IHB News 4-17-2010

The asking price on today's featured property would result in a $1,000,000 loss. High end properties are lucky to find a bid.

Irvine Home Address … 29 BLUE HERON Irvine, CA 92603

Resale Home Price …… $4,695,000


In between the cover of another perfect wonder

And it's so white as snow

Running through a field where all my tracks will be concealed

And there's nowhere to go

When to descend to amend for a friend

All the channels that have broken down

Now you bring it up, I'm gonna ring it up

Just to hear you sing it out

Red Hot Chili Peppers — Snow

I read the housing bubble in those song lyrics. Do you?

The debtors refinancing to conceal their spending until there is nowhere to go, then they demand a mortgage amendment. The system is broken down, and now we have to add up the cost. It gives me something to sing out.

IHB News

A note from a satisfied customer:

As my wife and I decided to buy our first home in Orange County, we quickly learned it’s a jungle out there. Irrational pricing, agents who care more about themselves than their clients, and the list goes on. In the jungle of Orange County real estate, Shevy Akason is Tarzan. He’s a trusted guide who strives to represent your best interests while maintaining the highest standards of integrity. But he’s not naïve. He has the experience, intellect and intuition to understand the laws of the jungle. And he always sees the forest in the trees by maintaining a strategic perspective on each potential transaction. After 6+ months of searching, we just purchased a home in Irvine. Whether buying or selling in Orange County, I can’t imagine working with any other realtor.

Gerard Beenen, Ph.D.

Assistant Professor of Management

Mihaylo College of Business & Economics

California State University, Fullerton

Thank you, Gerard. It was our pleasure to serve.

Blog readership surges

The Irvine Housing Blog has been enjoying much attention of late. Patrick.net has been picking up more daily posts, so we had over 32,000 visitors last week.

The post Bank of America to Increase Foreclosure Rate by 600% in 2010 has been read by over 20,000 people, an IHB record. Calculated Risk emailed me and joked that Bank of America recieved many reporter phone calls as a result of that post. It was quite exciting this week when confirming reports came in about Bank of America sending out a large number of foreclosure notices.

Writer's Corner

My favorite cartoon of the week is the new "cozy" graphic. I feel anxious and clautraphobic looking at the picture. Don't you? I think it aptly captures the false euphamism in the realtor use of the word cozy.

I have also been exploring other themes in the relationships and behaviors of the various nefarious characters from the housing bubble. Nobody is blameless, and at one time or another, all the parties involved were taking advantage of the system. Exploring the different flavors of human relationship to greed leaves plenty of room for creativity. I also liked the strong statement from the minimalist nature of Banksy art.

Housing Bubble News from Patrick.net

Foreclosure rates surge, biggest jump in 5 years (news.yahoo.com)

U.S. Foreclosure Filings Rise 16% as Bank Seizures Set Record (bloomberg.com)

March Foreclosures Surge To Absolute Record, At 369,491 (zerohedge.com)

What the economy needs is more/faster foreclosures (invisiblerenters.com)

Why This Recession Is Different (Mish)

How can upside down houseowners spend money? (huntingtonhomes.freedomblogging.com)

Hard times in Paradise, AZ (realestate.msn.com)

The House-Equity Hurt Ahead for Banks (businessweek.com)

Et Tu, WaMu? Seattle Bank Was Subprime 'Polluter' (housingwatch.com)

18 arrested in $10 million mortgage-fraud case (sfgate.com)

Rural House Buyers Program Is Nearly Broke (ktvu.com)

Defaults Rise in Federal Loan Modification Program (nytimes.com)

Federal house loan program called into question (sfgate.com)

The Government's Loan Mod Bizarro World (timiacono.com)

Mortgage deduction: America's costliest tax break (money.cnn.com)

Some See a Housing Bubble Down Under (nytimes.com)

Austrian Economics Rising (thenewamerican.com)

Ohio "owner" rams house with his car (springfieldnewssun.com)

Renting: The new American dream? (money.cnn.com)

A fragile teetering tower of debt (theautomaticearth.blogspot.com)

Five for-sale signs in two blocks in Menlo Park (patrick.net)

LA has 2,205 Houses at $1 Million or More in Shadow Inventory (financemymoney.com)

92.6% of mortgage cesspool was rated AAA (Mish)

U.S. bank chief mobbed by angry borrowers (reuters.com)

Government extend and pretend housing initiatives immoral (immoralhazard.housingstorm.com)

Morgan Stanley real estate fund may face $5.4 billion loss (money.cnn.com)

Yes, 47% of Households Owe No Taxes. Look Closer. (nytimes.com)

California's poor pay the highest tax rate (totalbuzz.freedomblogging.com)

Gift From California Taxpayers To Mortgage Deadbeats Extended (ftb.ca.gov)

The California Tax Break Window (doctorhousingbubble.com)

The Most Hated Man in Real Estate? (video – thinkbigworksmall.com)

The Biggest Delinquent Taxpayers (ftb.ca.gov)

Houseowners Who 'Strategically Default' Are Under Guilt Pressure (theepochtimes.com)

Was Bernie Madoff the Exception or the Rule? (huffingtonpost.com)

We Haven't Learned the Lessons of the Great Housing Bubble (irvinehousingblog.com)

Wine Beats Russell Stocks as Liquid Investment in Swiss Study (bloomberg.com)

Crack Shack or Mansion? (crackshackormansion.com)

Now all my money goes to pay the loan (vreaa.wordpress.com)

Houseowners sacrificing to survive (blogs.ajc.com)

Bankers raise fairness issue over mortgage principal reductions (insidebayarea.com)

Multi-family foreclosure rate spikes in Chicago (suntimes.com)

Geppi mansion fails to sell at $2.79 million (baltimoresun.com)

Shiller: Why the Housing Optimism? (theatlantic.com)

Recession may not be over yet (latimes.com)

The Invisible Recovery (mybudget360.com)

Pimco Warns of Deflation Risk During Slowdown (bloomberg.com)

A danger in search for higher yields (heraldtribune.com)

China real estate bazaar drowns out government warnings (reuters.com)

The equity hole in China's housing (businessspectator.com.au)

Australia still in denial about their bubble (theaustralian.com.au)

Lehman Used Alter Ego to Transfer Risks (nytimes.com)

Washington Mutual created 'mortgage time bomb' (latimes.com)

Democrats Push for Disclosure of Corporate Campaign Roles (nytimes.com)

Small Business Association Projections (PDF – nfib.com)

Realtor At Party (patrick.net)

On auction block, Portland condos go for half off boomtime prices (oregonlive.com)

High-end Laguna Beach houses slash prices (lagunahomes.freedomblogging.com)

What's To Be Done With The Nation's Ghost Towers? (housingdoom.com)

Robert Reich: The Jobs Picture Still Looks Bleak (online.wsj.com)

Housing Headwinds and Baby Boom Demographics (Charles Hugh Smith)

It's Impossible To "Get By" In The US (zerohedge.com)

Bank Profits Dimmed by Prospect of House-Equity Losses (bloomberg.com)

Banking System Still Quietly Insolvent (Mish)

Failed Bailouts and the Neverending Mortgage Crisis (irvinehousingblog.com)

Senate probe finds fraud in WaMu mortgage lending (sfgate.com)

Mortgage Bonds Were Inside Job (audio – thisamericanlife.org)

Fed Had Misgivings About Friedman's Goldman Stock (businessweek.com)

Gold Rises to Four-Month High on Demand for Dollar Alternative (bloomberg.com)

The China Bubble (smh.com.au)

No One Is to Blame for Anything (nytimes.com)

Judge Jed Rakoff taps into nation's outrage over economic crisis (latimes.com)

Is the Stock Market Headed Back Down? (time.com)

US military warns oil output may dip causing massive shortages by 2015 (guardian.co.uk)

Nation's Building News Online for December 31, 2011 (Shhh, don't tell them) (nbnnews.com)

Office vacancy rate rises in San Francisco (sfgate.com)

Prices falling for small apartment buildings near LA (ocregister.com)

Culver City has More Expensive Income to House Ratio than Beverly Hills (doctorhousingbubble.com)

Bubbles: A Texas mystery (economist.com)

Minneapolis house listings surge, but can sales keep up? (twincities.com)

Don't Bet on a Housing Recovery (nytimes.com)

House price drop of 30% possible for 2010 (seekingalpha.com)

National Association of realtors Latest Scare Tactic: Rising Interest Rates (irvinehousingblog.com)

30-year mortgage rates jump to 8-month high (reuters.com)

Interest Rates Have Nowhere to Go but Up (nytimes.com)

Do I have to pay taxes on forgiven mortgage debt? (money.cnn.com)

Foreclosures Hit Rich and Famous (online.wsj.com)

Wanna buy Nicolas Cage's money pit? (money.cnn.com)

The Dorothy Theory: Bonds run amok (theautomaticearth.blogspot.com)

Former Fed Gov. Poole Blasts Fed's Favoritism (Mish)

FDIC: Failed Bank List (Gosh, no Fed member banks?) (fdic.gov)

Investigating Fannie Mae and the Housing Bubble (pbs.org)

Sovereign debt crisis at 'boiling point', warns Bank for International Settlements (telegraph.co.uk)

How One Hedge Fund Helped Keep the Bubble Going (propublica.org)

Let traders call the next bubble (washingtonpost.com)

Irvine Home Address … 29 BLUE HERON Irvine, CA 92603

Resale Home Price … $4,695,000

Home Purchase Price … $5,500,000

Home Purchase Date …. 5/17/2006

Net Gain (Loss) ………. $(1,086,700)

Percent Change ………. -14.6%

Annual Appreciation … -3.9%

Cost of Ownership


$4,695,000 ………. Asking Price

$939,000 ………. 20% Down Conventional

5.24% …………… Mortgage Interest Rate

$3,756,000 ………. 30-Year Mortgage

$998,880 ………. Income Requirement

$20,718 ………. Monthly Mortgage Payment

$4069 ………. Property Tax

$542 ………. Special Taxes and Levies (Mello Roos)

$391 ………. Homeowners Insurance

$475 ………. Homeowners Association Fees


$26,194 ………. Monthly Cash Outlays

-$2362 ………. Tax Savings (% of Interest and Property Tax)

-$4316 ………. Equity Hidden in Payment

$1951 ………. Lost Income to Down Payment (net of taxes)

$587 ………. Maintenance and Replacement Reserves


$22,054 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$46,950 ………. Furnishing and Move In @1%

$46,950 ………. Closing Costs @1%

$37,560 ………… Interest Points @1% of Loan

$939,000 ………. Down Payment


$1,070,460 ………. Total Cash Costs

$338,000 ………… Emergency Cash Reserves


$1,408,460 ………. Total Savings Needed

Property Details for 29 BLUE HERON Irvine, CA 92603


Beds: 4

Baths: 5 full 1 part baths

Home size: 5,677 sq ft

($827 / sq ft)

Lot Size: 20,604 sq ft

Year Built: 2004

Days on Market: 333

MLS Number: U9002365

Property Type: Single Family, Residential

Community: Turtle Rock

Tract: Shdc


This lovely Tuscan farmhouse-inspired custom home resides on one of Shady Canyon's most desirable streets & features large, private corner lot overlooking scenic Bommer Canyon. The romance begins w/beautifully landscaped garden & continues inside the 4 bed 5.5 bath approx. 5600 sf home, which has been tastefully appointed w/designer's eye for detail. Custom finishes & amenities include travertine & plank hardwood flooring, hand-hewn wood beam ceilings, built-in cabinetry & media w/artisan European glazing. Warmly inviting living spaces flow seamlessly from one to another & out to the grounds w/expansive lawn, stone-edged pool & spa, bbq & bar all soaking in pastoral views of the surrounding hillsides, canyons & city lights. Of special note is the chef's kitchen w/top-of-the-line appliances, 2 large islands. Master suite showcases private view terrace, spacious bath & dual dressing rooms. Other highlights are lower level game/wine room & library w/furniture-grade built-in cabinetry

Lovely, I want my guests thinking my multi-million dollar house was inspired by a barn…

Actually, having grown up in rural central Wisconsin, I probably wouldn't mind.

9 thoughts on “IHB News 4-17-2010

  1. winstongator

    Is there still custom construction going on at this price point in OC? I would think someone else’s custom would need a steep discount from my custom…if I were buying at that price.

    As you picture, farmhouses can be great homes. I think the Tuscan farm inspiration comes from the backyard views & Italian Cypresses in the front yard.

    From the Redfin – did this sell for $4M new in ’04? Would it cost less to build a similar home today (some material & all labor being cheaper)?

  2. newbie2008

    What no loan and HELOC on the custom house?
    Is the owner going to really take a 1 million haircut or just blow smoke for free rent extension?

    Only on the market for 333 days, but there’s a limited number of buyers for a house above $3 million. 20% downers will think twice before walking away or should taking the free rent stimulus package. I want my old -3% down requirement!!!!

    Congrads on your record number of web hits and recognition.

  3. Laura Louzader

    Congrats on your blog stats and your great book.

    Too bad the people who most need to read it will be the last to do so. But perhaps the generation just now coming of age will get the good of the awful lessons of the Great Housing Rampage.

    I am also writing to request your permission to borrow one of the graphics on this page and use it on my blog- the one of the little guy pulling the jitney with the two hogs in it, “they need the help more that I do”. I won’t use it without your express permission, thanks.

    1. IrvineRenter


      You can use any graphics you find the IHB.

      The drawing is from Banksy, and he didn’t give me permission to parody him. I doubt he cares.

  4. E

    Not that this house is an example, but sometimes, I wonder if the creation of the 7 figure option-ARMs that were used to purchase some of these properties was really just a way for the Uber-rich to wipe out the merely well-to-do.

    Food for thought.

  5. Alan

    It looks like a movie set or show model, more than a place where someone would actually live. I can’t figure out all the space used for eating: a long, linear island like the counter in a diner, a dining room, another dining table next to the kitchen, another shorter and more square (and more practical) island. Is this place for a family of 8, who also feed the groundskeeping staff?

    I look on these places like historical castles or mansions in Europe, or the mansions of the super-rich of the 1900’s in the US that are now tourist attractions. Curiousities, sometimes interesting, some modern places have really nice design features I’d like to have if in a useable size and scale.

    I wish them luck finding a buyer. It won’t be me, even if I win the lottery or otherwise find myself with $30 million.

  6. Freetrader

    Nice segue from Wisconsin farmhouse to the ‘prarie style’ Teliesin. Implicitly, if someone is going to pay $4.5 million for something, it had better be really special, and not just some McMansion monstrosity in Irvine.

    Not to mention that Frank Lloyd Wright didn’t spend anywhere near $5.5 million to built Taliesin.

  7. Gemina13

    Thank you for the post. As a side note, I would take any Frank Lloyd Wright house over a McMansion. I’ve seen his houses in Illinois, Chicago, and Arizona, and I’d take the prairie-style home shown above in a hot minute if I had the cash.

Comments are closed.