Author Archives: IrvineRenter

Shadow Inventory Revisited

Since I first estimated Shadow Inventory others have been trying to figure out how big the problem really is. Today’s featured property is an example of Shadow Inventory finally coming to light.

12 FOXHILL Irvine, CA 92604 inside

Irvine Home Address … 12 FOXHILL Irvine, CA 92604
Resale Home Price …… $594,900

{book1}

If you ever feel like something’s missing
Things you’ll never understand,
Little white shadows sparkle and glisten,
Part of a system, a plan

White Shadows — Coldplay

One of the carryovers of the Great Housing Bubble zeitgeist is the high level of suspicion about the people who are gaming the system to their advantage. The general public has little or no perception of the Titanic forces competing for their money, and discussions about sinister elements at the Federal Reserve sounds like conspiracy-theory nonsense to some.

Similarly, discussions of “Shadow Inventory” sound like the ravings of madmen. But those of us paying careful attention to the numbers know we have a problem. These ravings are the voice of reason staring at the chaotic struggle of greed and pointing out the economic ripples. These ripples are growing to a tsunami of foreclosed properties.

I am utterly astonished at the level of Government intervention, but we will see more. IMO, if you look far enough down the road, losses to the FHA — losses directly absorbed by the US Taxpayer — will finally call an end to government market props. Pressure is already building to increase downpayment requirements and eliminate tax subsidies. FHA is subprime, and everyone knows it. Will this batch walk away when they go underwater? Probably.

Shadow Inventory Revisited

In Shadow Inventory Orange County, I explored one method of calculating or estimating the number of
truly distressed property owners in Orange County. Since then, others
have written on the same subject including a new blog I am introducing today.

New Blog

I like to recognize excellence when I see it, and I found a new blog through Patrick.net called Finance my Money. The “About” doesn’t say much about the author, and the blog has only been around since August of 2009, but I found two excellent posts there:

California Notice of Defaults hit Record in 2009: Approximately 476,000 Notice of Defaults but Foreclosures Fell. HAMP Most Active in California. Approximately 5,900 Permanent HAMP Mods in California.

California Housing Inventory Mystery: 206,000 Homes on MLS but is the Real Inventory 412,000 or closer to 618,000?

The first post confirms, “California is at the center of the foreclosure wave. Of the 306,000
foreclosure filings in November 23 percent hit in California. You
cannot talk about housing distress without looking at the state of
California. The California housing market will be in a slump for many
years and there are a variety of reasons why California housing will see no recovery in 2010.
One of the most important leading indicators of housing distress is
notice of defaults. With so much talk about housing recovering the
data is showing that 2009 will set a record in terms of NODs filed in
California. 476,000 notice of defaults will be filed by the end of the
year setting a pace of over 1,300 NODs filed per day in 2009.”

In Shadow Inventory Orange County, I discussed that one method of leaving Shadow Inventory is by curing the loan, generally with a loan modification. Since loan modifications are billed as a housing market panacea, it is worth seeing how these programs have done:

Many have argued that HAMP will help many of these loans. California is the largest HAMP state:

Yet the above number is a misnomer. In fact, nationwide only a handful of modifications have become permanent:

Of the 759,000 HAMP trials started only 4 percent have become
permanent. This number is abysmal. In fact, if we take the 148,000
trial mods in California we can assume that only 5,920 have made it to
the permanent stage. We had 476,000 notice of defaults filed in 2009!
The HAMP is merely a delay of reality.

The cure rate was 6.6% back in September. It isn’t improving.

In defense of the HAMP program, the cure rates will get better because there are people who have made 1 or 2 months payments that will cure when they get to three months, so there is a lag in the reporting. The headlines will ignore the lag two months from now when the real cure rate is revealed.

For what it is worth, I guestimate cure rates will be between 10% and 15% as currently defined; however, there will be pressure to lower the bar. Did you notice three months is considered permanent? Three years maybe, but three months of consecutive payments doesn’t seem like much to ask. Despite how low this bar is, it could go lower. In fact, this program could fail to produce a single loan that survived to a market sale or payoff, and by their standards it would be a success.

We pick up the Shadow Inventory issue again in the second post:

So even though notice of defaults for 2009 are reaching the 475,000
mark actual defaults for the year are going at a pace of 230,000. In
other words, there is a major gap in the data. This isn’t because
loans are curing either. Recent cure rates are under 5% and for
California, they are even lower. So most of those 475,000 notice of
defaults are going to become additional inventory at some point. In
fact, how many of those 475,000 homes are even listed in the 206,000
current inventory? That is the major question and brings up the shadow
inventory trends.

A recent report from Amherst Mortgage Insight tackled this question:

There is another method of calculating shadow inventory. It’s out there, and the lenders don’t really want you to know it.

12 FOXHILL Irvine, CA 92604 inside

Irvine Home Address … 12 FOXHILL Irvine, CA 92604

Resale Home Price … $594,900

Income Requirement ……. $123,320
Downpayment Needed … $118,980
20% Down Conventional

Home Purchase Price … $852,000
Home Purchase Date …. 10/17/2005

Net Gain (Loss) ………. $(292,794)
Percent Change ………. -30.2%
Annual Appreciation … -8.4%

Mortgage Interest Rate ………. 5.01%
Monthly Mortgage Payment … $2,558
Monthly Cash Outlays ………… $3,160
Monthly Cost of Ownership … $2,510

Property Details for 12 FOXHILL Irvine, CA 92604

Beds 4
Baths 2 full 1 part baths
Size 2,522 sq ft
($236 / sq ft)
Lot Size 5,400 sq ft
Year Built 1975
Days on Market 4
Listing Updated 12/10/2009
MLS Number F1827782
Property Type Single Family, Residential
Community El Camino Real
Tract Dc
According to the listing agent, this listing is a bank owned (foreclosed) property.
REO.CASH ONLY! Open bright & airy. Landscaped backyard. Close to parks, schools, malls and freeways. 4 Bed + 2.5 Baths.

This was a loan issued by Nationpoint; it didn’t perform very well. The owner of this property paid $852,000 on 10/17/2005. He used a $680,000 first mortgage, a $170,000 second mortgage, and a $2,000 downpayment. On 6/20/2006 he got $10,000 out of the property. About a year later, he stopped paying the mortgage.

Foreclosure Record
Recording Date: 03/05/2008
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)

Foreclosure Record
Recording Date: 11/30/2007
Document Type: Notice of Default

Foreclosure Record
Recording Date: 11/30/2007
Document Type: Notice of Rescission

Foreclosure Record
Recording Date: 11/14/2007
Document Type: Notice of Default

This property was purchased on 7/15/2008 for $620,034 by DEUTSCHE BANK NATIONAL TRUST CO, ; FIRST FRANKLIN MORTGAGE LOAN TRUST 2006.

Shadow inventory coming to light?

There is not much chance of this property selling for asking price as comps are much higher. This property will be bid up well over asking — not because Fundamental Value says so — it is overpriced at listing price on that basis, but if you look at what buyers are able to finance today, comps for this house are much higher than $600,000.

High DTIs Equal High Default Rates

The most obvious sign of a housing bubble is a high aggregate debt-to-income ratio… that plus WTF asking prices on properties.

18682 PORTOFINO Dr Irvine, CA 92603 rear yard

Irvine Home Address … 18682 PORTOFINO Dr Irvine, CA 92603
Resale Home Price …… $2,295,000

I’m Broke — Black Joe Lewis & The Honeybear

The California housing market is volatile, but people only see the ups. Trying
to capture appreciation, they “stretch” to get into a property by
putting larger and larger percentages of their income toward housing
(until the entire system collapses). This stretching is (1) recorded in
the aggregate debt-to-income ratio for a particular market and (2)
observed in the struggles of individual homeowners.

For the post Doubling Time, I produced a chart showing the DTI Ratio in Irvine over time.

Irvine debt-to-income ratios 1975-2009

As you might surmise, the peaks in the DTI ratios correspond to peaks in our three California housing bubbles.

Today, I want to move from the macro down to the micro;
the charts above show aggregate numbers and big-picture relationships,
but what about the individual? What struggles does all of this mean for
you and me?

From Mark Hanson (Mr. Mortgage):

– Time-Tested DTI Standards Thrown out the Window

A long
time ago in a mortgage market far, far away (circa-2000 and before!)
there was responsibility in lending. Age-old underwriting standards
only allowed fully-documented debt-to-income ratios of 28% for housing and 36% for total debt (referred to as front and back DTI). On Jumbo loans, the ratios were
33/38 because Jumbo borrowers typically have more disposable income. On
occasion, banks would make exceptions to this rule if the borrower had
a large equity position or liquid reserves. At 28/36, homeowners can
pay debt, shop, take their annual vacation, and even save money. At
28/36 DTI a house is a place to live first and an investment, second.

Bubble
year’s loan guidelines not only pushed the boundaries of risk by exotic
loan structure but also income leverage. Circa-2002, time-tested DTI
standards went out the window. Allowable DTI ratios on Prime loans rose
to 50% and much higher when considering that so many loans were made
with limited or no income documentation. Alt-A and Subprime full-doc
loans would routinely go to 55% DTI…

This is the main reason we have an inescapable foreclosure crisis
coming, and it is also why the FED is keeping interest rates so low.
The only way to take a relatively small payment and apply some of it to
principal is to extend the term of the loan and lower the interst rate.
The Federal Government’s loan modification program will (1) lower
interest rates to 2% (2) increase amortization to 40 years, and (3)
defer principal like an Option ARM; this still doesn’t make the payment
affordable. There are simply too many people in houses they cannot afford under any circumstances.

{book2}

How bad is a 50% DTI?

Mark Hanson goes on:

1) What a 50% DTI Really Means?

Borrower Earnings: $100k per year

50% Total DTI: $50,000 per year to housing PITI & all other debt on credit report

25% Fed & State Taxes: $25,000 per year

Disposable income: $25,000 per year, or $2,083 per month

How does
this well-above average household SAVE MONEY AND pay for utilities
(power, water, cable, garbage, insurance (car, life, health), gas,
food, car payment, fuel, clothes, household maintenance and more on
$2,083 per month? How do they save an emergency fund or take even a
drive-away trip for the weekend? How do they shop this holiday season
when over a trillion dollar in consumer credit was taken away in the
past year?

A 50%
housing DTI turns the house into the largest investment of your life
and ruins most household’s balance sheet at the same time unless the
gross income – and disposable income – is much larger.

For most in a serious negative equity position, it is better to walk away.
Earning your way out of a $200k hole is impossible with disposable
income of $2,083 per month less expenses. Why not walk – the borrower’s
credit will be trashed for a few years but as long as they maintain
their credit rating on all other credit, their overall rating will not
be damaged for as long as their house remains underwater.

2) Now, let’s look at this with 28/36 time-tested debt-to-income ratios.

Bottom Line – 60% MORE disposable income each month.

Borrower Earnings: $100k per year

36% Total DTI: $36,000 per year per to housing PITI & all other debt on credit report

25% Fed and State Taxes: $25,000 per year

Disposable income: $39,000 per year or $3,250 per month

With
$3,250 per month, a $100k household can likely save $20k per year.
Still, this is not enough to make a real dent in a $200k neg-equity
position. But, with this much disposable income the homeowner is not
missing out on much and they are saving money, meaning their house is a
place to live.

What do households spend money in every year? The U.S. Census bureau provides the answers:

$200 billion on furniture, appliances ($1,900 per household annually)

$400 billion on vehicle purchases ($3,800 per household annually)

$425 billion at restaurants ($4,000 per household annually)

$9 billion at Starbucks ($85 per household annually)

$250 billion on clothing ($2,400 per household annually)

$100 billion on electronics ($950 per household annually)

$60 billion on lottery tickets ($600 per household annually)

$100 billion at gambling casinos ($950 per household annually)

$60 billion on alcohol ($600 per household annually)

$40 billion on smoking ($400 per household annually)

$32 billion on spectator sports ($300 per household annually)

$150 billion on entertainment ($1,400 per household annually)

$100 billion on education ($950 per household annually)

$300 billion to charity ($2,900 per household annually)

The
average homeowner household spends $22,785 per year, or $1900 per month
on the above. When making an allowance for some of the items that are
typically financed, the outgo is still roughly $1500 per month.

At 50%
DTI, the $100k earner with a disposable income of $2083 per month will
have extra monthly income of $583 based upon typical spending. That
does not leave a lot for savings, or items not listed such as auto
insurance, vacations, gas etc. That definitely is not enough to ‘earn
their way out’ of their negative equity hole.

However,
the 36% DTI borrower will have an extra $1750 month, which allows for
living life and saving money, significantly reducing the chance of loan
default due to negative-equity..

Bottom
Line – This shows vividly why 50% DTI – even with borrowers making
$100k a year and with 20% equity in their property – is in fact
over-leveraged and a recipe for loan default for any number of reasons.

{book4}

When you see the hopelessness of the circumstances of the individual
borrowers who either bought or refinanced at the peak, and it is
difficult to see how they continue making payments and have a life without
HELOC supplementation (it isn’t coming back soon). If many
individual borrowers do not make it, lenders end up taking back large
numbers of foreclosures — which is what we are seeing today — and what we will be seeing much more of over the next three to seven years.

In the post Debt-To-Income Ratios: The Forgotten Variable, I wrote the following:

Lenders have gone back to their historic data to relearn
underwriting all over again. They know they must underwrite loans at
DTIs in excess of 40% in order to support current pricing, so they
limit these loans to people with significant downpayments, large cash
reserves, and high FICO scores. In other words, it is the smallest
possible borrower pool. Because the potential borrower pool is so
small, and because there is a foreclosure tsunami coming, prices will continue to fall.

Over time lenders will continue to lower their allowable DTIs
because the default rates will continue to be very high. As long as
there are high default rates, there will be more foreclosures, prices
will continue to fall, and the lenders will continue to lose money.
This downward spiral will cause allowable DTIs to shrink until 28% to
31% DTIs are the maximum borrowers will be able to find in the
marketplace. Anyone who thinks this credit crunch in mortgage lending
is a temporary phenomenon is sadly mistaken.

So far, despite the Government meddling, ratios are falling to their
historic norms. The one that isn’t is the price-to-income ratio. It is
being artificially held at over 5-times income with 5% interest rates.

With the Government manipulation it is difficult to predict where
pricing will bottom, but we can be a bit more certain about payment
affordability and DTI ratios. It isn’t likely that pricing will fall so
low that people are putting less than 25% of their income toward
housing. Many will chose to buy a larger house rather than save money.
When DTI ratios fall into safe zones, properties enjoy payment
affordability, and with stable loan terms of 30-year fixed-rate
mortgages, markets enjoy price stability — at least they are supposed
to — we have never witnessed the kind of market manipulation we are
seeing today. I don’t feel our prices are stable, and neither should
you.

18682 PORTOFINO Dr Irvine, CA 92603 rear yard

Irvine Home Address … 18682 PORTOFINO Dr Irvine, CA 92603

Resale Home Price … $2,295,000

Income Requirement ……. $475,743
Downpayment Needed … $459,000
20% Down Conventional

Home Purchase Price … $585,000
Home Purchase Date …. 5/4/1995

Net Gain (Loss) ………. $1,572,300
Percent Change ………. 292.3%
Annual Appreciation … 9.5%

Mortgage Interest Rate ………. 5.01%
Monthly Mortgage Payment … $9,867
Monthly Cash Outlays ………… $12,150
Monthly Cost of Ownership … $8,630

Property Details for 18682 PORTOFINO Dr Irvine, CA 92603

Beds 4
Baths 3 baths
Size 3,663 sq ft
($627 / sq ft)
Lot Size 20,971 sq ft
Year Built 2005
Days on Market 5
Listing Updated 12/8/2009
MLS Number S598269
Property Type Single Family, Residential
Community Turtle Rock
Tract Cust

STUNNING CUSTOM TURTLE ROCK ESTATE!! LUSH LANDSCAPING SURROUND THIS HIGHLY UPGRADED 4 BEDROOM 3 BATHROOM RETREAT. PERFECTLY POSITIONED AT THE END OF A CUL-DE-SAC WITH PRIVATE ROCK POOL, SPA, BUILT IN BBQ, FIREPLACE, OUTDOOR LIVING AREA AND A PUTTING GREEN. FOREVER VIEWS MAKE THIS TRULY PARADISE!!

When I read custom Turtle Rock Estate, I am not offended; there really are custom estates in Turtle Rock.

I don’t know what to make of these property records. The owner bought back in the mid 90s, and only opened one other loan; a $1,600,000 HELOC! Realistically, when you look at this borrower’s behavior, I don’t think this money was borrowed and spent — unless this frugal owner suddenly decided to spend $1,000,000 renovating his property. It does have nice grounds….

If this owner can get this asking price, he stands to make a fortune.

IHB News 12-12-2009

I hope you are enjoying your weekend. Today’s featured property is a Northpark Condo.

84 NEW SEASON Irvine, CA 92602 kitchen

Irvine Home Address … 84 NEW SEASON Irvine, CA 92602
Resale Home Price …… $399,900

{book1}

I’d have to be some kind of natural born fool
To want to pass that way again
But I could feel it, yes sir
Walking on a country road
Walk on down, walk on down, walk on down
Walk on down, walk on down a country road
Country road
You can feel it, you can feel it,
You can feel it too on a country road

Country Road — James Taylor

IHB News

On December 4, 2009, we closed the IHB forums. The IHB forums were established to promote discussion of real estate
related topics. As the forums grew beyond real estate, it became a
great deal of work, and conditions developed in the forums that were
incompatible with having real estate related forums hosted by Ideal
Home Brokers. After exploring all options for changing the forums to a
form compatible with our basic mission (including discussions with
moderators and other interested parties), it was decided that closing
them down was preferable to continuing in a format which was draining
our resources and providing little recovery. If there had been an
alternative that served our interests as well as the interests of the
community at large, we would have pursued it. We may open the forums
again in the future when we are certain we can focus the content and
the conversation on real estate related matters; this will not happen
soon. We apologize to those who are upset over the loss of the forums.

Housing Bubble News from Patrick.net

fb U.S. Foreclosures to Reach Record 3.9 Million in 2009 (bloomberg.com)
fb California notices of default hit record (financemymoney.com)
fb Millions More At-Risk of Default (mhanson.com)
fb Los Angeles area houses lose $60.8 billion in value through November (latimesblogs.latimes.com)
fb The MLS Is Corrupt (patrick.net)
fb House of Subprime Lender Targeted by Violent Robbers (ktla.com)
fb Outlook for 2010: prices have further to fall (money.cnn.com)
fb U.S. Homedebtors Lost $5.9 Trillion Since 2006 Peak (bloomberg.com)
fb Default, Then Rent And Live Far Better (online.wsj.com)
fb CA public pension real estate investments down 49% in year (lansner.freedomblogging.com)
fb How underwater is California? (doctorhousingbubble.com)
fb Decline in house values continues despite spin (sfgate.com)
The Real Reason Mortgage Modifications Fail (seekingalpha.com)
Who Holds the Elusive Option ARMs? (financemymoney.com)
Non Performing Loans: Lessons from Japan (seekingalpha.com)
Pricewaterhouse Coopers report on housing (PDF – patrick.net)
Don’t Buy a House Yet (realestate.yahoo.com)
Walking away makes sense (sfgate.com)
Why Treasury Needs a Plan B for Mortgages (nytimes.com)
Geithner: “none … would have survived” (blogs.reuters.com)
Why Didn’t Canada’s Housing Market Go Bust? (clevelandfed.org)
Canada has no mortgage interest deduction (theglobeandmail.com)
Americans are Addicted to Nonsense (truthdig.com)

Housing Bubble News

US Government’s New Housing Bubble

Seeking Alpha (blog) – Jeff Nielson – ‎12 hours ago‎

As readers here have heard regularly, it is absolutely certain that there will be another down-leg for the US housing market, beginning no later than spring …

Federal Housing Adminstration should stiffen loan rules for home buyers

Kansas City Star – ‎Dec 8, 2009‎

In the aftermath of the housing bubble, the Federal Housing Administration is doing more to help prop up the market. But there are signs the FHA is …

Email Exchange With The Cleveland Fed On US Inflation Expectations

The Market Oracle – ‎Dec 8, 2009‎

Did not the Fed completely ignore a housing bubble? In fact, isn’t it true the Fed could not see a housing bubble that 100 housing blogs could see? 11. …

{book4}

84 NEW SEASON Irvine, CA 92602 kitchen

Irvine Home Address … 84 NEW SEASON Irvine, CA 92602

Resale Home Price … $399,900

Income Requirement ……. $82,427
Downpayment Needed … $13,997
3.5% Down FHA Financing

Home Purchase Price … $489,000
Home Purchase Date …. 10/10/2005

Net Gain (Loss) ………. $(113,094)
Percent Change ………. -18.2%
Annual Appreciation … -4.7%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $2,062
Monthly Cash Outlays ………… $2,840
Monthly Cost of Ownership … $2,140

Property Details for 84 NEW SEASON Irvine, CA 92602

Beds 2
Baths 2 full 1 part baths
Size 1,187 sq ft
($337 / sq ft)
Lot Size n/a
Year Built 2005
Days on Market 17
Listing Updated 12/2/2009
MLS Number S597627
Property Type Condominium, Residential
Community Northwood
Tract Tamr

NEWER TOWNHOME IN BEAUTIFUL COMMUNITY OF TAMARISK WITH RESORT STYLE AMENITIES. FULL GUEST SUITE WITH PRIVATE ENTRANCE, WALK IN CLOSET AND LARGE BATHROOM ON FIRST LEVEL; LARGE LIVING ROOM/DINING ROOM UPSTAIRS, OPEN TO KITCHEN WITH HALF BATHROOM AND LUXURIOUS MASTER SUITE ON SECOND LEVEL. NEW PAINT, TRAVERTINE FLOORING IN KITCHEN, FOYER AND ALL BATHROOMS, HARDWOOD FLOORING IN ALL OTHER ROOMS;; MOCHA KITCHEN CABINETS WITH GRANITE COUNTERTOP; PATIO OFF GUEST SUITE; STORAGE CABINETS IN ATTACHED GARAGE. READY TO MOVE IN.

ALL CAPS… I find it painful to read.

The original purchase was part of a complex transaction with multiple parcels, but apparently, not much equity was involved in the deal. On 8/21/2006, the owner refinaced with a $460,000 first mortgage and a $42,000 second, so it must have appraised at over $500,000 at one time. The six-digit loss we are all used to will be absorbed by the lender. The buyer will survive to speculate again someday — if lenders will give him the money.

Racing Wind?

Today’s featured property is in the Woodbridge Cottages. I picked it only for its street name.

If you find humor about flatulence offensive, you are warned not to read the remainder of today’s post.

68 RACINGWIND Irvine, CA 92614 kitchen

Irvine Home Address … 68 RACINGWIND Irvine, CA 92614
Resale Home Price …… $825,000

{book1}

They’re all dying. Dying inside
Slowly. Drowning in pride.
Reeking of lies. Proud of their lives.
Proud of their dead. Proud of the blood that shed.
Dying. Dying inside, slowly. Drowning in Pride.

Of Human Pride and Flatulence — Catttle Decapitation

One of the joys of writing for the blog is finding creative ways to tie properties to other things. The street names offer a fertile field for funny affiliations, occasional alliterations, rhymes and ruminations. That being said, I have never taken “fart propulsion” as a theme for a post before; however, given the street name, I could not resist.

I like these cottage homes. The front elevations are attractive, the floorplans are functional, and there is a nearby community park that is very nice. On the downside, you don’t have a back yard, and the density is very high.

I want to point out a land planning trick used to get more yield. If you look closely at the houses I have highlighted, they all have one thing in common; there is no street in front of them. On the downside, between (1) guests and (2) owners who fill their garages with possessions and must park on the street, the sidestreet parking near these units is full most the time (see photo).

For those who like less asphalt — and who doesn’t — eliminating the street takes out an ugly element that consumes much land. This is an area where the developer’s desire for density and a buyer’s desire for a detached house are in alignment. Expect to see much more of this kind of planning in the future. Hopefully, they will put in more guest parking.

68 RACINGWIND Irvine, CA 92614 kitchen

Irvine Home Address … 68 RACINGWIND Irvine, CA 92614

Resale Home Price … $825,000

Income Requirement ……. $170,047
Downpayment Needed … $165,000
20% Down Conventional

Home Purchase Price … $189,000
Home Purchase Date …. 4/24/1998

Net Gain (Loss) ………. $586,500
Percent Change ………. 336.5%
Annual Appreciation … 13.1%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $3,527
Monthly Cash Outlays ………… $4,440
Monthly Cost of Ownership … $3,270

Property Details for 68 RACINGWIND Irvine, CA 92614

Beds 4
Baths 3 baths
Size 2,252 sq ft
($366 / sq ft)
Lot Size 3,024 sq ft
Year Built 1980
Days on Market 14
Listing Updated 11/24/2009
MLS Number S597050
Property Type Single Family, Residential
Community Woodbridge
Tract Ch

This is a one of a kind custom home in Woodbridge Cottages. Highly upgraded throughout. Move in ready. Beautiful new casement windows and French doors. Gorgeous staircase and mouldings. Granite countertops and custom cabinets in kitchen . Teak hardwood flooring and Ralph Lauren carpeting. Fireplace in Master Bedroom and Living Room. Indoor laundry room with cabinets galore! Walking distance to award winning Irvine Unified School District neighborhood elementary, middle and high schools. This is a must see…….absolutely charming.

one of a kind custom home in Woodbridge Cottages? Unique tract homes? Hmmm…

These people stand to make a fortune; however, in typical Irvine style, they have doubled their mortgage debt. With $450,000 already spent, it isn’t the windfall it should be, but that is our new way of living, I guess.

Irvine Housing Blog No Kool Aid

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
September 2006.

Have a great weekend,

Irvine Renter

Champagne Taste…

Today’s featured property caught my eye because the photos are outstanding.

5226 WALNUT Ave Irvine, CA 92604 kitchen

Irvine Home Address … 5226 WALNUT Ave Irvine, CA 92604
Resale Home Price …… $468,000

{book1}

Cheap is small and not too steep
But best of all cheap is cheap
Circumstance has forced my hand
To be a cut price person in a low budget land
Times are hard but we’ll all survive
I just got to learn to economize

Low Budget — The Kinks

Spending a few dollars to properly stage and photograph a property can make an impact. This is either a listing agent raising the bar or an owner that knows how to participate in the sales process. Look at the outstanding staging and photographs of this property.

I particularly like the composition of this one. First, you have the green plant in front of the white wall reflected in the window, and you have the green plant on the white pillow reflected on each arm. The sunlight creates an interesting bright spot that calls your attention to the attractive wood flooring, and the interesting wicker shadows. You get a sense of the function of this space while your eye is drawn to the important features.

The sky in this photo appears to have been photoshopped based on some artifacts in the photo (there is a framelike edge that appears to be a series of dragged pixels) and the uniformity of the color of the sky. In the photographer’s defense, based on the washed out colors of the exterior shot, it was probably an overcast day, and the sky in the photo was likely totally white (it is a photographic effect). The blue makes it a bit more interesting, but at the expense of realism. It also makes me wonder if you really see sky and not perhaps another condo, but I will assume the view is as presented.

This is a small condo in a spotty neighborhood (by Irvine standards). The reality of its existence is totally lost in the photographs — which is great. The money for these photographs was well spent.

5226 WALNUT Ave Irvine, CA 92604 kitchen

Irvine Home Address … 5226 WALNUT Ave Irvine, CA 92604

Resale Home Price … $468,000

Income Requirement ……. $96,463
Downpayment Needed … $93,600
20% Down Conventional

Home Purchase Price … $206,250
Home Purchase Date …. 11/15/2002

Net Gain (Loss) ………. $233,670
Percent Change ………. 126.9%
Annual Appreciation … 11.5%

Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $2,001
Monthly Cash Outlays ………… $2,620
Monthly Cost of Ownership … $2,100

Property Details for 5226 WALNUT Ave Irvine, CA 92604

Beds 3
Baths 2 full 1 part baths
Size 1,430 sq ft
($327 / sq ft)
Lot Size n/a
Year Built 1980
Days on Market 1
Listing Updated 12/4/2009
MLS Number S597926
Property Type Condominium, Townhouse, Residential
Community El Camino Real
Tract Wc

JUST REMODELED…JUST-LIKE-NEW! VERY DRAMATIC and CONTEMPORARY. (CHECK OUT THE AWESOME PHOTOS!) BIG Grass YARD with Large Patio, just like in a Single Family Home! NEW GRANITE Kitchen Counters with NEW STAINLESS STEEL Sink & Faucet! NEW WOOD Laminate throughout the ENTIRE bottom Floor. NEW Porcelain Floor Tile in upstairs Bathrooms. NEW Designer Paint, NEW Light Fixtures, NEW Bath Faucets! Spacious and Glamorous Master Bedroom with Romantic View Deck…BEST Irvine Home in this price range…EQUITY SALE…HURRY!

intermittent CAPS lock.

The owners have increased their debt since buying, but unlike some of the HELOC abusers I profile, the rate of increase of their mortgage balance was not outrageous, and it appears to have been spent on improvements. If they get their asking price — something our sub-5% interest rates make possible — they will make a substantial profit.