Watch out
You might get what you’re after
Cool babies
Strange but not a stranger
Im an ordinary guy
Burning down the house
Hold tight wait till the party’s over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house
Burning Down The House — Talking Heads
I was reading Mathew Padilla’s Mortgage Insider Blog yesterday when I came across a comment from one of the market bulls who stated “If the tragic SoCal wild fires destroy many homes, there will be a huge housing shortage. Inventory will be falling rapidly… it is a fact. Sales inventory will be absorbed by many looking for shelter. It is fortunate there are homes for sale, but I don’t think there are enough. Hopefully, the available supply does not run out before all get a new residence.”
Hundreds of homes have been damaged, and someone has died due to these fires, and someone actually looks at this event as a positive event that will help out the value of their home. I guess if bulls get desperate enough, they can solve the excess inventory problem by burning down the houses.
Back to our collapsing housing market…
Just in case anyone still thinks the high end is immune, today’s property is another Shady Canyon rollback.
Asking Price: $3,199,000
Income Requirement: $799,750
Downpayment Needed: $639,800
Purchase Price: $3,680,000
Purchase Date: 7/28/2006
Address: 32 Prairie Grass, Irvine, CA 92603
1st Loan $2,628,000
2nd Mtg. $500,000
Downpayment $552,000
Beds: 6
Baths: 6.5
Sq. Ft.: 5,227
$/Sq. Ft.: $612
Lot Size: 0.38 acres
Type: Single Family Residence
Style: Spanish
Year Built: 2004
Stories: Two Levels
View(s): Pool
Area: Turtle Rock
County: Orange
MLS#: S508234
Status: Active
On Redfin: 16 days
From Redfin, “If there was anything else that could have been done to this property it would have been done. Rich Granite, Distressed Hardwood, Stainless Steel, Wrought Iron, Imported Fabrics, flat screen technologies, and peaceful fountains have been meticulously woven together to complete this turnkey masterpiece. Perfectly located on one of the largest lots in the Sycamores this home is a must have for an entertaining lifestyle. 6 bedroom suites means no one has to go home. Come See”
If there was anything else that could have been done to this property it would have been done. WTF?
.
.
If the seller gets their asking price minus a 6% commission, they stand to lose their entire $552,000 downpayment, and the bank stands to lose $120,940 for a total loss of $672,940.
I wonder if it would turn out better for them if they burned it down?
seller is a realtor
—–
As of 5:30 am from OCR
“Structures burned: 2 outbuildings damaged, 1 destroyed in Hicks Canyon”
Lets hope it stays that way and Jimmy Bullfeathers doesn’t get his wish.
I have seen the comment about the fire helping the RE market a few places. Do these idiots not realize that you don’t just go buy a new home if you current one burns down. You might rent a for a while during the rebuilding but you don’t just purchase another home.
The Northridge EQ was on Jan 17, 1994. It caused more damage and displaced more homeowners than these fires (so far). That event certainly didn’t lead to a bullish real estate market.
I have a theory. When an event like this happens in Southern California, it causes more people to rethink their living situation. I believe more people leave as a result of the catastrophes than we think (net-outflow migration). I know we saw a sudden population spike in towns like Henderson, NV after the Northridge Quake.
Just how many houses have burned? A few dozen, a few hundred?
In Hurricane Andrew, the figure was 80,000. 15 years later we
are totally overbuilt.
It reminds me of that horrible lawyer joke: what are 500 lawyers at the bottom of the ocean? (Or, eaten by sharks. Or hit by cars?)
A good start.
Now I am not without a sense of humor, but I have stopped being a
good sport about the lawyers jokes.
So the analog is: how what are 500 houses burnt in the fire?
A good start.
And that one isn’t funny either.
I hope you all stay well.
Off to Miami.
No need to worry about fires, the mudslides will put them out!
(credit to Johnny Carson for that one)
I love the imported fabrics comment! Don’t these people know that nothing is made in this country anymore!
They also can’t do math. SoCal wide, homes lost so far less than 700 at approximately 500.
SoCal wide, homes sold each month, 9000+.
SoCal for sale inventory: 185,000.
Except for the master bedroom, the rooms all look small and cramped with their furnishings.
I like the balcony off the master bedroom, here’s your balcony, here’s your $1000 telescope, too bad the glare from your neighbors windows and courtyard that’s 10 feet away will blind your looking.
BTW, what’s their’s and what is the communities? I don’t see space for that pool on the overhead photo or that nice bbq area. Is the HOA community property? A $3 million dollar home that needs community property for a simple BBQ and pool? Pathetic.
Overall, this house reeks of non-owner staging a house to look like what they think a multi-million dollar property looks like.
…” must have for an entertaining lifestyle. 6 bedroom suites means no one has to go home.”
This statement doesn’t seem to go along with $3.2M.
“dude, throw wild parties!!! with 6 bedrooms all of your drunk friends can avoid another DUI”
Is this what they meant?
Off topic, but its got me spinning! Countrywide just updated their REO listings, and they’ve added many tens of thousands to the website. National total now stands at nearly 200,000. Where I live, in DC, our numbers went from 15 to 323 (inside the District, only).
California shows 28,138–up from 2,119 in August. Almost every one of their entries has a note–“No broker assigned”
http://www.countrywide.com/purchase/f_reo.asp
If this is not some collosal mistake, we can expect what is left of seller confidence to evaporate like gopher piss in the Santa Ana winds. These are backbreaker, market-killing listings that will now flood the MLS in every corner of the union.
And if you saw the IMF charts over at Calculated Risk yesterday, you know that this is just Act I. There are many tens of billions of dollars in Option ARMs set to recast in the next three-five years.
The baddest bears weren’t pessimistic enough, I am now beginning to think. Deflation might become real, because the FED only has 475 bps of wiggle left.
If so, well….crap.
Ouch, not sure what they did, but Irvine has 67 properties listed on the Countrywide site. Previously they had, I think, 1. Huntington Beach jumped to 68 and I think had 3 listed.
Irvine starts on page 89 when you do just a California search with 100 per page.
Maybe it’s imported Italian nylon.
Is there a website that has a map which shows the Irvine areas by zipcode? I was trying to correlate the Home Sales Data that was posted a few days ago with where that is in Irvine. Thanks!
From Redfin: …. “Distressed Hardwood” …
From the financial data, we can infer that it is not only the “Hardwood” that is distressed! Ouch!
Gopher piss in Santa Ana winds……thank for this phrase, it made me laugh…..
Interesting thing happened will I was looking at the listings, when I click on the next page all the “No Broker Assigned” were gone from the listing?
while not will
RE market is too big to be saved by either goverment (fed, congress, …) or fire. they are all just players in this game
So much for real estate going down!!!
http://realestate.aol.com/article/investing/_a/america-for-sale-foreigners-flock-to-us/20071019112309990001
Countrywide REO goes from 13k to 195k?
http://thegreatloanblog.blogspot.com
Henderson NV, home of the toxic waste dump? Why leave SoCal for a sh**hole like that.
first homebuilder filing BK:
http://www.chicagotribune.com/business/chi-071022-neumannhomes-bankruptcy,0,4756992.story
My bet is that we will see a lot of home builders in the BK courts over the next 5 years…….the big question….what will the first national builder to go under?
I was bear enough but laughed at , even by people on this site.
It’s corrected now I think. CA is back to showing 3,400 homes, up 500 from a few months ago, but nowhere near what they evidently were showing…
One more REO in Irvine that was recently added.
It seems to me that Shady Canyon epitomizes the height of OC real estate’s irrational exuberance. The area has no intrinsic value — a dusty inland canyon with limited views, no ocean breezes, no coastline — nothing to distinguish it from any other part of Irvine. However, the developer decided to build mansions instead of tract homes and presto, buyers are supposed to accept that this is a luxury community? While high-end areas that have intrinsic value (like the beach communities in Newport and Laguna) seem to be hanging in there at around 10% off peak pricing, Shady Canyon (along with South County) seems to be getting killed. As I mentioned the other day, McGuire’s former home finally sold for at least 25% less than the last sale price. Prairie Fire is likely to follow. Most Shady Canyon homes just languish on the market with no interest. People seem to be realizing that there’s no “there” there.
And does anyone else hate the fact that the realtors all put the “TM” registration mark after every instance of Shady Canyon in their marketing materials? Why would I want to live in a community that is going to sue me for trademark infringement every time I address an envelope?
Whenever I see “Shady Canyon” I can’t help but think of Arrested Development’s “Sudden Valley.” Sometimes there’s more to a name than we realize. Shady indeed.
I clicked on the link and it showed CA as having 3445
“no intrinsic value — a dusty inland canyon with limited views, no ocean breezes, no coastline”
so true
The no broker assigned are gone, leaving just 6. I wonder what the story is with the other 61 places. Are they like 10 Sharpsburg, which showed up but has been reported here as bought by someone at the REO auction.
Certainly there is no shade in Shady Canyon. (Unless you count the smoke hanging over it now.) Why do they always name these places the exact opposite od what they are? Like Woodbury — no woods for one hundred miles! Lake Forest — neither lake, nor forest. (No, those are not lakes — they are ponds.) El Toro was closer to the truth. (The bull.) So on a 100 degree day with 100 mph winds and burning embers all around, maybe they will figure out WHY the land remained EMPTY for so many years!
I was in Shady canyon this summer, spent some time by the pool at a family member’s home on Vernal Springs. The heat and dust were not too bad, but flies were unbearable. The home owner’s have no idea where the files are coming from…Maybe the manure from the strawberry fields??? Is there horses around??? I dont know.
There is no privacy other than the 8 ft prison walls. Sites are approx 20,000 sq ft which would fine without the 80 ft or 90 ft frontage, too narrow for 5,000 sq ft home. The signifigant living area coupled with the ‘skinny lot’ gives these homes the appearance of detached condos! The interior is nice, there is two side yards that are ok, but the back is so cramped with the pool. It seems like a huge pain to pull cars in the L shaped 3 car garages. $2.5 mil was the starting price, $3.5 will be the high (for the tract homes), and $1.5 mil will be the low in few years.
I’ve used this zip code map before
http://www.usnaviguide.com/zip.htm
What’s with the Tuscan and Spanish building styles anyhow?
Why would I want to live in a house that looks like Torquemada’s summer cottage or some retreat used by the Machiavellis so that they could quietly torture some Tuscan Count?
This place looks like something El Zorro might have lived in? Where are the horse stalls? Where do you store the chorizos and jamones?
I figure that if we’re gonna be native, we should go Mission Style ( Not New Mexico Mission, no…, I’m taking Francisco Serra Mission ) like in Santa Barbara, with a nice porch where we caballeros can smoke cigars while Las Senyoras shoot the breeze in the parlor.
OTOH, I suppose that Tuscan and “Spanish” styles make more sense than a Tudor home in Huntington Beach.
I would love to build a true California house… something decomposed, like a glass and steel cube rising of the seemingly ruined stone remnants of a stone house.
I’d call this “After the Big One” Design.
The home owner’s have no idea where the files are coming from…
The decomposing landfill and trash site just up the hill that Newport Coast built on top of?
Naw.. I think that’s too far. TRidge is in between. The landfill was between TRidge and Newport Coast proper. The entry was right where Bonita Canyon goes under the toll road.
There is a marsh right at the entry of Bommer Canyon. This is alongside Bonita Canyon Road and at the feet of those fancy custom homes on the Shady Canyon Ridge.
Could this be the source?
There are no TR homes on the other side of the road, that’s a park.
So Countrywide is gonna “help” by changing the terms of some loans.
Hey, I got a 30 year fixed, we’re current on our payments, why don’t I get my loan rate lowered too?
As usual, if you’re responsible, you get screwed.
http://www.ocregister.com/money/map-of-oc-1899238-summer-home
This is a recent map from the Register listing the summer home sales by zip.
http://www.ocregister.com/money/map-of-oc-1899238-summer-home
I doubt that the promised help will actually materialize.
What’s with the Countrywide REOs zooming way up and
back down again?
There were 7 “No Broker Assigned” in Nellie Gail Ranch in Laguna Hills. One on 24951 Mustang Dr. shows a 8/2/07 “sale” on Zillow for $1,084,343 with 2006 taxes of $15,640? Could they be holding 28,138 CA homes? I can’t tell from their SEC filings. Wow
true – after the berkeley fire everyone realized they were grossly underinsured and they had to lobby for an insurance co bailout.
Wildfires: Could it be that it wasn’t a broker, but a homeowner?
I have no idea about insurance stuff (as I rent), but if your insurance covers your home and you are facing a rate reset, know that you won’t be able to make the payments and would have to eventually sell at a huge loss, you’d porobably rather set it on fire, collect insurance and pay off your loan…..
I don’t think these upside down follks would get enough to pay off the loan. The land is what is valuable. The fire insurance would only pay to put up another crackerbox.
There were more homes destroyed in 2003 when things were on the upswing. I doubt if as many will be replaced this time.
Tonye,I love your comment so much I’m printing it up and saving it. You are one of the best commenters on this blog.
My sympathies to those caught in the SoCal wildfires who are living in places there where they had no reason to expect the flames would ever touch them. This year’s fires are hitting many places there that seemed immune previously. Relatives of mine in San Diego and Los Angeles are shocked because these fires are now occuring in places that were considered safe previously.
A knock on the noggin to those, however, who keep building in places where they know damn well they can expect a monster conflagaration on a regular basis. I’m thinking of the giga-rich denizens of places like Laguna and Malibu who go right back and build an even more outrageously overpriced 30,000 sq ft palaces right in the middle of the fire coast. Time to “hazard zone” these folks off the coast so CA taxpayers don’t have to keep subsidizing their California Fair Plan insurance for their $35 MM coastal palaces.
The horror of it all stupefies me. There’s almost no place for many people to escape to. Where I live, an apt fire caused by , say, a short in a faulty air conditioner or a careless cig smoker is a big enough event to draw 500 spectators out of their apartments and down to the scene to watch the fire fighters. If there are fatalities, it will make the newspapers.
I hope everyone here is in the clear.
Just out of curiosity, what will the bank do, say, if a homeowner who still has a mortgage and cannot find anyone that will insure them for fire hazard anymore? As might be the case for some homeowners in SD fire event.
Tonye –
Something like Frank Gehry’s house in Santa Monica? Its a monstrosity, but conveys that feeling to me.
A random thought…
This is an aside, but uh, has anyone considered the effect on real estate prices of upcoming tax increases… IT’s minor, but I think its within the range of significance.
Consider the following:
1) California will most likely raise income taxes within the next 5 years, presumably on the top bracket from 9.3% to 10 or 11% depending — we are still in pretty lousy shape here — we had some unexpected revenue this year IIRC, but you know how our state government is with money…
2) Hillary Clinton is likely to become the next president of the US, and has an agenda that will require an increase in federal income taxes.
Let’s suppose that taxes go up by 3% (raw points, not on top of current levels), so if you are at 150k, you might be going from 33%+9.3% = 42.3% up to 45.3%
That means that the tax shield on a 500k loan at 6% goes from $1057.50/mo right now to 1132.50 — thats an increase of $75, or, imagine this, 2-3% of your payment. Presumably that should justify a requisite 2-3% bump on the relative desirability of owning a house vs renting.
by 2-3% of your payment, i mean, of total costs (HOA, maintenece, taxes…. closer to 2% since your payment is going to be close to 3k, of which 2.5k is interest)
Theres tons of data on this stuff, wildfires happen a lot, and insurers can make good predictions. If they are uncertain, they just model the uncertainty (which theyll have some idea of the magnitude, etc), and charge high.
Given that it is sufficiently known and you can value it with a reasonable degree of confidence, and there are bounds on liability, insurers WILL offer the product, it just might take a few months for everyone to get back into it.
If it gets to the point though where the insurance cant be afforded, I’d imagine you’ll see stuff where insurers will insure you if your community has certain anti-fire technologies, many of which are quite affordable. So you may just see some HOA fee bumps out of it 12 months ago to install that stuff…
that could be true, but also your disposable income went down by 5% (57.3% of income in wallet vs 54.3%)
Have you seen Northridge?
“Shady Canyon” “Woodland”
The best I’ve seen is “Pelican Cove” about 4 miles inland off Douglas in Oceanside. No cove and stuck in a hot, dry valley.
All the more to blunder into AMT with.
(1) Thanks.
(2) The homes down in Rancho Bernardo, Scripps Ranch, Poway, etc… built along the run of the I15 from Miramar MCAS (used to be NAS) to Escondido are built along a set of East-West canyons that run to the sea.
The fires and winds start at the head of the valleys, way out east and then come on down. The residential areas combine some still open brush with heavily populated (read tight) housing… and there’s lot of trees and brushes on these tight hill sides and canyons.
Why people should be building anyting, even large swaths of suburbs without some serious firebreaks is beyond me. If you go to Rancho Bernardo is beyond me.
If they followed the Irvine model of putting ring roads around villages then you would have natural firebreaks and plenty of fire hydrants to make a stand. Did you see the video of the Irvine Fire Dept making a stand at Portola? They had a wide road with plenty of water hoses running to keep the fire on the “wild side”.
(3) Laguna Beach has changed quite a bit since the Laguna fire. Those very tight roads up the hill have been widened, they’ve put in ridge top water reservoirs to ensure plenty of water pressure and tighten their fire standards. Their location is unfortunate for a Santa Ana condition but the Canyon today is more built up than it used to be so it would be far more difficult for a wild fire to race to the sea like it did back in 94 ( 93?)….
(4) Malibu? Sorry, that place should be napalmed and rebuilt anew. The owners of those homes on the beach most likely don’t need the insurance so iMHO, rather than putting firefighters at risk we should let the whole place burn down. All over Malibu you have people building homes with little thought of fire risk. The only reasons why they are allowed to do this is because most of them are rich and pay cash -no insurance needed- and can manipulate the local rules. Problem is that in order to save their mansions resources are removed from other places…. For example, the planes they were using on Malibu could habe nicely been used in Trabuco Canyon, Poway and Arrowhead. But, the news helicopters are on Malibu, not elsewhere…
(5) Also, people tend to be idiots. On TV two days ago was this tiny ranch home up on a hill side in Malibu. Nestled in a tiny ravine with a glorious view and idillically situated in a pastoral setting with big trees right up to the house and a little horse corral. Think Big House On The Valley….. And the Fire Dept was trying to save the damn thing. Why? It was obvious the owners had NOT cleared the bushes, had let big trees ( an oily eucapliptus) and two oaks grow right OVER the house and the whole place was made of wood. Why risk and waste the effort of the fire dept on an isolated place that showed the owners gave not a twit of care about fire prevention?
The fires are not the big issue, though. The smoke and ash is. We have it all over. And you ought to see the huge smoke canopy south of us. It covers the sky. I just hope the wind doesn’t shift north.
No joke.
We used to have great earthquake insurance coverage. Not cheap, but great coverage which was worth the peace of mind it afforded us.
But since many idiots didn’t buy it, the state came in and “helped” everyone. Whether you needed/wanted the help or not, Sacramento “helped” you.
The end result is that I pay 10% less than I used to but now I have 50% of the coverage. Which, of course, means I’m paying for those idiots….
To make matters short. On a conversation with my insurance agent years ago, after this change happened, I mentioned that we’d be better off torching the house after the quake. On inspection of the coverage she agreed that financially it would make sense but she couldn’t “recommend” it.
Haven’t seen it… but the LA Times publised my comment about the Disney Center in LA:
“All hail Disney Center. The one building in LA that will look the same after The Big One”.
However, the idea of my house would not be monstrosity. I would like to have a full stone wall on one end, slowly giving way on the sides. Imagine if someone where to take a very dilapidated Saxon Manor and build a modern building on top of its walls.
With NO stucco.
I agree with those saying there won’t be a noticeable difference to the market after this is all over. While some may rent and take up a those currently for sale and lease at the same time… there’s not the over a couple thousand we need to turn this market around. Last check, we’ve got 1,140 homes on the market in Santa Ana, 228 in Tustin, and 599 in Orange. Add to it all the other OC communities and we’ve got a heck of a lot of inventory sitting on the market.
I wonder if Malibu shouldn’t just be done away with, and not rebuilt.
There are some places that humans just don’t belong and perhaps the Malibu fire-coast is one of them. It seems to me that Malibu has burned frequently and badly over the past 30 years, each firestorm worse than the last, and that the landscape is just too fire-prone.
God’s Country is no place for people, one writer once remarked.
After the disastrous 1930 Decker Canyon fire, the great park designer Frederick Law Olmsted, who had a little place in the area in the 20s, recommended that the Malibu coast be “hazard zoned” and made off-limits to development.
Since that time, the entire Malibu coast has been burned over 3 times if you roll all the fires together. If your house escapes this year, it will get it next year, or five years from now.
The smoke and ash must be a nightmare and many thousands of people who already suffer from respitory ailments must now be suffering greatly. I hope we don’t lose people to asthma attacks and other respitory problems resulting from the smoke and ash cover.
Not really, higher non-AMT taxes dont blunder you into AMT
but they do reduce the relative expensiveness of home ownership.
Consider — suppose taxes are 0% today… owning has no tax shield, and thus, you just compare monthly costs to renting costs, more or less.
Consider if taxes become 90%… then, for every $1 you spend on ernt, you could instead tax deduct it and spend $8-10 on housing (depending on what % of your payments are tax-deductable)
Rising taxes WILL increase home values because home value is tax shielded.
Eric,
It’s true that everyone is in worse shape with increased taxes, but HOME PRICES will rise in response even if other things get jacked into recession. The higher taxes go, the more incentive there is to own a home… Right now, the govt takes 40% of the pie, and by owning you cut them out of some of that… the higher taxes go, the more pie you recover when buying a house, so the more incentive you have to do it.
So what you saying is that people will respond to lower take home pay by spending more money on housing in the hopes of having a bit less taken out for taxes? In short, it is rational to spend a dollar to save 45 cents?
IrvineRenter:
Yes, exactly what I’m saying. Extrapolate out to if marginal taxe rate was 99% and you’ll see the logic is rock-solid. It’s a gradual effect, but a significant one when we are talking about turning a 40%ish tax rate to a 43%ish one, or whatever. Higher taxes dilate the buying power of tax-shielded expenditures.
I can strongly recommend the Oreck air cleaners. We have three in the house and they work fantastic.
They are noisy at full blast but that’s a small price to pay to keep the air in the house clean.
We also running two humidifiers at the same time.
Plus our furnaces have fancy air cleaners too… which helps because we have to run the AC during the day.
With all of our windows closed we’re doing fine. And the background drone of the cleaners and humidifiers sounds like the 405 down by University Park…. ;-D
Yeah, and now we get to listen to endless stories about Malibu mudslides all winter long… Maybe we’ll have a big quake and Malibu will just fall off into the ocean?!
Looking at those Malibu Oversized White Elephants built on the beach (they’re waaay beyond McMansions) I kept remembering the beached whales we had recently. Those homes do look like a bunch of bleached beached whale carcases… all in a row.. skinny and so looong, almost touching each other.
For a while I was thinking that if the firefighters would pull away, a single B1B could do a nice low level run and lay a nice row of napalm on those monstrosities.
Then the firefighters could go help areas that are built with more common sense and with some more responsibility.
In other words, something “de-constructavist”.
I rather like deconstructionism, but the movement didn’t go very far. Too bad, because some very striking and stimulating buildings were built around this style.
I guess many people find it too disorienting.
A crystaline modern structure atop rough-hewn stone ruins would make a beautiful house. The new structure should remind one of a crystal formation atop the stones, something that ocurred by a process of nature.
This home is off the listings?