IHB News 5-22-2010

Fake auction today on the featured property. Ignore the asking price, there is a $648,000 first mortgage on the property, and I rather doubt the bank has pre-approved a short sale at $400,000.

Irvine Home Address … 41 BAMBOO Irvine, CA 92620

Resale Home Price …… $400,000


Load up on guns,

Bring your friends

It's fun to lose and to pretend

She's overboard self assured

Oh no I know, a dirty word.

With the lights out, it's less dangerous

Here we are now, entertain us

i feel stupid and contagious

Here we are now, entertain us

Nirvana — Smells Like Teen Spirit

Writer's Corner

I really enjoyed the writing this week. My favorite post is How Gaming Interests Could Save the Las Vegas Housing Market, and Why They Should. Aquanomics noted, "I read this twice and still can’t decide if you are serious." That is what made that post so special. Uncomfortable truths have that effect on people.

It takes way too much of my time, but I particularly enjoy doing cartoons. I wish I had more time for them. The one above I liked, but the one below was my favorite of the week. When I read the dialogue, I feel like I am watching a cross between The Godfather and The Count of Monte Cristo.

Housing Bubble News from Patrick.net

Fri May 21 2010

Is San Francisco the Most Overpriced City? (bayarearealestatetrends.com)

Has the housing market bottomed out? Probably not. (csmonitor.com)

Housing market looks as sick as ever (online.wsj.com)

One in Ten Mortgage Borrowers Will Lose Their House To The Bank (newobservations.net)

Loan aid leaves some worse off (finance.yahoo.com)

Demand for mortgages tumbles (chicagotribune.com)

Mortgage Data Leaves Bankers Uncertain of Trend (dealbook.blogs.nytimes.com)

Commercial Property Values Drop as Rebound Stalls (businessweek.com)

Builders fear return to sound mortgage standards (activerain.com)

How the banks silenced whistleblowers (democracynow.org)

Goldman profited every day last quarter, but its clients fared far worse (bloomberg.com)

Lender pleads guilty to felony mail fraud (latimes.com)

Why do we let the Fed starve the elderly to gorge bankers? (finance.yahoo.com)

Social Unrest Spreads; Images Around the Globe (Mish)

Stocks Dive Again (npr.org)

Stocks to Tumble Another 20%, Cash the Safest Place (cnbc.com)

Housing crash news links now available for mobile phones (patrick.net)

Free Trial of the Landlord's Bargain Finder

Thu May 20 2010

Mortgage Applications Plummet To 13-Year Low As Buyer-Bait Expires (businessinsider.com)

One in 7 US houseowners paying late or in foreclosure (reuters.com)

Foreclosures hit record high of 14% of all mortgages (marketwatch.com)

Mortgage Foreclosures Hit Record as Job Losses Strain Budgets (businessweek.com)

Mortgage delinquencies drag on economic "recovery" (news.yahoo.com)

Prime mortgages going bust at a wonderful rate (miamiherald.com)

Marc Faber and Mish debate inflation vs deflation (Mish)

Can China handle its inflation problem? (money.cnn.com)

Fed in No Rush to Sell Mortgage Assets, Minutes Show (bloomberg.com)

Volcker Says Time Is Running Out for U.S. to Tackle Fiscal Woes (bloomberg.com)

Builders lobby for continued pork for builders (nbnnews.com)

For Rent: 1159 Carey Dr, Concord, CA 94520 (patrick.net)

San Francisco is a renters' city (sfgate.com)

California renters in the foreclosure crisis (PDF – tenantstogether.org)

Cheapshitcondos in Seattle (cheapshitcondos.com)

Arizona's migrant law may affect housing market (azcentral.com)

How long can an apartment "Grand Opening" last? 10 years? (lasvegassun.com)

Love, Your Broken House (youtube.com)

A realtor ad that's guaranteed to work? (patrick.net)

Wed May 19 2010

Foreclosures in Mass. are up, occurring more quickly (milforddailynews.com)

House Prices Beginning to Fall Again in SF Bay Area (blog.redfin.com)

Housing "recovery" is just another government subsidy (finance.yahoo.com)

Bleak Second Half in Stock Market, Double Dip in Housing (Mish)

Feldstein Says Falling Permits May Signal U.S. Housing Slump (bloomberg.com)

Federal housing aid plan faltering (denverpost.com)

Reaching limits of bailout capability (prudentbear.com)

Debt-to-income ratios for mortgage modifications getting ridiculous (timiacono.com)

Dow Theorist: Sell Everything Liquid (businessinsider.com)

The 13 Housing Markets That Will Never Recover (businessinsider.com)

Chinese Drywall Maker Reaches Settlement (housingwatch.com)

Mortgage Fraud Continues to Climb (lexisnexis.com)

Why Treasury Bonds Aren't Always So Safe (money.cnn.com)

English savers suffer as inflation hits 3.7% (telegraph.co.uk)

A Deflationary Red Flag In US Dollar (pragcap.com)

Shadow inventory sales for years to come (mybudget360.com)

Free Advertising For Rental Or House For sale (patrick.net)

Try the Landlord's Bargain Finder

Tue May 18 2010

Are we going to get rid of the mortgage interest deduction? (curiouscapitalist.blogs.time.com)

Puget Sound house values decline (seattle.bizjournals.com)

Hawaii foreclosures way up again (google.com)

Silicon Valley's swagger seems a long way away (seattletimes.nwsource.com)

Why 'Second Housing Boom' Is Nothing But Huckster Hype (businessinsider.com)

Broker: 'Still a ton of distressed houses' (mortgage.freedomblogging.com)

Foreclosure Is a Superior Form of Principal Reduction (irvinehousingblog.com)

More houseowners wisely opt to quit paying mortgage (marketwatch.com)

Who Is The Fool? (patrick.net)

Banks Embrace Extend and Pretend as U.S. Hotels Await Rebound (businessweek.com)

S.F. hit parade: The Cannery latest to hit the skids Update (sfgate.com)

Another 'Freefall' to Push Dow Below 5000: Strategist (cnbc.com)

Unhinged: When Concrete Reality No Longer Matters to the Market (Charles Hugh Smith)

IMF warns rich nations to cut debt (financialpost.com)

"Mea Culpa" from Morgan Stanley on Rising Treasury Yield Call (Mish)

Abandoning Treasurys for safer bets overseas (marketwatch.com)

Sovereign debt 'vigilantes' make Europe pay (marketwatch.com)

In Europe, Fears of a Deeper Crisis Are Intensifying (nytimes.com)

Ron Paul: The Fed Works In Collusion With Goldman Sachs (dailybail.com)

Explanation of Fed and Inflation (long video – youtube.com)

Mon May 17 2010

Scottsdale house prices remain in free fall (azcentral.com)

Las Vegas valley had 74.7% of its houses underwater (lasvegassun.com)

Riverside County: 90% of mortgages underwater (irvinehousingblog.com)

Rampant foreclosures leave condo owners stuck with fees (tampabay.com)

No full job recovery until 2018? (economy.freedomblogging.com)

Email From Canada: It's Different Up Here (Mish)

Fannie & Freddie don't reduce balances on their mortgages (money.cnn.com)

Disconcerting Truth About Fannie and Freddie Default Rates (seekingalpha.com)

Small fry indicted for mortgage fraud; Fed still not even investigated (contracostatimes.com)

Fed, please raise rates! (online.barrons.com)

Builders at it again, with Fed's fake money (nytimes.com)

Goldman Sachs Ties to the Obama Government (seminal.firedoglake.com)

US banks under investigation (financemarkets.co.uk)

S&P Cuts to Junk Mortgage Bonds It Rated AAA in 2009 (bloomberg.com)

Solving the massive debt problem with more debt (mybudget360.com)

Fear of a Double-Dip Recession Could Cause One (nytimes.com)

Potential harbinger of housing double-dip emerges (snl.com)

Gerald Celente: Banks Robbing the People (lewrockwell.com)

Who will bail out the countries that bailed out the bankers? (marketwatch.com)

Good news! Bailouts saved banker bonuses! (video – thedailyshow.com)

Irvine Home Address … 41 BAMBOO Irvine, CA 92620

Resale Home Price … $400,000

Home Purchase Price … $820,000

Home Purchase Date …. 2/13/2007

Net Gain (Loss) ………. $(444,000)

Percent Change ………. -51.2%

Annual Appreciation … -20.0%

Cost of Ownership


$400,000 ………. Asking Price

$14,000 ………. 3.5% Down FHA Financing

4.94% …………… Mortgage Interest Rate

$386,000 ………. 30-Year Mortgage

$82,259 ………. Income Requirement

$2,058 ………. Monthly Mortgage Payment

$347 ………. Property Tax

$375 ………. Special Taxes and Levies (Mello Roos)

$33 ………. Homeowners Insurance

$250 ………. Homeowners Association Fees


$3,063 ………. Monthly Cash Outlays

-$339 ………. Tax Savings (% of Interest and Property Tax)

-$469 ………. Equity Hidden in Payment

$27 ………. Lost Income to Down Payment (net of taxes)

$50 ………. Maintenance and Replacement Reserves


$2,332 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$4,000 ………. Furnishing and Move In @1%

$4,000 ………. Closing Costs @1%

$3,860 ………… Interest Points @1% of Loan

$14,000 ………. Down Payment


$25,860 ………. Total Cash Costs

$35,700 ………… Emergency Cash Reserves


$61,560 ………. Total Savings Needed

Property Details for 41 BAMBOO Irvine, CA 92620


Beds: 3

Baths: 3 full 1 part baths

Home size: 1,800 sq ft

($222 / sq ft)

Lot Size: n/a

Year Built: 2005

Days on Market: 8

Listing Updated: 40318

MLS Number: P735430

Property Type: Condominium, Residential

Tract: Othr



This property has a $648,000 first mortgage

Does anyone want to guess what the minimum bid needs to be? If it isn't enough to pay off the first mortgage, it isn't going to get approved on the spot. If you are going to offer $400,000 for this property, don't hold your breath.

Artificial listing price to gain attention

Look at the silly game this listing agent is playing to get attention. He starts with an asking price close to what is needed to pay off the first mortgage, then he reduces it huge amounts each day. Every person with a drip email set to show price reductions has seen this property each of the last three days.

What price will it be offered for tomorrow? $300,000? $1?

Property History for 41 BAMBOO

Date Event Price
May 20, 2010 Price Changed $400,000
May 20, 2010 Price Changed $450,000
May 19, 2010 Price Changed $495,000
May 18, 2010 Price Changed $590,000
May 18, 2010 Listed $690,000
Feb 13, 2007 Sold (Public Records) $820,000

This listing is an interesting attempt to get attention. If a bunch of people go to the property today, this listing agent might find some buyers to work with. Of course, the fantasy is that a bidding war will break out and someone will pay off the first mortgage. Good luck with that.

29 thoughts on “IHB News 5-22-2010

  1. A.W. Chuck

    My wife and a toured the Carmel models in Woodbury a few weekends ago…all in the $900K’s. Obviously just for fun. Anyway, I told (hopefully only reminded) the agent on site that in a city like Irvine with a $100K median family household income, they shouldn’t be spending more than 3X times that, using the oft cited rule of thumb.

    So, if they should be between $300K and $400K…heck…w/ sunshine premium, go $500K…the only people buying $900K homes must be putting down A LOT of cash. Her response was that they were “blessed” to have many cash buyers. Nine of the homes were bought paid-in-full with cash. The others have been getting $300K-$500K put down on them.

    So I asked if these were foreign buyers and were these primary residences or what? She said they were local, mostly from Newport and Laguna who had bought a property there 10-20 years ago, paid it off, and were using that property to provide the cash down for these…then renting their old house and living in Woodbury as their primary.

    I’d love to hear what everyone thinks of this.

    1. Hera

      A friend bought for her just sun with all cash. She starts looking this model since opening and when she come back to buy the price already up $100K. According to her, in order to get higher priority, people camping at night on the grand opening day.

    2. tonye

      The Shadow Inventory at work…. A sucker is born every minute.

      What would someone in Newport or Laguna ever care about living out in the sticks by Woodbury? That’s nuts.

    3. newbie2008

      Many old folks can’t handle the colder coastal weather, so moved inland a few mile for a little higher temp. They sold their coastal house to pay cash for the in-land house. But most are far and few between. Coastal with dual income, retire and move away to low cost areas or condo/townhomes for easy living and traveling.

      IR’s featured NB squatter who HEW out several million dollars out of the house is likely able to pay all cash for this place and 5 extra houses in this price range. I would just be glad to get the free squatting for several years, let alone several millions in cash as walk away money.

      Your tax dollars at work. Banksters: I need more assistance to restore liquidity to prevent the next great depression — what is really being said: Give me money or else. What’s the reality: Fooled you 20 times, this will be the last because you will be a serf in 10 years.

    4. wheresthebeef

      That’s interesting to hear about Newport/Laguna buyers downgrading to Irvine. Where were these cash buyers 10 years ago when home prices were half of what they were today…and where were they 5 years ago when the mania was in full swing and you couldn’t lose with RE.

      Besides coastal buyers moving to Irvine, where are the others coming from. Did these people sell at the peak? Are they FCBs who benefitted from housing bubbles or bubbly stock markets elsewhere? Did these people just ride out the bubble and squirel away every penny? This is truly a strange phenomena, I would like to know more about it.

      1. Planet Reality

        Go to Redfins neighborhood demographics for Irvine. Find a neighborhood that is at least 85% home owners and less than 15% renters. The median incomes of the areas are $130K to $150K and higher. This includes people who have been there a long time so you know the newbies have high income and high asset levels with standard loan requiremets.

        It’s time to recognize that money is flocking to Irvine, and it’s real money.

        1. tonye

          Check out the demographics for 92603.

          Remember it includes UCI -which should not be high income… and allow for the Bonita Canyon which should introduce some outliers.

          There is money in Irvine. Just because there are people renting in the San Marcos Apts. who are relatively “low income”, the real median for homeowners in some of the older neighborhoods is rather high. Much higher than 100K.

  2. A.W. Chuck

    Unbelievable. I am beside myself. There just can’t be enough of these people running around with suitcases of $100 bills to make any of this sustainable.

    I get excited every time we can sock away another few thousand dollars for our downpayment and yet people are running around willy-nilly treating tens and hundreds of thousands of dollars like chump change.

    If I buy and my house drops even a few thousand, all I will think about is all the time and effort and sacrifice it took to save that.

    Five years of watching this housing bubble and I’m still fascinated and confused by it all.

    1. newbie2008

      Spending money is relative. You and I may careful with spending and some students in back east in private schools have allowances of greater than $20,000 per month from their parents. They don’t have second though of spending a thousand clubbing or a new car every two years. They don’t seem to have a care in the world. Current money is no problem, career after graduating is assured …. I assume that in OC there are many in that situation.

      1. HydroCabron

        I believe the “current money is no problem” part.

        If they’re planning an MBA or law school, I’m not so sure about the “career after graduation” part.

  3. TheYenGuy

    One can report prevent Slumburbia by reporting blighted properties on LAHoodwinked

  4. newbie2008

    In CA RE is the asking price (non-short sale) an invitation to bid or a firm price if one offers cash and no contigency?

    For example, if a property was missed valued and put on the market for $600,000 instead of $750,000. Shopper B writes a check for $600,000 upon the open house with no contingency, is the seller obligated to sell at $600,000?

    1. IrvineRenter

      The seller isn’t obligated to anything until they sign a contract. An asking price is pure fantasy. No seller can be forced to sell at an asking price.

  5. A.W. Chuck

    I can appreciate that, and if I was in Beverly Hills, or Newport Coast or Coto or the Hamptons, I wouldn’t be surprised at houses being snapped up with cash…and I also wouldn’t be saving up to buy one in those areas.

    But Irvine?! I mean, yeah Irvine is a nice place to live, arguable to an extent, but what it is not is Newport Coast, Hamptons, etc…

    I get the warmer weather thing, but we really must be talking about a handful of people with that. For everyone else, of all the places to pay cash, they’re picking Irvine? Rental investments? Okay…maybe., but they aren’t…they are going to live here. Just seems weird to me.

    If I had that much money, as nice as Irvine is, I can think of better places to live when money is no object.

    I guess I’m just wondering where all these people and families who make up Irvine’s $100K median household income are going to live? Maybe they are what’s already been here for twenty years and Irvine is just gentrifying into elite status with all this new million dollar home construction? Maybe in ten years I’ll see the median income go up to $250K.

    Either way, anyone making the Irvine household income now that’s not already in a house seems to be priced out now that Irvine is the new “Hamptons”…it would seem.

  6. SanJoseRenter

    Since this is an auction thread, I’m suprised
    nobody mentioned Zetabid property auctions, which are basically a scam since the high bid is not
    binding on the seller.

    From their FAQ:

    “What happens if I have the highest bid?
    The high bid is not a final sale (or a binding contract) of the property but only an OFFER by the bidder to purchase the property from the property seller. No property sales are final at auction until there is a mutually acceptable written purchase contract between the property seller and the high bidder.”


  7. awgee

    It has always cracked me up when I read folks who write that if the TARP had not been passed or if the FED did not engage in QE or is the administration did not bail out the banks that the financial system would have collapsed and the powers that be engaged in the least bad of the available options. The people who repeat this nonsense are the same people who hear something on MSNBC and without any critical thought assume that what they are hearing is correct and then go on to spew the same. Nitwits.


    1. CapitalismWorks

      I can’t imagine how Anyone with any knowledge of what has transpired over the past 24 months would be motivated to buy now.

      1. Planet Reality

        Did you ever consider that:

        A. The people buying have the money to buy because of government and banking policies of the last 20 years?

        B. The people are buying because they expect the government to stay the course?

        1. wheresthebeef

          With all the media spin, most people think the worst is behind us. However, if it really hits the fan sometime soon, many of today’s “savy” cash buyers will be eating a big shit sandwich. Irvine probably does have plenty of big downpayments used. What about adjacent areas? Is the same true there? These big downs do inflate prices locally. I have a feeling that sooner or later the stream of these buyers will thin out…then things will get interesting.

          1. raj

            From last two years I am watching Irvine market, I didn’t see cash buyers stream thinned out.

          2. Planet Reality

            You can already buy a house in nice adjacent areas for a 20% discount to Irvine. There is a reason for this. These adjacent areas are helped by Irvine, not the other way around.

          3. fly on the wall

            You’re still kind of a young buck around here, PlanetReality. Go check the archives and you’ll see that CapitalismWorks once posted comments exactly like your own, until reality hit. There was a time when CapWorks was predicting just a 10% drop in Irvine home prices. Of course we know how that turned out.

            Not to pick on CapWorks, of course–he was man enough to admit he was wrong. It will be interesting to observe your transformation, as well.


        1. newbie2008

          The Invisble hand is called GS and the Fed Reserve.

          Pre-Elections: The Bush bailouts are not the way to go.
          Post-Elections: We need to increase the bailouts to prevent the next Great Depression.
          Now: We need to bailout Europe or else we’ll have the next Great Depression.

          When are they going to bailout the US workers? End welfare for the Banksters? If you can’t properly run a business, you should leave with a small severance, not with 5 to 10 years of bonus if the company was well ran. With what was done, that should be 5 to 10 years of hard labor and reparations.

          Business can’t be the law of the jungle and capitalism can’t be welfare for only the banksters.

  8. Paul

    I visited this property and even made a bid of $405,000. Not really interested in the property, but we decided to bid up to a certain point, because it’s a value proposition. Thanks, IR, for posting the information on the mortgage. The sales agents (there seemed to be three of them) insisted it was not a short sale, but that depends upon what the closing price is. Very dishonest, if you ask me.

    This particular model is an interesting concept, but it’s just too small for what they tried to accomplish. There were a lot of people viewing the property yesterday, despite the fact it is in a gated community, and no gate code or phone number was provided in the listing.

    We were in the casita, which is a separate room across a little courtyard, and a small child said, “But Mommy it’s too small for my room.” Mom replied, “It’s a little smaller than your current room.” Mom looked in the garage, and the little girl turned and started walking towards the front door to leave. She had seen enough. Smart girl.

    Now, I’m disappointed we even bid on the property, because they have our phone numbers, and I expect they will add us to their marketing list.

Comments are closed.