Silent Scream — Slayer
It doesn’t look like we are going to have a bear rally this spring. The rate of price decline is accelerating, credit is still tightening, foreclosures are still increasing, job losses are mounting, mortgage interest rates are rising, inflation is rising, the economy is sputtering, and sales are still anemic. Did I forget anything?
Rachel Carson wrote Silent Spring in 1962 about the death of eagles caused by DDT. Who will write about our silent spring? Oh yeah, I did.
Asking Price: $670,000 
Income Requirement: $167,500
Downpayment Needed: $134,000
Monthly Equity Burn: $7,166
Purchase Price: $860,000 (via Sitex)
Purchase Date: 5/19/2006
Address: 36 New Hampshire, Irvine, CA 92606
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,270 |
| $/Sq. Ft.: | $295 |
| Lot Size: | 3,500
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Colonial |
| Year Built: | 2000 |
| Stories: | 2 Levels |
| Area: | Walnut |
| County: | Orange |
| MLS#: | P626711 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 50 days |
location. Four spacious bedrooms up + expanded loft. New base boards,
plantations, window casings, custom paint & lights. Large private
back patio/side yard w/ lemon trees. Exceptional gated community
w/group events & lots of friends.
Desirable parkside
location. I call BS on this one. It is far from the park, but immediately adjacent to the 5. I hope it has triple-pane glass and air purifiers.
That kitchen is the original cheap white tile.
.
.
Since this house is not currently lived in, we can assume our flipper gave up. They do have $43,000 of their own money in the deal, but values have long since put them underwater. Apparently they are not readers of the IHB, or perhaps not believers, as they purchased this property in February of 2007 as a flip. Lenders put up $817,000, so we are looking at another lender bloodbath. If this property sells for asking price and a 6% commission is paid, the resulting loss on the property will be $230,200. The seller will lose their $43,000 downpayment, and the lender will lose $187,200. You know, I don’t feel very bad when flippers lose money.
Another day, another quarter million dollar loss….
.
Have you noticed how the position of the market bulls has been evolving? Awgee has. He went on a rant in our forums making fun of the bulls arguments. I will quote him here:
At first, it was, “Prices will continue to appreciate at this rate.”
Then it was, “Prices may not continue to appreciate at the same double
digit rate that they have, and it will be healthy for the market if it
slows down to single digit appreciation.”
Then, “Prices will level off, but they will never decline in Irvine, (Newport), (take your pick).”
Then, “The market is experiencing a small. temporary correction.”
Next, “Prices have fallen, but interest rates are low and inventory has never been better. It is a great time to buy.”
Now, “We realtors are seeing greater market activity. The bottom is
in. Serious buyers are making offers. You may be surprised by multiple
offers on the home you are interested in. If you plan to live in a
home for ten years, it does not matter when you buy.”
Next month, “This latest decline is just the final blow-off before
prices start to rise again.” or “You can’t lose in this market.”
or ( Tell us what the next Kool-Aid sales pitch will be ).
I hope you have enjoyed this week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
🙂
.
Nightmare, the persecution
A childs dream of death
Torment, ill forgotten
A soul that will never rest
Guidance, it means nothing
In a world of brutal time
Electric, circus wild
Deep in the infants mind
Silent scream
Bury the unwanted child
Beaten and torn
Sacrifice the unborn
Shattered, adolescent
Bearer of no name
Restrained, insane games
Suffer the children condemned
Scattered, remnants of life
Murder a time to die
Pain, suffrage toyed
Lifes little fragments destroyed
Silent Scream — Slayer
IR, You’ve profiled many homes adjacent to high ways. But, this one beat them all. I mean it is not even 20 yards away from I5 shoulders. For those who do not care about this, you may “steal” this if you make an offer of $500k.
I like the 405 wildlife corrider myself. That is the height of hubris. Electric lines, roaring traffic…and look! I think I see Bambi!
I though the people here would “appreciate” this quote by Jose Canseco when explaining to “Inside Edition” why he lost his $2.5 million dollar house in foreclosure (found in the Washington Post).
“People have to understand that $35 million, you’re paying the government 41%. That leaves you with about $17-$18 million, not even. Then you’re taking care of your whole family.”
And, as we all know, we can barely survive on $20 Million. $17 Million is out of the question.
What a blowhard douchebag.
that is a bit out of context, not defending canseco, but he did mention a couple divorces cost him about 8 million as well. Still he mismanaged his money.
IrvineRenter is taking off the gloves on Awgee today.
I like it.
Awgee was the one taking off the gloves on the bulls. When I saw what he wrote, I was reminded of the conversations at the OC Register Blog over the last 2 years. He nailed it.
IR- it does read as if awgee was saying all those dumb things. You might want to edit to reflect that awgee isn’t saying those things but is just making fun of the stupid statements.
Yeah I misread it as awgee’s (position) has evolved =~_~=
Ouch! Too many soccer games gone afoul today!
AZ — Didn’t know you were a fan. I’ve got 4 tickets to the LA Galaxy on May 24. Want to come over and go the game with me? We can debate median household incomes over a few $8 beers. 😉
CK, you can’t take AZ to the game. All he will do all game long is babble about how the beers will be $3 soon during the coming economic apocalypse and how the Beckham’s are just trying to keep up with the Jones’s.
I was thinking of inviting you, IPO. And then maybe MMG to be on AZ’s team. Then it could be a fair debate.
BTW — I think you are a fan of soccer? Went to the Galaxy and Chivas last Saturday. 1st Galaxy game for me. Best time I have ever had at any sporting event. Woke up Sunday morning and went straight to Stub Hub to order 4 more tickets for the 24th. The Galaxy won a new fan in me with that game last week.
Longtime lurker, 1st time poster. Love the blog though.
Gotta love the Superclassico, and that game was a good one. I’d think about going on the 24th but I’ll be out of town
SF — Yep, I hate to be a cheerleader, but that was a damn good time. Of course, when the night starts out with the lead singer from “The Gap Band” doing the national anthem, you know you are in for a great evening. But $8 for a Bud Light and $4.25 for peanuts?? C’mon…
LOL 🙂
I’m not on any one’s team, I speak the truth wink
mmg…By the time we got to stoppage time I’d have you saying that you thought the median income for homebuyers was $200k… 😉
Ah, mmg….by the time we got to stoppage minutes I’d have you saying that the median income for homebuyers was probably $200k! 😉
CK
LOL, you can try, by stoppage time, you would be thinking about buying ammo and stocking up on food 🙂
by the way, I think I may have made fun of your intials on another blog last year, do they stand for Catching Knife 😆
Ha, you sure did. And as AZDavid would say, I had a big horse laugh over it! But I have not caught that knife yet. Lease is not up until Dec 31. We’ll see how things look then….
I got one available on my street CK. Just came on to the market… Come on brutha, be my neighbor until I move!
Soccer bores the hell out of me. It’s way up there with baseball in terms of sleep value. I’m a hoops first, football second, hockey third kinda guy.
Get some Lakers tickets and I’ll debate anyone with you. Even Weird Al and Shinehead.
ipoplaya-
Then you’d love this quote (even though I’m a huge soccer fan):
Announcer: The Continental Soccer Association is coming to Springfield! It’s all here: high-kicking, low scoring, and ties? You bet!
Bart: Hey Dad, how come you’ve never taken us to see a soccer game?
Homer: I… don’t know.
Announcer: You’ll see all your favorite soccer stars. Like Ariaga! Ariaga II! Bariaga! Aruglia! And Pizzoza!
Homer: Oh, I never heard of those people.
Announcer: And they’ll all be signing autographs after the game!
Homer: Woo-hoo!
Announcer: This match will determine once and for all which nation is the greatest on Earth: Mexico or Portugal!
Sorry IPO…After considering every last neighborhood in Irvine, the CK family has fallen back in love with Westpark — right where we have lived for 3 years. If it ain’t broke, don’t fix it. Do you think the Plaza Vista PTA will let me sign up for fundraising director using the name “CatchingKnife”?
Coby Jones?
And as AZDavid would say, I had a big horse laugh over it!
hotlinking ain’t nice, AZDavid. I would suggest grabbing the images and hosting on your own server.
That’s too bad. It was a funny picture.
I got it just by googling “horse laugh”.
They should ban google if they are so concerned.
If they “own” the image then they should just put their website URL in all of their images and then it would get them advertising when people on blogs looked at the images.
Certainly seems like more of a common sense approach to take.
net etiquette is that one does not overburden or use up a site’s throughput by hotlinking their image from a very popular blog/site. That’s an easy way to bring down a server that is not used to nor expecting such traffic.
I went ahead set up my own server. Hotlink all you want, people.
We can debate median household incomes over a few $8 beers.
They sell lousy beer at those. I can’t make myself spend the 8.00 for a Bud Light. I would have to sneak in the Guiness and Pale Ale’s.
you can’t take AZ to the game. All he will do all game long is babble about how the beers will be $3
Beer prices at a sporting event are propped up by strong arming captive customers – not bubbly. That’s never going to change.
Hell with that sneaking stuff in, AZ. We’ll just go get primed up before the game over Pier Ave in Hermosa before heading over to Home Depot Center. We can do shots of Jager and chase it with Stella. Heck, by the time we are done there, we’ll probably agree on just about everything.
Today, for some reason, I was stunned to see the down payment and income required to purchase this very(or below) average home.
I think thats because IR used the original purchase price for the home info. If we used the asking price it would be
Income $167,500
Down Payment: $134,000
Nano
one of the bloggers yesterday mentioned that average income in Irvine is 150k, how can you be surprised, where have you been living for the past 5 years. 🙂
and this is not very(or below) average home, it is located in Irvine, watch what you say 🙁
I’ve been inventing stuff….
http://www.tugtub.com
Talk about cherry picking the words mmg. What people were saying is 2 working professionals with college degrees should be able to bring $150K together. No one is saying the average income in Irvine is $150K per person.
Quite the burn rate, too. Perhaps dollars will give you more miles per gallon.
$10 bucks says, IPOP will state this home will be in escrow within a week.
Nah, its in a $hitty location so its still overpriced even relative to recent comps there.
haha
I’m surprised this house went for $330K in 2000. It looks like an ovesized condo in a very, very lousy location. Look a t the lot on redfin. There is ZERO land around the house. Its really sad that anyone would have paid that kind of money to live in a place that I would have turned down as a renting college student.
Its a 4/3, so fairly large, but what would this rent for? I don’t know rents for living on the freeway in Irvine. $2500? If so, this place shouldn’t be worth more than $450K today, and will probably bottom out under $400K. I’m making it up. What would this rent for?
No idea what it would rent for. However I did want to mention that this is a gated community. So check those HOA fees. I believe it is also a Mello Roos burden.
They don’t allow for a swim team ( which is a pretty big deal here in irvine, as the ISL (Irvine Swim League) has over 20 community teams that compete during the summertime only). I cannot remember if their pool is not regulation length or if the homeowner’s association is resistant to letting the community participate in the ISL. Either way, if you have kids who would like to compete with other communitys each summer, you are SOL.
That particular freeway location collects a ton of soot – greasy, gritty soot on everything if you leave your windows open.
Colony and College Park are the neighborhoods nearest. They are old, but they have NO MR, are much farther away from the I-5 and they have top ranked swim teams in ISL. At least Colony does. The current group of imbeciles running the CP HOA also ran the swim team into the ground the last couple of years. They placed 9th (from a steady down fall of 2nd place with perhaps the worst leaderhip in the organization EVER). So anyone looking at CP needs to know that there is a group of entitlement groupies running things for now. Hopefully most of them are heloc’ing themselves out of here soon.
I’ve been wondering when someone would raise this point. In my limited interactions with Irvinites I hear the swim team issue brought up almost as much as the school issue. I’ve never lived someplace with community swim teams but during the bubble years it did seem like people gave a decent amount of weight to this issue when selecting a neighborhood.
The swim teams are political bombs. I got crucified once for noting that we should fill the pool with dirt and grow tomatoes for all the grief that the swim team was creating.
The 860K was a private sale to a person with the same last name. It’s hard to know if it’s a relative, because the name is quite common in the OC.
The home was listed for 4 months at 869K and didn’t sell because it was overpriced for the condition & location.
It’s nice to have friends/relatives who can bail you out of a bad investment. This seems to have been quite a common type of transaction when the market was turning down. I wonder what was in it for the buyer who will take the hit on their credit.
One of these recently rented for $3K, although market rent is more like $2600-2800 on this units.
Buyers were camping out in tents, in Harvard Square, to buy the homes when they were new. The area was built when the prices were going up quickly during the last up market. Because these homes were built at the begining of the cycle, they are rather basic in their design & specs.
I saw a Hummer yesterday delivering pizzas from Papa John’s. It had those little removable signs on the top of it while it made its deliveries.
That’s some high class pizza for you! 😉
The gas to run that thing costs as much as the pizza..
You should have taken a picture for posterity.
Only in CA!
I think I know which Papa John’s that is. I’ve been there a few times and that place gets NO business. I always wondered how the owner can afford a Hummer when his business is so slow.
Cheap white tile? Ceramic tile is at least sustainable and more earth friendly than that gaudy granite with the cherry cabinets. It sure beats the faux wood formica in my kitchen. I’d love to have the tile 🙂
[i]Ceramic tile is at least sustainable and more earth friendly than that gaudy granite…[/i]
Bull. Ceramic tile, like plastics, require a lot of energy to produce, are basically unrecyclable, and are a weaker material than granite.
Granite is natural, abundant, tough, and an excellent choice for food work surfaces.
You may prefer the look of ceramic tile, but it is not more “earth friendly”, whatever than exactly means.
I like seeing $/sq ft under 300! This location sucks. I can’t imagine anyone paying much morew for this than the West Irvine house backing to jamboree and going at $240 per sq ft.
What could you reasonablly rent this home for?
I note that an unusually-high proportion of properties profiled on this blog are often right next to busy streets, or (the horror) smack dab on the interstates. What a ghastly fate for some fool buyer for today’s property: diesel particulates, 24/7. The public needs some education on the health dangers involved, this home should come with warning signs like the ones on cigarette packs.
I noticed that too. Most of the houses featured tend to be in bad locations. I think its because these bad location houses were flipped more during the bubble as no one wanted to hang on to them in the first place. Just my 2 cents.
I think I found another picture of the backyard:
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View Larger Map
$2600-2800
My wifey and I kinda like the Westpark and Oak Creek areas the best in Irvine. However, 92606 just doesn’t have enough fire sale on desirable locations (this is definitely NOT one of them) for me to be convinced that Irvine’s median price is heading **way** down.
Down, yes. Out, not yet.
Still waiting.
Hey IR,
I only saw the last sale price of this home at $800k through Redfin. I have no idea where you get this (via Sitex) site.
I normally don’t ask unless I’ve all googled out.
Can you point us to the website where you got that $860k purchase price?
Appreciate it.
Regards,
chao
Oh my gosh! How could I have forgotten,”Prices are not falling and buyers are still buying. Everyone is freaking out because the media is exaggerating a few cases. The media only operates on bad news, so you just need to have a positive attitude. There are no real declines. It is just the media.”
Just remembered another one, “Gary Watts, who called the last downturn, says that the OC economy is fine and as long as the local economy is good, real estate will continue to appreciate.”
They are coming fast and furious now. “But if you find a home you love, you had better jump on it, because this inventory won’t last long and you may miss out.”
Well, it is true that “they are not making any more”….
I’ve been thinking about how to explain why the logic that when prices hit a specific GRM (160) investors will buy the properties for rentals………here is the best I can do.
For any investment vehicle, there seems to be an asymptotic limit. For example, sub-prime lending started out to be a great lending model, increase interest rates on home loans to cover your risks and it will work out OK if you make enough loans. This worked until there was too much money chasing to few deals. Same thing occurs in venture capital, if you invest in 10 companies, one of them will be the big win. However, when too much money starts to chase to few deals, the model breaks down.
My bet is that this could happen with rentals, as said before, there are only a limited number of people that can actually afford a rental payment greater than $2500. Possible this could push the endpoint GRM to 120 or even 100.
Nano: GRM is a simple matrix for figuring potential profit on a rental.
You said,
“My bet is that this could happen with rentals, as said before, there are only a limited number of people that can actually afford a rental payment greater than $2500. Possible this could push the endpoint GRM to 120 or even 100.”
A change in the rental rate doesn’t change the GRM. It changes the Potential Price of the property. If you assume a GRM rate of 160 and rents are $2500 a month, that will make the property worth $400,000. But if rents go down because of recession or a glut of available rentals coming on the market, let’s say dropping to $2000 a month, then using the same GRM of 160, the same property would be worth $320,000.
GRM is a simple and good rule of thumb to use to avoid making the mistake of over-paying for a rental property. It’s also arbitrary and it can be different for different geographic areas. Some places are just worth more than other areas because of better location and command a better GRM.
Another down and dirty rule of thumb is the 10% rule. The yearly rent you can charge should be 10% of what you pay for the property. That will cover your mortgage, lost opportunity cost of down payment, maintenance, taxes, etc, etc. & leave you with profit. If you can charge $2500 a month – $30,000 a year, that makes the property worth $300,000. Some make it a 15% rule. Again a bit arbitrary.
Using any sensible matrix, the market hasn’t come close to bottoming!
Thanks
nanowest: agreed, there can be no stabilization of this market, the economic storm behind this deflationary spiral is not something the average joe can appreciate. Look at the choices left to the Fed: we can only lower short term interest rates, which has devastated our currency and lead to catastrophic price increases/speculation in commodities. Our consumers must have necessaries such as oil and food, where prices are sharply higher. So what happens to discretionary spending that drives our economy: it falls and falls. What a perfect storm: just as real estate implodes (thereby shutting down the home ATM and associated “wealth” effects that drive discretionary spending), commodities skyrocket. but don’t worry, irvine is immune to economic truth (ha ha).
“It doesn’t look like we are going to have a bear rally this spring. The rate of price decline is accelerating, credit is still tightening, foreclosures are still increasing, job losses are mounting, mortgage interest rates are rising, inflation is rising, the economy is sputtering, and sales are still anemic. Did I forget anything?”
I would disagree with you IR on some of these points. The rate of decline does not appear to be accelerating. The OC median per Dataquick has essentially been holding steady since early March. March’s CS number are likely to show a slower rate of decline than February and April, probably even slower than March. I’d venture the pace of price declines is currently decelearting and conditions exist for that trend to continue at least for a few months. The “bounce” might not be increasing prices, just flattening of price declines and unwinding of inventory.
Conforming mortgage rates are lower than they were six months ago and jumbos, while higher over the past six months, have been holding steady for the past two months on average. I think this leveling in mortgage rates has aided the bounce we are having today…
Decreases in payrolls, i.e. the pace of job loss, appears to be slowing if you believe the numbers that came out today. Slowing of the Fed easing cycle and the equity markets appear to concur with the notion that our economy’s recession will be shallow and short-lived.
Rising foreclosure activity hasn’t yet appeared to increase inventories materially. In Irvine, we have 15% less inventory than a year ago so lower sales volumes, which have been moving up of late, aren’t putting as much downward pressure on prices. Across the county, we have around close to the same amount of inventory on the market year-over-year. If the increased level of escrow activity turns into sales, I would guess that by this summer, year-over-year inventory levels will be much lower in Irvine and across all of OC.
Prices will keep coming down but it’s going to take much more REO inventory or higher mortgage rates to achieve the decline rates we have seen between last Fall and March…
I woke up on the less bearish side of the bed this morning after seeing four more Irvine places hit escrow last night.
Just in my search, that makes something like 12-13 going under contract over the past five days… Seven homes in my search spec closed escrow on the last two days of April alone.
Ipop –
Your statement that “The rate of decline does not appear to be accelerating” is due to a phenomenon known as “terminal velocity.”
LOL buster… I think it is more due to the buyers out there that are willing purchase as a result of 20% declines. Wonder how they are all getting through underwriting on $100K per year household incomes?! They all must have $500K to put down.
On a related note, Countrywide, who just did the refi on my condo, has now prequaled me to borrow $800K for a $1M purchase with 20% down. They are willing to lend to me at a 45% DTI… Not what I would exactly consider “tough” lending standards.
Gulp!…. what would be your monthly payment on an $800K mortgage?
Yeah, IPO — those are not tough lending standards at all, especially since your household income is only $84k per year. If you say it’s anything more than that, your lying.
I love this constant battle in the comments to spot who is lying about their household income. No one wants to believe anyone except those who claim they make a miserably low amount like the gal yesterday saying she only brings home 38% of her pay.
It really is stupid to keep trying to out someone on salary as there is no incentive for the poster to lie. Sure people brag and lie all the time but a lot of us on this board are trying to be analytical about this housing bubble and sharing salaries or general ideas of household incomes to understand who really can afford this market.
If we all just sit back and assume that all households only make $75K and wait until housing is 4x that number, we will all miss the bottom. I have said this already but almost all of my friends out of college makes more than $75K a year. We have been out for close to 7 years now and hence, the household incomes for the couples is over $150K. I am not here to lie but to try to understand the bottom and prepare properly.
Agree 100%, rkp. And you do know that I was just being sarcastic with IPO.
I really do not belive that you can just take the gov’t issued median income and apply that all as representative of likely homebuyers in a given area. There are certainly people who roll up into that number that are likely to never be considered homebuyers — college students, high school kids working BS jobs, GED (or worse) folks working at Shell, and retired or semi-retired collecting pension, SS, or working part time at Home Depot. I don’t know what the number is, but I am pretty sure if you culled the median income down to those in the likely homebuyer category (25-55 years old, maybe “some college” or “HS Diploma” checkboxes from the census, etc.), the median for that group (at least in Irvine) would come out somewhat higher than $100k per household commonly quoted here.
But I really don’t have any facts to back that up, so I should probably shut my pie hole on this subject.
It’s safe to say that with 13 years experience after college for me and 9 years on the scale teaching for my wife, we clear $150K comfortably. I still contend that this isn’t squat around Irvine after taxes, retirement, exorbitant daycare costs, etc.
The most I’m willing to spend on a house (mortgage, taxes, HOA) would $4600-4700 per month pre-tax so an $800K mortgage won’t be in my future… Nice to be able to qual for it though so I don’t have to sell before I buy.
hey – that was me. i actually goofed and made another post with my correct take home amount.
let chime in (you guys dont give up do you) 😆 what you guys are saying is true of most parts of the US where college grad with experience would make decent money. while I understand there are good paying jobs in Irvine, my point is not enough people to be buying all these place, plus most people making that kind of income are already home owners.
rkp–>(I have said this already but almost all of my friends out of college makes more than $75K a year.) which is non relevant. most of the people I know make more than 200k, but then again most of them own as they got sucked in during the boom. so becomes non relevant.
if you look back more than 5 years ago, a family making 75K (like all of rkp’s friend) would have been able to afford an average decent house. salaries have not gone up much.
JMO
PS. in my situation, if I actually leave Irvine to any where else I would most likely make more.
I disagree. 20 years ago my friends that were out of college for 5 years were making the equivalent of what would be 80K in today’s dollars. They couldn’t afford a house in Irvine. They could however afford a townhome. My DINK friends could either afford a condo/townhome very near the beach or a home a little farther away, but, e.g. still in Newport Beach. So reality should be somewhere inbetween todays prices and what you are saying.
“I think it is more due to the buyers out there that are willing purchase as a result of 20% declines. ”
Those are called knife catchers. At the current rate of decline they will be underwater in less than a year, assuming a healthy 20% down.
I hope we get 20% off over the next year but I’m beginning to doubt that, at least in Irvine.
5-6 months of housing supply isn’t going to sustain 2+% per month drops…
Come on REOs, we need more of you in inventory!
I agree that the rate of decline will not accelerate. It has been very high recently. Graphs of declines from past bubble pops have been pretty steady all the way down. Obviously they have little bumps up and down, but overall, the declines have been pretty much at the same rate until the bottom.
HOA is $95 in Harvard Square. Probably one of the lowest around. The MRs are quite small as well…
Using 6% interest, 2% property taxes (high but it is new), 25% gross marginal tax rate, rent would need to be ((6%+2%)*(1-25%))/12, 0.5% of price, a GRM of 200, which at 670k would be $3350 a month, or $2700 would be $540k. If property taxes were more average at 1.25%, a GRM of 220 would be reasonable.
Sorry, your math for rentals is way off, for as long as man has rented the price has been 1.0 percent of value. If the house will rent for 2.500,00 the value of the property is 250.000.00 and you’ll never find a smart landlord buying in an HOA…
From the silly rule of thumb principle? It depends on your assumptions and who is buying. It depends on circumstances and time. Specifics are more powerful than generalities.
A landlord will also want to cover depreciation and management. An owner will face others, say 1% for depreciation (maintenance and repair). A jumbo could push rates to 7%; a higher marginal tax rate including state could be 33%. That could push the GRM down to 180 for an owner. A renter looking for less than that is 1) too poor to purchase it, 2) waiting for a depression bargain when they won’t have a job to buy it, 3) prefers renting, perhaps expecting to move soon, or 4) irrational. Take your choice.
Errr, forget the “desireable parkside location” (could mean: good place to park versus the breakdown lane of the freeway). Where is the “Large private back patio/side yard w/ lemon trees”?
Maybe my monitor does not have enough resolution to show bonsai?
Sorry, but this is simply no place to live at any price. I’m not sure that I could be paid to live there. I can only speculate that Californians have been clobbered with incredible prices and the frenzy to buy something/anything that they have lost touch with common sense. Wow.
Maybe I’m in the minority here but I just can’t imagine spending 700k (or any amount really)on a house with no yard. To me having a yard to enjoy and provide separation from your neighbors is a requirement.
It seems like the cost per square foot metric is used pretty frequently when assessing properties these days without regard to whether the home has a yard or not. So for me the cost per sqare foot metric is misleading.
Oh and would I want to spend 700k and live next to the freaking freeway? no way.
Thats another thing I can’t understand whenever I go wine tasting in Temecula I pass these developments out in the middle of nowhere and they are right on free way. So in addition to having the commute from hell you get to listen to the freeway noise all day and all night. I can’t understand why anyone would buy those things
People buy them because at least living out there in the middle of nowhere in CA is better than living anywhere in AZ…
🙂
OH SNAP!
Yeah, you know that was tasty AZDP!
🙂
Dude I love your perspective. The first thing I thought of when I saw that hideous kitchen was YUCK! I just knew you’d ding ’em.
“Large private back patio/side yard w/ lemon trees.”
Really? Large? I don’t think so. You might as well live in a condo with that kind of “yard”. The patio is about equal to a balcony. How do the lemon trees get enough light in that narrow canyon between the two houses?
the lemon tree gets extra fertilizer from the 5 fwy particulate to make up for the lack of light!
To Jim Jones,
you are one of the few who cares about having a yard. In OC/Irvine, most people are living out in malls, or stuck inside their home watching TV.
They do barbecue with friends from time to time, but very unusual: it is either too hot or too cold.
Just drive by the different areas, and see during spring time and over the week-end how many people are having lunch outside. almost no body.
AC and TV is american way of life. Asian are not fond of sun either. So why care about yard !
I’m sure 90% of people on this blog won’t agree with the non importance of the yard, starting with me, but since when are we-renters representative …
So back to the price per sq feet: it is an extremely important metrix. A reference to compare a house to another. Especially in a declining market: you want to compare yourself with other before buying to see if you’d better wait another 3/6months so the average price will move from 300$/sf to 265 or less…
This varies from city to city, area to area, and then you can put more value to it if you like something in the house (jesus looking pool 😉
All these matrix (GRM, %of rental, ppsf, median, etc…) are very important to get a right sense of how much you are ready to pay for your home or your investment (VERY different !).
As far as I’m concerned, for a detached house in wespark area, for 4bd, no way to buy above 235$/sf.
Close to 470k$ for a 2000sqf house, which would put a 180GRM max …
Believe me, right now, we are very far from this (need a -30%). It will take more than a year for sure. unfortunatly. IPO is right, decline is slowing.
I think lots of people think a yard is important. Unfortunately, in a sellers market, the builders have been able to figure out the minimum amount of yard buyers will accept and offer product to that specification. Somewhere around 6000 sq ft for a SFR, I suspect. (Kind of like coach seats on an airplane — they figure out the smallest amount of legroom that won’t kill you.) Now, in a buyers market, I think homes and neighborhoods with larger yards are going to do much, much better.
A handful of us have discussed this in the past — we’re looking for corner lots, pie shaped lots, end of CDS lots, single loaded streets, all to try and gain more privacy and space between us and our neighbors.
I disagree with you CCR. I grew up near Santa Monica on a 7500 sq ft lot. I know that doesn’t sound big but it was huge for us. We could have water gun fights in our backyard, put out a water slide, play catch, etc. I completely value open area and always thought that my house would have a big big backyard.
However, I notice that the theme in Irvine communities is more shared space and more parks. A lot of the communities have very nice parks right in the center of the community and I imagine we would have played there over our backyards if I grew up here.
The whole no yard thing for me is a big turn off and would greatly reduce my homeownership enjoyment. I had a decent sized yard in a home I owned a few years ago and granted I didn’t hang out there a lot but it’s just nice to have that separation from your neighbors that a decent sized yard affords.
I hate the Irvine developments who’s homes have zero yards but instead have large common areas that you need to travel to and then share with others. In addition to having zero privacy while using this shared common area you have to pay to maintain it via your HOA fees.
I dunno, I’m guessing if you’ve never lived in a home with a decent sized yard you probably won’t mind not having one. To me a home is not just a box to live in its also the yard, garden, trees, landscaping, etc.
Too hot, too cold? Huh? I moved to SoCal for the weather and I think its pretty darn nice outside here most of the time. I think the whole indoor\outdoor approach to home design that you see in California is pretty appealing.
no argument guys, i do believe a house with a big yard is much better ! No way I’ll buy in super packed area where you small patio is under your neighbour main bedroom window.
My point was: when you see how few people really enjoy their (little) yard in Irvine, then ‘we’ are not representative.
But this is not new. People adept to this blog from early 2007 are not representative of the common OC.
Also check the new towers constructions. It is impressive to see how much these appartments are STILL selling for. I can get you live in a tower in NYC or some major big cities around the world, certainly not in OC, nor Irvine where you have so many nice detached house (but few with nice yard !)
just curious IR, has any homeseller or realtor seen one of their homes featured here and made legal threats over your snarking on their misfortune? Not that they would carry any weight, just wondering…
if that ever happens, please do publish the correspondence…
I haven’t had any realtor do that yet. I wish they would because the blog post I would do on it would be a riot.
speaking of houses on highways, check out this beauty I found:
http://sanmateore.dreamhosters.com/2008/04/3901-branson-dr-san-mateo-ca-94403/
688k for 1490 square feet of pure bliss on the 101
Chaos in the Luxury Finance Market.
The Other Shoe Has Dropped.
http://thegreatloanblog.blogspot.com
Take care Irvine Housing Junkies. Enjoy your weekend.
Ouch! I’d be sick to my stomach every morning if I were the people who bought a house in this neighborhood for $1 million!
I also have a friend who lives in this neighborhood, but they bought it before the bubble and paid a good price for it. I actually passed by this house that was profiled and it is directly across from the association park and pool. So the realtor isn’t exactly BSing about the “desirable park location.” However, it didn’t occur to me that this tract was that close to the freeway. Maybe it was because I’ve always felt a twinge of envy that my friend bought her house at a good time and price while I’ve been renting all these years. But, I don’t feel as envious now.
this quote
“The rate of price decline is accelerating, credit is still tightening, foreclosures are still increasing, job losses are mounting, mortgage interest rates are rising, inflation is rising, the economy is sputtering, and sales are still anemic.”
I believe everything in here, just that the inflaion will hold up the current value of the home.
Let it be man as it should be.