Delinquencies and foreclosures and inventory are all rising. But the current market is controlled by the banking cartel who is hoping to limit available inventory to force you to over pay for a home.
Irvine Home Address … 133 DANBROOK Irvine, CA 92603
Resale Home Price …… Listed at: $320,000
{book1}
Ooo and it's alright and it's comin' 'long
We got to get right back to where we started from
Love is good, love can be strong
We got to get right back to where we started from
Maxine Nightingale — Right Back Where We Started From
The last year has been a complete waste of time and resources as the government and the banking cartel conspired to prop up prices through taxpayer incentives and the Federal Reserve printing a lot of money. Delinquencies and foreclosures are rising, inventory is creeping up, and resale volume is low. Together these circumstances provide the market an illusion of stability and prosperity.
All our efforts have really accomplished is to delay the losses lenders must take before clearing the market at affordable prices, and in the process, we have cajoled many people into overpriced real estate and a lifetime of debt service. Our government puts the interests of bankers above the interests of the citizens of the United States.
Mortgage Delinquencies Decline Again [not]
By RUTH SIMON
In another encouraging sign for the U.S. housing market, mortgage delinquencies fell in March for the second month in a row, according to new data.
The number of mortgage loans that were at least 30 days past due or in foreclosure declined 8.6% in March, according to LPS Applied Analytics, which tracks loan performance. The biggest slide came in loans that were 30 days past due. Such loans fell by a record 342,000 to roughly 1.45 million, a level not seen since spring 2008.
Delinquencies nearly always fall in February and March as evidenced by the last five years shown in the related chart below. The monthly drops aren't reason to celebrate.
The graphic does show a decline in the percentage of loans in default, but this is a direct result of HAMP loan modifications, most of which are doomed to fail.
Ignoring the misleading headlines about declining delinquencies, what is the truth of the situation?
Total Delinquent Loans 21.3 Percent Higher Than Last Year; Foreclosure Rates At Record High
JACKSONVILLE, Fla. – April 12, 2010 – The latest Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS), a leading provider of mortgage performance data and analytics, shows that the total number of delinquent loans was 21.3 percent higher than the same period last year. Although the data showed a small 1.45 percent seasonal decline in delinquencies from January 2010 to February 2010 month-end, the national delinquency rate still stood at 10.2 percent. The report is based on data as of February 2010 month-end.
The nation’s foreclosure inventories reached record highs. February’s foreclosure rate of 3.31 percent represented a 51.1 percent year-over-year increase. The percentage of new problem loans also remains at a five-year high. The total number of non-current first-lien mortgages and REO properties is now more than 7.9 million loans. Furthermore, the percentage of new problem loans is also at its highest level in five years. More than 1.1 million loans that were current at the beginning of January 2010 were already at least 30 days delinquent or in foreclosure by February 2010 month-end.
As a result of the federal government’s Home Affordable Modification Program (HAMP), delinquent loans that were modified and that remained current through HAMP’s three-month trial period – called “cures-to-current” – have increased. Advanced delinquency rolls, however, remain elevated from a historical perspective.
Other key results from LPS’ latest Mortgage Monitor report include:
- Total U.S. loan delinquency rate: 10.2 percent
- Total U.S. foreclosure inventory rate: 3.3 percent
- Total U.S. non-current* loan rate: 13.5 percent
- States with most non-current* loans: Florida, Nevada, Arizona, Mississippi, California, New Jersey, Georgia, Illinois, Ohio and Indiana
- States with fewest non-current* loans: North Dakota, South Dakota, Alaska, Wyoming, Nebraska, Montana, Vermont, Colorado, Washington and Minnesota
Back to Mortgage Delinquencies Decline Again:
… There is still plenty of pain left in the mortgage sector. More than 320,000 loans that started the year current were at least 60 days past due at the end of March, according to LPS. More than 3.6 million homes will be lost from 2010 to 2012 because borrowers can't make their loan payments, Moody's Economy.com estimates.
Among other reasons for caution, mortgage delinquencies typically fall in February and March as borrowers get their tax refunds, said Lou Tisler, executive director of Neighborhood Housing Services of Greater Cleveland, which works with financially troubled homeowners. In the Cleveland area, foreclosure filings are on pace to equal the highs of 2008.
So the reporter comes back to the fact that negates her rosy headline later in the article.
Have you noticed that pattern before? Reporters start with a few rosy statistics, often taken out of context, then they proceed to fill in the story with the gory details of a deteriorating picture. Here we are in April 2010, and the reality of the housing market hasn't changed. It was like the market was encased in amber in early 2009, and we have been waiting for the collective incompetence on Wall Street and in Washington to get out of the way and let the market clear.
The number of borrowers seeking aid also continues to rise. At Consumer Credit Counseling Service of Greater Atlanta, foreclosure-prevention counseling sessions were up 4.7% through March compared with a year earlier. "We're probably seeing, at mortgage-counseling programs across the country, 5,000 to 7,000 new people a week," says Douglas Robinson, a spokesman for NeighborWorks America, which administers the government's national foreclosure-mitigation-counseling program.
Some borrowers are being helped by the Obama administration's foreclosure-prevention program and other modification efforts. Irma Bravo, the owner of a cleaning service in San Diego, recently received a loan workout that lowers the monthly payment on her $522,000 mortgage to $1,736 from nearly $5,000.
"It's a big, big relief," Ms. Bravo says.
No kidding! Of course, this borrower is now paying on a government sponsored Option ARM, but they have put off foreclosure for a few years.
Through March, more than 230,000 borrowers have received permanent modifications through the government program, according to the Treasury Department. It isn't clear how many borrowers will remain current once their loan is modified. [LOL! very few will remain current]
But getting a loan workout remains difficult. "There are still a huge number of cases in the pipeline or on hold," said Gabe del Rio, a senior vice president with Community HousingWorks in San Diego, which counsels borrowers facing foreclosure.
Yes, there is a substantial pipeline of new delinquencies and foreclosures. When will they release them for sale? We have been tracking the success rate at auction recently, and in many markets, more than 90% of properties scheduled for auction are postponed at the last minute. Lenders keep playing the music.
I found another chart very revealing: the cure ratio is still lopsided which means more loans are going bad than are getting better. The more loans we modify the more behind we get.
At least it is getting better, right?
This next chart is really disturbing. A third of all delinquent borrowers have been squatting for over a year.
For every delinquent borrower in California not in foreclosure — that means they stopped paying and no notices have been filed — thirty six percent have not made a payment in over twelve months. That is shadow inventory, a squatter's paradise. The banks have not begun foreclosure proceedings against these people, and as you can see from the data, it is not a phenomenon isolated to California.
At least the economy is seeing some benefit from all this squatting. $10 Billion a Month Freed up Each Month from People not paying their Mortgage. $1.9 Billion of That is in California so People can continue Leasing their SUV Mercedes and Getting Tans. Thanks Bailouts!
For those worried about taxpayer losses, this next chart will cause you to lose sleep.
FHA loan performance is slightly better than subprime, option ARM and Alt-A. Hurray! We as taxpayers are going to lose a great deal of money.
Very interesting data. Check out the PDF of the full report for yourself.
The banking cartel
Does the housing bubble seem like it is resolved? Can we celebrate the bottom and the return to prosperity? Can the government sponsored banking cartel hold together and keep prices high through supply restriction? Is that a good thing?
The supply constriction cartel arrangement is particularly maddening. Does anyone remember gas lines in the 1970s? How do you feel about OPEC?
There is really no difference between OPEC and the banking cartel withholding our housing inventory. For their own enrichment both cartels act to control the supply of a resource we cannot do without. If houses are made scarce enough, the few desperate buyers will bid higher than they otherwise would. That is the goal of the cartel.
Not just is our government permitting this injustice, they are actively encouraging it.
- Your government wants you to overpay for housing.
- Your government wants you to either settle for less housing or pledge all your income to their lending overlords.
- Your government wants existing debtors to overpay for housing and stay trapped underwater in debt servitude for a lifetime.
- Your government wants to screw you in order to enrich stupid greedy bankers.
An example of the cartel in action….
807 Days on the Market
Irvine Home Address … 133 DANBROOK Irvine, CA 92603 
Resale Home Price … $320,000
Home Purchase Price … $445,000
Home Purchase Date …. 3/25/2005
Net Gain (Loss) ………. $(144,200)
Percent Change ………. -28.1%
Annual Appreciation … -5.3%
Cost of Ownership
————————————————-
$320,000 ………. Asking Price
$11,200 ………. 3.5% Down FHA Financing
5.16% …………… Mortgage Interest Rate
$308,800 ………. 30-Year Mortgage
$67,471 ………. Income Requirement
$1,688 ………. Monthly Mortgage Payment
$277 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$27 ………. Homeowners Insurance
$80 ………. Homeowners Association Fees
============================================
$2,072 ………. Monthly Cash Outlays
-$161 ………. Tax Savings (% of Interest and Property Tax)
-$360 ………. Equity Hidden in Payment
$23 ………. Lost Income to Down Payment (net of taxes)
$40 ………. Maintenance and Replacement Reserves
============================================
$1,614 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$3,200 ………. Furnishing and Move In @1%
$3,200 ………. Closing Costs @1%
$3,088 ………… Interest Points @1% of Loan
$11,200 ………. Down Payment
============================================
$20,688 ………. Total Cash Costs
$24,700 ………… Emergency Cash Reserves
============================================
$45,388 ………. Total Savings Needed
Property Details for 133 DANBROOK Irvine, CA 92603
——————————————————————————
Beds: 1
Baths: 1 bath
Home size: 822 sq ft
($389 / sq ft)
Lot Size: n/a
Year Built: 2004
Days on Market: 807
MLS Number: S521349
Property Type: Condominium, Residential
Community: Turtle Ridge
Tract: Ashg
——————————————————————————
According to the listing agent, this listing may be a pre-foreclosure or short sale.
This property is in backup or contingent offer status.
Best deal in Turtle Ridge! Better then a model, granite counters, designer paint, berber carpet, upgraded bathroom, and much more. There is a garage with direct access, a fireplace, and air conditioning. This is a primo location with access to Newport Beach, Fashion Island, The Spectrum and the Beach! There is a really nice community pool and spa with clubhouse and nearby walking trails. only way to be in the area for this price! Only one of a few 1 bedrooms every built!
Inspired by Soylent Green Is People….
Thanks for posting the LPS presentation. Excellent resource.
You relate the states with most non-current loans: Florida, Nevada, Arizona, Mississippi, California, New Jersey, Georgia, Illinois, Ohio and Indiana … this is where there was a lot of subprime and option-arms lending; the sunshine states saw a flood of investors, that is flippers, who saw the TV ads encouraging one to invest in property; and the Georgia banks lent recklessly in Florida and Georgia.
And you relate that the tates with fewest non-current loans: North Dakota, South Dakota, Alaska, Wyoming, Nebraska, Montana, Vermont, Colorado, Washington and Minnesota. The Great Plains states with the exclusion of Colorado did not see a mass influx of people and consequently no mad rise in property values. I use to live in Colorado, it had a lot of boom and bust cycles; I finally moved to Washington state where there is no personal income tax and a milder climate; here Boeing and Microsoft have been major employers helping maintain property values despite some toxic lending. Many states with California at the lead borrow from the Treasury to pay unemployment benefits; that is not the case in Washington state. I firmly believe that Los Angeles and the State of California are insolvent and headed to bankruptcy … it’s too bad, that the Republicans and Democrats could not settle their differences and arrive at a budget accord.
The GSE’s losses that you reference will only make the Fed’s deficit spending worse causing interest rates to rise … actually I am more concerned about liquidity evaporation, that is a condition where there is a strong stock and bond market sell off, and one is not able to obtain funds in one’s money market and brokerage accounts.
You relate that the banks have not begun foreclosure proceedings against these people, and as you can see from the data, it is not a phenomenon isolated to California. Well this as we know is in large part due to FASB 157 and the monetization of the banks by Federal Reserve facilities where by the banks sit “high and pretty” being well capitalized. Well today, in my reference blog article, I relate the downgrade of Greece sovereign debt by Standard and Poors represents an epic investment turning point; yes, both a mega investment and social shift. It is somewhat of an incentive for banks to sell their real estate property. A federal and feudal, political and economic government will arise in Europe; national sovereignty is quickly becoming a thing of the past: we are witnessing the birth of a one euro government where leaders announce policy and the people follow. Yen carry trades globally will unwind carrying out the same process in the United States, Australia, Canada, Mexico, Latin American, Brazil, Russia, India and China … risk aversion to sovereign debt and fears of sovereign default will cause competitive currency deflation globally; housing prices will be going down to unbelieveable levels. I believe that in the future houses will be leased and not sold with mortgages.
The state of California requires (due to prop 13) a two thirds majority of both houses of the legislature to pass a budget. Therefore, it is basically impossible to pass a sane budget. Smoke and mirrors must be used to get to the required two thirds.
Almost all of California’s fiscal troubles can be traced back to prop 13 in one way or another.
Another way to look at the 2/3rds majority is – it only takes 1/3 of both houses + 1 person to stop any bill in the legislature. Taht gives a lot of power to one individual in the legislature.
Yes, therefore, we should give the bought-and-paid-for-by-the-public-employee-union-Democrats marjority the power to increase taxes in this state to the point where only limousine liberals will be living here. That’s the solution!
Well, what usually happens in practice is that the Democrats get everything they want, plus extra pork in the districts of the handful of Republicans that are willing to play ball. The net result is that government spending is actually higher than if the budget only required a majority vote. Plus, since there are a few Republicans on board, they have to use magic budget tricks instead of raising taxes to make up the difference, tricks which usually end up costing more down the road than just paying for it today-so taxes have to be raised later by 2X instead of raising them by X today.
Have you ever considered the fact that the 1/3 minority is responsible for making sure that the stupid legislature doesn’t overspend?
Well, that got shot right down the drain with CA voters voting mostly for Democraps.
The problem isn’t the 2/3 majority. The problem is that both sides have become so ideologically polarized in CA that meeting in the middle has become impossible. In NM where the legislature is part time, hasn’t been hopelessly gerrymandered and is and not paid for by the special interests (e.g. public unions) both the repubs and the dems sound similar. Both will say that if we don’t have the money were not going to spend it and they are able to get together and compromise on raising taxes and lowering spending.
alan:
That’s because in NM, there is no money to buy and pay for the state legislature.
http://biggovernment.com/aturner/2010/03/01/graft-greed-and-waste-in-state-government-new-mexico-edition
~Misstrial
I would argue almost all of CA’s fiscal troubles can be traced back to Governor Jerry Brown (yes, he’s back) signing the bill allowing government employees to collectively bargain.
Here, here. The ascendancy of public employee unions at the state and local level in CA directly correlates with the state’s failure and ballooning structural deficits over the past 4 decades.
Government employees already have civil service protections. They don’t need unions for any legitimate purpose, and once unions get in, they end up controlling the political process to guarantee unsustainable increases in future pension and health benefit burdens on the government and taxpayers, at the expense of providing services. E.g. California public schools.
Good post. I think you’re right regarding California going belly up. It’s just a matter of time before it all hits the fan. California’s current business model and spending habits are based on nothing but boom times. They never planned for a recession like this, which will probably bring this state to its knees. I honestly don’t know how home prices will stay at current levels when tax/fees will be increased, services dramatically cut and overall quality of life goes down. California will be the text book example of how a great state/economy was ruined in less than 50 years. We still have the weather and the beaches…but after that it goes downhill quick.
On a recent trip to socal to see some friends I was shocked to see that all the trees and decorative plants had been removed from the Santa Ana civic center plaza (by all the courthouses), leaving empty planters full of dirt, except for two remaining palm trees which appeared to be dead or good as it. I assume they couldn’t pay to keep watering the plants and to pay for the gardeners to keep them healthy. They even still had the lights at the base of the nonexistent trees, although presumably there would be no money for the electricity to power these lights even if the trees were still there. Very sad, and a very potent antidote to the schadenfreude that underlies a lot of my feelings about California. Definitely the brokest-ass state in the country, without a doubt. Good luck folks, you’re going to need it.
Dude, it’s Santa Ana. If you want to see nice landscaping, you’ll need to come to Irvine. Irvine *is* more expensive than Santa Ana, but that’s the price you pay for lower crime and nice landscaping! Oh, and home prices in Irvine are never going to fall any more either. They’re up from their 2009 lows, therefore there is no bubble. Buy now or be priced out FOREVER!
😀
Yes Irvine really is “different”.
Don’t know if you’re being sarcastic or not but Irvine police is also well known to target folks whose ‘looks’ don’t belong in Irvine.
That comes with a premium, my friend.
I see plenty of section 8’ers in my area that don’t look like they belong, but are mandated to be here. I bet the po po loves those people.
“actually I am more concerned about liquidity evaporation, that is a condition where there is a strong stock and bond market sell off, and one is not able to obtain funds in one’s money market and brokerage accounts.”
You bring up interesting points but the last 2 years proved that liquidity is the easiest thing to deal with by the central bank and we all know how by now… I think everyone will get their dollars albeit at a reduced real value.
Very interesting….this post is for Planet, as well as those that see beyond blaming the small fry (although they gamed the system and suck):
I see the sharks are circling (Goldman Sachs). But along the lines of “be careful what you wish for,” this process needs to proceed carefully, or, the individual investor needs to take measures to protect against a sustained market decline should the technical signs arise. Why? At one time GS comprised 70% of the volume on the NYSE. Should that decline sharply, if the big six banks merely stood aside and refused to buy, the market would likely free fall.
They have assets equivalent to 60 percent of our gross national product. And to put this in perspective, in the mid-1990s, these six banks or their predecessors, since there have been a lot of mergers, had less than 20 percent. Their assets were less than 20 percent of the gross national product.
In the post industrial paradigm Wall Street ‘is’ the economy. Wall Street may kindly remind us of this fact by simply doing nothing as the market falls.
This system needs to be dismantled as carefully as one would defuse live ordnance. If this is done precipitously this bomb is going to hurt many when it explodes.
The system as it stands is doomed but how it unravels and on what political party’s watch it occurs and therefore upon whom the blame will fall will be attempted to be controlled on both sides of the aisle.
In essence, fraud, embezzlement and corruption of the political process are the only profitable businesses left on Wall Street.
The same can be said of the housing market: without gaming the system, the housing market would go into a free-fall. This holds true not just for the mortgage lenders and Wall Street but also for the American public, many of whom are happily complicit in the fraud perpetrated by the mortgage packagers and lenders, as described by a Nevada resident:
“During the boom years, many (in fact, most) people purchased more than one home. In order to get around the “primary resident” issue (a.k.a. “wink and a nod” clause), contracts were drawn-up under the name of a sister, father, family dog, whatever.
Now – these “investors” are not simply living in one of their primary residences rent-free – they are also collecting rent on the other homes that they stopped making their mortgage payments on last week, month, or last year! This is the reality here in Las Vegas; it is the norm.”
When you looker deeper into the economic ramifications of this ongoing housing mess as it relates to consumer spending, you begin to see … the Deadbeats are so happy to get “free” money on their many homes, they offer attractive deals to tenants. A property that might normally rent for – say – $1,500/mo, is being offered for $1,000/mo. Now that puts extra money in the tenants’ pockets to spend on the economy as well.
Stop the gaming, fraud and lying, and you gut the U.S. economy, which has grown dangerously dependent on Wall Street and housing for its “growth” and stability. Cripple the gaming which produces the out sized profits, and you cripple both Wall Street and housing, which would then eviscerate the stock market and the sick-unto-death U.S. economy.
Defusing the incentives to game the system is literally like defusing a very large, very volatile, very unstable weapon of mass destruction.
I say it can’t be done. The gaming mentality is now so deeply woven into the U.S. economy and culture that it is akin to a parasite so interconnected with its host that killing the parasite will also kill the host.
This is how empires dwindle, grow vulnerable, and then collapse: the productive are taxed while the wealthy game their way out of paying their equitable share, while the status quo (the State/Plutocracy partnership) showers bread and circuses on the unproductive to buy their silence and complicity as the Oligarchy/Plutocracy loots and ransacks what is left of a productive economy and culture.
There is nothing left to say. You have summarized thousands of years of capitalism very nicely.
Capitalist economies are a bubbilicious game where all the wealth is transfered to the top. Medians don’t mean a damn thing in an “advanced” capitalist society.
So how does one profit from this economy without participating in the fraud?
Nefron,
When you find out please post the answer.
The banksters have maintained in debtor third world countries. The 3rd world sought debt relief through debt forgiveness. That forced the banksters to find new debtors that could pay. Welcome US taxpayers.
I liked it better with industrialists running the show. At least they produced actual goods and discoveries instead of inovative financing and capital draining mergers.
It should be clear to you by now that fraud in an “advanced” capitalist society is a gray debatable arena.
Okay, I’ll rephrase that. How does one profit from this economy and behave in a manner consistent with ethics and morals valued and taught in the U.S. society 50 years ago?
As you said taught 50 years ago. Morals involve God.
Oliver W. Holmes (US Supreme Court) said that laws are just agreements set by those in power to keep an orderly society, i.e., amoral. It’s very hard to have ethical behavior without a sense of right and wrong, just because someother blow says so.
“ethics and morals valued and taught in the U.S. society 50 years ago”?
Like that them uppity negros should be kept in their place? Hate to break this to you-the good old days weren’t.
Not sure about the “profit” part, however, it is completely possible to be an honest person and do business honestly even at this late stage.
Recall Abraham buying a buriel cave for Sarah.
Read the passage – he kept the transaction short and and paid the full price without bargaining which was traditional in that culture to do so.
Think of Daniel in Babylon. Joseph in Egypt.
And the New Testament – not coveting and not lusting and being content with what you’ve got will keep you out of a world of hurt.
This would apply to Christians, of course.
~Misstrial
OMG who said anything about uppity negros except you? You are suffering from projection or paranoia, which is it?
So how does one profit from this economy without participating in the fraud?
Easy! Just do what Goldman Sachs does. Short Goldman Sachs!
A good visualization of our “post industrial paradigm on financial steroids” is a Jenga game. Once a tower of wooden blocks is built, “players take turns to remove a block from a tower and balance it on top, creating a taller and increasingly unstable structure as the game progresses.” (WikiPedia)
Since the number of blocks is fixed, the only way to reach higher is by removing pieces from its very foundation. Likewise, for any economy dominated by 30 years of financial engineering that is designed to shuffle money (fixed pieces) around instead of creating real/tangible value, the only way to grow is to “hollow out” the structure from down below.
Of course the fun of the game is the suspense of not knowing which player in which round will remove which piece to cause the collapse.
I have been watching the US economic Jenga game for quite some time now. And I have to admit that I am completely marveled at some insane dexterous skills of players like Ben Bernanke.
So keep this in mind when next time you play this innocuous game with your friends…
My brother used to play a game “Drunk Jenga.” Someone had written drinking challenges on each stick (e.g. “Drink 1 shot”). For each stick pulled, you had to drink something. Whoever knocked over the tower had some big punishment (chug a beer, I think).
I think Drunk Jenga is a better metaphor…
” FHA loan performance is slightly better than subprime, option ARM and Alt-A. Hurray! We as taxpayers are going to lose a great deal of money.”
Does anybody know yet what will be the new government health care expense code for “intensive anger management therapy” and “straight-jacket”? It will no doubt be useful to us over the next several years.
Question 2: Is there any way to record or quantify the number of “delayed auctions” by lenders in Orange County? Where could this information be located? I think this would be interesting to study. When these “delays” happen at auction, does this involve a whole portfolio of REO houses being yanked off the auction block at the last minute, or just 1 or 2 homes at a time? I wonder too whether these last minute auction withdrawals coincide with the end of a financial quarter in a small effort to temporarily improve the bank’s books in some way?
This is a great post. It explains to why people/and banks are still listing homes at 12 to 10 times the median income in the area.
“Is there any way to record or quantify the number of “delayed auctions” by lenders in Orange County? Where could this information be located?”
The data on delayed auctions is readily available on ForeclosureRadar.com. However, it isn’t possible to search by lender because they are often disguised through servicers.
One of the first clients that approached us to purchase a trustee sale property has been working with us for a few months. We have prepared for 10 sales all of which have been postponed. Less than 10 percent of scheduled sales happen as planned, and more than half of those go back to the lender. The lenders are “cornering the market” with their failure to foreclose and buying the few properties that go to auction. It is textbook cartel behavior.
And I remember when many here said the banks could not create a cartel that would sustain. It’ll be like this until most of the bubble properties are transfered.
Just as I remember those predictions that the OPEC cartel would eventually fragment, and production would increase. And guess what: It never happened!
Hence the same long gas lines and high prices ever since 1979.
Oil prices have never dropped, not even once, over the past 30 years.
oil prices did drop in the mid to late 80’s. dropped from $40 per barrel to about $10 or so – as I recall. prices stayed low till about 2002. Talk about hydrocarbon 🙂
It’s HydroCaBRon – as in oil goat. Look up “cabron” in a Spanish-English dictionary.
To help with the intent of my post, I recommend Wikipedia’s entry on sarcasm, or google “verbal irony”.
The “hydro” in hydrocarbon refers to hydrogen, which gets its name from the Greek for water (as in hydro power meaning water power).
Cabron, derived from cabra meaning goat, is Spanish slang for a cuckold. (Wearing the horns.)
So a better meaning for HydroCabron would be water cuckold.
My Mom made us shirts out that “Primo” fabric in 1975!
I used to take the school bus by the “new” Primo brewery in Aiea back in the mid 70s.
I remember the stuff was cheap, so my parents weren’t too concerned if I “borrowed” one in the lanai. It wasn’t expensive like Oly or Pabst.
(The drinking age in Hawai’i used to be 18… the senior prom in our High School was held in Waikiki… the seniors got happily drunk…).
So I’ve been watching the prices on Irvine inventory in the 4/3 SFR category and the 2010 Collection for quite a while now and it doesn’t seem like there is as much of a drop as been predicted. In fact, The Irvine Company has raised prices on every phase in Woodbury and some of the neighborhoods are sold through (Montecito is winding down and will probably open up a second site on vacant land south of Woodbury Elementary).
So what is going on here? I read endless accounts of looming foreclosures and I have no doubts they exist but what impact will it have on market I am looking at in Irvine? It can’t just be gov intervention (and if I remember correctly, many of the permabears here claimed that no amount of gov intervention could “save” Irvine).
Sure, I can point out specific high-end and low-end properties that have taken a 40%+ hit but across the breadth of the mid-range, I just don’t see that kind of movement. Legend of the FCB anyone?
Acceptance is a difficult stage for perma bulls and perma bears. The perma bulls were lynched 2 years ago and are dead and burried. The perma bears for prime areas are grasping on to government intervention. At first it was impossible for government intervention to impact prime areas, now it is slowly being used as an excuse on the painful road to acceptance.
There are hardly any good SFR’s below 700 in this market. Houses that you could have ‘snapped’ for 650k last year are all above 700k.
I was hoping for a drop…didn’t happen. I do not plan to hold my breath waiting for prices to drop after after April end.
I dont understand this market at all…the only ‘sort of’ sane explaination that i have heard is from a friend from the far east. He said prices in Mainland China and Tiwan have increased by 2 or 3 fold and people from the region who buy here feel that prices are more stable here, they do not expect the houses in irvine to drop by more than 5% at the most…makes sense..but doesnt help make housing affordable for me.
“He said prices in Mainland China and Tiwan have increased by 2 or 3 fold…”
I’m not sure about China but in Taiwan there’s no increase in 2 or 3 fold except for a few parts within the city of Taipei where the bidding is totally outrageous.
Most of the Taiwan housing prices are stagnant since 2007.
At some point won’t the receiving dock at the banks just overflow with these foreclosures? I mean 2010 is only a quarter in and there is still a mountain of junk yet to come through, particularly in California.
So what do these foreclosures and REOs look like on the banks’ balance sheets? They are assets that must attract a lot of unwanted attention by investors, and would need to be earmarked for sale at slow and methodical rates so as not to panic the market and cause a failure to capture maximum value for these assets.
Surely there are a high number of smaller and medium sized banks that have REO/foreclosures on their books too.
Are we to believe that these smaller and medium sized bankers are all agreeing to collude on some giant conference call with the likes of cigar-smoking WAMU and Wells Fargo execs ( with special guest star Clarence Beeks and his citrus fruit crop report!) and agreeing to release REO inventory at equally slow rates, no matter how bad things are piling up behind them?
Is it possible for any one of these big, small or medium sized banks might step out of line and pull a book cleaning exercise of their own?
There appears to be no financial/accounting incentive to clear these homes from the bank’s books.
The “book cleaning excercise” you speak of is handing over the keys to the FDIC because it results in formal insolvency.
I’m perfectly happy renting and pouring my bacon grease down a drain that I don’t own.
Time for a BLT!
Best…comment…ever!
I do the same thing! At my last place I used to throw everything possible down the garbage disposal, including many things that truly didn’t belong. I never jammed up the disposal and in four years of living there, never had a clogged drain either.
Hell yeah!
A few months ago, I was having some difficulty making ends meet, so I gave my good buddy in the business a call, and started cooking! No worries about hiding anything from a prospective buyer; when the drywall in the garage gets too discolored, I’ll just move on!
Respect for the property of others is so overrated. I’m striking a blow for good, honest people everywhere by stickin’ it to the man!
You in Hemet?
I live in Irvine, I would like to buy a home in the same neighborhood that I live in, in Irvine, and I go to open houses in Irvine. I have lived in Irvine 10 years and am a former home owner, now renter. I am sort of “feet on the ground” in Irvine, and I think I have a good perspective of what’s going on with the Irvine market.
I think there is no more give on the down side for Irvine homes below about $600,000. I see 40 year old, 3 bedroom properties at $500,000 + snapped up by investors and prospective homeowners. I wish now that I had bought last spring, when I was still hopeful that prices were going to go down another 10%. I thought that prices were crazy last year, but now I believe that the market will hold up, and that is the price to pay to live in Irvine, just like Newport Beach or Newport Coast.
People have down payments, large enough to cut the mortgage down to a reasonable level. I’ve seen several young couples successfully outbid me on houses. I assume that they are getting down payment money from parents. I’ve also seen houses and condos in my price range bought and reappear on the market as rentals within a month or so. The rent being asked does not cover a mortgage, HOA and insurance if the buyer put down 20%. I assume the investors put down more.
When I moved to Irvine nearly 10 years ago, it had a good reputation, it was desirable, but it was not a “hot” area to buy in. I think TIC has been very successful at branding Irvine as a safe, upscale community with great schools, and that appeals to a huge number of upper middle class buyers. I think there are many families who buy into the Irvine image and would like to move there. I think there were plenty of prudent people who waited, and saved during the bubble, or who have other resources like family, and they outnumber the available inventory, and they will outnumber any remaining shadow inventory that hasn’t sold short. When I look at the foreclosures, pending auctions and defaults at least in the neighborhood I live in, it’s not a huge overhang. I’m not sure of the percentage, but I think about 30% of Irvine sales last year were short sales. Those are properties being removed from this ‘shadow inventory’ that keeps getting talked about.
I think that demographics of Irvine has changed in the past ten years, and there are many people who have the resources, either through themselves or family, who desire to buy into Irvine and are seeking to do so. I don’t think Irvine is “immune.” I think it has successfully marketed itself as the perfect family community, and that prices have increased there to the level of a two-income professional family. People have waited seven or eight years to buy, and they can afford the monthly payment and prices. If they are in their 20’s or 30’s, they have time for the market to recover, why wait? I’ve said before on this blog, an infant in 2000, when prices were starting to get bubbly, is now 10 years old. Why wait another two or three years? Children don’t stay the same age, time is of the essence. Maybe those mansions in Shady Canyon and Turtle Ridge, are going to crash, but not the typical 3 bedroom house in Irvine.
The “market” has decided that a plot of land in Irvine is worth more than neighboring cities and much more than distant ones (you don’t actually buy a house when you buy a house-you buy a plot of land in a certain geographic location on the planet that happens to have a house on it). And the reason is low crime and highly ranked schools.
But prices have stabilized and gone back up almost everywhere, even in low-end areas. Now, if the upcoming flood of foreclosures is actually a flood, that may change. But if it remains a trickle, expect more of the same.
I think that TRidge and Quail Hill were/are the aberrations, perhaps the same thing by Portola Hills and those areas.
Those uber McMansions were a bit of a reach and out of conformance with the surrounding areas. Because of this TRidge will come down to TR prices. Quail Hill will command a bit more than Oakcreek but no much more. Specially now that they have that beautiful new HMO hospital smack in their views.
Irvine wise… I’ve lived in TR for 26 years and I’m sick and tired of Irvine. I want to move to a ranch house on 10000 acres in Virginia City, NV. A place where I can walk out on saturday mornings wearing a stetson, boots (snakes!) and my boxer shorts, with a cup of coffee and a 22 rifle and do some target shooting right from my back porch.
Somewhere so that my nearest neighbor will be a quarter of a mile away and won’t care if my trees are too tall, my front door to brown and my roof materials something not in accordance with their brain dead taste.
Schools.. they are good, yes, but they have become way too competitive… something mostly having to do with a given minority.
I hear you. I don’t like Irvine anymore either, but I’d like to stick it out til my kids finish school. It’s pretty hard on kids to change schools and I don’t want to do that to mine. But if I had only myself to think about, I’d be outta there in a heartbeat.
When we moved to Irvine there used to be lots of open fields with oranges. The city felt open, an oasis of space between the Y and Costa Mesa.
We could smell the orange blossoms all the way up in TR.
It was wonderful.
Now, it feels as crowded as Manhattan Beach.
Yeah, it sounds like your inclination to get out of Irvine has nothing to do with Irvine but may have to do with where you are in life. It’s like a kid just wanting candy but then wants something different when he/she grows older… Maybe this
is a bad example because adults still love candy…
Ahhh, the “Not possible anymore outloook”. I see your reasoning with the numbers nefron, but as soon as people start thinking “it’s not possible” or something along that line, that’s when shit will hit the fan, whether it’s real estate, stock, or hell… even Tulip bulbs. We just need a few more people thinking like you, and then I can expect Irvine market to crash.
If you didn’t watch this video, make sure you do:
http://video.pbs.org/video/1479100777
if the link doesn’t work, just google pbs mind over money.
🙂 Haven’t thrown in the towel yet.
Irvine is on its way to becoming a “global community” made up of non-Americans.
RE interests along with TIC are behind this as are sellers who purchased prior to 1997.
As far as Irvine’s demographics, there is a demographic who believes in “luck” and who are in many cases, addicted to gambling. Generally, they do not relay on blogs such as this for their real estate information.
These are the very sort of folk who take the sort of risks that many of us are reluctant or refuse to engage in. Sadly though, their mentality is in alignment with Wall Street.
google: asians addicted to gambling
In fact, this is such a big problem in their community that all you have to enter is asians addicted and “to gambling” auto fills.
~Misstrial
Sounds as if you should act before it’s too late. Buy now, or be priced out forever!
The updated mantra is:
“Buy now before the tax credits expire and while interest rates are the lowest they ever will be!”
Even with the credits gone and if the rates go back up, I don’t think that’s going to proportionately affect pricing.
Who thinks a 7% mortgage rate is going to cause a seller to lower their price to where the payment would have been a 5% rate? They’re going to use comps and wish pricing, not financial affordability math.
“Why am I wasting time with these idiots?”
lol
great post today. lots of information. lots of sarcasm (or maybe bitterness)?
i feel the same way but still managed to have a good laugh.
Thanks IR.
The last socal bubble peaked in 1989-1990 driven primarily by the Savings and Loan silliness. Between 90 and 1992 it dropped significantly. For the next 5 years it leaked down another 10%. Eight years to reach bottom.
This current bubble was magnitudes greater driven by absurd lending practices and insane borrowers. We are only in year 4 on the long slide to prices matching fundamentals.
The historically loan interest rates and artificial liquidity being pumped into the housing sector will cease, and will it does prices will continue to go down.
Residential property in Irvine is no longer, imo, geared toward the American family or partnerships or American singles.
In the past, Irvine was geared toward a traditional single-income family. This was in the 1970’s. In Orangetree, singles could afford to purchase a small one or two-bedroom single-level TH.
In the eighties, this situation changed and home prices in Irvine were geared toward a 2-income family.
In the 2000’s the situation changed again with the international buyer the focus of sales efforts.
The IC and real estate agents do not care if anyone here can or cannot afford Irvine or if prices there are out of reach of American singles or families or partnerships.
Irvine is not for the local buyer anymore, imo.
Unfortunately, there are plenty of people from various countries that want to move here and thus prices do not have to come down to any rational affordability scale.
~Misstrial
I don’t know, $389/square foot. I think this more appropriately priced at about 175-200 square foot.
I’m sorry but 1 bed/1 bath for $320k? Is this Manhattan?
Effing ridiculous.