The indelible symbols of the housing bubble are the empty towers left in its wake. We have them here in Orange County, and the Chinese have them in every major city.

Irvine Home Address … 3131 MICHELSON Dr #507 Irvine, CA 92612

Resale Home Price …… $390,000

If you feel so empty

So used up so let down

If you feel so angry

So ripped off so stepped on

You're not the only one

Refusing to back down

You're not the only one

So get up

Let's start a riot, a riot

Let's start a riot

Let's start a riot, a riot

Let's start a riot

Three Days Grace — Let's Start a Riot

The Chinese have long known they have a problem with real estate values. Over the last several years, the Chinese government has enacted a series of half-hearted policies aimed to slow the increase in real estate prices. Unfortunately, the Chinese housing bubble is a runaway freight train heading for an awful crash.

Shanghai Homeowners Smash Showroom in Protest Over Falling Prices

October 25, 2011, 4:17 PM HKT

A weekend scuffle in Shanghai over a drop in apartment prices adds to increasing evidence that China’s efforts to tame a surging property market are having an impact – even as it offers a hint of what could happen if the measures go too far.

A group of around 400 homeowners in Shanghai demonstrated publicly and damaged a showroom operated by their property developer after the company said it cut prices. Home buyers had wanted to speak with the developer to refund or cancel their contracts but were unsuccessful, according to local media. One report said the price cuts exceeded 25% per square meter.

Can you imagine? These people are on the verge of rioting over a small decline in prices — at least it's small compared to what is coming.

I remember the fervor over rising house prices here and the hostility people exhibited at the mere suggestion that prices might go down. I had to blog anonymously for the first 18 months I wrote for this blog for fear of what the crazies might do. Given the behavior of these protestors in China ransacking a showroom, it appears my fears were well founded. When people realize they bought a steaming pile of crap rather than a pot of gold, they get pretty upset.

The local media reports said an unspecified number of people were injured. The property developer, a unit of China Overseas Holdings Ltd., didn’t respond to requests for comment. Photos of the event showed broken glass in the sales office, homeowners marching with banners and a phalanx of police watching over.

Chinese media separately reported that another group of Shanghai homeowners gathered on Saturday to speak with Longfor Properties Co., after it dropped asking prices to 14,000 yuan per square meter from 18,000 yuan per square meter at a residential development in the city’s Jiading district. Longfor didn’t return calls for comment. In an Oct. 20 release, it said it posted stellar sales following an aggressive sales strategy for three of its projects in Shanghai and in the city of Hangzhou.

It's time to line up the bagholders. Anyone who buys now in China will watch their investment turn to garbage overnight.

Beijing has been tightening control of the property market this year to tame surging property prices, amid fears that unaffordable housing could lead to greater social unrest. Measures include a massive 1.3 trillion yuan program to build about 10 million public housing units for low-income earners this year, as well as limits of purchases of second homes and other restrictions.

Data in recent weeks have suggested that the curbing efforts are having an impact. China’s housing prices were largely unchanged in September from a month earlier and grew at a slower pace than in September 2010, indicating Beijing’s efforts to cool the real estate sector are having an impact.

Speculation has turned to whether authorities will now relax restrictions. On Monday, China’s eastern city of Nanjing said it would let residents borrow more money from the city’s housing provident fund to buy “ordinary homes,” in a move designed to give the struggling property sector a boost. While it didn’t elaborate, such homes are often defined as no larger than 140 square meters.

In the southern city of Foshan earlier this month, local officials announced they would lift some property-market restrictions, then postponed that move the next day “to seek further public opinion and to make an assessment on the effects of such measures”, without giving further details.

Chinese Premier Wen Jiabao on Saturday stressed that all levels of government need to reinforce China’s controls of the property market, and that tightening efforts in the property market and the construction of public homes in China are at a pivotal moment.

It will be interesting to see how the Chinese react to this problem. They surrendered central control of all pricing and embraced a modified form of capitalism. With capitalism comes its associated ills, one of which is Ponzi viruses. Once a Ponzi virus in unleashed on the financial system it reproduces like a cancer cell until it grows so large it imperils the economy. China should have stamped out this virus years ago, but the ensuing development it created was highly sought after by the government, so they didn't recognize the danger in what they were doing.

They now have a Ponzi scheme so large it threatens everything. The civil unrest at this showroom is a minor skirmish in what could easily grow into a massive outpouring of violence when the crash wipes the illusions of wealth of the entire nation. If people are this upset over a 25% decline, they are obviously quite attached to their notion that prices only go up.

The Shanghai property-owner demonstration found little support on China’s Internet, where most still expressed worries that housing prices are too high. In an informal poll posted on the Twitter-like microblogging site Sina Weibo that had attracted more than 34,000 votes by Tuesday evening, 80% said they that thought it was normal for housing prices to fall and that the Shanghai protestors were just playing up the issue.

“This is an immoral action,” Weibo user Xiaobai Yeyou Naxieshi wrote in one of the 7 million property-related posts Sina had collected Tuesday on a special topic page. “Buying a house is a form of investment and every investment involves risk. If prices didn’t fall, people who can’t afford to buy an apartment would really have to wait forever.”

Interesting that your average Chinese citizen realizes people cannot be priced out forever, but the average Californian doesn't get the concept.

“Dear Government, can you please cancel my purchase of Petrochina shares? A refund based on the IPO price would be fine,” joked Linshi Renyuan. Petrochina, which debuted on the Shanghai stock market at 16.7 yuan per share in 2007, was trading at to 9.85 yuan per share at the end of the day Tuesday.

LOL! But real estate is different. Prices only go up. Real estate is an investment with no risk, right?

That said, a sustained drop in housing prices could spark its own displeasure. It could also spark criticism that Beijing’s policies don’t address long-term issues.

Outspoken Chinese real estate tycoon Ren Zhiqiang, whose properties haven’t been involved in the demonstrations, said on his microblogon Monday, “Does the government really want to solve the housing (issue) for the public or is it just using the property market as a tool to balance between economic growth and the public sentiment?”

The answer is obvious: the Chinese government doesn't care at all about providing affordable housing, it simply wants economic growth and the perception of wealth even if that wealth is an illusion based on a Ponzi scheme.

“Why doesn’t the government work on land supply, land prices and tax incentives? Why doesn’t it raise wages and lower home purchase taxes, and raise the affordability for the citizens?” Mr. Ren asked.

–– Esther Fung with contributions from Amy Li and Josh Chin

Yes, why doesn't the Chinese government work on those things. They demand they have created is artificial, just like ours was. They need to create real demand based on higher wages and increased worker productivity. The rest is an illusion.

North Korea towers in Irvine

Shanghai will be littered with empty housing towers built for high-end residents who simply don't exist. Orange County is also littered with empty housing towers built for high wage earners who simply aren't present. One of the most obvious examples of this phenomenon is the North Korea towers in Irvine, otherwise known as the Marquee at Park Place.

Most building and development happens in reaction to prices in the resale market. If developers believe they can sell a certain product for a certain price, they will provide that product if they believe they can do it profitably. Unfortunately, when the resale value is an illusion created by a housing bubble, developers build projects like these and either sell them to bagholders like the North Korea towers, or they become the bagholders like the Astoria across the street.

These false price signals sets in motion a great deal of wasted economic activity. The resources devoted to producing the worthless assets could have been, and should have been, diverted to other uses which would have had more societal value. This misallocation of resources is the problem with Ponzi viruses. For example, in the 16th century, the entire Dutch economy revolved around producing tulip bulbs. The misallocation of resources created a severe economic slump when tulip prices crashed.

Each dollar spent constructing an empty housing tower was robbed from a better use. Whatever this use might have been, it certainly would have helped the economy far more than the empty towers which serve as a testament to the folly of housing bubbles everywhere.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 3131 MICHELSON Dr #507 Irvine, CA 92612

Resale House Price …… $390,000

Beds: 2

Baths: 2

Sq. Ft.: 1500

$260/SF

Property Type: Residential, Condominium

Style: One Level, Contemporary

View: Yes

Year Built: 2005

Community: Airport Area

County: Orange

MLS#: S677328

Source: SoCalMLS

On Redfin: 6 days

——————————————————————————

The unit is on the 5th floor of the Marquee at park Place. This unit is a 2 bedroom plus den with 2 baths. View of surrounding office buildings. Two parking spots in the second level. Small storage locker.

——————————————————————————————————————————————-

Proprietary IHB commentary and analysis

Resale Home Price …… $390,000

House Purchase Price … $817,500

House Purchase Date …. 1/20/2006

Net Gain (Loss) ………. ($450,900)

Percent Change ………. -55.2%

Annual Appreciation … -12.1%

Cost of Home Ownership

————————————————-

$390,000 ………. Asking Price

$13,650 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$376,350 ………. 30-Year Mortgage

$136,919 ………. Income Requirement

$1,836 ………. Monthly Mortgage Payment

$338 ………. Property Tax (@1.04%)

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

$81 ………. Homeowners Insurance (@ 0.25%)

$433 ………. Private Mortgage Insurance

$849 ………. Homeowners Association Fees

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

$3,537 ………. Monthly Cash Outlays

-$289 ………. Tax Savings (% of Interest and Property Tax)

-$525 ………. Equity Hidden in Payment (Amortization)

$20 ………. Lost Income to Down Payment (net of taxes)

$69 ………. Maintenance and Replacement Reserves

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

$2,813 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$3,900 ………. Furnishing and Move In @1%

$3,900 ………. Closing Costs @1%

$3,764 ………… Interest Points @1% of Loan

$13,650 ………. Down Payment

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

$25,214 ………. Total Cash Costs

$43,100 ………… Emergency Cash Reserves

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

$68,314 ………. Total Savings Needed

——————————————————————————————————————————————————-

November's presentatations have been moved

Due to competing demands from holiday parties, we have decided to move the November and December presentations to the classroom at the offices of Intercap Lending.

Larry Roberts is hosting a Las Vegas cashflow properties presentation at the offices of Intercap Lending (9401 Jeronimo, Suite 200, Irvine, CA 92618) on November 9, 2011. Please RSVP at sales@idealhomebrokers.com. Register online here: Las Vegas cashflow property – Intercap Lending

Larry Roberts and Shevy Akason are hosting an OC housing market presentation at the offices of Intercap Lending (9401 Jeronimo, Suite 200, Irvine, CA 92618) on November 9, 2011. Please RSVP at sales@idealhomebrokers.com. Register online here: OC Housing Market – Intercap Lending

To avoid the morass of the Florida court system, BofA is now paying short sellers $20,000 to sell and return BofA its much needed cash.

Irvine Home Address … 18921 ANTIOCH Dr Irvine, CA 92603

Resale Home Price …… $764,900

I want a girl with smooth liquidation

I want a girl with good dividends

At Citi Bank we will meet accidently

We will start to talk when she borrows my pen

She wants a car with a cup holder armrest

She wants a car that will get her there

She is changing her name from Kitty to Karen

She is trading her MG for a white, Chrysler LeBaron

I want a girl with a short skirt and a

looooooooooooooooooooooooooooooooong jacket

Cake — Short Skirt, Long Jacket

The foreclosure process in Florida takes a long, long, long time. Florida is a judicial foreclosure state, and with millions of delinquent mortgage squatters and the lingering impact of robo-signer, BofA has given up on forcing people to leave via foreclosure, and has started to pay people to get out. Second mortgage lien holders must be thrilled, after all, they are the ones who will end up with the money.

Bank of America Offering Up to $20,000 to Florida Short Sellers

By Stefanos Chen | Posted Oct 11th 2011 5:00PM

It's not mortgage principal reduction, but it's a start.

WTF? Do I really care about the bogus opinion of this reporter to start the story? He makes this statement as if mortgage principal reduction is the answer to the problems in housing. Principal forgiveness is the the worst policy option. I certainly hope it isn't the endgame.

Further, if BofA is desperate, this is not the start of anything good for loan owners. It's a sign BofA is going to start clearing out its foreclosure pipeline which will reduce prices.

Bank of America is quietly rolling out an incentive program in parts of Florida in which they'll pay distressed homeowners up to $20,000 if they successfully short-sell their home, according to The Palm Beach Post.

A short sale is an arrangement in which the lender agrees to accept less than what's owed on the mortgage to avoid a lengthy (and expensive) foreclosure process. Foreclosures in Florida take an average of 23 months to be processed — nearly twice the national average, according to analytics firm RealtyTrac.

Therein lies the reason for this policy. The Florida court system is so bogged down with foreclosures, it is more cost effective for BofA to pay people to short sell rather than push them through the foreclosure process. If BofA doesn't get some of its capital back, they may not be around to complete the foreclosure process.

The pilot program, identified by BoA spokesman Rick Simon as the “short sale/relo incentive program,” is only being tested in Florida at the moment, due to the state's high volume of foreclosures. If the program is successful, the program may be launched elsewhere, he said in an email to AOL Real Estate.

Sometimes referred to as “cash for keys,” the money may be used to provide distressed homeowners “with the tools and resources necessary to transition out of their home with dignity,” the press statement says. In other words, there will be less chance that the homeowner will be tempted to vandalize the property on the way out.

This is a cash-for-keys deal, pure and simple. The contentious part will be debating over who gets the money. In the real world, the second mortgage holder is going to demand payment, and the loan owner is not going to want to turn over the money. Most borrowers have the belief that paying a second mortgage is optional, and that the second mortgage holder should lose everything because they took on that business risk. Of course, this is completely wrong, but that's what most people think. Plus, people simply want the money for themselves whether it's justified or not.

Trouble Thrives in Vacant Homes

In the humid climes of Florida, short sales are far more desirable to lenders than letting the house sit vacant in a foreclosure. Mold can ravage even the best built homes, and empty houses are prone to squatters and vandals. The $20,000 payout could be a drop in the bucket in comparison to the cost of maintaining a rapidly deteriorating home.

But there may be a major downside to the program for severely underwater homeowners. In recourse-loan states like Florida, the lender can seek what's known as a deficiency judgment — the unpaid balance left on the mortgage — even after a short sale is completed.

In such cases, much of the money could end up back into the bank's pocket.

If the same bank holds both the first and the second mortgages, this is less of a problem, but if another lender holds the second, they will not give up this money easily.

BoA's Simon said that the bank's guidelines “allow for the deficiency judgment to be waived,” but the bank reserves the right “to pursue collection” after the sale. That may not be a strong enough commitment, according to Broward County-based consumer defense attorney Margery Golant.

“The fact that they 'may consider' waiving the deficiency judgment means nothing to me,” Golant told AOL Real Estate in a phone interview. “It just fosters false hope.”

Hasn't everything the government and lenders done since the housing bubble burst been designed to foster false hope? I think so.

For Golant, who regularly sees homeowners with close to six figures of outstanding debt, even the full $20,000 would do little to get an owner out of the hole if they're still on the hook for the difference, she said.

“If they really were waiving the deficiency judgment, then I would think it could mean a meaningful approach,” Golant says. “But to say we'll give you $20,000, yet reserve the right to sue for the difference is not only not meaningful but deceptive.“

Yes, it is deceptive. Perhaps BofA doesn't want to write the debt off on their books, so they can retain at least some valuation for this bad loan if they can sell it to a zombie debt collector.

Could It Work?

There is already a national precedent for what BoA is attempting – the Home Affordable Foreclosures Alternative (HAFA) program, which offers a $3,000 short sale “relocation” incentive. But so far the results have been less than encouraging. Since April 2010, HAFA has only completed 15,531 short sales nationwide, The Palm Beach Post reports, and the program is scheduled to sunset at the end of 2012.

Results have been less than encouraging? LOL! Completing only 15,531 short sales in a year and a half is a complete and utter failure.

Still, if BoA can put up some impressive numbers in its trial run, there may yet be hope of more aggressive financing options for America's thousands of underwater homeowners – like the often-trumpeted, mostly dismissed notion of mortgage principal reduction.

Statements like that give more false hope than any government or bank program. the reason the notion of mortgage principal reduction is mostly dismissed is because it is a really, really bad idea.

For Florida homeowners interested in participating in the program, here are some key points:

The program offers $5,000 to $20,000 to qualifying homeowners who complete a bank-approved short sale. The amount is based on the unpaid balance on the loan as of Aug. 2011.

Short sale must be initiated between Sept. 26 and Nov. 30, 2011, and closed by Aug. 31, 2012.

To learn more about the program, call 1-877-459-2852.

This program will likely spread to other judicial foreclosure states where BofA is having a hard time getting its money out.

Doubled the mortgage plus got a big HELOC

Meny casual observers of the housing market believe Turtle Rock may not fall because the homeowners there are generally longer term owners so there is less mortgage stress. Perhaps that is true, but perhaps not. Turtle Rock still had Ponzis, and today, we are featuring one of them.

• This house was purchased on 12/30/1999 for $400,000. The owners used a $320,000 first mortgage and an $80,000 down payment.
• On 7/5/2000 the owner obtained a $60,000 HELOC.
• On 6/10/2005 they cashed out with a $650,000 Option ARM with a 1% teaser rate. It was a fatal mistake.
• On 11/16/2006 they refinanced again with a 1-year ARM at $680,000.
• On 7/26/2007 they obtained a $139,000 HELOC.
• The quit paying in April 2010 at the latest and squatted for at least 15 months.

Foreclosure Record

Recording Date: 01/19/2011

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 09/03/2010

Document Type: Notice of Default

Foreclosure Record

Recording Date: 09/03/2010

Document Type: Notice of Rescission

Foreclosure Record

Recording Date: 07/27/2010

Document Type: Notice of Default

The 2005 Option ARM is what did them in. Once they doubled their mortgage, it looks as if they crossed the Ponzi limit. It was only a matter of time. They held out for five more years, but finally succumb to the weight of the accummulated debt.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 18921 ANTIOCH Dr Irvine, CA 92603

Resale House Price …… $764,900

Beds: 4

Baths: 2

Sq. Ft.: 2011

$380/SF

Property Type: Residential, Single Family

Style: One Level, Ranch

View: City

Year Built: 1968

Community: Turtle Rock

County: Orange

MLS#: S676762

Source: SoCalMLS

On Redfin: 7 days

——————————————————————————

Single level 4 bedroom home in highly desirable Turtle Rock. Large lot with views from backyard. Great location across from the park. Home has great potential. Great opportunity!

——————————————————————————————————————————————-

Proprietary IHB commentary and analysis

Resale Home Price …… $764,900

House Purchase Price … $400,000

House Purchase Date …. 12/30/1999

Net Gain (Loss) ………. $319,006

Percent Change ………. 79.8%

Annual Appreciation … 5.4%

Cost of Home Ownership

————————————————-

$764,900 ………. Asking Price

$152,980 ………. 20% Down Conventional

4.18% …………… Mortgage Interest Rate

$611,920 ………. 30-Year Mortgage

$150,523 ………. Income Requirement

$2,985 ………. Monthly Mortgage Payment

$663 ………. Property Tax (@1.04%)

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

$159 ………. Homeowners Insurance (@ 0.25%)

$0 ………. Private Mortgage Insurance

$81 ………. Homeowners Association Fees

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

$3,889 ………. Monthly Cash Outlays

-$699 ………. Tax Savings (% of Interest and Property Tax)

-$854 ………. Equity Hidden in Payment (Amortization)

$228 ………. Lost Income to Down Payment (net of taxes)

$116 ………. Maintenance and Replacement Reserves

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

$2,680 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$7,649 ………. Furnishing and Move In @1%

$7,649 ………. Closing Costs @1%

$6,119 ………… Interest Points @1% of Loan

$152,980 ………. Down Payment

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

$174,397 ………. Total Cash Costs

$41,000 ………… Emergency Cash Reserves

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

$215,397 ………. Total Savings Needed

——————————————————————————————————————————————————-

The Orange County housing market is suffering due to the abundance of distressed sales. Prices are down 3.8%, and the volume of distressed sales shows no signs of decline.

Irvine Home Address … 199 WILD LILAC Irvine, CA 92620

Resale Home Price …… $409,000

One – Something's got to give

Two – Something's got to give

Three – Something's got to give

Now

Let the bodies hit the floor

Let the bodies hit the floor

Push me again

This is the end

Drowning Pool — Bodies

The government is determined to prop up the zombie banks and the dead housing market. We would all be much better off if they simply let the bodies hit the floor and cleared the market

Distressed home sales gumming up market

By JEFF COLLINS / THE ORANGE COUNTY REGISTER

Published: Oct. 24, 2011 Updated: Oct. 25, 2011 11:55 a.m

Market insiders had envisioned that the housing market would be well on its way to recovery by now.

No market cheerleaders and fools envisioned the housing market would be recovering by now. Thoughtful observers reasoned there were too many factors conspiring against higher prices and sales volumes for any market recovery so far.

Instead, it remains mired in the doldrums, with sales and prices hovering only slightly higher than when they hit bottom more than two years ago.

Here’s one possible reason why:

On average, four out of every 10 Orange County homes sold each month is either a bank-owned property or a short sale, according to figures provided by Adrese Roundtree, chief operating officer for the California Regional Multiple Listing Service.

These distressed properties – sold by the most motivated buyers in the business — act as a drag on the market, depressing prices.

Bank-owned homes are foreclosures that were repossessed by lenders. Short sales are homes sold on the open market for less than is owed on the mortgage.

Supply is only half the problem. Demand is off as well. The move-up market is dead, household formation is low, unemployment is high, and with falling prices, buyer motivation is low.

The MLS numbers show:

• The average number of distressed properties sold through the broker-run home listing system was 1,119 a month in 2009, representing 49.9% (half!) of all MLS deals.
• In 2010, the average fell to 1,097 a month, accounting for 43.5% of all MLS transactions.
• This year so far, the average held at 1,090 a month, still at 43.5% of all deals.

So even though the percentage of distressed sales fell slightly, the actual number of distressed transactions remains virtually unchanged for nearly three years.

What better example can we find of lenders controlling the property flow? They are selling out their inventory at a rate designed to hold prices steady. However, since their sales need to be slightly below comps to attract buyers, prices are drifting lower.

Of course, those numbers are averages. Monthly numbers fluctuated from a high of 1,239 in May 2009 to a low of 669 this past July.

In addition, the distressed market’s share of sales fluctuated from a high of 63.9% of all homes sold in January 2009 to a low of 30.1% in July.

But even after falling to July’s low point, distressed sales turned around in recent months, rising to 971 homes sold in September, representing 42.7% of last month’s total MLS deals. September’s distressed sales numbers are only slightly below the post-crash averages listed above.

Look for the percentage of distressed sales to increase in the coming months as lenders such as BofA become more motivated.

Other trends show that while the number of bank-owned sales has been falling over the past three years, short sales have risen. The MLS figures show:

• Sales of bank-owned homes dropped from an average of 615 units a month in 2009 (or 27.9%) to 552 a month this year so far (24.1%).
• Short sales increased from an average of 451 a month in 2009 (or 19.7%) to 481 this year so far (21.3%).

Period	Short sales	Bank owned	Total distressed sales
2009 Average	451	615	1,119
2010 Average	466	578	1,097
2011 YTD	481	552	1,090

I would look for short sales numbers to decrease, particularly now that lenders have no way to collect for deficiencies after an approved short sale. Lenders cannot sustain the loans on their books in California after a short sale because they have no residual value. In other states, they can potentially sell this bad debt to zombie debt collectors, but not here.

O.C. home prices slip 3.8%

October 24th, 2011, 12:11 am — posted by Jon Lansner

Highlights of DataQuick’s Orange County homebuying report. For the 22 business days ending October 6 — the latest numbers — Orange County’s real estate market saw …

• Median selling price for all residences of $425,000 — that is off 3.8% vs. a year ago.
• Total Orange County sales of 2,505 residences closed in the latest period — that is off down 2.0% vs. a year ago.
• Note: 12 of 83 Orange County ZIPs had both rising sales and prices in the period. Is your ZIP one of those neighborhoods? To see, CLICK HERE!

If 12 of 83 zip codes had both rising sales and prices, then 71 of 83 zip codes or 85% of local zip codes had either falling prices or falling sales volumes. It doesn't sound quite so rosy when put that way, does it?

Here’s the breakdown of recent activity by key category; included is how the latest results compare to the average monthly sales pace from 1988 through 2010:

Slice	Price	Price vs. year ago	Sales	Sales vs. year ago	Sales vs. ’88-’10 avg.
Houses	$480,000	-5.9%	1,714	+3.9%	-24.1%
Condos	$262,500	-12.4%	646	-12.8%	-25.0%
New	$604,250	-9.7%	145	-12.1%	-72.4%
All O.C.	$425,000	-3.8%	2,505	-2.0%	-31.3%

And more analysis ….

• $425,000 median selling price is 34% below June 2007′s peak of $645,000.
• Current price is 5.6% below 2010′s peak (May and July) of $450,000; 4% above end of 2010′s median ($410,000.)
• The most recent median is 15% above the cyclical low hit in January 2009 at $370,000 — so the median has recouped 20% of the $275,000 price drop from the peak.
• Compared to cyclical low, single-family house median is 15% higher ($418,250 in January 2009); condo median is 4% higher ($252,000 in March 2009.) Builder prices for new homes are 43% above June 2009′s $424,000 bottom.

Those statistics show just how unreliable the median is as a measure the change in value of individual homes. Nobody who bought in early 2009 has seen 20% appreciation, and nobody who bought a new home has seen 43% appreciation. The change in mix greatly distorted the median in 2009. The number reported was too low. The big rise off the bottom is nothing more than a statistical aberration created by the distortions from the changing product mix. The $/SF and the Case-Shiller indices both show a double dip as neither of these measures are impacted much by a change in sales composition.

• The median selling price of a single-family home is 35% less than their peak pricing (June ’07). Condos sell 44% below their peak in March 2006. Builder prices for new homes are 30% below their February ’05 top.
• Single-family homes were 83% more expensive than condos in this period vs. 70% a year ago. From 1988-2010, the average house/condo gap was 57%.

There are two reasons for the change in the SFR premium. First, fewer detached homes are selling as these are being withheld from the market. These prices will come down to help close this gap. The second reason is the increased cost of FHA financing. Since the FHA insurance premium is now a whopping 1.15%, substantially less of an FHA buyer's income is going toward the loan payment. Smaller payments makes for smaller loan balances and lower prices on condos which typically use FHA financing.

• Builder’s new homes sales were 6% of all residences sold in the period vs. 6% a year ago. From 1988-2010, builders did 14% of the Orange County homeselling.

The lack of new home sales is an ongoing problem exacerbated by the ridiculous prices being asked in many new home communities. Competition from REOs is likely to keep sales of new homes low for the foreseeable future.

Bear rally buyer takes a loss

Many bear rally buyers refuse to acknowledge the obvious. The bear rally was not for real, prices have double dipped, and prices will continue to decline. For proof of these market realities, we only need to see today's featured property.

The buyers paid $425,000 on 11/30/2009. The conventional wisdom in 2009 was that prices bottomed in the spring along with te stock market. A buyer in 2009 would not have worried about selling for a loss. They should have.

Today's featured property is asking less than their 2009 purchase price. When you factor in the commissions, they will lose nearly 10% of the purchase price or about 40% of their down payment. That makes the cost of ownership for this family over the last two years quite high. It's cases like this which prompt Shevy and I to warn buyers against buying if they might have to sell in the next three to five years. This could happen to them as well.

——————————————————————————————————————————————-

This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 199 WILD LILAC Irvine, CA 92620

Resale House Price …… $409,000

Beds: 2

Baths: 2

Sq. Ft.: 1357

$301/SF

Property Type: Residential, Condominium

Style: Two Level, Contemporary

Year Built: 2005

Community: Woodbury

County: Orange

MLS#: S677194

Source: SoCalMLS

Status: Active

On Redfin: 3 days

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Absolutely fantastic, great opportunity for the first time buyer or investor, family floor plan, gourmet kitchen with Island, upgraded cabinetaries, nice sized great room with fire place, formal dining room. Upgraded wood laminated floors, front private patio. 2 bedrooms suites upstairs, plantation shutters. Just walking distances to Woodbury Elementary school and Woodbury Town Center and to the Commons. This is a must see.

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Proprietary IHB commentary and analysis

Resale Home Price …… $409,000

House Purchase Price … $426,000

House Purchase Date …. 11/30/2009

Net Gain (Loss) ………. ($41,540)

Percent Change ………. -9.8%

Annual Appreciation … -2.1%

Cost of Home Ownership

————————————————-

$409,000 ………. Asking Price

$14,315 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$394,685 ………. 30-Year Mortgage

$128,866 ………. Income Requirement

$1,925 ………. Monthly Mortgage Payment

$354 ………. Property Tax (@1.04%)

$250 ………. Special Taxes and Levies (Mello Roos)

$85 ………. Homeowners Insurance (@ 0.25%)

$454 ………. Private Mortgage Insurance

$260 ………. Homeowners Association Fees

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

$3,329 ………. Monthly Cash Outlays

-$303 ………. Tax Savings (% of Interest and Property Tax)

-$551 ………. Equity Hidden in Payment (Amortization)

$21 ………. Lost Income to Down Payment (net of taxes)

$71 ………. Maintenance and Replacement Reserves

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

$2,568 ………. Monthly Cost of Ownership

Cash Acquisition Demands

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$4,090 ………. Furnishing and Move In @1%

$4,090 ………. Closing Costs @1%

$3,947 ………… Interest Points @1% of Loan

$14,315 ………. Down Payment

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

$26,442 ………. Total Cash Costs

$39,300 ………… Emergency Cash Reserves

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

$65,742 ………. Total Savings Needed

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Sales rates are 25% below normal, and with low household formation and a lack of equity in potential move-up households, transaction volumes will remain low for the foreseeable future.

Irvine Home Address … 65 SAPPHIRE Irvine, CA 92602

Resale Home Price …… $429,900

Just move on up

and keep on wishing

Remember your dreams

are your only schemes

Curtis Mayfield — Move On Up

Everyone want to move up to better housing accommodations. Years ago I toured the Tijuana subdivisions of URBI. One of the homes was a 288 SF single family detached home. When I asked one of our guides who bought such a place, he beamed with pride and said they were generally people moving out of shanties. They were thankful to have working plumbing, solid walls, and climate control. That tiny home was a huge improvement over what they moved out of.

My wife recently had a conversation with a woman who was lamenting her plight. Her family was outgrowing their Shady Canyon home. With three children, their 4.000 SF 5 bedroom house no longer met their needs. She wasn't bragging or being pretentious, she was relaying the truth of her situation as she saw it.

No matter your station in life, it's human nature to want more. Thus, a move-up buyer is a large component of any healthy real estate market.

Move-up markets need equity and wage growth

A move-up market requires two things in order to function: equity and increasing incomes. Neither is present in today's housing market, and there are few glimmers of hope on the horizon.

In the real world, most first-time homebuyers use an FHA loan and buy a low-cost property. The reason for this is simple: it takes too long to save 20% for a down payment on a conventional loan. First-time homebuyers use FHA loans because the 3.5% down payment is within reach. Further, once these buyers are in a property, they simple wait five or ten years for the wage-based appreciation to magically give them 20% to 30% equity in a property to use on their move-up purchase.

Once the owner has enough equity to get a closing check large enough to fund a 20% down payment on a move-up property, they go shopping. Since this is usually quite some time after buying their FHA financed property, it's likely the household wage earners are making more money. They take their larger family income and their 20% down payment and buy a move up property. At least that's how it used to work.

Notice the scenario above requires both appreciation to create equity and increasing income to finance a larger loan balance. If either of those conditions is missing, the move-up market suffers because fewer buyers are active.

So think about today's market. We are creeping out of a deep and prolonged recession characterized by persistently high unemployment. Incomes are down, not up. Even if buyers had the equity, they don't have the income growth also necessary to push buyers up the property ladder. If not for historically low interest rates, loan balances would be contracting with the declining wages experienced by many during the recession, particularly those in real estate related fields.

Also, prices have crashed, particularly for low-end properties typically purchased by FHA buyers. Nobody purchasing low-end properties with FHA loans over the last decade has accumulated any move up equity, and prices are still going down. That problem alone explains much of the ongoing weakness in the move-up market. In fact, I argue that the lack of equity at the bottom of the housing ladder is largely responsible for the weakness in pricing and volume at higher price points.

The future of move-up markets

Many housing pundits believe the market will strengthen from the top down. This view is not correct. The high end of the market will bottom last because it will experience a persistent lack of available buyers. If there are fewer move-up buyers, there will be less buying pressure, and since we know there are plenty of distressed properties from the plethora of overextended borrowers struggling or squatting in high-end homes, there will be no shortage of supply.

Lenders have been successful so far at slowly releasing high end homes to the market to keep the decline orderly. Let's assume that practice will continue. Due to the low demand, there will be an ongoing imbalance with supply and demand, and prices will slowly creep downward as banks are forced to take slightly lower prices than recent comps in order to liquidate. Like slowly removing a band-aid, the pain gets stretched out over a much longer period of time — but it is still painful.

Banks will release product slowly because they need to get their cash back out of these properties. If a big bank like BofA gets really desperate, they might increase the pace of their liquidations and push prices lower quicker, but if they don't, prices will drift lower slowly as the inevitable liquidations run their course.

Lenders have this fantasy that they can slowly release product into a rising market and obtain a better recovery. It isn't going to happen because there is simply too much product. For example, the Irvine Company and other new home builders generally account for about 15% of sales. At that rate, they can obtain higher prices and not disrupt the market. Right now, distressed sales by lenders account for 30% to 40% of the monthly sales volumes, and they have a backlog which will take a decade to clear out. If they try to reduce their sales volumes to be only 15% of sales, they will be selling REO forever.

In my opinion, we will see the low end of the market bottom in the next year or two. There will be a multi-year gap between when the low end bottoms and when the high end bottoms due to the lack of a move up market. It isn't until those who bought near the bottom at the low end have enough equity to move up to the next rung on the property ladder that each subsequent rung will bottom out. In other words, the bottom process will take a long time, and the high end will be the last to experience it.

Home price index edges up

The 0.2% bump in August in the Standard & Poor's/Case-Shiller index of 20 metropolitan areas is the fifth straight monthly increase. But a sustained improvement in housing may be hard to achieve in the months to come.

By Alejandro Lazo, Los Angeles Times — October 25, 2011, 9:20 p.m.

Providing a ray of hope for the beleaguered housing market, a closely watched index of home prices in major U.S. cities nudged upward in August, marking the end of what is typically the busiest sales season of the year.

Home prices have risen for five months in a row, but whether the spring and summer gains will prove lasting is an open question. Sustained improvement in housing may be hard to achieve in the months to come, experts said, if the nation's foreclosure machinery picks up momentum and employers remain reluctant to hire.

“We will probably see a reemergence of the seasonal dip in most markets, quite frankly, including California,” said Thomas A. Lawler, founder of research firm Lawler Economic & Housing Consulting.

Yes, the seasonal pattern will spell then end of rising index prices. I have repeatedly predicted a welcome decline this fall and winter.

The Standard & Poor's/Case-Shiller index of 20 metropolitan areas rose a meager 0.2% from July to August, an uptick many analysts noted as probably seasonal in nature and influenced by the decline in foreclosed properties as a share of the total number of homes sold.

Comparing the August reading with the same month a year earlier, the index fell 3.8%, a drop economists viewed positively because it was one of the slowest rates of year-over-year decline registered by the index all year.

Prices falling 3.8% is a positive? Well, I think so, but not because I want to see prices go back up. It's positive because it's a sign houses are becoming more affordable to the average person.

Christopher Thornberg, principal of Beacon Economics, said other home price indicators point to two trends developing in the nation's housing market: Values are declining for homes in distress — those properties that are either foreclosures or cases where the homeowners are delinquent on their mortgages — but other homes are fetching higher prices.

These two divergent forces are flattening out overall market values, he said. The main source of sales sluggishness is the scarcity of potential move-up buyers with equity in their homes.

“The biggest problem is not credit, it is not confidence, it is equity,” Thornberg said. “No equity, no move-up buyer; no move-up buyer, you get a slow market.“

Chris Thornberg is correct. The lack of equity is weighing down the market by reducing the number of move-up transactions.

But David M. Blitzer, chairman of the index committee at S&P Indices, said he sees “a modest glimmer of hope” in improvements in some aspects of the data.

I do get tired of every comment by every person in every news story being slanted to the point of view of loan owners. I find more than a modest glimmer of hope that prices will get even more affordable when I see how far prices have already come down, the downward price momentum, and the lack of demand at current price points.

Prices rose in August for 10 of the index's 20 metro areas compared with July, and prices fell in the other 10 cities.

California cities stumbled. Home prices in Los Angeles fell 0.4% over the previous month, San Diego prices declined 0.2% and San Francisco saw a 0.1% drop.

Atlanta experienced the biggest decline, down 2.4%. Las Vegas fell 0.3% and Phoenix was down 0.1%.

Prices fell more in Las Angeles than they did in Las Vegas last month. Which market do you think is closer to the bottom?

The Midwest has made gains in home prices in recent months, and Chicago and Detroit were both up 1.4% over July. Washington has fared better than other regions and gained 1.6%.

Earlier this year, the 20-city index dropped below its previous bottom, hit in April 2009, confirming a double dip in prices, but has come up above that level since. Some economists predict a renewed decline in prices in fall and winter, typically slower periods for the market.

Economists have had trouble pinpointing the source of the recent rise in prices.

Home values often rise in the spring and summer months because families more actively shop for houses so they can complete moves before the start of the new school year. But the number of foreclosed homes for sale also has been dwindling because foreclosure processing by the big banks has slowed down as a result of investigations into their practices.

“Prices just stabilized earlier in the year because of foreclosure-gate last year, where the lenders stopped foreclosing on so many homes to get their books back in order,” said Patrick Newport, an economist with IHS Global Insight. “Now they are ramping up.”

Yes, lenders are ramping up. Reports about the declines in foreclosures usually omit the reason foreclosures declined. The implication is that lenders must have run out of people to foreclose on, so the foreclosure cleansing must be nearly over. That was never the case. The price pressure from distressed properties will not be relieved until delinquency rates are back down to historic norms and the shadow inventory is cleaned out. That process will take years.

But Lawler disagreed, saying that the recent increase in the number of notices of default, the first formal stage of the foreclosure process, was mostly due to activity by Bank of America. There has yet to be a significant uptick in home repossessions by banks.

“We have seen that a few banks have started to accelerate the foreclosure process somewhat, but we haven't really seen it translate into actual repossession of homes,” he said. “I don't think we have seen immense signs that banks have re-accelerated the process.”

What does Mr. Lawler think BofA is doing then? Are they issuing all these NODs just for giggles? Just because the NODs have not been seasoned for 90 days so they can become Notices of trustee sale (NOTs) and ultimately foreclosure does not mean that they won't. BofA and other banks are clearly setting out to liquidate their shadow inventory. Once these properties are REO, they may have second thoughts about how quickly they dispose of these properties, but their recent actions show they are intent on repossessing these properties.

20% down the drain

In any market crash, the weakest hands give up their positions first, and the strongest hands give up last. During 2007 and 2008, many of my property profiles were borrowers who used 100% financing, Option ARMs, or were dependant upon Ponzi borrowing to survive. When conditions became even slightly adverse, they walked away. Over time, we saw fewer and fewer of those borrowers, and we started to see the people who put 5% or 10% down.

Now that the decline has dragged on for 5 years and prices are over 30% down from the peak and still falling, we are starting to see the people who put 20% down give up and walk away. The former owner of today's featured property paid $598,000, and he put $119,400 down. It went back to the bank on 3/11/2011. The former owner's substantial down payment is lost.

Larry Roberts and Shevy Akason are hosting an OC housing market presentation at JT Schmids at the District on November 9, 2011. Please RSVP at sales@idealhomebrokers.com. Register online here: OC Housing Market – JT Schmid's.

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This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 65 SAPPHIRE Irvine, CA 92602

Resale House Price …… $429,900

Beds: 3

Baths: 2

Sq. Ft.: 1500

$287/SF

Property Type: Residential, Condominium

Style: Two Level

Year Built: 2001

Community: West Irvine

County: Orange

MLS#: P789463

Source: SoCalMLS

Status: Active

On Redfin: 95 days

—————————————————————————-

Quiet Two Story Town Home ~~ 3 bedrooms, 2.5 bathrooms, with a 2 car attached garage with direct access. Property features Harwood Laminate flooring throughout, oversize gas burning fireplace, open kitchen with custom cabinets and solid granite countertops, large master suite with room for seating area/office and walk~in closet, upstair laundry room, walk~in pantry, and patio. Property has been rehabbed to include new interior neutral color paint throughout. Property is located near multiple shopping and entertainment opportunites.

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Proprietary IHB commentary and analysis

Resale Home Price …… $429,900

House Purchase Price … $598,000

House Purchase Date …. 12/8/2005

Net Gain (Loss) ………. ($193,894)

Percent Change ………. -32.4%

Annual Appreciation … -5.5%

Cost of Home Ownership

————————————————-

$429,900 ………. Asking Price

$15,047 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$414,854 ………. 30-Year Mortgage

$127,616 ………. Income Requirement

$2,024 ………. Monthly Mortgage Payment

$373 ………. Property Tax (@1.04%)

$67 ………. Special Taxes and Levies (Mello Roos)

$90 ………. Homeowners Insurance (@ 0.25%)

$477 ………. Private Mortgage Insurance

$267 ………. Homeowners Association Fees

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

$3,297 ………. Monthly Cash Outlays

-$318 ………. Tax Savings (% of Interest and Property Tax)

-$579 ………. Equity Hidden in Payment (Amortization)

$22 ………. Lost Income to Down Payment (net of taxes)

$74 ………. Maintenance and Replacement Reserves

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

$2,496 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,299 ………. Furnishing and Move In @1%

$4,299 ………. Closing Costs @1%

$4,149 ………… Interest Points @1% of Loan

$15,047 ………. Down Payment

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

$27,793 ………. Total Cash Costs

$38,200 ………… Emergency Cash Reserves

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

$65,993 ………. Total Savings Needed

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Larry Roberts is hosting a Las Vegas cashflow properties presentation at JT Schmids at the District on November 9, 2011. Please RSVP at sales@idealhomebrokers.com. Register online here: Las Vegas cashflow property – JT Schmid's.

Mitt Romney is the first presidential candidate to demonstrate the courage to endorse the right policy for housing.

Irvine Home Address … 67 HAVENWOOD Irvine, CA 92614

Resale Home Price …… $444,900

antichrist vanguard advance

spilling the blood of matyrs abd slaves

credo decimatus

machinery of the cleansing

decay and degradation dwell amongst us

machinery of the cleansing

sepsism swells the flock obscene

machinery of the cleansing…

Angelcorpse — Machinery of the Cleansing

Foreclosure is the machinery of the cleansing. Unfortunately, both lenders and loan owners are loath to take a bath, and politicians are too busy pandering for votes to do the right thing. Perhaps that is about to change.

I am neither left nor right in my political leanings. I am one of the moderate swing voters who votes for either party. I was annoyed by McCain's pandering to loan owners in the 2008 election, so he blew his slim chance at getting my vote (I was probably still too pissed at Bush to vote Republican.) So far, I have seen nothing by clueless pandering or outright avoidance of housing issues by any of the presidential hopefuls. Nothing Obama has done has impressed me so far either.

When I read today's featured article on Mitt Romney's comments, I was pleasantly surprised. He actually seems to display a grasp of the issue and is endorsing a politically unpopular policy. He wants to let markets work which means letting home prices fall.

Foreclosures: Don't slow them, Romney says

Foreclosures need to go forward so the housing market can begin to recovery, GOP presidential hopeful Romney says in Nevada. Nevada leads the nation with the highest rate of foreclosures.

By Kasie Hunt, Associated Press / October 20, 2011

Las Vegas: Mitt Romney came to the state with the highest foreclosure rate in the nation and said he wants to allow home foreclosures to “hit the bottom” to help the housing industry recover.

He picked the right place to make those statements. There are no successful market props working in Las Vegas. Prices have crashed, transaction volumes are high, and the market is bottoming as cashflow investors are moving in to clean up the debris. That's how markets are supposed to work.

In an interview published Tuesday ahead of presidential debate, Romney told Las Vegas Review Journal's editorial board that solving the foreclosure crisis would require letting banks proceed against homeowners who have defaulted on their mortgages. New investors could then rent out the homes until markets adjusted.

“As to what to do for the housing industry specifically and are there things that you can do to encourage housing: One is, don't try to stop the foreclosure process. Let it run its course and hit the bottom,” Romney said.

Wow! Romney is right — completely and totally right. I imagine the “give away free houses” movement on the left will freak out over these comments. Apparently, Mitt Romney either isn't listening to his advisors who want him to pander to loan owners, or he actually has the courage to say what needs to be done. I thought Ron Paul was the only politician with the bravery to do that.

Romney elaborated during the presidential debate Tuesday night. “The idea of the federal government running around and saying, 'We're going to give you some money for trading in your old car…or we're going to keep banks from foreclosing if you can't make your payments,” Romney said, “The right course is to let markets work.“

This is the first utterance from this campaign that got my attention. He is right on with his comments.

Nevada, where seven of the presidential candidates are debating, has the country's highest foreclosure rate and the nation's highest unemployment rate.

Democrats immediately criticized Romney as out of touch with middle class Americans, many of whom are struggling to hold on to their homes amid high unemployment.

I suppose Romney is out of touch with loan owners who are trying to hold on to the bank's home.

“Mitt Romney's message to Nevada homeowners struggling to pay their mortgage bills is simple: You're on your own, so step aside,” President Barack Obama's reelection campaign spokesman, Ben LaBolt, said in a statement.

Yes, that's exactly what he's saying, and it's about time someone did.

“This is just one more indication that while he will bend over backwards to preserve tax breaks for large corporations and tax cuts for millionaires and billionaires, Mitt Romney won't lift a finger to restore economic security for the middle class.”

No, it's an indication Romney doesn't want to give free houses to people who aren't making their payments.

Senate Majority Leader Harry Reid of Nevada also went after Romney. “Nevada has the highest foreclosure rate in America, and it has for almost three years. And here's what Mitt Romney said: He would just let them hit rock bottom,” Reid said during a press conference in the U.S. Capitol. “I don't know what's more graphic than that, in how we have different views of what the world should be like than our Republican friends.”

These bozos may cause me to vote Republican in the next election. I haven't done that for a federal office since 2002. The bottom line is that Democrats are wrong, and they are endorsing the wrong populist pandering policies.

But the home foreclosure issue has been almost entirely absent from the GOP presidential race. While it was mentioned during the presidential debate Tuesday, and Romney addressed it as part of a larger answer, the candidates quickly started talking about bank bailouts instead.

Romney has just scored points with me. My personal view is that he will likely win the nomination but lose the election. Too bad, if he keeps making economic sense, I may vote for him.

Apparently, I am not the only one impressed with what Mitt Romney said:

Romney's Finest Hour

He speaks the truth about housing and foreclosures.

A friend of ours quipped recently that Mitt Romney could do his Presidential candidacy a lot of good if he took even a single position that is unpopular in the polls. Well, we can report that he has done that on housing policy, that he's being pummeled for it, and that it may be his finest campaign hour.

They just couldn't afford it

Today's featured property was sold on 7/30/2004 for the ridiculous price of $619,000. The loaners used a 433,300 first mortgage, a $123,800 second mortgage, and a $61,900 down payment. On 8/22/2006 they obtained a $125,000 HELOC and got access to their down payment plus a little spending money. There is no way to tell if they took out the money.

With no further mortgage equity withdrawals, they still couldn't make the payments on the first mortgage, and the property was foreclosed on in early September. Perhaps it was unemployment, or perhaps they just couldn't afford it to begin with.

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This property is available for sale via the MLS.

Please contact Shevy Akason, #01836707

949.769.1599

sales@idealhomebrokers.com

Irvine House Address … 67 HAVENWOOD Irvine, CA 92614

Resale House Price …… $444,900

Beds: 3

Baths: 2

Sq. Ft.: 1578

$282/SF

Property Type: Residential, Condominium

Style: Two Level

Year Built: 1980

Community: Woodbridge

County: Orange

MLS#: U11004456

Source: SoCalMLS

Status: Active

On Redfin: 2 days

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This home offers three bedrooms, two and a half bathrooms, two car garage and rear patio area with brick accents. Living room boasts wood-type flooring, conversation-area with a cozy fireplace. Kitchen has plenty of storage, ceramic tile flooring, granite countertop and stainless steel appliances. The property requires some cosmetic touches such as new carpet and fresh paint, perfect opportunity to put your personal touch on your new home.

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Proprietary IHB commentary and analysis

Resale Home Price …… $444,900

House Purchase Price … $619,000

House Purchase Date …. 7/30/2004

Net Gain (Loss) ………. ($200,794)

Percent Change ………. -32.4%

Annual Appreciation … -4.5%

Cost of Home Ownership

————————————————-

$444,900 ………. Asking Price

$15,572 ………. 3.5% Down FHA Financing

4.18% …………… Mortgage Interest Rate

$429,328 ………. 30-Year Mortgage

$132,425 ………. Income Requirement

$2,094 ………. Monthly Mortgage Payment

$386 ………. Property Tax (@1.04%)

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

$93 ………. Homeowners Insurance (@ 0.25%)

$494 ………. Private Mortgage Insurance

$354 ………. Homeowners Association Fees

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

$3,421 ………. Monthly Cash Outlays

-$329 ………. Tax Savings (% of Interest and Property Tax)

-$599 ………. Equity Hidden in Payment (Amortization)

$23 ………. Lost Income to Down Payment (net of taxes)

$76 ………. Maintenance and Replacement Reserves

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

$2,592 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$4,449 ………. Furnishing and Move In @1%

$4,449 ………. Closing Costs @1%

$4,293 ………… Interest Points @1% of Loan

$15,572 ………. Down Payment

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

$28,763 ………. Total Cash Costs

$39,700 ………… Emergency Cash Reserves

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

$68,463 ………. Total Savings Needed

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