Do high-end properties appreciate at a faster rate than low-end properties? Today’s featured property has appreciated at an 8.3% annual rate since 1973.

Irvine Home Address … 19196 SIERRA ISABELLE Rd Irvine, CA 92603
Resale Home Price …… $1,048,888

{book1}

Diamond Girl – you sure do shine
Glad I found you – glad you’re mine
Oh my love you’re like a precious stone
Part of earth where heaven has rained on
Makes no difference where you are
Day or nighttime you’re like a shinin’ star

Diamond Girl — Seals and Croft

The long-term average appreciation for Irvine is just over 4%, and yet there are homes like this one that have appreciated at 8% for a very long time. How is that?

It is still hugely inflated pricing.

Trees cannot grow to the sky, and it is not possible to continue with a large disparity between appreciation rates at the low end and at the high end. Remember our property from Monday 275 STREAMWOOD Irvine, CA 92620? It went from $56,000 in 1988 to $126,140 now — which is near the historic norm of 4% appreciation in Irvine.

If the foundation of the market — entry-level properties — have only appreciated at 4%, how can high-end properties appreciate at 8%? Ten years from now when that condo is going for $200,000, will properties like today’s be selling for $2,000,000? Isn’t that a bit of a price stretch?

There is nothing but air holding up prices at the high end. I still believe these properties are going to get clobbered.

Irvine Home Address … 19196 SIERRA ISABELLE Rd Irvine, CA 92603

Resale Home Price … $1,048,888

Income Requirement ……. $194,372
Downpayment Needed … $209,778

Home Purchase Price … $54,000
Home Purchase Date …. 3/15/1973

Net Gain (Loss) ………. $931,955
Percent Change ………. 1842.4%
Annual Appreciation … 8.3%

Mortgage Interest Rate ………. 5.06%
Monthly Mortgage Payment … $4,535
Monthly Cash Outlays ………… $6,060
Monthly Cost of Ownership … $4,590

Property Details for 19196 SIERRA ISABELLE Rd Irvine, CA 92603

Beds 4
Baths 1 full 2 part baths
Size 2,516 sq ft
($417 / sq ft)
Lot Size 5,200 sq ft
Year Built 1972
Days on Market 6
Listing Updated 11/10/2009
MLS Number U9004860
Property Type Single Family, Residential
Community Turtle Rock
Tract Bm

Largest model in the tract – quiet, ‘inside’ location directly facing the big association park, pool & BBQ – 4 bedrooms plus bonus room – recent, tasteful upgrades include lavish use of tiles in baths and kitchen, brand new stall shower & tub, granite kitchen counters, new stovetop, dishwasher & microwave, new neutral carpet & interior paint, textured ceilings, light fixtures, roll-up garage doors and picturesque landscaping (to mention just a few) – viewing deck, newer roof – close to top schools, public parks & tennis -low associaion dues and no Mello-Roos. This turnkey home enjoys the best location in the tract and is ready to move into and enjoy – don’t hesitate on this choice property – for the most discriminating! The home is light,bright, sunny, cheery and super clean – great view of the park, pool and hills from the bonus room! This home has true pride of ownership – a ‘creampuff’!

The property records show no debt on this property, so it is likely owned outright. Not a bad retirement nestegg for somebody….

I have a number of small announcements concerning some of the new features of our expanded website. We have tried to keep the transition as painless as possible. Thank you for staying with us.

Address: 5153 Scholarship Irvine, CA 92612
Asking Price: $2,389,000

I make my living off the evening news
Just give me something-something I can use
People love it when you lose,
They love dirty laundry

Dirty little secrets
Dirty little lies
We got our dirty little fingers in everybodys pie
We love to cut you down to size
We love dirty laundry

Dirty Laundry — Don Henley

IHB News

Week of October 10, 2009

I have uploaded the full text, diagrams and end notes for The Great Housing Bubble. It is available in the library. I am planning to debut all 21 posts on successive Sundays come January of 2010.

IHB Calculator

Last week we rolled out the new IHB calculator on the weekend open thread. One of the suggestions was to put back in the feature where you could input your rent and determine how much house you can afford. I have added that back into the calculator. There is now a rental field that is automatically given a value based on the $100,000 income I use as a basis. If you overwrite one of these variables, the spreadsheet will recalculate based on your inputs.

IHB Fundamental Value Reports

Many of you have requested IHB Fundamental Value Reports since I made them available this week. If you have not seen them yet, check out our Reports tab.

IHB Recent Listings

We have brought back the recent listings in the sidebar. They are pulled directly from the MLS and run through our IDX system.

IHB Recent REOs

We have also added a recent listings of REOs to the sidebar, again from our IDX system and the MLS.

IHB Foreclosure Search

We have partnered with Foreclosure Radar to provide you with the latest search technology for finding foreclosure properties. Watch your favorite property work its way through the system.

Housing Bubble News

Washington Post

Next Asset Bubble Could Come Sooner Than You Think

ABC News – Stevenson Jacobs – ‎22 hours ago‎

After the housing bubble popped, we’re lucky to still have a functioning financial system. And
because millions of working Americans now depend on 401(k) …

AP: Next Asset Bubble Could Come Sooner Than you Think Benzinga

all 120 news articles »

Email this story

Alan Greenspan is the definition of ‘EPIC FAIL’

{book}

Real Estate Bubble News

Flipping Homes No Longer Profitable, Investors Pursue A Long-Term Strategy

Address: 5153 Scholarship Irvine, CA 92612

Asking Price: $2,389,000

Income Requirement: $439,703
Downpayment Needed: $477,800

Purchase Price: $1,988,500
Purchase Date: 9/12/2007

Net Gain (Loss): $257,160
Percent Change: 20.1%
Annual Appreciation: 9.8%

Monthly Payment $12,376
Monthly Cash Outlays $15,263
Monthly Cost of Ownership $10,254

Property Details for 5153 Scholarship Irvine, CA 92612

Beds 2
Baths 1 full 2 part baths
Size 2,000 sq ft
($1,195 / sq ft)
Lot Size n/a
Year Built 2007
Days on Market 1
Listing Updated 10/1/2009
MLS Number S591166
Property Type Condominium, Residential
Community Airport Area
Tract Plza

Enjoy the luxury of height in this fabulous penthouse offering unobstructed breathtaking city light and natural reserve views. This special residence boasts over $280,000 in interior finishes and upgrades inclusive of Royal Oyster marble flooring and tectured carpeting, three professional built-in cabinets, Audio-Visions theatre sound system throughout, Snaidero Italian cabinetry, granite and marble baths, Classy Closet cabinet systems, European wall treatments and 19 foot vaulted ceilings with a stainless steel ballister. Enjoy resort-like amenities at The Plaza Irvine including a Concierge service, convenient on-site retail, 2 pools, spa and cabana area, state-of-the-art fitness center, and an outdoor grill / fireplace area for dining. This is a special opportunity to live in luxury and so close to the areas renowned shops near Fashion Island, fine area restaurants and sought after beautiful beaches and coastline cities.

Obviously, there was no housing bubble. This property surely has appreciated 20% since the savvy buyer purchased this in late 2007… Not!

Foreign cash buyers are quite active in Northwood. They have served to keep prices elevated to WTF levels in my favorite neighborhood. 🙁

Asking Price: $639,000
Address: 30 Garden Gate Ln Irvine, CA 92620
{book7}

Here we sit in tombstones in the mud,
like it’s where we want to be.
It’s impossible to feel sacred in this lie,
in this aerial fantasy.

It’s only been a year,
English garden,
and you’re farther away,

English Garden — Silverchair

I like this neighborhood and its English Garden. It must be popular with foreign cash buyers (FCB) too. Who else would pay $435/SF to live in this neighborhood?

The owners of today’s featured property bought in 2002 for $399,000, but they only used an $82,000 mortgage… although, I am a bit suspect. My record may only have the second mortgage. Either that, or the owners put 80% or $317,000 down. Was this owner part of the first wave of FCBs to hit Northwood? He probably will not be the last.

Asking Price: $639,000

Income Requirement: $120,980
Downpayment Needed: $127,800

Purchase Price: $399,000
Purchase Date: 8/20/2002

Net Gain (Loss): $201,660
Percent Change: 60.2%
Annual Appreciation: 8.5%

Address: 30 Garden Gate Ln Irvine, CA 92620

Beds: 2
Baths: 2
Sq. Ft.: 1,468
$/Sq. Ft.: $435
Lot Size: 3,367 Sq. Ft.
Property Type: Single Family Residence
Style: Cottage
Stories: 1
View: Hills
Year Built: 1998
Community: Northwood
County: Orange
MLS#: S589057
Source: SoCalMLS
Status: Active
On Redfin: 6 day

MODEL VERY RARELY ON THE MAEKET FOR SALE, BEAUTIFUL ONE STORY HOME, ONLY GARAGE ATTACHED WITH THE OTHER HOUSE’S GARAGE, NO INTERIOR WALL HAS ATTACHED. TWO BEDROOMS PLUS A SMALL OFFICE OR DEN, LARGE SIZE LIVING AND DINGING ROOM,NICE KITCHEN WITH OPEN TO DINING ROOM, BREAKFAST COUNTER, AND A LOTS CABINETS. MASTER BEDROOM HAS FRANCH DOOR TO THE BACK YARD, SPICEL DESIGNED TILE IN LIVING ROOM, DINING AND KITCHEN, CARPET IN BEDROOMS, WOODSHUTTERS. IT IS A VERY BEAUTIFUL HOME, NICE, CLEAN, WELL KEPT. JUST LIKE A DETACHED HOME.TWO CARAGE.

MAEKET? DINGING ROOM? FRANCH DOOR? SPICEL? A LOTS CABINETS? SPICEL? TWO CARAGE?

ALL CAP

Conventional wisdom says you should not paint with “custom” colors because it turns off potential buyers. This is true; however, if you are a “special” buyer who likes the colors, it can make you fall in love with the place. I really like the green in this house…

.

And so concludes another week at the Irvine Housing Blog, chronicling the Irvine home market since September of 2006.

Have a great weekend.

😉

What would you do if you were underwater and you were offered a great new job out-of-state?

Asking Price: $1,499,000
Address: 66 Eclipse Irvine, CA 92620

I think it’s high time you knew
Whenever I think of you
My mind blows a fuse
When I look in your eyes
My meter starts to rise
And I become confused
My motor cranked electric goes
When I’m sitting next to you
Electricity starts to flow
And my indicator starts to glow

I, I, I’m just a love machine and I won’t work for nobody but you

Love Machine — The Miracles

To be quite frank, if you pass this up, you will be missing not only
the boat, the limo and party, BUT LIFE ITSELF!!! Buy it and let the
love begin!

I give the realtor credit for having the courage to put that in the description. He just landed some free exposure for his listing…

Corporate Relocation Sales

MalibuRenter emailed me recently and posed the following question:

Imagine you have a house in Irvine. You are offered a good job out of state, making considerably more than you do now. You want to accept the job, but you have a $900,000 mortgage on a home with a market value of $700,000 at most, and you are current on the payments. As far as you can tell, your current job is secure.

What would you do?

The answers have started a lively thread in our forums.

Calculated Risk noted the Housing Bust Impacting Labor Mobility.

According to the Census Bureau,
from 2005 to 2006 (the most recent data), approximately 1.7 million
owner-occupied households, moved to a different county or state. If
approximately 1 in 8 households (the same proportion as with negative
equity) will not accept a transfer now because of depressed home values
that would be about 200,000 households per year that will be reluctant
to accept job transfers.

This will not only impact the earning
potential of these households, but this could also impact the
performance of various companies. A significant majority of households
that migrate have incomes above the median – and negative equity
situations will limit the ability of companies to transfer these senior
employees.

…

One of the strengths of the U.S. labor market has been the flexibility
associated with labor mobility – households could easily move from one
region to another for better employment. The housing bust is now
limiting this flexibility.

That is the macro view, but what of the micro? What would you do in the circumstances above?

Today’s featured property owners are doing what many before them have tried; ask for a breakeven exit and see what happens….

Asking Price: 1,499,000

Income Requirement: $374,750
Downpayment Needed: $299,800

Purchase Price: $1,438,000
Purchase Date: 5/30/2006

Address: 66 Eclipse Irvine, CA 92620

Beds: 6
Baths: 6
Sq. Ft.: 3,700
$/Sq. Ft.: $405
Lot Size: 8,000 Sq. Ft.
Property Type: Single Family Residence
Style: Mediterranean
Stories: 2
View: City Lights, Coastline, Greenbelt, Panoramic, Park or Green Belt, Trees/Woods, Has View
Year Built: 2005
Community: Woodbury
County: Orange
MLS#: S588282
Source: SoCalMLS
Status: Active
On Redfin: 5 day

Corporate relocation foreces sale – this is your good fortune – ONLY LOCATION OF ITS KIND on the Irvine Ranch.The most SPECTACULAR LOCATION in Woodbury! End of cul de sac with sunset, Disneyland fireworks and city lights view on SINGLE LOADED street. The safest family location on the planet. Fantastic for family block parties with plenty of guest parking. Seperate casita with bathroom and own HVAC system. 6th bedroom is huge playroom. Each bedroom has its OWN bathroom. Upgrades galore with wood floors, imported granite counters, stainless steel appliances, extra recessed lighting, custom designer paint,custom stone hardscaping and facade. To be quite frank, if you pass this up, you will be missing not only the boat, the limo and party, BUT LIFE ITSELF!!! Buy it and let the love begin!

foreces? Seperate?

ONLY LOCATION OF ITS KIND?

Is isn’t even the only (1) southeast side property (2) on the boulevard (3) at the end of a cul-du-sac. What makes this property unique?

Coincidentally, this property is listed at 3% over its purchase price — the cost of a buyer’s agent in the transaction. Do you think they will get 3% more than their purchase price? (Hint: they bought at the peak.)

The Grimble Gromble Gnome Home; some places you just have to see to appreciate….

Asking Price: $1,625,000

Address: 24 Lamplighter Irvine, CA 92620

{book}

I want to tell you a story
‘Bout a little man if I can.
A gnome named Grimble Gromble.
And little gnomes stay in their homes,
Eating, sleeping, drinking their wine.

He wore a scarlet tunic,
A blue-green hood, it looked quite good.
He had a big adventure
Amidst the grass, fresh air at last.
Wining, dining, biding his time…

The Gnome — Pink Floyd

Some properties are so special and unique that they must have value well beyond cashflow standards. Today, I am featuring one of the most unusual properties in Irvine: the Grimble Gromble Gnome Home (say that three times very fast).

The property description says the owners spent over $300,000 on upgrades. When a property is over-improved, it is a condition know as super-adequacy. Most improvements add value, but even the best ones only add about 70% of their cost to the value. As people over-improve, the additional value added falls off quickly.

Of course, by definition an improvement must improve the property. Some items people “improve” their properties with are undesirable and instead of adding value, it actually diminishes it. Today’s featured property is a case study in how to turn a super-adequacy into a value defeating fail.

Let’s start our tour with the most interesting feature on the property — the oubliette.

What you would do with your own secret hiding place? Hopefully, nobody is keeping any Egyptian slaves there.

Maybe this can be a home for bizarre rituals.

You will have a pair of knights to stand guard.

A heavily armed pair of knights…

The current owner has some interesting art…

Equus? Perhaps the owner believes Obama is riding to his rescue.

This 2005 construction has that patina of age. Note where the plaster is breaking from the wall and exposing the underlying brick…

The children “sea” the house differently than their parents…

Home! sweet home!

Asking Price: $1,625,000

Income Requirement: $406,250

Downpayment Needed: $325,000

Purchase Price: $1,330,000

Purchase Date: 6/3/2005

Address: 24 Lamplighter Irvine, CA 92620

That is a good description. I don’t know if I could write a good description for this home.

Even though these owners bought near the peak, their property has appreciated over the last 4 years. If they sell it for its asking price, they stand to make nearly $200,000 after commissions.

I am trying to figure the likely buyer profile for this property. Who would this property really appeal to?

I suppose if the Munsters and the Addams family are not interested, I know another family that can adapt to Southern California…

And so concludes another week at the Irvine Housing Blog, chronicling the Irvine home market since September of 2006.

Have a great weekend.

🙂