I’m watching it fall

Watching the people around

Baby please come home

The churchbells in town

They’re rining a song

What a happy sound

Baby please come home

Theyr’e singing deck the halls

But it’s not like Christmas at all

I remember when you were here

And all the fun we had last year

Pretty lights on the tree

I’m watching ’em shine

You should be here with me

Baby please come home

It’s Christmas – U2

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Asking Price: $899,900

Income Requirement: $224,975

Downpayment Needed: $179,980

Purchase Price: $1,000,000

Purchase Date: 7/18/2005

Address: 12 Pollena, Irvine, CA 92602

First Mortgage $750,000

1% Neg Am

Downpayment $250,000

HELOC $150,000

Beds: 4

Baths: 2.5

Sq. Ft.: 2,500

$/Sq. Ft.: $360

Lot Size: 7,000 sq. ft.

Type: Single Family Residence

Style: Contemporary

Year Built: 2002

Stories: Two Levels

View(s): Pool, Trees/Woods

Area: West Irvine

County: Orange

MLS#: S491800

Status: Active

On Redfin: 181 days

Unsold in 90+ days

From Redfin, “HUGE PRICE REDUCTION: Absolutely one-of-a-kind home on cul-d-sac. ONE OF THE LARGEST Back Yards you have seen in IRVINE. Beautifully hardscaped with Salt-water Solar heated POOL AND SPA, Built-in bar-B-Q and outdoor kitchen. .. .beautifully landscaped yard beyond!! Inside this home has all the bells and whistles. .. .granite, stainless, stone, crown moulding, large bedrooms, balcony, Family room, family eating area off kitchen, formal Dining room, BUT only one lucky family gets this GREAT home!”

HUGE PRICE REDUCTION — from WTF to LOL…

“BUT only one lucky family gets this GREAT home!” Even though it takes two to afford it.

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Asking Price History

07/07/2007 $1,112,000 to $1,069,000

unknown $1,069,000 to $999,900

10/19/2007 $999,900 to $949,900

11/19/2007 $949,900 to $899,900

You can see the psychology at work with these asking prices. First, they want the profit they deserve, so they list it for a couple of months at a wishing price. Then reality starts to set in, and they give up their fantasies and start lowering the price to sell. The first reduction would get them out at breakeven with a 6% commission. When the house doesn’t sell, they start methodically chasing the market down in $50,000 increments getting more frustrated and desperate with each reduction. Unfortunately, the are still one or two reductions away from finding the market, and the market keeps moving lower with their asking price. I find it amusing they think this is a huge price reduction. It is huge — only in their minds. They are still over the market. If they had priced it appropriately from the beginning, the price reductions leading them to this temporary milestone wouldn’t seems so drastic.

If the owners manage to get this asking price, they stand to lose $154,094 after a 6% commission. I suspect their loss will be closer to $200,000 before they find a knife-catcher willing to lose the next $200K.

This property is still on the market, and they are still chasing the market down. The price now stands at $559,900. The losses now exceed $120,000…

First Update September 3, 2007

Originally published July 13, 2007.

The price has been reduced to $599,900. Assuming this seller gets their asking price, they stand to lose $86,094 after a 6% commission.

Today’s property is nothing unusual or unique, and that is what makes it so special. It is extraordinary in its ordinariness. This is a nice, Irvine property typical of many nice, Irvine properties, and it is selling for a loss. Do you get the sense this is becoming the rule rather than the exception?

Asking Price: $624,900

Purchase Price: $650,000

Purchase Date: 6/23/2005

Address: 8 Lilac, Irvine, CA 92618

Beds: 3
Baths: 2.75
Sq. Ft.: 1,525
$/Sq. Ft.: $410
Lot Size: –
Year Built: 2000
Stories: 2
Type: Condominium
View: Park or Green Belt, Peek-A-Boo
County: Orange
Neighborhood: Oak Creek
MLS#: S493537
Status: Active
On Redfin: 20 days

From Redfin, “Beautiful Oak Creek Townhome! New Plush Carpet! Popular Floorplan Features Gourmet Kitchen/Center Island! Dual Master Suites plus Mainfloor Bdrm/Den/Office w/ Bath! Quality Custom Upgrades inc/ Granite Counters/Maple Cabinets/20” Neutral Floor Tiles/Recessed Lighting/Plantation Shutters/Designer Paint/Media Entertainment Center/Etc! Convenient Indoor Laundry Room! Spacious Patio Backs to Greenbelt! Oversized Garage w/ Cabinets! Fabulous Resort-Style Recreation Complex! Award-Winning Schools!”

Did you see the realtor got excited about a “Bath!” What is the deal with all the slashes and Title Case? I can’t decide which is more annoying: Title Case or ALL CAPS? What/Do/You/Think?

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Assuming this seller gets their asking price, they stand to lose $62,594 after a 6% commission.

I can remember earlier this year when I first started blogging, it was hard to find a house with a loss. You could demonstrate a loss when you factor in commissions, and that is still a real loss, but it doesn’t have the same emotional impact as when you see a true equity crushing loser. Now finding real losses are like seeing implants at Fashion Island Mall: there is no novelty because they are so common.

I hope you have enjoyed Oak Creek week here at the Irvine Housing Blog. On Monday, I have a new analysis post ready — Land Value 101, and there are a number of rollbacks to show you.

All of this excites me. It’s the weekend, so let’s GET THE PARTY STARTED

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Get this party started on a Saturday night
Everybody’s waiting for me to arrive
Sending out the message to all of my friends
We’ll be looking flashy in my Mercedes Benz

GET THE PARTY STARTED by: Pink

I’m dreaming of a white Christmas

Just like the ones I used to know

Where the treetops glisten,

and children listen

To hear sleigh bells in the snow

I’m dreaming of a white Christmas

With every Christmas card I write

May your days be merry and bright

And may all your Christmases be white

I’m dreaming of a white Christmas

With every Christmas card I write

May your days be merry and bright

And may all your Christmases be white

White Christmas — Elvis Presley

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Asking Price: $600,000

Income Requirement: $120,000

Downpayment Needed: $150,000

Purchase Price: $700,000

Purchase Date: 3/7/2006

Address: 6 Silvermaple, Irvine, CA 92618

First Mortgage $560,000

Downpayment $140,000

Beds: 3

Baths: 3

Sq. Ft.: 1,600

$/Sq. Ft.: $375

Lot Size: –

Type: Condominium

Style: Contemporary

Year Built: 2000

Stories: Three or More Levels

Area: Oak Creek

County: Orange

MLS#: L23942

Status: Active

On Redfin: 121 days

Unsold in 90+ days

From Redfin, “A stunning, detached home on a culdesac in the gated Oak Creek Community of Irvine. Three generous bedrooms with 3 full baths. Elegant upgrades including designer floors, custom paint, crown molding and custom window treatments. Large, sparkling kitchen with center island and sit-up bar. Great Room style floorplan with separate living room, family room, full-size dining area and dining alcove. First floor bedroom and bath. Lushly landscaped yard with beautiful slate accents.”

This description is well written. I particularly like the adjectives: stunning, generous, elegant, sparkling, lushly, beautiful…

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It is sellers like these who make me rather sad. They did what you are supposed to do; they put 20% down and got a conventional mortgage. They obviously customized the home, so I don’t think they were flippers. Whatever life circumstances have caused them to need to sell, the volatility of house prices in Irvine is going to wipe them out. I know people believe real estate only goes up, but the fact is that it sometimes goes down. A stable market with boring 4% appreciation is better than the roller coaster ride we are on here in Irvine. Perhaps it is a good time to review Houses Should Not Be a Commodity.

For the record, if they get their asking price and pay a 6% commission, they stand to lose $136,000 of their $140,000 downpayment. There is probably a reason this price hasn’t dropped further despite being on the market for 121 days. Do you suspect this price is as low as they can go?

For a little fun, what does this photo tell you about the occupant…

I’ll be home for Christmas

You can plan on me

Please have snow and mistletoe

And presents ‘neath the tree

Christmas eve will find me

Where the love light gleams

I’ll be home for Christmas

And you’ll be in my dreams

I’ll be home this Christmas, darling

I’ll be coming home to you

And there’s nothing in the world

Gonna get in my way

I’ll be home for Christmas

You can plan on me

Please have snow

And mistletoe

And presents ‘neath the tree

Christmas eve will find me

Where the love light gleams

I’ll be home for Christmas

And you’ll be in my dreams

I’ll be home for Christmas

Till then you’ll be in my dreams

I’ll Be Home For Christmas — Elvis Presley

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Asking Price: $649,000

Income Requirement: $129,800

Downpayment Needed: $162,250

Purchase Price: $651,500

Purchase Date: 12/3/2004

Address: 56 Autumn, Irvine, CA 92602

Refi First Mortgage $695,400

Beds: 3

Baths: 3

Sq. Ft.: 1,858

$/Sq. Ft.: $349

Lot Size: –

Type: Condominium

Style: Traditional

Year Built: 2001

Stories: Two Levels

Area: West Irvine

County: Orange

MLS#: S494939

Status: Active

On Redfin: 158 days

Unsold in 90+ days

From Redfin, “Priced under Market! Beautiful home in Summerplace, West Irvine. Patio at entrance with French doors to kitchen. Dark hardwood flooring, granite kitchen counters, big center island, mocha cabinets and stainless steel appliances. Formal dinning room, fire place in living room, custom window blinds. Full bath downstairs near garage entrance. Computer niche upstairs. Separate laundry room. Master bedroom with large bathroom and walk in closet. Close to gated association pool.”

Priced under Market! That is such BS. How can something be priced under market for 158 days? It is clearly priced over market, or it would have sold by now.

They forgot to say it is empty and burning a hole in someone’s pocket.

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In the spirit of yesterday’s post, this seller has already taken their profits from the deal when they refinanced early this year and brought their mortgage up to $43,900 over their purchase price. Do you think they will give this money back when the short sale happens? I am not holding my breath.

The stupidity of lenders is breathtaking. How can you do these large, cash-out refinance loans and not expect to lose money? I suppose this is now a recourse loan, so they have the ability to go after other assets, but that is assuming this seller has any — or at least some the bank can find. Cash in a mattress is hard to find, you know.

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BTW, for those of you who do not think prices on homes in nice neighborhoods can decline 40%, I invite you to check out this property in the San Diego suburb of Chula Vista I found on Piggington.

Well, its christmas time pretty baby

And the snow is falling on the ground

Well, its christmas time pretty baby

And the snow is falling down

Well you be a real good little girl

Santa claus is back in town

Got no sleigh with reindeer

No sack on my back

Youre gonna see me comin in a big black caddilac

Oh, its christmas time pretty baby

And the snow is falling on the ground

Well you be a real good little baby

Santa claus is back in town

Hang up your pretty stockings

And turn off the light

Santa claus is comin down your chimney tonight

Oh, its christmas time pretty baby

And the snow is falling on the ground

Well you be a real good little baby

Santa claus is back in town

Santa Claus is Back in Town — Elvis Presley

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It did not occur to me until writing this post that people can sell their houses to the bank for a profit by simply convincing the bank to make them a loan. Nice idea. I am surprised more people are not doing it.

Asking Price: $1,199,900

Income Requirement: $299,975

Downpayment Needed: $239,980

Purchase Price: $1,050,000

Purchase Date: 11/15/2004

Address: 6 Malibu, Irvine, CA 92602

First Mortgage $1,050,000

Downpayment $0

HELOC $500,000

Beds: 5

Baths: 3

Sq. Ft.: 3,030

$/Sq. Ft.: $396

Lot Size: –

Type: Single Family Residence

Style: French

Year Built: 2000

Stories: Two Levels

Area: Northpark

County: Orange

MLS#: S485174

Status: Active

On Redfin: 221 days

Unsold in 90+ days

From Redfin, “STUNNING. .SHOWS BETTER THEN THE MODEL. .FULL 5 BEDS-COULD BE 6 W/ HUGE UPSTAIRS BONUS/OFFICE) GOURMET KITCHEN W/ BLACK GRANITE, CHERRY CABINETS W/ GLASS DISPLAY, 6 BURNER MONO STOVE. .FML LIVING W/ FIREPLACE (USED AS DINING RM)SEP. FML DINING RM. .DESIGNER PAINTS, CROWN MOLDING, WAINSCOTTING FANS, WINDOW CASINGS, CHAIR RAILS. .FP IN LIVING, FAMILY & MASTER. .HUGE ROMANTIC MASTER SUITE W/ FP. .FABULOUS LG FAMILY RM. W/ ENTERTAINMENT CENTER & FP. .EX LG PROF. LAND/HARDSCAPED PRIVATE YARD. .CUL DE SAC. . GUARD GATED. .

Between the CAPS LOCK and the abbreviations (& FP. .EX LG PROF. ), this description is practically unreadable.

“SHOWS BETTER THEN THE MODEL.” This kind of BS is annoying.

GOURMET KITCHEN — You did notice our new award, right? Thanks Shhhhh.

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At 221 days on the market, this house is obviously overpriced, but that isn’t the story here. These people have already sold the house to Bank of America and made a $500,000 profit — sort of. Bank of America issued this homeowner a $500K HELOC in July of this year. How did they get an appraisal for $1,550,000 to obtain the HELOC? WTF was Bank of America thinking?

I don’t know if this HELOC has been maxed out, but if it isn’t, it should be. This house is not going to sell for a profit, and Bank of America has graciously consented to give these people $500,000 for the right to foreclose in a second lien position which will probably be entirely wiped out by the first mortgage during foreclosure. These people have every incentive to take the money, go to Vanuatu (a notorious tax haven,) and hide the cash in a safe deposit box in a bank there. Yes, it is illegal and immoral, but not any more so than the others who have defaulted on their loans. If the banks are really this stupid, they deserve what is coming to them.