Free Fallin’ — Tom Petty
Do you remember the days when a relatively low-priced property would bring out the knife catchers and get bids over the ask? Those days appear to be behind us. The price on today’s featured property was dropped $100,000 at the beginning of the month, and it is still there. It is discounted 30% off its 2005 purchase price which likely represents almost 35% off the peak valuation. With another $70,000 to $90,000 off, this property would be at rental parity. Prices are still free fallling, but at least a potential bottoming figure is in sight. To be honest, I did not think we would be seeing prices like this in 2008.
Asking Price: $549,900
Income Requirement: $137,475
Downpayment Needed: $109,980
Monthly Equity Burn: $4,582
Purchase Price: $780,000
Purchase Date: 9/22/2005
Address: 415 E Yale Loop #13, Irvine, CA 92614
| Beds: | 3 |
| Baths: | 3 |
| Sq. Ft.: | 2,150 |
| $/Sq. Ft.: | $256 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Garden Home |
| Year Built: | 1985 |
| Stories: | 2 Levels |
| Floor: | 1 |
| Area: | Woodbridge |
| County: | Orange |
| MLS#: | P645606 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 38 days |
LIVING ROOM WITH WOOD BEAMS&COZY BRICK FIREPLACE. LARGE KITCHEN
WITH DOUBLE OVEN, PANTRY WITH NOOK AREA. FAMILY ROOM WITH WECOND BRICK
FIREPLACE & BUILT IN BOOK SHELVES. LIGHT TEAK WOOD FLOORS.
PLANTATION SHUTTERS THROUGHOUT. NEWER LIGHT, BERBER CARPET, LARGE
MASTER SUITE WITH DUAL VANITIE, LARGE TUB&SEPARATE SHOWER.
CATHEDRAL CEILINGS. NEWER HVH DIGITAL HEATING SYSTEM. BUILT IN
CEDAR&ORGANIZERS IN CLOSETS. TROPICAL BACKYARD WITH FOUNTAIN.
ROMANTIC JACUZZI AND PALM TREES!!!
COZY BRICK FIREPLACE? Is it just me or do the words “cozy” and “brick” seem incongruous when put together?
WECOND?
ALL CAPS and three exclamation points.
Today’s owners are losing some of their own money. The property was purchased on 9/22/2005 for $780,000. There is a $624,000 Option ARM first mortgage with a 1% teaser rate, and a $78,000 HELOC. If this HELOC was used for the purchase, the downpayment was $78,000. If not, the downpayment was $156,000. It seems likely this 10% was put toward the purchase. Either way, all downpayment money is gone, and the first mortgage is significantly imperiled. If this property sells for its asking price, and if a 6% commission is paid, the total loss on the property will be $263,094. The loss to Countrywide/Bank of America will be $185,094.
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.
🙂
.
Shes a good girl, loves her mam a
Loves jesus and america too
Shes a good girl, crazy bout elvis
Loves horses and her boyfriend too
Its a long day living in reseda
Theres a freeway runnin through the yard
And Im a bad boy cause I dont even miss her
Im a bad boy for breakin her heart
And Im free, free fallin
Yeah Im free, free fallin
All the vampires walkin through the valley
Move west down ventura boulevard
And all the bad boys are standing in the shadows
A ll the good girls are home with broken hearts
And Im free, free fallin
Yeah Im free, free fallin
Free fallin, now Im free fallin, now im
Free fallin, now Im free fallin, now im
I wanna glide down over mulholland
I wanna write her name in the sky
Gonna free fall out into nothin
Gonna leave this world for a while
And Im free, free fallin
Yeah Im free, free fallin
Free Fallin’ — Tom Petty
Nice size although $780k for a condo in 2005, I’m glad we’ve been renting. Hope they’ve gained some market experience.
sorry for thread-jacking, but am I the only one who couldn’t read this post without highlighting the text? Using firefox here.
Same problem here. Try control-A (good luck getting this guy to fix his site).
Should be fixed now. Send me an email next time and I’ll try to get to it sooner. It had something to do with the threaded comments.
3% increase every year from 1992 price of $300k comes out to $419K. Another year or two, we’ll be there.
Sorry, $419k is for 2% compounded yearly from 1992. 3% increase is $481k instead. This one should sell at or near $500k in today’s market.
It should? This appartment should sell for what the market will command in March of 2010.
It is so shocking someone would pay 780k for an appartment. I can’t imagine we are going to see prices like that for at least 20 years.
As much as I’d like something this nice to be within my price range, I’d say $419k is pretty reasonable for this condo. Well, except that it needs to be discounted due to the increase in condo fees. I don’t think they totalled over $320/month back in 1992. So that eats up some of the 3% price increases. Too lazy to do the math myself today though.
But if this was 2% per year then that makes $419 about right.
I beg to differ. This is a nice condo in a good locacation in a nice neighborhood. I think it’s worth at least $700,000 because it has an Irvine-rare backyard
I think using 1992 as a beginning price point to determine what you think appreciation should be is misleading because housing prices were severely depressed in 1992. If somehow you can find the price around 1988, I bet the price would have been higher than $300,000.
1992 price was about the mid point of the decline of that bubble. So is 2008 about the mid point of the current decline.
Thus, I believe 1992 price is a fair base.
” $700,000 because it has an Irvine-rare backyard”
Are you insane? This is a CONDOMINIUM!!! If you can by a 2000 sq ft. place in Quail Hill for $725K, HOW THE HELL do justify $700K for a 24 years old condo in Woodbridge?
because I would much rather live in Woodbridge than AQuail Hill. In fact, I would prefer a 40 year old condo in University Park to Quail Hill. To me Quail Hill is what went wrong with the housing market in Irvine. I wouldn’t pay more than $200,000 to live there. The condos in Quail Hill look like they should be Section 8 / Low Income Housing.
You are in the minority.
LOL. Have phun overpaying for your woodbridge house. Make sure you’re over 55 because there’s not a whole lot going on here except bridge and Wednesday Rotory Club lunches at the Waters.
My wife and I liked both Oak Creek and Westpark. I think Westpark’s Mello Roos will be gone in another 8 years or so.
But then to each his own.
As much as I’d like something this nice to be within my price range, I’d say $419k is pretty reasonable for this condo. Well, except that it needs to be discounted due to the increase in condo fees. I don’t think they totalled over $320/month back in 1992. So that eats up some of the 3% price increases. Too lazy to do the math myself today though.
Price makes me wonder.
Assuming IR is correct and this is a short sale, did BofA really approve the short. BofA is already behind absorbing CFC and I doubt they have the staff to approve these shorts. If the short hasn’t been approved, are these owners just fishing for prices to take to BofA to try to get the short approved.
Will this end up as a foreclosure in 3 months?
I rather doubt the short sale is approved. This will likely end up as a foreclosure soon.
Then if they don’t have approval to sell at this price, how fair is it that they are allowed to put it on the market at this price.
Refin should require shorts to put a discalimer on their listing to alert potential buyers.
I.E. This property is a short sale without lender approval. Bid at your own risk.
OK,
The thing about short sales… for those who don’t know. Surprise! are never, ever approved until they close.
Yes, I know you’ll see some well-intentioned realtard saying they have “a letter from the bank in hand!”. OK, tell them to send you that letter.
If they have anything, it was from a former offer that bid that amount. Then they bailed.
Ever wonder why the last buyer bailed? Maybe they were impatient? Maybe they thought they could get a better deal elsewhere? Maybe, just maybe, it’s not even worth the offer they made and realized that 15 or 30 days into the process. What makes you think that you are so much smarter? And, why wouldn’t you just wait and see?
Yes, short sales are a gamble. For somone who is in foreclosure and underwater, what do they have to lose by listing low and lying? Are there any penalties? Trust me, if there were penalties for lying, Gary Watts would be in Guantanamo. We’d call him Guantanamo Gary, not scary Gary.
Chuck Ponzi
This post is officially br9#3n in Firefox. This sucks. And my comments are not showing up where they are supposed to.
OK,
The thing about short sales… for those who don’t know. Surprise! are never, ever approved until they close.
Yes, I know you’ll see some well-intentioned realtard saying they have “a letter from the bank in hand!”. OK, tell them to send you that letter.
If they have anything, it was from a former offer that bid that amount. Then they bailed.
Ever wonder why the last buyer bailed? Maybe they were impatient? Maybe they thought they could get a better deal elsewhere? Maybe, just maybe, it’s not even worth the offer they made and realized that 15 or 30 days into the process. What makes you think that you are so much smarter? And, why wouldn’t you just wait and see?
Yes, short sales are a gamble. For somone who is in foreclosure and underwater, what do they have to lose by listing low and lying? Are there any penalties? Trust me, if there were penalties for lying, Gary Watts would be in Guantanamo. We’d call him Guantanamo Gary, not scary Gary.
Chuck Ponzi
PS, this thing posted below when it was supposed to be here. Don’t know why!
there will come a day where the banks approve those short sales. They probably don’t want a nominally performing property put on the books as a loss. So they’ll take a bigger loss tomorrow over a smaller loss today. I don’t think that will be the situation forever.
Redfin just puts up the MLS info.
The MLS info is put in there by the listing realtor.
The listing realtor is trying to get fish on the line.
At this point in the market, with the number of “short sales” falling through, relistings, etc., I would say it’s REALLY in the buyer’s interest to remember that listings are advertisements. Some advertisers are really stupid and list irrelevant things (like exclamation points). Some advertisers are clever and don’t put in the bad info. In a market like this (just as with a bubbling market), buyers must beware.
I believe it is the $372 a month association fees that are holding this place back. The price/square foot value is getting close to sanity, and I didn’t think we would get there during 2008.
Does this condo share any walls or is it an SFR zoned as a condo? That’s one of my gripes with the MLS as it doesn’t easily identify that.
From the street view, I believe that these are triplexes with the illusion of being a large SFH.
I hope I don’t offend any Irvinites here but this “illusion” is quite typical of Irvine and Orange County in general…just like the bubble these homes are merely facades of massive houses (wealth) so everyone thinks you live in a mansion, but all you get is a little box condo you share with a bunch of other people holding out the same facade. It personally drives me nuts.
Sad but true.
The description in redfin says:
Interior Features
* 1 Common Wall
* No Residence Above or Below
COZY BRICK FIREPLACE?
It’s time to do away with the word cozy. When I was looking for a home to purchase I would automatically discount a property if the realator mispelled words, used all caps or the term cozy.
Her in Ct “cozy” is realtor speak for “WOW that is small!!!!” [ note my realtor-correct use of exclamation points.]
Looks like a nice property… just a little bit more and it will reach rental parity! Woo-Hoo!
We will see though, i get the feeling that this place will stay on the mark and FOLLOW it, not quite beat it.
good luck
-bix
BofA’s loss will actually be greater on their books. The 1% teaser meant that the loan principal was rising. I’m guessing the owner hit their reset about the time it was put up for sale.
If the fully amortizing rate was 6.5%, the bank’s loss would be about $100k higher after three years due to negative amortization of the loan (5.5% * 3 * 624,000).
Compare the 15%+ negative amortization of the loan on today’s house with a fully amortizing 6% loan. The difference is about $125k to the bank.
http://farm4.static.flickr.com/3097/2765814972_35c4d27cee_m.jpg
Yikes! Thank you for doing the calculation on that one. It will be interesting to see if the bank attempts to get this back after the foreclosure.
http://www.nytimes.com/interactive/2008/07/20/business/20debt-trap.html
The Debt Trap
Home Equity Frenzy Was a Bank Ad Come True
NYT August 14, 2008
The NYT business section even casts a pall on the recent past, with an in-depth examination of how bank advertising persuaded millions of Americans to take out home-equity loans, which, as the paper puts it, “used to be known as second mortgages [and] were considered the borrowing of last resort, to be avoided by all but people in dire financial straits.” The value of those loans has risen from $1 billion in the 1980s to $1 trillion today, the paper reports, and “hundreds of thousands are delinquent, owing banks more than $10 billion on these loans, often on top of their first mortgages.”
I guess it is not any of our concern, but I am curious as to if there is any logic or reason behind Bank of America taking over Countrywide. Do all the losses stop at Countrywide, or is BofA now on the hook if and when Countrywide goes down the chute?
If there are some parts of Countrywide’s business that BofA wants, why not just let them do a Bear Stearns and then move (not to mention having the US taxpayer guarantee the losses)?
seems to be a closly guarded secret.
best guess is that BofA purchased all of CFC’s stock, so if CFC goes poof, they just lose all their investment like any other common stockholder. Stockholders are not liable for the company’s debt’s so there is a debt firewall between BofA and CFC. It’s the bondholders who will get the shaft.
truth!!!!!!!!!!
In addition to Alan’s comments, there are other reasons why BofA might want Countrywide. They got their servicing portfolio and servicing rights. I haven’t yet seen banks changing the value of their mortgage servicing rights on their books, but they are definitely changing. While loans are more likely to go into foreclosure (where there is no more mortgage to service), they are also much less likely to be refinanced or to end because the owner sold the house.
That leads to a big increase in the value of mortgage servicing rights for many classes of loans. For any group of loans where the owners are likely able to make payments (prime with LTV >80% for example), the value of the rights will keep going up as real estate prices drop and fewer people move voluntarily.
For option ARM portfolios, the picture is mixed. Many of these were expected to be taken out with new loans or home sales. Instead, a very large portion will be taken out with foreclosures, short sales, and workouts.
Sorry, the greater than 80% should be less than 80% loan to value ratio.
http://www.nytimes.com/2008/08/15/business/15sell.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1218819717-UiGzE5cy6YpgzmAJMoG+pA#
Is anything selling in Irvine? I would think given the low $/sq foot, this would be one of the first to sell. There are lots of properties in Irvine asking $400 – $500 per sq foot. If this property is asking too much then what of those other guys?
I should add that even within Woodbridge, there are condos and houses asking north of $400/sf.
Everything this time is many folds bigger than 1992 and many folds worse than anything in the past 30-40 years. Its next only to Great Depression, not as bad but real bad. Quit valuations and wait for Alt-A implosion.
This property will be valued at around $350,000 when we reach bottom. It appears that many here who foresaw this huge price drop/bubble burst still don’t understand how far prices will drop. (back to 1998 at the most, probably lower).
Refering to Mallen’s statement on Hedge funds purchasing CA foreclosures. First I don’t believe anything I hear or read from msn news! Lastly, don’t know if anyone is aware or not but this housing depression is global folks! Read for yourself, it is hitting Europe and next Asia. So as far as foreign investing, well I think that they have lost enough in their investment of our bonds. They might not want to risk losing more.
Thanks for depressing me IR.
It’s a large, nice, townhome. I agree that at current rents, rental parity post tax hits about $450K.
That’s really sad IMHO. At a 28% DTI, the required income is $133K, that’s with 20% down, basically $100K for down and closing costs.
Also, it’s funny when you look at the rents and realize people need $100K plus not to have poverty inducing rent.
Something is going to have to give.
Or Irvine’s incomes is going to have to rocket.
Well said. I met a nice guy with a family of 5 on the plane while flying back into Cali from my Cabo trip this summer and I told him my rent was $1600/mo for a 1-bedroom. He about flipped and told me how that was significantly higher than his house payment–in Arkansas. Before we rip on Arkansas, keep in mind this guy has a decent job and likely made at least the the median income in Irvine.
My primary issue with living in CA the last seven years with housing prices skyrocket has been the high rent in the area. Anywhere in South OC you’re going to pay an average of 1350-1850 for a 1 bedroom.
Over half a mil for a condo in Irvine? Sorry, this is still freaking nuts.
The bottom line is these people took their downpayment and decided to bet (against me and all other renters) that home prices would continue to rise.
They lost the bet.
In the near future cash will be king. If you don’t own your home outright, didn’t sip the HELOC tonic, you better get out of the housing market. I think the bottom of this thing will drop beyond the prices back in 2000.
REAL incomes have not gone up in the past 10 years.
People in were basing their net-value on the magical “equity” genie.
It’s time to get back to the basics. Go see I.O.U.S.A!!
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Damn. That didn’t work. How do you embed youtube video?
This looks like an attempt to get a bidding war started, none of the comps or recent sales on Redfin come in with a $/Sq.Ft. this low.
Could be the owner just gave up and wants out as fast as possible, figures that at least with an offer they might be able to get the bank to go along?
Must be a royal pain for the RE agents trying to explain this one away, though.
IR and others
I am not sure if you read or come across about the new issue Irvine is facing. Have a look at this site and if appropriate, educate others.
http://newsoc.org/
newsoc.org/PDF_Docs/El Toro Contamination Map.pdf
I came across this in one of blogs on OCR
serious matter, source needs to be verified..
http://newsoc.org/newsoc.org
recommended
Thanks for the link (though you have an extra trailing “newsoc.org” on there).
The author of the site seems like a bit of a crank. There’s a lot of very questionable reasoning in his discussion of IRWD statements, tons of unsourced claims (as you also allude to). And in that shower photo, can’t tell for sure due to the low resolution, but to me, the pink stuff looks clearly like common Serratia marcescens bacteria, and the darker stuff on the floor like soap scum (and/or non-water-soluble lube residue ;^>) stained with dirt / oils / dead skin / mold.
But yeah, obviously a very important topic, and I hope it’s getting a thorough treatment from non-conspiracy-nuts.
The various monthly fees reach $500/month and you haven’t even paid taxes or insurance. Put that together and you have $1200/month and you haven’t even paid P&I;yet. Wow, these people are day dreaming!
Chuck, In trying to keep up with my techno babble, what is “br9#3n”?
Joe
IR,
I love what you do here but I really think prognosticating the bottom is something that shouldn’t be attempted based upon current rental prices. We are probably entering a deflationary period that could get very, very scary. Asset prices could tumble far lower than you think possible due to a shrinking economy and job losses.
Instead of predicting a bottom based upon current rental rates, why not just wait and see what happens? I’d hate to see someone buy something just because they think it may be a good deal and then prices continue to fall.
It’s not like this is going to be a “V” shaped recovery. You won’t miss out by waiting…