Look what’s happening to me,

I’m going blind, please help.

There I sat until three,

gettin’ further behind myself.

Bymyself.

Someday I will be free,

and there’ll be times, you just wait.

I will come to you, see,

what I’ll bring you when I get straight,

Oh it’s too late.

And I’m hung upside down.

And I’m hung upside down.

Hung upside down, said I’m

hung upside down, c’mon, c’mon.

Hung upside down.

Hung Upside Down — Buffalo Springfield

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This is the story of many homeowners now that the market has started its downward spiral — hung upside down. Trapped in a property they cannot sell and cannot afford, they count the days until their mortgage resets and they face foreclosure. It is a bit like death row when you think about it. You know your sentence, it has a feeling of dread and finality, and you know the date when judgment will be rendered. You have your false hopes for a government reprieve, but after a time you become resigned to your fate.

Asking Price: $600,000

Income Requirement: $150,000

Downpayment Needed: $120,000

Monthly Equity Burn: $5,000

Purchase Price: $610,000

Purchase Date: 6/30/2004

Address: 3 Carlina, Irvine, CA 92620

First Mortgage $495,000 – 1.5% teaser rate

HELOC $99,000

Beds:	3
Baths:	2
Sq. Ft.:	1,377
$/Sq. Ft.:	$436
Lot Size:	4,420 Sq. Ft.
Type:	Single Family Residence
Style:	Cape Cod
Year Built:	1978
Stories:	One Level
Area:	Northwood
County:	Orange
MLS#:	S518479
Status:	Active
On Redfin:	30 days

Seller super motivated. Make an offer, ANY offer on this Charming light and bright home located in a quite Cul-de-sac. Newer Kitchen cabinets and appliances. Large ceramic tiles in main areas. Above ground spa, Covered patio with skylight. Remodelled bathroom in master berdroom. Many nicely upgraded features thoughout this home. Interior and exterior painted a year ago. No mello roos or HOA. Low Property Taxes.

Make an offer, ANY offer. Do you smell blood in the water?

light and bright — This is nails on a chalkboard to me. Pet peeve, I guess.

Seller super motivated. If so, where are the obligatory three exclamation points?

berdroom? Is that like a birdroom?

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This seller (or the lender if they maxed out the HELOC) is going to lose $46,000 after a 6% commission assuming they get their asking price. As you can see, we are moving past 2004 prices and heading downward.

These are the properties that are going to drive prices lower in Irvine. This isn’t subprime, this is just an ordinary buyer who bought too late, paid too much and cannot afford the home. There are many of these people in Irvine. We have profiled many here, and we will profile many more. The ones we have seen to date are the most distressed sellers with the shortest fuses on their time bomb loans, but there are many, many more of these people hoping and praying the market will come back to save them. Unfortunately, all the people with shorter fuses on their bombs are going to explode first and keep prices depressed in the process. This is the nature of “overhead supply,” and it is why a market needs capitulatory selling to clear it out before any appreciation can take place.

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Somewhere in a roadside motel room

Alone in the silence she wakes up too soon

And reaches for his arm

But she’ll just keep reachin’ on

For the cold hard truth revealed what it had known

That boy’s just

A walkaway Joe

Born to be a leaver

Tell you from the word go, destined to deceive her

He’s a wrong kinda paradise

She’s gonna know it in a matter of time

That boy’s just a walkaway Joe

Walkaway Joe — Trisha Yearwood

Doesn’t this song describe late bubble buyers with little or no money down?

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Asking Price: $449,900

Income Requirement: $112,475

Downpayment Needed: $89,980

Monthly Equity Burn: $3,749

Purchase Price: approximately $580,000

Purchase Date: Unknown

Address: 342 Quail Ridge, Irvine, CA 92603

Beds:	2
Baths:	2
Sq. Ft.:	1,500
$/Sq. Ft.:	$300
Lot Size:	–
Type:	Condominium
Style:	Traditional
Year Built:	2005
Stories:	Two Levels
View(s):	Hills
Area:	Quail Hill
County:	Orange
MLS#:	S521784
Status:	Active
On Redfin:	2 days

A Stunning Home! So many upgrades!Gourmet Kitchen with VENETIAN GOLD Granite Counters and Sit-Up Bar * Stainless Appliances, * Stunning Fireplace * Extensive Dark Maple Wood Floors (see pic’s) * Dark Wood Built-ins * Master Suite w/ Spacious Walk-in Closet and Hugh Master Bath w/ Custom Tumbled Turco Stone Tile * Dual Sinks * Separate Soaking Tub /Shower * Open Spacious Floorplan. Great Living Area With Nice Formal Dinning Room * Deluxe Garage * Recessed Lights * Gorgeous Upgrades * This Home Is SPOTLESS * * * * * SHOW LIKE A BRAND NEW HOME * * * * * A MUST SEE! Tax rate 1.4% including Mello Roos!

ALL CAPS

******** Asterisks **********

! exclamation points !

“SHOW LIKE A BRAND NEW HOME * * * * * A MUST SEE!”

Gourmet Kitchen

And of course…

Pergraniteel.

This listing manages to encapsulate every cliché known to realtors.

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The carnage in Quail Hell continues. I don’t have an accurate purchase price and date, but inferring from the tax records, it appears this seller paid around $580,000. If he gets his asking price and pays a 6% commission, the loss will be around $160,000. I would imagine the lender will eat this one, but I can’t be sure. Notice the price on a per square foot basis: $300. This is a very low price for a small unit. It wasn’t long ago we were blogging about breaking the $500,000 barrier in Quail Hill, now we are about to break the $300 / SF barrier as well.

So how low will it go in Quail Hell?

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Must be getting early, clocks are running late.

Paint my love a morning sky, its all cold.

Dawn is breaking everywhere, light a candle, curse the glare

Draw the curtains I dont care, but its all right

I will get by, I will get by, I will get by, I will survive.

I see youve got your list out, say your piece and kiss off.

Guess I get the gist of it, but its all right

Oh well anyway, sorry that you feel that way.

Every silver linings got a touch of grey

I will get by, I will get by, I will get by, I will survive.

Its a lesson to me, the ablers and the beggars and the thieves

The abcs we all think of, try to win a little love.

I know the rent is in arrears, the dog has not been fed in years

Its even worse than it appears, but its all right

Touch of Grey — Grateful Dead

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What will be the silver lining in the housing bust? What will be the touch of grey? Right now, it is even worse than it appears, but its all right…

(The rent isn't in arrears, but the mortgage payments certainly are.)

Quail Hill is a great Irvine Village. It is unfortunate it was built during the later stages of the housing bubble because it will become Quail Hell for those who bought there. The discussion about housing is no longer about whether or not there was a real estate bubble: there was. The discussion now is about the depth and devastation of the crash which follows. The bulls will call the bottom every so often, and they will be consistently wrong until we ultimately hit bottom. I have made my case housing prices will fall back to fundamental valuations about 40% off the peak in Irvine. It might get worse. If prices do fall back to fundamental valuations, every buyer in Quail Hill will be underwater — all of them. Think about that for a moment… an entire neighborhood where every homeowner owns a property worth less than they paid, and the vast majority owe more on a mortgage than it is worth. The last time that many were underwater, Noah built a boat.

What would it be like at the local shopping center when conditions are bad, and every person you look at is in financial distress? This is Irvine, so we probably will not see much urban blight or other outward signs of distress, but inwardly, it will be hell on earth. A touch of grey? I hope affordable housing is the silver lining…

Asking Price: $525,000

Income Requirement: $131,250

Downpayment Needed: $105,000

Monthly Equity Burn: $4,375

Purchase Price: $621,000

Purchase Date: 12/30/2004

Address: 356 Quail Ridge, Irvine, CA 92603

Beds:	3
Baths:	3
Sq. Ft.:	1,843
$/Sq. Ft.:	$285
Lot Size:	–
Type:	Condominium
Style:	Spanish
Year Built:	2005
Stories:	Two Levels
Area:	Quail Hill
County:	Orange
MLS#:	S519520
Status:	Backup Offers Accepted
On Redfin:	11 days

The largest floor plan in Ambridge community with one bed and bath on main floor. Spacious living room with fireplace, dining area, all hardwood floor. Open kitchen with granite counters, large master suit, direct access to two car garage with full size driveway. Short distance to Laguna Beach, shopping, 405/133 Fwys.

Don't you love the picture of the garage door? That has to be the worst, most useless photo on the MLS.

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Look at this unit — a 3/3 in a new Irvine neighborhood selling for $285 / SF. This is almost $100,000 off a 2004 price. As sales like this one set the comps, it will soon become apparent that every homeowner in Quail Hill is underwater. There will certainly be many who hold out for ridiculous wishing prices, but the fact is the market transactions are occurring at steep rollback pricing. If this selling comp killer gets their full asking price (which looks likely as they are in escrow) and pay a 6% commission, they stand to lose $127,500 on their 2004 purchase.

Who said they wouldn't just give it away?