Not a short sale? Yes, if you raise your asking price enough, a sale would cover your mortgage debt. Now if you could only find a buyer….
Go check out an interview with me at the Irvine Homes Blog (Blogger: Irvine housing market nowhere near bottom).
Asking Price: $729,000
Address: 56 Oakdale Irvine, CA 92604
{book6}
I know the breakdown
Everything is gonna shake now someday
I know the breakdown
Tell me again am i awake now maybe
You can find the reason that no one else is living this way
Breakdown — Tantric
I wanted to profile this property because I find this listing phenomenon amusing; typical homeonwers who have borrowed themselves to oblivion offer their homes for sale at a prices that would pay off their debts and advertise that it is not a short sale.
It is a nice bit of denial fantasy, but most of these properties will not transact at price levels where they will not be short sales, particularly as these mid to high end properties when prices really start to drop. This property and others like it do not show up as distressed inventory, but this property will be sold in the next 24 months either as an open market sale, a short sale, or a foreclosure. The owners spent their bubble equity by doubling their debt. It is likely that they cannot afford the debt service, and they will eventually give up. This is must-sell inventory, so it is just as distressed as those properties that fit the traditional definition.
Asking Price: $729,000
Income Requirement: $182,250
Downpayment Needed: $145,800
Purchase Price: $350,000
Purchase Date: 7/26/1991
Address: 56 Oakdale Irvine, CA 92604
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,123 |
| $/Sq. Ft.: | $343 |
| Lot Size: | 4,230
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Contemporary |
| Stories: | 2 |
| Year Built: | 1977 |
| Community: | Woodbridge |
| County: | Orange |
| MLS#: | S579354 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
home nestled in a quiet cul-de-sac in the sought after community of
Woodbridge. Very well maintained & clean. Laminate floors
downstairs & Berber carpet upstairs installed only 2 years ago. New
stovetop & dishwasher. Vaulted ceilings with skylight in living
room. Atrium with fountain adjacent to family room. Landscaped
wrap-around backyard with small pond. Minutes to 5 & 405 freeways.
Walking distance to North Lake.
- This property was purchased on 7/26/1991 — near the peak of the last bubble — for $350,000. They endured being underwater for about 8 years before we inflated the Great Housing Bubbble. When prices started going up, they finally got to enjoy the fruits of their homes labor: HELOC money.
- On 07/06/1999 they opened a HELOC for $50,000.
- On 06/06/2003 they took out a new loan for $277,000. This may have been a refinance of their first mortgage. The records are not clear.
- On 4/20/2004 they opened a HELOC for $275,000.
- On 3/10/2006 they opened a HELOC for $250,000. At this point, there is no conclusive evidence of MEW.
- On 8/3/2007 they refinanced with a $630,000 with a 1-year ARM. OK, now we know they took out the money.
- Total debt is $630,000.
- Total mortgage equity withdrawal is $280,000 plus their downpayment.
These owners more than doubled their mortgage just as most homeowners I see who are selling their homes now. In fact, as prices start to fall, the percentage of distressed properties will pick up quickly because there will be fewer and fewer of these properties who think they can ask for an amount that will pay off their mortgages.
I find the place amusing too. Keep up the good work. I know someone who might help you with these real estate properties properties. Thanks for great post and photos.
Above post is spam, but well done spam.
I’ve read this thread, and I have one quick point!
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Nancy, your brain is sluggish.
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There, now it’s time to get to my glass of Merlot.
Skip right down to Geotpf’s comment … that’s where reality lays.
People, try to buy in less expensive commutable towns (Not Irvine), move on with your lives, don’t sit around wasting precious life expecting to receive financial wisdom and market timing secret knowledge from this blog. This may just be a cover for a scam dressed up with lipstick.
NeoCons: “watch out, they’re attacking us….”
IR: “homes are crashing… don’t buy, rent”
“…that’s where reality lays.”
Is reality horny, or is someone taking sexual advantage of reality? I’m not sure why reality would need to reproduce, as reality is everywhere and universal, but maybe that $700K price is where reality escapes with its lover, to enjoy a few moments of passion and a cigarette afterward.
Cheers!
“It is a nice bit of denial fantasy…”
Let’s assume someone pays near full price on this place. What turnip truck did they fall out of? In my recent property searches I assume that all regular listings are fantasies. The real market is in the trenches.
My wife was thoroughly impressed after meeting you and Shevy yesterday evening at the block party and reading your interview with Erika Chavez. We need more of that “midwestern ethic”.
Sorry I missed the party. Maybe I’ll be in LA for the next one.
Where did they spend the money? Everything looks like it did in 1978. Maybe the new dishwasher cost 100 grad.
I’m willing to be that they used the money to start a business. The kitchen, bathroom, windows, and roof have never been updated, and the furnishings are fairly spartan.
Those kitchen appliances sure look like they are 70s vintage.
The place looks tired and cheap.
Look at Redfin’s sold comps. It looks like they will probably get more than $700k for this house. $729k is not an unrealistic listing price here, IMHO.
…and it’s now off the market. It probably sold.
I am confused now. Are these properties really selling for these prices?
Yes. Here’s Redfin’s computer generated sold comps. These all are within one mile of this house and sold within the last six months, including three sold in May:
Nearby Similar Sales
Closest homes of similar size and type, and sold within the past six months:
$685,000
46 Redhawk
Sold on Feb 18, 2009 0.22 miles
4 bd / 2 ba
1,946 Sq. Ft.
$675,000
84 Nighthawk
Sold on May 21, 2009 0.23 miles
3 bd / 2 ba
1,895 Sq. Ft.
$615,000
5 Gold Blf
Sold on Mar 26, 2009 0.4 miles
3 bd / 2 ba
1,870 Sq. Ft.
$749,000
1 Suncreek
Sold on Mar 24, 2009 0.58 miles
3 bd / 2 ba
1,803 Sq. Ft.
$735,000
11 Whistling Swan
Sold on Mar 12, 2009 0.63 miles
4 bd / 3 ba
2,254 Sq. Ft.
$750,000
48 Shearwater
Sold on May 22, 2009 0.73 miles
4 bd / 3 ba
2,022 Sq. Ft.
$720,000
21 Winterbranch
Sold on Jan 28, 2009 0.82 miles
4 bd / 2 ba
1,946 Sq. Ft.
$567,900
3941 Banyan St
Sold on Feb 17, 2009 0.86 miles
4 bd / 2 ba
2,318 Sq. Ft.
$650,000
5366 Royale Ave
Sold on May 05, 2009 0.87 miles
4 bd / 2 ba
2,086 Sq. Ft.
$605,000
14731 Doncaster Rd
Sold on Apr 08, 2009 0.91 miles
4 bd / 3 ba
2,000 Sq. Ft.
Range: $567,900 – $750,000
Average: $338/Sq. Ft.
This home at $338/Sq. Ft.: $719,304
That last paragraph is the important part. According to the prices of recently sold houses of about the same size within a mile, this house is worth $719k. So listing it at $729k is not a stretch at all.
Even if you just look at the houses sold last month, they still comp out to about the same dollar per square foot.
except last month rates were 75 bps lower, which markedly increases carrying costs. You must bump the current price down ~7.5% to compensate. That’s ~$50K.
Whenever I see a listing that starts “NOT A SHORT SALE”, my brain automatically screams “NOT PRICED TO REALITY”. I have never seen a listing that starts out this way that was priced appropriately to the market. Double the market price seems to be the norm.
The only benefit of a home not being a short sale is the time/effort saved on waiting for bank approval. Normally, I would add in as a benefit the ability to lock in the current price on the home, but with the continued drop in home prices, locking in at today’s price is a negative, not a positive.
My wife and I combined make $150k not including bonuses or moonlighting and would not imagine at our income of buying a $700k home. How much would the payments, including taxes & insurance be on the ~600k loan? In the ‘hood of $5k/mo. The $182.5k income req’d is 33% DTI? If you have fed & state taxes taking ~40% (6-ss, 25-fed, 7-ca) how much disposable income does this really leave? Is the $500 or so a month paying down principal considered the owner’s savings?
It just seems like a stretch to me, but this listing is no different than any other. I think one of the big ways people justify putting huge percentages of their income towards housing is the ‘investment’ aspect of it. We have prices, but also incomes falling, but hopefully the DTI people take on also comes down.
And this is why, in the long term, prices in areas like Irvine will fall. If somebody making $150k a year can’t afford a completely ordinary tract home, prices are still too high.
But in the short term, there are enough suckers out there who are willing to stretch themselves to pay $700k+ for this. This property will sell for 95% or more of the current list price.
I live in NC, thus the Winston & early comments.
$700k here will get you new construction in a historic downtown neighborhood at 4000sqft.
By IR’s & most underwriter’s math $150k can afford roughly $600k at today’s interest rates. I personally wouldn’t want to push things that hard and wonder how prevalent >33% DTI is. I remember seeing something about the SoFL market and the average DTI in 2005/6 being over 40%.
Another point, being relatively young, it would take 8 years for the 180k buyer to save for the dp at 10%/yr.
I view housing as a consumption expense rather than an investment. I think that perspective changes attitudes towards how much is good to spend on housing.
Again, don’t start comparing apples with oranges… So what if NC is cheaper than Irvine. North Dakota is likely even cheaper.
And I’ll bet you can get a big ranch for $10K somewhere in North Pakistan.
North Pakistan!
LOL.
You could invite Bin Laden over for dinner parties.
Interesting. Bin Laden educates on the FUNDAMENTALS of Divine Law, while this blogger educates us on the FUNDAMENTALS of Real Estate valuation.
The world is Black and While, according to some. You must conform to their model, or you’re wrong, misinformed, misguided. Evangelize Bad News until the masses concede.
There’s a 300 acre land in Mojave desert for $30K, it’s perfect real estate for the like-minded.
Huh? Wha? So since I don’t believe you when you say that your neighborhood will defy the laws of economics I’m some kinda of extremist? A terrorist? Take you crazy somewhere else lady, we’re all full here.
Hi Winstongator,
tonyE here is demonstrating typical CA chest thumping. To Californians, there’s nowhere better to live, regardless of how miserable you would be sleeping on a futon and living off ramen while trying to afford a pitiful outdated cottage.
There’s a lot of that on this blog. You get used to it, I guess.
I see you’re from NC. For my own amusement, I started a bubble blog for Chapel Hill, following in IrvineRenter’s footsteps.
Chapel Hill Bubble Blog
TonyE crawls out of the woodwork to define the charms and “uniqueness” of Irvine every time someone dare to point out it’s a nondescript, incredibly overpriced town. Unless you live on the ocean, Irvine might as well be in North Carolina. Or North Dakota. Or Alabama. You have no culture in Irvine, no history, fake diversity, no big-city edginess, no small-town charm, cookie-cutter homes, and an economy living (and now dying) on real estate. So what does that leave you? Weather and schools? Again, unless you live on the coast, the weather is no different from Texas. And the schools? Uh, I think the California fiscal crisis might have a little to say about that.
My real point was that why do people making $150k in Irvine buy $600k homes, but those people in other parts of the country devote less of their income to housing? Should DTI’s be as high as possible without increasing defaults too much? Viewing housing as mostly a consumptive expense rather than an investment is a change I’d like to see.
The $700k example was an A2O comparison to show something that might knock socks off.
Ay! I like the weather in Orange County, OK?
Orange County is not perfect and Irvine often drives me nuts. In fact, once my kids are out of High School I would love to move the mountains in Nevada, get a high speed satellite Internet connection so I can work from home and shoot snakes from my back porch while I walk around in my boxers and cowboy boots and drink cold beer.
You couldn’t do that in Irvine.. nor in most place in NC either.
So, look, don’t call me names, don’t call me things I am not. Open your eyes and become a realist. When you compare places you have to take into account a bunch of factors. And, to be honest, Orange County, CA., has a lot of nice things going for it that affect the cost of real estate. So does the whole West Coast.
So there… >:-P
I’m having that same struggle as well, with the same income as you have. Last house I bought, in 1999, was $315K and I was making about 100K, which was a stretch to me at the time (no other debt though). Now after selling my house in 2007 and renting, it just seems foolish to take on so much debt, for a myriad of reasons (like being able to pay for college for kids who are teens now, etc.). I am a fed. attorney and the job is as secure as those can be (the future is uncertain for all of us), so the steady income is there…but…when I see a house like this, which is supposedly in my price range…I think “I want something that knocks my socks off at that price.” This house (and those like it) does not do that for me. I can’t justify spending near this much on a house, in this climate…
A home in that price range may get 50% cash offer, they’re not entry-level as they were in 2002. I’m seeing that in my area.
How much is $100K these days? 3.5 years rent for the same home?
Oh, I wouldn’t buy so close to a major street anyways.
So did you all drink too much at the block party and then make offers on houses last night? :sick:
Aw man! I missed the party. I even had it in my calendar. I forgot about it until this morning. Oh well. Next time…
I just noticed on http://www.cnnfn.com that populaton growth in Irvine is still strong. That might counter the drop in house prices a bit in Irvine.
Unless the new people are making $200K+ income, I doubt it will help. Prices are falling to levels sustainable by incomes, and there isn’t much that can prevent that.
Tell that to the sellers of $1.2 million fixer-upper Westside homes, getting multiple offers. They make Irvine prices look dirt cheap. Tell them their fundamentals are out of whack, tell them the Schiller Index says their homes should be worth $400K. Tell them you need an income of 400K to buy their homes, it’ll come down.
You’ll be laughed at in Westside, with this blog’s mentality.
New buyers in good neighborhoods are buying with sizable down payments, just like they are in Westside. We’re turning into a healthier cash market along with long-term homeownership much like the rest of the world, not a debtor’s market with home-flipping abound.
Nancy,
How sustainable do you think your above examples are? Do you believe that home prices in that area can be sustained through a protracted period of 12% unemployment? How big is the pool of buyers who legitimately have a sizable down payment?
There certainly are some people willing, and able, to pay cash to trade up. My guess is they will lose most of their investment (downpayment) in value. If they are lucky enough to have the cash to throw away, good for them. Most people don’t feel like throwing $100k down the toilet.
IrvineRealtor or Ipop on the forums has charted the course of the the downpayment amounts as this collapse has progressed. The amounts are decreasing. The cash (or primarily cash) buyers are what kept things going for a long time, but they are also running out. At least for Irvine.
“… but they are also running out.” Show me the stats, or let me borrow your crystal ball.
The LA area is benefitting from high times in the entertainment industry. As has happened in past recessions economic doldrums drive people towards the movie theater. I have been trying to move closer to my office in the Burbank area and I can tell you that prices are high, competition is tough and realtors are their arrogant, snotty selves.
But this just proves the point. The reason that Irvine is not like this now is precisely because the job situation here is the polar opposite. The high paying RE-linked jobs are gone. The corporate HQ’s are cutting back dramatically. UCI is cutting salaries and hiring fewers professors. Prices have to come down to meet the buying power of local incomes, they are nowhere near there yet.
UCLA is cutting salaries and letting go of many temp staff, Entertainment professionals were financially harmed by long-term strikes, many left town at that point and never returned. So…
It all depends on how you look at the glass. It’s always half-empty, by IR fans. It’s wishful thinking.
While Europe falls into deflation, people waited and waited to see the Euro at $1.4 go back to fundamental valuation of $1.1. When will it happen?
Ah, this story is beginning to get very old.
Actually, Nancy, your comments are getting tired. Free forum are one thing, but simply ripping on IR is uninteresting. Maybe you could try Lansner’s blog – -there are plenty of people there like you who look to pick fights rather than have intelligent discussions.
I assume IR’s ripping on homeowner misery is perfectly healthy and commendable in your perspective? What if God forbid, he is victim of a medical issue that leaves him penniless, into heavy debt, and his short-sale property is paraded on this blog with assumptions of homeowner debt addiction and abuse?
One must be willing to receive what one dishes out.
Most of what I’ve read is black-and-white mentality, false logic, fantasy thinking. It needs a jolt of reality. It’s burried deep in its own dark cloud.
It’s called “being realistic” you fool. The sane thinker is willing to analyze the world around him and accept that things are not always great. Now is one of those times.
I love it when a Pollyanna shows up and cannot find a way to argue other than to accuse the other side of not being a “pothative” thinker.
You have to watch out for the Pollyannas though as they are all more than willing to risk your security with their faith in “pothative” thinking. Why just think about how optimistic those rebels under Pickett’s division must have been as they charged the wall at Gettysburg, thinking happy thoughts about how their shock and awe salvo of cannon fire certainly must have decimated the union troops on the other side.
Whoops! Too bad they didn’t have a negative nancy on their side to stand up and say “What if we missed?”
Irvine doesn’t follow formulas. Formulas are modeled based on reality; reality chooses whatever path it wishes to take based on demand and supply, and reality has many shades… not black and white, or north or south.
Comment saved on your battle analogy. It’s way “out there,” hopefully not coming from a radical fundamentalist with violent fantasies.
Comment saved on your battle analogy. It’s way “out there,” hopefully not coming from a radical fundamentalist with violent fantasies.
Ah yes. Isn’t it fun to engage in internet fantasy? To sit there and imagine that the person the other end is frothing at the mouth, cackling wildly in a basement somewhere while playing Russian roulette all by himself? It’s quite the hoot!
Irvine doesn’t follow formulas. Formulas are modeled based on reality; reality chooses whatever path it wishes to take based on demand and supply, and reality has many shades… not black and white, or north or south.
They are being based on statistical trends which are using historical information that reflects the state of the economy at a specific point in time – that is not mathematical voodoo to understand. If it has been raining for the last two days at 1 inch per day and it looks like it is going to rain for 2 more days then it is not a total crackpot idea to guess that we may get 4 inches by the time it is over.
Of course, I may be totally wrong and the rain may last 1 day or 100 days or it may rain a lot today and very little tomorrow. The fault is in extrapolating the future which is unknown but it does not mean that the guess is completely unfounded by some wizard in a tower somewhere.
To quote yourself, “There are 10 kinds of people who understand binary. Those who do and those who do not.”
Seems the world is divided in halves everywhere… North/South, Zeros/Ones, WallStreet’s rich in the East / Misery in the West…
Did you ever manage to “crack the code” or is the code managing to crack you? 🙂
Forgive me for noticing IR’s fans are like-minded.
You don’t like my 10 kinds of people?
What is with the “fans are like-minded” remark?
What do you believe is going on? Is IrvineRenter dressing up in robe and calling us in for a bible reading on the day’s brainwash?
IrvineRenter is a raging bull compared to my assessment of the situation.
I see I will have to speak very slowly for you to understand. What does the USD/EURO exchange rate have to do with the fact that there is a scarcity of high paying jobs in Irvine?
With due respect, the number of HELOC abusers far outnumber people with genuine “medical issues”.
In soviet Irvine, houses buy you!
A scarcity of high-paying jobs? There is a scarcity mentality for sure, pathetic Mid Western Scarcity mentality here. Do you know the jobs of people moving in the neighborhood, or have a talking crystal ball?
Please continue with your bashing comments, it’s invigorating to know the mentality of those I’ve avoided being neighbors with, and will never share my neighborhood with me.
so Nancy… your income went up right?
Not substantially… it barely kept up with inflation.
When I first moved in in 2002, I assumed the home would lose 35% of its value. That’s because the market already seemed abnormal and that’s what analysts were saying. To compensate, I just built equity faster and tightened my belt.
You can do it too, with the right discipline.
A graceful home in a good location is rarely up for rent, so there’s no parity comparisons in my book.
Nonsense. Analysts were predicting further increases in house prices in 2002 because of the low interest rates.
Homes are for rent in EVERY neighborhood.
No, the analyst I listened to was contrarian-minded. He was a rare breed, and he continues to say not to buy until jobs recover in 2010+. Can’t put much weight on his predictions, having been wrong once, but I’m glad I walked into my purchase with a sober mind and understanding of possible consequences.
I never thought I’d see this! CapitalismWorks was the resident bull around here back in ’07, and he’s now playing the bear role to Nancy, the new resident bull. After Nancy goes through the necessary detox and kool-aid withdrawal, maybe we’ll see a similar transformation.
Nancy, you seem to be a little confused. He said that prices are falling to levels sustainable by incomes, not that they have fallen there already.
In a nutshell, the premise, everything in Irvine must fit the formula, if it doesn’t, the world is wrong. The formula is right.
Schiller Index predicts Metro area will decline by X% in 2009. To the logic challenged, this implies the home I want to buy must go down by X% in 2009.
That’s all what this blog’s wishful thinking is about.
In a nutshell, the premise, everything in Irvine must fit the formula, if it doesn’t, the world is wrong. The formula is right.
Straw man. This has never been claimed by anyone.
Schiller Index predicts Metro area will decline by X% in 2009. To the logic challenged, this implies the home I want to buy must go down by X% in 2009.
Wrong. That is an average for the aggregate area and says nothing about any one house in particular. While I am just as skeptical of these predictions as you might be, they are forcasting these numbers based on the current trends which do have some merit; their fault is in assuming that the future is 100% representative of the past. If you want to argue it like that then I am the first to agree with you, but if you are just going to huff and puff and rip up a bunch of straw dogs – you don’t get my respect.
“Schiller Index predicts Metro area will decline by X% in 2009. To the logic challenged, this implies the home I want to buy must go down by X% in 2009.”
Total straw man. Nothing of the sort has been claimed.
Again, you are missing the point. Noting what the market is like right now in 2009 is not particularly interesting or useful. Intelligent and well-reasoned speculation about what the market will be like in the next few years is.
Oh wait, you’re right.
IR says homes should not be worth more than x% of your income, or if a home rents for $y, then it should not sell for more than $z.
Whichever suits you, they’re all linear and lame formulas, and he’s trying really hard to fit the reality of Irvine market into the formula, on this blog, ensuring to ignore all contrarian indications.
That’s called data mining… you can support any “truth” you wish via data mining. That’s how the story of Iraq’s WMD’s was sold to the American public… stovepiped data mining.
Okay, so what’s the GRM cut off then? How much more expensive does need to be until people say I’d rather rent? Since we’re not going back to “gambling” loans, there needs to be threshold. So what’s the threshold, that’s what IR is showing us everyday and anlyzing what the results of dangerous house gambling will do your financies. People are still gambling today, the kool-aid is still fresh enough for people to over stretch their financies, gambling that appreciation will save them even if their rental investment is currently negative in cash flow.
IR says homes should not be worth more than x% of your income, or if a home rents for $y, then it should not sell for more than $z.
You may not like it (and I certainly do not either) – but these are methods that have been used by banks to determine a safe bet on a potential slave’s ability to repay a loan.
It’s not that hard to look at the median income of an area and be able to come up with a rough estimate of what the median house should sell for.
If the banks return to this model of lending in order to stop their losses then you can guess what the house will sell for.
Nobody is saying what it should sell for in a perfect world – it’s what the house should sell for under the model that has worked for the lenders in the past.
Again, IR is using his formulas (as you call them) to make predictions about THE FUTURE of the Irvine market. Of course these formulas don’t come close to representing what is currently going on… that’s the whole fraking point of this and every other housing bubble blog. Get a clue.
But you ask the same questions, “what’s your GRM cutoff, then. Must we see the world in terms of GRM? How often has GRM applied to prime neighborhoods? Never. I’m saying don’t extrapolate from Schiller indices and GRMs. I don’t know what IR is up to, but I smell unfair advantage (he’s associated with a real-estate agent, after all) dressed up with articles trying to win public sympathy.
If you think really hard, you’ll find the answers to your questions… they aren’t necessarily found here in this blog.
My stance has always been, don’t buy in my neighborhood unless you’re ready to make a commitment to retiring here or staying at least 10 years. And in those durations NO ONE loses more than renters. Renters are the prime suckers of the RE industry.
So, in the world of real estate according to David of AZ… no bank would lend in Westside, LA.
My stance has always been, don’t buy in my neighborhood unless you’re ready to make a commitment to retiring here or staying at least 10 years.
Take it easy there, Nancy – you are blowing lots of smoke.
My stance is even more Draconian than yours. I say do not borrow one penny more than you are willing to repay via your own blood, sweat, and tears at risk of being thrown into debtors prison if you default.
That would bring prices down and sober up our buyers/borrowers real fast.
It won’t happen though because the big boys running the show are making big fat bank off of the average moron’s appetitite for risk and hesitance to question “the system”. Scaring off the borrowers is bad for business – the government will not stand for that which is why you see the neutered system we have today.
Soft-spoken David of AZ:
The government has given so much assistance to American homebuyers, that you will never see in any other country in the world, and that has no precedence anywhere in the world. Tax-free capital gains, interest deductions, 40-yr conforming loans, with 3% down FHA/VA loans, Fannie/Freddie, direct tax credits this year. The government has literally started to buy GSE debt that was once invested by Sovereign Wealth Funds. They pave the ground on which we walk with gold, incentive after incentive, with easy credit.
All they asked from the American consumer was to invest the money responsibly. We blew it hard and manage to blame everyone but ourselves. I suppose the banks forced us to take out HELOCS.
There’s no end to our complaints, homes are inaffordable, too expensive, they’re not safe investments anymore… while the Canadian gets none of our incentives and has low default rates, the Germans have only a trival home ownership rate and their renters don’t have lofty dreams of flipping homes for a living.
Now walks in the Asian saver, who is now importing back the inflation we exported to them by our outsourcing and their undervalued currency. They buy up our homes nearly all cash, put high-aptitude children to our schools, raise our neighborhood’s desirability and our neighborhood’s sale prices, and they feel grateful for everything they have here, that they didn’t have at home. They even buy our foreclosures, for the same homes that bought their manufactured plasma TVs.
It’s a sad picture… and we’ve not seen the end of it yet. It’s a major adjustment and redefinition of the middle class, in progress.
So if it cost me 3-4x to buy then rent, I’m a sucker for renting? You remind me of someone who said that the value of their home will never go down because they’ll never have to sell, but then go on to say how much their home is worth. Bizarre.
Assuming you can afford it comfortably, why not buy in neighboring towns, mortgage it with a 15yr and get on with life? I’m sure you’ll find great deals elsewhere, why the fixation with Irvine?
I moved to this house three years ago when homes on this block were selling for $900k. $900 freaking thousand dollars for a three bedroom stucco box with a shared wall because too many people were taking advice from cretins like you. Three years later these houses are not selling at any price the ‘in-denial’ owners are willing to offer so one-by-one the banks are taking them over. The moving companies all know the way to our alley. If I had purchased this house I would be looking at the complete loss of my downpayment, a $700k note on a house not worth $600k and the joy of over $12k a year in taxes, mello roos and double association dues. Thankfully I am such a loser that I avoided this fiasco, have my money in the bank and have the luxury to make my next move on my own terms. You know what though? I am going to make sure I am going to congratulate the desperate home debtors on my street for their incredible wisdom.
Nancy:
These are serious questions.
a. As you say, Irvine is different. Fine. What, according to you is the DTI ratio Irvine home buyers bear?
b. What is the percentage of cash they come in with?
c. Per Wikipedia, the household median income is 111K per year. With a 4x multiplier for the amount of loan they can carry, it comes to 444K. (That’s stretching it as it is) Even if they come in with 200K cash, it all adds up to 644K.
Would you agree with the math above?
d. How much longer do you think people will come in with 200K cash for this to continue?
Unless you pay cash for your house, you’re just another renter. A renter that pays property tax and maintenance and HOA fees and PMI etc etc…
I’ve lived in Irvine a decade and don’t even know where Woodbury is, let alone want to buy or rent there. You consider it an “established” neighborhood?!
I beg to differ. You can be housing-debt-free in 15 years from the time you buy. All it takes is daily discipline from everyone in the household. And you CAN save while you pay your mortgage too, if you bought BELOW what you could afford.
Needles to say, a $900K home is not middle-class affordable. It’s high-end by any measure. Don’t buy high-end unless you AND your spouse can *independently* manage the mortgage.
That’s how I managed my life, and have no regrets.
Hopefully such good news won’t burst anyone’s wishful thinking bubbles.
Let them sleep in the bed that they made. The borrower and the banks. The only group that is semi-innocent is the investor that purchased the bad AAA rated loans (a form of fraud by WS and blessed by local govt, congress (BF et al.) and GB in the White House).
Many Asians can save, but can they all do math? I can.
Let me tell you a little anecdote to cheer you up, as I have faith there remain those who are uplifted by others’ success stories.
I recently met Hispanic gentleman in my neighborhood; he claimed he was the sole Hispanic in our neighborhood, and had paid off his mortgage a few years prior; he was debt-free living in a prime Irvine neighborhood, having had bought his house in ’95 for what is now commensurate with a few years rent. He apparently had a 15-yr loan.
In ’95, the city was in final days of it’s previous correction, many mortgages were under water, many sold their homes and regretted it later. People with fiscal discipline reap the rewards over time, not on day one.
I found the median household income in my zipcode on SoCalMLS; it’s close to $150K. That is NOT to be confused with IRS-filers income (single vs. joint), and it is NOT to be assumed to be Irvine’s median income. Challenge SoCalMLS if you disagree with their figures.
Overall, Irvine’s unemployment is SIGNIFICANTLY *below* the state’s, that is a fact and no one disputes it. It’s ~4% in 2008, ~6% current.
I suggest you request the other details from an agent or economist you trust; 50% up to all-cash offers are not unheard of where I reside. Crystal ball is opaque today, but I reckon the money will dry up when the US starts producing its own under-ware again.
Nancy – What a thoroughly unpleasant person you are acting. Learn to say something nice or shut the f up. What are you a mortgage broker? Bitter divorcee? aye carumba – don’t be jealous because you’ll never afford 90402. We don’t need people like you here either.
Nancy, don’t worry whether it makes sense or not. Just go ahead and buy as many houses as you can right now or you will be priced out forever 🙂 Remember that they are not making any more land 🙂
Let the people in this blog suffer by renting for thousands less a year instead of being proud homedebtors, I mean owners.
Let me reply to your sarcasm with sincerity. They don’t need my help, when homes sell in 3 days.
Home Debtor? If you manage your life as I have, you’d not be paying off your trivial mortgage faster than the amortization schedule because you’d make more from the interest of your tax-free investments than your deductable loan interest.
Did you know that one-third of your 15-yr mortgage is paid off in the first 7 years? There’s massive equity generation built into fast-amortizing mortgages. Try it, you may thank me someday.
Likely, people who landed bad loans will lose their homes (but who forced them to maximize their lifestyles?)… the ones buying today are putting down large downpayments and getting conventional, stress-tested loans. The tide is turning and becoming more healthy over time, as the deadwood is washed out.
This blog used to be written by an anonymous coward until his “book” got published. Now any negative feedback gets your IP blocked. I feel for you Nancy, but if you are looking to provide another point of view you are wasting your time. The frequent posters here are drinking the Irvine Realtard kool aid.
Appreciate the heads up and support. If my IP gets blocked, it won’t be a challenge to circumvent it and let everyone here know the selective pruning of the audience.
“You can have free speech, as long as you agree with me” – any dictator.
Why not start your own blog and you can take foo with you. You have soooooo much to say.
The FED is not overly optimistic:
SF Fed President Yellen on the Economy
Well, the easy HELOC access seems to have killed homeownership as a way to build wealth for most people. After 18 years in this home, the owners have zero equity and will walk away with nothing after commissions if they get close to their asking price.
Its not clear why the owners MEWed themselves out of their house but its depressing to see it happen. I’m curious – what percentage of long term owners (say 10+ years) have more than 150% of their original mortgage debt in refis and HELOCs?
This housing bubble is a good cautionary tale for me. I have been pretty horrible about money decisions in my life. If I had scraped together and bought a house in 1999, I would not be surprised if I had ended up being a HELOC casualty. It sure would be tempting to know you could have an extra $200,000 in your pocket by refinancing.
I dodged a bullet.
The easy money is very tempting. My wife and I bought in ’97 and we would receive about 2 HELOC offers per day either in the mail or dropped at our front door during the peak of the bubble.
We fell for all the usual real estate tricks and stretched to buy with the assurances that the payments that seemed expensive would soon be affordable. At least we lucked into a reasonable time to buy. In the early 2000s, there really seemed to be a switch to debt as something to be managed rather than paid. We never really bought this and that probably saved us although it is a really tempting idea.
We almost committed a bubble double-whammy. We had an engineer friend who almost had us convinced to HELOC and buy Conexant stock in 2000. Luckily, we didn’t but I can certainly understand the temptation. I guess more people than I realize did keep leveraging their homes or else those offers wouldn’t have kept coming.
I don’t have aggregate data for the whole of Irvine, but anecdotally, I can tell you that more than 3/4 of what is for sale has increased their mortgage. Probably 1/2 have increased it by 50%, and about 1/4 have doubled it like today’s featured property owners.
The rotten in Irvine are being weaned away from their properties, cast into life-long lives of living with their moms… or being disgruntled renters living in shady holes, with no hopes of moving up.
The new buyers are cleaning up the mess these money-challenged people left behind. They’re improving the social fabric and outlook for this town. Only serious savers with immense fiscal discipline can buy here now.
OK, the first post by Nancy fooled me, but this post is troll work. Please don’t feed the troll.
“Only serious savers with immense fiscal discipline can buy here now.”
…as it should be.
Then why all first time buyers using 3.5% FHA loans? What are the ramifications of allowing such bad loans to be backed by the tax payer? These will be the next generation of defaults and it will be the US gov taking the enormous losses.
1. 3% FHA is not happening in prime neighborhoods.
2. Don’t throw the baby out with the bathwater. First-time homebuyers need an opportunity to become debt/rent-free. Not all such debt is bad.
“First-time homebuyers need an opportunity to become debt/rent-free. Not all such debt is bad.”
That opportunity will present itself if the government gets out of the hom-buying business. All “help” by the government to home buyers gets priced into the market increasing home prices. If you need proof for this phenomenon, look no further that the latest housing bubble.
Agreed, but we only see them increasing incentives … e.g., direct tax credit for first-time buyers this year, thanks to the RE industry’s lobbying power, the show must go on.
And when those incentives stop? What am I saying, they’ll never stop, in fact, they’ll have to go even higher. Witness the newest plan to allow 125% refiances. God help us.
Has this listing been pulled?
It must have just been pulled. It was there earlier.
What is the point of advertising a property as “not a foreclosure or short sale”?
As a buyer, does it matter to me if the house is an organic sale, a foreclosure or a short sale? (I honestly don’t know the answer.)
I assume there might be a higher chance that the purchase falls out of escrow if it’s a short sale.
Many people do not want to bid on short sales because they take forever to close. If someone had enough equity to close without bank approval, the deal can happen much faster.
Hi IrvineRenter,
I don’t mean to hijack this thread, but check out this home on RedFin, it was originally listed for 8M, now it is a tad under 3M; is this a steal/deal?
http://www.redfin.com/CA/Santa-Ana/Undisclosed-address-92705/home/3417617
Interesting property. I haven’t seen too many luxury homes priced at $148/SF. The owner has certainly been chasing the market down. I wonder if the $2,000,000 price tag in 2006 was for the lot and if this is new construction?
Hmmm…it’s built on the side of a hill. I wonder if it’s structually unsound. Or maybe the owner is in financial distress for non-housing related reasons (since it doesn’t seem to be a short sale) and needs it sold ASAP, no matter what the price.
I live on the hill across Crawford Canyon from this house, and it’s been there for the decade that we’ve lived here, so it’s not new construction. It’s pretty damned ugly to look at, though. And, seriously, who needs 20,000 square feet?
Agreed on the 20k part. This house apparently has a full fledged bar/restaurant/casino inside it. Unless you are Hugh Hefner, talk about overkill. Heck, I think 3,000 sq ft is overkill.
While looking at the pictures of the house I can’t help but wonder about the parties that went on at the “nite club” in this house. I half expected to see a picture of Al Pacino in front of a bowl or cocaine a la Scarface….
And can you count the typos/spelling errors/poor grammar in this listing:
views views views from nearly every room. this modern enterrainment home has a full disco/ nite club, with large bar casino large outdoor decks off nite club with pool. movie room sushi bar outdoor kitchen by pool with full bath. private maid wing for live in, master suit with 2 his and her baths and walk in closits, spa sauna and 2 steam rooms. this home has too much to list views are stunning with windows from floor to ceiling.
WTF is up with AIG?!!!!! up 1,500%!!!!!!!!!!!!!!
WTF?WTF?WTF?
http://finance.yahoo.com/q?s=AIG
Bwhahaha.
From Yahoo right now:
2:49pm ET: 18.1998 (+)17.0398 (1,468.95%)
20 – 1 reverse split
That would do it. Should be up 1,900% then, though.
Down 20% in real terms, and dropping. AIG is toast.
AIG’s main purpose is to funnel taxpayer money to CDO/CDS buyers; it’s sending the settlements to parties offshore… parties you can’t tax or ever get your money back from. And guess what, the administration won’t remove their loophole. Recall what happens when “Everyone’s In It?”
Kind of like the flopped flippers in Irvine and vicinity that gambled and lost with other people’s money. But did they really lose?
Many made wheel-barrel-loads of money from the housing bubble. I bet those people are mainly living in the west… maybe in the OC, the epicenter of the Subprime Mortgage Industry. I bet there’s a few documentaries on that.
This is how CapitalismWorks – capital moves away from the masses, accumulates into the hands of a few. Then there’s some type of revolt.
Many made wheel-barrel-loads of money from the housing bubble
Wrong. The biggest profiteers were working on
Wall Street and living the good life back east.
This is how CapitalismWorks – capital moves away from the masses, accumulates
Not true. The system works when you have a strong middle class. The problem that you are witnessing is the product of the reduction in the middle class as cost of living has increased, wages stagnate for the working man, jobs are sent over-seas, while the corporate buttheads at the top continue to pigishly take more for themselves. It’s a cultural problem.
Then there’s some type of revolt.
No there isn’t. There will be no revolt as long as KFC is still serving up the goods and American Idol is being spoon-fed into the brains of the masses that are more into their gadgets than a newspaper. Americans are very lazy and have it too well compared to the rest of the world even within a recession.
Nancy = CapitalismWorks? Now I get it. Nice prank.
If only.
Too big to fail…. indeed. Only when it milks taxpayers. Never too big to fail the other way around, paying off the taxpayers for fraud (e.g. Enron).
That’s right. That is how the business model works at the moment. Who did you vote? If you voted for Diet Coke or Diet Pepsi then it’s your fault for buying into the media’s two chosen candidates.
Forget the general election…the primary is where it’s at…and the last presidential campaign had about twenty candidates in the primaries of the two major parties, and at least three or four in each party who were serious contenders.
Third party candidates usually lose because nobody likes what they stand for and/or thinks they are personaly loony tunes, not due to the “media”. The media would LOVE a three-way race in the general election-makes things that much more unpredictable and therefore exciting, which boosts ratings.
The other day I thought Nancy was interesting. Now I’m getting tired of her (maybe him, who knows who or what lurks behind a screen name).
Feel free to tune back into TMZ – it’s much more profound than this blog’s material.
Hopefully you’ll crawl back under the rock from whence you came – and soon.
I agree.
Nancy,
Thank you for livening up the discussion. It is good exercise for everyone to remember the reasons they believe house prices have not stabilized and will continue to decline.
Perhaps your neighborhood is “different.” Many people have come through here with that belief. Only time will tell who is right. You appear to be wagering on the “long” side of the transaction. I do not envy your position.
There is plenty of data on this blog in the analysis posts, and there is a spreadsheet in our forums with the closing data of every transaction in Irvine for the last year and a half. Plus Ipoplaya’s site has plenty of data.
From what I have observed, you appear to be unmoved by the rational arguments presented and prefer to mock those who disagree with you. People will tire of that quickly.
BTW, do you know an Irvine resident named Janet?
every bubble has their Janet’s / Nancy’s… they are both entertaining and tragic at the same time….. human nature is a wild thing, often stubbornly self destructive for no apparent reason other than vanity…
But we are really missing is the fact that this whole situation is fluid and subject to many forces. One of which is perception. I believe we are now at the tipping point of perception. If things dramatically improve then they will improve more due to change in perception by the general population (much like green shoots!). However, the alarm bells sounded by blogs like this one are a headwind to those that like to see the glass half-full. My take is that I’d rather wait for things to fall as they may than jump into uncertainty and calamity. Nancy has a point that if an entire neighborhood (i.e. The Vatacan) decides not to sell then their price really can’t go down) but unfortunately no neighborhood, no matter how nice, is an island.
Surely, you may find distressed homes in prime neighborhoods. Unfortunately they’re typically not prime locations or properties within those neighborhoods. And don’t be surprised if you compete with dozens of other sideliners who were waiting for a discounted home to move into those areas. Even those properties may be quickly bid back to market price in a bidding war.
That’s because they all kool-aid intoxicated and it’s people like you who spread the idea that they’ll be priced out forever or get rich on real estate that they act even if it is not in their best interest. I won’t compete in a bidding war over a stucco box with no yard that backs to freeway. I’ll wait and rent and save until I can afford, just as you suggest, a mortgage that doesn’t mortgage my soul.
then why are you spending so much time on this blog. You are happy with your 15yr mortgage away from the rif-raf. After reading your comments i feel that you want to sell your home in the future and are afraid that this blog will depress the value of your mansion. (you can understand that I am taking the liberty to make some assumptions about you, just as you have made some about the regulars on this blog.)
suggestion: irvinehousingblogrebuttal.com is available. you can start your own blog, we will visit and post comments (if we find your articles interesting).
I for one am thankful to this blog. 12-15 months ago were planning to buy a house for 840k and i ran into this blog. I am happy that we refused to counter the sellers offer and decided to keep renting. To each his/her own, but i visit this site everyday and read all the comments.
What makes me tick? Distaste for faulty Group Think and false logic. And ownership pride. Probably exact opposites of what makes IR fans tick.
Nancy rather than making unsubstantiated claims, try posting assertions with links to data and stats. If you honestly believe that certain neighborhoods are immune from the current depression, all time high unemployment in CA, nearing 80 year unemployment highs in the U.S., a steaming pile of crappy loans wending its way to doom, and increasing taxation, well SHOW ME. Don’t tell me. I (and I’m assuming everyone else here) is unmoved by seeming pollyannas declarations of green shoots and miracle neighborhoods. We are, by and large, a very open-minded bunch. I know it may not appear that way because we share a common (and rather complete) set of details on historical pricing dynamics, current economic factors, which results in what may appear to be groupthink. It is not. Personally I spent the first several months I participated on this blog vetting my previously held beliefs that things wouldn’t get that bad (say max 15% peak to trough drop). Results have demonstrated exactly how wrong that belief was.
Regardless, I encourage you to continue to post, as I enjoy hearing the bullish case, as my great concern at present is confirming evidence bias. The problem is the income data you referenced is false (please see my post from yesterday’s blog for details) and the areas you cited in Westwood and Bel Air are showing dramatic weakness.
IR, I hope you are not dissuading Nancy from participating. I think she has been more courteous in her replies than the general IHB audience (with perhaps the exception of her references to you — show some respect, Nancy).
Nancy seems to have an opinion on everything, but then so does AZDavidPhx.
Let me ask the readership: have any other newcomers suggested that long-time owners are in a better position to weather the bust than bagholders? To my thinking, Nancy has voiced a concept that is not the usual meme presented by realtors, permabulls, and bagholders.
Logically, if all of Woodbridge bought in ’78 (or whenever it was built) and never sold and never refinanced, they would have absolutely nothing to worry about right now because they would have paid off their homes by now. We wonder how people can afford $700k homes and forget that these people bought them as $200k homes long ago (except the idiots in today’s post who bought at the peak of the last bubble). It doesn’t matter that others can not afford these homes at the current prices. Yes, the absence of buyers will eventually cause the the market value of the homes to go down, but in this utopian thought experiment, nobody is in a distressed position.
So yeah, the real world is not so ideal, but if you have a little imagination, you might be able to see that some neighborhoods may exist where there was less froth than places like the “flip-central” Quail Hill or what have you.
More importantly, new ideas are a good thing.
If I was interested in buying in Woodbridge (and I am) this would be an important point (if true). I believe you mentioned yourself, IR, when you covered the neighborhood early on, that some buyers had lived in their houses for a long time.
Oh, and before some very clever poster decides “Nancy = WaitingToBuyByAndBy” you should know I’m a 300+ lbs man who has been visiting this blog for at least the last year if not longer.
Although as a disclosure, I have also posted about areas with less churn than others during the bubble years, so you could argue I’m supporting Nancy to support my own idea.
I would be interested to know if Nancy agrees with any of the analysis IR has posted. Nancy should know IR has been posting long before the realtor guy got involved. I believe there is much wisdom and insight in the analysis posts IR has organized and only a fool would pass on the chance to explore it.
The idea that newer neighborhood will decline farther/faster than established neighborhoods can be analyzed in real time by looking at 92660, 92625 and 92657 (CDM and Newport Coast). From what I have seen both the areas are decling at the same rates despite the age difference.
Nancy’s claims are seemingly logical. The only problem is they aren’t based on reality.
I appreciate new ideas, and different perspectives as well. I read a number of papers and blogs, all with different viewpoints. If this was a “bears only” blog, it would start to get old fast (well, OK, theoretically). It is mostly a “reality check” as far as I can tell, with the bear undertone (who of the fence-sitters can’t appreciate lower prices?). Maybe it’s just where I am coming from: a position of playing it safe. I don’t wish for a crash in prices and pain for the reckless lenders and borrowers, but I agree with the iea that if homes were more affordable for everyone, we’d ALL benefit. I don’t think that’s a despicable position.
The problem with Nancy (unemployed real estate troll or not) isn’t just her pile of anecdotes about multiple offers, etc., and her lack of real data (as well as the focus on LA), it’s her mean-spiritedness towards the group and in particular IR. Blogs are not simply a place to vent, though they can be cathartic at times for all of us- – but they ought not to devolve into pissing matches. To me, Nancy has made her crusade too personal, too pointed, as if she is looking at each of us in the face and pointing at us, calling us out (which she’d never do to me, a 210 pound male athlete, in person, unless she’s really a 275 pound male). I don’t like that kind of blogging, and it really disrupts the flow of ideas and information. The next logical place to go from that kind of exchange is the way of Lansner’s gorilla cage, where feces are regularly hurled at one another. Not pretty. No need for that here.
Let’s keep the positive energy flowing – and contrarian views always welcome so long as the fangs aren’t bared. We need to keep this a little lighter, a little more fun for everyone. IR busts his butt to provide tons of really interesting information, and I applaud his efforts every day. I read his blog before even any of the MSM stuff, before Mish, before Calculated Risk, etc. Let’s keep encouraging him and keep the discussions enjoyable!
Here on the westside, we have the people making normal salaries – the median incomes – but these amounts are so small, they have no hope of buying. These people’s salary, their job losses – do not make much impact on the overall housing situation – unless they are long time owners. When you move to the area, there are people working there paying greatly reduced rents (rent control area)/mortgages because they have been there so long – even 5 years and the amounts are much much smaller than what you would have to pay now. If you have owned in one place for a significant length of time, provided you didn’t borrow, you should be fine. If you bought with the intent of paying down – the payments shouldn’t be onerous. The trouble comes when you want to buy now or rent now – most people can’t wrangle a section 8 or a rent controlled unit so they have to pay market rate… and if you want to sell, you have to find someone who can pay the going rate and get funded to borrow for the going rate. This has caused our low end condos 1B, 2B crappy buildings to plummet in price. If you want to look for distress in Santa Monica housing, this is where to look. As staggering as it may seem, there are many many households in the area making 200K+ – not enough to buy a decent condo, to 400K+ – usually comes with student loans or high indemnity obligations – still not enough for 90402. Many of these guys spent more as they earned more. For these guys the stock market has a big say in whether they can afford to buy – get funding to buy. In Oct, the stock market tanked, and the less slummy home prices started to tumble. In La Jolla, many of the old timers are sitting on a gold mine – but they can NOT afford to move- because of prop 13. They would have to pay current rate property taxes and that is something many of them could not afford and would utterly resent doing.
I think it must be very hard to say no to helocs and refinancing schemes – but I could never understand them and hate the idea of PAYING any kind of interest so mark these opinions that many of the old timers are likely fine down to those of a mere renter.
I don’t think most people realize how much of the price of ANY CA home is now due to the accumulated effects of fraud – be it by the owner when they lied on their loan or other owners who lied on their loans about their income – or the broker who did it for them. You may have been 100% honest, but comps got pushed up because of those who were not, and if nothing else -this relaxing of prices to remove the accumulation of fraud is going to reduce the prices of current owners somewhat.
Anyone that has to come on a blog and scream how wonderful they are though – you have to wonder if they are trying to subsidize their therapy bills or convince themselves that they are right to make so many sacrifices yadda yadda.
I just realized people are going to generalize this to the “my neighborhood is different” meme.
Instead of just saying “my neighborhood is different” Nancy gave a logical suggestion as to why one neighborhood may be different from another.
I am very familiar with the “can’t happen here” meme and my greatest schadenfreude was seeing the housing bubble go national (older folks will recall the real estate mantra “All real estate is local. While some areas may bubble, others will bust so it is impossible to have a national housing bubble” — yeah, you don’t hurt that so much anymore).
Point is, don’t generalize what people have to say, you may be filtering out new ideas.
What was $600,000 at the peak — the very lowest, entry level, single-story, 1960s house in Huntington Beach — is now $325,000. Bear in mind that people are still asking $599,000 for basically the same crap, but we are getting close to 50% off over here.
The idea that homeowners are more desirable than renters has been tested in real life by Switzerland–a nice, well-kept country, by all accounts, and certainly a fiscally prudent one–with its 34 percent homeownership rates, the lowest in Europe and far lower than the U.S.’s.
Everyone’s got their irrational prejudices. Some people hate gays and lesbians. Others hate African-Americans. Nancy hates renters. Maybe it has nothing to do with her business–that might be giving her too much credit, and ascribing too many rational reasons to her conduct here. All I’ve got to say about that is this: as a renter, the only mistake I made during this bubble was not checking my former landlord’s credit report. An unsuccessful flipper, he stole my security deposit, then, after I moved out and decided he was too deep in debt to make it worth my while to pursue the security deposit, proceeded to steal my American Express card number. I still rent, and my lawn is a whole lot better kept than my neighbor’s, who happens to “own.” Ownership society, my lawn mowing, gardening ass.
Brilliant story. I assume you’re going to rent all the way into retirement? Or move back to Switzerland?
Why do you satisfy your critics?
We’re not all that divided here and I’m not here to oppose a person, but a false ideology.
Shannon brings up one of the greatest downsides of renting in recent times. Foreclosure on landlords has resulted in numerous surprise evictions for unwitting, innocent tenants. And if the identity theft culprit was truly the landlord,, what more can top it off as a reason NOT to avoid renting if feasible?
You’re a funny troll, but your reading comprehension skills leave something to be desired. My comment was about your nasty, piggish opinions about renters v. owners, i.e. always attributing to the latter the status of moral paragons. It’s quite easy to reverse what you just said here and add that one of the great downsides of owning and renting your property out these days is that it’s hard to find a tenant with good credit and a steady job, those being in short supply because of housing bubble’s catastrophic (and extremely hilarious) deflation. The identity theft is a non-sequitur: just about anyone can steal your identity. The point is the same as one I made further down in the thread: there is no moral dimension to owning a house, or not owning one. Imputing one is what led us into this mess. If you ever have the opportunity to travel outside of Orange County and realize that most of the world in fact does not own and gets along fine, you may come to realize this. Your little jab at Switzerland there leads me to believe that, like certain Spaniards circa 1490, you believe that you might fall off the edge of the world if you drive east, but that’s Orange County for you. Go get your toenails done, sweetheart, and leave the big numbers to people who understand them.
Shannon, read my prior comments in the blog carefully about world trends of homeownership before erupting in an emotional fit.
I might very well do that. Probably not the move back to Switzerland part, but you never know. (And I did live – rent – there for quite a few years.)
I will buy if it is to my financial advantage vs. renting (as IR does so well at pointing out) or if I have a good reason to value home ownership over purely financial calculation. If I am looked down upon because I rent, it’s a good clue that this is someone who’s opinion of me does not matter to me.
For the record, and to correct another example of black-and-white interpretations: I reject the idea of renting when I can afford to own. Why do you wrongfully accuse me of “hating renters?!”
I think they’re doing the right thing, if they can’t afford, or if they don’t have fiscal discipline or the courage to undertake a massive life-long obligation.
Doesn’t have anything to do with discipline, courage, or affordability. It has to do with the only principle of investing worth attending to: buy low, sell high. You’re loading a cold-blooded economic decision with all sorts of moral and emotional baggage (“courage” “discipline” and all of this it’s always better to be an owner because ownership society blah blah blah garbage) that doesn’t belong there. If prices have been bid up to unrealistic levels, it only makes sense to buy when you believe they’ve reached a bottom, or pretty close. In my case, I was pretty sure that prices would crash and not recover before I was ready to move away from San Diego, and I was right. I may buy here in the Bay Area before the absolute bottom because I have every intention of being here until I can make a slight profit. Like many of the people here, I could easily afford to buy. And like many of the people here–yourself excepted–I realize that this isn’t a moral imperative or a statement about me as a person. I’d suggest that you stick around and learn a little.
IR, :]
All/most of the IHB are not paying enough taxes to support the bailout and to reinflation of the housing bubble. If you paid enough taxes, the sandwich artist at Subway could get another condo loan for a $600,000 with nothing down. Since the loan will be for purchase and non-recourse, you must support the reinflation or the bank might loss some money. If the bank loses money, you should make the banks whole with another bailout and Fed. backed loan.
The median reduces the effect of great outliers such as highly professional athletes and CEO of public companies. For a more accurate model on affordability, the percentage of high outliners needs to be normalized for different locations and neighborhood/size of the house. I estimate is Westwood has a higher percentage of high outliners than Irvine. Westwood also has a very higher student population of lower incomes that’s renting, because the lack of on campus housing. UCI has on campus housing with their own zip for faculty, staff and students. In Westwood, the studio’s or companies may actually be the real buyers and not those living in the house.
IR, your doing a great service to the public. Not very many working people can afford to lose a real $200,000 (non-paper loss).
How did the renter come ahead, exactly? You’d rather loose $200K renting for 5 years paying the in increments, making it a less painful experience?
Have you noticed how the best swindlers work you in small chunks over time?
And exactly how did I lose $200K after 7 years homeownership?
Does solely pointing out the outliers really make a point, or just make renters feel self-righteously vindicated?
Nancy,
It’s clear that you don’t understand stat analysis. The outline analysis actually will help your arguement for general affordability a bit. But how much I do not have the data.
I was paying $2600 for rent for 4 years. If I purchased in 2003 for $950,000, I would have a monthly payment on interest and taxes only of $5145. That house has stay about the same price (newer house). Some of the older houses, a half mile away have dropped $100,000.
Take $5145 (interest & taxes) – $2600 (rent cost)= $2545 saved per month.
$2545 saving/month * 12 month/year * 4 years = $122,000 saving in 4 years. That does not include additional expenses such repair cost for the owner.
RE say saving from less tax reduction for interest. Most people that have high income are paying AMT. Those that have high charitable donations or interest don’t have a one to one dollar reduction in income by the sch A because AMT cancels out some of the deduction. Remember the majority of taxes are by income tax and not wealth tax. Granted I had a great deal on the rent. I had to move for a job change. My employer will pay for the sale of the home, but most people don’t have that benefit.
It’s not worth the time to type out the numbers. She either 1) doesn’t understand them; or 2) doesn’t care.
You provide stats only after you claim I don’t understand it… isn’t this logic challenged?
Rent/ownership analysis *never* holds up in the long-term, And I haven’t found one Market Timer who’s been right consistently, and hasn’t profited from his followership by subscriptions and such.
Nancy, You don’t seem to understand stat analysis vs. a single example. Stat. analysis applies to a large set of data. Outliners are minimized using median analysis.
My example is a personal example. Not a stat analysis. A single example. Not everybody will be saving that amount. You ask how a person can loss 200,000 by buying verse renting. I gave a personal example of voer $100,000 for 4 years on just out of pocket cost (house loss is not included).
Some people like stocks. So RE. I like RE better because it a real asset that I can use. I can clearly see that RE has been overvalued, priced for a long time in CA. There are RE values outside of CA, but managing is difficult from a distance.
Your comments are like stock brokers who were claiming a mature company with $100 billion capitization without earning or hard asset/cash is undervalued. The math doesn’t work out.
Come to think of it, where did I hear the “You don’t understand” line over and over again, baselessly? In the 2008 election debates? Try something novel, that line’s already hackneyed.
Your median rent/own analysis never applies to homes I would buy, and it never applies to the manner in which I buy my home – buy and hold with 15yr amortization. I don’t really care what happens in the meantime – and in 15 years, the rent/own analysis is moot, I’d own the property outright. If you do worry about depreciation because you’re playing with homes like short-term assets, then don’t buy now, IR is right. Chances are you will not buy in my neighborhood because prices are in the WTF sphere and will always be WTF in relation to other neighborhoods with high turnover. That’s how places such as mine weed out the buyers with wrong mentality – and stay healthier than surrounding ones over time.
BTW, anyone who intend to buy for short-term profit taking is part of problem that created the bubble.
http://fraudonomics.blogspot.com/2009/06/ben-bernanke-moron-or-liar.html
Some past clips from ben b from years ago to today. Good for a laugh or cry.