Sugar Shack — Jimmy Gilmer and The Fireballs
There were people attempting flips in 2007. There were looking for their own Sugar Shack to sweeten their lives. Prices in our area were still at or near the peak, but all the signs were pointing to a downturn which was already underway in many markets. Residential real estate markets are dominated by amateurs because professionals do not bother with the headaches of what is generally a poor investment. Non-professionals by and large have no idea what they are doing, and they only make money when they get lucky because the emotions of speculators always lead them astray (remember Speculation or Investment?) Today’s featured property was purchased after the collapse of subprime was front page news in March of 2007. Our would-be Donald Trump either wasn’t watching the news, or he truly believed the subprime containment BS put out by the media. This guy actually put some of his own money into the deal, so it wasn’t just gambling with the lenders money. You would think if someone was going to put their own money in the deal they might have a clue about what he was doing: apparently not.
Asking Price: $699,000
Income Requirement: $174,750
Downpayment Needed: $139,800
Monthly Equity Burn: $5,825
Purchase Price: $850,000
Purchase Date: 4/4/2007
Address: 36 Gillman Street, Irvine, CA 92612
| Beds: | 5 |
| Baths: | 2.5 |
| Sq. Ft.: | 2,294 |
| $/Sq. Ft.: | $305 |
| Lot Size: | 5,220
Sq. Ft. |
| Property Type | Detached, Single Family Residence |
| Year Built: | 1965 |
| Stories: | 2 Level |
| County: | Orange |
| MLS#: | S08079260 |
| Source: | MRMLS |
| Status: | Active |
| On Redfin: | 5 days |
Seller needs to sell quickly. Short Sale subject to lender???s
approval. Please contact showing agent for details. Please do not
disturb occupants.
Is this another example of a house being sold or foreclosed with an unwitting renter inside? Anyone think this landlord is skimming the rent?
The property was purchased for $850,000 with a $637,500 first mortgage, a $170,000 second mortgage, and a $42,500 downpayment. The 5% downpayment evaporated even before he closed as he overpaid for the house. When the credit crunch hit in August, the property values really plummeted, and now he is asking $699,000. If this house sells for its asking price, the total loss on the property after a 6% commission will be $192,940. The seller will lose his $42,500, and the second mortgage holder will lose $150,440. The lesson for our speculator will not be as tough as it is for the lender, but losing $42,500 along with trashing your credit cannot be a good time.
.
Theres a crazy little shack beyond the tracks
And evrybody calls it the sugar shack
Well, its just a coffeehouse and its made out of wood
Expresso coffee tastes mighty good
Thats not the reason why Ive got to get back
To that sugar shack, whoa baby
To that sugar shack.
Theres this cute little girlie, shes aworkin there
A black leotard and her feet are bare
Im gonna drink a lotta coffee, spend a little cash
Make that girl love me when I put on some trash
You can understand why Ive got to get back
To that sugar shack, whoa baby
To that sugar shack, yeah honey
To that sugar shack, whoa yes
To that sugar shack.
Now that sugar shack queen is amarried to me, yeah yeah
We just sit around and dream of those old memories
Ah, but one of these days Im gonna lay down tracks
In the direction of that sugar shack
Just me and her yes were gonna go back
To that sugar shack,
Whoa uh ohT
o that sugar shack, yeah honey
To our sugar shack
Sugar Shack — Jimmy Gilmer and The Fireball
I would say the lesson is tougher for the buyer than the lender, as the buyer may actually learn a lesson. All the lender learns is that they will get bailed out if they are “too big to fail”. If they aren’t that big, they just get bought out by JP or BOA.
The buyer is going to actually learn that P/E matters, even for houses.
For that kind of money, I would want a home that my mother would be proud of. I think if she saw this place, she would think I wasted 700K. Of course she would be right.
Why of the 5 photos were three of the front of the house? Wouldn’t one do? I know it seems petty but it makes me wonder if they are committed to selling.
Why, the slumlord doesn’t want the renters to know it’s for sale. He can’t exactly come in and say, “I really need some pictures for my, ummm, scrapbook.” Also, based on the condition of the back yard, I’d say the slumlord would prefer NOT to advertise the condition of the interior.
This place is worth exactly zero. The cost to tear it down and haul it off is the same as the land value, which isn’t much considering it backs to Michelson (unless you like living in the infield of the Indy 500). Perhaps the first truly worthless home in Irvine
What a POS. A fool and his money are soon parted.
BD
Tune in next week for:
“Cocaine is a hell of a drug”
(buyers are high as hell)
or
“Did they misread one of Pat Velings reports?”
(buyers are not smart enough to walk out of a wet paper bag)
I bet when the sellers of that place sold it in April ’07 they must have felt like they hit the lottery.
[b]My Offer[/b]
After giving this property a thorough look, my offer today is [b]$251,100.00[/b]. I believe this is what this property is worth.
This property owner has stopped making payments and is looking for a short sale. I heard it through the grapevine.
[url=http://www.redfin.com/CA/GARDEN-GROVE/10372-HAMMONTREE-DR-92843/home/3461100]10372 HAMMONTREE DR
GARDEN GROVE, CA 92843[/url]
IR — Could you check your Refin search agent? I think “Built Prior to 1980” may have been left activated. I may be wrong, but it seems like a while since we have seen anything from the post-Carter era.
Yesterday’s property was in Quail Hill built in 2003.
I just go where the action is. Right now the real carnage is in the smaller, older properties.
I know, I was just being snarky. I never get the pleasure to have these dumps delivered to my email by Redfin, because my filter says “built after 1990”.
At least you get to see all the WTF prices 😉
You better believe I do. Nothing gives me more pleasure than dropping that rent check off at the leasing office every month….
anybody with stories of a dumb realtor — i have the impression every realtor is learning disabled — please post them. stupid things they said or wrote. meager educational backgrounds. etc.
I started a post here for the stories; [url]https://www.irvinehousingblog.com/forums/viewthread/2371/[/url]
Not to pile on here but dang! 850K?????
Only an 18% haircut — I think they are getting out easy.
Just for a frame of reference, new giant homes all over California are sitting unsold for $399,000. If Irvine is worth 2X the rest of the state — the historic multiple — maybe the top of the line house is worth $800,000. But I think that $399,000 will not last — I see them coming down to $270,000 or less.
😛 This house is just 600 or so yards from the 405. On days of high Santa Ana winds (or even mild offshore flows), it sounds just like roaring surf at the beach!
I assume the synthetic surf sounds would be a selling point.
There are still people out there paying big bucks for homes despite nearby carnage.
One example is 25 Prosa, 92620 which just sold for $730k ($350/sq ft) closing on 5/22. One the face it may seem like a reasonable price given previous sales, but here’s the kicker: 15 Prosa a few doors down seems to have just sold for $285/sq ft. I say “seems” because the Realtor flyers show it selling for more money ($680k or $326/sq ft) on 11/15/7 (5 months earlier) and they omit the latest sale. Redfin and Zillow indicate this property sold for $595k on 4/8/8. I’m assuming this went back to the bank for $680k and actually did sell for $595k to an individual/investor and the Realtors are conveniently omitting this fact.
If this is true, wouldn’t the comp for 25 Prosa have been wiped out? Maybe the buyer of 25 Prosa just didn’t care and had the cash.
I have been inside 15 Prosa and while it wasn’t the greatest house, at least on the surface, it wasn’t a dump either. Location and lot size are virtually identical too. (One thing though, somebody pulled a fast one by listing 15 Prosa as 1990 sq ft. when it really is 2086. Probably gaming the system for just this reason or maybe to get a lower price from the sucker lender).
Any thoughts on this one? Is the $595k sale real? Why would someone pay $730k just down the street for basically the same thing?
2 more of this same model house just went up for $760k and $800k. The sellers are clearly emboldened by the $730k sale.
IR
you still have people on this board who believe Irvine is special and that every one wants to live here….etc, 😆
I think there will be more knife catchers in 2008 who fail to see that incomes dont support these prices. until people think twice about what they are buying, we still have a long way to go.
Missed you at the Galaxy game a couple of weeks ago, MMG. The good news is, have a suite for the Angels on Saturday the 14th. Come on by, I’ll bring all the latest glossy Irvine Company propoganda — and we can have that discussion over how special Irvine is over a couple of beers!
BTW — it does not matter that “everyone” does not want to live here. Thank god they don’t. But you cannot deny that Irvine is *different* than most places in So Cal. I’ve looked long and hard to find the same mix of clean and safe neighborhoods, schools, and central location thoughout So Cal. I’m not stuck on Irvine, and would be totally open to a comparable alternative. I just can’t find it. There are areas just as nice, but they are a crap commute. There are areas just as expensive, but their schools suck and you’d have the incremental cost of private school. Please, please give me the comp. And don’t sing that tired song “Laguna or Eastside Costa Mesa or Newport are so much nicer”. They are great. But they are not comps to Irvine — people who want those places don’t want to live here, and vice versa.
So while you may not like or appreciate the things I do, there are at least 200,000 people who do — and thus Irvine will continue to carry a premium. Not the current premium, but *a* premium. That’s why the jokers out here saying “this place ain’t worth nuttin more than $150 sq ft” sound just as silly as the realtards asking $550 sq ft.
CK
totally agree with you, Irvine deserves a premium, always has, always will, at about 200 per sf 😆 Thanks for the invitation dont drink beer but importantly have traffic school to go to that day, cops need money and are stopping people left and right then giving out tickets for over 300 bucks….. 🙁
I never denied Irvine being a nice city, but my point is the economy is heading south, gas/food and every other thing is going up in price, alot of high paying financial jobs have left (guess where:IRVINE). and for your comp go check out a neighborhood similar to Irvine (longer commute by 20 minutes)in Ladera Ranch and see how they are doing 😆
Irvine will carry a premium over neighboring cities for the reasons you cited but Irvine is NOT THAT SPECIAL. it will come down like other towns. like you said not everyone wants Irvine and vice versa, with credit becoming very tight, sellers in Irvine(and other cities as well) will be competing for a smaller number of buyers in the next couple of years. just read on calculated risk that problems are spreading to Prime— guess my friend what that means 😆
You are still essentially saying “Irvine is special”. Most people who live in Irvine work very close to it, and that’s going to be an increasing factor in decision making with higher gas prices as well. If I didn’t work in Irvine or very closeby I doubt I’d live here just because of the commute.
Now is a great time to buy or sell a home
Easy fix for all RE bubbles: Debtors Prison.
Our oh so wise federal government decided in 1933 to get rid of this very important tool to discourage theft through acquisition of unpayable debt. Since then some Americans have basically turned it into a business model. How many of the folks profiled on this blog heloc’d the $h!t out of their houses during the run up and stashed/spent all the money prior to forclosure ?
The only way we’re going to maintain our financial status in the world is to encourage wealth building through savings and investment. Debtor’s prison is an important tool in this effort.
Would need a lot more prision space.
CA already has 180,000 in prision, mostly drug users due to three strikes law. Adding debtors would increase the prision population to well over 250,000 inmates, not to mention who would take care of all their kids.
No, there has to be another way to punish these people.
Make them join the army and send them to IraKK!.
You could put them in house arrest.. that would force the State to buy a lot of homes and solve the RE problem.
Voila… problem solved. 😉
Plus this house is right on Michelson Drive which is a pretty busy road in Irvine. Oh well!!!
That part of Michelson narrows and quiets down since most people turn to Culver or go to the shops on that corner, so it’s not that bad. But yeah it is next to a road.
IR
“‘We don’t want to go back to the days when you had to put 20 percent down,’ Hobbs said.”
Dustin Hobbs is the (big surprise) communications director for the CMBA (California Mortgage Bankers Association)
http://www.capitolweekly.net/article.php?_adctlid=v|jq2q43wvsl855o|x60x5v7hs1wf5u&issueId=x60vgstux00b9h&xid=x60wxnnhra8env
Has anyone ever done a basic analysis of the incomes of the folks really buying these properties besides the banks? Do we all really believe every family in Irvine makes $200K? How else could you fund all of your retirement investments, pay for electricity, cable, food and gas? I’m just astonished by the prices and the fraction of income that goes to debt service.
BD
BD – indeed, that is a well-worn subject here on the blog.
One of the major pillars of our discussions here has centered around affordability and the seemingly large disconnect between “median household income” and “median home price” here in Irvine.
There are many sources for the stats but suffice it to say the median in Irvine is NOT $200K. In fact it’s currently reported at less than $90K. With median home price hovering around $600K, that would put the home price metric at 7X median household income. Obviously not a sustainable level and a key reason why the downturn will continue unabated.
To your point, it’s likely many of these folks are over-extended and therefore not funding retirement and barely making it from paycheck to paycheck while the noose tightens.
I foolish!