Author Interview — Jim Randel
I would like to introduce you to a new book by bestselling author, Jim Randel, called The Skinny on the Housing Crisis, What Every Homeowner and Homebuyer NEEDS TO KNOW.
Jim Randel takes the complex issues related to the housing crisis and presents them in an easy-to-understand manner. The book is well written, it can be read in under an hour, and the reader is left with a basic understanding of the mess we are in today. If you or someone you know wants to understand the housing crisis, but you don’t want to spend several hours reading a 250 page book, I highly recommend The Skinny on the Housing Crisis.
The basic presentation is similar to the stick-drawing joke circulating the internet. The story is presented through the eyes of Billy and Beth, a typical couple who trusted the “experts” and were duped into a disastrous financial transaction. In a series of cartoon-like scenes, the author takes us through the buying process and shows how all the parties involved had incentives to push Billy and Beth into a transaction they did not understand. The average buyer can easily relate to Billy and Beth’s plight, and all of us can empathize with what people went through as they got caught up in the housing crisis.
Many of you who have been reading the IHB and have purchased my book, The Great Housing Bubble, have commented on how I am able to take complex subject matter and make it understandable. Jim Randel takes this one step further. His simple presentation is understandable to everyone. This book will serve as education to teenagers preparing for adulthood and the personal finance decisions they will face. He is planning a series of books using the same methods to explain other personal finance issues. I look forward to seeing them.
Today’s featured property is typical of what I see on the market today. Long-term homeowners who are selling in today’s market in Irvine have on average doubled their mortgages since they purchased. There was so much HELOC abuse and housing ATM dependancy during the bubble years, it should come as no surprise that consumer spending has fallen off a cliff, and our entire economy is in shambles. Today’s owners will likely still make a profit on their home and pay off their mortgage. They won’t have much to show for it, but at least they will not face bad credit for their free-money spending spree.
Asking Price: $839,000
Income Requirement: $209,750
Downpayment Needed: $167,800
Monthly Equity Burn: $6,991
Purchase Price: $302,000
Purchase Date: 4/29/1998
Address: 23 Washington, Irvine, CA 92606
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,500 |
| $/Sq. Ft.: | $336 |
| Lot Size: | 4,628
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Contemporary |
| Year Built: | 1998 |
| Stories: | 2 |
| Floor: | 1 |
| Area: | Walnut |
| County: | Orange |
| MLS#: | S555490 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
 New Listing (24 hours)
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This is a great find! Desirable four bedroom Centennial Home in the
private gated community of Harvard Square. Ideal interior tract
location. Spacious and functional floor plan with high ceilings, lots
of natural light, beautiful hardwood floors and neutral plush carpet.
Custom gourmet family kitchen, granite counters, maple cabinets and a
kitchen window, which looks out to the oversized back yard. Yard is
half grass and cement patio, perfect for entertaining. The BIG Park is
a big selling feature. Residents love the holiday events, community
gatherings, pool, basketball court and tot lots. A dog walkers dream!
A dog walkers dream! Do people really place a high importance on where their dog takes a dump?
- This property was purchased on 4/29/1998, very near the bottom of the last cycle. The owner’s paid $302,000. They used a $226,150 first mortgage, a $45,200 second mortgage, and a $30,650 downpayment.
- On 6/2/1999 they refinanced with a $316,000 first mortgage. This pulled out their downpayment plus $14,000.
- On 9/11/2000 they obtained a HELOC for $35,000.
- On 10/11/2001 they refinanced for $365,000.
- On 10/31/2002 they refinanced for $370,000.
- On 11/3/2005 they refinanced for $485,000.
- On 4/20/2007 they opened a HELOC for $60,000.
- Total mortgage debt is $545,000.
- Total mortgage equity withdrawal is $288,200 including their downpayment.
I am amazed at how often I see this. Many, many Irvine homeowners doubled their mortgage obligations during the bubble. These aren’t the flagrant abusers, these are the average homeowners living their pretend lives built on a mountain to cheap debt. The payments are coming due. Do you think most of these people doubled their incomes over the last 10 years? I doubt it.
{book}
Happy Thanksgiving, IHB.
http://www.crackthecode.us/images/lets_shop.jpg
It will be very interesting to see what this actually sells for, because it looks like a decent but very middle class house. I thought that $300k was about right … then noted that this was the 1999 price, not current asking. Of course in most of the rest of the country it would be a $200k house if it had more land around it, but there can be some California and Irvine premium. I’m glad that right now I can comfortably sit and watch (and learn).
actually sounds underpriced at 839k, I think I will offer over asking 😆
Stopped by a good friends place for Thanksgiving desert. The friend’s wife’s dad is a RE agent. Told him I am waiting to buy because prices will most likely fall further.
He said I am out of my mind and in fact I should not wait. I pointed out waiting has served me well the last 2 years. His response: buying a year or two ago would have been fine because of all the money I would save on rent and with the tax write off the government would be paying for the house.
At that point I stopped talking. I did not know how to respond.
Yes, the level of residual denial still amazes me also.
Give him another year, when the winds of recession really blow through they should blow away the last of the deniers.
If you are feeling adventurous, here is how to find out if you are dealing with a promoter, or someone who actually believes what they are saying.
Ask “So, would you like to make a friendly wager? How about $100 on whether the Case-Shiller index is higher or lower 12 months from now?”
Regarding whether you are better or worse off renting for the past two years, point him to https://www.irvinehousingblog.com/blog/comments/timing-does-matter/ and ask him to show you where the logical errors are. Alternatively, ask him to show you an actual calculation of what he asserts. I watched several RE agents grind to a halt on this one. They had talking points but no math.
Thought about pushing the issue with some comments along those lines, but getting into it with my hosts father would not have done much for the holiday spirit so I clammed up.
Walter, I feel your pain. I have learned in social settings that in Irvine discussing real estate is as difficult a topic as religion and politics. I just steer very, very clear.
I just leased a house in a very nice Northwood neighborhood. The neighbors are very freindly and when I met them I only said that “someday” I may buy the house. The idea being that I am an “almost homeowner”.
Of course I have no intention of buying at current prices (~$600K). But since that would be saying their houses aren’t worth what they think they are, I change the subject to football.
Lot Size: 4,628 Sq. Ft.
People still cannot see how crazy it is asking $839,000.
The Zillow comps are all in the mid 600’s. Price seems quite high based on that.
Am I the only one who noticed they turned their front living room into a billiards room?! At first I thought that room was an extra room with a side entrance or something, but looking at the front elevation of the house and the view out the window, it’s now clear that the “billiards room” is actually the home’s living room!
How on earth do people show this setup with a straight face? Can you imagine walking in at the open house and finding the 1990’s pool table setup in the front room? How very, very odd.
These prices make me sad. I make about the same money I did in 1998 as an IT consultant. Indian labor has pushed rates down and just last week I found out my IT consulting contract will end in December.
So when I look at this home for $839K I wonder who is able to afford this home? Most people I know make about 100K year, maybe a little more. How do you afford a ~$5000 month payment? Where does the money come from? I am being serious?
This is not a middle class home that people can afford on the average wage in OC. $300K is about right, maybe $350K.
That’s why I find this sad. If homes were priced correctly (CHEAPER) then more people could afford them and we could enjoy and spend the left over money on other things in life. (Food, family, friends.)
I am wondering the same thing. My wife and I make 180k between us and can’t imagine having a mortgage over $3800/month. We fund our own retirement and have 1 $300/month car loan. Those are the only debts we have. HOW MUCH ARE PEOPLE MAKING?
$85000 medium household income for Irvine. Say $100000 for those looking to buy.
8830000 saking 8.3 x yearly income.
Any way you slice it, after the monthly payments, there’s almost nothing left for anything else.
I have been reading this blog for about a year now (and renting) but am interested in buying in Irvine at the end of 2009. Does anyone have recs on good realtors just to check out whats out there. It seems tough to try and find open houses and we dont know the various areas of Irvine well.
While waiting to pick up a repaired camera about a year ago, I got into a conversation with a realtor. We were in total agreement over the state of the real estate market. The only realtor I’ve talked to who didn’t give out the NAR line. I sure am going to give her a shot at my purchase ……when the time comes. Her website is http://www.socestates.com/
Wow, Dee Dee McGann-Gollwitzer — that’s quite a name. Why doesn’t she throw her middle name in there too? ;-P Anyhow, thanks for the recommendation, LNR — here’s hoping she’s equally honest when she’s got a commission at stake.
Ana, there are some realtors that frequent the site that seem to “get it”, including IrvineRealtor (http://www.camoves.com/scott.gunther), who ipoplaya had a good experience selling a house with.
I noticed the price dropped to 800k.