On this weekend's open thread, we have a look at a unique property in Irvine: a vacant lot.

Irvine Home Address … 86 CANYON Crk Irvine, CA 92603

Resale Home Price …… $1,995,000

{book1}

It's alright

You're ready for the night

Of your life

Stars will shine so bright

They say

We're dancing the stress away

Manian — Welcome to the Club

IHB News

I hope you are all planning on attending our Wednesday gathering. I am looking forward to it.

realtor quote of the week:

You're kidding yourself if you think prices are going to drop even more. We have already hit the bottom. I don't understand why "potential homebuyers" are under the assumption that there is going to be some sort of "correction." Get it through your thick skulls people…..right now is seriously the time to buy. I am not saying this as a Realtor but as a person with common sense.

Don't get me wrong, many areas of the US will continue to face declining RE markets, but not Orange County.

Helping out our friends

"We want to give a shout out to our buddy Harry who opened a deli in Irvine a few months back. Harry's Deli has quite the following already and received a very favorable review in the OC Weekly. If you are in the area during the week, it is definitely worth checking out!"

By request…

If someone can find a better image, perhaps one where the person getting punched is in more pain, I can create another version.

Writer's Corner

From Friday's post it is clear that I am looking forward to my vacation in Wisconsin. I am planning to take my voice recorder and spend a few days alone on the lake, and I hope some meaningful writing becomes of it. I was planning to write about my old home town back in December, but I thought I would wait until I could spend some time there and clear my head. That time is now.

Housing Bubble News from Patrick.net

Fri Jun 11 2010

US House Foreclosures Climb 44% to Record in May (businessweek.com)

Most Foreclosure Properties Not Underwater (housingwire.com)

Foreclosure Activity Over 300,000 For 15th Straight Month (zerohedge.com)

Fed's Beige Book: "Shadow" inventory of Foreclosed Houses (calculatedriskblog.com)

Thousands in California face unemployment check cutoff (economy.freedomblogging.com)

10 important real estate charts showing no housing recovery in 2010 (doctorhousingbubble.com)

Liquidity Seizure May Renew Recession, Nomura Says (bloomberg.com)

Banks Face Short-Sale Fraud as House Flopping Rises (bloomberg.com)

Uninformed online real estate investors buy trouble (daytondailynews.com)

US action in rescuing AIG poisoned market (marketwatch.com)

Bernanke says "Gold Acting Differently"; New Mortgage Applications at 13-Year Low (Mish)

Federal Reserve's Dollar Debt Can Never Be Repaid (marketoracle.co.uk)

Women Prefer Men Holding State Bonds, Japan Ad Says (bloomberg.com)

Hedge fund manager see deflationary environment (theglobeandmail.com)

Rarity of stock splits seen as a warning bell (usatoday.com)

Obama orders cuts in federal building costs (washingtonpost.com)

Banks Paying Colleges For Students Who Rack Up Credit Card Debt (news.yahoo.com)

Rapper Chamillionaire Strategically Defaults on His Mortgage (bvonmoney.com)

Free Trial of the Landlord's Bargain Finder

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Thu Jun 10 2010

Fed Study Finds "Real" Houseownership Rate (blogs.wsj.com)

The housing-market recession is not over (marketwatch.com)

Without buyer bait, US house sales keep slumping (reuters.com)

Mortgage Applications decline 35% over last four weeks (calculatedriskblog.com)

Mortgage Demand Slumps for 5th Week (cnbc.com)

China eyes property tax to quell its housing bubble (seattletimes.nwsource.com)

Greece is tapping China's deep pockets to help rebuild its economy (washingtonpost.com)

France selling 1,700 buildings to help cut debt (news.yahoo.com)

Debt Trap Makes Scottish Investors Scrutinize U.S. (bloomberg.com)

Borrowing costs so low that Washington couldn't possibly be facing debt crisis… (timiacono.com)

Bernanke Warns of Unsustainable Debt (nytimes.com)

Greenspan's "froth not bubble", 5 years later (lansner.freedomblogging.com)

How the central bank eats your money (nationalpost.com)

BMO Says "Go to Cash – In Plain English" (Mish)

A failure of economic and environmental regulation (newyorker.com)

Estate Tax Dormant, Billionaires Bequest Is Tax-Free (nytimes.com)

Keeping Politics Safe for the Rich (nytimes.com)

Only a fraction of those in need file for bankruptcy (usatoday.com)

Florida Keys Island Mansion Still Has No Takers At Over 70% ($7M) Off! (rocktrueblood)

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Wed Jun 9 2010

Record Low Mortgage Rates Make Now a Terrible Time to Buy a House (theaffordablemortgagedepression.com)

10 housing lessons we have not yet learned (bayarearealestatetrends.com)

Irrational US investors will always lose to Wall Street (and Realtors) (msn.com)

Kool Aid Intoxication of the Housing Bust (irvinehousingblog.com)

Condo conversions struggle, so owners rent them out again (azstarnet.com)

Apartment 1.5% net income, time to sell? (patrick.net)

Housing's Double Dip: Numbers Tell How Bad It Is (cnbc.com)

Foreclosures to be high for 18 more months (mortgage.freedomblogging.com)

Court order halts Bank of America foreclosure sales in Utah (builderonline.com)

New horror movie about foreclosure (hollywoodreporter.com)

Disturbing Job Ads: 'The Unemployed Will Not Be Considered' (huffingtonpost.com)

Britain, Germany plan severe spending cuts (latimes.com)

Australia: Surging house prices built on a debt time-bomb (wsws.org)

Stalling the Housing Recovery, One Stimulus Bill at a Time (fool.com)

Subsidizing housing makes it more expensive: FDIC's Bair (wallstreet.blogs.fortune.cnn.com)

Subsidizing education makes it more expensive (financemymoney.com)

Subsidizing anything makes it more expensive (archive.org)

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Tue Jun 8 2010

Real estate will dampen Florida's economy for years (tbo.com)

Economist: Housing crisis to linger for years (freep.com)

Is Massive Refinancing During Bubble Years a Ticking Bomb? (realestatechannel.com)

Is housing already double dipping? (seekingalpha.com)

In Brutal Job Market, More Than a Million Quit Looking (cnbc.com)

Why do you want to own? (patrick.net)

What Do You Own – Really? (endoftheamericandream.com)

Commercial Loans That Vanished in Property Bust Reappear (nytimes.com)

Bank of America to pay borrowers $108 million to settle excessive charges (sfgate.com)

Crisis panel issues subpoena to Goldman Sachs (marketwatch.com)

Realtors spent $4.3M to corrupt our laws in Q1 (businessweek.com)

Canadian realtors lower housing forecast as market weakens (nationalpost.com)

Profit On Your House's Price – Even If It's Falling (sfgate.com)

Will China's Housing Market Crash? How to profit (tycoonresearch.com)

May Property Sales Drop in Shanghai, Beijing (businessweek.com)

Surviving Dubai's Real Estate Crash (knowledge.wharton.upenn.edu)

5 Steps Of A Bubble (sfgate.com)

Empty houses in the desert: American suburbanization meets the resource crises (PDF – commoncurrent.com)

Houses in Dayton, OH on eBay with starting bid of $1 (daytondailynews.com)

The Secret Powers Of Time (wimp.com)

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Mon Jun 7 2010

Luxury Houses Losing Value (cnbc.com)

May House-Buying Activity Looks Worse Than Expected (blogs.wsj.com)

Manhattan Empty Condos May Be Rentals as Leases Reign (bloomberg.com)

Foreclosure developer thriving from rentals (northjersey.com)

Why We're Falling Into a Double-Dip Recession (robertreich.org)

Scariest Job Chart Ever Just Got Even Scarier (tpmlivewire.talkingpointsmemo.com)

Disneyland, businesses, enjoy Prop. 13 loopholes (taxdollars.freedomblogging.com)

Mortgage Mystery At The FHA (dailybail.com)

Geithner: Fannie and Freddie next for reform, someday (thehill.com)

Did Fannie and Freddie Cause the Housing Bubble? (theatlantic.com)

Fannie Mae's Duncan Says Buyer-bait Tax Credit Did Not Create Demand (businessweek.com)

Big increase in mortgage foreclosures predicted for this year (miamiherald.com)

Strategic Default: The $10,000,000,000 Monthly Economic Stimulus (irvinehousingblog.com)

Why Banks Try to Make Borrowers Feel Like Sinners When They Can't Their Mortgages (alternet.org)

Drumbeat for Fed rate hike gets louder The Fed (marketwatch.com)

A Move to Ease Student Debt Lifetime Slavery (nytimes.com)

Break the Credit-Rating Rules (nytimes.com)

Automobile-dependent real estate and jobs (patrick.net)

Small-time counterfeiter arrested, Federal Reserve not even investigated (latimesblogs.latimes.com)

Clarke and Dawe on the Subprime Mess (old but good) (youtube.com)

A buildable lot in Irvine?

Raw land deals historically have not been highly leveraged because land values are notoriously volatile. Lenders forgot that fact during the housing bubble and extended large loans on raw land deals many of which are blowing up now.

Today's featured property was purchased by Baldwin Investment and Development in 2007. It was picked up at auction on 4/6/2010 or $500,000 by the lender. If you believe this property is worth $2,000,000, it was quite a profitable foreclosure for the lender. This lot is worth whatever the final product could be sold for minus the cost of construction and profit.

Buildable lots in Irvine are very rare. Since the Irvine Company builds all of its own product, a foreclosure on pre-build like this one is the only way such a lot would enter the market. How would you value such a unique property?

Irvine Home Address … 86 CANYON Crk Irvine, CA 92603

Resale Home Price … $1,995,000

Home Purchase Price … $2,350,000

Home Purchase Date …. 5/3/2007

Net Gain (Loss) ………. $(474,700)

Percent Change ………. -15.1%

Annual Appreciation … -5.0%

Cost of Ownership

————————————————-

$1,995,000 ………. Asking Price

$399,000 ………. 20% Down Conventional

4.84% …………… Mortgage Interest Rate

$1,596,000 ………. 30-Year Mortgage

$405,593 ………. Income Requirement

$8,412 ………. Monthly Mortgage Payment

$1729 ………. Property Tax

$550 ………. Special Taxes and Levies (Mello Roos)

$166 ………. Homeowners Insurance

$400 ………. Homeowners Association Fees

============================================

$11,258 ………. Monthly Cash Outlays

-$1613 ………. Tax Savings (% of Interest and Property Tax)

-$1975 ………. Equity Hidden in Payment

$740 ………. Lost Income to Down Payment (net of taxes)

$249 ………. Maintenance and Replacement Reserves

============================================

$8,659 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$19,950 ………. Furnishing and Move In @1%

$19,950 ………. Closing Costs @1%

$15,960 ………… Interest Points @1% of Loan

$399,000 ………. Down Payment

============================================

$454,860 ………. Total Cash Costs

$132,700 ………… Emergency Cash Reserves

============================================

$587,560 ………. Total Savings Needed

Property Details for 86 CANYON Crk Irvine, CA 92603

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Lot Size:: 0.77 Acres

Property Type:: Lot/Land

View:: Canyon, City Lights, City

Turtle Rock

County:: Orange

MLS#:: U8003599

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* * * $1 MILLION PRICE REDUCTION !! * * * Prime custom lot with front row canyon / city lights / sunset views set amongst the hillsides embracing Shady Canyon. Take advantage of the rare opportunity to build your dream home. Long, estate-style private driveway set back from the road for complete privacy, with only one neighbor adjoining. The lot size is over 33,000 sq ft. There are architectural plans to build a grand-scale custom home up to 18,000 sq ft. secluded in the hills. A truly prestigious enclave.