These dreams go on when I close my eyes
Every second of the night, I live another life
These dreams that sleep when it’s cold outside
Every moment I’m awake, the further I’m away
These Dreams — Heart
Everyone has dreams. We would all like to have unlimited money with no effort on our part — kind of like buying a home was supposed to be during the bubble…
Today’s property is clearly dreaming about the next rally where someone will be foolish enough to pay this WTF price. Of course, the market is moving the other direction, and every moment they are awake, their dream gets farther away.
Asking Price: $1,119,500
Purchase Price: $405,000
Purchase Date: 7/18/1996
Address: 4 Holly, Irvine, CA 92612
Beds: 4
Baths: 2.5
Sq. Ft.: 2,850
$/Sq. Ft.: $393
Lot Size: 4,876 sq. ft.
Year Built: 1974
Stories: 2
Type: Single Family Residence
View: Pool
County: Orange
Neighborhood: University Park
MLS#: P575451
Status: Active
On Redfin: 110 days
Unsold in 90+ days
It seems that this listing has recently changed to ‘Hold Do Not Show’ status. Here is the description from Redfin while it was up, “Beautifully upgraded Parkside home with pool and spa. Home has numerous upgrades including 18inch tile flooring, duel drawer dishwasher, granite countertops, custom cabinets in office, new stairway, new chandeliers, pool redone, new window to capture view of pool. Also, a built-in entertainment center, wet bar, french doors, lifetime warranted cement tile roof, surround sound, putting green, new mantel, new AC, furnace, ducts, & 2hot water heaters. And a master bath ‘to die for'”
Sometimes a realtors colloquial manner comes off more uncouth than cultured — And a master bath ‘to die for’
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{adsense}
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This is the only property for sale in University Park for over $1,000,000. This home is large, and they are asking a high dollars per square foot price. In short, this price is ridiculous (and I am happy to ridicule it.)
Do you get the feeling some of these prices are set because people just really like their homes? These people obviously have no real desire to sell their home, or they would have priced it somewhere in the realm of sanity. It probably is worth over a million dollars — to them. The problem is that nobody else is going to agree.
Just in case you don’t think this price is too high, let’s see what you can get of similar size in University Park.
Price: $819,000
Irvine, CA 92612
Beds: 4
Baths: 2.5
Sq. Ft.: 2,682
$/Sq. Ft.: $305
Lot Size: 3,200 sq. ft.
Year Built: 1967
Stories: 2
Type: Condominium
County: Orange
Neighborhood: University Park
MLS#: U7002268
Status: Active
On Redfin: 83 days
Largest University Park Townhome: 2682 sq. ft. , 4 bedrooms and 2.5 baths. Pristine condition. Located on cul-de-sac. Vaulted ceiling. Light, bright, open floor plan. Walking distance to schools and stores.
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This property is almost as large, it is updated inside, and it is $300,000 less expensive. Hmmm…
Irvine, CA 92612
Beds: 4
Baths: 2.5
Sq. Ft.: 2,700
$/Sq. Ft.: $267
Lot Size: 3,000 sq. ft.
Year Built: 1969
Stories: 2
Type: Single Family Residence
View: Park or Green Belt
County: Orange
Neighborhood: University Park
MLS#: S495329
Status: Active
On Redfin: 48 days
Great price for so much square footage. Seller is only the 2nd person to live here. Property needs updating, so bring your client who wants to make the changes for themselves and not live in somebody elses remodeling. Ceilings have recently been scraped, freshly painted and new carpeting installed. All termite work has been completed. Quiet location in University Park, backs to greenbelt, excellant association facilities and Uni High School.
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This property is almost as large, and it is $400,000 less expensive. It needs remodeling, but for $400,000, I bet you could do a fantastic job.
My conclusion: the price of 4 Holly is laughably silly. Therefore, we honor these sellers with our WTF Award!
But just think, that first house has “duel drawer dishwashers”. I’m surprised it isn’t “the shootist” floorplan.
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I always have thought that the phrase “to die for” is weird. If you’re dead, you can no longer enjoy whatever the “to die for” object was.
Putting green – I knew someone who bought a completely wacky house in La Mesa. It had a nine hole golf course (more of a pitch and putt) in the backyard and pool in the courtyard in the middle of the house (with retractable roof).
The first thing the new owner did was knock out the pitch and putt, and then he constantly complained about the stupid pool which caused chlorine smells in all of the surrounding bedrooms AND whose roof often stuck halfway.
Just goes to show – most home “improvements” are detriments to the new owner.
Why is 18″ tile such a bonus, BTW? If it cracks – don’t you have to replace the whole tile, rather than one of the 4″ numbers?
“Why is 18? tile such a bonus, BTW?”
Less grout to clean. Honestly, though, a half lemon will do wonders on your grout w/o the scrubbing.
(1) What does “Hold do not show” mean? Is it like a “here’s my house and no… you can’t buy it” idea where you tell the prospective buyers your house is too precious and they better beg you to entertain your offers?
(2) Over 1 MIL in University Park? That’s NUTS. Sorry man, but even 700K is high IMHO for that place. Most of that area looks like a bunch of townhomes (which they are) in a sea of asphalt. Not a lot of green on the streets. To put 2600 sq feet of home you have to go over the garage and max out the tiny lots (I thought my 5500 foot lot was small…)
Driving to the library through University Park makes me feel like I’m driving through the parking lots of a huge condo complex.
IR – the 2 lower priced properties you compare with are on much smaller lots. I don’t think you are giving fair comparisions. I understand that there isn’t much out there to compare with but at least note it down in your summary of the comparision.
Ugh! Lifetime warranty on a cement roof? The shingles may last, but the underlayment won’t. We had to replace our cement roof because the underlayment failed. The cement roof was 30 years old…hardly a lifetime. BTW, it costs us $18,000 to replace it with a comp roof. Owning a home is a costly endeavor.
not justifying the price, but agree with you, unfair comparisons, one is a townhome and looks like it has a detached garage–
If you live with tile, 18″ tile is much better due to less grout cleaning and harder to install as well.
Home Foreclosures Almost Double in July as Rates Rise (Update2)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZj6cdpXzYRs&refer=home
18″ tile is not a bonus unless you like that kind of thing. A friend of mine installed a whole bunch of it for the sole reason that it was cheaper and took far less labor than even 12″ tiles. That being said, perhaps in this case the 18″ tile matches the scale of the house better.
I disagree with Tonye’s comments about University park feeling like a huge condo complex. I love the parks and the trails with the “tot lots” that are hidden behind the homes. You can take walks without having to deal with traffic. There also seems to be more of a community feel than other areas of Irvine. The only downside seems to be the aging population of that area.
Commercial Paper Market Roiled With $550 Billion Due (Update1)
http://www.bloomberg.com/apps/news?pid=20601109&sid=a0eWRcMYfbqg&refer=home
Wall Street is in a “financial panic” and won’t fund any mortgage bonds, even AAA rated bonds backed by prime home loans, said Garrett Thornburg, chief executive officer of Thornburg, which makes loans of more than $417,000 to people with good credit. The mortgages are known as jumbo loans because they exceed the limit on what Freddie Mac and Fannie Mae can purchase.
Putting green in your backyard? Wow. That’s not an unnecessary improvement or anything.
I can just picture one of those RE shows where the peppy agent who is doing his little “appraisal” to determine an asking price is like “You’re going to get at least double your money back for all these improvements!” Not.
The definition of ‘Hold Do Not Show’ from one of the local boards is “The seller/lessor is soliciting offers through the MLS, however, because of various reasons such as repairs, illness, guests, etc., the seller/lessor has requested that temporarily there be no showings. The listing contract between the Seller/Lessor and the Broker remains in effect until its expiration date“.
Housing woes hit high end
The subprime mortgage collapse isn’t just threatening the market for low-end homes; it’s also afflicting luxury homes, reports Fortune’s Jon Birger.
http://money.cnn.com/2007/08/19/real_estate/mortgage_luxury.fortune/index.htm?postversion=2007082008
Not only has the collapse driven up rates on many kinds of mortgages, but fear of a stock crash — one perhaps sparked by the bursting of the credit bubble — has for now prompted many high-end homebuyers to either trim their offers or stop shopping altogether.
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Increased rates on big home loans translate to a substantial decline in buying power. Two years ago a $6,000 monthly payment would support a $1 million, 30-year mortgage at 6%. Today that same $6,000 payment covers only an $870,000 mortgage at 7.35%.
So here is an interesting question: If you assume (and I realize it’s an assumption, but bear with me because it’s a reasonable one) that Big Ben will step in and cut the full fed funds rate, what will the impact be on the RE market?
I know a lot of ARMS are tied to the LIBOR (side question: How does the fed funds rate affect, if at all, the LIBOR?), but a lot of HELOC’s are tied to prime. Which is obviously directly linked to the fed funds rate. So if consumers are paying less interest, this may reduce the impact of all those resetting ARMS by mitigating the number of foreclosures. It could also have the effect of stimulating demand since new mortgages will be less expensive. Of course, it may very well depend on Wall Street’s appetite for MBS, which may not be stimulated vis a vis a rate cut.
Overall, you have to think that it’s going to be a positive thing for the RE market as a whole…
The Fed funds rate has no direct effect on the LIBOR, nor does it have a direct effect on mortgage rates. The secondary market will only buy what it wishes and is not compelled by the fed funds rate to lower the spread they desire. My understanding is “prime” is not directly linked either. Prime is the interest rate banks charge their best customers and banks can set that at whatever they want. The fed funds rate usually effects most interest rates charged, but there is no guarantee. And there is no gaurantee that folks will want to borrow and buy homes at present prices.
If you were a bank, at what interest rate would you loan $500,000 for a home that you thought was likely to be worth $450,000 in a couple years or less, especially if you could not sell the paper?
There is absolutely no gaurantee that if the fed lowers rates that the banks will borrow, or that they will loan, or that there will be a market for asset backed paper. Even if the banks do borrow, the Fed has no control over where the liquidity would flow. Do you think it would flow into real estate or maybe another asset bubble?
’03 home prices might restore O.C. affordabilty
http://blogs.ocregister.com/lansner/archives/2007/08/03_home_prices_mi.html
IR,
Great job on uncovering these listings and analyzing them.
I hope that apart from educating the buyer and seller about the absurd, inflated market conditions, this website also looks practically at the future and educates buyers on practical guides to buying homes and timing of buying. Issues like short-sale purchases, foreclosure purchases are becoming relevant in the times approaching. It just seems like all conversations tend to veer towards schadenfreude and regurgitating the absurdity in the market place. Just a humble suggestion to make this website more useful for bloggers.
Thank you.
PH
correct!
In THEORY, the rate charged is a factor of two things: The “risk free” rate of return plus a “risk premium.”
The “risk free” rate of return is generally the rate that can be earned on a comparable Treasury securty (same maturity or duration). This is the rate that covers (1) anticipated inflation and (2) provides an additional return over inflation. It’s generally set by the bid and offer rates for US Treasury securities.
The “risk premium” is the additional amount of return required by the lender to cover the perceived risk of default, reinvestment risk, etc. The issue today is that, as the mortgages are perceived as more risky, the risk premium demanded by the lenders increases.
So although a drop in the Fed rate may lower the “risk free” rate, that may not translate into a drop in mortgage rates depending on the “risk premium” demanded by lenders. Right now, that risk premium is getting much bigger, not falling. That accounts for the rising rates for jumbo, no-doc, stated income, etc. loans. They just look riskier to lenders, and they want more money for taking on that risk.
This goes to show you how delayed the mainstream fiancial media is. Masterofdamoney is actively involved with NOD lists and shortsales. Many others on this blog could see the foreclosures surmounting even in the first part of July, but it didn’t seem to be getting any press.
Just wait until September! August fundings are mainly a result of rate locked loans prior to the secondary market collapse that started on August 3rd. I can’t imagine how many brokered loans fell out this month! I am not an Account Executive, but the ones that I do know are seeing loans drop like flies.
It is my belief that once the purchase/refi results for august are released, gasoline will be thrown on the already distraught market.
The homes in University Park do not have front yards like in other parts of Irvine. Instead, you have homes and garages fronting right up to the parking “loops” that run right off the streets.
Hence there are no front yards on the homes.
Yes, there are some parks, but the net result is that the greenbelts are bundled together and away from the street so overall feel of the area is one big condo parking lot.
The aging population should not be a problem. In my experience they tend to be the most fiscally responsible.
If the Fed were considering tightening, would you then say there will be no direct effect? I would think many comments here would project 75% depreciation as opposed to their previous 50% projection. There are many factors involved in the performance of a residential real estate market. The Fed’s lowering of the discount and/or fed funds rate can be considered “positive” for the possibility of a more orderly depreciating market (if any market can be said to correct non-violently).
Maybe if the fed gave money for free the way the banks did over the past 6 years the real estate market would stablize.
Looks like Japan in the 90’s!
Mortgage crisis will strain home builders: B. of A.
Spike in cancellations could imperil home builders the most, bank warns
http://www.marketwatch.com/news/story/mortgage-crisis-hit-home-builders/story.aspx?guid=%7B7BB80E2F%2DB949%2D45F7%2DBE62%2D06BE2FB946F9%7D
As mortgage lenders tighten underwriting standards and home prices fall, Bank of America analysts estimated that 40% of home buyers who got a mortgage in 2006 probably wouldn’t qualify for a home loan now
Bush Tries to Calm Skittish Investors
http://www.nytimes.com/aponline/us/AP-Credit-Crisis.html?_r=1&oref=slogin
Consumer Comfort Index Reports Dramatic Decrease
Post-ABC Poll on Economic Conditions Shows Largest One-Week Drop Since 1985
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/21/AR2007082101409.html?hpid=topnews
Amid housing woes, trade group forecasts fewer realtors by year-end for first time in a decade
http://www.signonsandiego.com/news/business/20070821-1144-realtors-leaving.html
The California Association of Realtors is expecting its first decline since 1997, forecasting a year-end tally of 185,000 members compared with more than 199,000 last year.
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Colleen Badagliacco, president of the California group and in the business since 1980, says many agents joining the last three years wanted to cash in on a hot market but weren’t prepared to endure what she calls the “ugly perfect storm” that attracted more agents than a sagging market can support.
In California, applicants can get a conditional real estate license after taking one class, a loophole that will close after Sept. 30 when three classes will be required.
those houses are all ugly
California July 2007 Home Sales
http://dqnews.com/RRCA0807.shtm
A total of 35,185 new and resale houses and condos were sold statewide last month. That’s down 8.1 percent from 38,291 for June, and down 21.9 percent from 45,051 for July 2006. Last month’s sales made for the slowest July since 1995 when 30,596 homes were sold. July sales from 1988 to 2007 range from the 30,596 in 1995 to 71,186 in 2004. The average is 48,200. On a year-over-year basis, sales have declined the last 22 months.
Scroll down to “Orange County” for the Irvine stats
http://www.dqnews.com/ZIPLAT.shtm
Oh no!!!! 3 classes instead of one!!!
I think one of the classes should be dedicated to teaching how to apply for unemployment….
…ohh wait….1099 real estate agents, brokers, appraisers, etc can’t claim unemployment! OUCH!
How many unemployed RE people are not going to be counted in the unemployment rate. The indicator will be a lost cause very soon.
Guess all those RE agents will go back to cutting hair and waiting tables — at least until the next gold rush comes alone.
Foreclosures as the Family Business
http://www.voiceofsandiego.org/articles/2007/08/20/housing/934family032207.txt
Take a look at Lanser’s blog post about california realtors forecast……….the last paragraph………..
ReMax says that the number of homes in escrow went from 1804 on August 9th to 1467 on August 20th. A decrease of 337 homes in about 10 days. I guess when there is no funny money, there are no funny deals.
Predictions of a 50 % price decrease for OC home prices now seem conservative………..
First it was 2003 price roll backs, then 2001 roll backs. I am now predicting a roll back to late 90’s prices. Yup. Let’s give up ALL the gains during this current century.
Lendingmaestro:
“First it was 2003 price roll backs, then 2001 roll backs. I am now predicting a roll back to late 90’s prices. Yup. Let’s give up ALL the gains during this current century.”
Really? Are you serious or kidding?
Why not 100% depreciation? Seriously, I know very soon there will be some comments here suggesting that they wouldn’t purchase an Irvine home unless it were free.
From Calculated Risk:
“REOs last week were 349 (3 week centered average was 247). To put this number into perspective, the San Diego MLS reported 1072 closings (regular sales) from Aug 1 to Aug 20, so pretty soon foreclosures are going to completely swamp the real estate market in San Diego”
OC is next, just a little bit delayed
Off topic but relevant to the Countrywide situation:
Countrywide Seeks Cash.
http://thegreatloanblog.blogspot.com/
marvelous
And who in their right mind would give them anything over the FDIC limit to Countywide? Unfortunately, a lot of a bank’s cash comes from the $2,000,000 guys puting “safe” cash into a bank, not thousands of small checking accounts. Anyone with half a brain would pull everything over the FDIC limit out of Countywide. And, IMO, it’s safe to assume people with deposits in excess of the FDIC limit of $100,000 have at least half a brain.
Is there a way to e-mail Irvine Renter privately? I have a lead for him that might be very interesting.
Thanks
Well, truth is I wouldn’t take a house in Irvine for free…..thats because there are no dive bars or good pizza joints in Irvine.
irvinerenter [at] irvinehousingblog [dot] com
LIBOR is the financing rate charged by banks to each other for short term dollar denominated loans. It is a AA-credit quality rate, and used to benchmark all sorts of financing. I disagree we you Awgee, LIBOR is infact very tightly correlated to the Fed Funds Rate. In fact over longer periods of time the Correlation Coefficient is over 95%. Only recently (read within the last year) has the correlation dropped. Obviously the recent flight to quality caused a tremendous move in Treasuries, however corresponding LIBOR rates have not kept pace..yet. The expectation is that the LIBOR curve will trend back toward the treasury curve (of course with the risk premium of AA-credit). Additionally, there is an arbitrage between treasuries futures and eurodollars (though not perfect), that should eliminate pricing errors.
As for the markets appetite for mortgage backed securities, or spread product of any kind, as the sun rises surely it will return. The issue now is the inability of anyone to accurately price mortgage securities. Over time as balance sheets are shored up (and a few crumble), the markets will ease up.
I would expect that rates on subprime paper would never again reach the lows we saw over the past few years, and that subprime borrowers will be faced with far higher interest rates relative to prime loans.
Yep.
This is not a RE problem anymore. This is everyone’s problem now.
Even renters.
I totally agree with the posts here. being a part of the real estate industry myself, I must say – this makes really interesting reading.
Regards
Kim
http://www.loanchatlive.com/