Somethin’ Stupid — Frank and Nancy Sinatra
Do you think speculators who bought at the peak are feeling stupid right now?
| Beds: | 2 |
| Baths: | 3 |
| Sq. Ft.: | 1,031 |
| $/Sq. Ft.: | $572 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Mediterranean |
| Year Built: | 2003 |
| Stories: | 2 Levels |
| Area: | Quail Hill |
| County: | Orange |
| MLS#: | S542118 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 3 days |
soaked back landscaped courtyard. Wood flooring and custom paint.
Within walking distance to Alderwood elementary. Resort style pools,
spas, gym and parks all part of the association. Near the 405/5/133
FWYs. Close by entertainment includes the Irvine Spectrum and Laguna
Beach.
sun soaked? Look at the surrounding walls and buildings. That courtyard will feel more like a cave than an open patio.
{Adsense-ir}
Paid peak prices past the peak. Check…
Watched prices drop 20% since then. Check…
Asking for a profit despite market conditions. Check…
Praying for a greater fool to come along. Check…
Preparing for a short sale. Check…
Feeling stupid. Check…
.
I know I stand in line until you think
You have the time to spend an evening with me
And if we go someplace to dance
I know that there’s a chance you won’t be leaving with me
And afterwards we drop into a quiet little place
And have a drink or two……
And then I go and spoil it all by saying
Something stupid like I love you
I can see it in your eyes that you despise
The same old lines you heard the night before……
And though it’s just a line to you for me it’s true……
And never seemed so right before
I practice everyday to find some clever lines
To say to make the meaning come true……
But then I think I’ll wait until the evening gets late
And I’m alone with you
The time is right your perfume fills my head……
The stars get red and on the nights so blue……
And then I go and spoil it all by saying
Something stupid like I love you
Somethin’ Stupid — Frank and Nancy Sinatra
Apologies that this isn’t in Irvine; I’m up in Hollyweird so the houses I follow recreationally tend to be in the Valley or the Hills. Nonetheless, thought I’d share the most glorious WTF I’ve seen in my inbox in a while:
http://www.redfin.com/CA/Sherman-Oaks/3912-Witzel-Dr-91423/home/4859537
Description of Ultimate Awesomeness:
“Cash only – no financed offers will be considered for this bank-owned/REO/foreclosure property. This is NOT a short – bank ready to sell now. Stupendous panoramic Valley view from non-through street site – and a pool! House is gutted down to the studs – most interior walls and ceilings not there, just open frame. No flooring, fixtures, cabinets, and for the most part no drywall. Exterior is closed, has windows. Property sold subject to city-recorded Notice of Substandard Conditions, this will not be cleared. House is boarded. 3 small expansions appear to be without permits and will probably have to be removed. 1960s contemporary plan, 3 large bedrooms upstairs, master has big closet & bath, formal dining room & den with fireplace downstairs, big kitchen – but all are shells. Expansion of living room, enclosed deck off kitchen, and expansion of master closet will most likely have to go. Awesome project not for the faint-hearted.”
Sold for: $1.25m in Sept 2006 (probably when it was whole), $595k two weeks ago, now asking?
$619,900.
Apparently the Money Pit won, only nobody told the realtor.
Must be a bit of a pain for the guy trying to sell his house next door for $2,390,000
http://www.redfin.com/CA/SHERMAN-OAKS/3918-WITZEL-Dr-91423/home/4859533
The previous guy paid $1mil and got $1.3 mil profit in less than 3 years. That is an awesome timing and market condition recognition…
Jeez, WOW, it has a swimming pool! Isn’t that just fab?
I mean, are you even allowed to NOT have a pool in that area?
How much is the lot worth, at post-bubble prices, do you think? Because that is what a gutted 60s-vintage with illegal additions is worth. I’m sure the pool is a goner, too.
The price of the lot, minus demolition, clearance, and land rehabilitation.
Did this post give me weekend IHB schadenfruede ? Check.
Regarding Seth’s WTF:
How long before that one slides down the hill? One might opine that’s why the seller doesn’t want escrow, just gimme a big bag of cash and quick!
I think the portopotty in front of the garage door is a thoughtful touch.
As for the Irvine, $572 a square foot. Sounds like a great deal to me!
[/snark]
What are the comps in the area?
That is a very posh neighborhood, close-in, right over the hill from Westwood/Brentwood/UCLA/Getty etc. For the right person, this could be a huge honking deal.
It must be said, however, that the views are not normally of the clarity shown in the picture over the Valley.
Quick question for all of you:
Why were the majority of these exotic loan programs (option arms, 100% financing, etc.) used – primarily – in only three housing markets across the country: Southern CA, Las Vegas, and Southern FLA?
Considering their popularity, and the part that they played in driving up home prices, why didn’t we see these lending programs prosper or be used more prominently in other cities or parts of the country?
Just curious as to your observations, thanks.
I think that in So Cal the prices are so high that people went for the affordable payment. Of course for the specu-vestor, no skin in the game bet worked well for second home destinations like SoFla and LV. I don’t know if I would bet on Des Moines IA.
Your question is at the core of the housing bubble. When the first housing bubble was inflated in the late 1970s in California, people learned they could drive up real estate prices and profit from it — if their timing was right. At that point, California’s market became a speculative frenzy, and the delusions of kool aid intoxication took over. The rest of the country did not experience that first bubble, and most of the country did not experience the one in the late 1980s either. Since Californian’s have the pathologic belief in endless real estate appreciation and other areas do not, we built a bigger bubble. The higher the percentage of the population that is willing to bid inflated prices higher, the larger the swings in real estate prices will be. California has now exported this pathology to the rest of the country. Only time will tell if we inflate another one. If structural changes are not made to the housing finance market, we will. Greed springs eternal.
I think we can also add that a pathology of false impressions of wealth and live for the moment mentality was part of this too.
Speaking from experience, I can affirm that other parts of the country, including the midwest and parts of the SE, do not view their home as an ATM nor as a speculative investment. One’s home is precisely that, a home first and foremost. It is considered a badge of honor to pay off one’s home early. Any increase in value over time is merely a bonus.
Let’s hope the specu-vestors are feeling the pain. Along with the truly stupid, these people bid home values out of reach and caused many more well intentioned folks to have to compete with the stupidity in order to get a piece of the American dream. Now we all feel the pain. Speaking for myself, I wish some of these people would wind-up in prison. They stole my home from me because I wasn’t willing to become the GF.
Those aren’t the only places…… Chicago and St.Louis surely have their share of overpriced homes financed with exotic loans.
Local financiers estimate that half of the loans issued in Chicago, another bubble market, in the past five years are exotics, and we can see the results- about 50% of all South Loop condos are standing empty, with a substantial percentage in foreclosure.
Seems like every other listing I see is in foreclosure.
And every loan I was offered was an adjustable, which is why I’m still renting. The prices for places comparable to my excellent cheap rental were way out of line and beyond my means.
Point well taken. As a former Chicagoan I can honestly admit I barely recognize the places where I grew up. Certainly there are places in Chicago, the Loop being one, where money and greed have always been on display and throw a little “cheap” money around and the pretenders come out of the woodwork.
But the sub’s where my family still live display a different mentality, the one I was referring to … a house is a home first, everything else comes in second. Or at least that’s my experience and I can offer anecdotal evidence in that many neighbors have lived there for years and years and the make-up of neighborhood remains very static.
As to Southern Fla, the reason was that here in the Land of Low Salaries, people couldn’t afford the prices, and yet the prices were going up, up, up and away, apparently forever. Normal people feared being priced out. So these exotic loans were devised on that premise. Instead of just loaning on a normal price. Or, since nobody could tell what a normal price was, a say, 10% or 15% downpayment could have damped down the worst of the excesses.
But because the originators were not keeping the loans, what did they care? If they were required to keep 30% of what they generated on the books, that would have damped the binge down.
None of the normal checks and balances worked. The herding instinct was simply too strong.
I had the fear of being priced out when I bought in miami in 1981. We bought at just the wrong time!! From 72 when we moved to Miami, til the present disaster, prices went down precisely once–just after we bought. But we had put 21% down, and prices dropped less than that and we liked our house and could afford the payments, so it never entered our heads not to pay.
But I understand the fear of never being able to buy a house.
Later during the bubble people would ask why I didn’t buy a 2nd house, I’d just say that I didn’t like to owe money, I was just too conservative.
The house we own up in Brevard is now paid for, and we are surrounded by people who bought long ago, except for one next door neighbor. No foreclosures as far as I can see, within half a mile. Values ‘way down, but ‘way up from when we bought.
But werent prices going up up and away because of the exotic loan products? I’ve also wondered why the mortgage abuse/stupidity was contained to a handfull of areas in the country. maybe Californians (I’m a native BTW) are just more shallow and stupid than the rest of the country?
People in Irvine should spend some time looking at the workforce composition of OC and LA, if they want to see something frightening. Basically, like South Florida, it is an economy based on tourism, where prevalent jobs are housekeeper and theme park worker. The average years of school completed in the nation’s second largest metropolitan region is way below the national average. The average wages paid in the Riverside are the lowest in the nation. This is where you live people: Irvine is not a separate market.
LC — Do you just come here to pull statements out of your a$$? From the things you say, it is clear that you are not from here, and likely have neven even been here — but certainly are fixed on the IE, and grasping at straws to link it to Orange County. A couple of statements that come to mind:
– “Corona is not that much different than Irvine”
– “Hemet is the same market as Huntington Beach”
– “Riverside wages = Irvine wages”
And now you are defining Southern California as a tourist and service industry economy? Dude, do you have any clue what you are talking about? All you need to do is type ‘Southern California Economy’ into Google, and you might find something like this pop up:
“The Southern California economy would rank as the world’s 11th largest economy if it stood alone as a nation—approximately between the economies of Mexico and India. Los Angeles County alone would rank 16th, between Australia and Russia.”
Please do a little research before you comment on the IRVINE Housing Blog, or stick to commenting on broader non-localized issues.
1) This is the same city: Los Angeles, Orange County, Irvine, Riverside — I hate to burst your bubble. (OK, I don’t — that is what I do.) It is considered the same market for everything, including housing and cars. San Diego is not — I grant that. How on earth can you think that the housing market is somehow “special?” Irvine is just a petty suburb in a large metropolitan region.
2) As a suburb, Irvine is more prone to the forces exhibited by the nearby larger metropolis.
3) I tried to point out that the average worker in the region is poorly educated and poorly paid — not the type of person you would expect to work in a world class city in an information age. But the reality of this city is different — warehouse workers supporting global trade and maids supporting tourism do not get paid well.
http://www.labormarketinfo.edd.ca.gov/
Uh, LC — It appears you are trying to assert that because there is an *average* of all of the 17 million or so people who live in Southern California that there will or should not be any major deviations? Therefore, Huntington Beach and Hemet should not be that different?
I hate to burst your bubble, but this is unfair capitalistic USA. Looking at a broad average on an EDD spreadsheet won’t tell you the reality. Perhaps the suburbs of cold war Moscow were all socioeconomically similar — but it ain’t so here buddy. Unfortunately, the reality of Southern California is there are have and have not places. SoCal is very economically segregated, as you might notice if you come to visit. Not saying it is right — but it is what it is. Irvine is a *have* place — not as much as Newport Beach or Beverly Hills, but much more than Norwalk or Bellflower. Have you ever been to Beverly Hills? You can drive (or even walk) from ridiculously lavish homes to sheer ghetto in a matter of minutes. The *averages* of the LA-Long Beach-Santa Ana-Riverside CMSA don’t seem to be hurting the good folks there much.
Yes, Irvine and all of SoCal was overpriced and still has much room to fall. But to draw parallels to Hemet — where I am pretty sure there are more people than there are teeth — is just plain silly.
PS — Anyone can google, so what is so special about your evidence? It sounds like Chamber of Commerce boosterism to me. My evidence comes from years of reading. Look at the details of what is going on in this economy, particularly at the job market. How can you can generalize about So Cal on one hand, and gripe about Irvine, Corona and Riverside being different on the other?
I live in HB, and study in Irvine, not that it makes any difference, but you are also wrong about that.
Oh, my bad — you are a student. Yes, you know everything from books and spreadsheets.
In that case, you will probably start to understand the difference between Irvine and Riverside in about 15 years, when you have little Emma or Ethan running around. You will undertand why someone would pay $500k for a townhouse in Irvine vs. anything in Riverside when you lay awake at night worrying about your the safety and education of your child.
BTW — Have you ever heard the term “all real estate is local”? Is your local everything between the 405/5 split in Sylmar and the 405/5 split in Irvine?
I am actually a returning student, with a career and two kids almost ready for college themselves. But I just cannot for the life of me figure out why the cheapest SFR in HB is worth a 1000% premium over the cheapest place 80 miles away, when they look identical, they are surrounded by the same trailer parks, the same white demo, etc. Maybe I am just not as smart as you are, CK. I get even more confused when I see the same house in Corona in a similar, even closer, mass produced setting as Irvine. What is the difference of Irvine again? It all looks the same to me, help!
lost_in_the_fog,
The “price doesn’t matter, just get the payment affordable” mentality swept the so-called hot spots, to a degree. I saw a poll somewhere not even a month ago where 36% of mortgagors STILL don’t know what kind of mortgage they have or what the terms are.
Then you had the “get rich in real estate” infomercial crowd, pumped by carneys and bought by “entrepreneurs” who thought they were God’s gift to salesmanship, fondly (or not) known as flippers.
CA, FLA and Las Vegas had bigger numbers going up faster, so that was where the real action was.
Remember also that the use of affordability products was not the result of high prices, it was the cause of high prices.
I agree, it was the loan products causing the high prices, but why did the bubbles grow so large in just a handfull of areas? I’ve thought about this a lot but can’t think of a good reason.
Is it the availability of a large uneducated workforce?
It’s no accident the bubbles grew worse in areas partially if not fully dependent on an aura of fantasy. The “Southern California Lifestyle”, the “Miami Beach lifestyle” and what city could be more pure fantasy than Las Vegas?
Economically speaking, price became an afterthought in the transaction. It was all about affording the payment. This is why car dealers ask you what you want your payment to be, it tends to remove price from the discussions. As anyone who knows anything about financing, you can hide a whole host of horrors and questionable fees in a monthly payment.
We are now returning to reality. Price is once again important. I would argue that it is the most important consideration in any deal.
I think it’s actually a lot simpler than trying to figure out regional psychology.
The areas that inflated the most were the areas of growth in the country. Vegas, Phoenix, Florida, Colorado, Atlanta, LA…..these are the places people are moving! More people coming in means more demand…those folks are going to want a house. So, builders AND existing owners are in a profit-making position.
These areas are also growing jobs, and high-paying ones. Yes, most people don’t have those jobs, but the ones that do drive up prices. Then the average person sees prices skyrocketing, and the “priced out of the market”/”greatest investment ever” mindsets take hold.
Finally, I think that a lot of the places with the most inflation were already more expensive. Which makes total sense: Greenspan’s rate cuts save you more on a more expensive house. (particularly once you realized that a married couple “loses” the first 10K of interest to the standard deduction: at home prices in the middle of the country, that tax deduction ain’t worth much—on a bigger loan, people can hit that 10K by April or May, but in Des Moines, you won’t hit that until October)
Actually, massive building was a feature in all three markets. Irvine was one of the fastest growing cities in the US during this phase, if you remember. So the builders must have been fanning the flames of high prices.
The builders are more reactive than anything. They certainly profited from the bubble, but there isn’t much they can do to inflate prices. As a supplier of homes, the greater their activity, the less prices should go up. The massive inventory of unsold homes they built at the end of the bubble is one of the problems with the market right now. Lots of supply and diminishing demand due to the credit crunch.
If they did anything, it was contrict supply of new homes (it was a lesson learned from 1989-92.) Certainly new SFR median price greatly exceed resale SFR at the peak. The only oversupply now is in condos, not in SFRs. Condos are the cheapest to build. I don’t see anything demand-oriented about any of this.
My casual survey of the outer rim of Los Angeles reveals SFR properties for $45,000. Also plenty of newer big houses for $150,000. A comparision reveals the lowest priced house in Hemet ($45k) versus the lowest price house in Huntington Beach ($450k) to be ten times (1000%) the price. These towns are not that different, frankly. Things are going to fall much more, because the lower end will pull very hard. I consider these houses in the same market.
Sorry LC but Hemet <> Huntington Beach…seriously.
I agree completely, but it certainly is worth maybe 2 or 3 times the price, but not 10 times. We are talking about the _lowest_ priced house.
Riverside County used to track the rest of the US, and it was half the price of OC.
Sorry, I have to agree that Hemet stretches the limits of comparability. It is simply too far to be considered a real part of the metropole, even the massive sprawl that is LA.
Compare Corona to HB, and now you’re getting somewhere (even though I hold HB *SO* much higher than Corona) At least your commutes to jobs (in distance traveled…let’s ignore the hell that is the 91) starts to look roughly similar. Not the same, but within some kind of ballpark.
Ten times the price! This is my point. You can never make a fair comparison, there is always something, but how on earth is HB worth a 1000% premium — for the cheapest house!?!?
The substitution effect you describe is exactly what causes transaction volumes to decline so dramatically in high-priced areas prior to price drops in those locations. People may prefer Irvine to Corona, but if the price differential is great enough, people will chose Corona instead. Unless the market prices in Corona go up, prices in Irvine will fall.
Do you really believe that many people targeting Irvine would choose Corona as a substitute? AV, MV, Ladera yes — but I have to question how many would actually make the giant cultural leap to Corona.
I know it is a small sample, but this was discussed on the IHB forums in the past, and overwhelmingly people indicated they would choose a smaller home or townhome in Irvine as opposed to a Corona mcmansion. Of course these are people who value what Irvine is — and certainly its not for everybody. It’s all about what you value — and for the most part I think the folks in Irvine value different things than those in Corona.
CK,
I would agree that the Irvine buyer would rarely even consider Corona. As I thought experiment, I’ve often considered how low a SFR would have to go in Corona for me to want to live there. I end up with a ridiculously low number because I would only be buying dirt cheap with the intent on making money on the sale or converting it to a rental property with strong cash flow. Plus I deduct for the hassle of the 91, the poor air quality, etc.
That said — the Irvine buyer would consider, say, Tustin more readily. The Tustin buyer would consider Yorba Linda. The YL buyer might consider Corona. So while there isn’t much of a direct substitution effect between Irvine and Corona, it seems logical that a sharp decline in Corona prices will end up pulling down Irvine due to the chain of substitution effects between the cities.
As the low end drops, I suspect that it will start to pull down the whole spectrum of housing — but with a delay as the substitution effect propagates through higher-value areas.
Anecdotally, I’ve already heard a number of Irvine friends looking at SFRs in Lake Forest or Costa Mesa given that those areas have dropped more rapidly in value. You are still close to jobs and have decent weather with worse schools. Everything in life is a trade-off.
What kind of choice is Irvine going to be for a first time buyer? A tiny condo for the price of two houses across the hill, or one house near the beach? And what kind of move up buyer would want to downsize into Irvine living?
The more I think about it, the worse it looks for Irvine. All of the signs are there: massive overbuilding — right there with Las Vegas and Miami — very overpriced, a huge boat anchor of nearby low end housing around its neck. Irvine has held up pretty good so far. But as many people said, this is going to be ground zero. Perhaps not ground zero, but a neutron bomb for sure.
People are missing the point. You have to evaluate price somehow. Certainly there is a premium to be paid for Beverly Hills. But at what point is it ridiculous?
South Corona – in every way, identical to Irvine Woodbury. Same palm trees, same shopping centers, same mass produced housing cul-de-sacs built by the same corporations. (Irvine, btw, is distinguished by its sameness.) What premium should be paid for living on the other side of the same hill?
The premium now is around 600% for a brand new house, separated by 20 miles and common sense.
Check this out:
http://www.1stmillionat33.com/
Look at 7/30/08 blog for rampant OC cheating that’s still going on in the RE realm.
those of us who live frugally took what verged on abuse and mockery for years. ‘you’re still driving that car?’ “why don’t you just get a new TV?” — when i had one fixed for $50 by 1 of the dwindling # of TV repairmen. “i can’t believe you don’t have an Ipod!”
now i am reading an article about a bequest of several millions to the public library by an old woman and faithful library user who died after a long and parsimonious life. the people quoted, of course, pity her for living so frugally — IDIOTS — and while there is something to be said for the truism of “you can’t take it with you,” there is NOTHING to be said for the nationwide frenzy and orgy of debt we have witnessed.
i never bought a house though i am deep into middle age, b/c i live in a metro area that drank the kool-aid and made buying a house punitive for anybody without an MD or JD.
… kool-aid that the area’s newspaper also mixed and poured for its readers, with years of breathless, gullible articles documenting the bubble. now the newspaper, i hope, will go the way of all the shallow realtors and other advertisers who inflated its ad revenues for a few years. and in my bitter way of greasing their skids, i habitually pull out the desperate signs illegally stuck into public lots by realtors. signs that didn’t exist a few years ago, b/c realtors and contractors didn’t even have to advertise.
“…made buying a house punitive for anyone without an MD or JD”. This is not quite right. What you mean is “made buying a house punitive for anyone without an MD practicing in a highly paid specialty, or a JD who is partnering in a major firm, or a successful investment banker or private-equity manager”. Docs in family practice, attorneys in public practice like prosecutor or PD, are shut out of the RE markets in many regions just as surely as cops and schoolteachers. This is a reason why there really has to be a major readjustment. And the more I read IHB, the more I realize that this unjust and dangerous and morally-erosive situation came about because forms of financing evolved that simply invited fraud and bubble speculation. And this is why the bailouts make me so mad, even though I’m a card-carrying lefty Librul.
Sundays are boring without IrvineRenter’s posts! 🙁
Time to go outside and play, go to the beach, barbeque for friends, golf, bike.
Probably should, but too obsessed with work lately…
And if I don’t work, I’ll be Quail Hill RENTER forever! With detached homes costing around $500,000 around here still, I gotta work a lot man!
Irvine Renter:
A little off topic but just wondering if you have any info on how common deficiency judgments are right now. I read about one guy who said he was court-ordered to pay a deficiency judgment after his house was sold at auction for less than he owed and now his wages will be garnished since he does not have the money to pay. I was thinking these type of situations weren’t happening because maybe it’s too much trouble to go after the former homeowner for it but maybe I am wrong? If you have any info, thanks in advance. Sincerely, Ambiepants
I guess people are still continuing to leverage themselves.
http://www.latimes.com/classified/realestate/news/la-hm-landlord2-2008aug02,0,6576792.story
“For Laurie and Ron Arreola, selling in the current market isn’t an option they want to take. Laurie, 44, a stay-at-home mom and former teacher, and Ron, 46, a teacher, bought their two-bedroom, one-bathroom North Hollywood bungalow in June 1992 for $190,000.
With the addition of sons Ben, 5, and Dylan, 8, the family has outgrown the space but can’t afford a larger home in the area. So in June, the Arreolas — lured by good schools and close friends in the area — bought a four-bedroom, 2 1/2 -bathroom house in Claremont for $492,000. Laurie said she plans to rent out the North Hollywood home this month.
“We never seriously considered doing anything except selling until a broker suggested we take the equity out of our existing home, buy another house and rent out the old house until the market turns around,” Laurie said. “When the market really fell out last year, we decided to take his advice.””
Waaaa? What are these folks thinking?
So let’s see, they have a depreciating and they think “Ah this is the best time to leverage it before my margin goes away!!”
Hey
Great blog… I recently bought my first house and I used blogs and websites like this one to find out more information on real estate in general. In fact in my search I found the guys at http://www.homeinspectionspecialist.com and they inspected my house. Not only their inspection was affordable but also detail and comprehensive. Anyways, thanks again and I look forward to all the updates.
Jessica
I agree with Jessica about the wonderful people at http://www.homeinspectionspecialist.com . They not only inspected my home in a detailed and comprehensive manner for an affordable fee, but also washed my car and clipped my toenails for free.
(Jeez, how transparent)
check it out.. this guy is 90k less than the featured property
http://www.redfin.com/CA/Irvine/52-Windchime-92603/home/5945261