Distressed sellers have no room to negotiate on price, and often these transactions have to be cleared through other interested parties. Sellers with equity have no such limitations.
Our property today is owned by motivated sellers who are not distressed. They want to get out, but they do not have to.
Asking Price: $679,900
Address: 14872 Yucca Avenue, Irvine, CA 92606
{book4}
I Want Out — Helloween
Shut your mouth and take it home
cause I decide the way things gonna be
I want out… to live my life alone
I want out… leave me be
I want out… to do things on my own
I want out… to live my life and to be free
In a normal real estate market, buyers and sellers negotiate a sale
price and close their transaction. Sellers are supposed to have equity
in the property because they put 20% down, and the property has
appreciated since they bought it. When buyers and sellers come together
to negotiate a sale, they are negotiating the amount of cash equity the
seller will be taking with them when the closing is complete. At least
that is how it is supposed to work.
During the deflation of the housing bubble, few transactions are occurring
in the normal way. It is rare to find sellers in today’s market who put 20%
down or bought early enough to have significant equity. Most homeowners
who are still in a positive equity position either do not want to sell
or do not need to sell. They are not in the for-sale market. The
properties that are available are generally distressed, and they have
their own sales dynamics.
The inventory in Irvine has been building steadily since the beginning of the year. Several of the recent additions to the market have been sellers who have significant equity. These are the sellers who were notably absent from the market over the last year. With any group of homeowners, there are those who are cautious and see reality. These homeowners are going to sell if they can because they don’t want to lose any more equity, and they live with the reality that house prices are going to continue to fall.
Sellers with equity have room to negotiate. If they become motivated, they can lower their price to sell the property. If they have a significant equity position, they can lower the price substantially. They need nobody else to approve the sale. If they want out, they can get out.
Are the owners of today’s featured property motivated enough to lower their price to find the market? At a $268/SF asking price, it looks like they might be.
Asking Price: $679,900
Income Requirement: $169,975
Downpayment Needed: $135,980
Monthly Equity Burn: $5,665
Purchase Price: $163,900
Purchase Date: 2/25/1999
Address: 14872 Yucca Avenue, Irvine, CA 92606
| Beds: | 4 |
| Baths: | 3 |
| Sq. Ft.: | 2,535 |
| $/Sq. Ft.: | $268 |
| Lot Size: | 5,000
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Other |
| Year Built: | 1972 |
| Stories: | 2 |
| Area: | Walnut |
| County: | Orange |
| MLS#: | S566384 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
state and wants this sold now. Largest model in College Park with 4
bedrooms, 2.5 baths and large bonus room. Nice inside location down the
street from the park area, association pool and California
Distinguished grade school. Spanish tile roof, covered patio with rear
yard fruit trees of avocado, orange and lemon. The home needs some
updating and is a diamond in the rough. Make us an offer.
This realtor is telling the truth, and he did a decent job of writing this description, although it is a rather short. I would like to know more about the property.
This property was purchased on 2/25/1999 for $163,900. The sellers’ mortgage data isn’t available, but we can surmise they used an 80% first mortgage. There is no other mortgage activity on this property. This couple did not spend their home.
If this property sells for its asking price, this couple stands to make $475,206 after a 6% commission. They will not make that much, but since they have the ability to drop the price half a million dollars and still come out ahead, they have plenty of room to negotiate.
{book5}
So they keep talking and they never stop
And at certains point you give it up
So the only thing thats left to think is this
I want out… to live my life alone
I want out… leave me be
I want out… to do things on my own
I want out… to live my life and to be free
People tell me a and b
They tell me how I have to see
Things that I have seen already clear
So they push me then from side to side
Theyre pushing me from black to white
Theyre pushingtil theres nothing more to hear
But dont push me to the maximum
Shut your mouth and take it home
cause I decide the way things gonna be
I Want Out — Helloween
It has to be a very rough diamond. There are no inside photos at the listing. All the agent took was one outside shot of the actual house and several of the amenities available for use to the new owners. It kind of scares me to think what the interior looks like…
You are right, Gindy…usually when there are no interior photos it needs some work. Probably all original.
I love it when the realtors claim “diamond in the rough” or “contractor’s special”…means bring your wallet to make it up-to-date.
My guess is that it is a rental.
I agree
Great. A $700k fixer…
Patrick.net linked a most humorous article today of a real-estate bull who ended up walking away from his mortgage.
The kicker is that they have the deadbeat quoted all over the Sacremento Bee message boards pontificating bubblethink and giving out real-estate advice while mocking the more bearish readers.
http://sacramentolanding.blogspot.com/2009/03/ryan-jessup-sacramento-bees-latest.html
That post is fantastic. Here is the live link:
Ryan Jessup: Sacramento Bee’s Latest Housing Bubble “Victim”
This guy is living proof that arrogance and ignorance do not mix.
Here is a compilation of his lunacy:
(1.) Employment is strong
(2.) Population growth is strong
(3.) Home prices will not crash
(4.) It’s all about affording the monthly payment
(5.) State government is strong
(6.) The sky is not falling
(7.) This will not be like the .com implosion
(8.) There are a lot of buyers out there (especially in my neighborhood)
(9.) My neighborhood is special/great/different [see green highlights below]
(10.) The economy is strong
(11.) Those who did not buy “missed the boat”
(12.) Real estate is not the stock market
(13.) Real estate is not wildly unaffordable
(14.) People have made millions on real estate
(15.) Construction employment is still going strong
(16.) My industry sources say things are good
(17.) This is nothing like the 1990s (as in not as bad).
(18.) The bottom is near
(19.) Good areas (i.e. where I live) are doing fine
(20.) The worst is behind us
(21.) I bought in 200x, I will be fine
(22.) Subprime will have little impact
(23.) The Bay Area will save us…
My favorite of his quotes are:
“If prices drop 53% here I will buy 20 of them….. “
Do you remember when the bulls were saying that kind of stuff on the IHB? It’s as though all these guys were reading from the same page in Bluffing For Dummies. Where are all these bullish home buyers? They should be coming out of the woodwork now to take advantage of these great deals to be had!
If you are in the house for the long haul – you will be fine
He then bails when his house loses value and after telling all these people on the message board to stay in for the long haul.
It really all comes down to the monthly payment and can you afford it
and
if you lock in a good rate and price isn’t as important
Stereotypical stupid-homebuyer Kool-Aid- drinkerspeak. This mentality is a perfect example of what I have been complaining about for over a year now how these myopic morons cannot see past the monthly payment and bend over to let the banks have their way with them.
There seems to be a vicious negative tone to the people who have an interest in the market and sky falling
Yes! It’s a tin-foil hat conspiracy! Idiot!
Everyone tried to talk me out of buying in 2002 – saying that it was better to rent and the sky will fall.
LOL!
This guy is the perfect example of those people who were all quick to pound their chests and horse laugh only to cut and run like the gutless cowards that they are when things didn’t turn out to be so rosy for their own personal situation.
This guy is the king of hypocrites. He is all about preeching the long term and being in it for the long haul, but after a couple years of declining values – he changes his mind. All of a sudden, it’s not all about long term. He is fully capable of continuing to make his payments, but he doesn’t see the point now because there is no equity. BOO HOO! Pay your debt you big baby.
This is the entire crux of the problem. I have said for a long time that the problem with these home buyers is that they borrow all this money and they don’t flinch at the sales price because they do not believe that they will ever have to pay it back with their wage income. All these shcmucks care about is holding for a few years at some monthly payment and then cash out while no principle gets paid down. Rinse lather and repeat. Can you say circle jerk?
Guys like this prick should be put in debtor’s prison.
http://www.crackthecode.us/images/bagdad_ryan.jpg
LULZ, Good work David. Someone needs to do a tribute to these real estate bull bloggers… and you are just the guy to do it !
I blogflogged/flamed him over on the sacbee site and he actually responded, admitting that he was at fault 100%.
rjessup2mouse wrote on 03/11/2009 10:45:45 AM: my last post on this site – azdavidphx – It is my fault – 100% mine.
That’s a start.
David, if you are looking for a round 2 of Schadenfreude today check out the post by “Pissed Off” at 10:59 am….
.
http://mortgage.freedomblogging.com/2009/03/11/late-payments-jump-for-oc-credit-card-holders/
I think we are going to be hearing a lot more about credit cards in the next year or so. I am wondering how many unemployed people are currently living on their magic plastic (since they have no savings) while they wait months and months to find work. Makes you wonder what will happen when the banks start cutting limits on people who start running up their balances and then stop making their payments. Should be interesting.
Meredith Whitney wrote about this in the WSJ this week. http://online.wsj.com/article/SB123664459331878113.html
Quick story on the credit card crisis…
I am in Europe and talking to a colleague about how Americans used their houses as credit cards. Then I said that,of course, they have three credit cards that are maxed out and that’s the next crisis.
I could tell they didn’t get it. When I explained that people didn’t have to pay off the credit card each month – they were incredulous. They never heard of a minimum payment.
Over here, a credit card has a one-month lead and that’s it. They take the balance out of your account every month. And they don’t give the cards to just anyone.
At least he got (12.) Real estate is not the stock market right.
House is not liquid, but capital.
As for the featured house: $164K purchase price to 1999 medium family income (1.7x) vs. $689K to medium income today (5.3x).
Thanks David, this made my day.
Doesn’t this remind you all of someone? š
Indeed. There is definitely a “familiar” tone as those posted by someone occasionally on here.
except he hasn’t been heard of for quite a while now.
you should tell him to come over to IHB for the koolaid detox program…although him telling you it’s 100% his mistake is a great beginning.
>:-(
That guy is a tool… and so is the MSM for not doing ANY investigative reporting on this tool… waaaaaah… it’s everybody’s fault but my own… waaaaah I need another $1 trillion dollars…
I agree with Gindy. Of the 6 pics, only 1 is of the actual home.
$679,900/$163,900=4.148.
Oh, boy! After a seemly huge mark down this property is still asking 414% of its 1999 purchase price.
How crazy this great housing bubble has been.
I was noticing that too. I wonder if the $163,900 purchase price is accurate. That is $65/SF which seems low.
Yes, sometimes a quit-claim deed recording or placing the home in a trust can show up as a sale. The property may have been purchased earlier than 1999. I think a 2BR condo was selling for about this much in 1999.
Regardless, the point is the same which is that the sellers have lots of equity…
It is not accurate. The prop tax value is $80K so there is no way that $163K you found was a market purchase.
These would appear to be original owners that purchased by in the 70’s… Probably no longer have a mortgage on the property.
Regarding the 88k tax value, my mother is an original owner of an equivalent 1971 house in Irvine. Her basis is about 170K. She put 20k in an addition. I don’t think that would justify a 90k different in tax basis.
Never mind regarding my last post. I check my mother’s prop records again and they show a tax basis of 116K
I have seen a couple of houses near me in the last few months that were for sale by older couples whose kids were gone and they didn’t need anywhere near as much space.
Both of them purchased in the 1980s. Both of them would have made more than a million dollars if they got their asking prices.
One is off the market, the other is still at the same price as last summer.
Looks like a great place for Octomom.
Oh, please don’t bring her to Irvine… Leave her at her new dig in La Habra.
The taxpayers need a new pad for the octomother and her new litter of cubs. A nice little McMansion in Irvine with no backyard will be perfect.
This is what happens when a home purchase is being talked about as something other then buying into a neighborhood where you want to raise a family and hedging against rental inflation.
The stock market isn’t tanking because companys are making less money, it is tanking becuase people “believe” the market is going down. Don’t get me wrong, there is a relationship to “potential” earnings and the prices of a particular stock, but quite honestly that is only used in modeling to try and decide when to make a purchase and when to sell.
Now that the market is going down, people have stopped investing, does that make sense? With the market trading at 12 year lows, it is safe to say that most people are now underwater in their investments? My question is, if you liked the DOW at 14,000 and felt comfortable with your investment, why ride it down and stop contributing when you can take advantage of the lower prices?
14,000 was the time to sell, 7,000 is the time to buy. Perhaps people think it will go to 5,000. It might, it might not.
The point I am trying to make is… the same psychology that leads to stock market appreciation was “transfered” to home ownership. How many people, including myself, lost their ass in stocks like JDSU, QCOM, BRCM, NT, LU etc? Those tech darlings rose to nose bleed levels because of one thing….the belief that they would still go up, which can now be linked to “The Greater Fool Theory”. LOL
Anyway, it is my belief that housing HAS to return to the veiwpoint that you are buying into a community, to raise a family, to hedge against inflation. None of those tech stocks will ever see their former glory, as a matter of fact even saying them leaves a bitter taste in my mouth.
At some point Southern California Real Estate will leave the same bitter taste for those that chose to take a walk on the wild side in the “Great Housing Bubble”.
I bought a house in 2000, sold it in 2001, watched it double in 5 years and got priced out of the market. I believe the market will go below 01 prices and I hope it does, not that I want to see people lose money, but because I would like for my children to be able to afford to live in Orange County.
Exactly right.
Looks to me like the next bubble to be pumped up is the health care industry. The masses are flooding into nursing schools all across the country. Nobody has quite figured out where all this money to pay for health care is going to come from, but clearly they will kick that can down the road to be dealth with another day.
I still say that weed should be legalized so we can get all the bubble chasers to start pumping up the Hydroponics industry. At least doing that will result in a tangible good being produced that the masses can afford to spend money on in the middle of a recession.
Sheesh – greedy much? They only paid $163k.
Still way over priced–this house would need termite (most older homes have them)control, new roof,( anything over 20 years would need a new one), most likely new fixtures (bath, kitchens) it would cost you an easy 200k to make this house look nice.
So if I had to bid on it I would say no more than 400K. And in reality that is the price for the lot.
The asking price is for a home that has been kept up this one has not.
If these people rented it they have brought down the price due to depreication without having put any money into it. They made their money out of this home.
If you truely wanted it you would have it inspected first before you even considered making a bid.
Every house that’s sold in CA requires termite tenting.
$265 for a somewhat run down home in College Park (CP)seems on the high side.
CP has always been one of the lowest priced areas in Irvine. With TR currently in the mid 300s per sq foot (more with a view), you can imagine that prices in UP, Woodbridge, Westpark and so will be below that.
So, CP at 265 is quite a reach, huh?
Just my guess, but I think prices should correlate with income, that being, home prices should be leveled back to the mid 1990’s. Also a quick note, anyone notice the very low HOA on this place, I would like to know how they do that? My guess is that occupant homowners are on the board and don’t raise the dues.
I agree with you on the mid-90’s prices. It’s amazing how the times have changed on here. I used to get beaten up on a daily basis and my lunch-money stolen when I would come on here and say things like that. Perhaps there is a light at the end of the tunnel afterall.
All the changes Obama can bring to USA are finally confirmed.
Obama is trying to use US dollar to bail out the house bubble by just keep printing paper money. This is the same as Bush uses house bubble to bail out stock bubble.
I think we will experience high inflation, maybe around 12%, starting form next year.
Andthe home prices in Irvine may not go down more than 25% from here.
The only danger part is we are going to pay more for his monetary policy just as we paid big prices for Bushās house bubble.
God bless USA.
The real problem here is that nobody has been held accountable for the raping and pillaging of our country’s wealth and prosperity by a corrupt group of elite citizenry who have sought fit to enrich themselves at the expense of the rest of us peons.
Other countries kill their corrupt CEO’s. I don’t know about you, but I am ready for a good old fashioned hanging at this point.
Maybe we will see some of these executives dragged from their towers kicking and screaming, frog marched through the streets of pissed off citizens who kick and spit upon the condemned who are taken up and hung in the village square.
Probably not, but fun to imagine. Hang them all, I say. Then watch the market regain half of its confidence overnight as people accept that the game has changed and corruption will no longer be tolerated.
Finally, hopefully some call for restraint by someone who may have learned the lesson of monetary credit (hopefully the lenders did too)… below is an excerpt from an article by By JIM KUHNHENN, Associated Press Writer on Yahoo.
“….Neel Kashkari, interim assistant secretary for financial stability at Treasury, told a congressional oversight panel Wednesday that banks should not be forced to make loans that bankers might deem risky.
“However well-intended, government officials are not positioned to make better commercial decisions than lenders in our communities,” he told a subcommittee of the House Oversight and Government Reform Committee”.
The US dollar is about the only currency that is holding up while the rest of the world refuses to confront deflation we will spend our way out of it. Thus our dollar is now considered the only place to put your money. We are the last man standing by allowing our debt to increase while the rest of them will suffer a prolonged recession. Similar to what Japan has gone though before and now again.
Deflation has to be stopped even if we get some inflation. Housing in Irvine will continue to drop down because it was so over extended to being with. The percentage increase the OC experienced is unsustainable according to DTI ratios. The only way this would change is if we all tripled our income as well. And that appears to be dropping.
Inflation will effect the items we need and use and not necessary the ones we don’t. Problem becomes prices may go up but we can refuse to buy those items so those have decreased in prices–such as autos.
What is the wild card is jobs–continued job loss will see continued deflation. That is why President Obama insists on new jobs without them we will not come out of this. So spending to keep people getting paid while trying to create new jobs is the fastest way out of this mess. Even though we will face huge deficits in years to come.
“The stock market isnāt tanking because companys are making less money, it is tanking becuase people ābelieveā the market is going down.”
The market is pricing in the apocalypse. You see, I can tell you really know nothing about stocks or the markets. You watch Cramer and think you know it all.
Stocks represent FUTURE cash flow, nothing more.
Your thesis is incorrect. Stocks must be sold in the short run to make a profit.
And hey, let’s take a look at the Nikkei. It peeked in 1989 at 40,000. Now their economic situation was less severe than our current crisis.
Today it’s about 7400!
http://tinyurl.com/cn393w
How’s that for buy and hold!
Hahahaha
Heard this one yet?
Denny’s just came out with an Octomom special
8 eggs
no sausage
and the people sitting around you have to pay for it-
*Thank you I’ll be here all week and don’t forget to tip your waitress*
I can’t help but get a sense that comparing your market there and ours here, that prices have not come down far enough in Irvine. I almost sense that we are further ahead of the curve but I may be wrong there.
By the way, it’s been a little time since I saw the College Park sign. I lived right up the road in the Racquet Club.
Thanks for sharing that. I appreciated the memory.
David Lorti