Category Archives: WTF

realtors Slammed in New York Times

I last pounded realtors back in January in Urgency Versus Reality: realtors Win, Buyers Lose. It's a subject entertaining to revisit. Today, the New York Times takes a shot.

Warning! This post has a graphic with an objectionable four-letter word… and perhaps another seven-letter word….

Irvine Home Address … 35 MORNING Vw Irvine, CA 92603

Resale Home Price …… $1,275,000


Oh I should have seen the signs

Now we're falling back in time

So far from where we started

So far from what we wanted

And I'm trying to right this wrong

So I need you to be strong

So far from where we started

So far from what we wanted

State of Shock — Money Honey

As the housing bubble deflates, I am struck by how far we are from where we started, and rather than try to regain our sanity, we blow air into the bubble, we foster moral hazard, and we embrace any get-rich-quick scheme available. There is no concern for the collective good any longer. Or are we only concerned with homeowners. If so, then everyone should own a home; thus it must be a great time to buy, right?

Great Time to Buy (Famous Last Words)


Published: March 12, 2010

“IT’S a great time to buy a home.”

Real estate agents were saying that in 2001, as home prices were rising. They also said it when home prices peaked in 2005 — in fact, David Lereah, former chief economist of the National Association of Realtors, published a book that year titled “Are You Missing the Real Estate Boom?”

And many real estate agents said it was time to buy as prices began to drop — and continued to say it over the past several years as prices fell by an average of 33 percent in America’s 20 largest cities.

Mr. Lereah would acknowledge that he had gotten it wrong. But from the perspective of many real estate agents, it is always a good time to buy.

I suppose I should be content trashing David Lereah in the Wall Street Journal, but since his name popped up in this article, I couldn't resist.

“What they are really saying is that it is a good time to be involved in a transaction that generates a commission,” says Barry Ritholtz, C.E.O. and director of equity research at FusionIQ, a quantitative research firm. He’s also author of “The Big Picture,” an irreverent blog on markets.

Barry is the man! [pictured right]

Glenn Kelman, chief executive of Redfin, is not.

“I can’t prove to you that housing prices have definitely bottomed out,” Mr. Kelman says. “I can say with a fair degree of certainty that the cost of money will go higher.” [I agree]

OF course, if rates go up, home prices tend to dampen. Borrowing $300,000 at 5 percent costs you $1,610 a month. If rates rise to 6 percent, that’s $188 a month more, or $67,680 over 30 years. Would the price of a $375,000 house fall because of a half-point rate hike? Now you are back to guessing about home prices. Don’t go there. Maintain your focus.

WTF? Don't go there? Don't think about future house prices? I thought I was going to be able to praise Redfin's guy, but then he spouted nonsense like a realtor, so I will try not to focus on that.

“People are frequently buying for the wrong reasons,” says Frank LLosa, a real estate agent working in northern Virginia. In most cases, he says, they think that they are getting an income tax break or that their home is an investment.

He points out that a buyer of a $300,000 home would have to see the house appreciate $18,000 just to cover the commission and closing costs. Then figure in the predictable costs of maintenance, the opportunity costs of the mortgage down payment and the amount one could have saved by renting a similar place more cheaply.

Mr. LLosa thinks that many people — including him — would be better off renting. People ought to buy a house for what he calls “warm and fuzzy feelings,” but they shouldn’t try to predict home prices. Nor should real estate agents, who aren’t much wiser.

“I don’t think real estate professionals should be in the business of telling people when it is a great time to buy,” he said.

I like this guy. Might he be a Realtor with a capital R? "An alternative perspective on Real Estate… the truth." Wow! This is promising. Check out some of these posts: Go FSBO! Save $20,000! Agent Tells All!; Agent Rebates. Free Money or Expensive Savings?

A good time to buy?

Bulls celebrate massive government intervention as a good thing, as if we are rescued from a temporary downturn and prices are set to head to the moon. Personally, I think that is crazy, particularly locally and closer to the coast, but I am just an opinionated blogger.

What do you think? Do you believe this is a good time to buy?

Irvine Home Address … 35 MORNING Vw Irvine, CA 92603

Resale Home Price … $1,275,000

Home Purchase Price … $695,000

Home Purchase Date …. 8/28/2001

Net Gain (Loss) ………. $503,500

Percent Change ………. 83.5%

Annual Appreciation … 7.0%

Cost of Ownership


$1,275,000 ………. Asking Price

$255,000 ………. 20% Down Conventional

5.00% …………… Mortgage Interest Rate

$1,020,000 ………. 30-Year Mortgage

$264,001 ………. Income Requirement

$5,476 ………. Monthly Mortgage Payment

$1105 ………. Property Tax

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

$106 ………. Homeowners Insurance

$376 ………. Homeowners Association Fees


$7,063 ………. Monthly Cash Outlays

-$1476 ………. Tax Savings (% of Interest and Property Tax)

-$1226 ………. Equity Hidden in Payment

$496 ………. Lost Income to Down Payment (net of taxes)

$159 ………. Maintenance and Replacement Reserves


$5,016 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$12,750 ………. Furnishing and Move In @1%

$12,750 ………. Closing Costs @1%

$10,200 ………… Interest Points @1% of Loan

$255,000 ………. Down Payment


$290,700 ………. Total Cash Costs

$76,800 ………… Emergency Cash Reserves


$367,500 ………. Total Savings Needed

Property Details for 35 MORNING Vw Irvine, CA 92603


3 Beds

2 full 1 part baths Baths

2,415 sq ft Home size

($528 / sq ft)

5,000 sq ft Lot Size

Year Built 1979

3 Days on Market

MLS Number S608552

Single Family, Residential Property Type

Turtle Rock Community

Tract Rp


35 Morning View is the home that you have been waiting for.Sit and look out at spectacular views of Shady Canyon,Strawberry Farms Golf Club,the lake/reservoir, mountains and city lights.This secluded home is located at the end of a cul da sac with a large landscaped island. As you enter the courtyard,with bubbling fountain,through the Dutch Entry doors you are in the homes entry and formal dining room,with vaulted ceilings and wood floors. A few steps up and you are in the formal living room with it marble fireplace,handcrafted mantle and panoramic,sit down view.The master bedroom is on this level with a walk in closet,built-ins,French Doors to the deck and views,views, views.Downstairs is a family room with another fireplace,built-ins,a door to the large patio and more views. There are also two bedrooms and a full bath downstairs.The kitchen is on the main level and is light and bright with an oversized skylight,built in refrigerator and an eating area. Don't miss this fantastic home.

Did the agent forget to mention THIS IS A DUPLEX!!! $1,275,000 for a duplex that needs an updated kitchen. Hmmm… No bubble here.

Nice view…

I am not sure if these owners deserve a B for mortgage management. They refinanced their mortgage in 2003 with a lower balance and lower interest rate, so it appears they may have even accelerated their payoff which would earn an A, but there is no way to be certain. There are two HELOCs that appear later which would earn them a C, but there is no other evidence that they took out the money.

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

Reconveyance Fee Rights: Long-Term Equity Theft by Real Estate Developers

Developers are embracing a new reconveyance fee designed to strip sellers of their equity for the next 100 years.

Today's featured property has fully recovered to peak pricing… NOT!

Irvine Home Address … 79 EDGEWOOD Irvine, CA 92618

Resale Home Price …… $699,000


I want your ugly

I want your disease

I want your everything

As long as it’s free

I want your horror

I want your design

‘Cause you’re a criminal

Lady Gaga — Bad Romance

It is human nature to want everything, and if you can get it for free, that makes it even better. There is a program where developers extract free money from houses they build over the next 100 years. Well, it isn't exactly free: it comes out of seller's equity. It is a great deal for developers. For sellers, not so much.

Most of my professional life, I have worked with real estate developers. I spent almost 20 years acting as a project manager, developer representative, and most recently as a land planner. I have worked closely with brilliant and very wealthy individuals. I am fortunate to work with men I admire; although, I have witnessed the actions of many I do not.

Developers are primarily motivated by money, and if there is a method for squeezing a few extra dollars out of real estate, most developers will embrace it. In fact, my livelihood depends on my ability to help developers create, find, and obtain the value in their land. Adding and extracting value has societal benefit, but not every tool available to developers benefits society, and some exist only to enrich developers. Mello Roos is a classic example in California of a financing racket that enriches developers. The latest scam in the development world is called Reconveyance Fee Rights.

Community Facilities District Act enriches developers

According to Wikipedia:

A Mello-Roos District is an area where a special property tax on real estate, in addition to the normal property tax, is imposed on those real property owners within a Community Facilities District. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and services.[2] These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax paid is used to make the payments of principal and interest on the bonds.

When a homebuyer in California purchases a property, most believe they have completely paid for the house. Not so. Instead of building subdivisions with their own money, real estate developers float bonds to pay for the improvements, and buyers pay for these improvements through their tax bills as a special levy. What should be an expense of doing business borne by the developer instead gets passed on to the consumer.

Imagine you purchased a new Ford. After you buy you find out the tires were not paid for as part of the car, and you will have an additional payment for the tires separate from any payments you may have for the car. That is what happens to homebuyers when they purchase in a neighborhood with Mello Roos — and nearly every neighborhood built since 1982 either has or had Mello Roos fees attached to them.

Revenues from Community Facility District bonds serve to make marginal project feasible, and as long as owners realize they have a large tax liability, then I see no real harm in the legislation. It is a big bonus to developers, but there are so many special tax breaks given out for dubious reasons that this one sinks into the morass and generates little outrage.

Reconveyance Fee Rights

A group of entrepreneurs has put together a gross ripoff of future homeowners by leaching seller equity. From the Freehold Capital Partners' website:

Simply put, a Reconveyance Fee Instrument represents the right to receive 1% of the gross sales price each time a particular piece of real estate property sells. These rights represent a valuable, fully collateralized long-term income stream with no risk of default.

realtor commissions are too high, but at least realtors participate in the transaction and provide some justification for the piece of seller equity they get at closing. No such justification exists for what Freehold Capital Partners is proposing. It is simply theft.

A new real estate cost to watch for: Developer's private transfer fee

Kenneth R. Harney

Saturday, March 6, 2010

How about this for a new and ingenious real estate money machine? Every time a house sells during the next 99 years, 1 percent of the price goes back to the original developer or is shared among investor partners. Ka-ching!

The levy won't be subject to haggling between future buyers and sellers, either. That's because it's a covenanted mandate — a novel type of lien on the underlying real estate — called a private transfer fee. It's not a government transfer tax. Nor is it a homeowner association or environmental protection covenant. It's purely a private requirement that runs with the land. If a seller refuses to pay it to a third-party trustee at closing, the sale won't proceed.

It isn't something a seller can fight because no party at the closing table can negotiate. The seller's choices are (1) pay the fee, or (2) don't sell the house. I suppose they could try to sue some asset-backed security holder somewhere, but how far do you think that will get?

Guess who doesn't like this idea?

The National Association of Realtors and the American Land Title Association, for example, are asking their members to persuade legislators to prohibit or limit the use of investor-oriented private-transfer-fee programs. Even the National Association of Home Builders, some of whose members reportedly have signed up to participate in the transfer fee program, isn't convinced that the idea is sound.

"It's a very creative concept," said David Ledford, the builder association's senior vice president for housing finance, "but it's largely untested and controversial politically."

realtors hate the idea for obvious reasons: they don't want anyone else in the seller's wallet at closing because it draws undo attention to how much they are getting. The National Association of Home Builders doesn't like the idea, partly because they see it for the fraud it is, and partly because they know the inevitable lawsuits will mostly be directed toward its members.

For its part, Freehold maintains that its transfer-fee covenants are good for consumers and good for cash-strapped builders. Curtis Campbell, a spokesman for the firm, said in an e-mail that "private transfer fees represent an adaptation in how to pay for development costs" incurred by builders "at a time when funding is not available" to them on "reasonable terms."

Did you giggle when you read that? I did. I can tell you from personal observation that builders have no shortage of capital available to them right now. Most builders have restructured their debt, and they have plenty of cash on hand which they are currently using to buy up land.

By creating future revenue streams — which builders can monetize upfront by selling to investors — the plan allows developers to sell houses for lower prices than they otherwise could, Campbell said.

OK, that one isn't funny, that lie is so offensive it makes me angry. Mr. Campbell is insinuating that customers may actually benefit from this practice with lower prices. No way. The builder is going to sell the house at market, and a transfer fee is not going to create conditions where buyers get bargains from builders.

There is no rational justification for this fee. It is only being charged because they think they can get away with it. The facts are obvious, and the feeble rationalizations are laughably stupid.

Developers Embrace New 'Flip Tax'

And as if we haven't learned a lesson about slice-and-dice packaging of mortgages, Freehold Capital apparently wants to "securitize" pools of transfer fees that can then be spun off and sold to investors.

Yes, let's bring in all the complicated issues of securitization. That way, when this all blows up, the syndicators will already have their money and the government can step in and bail everyone out.

Will cooler heads prevail? Will the legislatures around the country strike this one down?

Now this is, as you might imagine, controversial. So much so, some states have apparently either limited or banned these "private transfer fees." OK, I should have known you'd want to know which ones: Kansas, Oregon, Florida and Missouri, just plain ban the practice, according to the paper, while Texas and California have some restrictions on it.

But most states do not address the issue of these fees at all, so it is something you the potential home buyer should look for before signing a contract for a new home. That's vital because the fees (which are paid by the seller) are not subject to negotiation. If you end up selling a house one day that has one of these private transfer fee deals attached to it, you either pay a trustee at closing or, sorry, no sale!

Developers think this is a swell concept because they can, over years, get back some of the initial upfront costs of the project without having to have the first buyer of the property cough up the entire amount. However, others argue that, in the long run, homes with transfer fees attached will actually become more difficult to sell, which, if you happen to be the current homeowner, is not such a good thing!

If you think you may be able to fight this in court someday, think again. Not so easy, apparently.

On the PR Newswire this past weekend, one expert on private transfer fees delivered a commentary of sorts. Says attorney RJon Robins, a member of the Florida Bar's Real Property, Probate & Trust Law Section, "…absent a specific statutory prohibition, a well-crafted private transfer fee covenant will likely be enforceable, particularly when undertaken in connection with a real estate development project."

So how long before the Irvine Company does this on the Ranch? Should you buy now before they figure out they can get a piece of your equity as well? Perhaps the California restrictions prevent them, or perhaps they recognize this fee for the theft it is and don't want to participate. I hope it's the latter.

Irvine Home Address … 79 EDGEWOOD Irvine, CA 92618

Resale Home Price … $699,000

Home Purchase Price … $650,000

Home Purchase Date …. 6/7/2006

Net Gain (Loss) ………. $7,060

Percent Change ………. 7.5%

Annual Appreciation … 1.8%

Cost of Ownership


$699,000 ………. Asking Price

$139,800 ………. 20% Down Conventional

5.00% …………… Mortgage Interest Rate

$559,200 ………. 30-Year Mortgage

$144,735 ………. Income Requirement

$3,002 ………. Monthly Mortgage Payment

$606 ………. Property Tax

$225 ………. Special Taxes and Levies (Mello Roos)

$58 ………. Homeowners Insurance

$139 ………. Homeowners Association Fees


$4,030 ………. Monthly Cash Outlays

-$734 ………. Tax Savings (% of Interest and Property Tax)

-$672 ………. Equity Hidden in Payment

$272 ………. Lost Income to Down Payment (net of taxes)

$87 ………. Maintenance and Replacement Reserves


$2,983 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$6,990 ………. Furnishing and Move In @1%

$6,990 ………. Closing Costs @1%

$5,592 ………… Interest Points @1% of Loan

$139,800 ………. Down Payment


$159,372 ………. Total Cash Costs

$45,700 ………… Emergency Cash Reserves


$205,072 ………. Total Savings Needed

Property Details for 79 EDGEWOOD Irvine, CA 92618


3 Beds

2 full 1 part baths Baths

1,650 sq ft Home size

($424 / sq ft)

4,444 sq ft Lot Size

Year Built 2000

2 Days on Market

MLS Number S608565

Single Family, Residential Property Type

Oak Creek Community

Tract Kell


Darling home located in desirable Oakcreek in the gated community of Kelsey Lane*3 spacious bedrooms, 2.5 baths*Popular style great room w/open living, dining & kitchen*Living/family room has upgraded brick fireplace w/battenboard detail & white mantel & is wired for surround sound*Dining room is large w/plenty of space for a computer niche*Spacious white on white kitchen has thermafoil cabinets w/high-end knobs, tile countertops, large pantry, center island, new faucet & dishwasher*Lovely master bedroom w/distrelled wood floor & bath w/tub & stall shower, double sinks, walk-in closet*Large secondary bedrooms*Features include Pergo-style pine flooring, newer high quality Berber carpet, white plantation shutters, crown molding, designer paint*Beautiful backyard w/large outdoor entertaining area w/bbq, large bar w/seating, firepit, raised beds, & extra-large grassy sideyard perfect for a swingset*Garage has lots of cabinets & epoxy floor*Walk to pool,spa,tennis & school too

Another writer who confuses asterisks for periods. This punctuation is working its way into realtorspeak.

Past the bubble peak?

This owner has priced this property to get out at breakeven — a property purchased at the peak of the bubble. WTF? Have we so restricted inventory and pimped interest rates that sellers can get prices higher than 2006?

What do you see?

This owner likes the color green and working out.

Is it creepy to have pictures of sexy dead people over a headboard (the image is Marilyn Monroe)? When would you look at this picture and under what circumstances?

Is this place small, or is the furniture too large?

Can anyone identify what is in the washer?

Is that like Jesus Toast or Virgin Mary Grilled Cheese?

Sales Volume Limp as Local Inventories Rise

The precarious balance of supply and demand in our local housing market is sustained at low sales volumes by low inventories. Is the new inventory coming to market upsetting that balance?

Irvine Home Address … 29 CHARITY St Irvine, CA 92612

Resale Home Price …… $1,449,000


The walls start breathing

My minds unweaving

Maybe it’s best you leave me alone.

A weight is lifted

On this evening

I give the final blow.

When darkness turns to light,

It ends tonight,

It ends tonight.

The All-American Rejects — It Ends Tonight

The array of government market supports are tentatively scheduled to be removed from the market. Unfortunately, the tax credit for houseowners is not helping sales, and many are worried about what will happen to the housing market when tax credits expire? People have good reason to worry because the housing market is still dependent upon government support to maintaining our inflated current prices.

realtors blather on about pent up demand, but in reality, there is very little demand because (1) many people were pulled forward during the bubble and (2) many who were not pulled forward during the bubble are either unemployed or underemployed and thereby not contributing to demand. The end result is low sales volumes that will persist until either prices are much lower or the economy recovers and those not foreclosed upon or bankrupted during the bubble start buying houses.

Pending Sales of Existing Houses Decline

March 4 (Bloomberg) — Fewer Americans than expected signed contracts to purchase previously owned homes in January, indicating the extension of a tax credit is doing little to lure buyers.

The index of purchase agreements, or pending home sales, dropped 7.6 percent after a revised 0.8 percent increase in December, the National Association of Realtors announced in Washington. Other reports today showed factory orders increased and first-time jobless claims declined.

The drop in contract signings adds to evidence the housing market at the center of the worst recession since the 1930s is struggling to rebound after reports last week showed unexpected declines in purchases of new and existing homes. The market may get another blow this month when the Federal Reserve ends planned purchases of mortgage-backed securities.

“When you take away all the support from the housing market, the underlying demand for housing is a lot weaker than we thought,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway. The housing recovery is going to be very, very slow.”

Mr. Vitner's analysis is right on; what little demand was left over has either been pulled forward during the bubble or it has since been pulled forward with the glut of government supports. Any decline in sales during the first half of the year fails to match the historic pattern and causes concern among the rational.

February Sales

“The abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” Lawrence Yun, the group’s chief economist, said in a statement. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June.”

The Realtors’ report showed declines in January pending sales in all four regions, led by a 13 percent slump in the West. Contract signings fell 8.9 percent in the Midwest, 8.7 percent in the Northeast and 2.1 percent in the South.

Pending home sales are considered a leading indicator because they track contract signings. The Realtors’ existing- home sales report tallies closings, which typically occur a month or two later. The pending sales data go back to January 2001, and the group began publishing the index in March 2005.

Reports last week showed the housing market may be faltering. Sales of previously owned homes unexpectedly dropped 7.2 percent in January after a record decline a month earlier, according to Realtors group’s report Feb. 26. New-home sales slumped to an all-time low, the Commerce Department said Feb. 24.

Does Lawrence Yun have any credibility with anyone? Is there even one person who believes him? Isn't he a stuffed shirt?

Credit Extended

President Barack Obama and Congress extended the first-time buyer credit in early November to cover deals signed by April 30 and closed by June 30, and expanded it to include some current homeowners.

Among other concerns for the housing outlook, the Fed said it plans to end a program later this month to purchase mortgage- backed securities, which helped contain borrowing costs.

The rate on a 30-year fixed mortgage dropped to 4.71 percent in early December, the lowest level since Freddie Mac started keeping weekly records in 1972. The rate has hovered around 5 percent since then.

Is anyone surprised that Ben Bernanke refinanced his ARM to a fixed-rate mortgage late last year? Interest rates for fixed-rate mortgages are at bottom, and anyone who has not refinanced into fixed-rate financing should do so now.

Southern California Sales Volume and Price

Dr. Housing Bubble recently wrote a post on The Housing Metrics of Southern California – Seasonal Home Sales, Inflation Adjusted Home Prices, Tens of Thousands Living Rent Free, and the Japanese Experience. The chart below comes from that post:

From the good Doctor:

This is a fascinating look at the market. Even during the boom we clearly see the seasonal pattern in sales. Each fall and winter sales drop as more people take inventory off the market. Spring and summer overall are bigger sale months because of school schedules, family commitments, and just a general acceptance that this is when more inventory enters the market. But you’ll notice in 2006 that the trend radically shifted. The crash hit and sales plummeted. An interesting phenomenon occurred where the median sale price didn’t peak until the middle of 2007 well into the monthly sale crash. So it would appear that sales would actually lead future prices.

Irvine Inventory

At the Irvine Housing Blog, we have been tracking inventory since January 2007. The chart of inventory is shown below.

If you think back to what was happening in our market, the inventory graph reveals much about the strength of our market.

In 2006, the market topped, sales volumes declined, and inventory increased.

Beginning 2007, inventories were already elevated and the market contained a dwindling qualified buyer pool and tightening credit standards; consequently, when a normal amount of spring listings hit the market, sales volumes were low, and inventories ballooned.

By 2008, many late buyers were underwater, and discretionary buyer viewed the price drop as a temporary apparition; therefore, many sellers did not bother listing their properties, and many that were listed had WTF asking prices nobody could afford. The result was a continued decline in sales volume and lower prices.

By 2009, the crisis prompted the government into providing an array of market subsidies designed to improve affordability and prevent further price declines. The same problems that existed in 2008 persisted into 2009 and became worse due to rising unemployment, strategic default, and a number of other problems.

Now in 2010, we are seeing inventory rise again, but we are still well below historic norms. Current pricing is sustained by restricted inventory and low sales volumes. If either inventory or sales volumes increase, it will adversely impact prices. Some of our recent inventory is discretionary sellers asking WTF prices that will never transact, but a significant amount of this new inventory is appearing as trustee sale flips that previously has been withheld from the market. Will the lending cartel be able to sustain prices, or with the incentive to cheat and sell while prices are still high force more inventory on the market and push prices lower?

At its current trajectory, inventory should break the 30 month trend of declining inventory very soon. In both 2008 and 2009, the seasonal inventory increase was abruptly reversed, and prices were able to remain firm. Will that happen again?

Irvine Home Address … 29 CHARITY St Irvine, CA 92612

Resale Home Price … $1,449,000

Home Purchase Price … $888,000

Home Purchase Date …. 3/25/2003

Net Gain (Loss) ………. $474,060

Percent Change ………. 63.2%

Annual Appreciation … 7.1%

Cost of Ownership


$1,449,000 ………. Asking Price

$289,800 ………. 20% Down Conventional

5.01% …………… Mortgage Interest Rate

$1,159,200 ………. 30-Year Mortgage

$300,371 ………. Income Requirement

$6,230 ………. Monthly Mortgage Payment

$1256 ………. Property Tax

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

$121 ………. Homeowners Insurance

$230 ………. Homeowners Association Fees


$7,836 ………. Monthly Cash Outlays

-$1521 ………. Tax Savings (% of Interest and Property Tax)

-$1390 ………. Equity Hidden in Payment

$565 ………. Lost Income to Down Payment (net of taxes)

$181 ………. Maintenance and Replacement Reserves


$5,672 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$14,490 ………. Furnishing and Move In @1%

$14,490 ………. Closing Costs @1%

$11,592 ………… Interest Points @1% of Loan

$289,800 ………. Down Payment


$330,372 ………. Total Cash Costs

$86,900 ………… Emergency Cash Reserves


$417,272 ………. Total Savings Needed

Property Details for 29 CHARITY St Irvine, CA 92612


4 Beds

2 full 1 part baths Baths

2,910 sq ft Home size

($498 / sq ft)

6,223 sq ft Lot Size

Year Built 1995

108 Days on Market

MLS Number S596674

Single Family, Residential Property Type

Turtle Rock Community

Tract Cw


Beautiful Plan 1: Professionally maintained gardens, decorator paint, brand new granite countertops, refinished hardwood floors and brand new never lived on designer carpet throughout. This home is truly move in ready. The yard is lined with Fuji apple tree's that bear great apples every year, Orange, tangerine and lemon tree's are also part of the back yard. If you are looking for a multiple purpose home to entertain, easy everyday living and easy to keep clean this is the one! This home is located in the best part of Concordia, best of the Irvine School system, always on the top 10 safest city list. Gated community with hill lined street and nice views. Centrally located to schools, shopping, freeways, toll Roads and minutes to the beach. Another bonus is that the association dues are low and there is no mello-roo's tax. This is a great place to raise a family and you are guaranteed University High which is a top high school. THIS IS THE ONE!!

This is chasing the market down:

  • Property History for 29 CHARITY St

    Date Event Price
    Mar 05, 2010 Price Changed $1,449,000
    Feb 10, 2010 Price Changed $1,475,000
    Jan 26, 2010 Price Changed $1,498,000
    Jan 18, 2010 Price Changed $1,515,900
    Jan 13, 2010 Price Changed $1,534,900
    Jan 11, 2010 Price Changed $1,542,900
    Jan 05, 2010 Price Changed $1,547,900
    Jan 01, 2010 Price Changed $1,548,900
    Nov 27, 2009 Price Changed $1,549,900
    Nov 19, 2009 Listed $1,575,000
    Mar 25, 2003 Sold (Public Records) $888,000
    May 23, 1995 Sold (Public Records) $524,500

  • At this rate, the house should reach its current resale value by 2020. Does any rational person believe this property has gone up in value about 80% since 2003?

    High End Home Prices Benefit from Lack of Inventory

    The high end has benefited from a lack of supply and low sales volumes. With lenders proceeding with foreclosure faster, we are starting to see the inventory we have been waiting for.

    28 WOODS Trl kitchen

    Irvine Home Address … 28 WOODS Trl Irvine, CA 92603

    Resale Home Price …… $2,049,900


    We can never know about the days to come

    But we think about them anyway, yay

    And I wonder if I'm really with you now

    Or just chasin' after some finer day

    Anticipation, anticipation

    Is makin' me late

    Is keepin' me waitin'

    Carly Simon — Anticipation

    Since the Government deeply inserted itself into the housing market, the future has become far from certain, and we spent an agonizing year anticipating the release of inventory lenders have determined will never come. Two-thousand ten is a different year; lenders are foreclosing in earnest, and we are seeing the first of this inventory hitting the market.

    Report: Sales of pricey California homes drop in 2009

    Sales of California homes priced at $1 million or more tumbled for the fourth consecutive year in 2009, according to a report out Thursday.

    The number of million-dollar-plus homes sold dropped 23.8% to 18,621 in 2009 from 24,436 in 2008, according to San Diego real estate research firm MDA DataQuick.

    If we were experiencing a true, robust housing market recovery, why are sales at the high end falling year after year? Low volumes are sustaining asking prices (that plus denial), but actual sales continue to plummet, and unless the government is planning to subsidize this market, look for a crushing weight of pricing to fall at the $729,750 conforming limit plus available downpayment savings. Expect a dramatic squashing of the market down to the $800,000 to $1,100,000 range

    The decline was the result of buyers holding back, a weak mortgage market for big loans and the drop in home prices over the last several years dragging the value of several houses below the $1-million-dollar threshold, DataQuick said.

    "Prestige home sales are a unique subcategory of the real estate market. The buyers and sellers respond to a different set of motivations,” DataQuick president John Walsh, said. “In the multimillion-dollar price ranges, decisions are largely discretionary and aren't as dependent upon jobs, prices and interest rates the way they are for most buyers and sellers."

    This article is focused on homes prices at $1,000,000 and above, and yet the reporter quoted John Walsh's statement about multimillion-dollar homes. The reporter is implying that the dynamics of real wealth have some bearing on the pretenders who own houses they believe are worth between $1,000,000 and $2,000,000 where the major disaster is coming. Multitudes of borrowers overextended themselves to get into houses in the no-man's land between the FHA limit and price points only the truly wealthy can afford.

    The trend underscores the nature of the state’s housing recovery. Sales of California home sales at all price levels increased 16.9% percent last year, to 460,166 from 393,703 in 2008. One in 25 homes sold for a million dollars or more last year, while the year before it was one in 16 and was one in nine in 2006.

    No, the trend underscores the nature of the State's housing fiasco; we have no housing recovery, and saying that we do doesn't make it so; although, it makes people feel good, and it keeps the high end in denial. Why are homedebtors idiots? Because they are lied to constantly.

    Lower-end homes largely fueled last year’s buying spree as both investors and first-time purchasers sensed opportunity in steeply discounted foreclosure properties across the state.

    The Federal Housing Administration, a federal agency that insures mortgages often used by first-time buyers with little cash for a down payment, has played a big role in supporting the market for lower-end properties in California and some move-up markets. In pricier California communities, such as Los Angeles County, the limit for FHA loans was increased to $729,750 from $362,790 less than two years ago.

    But more expensive homes haven't enjoyed that same level of government support nor were they hit as hard by the subprime mortgage meltdown.

    Traditional luxury markets are faring better than those that experienced large price increases during the bubble years. For instance, million-dollar-plus home sales in Riverside County dropped 48.6% last year while Los Angeles County saw a 13.3% decline.

    Notice the subtle lie perpetrated in this sentence: "Traditional luxury markets are faring better than those that experienced large price increases during the bubble years." Did you read, "Traditional luxury markets did not participate in the bubble therefore, prices will not fall?" The writer intended for you to get that message, and it is deceitful drivel.

    There is one, and only one, reason million-dollar-plus home prices have not fallen off a cliff: lenders have not been foreclosing and discretionary sellers are in denial, so both available inventory and sales volumes are very low. Demand is nearly absent, but if supply is restricted enough, prices don't fall. What we are left with is a huge market segment dominated by shadow inventory with nobody to sell it to.

    Lenders are finally moving properties through the foreclosure system, and I am anticipating much more high-end inventory this year. Through the summer, demand may be sufficient as unsatisfied buyers exist from 2009, but their numbers will be depleted quickly, and once exhausted, prices will get pushed down by the weight of all this inventory. Financing will not return, and many properties will fall to the $729,750 limit plus savings. Have you noticed that the Irvine Company priced everything within reach of financing? If they believed the over $1,000,000 market was viable, they would be selling at those price points; they are not because no market exists there.

    I am profiling many more Trustee Sale flips lately because there have been many more Trustee Sales, sales that simply were not occurring last year. The pace is quickening with some lenders clearing their books. Today's featured property is an REO the lender is hoping to flip for a price higher than its peak purchase price in 2006. Has the high end already fully recovered?

    No, no way.

    28 WOODS Trl kitchen

    Irvine Home Address … 28 WOODS Trl Irvine, CA 92603

    Insightful Housing Beacon

    Resale Home Price … $2,049,900

    Income Requirement ……. $426,871

    Downpayment Needed … $409,980

    20% Down Conventional

    Home Purchase Price … $1,700,000

    Home Purchase Date …. 11/4/2009

    Net Gain (Loss) ………. $226,906

    Percent Change ………. 20.6%

    Annual Appreciation … 57.5%

    Mortgage Interest Rate ………. 5.05%

    Monthly Mortgage Payment … $8,854

    Monthly Cash Outlays …..….… $11,650

    Monthly Cost of Ownership … $9,100

    Property Details for 28 WOODS Trl Irvine, CA 92603

    Gourmet Kitchen Award

    Beds 5

    Baths 4 full 1 part baths

    Home Size 3,800 sq ft

    ($539 / sq ft)

    Lot Size 9,052 sq ft

    Year Built 2007

    Days on Market 11

    Listing Updated 2/3/2010

    MLS Number S603502

    Property Type Single Family, Residential

    Community Turtle Ridge

    Tract Arez

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

    Spacious five bedroom plus four and one half bath home situated on a private cul-de-sac in the gated community of Turtle Ridge. This home is like brand new through out. Gourmet kithcen offers stainless steal appliances, granite counters, travertine flooring. Upper level media/game room loft. Main floor bed and bath. Entertaining rear yard with custom designed pool, spa, outdoor kitchen, fireplace, courtyard fountains, water features. Plus much more

    kithcen? Does the realtor still earn the gourmet kitchen graphic when he spells kitchen wrong?

    How many of you were introduced to Carly Simon this way?

    IHB News 1-30-2010

    Anyone going to the Irvine Company model homes this weekend? They've hit the reset button on our housing market, so it's time to start all over.

    55 PLANTATION Irvine, CA 92620 kitchen

    Irvine Home Address … 55 PLANTATION Irvine, CA 92620

    Resale Home Price …… $849,000


    We can break the cycle – We can break the chain

    We can start all over – In the new beginning

    We can learn, we can teach

    We can share the myths the dream the prayer

    The notion that we can do better

    Change our lives and paths

    Create a new world and

    Start all over

    Start all over

    Start all over

    Start all over

    New Beginning — Tracy Chapman

    IHB News

    Irvine Company Opens New Models

    In case you have been hiding under a rock, I want to let you know that the Irvine Company is opening its new models to the general public this weekend. I will likely go visit myself soon and blog about what I see. As an industry observer and participant, and Irvine resident, I want to see them be successful. The success of the Irvine Company is inexorably tied to the success of Irvine itself. As they do good work, we live the results.

    House of Blues Benefit Reminder

    A long time reader of the Irvine Housing Blog recently contacted us for our support.

    Todd Larsen, director of the Irvine Music Academy has been struck with leukemia at age 44. He was the family's sole wage earner taking care of his wife and 10 month old son by teaching music and coaching swim lessons in Irvine.

    Thankfully Todd has great health insurance but unfortunately did not have disability insurance. As you can imagine his family's world has been turned upside down. The Irvine community has been holding walk-a-thons and auctions to help the family make ends meet. (Click below to read more about how the Irvine community is rallying around the family – the second link is to Todd's blog where tickets to the event can be purchased.

    Tickets to the event can be purchased on Todd's blog at

    Housing Bubble News from

    In Foreclosure 101: Non-Judicial Foreclosure, I discussed how mortgage debt is not discharged, and lenders can still try to collect from borrowers. Bloomberg, Calculated Risk and Mish all had articles on that subject this week.

    Lenders Pursue Mortgage Money Long After Houseowners Default (

    Fed Keeps "Extended Period" Pledge To Screw Savers; Hoenig Dissents (

    So. CA Shadow Inventory (

    Bankers have a NEGATIVE value to the rest of us (

    Fed Weighs Interest on Reserves as New Policy Rate (

    Unemployment rises in 43 states (

    Fed Buys Another $12bn of Fannie, Freddie Crap With Counterfeit Money (

    Rents Fall to 3 1/2 Year Low in Orange County (

    No bottom

    Outlook for housing market muddied by anemic rise in prices (

    Housing Market: Even More Pain in Store? (

    Bottom In House Prices, a Decade Away (

    Housing recovery could take a decade, say optimists (

    House values won't regain bubble heights for AT LEAST a decade (

    Home sales decline

    House Sales, uh, "Worse Than Expected" in December (

    House Sales See Biggest Monthly Drop In 40 Years (

    Existing House Sales: The Lemmings Slow Down (


    Foreclosure plague: 2009's worst-hit cities (

    10% of Merced Houses Are In Foreclosure (

    Fear and foreclosure in Las Vegas (

    28% of Orlando-area rental apartments, condos, town houses vacant (

    Hawaii Foreclosures Reach Record High for December (

    New Home Sales

    New-House Sales Fall, Capping Worst Year (

    US housing news keeps world markets in retreat (

    Excess Supply of Existing Houses For Sale Equals 600,000 Units (


    The Lessons of Oregon's Vote to Tax the Rich (

    Inflation: An Old People's Disease (

    Banks defeated soverereignty of USA (

    Why Are We Donating $2,000 Per Family to Wall Street Bonuses? (

    The Fed: Reappoint Captain Smith of the Titanic? (

    Doing the Bernanke Dance: Rational Irrationality (

    What us, worry? Banks double down on risk (

    The Only Country With No Debt (

    The New Mortgage Revolution: Walk Away (

    Insider's View of the U.S. Real Estate Train Wreck (

    It only gets worse this year for commercial real estate (

    Housing Unaffordability as Public Policy (

    Tishman's "Strategic Default" on Stuyvesant Town in NYC (

    No worries about "morality" in biggest real estate default in history (

    Dummy Bidding: Inside real estate auction's notorious fraud (

    West Coast Wasteland (

    Housing bust keeps consuming California jobs (

    The new breed of perma-renters (

    2010: The Year of the Renter? (

    What Could You Live Without? (

    The housing bust and what to expect next (

    Excellent Explanation of Bubble (

    Volcker Rule Vindicates Former Fed Chief (

    Stakes are high as government plans exit from mortgage markets (

    55 PLANTATION Irvine, CA 92620 kitchen

    Irvine Home Address … 55 PLANTATION Irvine, CA 92620

    Resale Home Price … $849,000

    Income Requirement ……. $178,405

    Downpayment Needed … $169,800

    20% Down Conventional

    Home Purchase Price … $678,000

    Home Purchase Date …. 12/27/2007

    Net Gain (Loss) ………. $120,060

    Percent Change ………. 25.2%

    Annual Appreciation … 10.4%

    Mortgage Interest Rate ………. 5.13%

    Monthly Mortgage Payment … $3,700

    Monthly Cash Outlays ………… $4,730

    Monthly Cost of Ownership … $3,470

    Property Details for 55 PLANTATION Irvine, CA 92620


    Beds 3

    Baths 2 full 1 part baths

    Home Size 1,964 sq ft

    ($432 / sq ft)

    Lot Size n/a

    Year Built 2007

    Days on Market 2

    Listing Updated 1/28/2010

    MLS Number S603288

    Property Type Condominium, Residential

    Community Woodbury

    Tract Wdst


    WOODBERRY!! Does an embarrassing misspelling like that make you want to cringe?

    Is there something wrong with a period as end-stop punctuation? Is using two or three asterisks more efficient?