The spring rally is officially over as sales in Southern California have dropped dramatically. Sellers are getting frightened and greatly reducing their asking prices.
Irvine Home Address … 14911 DOHENY Cir Irvine, CA 92604
Resale Home Price …… $499,000
You’re such a catastrophe
Hold on, you’ve been running for oh so long
And soon I’ll be gone
You’ve got to build it up and then break down
Four Year Strong — Catastrophe
The Federal Reserve and the government spent the last 18 months engineering a market bottom through a variety of market props. The powers-that-be hoped the market would support itself as the artificial props were removed. Well, it isn't working out that way.
Home sales slump in July
Southern California sees a 21.4% drop in home sales from 2009 but tax credits skew the figures.
[Before the article even starts, the writer has to put in some reassuring bullshit for nervous bulls. It goes downhill from here.]
August 18, 2010 — By Roger Vincent, Los Angeles Times
Southland home sales fell dramatically in July as federal tax credits for buyers expired, yet the median home price declined only slightly from June.
Volume always precedes price. In 2007 volume dropped off, inventory ballooned, and prices began to roll over. It was the beginning of a slide that went unabated until early 2009 when supply was constricted enough to prevent further declines. Since the bubble was not allowed to naturally deflate, we are awaiting another leg down to return us to reasonable valuations.
Observers say buyers' rush to take advantage of the tax benefits pushed forward sales that would otherwise have taken place later in the summer, creating a statistical drop that didn't signify sudden underlying market weakness.
Observers say? Well, I am an observer, and I say that the volume drop has far exceeded any "statistical drop" and falls into the category of complete disaster showing underlying market weakness. This guy is trying to make a huge drop in sales volume sound like no big deal. Typically, a sudden 20% drop in sales is a signal that the market has topped. The last time a similar event occurred was June of 2006.
When averaged, home sales have been fairly flat in recent months, said Gerd-Ulf Krueger, principal economist at HousingEcon.com.
"The lack of progress on the economic front is just having a very problematic impact on the psychological situation of a lot of American consumers," Krueger said. "They are very cranky."
So now we are all cranky? That explains a lot. Perhaps we will change our mood with a few more feel-good nonsense stories in the newspaper.
Notice how this is being portrayed as a completely psychological problem. This implies that the condition will change as quickly as people can change their mind. Such an idea is comforting to bulls, but it ignores the structural problems of foreclosure-induced bad credit, increasing unemployment, and tightening credit standards that are preventing people from buying. There is a legitimate reason for people's "crankiness" that will not disappear if people suddenly change their state-of-mind.
The median price for all new and resale single-family homes, condominiums and town homes in July in Southern California was $295,000, according to MDA DataQuick of San Diego. Although that was a 1.6% drop from June, it represented a 10% increase from a year earlier, the real estate research firm said Tuesday.
Prices have rolled over at the peak of the spring selling season. That is not a good sign. What is going to happen in the historically weak fall and winter? Notice the writer had to spin it with some good news about a higher median to lessen the impact. Of course he ignores that a higher median only reflects a change in product mix and not a real increase in prices.
Year-over-year price increases have occurred throughout 2010, with the exception of a 1% dip in April. But such advances will be harder to come by in future months, DataQuick analyst Andrew LePage said. Median prices — the point at which half the homes sold for more and half for less — were depressed early last year by a glut of distressed sales in cheaper inland markets, then moved up in later months as sales activity spread to wealthier neighborhoods.
"The high end came alive in the middle of last year," LePage said. "Sellers got real and buyers started buying."
"came alive" and "started buying" Let's put on our cheerleader uniforms and shout "Go team!" The real point lost in the rah rah is that sellers finally started lowering their prices in order to sell their properties.
A total of 18,946 homes were sold in the six-county region, a 20.6% drop from the previous month and a decline of 21.4% from July 2009, DataQuick said.
Those numbers are a catastrophe. New home sales plummeted 33% with the expiration of the tax credits. And now resales are confirmed at 20% off what was already 20% below historic norms. People can try to spin that all they want, but another 20% decline from already a weak sales volume does not bode well for the market.
"It was to be expected," LePage said, because many sales closed in May and June after buyers rushed to take advantage of a federal tax credit of up to $8,000.
Let's be a bit more specific here. Some kind of decline in sales was expected; that much is true. Nobody forecast a 33% drop in new home sales or a 20% drop in resale volume. If anyone had credibly forecast such a decline, the government probably would have extended the credit. I'm glad they didn't ask me.
About 34% of resales of existing homes involved foreclosed properties, compared with 33% in June and 43.4% in July 2009 in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties. Foreclosure sales have been flat for the last few months, LePage said.
Home prices will also be mostly flat in the months to come, perhaps with a slight upward trend, Krueger predicted.
That is pure NAr shilling nonsense. What is going to make prices trend upward? Ballooning inventory? Falling demand? A weakening economy? The only thing holding up prices at all is the falling interest rates, and Low Interest Rates Are Not Clearing the Market Inventory.
"That won't change until we hit the wall in terms of supply," he said.
Irvine's inventory hit 879 homes on Saturday, August 21, 2010. Where exactly is this wall Mr. Krueger speaks of? Is it when we eclipse the 2008 inventory peak of 948 houses? Or have we already hit it because of low demand?
Krueger found some encouragement in the number of homes being snapped up by investors. Almost 22% of July home sales were to absentee owners who intend to resell or rent them to tenants.
Krueger found some encouragement? Good for him. Why do I care? Is this supposed to be a news story giving me information, or is this an NAr press release to make homeowners and knife catchers feel good about their speculative bets.
"There is pent-up demand for speculative product," he said, and even a shortage of foreclosure-related bargain properties on the market as far as investors are concerned.
The old "pent-up demand" nonsense. Desire is not Demand. If we had actual demand — people with desire who can put dollars behind it — we would not have a huge decline in sales volumes. What we have done is pull all our available demand forward with a plethora of government incentive programs. The evidence clearly shows a total lack of demand, nothing is pent-up.
Recent first-time buyer Steven Kaplan said he and his wife were not impressed with the distressed properties they saw on the market around Melrose and La Brea avenues in Los Angeles. Many were "short sales" priced for less than the banks were owed.
"What we were seeing for $600,000 were totally trashed houses," the 33-year-old sound engineer said.
The couple ended up buying a smaller house for less than $600,000 last month that didn't need a lot of work. He and his wife, Lola Stewart, had been thinking about buying a house for about five years. They decided to plunge ahead when they saw both home prices and apartment rents tick up a bit earlier this year.
This couple bought out of fear of being priced out. Very sad. This false price signal from the bear rally has enticed many to buy prematurely.
"We were looking to get a better place," he said, "and low interest rates made us able to actually afford something."
The lure of loans at rock-bottom interest rates, though, still isn't strong enough to overcome weak consumer confidence, said broker Syd Leibovitch, president of Rodeo Realty Inc. in Los Angeles.
"Interest rates are at 1950s levels," he said. "I am surprised that hasn't spurred more activity."
Inventory on the market is almost double what it was in February, Leibovitch estimated. "Agents are no longer complaining they have nothing to show. There are lots of choices now."
Mr. Krueger said we won't have any problems until inventory hits a wall. Isn't a doubling of inventory a telltale sign that we have have hit the wall already?
Agent Lynette Williams, who specializes in northeast Los Angeles and Pasadena, said she was also seeing more houses on the market, and some of them in select neighborhoods sell rapidly. Still, she is apprehensive about how the market will perform without federal tax credits. State subsidies are also phasing out.
Interest rates may be low, but getting financing is no picnic, she added. "Banks are scrutinizing everything."
Banks are scritinizing everything? LOL! Let's go back to 100% financing on stated income and see how that turns out..jpg)
WAMU Option ARM
Today's featured property was purchased for $815,000 on 1/18/2007. The owner used a $652,000 Option ARM from WAMU and a $163,000 down payment. That has got to hurt….
She has squatted for about 18 months so far, so I suppose she is getting some of that value back.
Foreclosure Record
Recording Date: 05/10/2010
Document Type: Notice of Default
Foreclosure Record
Recording Date: 08/12/2009
Document Type: Notice of Rescission
Foreclosure Record
Recording Date: 05/06/2009
Document Type: Notice of Default
She has not received her notice of trustee sale yet, so she will likely get to drag this out for quite some time.
The real story with this property is the dramatic price reduction.
| Date | Event | Price | Appreciation | ||
|---|---|---|---|---|---|
| Aug 20, 2010 | Price Changed | $499,000 | — | ||
| Jun 18, 2010 | Price Changed | $625,000 | — | ||
| May 27, 2010 | Listed | $650,000 | — | ||
| Jan 18, 2007 | Sold (Public Records) | $815,000 | 0.0%/yr | ||
This has been for sale since May, and apparently it has not attracted the kind of bid the holder of WAMUs trash wants to see. I imagine the seller hopes this will start a bidding war. At $499,000 with low interest rates, no HOAs and no Mello Roos, the price is attractive. The total cost of ownership is less than $2,000 per month. Surely this would rent for that much. To be honest, an updated 3/2 with a pool at less than $500K piques my interest (Did you see the cool home theater?)
Over the weekend, I profiled 5 FERN Cyn Irvine, CA 92604, also being offered for under $500K. It too had recently witnessed a dramatic price drop. That property might actually transact because it was an equity seller. These are both solid middle-class properties with costs of ownership at $2,000 a month. That kind of value — prices with a cost of ownership below rental parity — will entice buyers.
Perhaps two properties does not make a trend, but both today's featured property and 5 Fern Canyon show desperation by the sellers. Ballooning inventory and swooning demand will prompt more sellers to lower their prices if they want to transact. If enough of them lower their prices, that becomes the market, and prices fall.
Is this a trend, or are these two properties outliers that will be snapped up quickly for above their asking prices?
Irvine Home Address … 14911 DOHENY Cir Irvine, CA 92604 
Resale Home Price … $499,000
Home Purchase Price … $815,000
Home Purchase Date …. 1/18/2007
Net Gain (Loss) ………. $(345,940)
Percent Change ………. -42.4%
Annual Appreciation … -12.9%
Cost of Ownership
————————————————-
$499,000 ………. Asking Price
$17,465 ………. 3.5% Down FHA Financing
4.51% …………… Mortgage Interest Rate
$481,535 ………. 30-Year Mortgage
$97,637 ………. Income Requirement
$2,443 ………. Monthly Mortgage Payment
$432 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$42 ………. Homeowners Insurance
$0 ………. Homeowners Association Fees
============================================
$2,917 ………. Monthly Cash Outlays
-$392 ………. Tax Savings (% of Interest and Property Tax)
-$633 ………. Equity Hidden in Payment
$29 ………. Lost Income to Down Payment (net of taxes)
$62 ………. Maintenance and Replacement Reserves
============================================
$1,983 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$4,990 ………. Furnishing and Move In @1%
$4,990 ………. Closing Costs @1%
$4,815 ………… Interest Points @1% of Loan
$17,465 ………. Down Payment
============================================
$32,260 ………. Total Cash Costs
$30,300 ………… Emergency Cash Reserves
============================================
$62,560 ………. Total Savings Needed
Property Details for 14911 DOHENY Cir Irvine, CA 92604
——————————————————————————
Beds: 3
Baths: 2 baths
Home size: 1,880 sq ft
($265 / sq ft)
Lot Size: 5,000 sq ft
Year Built: 1971
Days on Market: 87
Listing Updated: 40410
MLS Number: S618914
Property Type: Single Family, Residential
Community: El Camino Real
Tract: Wl
——————————————————————————
According to the listing agent, this listing may be a pre-foreclosure or short sale.
Expanded home in the Willows. Located on a culdesac. Remodeled kitchen with beautiful cherrywood cabinets. Bathrooms feature spa tubs. Bamboo style laminate flooring.
This ‘fear of being priced out’ is one of the geographic dependent factors that has impacted home prices. It doesn’t exist everywhere, but does in FL as well as CA. It is not a rational factor that should impact people’s decision to buy a home. Granted, it is based on periods in the past when people were ‘priced out’, but the past also shows that buyers during that period were buying at the peak and getting crushed.
Two factors that make real estate more prone to bubbles or inefficient market behavior: leverage and illiquidity. I guess during the bubble, homes would sell within 1-2 weeks, but that is not normal. With stocks, most of the purchases are w/o leverage (even if we go to ‘large’ DP’s for homes you’re going to have 5 or 4-1 leverage) and are relatively liquid. The huge differences in the mechanics of the two markets should give a clue that they might not behave identically.
The foreclosures around here are selling for pretty close to the nominal amount owed on the note. Where banks are getting hurt is the lost payments. For this loan, the lost payments are probably close to $45k/yr, plus the neg-am of about $50k total. There is ~$150k capital loss, but ~$140k in lost payments. Waiting to foreclose banks are weighing capital losses against lost payments.
If IR buys, does he have to change his site username?
“If IR buys, does he have to change his site username?”
I have given that some thought, and I will keep the IrvineRenter moniker. There is too much identity value in that name to abandon it. If I lose my empathy with renters once I buy, I may be forced to change, but short of that, the name is here to stay.
What would I do if I didn’t buy in Irvine? Hmmmm…
Lake Forest Owner has a nice ring to it.
Please don’t choose LasVegasLandlord
Woodbridge Warlord?
Better write ALL FURNITURE IN HOME THEATER STAYS WITH HOUSE in your sales contract if you spring for this place, IR. Be very specific down to the last fixture, fitting, or piece of furniture. All the other fixtures and fittings you want to keep, too. Then, if it isn’t all intact when you take possession, prosecute the seller for stealing.
At least she hasn’t trashed the place or stripped it YET. The foreclosure “victim” will usually save that operation for the day she vacates the house. I am looking at lot of foreclosures, and the theft and vandalism are sickening. Bath fixtures ripped out of walls and/or broker, leaving gaping holes and ruined plumbing, entire kitchens stripped out.
The media equipment in the home theater is specifically excluded from the sale, per the Redfin listing:
Listing Information
MLS: SoCalMLS
Exclusions: Viking Stove, refrigerator, chandelier, portable spa, and media room equipment.
http://www.redfin.com/CA/Irvine/14911-Doheny-Cir-92604/home/4666468
-Darth
Great, so you get a home theater with no home theater equipment. Why even show the picture…that is pretty misleading. Coming from a realtor I wouldn’t expect anything else.
That room looks absolutely ridiculous. A bunch of chairs jammed together and stuffed into that small room. LOL!
Seriously imagine 5 people all in there at once watching a movie.
I am surprised that they did not add an extension to the room for a snackbar that sells 10 dollar buckets of popcorn.
Cheesy.
Maybe it is hard to judge depth in the photo, but the front row (actually both rows) look to be way too close to the screen to me. I think you’ll see a blurry and distorted image with washed-out colors, and finish the show with a headache if you last that long. Think about sitting in the first row of a movie theater before cramming a big screen into a small room.
A mansion wannabe without the space. Not a lot of room around the pool either.
If the media room furnishings and equipment are excluded, then how does it have a home theater? It’s just a blank, featureless, boring room without it.
And the built-in appliances? WOW but this seller has some cheek taking those with her. They are attached to the house.
If you want fixtures excluded from the sale, it’s a misrepresentation to show photos with these things when you list the house. Very dishonest to list a theater room if you’re taking the equipment and furnishings with you. Items you wish to exclude should be removed before you sell the place.
Strip that Home!!!! Plastic screw in ceiling lights, cheap Wal-Mart blinds….maybe I should start a site that shows people how to LEGALLY strip the living shit out of homes.
You can always replace an AC Unit with one not working (help out your neighbors, why let the bankster/flipper make more profit?). The same goes for EVERY fixture. There has to be one in place, whether it works or not, well.
See how easy it is to stay within the law and make the Pharisees who want to convict people grind their teeth in anger? Since coming to LAW crazy California, I’ve found the very BEST way to screw people, is to USE THE LAW. Read it, learn it, USE IT.
Have a nice day! 🙂
Agreed! Most definitely do not Break The Law by stealing anything from your bank’s house. We want everyone to have a clean moral conscience and we have established now that anything that is legal is by default moral – so no worries! You have to act like a sophisticated banker when you do business with them.
It’s not your fault the “new” AC does not work. Nor is it any of the banks business that you just happen to like bright hot pink wall paper all throughout your home.
Cheap countertops work just as well as granite!
Toilet seats are just a convenience. You are the rugged type!
Your garage door opener “suddenly stopped working” and you decided to do it manually from then on out because the government wants you to work out more and be healthier for the sake of society.
That pool was a danger to your children and fence was stolen by gypsies in the middle of the night and sold on craigs list so you had no choice but to fill it in with concrete. To protect the children of course…..
David…that is hilarious! I didn’t even think about the ramifications of “converting” all the things in the home to comply with the “green laws” pushed so hard by government.
Maybe someone can do a study on how many calories are burned if the government bans Remote Controls!
I’m not advocating people to mindlessly destroy or lash out. Just be creative. If you are really hurting and on the edge financially, strip the home, follow the law to the “T”, and prepare for your next move.
People who vandalize their homes are no different than someone who would throw their feces in public, it’s disgusting.
Speaking personally, I would just as soon the foreclosure “victim” would strip out all the tacky developer “upgrades” in the foreclosures I’m looking at here in Chicago.
I have a taste for 80-year old buildings with nice millwork and covings, and nothing makes me sicker than to see a beautiful old vintage “rehabbed” into something that’s trying to look like a cheap 70s vintage tract house out in Aurora or someplace. So please take the tacky cheap junk developer’s kithen and baths out for me so I can get $50K discount and rehab the place correctly.
Just when I thought it couldn’t get any worse, this blog is resorting to cnbc style spin.
Dude there is no way in hell this transacts. Why not be truthful, they ain’t paying for their house and don’t want anyone to buy it for as long as possible.
Uhh…
By lowering the price, they are trying to STOP people from buying it.
Uhh…
WELCOME to Planet Realty!
Talk about spin…
-Darth
Planet Realty: “Just when I thought it couldn’t get any worse”
A very appropriate comment from Planet Realty, given the recent price declines in Irvine.
In fact, ‘declines’ doesn’t even begin to cover it, as IR has been pointing out. These are more like cliff-dives. Freefalls. Plummeting.
-Darth
Cliff dives? Pass the bong over here please.
There have been pricing tricks like this going on for the past 3 years. You guys are suckers to fall for it.
With increased inventory and entering the “slow” time of year I’d be a little nervous too if I needed to sell a house. I’m sure the government will start another round of home buyer tax credits since the first giveaway worked so well.
“I’m sure the government will start another round of home buyer tax credits since the first giveaway worked so well.”
Try doing that with the elections just around the corner.
Can you say “gridlock Congress”?
PR has been increasingly defensive as of late….
Have to agree with PR on this one. All these people are doing is extend and pretend. They have no intention to sell but to stay in as long as possible.
We all know that prices cannot possibly decline because at this point all of the pretenders have been pushed out and the “real” money has found the way in to premium areas like Irvine, CA which makes it independent of buyers elsewhere. Instead, the city is composed of disciplined “hard-working” talented savers who scrounge up 200K downpayments with a few weeks hard work of walking on water. Indeed, the city has found a final price plateau and has successfully defied gravity. Welcome to reality.
Not to step in before IR defends himself, but he does put the major caveat, “That property (not this one) might actually transact because it was an equity seller.” It that one will only ‘might actually’, this one falls into a category less likely than that.
PR is right. At this price point, the property is $300k underwater. Lowering the price is playing chicken with the bank.
How do they get away with taking the stuff that was most likely purchased with money that should have been going towards their loan payments?
Did you read the article? Did you see the down payment? Do you realize you sound like a robotic bankster full of greed, er I mean a typical orange county republican when you BITCH about the person not paying their loan?
Hey Winston, how about we go after them useless pieces of human offal and strip the clothes off their back, or kill them and render their fat to light the peasants candles so they can continue to work at night at their corporate slavery job so your portfolio keeps growing?
See what I mean about the “compassion” of the people in OC?
The fact that my money & vote both went to Obama shows that there’s some real disconnect. There is a long way from taking someone’s clothes, and not letting them keep their Viking range. Seriously? The $300k plus that the bank will lose is not nearly covered by the range, fridge, spa, & media room equipment. Those are obviously things related to the home whose loan is in default.
I would imagine the down payment came from a bubble sale of another property.
But really, we need to make sure this guy keeps his home’s goodies and not pay attention to the millions of unemployed.
Good points, but it doesn’t change the fact that the money is GONE. The homebuyer lost their 6 figure down payment.
And remember, it was OUR government, that voted to pay the banksters, which results in people being able to live in their homes for years rent free.
I’m WAY more pissed off at the system than the freeloaders and scumbags that KNEW they would never pay the money back. Good old Obama fell right in line with Bush in lining the banksters pockets.
What if that down payment came from 15 years of hard labor….is that harder to imagine than a previous bubble sale? Also, does that mean YOUR home bought WAY PRIOR to the bubble years, that is now STILL bubble priced, shouldn’t count as equity?
The buyer lost over $100,000 and you brush it off, and then whine about the lost revenue for the BANK. Good damn, you GOTTA love “THE OC”.
The money is gone, but the stuff in the home is still there. You’re missing my point. If you use HELOC money (which is the same as the unpaid interest from an op-arm) to buy improvements to a home, those improvements should be considered ‘attached’.
You get an option-arm for two reasons: you couldn’t afford the regular payment, or you wanted to lever up into the biggest home possible to maximize your gains from appreciation. Either way, my sympathy goes to the people who were paying principal who were not gambling.
Killing debtors is bad business. This country needs eager slaves to do the work around here while the zero contributors wank themselves over their “portfolio” gains.
So the guy not making his payment and keeping his home related toys is the ‘contributor’?
Who else is going to do the work? We need slaves.
Hell, I need slaves too. I’m tired of ZIRP and I need my money to work for me 😉
I have one hell of a hard time feeling “compassion” for someone squatting for a year and a half in a $500K house, who most likely has a much higher income than I do and gets to squat for many months, then takes off with the fixtures and trimmings.
I am a renter and I am dealing with gut-churning job insecurity and reduced hours and pay, in middle age. If I default on my rent for 2 months, my things will be stacked up on the parkway in front of the building and looted down to nothing by the parasites and thieves who can smell an eviction 10 miles away. And I had better not make off with the 10-year-old rental grade appliances.
5 Fern Canyon is an equity seller, and they could transact at that price. That isn’t spin; it’s a fact.
In order to spin this you need at least one fact. Welcome 5 fern. 5 Fern will transact, it’s not comparable to this house and would you like to guess the price? 480K??? LOL
I think we can safely categorize you as being in the camp that believes these dramatic price drops do not represent a new trend. Over the next several months, we will see if you are correct. Your dismissive comments will be quite amusing in retrospect if you are wrong.
We all know the track record of me being right and you changing your tune.
You want to know the most hilarious part? If you are right, your first trustee purchase will likely be a disaster.
Are you still in for $100K? I need your completed subscription agreement by September 17.
I’m waiting for the large index funds to have a 4-5% dividend, that’s a more intelligent investment than flipping. You deserve credit for raising money from a blog. Also I can only guess at your business model but I imagine you are taking a 1% commission in addition to your sweat equity. The deal will be best for the realtor at IHB who gets maybe 1% with no sweat equity at risk. It will be interesting to hear about the results and hear from investors.
Succeed or fail, it will all be very public.
PR to IR: “We all know the track record of me being right and you changing your tune.”
Oh great. I just spewed soda all over my monitor.
-Darth
…wondering what Planet Realty will come up with next
Buyers still expect 10% annual appreciation over the next ten years
http://www.nytimes.com/2010/08/23/business/economy/23decline.html?_r=1
Indeed a great NYT article.
““There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up”…”In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.
With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.
“People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.”
Ah, another couple who is “just going to rent out” their Chicago condo until the value skyrockets back to bubble heights. The market recovery – a foregone conclusion as far as they are concerned. Such savy financial management; Their solution is to go and buy a 400K house to make payments on and lose more money.
The Chicago condo market is so glutted it is almost like Miami, especially in the South Loop area, where thousands of units in massive high rises were built in the $300K-$1M range. Flippers were taking down 20, 40, 60 units at a time with IO loans during the Rampage, and now most of these buildings are at least half-empty.
Worse, construction problems abound in many of the really huge high rises, 50 story buildings with 500-600 units. One building at least has water seepage problems requiring over $2.5M in mitigation, or about $50K per unit, for units that originally sold for about $500K, now worth about $250K if even. What do you guess the default rate in this building will be?
Other neighborhoods like River North and “south” Streeterville, as well as Near North, are very glutted.
These people are going to be waiting a looooooong time for the market to recover to bubble levels.
““We’re trying not to think too far ahead,” said Ms. Lyons, 35, an information technology manager.”
Irony is an information technology manager who chooses to ignore information.
That’s a great statement to make when making one of the biggest purchases of one’s life:
“we’re trying not to think”
Impressive.
The modern man’s motto. BTW i suggested that Guatemalan sinkhole for the “open floor plan” meme 🙂
It looks like the pool takes up most of the backyard. There’s only one way to get to the table and chairs and with my luck I’d fall in the pool getting there. And don’t sit there while your kids are playing in the pool. The media room? It’s a small bedroom with blinds at the window. Come on.
No! It’s a “media room” damn it! You are just jealous because you don’t have one for yourself.
The buyer must demand that at least the fine furniture in that room stays with the house otherwise NO DEAL!
Media room? Bwahahahaha.
Do you have to climb over an armrest to get to the front row?
Both pretentious and impractical at the same time.
The last time I checked – sitting in the front row at a movie really SUCKED.
Now you can enjoy a really crappy front row seat from the confines of your own house (assuming you can crawl over the chair to get into it).
Don’t expect the fed to raise rates anytime soon
I thought it said 1%/yr when I first read the article, which would be sensible. 10% yoy, in an environment of generally declining prices??? Can I buy a credit default swap betting against this?
Don’t know if anybody noticed. This property as well as at 5 Fern Cyn are within 100 ft from the train track. Considering that, the price does not seem attractive at all !!
The train noise at that location is actually not that bad. I have toured both 1 Fern Canyon and 3 Fern Canyon. The day I saw 3 Fern Canyon, I was standing in the back yard with the owners when the train went by. It really wasn’t that loud. This location is far from a crossing where they blow their whistle, and it is far enough from the tracks that the windows don’t shake. It is actually noisier to back on to one of the arterial streets than it is to be set back that far from the RR tracks. The train noise is much more of a problem on the El Camino Real side of the tracks as the houses are much closer, and the noise is very bad near Harvard where the train blows its whistle.
If you live there… you will notice it.
There is a difference between visiting and sleeping there.
I live 500 feet from a busy freight rail line which usually sees about four trains pass per hour, even during the night. After the first week of living here, I got used to it. The noise isn’t bad at all, and I don’t even notice when a train is passing. Now that the nearby crossing went silent (no horns) it’s even quieter.
Living near a railroad isn’t a terrible problem as people make it out to seem. It’s much better than living by a freeway or busy side road that has continuous traffic noise.
Wow IR, I am very surprised to hear you say this. You really do sound like a realtor now.
That one hurts….
I’m just telling the truth. You have become too accustomed to me telling a truth that happens to be negative. I would not stay away from 5 Fern Canyon because of the train noise.
No Sue, he’s telling the truth on this one. I’ve toured houses all along those tracks in Deerfield, Columbus Grove, and The Ranch. This is why the new crossing going in at Jeffrey between Walnut and Irvine Ctr Dr is such a big deal. Once it’s complete and the train no longer crosses over the city street, the train will no longer have to blow its horn. You can expect an increase in property values on Deodar once that overpass/underpass is completed, assuming they haven’t already been priced in.
On the other hand, as IR pointed out, the train crossing at Harvard is a HUGE problem! There’s a good reason that many of the condos right there are govt-subsidized, low-income housing. Check out these 2 listings at Liberty Street:
http://www.redfin.com/CA/Tustin/107-Liberty-St-92782/home/5953328
http://www.redfin.com/CA/Tustin/117-Liberty-St-92782/home/5953361
These 2 condos are both newer 3/3’s with attached garages selling for $241 and $257/sf. I toured another condo on Liberty Street about a year ago. I also regularly ride my bike on the Mountain-to-Sea trail that passes right near there. You do NOT want to live near that train crossing. But as soon as you get a few hundred feet away from the crossing, it’s not bad at all, and the merely passing train (not honking) isn’t a problem.
-Darth
Your spin was OK until this comment, take another stab at it. How about:
“For only a half mil, enjoy the calming sound of a distant tornado combined with the massage of a 2.2 earth quake.”
As I said on Saturday’s blog… the Willows is not middle-of-the-road Irvine.
Like condos, this is a lower-end home in Irvine and will see drops. To put this into perspective, these homes were selling for $250k just over 10 years ago, less than $200k 5 years before that. If AZDave wants 1999 prices, this home will have to sell for less than $300k… do you think that will happen?
The best thing about this house is the Viking stove… which of course is not included.
Even the Regal Theater in La Habra picks up the trash after each movie. Please remove the snot rag left in the front row from last nights tear jerker.
This is hilarious. If the facts do not show a particular property in a good light, you are a perma bear doom and gloomer. If you point out a property which may be a good buy, you are a real estate shill. It is absolutely hilarious that some just ignore the facts or the data and make everything about you and your supposed motivations.
You relate: … “Sellers are getting frightened and greatly reducing their asking prices.”
This is entirely normal when maket participants stay around as a market peak is attained.
The same is true in the bond market today.
The chart of the US Ten Year Note IEF, the 20 to 30 year US government bonds, TLT, municipal bonds, MUB, and emerging market bonds, EMB, appears to be putting in a top.
The current market peak in bonds is being made after many, many years of rallying. Soon content market participants will turn to frightened sellers.
I have to ask will there be enough buyers in the market place to meet selling demand? Perhaps not.
And then there will be a liquidity evaporation followed by a liquidity crisis.
Companies that securitize debt will have no product to market. Small companies that make up the Russell 2000, IWM, will not be able to issue commercial paper or borrow, and will fold. Banks, KBE, will go under because business borrowers are not paying.
Treasuries will not auction and Freddie Mac and Fannie Mae will not be funded …. There will be no mortgages available.
Real estate sales will be an activity of a bygone era of lending … Banks will soon start foreclosing and leasing their properties.
“Banks will soon start foreclosing and leasing their properties.”
I don’t know exactly how everything is going to pan out, but I can pretty much guarantee that the banks are NOT going to become large-scale landlords.
-Darth
Wow, if you think this now, what were you thinking in late 2007, early 2008?
Right now there is giant bond buying bazooka Ben that will keep rates relatively low. His bazooka is large and he’ll use it.
Does anyone know implications of living close to a freeway? How far one should be to avoid toxic pollutants? Anyone here has ever consiered this being an issue? Please help. I have made an offer on a home that is in the 2nd row away from the sound wall of 5-freeway, its boundary is about 260 feet from the freeway sound wall.
Sorry for being a bit off topic. last 5-years madness did not care about freeway pollution or railroads.
I’m commenting a few days late, so I hope that you subscribed to email alerts…
most studies of health and child learning indicate that 500 yards to 1/3 of a mile is the affected zone.
you are not alone worrying about this. it is one of my purchase criterion to be that far away from a large freeway or feeder road
Thanks for replying. I did a lot of research and came to conclusion that new Environmental laws require no construction of residential, schools, parks, etc. within 500 feet of major highway or freeway.
I read that folks at a min. should live at least 1000 feet away, this distance causes the pollutants to drop by about 80%, wich isnt safe but is average for polluted ares such as Downtown LA.
I am glad that I did the research, now I am thinking about at least 0.5 miles away. I feel sorry for folks even in Irvine who paid/paying over $600K to risk their health living next to the 405 and 5 freeways, I mean most homes back to the sound wall, pollution there is 50 times more than its 1000 feet away, this is a recipe for astama!
Ha, I wouldn’t call that a ‘cool home theater’. It looks more like a closet with a bunch of leather chairs stuffed in it with a pull down screen.
It’s even worse than I originally thought. Looking at it again, the room is so cramped that the front speakers don’t even have enough space to stand without blocking the screen! And they aren’t that big of speakers to begin with so that’s saying a lot.
Your post is right on today. There seems to be panic amongst sellers as of the last couple of weeks. The banks haven’t caught up to the real world “we’re going lower”, what else is new. The negotiations with the banks is getting harder not easier. The idiots deserve to go out of business but they won’t thanks to OBAMA and congress and yes I include the Republicans..A…..holes!