Over My Head — Fleetwood Mac
I’m over my head,
But it sure feels nice.
Isn’t that the reason everyone panders to their sense of entitlement and buys too much home? We all know that emotional longing to live well and have the very best. I am certainly not immune. Like many in my industry, I have had to live with a reduction in my income during the housing crash (I am lucky to have a job at all). The place I rent now used to be easily affordable, but now I am stretched to maintain my standard of living. Am I entitled to the life I had during the bubble? I certainly do not want to downsize and lower the quality of the place I live because I enjoy it. I am over my head, but it sure feels nice.
Everyone feels these desires to have more. Some people have less discipline than others when it comes to resisting these urges. During the bubble, lenders removed all external resistance, and the most irresponsible among us were given access to as much money as they wanted to buy a home. It shouldn’t be terribly surprising that we are having a lot of foreclosures now.
Of course, the assurances of realtors like Suzanne convince people they deserve it and they can do it. Well, sometimes they don’t deserve it, and they can’t do it. If you don’t fully understand what “pandering to a sense of entitlement” means, watch the Suzanne Researched This video above. It demonstrates the concept better than I could explain it.
Today’s featured property was owned by someone who overbought and simply could not afford the place they had. The property was purchased in 2004 with an Option ARM and a significant downpayment. The Option ARM consumed much of their equity, and the market took the rest. Now the bank owns it, and they are asking 15% off the 2004 purchase price.
Asking Price: $567,000
Income Requirement: $141,750
Downpayment Needed: $113,400
Monthly Equity Burn: $4,725
Purchase Price: $679,000
Purchase Date: 6/29/2004
Address: 9 Hollyhock, Irvine, CA 92602
| Beds: | 3 |
| Baths: | 3 |
| Sq. Ft.: | 1,700 |
| $/Sq. Ft.: | $334 |
| Lot Size: | 4,027
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Other |
| Year Built: | 1998 |
| Stories: | 2 Levels |
| Area: | West Irvine |
| County: | Orange |
| MLS#: | P661034 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 2 days |
Great entertaining floorplan! Spacious open kitchen with Euro whitecabinets & center island. Roomy Master Bedroom with large walk-in
closets. Upgraded Wood Floors, Plantation Shutters. Master bathroom
with separate shower and bath tub and dual sinks. Home is light and
bright with an inviting feel…..and no HOA Dues!
This property was purchased on 6/29/2004 for $679,000. The owner used an Option ARM with a 3.67% teaser rate with an initial balance of $543,200. The remaining $135,800 was a cash downpayment. On 8/9/2005 the owner opened a HELOC for $98,000, but it isn’t clear whether or not they took the money. By 7/2/2008 the negative amortization and missed payments had ballooned to $600,555 which is how much WAMU paid at auction for the property. It looks as if the new JP Morgan Chase / WAMU isn’t messing around with their foreclosures. This property is priced to move.
I feel bad for owners like this one. They were likely moved by an emotional appeal for this property. The realtor told them they could have it, the mortgage brokers gave them a loan, and they sunk a great deal of their own money into the transaction. In the end, they lost the house, lost their money, and lost their credit. That must really suck.
{book}
You can take me to paradise,
And then again you can be cold as ice
Im over my head,
But it sure feels nice.
You can take me anytime you like,
Ill be around if you think you might love me baby,
And hold me tight.
Your mood is like a circus wheel,
Youre changing all the time,
Sometimes I cant help but feel,
That Im wasting all of my time.
Think Im looking on the dark side,
But everyday you hurt my pride,
Im over my head,
But it sure feels nice,
Im over my head,
But it sure feels nice.
Over My Head — Fleetwood Mac
*that* is a spacious, open kitchen??? I’d hate to see one that’s narrow and crowded…
Why is every floorplan profiled on here “great for entertaining”? What does this mean? I am still trying to figure it out. What would be an example of a floor plan that is “bad for entertaining”? Under what circumstances would the average buyer walk into a house and say “No, I cannot live here – it is not good for entertaining.” What does this mean?
Is everyone having wine and cheese parties every weekend? Or big HALO parties?
What’s the deal?
**Is everyone having wine and cheese parties every weekend?**
Um, yeah, but you weren’t supposed to find out about it. 😉
I want my wine and cheese platter.
“Entertainment” and kitchens are hot buttons for chicks. The kitchen has become the female equivalent to the man’s new Corvette.
Pauley Shore defined “entertainment” well when Cribs visited his house as “bringing your 50 most intimate friends over to chill.”
If you are moving from a 900 sq ft condo, I am sure this place is “great for entertaining”. If you were moving from a 3,500 sq ft palace in Turtle Rock, not so much.
I think they throw that term in on all the listings hoping to excite the condo mover uppers.
My apartment kitchen looks exactly like this.
So does mine! The cabinets, tile counters and appliances are standard-issue Irvine Apartment Communities, circa 1998.
This is truly a sad story when simple working class people got sucked into the euphoria of the housing bubble. And then you think of the blood sucking parasites like the realtors and mortgage brokers that cleaned up and are still at it to this day waiting to find some other poor suckers that they can glean off some more money that other people earned. Next time you close escrow on a house purchase just look at the closing statement and just add up all of the fees and costs that are siphoned off of your equity that you sweat-ed over to build. The whole blood sucking industry makes me want to puke.
Ultimately, the decision was theirs to make.
Yes, the realtors and brokers were looking to capture commissions and fees and were more than willing to tell the buyers what they wanted to hear and happily steered them into the time bomb loans.
However, typically, it’s the buyers who make first contact with the brokers and agents so by that time, they have already decided in their minds that now is the time to buy – they just want some positive reinforcement from the salesmen who are always happily oblige them.
Nevertheless, the buyers decided that the risk was negligible and gambled that they would not be the greatest of the fools. Bad move.
Pay attention children. This is an example of what can happen when you follow the herd.
All throughout nature, herds are used as a form of protection from predators. If a gazelle heeded your advice it would soon be voraciously consumed by the lions. People that don’t run with the herd are simply people that lack common sense and are an abomination of nature.
What you write is true for protection and many other social needs, but is absolutely wrong thinking for investing.
Well said, Kirk.
Who are the predators in this scenario? I suppose an argument could be made that they are the brokers and the agents.
So under this analogy of yours, the herd of Gazelle are flocking to the voracious lions, lining up at 3am to get on the consumption waiting list.
So indeed, the ones getting out of the herd are protecting themselves from the predators.
Good analogy, I am glad you brought it up and validated my point.
However, I think the larger point has merit in understanding part of the bubble psychology. Herd behavior is ingrained in all animals.
Now, as the smartest of the animals, we are hopefully able to use our intellect to overcome what is a very powerful (and ordinarily logical) instinctual impulse. It’s not clear that all of us are.
I agree, I remember in 1985 when I was looking to buy my first house and the realtor was steering me away from the higher priced one stating that it was a litle out of my price range. My how things have changed.
It looks like the favorite tactics of the realtors is to go after the woman-part of the household. They usually cannot rationalize to save their lives. It takes the iron will of the man-part of the house-hold to stem back these irrational exuberance. Amen!
Well, they probably got the $135,800 from the sale of a previous house.
They decided to let it ride…
Yup. Paper loss.
LOL! I always laughed when ever I saw that commercial. It does do a great job in proving your point a while back on the (overly sensitive) issue dealing with the “female” emotion in buying. Not to mention the countless number of “spineless” men who cave into these poor emotional motivated decisions.
I don’t think that the problem is the female urge to nest. The real problem is the “entitlement” mentality that affects both genders evenly.
In this ad, the female happens to be the one who displays her feelings of entitlement to own a house while the male appears to be apprehensive.
The makers of the ad were targeting a select group of women.
Have to be careful about drawing stereotypes from these kinds of ads.
For every real-life instance of these types of scenarios, there were plenty of other examples of men who were too proud to rent.
What if the ad were portrayed as a man being mocked by his friends for still being a renter while all of his buddies were living the HELOC life buying toys and vacations and telling all the girls at the club that he owns his own house?
It’s all about manipulation. Throwing a bunch of S at the wall and see what sticks.
I don’t get why the man doesn’t finish his sentence when he says “that’s not the point…” I would like to have heard what the reasons were that he didn’t want to buy the house.
Not affordable?
Too much maintenance?
Termites?
Has a funky smell?
“I’m in the construction industry and I fear a turndown.”
“Your job at the day care won’t cut it if I lose my job. Nor will the weekend scrapbooking gig.”
“I think the neighbors there are all pretentious wannabe’s and I don’t wanna be like that.”
“I think this dumpy single story is just fine. Besides, I just put in a new kegerator.”
OR…
“Why don’t we wait 5 years and then move after home prices crash?”
Suzanne researched this? Well heck, sign me up.
Suzanne the Realtor, Major S., Awgee, IR with his new book. Feels like old home week on IHB! As an aside if you guys haven’t seen Chris Rock’s “Kill the Messenger” there is one particular part of the act that refers generically to the dumb schmuck in the Suzanne commercial. I won’t spoil it but you’ll recognize it immediately. Really funny.
Chase/WaMu had better water the lawn….
I knew there had to be a reason somewhere for building all those houses right up to the lot line! A water conservation move – brilliant.
That must be quite an attractive front door in order to rate it’s own photo.
“That must be quite an attractive front door in order to rate it’s own photo”
I thought it was a photo of the stylish lockbox!
When we were buying a home in 1997 we had the same pitch spewed to us about buying a bigger house than we could afford.
We went back to our then present home, crunched our own numbers and decided to pass. We do not regret it.
When we did buy, WE were the ones who told THEM what we could afford, not the other way around. That’s how you buy a house. It’s your money, your credit rating, and your sleep to lose so YOU dictate what you can comfortably afford.
I tell any one I see who mentions buying a house to not trust anyone in the transaction except themselves and to second guess even that person and their real motives. It has saved at least 4 people from buying an over priced house at the wrong time.
In 2002 when I was looking to buy a house in Tucson, the lender was “pre-qualifying” me for a loan that was 7x my gross income. I said “No, I do not want to owe that much money” and settled for something that was 2x my gross income. It was not a guard gated estate with granite counter tops, but it was not in the slums of the city either and I was able to walk to work on a daily basis.
If nothing in my comfortable price range was available, I would have just stuck to renting which is what I am doing now.
It’s common sense. I will buy again when it makes sense when compared to renting. The problem is that other buyers out there speculate on house values which I do not, so what makes common sense to me will obviously not make sense to them.
15% off of 2004, and it is still not worth it. A person willing to settle for a cramped quarters like this might be willing to pay for a toll road transponder, and move to the other side of the hill where houses can be had for $75 sq ft. Do banks know what is going on in Corona and Riverside?
IR,
I was very much interested in buying this house at 575k just in April. But my realtor did his “research” and told me that there were already several offers for 599k. What changed then that none of those offers were accepted, and the asking price was pulled down? Any idea?
PS: My new realtor is very professional. Not like my previous one from First Team also who said everything I offered was low, nothing in Irvine would sell below asking price, and there were always full asking price offers on the property.
CZ
Most likely the realtor in charge of selling the house was fibbing about the multiple offers.
It’s a Jedi Mind Trick that worked well during the mania used to spark “bidding wars”.
Kudos to you for not being a weak minded fool.
IR
Thanks so much for finding this quintessential commercial.
It repulsed me when I saw it when it originally aired.
It plays to so many levels. The uber-competitveness of women – something far too many men undersestimate. The female desperation to be in a certain school district. I always wonder if it is the the quality of the schools or the cache of “being” in a good school district versus the shame of being an . . . untouchable . . and associating with . . . them.
The husband . . being a . . . good man/father/husband . . . making the sacrifice . .. for the kids future . . by moving up.
Very soon …. it will become family lore throughout the US how some parents saved the family from fiscal crisis by NOT moving to the bigger house or the newer neighborhood.
Jesus save us from ourselves
Lite Brite makin things light-i-iteeee, Lite Brite making things wit Lite Brite 🙂
LOL IR, man you are dating yo self.
Now if you post of a pic of Perfection, Stratego or Operation, I’m gonna faint.
Please don’t feel sorry for these people, I have information from a source that lives in the area, these buyers were SPEC’s and this was their THIRD house! Yes they put a large down, but also took out a HELOC, they got their money back. As far as blaming the realtards and banks, they can not hurt you if you don’t let them, there is no excuse for people’s greed. For these people, the music stopped and they didn’t get a chair.
I wonder how many second and third houses will come/are on the market right now?
I think somebody ran a little marijuana grow op in that one bedroom there, 7th photo in the listing. Black mold in the corners, lots of wear on the carpet, and a big circle cut out of the left wall for the exhaust hose from the fans.
I don’t know what’s worse–the utter stupidity of anyone who could fall for that commercial, or the misogyny displayed here by many posters.
For the record, I stayed well away from the CA housing bubble. My brother not only bought a townhome in Pasadena, he also bought a home in a new development near Carefree Highway in AZ. He lost over $30,000 selling the townhome in Pasadena. The equity burn on the Carefree home has taken the $45,000 he put down there. And all because, as he insisted to me from 1999 onward, “only idiots rent.”
Well, now he gets to discover the joys of filing Chapter 11, and I get my nice little nest egg for a future, sane home purchase.
That commercial is horrible. I’ve never seen it before. Just makes out the wife to be shallow and manipulative and the husband to be this poor schmuck victim of the wifey and the female real estate agent. yuk.
Hahaha. IRs book ranking on Amazon is dropping faster than the national housing market. Lost over 2000 spots in just under 5 hours. Ahh.. Shadenfreude.
“Hahaha. IRs book ranking on Amazon is dropping faster than the national housing market. Lost over 2000 spots in just under 5 hours. Ahh.. Shadenfreude”
People don’t want to hear bad news. Especially if the news is true and the foolishness describes them. Who want to buy a book that describle their foolish behavior?
IR is one of the best analysis that I have read. Most of the others have been justify bad behavior or blaming Bush advocating a big out to keep prices high. That doesn’t fix the underlining problem that housing is consuming 60% of people’s incomes. Do the math. 100% – 60% housing – 15% Fed tax – 5% CA tax – 6% SSI = ecomical slavery
It’s easy to say that many people don’t “deserve” to buy, but it would be better to leave the word “deserve”, out of discussions as to whether you should buy.
Face it, many of us will not get what we “deserve”, and others will get things they don’t deserve- like, say, the bill for the malfeasance and fraud and lunacy of a rampage that they themselves did not participate in and did not profit from. Others will get undeserved 7-digit salaries for being talking heads on CNBC and promoting this sort of lunacy.
To keep a level head when approaching the decision to buy a house, it would be better to use words like “appropriate” or “suitable”. There are many people who “deserve” to own by virtue of their thrift and discipline, for whom ownership would be unsuitable because they can’t handle things like maintenance or the constant worry of it.
Before you figure you “deserve” to own, you better figure whether or not you “deserve” a monster debt load on an oversized dwelling that will be a drain on your energy and resources as long as you own it, and then you might figure that what is really good for you is the ease and flexibility of renting.