.
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The National Association of Realtors hopes that the American sheople are American idiots. They control the media message nearly everywhere, and they constantly push their self-serving agenda: it is always a good time to buy or sell and generate a commission. Unfortunately, you can’t even find the truth in newspapers anymore. Does anyone think the OC Register would be willing to write stories about how and why the market is tanking? If they did, I suspect their real estate advertising section would get a lot smaller. People come to the Irvine Housing Blog because we tell them the truth about falling prices, and we explain why prices will continue to fall. Last week I wrote a post called Inventory Panic. In that post, I mentioned that there are a large number of bank owned properties not yet for sale on the MLS. When these get listed and sold, they will continue to push prices lower. Currently, there are more foreclosures each month than there are sales, and Irvine is in the eye of the storm. How long can that continue before the banks start becoming even more aggressive? We better hope there is an increase in sales volumes soon, or the lenders will own all of Southern California.
Today’s property is one of those I mentioned in the Inventory Panic post. It has just been listed for about 24% off its peak sales price back in 2005.
Asking Price: $499,900
Income Requirement: $124,975
Downpayment Needed: $99,980
Monthly Equity Burn: $4,165
Borrower Purchase Price: $655,000
Lender Purchase Price: $396,000
Purchase Date: 9/27/2005
Address: 14952 Greenbrae St. Irvine, CA 92604
| Beds: | 2 |
| Baths: | 1 |
| Sq. Ft.: | 1,192 |
| $/Sq. Ft.: | $419 |
| Lot Size: | 5,256
Sq. Ft. |
| Type: | Single Family Residence |
| Style: | Ranch |
| Year Built: | 1975 |
| Stories: | One Level |
| Area: | El Camino Real |
| County: | Orange |
| MLS#: | P631342 |
| Status: | Active |
| On Redfin: | 1 day |
 New Listing (24 hours)
|
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Story Floorplan with a Large Backyard. Interior Features Include a
Large Open Kitchen, Brick Fireplace, Laminate Wood Flooring and a
Spacious Master Bedroom. This Property is Bank-Owned and the Bank is
Known to Have Quick Response Times.
Well Taken Care of? It looks like pretty run down to me.
Bank is
Known to Have Quick Response Times? LOL!
.
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Can you believe someone paid $655,000 for this place? That is $550 / SF. It is still ridiculously priced at $419 / SF.
Properties like this will be real bargains 2 or 3 years from now. IMO, a good way to buy is to find a run down POS like this one and renovate it to your taste (assuming there are not structural defects.) Everyone wants to personalize their home, but if you pay move-in-ready prices, you won’t have much left over to renovate.
So how much is the lender going to lose today? Well, sadly, the buyer put 20% down, and they lost $131,000 — funny how it is sad when the family loses money but not when the lender does. If this sells for asking price (it went for $100,000 less at auction), and if the lender pays a 6% commission, the total loss on the property would be $185,094. The homeowner would be out their 20% downpayment of $131,000, and the lender would be out $54,094.
.
Welcome to a new kind of tension.
All across the alien nation.
Where everything isn’t meant to be okay.
Television dreams of tomorrow.
We’re not the ones who’re meant to follow.
For that’s enough to argue.
Don’t want to be an American idiot.
One nation controlled by the media.
Information age of hysteria.
It’s calling out to idiot America.
Welcome to a new kind of tension.
All across the alien nation.
Where everything isn’t meant to be okay.
Television dreams of tomorrow.
We’re not the ones who’re meant to follow.
For that’s enough to argue.
Idiot America — Green Day
Wow, 655k? $550/sqft? How did that even happen? And for a property that’s way inland. . . 550/sqft? I’d like to see some sea for that. . .
I like the point about how media content and advertisers. . . They’re walking a fine line between publishing truth and keeping their waning sponsorship, and IHB is a real wedge between two.
$500K for a 2 bedroom, 1 bath 1200 SQ FT mess? WTF, WTF, WTF. And the people that paid $655K? WTFFFFF were you thinking?
Wow. The bank is going to have to take a bigger haircut then that. That is a “starter” home at a too high price. Nice backyard though.
I put in at selling around $350k.
I wonder if anyone is still paying the gardner while it is bank owned.
In the Olden Days, when a family would need to pony up 20% cash to purchase a home, this would not be considered a “starter” for housing. A condo or townhome is a “starter”. When a family then built up some equity (by actually paying down the note, for example) then they could consider an actual detached home or a larger condo.
Expectations of what entry level housing is for the average family is extremely out of whack, imo.
$500k to 600k debt load for a home is not a reasonable “start” for most people. No one is entitled to start up with a home with a price tag that would have taken their parents several decades to be able to afford by working to build up enough equity to legitimately afford the home.
Someone had 131K cash in hand and THIS is all they could afford? WTF?
This place seems to have a decent backyard compared to most properties I see on here. Other than that, the rest of it is a 1975 time capsule.
Per Redfin:
Taxable Value:
Land $575,816
Additions $92,284
Total $668,100
I agree with the additions number, but OC must be gulping the kool aid to think this 5256 sq ft lot is worth $575k.
“In the Olden Days, when a family would need to pony up 20% cash to purchase a home, this would not be considered a “starter” for housing. A condo or townhome is a “starter”. ”
Baloney. A starter home is based on demographics. A starter home is IMHO, the median home. Pricewise it isn’t and that is the root of the problem in the market. Configuration-wise, the median home is what is basically a starter home.
Anything below it is a substitution for renting or edge market. A starter home is basically a 3/2 either a nice and slightly larger townhome or a small SFR. Until they and the median fall into line with what a ‘starter’ couple can afford the market will continue down.
For this house, it’s not a starter. It isn’t because of price, which is insane, it is becuase of configuration. It potentially is an empty-nester move-down home, not a starter.
This one wins the hat-trick award.
Old, dated, and significantly over priced.
Any one even considering buying this ‘70s throw back for more than $200K suffers from low self worth.
it seems to me there is some backstory here we can’t know about. how did a family with $130,000 to plunk down, buying in 2006, end up with this house, and then end up losing it to the bank?? it would seem to me that either they’d be the sort of people to really stretch it, in which case they would have been offered some truly insane mortgage for an $800,000 house–or they would be careful, frugal types, in which case they would be able to make the mortgage just a few years down the road, right? it just seems weird.
This example makes me think of who I would support a government bail out for. I would support a bail out for this person if they did indeed put 20% down. I certainly don’t support bail outs for people that put $0 down. I also don’t support bail outs for people that went nuts taking out home equity loans.
While imperfect, I think I would start with a formula for principal reduction. The government would look at the down payment for the house and come up with its percentage related to the purchase price. This percentage would then be treated as a whole number and multiplied by 5 with a cap at 100%. Then 10 points would be subtracted from the percentage.
This percentage would be the base principal relief percentage.
I would also further refine this amount by subtracting 20 points from the down payment percentage. Any positive amount would be added to the base principal relief percentage with a cap at 100%.
This percentage equates to the amount of relief a home owner would receive to bring their principal closer to the market price for the house.
So, the government would appraise the house at today’s market price. Subtract that from the principal owned. Multiply the difference by the relief percentage to get the principal forgiveness amount. FHA would then buy the loan at what it would be worth with the house at market price, but would only reduce the principal by the forgiveness amount.
This would put most of the damage on the banks where it belongs and would allow FHA to capture a significant premium in most cases. It helps, but doesn’t reward, those who tried to be responsible, but sucked at economics.
The new FHA loans would be fixed recourse loans that would only be issued if the borrower had the ability to repay. The loan documents would need to make it very clear that the government will garnish your paychecks for as long as it takes to cover any losses if you default on the loan.
Basically, someone who put 20% down on a home would get the amount they are underwater reduced by 90%. Someone who put 30% down gets 100% relief. Someone who put 10% down gets 40% relief.
I think this is a reasonable compromise and it certainly is not a free ride. Very few people would qualify to receive this relief and they would be on the hook for the amount owed if they decided to accept the package.
Will the bank have that supposed quick response time with a potential buyer who sees that the bank purchased the house for $396,000 and the buyer wants to pay that price and not the $499,900 the bank has the nerve to list the property for?
Wow. Wow. Okay, I am not one to usually speak the “comparison lingo”, because all real estate is local, blah, blah, blah, but this place is TRASH. In the Midwest (yes, I know, different market, blah, blah), this shack sells (2 bed + 1 bath!) for under a $100,000. UNDER a hundred grand. Boring, small, ugly, crappy yard, horrible kitchen, apartment-style bedroom (closet?). Where is the f’in value? You’re not on the beach, you’re stuck next to the highway… WTF? I lived in a cozy rent-controlled apartment in Century City for 6 years and it was more attractive than this rathole (and in a fun neighborhood). Tell me again how living in a dump in boringtown, USA is worth a half MILLION? Idiots, indeed.
A house this age should never be bought without a full home inspection. It is impossible to know what the potential/hidden problems are here.
Of course, the price makes absolutely no sense. But if the price ever does drop to whatever someone thinks is reasonable, it should be contingent on the inspection.
I believe there was a great deal of speculation in this particular section of the city. I think there are a number of funky “personalized” mansion type things where “developers” and “investors” bought up homes like this one and then renovated them into two story oddities.
Sometimes having an HOA is a good thing :coolsmile:
This makes no sense. How can you have 1,200sf single family with 2-bed and 1-bath? Are the bedrooms 20×20?
This would make a great fixer starter. A young couple with no kids willing to do a lot of the work themselves. Perfect – at $165,000. Sink $35,000 in materials and some sweat equity, then you have a decent place for $200k – $225k At this WTF asking price — no possible way.
IrvineRenter, I think people that have cookies from the old site are sometimes getting blocked from viewing the new site.
I didn’t keep the error, but it cleared up once I cleared out the cookies.
I set Firefox to delete cookies when I close, and it remembers passwords. Who wants cookie crumbs getting all over everything anyway? 🙂
“The eye of the storm” comment was interesting, because it seems like Irvine is indeed looking fairly CALM in the middle of the chaos surrounding it. It seems like Irvine is NOT extremely hard hit with the ARM and foreclosure crisis as the surrounding lower income areas are. Looking at the Fed’s mortgage map and the one posted here, it would seem like Irvine is doing well? Obviously the prices are still sky high, and the regional adjustment would bleed significantly into Irvine itself. But I’m wondering if we’ll see any significant *crash* in Irvine since I don’t see as many desperate sellers as elsewhere. People seem to have more of fixed rate mortgages which they can obviously handle, and likely won’t be hardpressed to sell. The only area that seems harder hit in Irvine is 92618, although I wonder if Lake Forest bleeds into that somewhat? Anyone want to comment why I’d be wrong on this analysis? I WANT Irvine to crash HARD, because I want to be able to afford a nice house with 20% downpayment, max 1/3 of income, fixed rate, you know with the traditional sensible lending practices… But I’m not sure I’m seeing that crash from the mortgage data?
politrix, I think you may be correct. It seems like the better, more desirable places to live, like Irvine, Newport Beach, Laguna Beach, are holding up better than places like Ladera Ranch, Lake Forest, Mission Viejo, Santa Ana. I hate to say it, but that’s the way it seems to me, too.
This is not a property for empty nesters. Empty nesters need two bathrooms–getting older does funny things to your plumbing. This is, as one comment noted, a “rathole”. This is wrong-side-of-the-tracks, po’ folks housing of the sort that in most cities today is available only as a rental. If the neighborhood and location would make the expenditure make sense, the lot size would permit addition of an additional bedroom and bath, perhaps bump out of kitchen to provide a breakfast area or family room, etc. I concur that the asking price is wtfffffff.
It is encouraging to finally see a place like this selling for under half a mil. Now it just needs to drop to what it is really worth.
It is so empty inside! I’m suprised the RE didn’t write “Move-In Ready”.
IR, little help here please. I agree with everything you and the others say about this wtf POS, but then how to explain this:
http://www.redfin.com/stingray/do/printable-property?external_id=4666353
The January and March sales have me confused…surely there’s more to it than meets the gimlet eye :ohh: cuz this seems totally improbable…
“It seems like Irvine is NOT extremely hard hit with the ARM and foreclosure crisis… People seem to have more of fixed rate mortgages which they can obviously handle…”
The ARM, particularly the Option ARM, crisis has not hit yet. Very few people who bought since 2002 have fixed-rate mortgages. The foreclosures we are seeing today are mostly overextended flippers and specuvestors. The Option ARM crisis won’t really be in full swing until 2009 and 2010, and then there will be a delay between the explosion of the mortgage, the foreclosure and eventual sale. In the meantime, adjacent markets will be pulling away prospective buyers because those markets are crashing hard. The Irvine market will crash even harder than it already has, it is only a matter of time.
As for the listing cosmo kramer posted, I can only quote Forrest Gump, “Stupid is as stupid does.”
The OC Register has p0wn3d by the NAR for as long as I have been reading it (5-6 years). The Register always quotes NAR data and biased “chief economist” NAR projections about the future of the real estate market. The Register IMO has almost no credibility when it comes to its business finance sections anymore. And don’t even get me started on the Technology section–what a joke. The problem is that Register editors are too lazy to do any real research so they just rehash the propoganda materials fed from them, most of conveniently spawn from the bowels of the NAR.
In a way, the OC Register caters to the denial mentality of the American Idiots who are going to get thrashed the hardest by the market. There was an article in the business section yesterday that had probably 2-3 quotes of individuals and “chief economists” that are anticipating a real estate market recovery at the end of 2008. Its easy to visualize the sheople reading this with their eyes wide open thinking “If I can just hold out ’till the end of the year I’ll be able to get the $550/sqft I paid for my McMansion.”
If its in the paper it must be true right? Well, American Idiots don’t really care about the truth.
In regards to this being a starter home:
Posted by NoWow!way on 04/10/08 at 07:36 AM
“A condo or townhome is a “starter”. When a family then built up some equity (by actually paying down the note, for example) then they could consider an actual detached home or a larger condo.
Expectations of what entry level housing is for the average family is extremely out of whack, imo.”
I am looking at buying a starter home and if I all I get for 500K is this dump, well, lets just put it this way: I’d rather shoot myself in the face.
Since I will be a first-time home buyer, let me tell you what I personally am looking for in a starter home: 3 bed, 2-3 bath, 2 car garage, mid-sized yard, low HOA, no mello-roos, and minimal maintenance. I am an extremely busy working professional and I do not have the time, money, or energy for a fixer-upper or an extravagant home that requires a lot of upkeep. When I buy my home I do not want to be inundated with upgrades, daily trips to home depot, dumpsters, noise, paint, the water and power shutting on and off every few hours, and contractors and laborers wandering around all day long.
Posted by NoWow!way on 04/10/08 at 07:36 AM
“$500k to 600k debt load for a home is not a reasonable “start” for most people. No one is entitled to start up with a home with a price tag that would have taken their parents several decades to be able to afford by working to build up enough equity to legitimately afford the home.”
…which is exactly why this home isn’t worth 500-600k. The real estate market has a tremendously long way to fall, and this house just goes to show how disconnected from reality most sellers and newspapers like the OC Register are from reality.
If you think that starter homes are at the bottom of the real estate food chain, break out the microscope because this home is near the bottom of the microscopic real estate food chain. Only trashy fixer apartments (my personal definition of an apartment includes any shared wall structure including condos and townhomes) are beneith this one.
As previously mentioned in the comments this property is a candidate for a positive cash flow investment in 2-3 years as a rental after some serious upgrades. Only after upgrading would someone legitimately consider this a starter home.
“The Register always quotes NAR data and biased “chief economist” NAR projections about the future of the real estate market. ”
It’s been something they’ve been doing since the last downturn. It makes it all the more funny to go back to the archives and see quotes from 1990 about how “the market is turning around!!!!”
It’s a little lazy of them to go to sources who have an obvious agenda, but with a title like “chief economist” they are playing off the authoritative-sounding angle. They really should balance it with a more bearish opinion, but that takes extra time, effort and manpower – things the newspaper biz are short on right now.
No one else is bothering to point out that they took the fridge? Must have been stainless steel, the beginning to their planned upgrade.
or that they left the bbq and lawnmower?
they clearly moved into an apartment that lacked a fridge (typical OC) but had no outside space.
and just another exclamation about what a POS for $500k. I wouldn’t pay $200k for it.
My wife and I are first time home buyers in 2010.
I am 24 and come from Houston, Texas (a major metropolitan area) and my wife comes from West Michigan. (not the crappy eastside and Detroit) Both of us have been blown away by the insanity of “sheople” out here in the Irvine area.
At some point the older generation will need to sell their homes and my generation is the one to buy them. We cannot afford these prices. My generation is already saddled with student loan debt for rising undergrad and outrageous graduate school tuition. How do ya’ll expect us to come up with 100,000 dollars to put down on crap like this to meet what lending standards will turn back to? Besides, my wife and I make about 90K between the two of us and that means we would only qualify for 3to 4 times our income. (270K to 360K)
I have many friends who have already purchased homes that are brand new or were built in the last 15 years for $70 to $100 a square foot!!
That is the real statistic to watch. Price per square foot. If It doesn’t come back down to around 225 or so in the Irvine area, there will be one less potential homebuyer. If we are going to spend 300K plus on something, it better be semi-new and have 3 bedrooms.
If things don’t get reasonable, I think you won’t be seeing anyone under their 30’s in the Irvine area anymore. We will just transfer elsewhere. Our pay could get cut in half and we would still be able to afford more in Texas or Michigan or most any other state. Plus those other states don’t have the highest income taxes in the United States…..
I could go on and on.
My favorite part is the listing agent’s name:
Todd Schimmelpfennig.
Schimmelpfennig.
Sssssssschimmelphfennig.
OMG, ROFLMAO !
Z! Nested comments are back ! Hurrah !
NewToTheArea — Welcome! Sadly you arrived here in the midst of what can now be called a well documented hysteria. Trust me, it wasn’t always this silly … well maybe a little silly! 🙂
You hit the head right on the nail! As IR and others on this blog have said many times … until the normalcy of the move-up market returns, there will be severe downward pressure on prices. Without first timers like yourselves, able to afford a reasonable home, with a reasonable payment and debt-load, the market will continue to be constipated. Sure there will always be some kind of premium to be paid for living in So.Cal. (our aptly named “sunshine tax”) but expectations of Midwestern prices are unreasonable.
You also raise a very good point, demographics. Following the boomers are us “baby busters”. Not nearly enough of us to replace or displace the boomers. That adds yet more downward pressure on the market in the future, lack of available buyer pool. You also accurately point out that GenX/busters certainly did not benefit from the sheer economic juggernaut that was the boomer generation. By sheer force of numbers, they benefited from unprecedented wealth generation and accumulation. It’s gonna be a bumpy ride.
Check out the 50% reduction on Acapulco street in Laguna beach!
http://www.bluemove.blogspot.com
viva le market forces!
Well cared for bank owned property. My bank is famous for their tender loving care. They usually provide lubricant, too.
I’ll forbear to make snotty comments about the decor of this house. Suffice it to say that it is not the least bit to my taste.
Having said that, I will say that they need to “de-personalize” this house to make it showable, and should take everything out and have it professionally “staged” with nuetral colors and classicly styled furniture.
I feel for these people, as they tried to do the right thing for themselves financially. I almost did the same, but just couldn’t bear the thought of committing myself to the garbage available to me on a 30-year-fixed for a reasonable multiple of my income. If I had had children, I’d have bought, even if it meant accepting an unpalatable house just to be in a good school district.
We who wished to buy sensibly really suffered in this speculative rampage, as houses that would otherwise have been well within our means inflated to wonderland prices. Now, it looks like our suffering will be prolonged as politicians on both sides of the aisle scramble to bail out unscrupulous lenders and delusional borrowers.
To Kirk: I feel very badly for these people, too. These were clearly honest people who needed a house and bought what they could afford with a 20% downpayment, and still got buried because they bought into a lunatic market made ludicrously overpriced by EZ money and loose lending.
However, I still can’t support a bailout for them. No matter how unfair it is for them to be hit like this because they bought into an irrational market that is now deflating rapidly, it would be still more unfair to make me, and you, absorb their losses.
We simply cannot guarantee anyone against loss due to their own decisions and actions. We can only, at most, provide basic temporary social safety nets for people who have fallen into total destitution, and bankruptcy relief, but they will still have to absorb their losses. We cannot attempt to make people whole.
And where will it stop? There are many millions of people in similar case- people who bought for the right reasons, in the right way, but who are buried anyway. There are also hundreds of thousands of homeowners in depressed places like Detroit and Cleveland, who are facing foreclosure and the loss of homes they’ve owned for 20 years, because of mass layoffs and plant closures. These people are deserving of assistance, too, but if we attempt to make whole every deserving homeowner who is suffering losses because of the volatility of the housing market,or because of job and income loss, we will completely collapse our economy and will all be much, much poorer, with all roads to recovery cut off.
Does anyone think the OC Register would be willing to write stories about how and why the market is tanking?
No, I expect them to write editorials praising Ayn Rand and holding up 1830s England as The Perfect Free Market Economy (TM).