Author Archives: IrvineRenter

Lilac Rollbac Update 2

This property is still on the market, and they are still chasing the market down. The price now stands at $559,900. The losses now exceed $120,000…

First Update September 3, 2007

Originally published July 13, 2007.

The price has been reduced to $599,900. Assuming this seller gets their asking price, they stand to lose $86,094 after a 6% commission.

Today’s property is nothing unusual or unique, and that is what makes it so special. It is extraordinary in its ordinariness. This is a nice, Irvine property typical of many nice, Irvine properties, and it is selling for a loss. Do you get the sense this is becoming the rule rather than the exception?

Asking Price: $624,900

Purchase Price: $650,000

Purchase Date: 6/23/2005

Address: 8 Lilac, Irvine, CA 92618

Beds: 3
Baths: 2.75
Sq. Ft.: 1,525
$/Sq. Ft.: $410
Lot Size: –
Year Built: 2000
Stories: 2
Type: Condominium
View: Park or Green Belt, Peek-A-Boo
County: Orange
Neighborhood: Oak Creek
MLS#: S493537
Status: Active
On Redfin: 20 days

From Redfin, “Beautiful Oak Creek Townhome! New Plush Carpet! Popular Floorplan Features Gourmet Kitchen/Center Island! Dual Master Suites plus Mainfloor Bdrm/Den/Office w/ Bath! Quality Custom Upgrades inc/ Granite Counters/Maple Cabinets/20” Neutral Floor Tiles/Recessed Lighting/Plantation Shutters/Designer Paint/Media Entertainment Center/Etc! Convenient Indoor Laundry Room! Spacious Patio Backs to Greenbelt! Oversized Garage w/ Cabinets! Fabulous Resort-Style Recreation Complex! Award-Winning Schools!”

Did you see the realtor got excited about a “Bath!” What is the deal with all the slashes and Title Case? I can’t decide which is more annoying: Title Case or ALL CAPS? What/Do/You/Think?

Assuming this seller gets their asking price, they stand to lose $62,594 after a 6% commission.

I can remember earlier this year when I first started blogging, it was hard to find a house with a loss. You could demonstrate a loss when you factor in commissions, and that is still a real loss, but it doesn’t have the same emotional impact as when you see a true equity crushing loser. Now finding real losses are like seeing implants at Fashion Island Mall: there is no novelty because they are so common.

I hope you have enjoyed Oak Creek week here at the Irvine Housing Blog. On Monday, I have a new analysis post ready — Land Value 101, and there are a number of rollbacks to show you.

All of this excites me. It’s the weekend, so let’s GET THE PARTY STARTED

Get this party started on a Saturday night
Everybody’s waiting for me to arrive
Sending out the message to all of my friends
We’ll be looking flashy in my Mercedes Benz

GET THE PARTY STARTED by: Pink

Balance

I hear the bells

Saying Christmas is near

They ring out to tell the world

That this is the season of cheer

I hear a choir

Singing sweetly somewhere

And a glow fills my heart

I’m at peace with the world

As the sound of their singing fills the air

Oh why can’t every day be like Christmas

Why can’t that feeling go on endlessly

For if everyday could be just like Christmas

What a wonderful world this would be

I hear a child

Telling Santa what to bring

And the smile upon his tiny face

Is worth more to me than anything

If Every Day Was Like Christmas — Elvis Presley

In many ways blogs are uniquely personal things. The personalities of the contributors and commenters shapes the conversation and gives the blog a personality all its own. The Irvine Housing Blog is a community — a community of like-minded individuals (and recovering kool-aid addicts) who have come together to make sense of the very unusual events we have witnessed in our housing market.

There are a number of great housing and real estate blogs. Calculated Risk is one of the finest, and the discussions over there are very cerebral. Quite honestly both Calculated Risk and Tanta are more intelligent and more experienced than yours truly. I go to their blog frequently to keep up on the evolving nature of the intellectual discussion of the issues surrounding housing. However, residential real estate is an emotional issue as well. A heady discussion of real estate matters is a useful part of the discourse, but the emotional aspect is equally important. This bubble we are living through was not created by logic or fundamentals: it was a perfect example of irrational exuberance.

Discussing and expressing the emotional side of the bubble is part of my mission as a blogger. I know I am not the only one with a Reservoir of Schadenfreude. I must confess that I enjoy going over to Housing Panic and reading the unbridled emotional release you find there. I couldn’t maintain the level of intensity Keith does and stay sane, but there are times when letting loose is appropriate, and Housing Panic is a place to do it.

Some people come to this blog for the analysis; some come for the schadenfreude. We welcome both groups. Some would like this blog to limit itself to analysis, and some would like nothing more than daily doses of schadenfreude. When I write for the blog, I want to express myself fully. I do not want to ignore my emotions nor do I want to discard my intellect. More of one side or the other may come out during any given day, but over the course of time, I hope I achieve a balance in my posts just as I hope to achieve a balance in my life.

Life is about balance; it is about being aware of your intellectual and emotional intelligences and being able to manage both. During a financial mania people allow their emotions to override their intellect, and the results are not pretty. It is only through the interplay of the intellect and the emotions that we can gain a deeper understanding of what really happened in the Great Housing Bubble.

Elvis's White Christmas

I’m dreaming of a white Christmas

Just like the ones I used to know

Where the treetops glisten,

and children listen

To hear sleigh bells in the snow

I’m dreaming of a white Christmas

With every Christmas card I write

May your days be merry and bright

And may all your Christmases be white

I’m dreaming of a white Christmas

With every Christmas card I write

May your days be merry and bright

And may all your Christmases be white

White Christmas — Elvis Presley

Asking Price: $600,000

Income Requirement: $120,000

Downpayment Needed: $150,000

Purchase Price: $700,000

Purchase Date: 3/7/2006

Address: 6 Silvermaple, Irvine, CA 92618

First Mortgage $560,000

Downpayment $140,000

Beds: 3

Baths: 3

Sq. Ft.: 1,600

$/Sq. Ft.: $375

Lot Size: –

Type: Condominium

Style: Contemporary

Year Built: 2000

Stories: Three or More Levels

Area: Oak Creek

County: Orange

MLS#: L23942

Status: Active

On Redfin: 121 days

Unsold in 90+ days

From Redfin, “A stunning, detached home on a culdesac in the gated Oak Creek Community of Irvine. Three generous bedrooms with 3 full baths. Elegant upgrades including designer floors, custom paint, crown molding and custom window treatments. Large, sparkling kitchen with center island and sit-up bar. Great Room style floorplan with separate living room, family room, full-size dining area and dining alcove. First floor bedroom and bath. Lushly landscaped yard with beautiful slate accents.”

This description is well written. I particularly like the adjectives: stunning, generous, elegant, sparkling, lushly, beautiful…

It is sellers like these who make me rather sad. They did what you are supposed to do; they put 20% down and got a conventional mortgage. They obviously customized the home, so I don’t think they were flippers. Whatever life circumstances have caused them to need to sell, the volatility of house prices in Irvine is going to wipe them out. I know people believe real estate only goes up, but the fact is that it sometimes goes down. A stable market with boring 4% appreciation is better than the roller coaster ride we are on here in Irvine. Perhaps it is a good time to review Houses Should Not Be a Commodity.

For the record, if they get their asking price and pay a 6% commission, they stand to lose $136,000 of their $140,000 downpayment. There is probably a reason this price hasn’t dropped further despite being on the market for 121 days. Do you suspect this price is as low as they can go?

For a little fun, what does this photo tell you about the occupant…

Elvis's I'll Be Home For Christmas

I’ll be home for Christmas

You can plan on me

Please have snow and mistletoe

And presents ‘neath the tree

Christmas eve will find me

Where the love light gleams

I’ll be home for Christmas

And you’ll be in my dreams

I’ll be home this Christmas, darling

I’ll be coming home to you

And there’s nothing in the world

Gonna get in my way

I’ll be home for Christmas

You can plan on me

Please have snow

And mistletoe

And presents ‘neath the tree

Christmas eve will find me

Where the love light gleams

I’ll be home for Christmas

And you’ll be in my dreams

I’ll be home for Christmas

Till then you’ll be in my dreams

I’ll Be Home For Christmas — Elvis Presley

Asking Price: $649,000

Income Requirement: $129,800

Downpayment Needed: $162,250

Purchase Price: $651,500

Purchase Date: 12/3/2004

Address: 56 Autumn, Irvine, CA 92602

Refi First Mortgage $695,400

Beds: 3

Baths: 3

Sq. Ft.: 1,858

$/Sq. Ft.: $349

Lot Size: –

Type: Condominium

Style: Traditional

Year Built: 2001

Stories: Two Levels

Area: West Irvine

County: Orange

MLS#: S494939

Status: Active

On Redfin: 158 days

Unsold in 90+ days

From Redfin, “Priced under Market! Beautiful home in Summerplace, West Irvine. Patio at entrance with French doors to kitchen. Dark hardwood flooring, granite kitchen counters, big center island, mocha cabinets and stainless steel appliances. Formal dinning room, fire place in living room, custom window blinds. Full bath downstairs near garage entrance. Computer niche upstairs. Separate laundry room. Master bedroom with large bathroom and walk in closet. Close to gated association pool.”

Priced under Market! That is such BS. How can something be priced under market for 158 days? It is clearly priced over market, or it would have sold by now.

They forgot to say it is empty and burning a hole in someone’s pocket.

In the spirit of yesterday’s post, this seller has already taken their profits from the deal when they refinanced early this year and brought their mortgage up to $43,900 over their purchase price. Do you think they will give this money back when the short sale happens? I am not holding my breath.

The stupidity of lenders is breathtaking. How can you do these large, cash-out refinance loans and not expect to lose money? I suppose this is now a recourse loan, so they have the ability to go after other assets, but that is assuming this seller has any — or at least some the bank can find. Cash in a mattress is hard to find, you know.

BTW, for those of you who do not think prices on homes in nice neighborhoods can decline 40%, I invite you to check out this property in the San Diego suburb of Chula Vista I found on Piggington.

Santa Claus is Back in Town

Well, its christmas time pretty baby

And the snow is falling on the ground

Well, its christmas time pretty baby

And the snow is falling down

Well you be a real good little girl

Santa claus is back in town

Got no sleigh with reindeer

No sack on my back

Youre gonna see me comin in a big black caddilac

Oh, its christmas time pretty baby

And the snow is falling on the ground

Well you be a real good little baby

Santa claus is back in town

Hang up your pretty stockings

And turn off the light

Santa claus is comin down your chimney tonight

Oh, its christmas time pretty baby

And the snow is falling on the ground

Well you be a real good little baby

Santa claus is back in town

Santa Claus is Back in Town — Elvis Presley

It did not occur to me until writing this post that people can sell their houses to the bank for a profit by simply convincing the bank to make them a loan. Nice idea. I am surprised more people are not doing it.

Asking Price: $1,199,900

Income Requirement: $299,975

Downpayment Needed: $239,980

Purchase Price: $1,050,000

Purchase Date: 11/15/2004

Address: 6 Malibu, Irvine, CA 92602

First Mortgage $1,050,000

Downpayment $0

HELOC $500,000

Beds: 5

Baths: 3

Sq. Ft.: 3,030

$/Sq. Ft.: $396

Lot Size: –

Type: Single Family Residence

Style: French

Year Built: 2000

Stories: Two Levels

Area: Northpark

County: Orange

MLS#: S485174

Status: Active

On Redfin: 221 days

Unsold in 90+ days

From Redfin, “STUNNING. .SHOWS BETTER THEN THE MODEL. .FULL 5 BEDS-COULD BE 6 W/ HUGE UPSTAIRS BONUS/OFFICE) GOURMET KITCHEN W/ BLACK GRANITE, CHERRY CABINETS W/ GLASS DISPLAY, 6 BURNER MONO STOVE. .FML LIVING W/ FIREPLACE (USED AS DINING RM)SEP. FML DINING RM. .DESIGNER PAINTS, CROWN MOLDING, WAINSCOTTING FANS, WINDOW CASINGS, CHAIR RAILS. .FP IN LIVING, FAMILY & MASTER. .HUGE ROMANTIC MASTER SUITE W/ FP. .FABULOUS LG FAMILY RM. W/ ENTERTAINMENT CENTER & FP. .EX LG PROF. LAND/HARDSCAPED PRIVATE YARD. .CUL DE SAC. . GUARD GATED. .

Between the CAPS LOCK and the abbreviations (& FP. .EX LG PROF. ), this description is practically unreadable.

“SHOWS BETTER THEN THE MODEL.” This kind of BS is annoying.

GOURMET KITCHEN — You did notice our new award, right? Thanks Shhhhh.

At 221 days on the market, this house is obviously overpriced, but that isn’t the story here. These people have already sold the house to Bank of America and made a $500,000 profit — sort of. Bank of America issued this homeowner a $500K HELOC in July of this year. How did they get an appraisal for $1,550,000 to obtain the HELOC? WTF was Bank of America thinking?

I don’t know if this HELOC has been maxed out, but if it isn’t, it should be. This house is not going to sell for a profit, and Bank of America has graciously consented to give these people $500,000 for the right to foreclose in a second lien position which will probably be entirely wiped out by the first mortgage during foreclosure. These people have every incentive to take the money, go to Vanuatu (a notorious tax haven,) and hide the cash in a safe deposit box in a bank there. Yes, it is illegal and immoral, but not any more so than the others who have defaulted on their loans. If the banks are really this stupid, they deserve what is coming to them.