IHB News 1-15-2011

I hope you are enjoying your weekend.

Irvine Home Address … 13 HAWTHORN Irvine, CA 92612

Resale Home Price …… $489,000

Irvine Home Address … 13 HAWTHORN Irvine, CA 92612

Resale Home Price … $489,000

Home Purchase Price … $190,000

Home Purchase Date …. 10/21/97

Net Gain (Loss) ………. $269,660

Percent Change ………. 141.9%

Annual Appreciation … 7.2%

Cost of Ownership


$489,000 ………. Asking Price

$17,115 ………. 3.5% Down FHA Financing

4.79% …………… Mortgage Interest Rate

$471,885 ………. 30-Year Mortgage

$98,845 ………. Income Requirement

$2,473 ………. Monthly Mortgage Payment

$424 ………. Property Tax

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

$82 ………. Homeowners Insurance

$209 ………. Homeowners Association Fees


$3,187 ………. Monthly Cash Outlays

-$404 ………. Tax Savings (% of Interest and Property Tax)

-$589 ………. Equity Hidden in Payment

$31 ………. Lost Income to Down Payment (net of taxes)

$61 ………. Maintenance and Replacement Reserves


$2,287 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$4,890 ………. Furnishing and Move In @1%

$4,890 ………. Closing Costs @1%

$4,719 ………… Interest Points @1% of Loan

$17,115 ………. Down Payment


$31,614 ………. Total Cash Costs

$35,000 ………… Emergency Cash Reserves


$66,614 ………. Total Savings Needed

Property Details for 13 HAWTHORN Irvine, CA 92612


Beds: 3

Baths: 2 baths

Home size: 1,539 sq ft

($318 / sq ft)

Lot Size: 2,500 sq ft

Year Built: 1974

Days on Market: 7

Listing Updated: 40553

MLS Number: S643461

Property Type: Condominium, Residential

Community: University Park

Tract: Tr


NOT A SHORT SALE!!! Single level home with no one above or below. Situated in one of Irvines most sought after communities; the Terrace. Home is at the end of a cul de sac with an oversized driveway and a two car attached garage with direct access to the house. There are three large bedrooms and one has a secluded small patio/atrium. There is a large patio off the living area with plenty of room to entertain. The kitchen has an eat-in area and plenty of counter and cabinet space. This lovely home is surrounded by greenbelts and this family community has two pools, a club house, lots of walking trails and tot lots for the little ones to play in. Walking distance to Irvines award winning schools (Uni High is also very close), stores and parks. Also close to the 405 and 5 and toll roads. The beautiful beaches of Orange County are a few minutes drive away. Hurry, this one will not last.

hat tip SGIP

32 thoughts on “IHB News 1-15-2011

  1. Laura Louzader

    Here’s another beautifully staged house. I can see how much thought and care went into making this place look attractive in the agent’s photos, and I’m duly impressed.

    Let’s see…… dirty towel and open jar on LR coffee table, personal junk all over living room; large, dark stain on LR carpeting, badly coordinated living room furniture; loose dishes, cleaning stuff, small appliances and other loose junk from one end of the kitchen counter to the other along with badly coordinated towels and throw rug; teen’s bedroom with unmade bed and otherwise looking exactly the way a teen’s bedroom usually looks; garishly painted open bar in living area with junk shelving attached to walls; and garage piled high with discarded boxes, old pool table, and other junk.

    God knows what the other rooms look like, and I don’t even want to think about the bathrooms.

    Everybody knows that life happens and its messy, but when you’re showing a property, you want to make it look its best. I mean, this was not a surprise showing of the house, but staged photos, for Chrissakes. Photos of the house looking this way is like showing up for a job interview in your housecleaning clothes with uncombed hair that hasn’t been washed in three days.

    1. wheresthebeef

      C’mon, we all know Irvine is different. This is a bargain for a cool half million dollars. I expect a line of savy FCBs to literally vacuum these deals up…what could go wrong?


      1. Swiller

        That is a bong, most likely a nice thick pyrex one. Those are not cheap! HELOC money working hard again LOL! At least the money is supporting local incomes 🙂

  2. Vincenzo

    How Did Canada Avoid the Foreclosure Crisis?

    Is it so difficult to follow the neighbors from Canada and use their rules to avoid financial crashes? Apparently, housing crashes in the USA bring enormous profits to those who establish the rules.

    “Fewer than 1 percent of all Canadian mortgages are in arrears.

    1. Canada does not have a direct analogue to Fannie Mae or Freddie Mac

    2. Canada also doesn’t have fixed rates mortgages, nor is there a mortgage interest deduction. This means that borrowers have the incentive to pay off their mortgages as quickly as possible. Additionally, because mortgage rates are allowed to adjust to market conditions after 5 years, the interest rate risk falls upon the borrower rather than the lender. This helps to keep mortgage rates low.

    3. Finally, Canada’s mortgages are recourse loans. This means that if a Canadian borrower defaults on their mortgage debt, they cannot give the house back to the bank and walk away from the debt, as Americans in many states can. Canadians are still responsible for whatever debt remains on their mortgage after the proceeds of a foreclosure sale are applied. This gives Canadian borrowers even more incentive to stay current on payments. “

    1. Chris

      “Finally, Canada’s mortgages are recourse loans.”

      That’s not only true with Canada but with other countries as well.

      This, however, doesn’t mean that there’s no housing bubble in Canada. It only means that people are stuck with their debts no matter what happens to the housing prices.

      1. Vincenzo

        This contains housing bubbles.
        You don’t buy properties that you can’t afford. So, housing prices don’t go up astronomically.

        1. Chris

          That’s somewhat true although I don’t have any anecdotal evidence to back my claim.

          I can provide a dire example of how the offspring can inherit a debt left by a deceased elder:

          Debt Inheritance

          Now **that** is totally self-restraint on taking a large debt although the parents can play “who gives a flying F” on their children (even though I doubt most would).

  3. Laura Louzader

    I don’t believe we’re even halfway through the full story of the Canadian housing bubble, which looks like it’s at the same stage our housing market was in 2005.

    Recourse for deficiencies in IL hasn’t stopped the Chicago housing bubble from bursting and prices from deflating drastically,and I do not believe that it will stop the Canadian housing market, which has been appreciating 20% year over year, either.

    Home borrowers in Vancouver and other major cities are paying 50% to 70% of their incomes for mortgage costs. This is not sustainable and many of these people will default.

    Worse, sales in Vancouver and Calgary are “plummeting” and Toronto experienced a 23% drop in sales last year. The overheated market appears to have exhausted itself, which happens just before prices start dropping off a cliff.

    Nobody escapes the laws of gravity and arithmetic.

  4. Laura Louzader

    Here are some remarks on the Canadian housing situation as of July, 2010, at The Trumpet (http://thetrumpet.com/)

    “House sales in Vancouver and Calgary are plummeting. Is the top in Canada’s ridiculously inflated housing bubble finally in?

    The Globe and Mail reports that home sales in Vancouver plunged by 30 percent in June compared to one year ago. Sales were down 5.8 percent from May. Calgary saw even greater reductions in sales. In June, the Calgary Real Estate Board reported that single-family home sales were down 42 percent from a year earlier and down 16 percent from May.

    In Toronto, realtors report a 23 percent drop in sales from last year.

    “We have seen an unusual pattern of activity in the housing market over the past 12 months,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services, concerning the housing market in Regina. “An expected increase in the supply of homes on the market will now bring stabilization in prices, and in some cities we will see both prices and unit sales decline towards the end of the year. This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”

    Sitka Pacific Capital Management’s Mike Shedlock warns that the plummeting sales volume pattern is quite similar to how things cascaded in the United States once the housing bubble peaked. According to Shedlock, the housing collapse cascade pattern is:

    * Volume drops precipitously
    * Prices soften a bit
    * Inventory levels rise slowly
    * High-end home prices remain relatively steady for a brief while longer
    * The real-estate industry tries to convince everyone it’s “business as usual” and homes are affordable because rates are low
    * Bubble denial kicks in with media articles everywhere touting the “fundamentals”
    * Stubborn sellers hold out for last year’s prices as volume continues to shrink
    * Inventory levels reach new highs
    * Builders start offering huge incentives to clear inventory
    * Some sellers finally realize (too late) what is happening
    * Price declines hit the high end
    * Increasingly desperate sellers get creative with incentives, offering new cars, below-market interest rates, trips, etc.
    * Gimmicks do not work
    * Price declines escalate sharply at all price levels
    * The central bank issues statements that housing is fundamentally sound
    * Prices collapse, inventory skyrockets, and builders holding inventory go bankrupt

    “I am now confident the peak in Canadian housing insanity is finally in,” says Shedlock.

    Canadian readers may want to take note of the calamitous events south of the border that ensued following America’s great housing bust. Millions of Americans are losing their homes and thousands of others are choosing to let the bank foreclose rather than spend decades paying for houses that are worth fractions of current market values. Hundreds of thousands of people associated with the construction, real-estate and mortgage-related industries found themselves out of work. This, plus the resultant credit crunch, caused a snowball effect that hit virtually every sector of the economy.

    Three years after the peak, America’s economy is still down at least 8 million jobs (conservative estimate)—which is the equivalent of every man, woman and child in Vancouver, Calgary, Edmonton, Ottawa, Quebec City, and the provinces of Saskatchewan and Manitoba out of work. Many of these people have been without work for two years.

    Canadians should prepare for a drastic downturn in the economy. It is coming. Begin by reading “Storm-Proof Your Financial House.” •”

    Looks to me like Canada is about where we were at the beginning of 2007.

    1. Vincenzo

      Correct my calculations:

      1. The USA. Your home cost $500,000 in 2007. Your bank foreclosures it and gets $300,000. You are clean, and after 5-7 years you can get another mortgage. I, the taxpayer, has to to cover the bank losses, $200,000.

      2. Canada. Your home cost $500,000 in 2007, $300,000 now. Your bank sells the house, and You not I have to repay $200,000 from your future income. That seems fair.

      1. about2walk

        This is decidely unfair.

        Housing serves a great social need. The stability of home ownership benefits us all by reductions in crime, higher employment, and improved literacy rates.

        When housing fails, we fail as a society, therefore we should all bear the burden of those that walk away. There must be shared sacrifice.

        This is what I tell myself as I prepare to walk away.

        1. EconE

          “Housing serves a great social need”

          Yes, it keeps the rain off our heads. Renters and owners alike.

          “The stability of home ownership benefits us all by reductions in crime, higher employment, and improved literacy rates.

          Said the used house salesclerk tugging on the sheep buyers emotional heartstrings.

          “When housing fails, we fail as a society,

          LOL. Bullshit. More emotional tripe.

          “therefore we should all bear the burden of those that walk away. There must be shared sacrifice.”

          Bail me out. Please? Pretty Please?

          Stop whining.

          1. about2walk

            Bail out, why not?

            Home ownership benefits us all, through services funded via property taxes.

            Yet those of us who choose to walk will…

            You (and everyone else) will have to pay again, just as you paid before, and there is nothing that can be done about it.

            Your lack of faith is disturbing.

            Besides, squatting after walking is better than sliced bread.

          2. EconE

            Somebody will buy your foreclosure and they’ll pay the property taxes.

            Go ahead and walk.

            Just stop being such a whiny bitch about it.

            When you get your financial house in order then you can be a homeowner again. Right now, you’re just an underwater loanowner. You don’t own SHIT.

          3. Laura Louzader

            I think about2walk is being sarcastic here.

            But I’m not.

            Housing hasn’t failed. Housing is better than ever…I can now afford the Chicago vintage condo of my dreams, if only I can get financed in this worst condo market in the country.

            What has failed is our financial system and worse, THE RULE OF LAW.

            When these two things fail, you no longer have a viable society. Our system has become completely chaotic and anarchistic. Unless we manage to right this ship somehow, complete collapse followed by strong arm rule is not far behind.

        2. Vincenzo

          >Housing serves a great social need.
          Somehow, in Canada home ownership is 69%, in the USA 67%.

          Also, who lives 30 years at the same place nowadays? You may work for a company in Irvine; but once the CA government raises taxes, the company will relocate to a corn state and you’re stuck with your house.

          1. SanJoseRenter

            “corn state” 🙂

            I noticed that a number of phrases from this site have crept into my vocabulary, including “flyover country” and “pergraniteel.” One more to add.

            I’ve also been using “royalty” to describe California public pension fund members, our new royalty class, who retire on $100,000/year with free health care starting around age 40.

          2. hthflute

            Just an FYI, under the benefit formulas for most current California government pension plans, one would need 37 years of service to achieve 100% of salary for general employees and 33 years to equal 100% for a public safety employee. Tough to get to that by age 40 with the current pesky child labor laws….

          3. Vincenzo

            Yes, the CA government workers do the opposite thing due to pensions: they relocate but still work in OC.

            Do you expect an OC firefighter to live in Illinois and fly to his work?

            “OCFA Engineer Lloyd Pinel, for example, would have to wait for the next available flight from Third Lake, Ill., The 21-year veteran’s home is a 30-minute drive from Lake Michigan, but more than a three-hour flight from his station in Buena Park.

            With more than 2,000 miles between his home and his place of work, Pinel has the longest commute of any OCFA firefighter.

            Capt. Daniel Colgan, a 23-year-veteran who is stationed in Irvine and lives in Queen Creek, Ariz., says even though he lives outside of California he is available.”

  5. Planet Reality

    Any updates on the Las Vegas house flipping venture?

    Also how about updates on the Irvine/Lake Forest trustee sale commissioned service.

    It would be interesting to learn about complications, difficulties, and successes. It would be interesting to know what % of houses you look at actually get auctioned, what % you win, and how many total hours goes into each final purchase given the failure rates.

    1. jumpcut

      I was wondering the same thing. IR used to give weekly updates on his RE ventures in the “Writer’s Corner” section of his weekend posts. Oddly, those update posts were suddenly discontinued several weeks ago with no explanation.

      1. .

        IR said he’s not going to post regular updates about his investments and updates will be sporadic at best.

        i don’t blame him. he has a ton of readers (surely in the thousands). anytime you expose any tiny piece of your strategy all the copycats jump on and steal your system. which always hurts returns. i’ve seen it happen a number of times.

        if i were him, i wouldn’t even mention i’m investing in real estate. a complete blackout of information is best for him.

        but IR is a generous guy – he spends inordinate amounts of time updating this blog without asking for anything in return. so i suspect he’ll share some information to his and his investors detriment, but to the benefit of his readers.

        1. Planet Reality

          Don’t kid yourself, the only reason he was able to get investors without first proving the model with his own money was through this blog. That’s either trust or stupidity, depending on your viewpoint.

          I agree it makes more sense to display the details of the Irvine debtors and speculate on their past, present, and future than discuss his own success and difficulties. Don’t expect a hypocrite to recognize hypocrisy.

          1. IrvineRenter

            You are not very nice. I liked it better when interest rates were going up and your were feeling defeated.

      2. IrvineRenter

        “IR used to give weekly updates on his RE ventures in the “Writer’s Corner” section of his weekend posts. Oddly, those update posts were suddenly discontinued several weeks ago with no explanation.”

        I suppose that since my business is being a vulture, I would see threads where the vultures circle and speculate on my untimely demise. No such difficulties to report here. After speaking with several of the investors, I think it best to remain mum on the details of venture on the blog except to raise interest for sales on rental properties.

        I do have many interesting stories, and I will present more of them in 2011. Those stories take longer to write, and I am more pressed for time these days.

  6. rkp

    As a reader, I would like IR to share more about the LV venture. As an investor, I prefer him keeping it quiet and only sharing with the investors.

    1. Planet Reality

      Most seasoned investors would have gone in with their own money first, to determine the failure rates and determine viability of the model before rolling out to a fund. Questions on resource requirements are different than private return info.

      1. CapitalismWorks

        Really? Most seasoned investors would have gone in with their own money first. In my experience, which is considerable, “seasoned” investors are extremely keen to enter into funds with experienced managers in a purely passive role. This includes investors with direct experience in the target asset(s) of a particular fund. Seasoned investors are looking for something to do with cash to keep it growin, typically they do not have time and/or desire for more “work”.

      2. Walter

        You say some things that make a certain amount to sense. Then you say something like “Most seasoned investors would have gone in with their own money first, to determine the failure rates and determine viability of the model before rolling out to a fund.”

        I get the feeling you have no idea what it takes to deal in the trustee sale market.

        I have the cash, and I am a Realtor, but I am very busy with my technology businesses. I invested in the fund because it allowed me to gain some exposure to the trustee sale market without making further demands on my time.

        You seem like a bitter person. Hoping you find something positive in your life other than insinuating IR’s failure is at hand.

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