Meet up with us Sunday night at JT Schmids from 5:00 to 9:00. I hope to see you there.
Irvine Home Address … 5 FERN Cyn Irvine, CA 92604
Resale Home Price …… $499,900
Seize the day or die regretting the time you lost
It's empty and cold without you here, too many people to ache over
I see my vision burn, I feel my memories fade with time
But I'm too young to worry
These's streets we traveled on will undergo our same lost past
Avenged Sevenfold — Seize the Day
We are having another event Sunday night at JT Schmids at the district. I will be addressing interested parties on how they can invest in the trustee sale market. I am expecting a smaller turnout, and I should be able to give each attendee individual attention to ask questions.
As always, we encourage everyone to attend and enjoy an evening of comradery and conversation about real estate. Appetizers and drinks will be served.
Huge Price Reduction
The burgeoning inventory in Irvine is starting to frighten buyers who really want to sell. Today's featured property was originally profiled on March 4, 2010 when the owner was asking $629,000. I noted back then that they were not likely to get their asking price. A few days ago, they lowered their asking price from $559,900 to $499,900 — a decrease of more than 10% and more than 20% from their original asking price. At its current price, and 4.5% interest rates, it is quite affordable.
This is exactly what the banks fear. If too much inventory hits the market — and it is still steadily climbing — sellers will start to lower price to find a buyer. If a great deal of inventory hits the market, the price reductions may get quite aggressive like today's featured sellers. That is how a market price drop happens.
Irvine Home Address … 5 FERN Cyn Irvine, CA 92604
Resale Home Price … $499,900
Home Purchase Price … $276,000
Home Purchase Date …. 10/1/1999
Net Gain (Loss) ………. $193,906
Percent Change ………. 81.1%
Annual Appreciation … 5.5%
Cost of Ownership
$499,900 ………. Asking Price
$17,497 ………. 3.5% Down FHA Financing
4.51% …………… Mortgage Interest Rate
$482,404 ………. 30-Year Mortgage
$97,813 ………. Income Requirement
$2,447 ………. Monthly Mortgage Payment
$433 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$42 ………. Homeowners Insurance
$50 ………. Homeowners Association Fees
$2,972 ………. Monthly Cash Outlays
-$393 ………. Tax Savings (% of Interest and Property Tax)
-$634 ………. Equity Hidden in Payment
$29 ………. Lost Income to Down Payment (net of taxes)
$62 ………. Maintenance and Replacement Reserves
$2,037 ………. Monthly Cost of Ownership
Cash Acquisition Demands
$4,999 ………. Furnishing and Move In @1%
$4,999 ………. Closing Costs @1%
$4,824 ………… Interest Points
$17,497 ………. Down Payment
$32,319 ………. Total Cash Costs
$31,200 ………… Emergency Cash Reserves
$63,519 ………. Total Savings Needed
2 baths Baths
1,350 sq ft Home Size
($466 / sq ft)
4,500 sq ft Lot Size
Year Built 1974
1 Days on Market
MLS Number S607254
Single Family, Residential Property Type
El Camino Real Community
MUST SEE THIS…GREAT CURB APPEAL-Beveled Glass bay window – NEW THOMASVILLE CUSTOM KITCHEN! Cherry wood cabinets, Granite Counters,Frigidare Professional Series Stainless appliances-Vaulted Ceilings-New windows and Doors-Ceramic tile floors-Custom Lighting–Cul de sac–Private side enterance – Concrete tile roof – New roll-up Garage Door – Lush mature landscaping – Tile hardscaping – Large back yard, great for children – Best Schools…5 Deerfield pools..Tennis in the park…Standard sale –
From the previous post:
Day after day, I see sellers who have spent their home price appreciation as it came in as if it were a source of managed income. I believe this practice is so widespread that many who live in California consider it an entitlement; buy a house and you automatically get to double your spending power. With entitlement comes a social acceptance of the means to obtaining that entitlement — taking on excessive debt. To the chagrin of lenders, borrowers have also figured out that if things don't work out it is easy to walk away from debt and start over, and any social stigma associated with foreclosure and bankruptcy has vanished.
- Today's featured property was purchased on 10/1/1999 for $276,000. The owners used a first mortgage and a $50,000 down payment — well, kind of…
- On 10/13/1999 a stand-alone second for $50,000 was recorded on the property. The real down payment was $0.
- On 5/9/2001 they refinanced with a $273,000 first mortgage reflecting a $3,000 decline in their mortgage balance.
- On 2/13/2004 they went over to the dark side and refinanced for $313,000.
- On 1/3/2005 they opened a stand-alone second for $90,000.
- Total mortgage debt is $403,000.
- Total mortgage equity withdrawal is $127,000.
I gave these owners a "D" because the $90,000 stand-alone second is more than just paying off a few credit cards; that is simply adding to a mortgage to get the money to spend which crosses the threshold of knowingly spending anticipated appreciation which is a "D" by definition. Since their withdrawal was relatively small by Irvine standards — $127,000 — and since they paid down the mortgage at times, one could argue for a "C."
Not a bad take for a $0 investment — plus, if they get their asking price, they stand to make another $200,000. They won't get it.
I have been inside both neighboring properties 1 Fern Canyon and 3 Fern Canyon, the latter in particular was much larger and very nice inside. It appears that the original listing was for $529,000 — a more realistic although still inflated asking price. Perhaps the owners feel they added $100,000 in value by installing an over-the-top Thomasville kitchen. ~giggles~