Party time, going down

you better not mess us around

the stakes are rich, take a hit or stay

the price is high, someone’s gonna pay

Looking for trouble, now you’ve found it

you’re a drum and we’re gonna pound it

Last one standing wins the fight

hear us scream and shout all night

down on the floor and eat the grit

this is gonna hurt a little bit

Heads I win, tails you lose

out of my way I’m coming through

roll the dice don’t think twice

and we crush (crush), crush ’em (crush ’em)

Don’t need reason, don’t want names

just a John Doe to put to shame

step aside let me explain

the name of the game is pain

Now we’ve found you

We’re gonna pound you

We’re gonna beat you

Gonna defeat you

We’re gonna bust you

We’re gonna crush you

We’re gonna crush ’em

Crush ‘Em — Megadeth

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Financial markets can be brutal, particularly for those who speculate. Today’s property was purchased for nearly double its cashflow value as were all the other properties in Northwood II. These properties were all built in 2004 and 2005 near the peak of the housing bubble. Most of them were purchased by speculators, and the featured property today was one of these. So what did the market do? It crushed him…

Asking Price: $780,000

Income Requirement: $195,000

Downpayment Needed: $156,000

Purchase Price: $847,500

Purchase Date: 11/15/2006

Address: 20 North Torrey Pines, Irvine, CA 92620

Beds:	3
Baths:	2
Sq. Ft.:	1,765
$/Sq. Ft.:	$442
Lot Size:	5,000 sq. ft.
Type:	Single Family Residence
Style:	Other
Year Built:	2006
Stories:	One Level
Area:	West Irvine
County:	Orange
MLS#:	P618797
Status:	Active
On Redfin:	4 days

Gated community, best location next to green belt on the end of the Cul De Sac, bright light open floor plan. Tumbled stone flooring, granite kitchen counter’s, maple cabinets w/ cognac finish. Northwood school district.

Cognac finish? I would rather drink the stuff than finish my cabinets with it.

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If this seller gets their asking price and pays a 6% commission, they will have lost $114,300 in a little over 1 year. Since this price is only 10% off the peak, and we have seen many properties going for 20% or more off peak, this property’s asking price may be $75,000 over market. This speculator may lose over $200,000 in their little foray into the housing market. It is a good thing they are getting out now, properties in this neighborhood could easily drop to near $500,000 in the next couple of years.

That concludes another week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.

🙂

The sirens are screaming and the fires are howling

Way down in the valley tonight

Theres a man in the shadows with a gun in his eye

And a blade shining oh so bright

Theres evil in the air and theres thunder in the sky

And a killers on the bloodshot streets

And down in the tunnel where the deadly are rising

Oh I swear I saw a young boy

Down in the gutter

He was starting to foam in the heat

Oh baby you’re the only thing in this whole world

Thats pure and good and right

And wherever you are and wherever you go

Theres always gonna be some light

But I gotta get out

I gotta break it out now

Before the final crack of dawn

Bat Out of Hell — Meatloaf

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From the land of kool-aid, pretense, and noveau-riche nonsense, Turtle Ridge, we have a new race to the bottom, and they are going like a bat out of hell. This neighborhood first began to implode back in August when the credit crunch hit. We documented the troubles in the post Crimson and Clover. The property at 30 Crimson Rose went to auction at $1,400,000. Apparently the neighbors did not believe that was where the market stood for their houses. In their race to the bottom, they are almost there, and they still are not selling.

Asking Price: $1,499,999

Income Requirement: $374,999

Downpayment Needed: $299,999

Purchase Price: $1,384,000

Purchase Date: 9/28/2005

Address: 46 Crimson Rose, Irvine, CA 92603

Beds:	3
Baths:	3.5
Sq. Ft.:	2,863
$/Sq. Ft.:	$524
Lot Size:	7,500 sq. ft.
Type:	Single Family Residence
Style:	Contemporary, Spanish
Year Built:	2005
Stories:	Two Levels
View(s):	Hills
Area:	Turtle Ridge
County:	Orange
MLS#:	S514390
Status:	Active
On Redfin:	53 days

Dazzling ultra-luxury masterpiece perched on oversized lot in exclusive gated community of highly sought after Turtle Ridge. Dramatic curb appeal thanks to sharp contemporary styling. Remarkable entertainers floorplan complete w/ formal dining room, great room & guest house/casita. Magnificent European style gourmet kitchen w/ enormous granite island, slab countertops, full backsplash & breakfast nook. Huge master suite w/ retreat & lavish bath. Massive entertainers’ yard w/ fireplace. WOW!

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This property has already been sold to the lender, they just don’t know it yet. On 2/28/2007, this owner refinanced for $1,425,000, and three months later, they opened a HELOC for $284,990. For the lender’s sake, let’s hope they haven’t taken all this money out and spent it. Assuming this seller gets their asking price and pays a 6% commission, they will need to come out-of-pocket $15,000 to avoid a short sale. Of course, if they spent the HELOC money, then they have a different problem…

Asking Price: $1,699,000

Income Requirement: $424,750

Downpayment Needed: $339,800

Purchase Price: $1,647,000

Purchase Date: 1/25/2006

Address: 47 Crimson Rose, Irvine, CA 92603

Beds:	3
Baths:	3.5
Sq. Ft.:	2,900
$/Sq. Ft.:	$586
Lot Size:	7,800 sq. ft.
Type:	Single Family Residence
Style:	Mediterranean
Year Built:	2005
Stories:	Two Levels
Area:	Turtle Ridge
County:	Orange
MLS#:	S487879
Status:	Active
On Redfin:	258 days
Unsold in 90+ days

One of the LARGEST LOTS in Ledges * * * * * * * * * 7800 feet * * * * * * PRIVACY PLUS * * * * with huge wrap around yards. This home has it all with hundreds of upgrades. Rod iron stair case, front door with iron, travertine floors, upgraded cabinets thru-out, Wolf range and upgraded thru builder master retreat!!Total turn-key home. CORNER LOT LOCATION. You will not be disappointed !!!!!!!!!!!!!

What is the deal with all the ALL CAPS, asterisks and exclamation points? I count 13 exclamation points to end the description.

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These people have fallen $200,000 behind in the race to the bottom. At 258 days on the market, they don’t seem particularly motivated sellers. Perhaps the fact that any lowering of the price would make them lose money has something to do with their reluctance to lower it. I have news for them — they are more than $250,000 over market, and they are losing more every day !!!!!!!!!!!!!

Remember the property from the post Desperation? It appears that giving away the free Mercedes was not successful, and now they have reduced their price $200,000. Unfortunately, they are losing their race to the bottom, and they are already a rollback.

Asking Price: $1,799,000

Income Requirement: $449,750

Downpayment Needed: $359,800

Purchase Price: $1,860,500

Purchase Date: 12/12/2005

Address: 37 Crimson Rose, Irvine, CA 92603

Beds:	3
Baths:	3.5
Sq. Ft.:	2,900
$/Sq. Ft.:	$620
Lot Size:	6,500 sq. ft.
Type:	Single Family Residence
Style:	Mediterranean, Spanish
Year Built:	2004
Stories:	Two Levels
View(s):	City Lights, Ocean, Panoramic
Area:	Turtle Ridge
County:	Orange
MLS#:	S495046
Status:	Active
On Redfin:	209 days
Unsold in 90+ days

FORMER MODEL HOME with PANORAMIC CITY LIGHTS/OCEAN VIEWS!One of the BEST and highest view lots in The Summit at Turtle Ridge; Over $500K in designer upgrades; Provencial Style Home; Casita with Bath, custom hardwood flooring/wainscoating walls, faux paint, stone walls and stone flooring, spa-like master bath; covered loggia with outdoor fireplace.

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This property is already underwater. If they get their asking price and pay a 6% commission, they stand to lose $169,440, and the same house across the street asking $300,000 less, so I think this asking price is a bit too high. OK, it is a WTF, and these sellers are probably going to lose $500K.

Turtle Ridge — a little HELOC abuse, a stubborn seller praying for breakeven, and a desperate seller who is both overpriced and underwater. Another day in hell for those who want to leave…

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BTW, if you didn’t see this great post at South OC Real Estate Tracker, go check it out. Let’s play…Match Game.

Since our original post on August 2, our race to the bottom has been continuing. Our low price leader is really starting to race now. Their new asking price is $515,000. That is a full $100,000 below their 2004 purchase price. Wow!
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There’s a lady who’s sure
All that glitters is gold
And she’s buying a stairway to heaven.
When she gets there she knows
If the stores are all closed
With a word she can get what she came for.
Ooh, ooh, and shes buying a stairway to heaven.

Stairway to Heaven — Led Zepplin

Link to Live Performance Music Video

Link to Studio Version

Buying a property on Stepping Stone was supposed to be the Stairway to Heaven of home ownership. Right now the staircase seems to be leading to Hades.

The four listings which follow are identical floorplans for sale. It is your classic race to the bottom.

Asking Price: $629,900

Purchase Price: $615,500

Purchase Date: 12/10/2004

Address: 112 Stepping Stone, Irvine, CA 92603

1st Loan $488,784
2nd Mtg. $122,196
Downpayment $4,520

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $406
Lot Size: –
Year Built: 2004
Stories: 3
Type: Condominium
View: Hills
County: Orange
Neighborhood: Quail Hill
MLS#: S496508
Status: Active
On Redfin: 17 days

From Redfin, “Great property – Great location, surrounded by mountain views, greenbelts and wide open spaces. Decorator colors, epoxy gar flrs, full bedroom/bath downstairs perfect for home office. French doors, front porch, totally move-in. All white kitchen with added cabinets and rear balcony with view. Large living room with fireplace and dining room. Each bedroom has it’s own bath”

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As you can see, this was a typical 2004 100% financing deal (well a 99.27% financing deal). And I suppose this isn’t technically a 2004 rollback, yet, but with $14,400 in negotiating room, it probably will be. If this seller manages to get full asking price, and assuming a 6% commission, they still stand to lose their whopping $4,520 investment, and the bank will eat an additional $27,914.

Let’s see how the neighbors are doing…

Asking Price: $639,800

Purchase Price: $417,500

Purchase Date: 12/23/2003

Address: 91 Stepping Stone, Irvine, CA 92603

1st Loan $333,390
2nd Mtg. $62,510
Downpayment $21,100

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $412
Lot Size: –
Year Built: 2004
Stories: 3
Type: Condominium
View: Hills, Park or Green Belt
County: Orange
Neighborhood: Quail Hill
MLS#: S485936
Status: Active
On Redfin: 89 days

From Redfin, “Amazing ‘Mame’ award winning model * * Dramatic floorplan * * Enormous Great room/fireplace & large viewing Patio * * Gourmet Kitchen/ Granite Island * * Granite counter top with 6’splash * * Upgraded Dishwasher * * 3 huge bedrooms suites/ bathrooms * * ceiling fans in every bedroom * * Designer Paint * * surround sound * * Upgraded carpet and ceramic tile * * custom window coverings * * country club facilites-pools, spas, parks-tennis cts, * * Award winning Irvine schools * * Seller motivated. Will look at all offers. “

I guess the MAME (Major Acheivement in Marketing) award isn’t helping the marketing of this unit.

Enough with the asterisks already…

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This unit is priced $10,000 higher, and it has been on the market almost 90 days. This strongly suggests the price is too high. This doesn’t make the asking price of 112 Stepping Stone look to promising.

How about this one:

Asking Price: $645,000

Purchase Price: approximately $250,000

Purchase Date: unknown

Address: 131 Stepping Stone, Irvine, CA 92603

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $415
Lot Size: –
Year Built: 2004
Stories: 3
Type: Condominium
View: Hills, Mountain, Park or Green Belt
County: Orange
Neighborhood: Quail Hill
MLS#: P575773
Status: Active
On Redfin: 86 days

From Redfin, “Gorgeous 3 Bed & 3 Bath Townhome. It is situated away from the street, View of Hills, Green belt, Park, Prime location. One bed/full bath on downstairs, large gourmet kitchen with solid granite counter top w/ full back splash, Upgraded ceramic tile, New Paint, Upgraded Lush Carpet, Relaxing Balcony w/ view. Assoc. pool, spa, BBQ , fitness center, tennis ct. Close to award winning Irvine school, village shopping center. Easy access to #405, #133 & #5.”

Yet another gourmet kitchen…

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This seller is sitting on plenty of equity at this point, so they don’t seem too motivated. It is probably why they are in third place on the race to the bottom.

Asking Price: $650,000

Purchase Price: approximately $420,000

Purchase Date: unknown

Address: 171 Stepping Stone, Irvine, CA 92603

Beds: 3
Baths: 3
Sq. Ft.: 1,553
$/Sq. Ft.: $419
Lot Size: –
Year Built: 2003
Stories: 2
Type: Condominium
County: Orange
Neighborhood: Quail Hill
MLS#: S471673
Status: Active
On Redfin: 195 days
Unsold in 90+ days

From Redfin, “Premier Quail Hill condominium with upgraded kitchen. Granite countert ops and stainless steel appliances, ceiling fans, hardwood floors, ceramic floors & berber carpet. Main level room can be used as an office or 3rd bedroom. Unit has large storage area in garage and spacious front entry porch. This unit is tucked away from traffic noise. Washer/Dryer/Refrigerater included. A must see!!!! Seller will consider all offers.”

Wow!!!! Four exclamation points. This realtor must be very excited about this listing.

As you can see, this unit is bringing up the rear on our race to the bottom. At 195 days on the market, perhaps the seller should consider lowing the price. The market is obviously not where this seller wants it to be.

These races to the bottom are very revealing. You can see how the sellers financing terms and purchase price plays into their motivation and their asking prices. One of these units will sell eventually, and it will set the comps for the other three. I would guess a sale will take place under $600,000, but there are still some buyers out there who can get the necessary financing. These units are on the edge of the abyss of the financing picture. Units smaller and less expensive than this are not moving at all. Do you think one of these sellers will get lucky?

I hear the train a comin’

It’s rollin’ ’round the bend,

And I ain’t seen the sunshine,

Since, I don’t know when,

I’m stuck in Folsom Prison,

And time keeps draggin’ on,

But that train keeps a-rollin’,

On down to San Antone.

Well, if they freed me from this prison,

If that railroad train was mine,

I bet I’d move out over a little,

Farther down the line,

Far from Folsom Prison,

That’s where I want to stay,

And I’d let that lonesome whistle,

Blow my Blues away.

Folsom Prison Blues — Johnny Cash

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Today’s property is the lowest priced unit in Irvine, and it is very near the breakeven point for an owner occupant as evidenced by these comparative rental units asking $1,095 and $1,195. The problem is the same one all small condos face: who wants to be an owner-occupant? This unit is a tiny prison, and the person who buys it is going to be trapped there for the duration of the bear market. They would probably be listening to a lot of Johnny Cash…

Asking Price: $179,500

Income Requirement: $44,875

Downpayment Needed: $35,900

Purchase Price: $191,826

Purchase Date: 6/11/2007

Address: 171 Streamwood, Irvine, CA 92620

Beds:	0
Baths:	1
Sq. Ft.:	415
$/Sq. Ft.:	$433
Lot Size:	–
Type:	Condominium
Style:	Other
Year Built:	1977
Stories:	One Level
View(s):	Trees/Woods, Water
Area:	Northwood
County:	Orange
MLS#:	S517557
Status:	Active
On Redfin:	9 days

Great Location at a Fantastic Price! Enjoy the sounds of meandering streams from one of the least expensive condos in all of Irvine. This studio unit is on the ground floor within a great community close to shopping, dining and transportation. numerous association amenities including 2 clubhouses, 2 pools, 2 spas, and tennis courts make this a great place to live!!!

The two needless capital letters at the beginning were excusable, but then he added three exclamation points after offering his dubious opinion of “great” living. Do you really think this realtor thinks this is a great place to live?

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Sales History

Date………………Price

06/11/2007 $191,826

03/21/2005 $210,000

04/16/1998 $57,500

I am not sure if this was an REO or just a really stupid flip attempt. In either case, the 2007 purchase was a discount off the 2005 price. If the current seller can get their asking price, they stand to lose $23,132 after a 6% commission. Of course if this is an REO, and if the lender had $210,000 in it originally, the loss is closer to $45,000.

Also take note of the 1998 price. This was probably its worth to an investor in 1998 using a 100 GRM. This unit or similar ones will probably be heading down to the 100-120 GRM range because the only people who would be interested in owning them would be an investor looking for positive cashflow as a rental. This is also one of the reasons condos will crash particularly hard in the bear market because people will not want to be imprisoned in one for long.