Category Archives: HELOC Abuse

No Housing Market Bottom

Today we review current conditions to verify that we are not at the bottom of the housing market, and examine the property of a grade D HELOC abuser.

17 SUNRISE Irvine, CA 92603 kitchen

Irvine Home Address … 17 SUNRISE Irvine, CA 92603

Resale Home Price …… $1,528,000

{book1}

I don't wanna close my eyes

I don't wanna fall asleep

'Cause I'd miss you, babe

And I don't wanna miss a thing

'Cause even when I dream of you

The sweetest dream will never do

I'd still miss you, babe

And I don't wanna miss a thing

Aerosmith – I Don't Wanna Miss A Thing

Their gullets awash with kool aid and eyes ablaze with imagined riches, fanatical bulls prematurely celebrate the bottom of the housing market.

Relax. You haven't missed a thing; we are not at a bottom, and although I have stated I will not call a bottom, I do not believe conditions exist for a bottom to form — unless perhaps kool aid intoxication is so strong that bulls can make it happen through force of will. Anything is possible.

The obsession with a market bottom comes mostly from bulls hoping to make a fortune and to restart the housing ATM and to live the bubble lifestyle — a foolish mindset discordant with our future reality of (1) flat home prices, (2) rising interest rates, (3) less borrowing, (4) increased saving and (5) less spending. Timing Does Matter, and nobody wants to overpay for real estate, but once prices fall below rental parity, timing the bottom becomes less important, and drop duration takes on new importance because it determines how long buyers will be trapped in the homes they purchase.

Today I want to look at where prices are, where they are going, and how long it will take them to get there.

Good News

On the positive side, many of the IHB Property Valuation Reports we prepare show properties as positive cashflow, a prerequisite for a durable market bottom. As long as it is less expensive to own than to rent, buyers intent on long-term ownership of a particular property are making a rational decision, and the collective action of these buyers (coupled with the irrational ones) forms a market bottom.

Bulls want to end the discussion with acheiving rental parity and assume other problems — like rising interest rates, falling rents and foreclosures — will not impact pricing, so when prices do go down, they claim the obvious forces working against prices were a surprise — it is only surprising to those who bury their heads.

Bad News

I wrote a post early last month titled House Prices Will Decline in 2010. I mentioned the 3 primary factors working against the market; (1) prices are too high, (2) mortgage interest rates will go up, and (3) foreclosures will increase.

Prices are too High

The basic argument as to why prices will fall is not complex; prices are still too high by historic measures.

Calculated Risk put it this way: "House prices are not cheap nationally. This is apparent in the price-to-income, price-to-rent, and also using real prices.

Mortgage Interest Rates will go up

This is also a simple argument; interest rates are nearly zero, and based on the long-term chart, it looks like rates must move higher.

Perhaps the best evidence for concluding interest rates have bottomed and will soon move higher comes from Ben Bernanke, Chairman of the Federal Reserve, who recently refinanced his ARM to a fixed-rate mortgage.

Foreclosures will Increase

CNN Money recently published an article titled, 3 reasons home prices are heading lower, where the authors cited (1) foreclosures, (2) rising interest rates, and (3) the end of the tax credit. Rising interest rates was mentioned above, and tax credit props made my list of caveats as to why people may not want to buy now. Foreclosures and Shadow Inventory made my list of 2009 Residential Real Estate Stories in Review, and it is the biggest unknown facing the market — it isn't unknown as to whether or not this inventory exists; it does, what is unknown is when this inventory will hit the market.

Nothing has changed, but for further support, I want to enlist economists Dean Baker and Christopher Thornberg.

Dean Baker: We’re Still In a Housing Bubble

Housing economist Dean Baker, the co-director of the Center for Economic and Policy Research, speaks frequently about the relationship between the cost of ownership and the cost of rental — rental parity as we call it — as an important measure of house prices. Obviously, I agree with him. His latest writing, Dean Baker: We’re Still In a Housing Bubble, is a cogent presentation of the current housing market situation.

"Home prices have posted six months of gains, according to the Case-Shiller home price index, released this morning. But some housing bears say that the fundamentals don’t support those price gains and that, even once the market finds a bottom, home prices aren’t likely to show significant appreciation for many years to come.

Housing economist Dean Baker, the co-director of the Center for Economic and Policy Research, laid out his case [PDF warning] at a risk conference last week for why we still have a housing bubble. Adjusted for inflation, home prices are still 15-20% higher than they were in the mid-1990s. “There’s no plausible fundamental explanation for that,” he says."

Remember Christopher Thornberg's Beacon Economics 2010 Orange County Forecast? He had the same observation:

Back to the article:

Why? Simple, he says: Economic fundamentals are all going in the other direction. Rental apartment vacancies are reaching record highs. [also see Rents Fall to 3 1/2 Year Low in Orange County] Many segments of the housing market are still oversupplied. And the core demographic in the country—the baby boomers—are reaching the age where they’re more likely to downsize, buying less house in the years to come.

Far from some rosy estimates that housing is going through a temporary, once in a lifetime downturn, and that once the market bottoms, homes will again appreciate well beyond the rate of inflation, Mr. Baker argues that home prices are far more likely to increase annually at the rate of inflation, at best.

“If anything, I expect housing to be weaker than normal rather than stronger over the next decade,” he says. “People who say this is a temporary story, there’s no real reason to believe anything like that.”

The recent burst of good housing news has been fueled by government stimulus, including the tax credit, low mortgage rates and easy financing from the Federal Housing Administration. Mr. Baker, who had been a skeptic of the tax credit, concedes that it has worked. So, too, he says, has the FHA effectively supplied credit to goose sales.”

Yes, we replaced subprime with FHA (and the GSEs), and we put thousands of people into homes with 3.5% down FHA loans, money renters likely to fall 10% or more underwater. If they walk, you and I pay the bills.

Housing Bubble Deflation Progress by Market Segment

The Great Housing Bubble deflates unevenly across market segments with the low-end falling most and the high-end falling least — so far anyway. The differential rates of decline has created a gap between top and bottom that has never been so stretched. The bottom of the market collapsed first as toxic financing is most lethal to those with least sophistication, resources and experience: subprime. Borrowers further up the property ladder are falling flat like subprime but they are allowed to dance with lenders in amend, extend, pretend — a charade seemingly with no end.

Many people believe the high end will suffer the least while the low end suffers the most because history recorded same over the last 3 years. I contend the various market strata are like Shoemaker Levy comet fragments marking different points along the same trajectory destined to meet with the same fate. Only time will tell if I am right or wrong.

Psychological Stages of a Bubble Market -- Irvine 2010

I have a difficult time visualizing how prices at the high end can stay so high. The high end and the low end went up together, and the low end has since fallen; either the low end must go back up a great deal, or the high end must come down — unless you believe the gap between the rich and the poor is destined to widen forever.

Bulls would have us believe that Irvine and Orange County are so desirable that wealth will concentrate here in abundance saving our housing market and making it different than the rest; it is a compelling narrative with a small kernel of truth; however, the narrative ignores the size and interrelationship of all housing markets and the consequences of the substitution effect on housing values.

Roaring Back?

What about the idea that "housing is going through a temporary, once in a lifetime downturn, and that once the market bottoms, homes will again appreciate well beyond the rate of inflation?" It is the prevailing (and incorrect) belief in the market today. Dissenting views exist: Housing recovery could take a decade, say optimists, and House values won't regain bubble heights for AT LEAST a decade. That doesn't sound good.

The first story has a great opening:

"Even as the housing market shows signs of improvement, including in new data released Tuesday, economists warn that it could take up to a decade for many homeowners to regain equity in their homes, while some people in the hardest-hit regions of the country may not see a recovery during their lifetime."

During their lifetime? Yikes! Certainly not giving any false hopes here.

The second story is interesting because it is either extremely bearish or condescending of bears, and I can't determine which:

"A New Jersey financial publishing house assumes conservative rates of growth in its formulas but acknowledges that its conclusions take a 'real leap of faith.'"

It is a leap of faith because (bearish) house prices will not bottom as quickly and prices will not rise as fast as projected? Or, is the leap required because (bullish) prices are obviously going to rise much faster than this guy projects, so he is way too conservative? Enlighten me in the astute observations.

"According to the Standard & Poor's/Case-Shiller index, which tracks changes in the value of residential real estate in 20 metropolitan regions, prices have fallen 32.6%, peak to trough, between 2006 and the third quarter of 2009.

HSH is predicting a flat real estate market with no increase in value through June 2010. Then, from July 2010 through August 2011, a period of 14 months, prices are projected to increase at a rate of about 2.5% a year. And from then on out, the company is figuring on a yearly gain of 3%.

With these percentages in mind, let's look at what would happen to the value of a $200,000 house purchased at the top of the market in July 2006.

By the time the market hit bottom — at least the bottom according to Case-Shiller's 32.6% figure — that property was worth $134,800. Using HSH's assumptions, the value of the imaginary house won't get back to the $200,000 paid for it until July 2022 — 12 1/2 years from now."

As you may have surmised, I also projected recovery times in The Great Housing Bubble, Future House Prices – Part 1:

Irvine, CA, Projections from Historic Appreciation Rates, 1984-2026

Perhaps we will round out the bottom a bit with 5% interest rates, but we do eventually need to get back on line of rational appreciation instead of the line of irrational exuberance. What many consider normal appreciation is in fact a parabolic blowoff of a speculative mania.

Don't worry, it is different here.

What happens in Vegas, stays in Vegas, right?…

Hard Landing Las Vegas

Fortunately, we are much closer to the bottom than to the top for most market segments. In fact, I am very bullish on Las Vegas, if for no other reason than I see where we are in the chart above. Here in Orange County and Irvine in particular, we have not progressed far enough along the journey to reach bottom.

It is what it is. Stay tuned.

17 SUNRISE Irvine, CA 92603 kitchen

Irvine Home Address … 17 SUNRISE Irvine, CA 92603

Resale Home Price … $1,528,000

Income Requirement ……. $321,086

Downpayment Needed … $305,600

20% Down Conventional

Home Purchase Price … $675,000

Home Purchase Date …. 4/9/1999

Net Gain (Loss) ………. $761,320

Percent Change ………. 126.4%

Annual Appreciation … 7.7%

Mortgage Interest Rate ………. 5.13%

Monthly Mortgage Payment … $6,660

Monthly Cash Outlays ………… $8,340

Monthly Cost of Ownership … $6,150

Property Details for 17 SUNRISE Irvine, CA 92603

Beds 5

Baths 3 full 1 part baths

Home Size 3,500 sq ft

($437 / sq ft)

Lot Size 5,800 sq ft

Year Built 1980

Days on Market 424

Listing Updated 11/13/2009

MLS Number U8005368

Property Type Single Family, Residential

Community Turtle Rock

Tract Rg

Rarely on the market. Location, location. Thousands spent in upgrades. Home has been remodeled and updated. Beautiful backyard, light and bright, open floor plan. Hardwood flooring throughout, Huge family room/den area. Office area. Master suite with private sitting area attached. Entertainers backyard with BBQ area, Private jacuzzi and sitting area. Awnings, outdoor fireplace. Three indoor fireplaces enhance the living areas. Kitchen nook, large den with wine room attached. Skylights bring more sun to already bright home. Low association fees. No Melo-Roos. Walking distance to Bonita Canyon and Turtle Rock schools, University High School. Next to Turtle Rock Community Park, Tennis, Pools and Association. Beautifully kept and maintained. Thank you

lite-brite

I have to admit, when I look into the details of some of these HELOC abuse cases, I try to imagine the borrower's life and the feeling of power of having hundreds of thousands of dollars given to you by the market to spend as you will. Borrowers get to enjoy a carefree (and careless) attitude toward money where they simply spend whatever it takes to get whatever they want; what a great reality to live in. It's unfortunate that reality isn't Reality.

Some assume I must be jealous to even ponder such things, but I assure you it isn't jealousy. There are some things in life you have to see for what they are, and the seduction of kool aid intoxication and reckless spending is just as potent as any vice known to man. As a society, we succumbed to the Siren's Song in large numbers and inflated the largest and most destructive housing bubble in US history. I hope we can see clear not to do it again.

HELOC Abuse Grading System

Home Equity Line of Credit (HELOC) abuse was a massive stimulus to our economy, and now it is one of the leading causes of foreclosure. Today, we are going to take a detailed look at this phenomenon and the implications for future lending.

25 ROSE TRELLIS Irvine, CA 92603 kitchen

Irvine Home Address … 25 ROSE TRELLIS Irvine, CA 92603

Resale Home Price …… $1,267,000

{book1}

He hears the ticking of the clocks

And walks along with a parrot that talks,

Hunts her down by the waterfront docks where the sailers all come in.

Maybe she'll pick him out again, how long must he wait

Once more for a simple twist of fate.

People tell me it's a sin

To know and feel too much within.

I still believe she was my twin, but I lost the ring.

She was born in spring, but I was born too late

Blame it on a simple twist of fate.

Simple Twist of Fate — Bob Dylan

There is a simple truth about the housing market; people are going to buy and sell homes when is suits their life's circumstances. Unlike many of the readers of this blog, few base their decisions on market dynamics, and even when they do, each sets their own risk parameters.

The main factor separating those who benefited from the housing bubble from those who did not was a Simple Twist of Fate; for some it was time to sell or buy, and Fate either enriched or destroyed them.

I have often wondered if I had made different decisions during the bubble if I would have been caught up in the frenzy. Although I don't believe I could have fully ingested kool aid, I probably would have behaved like most of my cohorts and increased my loan balance. I consider those who did this with fixed rate financing and still managed to lower their payments as the sly ones. That is as far as I would have gone, but I probably would have taken some of the free money.

The conditions that spawned the rally of The Great Housing Bubble are gone, and we will not see rapid appreciation and a HELOC-fueled economy for decades. I believe we are embarking on a 20-30 year cycle of slowing rising interest rates as we stay one step behind inflation the entire journey. In an environment of increasing financing costs, mortgage equity withdrawal is rare because there is little equity available, and the cost of accessing and spending that equity is high — the opposite of what people have become accustomed to over the last 20-30 years.

It is important to me for people to realize HELOC spending is not coming back. Many buyers operative today are basing their decisions on poor information, they believe that if they can just get into a home, they will get to live off the HELOC money like everyone did in the 00s — they may have to wait a few years, but most buyers are certain HELOC money is on its way. It's not. As long as buyers are making buying decisions based on poor information, they will likely overpay and be unhappy with the results later on.

HELOC Abuse Grading System

I was looking back on the abundance of HELOC abuse stories from last year, and since I know we are going to see many, many more of these disasters over the next several years, I have developed a simple grading system that will tell you at a glance information about the borrower. By devoting this post to the grading sysem, in the future when you see a small graphic that labels the owner a "Grade D HELOC abuser," you will know a great deal about how they lived and how they managed their debt.

HELOC Abuse Grading System

As I contemplated a grading system, I wanted something visually intuitive so I developed the graphic above. The origin point to the left represents the total loan balance on the day the property was purchased. The lines emanating from the origin extend to the right with an angle of trajectory that either pays down a mortgage or adds to it.

Each HELOC grade is separated by a psychological or behavioral threshold, and each one has observable results — you can compare the current mortgage balance with the original one and see how quickly the debt went up or down.

HELOC Abuse Grade AHELOC abuse grade A

Most people who borrow money do so because they need it. There is a limitation to how quickly they can repay the money, and the limit at the bottom of Grade A is the pinnacle of borrower prudence.

I probably shouldn't call this HELOC abuse at all because in order to earn an A, a debtor must pay off a mortgage faster than a 30-year amortization schedule. This should not be a difficult hurdle to jump over; in fact, prior to the housing bubble, most borrowers were forced to toe this line by conservative lenders.

The major difficulty in earning an A comes from deferred maintenance and renovation. People tend to borrow for major improvements with the justification it adds value to the property. Added value is debatable, but added debt is certain. Few people pay down their mortgage faster than a 30-year rate, and fewer manage to maintain that trajectory. Kudos and special recognition are in order for those who accomplish this difficult task.

HELOC Abuse Grade BHELOC abuse grade B

Earning a B in this system requires a debtor to at least hold the line on the total debt. Anyone who does better than treading water — which puts all interest-only borrowers on the line — can earn a B. As previously noted, prior to the bubble, few borrowers were near this threshold and most of the market earned a B for debt management.

Since lenders lost billions allowing copious amounts of mortgage equity withdrawal, since prices are no longer rising, and since the cost of money (interest rates) is likely to rise, borrowers of the future will be forced to earn a B as lenders drop their C, D, E and F customers.

Earning a B is a badge of honor; the scarlet letters are coming next….

HELOC Abuse Grade C HELOC abuse grade C

I hate to give borrowers in this category a "passing" grade, but this is the reality for most Americans. Growing credit card or mortgage debt slowly generally can be compensated for through home price appreciation, and although I consider this a bad idea, I can't really call it HELOC abuse, just foolish HELOC use. Is there a distinction there? I will let you decide.

Financial planners will tell you that most people fail to budget properly for unexpected expenses (they don't save), so when they fall behind a little each month, they put the balance on a credit card and hope they can pay it back with a tax return — or during the bubble with a visit to the housing ATM.

People are still going to manage their bills this way going forward, and there will be pressures to "liberate" this equity to pay for these expenses. The money changers will continue to peddle this nonsense as sophisticated financial management. It is a stupid way to manage debt, and I give it a C.

HELOC Abuse Grade DHELOC abuse grade D

The transition between a grade C and a grade D is somewhat subjective, but it is hinged to an idea; once borrowers start knowingly increasing their loan balance to spend appreciation as a matter of habit, once they start expecting appreciation and HELOC money as a reliable source of income, they have moved from what some may consider legitimate use of HELOCs to Ponzi Scheme financing and ultimately a foreclosure implosion. This Ponzi borrowing limit is an invisible threshold borrowers do not realize they have crossed, but once they accept using debt to pay debt as a concept, they have crossed over to the Dark Side.

The top of the range of D graded HELOC abusers is the limit of each borrowers self delusion when it comes to how much appreciation they feel comfortable spending without losing their homes. People who earn a D still planned to keep their homes, they were merely misguided by their own ignorance and the incessant Siren's Song of kool aid intoxication. These are the sheeple; like the rats St. Patrick cast into the sea, each borrower followed the Piper to their underwater mortgage and a watery foreclosure.

HELOC Abuse Grade EHELOC abuse grade E

Most of the HELOC abuse posts I have done have been Grade E abusers because they are entertaining. When someone borrows and spends a $1,000,000, it is dramatic, and as an outside observer, you have to wonder what they spent all that money on.

Somewhere beyond the limit of self delusion, a borrower makes another psychological leap, they no longer worry about the consequences of their actions and they spend, spend, spend. This grading category spans the continuum from thoughtless spending to foolish and reckless spending where the borrower exercises no restraint at all.

HELOC abusers who get an E had to make an effort to spend. It takes time and effort to really spend beyond ones means one small transaction at a time. How many dinners out, trips to Vegas and other indulgences does it take to consume $1,000,000? I don't know, but grade E abusers try to find out.

HELOC Abuse Grade F HELOC abuse grade F

Grade F HELOC abusers are the creme de la creme of their craft. These people are not maxing out their debt to spend recklessly — although I am sure much reckless spending occurred — grade F HELOC abusers are openly gaming the system to flip properties or strip equity while passing the risks on to lenders.

Another group that falls in this category are the Land Barons, as they are described at the Coto Housing Blog. People who stripped the equity from one property to acquire others build a massive Ponzi structure. Back in February of 2009, I profiled the holdings of one such land Baron in Everybody Wants to Own the World.

The upper limit of this boundary is determined by lender greed as reflected through their underwriting standards. During the housing bubble, this line was pushed so far as to create categories C, D, E and F. Since most of these people are going to lose their homes, expect to see lenders lower the trajectory of this line significantly.

Grade F HELOC abusers are the ones who benefited the most from the housing bubble. All Grade D, E, and F borrowers either have or will lose their homes. The grade F borrowers got to extract the most value out of their equity before the market collapsed. Any borrower who had any psychological restraint — even the clueless ones who get an E — are worse off than those who spent with the greatest abandon.

When you contemplate the wide range of bad behaviors that were encouraged during the Great Housing Bubble, do you think we will have future issues with moral hazard? I do.

{book4}

25 ROSE TRELLIS Irvine, CA 92603 kitchen

Irvine Home Address … 25 ROSE TRELLIS Irvine, CA 92603

Resale Home Price … $1,267,00025 ROSE TRELLIS Irvine, CA 92603 sunset

Income Requirement ……. $272,289

Downpayment Needed … $253,400

20% Down Conventional

Home Purchase Price … $1,274,000

Home Purchase Date …. 11/24/2004

Net Gain (Loss) ………. $(83,020)

Percent Change ………. -0.5%

Annual Appreciation … -0.1%

Mortgage Interest Rate ………. 5.33%

Monthly Mortgage Payment … $5,647

Monthly Cash Outlays ………… $7,640

Monthly Cost of Ownership … $5,630

HELOC abuse grade C

Property Details for 25 ROSE TRELLIS Irvine, CA 92603

Beds 3

Baths 3 full 1 part baths

Size 2,650 sq ft

($478 / sq ft)

Lot Size 4,792 sq ft

Year Built 2004

Days on Market 3

Listing Updated 12/31/2009

MLS Number S599997

Property Type Single Family, Residential

Community Turtle Ridge

Tract Ledg

According to the listing agent, this listing is a bank owned (foreclosed) property.

Bank Owned Property With Spectactular City Lights Views. Upgraded 3 bedroom home with distressed hard wood flooring downstairs. Kitchen has a large center island, Granite counters and a breakfast nook. Each bedroom has its own bathroom with a guest half bath downstairs. Outstanding City views from master bedroom upstairs with two french doors to two juliet balconies. Upstairs laundry. Nice size Casita with full bath for your guests downstairs. An upgraded epoxy flooring in Garage. This community is guard gated 24 hrs with resort like association amenities that includes a Gym, Club House, Parks, picnic areas and two pools. Walking and biking trails everywhere with views of the city and the ocean. Agents, bring you clients to see this resort like area and this outstanding home. Don't miss out!

IMO, cropping the bottom half of the sunset photograph would be an improvement. The sunset is pretty; the black blob below is not.

upgraded epoxy flooring? Does epoxy flooring come in a standard and upgraded form?

bring you clients… correct you grammar…

Spectactular?

The lender is trying to break even and get late 2004 pricing. If they can find a qualified buyer, the property will sell.

IHB News 1-2-2010

Today we have a little HELOC abuse to go with your weekend news update.

Irvine Home Address … 171 BRIARWOOD Irvine, CA 92604
Resale Home Price …… $319,000

{book1}

I fell asleep down by the stream
And there I had the strangest dream
And down by Brennan’s Glenn there grows
A briar and a rose

There’s a tree in the forest
But I don’t know where
I built a nest out of your hair
And climbing up into the air
A briar and a rose

The Briar And The Rose — Tom Waits, performed by Celtic Wonder

Housing Bubble News from Patrick.net

Fannie Mae Delinquencies Increase Sharply in October (calculatedriskblog.com)
Foreclosures rise in third quarter (csmonitor.com)
Paul Volcker: The Lion Lets Loose (businessweek.com)
Not So Radical Reform (businessweek.com)
Robert Shiller on the Next Bubbles (newsweek.com)
House equity lending evaporates (news.yahoo.com)
Billions to Fight Foreclosure, but Few New Loans (nytimes.com)

Predictions

10 years…no gain in house prices (money.cnn.com)
Housing sales seen shifting in 2010 (ocregister.com)
Predictions For 2010
Are Houses now “Cheap”? (calculatedriskblog.com)
The Numbers Still Say 30% Down 30% Left To Fall (newobservations.net)
Don’t Be Fooled by the Housing Market’s False Bottom (moneymorning.com)
3 reasons house prices are heading lower (money.cnn.com)
House prices will continue to collapse like a ponzi scheme (thepanicnews.com)
U.S. house prices flat; Double-dip hoped for (latimes.com)
Morgan Stanley Predicts 5.5% 10-Year Treasuries, 30 Year Mortgages at 7.5% (Mish)

FED program to buy agency paper

Fed buys $9.3 bln net in agency MBS in latest week (reuters.com)
Mortgage Bond Rally May End, Rates Rise as Fed Stops Purchases (bloomberg.com)

GSE Bailout

Bankers Get $4 Trillion Gift From Barney Frank (bloomberg.com)

Canadian Bubble

The Vancouver Bubble And Bust (howestreet.com)

Option ARM

Four reasons to walk away from your option ARM (financemymoney.com)
November new house sales sink 11 percent (news.yahoo.com)
Where Americans aren’t moving – California (money.cnn.com)

Walking Away

No consequences for lying borrowers (finance.yahoo.com)
If billionaires don’t feel guilty about walking away from debts, should houseowners? (slate.com)
Walking Away From The House She Can Afford (npr.org)
Elderly Savers Financially Murdered By Low Rates, To Save Debtors (nytimes.com

Miscellaneous

Interview With Patrick (directorslive.com)
Mortgage History Lessson From Chicago, 1877

{book3}

Irvine Home Address … 171 BRIARWOOD Irvine, CA 92604

Resale Home Price … $319,000

Income Requirement ……. $68,021
Downpayment Needed … $11,165
3.5% Down FHA Financing

Home Purchase Price … $140,000
Home Purchase Date …. 6/12/1989

Net Gain (Loss) ………. $159,860
Percent Change ………. 127.9%
Annual Appreciation … 4.0%

Mortgage Interest Rate ………. 5.26%
Monthly Mortgage Payment … $1,702
Monthly Cash Outlays ………… $2,380
Monthly Cost of Ownership … $1,830

Property Details for 171 BRIARWOOD Irvine, CA 92604

Beds 2
Baths 1 bath
Size 1,000 sq ft
($319 / sq ft)
Lot Size n/a
Year Built 1978
Days on Market 6
Listing Updated 12/23/2009
MLS Number S599524
Property Type Condominium, Residential
Community Woodbridge
Tract Vg

According to the listing agent, this listing may be a pre-foreclosure or short sale.

Great Location in Woodbridge and Great Location in the tract. Quiet, Upstairs End Unit. Very nice and neat inside. Large Deck outside. Spacious Kitchen with Large Eating Area. Both Bedrooms are Light and Bright and Good Size. Enjoy the Spacious Living Room with access to the patio. Convenient Inside Laundry Room. Freeway close and walking distance to Schools and Shopping.

Perhaps that $250,000 HELOC the owner took out in 2005 was not such a good idea….

IHB News 12-26-2009

Happy Boxing Day!

5322 PLUM TREE Irvine, CA 92612 kitchen

Irvine Home Address … 5322 PLUM TREE Irvine, CA 92612
Resale Home Price …… $520,000

{book1}

Take it all down, Christmas is over
But do not despair, but rather be glad
We had a good year, now let’s have another
Remembering all the good times that we had
Oh no more lights glistening
No more carols to sing
But Christmas, it makes way for spring
Though hearts of man are bitter in weather
As cold as the snow that falls from above
But just for one day we all came together
We showed the whole world that we know how to love
Oh no more lights glistening
No more carols to sing
But Christmas, it makes way for spring
Oh no more lights glistening
No more carols to sing
Christmas, it makes way for spring
Oh remember that Christmas, it makes way for spring

Boxing Day — Relient K

I want to thank my wife for the inspiration of today’s post.

From Wikipedia:

The name [Boxing Day] derives from the tradition of giving seasonal gifts, on the
day after Christmas, to less wealthy people and social inferiors, which
was later extended to various workpeople such as labourers and servants.

The traditional recorded celebration of Boxing Day has long included
giving money and other gifts to charitable institutions, the needy and
people in service positions. The European tradition has been dated to
the Middle Ages, but the exact origin is unknown and there are some
claims that it goes back to the late Roman/early christian era.

In the United Kingdom it certainly became a custom of the nineteenth
century Victorians for tradesmen to collect their ‘Christmas boxes’ or
gifts in return for good and reliable service throughout the year on
the day after Christmas. [1].

The establishment of Boxing Day as a defined public Holiday under
the legislation that created the UK’s Bank Holidays started the
separation of ‘Boxing Day’ from the ‘Feast of St Stephen’ and today it
is almost entirely a secular holiday with a tradition of shopping and
post Christmas sales starting.

Christmas Day is usually spent quietly with the family (my son was thrilled to spend all day in pajamas). According to my British sources, Boxing Day is the day to get outside, whatever the weather. Watch sport. Play sport. Have fun!

Housing Bubble News from Patrick.net

2010: Another year, another crisis (blogs.reuters.com)
Housing May Stay Shaky Without U.S. Aid (online.wsj.com)
Despite modified loans, many houseowners lag again (miamiherald.com)
Watchdog needed to prevent financial collapse (heraldtribune.com)
Small-business bankruptcies rise 81% in California (latimes.com)
Serious U.S. mortgage delinquencies up 20 percent (finance.yahoo.com)
Borrowers with modified loans falling into trouble (finance.yahoo.com)
U.S. property faces long road to recovery (reuters.com)
Foreclosures for “seriously delinquent loans” topped 1 million in Q3 (latimes.com)
Spend or save — what’s an American supposed to do? (latimes.com)
With rates so low, where should your cash go? (msnbc.msn.com)
Top 10 Outrageous Predictions for 2010 (cnbc.com)
More houses are poised to hit the market (latimes.com)
Glut of shadow properties could hurt housing prices (tennessean.com)
Foreclosure backlog estimated at 1.7M (news.yahoo.com)
My Half-Baked Bubble (nytimes.com)
Realtors Try Used-Car Salesman Tactics (minyanville.com)

5322 PLUM TREE Irvine, CA 92612 kitchen

Irvine Home Address … 5322 PLUM TREE Irvine, CA 92612

Resale Home Price … $520,000

Income Requirement ……. $108,654
Downpayment Needed … $104,000
20% Down Conventional

Home Purchase Price … $212,000
Home Purchase Date …. 5/14/1998

Net Gain (Loss) ………. $276,800
Percent Change ………. 145.3%
Annual Appreciation … 7.8%

Mortgage Interest Rate ………. 5.08%
Monthly Mortgage Payment … $2,254
Monthly Cash Outlays ………… $2,960
Monthly Cost of Ownership … $2,390

Property Details for 5322 PLUM TREE Irvine, CA 92612

Beds 3
Baths 1 full 1 part baths
Size 1,372 sq ft
($379 / sq ft)
Lot Size 1,500 sq ft
Year Built 1974
Days on Market 1
Listing Updated 12/16/2009
MLS Number S599118
Property Type Single Family, Residential
Community University Park
Tract Tr

According to the listing agent, this listing may be a pre-foreclosure or short sale.

***Short Sale in process with a professional short sale negotiator***Upgraded University Park Home With Remodeled Kitchen, Recessed Lights, French Doors, Skylights And Much More. Bright And Open Floor Plan Featuring Large Living Room With Fireplace, Sunny Kitchen With A Bay Window, Two Large Private Patios. Tract Is Like No Other With Huge Parks, Lots Of Trees, Private Driveways, Assoc Maintained Front Lawns And Landscaping, Pools/spas/clubhouse.

***Short Sale in process with a professional short sale negotiator*** LOL! People are carving out niches as professionals with respect to short sales. Does anyone remember 3 years ago when nobody knew what a short sale was?

Merry Christmas from the IHB

Santa left Super Mario Bros. Wii!!! I am having so much fun!!!

27 KERNVILLE Irvine, CA 92602 kitchen

Irvine Home Address … 27 KERNVILLE Irvine, CA 92602
Resale Home Price …… $1,250,000

{book1}

Oh come all ye faithful
Joyful and triumphant
Oh come ye, oh come ye to Bethlehem

Sing choirs of angels
Sing in exultation
Oh sing, all ye senders of the heaven above

Oh Come All Ye Faithful — Nat King Cole

Merry Christmas from the IHB

I hope you are enjoying this Holiday whatever your faith or belief. Few are working today, and for those that are at their jobs, thank you for giving up your Holiday to make ours possible.

27 KERNVILLE Irvine, CA 92602 kitchen

Irvine Home Address … 27 KERNVILLE Irvine, CA 92602

Resale Home Price … $1,250,000

Income Requirement ……. $261,187
Downpayment Needed … $250,000
20% Down Conventional

Home Purchase Price … $641,500
Home Purchase Date …. 10/2/2002

Net Gain (Loss) ………. $533,500
Percent Change ………. 94.9%
Annual Appreciation … 9.3%

Mortgage Interest Rate ………. 5.08%
Monthly Mortgage Payment … $5,417
Monthly Cash Outlays ………… $7,100
Monthly Cost of Ownership … $5,190

Property Details for 27 KERNVILLE Irvine, CA 92602

Beds 4
Baths 3 baths
Size 3,650 sq ft
($342 / sq ft)
Lot Size 6,000 sq ft
Year Built 2002
Days on Market 9
Listing Updated 12/16/2009
MLS Number S599020
Property Type Single Family, Residential
Community Northpark
Tract Tria

A must see. Best floorplan in track. 3 bedrooms downstairs (including master) and one studio master with loft upstairs. Built-in BBQ and fountains. Travertine in living room, family room and kitchen.

Does is seem right to you that this property has appreciated at 9.3% per year every year since 2002? I don’t see how these houses maintain these price levels.