Shadowplay — The Killers
Each new low sale or asking price lowers neighborhood values. As I discussed in Financing in a Declining Market, everything within a 1 mile radius of a low asking price becomes very difficult to finance. All of the short sales we have been seeing advertised do nothing for the would-be seller, as they rarely result in a sale; however, they do serve to obliterate the neighborhood comps as these low asking prices sit on the market. In fact, I would say that attempted short sales are doing more damage to the market right now than foreclosures because the foreclosures simply disappear into the black hole of lender holdings whereas short sales stand out in the market signaling a new lower pricing level. Today’s featured property is a nearly new property in Northwood II asking $240/SF. It is an astonishingly low price in today’s market.
There are no pictures on the MLS, but the pictures below are of the identical property at 39 Secret Garden offered by a neighbor for $240,800 more (WTF?) Let’s just say this neighbor can’t be very happy about this short sale.
Asking Price: $599,000
Income Requirement: $149,750
Downpayment Needed: $119,800
Monthly Equity Burn: $4,991
Purchase Price: $814,000
Purchase Date: 11/29/2004
Address: 26 Shadowplay, Irvine, CA 92620
| Beds: | 4 |
| Baths: | 4 |
| Sq. Ft.: | 2,492 |
| $/Sq. Ft.: | $240 |
| Lot Size: | – |
| Property Type: | Condo/Co-op |
| County: | Orange |
| MLS#: | 08-295511 |
| Source: | TheMLS |
| Status: | Active |
| On Redfin: | 3 days |
interior,spacious living space(2,492 sq.ft)built in2004,$120,000
upgraded option when purchased, This is a short sale property!
Is this the bottom for pricing in this neighborhood? I doubt it. It isn’t very likely we will see the bottom of resale pricing anywhere in 2008. The bulk of the problem with foreclosures is ahead of us, not behind us. No matter how low prices get in 2008, they will go lower. Seeing this price levels in 2008 is rather surprising. It foretells of a significant downside overshoot of fundamentals, in my opinion, but we will see.
Many of the buyers in this neighborhood used 20% downpayments. I heard rumor that it was a requirement of the builder. Not to worry, they promptly withdrew their equity with a HELOC, so they will not lose any money. In fact, if they fully tapped their $250,000 HELOC with Washington Mutual, they stand to make money on the deal. If the HELOC is fully tapped, the total mortgage debt is $901,200. If this property sells for its asking price, the total loss to the lenders will be $338,140. Washington Mutual will eat $250,000 and America’s Wholesale Lender will lose the rest.
As for the rest of the neighborhood, the financing environment just got a lot more challenging. I doubt the sellers at 26 Shadowplay will be getting any tearful send offs by the neighbors…
.
To the centre of the city where all roads meet, waiting for you
To the depths of the ocean where all hopes sank, searching for you
Moving through the silence without motion, waiting for you
In a room with a window in the corner I found truth
In the shadowplay acting out your own death, knowing no more
As the assassins all grouped in four lines, dancing on the floor
And with cold steel, odour on their bodies made a move to connect
I could only stare in disbelief as the crowds all left
I did everything, everything I wanted to
I let them use you for their own ends
To the centre of the city in the night, waiting for you
To the centre of the city in the night, waiting for you
Shadowplay — The Killers
Haha…are you tying your entry names in with Mish’s blog now?
Yes, the other owner should have been a little more aggressive. He has no chance to get anything near his price now.
I can’t agree with you more that the bulk of foreclosures are ahead of us. I’m already seeing where houses that were up for sale a year ago at obscene prices are back up for much lower prices: what happened was that the owners threw tantrums when they didn’t get the WTF price they wanted for their houses and pulled them from the market “to wait until things got better.” Apparently they didn’t, because now they’re either short sales or obvious repos.
I’m watching one house down the street from me, where the original owner died two years ago and his children decided to put the house up on the market. After a year, it was marked “FOR LEASE”, but the kids couldn’t find anyone dumb enough to pay what they wanted for rent, and they’re not helped by the number of superior houses in the area up for rent at better prices. From what anyone can tell, the kids just simply dumped the house and left: the lawn hasn’t been mowed for about three months, the front porch is covered with flyers and junk mail, and the yard is strewn with broken tree branches. I don’t even want to think about how bad things are on the inside. Somehow, especially with heirs who’ve been chugging the Kool-Aid from the beginning, we’re going to see more of this in the next couple of years.
Funny.
I can recall a time where a mere mention of 600K for a property like this would have resulted in an immediate blog flog and tar and feathering by the usual suspects.
Oh how the times have changed.
Not to forget the letter to the owner on how the prospective buyers life would change if they chose to sell them the house, and here is an extra $35K with my offer.
Are you friggin’ crazy? Go back to Arizona fool! This property is worth at least [dr evil] One MILLION dollars! [/dr evil]
No! [dr evil]One Billlion dollars! [/dr evil]
No! [dr evil]One Hundred Billion Dollars![/dr evil]
You ought to focus your attention locally. http://money.cnn.com/galleries/2008/fsb/0807/gallery.recession_concessions.fsb/4.html
Seems AZ is bad as well. Giving free drinks to owners of foreclosures. hahahahaha
AZ:
If I recall correctly, you were calling parity with the current AZ market (even citing comp properties, if I remember), using asinine numbers like $200k for an Irvine SFR.
Even with the aggressive discounting – even assuming a worst case, cash pay financing environment, your statement was and is ridiculous.
Since then, you have spent many hours on the Irvine Housing Blog and have become more familiar with with the Irvine dynamics.
Go back and look at your earliest posts before playing martyr.
The AZ comps are used to illustrate the foolishness and level of over-spending in southern California.
Is 200K really that ridiculous?
Mr. Mruvka doesn’t seem to think so over at
http://www.pe.com/business/realestate/stories/PE_Biz_S_condos13.2ff32a8.html
AZ:
I gave you too much credit. The article you just linked is a freaking joke. My brother lives out that way and places are going for $100/foot and falling. No one wants to live there because you have to drive 2 hours for a half decent job, it’s hot, there’s crime, and it’s RIVERSIDE.
Riverside = Arizona.
Irvine ? Riverside.
There is always relative value. Is it way overpriced, even today? Yes. But there is a pecking order of value, and dirt in Riverside is extremely undesirable.
Are you suggesting that all land has the same value?
Of course not.
And please don’t oversimplify my comments to say this is sacred ground. You are insulting all of our intelligence.
Don’t worry – we all know that it will be different in Irvine.
That’ll show those bears who their daddy is.
No, smart guy.
Inland dirt is just cheaper than coastal dirt. And it gets cheaper as you drive east. All boats rise and fall together, but some are worth more than others.
That’s it.
I’m trying to think of an apt analogy in Arizona, but am struggling. Sedona, perhaps?
Not sure why this is such a difficult concept for you to grasp.
By the same argument, Irvine is not Laguna Beach or Newport Beach. It is a flat place with a lot of chain stores, tract housing, and very large crowded freeways, and it is about 15 miles to the nearest beach (where you can’t park except at 6 AM on Tuesday morning), the inland parts of Irvine are pretty much ocean-breeze-free and very warm, etc. The typical landscaping and layout in Irvine contributes no sense of place — I find it to be sort of Anywhere USA (an upscale version). AND I note on google map that this property doesn’t seem to be in easy walking distance of any of the famous Irvine parks. Irvine has been, and remains, a mystery to me. And I worry that somebody is going to pull aside the curtain and we’ll be able all of a sudden to see the wizard.
Also — Sedona is more like Malibu. It’s spectacular and really, really rich people live there. Irvine is more like, say, the nice parts of Tempe.
I agree – Laguna and Newport will always be higher priced dirt for the reasons mentioned above. Same with the west side, santa monica, palisades, PV, etc.
Your statement of 15 miles to the nearest beach simply isn’t true. Turtle Rock, Turtle Ridge, UCI area, and others are a 10 minute bike ride to Newport. Of course, that dirt is more expensive than Northwood.
Irvine’s magic is that it has cool temps + jobs + master planning.
That’s it. So the dirt is more expensive than *ahem* RIVERSIDE.
My point stands. It’s all relative. Overpriced, but still relative.
I’ve been in Irvine for a year now (from Wisconsin) and people’s attraction to it remains a mystery to me as well.
Speaking of mysteries…does anyone know why so many here drive silver cars?
Kim
Irvine has schools, jobs, weather, cool temps. In the past few years, it has lacked affordability.
Thus the blog.
There is no other community in Southern California that I am aware of that combines these 4 factors. San Diego comes closest, but jobs are relatively scarce and the schools are iffy unless you’re inland somewhat.
You can get 2 of the factors above, maybe 3, but not all 4. Once affordability kicks in, you get 5.
If I am wrong, please suggest a community that combines all the attributes above. Be glad to relo there…
Don’t forget the schools.
Sorry – the first line should read “Irvine has schools, jobs, weather, safety.”
Weather and cool temps… Freudian slip as I cook up in the SFV.
Don’t forget racial makeup. Unfortunately true.
Where else can you find a city with only Asians and Whites and the cops are out there enforcing the “Driving While Being Dark” rule.
Obviously you people haven’t checked out Cupertino, California. The price there makes Irvine look like AZ.
Excellent observation Kim! You win! You get to stay in the OC for another year! Congrats. 😀
Seriously though … I think silver cars abound in Irvine for a couple of reasons. 1) vanilla surroundings make for vanilla cars. Silver is a very safe color. Sits somewhere between white- too “girly” and black- too hot and difficult to keep clean. 2) lack of imagination. Like it or not, Irvine tends to be very socially conservative which often leads to safe decisions (see reason 1).
Clearly this doesn’t apply to housing finance options but hey, free money will make people do all sorts of stoopit things. That and “livin’ the OC lifestyle”!!!
…does anyone know why so many here drive silver cars?
Because gold would be tacky?
This short sale at $599k might be a design of tease. However, realistically, that is where potential buyers (knife catchers) are located.
I would never buy this at 59k, but I guarantee you there are numb nuts here in Irvine who will bite.
$59k? Where do I sign up?
i might pay 480k…..but then again, if i wait another 6 months….
Ok, here’s the obvious question (at least to me) –
This is built in 2004, listed at 25% below the 2004 purchase price, works out to $240/sf. I know nothing of the neighborhood, but…
why is this price too high??
Why do you bears forecast the prices falling much more than this for this type of house?
I must agree with you here. I am not sure the price will hold up at $600k, but I doubt it will fall a lot more.
IR, shouldn’t you modify your monthly equity burn based on the relative value of each home?
It’s hard for me to believe this home will be worth 20% less in 2 years. Will a nice home in Irvine be under $200 / sq. ft.?
What is the rental rate on a similar unit. I guess it’s pretty close to the mortage payment.
This home will be worth more than 20% less in two years. Thats the fundamentals of economics.
What was crazy was buying a stucco box for over $800k and then having to put in $120K of upgrades. At $800k this house should have been turnkey with all the amenities.
I don’t think it’s crazy where prices will go. When the buyer pool dries up, prices collapse. Look at GM, now they are trying to sell trucks 1/2 off and still not finding any buyers. A 1 year old Cadi Escalade that sold for $71k one year ago was recently appraised at only $33k. Why are overpriced houses any different than trucks or SUVs.
Supply and demand.
I would estimate the breakeven owner-occupant value at around $480,000 based on a $3,000 rent. I do believe it could easily fall 20% in value, particularly since the foreclosure nightmare is only beginning in this neighborhood. The breakeven rental value is a price level where I would buy, but it isn’t going to magically form a bottom. If the number of foreclosures is greater than the number of buyers, prices will continue to fall. I believe we will see an overshoot of prices to the downside while this mess is getting cleaned up.
IR, I think we need to readjust owner-occupant value. Mortgages are closing in at 7%. 20% down is $100,000, which frankly, is borderline real money.
I get a owner occupant value of $350,000. That’s assuming 97% LTV FHA loan, tilting in at 7%. $270 in HOA, $250 more in mello Roos, $320 a month in taxes and mortgage payment of $2258. Which comes to about $3100 before insurance and maintenance. And at that downpayment, only about $250/month is equity savings.
Yes folks, that’s the power of taxes, cut this place to 1/2 of it’s former list price and it’s still carrying nearly a $1000/month in taxes, HOAs and mello roos.
This is built in 2004, listed at 25% below the 2004 purchase price
Sounds like the original buyer way overpaid, much to the delight of the builder.
works out to $240/sf.
So what? Do you buy smaller shirts because the larger ones cost more $ per square inch? No, they both cost the same.
why is this price too high??
Apparantly it is difficult to find a buyer with 120K cash on hand right now to put down. Seems like it logically follows that the price is too high.
Why do you bears forecast the prices falling much more than this for this type of house?
Incomes are not sufficient to maintain this price. Creative financing is required.
Price has a ways to go. Look for it to drop down into the 400’s.
“Price has a ways to go. Look for it to drop down into the 400’s. ”
Lower!
“Price has a ways to go. Look for it to drop down into the 400’s. ”
Even lower.
mid-300s before it’s over. Maybe even lower than that. Or maybe that’s just my Rust Belt raisin’ talkin’. I dunno.
My broker at Smith Barney laughed at me when I told him the Dow was probably going to hit 8000 again. He’s not laughing anymore.
the answer to your question is a question:
what is the profile of a person who will buy this house? How much do they make? do they have the cash to afford the down plus PITI plus maintenance?
I would postulate the buyers of this house are making ~$120k, perhaps a dual-earning household. They have $50k available for a down. That puts the value somewhere around $500k, depending on the HOAs (“detached condo” = HIGH HOAs), mello-roos, and interest rate — all of which can be a significant drag on value.
So that may need to adjust down a touch. $450 – 500k, based on my assumptions above?
Or is that false precision?
I don’t view it as an overshoot of fundamentals. I think rents will tumble quite a bit as well.
Think about it – economy is heading in the tank, unemployment is shooting up. Who exactly is going to be in position to pay high rental rates, I don’t think there’s a chance in hell that they hold at current levels.
Buying today at a seemingly fabulous price is a huge risk.
Rents can be high because the equivalent mortgage for home purchases is even higher. As the latter drops, so will the former. I believe this because rents in the area are very high relative to income. So, back to the fundamentals argument…what can people afford? I say much less as times get tougher.
Lunatic and Phil,
Agreed. The little circle goes such…prices fall, rents fall, prices fall until everything is once again in equilibrium based on area earnings. Of course, the buyer beware here is what will happen to EARNINGS? It’s tough to pay 3 grand a month in rent if you’re suddenly making 40k a year. (Oh that won’t EVER happen in Irvine, I know…and I have a bridge up for sale in New York if you really believe that.)
Are there any lenders left willing to make home loans?
Maybe we can get some more good old fashioned bank runs. That was fun.
That was fun. Now the bank runners are being threatened to be arrested in Pasadena.
Encino, actually.
http://www.latimes.com/business/la-fi-indymac16-2008jul16,0,1217522.story
I know because I biked right past it this morning on my way to work…
Yesterday I heard a guy on the radio who went to IndyMac to withdraw his money. He complained and said all the people who were panicking were stupid.
I guess his panic was justified.
Of course rents can fall.
I love it when I see one of the Charlatans on here call the bottom using the “rent factor”.
They are in essence making the faith based assumption that today’s rent is set in stone – commanded by god thou shalt not drop and only go up.
As median incomes drop – rent will drop – house prices will drop.
YES!
This will sell for $300/sq.foot. The asking price is a teaser and I can guarantee there will be investors all over this paying the full amount in cash. It will sell for over $700K, because well…….it’s Irvine,the 4th best place to live.
I concur.
There are more ill-informed, uneducated suckers out there in Irvine than ever.
They will happily fork out 700K or more for this condo.
Until these suckers are weeded out and burned (financially), we will continue to see WTF pricing in Irvine.
Yes, this beauty is clearly worth $600,000 — FOR A FRIGGIN’ CONDO. It’s a CONDO. Not a SFR, a condo. “Honey, let’s have a nice BBQ in the back yard. Oh, sorry, forgot, we don’t have one.” Let’s go to the Association BBQ and fight for space with the other Condo Dwellers.
Don’t get me wrong, there’s nothing wrong with Condo living — but not at $600,000. For over half a million, I would expect a lot size bigger than the listing of —-. I guess that’s Realtard speak for NONE, NIL, Zero, Zilch.
My sentiments as well. I don’t understand how prices on Condos rose so high. To me if a home has no yard then by definition it’s a condo.
Its the bubble thing. In the tech bubble, we sold each other worthless .com stock to each other to get rich. In the great RE bubble, we sold each other any housing box to get rich.
“Its the bubble thing. In the tech bubble, we sold each other worthless .com stock to each other to get rich. In the great RE bubble, we sold each other any housing box to get rich. ”
In the next bubble thats comming, we’ll be trading “worthless” US dollars for gold, and silver.
He who has the gold will be making the rules, and there isnt enough gold to go around.
Got yours?
Jan. 22, 2001 — George Bush sworn in as president. DOW closes at 10,578.24.
July 16, 2008 — Today. DOW closes at 10,962.54.
Interesting, isn’t it?
They’re not making more gold!!!
Yes, it is interesting that President Bush grew our economy significantly. What did Clinton do?
Funny you should ask. The DOW went up 8000 pts under Clinton.
>>………it’s Irvine, the 4th best place to live..<< You argue because of this Money's ranking that it should sell for over $700k? Are you serious? Well, how much then the similar property should sell for in the #1 place to live? By the way, there are multiple entries on the Money's top 25 list from New Jersey which I do not get it.
I think you missed his sarcasm….I BELIEVE that Orange Renter’s point was that there’s still enough stupid people with money out there to get this place sold.
Lots of badly priced items sell. My thinking is that this will sell (near its current price, though) as some people see “30% decline in 16 months” as an invitation to buy. Macy’s has 30% off sales that do very well, despite the fact that they’re selling stuff at 30% off 40%-inflated prices.
We almost brought this same model house, as exchange to an investment house sold, between March and May 2004. At this time, builders already develop very innovation priority order. Thanks to $300K down payment doc, we get very high priority number. Our observation of how priority was decided as following order.
1. Builder relative
2. IAC exec relative
3. Builder Employer
4. Amount down payment of applicants
5. Amount of income
6. Receiving oreder of application form
Our observation of how priority was decided as following order between March and May 2004.
Pecking order 2008:
1. Bank
2. Idiots
IR,
Great song choice but you must be holding out for an even better property to spin KC and the Sunshine band’s “Keep it Coming Love” to:
“Keep it coming, love! Keep it coming, love!
Don’t stop it now, don’t stop it, no, don’t stop it now, don’t stop it!
Don’t build me up just to let me drop, don’t stop it now!
Don’t turn me on just to turn me off, don’t stop it now!
Keep it coming, love! Keep it coming, love!
Don’t stop it now, don’t stop it, no, don’t stop it now, don’t stop!”
I’ve lived in SoCal my whole life and I’ve watched the trend as the builders started shoving the houses closer and closer and taken away more and more yard from the newer developments. They COULD do that because we were all willing to camp out all night just to get in line for a release of 15 new properties in phase 3. Now we are all stuck with a bunch of condos with no yards or privacy to choose from. Go sit on your porch and you can hear one neighbor’s tv, another on the phone and another yelling at their kids. Then the neighbor’s AC kicks on and you can’t even relax on your own patio. When your neighbor goes on his porch to light up, you are forced to retreat inside and close all of your windows. I understand that condo life is like that….. but that kind of life should cost you $275k, not $600k. Don’t be fooled by the “newness” of this listing… $600k is still a LOT of money- well, for me anyway. But I only earn $150k a year.
“Keep it coming love” is my mantra….. well, that and “Serenity now.”
[b]ONLY $150K?[/b]
Nice.
You have to love these chumps who are most likely exaggerating their income and intentionally qualify it with words like “only” to imply that the circumstances of someone earning 150K per year is nothing out of the ordinary.
Hey, I make 120k annually and it feels like nothing, sitting here in my 2 bed apt in newport beach. There is no way in heaven that i can afford this place, unless I found a briefcase with 250k on my way to work.
“You have to love these chumps who are most likely exaggerating their income and intentionally qualify it with words like “only” to imply that the circumstances of someone earning 150K per year is nothing out of the ordinary.”
No, I actually used the word “only” to point out that what is more than double the national household income average doesn’t add up to much out here. In my younger days I imagined that $150k a year would buy a decent home in a middle class neighborhood. Now it won’t even get a friggin’ condo in the plains of Irvine. When you consider the mortgage, property tax, mello-roos, HOA and other costs, you’re looking at a lot of money for an unimpressive residence. As Bush Senior said, “I’m not gonna do it”.
Chump
In MY younger days, I thought someone who made 100k for 5 years in a row could retire after that.
Of course, I am thinking about 30 years ago.
Amen. I also make about that much and don’t feel rich by any means.
My “starter” was $200,000, and my latest one was double that. Luckily I bought before the run up of crazy prices. But even making 120K, I felt 400K for a house was pushing it in affordability.
Our generation is getting screwed! With WTF housing prices, no pensions, and outrageous college costs – 120K ain’t what it used to be.
You “only” earn $150k a year?
600k is a lot of money… But I only make 250k a year
Closing prices in Irvine and Tustin Ranch, on mainly 2000+sf places, continue to trend upward from their April lows…
http://www.ipoplaya.com/iposhiller.pdf
2-3 months do not make a trend, especially when they represent the peak selling period. To me the interesting thing is that your data shows mid 2004 roll backs. That, I suspect, is worse than the costal cities.
I agree. The data disputes the notion that prices are continuing to “trend” lower though… I started making the case months ago that listed inventory was headed down and that price declines would likely dwindle or stop altogehter. The market has gone further than that in Irvine, with prices actually moving up a little over the past couple of months.
In Irvine, we have less inventory today, at the peak buying time of the year, than we did at 12/31/07 when RE is normally dead and dried up. IMO prices will continue to firm until more listed inventory arrives or lending dynamics change. Rates in the 6% range, lower inventory, and 20% off peak prices sure seems to be enticing buyers into transactions, at least in Irvine.
Month to month they may be trending sideways or up, I agree, I’ve seen it. But year over year we are still trending lower.
More listings will come out as there are still years of foreclosures ahead of us, and demand will slow once again because of the slow winter season. Demand will also slow and foreclosures will raise as unemployment keeps going up. The stock market keeps going down and people will be able to come up with less money for a down payment. There are so many things working against housing it is not funny. Things will continue to trend down. This process will slow and eventually reverse as prices come down, but we are not close to that happening yet. Although Irvine is fairly diversified, some of the biggest companies in Irvine are auto companies and financing companies. You probably know those are struggling. I can go on and on, but my point is that prices will keep going down. Irvine is really a nice place, and is a boat that will float higher that the rest of the country, but it will also come down, that is for sure. Just be patient.
By the way, I do think this price is intended as a “teaser” and because there are still many knife catchers and ignorant people out there, it will likely sell for over listing price.
Off topis but I need some advice:
My Uncle passed away a few weeks ago. His daughter, my cousin, has been taking care of him for the past few years. My Uncle refinanced his home in Santa Ana on February 9, 2007. The house was paid for and he refinanced to a 40 year loan 495000.00. He would have been 75 on July 27 and his only form of income was a small pension, social security, and some military funds from serving 40 years ago. From what I can tell by the interest rate it is 1.25% initial with a fixed at 8.42%. He had very good credit so I’m pissed that they were charging him such a high rate but he just hasn’t been with it the last couple years and the initial payments were 1300.00 a month. Anyway, from what I can tell, if the loan reaches a LTV of 115% it will go up to 3800.00 a month. Right now my cousin is making the house payment of 1700.00. She is a waitress at Marie Calendars so refinancing and putting house in her name is not an option. Should she just keep making the loan payment until it adjusts and then try and decide to walk or apply for assistance? Does she have to put the loan in her name? Is it illegal or misrepresentation to pay the debt even though my Uncle has passed on? Rentals in the area are more than her initial payments, she has been maintaing the house, and she has pets so she really doesn’t want to move. One more thing. No one knows where 495k went. My uncle took a few small trips but had nothing of value to speak of. He had a girlfriend with 5 sons. The sons tried to talk him into signing their names on a life insurance policy but it was denied. We found all this out through paper work and emails. I personally think he gave those children and his girlfriend the money. It is a really sad situation for my cousin who didn’t even know about the refi. She thought the house was going to be hers to retire in.
That is a sad story.
It does not sound as if she can ever make the payment on the loan, so keeping the house is probably not an option.
If the house is worth more than $495K, I would sell it immediately. If not, well…
I agree it’s sad.
I think you need to sell the house and hope it brings in more than the note.
If your cousin is the executor she can pay on the mortgage.
I wonder what Tom Leykis would have to say about dating someone with 5 sons.
Indeed a very sad story. I am sure the GF took advantage of your uncle. >:-(
” I am sure the GF took advantage of your uncle. ”
IMO, no doubt about that ! She’s probably laughing all the way to the bank.
Thanks for the feed back. She is the executor. The house is probably worth today 350k at the most. I am going to advise her to keep paying the mortgage until it resets. After that I am going to advise her to call Washington Mutual and see if she can get it refinanced to something affordable. If they won’t work with her than I am going to advise her to stop making the payment and save as much as she can before it goes into foreclosure. With the slowness of the banks I’m thinking it could take 9 months to a year to foreclose after the reset. She can save about 20k or more. If it doesn’t sell on the steps of the court house maybe she can actually buy it from the bank when it gets listed. This is all best case scenario but does anyone think it could work? Her name is not on the loan. She has nothing in her name. Basically at this point she is a renter.
There’s no “downside overshoot of fundamentals” coming. House prices have a lot farther to drop, and rents are going to drop with them.
I don’t understand what all of you are saying about rents dropping. We rent a 4br, 3 bath house in Irvine for $2500. This was 2006 pricing (for rents). Well, our landlady is intrusive (comes over every two weeks to “check” on things), so we’ve been looking at other rentals. For a similar-sized place, rents are well over $3k. To find a rental price similar to our current one, we’d have to rent a much smaller place. I’m fine with that, because the owner drives me batty, but still…I dont’ see the argument that they are falling. Maybe in the future, but that’s speculation.
I have to respectfully disagree here.
Shannon – talk to an attorney you trust. That money is long gone – but many an old man has had to pay for companionship – this is not a new story. Gold diggers can smell them out.
Do some real DD – and have the right person talk to the mortgage company – maybe in this turmoil something can be saved.
DD – if you set up your life so that moving is easy – mail to a P.O Box, “get teh wife’ head in order , you can make out like a bandit. It also is going to take some homework. Fliplords will be begging for A-1 credit tenants soon. I own property and there is nothing better than a tenant who pays on time and does not tear up your place.
Market forces are market forces – they cannot be held back. I would look for homes in distressed areas with out of town owners – you are doing them a favor. And, i would ditch that landlord you have in a heartbeat – i guarantee every newpaper/magazien/tv article regarding this foreclosure/credit crisis is keeping her up at night.
Its the same refrain – Don’t drink the kool-aid” These landlords and realtards are SELLERS and will never admit the truth.
Huge laugh at all the descriptions of Irvine as the grooviest place on earth.
Haven’t lived there, used to work there–its as fucked up as any other place I’ve ever been, if you consider the crime is just of a different caliber (the net result is largely the same).
For people who stamp their little Asian/whitey feet at the thought of their precious children going to school with blacks and Mexicans, its a treasure! For anybody else, same crap franchise restaurants, urban sprawl and blight, a city manufactured before my eyes for the benefit of Whitey. Well, fuck Whitey.
Which isn’t to say that this isn’t a very entertaining and readable blog; the termites who dream of living in a ghastly suburban hellhole of self-righteous cretins deserve what they get, whether they pay $333 a square foot or a million. It’s still a piece of shit with no reason for its existence except for third rate IT firms and now destitute ‘financial companies’ to house their employees while they wait for their jobs to be shipped to Mumbai.
Or did I miss something obvious? OH YEAH, the schools.
Lamb Cannon:
Wow. Very constructive post.
Some of us have kids.
Any suggestions for a place to live that has work, weather, schools, safety, and affordability?
Didn’t think so.
I’d like to say thanks to the mysterious writer of this blog. Due to the excellent quality and clear thinking of the pieces written in the “analysis” section my wife and I are up over $200k in cash from where we would have been without some intelligent sign posts last year.
This is most of our net worth and we would have been facing certain bankruptcy without large life changes last year.
Wanted to let you know that your efforts have had some very large real life impact.
Haven’t lived there, used to work there.
No one can call you bitter…jes take a chll pill :coolmad: