Orange Crush — R.E.M.
Yesterday was quite a day. It witnessed the defeat of the housing bailout bill (unless it is resurrected which is probable) and it saw some of the largest one-day declines in stock market history. The credit markets are still frozen, and we appear to be on the brink of a complete meltdown of our financial system. It must be a good time to buy a house… You do have to wonder what buyers are thinking right now.
It is hard to say why some neighborhoods get hit harder than others. Often times it is a combination of factors like age, desirability, amount of toxic financing, etc. The Lakes condo development has been getting hammered by foreclosures because it is old, undesirable, and full of toxic financing. The neighborhood containing today’s featured property is new — which of course means it is full of toxic financing — and it is in an undesirable location. The peak prices paid here were also WTF high. I have profiled 8 Orangetip and 10 Orangetip before. Both properties are remarkable for the extreme discount from peak pricing. Today’s featured property is no exception.
Today’s featured property is being offered for 38% off its peak purchase price.
This property is being offered for similar pricing to the two comps I profiled earlier. This one is not likely to get bids over asking.
Asking Price: $549,900
Income Requirement: $137,475
Downpayment Needed: $109,980
Purchase Price: $886,000
Purchase Date: 1/27/2006
Address: 15 Orangetip, Irvine, CA 92604
| Beds: | 5 |
| Baths: | 2.75 |
| Sq. Ft.: | – |
| Lot Size: | – |
| Property Type | Detached, Single Family Residence |
| Property Style: | Modern |
| Year Built: | 2006 |
| Stories: | 2 Level |
| County: | Orange |
| MLS#: | S08137852 |
| Source: | MRMLS |
| Status: | Active |
| On Redfin: | 4 days |
Upgraded Kitchen with golden brown cherry cabinets, absolute black
granite counter top, walk in pantry, stunning Italian hand carved
hardwood floor, food pantry and stainless steel appliances. Great room
on the top of the stairs leading to the master bedroom which features
double door entry, walk in closet, full bathroom with jetted tub and
travertine tiles in the shower, 4 bedrooms, 2 bathrooms upstairs and 1
bedroom, 1 bathroom downstairs. Fire place in family room, central heat
and ADT security. – BUYER TO VERIFY ALL INFORMATION INCLUDING
ASSOCIATION DUES.
This property was purchased on 1/27/2008 for $886,000. The owner used a $708,700 first mortgage, an $88,600 second mortgage, and an $88,600 downpayment. If this property sells for its asking price, and if a 6% commission is paid, the total loss on the property will be $369,094.
I have been noticing a trend in short sales lately. At first, almost all of the short sales were 100% financing deals, and many still are, but now I am seeing more and more short sales where the owners have some money in the transaction. It makes sense that owners with some of their own money in the deal would be more hesitant to give up and take a loss. Seeing these kind of sales are a sign of capitulation in the market. Market capitulation does not happen all at once. People will not all give up at the same time. When we start seeing large numbers of people who put 20% down give up, we will be at the capitulation stage. For now, the local market is transitioning from denial to fear. The broader economic picture is deteriorating, and even the President acknowledged we had a real estate bubble. As the price drops continue this fall and winter, fear will begin to grip the market. When prices do not start to recover next year, fear will begin to change to capitulation and acceptance. It is only a matter of time.
.
Follow me, don’t follow me
I’ve got my spine, I’ve got my orange crush
Collar me, don’t color me
I’ve got my spine, I’ve got my orange crush
We are agents of the free
I’ve had my fun and now its time to
Serve your conscience overseas (over me, not over me)
Coming in fast, over me
(repeat verse)
High on the booze
in a tent
paved with blood,
nine-inch howl,
brave the night,
chopper comin’ in, you hope.
We’d circle and we’d circle and we’d circle to stop and consider and
centered on the pavement stacked up all the trucks jacked up and
our wheels in slush and orange crush in pocket and all this here county
hell any county it’s just like heaven here and I was remembering and I
was just in a different county and all then this whirlybird that I
headed for I had my goggles pulled off I knew it all I knew every back
road and every truck stop
Orange Crush — R.E.M.
What’s the sq ft on the prop?
There goes the neighborhood.
What are the odds that these sellers were back in 2006 camping out at 3:00 a.m to claw their way up the gates, stomp on whoever they had to to buy into this tickle-me-elmo sub-division to pay whatever price the builder named?
Sooner or later, people are going to realize that places like these are worth 350K tops. Only 200K to go and we’ll be at the bottom.
Hopefully the rejection of the bailout bill will accelerate the process and we can all get on with repairing the economy by saving money and producing rather than consuming and trading commodities back and forth to each other like baseball cards/action figures.
I come to this blog now not for the repeated IR drivel, but for the absolutely ignorant comments made by you.
I thought you came here because you were banned from the OC Register blogs.
The prices of these properties seem to be getting to the point of affordability. Then again, with a recession on the horizon plus the tight lending standards there are still no buyers willing or able to purchase. So it seems that the prices of properties like this one will sink even further.
Indeed.
When I first began posting on here, I was called all sorts of crazy names. I was horse laughed on a regular basis for my “lack of understanding” how special Irvine was.
Look at how much the prices have dropped since then and we are just now beginning to feel the pain which is going to last for years before we reach the capitulation point.
Remember, CA especially has been steadily bubbling up since the late 90’s. Many of the people on here falsely believe that 2001-2002 is where it started (because of the terrorist attacks). CA was in a bubble well before 2001, but the creative financing didn’t start infecting on a wide scale basis until later.
I think that CA is going to get hit extra hard by the recession for the simple reason that it costs businesses a lot of money to operate in CA.
The people who run these businesses are going to have to reason “Why pay someone in CA X dollars when I can pay someone in AZ (who is just as qualified) (3/4)X?” Just do the math – it is not very difficult to see that businesses are going to discover that they can save a lot of money by moving operations out of CA to areas where the cost of living is not artificially inflated.
For that reason alone – I think that the majority of Californians should be praying that the costs of living come down (along with salaries) to better align themselves with the rest of the country.
You’re absolutely right. Our Calif. legislators are only a few votes shy of having the numbers that they need to raise taxes. When this happens a lot of businesses will flee and drive Calif. into a deeper economic slump than other parts of the country. I saw it happen in the early 90’s and the idiots running our state will not hesitate to do it again. The “vicious circle” of course is that the state will be even further in debt and will look for more ways to raise taxes……er, “generate revenue”.
They just cut off overtime pay for software engineers making over $74k. Nice.
I’ve long been considered “exempt” anyway, but this eliminates the fear of lawsuits for overtime pay and will make companies much more reckless with their scheduling.
Every day I find a new reason to leave CA. If I didn’t surf I swear I’d be somewhere else by now.
Forget stupid CA people voting for stupid Democraps to CA assembly and senate (CA Dems are the worst!), CA is a lot better than your avg 125 degree AZ, snowplowing WI, redneck ID, tornado/hurricane TX, hot and freaking humid FL (hurricane as well), etc, etc, etc.
Weather has a premium, ya know? It ain’t free.
I grew up in Colorado, so I don’t get my panties in a bunch when the weather gets outside of the 60-80 degree range. Don’t get me wrong, I enjoy the coastal climate but I don’t think it deserves a 10x premium. I’m here for the surfing and the video game industry. The food isn’t too shabby either.
Re: Irvine is special
Interesting charts here with costs of housing & rent showing costs for Irvine & other expensive places to live in the US
http://lansner.freedomblogging.com/2008/09/23/newport-beach-leads-nation-in-housing-costs/
AZ, funny that you mention that,anecdotely a friend of mine recently told me how his company is moviing to AZ to reduce costs offering him his job there. he is not very happy considering he was very stable in CA.
AZ-For that reason alone – I think that the majority of Californians should be praying that the costs of living come down (along with salaries) to better align themselves with the rest of the country.
living costs will come down, salaries in my field are equal if not lower than other states esp when you add massive taxes. despite all that, Irvine is special and will no be affected by anything 😆
Ah, but as American jobs move towards simply selling things to other Americans, the wages you pay your workers (and regulations, and all the other stuff that running a business in CA entails) become just one side of the equation.
The whole Ponzi scheme requires that you have someone to SELL goods to, and the higher incomes in CA lead to more buying. (With higher living expenses, what gets squeezed out is savings, such that home equity is ALL that a lot of Californians have to retire on)
I’ve heard the death knell for business in California many times before. As long as a large portion of the economy is related to selling people something (be it physical or a service, but especially services), then the lure of CA remains strong. Manufacturers have little reason to remain here (unless they export heavy items to Asia, in which case being close to major ports in either SF or LA helps keep costs lower than the company in AZ that has to put it on a train first).
However, to take AZDavid’s question a step further, “why should they pay someone in CA $X when they can pay someone in AZ $(3/4)X, or when they can pay someone in South Korea, China, India or Mexico $(1/8)X?”
In the end, one of the MAJOR reasons why wage/price inequalities can persist is that the American economy has a strong basis in small businesses (not entirely, to be sure, but collectively, they make up a very large portion of our economy). Small businesses locate where the owners live…not because of any huge calculation of wages, but simply because that’s where the owner lives. And a lot of people live in CA for non-economic reasons.
Yes, the American workforce is more skilled than those of many other countries (but certainly not all). And, some Californians have more skills than others in the US(notably in high-tech and bio-tech), but for MANY jobs out there, you can find skilled workers in California, Arizona OR Mexico.
Wait, you really think the talent pool is the same in OC as it is in Orange County?
You also realize that you vehemently disagree with Irvine Renter’s predictions of where the market is headed too right?
The uber bear himself is a bull compared to you.
The talent will go where the jobs are, 25w100k+.
If businesses leave the state then all those talented people will move away.
Duh?
What you are describing is a chicken/egg problem.
It is true that more companies are moving to rural areas for departments that just need warm bodies (customer service, etc), but a company is not going to move where there is a lack of highly skilled labor.
By your ‘current’ logic, you are saying that companies will move to cheaper locals, and the talent will follow. What do you think will happen to salaries then?
The whole reason salaries are higher in SoCal is due to the higher talent pool and neccessarily complex jobs!
(I had a hard time deciding where to put in my reply – this is getting complicated.)
What about working from home? I was the only one in my department for years who did it. Now, my employer has decided that they don’t want to pay for an office for my department (it’s in SF Bay area) and everyone (only 5 more) will work from home.
So we can live anywhere. I choose to live here because I love it. I’ve lived in Armpit, FL; Atlanta; Chicago; and SF Bay area and this is BY FAR the best place.
I’ve been reading that teleconferencing is coming in a big way.
So what happens when the talent can live anywhere it wants? How will this affect the area? Think people who can live anywhere will choose to live here?
By the way, forget the India argument for now. We already have a big team there. My department manages them and fixes all the crappy code they send us in addition to doing the more complex stuff.
In spite of the fact that they have a billion+ people, only a small portion are currently educated enough to do the more complex programming tasks we need. And none can do it without close management.
Good discussion AZ and 25. Here’s my two cents…about a week ago I get a call in my office from a strange area code I did not recognize:
Caller: “Hi, this is so-and-so calling from Walmart stores”.
Me: “Never shopped there”.
Caller: “I’m calling because we came across your information, and would like to discuss with you some finance opportunities with our organization”.
Me: “Where are the jobs located?”
Caller: “They are here at our world HQ in Bentonville, AR”.
Me: “Not interested”.
I wonder how many times she hears that a day? The point is AZDave…why is Walmart calling people all the way over in OC? Certainly the bench is pretty thin in Arkansas, but surely they tried to source people is the bigger markets closer to AR first….Like Dallas, Houston, maybe St. Louis? I would suspect they would have an easier time enticing someone from those parts than a left coast a-hole like me.
Could it be that there is just not that much available talent away from the big population (and education) centers on the coasts? Thus they have to reach this far?
Let’s take your derision for OC off the table —surely it would be cheaper for all the Wall Street firms to move to Branson, Mo, wouldn’t it? Why do you think they have not moved? Is it possible there are not a lot of country music fans on Wall Street, who would follow their Firms under your “if you move the talent will follow” theory?
The 125 degree heat has finally gotten to his brain.
Didn’t you know that he also tout his military experience alongside McCain?
I have worked with very talented software developers/teams who are located in Oklahoma and Pennsylvania and other parts of the country that do not immediately stand out as software engineering capitals.
They may not be areas you choose to live in, but I certainly do not see a lack of talent in either of those instances.
That’s just my own experience from my own travels and having “been around”.
No doubt there are some really talented people in every corner of the US. Well, maybe not Wasilla, AK — but that’s another story. But there is not a deep bench in many outlying locations. How else can you explain the existance of somewhere like Silicon Valley? God awful cost of living, god awful salaries (if you have to pay them) — but there are a few firms up there who still manage a pretty decent margin up there.
True. But you know a lot of people move out there to find work. They would be just as likely to move somewhere else that had a technology boom
Technology in Irvine is dead.
A few years ago, our company had recruited a few MIT and Stanford just graduated, but all of them are gone (This is biggest lost for our company). None of them stay in Irvine because not WORTH it (This is biggest lost for Irvine/OC).
We use able to get some 1-tier engineers from India, but in recent day only a lot of 3-tier engineers (consider our company is 1-tier). Ironically, I heard, in India, they may not find a job.
IMHO, Irvine home prices must go down another 30% to attract some young talented person and technology company.
OC Civic Planner’s Dialogue:
2000: “Who needs technology when we are the mortgage capital?”
2009: “D’oh!”
Despite all the financial chaos going on, I’m still seeing houses sell immediately for wtf asking prices in LA. People can’t possibly be paying cash, so which soon-to-be closed banks are still lending crazy money to these soon-to-be upside down souls? How is this still happening?? Strange times indeed.
There is still plenty of bubble wealth out there. Think about the groups of people who sold in 2006, made a nice profit, rented for awhile and are now jumping back in thinking that the bottom is here.
Be patient. The market has to reclaim the wealth that the knife catchers are holding.
I bet you that even if they are selling – they are not selling for 0% down. The knife catchers are putting down money and they are going to lose every penny of it.
I wonder the exact same thing.
IR, Lendingmaestro, Ipop, or whoever knows the answer, PLEASE enlighten us!
I know a lot of financially conservative families that still have equity in their homes unfortunately now feel it is a good time to suck out their remaining equity and put it into rentals. Soon, we’ll have even more over-leveraged home-owners with rents going down!
Is it just me or does the double bathroom sink go right up to the bath tub? Kinda odd looking for a newer house.
Looks like the vanity abuts the tub. Never seen that before either. Looks awkward.
At least these people were able to buy decent furniture. It’s weird seeing houses over $500K with just junk inside.
I loved that bathroom picture. I am an, uh, largish person, on the oldish side, and I was trying to imagine climbing over the faucet and the handles while hanging onto the vanity to get in and out of that tub (and paying 600K for the privilege). That was just plain strange. Basic planning of bathroom oughtta have a rule: Leave room at minimum for a wastebasket between the vanity and the tub.
There’s a suspicious amount of info missing from this listing. The property is also very close to the I-5.
Whats up with the:
* Dues #1: $250.00
* Pool
This is a SFR so you are on the hook for everything about the house unlike a condo, and you have to pay condo style dues?
That must be one hell of a pool!
It costs a lot of money to hire someone to walk around micro-managing the neighborhood and make sure that nobody has a flamingo ornament sticking up out of the grass or have 1 extra part per million cornflower blue in their paint.
LOL!
Thanks for keeping things amusing here, AZ.
not only that, but there’s probably a second HOA due in the $150 range.
standard for newer communities in Irvine like Northwood II and Woodbury and Quail Hill.
there’s the ‘major community’ HOA that pays for landscaping and facilities shared by the whole neighborhood, and then there’s a subcommunity one that’s only for your tract (like the landscaping in your immediate area, beyond your front lawn)
If it says “central heat” does that mean it’s not air conditioned? And they want how much?
Loved this comment in
http://www.ocregister.com/articles/vote-lawmakers-down-2173281-voted-house
criminaljustice wrote:
No new vote until at least Thursday. Great news! We all need to step away from the chicken little crew and think.
The credit system is “frozen”? Of course it is, If I wanted to sell my toxic assets as a finacial organization. I would want to project the worst possible outlook for not bailing me out.
However, “IF” I couldn’t get out of jail free (card) I would have to start making good business decisions and start building a portfolio of solid futures. Credit markets will be forced to start investing in:
Good businesses
Local businesses
Qualified home buyers
“Banks won’t even loan to banks” Well that’s not entirely true. Yes, Wamu could not borrow money but they are carrying so much debt in sub-prime loans that they have no value of assets to back a loan. BofA can get money, loan money etc. This is because even at the height of the “Money Grab” lending BofA did not do sub-prime loans.
Now, unicorns and elves don’t live in my neighborhood, so I’m not saying these are not tough times, but Americans will continue to go to work everyday and because Americans are the power behind our economy credit markets will be forced to get back to doing business, or close their doors.
How many dinnertime phone calls have you received from the local body shop? the local market? the corner tire store? “Real business”? Now how many have you received from someone who dangles money in front of you and assures you that you can make money appear from thin air?
It will take time to purge the system of this bad paper. As is evident by the world markets, it wasn’t just us. Governments all over the world are rushing in and throwing money at a problem that was created by to much money and not enough work. California home production is down 96%, mainly because the build frenzy was not supported by home ownership. It was fueled by flip inflation. Housing prices are falling, well duh… Housing value should increase 10-15% over a 10 year period. There is no basis for housing to increase 20,30 or 40% in months due to flip inflation.
In the end the economy will be rebuilt as it always is on the backs of American workers. A 700 billion dollar give away will not free credit markets, it is just another way American tax payers will loose money to a criminal business model that needed to be euthanize when the sub-prime market was in it’s infancy.
You mentioned B of A.
I am surprised B of A and Wells Fargo have held up this long.
We know Buffet has a substantial investment in WFC, and I believe to a lot of investors that is like an endorsement.
At the same time, isn’t B of A the new owner of all the countrywide crap, and isn’t WFC holding a lot of 2nd mortgages that are getting 100% wiped out in every foreclosure?
Before the credit crunch and bailout bill took the spotlight there was talk of the incoming option-Arm and Alt-A wave of defaults.
More to the point though, as prices go lower and equity goes negative, ANY loan purchased at bubble prices is in danger of default.
On topic, I can’t believe some insane idiot paid 880k for this place! Unfathomable!
They’re still asking over half a mil for this place. Then again, it would be about $1.8 mil (or more) in Santa Monica, so I guess $.55 mil ain’t so bad.
Foreclosure Alley
Must watch, its sad, but it might also be folks who tookoff with helloc money!
http://kcet.org/socal/2008/09/foreclosure-alley.html
I some how get the feeling this is just a sad, sad story. If they had all the heloc money, I think they would have at least taken the big ticket items.
And the poor kids. They had no part in their parents bad decisions. While I am looking forward to more price drops so I can finally buy, this leaves me with a bitter sweet feeling.
I know. The worst part was watching those family photos and teddy bears on the floor. No matter how much you are depressed or whatever state of mind, you dont leave these things behind. I felt really bad for whoever went thru this.
I recommend everyone to watch this one. Its really a sad truth behind the bubble bust.