.
.
Today’s property is an example of how the market crash hurts ordinary people. This property is owned by a couple, and although I do not know them, I suspect they are a young couple who purchased this as their first home and they were hoping to do a move up later. That is how the real estate game is played around here. I don’t see any data on the first mortgage, but there is a HELOC for $116,850. Assuming this is 20% of the purchase price, I have estimated the purchase price at $584,250 which is consistent with the tax assessment. Therefore, they likely have a first mortgage for $467,400. I can’t feel too sorry for them as they don’t appear to have any money in the transaction. They are priced over the market and praying for a knife catcher to come bail them out. It probably is not going to happen.
Asking Price: $549,000
Income Requirement: $137,250
Downpayment Needed: $109,800
Monthly Equity Burn: $4,575
Purchase Price: $584,250 — I think.
Purchase Date: 3/14/2006
Address: 18 New Season, Irvine, CA 92602
| Beds: | 3 |
| Baths: | 3 |
| Sq. Ft.: | 1,479 |
| $/Sq. Ft.: | $371 |
| Lot Size: | – |
| Type: | Condominium |
| Style: | Mediterranean |
| Year Built: | 2006 |
| Stories: | Two Levels |
| Area: | Northpark |
| County: | Orange |
| MLS#: | P608073 |
| Status: | Active |
| On Redfin: | 158 days |
 Unsold in 90+ days
|
|
OF IRVINE. DESIGNER UPGRADES INCLUDE; GRANITE COUNTERTOPS, RICH WALNUT
FLOORING, DESIGNER PAINT, UPGRADED TILE FLOORING AND STAINLESS
APPLIANCES. ADDITIONAL FEATURES INCLUDE OPEN LOFT AREA, COZY FIREPLACE,
PRIVATE COURTYARD, WALK-IN CLOSET, 2 CAR ATTACHED GARAGE, LAUNDRY ROOM
AND DESIREABLE END UNIT LOCATION. THIS QUALITY HOME IS LOCATED CLOSE TO
TRANSPORTATION ROUTES, SPORTS PARKS AND FANTASTIC SHOPPING AND FINE
DINING.
Another CAPS LOCK attack.
Rich Walnut Flooring? Is the walnut wealthy? Can you say, Pergraniteel?
DESIREABLE END UNIT? If you desire being at the corner of the 5 and Culver, then this is very desirable. I hope you like noise and air pollution. And yes, it is LOCATED CLOSE TO
TRANSPORTATION ROUTES.
.
.
There is a time bomb in their neighborhood that is about to ruin the
comps and remove any hope they had of selling this property. The
neighbor at 34 New Season was a flipper, and he let the property go
back to the bank on 4/2/2008 for $360,000.
34 New Season is not listed on the MLS, so I can’t post any pictures
for you. It is one of many bank owned properties in Irvine that are not
offered for sale yet. It is not an exact match for 18 New Season, but
the flipper paid $520,000 back in December of 2005, so the values are
within $60,000. Some quick math says the property at 18 New Season is
worth $420,000 in today’s market not the $549,000 they are asking. The
fact that 18 New Season has been on the market for 158 days strongly
suggests it is overpriced.
Property traders — people who bought and sold stucco boxes without
doing any improvements to add value — drove prices up and priced many
families out of the market. Most of the properties we have profiled,
the ones that have made priced plummet so far, are those being allowed
to go into foreclosure by failed flippers. I would like to say they are
getting their comeuppance, but it is really their enablers — the
lenders — who are bearing the brunt of the destruction. I won’t be
shedding tears for either group.
This leads us back to today’s featured property. The sellers are
going to be ruined financially as they will have either a short-sale or
a foreclosure on their credit. Was this couple a pair of hapless
victims who were just doing what you are supposed to do get on the
property ladder in California? Were they caught up in the whirlwind of
speculation and burned by the market? They likely fit the profile of
the family targeted for the various bail-out programs being discussed:
do they deserve to be bailed out?
.
I feel stupid – but I know it wont last for long
Ive been guessing – I coulda been guessin wrong
You dont know me now
I kinda thought that you should somehow
Does that whole mad season got ya down
I feel stupid but its something that comes and goes
Ive been changin – think its funny how now one knows
We dont talk about – the little things that we do without
When that whole mad season comes around
Mad Season — Matchbox Twenty
No… these folks should not get a bailout. Bailouts don’t work. They keep the market from clearing and only prolong the problems. Prices need to fall so the market can clear with new real home buyers putting their own money into a house at a price, rate, and debt profile that is consistent with history (28% DTI).
How do you bailout or compensate the couple dilligently saving their money and renting waiting for affordability?
BD
BD – Nobody’s getting bailed out except the big banks (so they can continue to pay multi-million dollar annual bonuses to the geniuses that thought up this stuff) and the Asian billionaires who are holding this toxic waste.
The “bailout” is all designed to keep hapless victims and speculators in their overpriced properties, paying overpriced taxes and overpriced mortgage payments. It’s a suckers bet to keep the payments flowing on a depreciating asset. Anybody who takes the “bailout” is just doubling up their suckers bet and the odds are stacked long against them.
Yeah, keep paying your $600,000 mortgage on a $420,000 property while it continues to drop — that’s a smart move!
It even has designer paint!!! Holy cow!!!
I’ve always wondered what designer paint was…
I don’t have anything to say, I just wanted to test to see if the nesting thing is working here now. And I just wanted to say hi to AZDavid. Hi David! 🙄
Can we get the reply to comment option back please? It made it much easier to follow the conversations.
Carl
I think it’s working!
$420k actual value is what I’ve been thinking these types of condos in Irvine are worth. It makes it fall into the $280-300 sq ft. range.
If this becomes true, then it becomes much more affordable with a 20% down payment. 30 yr fixed @ 6% will work out to $1,980 monthly mortgage plus $400 month for property tax and $200 for HOA probably…works out to $2,600.
Let’s play the assumption game.
Let’s assume that the owners are a young couple buying their first home. Sure, they want to play the flip this house game but they’re timing sucks. So they’re stuck. Stuck in a box that “cost” them much more than it is worth…now.
That said, it’s not a bad place and for a young couple the 3 bedrooms offer them room to grow as a family. There’s really no visible reason why said hypothetical couple couldn’t sit on this property and try to ride out the implosion. Whether or not it makes sense isn’t really my point. My point is only that it seems they don’t want to do it. Perhaps another sign of irrational behavior or is it the only rational thing they’ve done so far?
Other than that I just wanted to say thanks to Irvine for defining the term nouveau riche to another generation. That’s for the entire nomenclature (pergraniteel is one of the best) of economic failure and moral bankruptcy. Thanks Irvine for making it all so succinct.
If this is indeed a young couple who have purchased a starter home then these are the folks that I feel for the most. Young people that got all wrapped up in this greedy lunatic real estate market and took the plunge because they figured if they waited too long they’d be left out. Can’t imagine signing loan docks for a $500K mortgage. I guess these people will be forced to walk away, and start over in 5 or 10 years when thier credit score has recovered.
A tough predicament for a young couple. Buy now and sit on an asset that will go down and back up but end up flat for probably the next decade.
As I’ve stated to my friends who ask me about real estate..is it time to buy, rates are sooo good etc
I rather wait it out another 12-18 months and start looking.
I rather pay 8% interest in exchange for a home dropping another 10-20%. You can always refi but you can’t reprice your home cheaper.
Carl, it is in the works and should be implemented soon.
test.. it isn’t pretty right now but should function.. yes, text is covering the Submit button..
FYI in FF 2.0.0.13 when you enlarge the font scaling by one size the submit button dies.
Looks good in IE7
I even have Smileys 😛
Is that really northpark? Northpark I thought was everything behind the gates.
Speaking of Northpark, I know there is at least one REO in there (on Modesto) that has had a broker sign up for months but still doesn’t show up on the MLS/Redfin. If the bank took a few months to turn it over to the agent, they must be looking at holding the asset now between 9-12 months. Plus figure 9 months of no cash flow before they finally foreclosed.
Hey thanks for the info.
Is it 11 Modesto?
That one’s sweet, I’d move on it in the $900K
Northpark rocks!
The thought of one cent of my tax money going to help risk takers like this (and in the process continue to artificially prop up real estate so as to keep it unaffordable for fiscally responsible people such as myself) is sickening to me.
The next “bailout” I expect to read about will be a tax on all renters in order to keep stupid people in their overpriced homes and ensure renters a permanent seat on the outside.
This is part of Tamarisk in Irvine, on Culver and very close to the 5. We saw these in ’05 but fortunately decided not to buy and are still renting. At that time, the range was around 480-540k (I think).. This looks like the 3rd and biggest model. Probably 450k is reasonable for this in the current market?
These places will be in the low 300,000 dollar range in about 3 years. Rents for bedroom rentals from the IAC will be around $1800 by 2011.
IR,
Did you notice the NODs in the next street: Night Bloom?
I have 37 Night Bloom and probably 33 and/or 39.
The whole neighborhood is under water now, sales releases began around 2005/2006 at the peak of the bubble.
I’m sure that we can find flippers holding 2-3 units.
This is the second home in a row next to the 5!
I know that land is too valuable to leave it empty, but who really wants to live one block from the 5 fwy? If you have (or are planning on having) kids, you don’t want to purchase so close, as a bunch of studies show how harmful it is. Even if all you want is quiet enjoyment of your home, it is an awful location!
Why is the Irvine company allowing housing abutting the freeway? Why not commercial or retail?
This zone in this area originally is for building Corporation office. And Irvine city counselor approves to convert it to high destiny housing. And this causes all the consequence problems. For example, Hick canyon elementary has more than 850 students and keeps adding a bunch of convertible classroom every year.
I don’t understand this either. Why did Irvine City council approve the zoning change. Seems to me that if Irvine thinks it’s OK to live next to a freeway then Irvine should feel fine about living next to an airport.
Bunch of hippocrits.
Does Irvine Company hate this site at all? The answer is NO, at least not yet.
Do you think the owner of the Irvine Company will read this blog? No, my guess is he is too busy to expand his business. The only persons in IAC care about this site is the top executives, a group of people, I bet they will cover up all bed things mentioned in this site.
I guess to IAC owner, everything are perfect: their top executives can convert zoning at will, make two stories apartment to 4 stories, take out planned school to build more homes and brings more profits. And the annual reports on his table just can’t be better.
Did anyone hear the bit on NPR this morning around 6:40AM EST on blogger’s reactions to the mortgage bailout plans? The take (from what my sleep addled brain remembers) is that the biggest sector of the public protesting is found on blogs. They mentioned quite a few by name (along with interviews). I was disappointed that IHB was not mentioned. But it’s the first time I’ve heard a main stream piece discuss the issues and concerns found on IHB (rather than bland political talk).
I know you guys have hammered end units before but can I ask if there is ever a time you consider an end unit to be a premium (aka desireable)?
When I was a teenager, I worked at a Christmas tree lot that used to be there before they built this development. Glad they put the land to good use (/sarcasm) Although, I do like that there is a hidden post office back there.
The Bush administration is loosening the rules on a federal mortgage insurance program to protect banks from losses on loans that exceed home values in exchange for helping homeowners nearing foreclosure to refinance….
[url]http://www.bloomberg.com/apps/news?pid=20601087&sid=aVUUWjxz8aes&refer=home[/url]
This looks like all the risk is being thrown on the taxpayer.
Is this a good idea??
The Bush administration and other House members are pushing a plan that would force lending companies to write down the principle value on the loans for these houses to 85% OF CURRENT MARKET VALUE.
If I can do basic math, and the median home price for Orange County is 500,000, then that would push the loan down to 425,000.
My question to Irvine Renter is how would this impact the pricing in the market.
Would everyone be aware that people who bought homes for “price X” is now only paying a mortgage at a 15% discount to current market prices?
Would this bring the market down another 15% by default?
I would pay 1997 price for this home and every other home. That is what I think properties are worth.
🙂
I know this question has been answered before but when I look at a redfin listing and see the recent sales that it uses as comps – – what do the $0 sales mean?? really messes with the average sq foot price, etc and I’m curious. Thanks!
:cheese:
smileys work for FF?
yep they work
Prices are still crazy. I see fewer home for sale too, which is not going to help the prices. Some day the bottom will drop out, but not with all of these bail out plans. It is just moving the pain down the snake.
A better estimate of rental increases is inflation + 2%, or around 5.5%. We aren’t there yet but with ones like these we are getting there.
At what dollar amount does theft from taxpayers and savers constitute treason or a capital crime?
If this were the 1800s there would be a few politicians hanging high from the courthouse steps.
$371/sqft for this place is laughable. It will be an REO and back on the market in about a year, at a much lower cost, and it will still be way overpriced. Condo prices actually started crashing up here in Los Angeles; it must be a bloodbath down in OC and SD.
Genius – Excellent point! When are we going to prosecute these charlatans and frauds who dreamed-up this global Ponzi scheme?
Today’s profile is a tough one in my opinion. If they truly are a couple who are first time buyers, then my sympathy goes with them. We often forget that many here are experienced in financial matters or as they say, “it ain’t our first rodeo”. Many many folks were not so fortunate and lacked any perspective. If what we hold is true, these poor sods believed all the media hype and real estate hype and felt they had no choice but to risk everything to buy or else they’d be “priced out forever”. I believe in second chances. We all make mistakes, the point is to learn from them and not waste the forgiveness. That said, if they had some inkling of what they did and now are walking away, then they deserve what befalls them. The real dilemma for me is I have absolutely no taste for my savings and tax dollars to be used to bail anyone out, most especially flippers and the enabling institutions.
Yuck.
No matter how sorry you feel for people, it really isn’t any responsibility of the Federal Goverment to make their situation right, nor should the government attempt to do so. There are lots of unfair situations in this world, that’s life. Stuff happens. Commiserate, pontificate, but you can’t right every wrong. Thinking that you can play GOD and protect people from every mistake they ever make in life just doen’t work. It’s the law of the jungle.
People were taken advantage of during the bubble and fraud was committed. There’s an interesting article over on Calculated Risk dealing with the extra price sub prime borrowers paid using a broker vs. a retail bank.
http://calculatedrisk.blogspot.com/2008/04/crl-brokered-loans-cost-some-people.html
Given the cost to the economy of the bubble collapsing, we should be going after these loan sharks. After all, if Martha Stewart can go to prison as an example, I don’t see why we shouldn’t also be making an example of some of these seven figure salesmen….at least it would make the bailouts a little easier to swallow.
alan- I take your point but I sense a little hostility in your comments. I’d like to think I live in a world a little more evolved and sophisticated than a jungle.
Although I agree I’d rather the government not use my tax dollars to save either the stupid or the opportunistic, I said as much, I believe we all deserve a chance at redemption. Just as a rising tide gathers all ships, a receding tide can sink us all. We all benefit when some degree of forgiveness can be had by all. That is the moral dilemma. Just how do we help the deserving while ensuring the undeserving do not benefit?
Remember the maxim, “there but for the grace of God go I”. You may be amongst the fortunate now but a fickle twist of fate might just put you on the other side. There is only so much anger and schadenfreude I can harbor.
This indeed is a serious wishing price for this place. A larger detached condo in the same development but further from the 5 is in escrow for perhaps $550K. I think $450-475Kish for this place right now is probably market value…
Ipoplaya,
According to the current government plan, your estimate of 450 to 475 is exactly what their asking price of 550k with a 15% decrease would fall into. 467,500 to be exact.
My only problem with that is the price per square foot. This is still 316 $ per square foot.
I think that price per square foot has to come down to about 250 or less on townhomes to see a bottom.
The Bush administration and other House members are pushing a plan that would force lending companies to write down the principle value on the loans for these houses to 85% OF CURRENT MARKET VALUE.
If I can do basic math, and the median home price for Orange County is 500,000, then that would push the loan down to 425,000.
My question to Irvine Renter is how would this impact the pricing in the market.
Would everyone be aware that people who bought homes for “price X” is now only paying a mortgage at a 15% discount to current market prices?
Would this bring the market down another 15% by default?
NewToArea – you miss my point, the asking price based on current market transactions is already inflated. For it to sell today, it would require a price of $450-475K in my opinion.
As our declines have a good ways to go still, the price will continue to head down to $350K territory…
IR, I fear you are making a lot of Freshman mistakes on the quest to find the biggest Roll Backs. The banks are buying back their loans at far under the amount owed on the the 1st loan in many cases. It reduces the transfer tax. The actual resales tell the tale.
Hey all ya’all… I’m still doing my income taxes (I traditionally do them in January, obsess over them for months, and then redo them all over again the last weekend just in case I made a mistake)
I’m getting $7500 back from the Feds. Not because I’m some sort of deduction-claiming wizard, I just withheld too much this year.
Genius said… “…Condo prices actually started crashing up here in Los Angeles; it must be a bloodbath down in OC and SD.”
Condo-prices are NOT crashing in West L.A. in fact while yes “significant price reductions” exist, condo’s are typically not on the market for more than 30 days, and 3+ offers are typical. And yes, this is *not typical* for all of L.A. just the Westside.
And so, one wonders… Is west-L.A. an aberration, or the beginning of a turn-around? And/or possibly just a “dead cat bounce” before a really serious price-crash?
pencipa – I don’t know what part of West LA you live in, I just moved from Westwood to Irvine and can confirm Genius’s observation is correct. I’ve been looking for a year (all 2007) to buy a condo in West LA, so I have provbably seen almost all there is to see in West LA. Condos were not selling even 6 months ago, sales agents and developers were quite desperate to capture my attention. Of course I was looking for a condo in Westwood, Brentwood, Century City and West LA (not Santa Monica). Where are YOU seeing condos in high demand?
30 days and 3+ offers on West LA condos? LOL. Please. I have not seen that at all for any of the condos I was looking at ($500-850K range). They were not selling then and they are not selling now. Of couse, now looking at how cheap Irvine is (comparing to west LA), I can’t imagine paying this kind of money for an average condo anyway.
OC rocks!!!