Are You Over It?

I have emptied my Reservoir of Schadenfreude. How about you? Are you over it?

6002 Sierra Siena Rd   Irvine, CA 92603  kitchen

Asking Price: $1,069,000

Address: 6002 Sierra Siena Rd Irvine, CA 92603

{book4}

Suckers walk, money talks!
But it can’t touch my three lock box!
Uh! Oh, yeah!
Mysteries of the days of old.
You find the key, you got the gold.


Three Lock Box
— Sammy Hagar

I had lunch with a friend yesterday who is not a fan of 3-car garages — can’t touch my three lock box! Perhaps we should ask our guest on Monday if the Irvine Company will be creating more product with 3-car garages (we don’t want them). I don’t believe there are any in the communities of the 00s. Today’s featured property may become rare and valuable….

{book}

The Great Housing Bubble made me angry (see The Reservoir of Schadenfreude). It drove me to write for this blog for 2 1/2 years and put together a
book. Anger can be very motivating, but over the long term, it eats
away at me, so I am letting it go.

In our collective unconscious which
manifests in our dreams and our mythology, water is often symbolic of
our emotions or our emotional state. Have you noticed people are often
categorized as deep or shallow? If you are in debt you often feel
“underwater,” etc.

Anger is much like water: if not given an outlet, it will fill a
reservoir until it reaches a breaking point and is expressed in a flood
of emotional rage. Each encounter with a pathologic, kool-aid
drinking housing bull over the last few years has added to this
reservoir, and reveling in failed flips is an outlet for this pool of
toxic emotional waste.

Waterdrop

There is an element of tragedy in every disaster, but financial
bubbles are some of the most interesting because they are completely
man made. They are created by the individual decisions of buyers who
are motivated by greed, foolish pride, and a false sense of security.
Each of these people should have known better. Many of them were warned
of their impending doom and chose to go down the path to the Dark Side.

My reservoir is empty.

I am over it.

Well, I may not be totally over it, but I am ready to move on.

The social media is a fascinating phenomenon. Traditional media outlets are being displaced, and citizen journalists and analysts are stepping into this void and providing real content. Have you been over to Calculated Risk lately? It is amazing the quality of the posts and the speed at which he produces them — and he is unpaid; he is doing it for the joy of the activity. How cool is that?

This blog reaches thousands of people each day. I am a citizen journalist. When we all look back on this era, the bubble blog community captured the Zeitgeist of the Great Housing Bubble. The archives of blogs like this one and Housing Panic encapsulate the Age. Keith walked away from Housing Panic and started a new blog. I am not that radical.

Many people come here for the analysis and information, and I hope I make it fun. 🙂 (we have to cut back on the schadenfreude) 🙁 I like to write about the local real estate market, and you like to read it, so I will carry on. I don’t know what changes you will see, but I have to be who I am.

My new goal when I talk about a property is to be accurate. If I have the time, I may do more in-depth analysis on properties like this one: (IHB Opinion_of_Value_14802_Devonshire_Ave_Tustin,_CA_92780.pdf) I will purchase better data to create better analysis posts. I will stay in Irvine on profiles during the week and make sure the IHB will always be the Irvine Housing Blog.

One of the pleasures of the blog are those moments when I can express myself on a personal level. The social media make that a part of the program. We shared this unique cultural event — the Great Housing Bubble and the ensuing recession — the emotions are part of the cultural experience. Back in December 2007, I put it this way in Balance:

BalanceIn many ways blogs are uniquely personal things. The personalities
of the contributors and commenters shapes the conversation and gives
the blog a personality all its own. The Irvine Housing Blog is a
community — a community of like-minded individuals (and recovering
kool-aid addicts) who have come together to make sense of the very
unusual events we have witnessed in our housing market.

Discussing and expressing the emotional side of the bubble is part
of my mission as a blogger. I know I am not the only one with a Reservoir of Schadenfreude. I must confess that I enjoy going over to Housing Panic and reading the unbridled emotional release you find there. I couldn’t
maintain the level of intensity Keith does and stay sane, but there are
times when letting loose is appropriate, and Housing Panic is a place
to do it.Balance scales

…. I do not want to ignore my emotions nor do I want to
discard my intellect. More of one side or the other may come out during
any given day, but over the course of time, I hope I achieve a balance
in my posts just as I hope to achieve a balance in my life.

Life is about balance; it is about being aware of your intellectual
and emotional intelligences and being able to manage both. During a
financial mania people allow their emotions to override their
intellect, and the results are not pretty. It is only through the
interplay of the intellect and the emotions that we can gain a deeper
understanding of what really happened in the Great Housing Bubble.

I am over it. It is time to rebalance.

Zen Garden

6002 Sierra Siena Rd   Irvine, CA 92603  kitchen

Asking Price: $1,069,000

Income Requirement: $267,250

Downpayment Needed: $213,800

Purchase Price: $380,000

Purchase Date: 11/26/1996

Address: 6002 Sierra Siena Rd Irvine, CA 92603

Beds: 4
Baths: 3
Sq. Ft.: 2,516
$/Sq. Ft.: $425
Lot Size: 6,783

Sq. Ft.

Property Type: Single Family Residence
Style: Traditional
Stories: 2
View: Park or Green Belt, Pool
Year Built: 1971
Community: Turtle Rock
County: Orange
MLS#: P695119
Source: SoCalMLS
Status: Active
On Redfin: 3 days

Turtle Rock Broadmoor Model G. Security gate and double door enty;
3-car garage. Fresh 2-toned painting, scraped ceilings. New
floorings-upgraded carpet and laminated wood. New vertical blinds.
Above-ground spa in backyard w/new cover. Downstairs master BR
w/remodeled master bath. new granite kitchen counter-top, stainless
steel sink w/GE range and dishwasher. Bonus/game room has a pool table
and antique light fixture. Brand new water heater w/earthquake straps
in garage. Overlooking community park and pool. Many upgrads, a
must-see!!

You know the housing bubble has not deflated yet when you still see homes sporting 300% gains in 13 years. A house should double in twenty not triple in thirteen. There is still a long way to go.

I am not sure how to close on a Friday now. The old catchphrase doesn’t feel right anymore.

I don’t know if this will become a tradition, but I will share an experience I had recently that sent me a message.

I was driving down to Laguna Beach last Sunday morning to meet a friend, have a cup of coffee and talk about life. On the way there, I passed a group of bikes clustered together in a tight pack. As I drove past, I could see one bike in the distance breaking away from the pack and peddling hard. I found myself asking, “Who was that guy?” Then, the more I reflected on it, I realized that I wanted to be that guy.

The message? Be your best and lead the way.

122 thoughts on “Are You Over It?

  1. cara

    Given the number of times this seller has listed and delisted and price changed, I’m guessing this seller is not ready to let it go, yet, and that this price is over market.

    It’s good to hear that you’re looking for a new balance. I just put in a bid, so obviously I must be moving on too. (not in CA). It’s a short-sale, but well priced, in a nice neighborhood, in the right school districts, good commute for us, and priced well under rental parity on the 30 year plan, or barely over parity on the 15 year plan.

    Sorry things where you’d like to buy aren’t there yet, but it’s good to hear you’re ready to move to a new stage.

    Does this new stage mean no more details on people’s loan’s then?

    1. IrvineRenter

      “Does this new stage mean no more details on people’s loan’s then?”

      Good question. I don’t know. If the mortgage information is a big part of the story concerning a particular property, I will still go through it. HELOC abuse must be seen for the pathology it is, or we will repeat the same mistakes. My tone will change, mostly because I am over it. These posts still have lessons to teach, so I will still do them, perhaps not as many.

      Our perception of reality has much to do with the way we choose to interpret it. That anger inside of me created a self-reinforcing negative filter of experience. I am choosing a different way of viewing my life.

      I have been noticing these changes coming on for months now, and it became apparent to me on Wednesday’s post that I felt more compassion than schadenfreude for a homeowner’s loss. That was a milestone for me.

      1. movingaround

        Great post and behind you all the way IR. I do think that loan information is very important. One of the biggest problems for me before I found this blog was that I knew inside something was wrong in CA but just couldn’t point to it. Seeing the mortgage and loan history puts itright out there and I really appreciate it!

      2. cara

        So I take it the owners in this post are just delusional, not big heloc abusers (or not by CA standards, or not by enough to put them in obvious distress).

        “self-reinforcing negative filter” Yikes. That’s indeed a good thing to let go of.

      3. IrvineRealtor

        Just another note of thanks, IR.

        I have little doubt that your spot-on analysis will continue, with less emotional drag.

        Your writing is important, and continues to be relevant. Whether you recognize it or not, you’ve broken away from the pack long ago. Wishing you continued success.

        -IrvineRealtor

      4. Lee in Irvine

        That anger inside of me created a self-reinforcing negative filter of experience.

        Ditto …

        First of all I want to say that I agree with almost everything you said above.

        What a twisting-of-mind this has caused me. I was somewhat consumed with it as I watched prices rise beyond prior bubbles, telling family and friends to beware, over-n-over-n-over. For a solid 3 years, this economic ponzi scheme, made me look like I was a paranoid blowhard to these same friends and family. I was consumed (and still am to a certain extent)!

        I for one, encourage change at the IHB, so I can continue to read.

        IR, I know exactly where you’re going with this. I desperately need “balance” too!

      5. christian

        keep striving to be that break away person but know that in others peoples eyes you are already leading the way. thanks for some great lessons that will be with me for a life time.

        1. longtimelurker

          IrvineRenter,

          I am a very long time lurker, and this is my first post and last. Thanks for the great blog. I echo Christian’s sentiment–you have taught us lessons that have opened my eyes about real estate. I have never owned a home, but when I buy, I will be armed with a vast reservoir (to use a water-phrase) of knowledge that you have imparted over the years. Thank you for that.

  2. Art Student in Atlanta

    IrvineRenter,

    I have just recently learned about you very insightful and educational blog. It is a great resource to learn about the methods and absurdity in our real estate system.(Particularly the financing part.) Thank you for this blog.
    I think this is a critical point in our country. Each individual needs to confront themselves about the really crucial aspects of their lives. “What is it that I should pursue and work for in my life?”
    Economics, to me at least is about belief. People spend their money and resources on the things most important and valuable to them. The question, “what is it that we should value and invest our lives and resources into?” This bubble was created because many people felt that their home was their most valuable asset. Few in this environment ever stated, “A house is just a building.”
    Perhaps the thing that we all are seeking is a way to see and define a new direction. The concept of basing our economy on “get rich quick” investment schemes is a mistake. The old formulas for evaluating wealth have just been proven false. ROI has proven shortsighted along with every other gauge for this system. Almost no one involved in this asked, “Is this return sustainable?” So much of our society runs from one place to another seeking easy money with no concern over the consequences. It’s like a pack or herd mentality.
    I think a different way of life needs to emerge from this. A way more responsible and driven by individual determination. A way that is less base.
    Again, thank you for this blog. Keep educating!

    1. IrvineRenter

      Thank you for posting. I appreciate your kind words.

      “The question, “what is it that we should value and invest our lives and resources into?””

      As a society — health and safety of citizens and economic prosperity (investment).

      As a person — good health, intellectual stimulation, emotional openness and spiritual peace. Pursue your passions and pour your resources (personal, financial and otherwise) into creating and nurturing what you love. What comes back to you will have value beyond money.

  3. AZDavidPhx

    I miss H.P despite the crazies on there. Keith will show up on the scene again at some point in the future, I have no doubt.

    There is still quite a bit of work to be done to try to rebuild our economy. Too much casino mentality exists in the general public; an economic recovery is just a foregone conclusion to the average person and the game is all about waiting for it.

    The being “pissed off” component definitely has to be there. I have long since accepted that I will never be able to afford a nice house even with a good job.

    Nowadays, I am pissed off when I look at the steps being taken to fix the problem by maintaining status quo and the people’s unwillingness to pull their heads out of their asses and say to banks: “F You – We don’t want your credit. We want to actually own our homes in less than 30 years. We want to go on vacation occassionally and not miss our kids baseball games while being forced to work 50 hours a week because we fear being homeless.”

    I have shifted my anger away from the borrowers and HELOC spenders and have moved on to the institution of endless debt and monthly payments – our modern equivalent of Slavery in America.

    1. MalibuRenter

      Really David? I thought that homes in PHX were dropping as fast as anywhere in the US. I think you’ll be able to trade a BMW for a tract home soon.

      1. buster

        Yeah, except the BMWs are fading fast as vanity leases expire and the Starbucks barista figures out that, hey, nobody cares if they drive a low-end BMW 325. So it goes back to BMW.

        BMW is like BofA. They have a massive resevoir of used lease returns but don’t want to lower the buyout prices because it, “cheapens the brand” according to my (ex-) lease guy. Good luck with all that, Mr. BMW.

        1. MalibuRenter

          Maybe something similar explains the $12,000 2005 low miles Jaguar a neighbor is selling. Probably $40-50k when new. Beautiful car. Sell my 1993 civic for $5k and move right on up. Too bad I don’t actually need a luxury car.

          1. Geotpf

            Luxury cars in general hold their value horribly. Jaguars in particular are even worse than most other luxury brands.

            The best cars in terms of resale value are Hondas and Toyotas. In fact, buying a two or three old use Honda or Toyota is a bad play, IMHO, because of this-new ones are much better buys.

          2. muzie

            I, and others who bought luxury cars, who full they don’t hold value. As a matter of fact, 99% of things you an procure in life don’t hold any kind of value at all, from services to goods.

            Sorry, it just seems you’re pointing out the obvious. It’s one thing to carelessly throw money overboard if one doesn’t value what one gets in return. It’s another thing to be entirely fixated into maximizing value per dollar without regard to individual consumer preferences.

          3. Geotpf

            If you want a luxury car, a one year old model is frequently half the price of a new one. That’s the best deal there.

            Of course, a lot of people want “that new car smell”, especially those that buy luxury vehicles (hence the poor resale value of them).

            This is similar to a supposition I made in the forums. I think the rent vs. buy proposition will rare favor buying on high end property, because rich people are more likely to want/be able to buy than rent, while poorer people are less able to buy (no down payment, bad credit) and have less of a “need” to buy than rich people do.

          4. SoCal

            I see trouble for BMW in the near future. The US, and SoCal in particular, account for a large percentage of their sales, around 20-25%. What will happen when the HELOCs run out, and South County residents can no longer afford BMWs? If you don’t mind driving a car that is used, there are a ton of almost-new German cars out there. Just get a warranty from the dealer to cover you after the original expires. It makes no sense at all to buy a new luxury car, given how fast they depreciate in value.

    2. alan

      “economic recovery is just a foregone conclusion”

      I hear you. I was watching Charlie Rose last night, he had Ron Emanual (Obama’s chief of staff) taking about the economy. (he looks way too young to be in the position he’s in) and he was mouthing off that the economy will start to rebound later this year because that’s the nature of the business cycle. What rubbish, the business cycle is not predictable like the tides. He had no fundamental numbers to back up his predication. It’s going to happen because it’s scheduled to happen, it’s written in the stars. Oh well, I hope he’s right, if he is it would be pure luck.

        1. Geotpf

          Doubt it. There is basically no scenerio in which the Democrats lose control of either house of Congress in 2010. It’s simply not going to happen. The fact that the loudest voices in the Republican Party these days are all batshit insane means that it doesn’t really matter how bad the economy is, or how badly the Democrats screw up-most people will decide the other side is even worse.

          It is possible for the Democrats to lose seats, but they won’t lose control. My prediction right now is treading water with no major change in either house.

    3. Lee in Irvine

      Gone are the days when a cop could raise 2-4 kids while mom stayed at home.

      In the late 70’s, total debt, including private and public was about 150% of the GDP, today it exceeds 400%.

  4. AZDavidPhx

    Getting real: A new era of frugality

    A summer series on what you get paid and how much you can have

    By Peter Koven, Financial PostJuly 20, 2009

    As the worst global recession since the Second World War grinds on, workers are facing pay cuts, unpaid leave and layoffs. Labour strife has swelled. The wealth hit from battered investment portfolios and falling home prices is forcing consumers to adjust their expectations, too. Today, the Financial Post begins a summer-long “Getting Real” series exploring
    the reality check now underway.

    A new era of frugality is setting in on consumers, and the implications for a global economy that relies so much on the U.S. consumer are extreme.

    “I think the consumer is looking at everything that’s going on and thinking ‘I’m never going to spend my money the same way [I] have in the past,” says Paco Underhill, author of Why We Buy: The Science of Shopping.

    It took a long time, but the word “thrift” has made its way back into the vernacular of the Western World, particularly in the United States, and the question on everyone’s mind is how long it will last.

    Despite massive government stimulus efforts, improving credit conditions, and virtually non-existent interest rates, consumers just do not want to borrow or spend money right now.

    This has a lot of economists shaking their heads. The economic models suggest people should be lining up at the bank to borrow money. And if all this government action won’t get them spending, what possibly could?

    “The evidence is that attitudes to home ownership, credit and discretionary spending have changed,” says David Rosenberg, chief economist at Gluskin Sheff & Associates.”

    Not everyone agrees. There is a wide school of thought that suggests as soon as this recession runs its course and consumer confidence returns to reasonable levels, people will take advantage of the easy money available and spend their way back to oblivion.

    Just as important is the psychology of a newly frugal era.

    He says that thriftiness has become a habit, rather than a conscious decision, for many people. Once behaviours become habits, he says, they are very difficult to reverse and can last a long time.

    “The economy will eventually recover. But I think the craziness of American spending will take longer to rebound than the economy,” Mr. Ariely says.

    1. CA

      It’s already happened with me, my income has ticked upward, and I ended up just banking it. I can guarantee you 5 years ago I would have gone out and bought something/upgraded my lifestyle.

      BUT, don’t underestimate the herd mentality of the country. I think one of the reasons why I’m being frugal is because everyone around me is tightening up too.

      I’m only human, and I have a feeling that I’ll be more inclined to spend when my peers are spending. This time, I’ll be aware of the psychology behind it.

    2. Perspective

      You’d think Americans’ spending habits would change after all of this, but I’m not so sure. As the article points out, spending tends to return very quickly. It’s cultural. That economists are saying “it’s different this time” makes me even more suspicious. It’s rarely “different this time.”

    3. Gemina13

      I think one reason Americans’ spending habits are changing is that most people just don’t have the money for it anymore. Nor are they likely to ever get it back. Look at how much “wealth” was created by using homes as ATMs. That “wealth” has disappeared; it was created by speculation, and it will be years before we see those levels of appreciation again. Hopefully, decades.

      Meanwhile, most employers are either cutting jobs that may not ever come back (thanks to outsourcing), or firing employees who’ll be lucky to find jobs at lower wages than they originally earned. I don’t see wage inflation coming out of this crisis; I see a continuing wage deflation, one which will kill the American consumer for good if hyperinflation sets in within the next few years.

    4. SD Kate

      I hope this change is true for the majority of Americans, whether or not they personally are affected in this crisis. It certainly is for me.

      One thing I did that really woke me up is get my whole paycheck in cash for a while. Psychologically, it’s a lot harder, at least for me, to spend it. I still do most of my purchases with cash (as opposed to bank card, credit cards are evil), but it’s kind of hard to pay cash for rent and utilities.

      If we can’t turn back time, at least we can change for the future…

    5. furious sugar

      I believe that the moment credit card lines start increasing again– people will spend right up to their limit. I think that alot of folks see their credit card line as an extension of their bank account. They assume that they will never have to pay it off- and as long as they can afford the minimum payment- they keep on spending. Ask most people what their credit card balance is– and they can’t tell you. But they can tell you what their payment is.

      1. Geotpf

        If companies are holding back giving people credit, I personally sure haven’t seen it. I just bought a house, and needed/wanted to buy a lot of things that went with it (new carpet, furniture, appliances, etc.) on credit. I had absolutely no problems opening about a half dozen new credit accounts to pay for all of this (most of these had some sort of discount to open the account, like 12 months same as cash, or 10% off first purchase).

  5. winstongator

    I’d like to think what I have is not shadenfraude but anger at the activities that helped fuel the bubble. Take a newly constructed home, original sale $1M, flipped later that month (8/15/07) for $1.65M 90% financing deal (JPM). FC records show unpaid interest from 10/1/07!!!

    From what I remember from our closings, you pay a partial month, nothing the next month, and then start. So this guy would have paid 1/2 month, nothing 9/1, 10/1 rolls and see-ya!

    This smells like outright fraud to me, to the sound of a half-million dollar loss to JPM. I have no idea what the buyer’s credit was, but is anyone’s credit rating really worth $500k? If the buyer & seller were working together that’s what happened. Maybe they split it and the foreclosed ‘owner’ sold his credit rating for $250k + months of free rent.

    While I would like to see prosecutions of fraud like this, JPM needs to be held to some account too. By August 07, the Miami part of Case-Shiller was already down 10%, I don’t know how you justify a loan over 50% over purchase price 2 weeks after the initial purchase.

    It’ll probably take until the end of ’09 early ’10 to sell at 500-600k. Capital loss of nearly $1M. Lost interest at 5% of nearly $200k. That ends up being an 80% loss on a new million dollar home loan. What is that loss currently being booked at on JPM’s balance sheet?

  6. cara

    Speaking of Calculated Risk and the OC, did you see the post on how the current budget under debate is stealing funds from the municipalities????

    CR’s take on the OC story

    One of the key elements of the new California budget is to have the state use money that is normally allocated to cities. This is a crushing blow to the finances of many cities.

    1. MalibuRenter

      Aside from the many problems and tricks in the current budget, litigation will stop several parts of it. The State Compensation Insurance Fund won’t sell. The taking of money from municipalities might not make it through the courts. You will get some very extensive turf protection from localities. While I don’t have a specific example, I have the funny feeling somewhere in there provisions of Federal grants or matching will be violated, and some expected Federal money won’t arrive. Those provisions can be very complicated, and it’s possible for lower State contributions to be amplified at the local level.

      Oh, and the expected revenues are too high. Even if none of the challenges were successful, the State would still be looking for new budget cuts by the end of the year.

      1. hormiguero

        You will get some very expensive turf protection from localities.

        ////

        Fixed that for you! Yup, always room for a few million bucks to pay the lawyers while fighting over… a few million bucks. Right?

  7. no_vaseline

    Nice post, IR. Unbeknownst to me, mine had silently drained over the past couple of years. I think I discovered it was so during the whole nutcase Janet/78 Fringe Tree deal last year. Where all the market participants a couple of years ago were in denial, most everyone who’s buying now is well aware that they are the knife catcher.

    One question –

    If you want to be “that guy” and lead the way, what are you leading to?

      1. Phil

        Very un-Buddhist analogy: competing in a bike race and focus on winning? Sounds like a combination of realtor-speak, faux Zen, and inspirational poster talk. All due respect.

        1. IrvineRenter

          “Sounds like a combination of realtor-speak, faux Zen, and inspirational poster talk.”

          Being your best and leading has nothing to do with winning or competing, except perhaps against yourself and your own standards. You have a cynics perspective, and you are seeing what you are preconceived to see rather that what is there. It is possible to win in life without having someone else lose.

          1. Phil

            It is possible to win in life without having someone else lose.

            It is impossible to win a bicycle race without having someone else lose. Ergo, poor analogy. I love competition, and cycling, but that’s precisely what it is: a competition. Let’s not mince words here.

            And no, I hardly have a cynic’s perspective: what I have is an excellent bullshit-detector, which picks up on cherry-picking faux-“Buddhism”. You want to experience schadenfreude and justify it, then at an arbitrary moment in time you announce you have moved beyond it. A true Buddhist perspective would never have justified schadenfreude in the first place, as this is represents attachment and slavery to anger. I am not a Buddhist, so I have no need to justify my schadenfreude, or couch it in slippery New-Agey language.

            You are a superb analyst of real estate and the bubble economy. But your “spiritualizing” is embarrassing and not a little dishonest.

  8. NanoWest

    Being a leader and taking risk have a something in common. You only hear about the successful risk takers and the successful leaders. Most risk takers end up losing everything, that is why the call in risk. Most leaders end up lost in the woods, never to figure out why they started leading in the first place.

  9. Shannon

    I know what you mean about letting go, but I think you hit the proverbial nail on the head when you wrote about the housing bubble dupes wanting *us* to feel jealous of *them* and to what lengths they were willing to go to manipulate our emotions to get what they wanted from us. (Look at your various trolls on this site. Same pathology, writ large because it’s the Internet.) There’s nothing that makes me launch fireballs from my eyesockets and provides that metallic taste in my mouth quite like emotional manipulation, and I think that’s why I’m not quite willing to let go yet. I remember the way my floplord in San Diego tried to make me feel like I was being financially irresponsible when he tried to unload his crappy condo on me and I refused, and how he went out of his way to show off the new trucks and gadgetry he bought with his HELOCs. I still check almost monthly on how much money he’s lost on his three properties and feel great personal satisfaction that it’s over $250,000 now. A quarter of a million dollars. Just saying that number puts a smile on my face. So no, I haven’t quite reached enlightenment yet. I’m glad you have.

  10. Lucky Victim

    After a visit from Housing Panic I got all depressed. You could read the amount of time and energy he had put into his blog. And to see him end it with the advent of Obama was almost like he was at peace. Too bad his new blog showed the frustration after 7 months of Obama’s presidency.

    1. IrvineRenter

      How much of Keith’s writing is a reflection of his inner world? Perhaps he could not take the moment of peace afforded to him when Obama won, or perhaps he keeps up the energy to keep a readership (slave to a different master). I only know that I could not keep it up angrily any longer.

  11. LC

    How can it be over, when they are asking $1 million for this place? Where do I begin? Bad location, old house, bad floorplan, mass produced junk…

    1. IrvineRenter

      You wrote the words I could not write today because of the nature of my post….

      1. tonye

        Location is bad but the house is not necessarily old junk. The Sierras are a nice place. The problem with this house (sometimes called a 5 bedroom) is that the master bedroom is downstairs and the location of the bathrooms is weird.

        OTOH, it has a very nice playroom over the garage.

        Think of this floorplan as a four bedroom with a large bonus room.

        Oh, the kitchen is small.

        Yet, yet, the three car garage is great and I’ve seen a couple of houses like this one that got enlarged very successfully.

        Price wise they are a bit high, 10% over the comps.

          1. tonyE

            Whether or not you think reality should net you a chateau in Bel Air for 45 bucks a square foot, reality is that the current comps on the area are going about 10% or more less than what these folks are asking.

            Sell wise, I don’t think this place is “worth” more than $850K. In fact, if you could get it for $795K you’d be doing well… assuming of course the property is in good shape.

            Note the three car garage and the likely possibility that you could turn the big bonus room upstairs into a bathroom/bedroom and then use the downstairs master as an office/guest room.

            This would give you a 5b/3.5ba home with a 3 car garage. Not something you should sneeze at when all those McMansions are squeezed so tight.

            You would still need to spend some money to install AC and redo the kitchen right. But that’s my own opinion.

          2. mmg

            in this economy, you have to have a very high income to qualify for that piece of crap for 1 mil, this is a 70s Piece of crap house, no one making more than 200k would buy this POS house, even if some one wanted, lenders are very uptight now, just my humble opinion.

  12. emilie

    LC- This home in prestigious Turtle Rock actually backs up to Shady Canyon Road. They can smell the affluence from their cheap above-ground hottub.

    1. furious sugar

      I find it interesting that one of the first attributes that the realtor lists is the “security gate”. What is that about??

  13. Eric from Austin

    Yeah I’m definitely over it. I would say that IHB is my favorite blog, but I barely even read it anymore. I always enjoy posts about Woodbury more than SFH posts because that’s what my wife and I were looking when we were in Orange County.

    The Woodbury equation felt so surreal back then. Insanely expensive condos, and depending on how the wind blew, you could smell the landfill. How’s that for rare and valuable?

    1. no_vaseline

      It’s dated September 30, 2006!

      My God, you’re either the lamest troll ever or really really………..dense.

      1. IrvineRenter

        Wait, cut him a little slack. Here is what is going on.

        I have been preparing to properly launch our brokerage since April. Part of that preparation has been to prepare some marketing materials. The post to which he refers was something I buried deep in the archives to use as a link to an email. To bury it, I dated it 9/30/2006. NewportSkipper did find something of value and interest.

        IHB: The Mission of the IHB

        This email/post contains our statement of who we are, what we stand for, and what we are going to do.

          1. cara

            There was a “sale” “state” problem in one sentence that a spellchecker won’t catch.

  14. Perspective

    I still find pleasure catching up with friends who were brokers and realtors a couple years ago. It seems like everyone I know has a similar friend or two, and I enjoy hearing updates on their friends. The stories are all the same. The friend was unlikely to have a college degree, yet was earning an insane income. They were buying homes, driving luxury cars, and wearing expensive label-conscious items.

    Every one of these friends I have, and every friend-of-a-friend I know of, has ceased working as a broker or realtor. They have all lost homes. A couple still have the luxury cars. A couple are living back at home with their parents. These friends that had mocked me for so much schooling (and the accompanying debt) just a couple years ago, are going back to school.

    1. MalibuRenter

      And a lot of former mortgage brokers have gone back to being grocery baggers and bartenders. It’s better for society that way.

      1. CA

        I managed to go get my master’s degree…but yeah 99% of my coworkers went back to random jobs like bartending or telemarketing.

  15. CK

    To answer your question, yes — I am over it and have been for quite some time. It’s great to see that it looks like you are going to take IHB in a more positive direction, I’m sure I’ll be reading more now. Had dinner with a couple of IHBers the other night, and told them the reason I quit participating on the forums was that it was just too negative a party for me. I don’t get the folks who are seemingly cheering for the utter collapse of the economy. Sure, the homedebtors will “get theirs” if that happens — but so will the rest of us. If this all turns into some scene from Escape from LA, it’s not going to be good for anyone. Time to let it all go and start looking forward….

  16. scott

    I too am over it, but I hope cheerful mocking of real estate agent’s misuse of the English language is still allowed?

    1. IrvineRenter

      Sure. I probably will in the future. I may use it as an opportunity to practice writing good descriptions that stand in contrast.

  17. Irvine Cyclist

    IR, LOL! I might have been the guy breaking away from the pack last Sunday down Laguna Canyon. No joke! I was riding Laguna Canyon and broke away right after the Day Laborer stand! Anyhow, thanks for all that you do. I’m a long time lurker and your info saved my wife and I from buying in 07! All the best and Thank you sincerely.

  18. alan

    Back to the three car garage thing. My folks house was built in 68 had a three car garage. This was quite common back then. Maybe the OC builders just didn’t follow. Most people used the third garage for storage (bicycles, extra frige, etc) or turned it into a man cave workshop table saw, bench, drill press. So it’s not that bad of a thing to have.

    1. Blueberry Pie

      Yeah – what’s wrong with a 3-car garage? I currently have a 2 car garage with no cars in it (instead I have motorcycles and various other projects). A 3-car garage would make it possible to keep at least one car in the garage.

    2. PortolaHillsOwner

      Yeah – when you say “3 car garages – we don’t want them”, who is “we”? This is hardly a statement of fact, but rather your opinion.

      Builders these days seem to make the garages particularly narrow. My ‘3 car’ garage is hardly any wider than the ‘2 car’ garage that my parents have, in their Los Angeles tract home. Where they have spacious areas to each side of the main door and to the rear, for work bench areas, laundry, etc., I have about 12″ – not even enough for a standard cabinet, which is usually 18″ deep.

      I’d forego a ‘3 car’ garage only if I could locate a home with an old fashioned ‘2 car’ garage with adequate storage and workspace. Without those, I’ll keep my 3-car garage and look for another in the future.

      Keep up the good work – the blog is enjoyable to read even as I see my equity continue to drain away.

    3. Geotpf

      It’s a taste/style thing-the problem is that the garage dominates the house from the street. Horrible curb appeal. Look at the first picture-that’s not a house with an attached garage, that’s a garage with an attached house. It’s not attractive at all.

      Of course, big garages are quite useful, which is why lots of houses have them. I personally like my particular house, which has a three car garage (actually, the door is only a two car, but then there’s extra space beyond, and a one car door could be added-it’s the size of a three car, but you could realistically only park two cars in it). Through the quirks of the way the house has been expanded over the years, and the fact that the house is on a corner lot, the front of the house is on a different street than the garage is. Facing from the street to the front door, it looks like it has no garage at all. Of course, this only works on corner lots, although you can have an alley and the garage in the rear and get a similar effect.

    1. Blueberry Pie

      Me neither. I probably won’t be until I am able to afford a decent house.

      I do feel bad for the people who played by the rules – made a hefty down payment – and then lost it.

      But I don’t feel bad for the people who bought a house with little or no money down and used some kind of unaffordable financing.

  19. tlc8386

    Well I see you have come to the conclusion of capitulation this is where you realize that all you have done has not been able to change the underlying problem and we all know what that is trying to live in Irvine. When you finally realize that you can’t have the life you want you either do two things. One is to move out say screw this place or the next thing to do is to take that anger and fight back but towards a real change and that my friend would be taking this to the politicians or becoming one yourself.

    When I fought my battles it was in front of City Hall. That is where the problem needs to be fought for decent/ affordable housing. The Fix is very widespread and no one wants to see change. NO one realizes that future growth depends on affordable housing. They will just tell you to move to Riverside. But if you work here or need the airport you really need to live here.

    And this is where you need to re-evaluate your investment needs. You have a few choices –the stock market or finding a fixer—or building one for yourself. Or taking the fight to City Hall.

    Money has to grow and it can’t here the housing the bubble is too deep. Too many will not let go of their threefold gains. Builders will not build cheaper because of their fees, costs of land, and who they have to pay off. We are stuck here renting because that is still cheaper. And we want a higher quality of life.

    So money has to be looked at as an investment and The Housing investment here is not going to change. It’s not going to drop down enough so the average person can afford a normal house on a normal lot.

    Too many players are in this market you can’t beat them. I have given up but I still write to the city council members with not one response. The people living here will not let this go—they will hold out for the higher price.

    I would move but I am stuck here as well. Dealing with the rude OC people on the plane this week was my indication that I have left the rest of the USA and found my way back here.

    It’s difficult when you are a caring person, when you see injustice and want to change but then you realize you are one person. Sometimes you can win, I have won a few good fights but this fight is so ingrained into the psych of the OC people that you can’t get them to care enough to want to change.

    They take in their large pay off the tax payer, they have lived here their entire lives so they know NO difference and they don’t care about affordable housing as long as they have prop 13. The new guy pays all the bills. And that is how the state is run.

    It’s very frustrating for the new comer who takes a decent job only to find out they can’t buy anything in Irvine but can only rent from the Irvine Company on their many thousands of rentals on every corner of every street.

    The Great Park is the land but of course they have spent millions on nothing—such a waste of money. When they really could of built affordable housing with decent lots. The Reality of Irvine is families with duel income who can spend half of their income on housing. While the rest bask in the taxes they collect off of the home owner.

    It’s a great Fix—

    1. Longtime Reader

      I think we reach a point of diminishing returns. Ever since we entered the era of globalization, prices, production, wages, goods and services are held in check. State worker’s salaries are being cut and people are being laid off. Real estate prices will soon follow.

      California is the epitome of the financial crisis. It does everything wrong, high salaries and pensions for government workers(that are now being cut), high education cost/healthcare (this is what happens when you don’t crackdown on illegal immigrants) and an over inflated housing cost.

      Prices have to fall.

    2. MalibuRenter

      I am afraid I must disagree. Regardless of where you are in CA, there is home price pressure, and now local government budget pressure.

      Perhaps it’s because of my finance and econ background, but I don’t view the bubble and housing affordability problems as having to do with justice. I view them as massive misallocations of resources and often incredibly stupid decisions.

      Many states and municipalities came to think that people would always want to move there; that it was appropriate for local government to make policy on finer details of how, when, and where new construction would occur; that their policies would have the intended results; and that the intended results were a good thing. Often, running up home prices or charging entry fees to new residents were primary intended outcomes.

      The tax and regulatory structures in CA are wholly unprepared for long term decline in pricing and population outflows.

      One view of people moving from CA voluntarily is that they are “fining” the state and local governments for their policies. My departure will cost state and local governments $20-25,000 per year directly in lost taxes of various types (income, sales, gas, vehicle registration, etc.). If 1 million households with decent incomes leave, it is probably about $10 billion per year of lost income to governments.

      You can vote with your feet, and fine bad behavior by taking your tax dollars elsewhere. When the population is growing and the economy is good, you probably won’t get so much attention. If you do this in a bad economy, call the news media, and do a caravan of 100 UHauls out of state for the film crew, you will be a top national news story.

    3. Geotpf

      “When I fought my battles it was in front of City Hall. That is where the problem needs to be fought for decent/ affordable housing. The Fix is very widespread and no one wants to see change. NO one realizes that future growth depends on affordable housing. They will just tell you to move to Riverside. But if you work here or need the airport you really need to live here.”

      Supply/demand. Now, you are right that the government throws up artifical barriers to make it difficult to build, driving up costs and shrinking supplies. Of course, right now, demand is so low and supply is so high that things are swinging in the other direction.

  20. Sue in Irvine

    I’m glad you have seen the light and the need for balance. As I’ve said before I am a 7 year stage 3 cancer survivor. And my family has had other painful health issues. I was brought to my knees and humbled beyond imagination. Each day now is wonderful. I have no stress, I am easy going, thankful for my family and our one story 3/2 condo we bought in 1993. We’ve always been thrifty. We could have easily sold and moved up to a house in Woodbridge. Each time a new development opened I was there looking at the models and dreaming.We lived here before all of Woodbridge was built out. Before Westpark, before Oakcreek. However, we had 2 kids and daycare and jobs. Why pay more each month for a house when we were perfectly fine in our condo (which BTW has a bigger yard than many of the new homes now). And every year after year the prices just kept going up. How do these young families afford these houses? Maybe they inherited money I thought. We bought for $170 in 1993, and then at the top (2005 or 2006 or whenever) our model was selling for $505. We never even thought of selling because this is where we lived and had one more kid in school. It was our home and slowly we had fixed it up and the neighbors are great.

    When I first starting reading this blog sometime earlier this year I wondered why is he exposing all these homeowners financial dealings? Sure it may be public information if you know where to look, but I sure wouldn’t go looking for it. Then I imagined that some homeowners who were featured were really pissed at IR. And he even gives interviews and people know his name. That can be bad because of all the crazy people these days. I can only imagine the hateful emails and messages IR has gotten.

    I can’t really comment when you all get into your financial speak and analysis. It’s way beyond my chemo brain. I do enjoy reading it though. I’m just a simple gal from Michigan who fell in love and ended up in California in 1980.

    IR..you are a fantastic writer and obviously highly intelligent. Now take a breather and find your balance for your family. One time you mentioned taking your son to Wild Rivers so you are a dad. Try to find your eventual house in a neighborhood where your son can walk to school and your wife can feel safe.

    Good luck.

    🙂

  21. thrifty

    Irvine Renter: Whatever shape your move-on takes, I hope you continue to present the facts, objective context and reasoned opinions for those of us following the housing market regardless of location. It is easy to confuse opinion and fact. Your disciplined approach, (whatever the fuel – anger, sympathy, etc.), provides that example. I believe the detail presented in individual examples is an excellent daily “case study” that all of us can learn from. The anecdotal information from conferences you attend is most enlightening. The well intentioned and informative comments from your bloggers completes the package.
    This blog, like life, is a process. Keep up the excellent work.
    Thank you.

  22. hormiguero

    Demographics are destiny. Glad that at least some of us have learned something from the past year or two. Now, time to get ready for the 20-year Tokyo slide.

  23. K

    I am glad you are letting go. I am not there yet. I worked hard in undergrad and borrowed up the wazoo to put myself through Law school. The plan was to buy a starter home and have my wife stay home with the kids. I couldnt see making it without a professional degree, so I jumped. Turns out my salary increased by about 1% yet my debt jumped 10 times. I live in a crappy IAC apartment on the freeway, and I cannot even afford to service my student loan debt. No way will I be able to buy a home in the foreseeable future. Probably end up getting a divorce because of that one – not my choice. My jobs sucks but there is no potential for moving as the legal industry is being clobbered by the recession. Cant move out of state because of lack of jobs and salaries are even smaller there (if I cant pay the $1,000/mo on student loans now, how will I do it on a smaller salary?) Here is the part the gets me. I have friends and family who didnt even graduate highschool got homes on liar loans etc. They are sitting pretty in nice homes just riding this thing out getting bailed out. They pissed around while I busted my a**. I keep trying to tell myself that their time will come but if you look around people in Irvine don’t seem to be hurting too much yet. So I will keep looking for my schadenfreude, but I hope to join you one day in finding peace with it all and moving on.

    1. Sue in Irvine

      K..be proud of yourself for finishing law school on your terms. That’s quite an accomplishment. I’m not sure the house with the stay at home mom is a reality anymore. We didn’t buy until we were married for 13 years. I’ve always worked. Back in 1993 our condo was a dream home to us. I never thought we’d be able to buy in Irvine when we were renting all those years. I guess age doesn’t matter, buying is hard when you are struggling. There are many other nearby areas with nice property a bit lower in price. I think Mission Viejo and Lake Forest are great places to live. Good luck.

    2. Shannon

      Good for you, Sue, for keeping up with your work. It’s hard to find an upside in a recession, but if it’s women realizing that they need to go out into the world and earn–just as housework and childcare should be shared, so should earning–instead of remaining dependent on their husbands, that would be a very good thing, for all of women who do work and all of the people who have missed out on what these often highly educated women have yet to give back. The upper middle class women I know don’t seem to realize what a bad situation they put themselves in when they agree to stay home with the children for the rest of their lives, or even 10 years. Maybe that will become painfully and patently clear after this recession, as marriages break up over financial squabbling and kids get pulled out of private schools.

      1. K

        Shannon thanks for you input but I don’t agree with you regarding working. I know this is a hotly debated topic among the working mom side and the non-working mom side but so that this thread doesn’t get off topic I will just leave it agreeing to disagree.

        Sue thanks for the reassurance.

        1. Shannon

          Well, it’s troubling that you still believe that, given the way you describe your situation. Surely it might alleviate your financial situation a bit if your wife got a job? Perhaps not in this market, but there’s the argument for working all along and not quitting the second you have a child. You can’t get the job security that those years give you back.

          Then again, I wouldn’t expect most men to grasp the damage they do to their wives and families when they demand that intelligent and educated women stay home to do tedious manual labor all day long. Men aren’t the ones doing the tedious manual labor, I guess, and aren’t deprived of their daily interaction with other adult human beings. They also aren’t depriving themselves of the independence and autonomy that comes with earning your own cash, or the years of experience it takes to advance in a job and earn more. And then again, I suppose that some men want to keep their wives as far away from independence and autonomy as possible. What I find less understandable are the women who assent to this.

          Sad, I think. All off topic, of course, but sad. And I’m feeling reflective this morning.

          1. WaitingToBuyByAndBy

            Shannon,

            I would also respectfully and politely disagree. Looking back, I see it was stupid to think all those years we could ever buy a home on my single income in the dual-income environment that is South Orange County.

            Still, I am very thankful for my college graduate wife, who in addition to the “tedious manual labor” also homeschools our children.

            She looks forward to the time when she can further her education and career, but in the meantime we have a great relationship and a loving family. Love is sacrifice, not freedom.

          2. irvinemommy

            Why are you so convinced that stay at home moms are oppressed? Being “deprived of independence” and forced to do “tedious manual labor”? I consider myself VERY lucky. It is a joy and an honor and a CHOICE to raise my own children and take the best possible care of my husband. Yes, we make sacrifices, but it isn’t just me, it is both of us. And we do it for the benefit of our family. It is a matter of priorities. I am not looking for a fight, but when people make blanket comments like this, it pisses me off. It is ignorant.

          3. k.o.

            Nice to see the Orange County mentality of “we need more, more, more” played out here. My guess is that Shannon has been burned in the past and has a grudge against stay at home moms. Yikes.

    3. Dan in FL

      K,

      Advise from one lawyer to another…work for yourself. Hang your own shingle. Find a line of law you like and just start doing it. Most of the student loan people will give you a 12 month reprieve if you have a drop in income.

      Law is a great profession to start your own business with. Start small, take on what you can, keep overhead low.

      That’s how I started, and that’s how I keep things. Don’t get down on yourself…there’s lots of good places to practice law in this country.

  24. AVRenter

    I still like poking fun at the HELOCers etc. It’s like a juggling circus monkey; entertain me monkeys. However, the anger is still well justified and needed (even the HELOCers’ anger is needed) but maybe a bit misdirected. Slaves can’t revolt on sugar and spice and everything nice. It’s time to take the red pill, slaves.

    The IHB may not be the best place for that focused anger, sure. But you can still live a balanced life that also includes an outlet for focused anger.

  25. Laura Louzader

    I thought I was past schadenfreude, but I’m experiencing another wave of anger at the people who created this mess, and joy at the financial dismemberment of the flippers and delusional home borrowers who helped create this disaster.

    Would it be that the financial maniacs at the top who engineered the whole thing could suffer similarly. Maybe they will yet. Maybe an enraged population of tent-dwellers will get hot for entertainment on some cold winter night, and go start some bonfires out in the Hamptons.

    The reason is that misery loves company, and I have had my hours cut and my pay reduced to a level I’m ashamed to admit to all of you. Now that prices on attractive condos are dropping to reasonable levels, I’m further away from being able to purchase than ever.

    I am FURIOUS at the damage the speculative rampage has done to our economy, and to the lives and dreams of the millions of people in this country who did not take part in this or benefit from it, but are being destroyed by the fallout from it.

    We who have suffered collateral damage as a result while deriving no benefit at all can be forgiven for still deriving just a tiny little bit of satisfaction at the ruin of people who contributed to this. The house and rent inflation eroded my paycheck and savings, and now I’m watching people who were formerly much better paid than me, lose professional level jobs and paychecks. I’m watching people who bought houses honestly and correctly 25 years ago have to give them up because of job losses and business reversals.

    But I will try to transcend schadenfreude, I promise. The best antidote is to concentrate on rescuing yourself and attending to your life, and making it work no matter what circumstances have befallen you. I will rebuild my old business and/or get another job. I will cope with whatever.

    That’s all we can do.

    1. Geotpf

      I blame the Fed. The Fed should have kept interest rates higher at the first sign of an irrational bubble. If done properly, price growth in real estate could have been slow and steady, instead of insane followed by a crash.

  26. Eat that!

    I think the next phase of mortgage cramdowns should reignite our anger. Just like K above I watched as people borrowed way more than they could ever payoff and then borrowed more to fuel their new lifestyle. Now, those same people are getting in line for mortgage cramdowns and Fed backed low interest rates so that they can stay in their homes and still enjoy the good life they deserve since they live in the OC. All the while, if I can’t pay my rent I’m evicted. All of this makes no sense to me anymore.

  27. Dawn

    Great post IR. I’ve learned a lot from you, through both this blog and your book. In addition to your technical knowledge I have admired your emotional equilibrium. You seem to have good instincts for the right balance in life.

    There are certainly enough old posts to read if I need a schadenfreude fix, but I’d rather move past that and make the best of what I can in this economic situation.

    Thanks for continuing to lead the way.

  28. freedomCM

    I”m not over it either.

    I’ve lived like a monk to save, my wife was laid off, and we still rent a small house.

    Our savings is less than some people took out HELOCing in a year.

    House prices are still 5x median HHI.

    And the economy isn’t getting better anytime soon.

    Still pissed.

    And still want to know if the turtle rock house was HELOC’d up the wazzou!

    1. IrvineRenter

      The owner paid nearly all cash in 1996. He put $320,000 down and only borrowed $60,000. He steadily increased the size of his HELOC, but there is no evidence he actually spent it. Even at the end in 2005, he had a $250,000 HELOC on what was probably a $1,000,000 plus home. This borrower was actually quite restrained.

      1. Shannon

        Oh, California, where a HELOC worth the value of many people’s very nice houses is comparatively restrained. 😉

  29. avobserver

    Great post IR. Without the emotional component I think the analysis will become even more objective on this blog. I have been over with my schadenfreude for quite some time too. Hard to do it when the massive collateral damage this housing bubble has inflicted on our society as a whole. By now we probably all know some friends and family members (if not ourselves) who are hit hard by unemployment or financial ruin. In the end we are all screwed one way or another – years of economic stagnation, asset deflation, high unemployment, reduced social services, increased crime rate … are ahead of us no matter what we do. Unless your employer happens to be GS ….

  30. AbroadThankGod

    I’m afraid that as I’m coming out the other end it’s with a renewed sense of hopeless bitterness.

    I simply don’t see the silver lining. I don’t see ‘mericans choosing long-term sustainability over immediate gratification. I don’t see the end of Bubble Culture.

    When a society has become so arrogant, so entitled, so full of hubris, it is virtually impossible for that society to voluntarily change its ways.

    And BTW, I’m not abroad any longer. These comments are made based on my recent experiences back in the States.

    All stations back to status quo! Go second half recovery! Where’s my Frappuccino?

    What? My grandchildren will be paying off my debt? Screw ’em! They should have thought to be born sooner.

  31. Geotpf

    Um, I’m sure this is a mistake, but if not…

    Heating & Cooling Information

    Floor Furnace Heating
    No Air Conditioning

    …I would expect air conditioning in a million dollar house (well, maybe it would be okay if it was right by the beach).

  32. muzie

    I, for one, have emptied my reservoir of Schadenfreude a long, long time ago. In fact, it saddens me to this day to see commenters still getting a kick out of the debacle, and still fixated on speculating on the extent of the damage, while apparently having nothing whatsoever to contribute to stem the damage.

    Language such as “the herd”, “retail investors”, “the great masses” is simply dehumanizing people around all of us, and to be frank, is very arrogant on the part of the speaker.

    Yes, like everyone I’m sure, I still want those that were reckless to be punished and to lose every penny (if any) they had put into the bubble so that such a thing never happens. But frankly, it doesn’t get me much.

    I started following this blog two years ago. Back then I simply wanted homes to drop in price so I could afford one.

    Much, much more than that as happened, and in the end, I’m quite sure most followers of the blog aren’t in any better position.

    We’ve simply rolled back to home prices from a few years ago, but in exchange have reverted to uncertainty and public mistrust like we haven’t seen in decades. Of course the price decline was inevitable (and will continue from what I can see), but I don’t find any glee when it’s clear to me the end result of all this is a net-negative, even with lower prices.

    After two years of this crisis, my desire to own a home after two years has actually being deadened, to the point where I just don’t care, to be honest.

    1. E

      I, for one, have emptied my reservoir of Schadenfreude a long, long time ago. In fact, it saddens me to this day to see commenters still getting a kick out of the debacle, and still fixated on speculating on the extent of the damage, while apparently having nothing whatsoever to contribute to stem the damage.

      How exactly are we supposed to stem the damage?

      There was a reason people used to say “got popcorn?”. It was because we KNEW there was nothing to do but sit back and watch the carnage.

      Language such as “the herd”, “retail investors”, “the great masses” is simply dehumanizing people around all of us, and to be frank, is very arrogant on the part of the speaker.

      Oh c’mon now. It’s not like we are putting them in stocks and throwing rotten vegetables at them…but if that would get people to learn, I’m all for it.

      Yes, like everyone I’m sure, I still want those that were reckless to be punished and to lose every penny (if any) they had put into the bubble so that such a thing never happens. But frankly, it doesn’t get me much.

      Lose every penny they had put into the bubble? Most people profile didn’t put any money into the bubble from what I have seen here, they took it out and spent it.

      I started following this blog two years ago. Back then I simply wanted homes to drop in price so I could afford one.

      You’ve been here for two years and didn’t realize that it was going to get UGLY for many many people? In the last two years, did you click on any of the Econ/Finance blog links to the right?

      Much, much more than that as happened, and in the end, I’m quite sure most followers of the blog aren’t in any better position.

      I’m sure many are. But the “better position” has nothing to do with having more or less money. It’s about caring less about the entrapments of life and just “being”.

      We’ve simply rolled back to home prices from a few years ago, but in exchange have reverted to uncertainty and public mistrust like we haven’t seen in decades. Of course the price decline was inevitable (and will continue from what I can see), but I don’t find any glee when it’s clear to me the end result of all this is a net-negative, even with lower prices.

      If the industry, politicians (and homeowners) were more honest with regards to why and how it happened, there wouldn’t be so much mistrust. This blog had nothing to do with the financial demise of all the homeowners it chronicles. In fact, it probably saved many people. Where is your appreciation for that?

      I’m not sure what you mean by uncertainty, but if you are referring to uncertainty about our economic future…you can be certain that most people will now live a more simple life. Is that so bad? Instead of shopping, they can go for a hike. How novel.

      After two years of this crisis, my desire to own a home after two years has actually being deadened, to the point where I just don’t care, to be honest.

      So why are you still here? To understand more about the bubble or to just watch Act II…’Crash of the Option-ARMs’?

      We’re still in the early innings.

      1. Muzie

        “How exactly are we supposed to stem the damage?”

        By stopping to focus on how everyone can preserve their own worthless assets and more on how as a community we can come together to help each other.

        “Oh c’mon now. It’s not like we are putting them in stocks and throwing rotten vegetables at them…but if that would get people to learn, I’m all for it.”

        The funny thing about blogs and the internet is that reading all of this I would get the definite impression that 99% of people never lost a penny on their 401Ks thoughout all this. That’s the facade people keep. Even many who saw the bubble coming lost much in the crisis. Even those who bought very conservative investments. Everyone seems to talk of “the others” as being the dumb ones while the majority think they did better than the average.

        “You’ve been here for two years and didn’t realize that it was going to get UGLY for many many people? In the last two years, did you click on any of the Econ/Finance blog links to the right?”

        How about some respect – this borders on the insult. IrvineRenter has stated many times things got much uglier, faster than he expected. Correct me if I’m wrong, but even he didn’t think 3 out of 5 major investment backs would go bankrupt in this process. When I started looking at this blog, prices weren’t falling, and subprime hadn’t started to go south. There’s only so much one could reliably predict at that time.
        “So why are you still here?”

        Huh? Because IrvineRenter provides the best analysis of this phenomenon that I’ve seen anywhere. That IS the point of the blog, remember? No, the point of the blog isn’t just to showcase houses from total strangers and laugh at all the fabricated and unverifiable stories of how they ruined themselves.

        ” In fact, it probably saved many people. Where is your appreciation for that?”

        Nowhere did I mention I didn’t appreciate this blog. I don’t think the Shadenfreude parts of the blog “saved” anyone. The rigorous analysis did.

        “’m not sure what you mean by uncertainty, but if you are referring to uncertainty about our economic future…you can be certain that most people will now live a more simple life. Is that so bad? Instead of shopping, they can go for a hike. How novel.”

        What a trite lesson. Plenty of people here have finished off degrees (my wife among them), started businesses or completed projects only to find that at the worst possible timing, this crisis has closed all manners of opportunities for them. And your response is “Oh well, too bad, why don’t just go take a hike instead?”.

        “So why are you still here? ”

        Because IrvineRenter still provides the best analysis of this phenonemon and there is still more to be learned here. As I stated, the interest now is more academic than personal.

        1. E

          Fair enough.

          I wish people in general would have more of the “come together” and help people attitude. Now I can’t say that people are in any position to help people financially as it’s asking a bit much to say that we could make their neg-AM loan “right”. When the payment triples after 5 years…it is what it is. IMHO, coming together, should be helping people to understand that money doesn’t buy happiness, keeping up with the Jones’ is stupid…and stuff is well…just stuff, and in the end it’s pretty meaningless. Most of the people losing “everything” are really just losing their “fake” sense of status and superiority. Is that so bad? I lead a simple life. Why can’t others?

          The blog should STILL point out the cases of HELOC abuse. Over and over and over. People need to wrap their heads around the fact that borrowing against your home is just plain STUPID. Period.

          The stories are not “unverified” nor “fabricated” as you state. It’s laid out in black and white. A person paid $X for a house and now is losing it owing $3X or more on it. People took out huge option-ARMs for high 6 and 7 figure amounts. If one plays with that much debt, one should know that the math of such a loan is unsustainable.

          WRT reading economics and finance blogs…I’d recommend reading them. IrvineRenter may not have been bearish enough, but many commenters were far more bearish than him. We were the ones given the “tin foil hat” label and continually derided. If your interest is academic now, I’d recommend reading Mish and Denninger in addition to IHB.

          1. Muzie

            I agree in general. As for the sense of status… Money is not all about status. And not all money is unearned. Money earned from the bubble is completely unearned, but for the others who worked hard to achieve whatever they set out to do, I think the choice for them to live a “simple” life or not is theirs.

            We do know what people paid for houses and what they owe. What is fabricated is what we know about what these people were thinking when they borrowed the money, and for what exact purposes they used that money. The simple hypothesis is they spent it on cars and jewelry. But that’s just that, an hypothesis. Fabricated. I’m sure there was a lot of that, but there must have been a lot of other reasons as well.

            I know about Mish and Denninger. Boombustblog is good too, Roubini, calculatedrisk, etc, it’s a well known circle. Back in November, I literally spent 6-8 hour every day reading all these blogs – and trading on the information. To be honest, I was quite miserable, hehe, it was just too much.

            However, for me the game changed when the government intervened so violently and massively – TARPs, short bans, trillions in debt… Government intervention on the scale that we’ve had was never in the cards on any of the blogs back then as I remember it. Ultimately I know trillions in debt can’t lead to anything good in the future… But in the mean time all bets are off.

            All these bloggers are very good at predicting economics trends and data, connecting the dots and so forth. But predicting fickle government willpower… that’s an entirely different ball game.

            It’s actually a good thing for the crisis to recede a bit, because when the crisis was at its peak government had quasi-absolute power to just decree anything as everyone was just too fearful. For all we know, government could very well buy houses off the market. Now has things pick up ever so slightly it forces the government to take a breather.

          2. E

            For me, it’s not so much what the people who used their homes as an ATM machine spent the money on, it’s the avenue that was provided for them in order to obtain the money. The amounts, regardless of what it was spent on, leave me flabbergasted.

            I’m not saying that the expenditures were appropriate or inappropriate. If you were running a business and someone wanted to purchase whatever good or service you were selling, would it matter where the money came from? Would it even become an issue? I’m sure that the Car Dealers, Plastic Surgeons, Jewellers, Restauranteurs…hell…even the Charities were just happy to receive whatever people were willing to give/spend.

            Once again…I feel that it needs to be hammered into the general publics psyche, over and over again, that borrowing against your home (shelter) is very, very shortsighted.

            I’m with you on the fact that Mish et. al. didn’t see the massive government intervention. They still seemed to want to “play the game” as if the same old rules were in play. I myself didn’t make a single trade off their opinions as I knew the fiasco was going to be much bigger than they surmised. I was more bearish than all the bloggers and kept my mouth shut so I wouldn’t be called a “doom-n-gloomer”.

            I’m willing to bet that the “intervention” will become far more severe over the next couple of years.

  33. awgee

    I was upset at the end of the last bubble, 1990, because I bought at the peak and was underwater within three years. I was not angry or upset during or at the end of this bubble, only determined to profit from it.

  34. steveforreal

    IR

    Losing the Schadenfreude is great and will open up many other vistas and opportunities for you.

    Never forget, that while so many here are caught up in winning, losing, fairness, etc. others around the country just . . . move. OC is just one of many places to live in the US. I would guess 80% of the country has never HEARD of Irvine. Please don’t tell me its difficult to move as I see another latin/asian family relocate from across the world with no education, money, credit, or the ability to speak the native tongue. Few of these people worry nightly about their home’s value as they do not own homes.

    Its painful to accept that we construct most of our own prisons in our mind.

    Its also difficult to accept that 95% of americans could quickly recover from their home indebtedness if extended families would consolidate – a model normal in most of the world.

    Things are as hard or as tough as you make them.

  35. Dan in FL

    What makes it hard for me to “move on” is the fact that we have no leadership to help us do so as a country. Astute observers on this blog, and elsewhere, are sort of a little community. We have similar viewpionts on the mistakes we have made in the past, and that has certainly been a focus of mine over the last year or so.

    But we, as a country, are not exactly ready to move forward, either are we? We have more pain to endure, more job loss and money loss to deal with, but our leadership seems to think that everything’s ok again, the bottom is here, we’re on our way to economic recovery.

    We’re still in the eye of the storm…the waters haven’t even receeded yet…and there’s going to be a lot of REAL cleanup to do. But the government seems to keep seeding the storms, instead of letting the winds die down on their own.

    My anger at HELOC abusers died a long time ago, but that’s partially because they stopped abusing the system. The banks and the government, on the other hand, have not.

    If the bubble starts hyperinflating again, my anger at the HELOC abusers will return; for know I think they’ve learned their lesson. But I’m sure the government and the banks haven’t learned their lessons yet.

  36. Irvine5

    IR,

    Your blog has provided a valuable source of strength and inspiration for people to resist the societal pressure to buy a home at any price. One of our friends here in Woodbury jumped at the chance to buy a home in 2006. I told them that they should be very careful about this decision however my voice was overwhelmed by all of their friends, family and neighbors. Long story short, they are now in the last stages of foreclosure with both their hard saved down payment and credit score obliterated. They think it will be easy to rent a place, I am afraid that they are going to be disappointed when landlords see their credit score.

    On another note I met a specialty realtor who was sitting in a REO/foreclosure sale home today in the neighborhood. He has carved out a specialty practice working with the banks to prepare forclosed homes for sale. He visits the property, prepares a report, does some initial staging etc. He receives a fee plus a period of exclusivity to sell the home before it hits the open MLS. Recalling a point that you shared regarding the true volume of foreclosed homes that BoA has on its books I asked him about the coming volume of foreclosures on the market and he confirmed that he thinks that it a huge number, at least several thousand.

    Just thought I share this as you plan your entry strategy.

  37. tonye

    Hmm… good for you. I never drunk the KoolAid, preferring my sugar delivered in scotch and cognac.

    Looking back I realized I could have taken out hundreds of thousands of dollars in money but I would not feel comfortable cheating the bank today.

    So, best thing you can do is to be honest with yourself and the rest just sort of goes along.

    😉

  38. Freetrader

    Good for you, IR. I think that taking a differently nuanced approach at this point is a good idea — after being for so long a leader in understanding and communicating the housing madness of the early ‘oughts, your views have become widely accepted. The danger with that, as we have seen, is that amazement of the stupidity and naivety of humanity during the housing bubble can turn into simple reflexive nastiness toward homeowners and real estate in general, which may not be appropriate or well directed. I am certainly not accusing you of that, but there becomes a ‘piling on’ effect in the community as a whole — at some point we all stop thinking in a nuanced manner, and that’s how we got to where we are in the first place.

    Excellent metapohor with the Bicyclists — by changing gears slightly now, you ARE that guy out front.

  39. Charleston SC HOA

    You got a story to make me momentarily speechless,quite interesting.If the industry, politicians (and homeowners) were more honest with regards to why and how it happened, there wouldn’t be so much mistrust. This blog had nothing to do with the financial demise of all the homeowners it chronicles. In fact, it probably saved many people.
    very interesting to read this article…………..thanks for sharing the views…………….

    1. E

      Jeeze.

      Could ya come up with something original rather than cutting and pasting what I had already said.

      I’m referring to

      If the industry, politicians (and homeowners) were more honest with regards to why and how it happened, there wouldn’t be so much mistrust. This blog had nothing to do with the financial demise of all the homeowners it chronicles. In fact, it probably saved many people.

  40. TurtleRidgeRenter

    I’m kinda over it, too. We love our IAC rental. Great location, beautiful pool. Crystal Cove beach is 5 minutes away. Realizing that we couldn’t afford to buy anything as great as what we rent, we relaxed. We stopped looking at houses 2 years ago. It’s more fun to just enjoy California.

  41. WaitingToBuyByAndBy

    IrvineRenter,

    There seems little pity for 100% financed buyers (perhaps another, better meaning for FB) and rightly so. At the same time, there appear to be a number of those who bought near peak with sizable down payments and traditional fixed-rate financing.

    I mention this because it seems an injustice that those “Financed Buyers” that helped inflate the bubble are walking away (or foreclosed upon) while others are imprisoned in a depreciating asset with perhaps a 7 to 10-year sentence.

    Often someone in a bad situation is unable to see the best solution. It can be helpful for someone outside the situation to assess the best solution.

    All this is to suggest it may be helpful for owners with skin in the game to see discussion and argument of the best escape such a situation.

    So for example, perhaps it is possible to create a “Pay vs. Walk” calculator, that takes the cost of the down payment + credit ding + moving against estimated future recovery (or loss) of value. Another idea is a “Years to Catch Up” calculator that (with some historical idea of long-term appreciation) could show an owner based on buy price and length of ownership how long until equity gains result in a positive position.

    Since text does not always communicate tone, let me say my suggestion is sincere and not sarcastic.

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