The IHB Community has been invited to an open conference call with Daniel Young, President of Community Development for the Irvine Company. The time is 7:00 PM. The call-in number is 877 269-7289. Callers will be asked to enter a
PIN, which is 13113. That allows them to listen to the conversation.
If they want to ask a question—and Dan will remind people of this
periodically—they need to hit *3. They can also e-mail questions to
Dan at info@cardinalhq.com.
The mid-rise towers in Irvine and in all of Orange County are crumblin’ down. Prices there are in chaos; people are either getting bargains or catching knives, but the discounts from original purchase prices are astounding.
These towers were ahead of their time. Irvine has not reached an income level where $700,000 condos are supportable. When $700,000 condos are the norm — perhaps 25 years from now — mid-rise condos will take over areas of Orange County where people can walk around. For now, they stand as broken dreams and monuments to the folly of the Great Housing Bubble.
From a land planning perspective, I question whether or not densities greater than 25 units per acre can be properly serviced without rail to relieve the road traffic. Since these properties are completely car dependant, there are few opportunities for walking to eliminate vehicle trips. Jamboree Road may become a major traffic issue as all the people living in these properties move back and forth between home, work and shopping. Traffic problems will impact long-term desirability and value.
The resale values of these properties are falling so far so quickly for many reasons:
It is difficult to obtain financing in certain condominium situations (e.g. GSEs have occupancy requirements).
The HOA dues are very high. This dramatically reduces the cashflow value because a large amount of the rent goes to the HOA.
Buyer pool is mostly cash buyers “investing” in these properties.
Buyers are afraid of the uncertainties (potential for overshoot).
Investing in this context means different things to different buyers. Those investors who are speculating on the recovery and future increase in prices. We call them knife catchers because speculative buyers will purchase early and with the least amount of data and analysis. They are “betting” that prices will move their way. At the bottom, a different style of investor will purchase for positive cashflow and a return on investment.
For most of these towers, rental parity is nearly 50% off peak pricing. Positive cashflow for investment value is 65%-70% off peak pricing. IMO, that is where these towers find bottom.
Stunning Astor Court model located on the second floor with a view of
the Greenbelt. Home includes granite counters in Kitchen and Bathroom,
crown molding, window treatments throughout. Experience a sophisticated
lifestyle in one of the best condominiums in Orange County! The
Watermarke Community provides you with a bounty of amenities such as a
concierge service, top-of-the-line fitness center, movie viewing room,
pools, spas, and tennis courts.
I’ll stay with my unsophisticated lifestyle.
This property was purchased on 8/26/2005 for $310,000. The owner used $248,000 first mortgage, a $15,500 second mortgage and a $46,500 downpayment. There is a HELOC from 2007 for $68,404. If this guy took out the money, he got is downpayment back. If he didn’t max out the HELOC, he lost $46,500 in addition to having his credit trashed.
The above property is being offered for 35% off its 2005 price.
Don’t miss out on this sophisticated condo in the prestigious gated
community of AVENUE ONE! This 2 bedroom, 2 bath condo has the finest of
details throughout. Features include: granite kitchen and bathroom
countertops, rich dark wood cabinets, two panel doors, crown molding,
patio, very open and bright. The community ammenities include an
Olympic sized pool, Bar-B-Ques, fitness room, indoor half basketball
court and beautiful club house with full kitchen and flat screen TV.
Only built in 2006, this wonderful home and community are located close
to shopping, dining and entertainment. This is one great home you don’t
want to miss!
Another sophisticated condo!
ammenities?
I have no purchase or mortgage data for the above, but I do know than an NOD was filed in May.
That is individual capitulation. Will this become a mass movement?
The above property is being offered for 39% off its 2005 price.
One of the best views in the building with nearly 2100 square feet of
floor to ceiling views including a view of Catalina Island. 2BR + Den,
2.5 BA offers the finest in modern appointments with stainless steel
appliances, hardwood floors, granite counter tops and more. Pamper
yourself with full time concierge services, social events, gym, media
room, board room with Wi-Fi, billiards lounge, pool and spa. This
gorgeous home is the ultimate in living! And REALLY a great deal – to
be sold as is.
And REALLY a great deal – to
be sold as is. I find the linking of those incompatible ideas disturbing.
This is a two-bedroom condo that sold for $1,430,000. WTF?
I do not have the records for this one either, but someone involved is taking a $603,740 loss — assuming they get this asking price and pay 6%.
The above property is also being offered for 39% off its 2005 price.
{book1}
Conference Call Reminder
The IHB Community has been invited to an open conference call with Daniel Young, President of Community Development for the Irvine Company. The time is 7:00 PM. The call-in number is 877 269-7289. Callers will be asked to enter a
PIN, which is 13113. That allows them to listen to the conversation.
If they want to ask a question—and Dan will remind people of this
periodically—they need to hit *3. They can also e-mail questions to
Dan at info@cardinalhq.com.
Personal Note
I am taking a few days off and visiting with family, so I will be less available in the comments this week. Judging by the upsurge in comments lately, you all will carry on without me.
Your astute observations are greatly appreciated here. It is your participation that makes this blog special.
Monday is our big day. The IHB Community has been invited to an open conference call with Daniel Young, President of Community Development for the Irvine Company. The time is 7:00 PM. The call-in number is 877 269-7289. Callers will be asked to enter a
PIN, which is 13113. That allows them to listen to the conversation.
If they want to ask a question — and Dan will remind people of this
periodically — they need to hit *3. They can also e-mail questions to
Dan at info@cardinalhq.com.
This will be meeting between the makers of our community and the residents who live within it. An opportunity for both parties to learn from each other; you can make your voice heard, and and you can hear from the inner sanctum of The Irvine Company.
Let’s keep this encounter respectful. This kind of direct contact is rare, and if we make this a positive experience for everyone, it will happen more often. This is one of the unique opportunities opened by social networks.
Dan Young is president of Irvine Community Development Company LLC
(ICDC), an affiliate of the Irvine Company responsible for all
residential development on The Irvine Ranch®.
As president of ICDC, Mr. Young guides all facets of the Irvine
Company’s community master-planning and development process, which
began more than 45 years ago. From the villages of Woodbury, Northpark
and Woodbridge in Irvine, to the coastal communities of Crystal Cove
and Newport Coast, the residential communities on The Irvine Ranch have
won many national awards and are admired for their unique character and
livability.
Mr. Young came to the Irvine Company in November 1999, after a
20-year career as a real-estate developer and a consultant to the
industry. In his previous role with the Irvine Company, he served as
executive vice president of Entitlement and Public Affairs, overseeing
the company’s entitlement on The Irvine Ranch.
His community involvement includes 11 years on the Santa Ana City
Council, including eight years as mayor. In his official capacity as
mayor, Mr. Young also served on the board of directors of several
regional agencies, including the Metropolitan Water District and the
Orange County Transportation Authority.
Mr. Young received his bachelor’s degree from California State
University, Fullerton, and his master’s degree in public administration
from the University of Southern California.
The Irvine Company is a 140-year-old privately held company known
throughout the world as a best-of-class master planner and long-term
owner, investor and operator of a large and diversified real estate
portfolio. The company also is known as a steward of some of the most
beautiful, permanently preserved land in California. In addition to its
master-planned communities on The Irvine Ranch® in Orange County,
Calif., the company also is known for its portfolio of high-quality
investment properties—office, retail and apartment—it owns in San
Diego, Orange County, West Los Angeles and the Silicon Valley. The
company traces its roots to the 1860s with the assembly of The Irvine
Ranch from Mexican and Spanish land grants. The Irvine Company was
incorporated in 1894.
Suckers walk, money talks! But it can’t touch my three lock box! Uh! Oh, yeah! Mysteries of the days of old. You find the key, you got the gold. Three Lock Box — Sammy Hagar
I had lunch with a friend yesterday who is not a fan of 3-car garages — can’t touch my three lock box! Perhaps we should ask our guest on Monday if the Irvine Company will be creating more product with 3-car garages (we don’t want them). I don’t believe there are any in the communities of the 00s. Today’s featured property may become rare and valuable….
{book}
The Great Housing Bubble made me angry (see The Reservoir of Schadenfreude). It drove me to write for this blog for 2 1/2 years and put together a
book. Anger can be very motivating, but over the long term, it eats
away at me, so I am letting it go.
In our collective unconscious which
manifests in our dreams and our mythology, water is often symbolic of
our emotions or our emotional state. Have you noticed people are often
categorized as deep or shallow? If you are in debt you often feel
“underwater,” etc.
Anger is much like water: if not given an outlet, it will fill a
reservoir until it reaches a breaking point and is expressed in a flood
of emotional rage. Each encounter with a pathologic, kool-aid
drinking housing bull over the last few years has added to this
reservoir, and reveling in failed flips is an outlet for this pool of
toxic emotional waste.
There is an element of tragedy in every disaster, but financial
bubbles are some of the most interesting because they are completely
man made. They are created by the individual decisions of buyers who
are motivated by greed, foolish pride, and a false sense of security.
Each of these people should have known better. Many of them were warned
of their impending doom and chose to go down the path to the Dark Side.
My reservoir is empty.
I am over it.
Well, I may not be totally over it, but I am ready to move on.
The social media is a fascinating phenomenon. Traditional media outlets are being displaced, and citizen journalists and analysts are stepping into this void and providing real content. Have you been over to Calculated Risk lately? It is amazing the quality of the posts and the speed at which he produces them — and he is unpaid; he is doing it for the joy of the activity. How cool is that?
This blog reaches thousands of people each day. I am a citizen journalist. When we all look back on this era, the bubble blog community captured the Zeitgeist of the Great Housing Bubble. The archives of blogs like this one and Housing Panic encapsulate the Age. Keith walked away from Housing Panic and started a new blog. I am not that radical.
Many people come here for the analysis and information, and I hope I make it fun. 🙂 (we have to cut back on the schadenfreude) 🙁 I like to write about the local real estate market, and you like to read it, so I will carry on. I don’t know what changes you will see, but I have to be who I am.
My new goal when I talk about a property is to be accurate. If I have the time, I may do more in-depth analysis on properties like this one: (IHB Opinion_of_Value_14802_Devonshire_Ave_Tustin,_CA_92780.pdf) I will purchase better data to create better analysis posts. I will stay in Irvine on profiles during the week and make sure the IHB will always be the Irvine Housing Blog.
One of the pleasures of the blog are those moments when I can express myself on a personal level. The social media make that a part of the program. We shared this unique cultural event — the Great Housing Bubble and the ensuing recession — the emotions are part of the cultural experience. Back in December 2007, I put it this way in Balance:
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.
…
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.
…. 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.
Turtle Rock Broadmoor Model G. Security gate and double door enty;
3-car garage. Fresh 2-toned painting, scraped ceilings. New
floorings-upgraded carpet and laminated wood. New vertical blinds.
Above-ground spa in backyard w/new cover. Downstairs master BR
w/remodeled master bath. new granite kitchen counter-top, stainless
steel sink w/GE range and dishwasher. Bonus/game room has a pool table
and antique light fixture. Brand new water heater w/earthquake straps
in garage. Overlooking community park and pool. Many upgrads, a
must-see!!
You know the housing bubble has not deflated yet when you still see homes sporting 300% gains in 13 years. A house should double in twenty not triple in thirteen. There is still a long way to go.
I am not sure how to close on a Friday now. The old catchphrase doesn’t feel right anymore.
I don’t know if this will become a tradition, but I will share an experience I had recently that sent me a message.
I was driving down to Laguna Beach last Sunday morning to meet a friend, have a cup of coffee and talk about life. On the way there, I passed a group of bikes clustered together in a tight pack. As I drove past, I could see one bike in the distance breaking away from the pack and peddling hard. I found myself asking, “Who was that guy?” Then, the more I reflected on it, I realized that I wanted to be that guy.
“So let me understand this. These folks are employed, have money and
live in a home that they apparently thought was king-dingalicious when
they bought it a few years back. But because the market slowed down
(like it always does) and hasn’t sped up (like it undoubtedly will)
according to their timeframe, they are just going to stop making
payments. Like children, they’re just NOT going to do it.”
Yes, he understands the situation very well, and so do the people who are walking away. Even with the financial consequences of walking away, the consequences of staying in some of these properties is even worse. I saw recently that Monterey County watched its median home price fall from $800,000 to about $185,000 — a 75%+ decline. If you bought at $800,000, and your property is now worth $200,000, what would you do? Would you really keep paying on that $800,000 mortgage?
There is a “strictly business” aspect to the decision that most often
points to walking away, and there is a moral aspect that never points
to walking away. This is a complex dilemma, and it is easy to moralize
when one is not in the dire financial straits a massive home debt can
bring about. However, people often find it far too easy to just walk
away and justify their immorality.
As more people go upside down on their mortgages, they will walk away. Whether you agree with their decision or not, it is going to happen because it still benefits people to do so.
Woodbridge Gem in Cottage Homes. Beautiful 3 bedroom with numerous
upgrades including totally remodeled kitchen with granite counter tops.
Ceramic tile flooring, recessed lighting and beautiful contemporary
track lighting. Epoxy flooring in garage. Secluded, extremely quiet
location in park-like setting. Close proximity to Blue Lake South Pool
and wonderful family friendly park. Access to all lakes, swimming pools
and parks in Woodbridge.
I want to compliment Debbie Podlas, the listing agent, for taking some great photographs (or having them taken professionally) and writing a clear and concise description that accurately captures the property. I wish all listings in Irvine could be displayed to this standard.
I like these little cottages. The neighborhoods are some of the finest in Woodbridge and perhaps all of Irvine. This is the kind of neighborhood where you would expect to make a profit after 5 years of ownership, but that isn’t how it is working out.
The owners of this property put down $250,000, and they never tapped their equity. Now they are going to lose at least a little due to commissions.
REO-BANK OWNED PROPERTY…WOW! OUTSTANDING VALUE FOR THE LARGEST MODEL
IN AMBRIDGE WITH PRIVATE PORCH ENTRY, DOWNSTAIRS BEDROOM AND BATH,
GREAT ROOM WITH DARK HARDWOOD FLOORING AND FIREPLACE, CAESARSTONE
KITCHEN AND BATH COUNTERTOPS, MOCHA COLORED CABINETS PLUS A TWO CAR
GARAGE WITH EXTRA STORAGE SPACE. UPPER LEVEL SPACIOUS MASTER SUITE WITH
ELEGANT BATH AND WALK IN CLOSET. THIRD BEDROOM SUITE AND FULL LAUNDRY
ROOM ON UPPER LEVEL. CONVENIENT QUAIL HILL LOCATION AND EXCELLENT
SCHOOLS, PARKS, POOLS, SPAS, SPORT COURTS!
This ALL CAPS description is not so good…
This property is REO, and the bank is hoping to get what was paid in 2004. This was a 100% financing deal (actually, the people put $350 down), and the owners defaulted. No HELOC abuse.
Five years gone by, no appreciation, and the market is still weak. This recovery is going to take a while.
Stunning Astor Court model located on the second floor with a view of
Daniel Young, President of Community Development for the Irvine Company
