Any increase in pricing brings delusional sellers out of hiding. They put their properties on the market at WTF price levels and hope to hit the lottery.

Asking Price: $1,149,000

Address: 12 Inglenook, Irvine, CA 92602

{book6}

Every time I try to walk away
Something makes me turn around and stay
And I can’t tell you why

I Can’t Tell You Why — The Eagles

Most people watched prices go up in California during the Great Housing Bubble and they had no idea how and why it happened; most didn’t care, they just enjoyed feeling rich. The only explanation most people could come up with is that California real estate is “different.” We are running out of land, you know.

The higher up the property ladder you go, the stronger the belief in price-drop immunity becomes. The people who bought $1,000,000+ homes are under the impression that buyers might be a bit scarce right now, but that their homes have still been increasing in value by 10% or more per year.

They are in for a rude awakening.

Once there is the slightest sign of life in this price range, all the overextended borrowers and those discretionary sellers looking to cash in their lottery tickets put their houses for sale. This adds to the already bloated inventory of homes priced to sit at the high end. These properties will sit on the market until the owners tire of the listing, or in many cases succumb to their debts and end up in foreclosure.

I have made some bold predictions on this blog and many people did not believe possible when I made them. I have said a number of times that the high end is going to crash very hard — in some places 65% or more (particularly near the beach). I stand behind that prediction. It isn’t a matter of “if” it is just a matter of “when.” (BTW, I am not alone in this prediction.)

Asking Price: $1,149,000

Income Requirement: $287,250

Downpayment Needed: $229,800

Purchase Price: $1,024,500

Purchase Date: 5/24/2006

Address: 12 Inglenook, Irvine, CA 92602

ALL CAP

DESIREABLE? PRESTIOUS? WALKIN? BUILTIN?

This property was purchased near the peak on 5/24/2006 for $1,024,500. It is difficult to check comps because “No similar recent past sales could be found.” The owners have a $960,000 first mortgage on the property, and there is a $25,000 HELOC. Realistically, these people are already $100,000 or more underwater, but if someone is willing to relieve them of their debt burden, it looks like they are willing to move out.

Asking Price: $2,490,000

Income Requirement: $622,500

Downpayment Needed: $498,000

Purchase Price: $1,782,500

Purchase Date: 1/13/2006

Address: 35 Canyon Terrace, Irvine, CA 92603

Preimium? suround?
vacumn?

Most beautiful Estate? I find this kind of BS particularly annoying. First, this isn’t an estate, it is a tract home, and second, are you sure it is the most beautiful?

Like many owners in Turtle Ridge, these people believe their properties are “special.” They also bought at the peak, but since their property is so beautiful, it has appreciated $750,000 since they bought it.

WTF?

Based on neighborhood comps, they might be able to get out at breakeven if they wanted to sell today, but that would not give them the huge profit they are due.

One of the great features of the IHB is going to be seeing these WTF asking prices years from now. When properties like these are back under $1,000,000, these $2,500,000 asking prices are going to be a hilarious testament to just how crazy the housing bubble was.

There was a crooked man and he walked a crooked mile,
He found a crooked sixpence upon a crooked stile.
He bought a crooked cat, which caught a crooked mouse.
And they all lived together in a little crooked house

Asking Price: $679,900

Address: 4 Del Italia, Irvine, CA 92614

Follow her down to a bridge by a fountain,
Where rocking horse people eat marshmallow pies.
Everyone smiles as you drift past the flowers,
That grow so incredibly high.

Lucy in the Sky with Diamonds — The Beatles

I saw a story on MSN recently that the inspiration for John Lennon’s song was gravely ill. Of course, most people believe the Beatles were writing about drug induced hallucinations, but wherever the song came from, it is etched in the minds of our collective consciousness.

So where do crooked little houses on crooked little lots come from? Are the planners and designers high? In land planning, there is a tradeoff between the width of a lot (which translates into development costs) and the attractiveness of the street scene. Narrow lots are most cost effective, but they make for garage-dominated elevations and an unattractive street appearance.

Alley-loaded products are one possible solution, but the additional alleys eliminate back yards and drive up development costs. Many different solutions have been implemented to improve the street appearance while keeping lots narrow and cost effective. One such attempt at innovation is represented by the angled lots of the neighborhood where today’s featured property is located.

When you drive down the streets in these neighborhoods, on one side you will see garage doors, but on the other side, you will see the side of the garage that has often been dressed up with windows or other architectural features. Since the house fronts are at an angle to the street, the lines along the front elevations are broken, and the street takes on a more varied and attractive appearance.

Unfortunately, this kind of neighborhood is a nightmare for planners and surveyors because the lot lines have so many corners and crooked lines (A typical lot is a rectangle with four straight lines). Compare a normal rectangular lot to the lot outlined in red above. These neighborhoods are also difficult to build because the moving lot lines creates confusion on the construction site. The architecture has to be tailored to the lot as well.

It you drive around this neighborhood (or look at Google Street View), you can see the results of what the land planners intended. Some may consider it successful, and others may not. Developers for the most part are not impressed with the concept as evidenced by the fact you no longer see subdivisions designed in this way.

{book7}

As if on cue, the realtor has managed to take a series of crooked photographs to go with this crooked house on its crooked lot. Perhaps these fish-eye lenses are not a panacea for interior photography.

Asking Price: $679,900

Income Requirement: $169,975

Downpayment Needed: $135,980

Purchase Price: $327,000

Purchase Date: 5/31/2000

Address: 4 Del Italia, Irvine, CA 92614

This property was purchased on 5/31/2000 for $327,000. These owners have paid down their mortgage since purchasing, and the current debt is only $250,000! Perhaps you think I am crazy for making a big deal of this, but it is so rare, that I have to celebrate it when I see it.

If this property sells for its current asking price, the owners stand to make a fortune. At $475/SF, I don’t give it much chance, but at least with some IHB exposure, people will know it is there.