Eighty percent of North Las Vegas loan owners are underwater and unable to relocate to find a better job.

Home Address … 6388 BRIANNA PEAK Ct Las Vegas, NV 89142

Resale Home Price …… $95,900

Life springs eternal

On a gaudy neon street

Not that I care at all

I spent the best part of my losing streak

In an Army Jeep

For what I can't recall

Oh I'm banging on my TV set

And I check the odds

And I place my bet

I pour a drink

And I pull the blinds

And I wonder what I'll find

Sheryl Crow — Leaving Las Vegas

Many people leave Las Vegas broke. Most of them lost their money in games of chance, but the latest casualties of Las Vegas were ordinary home owners who bought homes.

Unlike many markets where only the most indebted late buyers and HELOC abusers have been washed out by falling prices, in Las Vegas, prices have fallen so low that ordinary buyers from before the bubble who paid down their mortgage find themselves deeply underwater, unable to move, and hopeless. Those owners are the true victims of the housing bubble because they didn't do anything foolish. They happened to buy in the wrong place at the wrong time purely by chance.

Now these ordinary citizens are trapped in their underwater homes unable to move to seek employment elsewhere. Las Vegas is the only desert where people routinely drown.

Leaving North Las Vegas no option for many 'underwater' homeowners

In parts of North Las Vegas, more than 80% of homeowners owe more on their mortgages than their homes are worth. Staying is expensive, but many can't afford to move.

By Ashley Powers and Alejandro Lazo, Los Angeles Times — May 31, 2011

Reporting from North Las Vegas, Nev.— Charles Mills can barely afford to stay here. But he also can't afford to move.

That's why the 44-year-old heavy-equipment operator was preparing to leave his wife and young daughter here and go where he could find work — the Oklahoma oil fields. Mills has a mortgage to pay, even if its size pains him.

He purchased his house in 2006 for $308,500. Current value: $105,797.

“We talked about it: What can we do with the house?” Mills said. “Nobody's going to buy it. Nobody's going to rent it. If we walk away, my credit's shot. We're stuck.”

You can see why these people feel helpless. What's unfortunate is that this family isn't considering strategic default. Is his credit score really worth $200,000?

Think about this rationally. How long will it take for the value of a North Las Vegas house that currently sells for $105,000 to appreciate to $308,500? Realistically, it won't happen in the next 25 years.

It will take at least three years and probably closer to five before the housing stock turns over at the new lower values. Most people will default or short sale and move on with their lives. The constant pressure of all this distressed inventory is going to keep prices near $100,000 for quite a while.

Then after the inventory pressure abates, there will likely be a period of rebound appreciation, but at best that only will restore the market to its long-term trendline. Let's say that brings the price back up to $150,000 seven to ten years from now. At that point, prices still have to double which will take another 15 to 20 years with a 3% rate of appreciation.

For owners in that circumstance, they would be far better served by strategically defaulting, waiting the ever-shortening required waiting period to get a new loan, and repurchase. That is by far the shortest path to having home equity again.

In some parts of North Las Vegas, more than 80% of homeowners have plunged “underwater,” meaning they owe more on their mortgages than their properties are worth — a stunning concentration of aborted plans and upended lives.

Mobility in search of new opportunity has long been a cornerstone of the American economy, much the way homeownership has long offered a path to firmer financial footing. But the housing bust has left tens of thousands of homeowners across Nevada essentially trapped.

They're considered the new normal here. They turn down higher-paying jobs elsewhere because they can't move. They tidy the yards of houses left vacant by foreclosure. They realize it's unlikely their children will receive tidy inheritances from the sale of their suburban homes.

Look at what the crash has done to homeowner expectations in Las Vegas. They don't believe they will have any equity in their lifetimes to pass on to their children. Compare that to the droves of kool aid intoxicated fools who believe they will be cashing HELOC checks soon from the double-digit appreciation sure to follow this brief correction.

Orange County will not become as desperate as Las Vegas, but we have a long way to go before the market psychology has changed enough to signal we are near the bottom.

When they look about their neighborhood, they question things they never questioned before. Are dead plants a sign that someone forgot to water? Or did the water get turned off? Does a garage sale mean more neighbors are about to bail?

“We don't even walk around our own neighborhood anymore,” Mills said. “Why? To say hi to strangers?”

Elsewhere on Midnight Breeze Street are Steve and Gay Shoaff, who once talked of selling their house and retiring somewhere pretty. Gay, 57, even toured a place in Wyoming.

But the Shoaffs have been living mostly off savings since the construction industry sputtered. Steve, 60, worked as a drywall taper and foreman.

“I'd say, 'Gay, we're going to become millionaires on this house,' ” Steve recalled one day as he and his wife unwound in the backyard they'd spent thousands of dollars sprucing up. Gay mustered a smile.

I give this man credit for the courage to admit his kool aid intoxication.

Their $187,980 home is now assessed at $99,220.

“This house won't be worth what we paid on it until after we die,” she said.

Some economists would agree, predicting that a full recovery in parts of the West's “foreclosure belt” — California, Nevada and Arizona — won't occur until at least 2030.

They are right. It will take longer than they have to live for prices to come back.

Nationwide, 23.1% of homeowners with mortgages are underwater. No state is more underwater than arid Nevada, with about two-thirds of borrowers holding such mortgages, according to CoreLogic, a Santa Ana research firm.

Some economists argue that, in a way, these homeowners are worse off financially than those who lost their houses through foreclosure and were forced to move on. Those borrowers often were able to live rent-free for years because of the snail's pace of foreclosure proceedings.

The people who bail and take their medicine are far better off than the people trapped in their homes. That's why strategic default is so common in Las Vegas. It's the wise thing to do.

Meanwhile, their underwater neighbors poured money into mortgages, not savings or investments. They couldn't chase higher-paying work. Homeowners with negative equity are at least a third less mobile than other homeowners, according to a recent study in the Journal of Urban Economics.

I feel sad for those who emptied their savings accounts and retirement accounts to pay mortgages. The poured their money down a rat hole, and now they are trapped in it.

But abandoning their homes was an option that appeared too dicey. “Walking away, it does wreck your credit history for a while and you can't get another mortgage for seven years,” said Richard Green, director of the USC Lusk Center for Real Estate. Defaulting also makes it harder to rent an apartment. “The other thing is, there is also some sense of obligation to repay your bills,” he said.

I'm sure the mortgage industry likes to see those comments from “experts” on these matters. Too bad it is totally inaccurate. The GSEs are letting people get new loans two years after a foreclosure. Further, the ramifications for people's credit scores, ability to get a lease or a job is hugely exaggerated. Plus, the whole notion of moral obligation to repay debts has been washed away. Mr. Green is wrong on every point.

Indeed, some North Las Vegas residents would rather forge a community here. Some feel blessed to have held on to their homes when so many people lost theirs.

… Mills, who was lured here from Los Banos, Calif., in 2006 by good-paying work and cheap housing, started seeing more neighbors padding around during the day, suggesting they had lost their jobs. Suddenly, they would vanish — sometimes after ripping out their toilets and sinks.

A family who lived near Mills, whose little boy played with his daughter, recently moved after his secretary mom and construction worker dad were laid off.

“I told my wife we don't have friends anymore. They all move away,” he said.

Actually, most of them moved into a rental in the same neighborhood. Unless they can't afford a rental, most who strategically default will rent a place in the same school district so their children can maintain friendships and they can keep their same social circle. In Las Vegas where unemployment is very high, particularly in construction, the neighborhoods are becoming much more fragmented.

Mills' wife, Maria, was let go by the entertainment department of a casino. He bounced from job to job, sometimes trucking cooking oil around Utah and Nevada, sometimes juggling security and janitorial work.

Determined to hang on to their four-bedroom house, he and his wife returned two new Nissans. “The cars, those are toys. Those are material things,” Mills said. “This is home.”

They waded through a mound of paperwork — and instructions to temporarily stop paying their mortgage — to cut their $1,600 monthly payment to about $900. The total amount they owe, however, remains the same.

The got a loan modification that essentially turns their mortgage into an Option ARM. They are staying in their underwater house, but have they really benefited from the arrangement?

James R. Follain, a senior fellow at the State University of New York's Rockefeller Institute of Government, argued in a recent study that former home-building hot spots, such as Las Vegas and California's Inland Empire, may crumble in the manner of Rust Belt manufacturing towns.

“There is a different mechanism leading to a similar outcome,” Follain said. “It was built on this upbeat set of assumptions about the future of house price growth, of population growth.”

That scenario is more likely to play out in Riverside County than in Las Vegas. Las Vegas has the gaming industry as a core economic driver. Riverside County has cheap houses and an economy based on providing cheap houses. What will bring back the economy there?

So last month, while Mills was gearing up for Oklahoma, the Shoaffs tried to keep their neighborhood from looking like so many in the Las Vegas Valley, the ones marred by one decaying home after another.

Drive down Midnight Breeze, and you'll spot few obvious signs of the real estate bust: no bank-owned signs, no broken windows, no doors jammed with unclaimed pizza fliers. That's partly because Gay busies herself yanking weeds from yards and ripping foreclosure notices from garage doors so the vacant homes won't tempt vandals.

This woman is tearing legal notices off neighboring properties. Sounds like a new foreclosure defense: the owners didn't receive notice because a neighbor tore it down.

On a recent evening, however, the Shoaffs took a walk through the neighborhood. In a backyard a few blocks away, someone had shoved over a foosball table, smashed a computer, tossed around stuffed animals and ruined the hot tub with what appeared to be white paint.

Gay's face fell. This house was likely another foreclosure casualty, its owner long gone.

The Shoaffs aren't going anywhere.

ashley.powers@latimes.com

alejandro.lazo@latimes.com

Picking up the pieces

The housing market in Las Vegas is a disaster. The enormous imbalance of supply and demand has pushed prices back to the mid 1990s.

I now make a living recycling the debris left over from the housing crash. Most of the homes I buy now are empty, and like this one I purchased in April, they are modest single-family homes selling near the median. These are the quickest and easiest to prepare and sell.

Between March 2 and April 23, I bought ten houses. Of those ten, this is the only one not in escrow or closed.

I will have about $80,000 into this property, and if it sells for its current asking price, my fund will make about $10,000. In all likelihood, I will have to negotiate a lower price or offer to pay the closing costs of an FHA buyer, but it will likely be a good flip like the other nine.

House Address … 6388 BRIANNA PEAK Ct Las Vegas, NV 89142

Resale House Price …… $95,900

House Purchase Price … $69,000

House Purchase Date …. 4/12/2011

Cost of House Ownership

————————————————-

$95,900 ………. Asking Price

$3,357 ………. 3.5% Down FHA Financing

4.54% …………… Mortgage Interest Rate

$92,544 ………. 30-Year Mortgage

$20,190 ………. Income Requirement

$471 ………. Monthly Mortgage Payment

$83 ………. Property Tax (@1.04%)

$20 ………. Homeowners Insurance (@ 0.25%)

$106 ………. Private Mortgage Insurance

$94 ………. Homeowners Association Fees

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

$775 ………. Monthly Cash Outlays

$0 ………. Tax Savings (% of Interest and Property Tax)

-$121 ………. Equity Hidden in Payment (Amortization)

$6 ………. Lost Income to Down Payment (net of taxes)

$32 ………. Maintenance and Replacement Reserves

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

$691 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$959 ………. Furnishing and Move In @1%

$959 ………. Closing Costs @1%

$925 ………… Interest Points @1% of Loan

$3,357 ………. Down Payment

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

$6,200 ………. Total Cash Costs

$10,500 ………… Emergency Cash Reserves

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

$16,700 ………. Total Savings Needed

Property Details for 6388 BRIANNA PEAK Ct Las Vegas, NV 89142

——————————————————————————

Beds: 4

Baths: 2

Sq. Ft.: 1673

$057/SF

Property Type: Single Family Residential, Detached

View: Strip

Year Built: 2000

County: 0

MLS#: 1146598

Source: GLVAR

Status: Exclusive Right

On Redfin: 21 days

——————————————————————————

Not SS or REO. Great 4 bedroom house. Freshly painted. Carpets will be professionally cleaned. Very nice covered stucco patio with ceiling fans and electrically wired. Home boast a nice array of ceramic tile, hardwood floors and carpet. Appliances, including refrigerator to be installed by 05/20/11. Great strip view from front yard. Home is located on a great cul-de-sac street.

Have a great weekend,

Irvine Renter

Despite the best house price payment affordability on record, housing demand and mortgage demand is near record lows.

Irvine Home Address … 2 SOLANA Irvine, CA 92612

Resale Home Price …… $465,000

Get on up when you're down

Baby, take a good look around

I know it's not much, but it's okay

Keep on moving anyway

Five — Keep on Movin'

Despite gargantuan efforts by government policy makers and the federal reserve to prop up the US housing market, low prices in many markets, and low interest rates, buyer demand is still very low. The reason is simple, the buyer pool is depleted, and many who would ordinarily be in the market for housing are unable to qualify for the loan necessary for them to purchase.

Tighter lending standards are often blamed, but it is both a combination of higher lending standards and fewer people who meet those standards because they have credit or savings problems due to unemployment, short sale, or foreclosure. The only fix to this problem is time. People need to go back to work, pay their bills, save money, and wait for their credit score to improve. Until all of those things happen, mortgage demand will remain low, and sales will suffer.

House Affordability in U.S. Rises to Record Levels, Tight Financing Still Constrains Sales

Posted by Michael Gerrity 05/25/11 10:27 AM EST

According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) report released this week, nationwide housing affordability during the first quarter of 2011 rose to its highest level in the more than 20 years it has been measured.

The HOI indicated that 74.6 percent of all new and existing homes sold in the first quarter of 2011 were affordable to families earning the national median income of $64,400. This eclipsed the previous high of 73.9 percent set during the fourth quarter of 2010 and marked the ninth consecutive quarter that the index has been above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

Low interest rates are making houses in most markets in the US very affordable on a payment basis. Of course, prices in many markets are still too high, but the ability to obtain extremely cheap debt is making the large mortgage balances manageable.

Despite how inexpensive it is to borrow money right now, nobody seems to be doing it.

Mortgage originations down 35% in first quarter

by KERRI PANCHUK — Tuesday, May 31st, 2011, 3:08 pm

Mortgage originations in the first quarter fell 35% to $325 billion, breaking three consecutive periods of growth and threatening to plunge the market back to 2000 levels, according to a report from Inside Mortgage Finance.

The first-quarter drop is the worst experienced since the onset of the recession when mortgage originations plummeted 31.5%, according to a new research report from Federal Reserve Bank of Cleveland researchers Yuliya Demyanyk and Matthew Koepke.

The same report cites Mortgage Bankers Association projections which estimates mortgage originations could fall to $1.05 trillion in 2011, the lowest level in 11 years.

The report blames a decline in refinancings for the dip in originations. Since refinancings generally contribute to higher origination activity, a drop-off in that segment negatively impacts originations as a whole.

The Cleveland Fed Bank report concludes that the only way around declining activity in the refinance segment would be to generate more activity in new home originations—a development the report doesn't foresee when considering the current lull in home starts and the state of the overall housing market.

Write to Kerri Panchuk.

With a long and deep recession at the conclusion of a massive borrowing binge my US consumers, very few people qualify for mortgages. Since interest rates have been low for a long time now, everyone who can refinance already has. As the Cleveland Fed noted, the prospects for increasing new home originations isn't very promising.

Americans Shun Cheapest Homes in 40 Years as Ownership Fades

By Kathleen M. Howley — April 19, 2011, 9:12 AM EDT

April 19 (Bloomberg) — Victoria Pauli signed a one-year lease last week to stay in her rental home in Fair Oaks, California. She had considered buying in the area, where property prices have slumped 57 percent since a 2005 peak.

In the end, she decided it wasn’t worth it.

“I know people who have watched their home values get cut in half, and I know people who are losing their homes,” said Pauli, 31, who works as a property manager for a real estate company. “It’s part of the American dream to want to own your own home, and I used to feel that way, but now I tell myself: Be careful what you wish for.”

Those are the kind of statements that bring out my contrarian instincts. In markets down more than 50% from the peak, prices are generally much lower than rental parity. People in those markets are paying a premium to rent to avoid what they fear is downside risk. Most of the decline has already occurred, and saving money versus renting is a strong inducement to purchase a home. People in beaten down markets are reacting in fear when they should be seizing opportunity.

In markets like Irvine where prices are off by about 25% and most properties are still trading above rental parity, renters still save money, and the likelihood of further declines is higher. An attitude of wait-and-see is appropriate particularly since the financial incentive favors renting rather than owning.

The most affordable real estate in a generation is failing to lure buyers as Americans like Pauli sour on the idea of home ownership. At the end of 2010, the fourth year of the housing collapse, the share of people who said a home was a safe investment dropped to 64 percent from 70 percent in the first quarter. The December figure was the lowest in a survey that goes back to 2003, when it was 83 percent.

After five years of falling prices, I am amazed that 64% of respondents still perceive a house as a safe investment. What would it take for those people to say it's unsafe?

“The magnitude of the housing crash caused permanent changes in the way some people view home ownership,” said Michael Lea, a finance professor at San Diego State University. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”

Worse Than Depression

Historically, homes have been a safer investment than equities. During 2008, the worst year of the housing crisis, the median U.S. home price declined 15 percent, compared with a more than 38 percent plunge in the Standard & Poor’s 500 Index.

Americans stay in their homes for a median of eight years, according to the National Association of Realtors in Chicago. Someone who bought a home in 2002 and sold in 2010 saw a 4.8 percent increase in value, based on the annualized median price measured by the group. The average annual gain in the past 20 years was 4.2 percent.

There is another NAr statistic that serves their purposes now, but in years to come, it will not. Wait until we have the 2006 to 2014 comparison. That one will be brutal.

Falling prices have made real estate the best buy in at least four decades. Housing affordability reached a record in December, according to National Association of Realtors data that go back to 1970. The group bases its gauge on property prices, mortgage rates and the median U.S. income.

Despite the fact that much of the NAr data is manipulated bullshit, housing affordability is near its record high, particularly in markets like Las Vegas where you have the unique combination of prices from 15 years ago and very low interest rates.

The median U.S. home price tumbled 32 percent from a 2006 peak to a nine-year low in February, data from the Realtors show. The retreat surpassed the 27 percent drop seen in the first five years of the Great Depression, according to Stan Humphries, chief economist of Zillow Inc., a Seattle-based real estate information company.

For real historical accuracy, the big plunge in real estate prices occurred prior to the Great Depression during the severe recession of the 1910s. They fell again during the mid 20s when the Florida land boom went bust. And during the Great Depression, many people lost their homes in foreclosure, but prices were already beaten down from the turmoil of the two decades preceding. The Robert Shiller chart shows the decline of the 1910's clearly.

Ironically, it was financial innovation of a sort that propelled prices back to their historic trendlines after World War II. What was that innovation? The widespread use of the 30-year fixed rate mortgage with a 20% down payment. Prior to that most loans were interest-only with a 50% down payment requirement. If the real estate community is complaining about 5% down payments, imagine what would happen to the housing market if 50% down became the norm.

Not Risk-Free

“If we’ve learned anything from this mess, it’s that housing is not a risk-free investment,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York. “Everyone knows someone underwater in their mortgage or struggling to sell a home.”

About 11 million U.S. homes were worth less than their mortgages at the end of 2010, according to CoreLogic Inc., a Santa Ana, California-based real estate information company. An additional 2.4 million borrowers had less than five percent equity, meaning they’ll be underwater with even slight price declines, according to the March 8 report. The two categories add up to 28 percent of residences with mortgages.

Nearly one in three. It reminds me of the speech they give incoming freshmen in college. Look at the person sitting to your left and to your right. One of those people will not graduate. Well, any homeowner who isn't underwater need only look at his neighbor to the left or neighbor to the right to see someone who is underwater.

… Improving Employment

“We expect that purchase activity will pick up slowly as the improvement in the job market eventually leads to greater willingness to buy,” the mortgage bankers group said.

Willingness isn't the problem: meeting the qualification standards is. The unemployed must find work, then they must maintain it for two years before someone will give them a loan. And that assumes they didn't wipe out their reserves while they were unemployed and damage their credit.

Borrowing costs are at historic lows. The average U.S. rate for a 30-year fixed mortgage was 4.69 percent last year, the lowest in annual data going back to 1972, according to mortgage financier Freddie Mac, based in McLean, Virginia. The rate in March was 4.84 percent, the company said.

By 2012’s fourth quarter, the average fixed rate may rise to 6 percent, according to the Mortgage Bankers Association.

I've been predicting higher interest rates for quite some time, but the lack of demand and ongoing mortgage debt deflation is forcing rates downward.

I have been contemplating the meaning of the chart above. As long as mortgage debt levels are elevated about collateral value, banks have two options: (1) write off the debt to reduce it to the value of the housing stock, or (2) make debt so inexpensive that people can afford to keep their bad debt alive. Obviously lenders are choosing the latter. It's the approach the Japanese took since the early 90s, and housing has been deflating there ever since.

Since lenders are trying to minimize their losses on paper, they are offering debt at super low prices. They can underwrite loans at low rates as long as the federal government guarantees it all and investors don't find a better place to park their money. Right now, competing investments with more risk are not attractive to investors, so they are putting their money into 4.5% loans. Investors will probably stop doing that once there are more economic opportunities. I thought the October 2010 selloff was a sign that the economy was mending and interest rates would keep rising. So far, that has not been the case.

“If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing time to purchase real estate,” said Robert Stein, a senior economist at First Trust Portfolios LP in Wheaton, Illinois, and the former head of the Treasury Department’s Office of Economic Policy. “There are going to be a lot of people kicking themselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates.”

Tighter Lending

Cheap financing hasn’t done enough to boost home sales in part because lenders are being more selective with applicants, according to Federal Reserve Chairman Ben Bernanke. Fed policy makers have described the housing market as “depressed” in statements following their last eight meetings.

More selective with applicants! LOL! You mean banks aren't loaning home to anyone with a pulse? Shocking!

“Although mortgage rates are low and house prices have reached more affordable levels, many potential homebuyers are still finding mortgages difficult to obtain and remain concerned about possible further declines in home values,” Bernanke said in Congressional testimony last month.

The share of banks reporting tighter mortgage standards in the first quarter rose to 16 percent, the highest since 1991, according to the Fed’s Senior Loan Officer Survey.

Standards are tightening and will continue to tighten until houses are affordable under conservative lending metrics. Bankers don't become aggressive until they stop losing money. The credit cycle exacerbates the economic cycle by making booms larger and busts worse.

Federal regulators are proposing rules that may make lending even more stringent, including a requirement that banks and bond issuers keep a stake in home loans they securitize if the mortgage borrowers have imperfect credit and down payments of less than 20 percent. Borrowers who don’t meet the criteria would pay higher rates to compensate lenders for risk.

Fannie Phase-Out

As mortgage requirements rise, rates could follow as Congress and the Obama administration consider phasing out government-controlled Fannie Mae and Freddie Mac. The companies hold federal charters mandating they increase the availability of mortgages through securitization. In Fannie Mae’s case, that order goes back to the Great Depression, when it was created as part of President Franklin D. Roosevelt’s New Deal.

“There are a lot of unsettled policy issues on the table right now that, if they’re not handled right, could further set back the housing market,” said Richard DeKaser, an economist at Parthenon Group in Boston. “Fannie and Freddie have historically lowered interest rates, and eliminating them will increase the cost of home ownership.”

I'm not sure if that is an argument to keep them or eliminate them. I think he was trying to make the case for keeping them around, but providing artificial props to the housing market with risk to the US taxpayer is a bad idea, and the GSEs should go away.

Lowest in Decade

The U.S. home ownership rate dropped to 66.5 percent in the fourth quarter, the lowest in more than a decade, according to the Census Department. The rate probably will retreat another percentage point by 2013, according to Meyer, of Bank of America Merrill Lynch, and Lea, the finance professor. That would put it back to a 1997 level.

“People will still aspire to own their own homes,” Lea said. “They’ll just be a lot more practical about it.”

Pauli, the California renter, said she has no such aspirations, at least for now. She pays $1,500 a month for her three-bedroom, single-family home with a two-car garage, granite kitchen countertops and stainless-steel appliances. Her neighbors who bought before the housing crash typically have mortgage payments of about $2,800 a month, Pauli said.

“I don’t see myself purchasing, even with all the great prices I see,” Pauli said. “Going to bed every night worrying about your home value doesn’t sound like a good time to me.”

And Pauli will continue to feel that way until owning becomes less expensive than renting. Rental parity is a tipping point, and once prices fall below that level, fence sitters get off the fence and buy properties. The specter of price declines is less powerful than the desire to lower monthly housing costs, except for those people with a short ownership tenure.

Not a short sale… yet

A property owned for the last 15 years by one family would not ordinarily be a short sale candidate. With the $169,000 sales price and a $152,100 first mortgage, it is reasonable to believe their mortgage balance should be less than $100,000.

Of course, this is Irvine, California, so their loan balance is over $100,000; in fact, the last mortgage on the property was for $399,000. Instead of having $300,000+ in equity, these owners have limited ability to lower their price before they will be a short sale statistic.

When a HELOC abuser makes a sale for a $268,100 profit and only gets a $26,810 check at closing, how do they feel? Does it cross their mind that they pissed away a quarter million dollars? Any regrets?

Irvine House Address … 2 SOLANA Irvine, CA 92612

Resale House Price …… $465,000

House Purchase Price … $169,000

House Purchase Date …. 10/1/1996

Net Gain (Loss) ………. $268,100

Percent Change ………. 158.6%

Annual Appreciation … 6.9%

Cost of House Ownership

————————————————-

$465,000 ………. Asking Price

$16,275 ………. 3.5% Down FHA Financing

4.54% …………… Mortgage Interest Rate

$448,725 ………. 30-Year Mortgage

$97,899 ………. Income Requirement

$2,284 ………. Monthly Mortgage Payment

$403 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$97 ………. Homeowners Insurance (@ 0.25%)

$516 ………. Private Mortgage Insurance

$384 ………. Homeowners Association Fees

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

$3,684 ………. Monthly Cash Outlays

-$368 ………. Tax Savings (% of Interest and Property Tax)

-$587 ………. Equity Hidden in Payment (Amortization)

$27 ………. Lost Income to Down Payment (net of taxes)

$78 ………. Maintenance and Replacement Reserves

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

$2,836 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,650 ………. Furnishing and Move In @1%

$4,650 ………. Closing Costs @1%

$4,487 ………… Interest Points @1% of Loan

$16,275 ………. Down Payment

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

$30,062 ………. Total Cash Costs

$43,400 ………… Emergency Cash Reserves

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

$73,462 ………. Total Savings Needed

Property Details for 2 SOLANA Irvine, CA 92612

——————————————————————————

Beds: 2

Baths: 2

Sq. Ft.: 1404

$331/SF

Property Type: Residential, Condominium

Style: One Level

View: City Lights, Park/Green Belt, Trees/Woods

Year Built: 1975

Community: Rancho San Joaquin

County: Orange

MLS#: S659422

Source: SoCalMLS

Status: Active

——————————————————————————

Location!Location! Enjoy warm southern sun exposure, amazing golf course views, magnificent large old trees and endless golf course lawns. Charming home in the prestigious golf course community of Rancho San Joaquin. Premium private corner, ground location on the Green Belt single story home boasting amazing views and a very light spacious open floor plan. Two spacious Master Bedroom Suites. Two patios to enjoy while entertaining and relaxing. Enjoy a quiet Community Pool and Spa, inside washer and dryer and detached two car garage. Close to Mason Park, Shops, Restaurants, UCI, University High and much much more. Award Winning School District! Washer, Dryer and Refrigerator included. STANDARD SALE! A MUST SEE!

The S&P Case-Shiller home price indices have confirmed a double-dip in home prices. The bear rally has failed.

Irvine Home Address … 14 LONGSHORE #77 Irvine, CA 92614

Resale Home Price …… $730,000

Need a shave

Cut myself need a new blade

Something's gone wrong again

And again and again and again again and

Something's gone wrong again

Something's gone wrong again

The Buzzcocks — Something's Gone Wrong Again

The bulls were wrong — again. Eventually they will be right. Like a broken clock that is accurate twice a day, the perma-bulls will have their day. But their day is not today.

Home prices: 'Double-dip' confirmed

Les Christie, On Tuesday May 31, 2011, 10:43 am EDT

Home prices hit another new low in the first quarter, down 5.1% from a year ago to levels not reached since 2002.

It was the third straight quarterly drop for the S&P/Case-Shiller national home price index, which was released Tuesday. Prices are now down 32.7% from their peak set five years ago.

“Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, spokesman for Standard and Poor's.

The index covers 80% of the housing market, and this month's report confirmed “a double-dip in home prices across much of the nation,” said Blitzer.

The housing market went through a brief recovery period starting in mid-2009, recovering nearly 5% of earlier losses. After homebuyer tax credits expired last April, the slump resumed.

The only reason people had for believing the crash would not resume was wishful thinking. We can debate whether or not the transfer of trash from lenders to the government was necessary (that is the only thing the tax credit buying accomplished), but a steep decline in prices back to historic norms for price-to-rent and price-to-income was inevitable. With the associated strategic default, a depleted buyer pool, and huge stockpiles of REO, the bust is likely to have a long tail and many years before normal, income-induced appreciation takes over.

A separate S&P/Case-Shiller index covering 20 major cities also dropped during March, the index's eighth straight monthly decline. 10 dirt-cheap housing markets

Falling nominal prices only tell part of the story. On an inflation-adjusted basis, the declines have been far worse.

Of the 20 cities, only Washington has posted a home-price gain: 4.3% over the past 12 months.

Minneapolis homes lost the most value over that period, with prices falling 10%.

Other big losers include Phoenix (- 8.4%), Chicago (- 7.6%) and Portland, Ore. (- 7.6%)

Don't forget Las Vegas where prices have declined 12% since last March. The nation's best housing bargains keep getting better.

Prices continue to be hammered by foreclosures with high numbers of repossessed homes flooding the market.

Many repossessed properties are in poor condition and sell at a big discount to conventionally sold homes, driving down overall values.

It is demonstrably true that foreclosures are often in very bad shape. Check out this one I saw go through the Las Vegas auction site yesterday.

The hole in the wall to the right is where they went digging for copper pipe. That may also explain why they jackhammered a hole beneath the sink. The cabinets and counters were too old to have any value, so they left them behind.

Despite the evidence of beaten up foreclosures, it isn't their poor condition that is lowering prices, the lender's willingness to liquidate at very low prices is driving prices lower.

Falling home prices have a devastating impact on new home construction, according to Pat Newport, a housing market analyst for IHS Global Insight.

“They are a key reason why builders aren't building new homes, even in the fastest growing states, like Texas,” he said. “Existing homes are selling for so much less, the builders can't compete.”

That is not accurate. Builders are successfully building and selling homes in Las Vegas and obtaining a 25% premium for their efforts. They aren't building in large numbers like before the crash, but they are successfully exploiting the market niche that wants new and is willing to pay for it.

Normally, new-home construction is an important contributor to the economic recovery. Not so this time, according to Mike Larson, an analyst with Weiss Research.

“Housing has been an albatross for the economy as opposed to an engine powering it,” he said.

If residential development had come back as it has in the past, the current recovery would be much stronger. There's be much more robust hiring of construction workers, building materials manufacturers and drivers and deliverymen to bring the products to site.

Newport pointed out that when developers build a new home for $300,000 it adds $300,000 to the economy, as measured by GDP. An existing-home sale just adds 5% or 6% in broker's commission.

“As a component of the GDP,” said Larson, “housing has been out to lunch.”

Unfortunately, it continues to be a drag on the economy. Until lenders capitulate and dispose of their REO, builders will be facing competition, and they will always be unsure of the stability of prices. Under those circumstances, it is problematic to value and acquire property, set up a production run, and believe the houses can be sold on the other side.

The Irvine Company took that risk, and now they have many unsold homes, and they don't know what to do to kick start sales. Given the weak buyer demand, there isn't much they can do. There is a shortage of qualified buyers at price points at which they want to build and sell.

The national numbers are interesting, but the local data is what matters, right?

L.A./O.C. home prices down 8th straight month

May 31st, 2011, 9:38 am by Jon Lansner

Home values in Los Angeles and Orange counties fell for the 8th consecutive month in March, by the math of the S&P/Case-Shiller indexes as Standard & Poor’s analysts state that the national housing market is officially in a “double dip.”

S&P found locally:

• L.A./O.C. prices were down 0.29% from February to March after falling 0.96% the previous month. March’s dip was the smallest decline since September.
• L.A./O.C. prices were down — on a year-to-year basis – 1.66% in March. It was the fourth consecutive year-over-year drop but down from the 2.07% annual rate of decline seen in February.
• L.A./O.C. prices have fallen 4.8% since last July’s recent peak and 38.8% from the historic high of September 2006.
• The first time L.A./O.C. prices hit the current level was October 2003.

Nationally, S&P found:

• U.S. National Home Price Index declined 4.2% in the first quarter after 3.6% dip in fourth quarter to hit new recession low.
• National home prices are back to their mid-2002 levels.
• In March, 19 of 20 large markets covered by S&P/Case-Shiller are down in a year. DC only gainer.
• 18 of 20 markets feel February to March. DC and Seattle, only gainers.
• Minneapolis posted a 10.0% annual decline, the first market to be in double-digit losses March 2010 (Las Vegas, down 12%.)
• S&P’s David Blitzer: “This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. … The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.”

Patrick Newport, IHS Global Insight economist:

House prices are dropping at a steady clip nearly everywhere. Unfortunately, given that over a quarter of all mortgages are under water, according to zillow.com, and that 12.3% (or 6.3 million) of homeowners with mortgages were either delinquent or in foreclosure at the end of the first quarter, according to the latest Mortgage Bankers Association’s National Delinquency Survey, further declines in prices are etched in stone. Going forward, our view is that weak demand, foreclosures, and a glut of homes for sale should translate into at least another 5% drop in the Case-Shiller composite indices.

So when will prices stop declining? The price to rent ratio gives some indication that we are within 10% of the bottom, depending on how much markets overshoot to the downside.

Another foreign cash buyer bailing on Irvine

Periodically someone in the astute observations will point to the army of foreign cash buyers who will save prices in Irvine. I have pointed out many such buyers are dumb money buying into markets based on narrative rather than valuation. At least some of these buyers are wise enough to cut their losses when they realize prices are going south.

The owner paid cash two years ago when the market was beginning its bear rally. Based on his asking price, he estimates the house has declined in value rather than appreciated. Since he owns the property free-and-clear, this is not a short-sale price set too low in order to generate interest. He is willing to sell this property for a $72,800 loss after commissions. That wasn't supposed to happen to buyers over the last two years, right?

Irvine House Address … 14 LONGSHORE #77 Irvine, CA 92614

Resale House Price …… $730,000

House Purchase Price … $759,000

House Purchase Date …. 6/26/2009

Net Gain (Loss) ………. ($72,800)

Percent Change ………. -9.6%

Annual Appreciation … -1.9%

Cost of House Ownership

————————————————-

$730,000 ………. Asking Price

$146,000 ………. 20% Down Conventional

4.54% …………… Mortgage Interest Rate

$584,000 ………. 30-Year Mortgage

$127,412 ………. Income Requirement

$2,973 ………. Monthly Mortgage Payment

$633 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$152 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$277 ………. Homeowners Association Fees

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

$4,035 ………. Monthly Cash Outlays

-$497 ………. Tax Savings (% of Interest and Property Tax)

-$763 ………. Equity Hidden in Payment (Amortization)

$247 ………. Lost Income to Down Payment (net of taxes)

$111 ………. Maintenance and Replacement Reserves

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

$3,132 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$7,300 ………. Furnishing and Move In @1%

$7,300 ………. Closing Costs @1%

$5,840 ………… Interest Points @1% of Loan

$146,000 ………. Down Payment

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

$166,440 ………. Total Cash Costs

$48,000 ………… Emergency Cash Reserves

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

$214,440 ………. Total Savings Needed

Property Details for 14 LONGSHORE #77 Irvine, CA 92614

——————————————————————————

Beds: 3

Baths: 3

Sq. Ft.: 2614

$279/SF

Property Type: Residential, Condominium

Style: Two Level, Contemporary

Year Built: 1983

Community: 0

County: Orange

MLS#: U11000211

Source: SoCalMLS

Status: Active

——————————————————————————

Timeless elegance and contemporary flair infuses this spacious two-story townhome with a rare ambiance of peace, quiet and privacy. Located just steps from the Village of Woodbridge's picturesque south lake and a large community swimming pool, the custom-caliber residence measures approximately 2,614 square feet and is host to three spacious bedrooms–each with its own balcony–and two and one-half bathrooms, plus an attached two-car garage. Plush custom carpeting and handsome tile flooring accent grand living areas that reveal two hand-crafted fireplace surrounds, airy volume ceilings, vast window expanses that invite natural light, and recessed and track lighting in select locations. Overlooking a large, lushly landscaped atrium, the generously proportioned L-shape kitchen displays granite countertops, light wood cabinetry, deluxe appliances, built-in dining nook, and oversized atrium windows. Purchase price includes all furniture.

Is leaving the furniture behind a sign of bailing?

Timeless elegance and contemporary flair infuses this spacious two-story townhome with a rare ambiance of peace, quiet and privacy.

Somebody has been practicing their flowery writing with superfluous adjectives.

Republicans in the House of Representatives are introducing legislation to tighten lending standards on government-backed loans to limit the exposure of taxpayers to ongoing price declines.

Irvine Home Address … 2418 SCHOLARSHIP Irvine, CA 92612

Resale Home Price …… $325,000

Hey yo I once was a kid all I had was a dream

mo money mo problems when I get it I'm a pile it up

Now I'm dope, wonderbread we can toast

Chiddy Bang — Opposite of Adults

In our two-party political system, the function of the minority party is to oppose policies of the party in power, particularly when the party in power is overreaching or enacting legislation that is not in the best interest of the country. Sometimes, members of Congress act the opposite of adults, and the rhetoric gets heated and sometimes pretty ridiculous. But for the most part, the two-party system is successful in debating ideas and allowing only the most supported to become law.

One of the advantages of the minority party is that they can force uncomfortable public votes on major issues. When the majority party begins pandering to its constituencies with handouts and political seniorage, the minority party can garner attention by introducing good competing legislation and force the majority party to cast an unpopular vote.

The Republicans in the House of Representatives in Washington now hold a majority, and thereby they control the introduction of most new legislation into our grand political theater. They are taking advantage of their majority in the House to force the Democrats which control the Senate and the Presidency to vote down common-sense legislation designed to protect the interests of US taxpayers.

Republicans Aim to Raise FHA Down Payment Requirement

by Adam Quinones — May 25, 2011

The Republican led House Financial Services Committee has drafted legislation that would, among other things, (1) raise the FHA down-payment requirement to 5 percent and (2) prohibit borrowers from financing their closing costs.

The draft legislation, ‘‘FHA-Rural Regulatory Improvement Act of 2011’’, was discussed today in a House Subcommittee hearing entitled “Legislative Proposals to Determine the Future Role of FHA, RHS and GNMA in the Single-and Multi-Family Mortgage Markets”.

If both provisions above were enacted, the already depleted buyer pool would be made much smaller because it would require much more savings for buyers to close the deal. Raising the down payment requirement from 3.5% to 5% will get the most attention, but the other provision prohibiting buyers from financing their closing costs that will really add to the savings requirement and decimate the buyer pool.

I have sold several houses in Las Vegas to FHA borrowers. On properties selling for less than the $118,000 median, FHA dominates the market. In a typical FHA deal, the buyer submits a full asking price offer but asks for the seller to pay all buyer closing costs which generally run between 3% and 5% of the purchase price. If borrowers are prohibited from financing these costs into the loan, the effective down payment doubles to 7% or more.

By far the most damaging provision to the quantity of buyers in the buyer pool is the prohibition against financing their closing costs.

However, the long-term effect of this will be to have buyers with more of their own money into the deal which makes most borrowers much less likely to strategically default, partly because they are less likely to fall underwater, and partly because they don't want to lose their money in a sale. Despite the horrendous impact this policy would have the in the short term — and it would inflict a great deal of pain in the most beaten down markets — the long term impact is nothing but positive.

In a formal release, the House Financial Services Committee's Republican Chairman Spencer Bachus touted the bill as a coming at an important time in history, “This hearing and legislative proposal come at a pivotal moment, as the Committee debates the future of the mortgage finance system, and in particular, government guarantee programs that could expose taxpayers to significant losses.”

Senator Bachus is right. The various government guarantees have been used to shift much of the private sector garbage onto the balance sheets of Uncle Sam and the federal reserve. It was a short-term policy designed to keep our banks solvent, but since the various players in the real estate industry gain advantage from the government assignment of risk, they are lobbying to keep their advantage in place.

Industry advocates were quick to respond to the proposal as a move in the wrong direction. Michael Berman, Chairman of the Mortgage Bankers Association, explained that down-payments are not the best indicator of payment default. Berman said, “Recently, policymakers have focused on required minimum down-payments as a measure of what factors are necessary to create sound lending practices. While down-payment certainly impacts default risk, other compensating factors, particularly full documentation of conservative loan products, are more influential mitigating factors.”

This is a straw-man argument. This legislation does not argue that down payments are the best indicator of default. It isn't. However, based on the government database of loans in both the GSEs and FHA, the data shows that default rates are inversely related to down payment. As down payments go down, default rates go up. Some of this may be due to the borrower being underwater and hopeless, but much of this documented behavior is because borrowers aren't losing their money.

Berman went on to share the MBA's opinion on the matter, saying, “The current minimum down-payment of 3.5 percent for borrowers with credit scores of 580 or above and 10 percent for borrowers with credit scores of 579 and below permits borrowers to have appropriate “skin in the game” while providing credit-worthy homebuyers with an option for entering the purchase market. Maintaining the existing minimum down-payment requirements, while requiring strong underwriting standards, such as full documentation and income verification, allows borrowers to responsibly become, and stay, homeowners.”

The MBA isn't the only industry group to oppose the down-payment hike. Ron Phillips, President of the National Association of Realtors, shared similar sentiments in his prepared remarks. “NAR strongly opposes increasing the down-payment for FHA. The correlation between down-payment and loan performance is significantly less important than the linkage to strong underwriting, which FHA continues to have. FHA’s foreclosure rate remains less than conventional mortgages, so we don’t believe changes to the down-payment would do anything but disenfranchise many creditworthy homebuyers”.

Does the government really want to disenfranchise creditworthy borrowers? Increased home ownership has been the goal of Congressional public policy and every presidential administration since the 1920s. A declining home ownership rate is not politically popular. The only way a policy that negatively impacts the home ownership rate would be proposed is because the alternative is even less appealing — endless government bailouts.

Not all feelings were mutual though. The Cato Institute, a D.C. think tank devoted to limiting government participation in free markets, believes a combination of poor credit history and low down-payment requirements have resulted in “tremendous losses” for private mortgage investors and the FHA. In its prepared testimony Cato said, “Given the relatively “safe” features of an FHA loan, we do not have to guess about loan characteristics driving the borrower into default. We know it is equity and credit history that drives losses.”

To complete their list of causes, they should add unemployment due to the economic collapse that was a direct result of the anti-regulation policies endorsed by groups like the Cato Institute, but I don't want to quibble with their well-reasoned argument….

Cato outlined a variety of FHA program reforms it believes must be implemented immediately to ensure taxpayers are exposed to minimal risk. These reforms include:

• Immediately require a 5 percent cash down-payment on the part of the borrower.
• Require FHA to allow only reasonable debt-to-income ratios.
• Restrict borrower eligibility to a credit history that is equivalent to no worse than a 600 FICO score.
• Require pre-purchase counseling for borrowers with a credit history that is equivalent to a FICO score between 600 and 680.
• Require a 10 percent down-payment, immediately, for borrowers with a credit history equivalent to below a 680 FICO score.
• Borrower eligibility should also be limited to borrowers whose incomes do not exceed 115 percent of median area income, so as to mirror the requirements of section 502(h)(2), as amended, of the Housing Act of 1949.

That's the best policy proposal I have seen come out of Washington. Each one of those provisions would serve to limit the borrower pool to those most likely to repay the debt which in turn limits the exposure of taxpayers to further Ponzi scheme losses.

Besides raising the down-payment requirement, the proposed legislation would also cement the reduction of current “high-cost” loan limits. The maximum loan limits for Fannie Mae, Freddie Mac, and FHA are currently $417,000 with a temporary limit of up to $729,750 for one-unit properties in high-cost areas. The temporary high-cost area limit was first set in the Economic Stimulus Act of 2008, and was extended in subsequent legislation. It expires on September 30, 2011. Without the extension, the high-cost loan limit ceiling would revert back to the limits established under the Housing and Economic Reform Act (HERA), a maximum of $625,500 in high-cost areas.

The change from $729,750 to $625,000 will be effective October 1, 2011. There is no political will to save markets like Irvine where GSE financing between $625,000 and $729,750 is common.

The Obama administration already stated in its white paper that it will not support another extension of the higher loan limits, but the MBA believes the higher limits should be maintained until the housing market stabilizes and the private market shows more signs that demand has returned.

Why should government policy be used to prop up house prices for the upper-middle class? What societal benefit is obtained? Money is fungible, and any assistance the government is providing to upper income households is merely supporting their entitlements.

MBA urged such legislation to be enacted well before October 1, 2011, in order to avoid certain market disruptions that will, because of rate locks, occur within 90 days of the current limits expiring. The National Association of Home Builders echoed that perspective.

NAHB First Vice Chairman Barry Rutenberg, a home builder from Gainesville, Fla., told the House Financial Services Subcommittee, “Counties across the country would see their loan limit reduced by tens of thousands of dollars, placing further downward pressure on home prices and impairing the ability of borrowers to use FHA-insured mortgages to purchase new homes,”

To keep FHA, Fannie Mae and Freddie Mac loan limits at their current levels, NAHB called on Congress to support H.R. 1754, the Preserving Equal Access to Mortgage Finance Programs Act, a bipartisan measure sponsored by Reps. Gary Miller (R-Calif.) and Brad Sherman (D-Calif.).

The draft legislative proposal will require a full Committee vote before it is formally introduced to be voted on by the entire house. Such measures would not be expected to pass the Senate.

Is anyone surprised that two California legislators signed on to a bill designed to support the California real estate Ponzi scheme? I'm not.

A stable home ownership rate requires the limiting of access to home loans to those who cannot make the payments. It doesn't serve anyone for lenders to let borrowers move into properties they cannot afford, develop a sense of entitlement to property they cannot afford, and then foreclose on them because the borrower cannot afford it. The cycle merely upsets everyone involved and makes the taxpayer lose money through losses on the insured loan.

It has been a long and painful process as the bubble deflates back to levels of affordability. Housing deflation is not over yet, particularly in markets like ours where price deflation has been slowed by the government meddling. Kool aid intoxication must die, and buyers must give up on the idea of their California house being a substitute wage earner. Until that happens, a few people will overpay, the the slow grind of lower prices will go on.

Welcome to our new normal.

A 50% loss in an Irvine high rise

One of the most obvious signs of the housing bubble was the rise of buildings on the Jamboree corridor about 25 years ahead of when the economics may support it. These properties should never have been built. The units within them are worth less than half of what they were at the peak, and if today's pricing would have been the order of the day back when these were proposed, they wouldn't have been financed.

The owner of today's featured property paid $635,000 back on 1/27/2006. He used a $507,650 first mortgage and a $127,350 down payment. However, on 10/6/2006 he obtained a $150,000 HELOC from Wells Fargo which gave him access to his down payment plus $22,650 in HELOC booty.

Do you think he took the HELOC money, or did he lose his down payment?

And, if he didn't take the HELOC money, do you imagine he wishes he did?

Irvine House Address … 2418 SCHOLARSHIP Irvine, CA 92612

Resale House Price …… $325,000

House Purchase Price … $635,000

House Purchase Date …. 1/27/2006

Net Gain (Loss) ………. ($329,500)

Percent Change ………. -51.9%

Annual Appreciation … -12.0%

Cost of House Ownership

————————————————-

$325,000 ………. Asking Price

$11,375 ………. 3.5% Down FHA Financing

4.54% …………… Mortgage Interest Rate

$313,625 ………. 30-Year Mortgage

$68,424 ………. Income Requirement

$1,597 ………. Monthly Mortgage Payment

$282 ………. Property Tax (@1.04%)

$0 ………. Special Taxes and Levies (Mello Roos)

$68 ………. Homeowners Insurance (@ 0.25%)

$361 ………. Private Mortgage Insurance

$460 ………. Homeowners Association Fees

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

$2,767 ………. Monthly Cash Outlays

-$257 ………. Tax Savings (% of Interest and Property Tax)

-$410 ………. Equity Hidden in Payment (Amortization)

$19 ………. Lost Income to Down Payment (net of taxes)

$61 ………. Maintenance and Replacement Reserves

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

$2,179 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$3,250 ………. Furnishing and Move In @1%

$3,250 ………. Closing Costs @1%

$3,136 ………… Interest Points @1% of Loan

$11,375 ………. Down Payment

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

$21,011 ………. Total Cash Costs

$33,400 ………… Emergency Cash Reserves

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

$54,411 ………. Total Savings Needed

Property Details for 2418 SCHOLARSHIP Irvine, CA 92612

——————————————————————————

Beds: 2

Baths: 2

Sq. Ft.: 1260

$258/SF

Property Type: Residential, Condominium

Style: Two Level, French

Year Built: 2007

Community: 0

County: Orange

MLS#: P782365

Source: SoCalMLS

Status: Active

——————————————————————————

THIS CONDO HAS OVER 100K IN UPGRADES. .. INTERIOR IS IMMACULATE. .. TURN KEY READY. ..

Off Topic: Las Vegas auction property in today's offerings

Anyone want that house? They ripped out the copper plumbing in the walls.