Can the zealots of Irvine support house prices throughout this crash? Can the belief in price crash immunity be a self-fulfilling prophecy?
Asking Price: $499,000
Address: 43 Leucadia #76 Irvine, CA 92602
Whats the use in tryin?
All you get is pain.
When I needed sunshine I got rain.
I’m a Believer — The Monkees
Kool aid intoxication is a religious dogma, and many people are Losing Their Religion (great post from last year).
People who are buying in today’s market in Irvine are paying more to own a house than it costs to rent it. This has been the case since the turn of the millennium, and few people outside the readership of this blog think that will ever change. Why do they believe that? And why do we believe prices will get so low that renting is more more expensive than owning? It it all a matter of faith?
Historically, when prices crash, they fall until it is cheaper to own than to rent because there is no speculative investment value in an asset with a declining price; therefore, there is no real reason to buy until ownership saves you money over renting — unless you believe the market has bottomed. This fact keeps would-be buyers on the sidelines until prices are reasonable. This phenomenon has happened in the two previous busts, but without the fanfare of a blog like this one.
There are two features of this bust that are different than the last one that may have an impact on prices: (1) the strength of the kool aid, and (2) the internet providing greater access to information.
Since there were so many people that were so rewarded by owning houses during the bubble, there are still large numbers of people in the market that will pay nearly any price to own. These are the knife catchers buying homes on faith — faith that appreciation will return. If there are enough of these people, it may become a self-fulfilling prophesy. If the past is any indicator of the future, the kool aid intoxicated will be the knife catchers providing liquidity on the way to the bottom.
The other big change this time around is the presence of blogs like this one to serve as a voice of reason in a kool aid intoxicated world. By presenting history, reason, fact-based arguments and a conceptual framework for understanding how and why prices rise and fall, the readers here have guidelines that will help them establish what reasonable valuations are when when house prices are approaching that range of bottoming values. In the past, this information was not widely available.
Will either of these differences impact the market? I doubt it; the housing market is much too large. If house prices do not reach rental parity across Irvine, many will claim it is because Irvine is so desirable that houses here represent a “reservoir of value.” The reality is that this reservoir is akin to a Holy Grail; it is an ordinary cup given special significance due to the faithful.
Our house prices are being supported by the zeal of Irvine buyers. Are there enough of them to sustain the market indefinitely? I doubt it.
Asking Price: $499,000
Income Requirement: $124,750
Downpayment Needed: $99,800
Purchase Price: $520,000
Purchase Date: 12/1/2003
Address: 43 Leucadia #76 Irvine, CA 92602
| Beds: | 3 |
| Baths: | 3 |
| Sq. Ft.: | 1,826 |
| $/Sq. Ft.: | $273 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Other |
| Stories: | 2 |
| Floor: | 2 |
| View: | Park or Green Belt |
| Year Built: | 2002 |
| Community: | Northpark |
| County: | Orange |
| MLS#: | P692169 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 15 days |
and spacious 3 Bedrooms, 3 Full Bath, 2 Attached Garage W/ Extra
Storage Space. Main Floor Bedroom W/ One Full Bath. Master Bedroom Has
Walk-In Closet W/ Huge Bathroom.Many Upgardes, Built -In Entertainment
Center. Just Steps To Elementry School & Beckman Highschool and
very close to freeway.
Did the realtor use enough asterisks?
- This property was purchased on 12/1/2003 for $520,000. The owner used a $389,925 first mortgage, a $77,985 second mortgage, and a $52,090 downpayment.
- On 11/2/2004 he opened a HELOC for $145,000.
- On 4/15/2005 he refinanced with a $487,500 Option ARM with a 1.25% teaser rate.
- On 6/24/2005 he opened a HELOC for $102,900.
- Total property debt is $590,400 if he maxed the HELOC.
- Total mortgage equity withdrawal is $122,490.
- In late 2008, he stopped paying on his mortgage.
Foreclosure Record
Recording Date: 03/16/2009
Document Type: Notice of Default
Document #: 2009000121341
If this owner did max out the HELOC, if this sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $121,340.
This is another 2003 Rollback.
If an area is that valuable, rents would rise too. Rents in Manhattan are outrageous, but demand for housing there is outrageous too.
I wonder why people refi into option arms. Is it because they were stretched initially and it makes the payment manageable, or could they afford initially but just want more disposable income.
Winstongator:
While both your guesses are plausible reasons, I also believe it is a result of making easy money available. “If it’s there for the taking, why not me get some too?”
I think the “because it’s there to have” covers it. Maybe even some people intended to invest it at 20+% return since the stock market was also going up steadily, and multiply the wealth seemingly coming from house appreciation even farther.
In reality it was just too easy and tempting to spend it and have it all right away.
I have friends with large student loans at 3-5%. They held a similar idea, but were even more ‘conservative’. If you can make 8% in the market why not skim the difference. I explained to my wife that you’re making yourself a bank in that case and we have no expertise in banking. In hindsight mayber our expertise wouldn’t have been that bad.
REFI into option arm so that debtor can hold on to the property long enough for appreciation and a greater fool to buy from him.
It’s kicking the can down the road and hoping prices are up by the time it’s time to pay the piper, much like what the government is doing now.
You also have to account for income. You can’t borrow money to rent.
Oopsy, article today in OC Register: PMI (the people who write private mortgage insurance) give Orange County a 99.9% chance of lower prices in one year. I guess today’s buyers are betting hundreds of thousands on that other 0.1% chance. Why not just put it all on the roulette wheel – the odds are MUCH, MUCH better.
Elementry ?
Nice catch. I missed that one.
What kind of educational background do these realtors have? IR, maybe that’s an idea for a future blog. I feel this is worth investigating. The realtors want us to believe their prognostications – I’d like to know their qualifications to decide how much faith to have in them.
I don’t think that the typos are necessarily a reflection of the listing agent’s educational background.
I’d say it is more of a being lazy problem. The listing agent is rushing and hastily cranking out a shallow description that has been not been proof-read or spell-checked because they most likely figure “Why bother – nobody buys a house based on a description anyway”.
I can see why it happens, but the problem is that it conveys a message that is contradictory to all of their fluff and self-promotion garbage that they publish alongside their glamour shot photographs. “You want me to be your realtor because I am all about looking out for you! I love my clients, take such good care of them, look out for their best interests, and kiss kiss kiss, love love love, SMOOCH SMOOCH SMOOCH”.
All that lovey dovey stuff they fill their profiles with sounds great until you see that listing description and you realize that your house is just one of many on their list and they really don’t have time to go and do all that extra-mile-customer-loving hanky-panky that they proclaim.
How many properties would an “average” real estate agent list under his name at any given time?
“Huge Bathroom.Many Upgardes”
These realtors don’t even know how to put punctuations correctly and they are selling 1/2 mil homes and pocketing the commission. Alas I should not have spent 6 years in college. All I have is an apartment to rent and a 10 year old car to drive…
Question,
How do you/where do you look find all the info on the past mortgages that people took out on these properties to know how much they were pulling out? Is this public information, or something that one must subscribe to?
Highschool ?
On the way down, one of the most important beliefs is whether prices will continue dropping quickly. If a home goes cashflow positive, but buyers believe prices are dropping by more than about 5-8% per year, they will typically wait.
That is why I think you will see policies over the next couple of years which aren’t quite designed to support prices in general, but rather are there to either: make people believe prices can’t keep going down (even though they can), or to actually do something different with prices below that level.
The doing something different could be different policy on taxes, subsidies, loans, etc. I’m also investigating whether there should be land-banking policies. If prices drop far below cashflow equilibrium in a given location, I am unsure if it pays to have the Federal govt subsidize banks to use them as rentals for a few years. Because so much of the supply in that kind of market will be bank-owned, it might actually help.
I am observing the “wait for a bigger drop” psychology right now. I just did an analysis on 3 properties located in Costa Mesa and Tustin. All three SFDs offered for sale at 10% under rental parity. In a normal market, this is as low as they would go; however, in our market of artificially low interest rates and an overhang of REOs, these probably will go lower. The belief that prices will overshoot to the downside is warranted; prices will overshoot to the downside in many locations.
In areas where there is a severe imbalance of supply and demand, I think we will see some government policies to encourage occupancy to stop blight, but I also think you will see bulk REO sales to investors who will clean up the mess. For instance, I read that in Lancaster there were about 600 sales this year, mostly at giveaway prices; there are 7,500 REOs in the pipeline. What do you do when there is a 12-year supply coming on the market?
I think the solution is probably some combination of government and private parties. The government can do downpayment assistance, rent-to-own programs, low-income housing, and other programs to put people in these homes. The private sector can buy these properties in bulk (for about 10 cents on a dollar), and hold them indefinitely. As long as they are occupied and positively cashflowing (the property management will be expensive), there is no need for the bulk REO owner to sell, so the market should stabilize and the neighborhoods will not turn to dust.
I don’t know what role the lenders can play. They need to get these assets off their books, and unless they are going to be allowed to form an SIV to hold these assets off balance sheet, I don’t know how they enter the real estate business long term.
No matter what happens, in markets like the high desert where there is a severe imbalance between supply and demand, prices will not appreciate until the excess supply is worked off. It will take at least a decade and probably two decades to clear out this inventory. The eastern fringe of Riverside county will face the same issue, but they may work off the inventory a bit faster — a bit meaning 10 years rather than 20.
An investor still may wait. There are vacancies, bad tenants cost and change of market to consider.
With high taxes, HOA and insurance, the joys of ownership gets old fast with no renter or get old very fast with a bad tentant. It can be a money pit. One friend rented to a professional bad tentant.
The Federal govt is still trying to get the “bad assets” off bank books. They think the assets are bad mortgages, CDOs, etc. If you start to think of an empty home as a bad asset, you do more to reduce collateral damage.
There are some other considerations. In many areas, there are enough jobs and real estate is too expensive. In others, there are far too many homes for the number of jobs.
IR, show me the Costa Mesa numbers. I don’t believe them.
Or is it one of those cruddy condos in South Coast Metro?
I love the morning. It’s very quiet.
Can we have a troll-free day please?
180+ comments is a lot to read through.
If you don’t find the trolling entertaining, don’t respond to any of the comments. As long as she/he gets a reaction, more comments will surely follow. I found the comments hilarious yesterday, but then again, I do not believe a word of what was written….
Agreed on all counts. Very very entertaining (Kirk-like as you pointed out).
Wasn’t “Nancy” an old flame of Dr. McCoy’s, who was impersonated by the salt vampire, on Star Trek? Perhaps this annoying person is a fan, if he/she/it is a single entity.
Kirk…Nancy…Blalok?
You are a hardcore Star Trek fan. Yes, Nancy was the love of Dr. McCoy’s life who was impersonated by a salt-eating monster in The Man Trap. You just reminded me of what a geek I am. Thanks a lot.
Where’s Nancy? Has she/he been banned?
The excess loans were like Nancy in Star Trek.
Worked to deceive people based on old memories and emotions, miss-information, false connections to pleasing events (home and money). feed upon (debtor indentured servitute or slavery) and then death (in this case financial ruin).
Ant and Grasshopper story has changed.
So have the stories and lessons on the Sirens, Merimaids, Vampires ….
Evil is good and kind. Virtue is abhorant and for losers.
Latest RE radio commerical are describing first time house buying as if it were the first born child. Remember RE prices have reached the bottom. The stock market will rebound in the end of 2009. Why aren’t CDS issued for “buyer” who drank the Kool-Aid.
Kirk was much more entertaining than Nancy.
Reminded me of an old radio program (think it was on KFI) where the guy had a million different voices and played several roles in the same interview. Listeners would go nuts and call in screaming about it. He was equally good in both male and female roles. Hysterical!
You’re thinking of Phil Hendrie (link on this post goes to his site). I used to listen to him when I lived in Los Angeles. Hilarious.
If you don’t find the trolling entertaining, don’t respond to any of the comments
I was thinking this yesterday as it seemed like one after the other were stepping out of the woodwork to take the bait and actually debate the person.
The first day was fine, but it’s pretty clear at this point that the person is just getting his jollies off by being able to act out his narcissistic personality disorder in a “safe” anonymous environment.
Somehow there’s a way to connect your statement with Nazi Germany, but I can’t think of one at the moment.
I’ll ask my Chinese neighbors who just bought the house next door. Maybe they’ll know. Their kids are super academic smarties. They’re really good at math.
[Ducks head back behind barrier, puts fingers in ears…]
You may have seen this video, but it indicates just how stupid (or a liar), the nations chief banker is.
And to think … this is the man that’s responsible for subsidizing mortgages, buying shitty assets from foolish risk takers (aka banks), and devaluing the nations currency. All at the expense of future taxpayers.
“devaluing the nations currency”
That’s the Fed’s attempt and a bad one if I might add.
Take a look at Japan and the Yen.
There were more credits being created in USD and Yen before the crisis. When the credits unwind (i.e. shrinking the balance sheet), the debtors need to pay the creditors in their respective denominations and the printing press isn’t that great in making excessive bills (I read an article somewhere that only 5% of the total USD paper money printed are for new circulation).
The more the Fed tries to devalue, the more USD will resist going down.
The return of CDO.
bloomberg is declaring that wall street is back at it again. Irvine renter seems like banks have already issued over 2billion in debt compared to 5.8billion for all of last year. will this ever end?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aeTzfvEedKpQ
JMHO ~ It ain’t gonna return to the levels it was in the past, mainly because investors don’t trust proven liars anymore. That includes WS Banks, Credit Rating Agencies, The Federal Reserve, and originators of Credit Default Swaps to pay claims. The entire mess was nothing more than a giant Ponzi scheme, full of shifting paper, and perceived hedges. A big lie.
I love the different decorating tastes that we are exposed to by looking at listing photos. That is one bizarre sculpture in the living room. If I didn’t know any better, I would think it was a giant-sized replica of something my cat leaves in the litter box.
Oh my…
http://media.cdn-redfin.com/photo/46/bigphoto/169/P692169_3_0.jpg
WTF is that?
If I know my art, that “piece” is called Headupus Rectimus. It was done by the renaissance sculptor Realtorissimo circa 2006 AD. Timeless.
LOL! I kept seeing some kind of yoga position, but now that I read your description, it all makes perfect sense.
If you think the art work in the Irvine house is bad, check out this link to a place in East Hampton NY:
http://www.sothebyshomes.com/hamptons/sales/0043862#
YIKES!
It’s just a meteor that landed in the living room next to the couch; happens all the time. My sense of style tells me that Iridium counter tops are going to be the next big thing.
It would be a crying shame if someone were to Photoshop that into some derisive collage. Yes Sir, that would be terrible if that happened.
Here:
http://www.crackthecode.us/images/Irvine_Meteor.jpg
What, no elephant standing over it?
http://riverdaughter.files.wordpress.com/2008/11/elephant20shit1.jpg
That’s funny – I like the feet sticking out from the bottom of the pile. The symbolism could not be any better.
What a beautiful Freudian slip, because if anything screams, “Overpriced pile of crap,” it’s that place . . .
Don’t you recognize this? My God you poeple must be so young. This is the model that was used to instruct us in the 50’s about how to survive a direct nuclear attack (or is it nucular, I fergit). Sure you remember, “sit under your desk, put your head between you knees and kiss your a** goodbye” Perhaps it has been updated for the current crop of recent buyers.
say a house cost $3000 monthly payment to buy, and $2600 rent. isn’t it better to own because house is a saving account, monthly payment builds equity. but rental also builds equity FOR THE LANDLOARD not renter? I think this is the traditional mentality of a lots home buyers. that’s why you see asian ppl bid big to own houses. no wonder asians have the highest avg. networth in the states. objections?
oh well, i take that back, maybe not directly related. asians in the states are most educated by avg. too.
Just so you know, many of the biggest HELOC abusers I have profiled to date have been Asian. Spending one’s equity has no socioeconomic or cultural boundaries.
Those Benzes and Lexii are not cheap, eh?
Given the equity draw bore almost no consequences to the loanowner, I’m not sure those of us being “responsible” are the smart ones. The $500k draws we’ve seen lately actually made me envious. If they pull off the short sale, you’re maybe talking about a 1099 for the difference — and that’s it. Beautiful.
I hope this doesn’t come across as hypersensitive or too pollitically correct, but I think this blog’s comments have had enough discussion of what Asians do for now. We should be able to take an Asians-as-examples break for a couple of days.
Yes, we need a time-out to reorient ourselves.
The term is “reasian ourselves” these days, sheesh.
“say a house cost $3000 monthly payment to buy, and $2600 rent. isn’t it better to own because house is a saving account, monthly payment builds equity. but rental also builds equity FOR THE LANDLOARD not renter?”
You should take a look at the rent versus own calculator on this site. We subtract the hidden equity in the payment to help accurately determine where the breakeven point lies.
What you seem to be failing to see is that in Irvine it costs you $5,000 a month to own something that you can rent for $3,000 a month. Even if some amount of this is “saved,” your net cost of housing is much, much higher as an owner than a renter. If you want to explore the ramifications of that truth, please read the post Timing Does Matter.
The incorrect assumption is that the $3000 is going towards principle. It isn’t, at least most of it isn’t. And you need to consider whether your $3k payment includes tax, insurance, upkeep.
The rent v. own calculator is the way to go.
That may be true but only if you intend to sell later for a profit. What happens when both rents and prices fall due to a recession that considered to be the worst since the great depression?
Excellent article by Michael Lewis in Vanity Fair online. If the following excerpt concerning mortgage credit default swaps interests you, the link (thru patrick.net) is at the end of the excerpt:
In a normal economy, when interest rates rise, consumer borrowing falls—and in the normal end of the U.S. economy that happened: from June 2004 to June 2005 prime-mortgage lending fell by half. But in that same period subprime lending doubled—and then doubled again. In 2003 there had been a few tens of billions of dollars of subprime-mortgage loans. From June 2004 until June 2007, Wall Street underwrote $1.6 trillion of new subprime-mortgage loans and another $1.2 trillion of so-called Alt-A loans—loans which for some reason or another can be dicey, usually because the lender did not require the borrower to supply him with the information typically required before making a loan. The subprime sector of the financial economy clearly was responding to different signals than the others—and the result was booming demand for housing and a continued rise in house prices.
http://www.vanityfair.com/politics/features/2009/08/aig200908?ref=patrick.net
Another factor that needs to be pointed out is that many subprime customers were not subprime borrowers. Many prime borrowers went to subprime lenders because the terms were easier, they could pull out more money, and processing was faster. This problem is by no means concentrated in the hands of those with low FICO scores.
This is an article about how the govt is funneling tax dollars into developer’s pockets in Victorville (everywhere really) through the FHA. I guess I knew it was happening somehow, I just didnt understand the mechanics of the whole thing. Its worse than I thought. Just change the programs a little and nobody notices. But its the same thing with the same mistakes and the same execs getting bonuses.
CAUTION – this site may have some slightly explicit stuff on it that could be offensive to those with a fairly conservative mindset…
http://exiledonline.com/subprime-the-second-coming-now-with-a-100-taxpayer-backed-guarantee/
Irvine and other premium OC housing markets have held up so far because of the false hope by many home owners that Fed has the intention and the ability to re-inflate the economy. But this hope looks more and more like wishful thinking. Here is a good article explaining why no amount of Fed money printing is able to avert the onslaught of deflationary pressure:
http://theautomaticearth.blogspot.com/2009/07/july-5-2009-unbearable-mightiness-of.html
1. During the bubble era the credit generated by the shadow banking system took on the role of “moneyness”, and in an expansionary market (with non-stop asset price appreciation) credit and debt became the money-equivalent. But once asset prices begin to fall the “value” of credit (debt) disappears and can no longer function as money. So all these zero interest rate and massive printing by Fed as the means to pump up money supply will not come close to fill the void left by a rapid credit contraction. Fed’s influence can be felt primarily on traditional lending channels (commercial banks), not the shadow banking system and countless derivatives it has created to function as quasi-money during bubble years.
2. All the new money that went to banks are just sitting there since banks know how much bad loans are still on their books and need to be written off eventually. So there is no “velocity” of money – i.e., the dreadful liquidity trap.
IMHO deflation will take its firm grip on US (and global) economy later this year and all asset class will undergo a prolonged period of decline similar to what Japan experienced in 90’s. The housing market in SC will not reach a bottom probably until 2017 or later, with price in places like Irvine dropping no less than 75% …. We had the same twin bubbles in the US as Japan had with the same set of inane policies to battle the economic collapse – massive fiscal stimulus, zero interest, QE … I just don’t see why we should expect a different outcome.
FHA refinanced borrowers aren’t taking much time to default.
RE say rent just goes down the drain to the landlord. Why don’t they say: interest expense for home/house just goes down the drain to the bank?
The cost of ownership is more than P&I. There are taxes, insurance, HOA, MR (in CA), repair, replacement (roof, termites damage repairs, HVAC are expensive), lawn and garden, routine maintenance (painting, minor roof, leaks). Only taxes are Sch. A accountable and with the AMT, most in high COL areas will lose much of the full deduction.
On paying a loan early, I decided because I was getting much less from investing than the 8% house loan.
The grasshopper hasn’t learned his lesson. More of the same bad loans by govt GSE. Maybe the grasshopper has learned. It got on the govt. payroll/bailout, so repeat the process again. The govt is just reenforcing bad behavior on the taxpayers expense/backs.
1.5x GB bailouts = BO bailouts, but BO has 3 more years to ask for more bailout money.
Bubbly Rents are dropping right on schedule.
Apartment Vacancy at 22-Year High in U.S.
By Hui-yong Yu
July 8 (Bloomberg) — U.S. apartment vacancies rose to their highest in 22 years in the second quarter as job losses cut tenant demand and more units came to market.
Vacancies climbed to 7.5 percent from 6.1 percent a year earlier, New York-based real estate research firm Reis Inc. said today. The last time landlords had so much empty space was in 1987, when vacancies reached 7.6 percent as the Standard & Poor’s 500 Index plummeted 23 percent in the last three months of that year.
Job losses and falling wages are shrinking the pool of potential renters, defying forecasts that prospective homebuyers would rent rather that purchase as house prices decline. The U.S. unemployment rate rose to a 26-year high in June and U.S. payrolls dropped more than forecast in June, the government said last week.
Equity Residential, founded by billionaire Sam Zell and now the biggest U.S. apartment landlord by market capitalization, said in April that job losses made the company “cautious” and it was offering rent reductions to lure tenants.
Asking rents for apartments fell 0.6 percent in the second quarter from the first, Reis said. That matched the rate of change in the first quarter, the biggest drop since Reis began reporting such data in 1999.
Asking rents dropped 0.7 percent from a year earlier to an average $1,040 a month.
Rents Drop
Rents paid by tenants, also known as effective rents, fell 0.9 percent from the previous quarter to $975, said Reis. Effective rents were 1.9 percent lower than a year earlier.
Effective rents fell the most in San Jose, San Francisco, Las Vegas, Southern California’s Orange County and Seattle. Those cities had been boosted by technology companies or the housing boom.
“New buildings coming online over 2009 and 2010 will face higher initial vacancy levels, and will work to increase the pressure on leasing managers,” Calanog said.
Astute Observation by IrvineRenter
2009-07-09 06:01 AM
I am observing the “wait for a bigger drop” psychology right now. I just did an analysis on 3 properties located in Costa Mesa and Tustin. All three SFDs offered for sale at 10% under rental parity.
Have you been monitoring rents in these cities?
My casual observation over the last year for each is that the rents for modest 3/1 or 3/2 SFD has gone down 15%-20% in each city.
GRM is a moving target!
As a rent-based data point, my girlfriend just “renewed” her lease in a large CM complex near Harbor and Adams. Initial rent was 2/2 1000 sq. ft unit with no W/D for $1,850/mo. New rent, after unit change, is $1,470/mo. for a 2/2 1200 sq. ft unit with W/D. That’s 20% more space at 20% less cost. Rent/sq. ft is down about 40%. Frankly, this is a steal relative to 2007/8 pricing.
Even better, the apartment management company admitted that they use “proprietary yield management” software to hit a 97.0% occupancy rate. The clerk even showed me some of the screens from their system, so I have no reason to doubt her. Assuming this to be true, then they are pretty accurately pricing-to-market for these units. The rent bubble is deflating almost as fast as the housing bubble, probably due to unemployment impacting renters more quickly (an eviction is faster than a foreclosure).
If nothing else, this greatly lowers the value of low-end condos — assuming those condos bottom out well below rental parity.
Woodbury East is having their “Grand Opening” on Saturday. I got a big 4 page brochure with my paper this morning. It looks like only one builder has condos for sale now. William Lyon Homes. Two story townhomes from the high $300,000s. The high $300s will get you a 2 bedroom, approx. 1,180 sq ft.
The move-up market died months ago. Builders aren’t touching anything over $500k as it generally involves a sell transaction from the buyer. Since the sales are mostly taking placed in the distressed category, no one is being cashed out to move-up.
TIC’s new target buyers (a shift from the typical 2k+ sf stucco box in Woodbury/Quail Hill/Northpark) are cannibalizing the IAC business, which will have initiate more downward pressure on pricing as rentals drop pricing to compete.
The negative feedback loop is in full effect.
A “Real” Housewife of OC has listed her home..
http://lansner.freedomblogging.com/2009/07/09/housewives-coto-home-listed-for-55-million/29449/#comment-130821
And check out the description..complete with misspellings.
From Calculated Risk – Condo Association files for bankruptcy. This in Miami but is something people should be thinking about. I think IR has posted before about investigating your Homeowner associations.
http://www.calculatedriskblog.com/2009/07/condo-association-files-bankruptcy.html
From the Redfin listing, here’s what they should have put the asterisks around: “Mello Roos: Yes”
I’d never buy a place with Mello Roos taxes unless there was some other factor that balanced it out, and I’ve yet to find a property where it balanced out.
-Darth