Today’s featured property caught my eye because the photos are outstanding.
Irvine Home Address … 5226 WALNUT Ave Irvine, CA 92604
Resale Home Price …… $468,000
{book1} 
Cheap is small and not too steep
But best of all cheap is cheap
Circumstance has forced my hand
To be a cut price person in a low budget land
Times are hard but we’ll all survive
I just got to learn to economize
Low Budget — The Kinks
Spending a few dollars to properly stage and photograph a property can make an impact. This is either a listing agent raising the bar or an owner that knows how to participate in the sales process. Look at the outstanding staging and photographs of this property.
I particularly like the composition of this one. First, you have the green plant in front of the white wall reflected in the window, and you have the green plant on the white pillow reflected on each arm. The sunlight creates an interesting bright spot that calls your attention to the attractive wood flooring, and the interesting wicker shadows. You get a sense of the function of this space while your eye is drawn to the important features.
The sky in this photo appears to have been photoshopped based on some artifacts in the photo (there is a framelike edge that appears to be a series of dragged pixels) and the uniformity of the color of the sky. In the photographer’s defense, based on the washed out colors of the exterior shot, it was probably an overcast day, and the sky in the photo was likely totally white (it is a photographic effect). The blue makes it a bit more interesting, but at the expense of realism. It also makes me wonder if you really see sky and not perhaps another condo, but I will assume the view is as presented.
This is a small condo in a spotty neighborhood (by Irvine standards). The reality of its existence is totally lost in the photographs — which is great. The money for these photographs was well spent.
Irvine Home Address … 5226 WALNUT Ave Irvine, CA 92604
Resale Home Price … $468,000
Income Requirement ……. $96,463
Downpayment Needed … $93,600
20% Down Conventional
Home Purchase Price … $206,250
Home Purchase Date …. 11/15/2002
Net Gain (Loss) ………. $233,670
Percent Change ………. 126.9%
Annual Appreciation … 11.5%
Mortgage Interest Rate ………. 4.96%
Monthly Mortgage Payment … $2,001
Monthly Cash Outlays ………… $2,620
Monthly Cost of Ownership … $2,100
Property Details for 5226 WALNUT Ave Irvine, CA 92604
Beds 3
Baths 2 full 1 part baths
Size 1,430 sq ft
($327 / sq ft)
Lot Size n/a
Year Built 1980
Days on Market 1
Listing Updated 12/4/2009
MLS Number S597926
Property Type Condominium, Townhouse, Residential
Community El Camino Real
Tract Wc
JUST REMODELED…JUST-LIKE-NEW! VERY DRAMATIC and CONTEMPORARY. (CHECK OUT THE AWESOME PHOTOS!) BIG Grass YARD with Large Patio, just like in a Single Family Home! NEW GRANITE Kitchen Counters with NEW STAINLESS STEEL Sink & Faucet! NEW WOOD Laminate throughout the ENTIRE bottom Floor. NEW Porcelain Floor Tile in upstairs Bathrooms. NEW Designer Paint, NEW Light Fixtures, NEW Bath Faucets! Spacious and Glamorous Master Bedroom with Romantic View Deck…BEST Irvine Home in this price range…EQUITY SALE…HURRY!
intermittent CAPS lock.
The owners have increased their debt since buying, but unlike some of the HELOC abusers I profile, the rate of increase of their mortgage balance was not outrageous, and it appears to have been spent on improvements. If they get their asking price — something our sub-5% interest rates make possible — they will make a substantial profit.
Great photos, too bad the alternating CAPS and randomly Capitalized Words ruins the listing.
I like these professionally written descriptions that include such sophisticated words like ‘AWESOME’ alongside breath_taking imaginative phrases like ‘BIG GRASS YARD’.
6% gets you a so-easy a caveman can do it listing description. Can sellers just write their own descriptions and get a discount?
Based on the contrast in quality between the written description and the photographs, I surmise the photographs were the seller’s idea and execution, but I have no evidence.
Resale Home Price … $468,000
Home Purchase Price … $206,250
Home Purchase Date …. 11/15/2002
So what exactly was different back in 2002? What makes this place worth so much more now? When adjusted for inflation (according to the Consumer Price Index), what cost $206000 in 2002 would cost $245231.69 in 2008. I can handle that. I can’t comprehend $468,000.
Perhaps this is a very smart seller, trying to cash out and take advantage of still-high prices, then planning to ride it out a few years while prices tank, then picking something up with all the cash he has on hand.
One difference is interest rates are lower now. Another is there is not much inventory.
These will both change over time and we may very well find ourselves back at 2002 pricing.
Also psychology is different this year versus what it was in 2002. A lot of people had never heard of a housing bubble in 2002. People were not able to use their homes as a repeated ATM prior to 2002.
Today there are a bunch of ignorant people that do not understanding economics, but they do understand appreciation, they just chose to ignore the ponzi scheme aspect of the appreciation. And a lot of these people are the dip buyers today … they think the market has bottomed.
The mania psychology has not fully changed, and the new reality of appreciation and HELOC spending may cause a permanent change — assuming banks are willing to create another Ponzi scheme. Many of the buy-the-dip buyers are drinking kool aid (buy now or be priced out and so on).
One thing I have come to believe is that most people who are going to buy and sell based on when it fits into their life cycles and job circumstances. Bubble or not, people were getting married, having children and taking jobs in and out of the area. Those people who had fortunate timing in their personal life circumstances enjoyed a tremendous windfall; whereas, those people whose personal circumstances was ill timed to the housing market… they did not do so well.
Really lame technical question:
What’s a good way to inflation adjust a price? Do you assume 2% inflation, or do you go and find some expert source on inflation for past years?
Or is that what you did — you went to the CPI. Where are the CPI inflation numbers? Do they publish anual, quarterly, or monthly interest rates? If several, which ones do you use?
“So what exactly was different back in 2002? What makes this place worth so much more now? ”
I’m surprised IR and the long time Irvine residents on this blog cannot answer this **correctly**.
Although lower rate and ARM are the contributors, the main contributor to the increase in Irvine housing price after 2002 is the passage of El Toro conversion to a park instead of an airport that helped Irvine’s price. Had El Toro been converted into a regional airport (which suppose to replace John Wayne International), Irvine home prices would have stagnated or even dropped.
Trust me on this…I’ve lived in Irvine from ’01 to ’04 and I saw the price went up right after the defeat of that proposition back in ’02. ARM and the low rate were a national phenomenon.
We also got some notices that the city is moving forward with building out the Great Park now. Hopefully, that’ll help offset the shadow inventory.
And IR is right, life circumstances definitely affect when a person wants to buy a house. The ‘nesting’ reflex caused us to buy a house in July, for instance. Should we have waited? financially, maybe. But since we’re planning on staying here for the life of the mortgage (30 years), hopefully it won’t matter that we didn’t wait for the prices to bottom out.
WTF is up with irvine? Mostnareas around the OC are already near 2003 prices. Are the properties in Irvine special? Especially this old shoebox?
I want to see Irvine prices burn.
Woo, a new sink. That’s expensive… I don’t know that putting steel and kitchen together in a buyer’s mind is a good idea if the appliances aren’t stainless themselves. I also am unsure of the wisdom of having the place be a huge let-down when the buyers arrive and see it in person. There is such a thing as the photos being too good.
That is certainly the counter argument; too much sizzle and too little meat.
You have to admit that photos this good make you want to go see it, and that is the essence of good marketing.
They do. I would totally want to see it in person. I just found that in my hunt, houses that looked fine in photos but better in person made me more likely to want to put in an offer.
Whereas way smaller in person was a big turn-off (although these photos avoid that problem with plenty of furniture for scale, it’s clear how small the place is), and pictures that avoided the major glaring architectural issues were a waste of my time.
When I was searching, my favorite were listings with bad, few, or no photos. I knew I would have less competition. The house I eventually bought had only a single photo in the listing.
check out the cabinets.. pure el cheapo circa ’70. It looks like they lightened them a little and varnished them. I used to have cabinets like that once upon a time and did the same thing to them.
But when it came time to put a new countertop I demo’d the whole kitchen and built a new one on a brand new 20×10 slab.
Oh, that looks like a cheap stainless steel sink. Not all stainless steel is good stuff. Nor does the faucet look particularly good. I think it all came direct from the Home Depot.
Irvine has a rather large asian & middle eastern crowd waiting to pounce on anything that pops up on MLS.
Ever been to a grand opening of a new housing tract (woodbury east). English was an option there.
I say this not to be offensive. I am asian. But it is beyond me why Irvine is cherished as much as it is. I can understand if it was a little higher than OC on average but the recent and current price points do not make sense to me.
Your observation is shared by many. It is hard to argue with the market, but for as much as I like Irvine, some of the prices people are paying relative to nearby comps is amazing.
The more I watch this over paying catastrophe play out, the more I am grateful for Irvine so that folks who want to pay too much have some place to go to over inflate home prices. This behavior keeps them away from other areas which then are more likely to decrease in price.
Obviously you haven’t heard of Cupertino.
CNN Misleading Us Out Of Reality:
Foreclosure Plague slowing Filings Fall 8%
This sounds pretty good! Until you read the actual story. The 8% is compared to last month. Compared to last year it is actually up 20%.
But don’t tell that to the countless numbers of people who will just read the headline and conclude all is getting better without bothering to read the fine print.
Notice the headline could just as easily been:
Foreclosure Plague Increasing : Filings rise 20%
They went with the less accurate, rosier one. Why not just take a neutral tone? Why the cheerleading?
Year over year comparisons are neutral because they take out seasonal differences.
I went to an open house yesterday about 6 cars pulled up while we were looking at the house, all families were from China…I dont know if its FCB or CB but we realized that we had no chance and we just walked away.
I had heard that that asians flock to irvine due to the schools. Todays list of top 100 schools in US does not have a single Irvine school… Based on this list Carson should be teaming with Asians :).
http://finance.yahoo.com/college-education/article/108337/americas-best-high-schools-2010?mod=edu-k12_education
I am not sure that Asian buyers – especially relative newcomers – have access to the same sorts of information you have. Probably a lot of what they know is filtered through word of mouth (thus necessarily elderly info), or through brokers.
This from Lansner’s Blog:
————————
Today is “D Day” for property taxpayers: 2009-2010 secured property tax bill, first installment, are due today!
Orange County’s Tax Collector office reports that just before the payment deadline its collections are running behind of the previous year’s pace.
————————
72.9% – Last Year Paid Property Taxes
59.3% – This Year Pair Property Taxes
I’m really getting tired of talking about others misfortune. But let’s be clear here … the quicker they get out of our houses, the quicker the local real estate market can recalibrate, and the quicker they can reestablish their lives.
Wow! The level of distress is amazing and getting worse.
I was at a function this morning where a national real estate market consultant whom I respect was saying the shadow inventory is real and its huge, and the Options ARMs are going to be really bad here.
Failure to pay property taxes is a great sign of shadow inventory. These people are not paying their mortgage, so their not going to pay the taxes either. The shadow inventory will be a bright and shiny beacon in the tax records everywhere whether or not the banks want to foreclose on it and recognize it.
I’m sure some of these people wait until the last minute, not because they don’t have the money, but rather because they like to hold the money until the last minute. However, these people are a minority. Most of the people that can pay, already have paid.
Think about this …
I believe roughly 15-20% of OC homes are fully owned, without a mortgage or lien. I’m very confident that these people are paying their property taxes at a 95%+ rate. These homeowners need to be backed out of the figures above. Therefore the real number of homeowners with a mortgage, who already paid their taxes, is probably somewhere around 50%. The other 50% or so, are either not going to pay, or they’re waiting until the last minute.
The interest rates and penalties for late payment are pretty high. I think late payment is not just a sign of borrower distress. I’ll bet it’s also a sign of REOs and walkaways.
One of the things that bothers me about this many people being late is that it means lenders will recover even less.
I am having a policy idea. I’ll be back to post about it if it works.
There is a reason they dont show the front of this property. I would suggest doing a google street view. Right off the street on busy Walnut.
Nice 30 year old POS. Up a few doors is a great trailer park too. What a dump.
I think that is why we are seeing the tops of trailers in the back yard image:
https://www.irvinehousingblog.com/images/uploads/2009121/S597926_18_1.jpg
First Look: Inside The $75 Billion Plan to Save Housing
For the first time, today, the U.S. Department of Treasury is releasing the number of trial mortgage modifications in its $75 billion Home Affordable Modification Program that went permanent.
These would be considered successful mortgage modifications, where the borrower paid the new lower payment for at least three months and submitted all the paperwork (income verification, tax returns, etc.) required and that paperwork was acceptable.
We got a lot of numbers, so I want to put this all in perspective:
So far the 78 banks and servicers in the HAMP, which represent 85 percent of the total mortgage market, have just over 3 million loans on their books that are at least 60 days past due. So they sent out notices to those 3 million borrowers requesting more information.
A lot of those borrowers (as high as 50 percent) didn’t respond, according to the banks. Some don’t even live in the houses anymore. Gone.
Of those that did respond, just over a million had at least the verbally stated income to qualify for a modification under the program. Others were either not owner-occupants, didn’t have the income level, or were unemployed. So 1,032,837 were offered modifications. But only 759,058 modifications were started. Why? Because a lot of the borrowers just didn’t want them. They would rather try to sell the house or go into foreclosure and walk away. Remember, some borrowers are so underwater on their loans, that they will never see equity again, so why bother making any modification payment, even if it is affordable.
Of the 759,058 modifications started, 697,026 are still in the three month trial phase. That’s when you’re supposedly making your monthly payment and gathering all the necessary documentation for the modification. Since the program really kicked into gear over the summer, we didn’t have any numbers on how many succeeded in the trial period and went permanent, until today.
Treasury reports that 31,382 trial modifications are now permanent. It also reports, well I had to do the math because they didn’t put it on the report, but a spokesperson did independently confirm, that 30,650 modifications were disqualified.
“Presumably, the vast majority were either determined ineligible when all their paperwork came in at the end of three months, or they weren’t current on their payments,” the Treasury spokesperson told me.
So how do we characterize that?
Is that a 50 percent success rate?
I say that because about the same number of mods went permanent as were disqualified. The Treasury spokesperson said she “wouldn’t go that far.” Or should we look at the fact that about 6 months into the program (it really started in June), barely 3 percent of the borrowers deemed eligible for government loan modifications are finally in permanent modifications?
Treasury’s official release said, “the program is on track to meet its goals over the next several years.” Those goals are, “offering 3-4 million homeowners lower mortgage payments through a modification over three years.” Treasury officials noted the 31,000 number in the release: “the report shows that servicers have only converted 31,382 modifications to the permanent phase.” Note the word “only.” But it goes on to say that “servicers need to do their part to help borrowers complete the process and get to the finish line.
Successful program? You tell me.
3% success = 97% failure
And something else occurs to me.
What was the average back end DTI of the 31,382 so called “permanent” modifications? 55%? Do you see where I am going with this?
I think they were reduced to a total front-end DTI of 31%, but if they are having other debt problems — which seems likely — then the back-end DTIs are probably more of a problem, and ultimately, it will contribute to their default and demise. I don’t know what number they have been using, but I think even the FHA goes to 41% or more.
Yes, the front end is 31%, and it is 31% on all mods because they adjust the payment until it is 31%. So, the initial front end DTI is already a problem by 3%.
The back end does not really have a limit. Huh? What? I gotta be smoking crack.
Nope. Here is how it works. If you have a back end DTI greater than 55%, you have to get credit counseling. 55% is trouble by 19 points.
I do not have the stats, but my guess is half of all over 45% will default within two years, and 4/5 of anything over 55% will default within two years. Anybody know where to find the actual stats for default vs. DTI?