This property sold for $775,000. That is a $175,000 or >20% off the peak price.
The summer solstice is the longest day of the year. According to The American Heritage Dictionary, the solstice is “A highest point or culmination.” Interesting that our housing market peaked in June of 2006 coincidentally with the summer solstice.
Today’s seller purchased a property on Solstice street at the highest point in the market. Now, they are trying to sell before the sun sets on their bank account.
Asking Price: $849,900
Purchase Price: $950,000
Purchase Date: 7/31/2006
Address: 11 Solstice, Irvine, CA 92602
Beds: 3
Baths: 2.5
Sq. Ft.: 2,013
$/Sq. Ft.: $422
Lot Size: 5,800 sq. ft.
Year Built: 2002
Stories: 2
Type: Single Family Residence
View: Trees/Woods
County: Orange
Neighborhood: Northpark
MLS#: S497016
Status: Active
On Redfin: 10 days
From Redfin, “Well located on one of largest lots in tract!!! Culdesac, long drivewa y, very private. Beautiful new lush landscaping w/ palm trees! Terrific entertaining area w/ BBQ and firepit. Interior is upgraded throughout!! Exquisite hardwood flooring, upgraded carpet, 2-tone paint, custom fixtures, gourmet kitchen, walk in pantry, stainless steel appliances, etc. .. Great community and facilities.”
The exclamation points are back, and so is the gourmet kitchen.
.
.
Another property for sale 10% off the top in Northpark. If this seller gets their asking price, and after a 6% commission, they stand to lose $151,094 after one year of ownership. If they intended this as a flip, I would say they were not entirely successful.
And with that, the sun sets on another week at the Irvine Housing Blog.
Next week, I will be featuring properties from Quail Hill, so come back to see what’s happening. Have a great weekend.
But, we’re Irvine, right in the middle of Orange County. Home prices don’t decline here! We have pent up demand, never ending job growth, and everybody wants to live here.
—–
I hate to say this, but in the Wichita Kansas area, there are new 3BR 2 BA homes for sale in very nice neighborhoods for $150 – $170K.
Ouch!
I hope they had a good sized down payment, otherwise somebody’s bank isn’t going to like them.
The fact that this place has a driveway makes it worth at least a million maybe two. I can’t believe that this “homeowner” is ruining the neighborhood by selling the home “way below market”. I wonder if they talked withe a “realtor” before making this decision. I bet no one is buying the place because it is priced way below market !!!!!
What – no custom backsplash?
Wow, what a difference a year makes. Now that the masses are beginning to realize RE doesn’t always go up they will need to come up with a new strategy for living beyond their means. I wonder how many of them are aware this is only the beginning of the downturn and the next few years will make 2007 look like the calm before the storm.
“Well located on one of largest lots in tract!!!”
5800 sq ft lot is large?
Anyway, this place has good curb appeal and the inside is nice.
Kitchen does need to be remodeled however. That white “hospital” look is so 1990s.
The 2003 price of 515k sounds about right.
You would think the REALTOR ™, being versed in so many things, would know that cul-de-sac is three hyphenated words, not one big word all strung together.
I guess “dead end” doesn’t have the same panache (another fine French word).
Patience – I like you blog, just added it to one of my iGoogle housing homepages!
Wait WTF? This place sold for a penny over the opening bid at the foreclosure auction for $734,700 on 6/27. Now they want to make a quick $100k? Geez they must have gone to the get rich with foreclosures seminar.
Take note people the pros didn’t think this place was worth $734k so niether should you.
“When the wise leave only the fools are left.”
-Warren Buffett
I saw this property on your auction list, but I didn’t know if it went through.
Did the bank buy this one, or did a flipper outbid the bank by a penny? This could be the bank going through its loss mitigation procedures.
I would love for you to tell me it was a flipper.
This blog got a little PUB this morning.
“Another Irvine-based operation, IrvineHousingblog, brilliantly drives home the same point with daily dispatches. The blog is a guide to the seventh circle of real estate hell—people who buy houses on spec with no money down. A typical entry chronicles the purchase price, tracks down the amount of debt on the property, and then calculates how much each party—the buyer, the first mortgage holder, the second mortgage holder—stands to lose assuming the seller receives the asking price. My favorite thus far is the house for which somebody paid $1.29 million in May 2006, putting down only $91,000 in cash. Today it’s on the market for $850,000, a whopping 34 percent reduction in about a year.
http://www.slate.com/id/2171235/
Just signed up for this site and love it!
– Mike…my parents just bought a 2bedroom house in Wichita KS for about 65k! That’s almost the size of the down payment on my last condo. Talk about a deal…their mortgage is 200 bucks/month.
If the homeowner above is a flipper, booyah!
This is useless info. Selling a home after one year of ownership is nowhere near the norm of market behavior. Add to that the fact that 2006 was the price peak, and DUH you have this year’s sellers taking a hit. This is in itself a debacle? Not exactly. Look at the market again in two years, then we’ll talk. Anyone selling between today and then will be hurt.
From the overhead, it looks like a triangular lot. Bad, bad Feng Shui!!!
14 solstice was sold in aug ’06 for $835, just a month after 11 solstice and they are of similar sizes.. there seems to be something funny in the sales prices..
I love this blog. I am starting law school in 3 weeks on the East Coast, and in between study sessions, I will read this site. Thanks!
“Look at the market again in two years, then we’ll talk” Do you think the market will recover by then? Open your eyes man.
PT,
Wishfull thinking.
Selling in the next 5 years will be a problem. Problems as large as the overpriced OC real estate market can take as long as a decade to correct.
In irvine now there are people trying to unload condo’s at just over $300 per square foot and they are not selling. The next wave of cuts will be to $250 per square foot. And after that, we will see condos on the market at $180 per square foot. This will play out over 4 or 5 years.
At the bubble inflates, people can’t wait to get in…..when a bubble starts to deflate, first people smell the stnch, then they feel the pain, and then they want nothing to do with the market.
Well you are going to love what I am going to tell you. It was bought by a flipper. I am 99.9% sure that if the bank takes it back it would have to say back to the beneficiary where this one is showing sold. I will do some cross checking later and see if I can confirm that it was sold but I am 99.9% sure that it did.
But you gotta live in Wichita, Kansas.
Let me see… hot and muggy, cold and snowy, at best a regional center with a minimal performing and fine arts scene, other than BBQ a culinary waste land.
Often, you get what you pays for.
Don’t worry.
I hear the Irvine City Council and King Agran are about to pass laws that will stop the bleeding.
They will dictate the minimum amounts that houses can be sold for.
An accompanying measure will make it illegal to rain during the 4th of July BBQ.
Unfortunately, yet another measure that would have made it illegal to rain during the rush hour commutes was dropped because Costa Mesa and Newport wanted to tie in with the minimum number of flights that can fly out of John Wayne.
See? The IRVINE CITY COUNCIL SAVES THE DAY.
Watch for the news next week in the Irvine World News. 😉
Some entity named “Solstice Trust #11, Pacific Legacy Real Estate and Investments, Inc. as Trustee” bought the property at a foreclosure auction 2 weeks ago for $734,700.01.
This house has just been reduced to $829,900
Could someone tell me WTF is going on at 18811 TABOR DR in the Turtle Rock Broadmoor? It sold in March for 895k and is now on the market again for 1.15M. Is this the bank getting greedy after a foreclosure, or a flipper, or what? I used to walk my dog past this house every night and it looks kinda goofy compared to some of the other homes. What gives?
Also check out the WTF pricing at 19502 SIERRA NUEVO RD also in the Broadmoor. $714/sq-ft!!! IrvineRenter, you should do a post about some of the crack smokers living large in Turtle Rock.
It will be interesting to watch how well the crash correlates to the charts that you posted showing your predictions. So far it seems to match almost exactly.
https://www.irvinehousingblog.com/2007/07/04/new-mountain-high/
We had a laugh over this one on July 4th. Apparently our teasing did not motivate them to lower the price any.
Also check out:
https://www.irvinehousingblog.com/2007/07/03/happy-birthday/
Sounds like an interesting update post. Let’s give it some more time to see if the pace of price declines accelerates this fall and winter. If that occurs on schedule, I will feel pretty good about the veracity of the predictions.
“Interesting that our housing market peaked in June of 2006 coincidentally with the summer solstice.”
The astrological sign of the solstice is Cancer – an appropriate symbol given the widespread(ing) rapid dissolution of home equity “wealth”.
IrvineRenter,
Thank you for the response. I read the post and had a laugh myself! Maybe you could put a search feature on where we can enter an address and we can see if it has been featured? Or perhaps a way to access a hyperlinked list of the properties you’ve profiled?
I googled and it seems “Pacific Legacy Real Estate and Investments” is two nice realtors named Anne Olson and Lori Lewis. And suprise, surprise, surprise, they are listing the property. We must keep track of this one.
I may start a pool on the selling price and days to close.
lendingmaestro’s horror story news flash of the day:
Today I’ve been scanning our portfolio’s HELOCS looking for opportunities to lower people’s rates….what I’ve found is horrifying. Three clients in a row appeared to be clones of each other. They all took out 250k + HELOCS. I then did some sniffing around on Realquest. (you can search by owners name) and saw that they all purchased additional properties in OC.
In each of these 3 cases the first mortgage says 1% adj arm. Yikes! They all have 2nd’s as well. One home was purhased in Aliso Viejo on 10/31/05 for 760K. The previous owners bought it on 05/18/99 for only 280k. That equates to a mindblowing annual appreciation of 80k a year.
One of the other gents purchased his home in 1987 and now has it leveraged beyond 100% LTV. He ows 950k on his primary and bought rentals in Phoenix, Las Vegas, and Temecula. All three are rented for less than the mortgage payment. What his this man’s profession? He is a financial advisor, I sh*t you not. Good job buddy!
With every file that I review I begin to grasp how many multiple bubble-priced home owners there really are. You cannot possibly grasp the dire situation of these people. You can pretty much look at everyone you see walking around south coast or fashion island and think….neg am…neg am…..upside down, neg am……3 properties listed……30 days late….as you look at them.
It’s getting scary my friends
Good post maestro!
I know people who are HELOCed up to their eyeballs.
I also have a cousin in law who is a cook. He bought a 530k house in Pomona in 2006. He used stated income. The loan is an I/O ARM that has a prepay penalty and will adjust in two years. He is barely able to make the payments right now.
The “future statistics” are EVERYWHERE!
Why does the purchase price and date on IR’s post not reflect the auction price? Where are those dates being pulled from?
I can just see Anne and Lori walking out of the auction with dollar signs in their eyes.
I got the info from Redfin which is tardy in updating its database. I saw graphix reference to this property in the forum, but many of these properties scheduled for auction get delayed, so I went with the information I had.
There is a search field on the top of the main blog. You can use it to check to see if a particular address has been profiled.
I had some problems trying to get the Housing Bubble Blog for awhile. But now it’s back up. Interesting newspaper articles there.
http://thehousingbubbleblog.com/
It’s fascinating to read this blog from up here in Seattle (I’m a San Diego native, moved north a long time ago). It’s a glimpse of the not-so-distant future for us, or at least I think so.
But I’m alone in that thinking. Thankfully, gravity does not apply here, and for a variety of reasons we we never, under any circumstances, be affected by the housing issues you’re seeing down in Orange County. Apparently, something in the water has given us complete immunity, at least if you read the papers or pay attention to real estate agents. Our housing prices have actually crept up a bit lately. Anyone know a good way to bet on a local housing market downturn?
lendingmaestro,
Thank you for your post. I hope the many lurkers on this blog read comments like yours and truly grasp the implications of what you are saying.
One of the “it is different this time” phenomenons of this bubble is the multiple property implosions we will witness. The 100% financing and HELOCs gave many people the ability to obtain multiple properties. I don’t believe this was near as prevalent in the last bubble.
The implications are clear: when these people succumb to the financial pressures of negative cashflow, they won’t just dump a single property on the market as a foreclosure, they will dump many properties on the market. The foreclosure numbers will be astronomical, and this situation will be a large contributor to the problem.
Thanks to Tim B. for saving me from the leg work!
I can’t remember who the poster was on the forums right now but they asked me to look into Pacific Legacy. What I found is a small group of agents buying foreclosures and distressed properties and turning around to sell them for a small profit. They seem totally legit and usually priced the homes right but now I have to wonder. They have been doing this for several years now and what is suprising on this one is the how they started with such a high price. All the transactions they had were decent but not greedy profits. This one could really change that.
The Solstice has set yet again. Price just reduced to $829k.
Well, the OC….let me see….
Highly congested, poor air quality, over populated, hyper-consuming and ultra-competitive, at best the highest concentration of silicone-per-capita in the nation, other than a one-up frou-frou stripmall wasteland.
Often, you think you get for you overpaid for.
Snobbery wins you no kudos.
Natch.
Interesting observation, lendingmaestro! Who is going to buy when the everyone owns all of the other homes as specs/flips?
Since when did housing become like trading baseball cards or beanie babies?
We once saw the Berlin and Vienna Philharmonic Orchestras back to back, EACH… that’s like unheard of.
They didn’t even bother to go to LA… only NYC and Costa Mesa.. that was their entire US tour.
And how about The Academy of St. Martin on the Fields doing a week long, complete cycle of Beethoven Symphonies plus varied ancillary stuff.
London, Paris, Madrid, Moscow, Budapest, Tokyo, etc, etc… they all send their top orchestras to tour the OC.
And we have TWO concert halls. The latest once is breathtaking. It’s like upgrading your stereo from tubes and Magnepans to class A behemoths and Wilson WATTS.
Snobbery? Sorry man…. that’s your word.
The OC is COSMOPOLITAN… and you pay for that.
Prices crept up? Yeah, so have ours.
How about actual sales? Declined? hmmm…
My sister has her house on the market. It’s a fantastic location on the hill overlooking the Fountleroy ferry and the house has a wrap around view.
Their price is very realistic, indeed under the comps. They are leaving the Puget Sound for good.
The house is perfect because my brother in law is a detailed driven person.
The house went on the market six weeks ago.
No deal yet.
Seattle is NOT immune. Indeed, I think the coastal OC will do better than Seattle when this all plays out. There’s are a TON of wonderful coastal views in Seattle, there’s little coast in the OC/LA.
So there is an Opera.
TWO concert halls? That’s wonderful.
Oh, I forget… everybody wants to see the Opera or Philharmonic as much as everyone wants to live in the OC. The wonderful Cosmopolitan symphonies are worth paying nearly 3 times meadian income for a little 800sq ft stucco box? We have some fine arts here in Chicago (where I am now) and not nearly the crazy run up like SoCal. Yep, they play right in the middle of our corn fields!
Wichita has some great BBQ. That maybe to low brow for a high end concert goer like you.
And some of you wonder why the rest of the country hates Californians… Different Strokes for different folks. I think the reason why so many OC’ers get nose jobs is because they get in the way when they look down at people.
Look dude. Your sense of bitterness towards California comes through clear and through.
Why? Don’t you have something better to do? Like mow your three acre yard with your John Deere riding mower?
We do not pick on the midwest nor NYC, so why is it that so many people love to pick on us? Maybe it could be because we do our own thing and are not stuck up like you? I mean, you don’t hear us wish ill or talk badly about the South Side of Chicago or the Bronx or East St. Louis.
Could it be rampant jealousness of our laisez faire attitude?
Personally I don’t care. That’s your karma to bear.
Our weather is perfect: dry and warm year round and that’s worth a lot of money to a lot people. It it ain’t to you, then wonderful but don’t go criticizing those who have a different set of values and needs.
And the fact that we have such a large metropolis, indeed a cosmopolitan world impact, means that we are blessed with many benefits that smaller cities do not share.
Except for the NFL… but who cares when you got the Angels playing well?
BTW, Chicago has one of the world’s best philharmonic orchestras too. They’ve been here. Do you ever go listen to them?
LMAO at your SoCal holier than thou attitude! I have no bitterness towards California. I like California, believe it or not. Nice weather, great scenery, goofy people, snobbery (like yours) all over to laugh at, etc. I think it is fascinating.
A Philharmonic orchestra with a nice concert hall compared to BBQ is pretty snubby, dontcha think?
BTW, California as “Laissez-faire”??? Hardly. (You didn’t even spell it right…)
According to wikipedia: “In the laissez-faire view, the state has no responsibility to engage in intervention to maintain a desired wealth distribution or to create a welfare state to protect people from poverty, instead relying on charity and the market system. Laissez-faire also embodies the notion that a government should not be in the business of granting privileges. As such, advocates of laissez-faire support the idea that the government should not create legal monopolies or use force to damage de facto monopolies. Supporters of laissez-faire also support the notion of free trade on the grounds that the state should not use protectionist measures, such as tariffs and subsidies, in order to curtail trade through national frontiers.”
Mention the midwest to most SoCal’ers and you get an intersting remark like “where are your overalls?” or other whimsical put-down comments like yours.
Cool, glad you like it. I’m no expert on this subject. I’m just learning about housing, finance and inflation. I figured I may as well learn publicly.
OC = Cosmopolitan…? Now thats a stretch. More stretched than those out there with their no down neg ams…
Good luck with law school Aboot. I discovered this site in the middle of my last year of law school and it was a great study break. Just remember, the first semester is the worst. It gets better.
I went to see a 1 bedroom condo in irvine about 3 years ago. It was a brand new project and the asking price was 500k. I wonder what happened to that condo. Could you please find out what became of it.
(1) By every definition of the word, The LA/OC basin is cosmopolitan.
(2) I don’t care about Midwesterners preaching at us. I guess that’s what happens when they sit to watch the Rose Bowl. My heart goes out to them, stuck in the winter wilderness with brutal summers to boot. Figure someday they’ll grow up, start putting words in our mouths and let us be.
Some people love winter. I hate cold, snow and grey skies and wish I could live in Pasadena in January.
Some people just do not like California. I do, but not everyone wants to live there.
Unfortunately, that warm weather comes with a steep price. 🙁
All the bashing you do regarding OC and thus SoCal..yet YOU are the one who calls yourself SoCalWatcher. You need to end your fascination with those of us who chose to make this part of the nation our home…it’s kind of creeping me out.
I still think this house is overpriced.
Those homes pretty much are smack in the middle of Irvine’s REO land. I would guess the buyer wanted the house otherwise I’d think those homes will fetch a much better price sometime next summer.
Likely another 10% down. At that point, those homes will sell with a conforming loan after a 20% down.
I assume that the Feds will raise the performing loan value to 500K rather soon. That will allow homes like this to sell for 600 to 650 assuming the buyer brings in 20 to 30% down.
My gut feeling is that the market will start to normalize in Irvine once the majority of homes north of Walnut start to qualify for a non jumbo loan. For that to happen the Feds need to nudge the number up a bit and lot of those homes need to drop 40%.
Judging by this home, we’re halfway there already.
Of course, the McMansions are gonna be a whole ball of wax. I figure McMansions on this side of the 405 may find buyers, but McMansions inland will hurt, particularly as many were built in the last two years.
You got the direction of the sign wrong in the description. That is a greater than sign, the other direction is for less than.
Certainly makes 10-15% decrease on the median price look overly optimistic! (I am still sticking prediction until the market proves me wrong)
My mistake, read it too fast.
hahaha, I knew you’d be the first to respond!
Don’t forget we’ve got Gary WATTS too!!!!!!!!
This place is DA BOMB!!!!!!!!
Everybody wants to live here. Everybody knows that. We’re the best place in the world. Best People, Best money, best businesses.
We’re so great, I just shit myself. Smells great.
Yeah, baby, we’re fartin’ through SILK!!!!
It’ll get much worse. The news is just starting to turn bad. The median is just starting to show the dents. How badly are people going to get spooked on housing when they read this weeks housing numbers to see housing down 7.6%.
Sales History
Date Price Appreciation
07/12/2007 $734,700 -23.8%/yr
07/31/2006 $950,000 21.0%/yr
05/16/2003 $515,500 —
I used to live in Deerfield and am curious about that particular neighborhood. I used the search box but didn’t find any profiled properties in that neighborhood. Does this mean it doesn’t have the same issues as other neighborhoods in Irvine?
We love Irvine. We lived in Texas and bought two condos in Irvine few years ago. We plan to retire over there. That’s the best city that I have seen. UCI is near by, beach is within short driving distance. Weather is the main reason we decided to retire there. I think it is worthy to pay more for a condo in Irvine than to pay less for a huge house in Texas, no culture but cowboys, don’t even talk about the weather.
But it’s in Kansas….who cares!!!!
Toto, we’re not in OC anymore. /cry !!!!!
Still listed for $1,150,000; 143 dom. Still owned by the $895k buyer. pub rec says 1650 sq ft vs mls 2650 sq ft. Unpermitted addition maybe. I presume they are basing their price on 19151 BECKWITH TER ($1,320,000), 2 MORNING DEW ($1,179,000) and 18971 GLENMONT TER ($1,150,000). All closed within the prior 3 months Each of these is east of Turtle Rock Dr vs Tabor which is west of. Is there a premium for being east of Turtle Rock dr???
Those windows are ridiculous.
I lived in OC for the last 18 years and I truely believe it is the best place to live in the world. San Diego’s weather is as good, and that can be a choice, but the quality of life is just so amazing here. I challenge anyone to try a week here and you will really like here.
The discrepancy is not new. The public records reflect the original size of the home. My own home shows 1750, but it’s actually 2700. And it was all done with permits.
The big change on those homes lining Culver is that the construction on Culver is finally over. Lots of those homes now have an additional 10 to 20 feet of additional backyard and a new 10 foot wall. That sort of ameliorates the additional traffic.
Since the construction took two years, those home value were relatively depressed vis a vis the rest of the neighborhood. After all, most home buyers don’t want to deal with construction and dust.
The homes within the TR drive loop are on higher land and have views. The homes in the Broadmoor do not have views rights in their deeds.
18811 Tabor does look funky. The remodel was done a long time ago and it’s not all that workable inside.
Banks May Pool Billions to Stop Securities Sell-Off
http://www.nytimes.com/2007/10/14/business/14bank.html?_r=1&oref=slogin
It isn’t just homeowners that didn’t read the fine print…
I Prescribe Bed Rest And Plenty of Liquidity
http://www.banklawyersblog.com/3_bank_lawyers/2007/10/i-prescribe-bed.html
Re: creation of a pool of pools
I don’t understand. No matter how you buck and weave, these
mtg backed securities are not worth what people thought they
were going to be worth.
If they are brought onto the balance sheets of the banks, and marked fairly they will crater the balance sheets. If they aren’t owned by the banks, some other poor soul will be on the hook.
At some point the losses will be seen to be so staggering that the banks CAN’T buy them back, so at that point
somebody will be left holding the bag. The whole thing reminds me of a check kiting scheme.
Or maybe I just don’t understand.
$75 billion is a lot of money, but nowhere near what would be
needed to save the day. From what I’ve been reading, it would
be more on the order of a half a Trillion to a Trillion and a half.
Didn’t the S & L crisis cost on the order of $100 to $200 billion
in 20 year ago dollars? Or, is the Fed hoping to inflate the dollar such that the loss in inflated dollars will cost less than an uninflated loss?
And why should the treasury or anybody else provide what
amounts to welfare for the rich?
Altho some of that stuff is probably head by pesion funds. I don’t understand, is this money supposed to actually buy back the
securities from hapless investers? Or to play hot potato with
securities that the banks have not been able to sell? Or, just
to keep the whole thing going for 6 month or a year, so things
collapse later rather than sooner? Do these people think somebody’s fairy godmother is going to come along and bail
them out?
Are the banks expecting to make that much profit during the
time the collapse is put off? How much money do all these
banks make in a year in reasonably good times anyway?
Is the hope that the collapse will happen AFTER the Bush administration leave office?
Hillary wants to be FDR maybe?
Are the candidates just not understanding what is going on here?
I really shouldn’t read these blogs; it is not good for my mental
health.
In my work, I hear every day about individuals who are losing houses; it’s too bad for them, but most will survive to another day.
But I see the collapse of the system. Or, a good chance of it.
The figures are so staggering, that they are virturally inimaginable.
Maybe I read too much science fiction and history. It allows you to
imagine the unimaginable.
The media were all eager to hype the avian flu which never happened into a possible black plague. Why aren’t they on this?
I keep reading everywhere we are at the bottom. September’s
foreclures are down a bit, so wh’re at the bottom. Somebody somewhere sold a house and got a mtg, so we are at the bottom.
Is is that they really don’t understand it? Heck, I’m not sure I understand it. I desperately hope I am wrong, anway. Or, is it that the editors don’t want to say anything
about it for fear they may cause the inevitable? Are some conspiracy theory musings appropriate here?
Tune in next month or year.
Oops, “held by pension”
“Or maybe I just don’t understand.” You understand very well.
“And why should the treasury or anybody else provide what
amounts to welfare for the rich?” Because that is the Federal Reserve’s job.
“Are the banks expecting to make that much profit during the
time the collapse is put off? How much money do all these
banks make in a year in reasonably good times anyway?” They think they can put it off forever. They have succeeded at doing so for 94 years and so far, have no reason to think they can not continue. They make money and have power in good times and in bad.
“Are some conspiracy theory musings appropriate here?” Yes.
What happen 94 years ago?
WWI?
Going off the gold standard?
Banks didn’t do well in the depression.
If you click on “Comments” link from http://calculatedrisk.blogspot.com/2007/10/siv-bailout-ny-times-on-proposed-m-lec.html
there is an interesting discussion going on this
If it understand it correclty, it’s like this.
There’s a fire the in movie theatre.
People’s natural urge is to run for the exits, thereby clogging all the exits so people can’t get out and trampling and killing more along the way.
Fed’s trying to force people to form a single line and exit in an orderly fashion.
But the theatres still going to burn and people are still going to die. But perhaps a few less will die if Fed can make them line up.
Apparently during the depression, people got so distrustful of banks, they took their money out and buried it in coffee cans in the backyard. As you can imagine, that caused some serious contractions in the money supply. Per the theory quoted in Bernake’s Gold & the Great Depression article, it was the contraction in the money supply that caused the Great Depression.
So, projecting forward…what would you do?
Step 1: Announcements to calm the public. “Calm down everyone, everything is contained. It’s safe to keep on depositing/lending/do personal and business investing like usual.”
Step 2: Try to prevent events that shake the public confidence. Like, say, spectacular bank failures. We need to keep the public’s money where it can be lent out to prevent money supply shrinkage.
Just to be clear – “people” in the analogy above = “financial institutions” holding mortgage debts”. It’s not the general public.
(1) Devalue the dollar
(2) Tell the chinese they better buy the CMOs and bury them under their new damn in the Yang Tze
(3) If the chinese don’t bury that money then Walmart goes bankrupt and takes half of the Chinese economy
It’s really simple, just as a trillion dollars of “value” evaporates, the chinese will have to “bury” that trillion dollars of surplus money they made from us if they want to keep from going into a deep recession themselves.
Then, the dollar goes back up, in a year, and everybody will be happy.
The Bank of China will have to save the day. After all, since their economy and currency is so tied to ours they will have to do something.
Thanks for the info on the views & lot dimensions. I guess the proof of your claims is in the evidence with respect to the 400k price difference! Both tracts were built in the 70s; is there a superior design as well (east of TR)??? Thanks.
As I noted earlier, it’s not west vs. east… the differential is due to elevation, size and view.
Homes INSIDE the TR Drive “loop” sit higher, are larger and cost more because they have views.
If our govt is so stupid, I don’t think the Chinese gov’t will
be any smarter.
What you are saying is that they allow us to quietly default.
Will they do this? I have muttered about defaulting on our
debt from time to time over the last 10 years, and people
look at me indulgently and roll their eyes.
On the other hand, they aren’t capable of going to war with
us. Maybe they could go seize Hawaii!!! In full payment of
debts owed.
(This was a joke, humorless readers. Well, sorta.)
The thing with defaulting is that nobody will lend you any
money. The king defaulted on his debts in the, um 1300s?
1400s? and a hundred years later the Italian moneylenders
still didn’t want to lend to the British crown. To pay for some war or other.
However, would this be such a bad thing? The gov’t would
not be able to overspend to the incredible degree it has.
I, by the way, am refusing to buy anything Chinese to the extent possible. I realize that this is futile, but I think it is:
a Buying stuff produced by slave labor, or as close to it as makes no difference.
b. Exporting pollution. Serious horrible pollution. They can
sell so cheaply (for a while) because they are ruining their country.
Therefore, I think buying Chinese is immoral.
I am not rabid about this and sooner or later will have to buy a new pair of shoes, and I suppose they will be Chinese.
So. . . this is what they are doing right now. Does anybody think it will work?
The assets are just as lousy as they were before. The wool has been pulled from our eyes.
The article in the WSJ said this would help them get financing.
How? Why?
Are investors gonna pull the wool back over their eyes again?
Are they going to g-r-a-d-u-a-l-l-y admit how horrible their
investments were?
It seems to me they are in a race to produce enough money or
hand off the problem to somebody else before the excrement
really hits the fan.
Stupid–once more you are really really smart. Many exclamation points!
I really like your burning theater analogy.
Remember those picture of people hanging out in front of banks during bank runs of the great depression? My grandmother was one of those people. Her (small) fortune
survived.
Personally I think the Chinese Commies have created The Perfect Storm against the Working Man (and Woman).
An authoritarian regime in cahoots with the worst capitalist robber barons. The combination is raping the environment and the people.
Sure you hear about the rich… but the vast majority of the country is still poor and working their butts off so they don’t starve?
After all, what’s the good of a Commie Regime if at least it doesn’t guarantee a bowl of rice a day?
We too try to avoid chinese stuff. It’s very hard. At the very least we avoid WalMart and Sam’s Club.
And, THERE ARE NO WALMARTS IN IRVINE… So we’re doing our little bit there.
Wow! Just got back here and am overwhelmed with the discussion. Here is my two cents to the questions and comments.
94 years ago – The Federal Reserve was enacted in 1913.
Many banks went under during the depression, but some gained power and control. They were given incredible control and power by not being limited by the gold standard, although it was already severly compromised.The US gov and the large banks never have to default because they can create an unlimited supply of dollars. If you have the ability to print money, you never have to be concerned with defaulting on your debts.
Inflate or die. Defaltion is the only “ation” the fed is afraid of. And B-52 Ben said the fed never has to face deflation because they can always drop money from helicopters.
Yes, the assets are exactly as worthless as before, but the large banks and the fed have a history of being able to smooth anything over and putting the cost on the taxpayers. Why would anything be different now? I don’t know, but my sense is that the large member banks are panicing. this might be a last ditch, but the truth is I do not understand it yet and need to read more. I think they are trying to cover any member banks quickly which need funds quickly, because they don’t what else to do. What would you do? That is what I ask myself to try and figure things out.
I think it is too big to be covered up, but I haven’t the slightest idea of how to make it all better.
Do we ask what would Ayn Rand do, instead of what would Jesus do? She wouldn’t “flate” whether “in” or “de”.
Do we go all Eastern mystic, and say let the goose peck itself out of the bottle?
Would it be better to let these enormous banks fail? I can’t see that
will help anything, but I go back to: it’s too big to solve.
Tell me I’m just a worrywort, and I’m wrongly extrapolating from my
real estate side of law going to zero in a week (literally) and Miami, along with you guys, being ground zero for overbuilding and fraud and people willing to take god-awful risks.
The rest of the country is normal, sorta, right?
I don’t know if there is any “making it better”. But, also, I wouldn’t worry. I would just figure how to profit from different possibilities.
ITC and TUSD own NPS home owners an apology.
Back to 2005, before the canceled of the elementary school,
the house prices between NPS and classic NP are about the same.
now because of Campanile to allow ITC to such $50 million ,
the NPS prices about 10-20% lower than NP.
what’s I think NPS owners should do it to as ITC to share the profit of selling Campanile.
What, other than buying gold?
I don’t have the nerve to sell short.
Silver?