IHB News 1-30-2010

Anyone going to the Irvine Company model homes this weekend? They've hit the reset button on our housing market, so it's time to start all over.

55 PLANTATION Irvine, CA 92620 kitchen

Irvine Home Address … 55 PLANTATION Irvine, CA 92620

Resale Home Price …… $849,000


We can break the cycle – We can break the chain

We can start all over – In the new beginning

We can learn, we can teach

We can share the myths the dream the prayer

The notion that we can do better

Change our lives and paths

Create a new world and

Start all over

Start all over

Start all over

Start all over

New Beginning — Tracy Chapman

IHB News

Irvine Company Opens New Models

In case you have been hiding under a rock, I want to let you know that the Irvine Company is opening its new models to the general public this weekend. I will likely go visit myself soon and blog about what I see. As an industry observer and participant, and Irvine resident, I want to see them be successful. The success of the Irvine Company is inexorably tied to the success of Irvine itself. As they do good work, we live the results.

House of Blues Benefit Reminder

A long time reader of the Irvine Housing Blog recently contacted us for our support.

Todd Larsen, director of the Irvine Music Academy has been struck with leukemia at age 44. He was the family's sole wage earner taking care of his wife and 10 month old son by teaching music and coaching swim lessons in Irvine.

Thankfully Todd has great health insurance but unfortunately did not have disability insurance. As you can imagine his family's world has been turned upside down. The Irvine community has been holding walk-a-thons and auctions to help the family make ends meet. (Click below to read more about how the Irvine community is rallying around the family – the second link is to Todd's blog where tickets to the event can be purchased.


Tickets to the event can be purchased on Todd's blog at http://www.toddrockinleukemia.blogspot.com/.

Housing Bubble News from Patrick.net

In Foreclosure 101: Non-Judicial Foreclosure, I discussed how mortgage debt is not discharged, and lenders can still try to collect from borrowers. Bloomberg, Calculated Risk and Mish all had articles on that subject this week.

Lenders Pursue Mortgage Money Long After Houseowners Default (bloomberg.com)

Fed Keeps "Extended Period" Pledge To Screw Savers; Hoenig Dissents (bloomberg.com)

So. CA Shadow Inventory (doctorhousingbubble.com)

Bankers have a NEGATIVE value to the rest of us (bloomberg.com)

Fed Weighs Interest on Reserves as New Policy Rate (bloomberg.com)

Unemployment rises in 43 states (articles.moneycentral.msn.com)

Fed Buys Another $12bn of Fannie, Freddie Crap With Counterfeit Money (housingwire.com)

Rents Fall to 3 1/2 Year Low in Orange County (calculatedriskblog.com)

No bottom

Outlook for housing market muddied by anemic rise in prices (latimes.com)

Housing Market: Even More Pain in Store? (foxbusiness.com)

Bottom In House Prices, a Decade Away (zerohedge.com)

Housing recovery could take a decade, say optimists (washingtonpost.com)

House values won't regain bubble heights for AT LEAST a decade (latimes.com)

Home sales decline

House Sales, uh, "Worse Than Expected" in December (nytimes.com)

House Sales See Biggest Monthly Drop In 40 Years (npr.org)

Existing House Sales: The Lemmings Slow Down (seekingalpha.com)


Foreclosure plague: 2009's worst-hit cities (money.cnn.com)

10% of Merced Houses Are In Foreclosure (centralvalleybusinesstimes.com)

Fear and foreclosure in Las Vegas (telegraph.co.uk)

28% of Orlando-area rental apartments, condos, town houses vacant (orlandosentinel.com)

Hawaii Foreclosures Reach Record High for December (abcnews.go.com)

New Home Sales

New-House Sales Fall, Capping Worst Year (bloomberg.com)

US housing news keeps world markets in retreat (sfgate.com)

Excess Supply of Existing Houses For Sale Equals 600,000 Units (newobservations.net)


The Lessons of Oregon's Vote to Tax the Rich (business.theatlantic.com)

Inflation: An Old People's Disease (greatdepression2006.blogspot.com)

Banks defeated soverereignty of USA (seekingalpha.com)

Why Are We Donating $2,000 Per Family to Wall Street Bonuses? (huffingtonpost.com)

The Fed: Reappoint Captain Smith of the Titanic? (newgeography.com)

Doing the Bernanke Dance: Rational Irrationality (newyorker.com)

What us, worry? Banks double down on risk (reuters.com)

The Only Country With No Debt (kitco.com)

The New Mortgage Revolution: Walk Away (housingwatch.com)

Insider's View of the U.S. Real Estate Train Wreck (marketoracle.co.uk)

It only gets worse this year for commercial real estate (mcclatchydc.com)

Housing Unaffordability as Public Policy (newgeography.com)

Tishman's "Strategic Default" on Stuyvesant Town in NYC (blogs.wsj.com)

No worries about "morality" in biggest real estate default in history (finance.yahoo.com)

Dummy Bidding: Inside real estate auction's notorious fraud (jenman.com.au)

West Coast Wasteland (thenation.com)

Housing bust keeps consuming California jobs (latimes.com)

The new breed of perma-renters (marketplace.publicradio.org)

2010: The Year of the Renter? (nytimes.com)

What Could You Live Without? (nytimes.com)

The housing bust and what to expect next (opednews.com)

Excellent Explanation of Bubble (debtdeflation.com)

Volcker Rule Vindicates Former Fed Chief (bloomberg.com)

Stakes are high as government plans exit from mortgage markets (washingtonpost.com)

55 PLANTATION Irvine, CA 92620 kitchen

Irvine Home Address … 55 PLANTATION Irvine, CA 92620

Resale Home Price … $849,000

Income Requirement ……. $178,405

Downpayment Needed … $169,800

20% Down Conventional

Home Purchase Price … $678,000

Home Purchase Date …. 12/27/2007

Net Gain (Loss) ………. $120,060

Percent Change ………. 25.2%

Annual Appreciation … 10.4%

Mortgage Interest Rate ………. 5.13%

Monthly Mortgage Payment … $3,700

Monthly Cash Outlays ………… $4,730

Monthly Cost of Ownership … $3,470

Property Details for 55 PLANTATION Irvine, CA 92620


Beds 3

Baths 2 full 1 part baths

Home Size 1,964 sq ft

($432 / sq ft)

Lot Size n/a

Year Built 2007

Days on Market 2

Listing Updated 1/28/2010

MLS Number S603288

Property Type Condominium, Residential

Community Woodbury

Tract Wdst


WOODBERRY!! Does an embarrassing misspelling like that make you want to cringe?

Is there something wrong with a period as end-stop punctuation? Is using two or three asterisks more efficient?

34 thoughts on “IHB News 1-30-2010

  1. Gemina13

    So let me get this straight: $849K for a shitty condominium under 2000 sq. ft.? I don’t care how new the paint on it is, it still has walls you can put a fist through, cheap cabinetry, and one of the fugliest elevations I’ve seen.

    Oh, wait, I guess they think the marble flooring in the bathrooms is worth the upgrade in price. Lovely! Just be sure to buy bathmats, or else you’re likely to slip and crack your head on the tumbled marble floor after a shower.

    **whistles for the flippers** Come and catch your next knife, it’s freshly polished and sharpened for you!

    1. IrvineRenter

      That front elevation gives new meaning to the word “boxy.” If they had not emphasized the windows, and planted softening landscape, this elevation would be beyond hideous. It is very efficient to build though….

      The little desk in the stairwell is an interesting use of wasted space. Would anyone want to sit in that space to work? Being surrounded by a stairwell is not the office environment I would choose.

      I find it amusing that people actually believe their houses have appreciated 25% since December of 2007. Many actually believe the price appreciation of the bubble was normal, and it will return. When the first number in the price is “5” instead of “8,” the price won’t be such a joke.

      The owner of this property should go to the new models at TIC and see what $849,000 will buy there. A rational owner would see the current asking price is about $130/SF too high.

      1. Gemina13

        I checked the TIC models out. I’ve learned more about what I personally find desirable in a house from experience, and none of the floorplans inspired much house-lust. To start, all the space is given to the garages and the “great rooms,” with hardly any left over for the kitchen or a stand-alone dining room. The bedrooms are a bit better, but frankly, they aren’t more than just average.

        It’s a celebration of wasted space and unimaginative elevations. And really, a “California” room? Just call it what it is: an enclosed patio. It’s the same thing here in Arizona: a square space that would benefit much more for being open, but the owner thinks it adds a certain cachet if he/she walls it in with French doors and calls it a “room.”

        **sigh** I knew I should have been an architect.

    2. LC

      There is good reason to still build condos. The energy use of townhome style, two shared walls is very efficient. Pretty sure it is a big issue in cold climates, but not sure about Irvine. As it is, this condo does not even avail itself to this simple benefit. Why would anyone want to live here? What nifty features are they going to add to the new condos that would make people want to buy them? Irvine is pretty far away from everything, has poor public transportation, is not very walkable — why would anyone want to live in a condo there?

      1. Gemina13

        I intend to buy a condo when I finally settle down–and as I like to roam, I don’t see that happening for another two decades. Still, when I buy, I want the things you’ve listed: available public transportation, a walkable environment, and shops and other attractions (like theaters and bookstores) within a reasonable distance.

        I don’t mind paying above what it costs to build the unit, but I do mind contributing to someone else’s dreams of striking it rich when the place just isn’t worth it.

  2. tonye

    Hey.. it’s in Woodberry! This is truly a unique home.

    BTW- where are the open houses? I usually trash a lot of mail without reading it and filter my email too.

  3. Walter

    The guy that sits next to me at work went to one of the Irvine Companies new home open houses. I think it was 2 weeks ago. He said it was a zoo and the sales people claiming the waiting list was bigger then the number of homes for sale. And that in order to be on the waiting list, you had to be pre-qualed.

    He kind of rubbed it in my face with a “how can you claim Irvine is still going to go down now?” All I could say was this was happening because there is so little inventory right now, but just wait.

    Time will tell…

    1. IrvineRenter

      Your friend’s attitude shows how successful TIC has been with its pre-marketing.

      TIC hasn’t built a home in two years which has given them plenty of time to grow a huge list, they have lowered their prices about 25%-30% to be below resale pricing, and they have pre-screened applicants to filter those with any problems closing. In short, they are taking the creme of the crop of buyers and selling them undermarket homes to generate positive sales and pricing momentum they hope will carry them through 2010 and 2011. It is a brilliant strategy because it creates the urgency your friend feels.

      TIC will almost certainly be successful through the summer of 2010. The real test of this strategy will come in the 4th quarter 2010 and 1st quarter 2011 when we get the seasonal drop. If buyer interest wanes, they will be forced to offer incentives — something they won’t be doing until sales slow down — in order to sell out the development. These incentives would be given privately on a case-by-case just as builders did in 2006 and 2007 when the slowdown started.

      The only thing that could derail TIC plans would be if lenders started foreclosing and released more inventory to the market. As I have been watching the Trustee Sale market more closely, I have noticed that lenders are no longer postponing auctions the way they used to. Once they decide to issue a NOD and begin foreclosure proceedings, lenders are now going through the process as quickly as possible. That is why we are seeing more Trustee Sale flips lately. This trend will continue.

      BTW, all of these factors make the asking price of today’s featured property look even more ridiculous.

      1. Planet Reality

        It would be interesting to see a list of current addresses of people buying the new TIC houses.

        My guess is arouund a third currently live in Irvine, with more than a third currently living in Los Angeles.

      2. tonye

        The shadow inventory is the issue, huh?

        If TIC does nothing to generate sales then the shadow inventory is released slowly because no one is buying.

        OTOH, if TIC creates a brisk market, then the creates an incentive for the banks to put their stock of previously owned homes on the market.

        Either way there’s downward pressure on prices.

        IMHO, TIC should stop building new homes and approach the banks to handle the shadow inventory just as the car companies have programs to sell “factory certified previously owned” product.

        TIC, and the home builders, should simply become reselling agents. Fixing up the foreclosed homes and providing liquidity in the market.

        Again… where are these models being shown? I want to get out of the house today because my son’s garage band is gonna be practicing today and they are LOUD.

    2. LocoLocal

      Here’s an REO that got back on the market quickly.

      Not a bad deal for the bank if it sells for the asking price and I think it will.

  4. zovall

    tonye, The new homes are in Woodbury and Woodbury East. Here is a link to the [url=”http://www.villagesofirvine.com/NewHomeCollection/grandopening.aspx”]TIC Grand Opening page[/url]

    1. tonye

      I’m not impressed by the floorplans.

      It’s obvious that McMansion thinking still rules new home design. I mean, 2600 sq feet and no formal living room? And what’s a “California Room”? A screened porch that cuts off the light coming into the kitchen.

      2600 sq feet and all you get is one large room with a bunch of smallish bedrooms?

      The folks creating these houses need to get their scale down to normal. The indoor laundries are nice but they take up a lot of space.

      At the least the “master bedroom retreat” is gone. Thank God for that.

    2. Hank

      Woah…Those are awful. One of them actually reminds me of a prison (home-debtors prison anybody?). The condos look like a bad flashback from the seventies. No yard to speak of, either. TIC is expecting people to pay money for that?

  5. Woodbury Renter

    Looking out the front windows from my home on Vintage (in Woodbury) at the crazy carnival outside. Lots of traffic. Parking all over the place. Maybe some of them will wander into the center of the community to look at all the foreclosure listing.

    to see where the models are and a map of the shuttle route (which noone seems to be using) then look at: woodburyhoa.org.

  6. A.W. Chuck

    My apartment at Woodbury Court faces the model homes. I could hit the roof with a rock. I’ve been listening to the sweetly obnoxious sounds of construction for a couple months now. As it turns out, one of my friends is driving one of the shuttle buses. I’m going to ask him how many people he shuttled all day.

    They have the entrance to Woodbury East coned off with a cop car there, ROAD CLOSED signs, balloons, EVENT signs, and the entire left side of Towngate going out of Woodbury is packed with cars.

    At the Woodbury shopping center there is a guard on the corner wearing a SECURITY vest and a sign on the way in saying NO EVENT PARKING.

    I’ve lived here for a few years now, and here’s the problem…there is plenty of parking up and down the residential streets. In Woodbury Court and the other apartment complexes here, they don’t enforce parking so you can park anywhere inside the complexes and not be bothered.

    I’m starting to think it’s just really good buzz and marketing. Put a cop car with lights on that costs TIC probably nothing, put some cones up out on Sand Canyon and some big ROAD CLOSED signs…put NO EVENT PARKING in the shopping center even though there is NO WAY to enforce that and there is PLENTY of parking.

    The shopping center is only a 5 minute walk from the models. I looked down some of the side streets and I see lots of curbside parking. I mean…it looks like a big circus but an unnecessary one. I’ve been out on my balcony several times this morning watching it and I see people…not a lot of people…just occasional families walking around. The turnout doesn’t match the hype.

    1. A.W. Chuck

      Woodbury Model Update:

      So my friend driving the bus said there are 13 buses doing 30 minute trips from the loading zone to the models. Approx 20-30 people per bus.

      Since the entrance to Woodbury East is closed, people are parking in Woodbury (or taking shuttle) and walking across Sand Canyon to see the models on that side.

      1. ate at counter today

        saw the cop car and all the signs and i have to tell you, it definitely created an image of a huge selling event. agree that its all hype but it amazingly works or at least works in creating the image…wondering how fast they sell through the new homes.

      2. love your blog by the way

        A.W. Chuck – just clicked on your blog link and really like the entries…can’t believe the calpers 100k club! that is nuts!

        1. A.W. Chuck

          LYBBTW – Thanks! That book is so full of ways that we are being taken advantage of by government unions that I can only read a few dozen pages before I feel my blood pressure rising and I need to put it down.

  7. Woodbury Renter

    Absolute zoo in Woodbury today. Huge traffic to the sites accross from my house on Vintage. (Carmel and Montecito). I hope this doesn’t last beyond tomorrow. People are treating the internal streets of Woodbury like a WalMart parking lot.

    Any bull could full a deep reservoir of upside faith in the market by looking at the rabid demand on display today. I wonder how many of these eager buyers are truly qualified for these price points.

    As for me I will much more impressed when all of the desperate underwater Woodbury homedebtors in the core of Woodbury are able to get out with their credit intact.

    1. tonye

      As a rule of thumb, how much below water (original selling price) are the houses in Woodbury?

      It’d be nice if a column were devoted to the neighborhood average prices during the last ten years.

      1. Woodbury Renter

        Generally people who bought from the builder are about even to their purchase price and can hang on as long as they didn’t take out a big HELOC. Almost anyone who bought from the first owner paid a big markup and is at least that markup under. For example the condo I live in was offered by the builder for $600k to those who “won the waiting list lottery” five years ago. Two years later they were selling for $850k – $900k. Now the few sales that happen are back in the $600k range. My street has become almost exclusively renters as the owners look to hang on with a little monthly income in dreams of a new run up.

  8. newbie2008

    Start all over
    Start all over
    Start all over
    Start all over in the blog.

    Buy now before you’re forever priced out of the market.

    Nice link warning that some states have recourse law and link to Feds usurping US sovereignty. US Supreme Court also says that treaties also trumps the US Constitution. Were rapidly becoming a nation of sheeple. Watch out for new treaties to make loan recourse and multiple actions allowed, which would trump CA one action and non-recourse laws. Likely to be ratified as an anti-child abuse treaty’s subsection on rights for the oppressed.

    TIC’s marketing is excellent. Create a want, change it to a need and make a lot of buzz.

  9. LC

    It seems that the economy is coming back, but the prices are still crazy. People are not making that much more money to justify these prices. I see a lot of hype. When all is said and done, Irvine is going to look just like the foreclosure capitals in the Inland Empire.

  10. irvine_home_owner

    I’m not sure if the SFRs are priced 25-30% below resale. They are still overpriced but the difference is they are brand new, there are multiple ones available, you can choose you location and upgrades and you don’t have to worry about bidding against other offers (just getting in line on the priority list).

    I do think that these will slow down 3-6 months… the pricing is just ridiculous… they already raised prices from the initial announcement, from the confirmed announcement (pre-Phase 1) and from Phase 1. What happened to all those bears who said Irvine wasn’t different from everywhere else?

    There are no FCBs.

  11. newbie_commuter

    The Irvine home inventory on the top right of this blog finally shows over 500. I have been watching it creep up slowly all January. I know it doesn’t look like much on the chart, but it was as low as 434 at the begining of the year. Hopefully this means a trend in the right direction.

    I read this blog regularly, but rarely post. Have learnt more from this website than from anyone else. Keep up the good work!

  12. Soylent Green Is People

    Do not mistake numbers of tire kickers with actual demand. There is plenty of curiosity what with new homes being so rare today, but how that translates into closed transactions is a far different animal. When I was an inhouse lender for a builder we’d chew through an interest list 3 to 400 deep before finding 20 poor souls to close on a home. That was when you actually got a driveway and a small yard for the Irvine home you purchased (1994-1997). Fast forward to these “condo-lite” homes TIC is pushing today with astounding HOA/MR dues and WTF prices, the minions who scoured through the models today are not all committed and closing buyers.

  13. Swiller

    Hey! You just landed on Boardwalk now cash in that cheap Baltic Hotel and pay me, you’re underwater!!!

  14. Derylak

    I can agree with that. As a Realtor in the Charlotte North Carolina area, I’ve seen very similar things happening. Charlotte Real Estate is picking up though, and I hope to see a very strong 2010! Best wishes to everyone in the new year!

  15. Linda

    I actually liked one of the models in Coronado and was considering buying. But dont know if right now its the right time to buy…or wait till at least fall of this year. Anyhow, i asked the sales people for incentives they said No. I asked if they would work with my realtor they said No. I asked if the price can be negotiated they said of course, ‘no, prices are going up’ What are some strategies i can use to negitiate with TIC?

    1. A.W. Chuck

      It’s like a toy that you pull the string on and it talks. Someone should come out with a Realtor Doll and it can only say with each pull of the string, “Prices are going up,” “It’s never been a better time to buy,” “They aren’t making any more land,” “Don’t be left behind” and “Real estate always goes up.”

      Looking at IHB’s posts, at the misspellings, horrible use of grammar, ridiculous punctuation and low-res cell phone photography of properties (if they even bother to put pictures)…it’s clear that being a real estate agent is just not a real job. Not any more so than being a bagger at Ralph’s or a bank teller.

      I am sure there are good Realtor’s, but they are the kind of people that could have been good at anything and they just happen to be Realtor’s. Outside of that slim, almost immeasurable minority are all the rest of them that aren’t good at anything, and just happen to be Realtors.

      Like bagging and bank telling, it doesn’t take a lot of brain matter, it makes ridiculous money for the effort required and you get to say the same wrong thing repeatedly and it’s okay because nobody expects you to say anything intelligent anyway. In summary, a perfect storm to attract the stupid.

      So just like the waves of Realtors during the bubble that regurgitated the Realtor credo fed to them by the mamma NAR…what will they say when interest rates rise, the government stops supporting interest rates, the FHA tightens lending standards, home buying credits expire, foreclosures increase and unemployment drags on? All significant and unstoppable downward pressures on home prices.

      Oh wait…that’s way too much to expect them to be aware of. Nevermind. Just pull the string.

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