context, can be efficient.

    It makes me wonder though, how long until we see a text message listing (to conserve space).

    Imagine:

    OMG! RARE FIND! GR8 PNRMC PRK VIEW! ACROSS FM BEUT PRK &SWM; PL. CLS 2 LK. EX 4 WTCHNG UR CHLDRN PLY. GND LVL W/WRP BCKYRD W/PATIO. HM IS DA BOMB W/NW CABS & CNTRS. UPGDD CRPT & BEUT CLNG FN IN DNG RM. VRY CLN. MST SEE!

    Alright, so I don’t really know how to text, maybe somebody can do it better. With the kind of education level representative of realtors, I predict txt-listings are just a matter of time.

    1. Bitter Renter

      Ouch, that text-speak listing really hurt. Whenever I see “the kids these days” posting that way on Internet forums or other places where there’s no 160-character limit making it a reasonable thing to do, I fear for the future a little.

      IR, not sure what you mean about “w/” not being a “proper” abbreviation. “w/” for “with” and “w/o” for “without” are certainly quite standard, and I thought they originally came from shorthand.

      Thanks for the interesting links about state and federal takes on marijuana legalization — pity that Obama isn’t as open-minded as Schwartzenegger and went on record as saying he thinks it’s a bad idea, rather than one that deserves to be debated.

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