With both prices and interest rates going down, affordability is expected to improve throughout 2011.
Irvine Home Address … 29 EARLY Lgt Irvine, CA 92620
Resale Home Price …… $1,000,000
You're holding me down (Oh Oh)
Turning me round(Oh Oh)
Filling me up with your rules(Oooh)
I've got to admit it's getting better (Better)
A little better all the time (It can't get no worse)
I have to admit it's getting better (better)
It's getting better
Beatles — Getting Better
With falling interest rates and falling prices, affordability in many markets is better than before the bubble began to inflate. Affordability has never been as good as it is now in Las Vegas. Even Orange County is affordable relative to its unaffordable history. If interest rates remain low and prices continue to fall, affordability will continue to improve throughout the year.
Zillow 30-year FRMs hit new low at 4.07%
by CHRISTINE RICCIARDI — Tuesday, November 9th, 2010, 3:48 pm
The 30-year, fixed-mortgage rate decreased after a stable two weeks, to new record low at 4.07%, according to the Zillow Mortgage Marketplace weekly update.
Zillow said the current 15-year, fixed average rate is 3.51% and the rate for a 5-1 adjustable rate mortgage is 2.91%. That type of mortgage maintains a steady rate for five years and then is adjusted annually thereafter.
Regionally, 30-year rates vary, but the majority of states witnessed a deflation. New York's average rate fell 30 basis points to 3.98% last week, down from 4.28%. Rates in Florida fell substantially also, down to 4.02% from 4.13% the previous week, California's rate decreased to 4.04% from 4.15%, and Texas saw its average rate disintegrate to 4.11% from 4.17%.
Pennsylvania's current rate of 4.08% is down from 4.11% last week. Colorado's average rate for a 30-year fixed mortgage shrunk to 4.10% from 4.14% at Nov. 2.
Washington's 30-year FRM increased to 4.12%.
Zillow bases its averages on real-time mortgage quotes from lenders registered with the company. The national average comes from thousands of daily quotes by anonymous borrowers through the Seattle-based company's website.
As mortgage demand continues to flag at historic lows, the pool of available money chasing that demand has been lowering its interest rate asking price to find a borrower. Each lower level increases payment affordability for buyers. Of course, this affordability is somewhat illusory because the debts are still very large. And Low Interest Rates Are Not Clearing the Market Inventory. Therefore prices will continue to fall, and as they do, affordability will improve even more.
Zillow: Home price depreciation to worsen market into 2011
by CHRISTINE RICCIARDI — Wednesday, November 10th, 2010, 10:53 am
Predictions for the fourth quarter housing market continue to dim as Zillow's third quarter market report released Wednesday suggests further house price depreciation through the end of the year.
September home prices depreciated 0.4% from August and 4.3% from one year a go to a national average of $179,900, according to the report. This is the 17th consecutive quarter of home price declines.
Zillow reported that nearly two-thirds (64.2%) of homes in the U.S. lost value between the third quarter of 2009 and the third quarter of 2010, and 27.3% of home sold in September were sold for a loss.
On Tuesday Foresight Analytics said residential, commercial, and construction loan delinquencies are expected to rise.
Delaware witnessed the most home price depreciation since 2009, down 18.5% to $174,700 in September 2010. California's home prices appreciated since 2009, up 1.9% to $337,200.
Approximately one in every 1,000 mortgaged homes in the U.S. was liquidated in September, according to Zillow, marking the highest liquidation rate the firm has recorded since it started tracking data in 1996.
The chart above is a good illustration of the workings of the banking cartel. Up through mid 2008, they kept pace with delinquencies so foreclosure rates rose quickly. When lenders saw that this was doing to prices in subprime areas where the delinquencies were concentrated, they collectively decided to stop foreclosing, allow squatting, and form a massive shadow inventory of unprocessed foreclosures on delinquent loans.
At first they were successful as the foreclosure rate declined, and prices began to stabilize. However, with any cartel, there is incentive to cheat and liquidate your holdings while prices are still high. The foreclosure rate has crept higher since the market superficially bottomed in early 2009. The result has been elevated inventories, and finally a reduction in prices.
Each of the last five years, housing inventory bottomed on December 31 and rose steadily through the spring. In 2008 and 2009, inventory was restricted and took out the end-of-year low. In 2010, we are poised to finish the year at levels similar to 2007 when the inventory rose from 795 houses to nearly 1300 in July of 2007. If we see inventory climb that high again next year, prices will certainly move lower.
The firm sees the liquidation rate remaining elevated because of an increase in negative equity rates. According to the report, the negative equity rate during the third quarter was 23.2%, up from 22.5% in the second quarter.
Foreclosure resales reached a near-peak level in September accounting for 20.1% of all sales made during the month. The peak percentage of sales attributable to foreclosure resales was in March 2009 at 20.5%.
Zillow said the firm doesn't expect home prices to hit rock bottom until the first half of 2011, but concluded that "the length and severity of the current turndown is fast approaching the length and depth of the Depression-era."
Zillow data is based on real-time mortgage quotes from lenders registered with the company. The third quarter report is available on their website and includes interactive charts and graphs broken down by state and by metropolitan statistical area.
Once prices are below rental parity for an owner occupant, how much lower does it have to go before you are motivated to buy? It is going to take a combination of enticed owner occupants and cashflow investors to stabilize the housing market.
What most people fail to understand is that this purging of debt and the economic problems that entails is for the long term benefit of the economy. As affordability improves, new buyers are spending less of their income on housing and more of it on other goods and services. The economy will not improve until the debt is purged, but the process will not be painless.
Freddie Mac says foreclosure problems may drain recovery
by JON PRIOR — Friday, November 12th, 2010, 10:46 am
Freddie Mac economists said recent problems in the banks' foreclosure processes could slow what little momentum the recovery holds, and perhaps send the housing market down to a new low.
In the broader economy, October payrolls, manufacturing production and consumer spending picked up in the third quarter. Housing, the October job report and struggles in other major economies are keeping the recovery too gradual.
"There has been a spate of good news in recent weeks that suggests the fears earlier in the year about a so-called 'double dip' recession were overblown," according to the report. "The recovery, though, remains too sluggish to do much good right now for the unemployment rate or the housing market."
Banks and the government-sponsored enterprises, including Freddie Mac, are working through the glut of foreclosures that is hampering credit lines. Many including Bank of America, JPMorgan Chase, Ally Financial and Wells Fargo had to begin resubmitting improperly signed affidavits in many states, delaying that work and pushing down foreclosures in October.
Freddie Mac, itself reported $120.1 billion in nonperforming assets in the third quarter, up 33% from a year ago, and more than $6 billion in REO that needs to be sold.
Even with the Federal Reserve's plan to purchase $600 billion in Treasury securities through quantitative easing, Freddie still expects "sub-par" growth in GDP over the near term with a slow acceleration through 2011.
"The sluggish nature of the recovery means the unemployment rate will likely remain at or above 9% through much or all of next year, with a decline in unemployment only gradually providing relief to the housing market," according to the report.
Investors buying in safe haven markets like Orange County are betting that incomes are going to rise. With 9% unemployment and no real prospect for recovery, it isn't likely that salaries will be going up soon. We will likely see some inflation as the Federal Reserve tries to print enough money to jumpstart the economy. This inflation will not make its way into wages; therefore, it will not put upward pressure on house prices.
Tell the second mortgage holder to pound sand
The reason short sales take so long is because the holder of a worthless second mortgage is trying to get money from insolvent debtors. The only power the second mortgage holder has is the ability to say no to a short sale.
In a foreclosure, the second mortgage's lien against the property is extinguished. Many borrowers think this means their debts are gone, but that is not the case. The debt survives as unsecured. Only the real estate is released from the debt claim.
If you look at the mortgage history and the listing history on this property, you see the negotiation and posturing of the borrower and the holder of the impaired second mortgage note. The final price reduction is the borrower giving that lender the bird. 
- This house was purchased for $1,482,500 on 12/29/2005. The owner used a $1,000,000 first mortgage and a $482,500 down payment.
- On 8/7/2006 he refinanced the first mortgage for $1,000,000.
- On 2/6/2007 the obtained a $500,000 HELOC. I don't think he used the HELOC.
- On 10/19/2009 — about a year ago — he obtained a $444,507 second mortgage.
I think it is this mortgage lien holder that is negotiating with the insolvent borrower to resolve the debt. The asking price history is each player betting their cards in this negotiation of bluffing and posturing. The end game is often a delayed sale or a foreclosure. The bickering parties need to release the property back into the system.
| Date | Event | Price | ||
|---|---|---|---|---|
| Nov 12, 2010 | Price Changed | $1,000,000 | ||
| Oct 08, 2010 | Price Changed | $1,250,000 | ||
| Aug 30, 2010 | Price Changed | $1,290,000 | ||
| Jun 18, 2010 | Relisted | — | ||
| May 28, 2010 | Pending | — | ||
| Apr 19, 2010 | Listed | $1,390,000 | ||
| Dec 29, 2005 | Sold (Public Records) | $1,482,500 | ||
If this lender and seller had someone willing to pay $1,390,000 back in May, they should have taken the deal. When they relisted, they found no takers.
The last price drop was the seller telling the second lien holder, "this is your problem, you figure out what you can get for it." If the house sells for $1,000,000, the first mortgage would be made whole, and the second mortgage would be entirely wiped out. Whatever this house nets for over $1,000,000 is how much of the lenders $444,507 they will get back.
Irvine Home Address … 29 EARLY Lgt Irvine, CA 92620 
Resale Home Price … $1,000,000
Home Purchase Price … $1,482,500
Home Purchase Date …. 12/29/2005
Net Gain (Loss) ………. $(542,500)
Percent Change ………. -36.6%
Annual Appreciation … -8.0%
Cost of Ownership
————————————————-
$1,000,000 ………. Asking Price
$200,000 ………. 20% Down Conventional
4.38% …………… Mortgage Interest Rate
$800,000 ………. 30-Year Mortgage
$192,695 ………. Income Requirement
$3,997 ………. Monthly Mortgage Payment
$867 ………. Property Tax
$325 ………. Special Taxes and Levies (Mello Roos)
$167 ………. Homeowners Insurance
$142 ………. Homeowners Association Fees
============================================
$5,497 ………. Monthly Cash Outlays
-$947 ………. Tax Savings (% of Interest and Property Tax)
-$1077 ………. Equity Hidden in Payment
$320 ………. Lost Income to Down Payment (net of taxes)
$125 ………. Maintenance and Replacement Reserves
============================================
$3,919 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$10,000 ………. Furnishing and Move In @1%
$10,000 ………. Closing Costs @1%
$8,000 ………… Interest Points @1% of Loan
$200,000 ………. Down Payment
============================================
$228,000 ………. Total Cash Costs
$60,000 ………… Emergency Cash Reserves
============================================
$288,000 ………. Total Savings Needed
Property Details for 29 EARLY Lgt Irvine, CA 92620
—————————————————————————— 
Beds: 5
Baths: 4 full 1 part baths
Home size: 4,162 sq ft
($240 / sq ft)
Lot Size: 6,180 sq ft
Year Built: 2005
Days on Market: 209
Listing Updated: 40494
MLS Number: S10041925
Property Type: Single Family, Residential
Community: Northwood
Tract: Pt
——————————————————————————
According to the listing agent, this listing may be a pre-foreclosure or short sale.
Luxurious estate in northwood gated community built by Fieldstone homes. Open floor plan has spacious living room and dining area. Hardwood flooring throughout the house. Attractive gourmet kitchen has upgraded Cabinet, Counter top, wine cooler, and Appliances. Each bedroom has built-in cabinets in the closet. Additionally cabinets in the garage area provides even more storage space. You will enjoy upgraded bathrooms with stone tiles. Built in media center in the family room. Outdoor amusement park style Swimming Pool and Spa, and Built-in BBQ grill with refrigerator. Wine cooler and Built in cabinet & bathroom in the attic (3rd floor). Owner spend over $200,000 in upgrade thoughout the house. Already Bank approved and ready to close ASAP. Property sold "as is". The house is in good condition.
This home is affected by a couple of the policies you’ve mentioned recently. They wouldn’t get a 4.38% jumbo, but they could structure a conforming first with some other way to get the loan amount down to $729k. Jumbos are now at 5.15%, so the difference is only about $4k/yr. The other policy is the HMID cap at $1M. The $300k over the $500k limit generates a yearly tax reduction, at the 25% you assume, of $3.3k. If it results in full marginal increase, I was going to say it would be a bigger reduction. But, if the buyer really makes $192k pre-tax, their marginal rate is probably 28%.
That’s still roughly $8k in federal subsidies to this potential owner. Consider that the average Temporary Assistance for Needy Families benefit is $418/mo or around $5k/yr.
Let’s see … we have mortgage rates at the lowest levels possibly ever, we have the FED rate at 0%, we have (are gonna have) 2.6 trillion in new printed money thrown at this mess, and the govt is manipulating 80%+ of the mortgage market … yet (OC) home prices are flat at best right now.
Oh jeeze … this is madness. Poor Ben must not be sleeping well. I wonder if the inflation that the FOMC is creating will trickle into OC real estate.
BTW, Inflation … something is definitely up there. They’ve raised the price of my morning breakfast at The Corner Bakery twice in the last 5-months.
Ten year treasury is at 2.85% today.
Interest rates will rise. The cost of food and energy will rise. Wages will stagnate or decline. And the Fed will be left scratching their heads.
When will all this happen? I dunno. I thought it would have happened by now, and have been wrong, but don’t think I am wrong about the general outcomes.
The Fed will not raise interest rates until it is very clear the economy has recovered.
The Fed does not raise or lower interest rates. The Fed raises or lowers the discount rate. The Fed does not even control the “Fed Funds Rate”, although its actions can influence it. The largest influence the Fed has is throught POMOs, but the Fed does NOT raise or lower interest rates. Interest rates rise and fall on a bid and ask basis.
The Fed reacts more than it acts. The Fed will raise the discount rate on a significant basis long after interest rates have already risen.
Fair enough. But the Fed will not act until long after the economy has fully recovered, and interest rates in general will almost certainly not increase significantly until that happens.
The Fed bought $9 Bil worth of treauries today at open market operations, …, and the ten year yield went UP to 2.95%. The is REacting, in the only way it knows how. The Fed has created out of thin air more than $2 Tril and it has done nothing except inflate the equities and bond markets. And now the Fed is further REacting by creating another $600 Bil to do more of the same thing that did not work with $2 Tril.
” …and interest rates in general will almost certainly not increase significantly until that happens.”
Remember that you said this in a year or so and you will start to understand how little you understand.
I hate to think about the impacts but, you are correct. Rates are likely to rise 2-5 points on a 30 year fixed over the next 10 years. Remember rates on a 30 year fixed with 20% down and good credit was 7.25% in 1999. We can easily go back to this and will likely overshoot.
Every one point rise in rates reduces purchasing power by 10%. Now you know whay I say if you buy now you better be prepared to ‘stay and pay’. Because you are going to see a slow grinding in purchasing power and housing prices for at least the next decade. It has lasted for 25 plus years in Japan….
This is a disaster…
BD
And the main reason the Fed is doing everything it can to influence interest rates to stay low is not because the economy is falterting. The main reason is because if interest rates rise, 20 trillion dollars worth of interest rate swaps owned by JP Morgan Chase, Goldman Sachs, HBSC, etc, will blow up.
The Federal Reserve is not a government agency and is not accountable to the US government or the citizens of the US. The Federal Reserve is a private corporation owned by the member banks. If you have any doubt of this, look it up. It is not a secret or a conspiracy theory.
The Fed’s structure is unique and complicated, but you are absolutely incorrect in that it is not governmental. It is not fully governmental, but it is not fully private either. It’s in a grey zone, like Amtrak or General Motors or Fannie Mae/Freddie Mac. Basically, the Board of Governors is definitely a government agency, and the Federal Reserve Banks are definitely private, and the Federal Open Market Committee a little bit of each, but biased towards the government.
Exactly how is it “governmental”?
Can you name one person on the Board of Governors who is accountable to any government agency?
Um…all of them?
(stolen from Wikipedia)
The seven-member Board of Governors is a federal agency and is the main governing body of the Federal Reserve System. It is charged with overseeing the 12 District Reserve Banks and setting national monetary policy. It also supervises and regulates the U.S. banking system in general.[60] Governors are appointed by the President of the United States and confirmed by the Senate for staggered 14-year terms.[37] The Board is required to make an annual report of operations to the Speaker of the U.S. House of Representatives.
The Chairman and Vice Chairman of the Board of Governors are appointed by the President from among the sitting Governors. They both serve a four year term and they can be renominated as many times as the President chooses, until their terms on the Board of Governors expire, but—regardless of whether either is reconfirmed for their chairmanship or vice chairmanship—he or she is free to complete their term on the Board of Governors.[61]
Oh, and I should have bolded the fact that it is a “federal agency” as well.
I did not ask who appoints them. I asked who are they accountable to? Who do they answer to? and if you think it is the President or Senate, how and when do they do this?
Instead of parroting what you read, think.
How exactly is it a federal agency? Who pays them? Can anybody fire Ben Bernanke? The president? Does Ben Bernanke have to ask anybody approval for his actions? What are the consequences if Congress asks the Fed for informaiton about their balance sheet and the Fed does not give it to them?
Think for just a second instead of just regurgitating what someone tells you.
“Basically, the Board of Governors is definitely a government agency…”
Correct me if I’m wrong, but the Board of Governors are appointed by the President and confirmed by the senate. HOWEVER, the candidates for these positions are selected by the member banks! So, the banks more or less choose who will be on the Board.
The Federal Open Market Committee (FOMC) is composed of the seven Board of Governors (selected by the member banks) and five member bank presidents. They twelve FOMC members meet ALONG WITH the other member bank presidents IN SECRECY eight times per year.
You really think such a system is designed for the welfare of the taxpayer?!
The common sense answer is no.
I would suggest those of you that think the Federal Reserve is a government entity ? Watch this.
https://www.youtube.com/watch?v=_dmPchuXIXQ
The Federal Reserve is about as “Federal” as Federal Express. The Bankers are killing us slowly. They created themselves and we are being enslaved by them.
And Awgee is correct about the Bond Market and the Default Swaps. Or Derivatives as they are called. Be afraid. Be very afraid. Pay attention to Bill Gross and Pimco. They are the hand to watch.
So if I bold Quantitative Easing, it becomes something other than creating money out of thin air and giving it to the Treasury Dept.? And revenue enhancement becomes something other than taxes because the government named it something else.
Dude, you have go to start thinking instead of memorizing.
Rhetorical question: If the Fed’s mandate is the stabilization of the currency and full employment, how successful has it been? Has the Federal Reserve benefited the banks or the US citizenry? Who does the Fed really work for, (benefit)? Forget what they say. What is their behavior? Results?
(hint) one FRN today will purchase the same as 4 cents in pre Federal Reserve currency in 1912.
I did not ask who appoints them. I asked who are they accountable to? Who do they answer to? and if you think it is the President or Senate, how and when do they do this?
They answer to the President and Senate, else they won’t be reappointed in 14 years time.
Look, Supreme Court justices are apppointed by the President and confirmed by the Senate (in a very similiar manner), and nobody argues that the Supreme Court isn’t part of the government-and they get the job for life, so once appointed they “answer to” nobody.
Accountability? The president AND Senate have complete control over who is running the fed every 4 and 14 years.
The Fed had about as much accoutability as your local congress servant.
It’s not conspiracy theory, it’s flat dumb.
Great point. The Supreme court is defined by the The Constitution as part of the judicial branch of the government. Where in the Constitution is the Federal Reserve defined and of which branch is it?
When you see how the Federal Reserve was formed, was it defined at part of the government or a private corporation? Branches of the government are not owned by private corporations. The Federal Reserve is WHOLLY OWNED by other private corporations. Where in The Constitution or anywhere does it say that the Federal Reserve is a government agency? In its charter? In the law that formed it?
Both the charter and the law say it is a private corporation.
Just because the federal reserve is not written in the constitution means nothing – the DMV is also not in the constitution, should we therefore do away with driver’s licenses? I think quoting the constitution to make your argument here makes no sense. If you’re going to make an argument, then please use some solid logic.
The DMV is a branch of the government of the State of California. Under what branch of the government is the Federal Reserve. Either it was created by the Constitution as a branch of the government or it is under the jurisdiction of an existing branch.
It was created by legislation and that legislation created it as a private corporation owned wholly by other private corporations. How exactly is it a quasi-government organization when it is a private corporation, wholly owned by other private corporations, and accountable to no one in the government.
The President appoints the Chairman and governors from a list provided by the member banks which are private corporations.
Those who think that the Fed is somehow a government agency, do you know who wrote the legislation that created the Fed and how it was passed and what Woodrow Wilson said upon signing the legislation?
Clagewag – I pointed out to Geo that the Fed is accountable to no one and can not be fired. Geo responded that the members of the Supreme Court are appointed by the prez and approved by the Senate, yet no one would argue that the Supreme Court is not part of the government.
The Supreme Court is created by the Constitution and was created as a branch of the government.
The Fed was neither.
It was not created by the Constitution which defines branches of the government not answerable to other branches. Any other federal government agencies are a division or agency of one of the existing branches created by the Constitution. Legislation can not create another branch of the Federal Government. Only an ammendment may do that.
The Federal Reserve was created by legislation, as a private corporation, without agency to any branch of the Federal Government, and is not accountable to any branch of the Federal Government.
It is fallacy that is it is a branch or agency of the government or a quasi-government agency.
And the difference is important. A wholly private corporation owned wholly by private banks has the authority and ability to print as much money as it wants and direct it as it sees fit. The Fed has created out of thin air, trillions of dollars in the last couple of years and to where did they direct that currency? They could have paid off every mortgage in the US with the currency it created and yet the Fed directed that money to the banks that own it. What does that tell you?
The Fed is now buying US treasuries, not directly from the US treasury, but from the primary dealers, who also happen to be the banks that own the Fed. The primary dealers buy treasuries from the US Treasury and they a week or so later sell them to the Federal Reserve for a profit. It is more free money for the banks.
Does the Fed really sound like a government agency created and run for the benefit of the citizenry?
We are without question living in the most significant time period in the history of human kind.
Anyone who disagrees has a good job.
World War II (for starters) was easily a “more significant time period in the history of human kind” than now.
I thought his closing sentence made it pretty clear that he was being facetious.
-Darth
Today pales compared Great Depression, with no welfare, no food stamps and starvation stalking the land and malnourished children (really malnourished as 1 in 10 New York schoolchildren had rickets) and the country so desperate that we came close to revolution.
http://www.digitalhistory.uh.edu/learning_history/children_depression/depression_children_menu.cfm
That would be my next choice. Then probably the Civil War, then the American revolution itself. You could also make very good arguments about the Cold War, World War I, etc…
Don’t real estate commissions come out of the selling price? That is, if it sells for $1 million exactly, only $940,000 goes to the first (assuming standard 6% commission), leaving them short too.
Wait, isn’t “the second mortgage would be entirely wiped out” contradicted by
“In a foreclosure, the second mortgage’s lien against the property is extinguished. Many borrowers think this means their debts are gone, but that is not the case. The debt survives as unsecured. Only the real estate is released from the debt claim.”
Perhaps “wiped out” isn’t a precise term.
A “mortgage” is a “lien.” The “promissory note” is the “loan/debt.”
When a first forecloses, the second(s) don’t have to do anything, but their lien is extinguished. That does not extinguish the debt, necessarily. In CA, if the second were used to purchase the home (as in the 80/20 context), not only is the second’s lien extinguished, but the debt is also (in a non-judicial foreclosure).
Looks like there are 3 loans on this place, each one from a different entity.
If the bank approves the short sale at $1M, given the neighborhood and price point ($240/ft.), this place is a steal.
New Irvine homes open to strong sales
http://www.ocregister.com/articles/homes-275622-irvine-young.html
There is not a high demand in Irvine.
The demand is in Vegas.
???
Is this more sarcasm, like J6P’s post was (maybe)? It is truly impossible to tell these days. The same house in Vegas would cost a lot less than in Irvine, hence you are 100% wrong.
Yes, he was being facetious. He was simultaneously trying to mock IR’s investment fund and support the Irvine-Is-Immune(C)(R)[TM] meme.
-Darth
@Darth:
No… I was re-visiting my point that IR did not respond to. I asked why there was such high demand in Irvine if prices were not lower and his response that there is not high demand in Irvine based on some sales number he was looking at.
I asked him if that includes new sales. I got crickets.
The reference to Vegas is to get further data regarding Summerlin’s 2010 sales vs. Irvine’s. I’m still waiting.
re: your “questions”
See my post below. It covers all of the points you brought up.
iho: “I asked … I got crickets.”
IR knows when to stop feeding the trolls.
-Darth
@Darth:
No… my response to your post shows that it doesn’t cover all the points I brought up. In fact, ,yours is almost a different point altogether.
As for your “troll” remark… first you need to show me that my posts have no merit. Maybe you don’t see it but again… you probably have a different perspective than those of us who do want to know these things.
Mote in your eye.
I thought we had already clearly shown that the Irvine Company has had high demand on all their recent sales because they are pricing them BELOW THE MARKET!!! It’s not hard to understand. If existing homes are currently selling for $330/sf (and falling, but let’s not mention that part) and you price NEW homes at $310/sf, the new homes will sell briskly. That is exactly what TIC did here.
IR has been trying to explain this to you FOR YEARS: LOWER PRICES equal stronger demand!
The market has not bottomed, turned, recovered, strengthened, improved, firmed, or whatever other hopey-changey description you want to use. TIC simply is smart enough to undercut the current market, that’s all.
Any of those buyers that bought with FHA financing will most likely be underwater as soon as interest rates rise.
-Darth
@Darth:
If you factor in HOA, Mello Roos, upgrade costs and landscaping… it’s not exactly below market. At least not the SFRs.
In 2005, you could buy fairly new (built in mid 90s) 3-car garage homes with 5brs for $900k-$1mil. In 2010, the new homes have the same cost but only a 2-car garage, no formal dining room and smaller lots. Are they really lower priced?
It’s easy to comment from the sidelines… those of us in the trenches have a different perspective.
“those of us in the trenches”
That is a very accurate description of the Irvine home market. I’d recommend that you stop digging, but to each his own.
-Darth
It’s a press release – an advertisement masquerading as “news”. I am sure the TIC paid good money for it.
Interesting housing statistics at the link below
First-time homebuyers half of sales
http://www.ocregister.com/business/home-276027-percent-year.html
Hello All –
Just a question – do you not all look forward when thinking about RE and a purchase vs. a rent option?
It doesn’t matter what is happening now but, what WILL happen in the future. If you don’t look forward 5-10 years minimum you are a housing trader.
Go for the flip if you can, and always buy if you can reliable ‘cash flow’ the home as an investment but, don’t be a fool and buy now thinking we have ANY RE appreciation on the horizon for the typical loan owner. Rates will rise because we are creating inflation everywhere but where it is needed. We are driving up the costs of all commodities – you know the things you have to pay for everyday – coffee, gas, sugar, bread, meat, other. The only thing this will do is make housing more expensive on a realative basis to afford because more money goes to pay for the basics.
‘Stay and Pay’ or give it up until you can own for less than it costs to rent or a sustained basis. Oh, and don’t forget they are now talking about reducing or eliminating the mortgage interest tax deduction. God help us in RE if that happens or you can’t buy with a 3% down FHA loan….
Just my .02
BD