Home values crater by $1.7 trillion in 2010

A billion here a billion there, and before you know it, the market losses add up to a lot of money.

Irvine Home Address … 2305 APRICOT Dr 2305 Irvine, CA 92618

Resale Home Price …… $244,900

Dad believed what Maggie said

Get a mortgage buy a home

So dad took out a great big loan

For a while there we were chuffed

Now the market has collapsed

And we're absolutely stuffed

Our house, in the middle of a slump

Our house, no one wants to buy this dump

Dad is desperate to sell

But now our homes worth even less

Than a pension from Maxwell

Our living room's a mess

Full of magistrates and bailiffs

Trying to repossess

Our house, in the middle of the boom

Our house, it was worth a small fortune

Our house, left us in a dreadful state

Our house, why the hell'd we decorate

We really caught a cold

Nowhere we can go to now

All the council houses have been sold

Our dads taken some stick

He's still voting Tory though

By God he must be thick

Our house, didn't work out like we planned

Our house, prices dropped by fifty grand

Our house, threw us out and changed the locks

Our house, it is now a cardboard box

Spitting Images — Our House

The headline about cratering home values is catchy, but what are we really talking about here? The underlying value of houses hasn't changed much, but the trading price of properties went way up and now way back down in a classic asset price bubble. The $1.7 trillion dollars in "value" was imaginary. If we had never had a housing bubble, we would not have had a crash, and nobody would believe in their own minds that they "lost" so much value in their property.

For the people who did not abuse their HELOC, buy at the peak with a toxic mortgage, or lose their job during the recession — let's hope this is still the majority — those people did not "lose" anything other than their imaginary wealth. For those that made the mistakes of the bubble and those who were swept up in the recession in the bubble's wake, those people lost their houses. Losing imaginary wealth is not as painful as losing the family home.

Zillow: Home values crater by $1.7 trillion in 2010

by KERRY CURRY — Thursday, December 9th, 2010, 10:19 am

U.S. homes are expected to lose more than $1.7 trillion in value this year, 63% more than the estimated $1 trillion lost in 2009, according to Zillow.

The decline brings the total value lost since the market peaked in June 2006 to $9 trillion. By comparison, from 2001 to the end of September 2010, the war in Iraq has cost $750.8 billion, according to a September report by the Congressional Research Service.

The second half of the year was more punishing on values. From January to June, the housing market lost $680 billion. From June to December, Zillow projects residential home value losses will top $1 trillion.

Less than one-fourth, or 31, of the 129 markets tracked by Zillow showed gains in total home values during 2010. Among those were the Boston metropolitan statistical area which gained $10.8 billion in value, and the San Diego MSA, which gained $10.2 billion.

“Government interventions like the homebuyer tax credit helped buoy the market during the second half of 2009 and the first half of 2010, but we saw a renewed downturn in the last half of this year. It's a testament to the nearly irresistible force of the overall market correction that government incentives can only temporarily hold back the tide, and that the market will ultimately find its natural equilibrium of supply and demand,” said Zillow Chief Economist Dr. Stan Humphries. (Click to expand.)

When we bounced off the false bottom in 2009, the market gained strength through the expiration of the government tax credits. The second half of 2010 saw house prices roll over and begin another leg down. The downtrend is expected to continue throughout 2011.

Fitch sees 10% drop in home prices in 2011, negative outlook for MBS

by JASON PHILYAW — Thursday, December 9th, 2010, 12:37 pm

Fitch Ratings expects another 10% decline in home prices in 2011, as the supply of distressed properties continues to weigh down the housing market.

Accordingly, analysts maintained the agency's negative outlook for the residential mortgage-backed securities space and said 53% of all investment-grade RMBS rated by Fitch have a negative outlook. The number of downgrades will once again outpace upgrades in RMBS, but not as severely as the past few years, according to analysts.

Fitch said the robo-signing debacle plaguing loan servicers, loan buyback pressures hitting mortgage lenders and a handful of other macroeconomic issues cause analysts to "remain cautious" regarding a sustainable stabilization for the market.

"Key factors that will continue to weight on performance include negative equity for recent vintage collateral, lower loan modification volume, and slightly higher loss severities," analysts said.

Fitch also said the market for commercial mortgage-backed securities should improve next year, as property market fundamentals have turned the corner. Still loan performance within the CMBS space will begin to diverge from the fundamentals next year because of asset-specific tenant rollover and high leverage, according to analysts.

Analysts said vacancies have peaked in many of the largest metropolitan areas of the country while rents have reached bottom indicating some stabilization. But the lack of construction financing over the past three years skews those gains, meaning "it will be some time before income growth is seen."

We discussed the market's fate in High prices, low demand, and large supply means lower prices ahead. Lower prices is the consensus opinion among economists outside of the NAr.

No money in. Much money out.

Many Ponzi borrowers simply ripped off the banks. Of course, lenders asked for this treatment when they gave people property with no money down and then gave them the appreciation as the values increased. It is difficult to resist the offer when lenders are willing to give you property and lots of money if you keep it.

The owner of todays featured property probably didn't set out to game the system. In fact, she probably still believes there is nothing wrong with what she did or what the bank did, particularly since the rest of us are picking up the tab. There is no reason to believe she will not do this again if given the chance.

  • This property was purchased on 5/11/2001 for $174,400. The owner used a $165,850 first mortgage, a $8,550 second mortgage, and a $0 down payment. Basically, she was given a free house by the bank.
  • Since the free house was not good enough, she then refinanced with a $207,200 first mortgage on 9/24/2003.
  • On 6/11/2004 she refinanced again with a $244,600 first mortgage.
  • On 11/24/2004 she refinanced with a $323,200 first mortgage.
  • On 11/8/2005 she obtained a $30,500 HELOC.
  • On 10/27/2006 she obtained another $30,500 HELOC.
  • On 7/3/2007 she refinanced with a $373,000 first mortgage.
  • On 2/14/2008 she got a stand-alone second for $10,000.
  • Total property debt is $383,000.
  • Total mortgage equity withdrawal is $208,600.
  • She quit paying in early 2009, and she got to squat for about 18 months before the bank finally took the property back.

Foreclosure Record

Recording Date: 08/19/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 05/18/2009

Document Type: Notice of Default

BTW, you know your house is a glorified apartment when there is a number on your front door….

Irvine Home Address … 2305 APRICOT Dr 2305 Irvine, CA 92618

Resale Home Price … $244,900

Home Purchase Price … $174,400

Home Purchase Date …. 5/11/2001

Net Gain (Loss) ………. $55,806

Percent Change ………. 32.0%

Annual Appreciation … 3.5%

Cost of Ownership


$244,900 ………. Asking Price

$8,572 ………. 3.5% Down FHA Financing

4.71% …………… Mortgage Interest Rate

$236,329 ………. 30-Year Mortgage

$49,048 ………. Income Requirement

$1,227 ………. Monthly Mortgage Payment

$212 ………. Property Tax

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

$41 ………. Homeowners Insurance

$372 ………. Homeowners Association Fees


$1,852 ………. Monthly Cash Outlays

-$114 ………. Tax Savings (% of Interest and Property Tax)

-$300 ………. Equity Hidden in Payment

$15 ………. Lost Income to Down Payment (net of taxes)

$31 ………. Maintenance and Replacement Reserves


$1,485 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$2,449 ………. Furnishing and Move In @1%

$2,449 ………. Closing Costs @1%

$2,363 ………… Interest Points @1% of Loan

$8,572 ………. Down Payment


$15,833 ………. Total Cash Costs

$22,700 ………… Emergency Cash Reserves


$38,533 ………. Total Savings Needed

Property Details for 2305 APRICOT Dr 2305 Irvine, CA 92618


Beds: 2

Baths: 2 baths

Home size: 910 sq ft

($269 / sq ft)

Lot Size: n/a

Year Built: 1979

Days on Market: 26

Listing Updated: 40491

MLS Number: S638534

Property Type: Condominium, Residential

Community: Orangetree

Tract: Sc


According to the listing agent, this listing is a bank owned (foreclosed) property.

Great Value! Top Floor Unit. Spacious Condo two private balconies. Plenty of natural light. Enjoy high ceilings & fireplace In Living Room. Nicely sized bedrooms. Enjoy reading on your private balcony of your master bedroom. Master has Mirrored Closets & Double Sinks. Formal Dining Room & Breakfast Bar Living Room. Inside Laundry Area. Extra storage in balcony closet. Must See!

I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing the Irvine home market and combating California Kool-Aid since 2006.

Have a great weekend,

Irvine Renter

72 thoughts on “Home values crater by $1.7 trillion in 2010

    1. IR_Fan

      wait, i thought all commodity prices were increasing across the board because of inflation that wasn’t picked up by CPI or PPI because of government statistical tricks to hide inflation.

      Someone didn’t apparently tell the construction suppliers their inputs have gone up in price.

      1. no worries

        This is coming from wage deflation:

        “But the news isn’t so good if you happen to be a subcontractor or a rank-in-file construction worker.

        Thanks to cutthroat competition, these cuts are coming out of their hides.”

        “We’ve reacted to the market,” Swain said. “We’ve seen that our competitors have lowered their labor rates, and we’ve done to same to stay competitive.”

        But cuts in labor remain the key element.

        Company matches for 401(k) retirement plans have been “suspended.” Employers no longer pay 100 percent of health insurance costs.

        And in some cases, hourly wages have been shifted to “piece work” rates, under which workers get paid for the amount of work completed, not the hours worked.

        “A typical laborer used to make between $150 and $180 a day,” observed McKernan. “Now (he or she is) making $60. Yeah, it’s sad.”


        Price drops for materials like lumber and drywall have helped some, but not much, industry officials say. And there have been reports that drywall costs could rise as much as 25 percent in coming months.

        Costs for nails have doubled thanks to rising steel prices.

        Ganahl Lumber’s purchasing Vice President Pete Meichtry says that overall material costs are down – at best – 5 to 10 percent.


        or just read the article?

      2. AZDavidPhx

        wait, i thought all commodity prices were increasing across the board because of inflation

        Don’t Be Fooled: Inflation Has The Upper Hand

        Wednesday, December 8, 2010, 5:23 pm, by cmartenson

        Here at Martenson Central, we are endlessly keeping a close eye out for the emergence of deflation, defined here as the purchasing power of the dollar going up.

        The reason that the inflation vs. deflation debate has been so noisy, yet simultaneously so murky, is that all of these intersecting variables impact the final equation. It is like the difference between trying to balance a single broomstick on your outstretched hand vs. trying to balance a broomstick with three well-greased hinges at points along its length. The former is tricky enough to balance; the latter would be impossible for nearly everyone.

        On the plus side for inflation are commodity prices, which are again nearing their all-time peak and which have been compounding at an average annual rate of slightly more than 10% over the past decade.

        But commodities are just a small component of the overall price landscape. If one trusts the CPI statistic — and I really have my doubts about its construction and methodologies (that’s putting it mildly) — then it would seem that prices are actually quite tame and that disinflation (in which inflation is declining slightly month-by-month but still rising overall) is the greater concern, as the Fed has claimed.

        With regard to prices alone favoring inflation, we find that commodities, stocks, bonds, medical costs, college tuition, and the CPI itself are all up over the past year, and in the case of everything but stocks, the past decade.

        1. awgee

          The 10 year is yielding 3.30% today.

          I am wondering if the financial geniuses who like to claim that China can not sell their treauries or stop buying them because China is dependent upon exports to the US know just how much of China’s GDP is US exports, as opposed to let’s say, domestic construction.

      3. matt138

        Costs should be going down. We are still in an economic contraction.

        It follows that CPI and GDP would be negative in an economic contraction. Why are they not?

        If prices should be falling 10%, but only fall 1% due to government and central bank subsidy, what do you call that?

        1. matt138

          manipulation for the appearance of stability?

          or robbing citizens of increased purchasing power?

          or monkey wrenching free market price mechanisms with taxpayer dollars?

          All of the above.

  1. AZDavidPhx

    Rates on fixed mortgages rose for the fourth straight week this week, hitting 4.61 percent. The surge could slow refinancings and further hamper the housing market.

    Freddie Mac said Thursday that the average rate on a 30-year fixed loan increased sharply from last week’s rate. And it is well above the 4.17 percent rate hit a month ago— the lowest level on records dating back to 1971.

    The average rate on a 15-year fixed loan rose to 3.96 percent. Rates hit 3.57 percent last month—the lowest level since 1991.


    1. IR_Fan

      so where were you during the prior months went it went ever lower…i don’t recall you posting “WHAT?! HOW IS THIS POSSIBLE?!”

      I bought in sept and got 4.5% and thought this was crazy low. But it kept going down further. So it is basically back to where it was.

      as an aside, I didn’t buy for investment purposes. I bought because of expanding family. I plan to stay for awhile and the decision to buy wouldn’t have have one bit of difference depending on whether the rate was 4% and 4.5% or 5%.

      1. Perspective

        It’s a good sign when we have to defend a decision to own/finance a home, as opposed to 2000-2006 when renters had to defend their decision to rent.

        The people in my small office happen to be very conservative (financially). Everyone must defend any large purchase, especially cars. It’s almost shameful if you have to come in here one day and admit that you bought a new car.

        1. Swiller

          Many people won’t “defend” their home ownership…they won’t want too, they will simply walk. This too, is a good sign to help stabilize prices. Too bad the republicans/democrats in congress voted for bankster welfare.

          Amazing how the people who WORK are paying the price for the rich who do not work, they just “invest” like that is a equal replacement for work.

          America used to be about freedom, now it’s all about pure greed and corporate profits. Hope all of you who support the current political atmosphere love it.

          1. AZDavidPhx

            Swiller, this is exactly why I do not vote.

            It is completely meaningless in the context of modern America. The ignorant far outnumber the informed.

            The people who run this country “get it”. They understand that the people are idiotic as a whole and will passively accept the bailouts welfare for the rich so long as Wal-Mart is selling Winchester 9mm for 40.00 a box and KFC is cranking out buckets of chicken.

            USA had its 15 minutes of fame. It is all downhill from here.

        1. awgee


          That is not very nice.

          BTW, have you noticed how shrill the knife catchers have been sounding lately?

          1. AZDavidPhx

            Oh, that the pride of ownership sure wears off quickly. At least at tax time, the 8,000$ will pay for some trips to Home Depot.

        2. tenmagnet

          Does the fact that he bought make him a sucker?

          Maybe he bought one of IR’s investment properties in Vegas

          1. AZDavidPhx

            My opinion of Las Vegas real-estate gaming is well known. If you think I am going to defend it then you are kidding yourself.

            Nevertheless, there is a difference that is IrvineRenter is doing the land-baron thing. Not the case with the September house buyer.

          2. AZDavidPhx

            The “my family is expanding” gimmick is getting old. Look at how most of the world lives. And these jerks have the audacity to claim that the “new baby” requires that they buy a house.


            Like Patrick says, Babies do just fine in rentals. Most can’t even tell the difference.

          3. irvine_home_owner


            Puh-lease back.

            How do you know what a “new baby” or an “expanding family” is like? Because what Patrick tells you?

            He never said the “expanding family” *requires* a purchase but it is one of his reasons. Considering that he plans to stay put and is not counting on an appreciation ATM (since it is not investment) shows he’s not a sucker or a jerk. And… for all we know, he may be at rental parity, yet another good reason to consider purchasing.

            Not everyone wants to rent all their life.

          4. nefron

            I bought in October. In Irvine. My family isn’t expanding. I bought because I expect to be in Irvine for at least another 12 years. I want to stay in the neighborhood I’ve been renting in for the past two years all of that time. The rent I was paying is equal to my mortgage, taxes and insurance. Yes, I’m paying more than my rent because of HOA fees of about $200.

            If I look at the free foreclosure search on Foreclosure Radar.com, I see 30 3-bedroom+ houses listed. That’s preforeclosure, auction and bank owned status. There are probably over 1,000 houses in my “village.” Not all of those 30 will go into foreclosure, or all do it tomorrow. I don’t think prices are going to be devastated by this shadow inventory. I see price going down, definitely, but I don’t think they are going to crater.

            Since I made an offer in September, only one house has come on the market that I reasonably would have made an offer on. The other two houses I wanted to make an offer on at the time were both bought by investors who have put both houses on the rental market.

            I think prices will go down, but I think that plenty of sellers aren’t distressed, and things will just muddle along, at least in my neck of the woods, for another decade.

            I also, cynically, believe in the government’s and banks’ ability to always get what they want. They are manipulating and hanging on hoping a recovery will bail them out, just like Cali has done for years.

    2. wheresthebeef

      There is only person who can answer that question. Our IHB expert on interest rates who goes by the initials PR.

      I am wating for an explanation because he was almost guaranteeing 3% rates forever, how can rates approaching 5% even be fathomable.

      1. irvine_home_owner

        It’s just a dead cat jump.

        Rates will be back down.

        (I don’t really know… I just wanted to use that phrase)

  2. alan

    Of course this also really blows holes in state budgets since property taxes fall with values. State are just like the folish homedebtors who live there, they spent and budgeted for the windfall revenue like it was never going to end. Now they don’t want to go back to the spending levels of 2000.

    1. Perspective

      Ah, but not in CA. The California legislature is protected by Prop 13. Because the tax income cannot grow exponentially with crazy unsupported prices, our government doesn’t get to spend phantom income like homeowners profiled here. Property tax income is extremely stable in CA and grows every year.

      1. alan

        WTF perspective…

        Perhaps you failed math… 2 + 2 = ?

        It is true that properties purchased before the bubble can only increase 2% per year. Properties purchased during the bubble were valued at bubble prices. Property tax collections in CA are falling, they fell last year and will fall again this year, and they are projected to fall more than they fell last year. County assessors are swamped with re-evaluations. While the swing in property tax collections was not as massive as the bubble, property tax revenue IS FALLING in CA, it is not “stable” and will not return to stability for at least three to five years.

        1. Perspective

          Hmm, I read a recent article from the Howard Jarvis Taxpayer Association that showed property tax revenue to the state has increased every year and continued to through the downturn in values 2006-2009. I’ll have to find that article.

          It is true that properties purchased in this timeframe are being reassessed resulting in lower taxation, but those properties represent a small portion of all CA properties – at least, that was the gist of the article.

          1. alan

            I tried to look it up, but my recollection was that property taxes in CA fell by something like $350 million last year. Income taxes are also falling. Yesterday the LA times reported that CA population grew less than 1% last year… and that was due to births, more taxpayer’s moved out and more dependants (babies)were made. CA budget defict now projected at $28-29 billion and growing.

          2. alan

            The following was cut and pasted from GAS’s revenue projections posted on the ca.gov web site. 2010-2011 projections remain optomistic in my opinion.

            “Property Tax

            Statewide property tax revenues are forecast to decline by 4.1 percent in 2009?10, and decline by 3.1 percent in 2010?11. The 2010?11 Governor’s Budget forecast the respective growth rates at ?2.9 percent and ?2.2 percent.”

    2. jumpcut

      Since this blog tangentially used to be about Irvine before it became the Las Vegas/Phoenix/Florida Housing Blog, it might be instructive to note that property tax collections in OC are up 12% over this time last year. Yes, collections are different from anticipated revenue but it certainly shows that people are more comfortable paying their bills in a timely manner (at least in OC). BTW, first installment taxes are due today 12/10…go online to get it in before the deadline.


      1. tenmagnet

        Careful, don’t mention anything positive about the Irvine market like demand for new homes or that people are still buying.

        1. lee in irvine


          Most of us want positive things to happen with RE, we just realize that pain must occur first, and then we can rebuild. Our biggest problem is with the assholes that are trying to cancel that pain. They’ve been wrong, and their intervention in the free market has only spread out the pain and misery. Therefore when we (bears) hear about “recoveries” and “rising home prices”, we get mad because there’s NO PROOF to their assertion, and only give solace to the current bankrupt system which is controlled by WS, Banks and The Govt!

          1. Nicholas

            jumpcut = tenmagnet = PlanetReality

            If IR checks the ip addresses, I’m sure they’d be identical. Pretty funny, actually.

      2. lee in irvine

        Oh stop it … this blog is still about Irvine REAL ESTATE. There are other cities around the country that detail different aspects of this massive pile of shit. These other example cities give many in here foresight, and further education.

        1. irvine_home_owner

          The HELOC schadenfreude example of the day may still be from Irvine but the content of the articles leading up to it (or even the comments afterwards) are usually more general or about other areas.

          Maybe Irvine should adopt a slogan similar to Las Vegas:

          What Happens in Irvine, Only Happens in Irvine

          1. AZDavidPhx

            the content of the articles leading up to it (or even the comments afterwards) are usually more general

            IrvineRenter is busy in Las Vegas these days. Perhaps you should offer to step in and write some blog posts for the IHB to help take the load off of him.

            Think about it – you could run the IHB for an entire day, all from the comfort of your glass house. I hope he accepts!

      3. alan

        From Lasner..

        “72% of the 1st installemnt’s tax roll is collected vs. 59% in same period last year.”

        So collections are up 12% and 13% more people paid their taxes on time this year… Big whoop

        Doesn’t mean that total collections will be up 12% over last year in the end as you seem to imply from your comment.

      4. AZDavidPhx

        Since this blog tangentially used to be about Irvine before it became the Las Vegas/Phoenix/Florida Housing Blog,

        You should start up a blog. The only reason I show up is to read your opinion. We might as well cut out the middle man.

        I look forward to posts about how great things are over there. Maybe you will even post a live stream of you wanking yourself in front of a nice little 700K tract house?

        1. irvine_home_owner

          AZDave wrote:

          “I look forward to… a live stream of you wanking yourself…”

          You should be more careful of your Freudian posts.


          1. AZDavidPhx

            Whoops, I hope I didn’t just out myself.

            Nevertheless, I think bulls wanking themselves live from Irvine would take TalkIrvine to a whole new level.

          1. AZDavidPhx

            I guess that’s different from a sad sack Phoenix renter hovering over Photoshop in his 1BR apt.

            Indeed, my blood is boiling! Boiling I say!

          2. The Solution

            The Woodbury mini bubble is irrelevant in the big scheme of things and caused by FCBs and blinded sheeples. There are outliers all over the country but that does not change the reality. You need to step out of your Woodbury dreamworld.

      5. norcal

        Every time a house sells the back taxes must be paid. I wonder if there’s any breakdown of the increase in takings – how much is attributable to, say, the sales of expensive new homes by TIC, vs. how much is from homes that have been flipped or put through the foreclosure mill. That would be a more precise indicator of where things are going.

  3. lee in irvine

    Something to think about:

    “America’s about to find out what austerity really means. When you don’t value stuff of enduring worth, you squander your future.” ~ Umair Haque

  4. newbie2001

    High housing price didn’t crater yet.
    It’s like a big 1 inch zit on the nose that popped to 1/2 inch. The zit isn’t yet flat. The crater will occur when the infection is eliminated and healing begins. Evenually the skin/market can be smooth.

  5. Feral

    Wasn’t the Real OC Housewife house supposed to be auctioned off on the courthouse steps today? If so, was there a bidder? Back to bank? Postponement?

        1. Feral

          Thank you. I’m sure a loan mod announcement will come soon, and this couple can thank their personal trainer, manicurist and interior decorator for the unwavering support and encouragement provided during this difficult time.

  6. BD

    Hello All –

    …why all the vitrol? This blog is about Irvine. Your local market could and from what I have learned over the last 10 years must be different.

    I think what we all know and feel is our own markets. What I say here is probably not applicable to the rest of the US or even Irvine for that matter.

    I live in SoCal and work in Irvine and have lived every where from Mission Viejo to Huntington Beach – most recently.

    My thoughts and comments start with Macro data and trends and then become more focussed on the OC but, never to the specifics of Irvine.

    I guess my basic thoughts are near term – don’t buy unless you can buy for less or equal to what you can rent. And, also longer term – look forward and understand the Macro world of finance that we live in.. meaning that if rates rise slowly or dramatically over the next 10 years you may have to sell at a loss.

    I recognize that a family and schools and other things drive individual decision making. So buying now might be the best decision for some. I’m just saying that it is possible that if you do that anywhere in OC or SoCal that you might have to sell because of a new job or loss of job etc. for less in the future because of the most determinant of all facts for housing prices – and that is rates.

    I believe rates will rise. If you don’t then great. But, if they go up 2/3/4 points or more over the next decade you could have to sell at a loss based on purchase price. This is just something you should consider.

    In my opinion, prices here have balloned because of a consistent fall in rates over the last 30 years and peoples’ belief in the ever increasing values of OC homes.

    You must admit, that prices can’t rise faster than incomes for any sustained period. People actualy have to pay for these things out of what they make. This was amplified 10 times in the bubble by ‘creative financing’.

    Simple rule.. just don’t buy unless you buy for less than you can rent. This is true for the low end (if rents hold up). But, is certainly not true for anything 800K and above.

    …just some thoughts.


    1. awgee

      “…why all the vitrol?”

      Because now that it is evident that the housing market has not recovered, and prices will continue to fall, and the dead cat bounce was due only to temporary government intervention. the knife catchers are nervous and projecting.

      Personally, if we decide to buy a house tomorrow, I could care less what prices do after or what anyone else thinks of our decision. My guess is that if someone is buying and counting on the home values appreciation over the next couple of years, they will be disappointed.

  7. BD

    …my best guess is that the high end (things above 800K) have 25-45 percent to fall in SoCal to get back to equilibrium.

    When I see things like a house for sale with an asking price of 30M in Laguna I say to my self… I could live in the penhouse suite of nearly any hotel in the world for a year for what the interest income of the 30M alone would spin off in crap tax free municipal bonds.

    Think about that. Why would anyone pay $30M for a place if you could put that money in crap CA bonds for 5% tax free??

    The super high end is falling badly. The place in CDM that was listed at 75M sold for less than half. But, these people never make payments. They don’t have to borrower didly. I can rent homes in Newport Harbor that are for sale at 10M but, will lease for a year at 8K/month???? If we could buy it would cost us 5 times that much!

    The bottom has collapsed and now the top is collapsing. The middle will get forced lower to prices that can really pay out of earned income.


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