House of Fire — Alice Cooper
The Village of Woodbridge is a desirable Irvine Village. It is an interesting study in the collapse of the market. Woodbridge is laid out with a large loop road framed with large duplexes giving the impression of driving through a series of manor homes. Behind this pleasant veneer is a great deal of high density housing. Outside the loop has the highest concentration of attached product while inside the loop has many large, single family detached homes. As the market decline has progressed, the low end has been deteriorating more quickly than the high end, and this has created a great disparity between the prices on the outside of the loop as compared to prices on the inside of the loop. This large disparity cannot persist forever. Either prices outside the loop will rise (which isn’t very likely) or prices inside the loop will fall. People who might want to live inside the loop will find the price differential so great, that many will purchase outside the loop as a next-best substitute. It is this substitution effect that pulls down the prices in the most desirable neighborhoods. It can be seen in small scale within Woodbridge, or it can be seen in large scale between Riverside County and Orange County. As prices drop in adjacent markets, sales volumes will continue to dwindle in the higher priced neighborhoods until the price curve flattens to its natural balance. This is why the big increase in sales volumes being touted by the bulls is only happening in the most downtrodden communities. The high-end properties still suffer from anemic sales volumes and significant price pressures.
Today’s featured property is a nice 3/2 outside the loop in Woodbridge. It is a typical starter home that will likely bottom in the $375,000 to $400,000 range. A household making $90,000 to $100,000 a year should be able to comfortably afford a property like this. Right now, they can’t.
Asking Price: $515,000
Income Requirement: $128,750
Downpayment Needed: $103,000
Monthly Equity Burn: $4,291
Purchase Price: $645,000
Purchase Date: 6/30/2005
Address: 15 Woodland, Irvine, CA 92604
| Beds: | 3 |
| Baths: | 3 |
| Sq. Ft.: | 1,655 |
| $/Sq. Ft.: | $311 |
| Lot Size: | 2,645
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Contemporary |
| Year Built: | 1976 |
| Stories: | 2 Levels |
| View: | Mountain, Park or Green Belt |
| Area: | Woodbridge |
| County: | Orange |
| MLS#: | S518236 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 21 days |
with 2 car garage. Newer parquet floor in living room and kitchen with
wrap-around backyard. No neighbors in the back. All 3 bedrooms and 2
bathrooms upstairs and 1/2 bath downstairs. Close to all schools,
churches, and shopping.Listing is updated daily you don’t have to
call.Just go ahead and show it! Thank you.
I am too lazy to get up off my a$$, you go ahead and show it, just leave me the commission.
.
.
20% off and falling. This was purchased a full year before the peak, to it is priced closer to 25%-30% off the peak resale value. Of course, it was purchased with 100% financing. If this property sells for its asking price, the Alternative Financing Corporation stands to lose $160,900.
Another day, another lender getting stiffed for over $100K. I wonder if any of these lenders are wishing one of our California wildfires would burn Irvine to the ground. At least then, they could collect the losses from their insurance company.
.
House of fire
House of fire, yeah
Let’s build a house of fire, baby
Not one of wood or stone
Walk through my door of desire, baby
Come on in and make it your home
Don’t need a window to watch you, baby
Don’t need no roof overhead
Don’t need no key to unlock ya, baby
I’ll use my lovin’ instead
I won’t tire
Take me higher
Building a house of fire, baby
Buildin’ it with our love
We are buildin’ a house of fire every time we touch
House of fire
House of fire
We ain’t gotta pay rent now, baby 
No landlord to throw us out
I want to play in your garden, baby
When you want it give me a shout
I won’t tire
Take me higher
Building a house of fire, baby
Buildin’ it with our love
We are buildin’ a house of fire every time we touch
We are building this house together, baby
Standing on solid ground
We are building a house of fire that you can’t tear down
Brick by brick the flames get higher
Build it strong with our desire
Building a house of fire, baby
Building it with our love
We are building a house of fire every time we touch
We are building this house together, baby
Standing on solid ground
We are building a house of fire that you can’t tear down
Building a house of fire, baby
Building it with our love
We are building a house of fire every time we touch
House of Fire — Alice Cooper
There are so many of these stories in Irvine. It’s too bad that the sellers can’t reduce the prices really quickly so reality sets in for EVERYBODY immediately and recovery can start right away…
Recovery cannot start right away – the timing is based in a meaningful way on human nature. We need a long grind lower to change the public’s perception of real estate.
One cannot go from feeling like a genius for buying their home (a 2004-2005 purchaser likely felt this way – at least for awhile) to feeling ashamed and hopeless.
This will not bottom until there is collective fear of lower prices among residents. Many many still feel immune (just look at half of the listing prices even today).
Interesting “choice” to not have any lights on in any of the pictures… Too stingy to pay the electric bill once they’ve moved out, or an REO?
Probably either don’t want to show too many details, or have really crappy lighting that needs to be updated.
[b]My Offer[/b]
After giving this property a thorough look, my offer today is [b]$256,700.00[/b]. I believe this is what this property is worth.
Only a deranged knifecatcher would pay $256.7k for this dump.
My Offer
After giving this property a thorough look, my offer today is $29,999.99. I believe this is what this property is worth.
This home is “worth” the highest price that someone is willing to pay. If someone is willing to pay 515k then that’s what it’s worth. What a home is “worth” is strictly a function of the most someone is willing to pay.
As someone waiting on the sidelines it is my hope that buyers decide that they are not willing to pay more than rental cost equivalent on homes anymore. Bottom line, buyers determine value.
The biggest half-truth in real estate.
“This home is “worth” the highest price that someone is willing to pay. If someone is willing to pay 515k then that’s what it’s worth. What a home is “worth” is strictly a function of the most someone is willing to pay.”
People overpay for things all the time. The house wasn’t “worth” $615K when it last sold. Some idiot zero downed the house and then defaulted. That doesn’t reflect what the home is “worth” only what some idiot was willing to pretend to pay.
The whole “worth” argument is really not nearly the truism that I think most people believe it to be. Outside of the most narrow technical sense, I think we would all be better off leaving the “whatever someone is willing pay” equation to the children.
You’re saying it’s worth 515k if a knifecatcher is willing to pay this price now? That’s BS.
A much better definition of what a house is worth is: the highest price that someone is willing to pay and not regret. Or, the highest price that somebody that can look into the future (not necessarily all of it, a couple of years is enough) is willing to pay.
It seems to be located nicely – free from busy street traffic and far enough away from both 405 and 5.
2003 price -$380k- will be a fair price in 1-2 year.
http://www.thislife.org/Radio_Episode.aspx?sched=1242
“typical starter home” and $375,000 just sounds weird when used together. 3 x 90k = 270.
My thoughts exactly. As a first time home buyer the mortgage on a 375k property is extremely high. Although if the dollar keeps getting trashed 375K might not be that much in a few years…
Maybe the credit crisis would be more aptly termed the debt crisis. If considered in the light of debt excess being the problem, it would seem more folks would relate to underlying problem. Calling it a credit crisis makes it sound like it is just a bit difficult getting credit right now. Borrowing more money is not a solution to excess debt. This isn’t a liquidity problem. This is a solvency problem.
I like that. It is much more of a debt crisis than anything else – people willingly, stupidly, and/or ingnorantly taking on much more debt than they could possibly service.
Very astute observation! This is clearly a debt crisis and should be called as such. I’m going to start using this term in discussions with friends and family and see if they notice.
Has anyone noticed how these enviro-capitalists (aka enviro-opportunists) are now calling it “Climate Change” instead of “Global Warming?” I will agree that “Climate Change” exists. It actually has a more common name of that we are all familiar with. It’s called “Seasons.” Talk to someone who has lived at least a thousand years before you start taxing me to pay for “Carbon Credits.”
In my opinion we should be focusing on reducing pollution that affects our health and environment rather that trying to control the temperature – something we will probably never be able to do anyway given that big flaming ball of gas that is 8 minutes away.
“The second vice is lying, the first is running in debt… Lying rides upon debt’s back.”
Banjamin Franklin, “The Way to Wealth”
“Borrowing more money is not a solution to excess debt.” That sums up exactly my problem with the whole 2nd mortgage and HELOC thingy … how can anyone, no matter how little they have read of the fine print or ignored the concept of teaser rates, decide that getting bigger and bigger loans leaves them with more money?
IR, thanks for featuring the Woodbridge neighborhood. I like this area but don’t know too much about it. I hope the drop to 375K range will be soon. Then my 2500sf sfr will become a reality, and not a dream! 🙂
An easy way to judge how bad demand is for a neighborhood is to set redfin to show past sales for 6mo and all current listings. Normally there should be an equal number of light blue (sold) and green flags…a sea of green is eventually bad news for a neighborhood.
One Irvine close neighborhood that is about to crater is Harbor View Homes in Newport Beach. These homes are still 2x what they should be and it’s reflected by the 3 YEARS worth of inventory on the market.
Hmm.. where exactly are the Harbor View homes? Are they on the upper east side of the bay?
Can you post a link into Redfin that shows what you were talking about?
Thanks
It’s an area between fashion island and bonita canyon. Also referred to as the “Port” streets. Upper east side of the bay is called East Bluff. Both are good family neighborhoods with schools that compare well to the best of Irvine.
Here’s a rental at $3,700
http://premierrealty3.california.remax.com/listings/ListingDetail_r4.aspx?LID=47884892&#a;Top;And the same house listed for $1,495,000
http://www.redfin.com/CA/Newport-Beach/1966-Port-Albans-Pl-92660/home/4718513
That works out to a GRM of 404:1.
This used to be lot value at the peak, so the GRM is probably a little misleading. However, land is the residual worth after building and selling a house. So if home prices drop 40%, then land prices will drop even further.
These units in Harborview were 450K 10 years ago. Should be priced around $700K – Lots of correcting to do.
My guesstimate calculation on lot value puts them at 750K and that’s only assuming a 25% price drop from the peak. Basically if new construction costs approx. $1.5M for homes in the tract that sell for ~ 3M. 25% less is a 750K hit to the selling price and the lot value. So 1.5M – 750K = 750K…which is also a 200:1 GRM. An old 3 bedroom home rental value seems to be 3700 and without the price appreciation on the land there isn’t any reason to pay a higher GRM.
The high end in Newport Beach is not being supported by the types of families that will want to buy in Harbor View Homes. Think of Brady Bunch vs. 90210. Therefore, the market for teardowns in the neighborhood is basically dead.
BTW, there are also several NOD’s in the neighborhood, and they appear to be on houses not on the MLS
Bringing this back to Irvine. The reason to look at this neighborhood is that it is very similar to Turtle Rock: Older homes, good schools, good location, and nice climate. I think this neighborhood is going to implode before TR because of the inventory and the prior speculation on land prices.
Gosh, I’ve always loved the port streets, but that neighborhood has always been relatively expensive. I don’t see it dropping harder than other areas of newport, do you? Elem school comparable to the irvine elementaries, but CDM may not be preferable to the higher ranking irvine midle and high schools (Uni in particular). Also, many parents do not like that CDM is a combo middle and high school.
Check that- 2007 API scores were released yesterday- both Turtle Rock Elementary and Bonita Canyon were 950+ (Turtle Rock neighborhood schools). Thought Anderson (top for Newport Mesa) was around 900. Overall Irvine schools were really impressive as compared to the rest of OC. The Register featured an article that said 5 out of the 10 top schools in the OC were in Irvine.
That said- I too like the Port Streets and had no idea that they were falling at this rate.
Nice skewing of the data by choice of rounding 😉
Andersen API = 922
Turtle Rock = 955
If you are comfortably in the 900’s for elementary school the differences are just not that great.
We almost moved to Newport in 08 when I found an “older” 3000 sq foot home on a 10K lot going for$500K.
One owner, deceased, kids selling it.
But the schools held us back.
Check this one out in Big Canyon
http://www.redfin.com/CA/Newport-Beach/2-Rue-Verte-St-92660/home/4650061
A condo purchased in Oct 2006 for for 1.3MIL and now it’s on the market for 2.2MIL.
The place is empty and on the market for 60+ days.
Well, I’m sure all that travertine cost at least 900k, so it’s actually a real bargain.
Here’s the redfin link that shows the search I was talking about. Any street that starts with “Port” is in Harbor View Homes.
http://www.redfin.com/search#sold_within_months=6&lat=33.62090913400794&long;=-117.8570365905762&zoomLevel=15®ion_id=38437®ion_type=2&market=socal&v=2
IHB quoted in Irvine World News section this morning! Did anyone else see the Register printed the post by ‘New to Irvine’ from the other day under “The World of Irvine” header on the inside cover? The post told of finding in their IAC mailbox a bailout postcard from HUD which was directed to their new apartment dwelling neighbor. It was a great post — and even worked the word schadenfreude in.
Guess this confirms that the Register folks are reading IHB pretty closely. Here is link to online version:
http://epaper.ocregister.com/Default/Client.asp?enter=true&skin=OCW&Daily=OCWIrvineWorldNews&AW=1211478020437
I grew up in Woodbridge. Simplifying inside and outside the loop is incorrect. There are plenty of high density condos inside the loop. There are also plenty of large SFRs outside the loop.
I loved growing up in woodbridge in the 80’s. But people delude themselves about “Family friendly”. Parents today are too freaked out to let kids roam around like we used to do in the 80’s. Furthermore most kids don’t want to play outside, they would rather be playing video games or on the internet chatting with pedifiles.
Parents are too overworked and lazy to supervise outdoor playing, bike riding and the such, it just doesn’t happen.
If you disagree just drive around woodbridge and look at all the empty playgrounds and pools. These places were packed 20 years ago.
I live in Woodbridge and go for a one hour long walk every day and rarely see kids outside playing. The whole neighborhood seems vacant. I guess the kids are all playing video games or at day care and both parents are working full time. What a great life!
When I was a kid I was all over the place from 2-6PM and later in the summer. I’d ride my bike 10-15 miles or more per day. And thats with Nintendo…
Want to see a stop-motion video about a couple of mice who must second-guess their real-estate-purchase descision? I made this video recently. Please check it out and comment. Thanks.
Blemish and Pittance: The New Place
^ SPAM
Why do the mice look like turds?
Today’s featured property is a nice 3/2 outside the loop in Woodbridge. It is a typical starter home that will likely bottom in the $375,000 to $400,000 range. A household making $90,000 to $100,000 a year should be able to comfortably afford a property like this. Right now, they can’t.
______________
So IR, you think a 30 year old house in Woodbridge will end up at 4X income? 50% DTI seems pretty steep as a fundamental value.
Here’s an interesting post I saw on my local craigslist today:
“Its almost impossible to sell or buy a house these days.We are buyers & have been looking for our dream home & when we recently found what we thought was a great deal the banks wouldnt finance it due to recent lower priced home sales on the same street.In other words even though the sellers had reduced the price by $200,000 from what it was worth in 2006 this market is dropping so fast the banks arent going to take the chance anymore,can you blame them.IT WAS A REAL AWAKENING THAT LET US KNOW NOW IS NOT THE TIME TO BUY—WE ARE GOING TO SEE SOME REAL DEALS TOWARDS THE END OF THIS YEAR.–DO NOT BUY A HOUSE NOW & WATCH IT GO UPSIDE DOWN ANOTHER 20% BY THE END OF THIS YEAR,—WAIT–WAIT—WAIT—“
Traders see LA/OC price falling 24.8% more
http://lansner.freedomblogging.com/2008/05/21/traders-see-laoc-price-falling-248-more/
Gosh, you will be joining Miami-Dade in price dropitus.
Hard equity lenders take peak price, divide by half and then loan 65% of that. It’s THEIR money, so they don’t want to lose it. While this type of loan should be used only by the desperate, their pricing analysis is useful as a gauge, when nothing is moving, as is the case here.
Are there hard equity lenders out there?
Thanks IR for profiling Woodbridge. For the HOA fee ($67?)- it beats every other “village” of Irvine for ammenities. It even has a “Big Wheel” park with tiny roads and bridges to pedal around. My kids think it is the coolest place ever.
For those locals that aren’t familiar with it- take a stroll around the lakes- feed the ducks and check out the Lagoon areas– I think the size devoted to common areas are impressive. Yes, it is older– but if you consider how VOC and Woodbury will look in 10 years– Woodbridge will stand out.
Unfortunately (or for some, fortunately) Woodbridge HOA is quite rigid– and can be difficult to work with……. a big reason that this place looks like it is in a time warp.
OMG!! I want a big wheel park, I want one, I want one! When I was little my big wheel gang just cycled around our block on the sidewalk. I’d totally pay an extra $25k for that!
Which park is th big wheel park?
It’s on Echo Run. You need a key card to get in. If you google map it – you can see it on the street view.
Woodbridge is beautifully landscaped. I often take roundabout ways home to Westpark which allows me to drive through Woodbridge and past the lakes to enjoy the scenery. I’d argue anyone that this is the best looking village in all of Irvine.
Good points about this property:
* Price. It’s likely to fall even lower in 2009.
* Ground floor is wheelchair / elderly friendly. No stairs/steps.
* Good-sized kitchen, there’s room for a small center island.
* Back/side patio, sufficient for a small to medium size dog.
* Location is not next to a freeway or major street. Looking at the overhead map, is that a green space behind the property?
Bad points:
* All bedrooms are upstairs, I’m looking for a property with at least 1 bedroom + full bath downstairs.
* The garage doesn’t have a full-sized driveway. Is that a drive-way in front of the front door?! For a condo that’s OK, but for a SFR I demand full driveway.
* The location is not that great in Woodbridge itself. I’d prefer being closer to the lake and park facilities.
p.s. HOA is $279 + $69 per month.
Good info – thanks, Irvine Renter. I was wondering if anyone could fill me in on what role PMI plays in a situation like this (assuming the homeowner did not obtain an appraisal when prices peaked and got rid of the PMI.) Will the mortgage insurance pick up any of this slack? I never seem to read about it. If you have any info thanks in advance.
I read the nice writeup about Woodbridge by IR and the link to the older one. It paints a good impression of the Woodbridge area and I’m sure it is a great area to live.
I used to live in Tustin Ranch until about 3 years ago, like the Irvine area and now am planning to move back from the Seattle area in July. I was strongly considering renting in the Woodbridge area until I read one comment about the Toxic Plume/ground water contamination issue. I’m now very concerned about what I am reading. It surprises me that noone responded to that other poster’s comments about this Toxic Plume issue.
Aren’t others living in this area concerned? Was there an update to this issue like the Navy cleaned up the issue already, etc? I would assume that is highly unlikely knowing how slow the military is in doing anything?
I would appreciate any responses.