IHB News 10-30-2010

I hope you are enjoying your Halloween weekend.

Irvine Home Address … 325 TANGELO 324 Irvine, CA 92618

Resale Home Price …… $208,800

Back in black

I hit the sack

I've been too long I'm glad to be back

Yes, I'm let loose

From the noose

That's kept me hanging about

AC/DC — Back in Black

Writer's Corner

I've been feeling energized lately. Everything is going very well personally and professionaly, and i am very excited about the new venture. After two or three years of the red-ink recession, I am back in the black. It's not just financial, its feeling useful, needed, and productive again. Long periods of professional inactivity dulls the mind and the senses. That's a hidden toll the recession exacts on people, even those who don't experience the full brunt of unemployment.

I have been reluctant to write much about the new venture. There are some business secrets I have an obligation to keep. I have been obtaining very good margins, but I don't want to broadcast it too loudly and bring in competitors. The blog has a loud voice at times.

I will start writing some posts about these Las Vegas properties, but I need to think through what I should and should not reveal as my greater duty is to the interests of my investors. If i spent a week documenting the details of each of the seven properties I have purchased, I would likely see a number of new competitors show up at the auction site. There is a balance, and I will find it.

Las Vegas

Las Vegas is an interesting town to travel to for business. Since I am there when the tourists are not, the rooms are much cheaper, and all the activities are less expensive and less crowded.

I have my own barometer of the financial health of Las Vegas. I am still driving to Las Vegas each week. As I go through Victorville and reach the edge of civilization before heading across the high desert, there is a Motel 6. Lately, the rate has been $44.95 per night on Sunday when I drive past. I have been staying at the Sahara for $30 per night. There are often rooms available for less than $20 per night in Las Vegas. When the Motel 6 on the fringe charges more than a big casino hotel on Las Vegas Boulevard, times are tough in Las Vegas. Maybe I am wrong, and perhaps fringe motel rooms always carry a premiium, but the Las Vegas casino hotel is a billion times more fun and interesting.

When I go out in Las Vegas (I like to throw dice), it still feels alive and vibrant. Fremont street is often packed with people, and the strip casinos have a lot of activity. The problem with Las Vegas isn't a decline in the traffic of people (there has been some of that too). The problem is that visitors are not losing or spending as much money as they used to. And while about 50% of the construction industry remains unemployed, those idle workers are not earning money and contributing to the economy. The lack of a viable housing market and its associated labor market is what makes this recession go on and on.

I have always liked Las Vegas for a variety of reasons. And going there every week is a responsibility I enjoy.

Housing Crash News

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Fri Oct 29 2010

Foreclosure activity up across most US metro areas (mynorthwest.com)

Foreclosure Crisis Is Spreading, New Data Show (npr.org)

Treasury Links Foreclosure Ills to Better Housing Prices (nytimes.com)

TARP Watchdog Makes Chilling Comment About Foreclosure-Gate (businessinsider.com)

New House Sales Stuck at Rock-Bottom (blogs.wsj.com)

'How To Forge A Client's Signature' And Other Lessons From Ameriquest (dailybail.com)

"Straight Talk" with Economic Bloggers (Mish)

Signs Hyperinflation Is Arriving (gonzalolira.blogspot.com)

2010 Contraction Now Crushing Consumers More Than Great Recession (businessinsider.com)

In Spain, Houses Are Taken but Debt Remains (nytimes.com)

GOP leader calls for weaning housing market from government support (scrippsnews.com)

New Theory on Evolution of Poltical Beliefs (miller-mccune.com)

The Robin Hood Tax (robinhoodtax.org)

Bill Gates, Sr, Promotes 'Robin Hood' Tax On WA Wealthy (huffingtonpost.com)

Portrait emerges of woman whose mummified body was found in realtor's car (latimes.com)

What's it really worth?

Thu Oct 28 2010

Scholar says lower housing prices are here to stay (lvrj.com)

Low household formations translate to high vacancy rates (firsttuesdayjournal.com)

Bernanke's Failed CNBC Predictions From 2005-07 (dailybail.com)

Bill Gross' calls QE Policy History's Most "Brazen Ponzi Scheme" (Mish)

Fed zombies hungry for quantitative easing (marketwatch.com)

Treasury: Foreclosure woes not systemic threat (financialpost.com)

Irwindale officials spent lavishly during trips to discuss housing for poor (latimesblogs.latimes.com)

Economy is running out of gas (marketwatch.com)

How Much Does It Cost the Government To Prevent a Foreclosure? (theatlantic.com)

Mortgage Mess Could Hit Banks, Housing (sandiegoreader.com)

The real foreclosure mess: Lack of accountability for banks (washingtonpost.com)

Mortgage scandal boosts investors' campaign to get banks to buy back securities (washingtonpost.com)

Elite group organizing campain to recover mortgage bond losses (blogs.wsj.com)

Mortgage Fraud and Foreclosure Fraud: The Perfect No-Prosecution Crime (usawatchdog.com)

Wall Street banks seeking to hide risks (bloomberg.com)

The real danger: another stealth bailout of the big banks (washingtonsblog.com)

Most Americans worry about ability to pay mortgage or rent (washingtonpost.com)

Val Kilmer slashes price of New Mexico ranch by $10 million (sfgate.com)

Thank You Damon S. ($20) for your kind donation.

What's it really worth?

Wed Oct 27 2010

Mortgage Bankers Push Housing Recovery to uh, 2012 (blogs.wsj.com)

Housing Cliffdives (hard to see that last data point, so small…) (dailybail.com)

US stocks down after weak housing report (economictimes.indiatimes.com)

US house prices dip again in August (bbc.co.uk)

House prices fell in August, near lows (finance.yahoo.com)

San Diego's slight house price rise stalls in August (signonsandiego.com)

Beach house from list at $2,900,000 to selling for $900,000 (doctorhousingbubble.com)

LA houses advertised in China (shanghai.craigslist.com.cn)

Australian housing hurtles toward disaster (smh.domain.com.au)

Real House Prices, Price-to-Rent Ratio (calculatedriskblog.com)

With foreclosures crisis, banks undermine faith in markets (money.cnn.com)

US should remove top bank execs over foreclosure mess (voices.washingtonpost.com)

Mortgages to Drop Below $1 Trillion in 2011 to Least Since 1996 (bloomberg.com)

Even The Super-Rich Prefer Renting To Buying In This Market (businessinsider.com)

Top Incomes Grew Five-Fold in 2009 to an Average of $519 Million (dailyfinance.com)

Number of Californians entering foreclosure rises 19% (latimes.com)

How Long Does Foreclosure Take? (npr.org)

Judge Judy: Before the Mortgage Crisis (youtube.com)

End Social Security And Medicare Now! (patrick.net)

Thank You Jaime L. ($10) for your kind donation.

What's it really worth?

Tue Oct 26 2010

Plans to cut the federal budget deficit could affect mortgage debt subsidies (articles.latimes.com)

Housing and banking lobbies will kill any attempt to free citizens from debt (marketwatch.com)

Existing House Inventory increases 8.9% Year-over-Year (calculatedriskblog.com)

99 Weeks: When Unemployment Benefits Run Out (cbsnews.com)

The Real Unemployment Rate Is 17% (realclearpolitics.com)

226,000 could lose jobless benefits (economy.ocregister.com)

Backdoor Foreclosure Via Insurance (mindonmoney.wordpress.com)

Liquidity Traps, Falling Velocity, Commodity Hoarding, and Bernanke's Misguided Tinkering (Mish)

Why the Fed's 'Trickle-Down Economics' Is Failing (dailyfinance.com)

Fed is dumpster for banks' smallpox-blanket-grade mortgage bonds (kunstler.com)

What is a currency war, and how do you win one? (slate.com)

US banking regulators in new foreclosures probe (bbc.co.uk)

Banks can't even manage to act in their own interest (nytimes.com)

Commercial Property Prices in U.S. Decline to Eight-Year Low (bloomberg.com)

Global house prices (economist.com)

A $10 million house in bubble days is now a $5 million house (reuters.com)

Unemployment Misery, Lower Earnings For All But Super Wealthy (huffingtonpost.com)

One rich guy who wants to pay higher taxes: Bill Gates Sr. (mcclatchydc.com)

Mukesh Ambani: India billionaire's house in Mumbai (latimes.com)

Housing Cartoons (Last one best) (ritholtz.com)

What's it really worth?

Mon Oct 25 2010

Interview with Gary Shilling: housing to fall 20% more (cnbc.com)

Sudden and Dramatic Drop in U.S. House Prices: 5.9% price drop in 2 months (clearcapital.com)

Unmentioned Elephant In Foreclosure Fraud Room: Second Liens (blogs.alternet.org)

Foreclosure crisis is about who gets stuck with $1.1 trillion in losses (businessweek.com)

We'd like to return these bad loans, please (money.cnn.com)

To fix the economy, let bad banks die (latimes.com)

FDIC Called On To Put Bank Of America Into Receivership (commondreams.org)

Mortgage interest deduction subsidizes wealthy at expense of middle class (mybudget360.com)

Reduction in debt subsidies could be in houseowners' futures (contracostatimes.com)

California unemployment: Government job losses (latimes.com)

Housing Calculator Guy Apologizes For Lack Of Negative Numbers (npr.org)

Dubai: Real Estate Crash Sends Prices, Rents Falling (news.yahoo.com)

Apartments are a good investment for some (usatoday.com)

Demand Rising for Rentals Among the Ultrarich (nytimes.com)

Income Inequality Linked to Senate Standoffs (miller-mccune.com)

Health Care and the Campaign (nytimes.com)

Was Fraud the Business Model for the Entire Mortgage Industry? (washingtonsblog.com)

Inside Job (film) (en.wikipedia.org)

Banks defeat regulation (salon.com)

Mobile Homes from Cullman Liquidation (honesty in advertising) (biggeekdad.com)

Four gets you one hundred and fifty

If you manage to time the real estate cycle in California, the return on investment can be enormous. All the speculators who used 100% financing and either HELOCed or sold at the peak obtained an infinite return because their investment was zero. But even the FHA buyers who put 3% down obtained returns on their investment that in many cases is measured in triple digits. The owner of today's featured property invested $4,500 when he purchased, and when he refinanced at the peak, he sold it to the bank (in a nefarious way) and made $169,500. That is approximately 38 times what he invested. The bank is left holding a $262,500 mortgage on a tiny old condo worth about $200,000 in today's still-inflated market.

Irvine Home Address … 325 TANGELO 324 Irvine, CA 92618

Resale Home Price … $208,800

Home Purchase Price … $97,500

Home Purchase Date …. 3/10/1999

Net Gain (Loss) ………. $98,772

Percent Change ………. 101.3%

Annual Appreciation … 6.6%

Cost of Ownership


$208,800 ………. Asking Price

$7,308 ………. 3.5% Down FHA Financing

4.23% …………… Mortgage Interest Rate

$201,492 ………. 30-Year Mortgage

$39,525 ………. Income Requirement

$0,989 ………. Monthly Mortgage Payment

$181 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$17 ………. Homeowners Insurance

$250 ………. Homeowners Association Fees


$1,437 ………. Monthly Cash Outlays

-$89 ………. Tax Savings (% of Interest and Property Tax)

-$279 ………. Equity Hidden in Payment

$11 ………. Lost Income to Down Payment (net of taxes)

$26 ………. Maintenance and Replacement Reserves


$1,107 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$2,088 ………. Furnishing and Move In @1%

$2,088 ………. Closing Costs @1%

$2,015 ………… Interest Points @1% of Loan

$7,308 ………. Down Payment


$13,499 ………. Total Cash Costs

$16,900 ………… Emergency Cash Reserves


$30,399 ………. Total Savings Needed

Property Details for 325 TANGELO 324 Irvine, CA 92618


Beds: 1

Baths: 1 bath

Home size: 819 sq ft

($255 / sq ft)

Lot Size: n/a

Year Built: 1979

Days on Market: 218

Listing Updated: 40362

MLS Number: S611090

Property Type: Condominium, Residential

Community: Orangetree

Tract: Othr


According to the listing agent, this listing may be a pre-foreclosure or short sale.

Looking for Investor or solid owner occupant transaction to stay the course with the short sale process.

Good luck with that.

I find that the cumbersome nature of the short sale process makes is easier for flippers to sell houses. Buyers don't have the patience to wait forever for a short sale. There are many buyers who have offers on several short sales, and they sit and wait for one of them to pop. When a filpper puts a property on the market, it gets attention because a prospective buyer does not have to wait for a bank to make up its mind. Both short sales and REO are bank decisions. Third party trustee flips pair serious sellers and impatient buyers. If the property is priced right, it quickens the pace of sales significantly.

18 thoughts on “IHB News 10-30-2010

  1. medy

    Hey IR, I read that Las Vegas will have a bad water shortage problem within this decade, are you not worried about that?

    anyway, i read some of ur previous posts and been thinking about Vegas for a while myself, how much is an average house in a good area? how long do the houses take to rent and for how much? which areas of Vegas are good to buy in?


  2. winstongator

    Per the redfin listing, this seems to be the 2nd foreclosure in 12 years on the property.

    What is the average time someone would live in a 1/1? Does it make sense for this to be owner-occupied and not a rental?

  3. Planet Reality

    IR it’s great to hear your endeavor has brought joy, energy, and purpose to your life. You haven’t written much about your personal difficulties of the recession.

    The economy of Las Vegas will never return to the boom years. The reason is that entertainment consumption is changing drastically as technology is embedded into our lives. The internet expansion into the living room and mobile technology is stealing market share from entertainment sources like Las Vegas at a rapid pace.

    The other challenges Las Vegas will face are based on location. It’s the desert. Water and energy will increase as % of sale expenses every decade into the future. Put simply there is no good reason for Las Vegas to be located where it is.

    Throw in the fact that twice as many houses were built there as needed, with two third of houses non owner occupied. The bubble was far larger in Las Vegas.

    It’s no surprise that Las Vegas trails only Detroit in the housing decline. The good news for you is that even Detroit has premium areas where prices have dropped but not gone to zero, you can still by in a good area with automotive executives for a half million.

    If you choose the right premium areas of Las Vegas your investments should pan out. Given Las Vegas’ over built and depressed economy circumstances major sections of Las Vegas will deteriorate and look like Detroit. If you avoid these areas you should survive. Some areas will be obvious while others have yet to decline to their 2020 status.

    1. Michael T

      Heh. One week you’re snidely mocking IR for his Las Vegas investments, and now all of a sudden you’re so pleased at his success–even sharing your deep wisdom about the existence of “premium areas” (GASP! How’d you stumble upon that ingenious discovery?).

      Dude, your transparency is kinda pathetic.

      1. DarthFerret

        I agree. It’s hilarious how he prances around here acting like he’s offering sage advice. All the while, every other reader is chuckling and shaking their head at what a fool he is making of himself.

        Maybe he’s finally realized how wrong his predictions of the past year (or so) have been? Maybe his new tactic is to predict every single possible outcome simultaneously? At least then, he’ll be able to claim that he was right about whichever one turns out to be correct.


        1. Planet Reality

          You are a fool. My predictions continue to be correct and I continue to make money on my long rates bet from last year.

          I’m also right about Detroit and Las Vegas. Premium areas of Detroit are still over half a million. Even in a bad economy there are still plenty of good high paying jobs, even in the circle of hell that is Detroit.

          Make no mistake about it, a homeless hotel in Santa Ana has a higher nightly rate than a 4 star Las Vegas hotel mid week. When IR passes that Victorville fringe hotel more expensive than the strip it is directly related to jobs.

          BTW Darth how are your bids going on $499K Irvine listings, talk about the king of fools.

  4. FoolishRenter

    LV has lost much of their edge of gambling. Gambling was legal in NV while illegal in most other areas. Boom of Hoover Dam and WWII RR depot. Gambling is now legal in CA and other areas with Indian casino, but lack the big shows of LV. Is LV dead? I don’t think so, it’s concentration of casino’s makes it a destination spot for vacations and company sponsored conventions. LV casino hotels are not for renting out for travelers to vacation in but for gamblers to rest. Hslf of gambling is the image of the game.

    What driving the economy in OC? Looks like aerospace, boat mfg and automotive mfg are gone, movie production and biotech/pharma are withering, automotive corp offices are strong for Japanese and Koreans, but dead for US mfg. Dock work is still strong, but with the Baja port built and Jorge Bush’s deal with Mexico to delay US bound cargo just a delay. Best jobs seems to be local govt jobs that have high pay and great defined pension plans. The question is what will support the high housing cost in CA other than govt jobs?

    1. awgee

      Tech and tourism still seem big in OC. I think it is a fallacy that govt jobs are high paying. There have been a few examples bandied on the news, but for the most part, govt jobs are still lower paying than their private counterparts.

    2. Alfred Nonymous

      Is banking/finance/RE still driving the OC economic engine? NB seems full of deep pocketed banksters, but I could be wrong.

      I don’t think that legalized in-state gambling is taking anything away from Las Vegas. The local casinos may be able to pull in some gamblers who need a quick fix, or keep some people roped in for a quick weekend gambling getaway, but those same people are still going to take their trips to Las Vegas. Vegas is an experience and has much more to offer.

      What I don’t understand is just how hardcore some people are when it comes to gambling. I’m afraid of taking $200 and gambling with it, yet I have friends who go to Vegas with a $2000 or $3000 to play with. With that kind of money, I’d rather skip the trip to Vegas and go some place really nice.

  5. Vincenzo

    According to my private surveys, the young consider Irvine to be a horrible city for living because of its lack of entertainment.

    The highly-praised Great Park is a bunch of trees and a lake in the desert climate. What were the retirees from Irvine city council smoking?

    There must a shooting range at the former military base. Open it for public.

    Open night clubs, strip clubs, a circus, etc. And lonely professionals won’t drive to Las Vegas and spend their money locally. Also, young girls will earn $1,000 per night and will be able to buy a house.

    Moreover, a schoolgirl complained about one of the “Best Irvine Schools”. She told me that it was full of foreigners of the different race, no chance to find a friend of the opposite sex. And the food wasn’t on a par with its high status.

    1. FoolishRenter

      School girl?
      Maybe the US can restore its competitiveness if role models as Paris and Linsey are replaced. Sheen and Homer also need to be replaced.

      1. Vincenzo

        What’s wrong about Paris?
        A school girl who maintains her looks at the same standard as Paris will always be competitive.

        Can I nominate these role models: Steve Jobs from Apple, Bill Gates from Microsoft, Richard Branson from Virgin? These college drop outs are doing fine. They were bad in Math and Biology, but they have good engineering skills.

        1. Alan

          Engineering skills? Eh? Bill Gates, yes. The others, and Gates, have great marketing and sales skills, and killer business instincts. They may be good role models, but nearly everyone who tries to match them is going to fail miserably.

          The US has great opportunities for a very few at the very top, and they are getting richer, faster. Not so good for people lower down the chain, and I doubt that the US sales manager of a Chinese firm is going to get 50x the boss’ pay. There are some extremeley rich people in Brazil, Panama, or whereever. Life is fine if you are one of them, but the other 99% of the population won’t be looking into buying houses in Irvine.

          1. Vincenzo

            What about this role model: cramming all her childhood, no time for hobbies; cramming at the university; sitting in her cubicle 8-5; giving all her earnings to the kids’ education and a small house?

  6. rkp

    IR- sahara has always been a lower cost hotel. During comdex 2002 I stayed there for $30! That’s during a major show and better economic times. That’s not to say vegas isn’t suffering but your barometer might need some adjustments.

    Personally I think vegas is already on a comeback. CR reported that hotel vacancy rate has improved though $ per night is still low. With people still coming, its just a matter of time before they open their wallets. Also while its easy to gamble locally now, it still doesn’t change the destination effect. Their is something different about going to vegas vs commerce or wherever. A simple way to think about it is amusement parks. There are decent parks around the country but people still come all the way to OC for disneyland and other parks. In same way, vegas is a brand and will attract people.

Comments are closed.