Asking Price: $675,000
Purchase Price: $659,000
Purchase Date: 8/8/2005
Address: 19 Calabria, Irvine, CA 92620
Beds: 3
Baths: 2.5
Size: 1,547 sq. ft*
Housing: Residential
Year Built: 1982
MLS #: S479474
As many of you know, Zillow has a feature called the “Make Me Move Price” where owners can provide asking prices that would get them to move out. To me it seems like a good place to look for “wishing prices” because that is exactly what they are. This flipper/seller must not have been very motivated when they first started because they went to Zillow and put in a Make Me Move Price of $725,000. The Zestimate is only $686,460. Obviously, the house didn’t sell.
Come forward in time, and our flipper is a bit more motivated. There is an add on Craigslist where it seems our flipper is just looking for someone to take over his payments, and he will walk. I don’t have the mortgage data, but I smell 100% financing, particularly when the add says, “Only $4,550/mo + tx & ins.” Want to guess what his payments are? ” Just four payments and closing costs moves you in.” Well, he isn’t so desperate if he wants $18,200 up front, or do you suspect he might be four payments behind on his mortgage?
NO BANK QUALIFYING, NO CREDIT APPLICATION!!!
Do you think he is offering owner financing? Is this an installment deal? Or is this just a fantasy?
I will give you my opinion, to quote Billy Joel:
It’s just a fantasy
It’s not the real thing
It’s just a fantasy
It’s not the real thing
But sometimes a fantasy
Is all you need
Oh how did you guess that it was 100% financing? $461,300 first at 5.5% probably 2 year adjustable set to adjust in August. $197,700 second with no rate info but figure at least 10% so the mortage payments are about $4355 a month until August.
But wait there is more! He has a loan for $100,000 from a private party who now is on title. Has a NOD been filed yet?
—–
I found this little tidbit on the sale history. I thought real estate only went up? The first owner lost $28,000 after owning the place for 6 years.
10/18/1988 $255,000
12/06/1994 $223,000
What is this guy panicing for? I heard that Senator Dodd is going to bail out the subprime borrowers… I’m not sure if this is before or after fixing SS and Medicare and prescription drug plans. What is Dodd doing… trying to buy votes?
What is Dodd doing… trying to buy votes?
The politicians are now starting to pander to the public. We all know it’s a way too late.
I will say this; I disagree with just about everything Barney Frank says, but he was spot-on two days ago in his interview on CNBC. He’s in favor of making the sellers of these foolish loans the bag holders.
I like the home. My “make me move” offer is 350k. Thats really what its worth now that the funny money is almost gone.
Are they serious?
http://www.dailykos.com/story/2007/3/7/222428/5798
I just read the post above on Dodd and I KNEW the government would try to interfere. Will anyone ever learn you can’t successfully eliminate stupidity through legislation? Now as a result, those of us who patiently rode out this storm, the “survivors” of the financial Darwin experiment if you will, must now bear the burden of 2.2 million subprime borrowers buckling at the knees.
So we have to wait LONGER and pay MORE to get into a bubble market that THEY created while THEY sit snug, cozy and warm in their overbid zero-lot granite countered stucco box as we foot the bill for THEIR ignorance? I don’t know who’s rolling in their grave more, Darwin or Smith.
The listing on Cragislist says: “Only $4,550/mo + tx & ins.”
Let’s add an additional $600 a month for taxes & insurance, and we have a carry cost of $5,150 per month for a 1,547 sqft condo. That’s laughable … truly comical. That place may rent for half that cost, if the landlord were lucky.
The music has stopped, and this seller is without a chair.
IrvineRenter,
“10/18/1988 $255,000
12/06/1994 $223,000
“The first owner lost $28,000 after owning the place for 6 years”.”
The actual lost should be multiply by 2, at least.
I own a house at about the same time frame, which I paid $440K and sold for $380K, guess how much I lost, no, the number is not $60K, not $100K. it $180K.
Here is the little math I do:
Lost in ownership transaction: $60K + $23K (agent) = $83K.
$200K down with 5 percent bank rate = $10K * 6 years = $60K.
own:$34K/year (10% mortgage rate + tax etc.+ maintenance) –
rent:$24k = $10K * 6 years = $60K.
Total cost is $83K+$60K+$60K = $200k.
Yes, I refi at 1991, the total lost still more than $180K just for owning a house for 6 years.
10/18/1988 $255,000
12/06/1994 $223,000
“The first owner lost $28,000 after owning the place for 6 years”.
I guess this number should at least multiply by 2.
I own a house at about the same time frame, which I paid $440K and sold for $380K, guess how much I lost, no, the number is not $60K, not $100K. it about 160K.
Here is the little math I did:
Lost in ownership transaction: $60K + $23K (agent) = $83K.
$200K down with 5 percent bank rate = $10K * 6 years = $60K
Own cost:$34K/year (10% mortgage rate + tax etc.+ maintenance) –
Rent cost: $24k = $10K * 6 years = $60K.
Total cost $83K+$60K+$60K = $203k.
Okay, I did refi at 1991, so the total lost still more than $180K.
mah,
I saw a rental in this complex in January for $2,500. Which makes more sense, renting the place for $2,500 a month or bailing out this guy for $5,150 a month? Doesn’t seem like a tough decision to me.
This house doesn’t quite surprise me… look at what some experts are saying:
“The nonprofit Center for Responsible Lending predicted the subprime failure rate would reach 22.8 percent in Santa Ana, Anaheim and Irvine, 22 percent in Los Angeles and Long Beach, and 25.2 percent in Bakersfield.”
NYT article: http://www.nytimes.com/reuters/news/news-usa-subprime-borrowers.html?_r=1&oref=slogin
“But, but, my RE agent assured me I could refi in a couple of years and get tons of money to buy that monster plasma TV and take a nice vacation. I even felt bad for those poor renters. How could it be my fault! not fair!”
Just a quick question, who is going to cater to the 21% of potential buyers who won’t be able to qualify for conventional financing? Would they just abandon the dream of ownership or will they flock to offers like this one?
Also, it looks like the new $100K was used to pay off the existing second (it’s been reconveyed by the way), so the seller doesn’t seem to be under water at all.
Is there some data available on what percentage of homes in Irvine or in specific neighbourhoods in Irvine have option ARMS or IO loans ?
Honestly in some of the nicer neighbourhoods in Irvine,unless there is some kind of distress (meaningful number of households unable to make increased payments),there may not be any significant selling pressure given the number of people who might love to get in.
We read about interesting stats (1/3 of all mortgages might be option ARM etc)but are they fine grained enough to call that single family homes in areas like turtle rock or Northwood will decline meaningfully?
Granted people might have to strech etc,but if supply demand doesnt push it,its had to see it playing out.Can anyone explain how it might play out ?
“The first owner lost $28,000 after owning the place for 6 years.
10/18/1988 $255,000
12/06/1994 $223,000”
I believe the owner’s lost is much more than $280K.
I own a house in Arcadia, at about the same time frame, from 1988 to 1993.
Brought for $440K and sold for $380K.
I put $200K down and every year total payment, include maintenance and 10% mortgage rate, is about $34K.
If I just rent, the cost is around $24K.
With 5% bank interest rate for my download pay, the total lost after 6 years is around $190K, this includes a 6% commission paid to Agents.
This expense lesson cost me $190K.
The first owner lost $28,000 after owning the place for 6 years.
10/18/1988 $255,000
12/06/1994 $223,000”
I believe the owner’s lost is much more than $280K.
I own a house in Arcadia, at about the same time frame, from 1988 to 1993.
Brought for $440K and sold for $380K.
I put $200K down and every year total payment, include maintenance and 10% mortgage rate, is about $34K.
If I just rent, the cost is around $24K.
With 5% bank interest rate for my download pay, the total lost after 6 years is around $190K, this includes a 6% commission paid to Agents.
This expense lesson cost me $190K.
RationalOcHomeBuyer,
I attempted to answer your question here:
https://www.irvinehousingblog.com/2007/03/11/predictions-for-irvine-housing-market/
There are other posts linked in the article which may further answer your question.
I have not found any data sources that break down exotic financing terms by city or zip code.
Irvine residents have done a good job of convincing the whole world they all make huge amounts of money. It is a myth. Because our house prices are so high, I find it hard to imagine that buyers in Irvine were not using exotic financing. Over the last couple of years, 80% of loan originations or refinancings were either Option ARM’s or I/O in Orange County, with 32% being Option ARM’s. Do you really think Irvine is any different? IMO, prices will hold up longer in Irvine because there is always the initial “flight to quality” at the beginning of a decline. However, when a bubble as massive as this one collapses, all markets will fall.
I have seen this house. It is a dump. There are about 4 to 5 men renting it. need to spend atleast 40k to make it livable.
IrvineRenter,
Thanks for the response and the lovely posts.
If I look at the income profile of several zip codes (ones I referenced earlier in particular)in Irvine
20% of households make > 150K
30 % make > 96K (median 96K)
If I take all home sales after median price was > 600K,about 20% of all homes were exchanged.
We make some assumptions here:
We assume in all these transactions prices paid was more than 600K
We assume same homes that were repeatedly sold do not significantly impact the number
We assume all homes were sold to those in the higher affordability bracket.
Basically we are asking the question,are there enough households in the area that can afford the the higher median home price of 600K ?If we see numbers that indicate there are not enough people that can afford the higher price,we can see signs of potential distress selling.
BUT,there are still enough households in the area that can afford it comfortably (20% make > 150K),another 30% that might be streched but they can afford it.
I am not saying that there CANNOT be distress but am trying to see if the numbers indicate there WILL be distress.
Lets take a household making 100k (around the median)
Home mortgage (assuming 30 year fixed ) : 42K (Assuming this is what they had to move to even if they are currently on more exotic products)
Social security taxes : 7000
Taxes (state & federal) : 13200
That leaves us the household with 3K per month.Now this means no 401k contributions and things would be streched for those around the median,but they might not be forced to SELL.
Is there anyway we can slice/dice the numbers where we can conclude potention distress selling will be a highly possible event.
The only problem with the 80% exotic and 1/3 option ARM figure is that,while they might not be the best debt instruments,its not clear why people will have to sell.There might be a little selling here and there but whether people will be forced to sell in droves for prices drop seriously is the question.
Dear Senator Dodd,
My name is Steve and I am a dog. I got a credit card and used it to buy all kinds of stuff. Now I find out that not only do I have to pay the money back, but I have to pay the money back WITH INTEREST. That is not fair. I don’t have that kind of money. I don’t feel like selling my stuff because so many other people were like me and bought stuff with credit cards too. If we all try to sell our stuff at once, the price will drop.
Please make a government program, so I can keep my stuff.
Cordially,
Steve the Dog
woof.