The collapse of the low end has arrived in one of Irvine’s most desirable neighborhoods. Entry level affordability is coming soon.
Today’s featured property is REO–not a short sale–being offered at 30% off peak pricing. The price is still too high.
Asking Price: $298,000
Address: 33 Costa Brava, Irvine, CA 92620
My Rifle, My Pony and Me – Dean Martin and Ricky Nelson
The sun is sinking in the west
The cattle go down to the stream
The redwing settles in the nest
It’s time for a cowboy to dream
Does affordable housing seem like an impossible dream? Are we fools at the IHB because we believe affordability will return to the market? Sellers and owners sure hope we are, but as prices crash all around us, and now even within the Irvine Sacred Land Trust, the reality of affordable housing is soon to be upon us.
This neighborhood is a bloodbath in the making. There are three foreclosures-in-waiting nearby:
21 Arboretum, Irvine, CA 92620 — asking $450,000, paid $535,000.
15 Costa Brava, Irvine, CA 92620 — asking $379,000, paid $498,000.
216 Guinevere, Irvine, CA 92620 — asking $400,000, paid $519,500.
Woodbury, like Quail Hill and Northwood II, is going to be wiped out by the next wave of foreclosures. Everyone who bought in these neighborhoods overpaid, and most used some form of toxic financing that is going to blow up. If is not a matter of “if,” it is only a matter of “when.”
Asking Price: $298,000
Income Requirement: $74,500
Downpayment Needed: $59,600
Monthly Equity Burn: $2,483
Purchase Price: $449,500
Purchase Date: 5/1/2006
Address: 33 Costa Brava, Irvine, CA 92620
| Beds: | 1 |
| Baths: | 2 |
| Sq. Ft.: | 975 |
| $/Sq. Ft.: | $326 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Other |
| Year Built: | 2006 |
| Stories: | 2 |
| Floor: | 1 |
| Area: | Woodbury |
| County: | Orange |
| MLS#: | S563973 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
 New Listing (24 hours)
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kitchen, Garage, Kitchen and living area all big open area…. HOA pool
and Park area.
The original buyer of this property paid $449,500 on 5/1/2006. He used a $359,657 first mortgage, a $67,435 second mortgage, and a $22,408 downpayment. Not to worry, on 10/16/2006, he opened a HELOC for $146,266 and got back his downpayment plus $56,383. I hope he sent his appraiser a Christmas card. The lender took back the property in foreclosure on 11/3/2008 for $392,062. If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $225,803: quite a loss for a 1 bedroom property.
{book1}
The sun is sinking in the west
The cattle go down to the stream
The redwing settles in the nest
It’s time for a cowboy to dream
Purple light in the canyons
That’s where I long to be
With my three good companions
Just my rifle, pony and me
Gonna hang (gonna hang) my sombrero (my sombrero)
On the limb (on the limb) of a tree (of a tree)
Comin’ home (comin’ home) sweetheart darlin’ (sweetheart darlin’)
Just my rifle, pony and me
Just my rifle, my pony and me
(Whippoorwill in the willow
Sings a sweet melody
Riding to Amarillo)
Just my rifle, pony and me
No more cows (no more cows) to be ropened (to be ropened)
No more strays will I see
Round the bend (round the bend) she’ll be waitin’ (she’ll be waitin’)
For my rifle, pony and me
For my rifle, my pony and me
My Rifle, My Pony and Me – Dean Martin and Ricky Nelson
IR, you have typos in the asking price. It should read $298,000, not $580,000 (above the fold) or $318,000 (below the fold).
This is a one bedroom apartment, I wouldn’t pay even 100k for it.
I would offer $150k tops because it is Irvine so I would say a 50% reduction. The normal price in Irvine for a 3bd/2ba townhouse should be $250k or so.
30% in Woodbury and 38% in Laguna Canyon. Do I hear 40%?
http://southcoasthomes.freedomblogging.com/2009/02/18/bank-selling-castle-in-laguna-for-38-less/
Another typo: He used a $359,657 downpayment. Shouldn’t this be: He used a $359,657 first mortgage
price per square foot does not match the listing price/sq foot. $306 vs $326.
The price was lowered this morning. I am updating the post.
Indeed too high. Top limit: $1400 monthly rent @ GRM160 = $224k for an owner occupant.
Ponzi scheme financing also impacted the rental market significantly. Rent on little Irvine crack boxes like this one, are declining and will likely continue to decline.
$1,100 monthly rent @ 160 = $176,000
Then you add the velocity of this collapse (overshoot fundamentals), and you end up with a home that sales for $135,000 to 150,000 at “the bottom”.
I thought they were “cracker boxes”, rather than “crack boxes”. Crack boxes tend to be in different kinds of neighborhoods.
You must have missed the CNBC special on this Ponzi scheme over the weekend.
This Ponzi scheme created a worm hole directly from da-hood/Mexico to The OC.
This was eloquently pointed out on the program, “House of Cards”. Come on dude, get wit-it.
Where was CNBC two years ago? I like how they do reports long after the horse has left the barn (or however that phrase goes.)
Exactly.
I wouldn’t pay 100K for this place, but there will be some Sacred Land believers out there who will.
However, there are a lot of jobless people in California right now. The majority of these laid off workers are going to be competing for fewer jobs and working for less money when they eventually re-join the job market and the median income is going to decline.
Personally, I think places like these are worth 80K tops when the incomes of Californians come back down to re-align with the rest of the country. The extent of how low the median income in California is going to drop is anyone’s guess at this point, but I think it is unquestionably “How much will it drop?” rather than “Will it drop?” at this point.
Thanks to the new state budget (i.e. tax hikes) that got through the legislature earlier today after-tax income of Californians will re-align with the rest of the country very soon.
But hey — it’s real good news for the foreclosure market, just not the California foreclosure market. I wonder how many producers have had it with this idiot run state, and are about to say no more. My guess is more than many of us think.
Who’s the beneficiaries? — Phoenix and Las Vegas come to mind, as well as Texas, the Carolina’s and even far off Florida. They will likely all get assistance in their foreclosure market/s from the California legislature.
Carolinas. You do not need an apostrophe to make plurals in English. It’s basic, fundamental English grammar. Learn it, please.
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I can’t wait until my current rent deal expires and they try to raise my rate. Well be a hilarious conversation what with the ridiculously high vacancy rate right now.
Off topic but I can’t see Obama’s new plan having any effect on Southern California. Am I reading it wrong or did they exclude help for ground zero. Or like the rest of us does Obamie think Irvine should return to fundamentals.
I get the felling Obama’s new plan is aimed at the non super bubble states. If they can get the rest of the country to stabilize, it will help a lot of voters; help keep some people in office. The super bubble states are almost a lost cause at this point. I don’t think that they even have an idea on how to clean up the big coastal bubbles.
Obama’s plan is not going to have an effect on anything other than it will keep some foreclosures off of the REO’s books…for a little while. It’s nothing more than monthly payment trickery to keep the existing FB’s obedient while the banks do damage control and dump their existing REOs on knife catchers.
As far as I can tell, the plan is going to allow some foolish under-water borrowers to refinance – Big whoop. They can refinance and continue being slaves to their declining asset a little longer. See how long that lasts when they realize they are being strung along as the value of their house continues to decline.
The plan fails to address the underlying problem which is affordability. The plan does nothing but try to keep the credit game going.
They can stop all of the foreclosures today, but it doesn’t change the fact that people cannot afford to buy homes without financial voodoo and minimal down payments.
The banks are going to be demanding more skin in the game from borrowers now that they have been burned. The reduction in credit is what is going to drive down the prices regardless of how many foreclosures the plan prevents.
Obama is about to become the servant of Wall Street. He just doesn’t know it yet. You see, since he took office, the Dow has lost 1,000+ points. This ultimately funnels down to the average Joe, and impacts the entire economy. In fact, it hurts bystanders more than wealthy investors.
It’s just a matter of time before the Prez stops badmouthing the bank CEOs, and goes under the desk (imagination). My guess is, it’ll take another 1,000 points or so off the Dow for him to start submitting to the bankers orders.
By the way, not if, but when.
AZDavidPhx – yeah i don’t see Obamie’s plan doing much cause all of that pesky fundamental affordability stuff….. but a lot of the terms seem to be explicitly excluding Southern California, Florida and Nevada from taking part. Is he just hoping for a REALLY big earthquake and maybe give Florida back to Spain on the condition that they also get David Beckham.
This is depressing if we’ve reached the bottom of the market. $300K for one bedroom still seems expensive to me.
This market is nowhere near bottom. It’s just taking longer.
Did anyone else read the discription as:
“Garage, Kitchen and living area all big open area”
Perhaps it is, if you have to use the garage as another bedroom because of the non-afforability factor. $300k for a small, one bedroom place is still way too expensive. I don’t notice any marble counters with high-end appliances in a well-designed custom kitchen, etc. that would raise the value of this place for someone.
I checked out these similar ones several months ago and ran away as soon as I found out that the mello roos on them are something like a flat fee of $400 per month. Just look at the tax rate. I’d be more comfortable paying $400 per month on a 600K property but no way on a 300K property.
You can deduct that mello roos AND the monthly RE taxes from the rent.
That means that if it rents out for $2400 (and does it REALLY?)that after deducting that $400 and the taxes $700 per month ($8,300+ per year!!!!)you are down to $1300 a month real rent, what you have left to cover your mortgage.
1300 X 160GRM = $208,000.
But maybe 160 GRM is a little generous. In this declining market and collapsing economy, is it really correct to use the most generous calculation?
I’d rather go $120GRM especially since this is a one-bed in a town that prefers single family houses. How about $156K, which might be affordable to a cautious first-time sub-median buyer making $60K a year or so.
How about $156K, which might be affordable to a cautious first-time sub-median buyer making $60K a year or so.”
There practically is no such thing as a “cautious first-time buyer.”
Remember, when it comes to housing, it’s what the lender lends which dictates what people will borrow and consequentially, house prices.
Well, then that means $156K tops, in this climate, because the lenders are getting very cautious.
Minimum credit score 720, at least 10% down and most likely 20% down, and a solid employment history. Those are the minum standards these days. I’m encountering many people with high six-figure incomes who are having difficulty getting financed on stuff that is 3X their incomes.
It’s a different world now.
Oy vey! And don’t forget the monthly $200 HOA charge so you can use the pool and the park.
That fool paid $450K for a 1 bedroom condo in 2006. My oh my. Hey, I have a question(s) for whoever wants to jump in and help us decide if we should sell now or wait. We bought a 3/2 one story condo in 1993 in Woodbridge (inside the loop). At the highest they were going for 500K.We have a huge yard but no garage. The last sale was recent for $425,000. This was outside the loop with one less window in the front. The last sale on our street was $460,000 last May. When the last kid graduates from high school in 2010 we want to move. Should we sell now and rent for a year or wait and sell next spring and buy at the same time? We would buy (hopefully) nearer to the beach but get a 2/2 condo for under $350,000 (again hopefully). We are over 55 so we can get the prop 13 property tax advantage. Thanks!
I’d get out of the house now. Price it very agressivly and hopefully create a bit of a stir – even a bidding war. Get the knife catchers to be emotional about the deal they’re getting. So emotional that they raise their price just to compete.
Then rent. Sign a 6mo lease and renegotiate it every 6 mo cause rents will continue to drop. Buy sometime after late 2010 (IMO). You may not be at the dead bottom at that point, but you wont lose too much more as it bounces along the floor.
Providing mortgage subsidies is changing the rules of financial responsibilty that we live by. When I rented a condo in Tustin Ranch in 2006, the price tag on it was $525k. Yes, $525 for a 2br/2ba , 1100 sq.ft condo. What was the monthly lease? $1,700 per month which was/is the norm for the times (yes, I realize rents ran up a lot too). Still, the mortgage payment including tax, HOA…etc would have been more than $4,000 per month. So I did not buy; I rented instead. It was not a hard choice even though I felt, like most renters, left out. I was previously a “homeowner” for 10 years, and witnessed the ups and downs of the mid 90’s.
Some nice neighborhoods here in Vegas are in flat out free fall. We are thinking of postponing our move back to So Cal, where it seem the correction is taking longer, and buying here. Our targe neighborhood now has homes that sold new for 600k in 02, sold at the peek in 06 for 1.2million now asking in the mid 400’s. No hurry though. In a guard gated community of about 100 homes, there are 21 for sale, 11 of those bank owned and climbing daily.
What do you think? 350k?
I wish our target neighboorhood in LA had already collapsed like this, but it seem to be creeping down
Out of curiosity, what’s your target hood in LA? It seems the nicer neighborhoods in LA and Orange County are in slow motion, as would-be sellers are trying to either wait out their price or deciding to lease for now. But the downturn has and will continue to come. As I believe Christopher Thornberg has demonstrated before, by the end of the 1990’s downturn, all neighborhoods had experienced about the same % decline. The wealthier areas were simply the last to decline.
Why move back to SoCal if you’re established and happy in Vegas? Or has it only been a couple of years and your family/friends are all in SoCal?
We are watching the Valencia area. I would consider us as established as one can be in Vegas after renting the past four year…..I don’t think anyone is “happy” living in Vegas. It’s not bad mind you, but the city has no soul, it is a fake fantesy land surrounded by dirt and rocks.
Understood about Vegas. I have not been watching Valencia that closely to offer advice (I’m in OC now but used to be in WLA), but I would suspect that it’s just a matter of time before you see more downward movement in prices. There has been so much new development in the Santa Clarita valley area over the past several years that the saturation of housing to population should aid in the decline. Happy hunting!
I’m an IAC renter in Quail Hill. The office-guy scoffed at my mention of “vacancies” because (honest quote) “the 3 vacancies JUST HAPPEN TO BE your side-neighbors”. He pointed out “your 2BR/2garage is by far the most-desirable in Irvine”.
Here’s my deal: I pay $2360. Soon I’ll ask for a reduction to $2000.
Anyone care to bet on the outcome?
Paul
I am an IAC Renter in Quail as well. Been there 3 years now. Your never going to get them to move down more than 10%. Their calculator would melt.
IAC would rather let it sit empty and wait it out before they give in to your demand.
Like bltserv, I doubt you’ll get them to come down that much.
I’m in a similar situation at my IAC complex where there are several recent vacancies around my unit (including two unbelievably inconsiderate neighbors, thank God; one was actually evicted), but when I checked on rental-living.com out of curiosity, the total number of vacancies was nowhere near as high as that made it seem.
Have you checked that? Just search for your complex name on the site, then click on “Prices & Floor Plans” and then the Check Availability buttons for the different floorplans. Presumably they leave out the current vacancies that someone is holding, so the real number of empty units is somewhat higher.
My monthly rent is higher than the top end of their price range for my unit, so I’ll certainly be asking for a reduction when my lease is up again, if they don’t reduce of their own accord, but I’m talking about a drop in the tens of dollars, not hundreds.
“…including two unbelievably inconsiderate neighbors”
After 8 years renting at IAC we decided to lease a house. Overall it was OK but we got neighbors above us who would not control their children. That pushed us over the edge and we decided to spend a little more to lease a real house for a little less than IAC’s current 3 bedroom apartment.
Correction: I meant to say $2200 (7% reduction approx).
P.
Just find someone with a rental property. I pay WAY less for a 2/2 w/ 2 garages close to UCI. There are tons of places to rent these days (as long as they don’t foreclose from under you) for way less.
I have been a long term Irvine resident. Sold my home in 2004. I’ve rented ever since. I have lived in an IAC apartment, and I have several friends who still do. In the newer IAC units, the rent for a 1 bedroom is well over $1300 a month. I know one couple that is paying $2100 month-month (for flexibility to buy a place). At least with this one bedroom condo there is a 2nd bathroom. I am not suggesting this justifies some crazy high GRM, but I believe this place could easily rent for $1800 a month.
160 x 1800 = $288,000???
Still seems high 🙂
Yeah, and it is detached, which should make for some premium over a packed-in IAC 1-bedroom. Would be interesting to see a floorplan for this place — pity that those aren’t easy to get at after the initial sell phase for new-construction tracts.
Yes, ask for $2000, and make sure that you bring print-outs of Craigslist comps. But don’t bluff–make it known that you will MOVE if you don’t get a fair price, and do it. The leasing agent can have 4 vacancies if he wants his $2360/month that badly.
Yes absolutely “proof-of-move” goes with my request for rent reduction.
Also, I’m asking for a 15-month lease (which IAC at QH started giving a few months ago).
PP
I own a rental condo in SF Bay area. I’ve owned it 26 years and have seen the non-existent appreciaton and the bubble and in-between. at the peak the complex had sales from 300K to 350K (depending on condition of unit). The unit next door is in foreclosure (along with more than I can count, though I could since the association sent out the past due balances for all units – some owners haven’t paid dues in three years!). I was visiting my tenant on a Saturday morning a few weeks ago and met a realtor showing the foreclosure to a family. I asked him how much the bank wanted. 150K. A sale for a comparable was 220K in that Saturday mornings paper. Seems to me the bottom of this market is sooner than later. This arguably was part of my retirement portfolio. good thing I wasn’t planning for anytime soon!
Haha… they call this a 1 bdr? There is a teeny living room type area downstairs and an huge open “area” upstairs akin to a studio apartment. My BF and I went to see it a week ago, so if one big room upstairs where the kitchen/dining room/bedroom qualifies as a bedroom vs a studio, I’ll pass 😛
IR. Stop spinning your wheels. The entire problem explained in one concise clip. http://www.snotr.com/video/2327
An excellent visualization — thanks for the link. That would be especially useful for people who don’t ingest info on this stuff on a daily basis. Note that you can also watch the video in HD on its original website, crisisofcredit.com.