Yesterday, we looked at some realtor spin from Canada, and today we are
going to see the US version of third-party pseudo news spin and a beautiful Woodbury home.
Irvine Home Address … 35 South TRIPLE LEAF Irvine, CA 92620
Resale Home Price …… $1,269,000
{book1}
Wash away my troubles, wash away my pain
With the rain in Shambala
Wash away my sorrow, wash away my shame
With the rain in Shambala
(chorus)
Ah, ooh, yeah, yeah, yeah, yeah, yeah, yeah
Everyone is helpful, everyone is kind
On the road to Shambala
Everyone is lucky, everyone is so kind
On the road to Shambala
Shambala — Three Dog Night
Do you think we can wish away the housing bubble or ignore its troubles and pain? I too long for the rains of Shambala…
Third-party data providers and other professionals making a living off real estate have learned they get more attention when they pander to their audiences needs. Hence, we get data reports that read like press releases for the NAR.
“Southland home sales and prices up
December 15, 2009
La Jolla, CA—Southern California’s housing market continued its
step-by-step climb up from the January-February bottom as both sales
and prices saw gains last month, a real estate information service
reported.”
Wait a minute. Who said we put in a bottom in January-February? No data shows a bottom in pricing or volume back to early last year, and certainly aggregate data does not, so this is a made up “fact” that lets everyone feel good.
“A total of 19,181 new and resale homes sold in Los Angeles,
Riverside, San Diego, Ventura, San Bernardino and Orange counties last
month. That was down 13.3 percent from October’s 22,132, and up 14.7
percent from 16,720 for November 2008, according to MDA DataQuick of
San Diego.
Sales almost always decline from October to November. The
year-over-year increase was the 17th in a row. In DataQuick’s
statistics, which go back to 1988, the average November had 22,312
sales.”
The two important pieces of information here are separated by obfuscation. The reality of our real estate market is that volumes are 15% below their normal seasonal low; the market is not healthy. The reality of low volume is lost in the press release.
“Sales of newly built homes saw an unexpected jump last month.
A total of 2,039 new homes were sold, the highest of any month so far
this year, and 25.5 percent ahead of 1,625 for November 2008.
Sales have been stoked in recent months by several factors: A
federal tax credit for first-time buyers, which had been set to expire
last month before it was extended and expanded; robust investor
activity, especially inland; super-low mortgage rates; the availability
of government-insured, low-down-payment mortgages for first-time
buyers; and the allure of a potential “deal” on a distressed property.
“This market is still really lopsided. Foreclosures and short
sales are huge factors. There’s still not a lot of discretionary buying
and selling outside the more affordable markets. Anybody who can sit
tight is doing just that. The market won’t fully rebalance itself until
financing becomes available for the higher price ranges,” said John
Walsh, MDA DataQuick president.
Mortgages above $417,000 – formerly the definition of a jumbo
loan – accounted for 15 percent of all home purchase loans, roughly the
same as it has been since June. Those loans made up nearly 40 percent
of purchases before the August 2007 credit crunch hit.”
The market will not
be stable until financing becomes available at the high end;
unfortunately, that is not going to happen. People seem to
believe super low interest rates and lax underwriting standards are
going to return soon; they aren’t. The high end is held up by nothing
but air, and when it deflates, it will send reverberations through the
rest of the market. The high end will not stablize until prices drop,
period.
“Only 4.1 percent of last month’s home purchase loans were
adjustable-rate mortgages. A higher ARM rate is part of a healthy
market. From 2000 through 2005, 47 percent of the Southland home
purchases were financed with an ARM.”
BULLSHIT!!! I get really tired of this kind of nonsense; a higher ARM rate is a sign that people are stretching in an already inflated market. In fact, the primary indicator of the shift from normal financing to Ponzi financing such as interest-only and Option ARMs is an increase in the ARM rate. A healthy market would have a zero ARM rate.
“Foreclosure resales – houses and condos sold in November that
had been foreclosed on in the prior 12 months – made up 39.1 percent of
all Southland resales. That was the lowest since May 2008 when it was
also 39.1 percent. It hit a high of 56.7 percent last February.”
Let me rephrase, “catastrophic numbers of foreclosures continued, but fewer of them sold so prices didn’t go down.” The writing focuses your attention on the fact that the numbers are declining. It makes no mention of the bigger picture problem that defaults foreclosures are piling up faster than we sell them.
“Government-insured FHA financing continued to play a vital
role in the Southland’s housing market. Last month 38.1 percent of all
purchase loans were FHA-insured mortgages, the same as in October and
up from 34.5 percent a year ago. Two years ago FHA accounted for just
2.5 percent of purchase loans.
Absentee buyers purchased 19.1 percent of all homes sold last
month, while buyers who appeared to have paid all cash – meaning there
was no corresponding purchase loan – accounted for 24.4 percent of
sales, based on an analysis of public records.”
There are a large number of cash buyers out there — 24.4% of total sales. (BTW, we now work with a trustee sale buyer if anyone is interested in buying at 15% under resale at auction).
“The median price paid for a home in Southern California was
$285,000 last month. That was up 1.8 percent from $280,000 for the
month before, and the same as November 2008. Last month was the first
since September 2007 that did not see a year-over-year decline in the
median.
Last month’s median was 43.6 percent lower than the peak
Southland median of $505,000 reached during several months in early and
mid 2007.”
Didn’t the headline say prices are up? I guess the fact that they are down 43.6% from the peak isn’t news.
“Because of a sales mix profile still tilted towards lower-cost
foreclosure resales, the median’s fall from its peak overstates the
decline in the value of the typical home. Generally, it appears that
homes in more costly, established neighborhoods have come down in value
by about half as much as homes in many newer, more affordable
neighborhoods in inland growth areas.”
Yes, the high end is yet to be crushed.
“MDA DataQuick, a subsidiary of Vancouver-based MacDonald
Dettwiler and Associates, monitors real estate activity nationwide and
provides information to consumers, educational institutions, public
agencies, lending institutions, title companies and industry analysts.
The typical monthly mortgage payment that Southland buyers
committed themselves to paying was $1,207 last month, up from $1,196
for October, and down from $1,380 for November a year ago. Adjusted for
inflation, current payments were 45.6 percent below typical payments in
the spring of 1989, the peak of the prior real estate cycle. They were
55.4 percent below the current cycle’s peak in July 2007.
Indicators of market distress continue to move in different
directions. Foreclosure activity remains high by historical standards,
although mortgage default notices have flattened out or trended lower
in many areas. Financing with multiple mortgages is low, down payment
sizes are stable, and non-owner occupied buying is above-average in
some markets, MDA DataQuick reported.
| Sales Volume |
Median Price |
|||||
| All homes |
Nov-08 | Nov-09 | %Chng | Nov-08 | Nov-09 | %Chng |
| Los Angeles |
5,037 | 6,257 | 24.2% | $340,000 | $329,000 | -3.2% |
| Orange | 2,177 | 2,528 | 16.1% | $400,000 | $432,250 | 8.1% |
| Riverside | 3,719 | 3,745 | 0.7% | $220,000 | $200,000 | -9.1% |
| San Bernardino |
2,385 | 2,751 | 15.3% | $185,250 | $160,000 | -13.6% |
| San Diego |
2,673 | 3,148 | 17.8% | $305,000 | $325,000 | 6.6% |
| Ventura | 729 | 752 | 3.2% | $355,000 | $365,000 | 2.8% |
| SoCal | 16,720 | 19,181 | 14.7% | $285,000 | $285,000 | 0.0% |
Source: DQNews.com Media calls: Andrew LePage (916) 456-7157 or John Karevoll
(909) 867-9534
Copyright 2009 DataQuick Information Systems. All rights reserved.”
I wish these guys would stick to the facts in their press releases. The realtors can pay their own copy editors to spin it into nonsense.
Irvine Home Address … 35 South TRIPLE LEAF Irvine, CA 92620
Resale Home Price … $1,269,000 
Income Requirement ……. $270,591
Downpayment Needed … $253,800
20% Down Conventional
Home Purchase Price … $1,913,000
Home Purchase Date …. 12/19/2005
Net Gain (Loss) ………. $(720,140)
Percent Change ………. -33.7%
Annual Appreciation … -9.5%
Mortgage Interest Rate ………. 5.26%
Monthly Mortgage Payment … $5,612
Monthly Cash Outlays ………… $7,460
Monthly Cost of Ownership … $5,550
Property Details for 35 South TRIPLE LEAF Irvine, CA 92620
Beds 4
Baths 4 full 2 part baths
Size 4,133 sq ft
($307 / sq ft)
Lot Size n/a
Year Built 2005
Days on Market 8
Listing Updated 12/24/2009
MLS Number P714925
Property Type Single Family, Residential
Community Woodbury
Tract Wdjb
According to the listing agent, this listing may be a pre-foreclosure or short sale.
Juliet’s Balcony Former Model 2 Home. Over looking beautiful park in front of the house. Entrance to courtyard with soothing waterfall, Juliet iron staircase, library with bookcase on first floor. Highly upgraded kitchen with professional Stainless steel appliances, center island combine in greatroom ambient: dining area and family room. 4 Bedrooms with 4 full baths upstair + Casitas (casitas has 3/4 bathroom) and many features to list… Sale in ‘AS IS’ condition. Refrigerator is not included.
Does anyone remember the drama with 33 Triple Leaf where the owner lost $500,000? Perhaps this street is cursed?
Foreclosure Record
Recording Date: 10/21/2009
Document Type: Notice of Default
Date Event Price Appreciation Source
Dec 20, 2009 Listed $1,269,000 — SoCalMLS #P714925
Dec 19, 2005 Sold (Public Records) $1,913,000 >1,000%/yr Public Records
Dec 15, 2005 Sold (Public Records) $1,416,500 — Public Records
——————–
According to Redfin, this home sold 12/14 for 1.4 mil
then it was resold 4 days later on 12/19 for 1.9 mil (???)
The first sale would have been “new” from the builder. Did someone campout to ‘win’ a spot in line to buy (remember those days?), then immediately resell to someone who missed phase 1 and turn a $500,000 profit?
Anyone to see WHO bought on 12/14 (from whom), and then who bought it 4 days later? It looks very strange…
“Highly upgraded kitchen with professional Stainless steel appliances. Refrigerator is not included”
But just imagine: you could buy a Stainless steel refrigerator and put it in this kitchen.
“greatroom ambient”
Sentence mindlessly.
“Many features to list”
To do: list features. Remember to edit this sentence before posting the listing.
…
Great post today IR.
“Sentence mindlessly.”
I love seeing the word “sentence” used as a verb.
IR,
So when will the market allow intelligent people who don’t want to throw their money away be able to buy in OC? Just wondering– seems like we hear a different theory about a *good* time to buy everyday.
That’s a great question. I don’t think anybody has the answer since we are in uncharted waters. The powers that be (the Fed, Treasury, Obama administration, Wall St., banks, and all things tied to the RE industry) will do everything humanly possible to prop house prices up. If house prices remain stable…we will hear the recession is over and it’s business as usual. Obama gets re-elected and Wall St. gets obscene bonuses and the RE industrial complex makes money trading houses.
I think buying now would be very risky. If you find the perfect house and know 100% that you will be living in it the next 10+ years, it might make sense to buy. I think waiting until fundamentals return to normal would be the correct thing to do…will this be 1 year, 3 years, never???? Proceed with caution.
Well said. My thoughts exactly. Sucks for me because I really want to buy a house–sick of renting.
For a kingdom to fail there is a density.
American first choice a lone-star ranch owner and then choice missionary ½ lawyer and ½ comedian. This maybe is our density.
“Just wondering—seems like we hear a different theory about a *good* time to buy everyday.”
I have tried to be consistent here. When I first wrote about when to buy, my simple rule was to buy when it was less expensive to own than to rent. This is a good rule, but when payment affordability is artificially manipulated by FED policy, the rule needed a caveat; so now I say it is a good time to buy when it is cheaper to own than to rent, and it is during a period of no direct government manipulation through tax credits, mortgage interest rate manipulation, and so on. Until these government props are removed, and until some time has passed to see the impact foreclosures will have on inventory, I don’t feel comfortable saying it is a “good” time to buy in Irvine.
I would say it is a good time for certain families who are (1) able to take advantage of tax incentives, (2) they know they are going to live in the house for a decade or more, and (3) they are paying a price where a fixed-rate mortgage makes the cost of ownership lower than the cost of rental. As long as the stars and the moon align, then it is a “good” time to buy.
As time goes on, The categories of circumstances where buying now is wise will expand. For now, it is confined to the circumstances I outline above.
Thanks IR. I did not mean to imply you are inconsistent. Rather, every newspaper, realtard, pundit etc. seems to say soemthing different.
“The market will not be stable until financing becomes available at the high end …”
What if mortgage rates will reach 12%, but inflation will rise to 7%? It may fix price to rent ratio in just 5 years.
I would say; it depends…
If the 7% inflation is driven by dollar devaluation, it will represent a general decline in our standard of living, and rents will not rise to match the 7% figure.
However, if the 7% inflation is primarily driven by wage increases and the ability of the American worker to demand and obtain higher wages, then real estate prices will go to the moon, and you should buy as much property as possible at today’s low fixed-rate mortgages and allow wage inflation to pay off your cheapening debt.
As you can tell, I am not in the camp that believes inflation is going to be driven by wage inflation. There will be zero inflationary pressure on rents or real estate values without wage inflation, and I don’t see how that is going to happen — if I do start seeing that happen, I will quickly change my tune, but right now, people are just lucky to have a job, and wage inflation is nowhere on the horizon.
Great analysis. Unless one works on WS, he/she is unlikely to see wage inflation. I have some stories about employment (meaning unemployment), as I’m sure many others do.
P.S., even the guys on WS may not see anymore wage inflation in 2010 after the historical pay bonuses they got this year.
Wage inflation is the last factor in the inflation train. Imbalance of the supply is the leader was the tradional leader, but with the free floating currencies, the expansion of the money supply ranks near or the top. Wages are the last to go up and gives justification for business to repeat the cycle. Wage increases are blamed for inflation by business media complex, but are just the result of inflation on the cost of living. Wages only goes up with a shortage of workers.
Home ownership is perceived as the american dream. It would be political suicide not to aid the industry. I am convinced we will see government interference for quite some time. The extension of the tax credit is a perfect example of the governments relentless quest to fill the cool aid bowl.
I am also part of the younger generation, all of my friends are in a rush to buy into the market with the FHA loan. Not completely sure if its true or not, but one guy was telling me after the tax credit and cash back at closing he had zero cash into the house. I would not be surprised to see a 10% to 20% increase in low end before the Federal Housing Crash (FHC) sets in. The government is to attached to the housing industry at this point to let it return to a stable affordable condition.
The saga at 33 Triple Leaf continues… The new owner has listed the home for 50k higher than purchase price 4 months ago.
http://www.redfin.com/CA/Irvine/33-Triple-Leaf-92620/home/5958335
The saga at 33 Triple Leaf continues… It is back on the market with a 50k higher asking price than previous close in August.
Suck out 30% or higher of distressed sales and that 19k number works out to 13,000 possible organic sales. Hmmm. 22k average, 13k net real sales. I’d say we’re still on the downside of a healthy market.
My .02c
Soylent Green Is People
Re: “The market will not be stable until financing becomes available at the high end; unfortunately, that is not going to happen.”
IR, how can you be so confident financing will not be available at the high end? I understand it would be difficult politically to pass a law that directly gives high-end home loans, but I’m sure the government or Fed can find a sneaky way to indirectly fund these loans (read, for example: AIG bailout to indirectly bailout Goldman et al.). In fact, it seems to me that a lot of the programs already help support high-end loans to some extent.
I predict some sort of new program that will fund high-end loans and CRE. Although the program won’t be touted as a “high-end loan funding source,” it will function that way. And the tab, of course, will be given to the tax payer.
If they wanted to specifically engineer a coastal California bailout to prevent the billions in bank losses surely to follow, they may be able to clandestinely fund these properties. One method would be be the GSEs to subbordinate to a small first mortgage.
For instance, lets say the GSEs wanted to raise the funding cap from $729,000 to $1,229,000. They could simply allow their mortgages to be subordinate to a single fixed-rate mortgage up to $500,000, and the GSEs would be insuring their $729,000 mortgage as a second. The interest rate on the first would be even lower than the GSE mortgage — what risk is there? The GSEs would be taking on substantially more risk, but it would allow them to underwrite loans on more expensive properties, save the Coastal California housing market (not), and pass enormous losses on to the US taxpayer.
Don’t be surprised when someone suggests this as a Treasury Department leak and we read it in the MSM.
Thanks for bringing this DQ article to light. I was thinking the same thing when I read it.
One thing I also noticed they don’t include anymore are NTS numbers. I’m assuming they purposely leave them out since they are a growing trend.
http://www.dqnews.com/Articles/2009/News/California/CA-Foreclosures/RRFor091020.aspx
Seems odd that they include the shrinking 1st stage of foreclosure and 3rd stage of foreclosure but seem to omit the growing 2nd stage of foreclosure.
Wow, just look at what 1.2 MILLION dollars will buy you in Irvine!
Personally, I miss the smell of orange blossom’s in the spring, but we are years gone from that.
The *only* place in Irvine that I would want to live in is the older areas of Turtle Rock. Homes like this 1.2 million dollar piece of crap have no yards, and you can pee in the bathroom in the morning while shaking your next door neighbors hand….not THAT hand, the other one!
wanna buy my chateau?
5500 sq foot lot, 2700 sq feet, 5b/3ba, 1600 feet of Cat5e with drops into every room. 300A panel, dual, four zone HVAC.
I’ll include the built in KitchenAid fridge (with built in wood panels to match the custom maple cabinets).
House is effectively 9 years old.
I’m sick of Irvine.
American dream of homeownership.
People will riot over the lack of affordable food because the prices are out of their control. When the industry and government have the people as willing participations in creating unaffordability and in maintaining the Ponzi scheme, the people will demand government action. The government actions will increase power of the banks and federal government, increase the Ponzi scheme and eventually make US citizens, their children and grandchildren indentured servants. Non-citizen can just flee back to their home country if it’s better at home.
IAC is a very powerful company and people perceive that it is a very successful company right?
It is true IAC has transferred itself to Wall St mentality and pursues the maximize profit (with all means). But IMHO, it is a failure company, it fails to have a broad view of the globalization and miss a golden opportunity to become a real estate of Berkshire Hathaway.
Given Irvine has best location and weather, the first question I will ask is is there any tier-1 technology company in Irvine? (Okay, Broadcom maybe ½, thanks to Pairgain).
Back to 1999, Irvine home prices about half of San Jose, a ton of tier-1 companies plan to move (some of) its R&D to Irvine and now there is Zero. Our company had spent a lot of resources to recruit quite a few MIT and Stanford graduated engineers, and now all left the company and also left OC, this is biggest damage to our company and to OC too. Because the home is equal expensive as San Jose. There is no reason to stay Irvine. It will be either San Jose or Austin or … but not Irvine. Only if Irvine has these companies in here then the prices will make sense.
Well, you can argue that IAC encourages sub-prime and mortgage companies move to OC so that enhance the bubble and they successful move the real estate prices and make big profits right? The point, I’ll argue with is does IAC really make biggest profit. Just see how many empty office space and rental property in Irvine you will start thinking if this is true.
The story here will bring you another angle to re-examine the IAC successfulness in pursue Wall St’ ‘profits’. My relatives own a lot of land in one of most desirable city in Asia, it’s as powerful as IAC in Irvine. The city was just a suburb as Irvine to LA but is has converted itself to high headquarter tech center of the county and the price of a condo is $800/sq now form $400/sq and the commercial property rental fee also goes up twice, also these happened during 2007-2009. They has patient and has broad view to see the globalization, and yes they pursues the max profitability but they also emphases core spirit such as credibility and other things.
IAC has randomly changes zone and bring over crowded classroom, so many convertible has been built to accommodate more student because zone changes, this is company perceived that is a successful company, but I miss the legacy of IAC.
Western Digital is returning to Irvine from nearby Lake Forest.
Any desirable area in Silicon Valley is more expensive than Irvine, there has been very little new home building in Mountain View, Los Altos, Cupertino etc.
I fully agree that the real problem here is that it has become to expensive for corporations to operate. Flight to Nevada and Texas is inevitable. Gov’t needs to wake up to this fact now. We can’t have an economy of selling our homes to each other … it is not sustainable.
$1.2 mil will buy you something in those areas with a 10x better quality of life and the huge Silicon Valley job market. Irvine will revert to 99 where prices are half of SJC. The FIRE sectors will contract dramatically which is the source of most professional jobs in OC. I laugh when I read tales of Poli Sci majors from prestigious schools that can’t find a job. Why didn’t they major in EE? If they did jobs would be plentiful, especially in an area like SJC.
I know many big players in the CRE industry (brokers) and I wonder what their career prospects are if they aren’t in a postion to retire? How will they earn a living? What else can they do?
If I had a kid entering college now, I would advise them to major in Engineering or Accounting from a top school (the only ones the companies are hitting for on-campus interviews these days) and start their job search freshman year, preferably for companies with operations in big job centers. Unfortunately this usually isn’t OC/LA. Secure a job, then think bigger via grad school.
I opined long ago to Lansner (even got a reply from him on the blog) that the lack of F500 companies with big operations in OC would be the Achilles heel of the housing market. Just look at BLS stats and where F500 companies are located across the US to see the big picture.
It’s only a matter of time before we see high tech companies come back to Irvine.
San Jose is simply way overcrowded.
There are also lots of small high tech companies based in OC. True, Cisco, my old employer shut down at UC and retrenched back to Tasman Drive, but I did not want to move up there.
Besides, I can’t stand the politics of the Bay area. Its only a matter of time before Obamalosi shuts down Saint Josey.
And, hey, UCI is a pretty damn good school.
Although I think my kid is gonna go private. UC sucks all around nowadays. It takes five years to get a BS… thus it $150 at UC vs. $170 at a good private school.
Like I said, I want to buy me a ranch in either Central California or Western Nevada.
Overcrowded?? There are more jobs up here than qualified applicants and the population is much lower. Plus all the talent is up here – they want to be around the other talent/VC $$$/Stanford.
Did you find comparable employment in SoCal after leaving Cisco?
I agree with you on UC. The budget cuts are devastating. I would recommend USC but there are other good cheaper options out of state. Rice is probably the best value but lacks the USC undergrad experience (which is unparalleled IMHO).
I tend to avoid political discussions up here as people are inevitably more left leaning. Some towns even have no problem passing school parcel taxes while funding Taj Mahal-like municipal bldgs! It seems the wealthier towns are the looniest.
“I am also part of the younger generation, all of my friends are in a rush to buy into the market with the FHA loan. ”
I’m a part of it too, and I have similar stories. Two good friends just bought houses because they wanted to take advantage of the tax credit. Both of them are spending around 50% of their take-home pay on housing related expenses (HOA, mortgage, interest, taxes, insurance, not including maintenance). It’s nice that they have a place to live, but if price decreases continue and they have to move then they’ll be in for a treat.
For now, I live in an area that has relatively stable prices; it’s still expensive by most standards, but nothing like what happened in CA/AZ/NV/FL. The biggest problem now is that I live in the state with the highest property taxes (and state income taxes) in the USA, and they keep rising with no end in sight. I chose not to buy when I moved here five years ago, and now that I’m looking to leave it was probably a good move on my part as prices are the same or lower than they were four years ago.
Let me guess: you’re in ‘Joysey’, right?
Just wanted to share this amazing 7 Mil estate profiled in the SF Chronicle today. Shows what multimillion dollar homes are supposed to look like.
http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2009/12/30/REDR1BAIUG.DTL&o=0
IR, OT, can you find out for us what is the current rental rate for various IAC apartment buildings? What is the trend currently?
FWIW, if rents are going down while vacancies are going up, we’re gonna see some interesting housing numbers for 2010.
We can say whatever we want on this blog but, unless we get anecdotal evidences otherwise, all talks here are just speculation at best.
TIA
No idea of rental rates, but parking at my IAC complex is getting way too easy compared to the past. Vacancies up here I suppose.
Good anecdotal evidence Anon. Thx.
IAC puts price ranges for each floorplan at each of their complexes online at http://www.rental-living.com. Someone with the right programming skills could pretty easily write a script to regularly trawl the site so that historical information could be built up. I’ve toyed with doing this myself but have been satisfied with just checking manually when it’s around renewal time.