Ebony and ivory live together in perfect harmony
Side by side on my piano keyboard, oh lord, why dont we?
We all know that people are the same where ever we go
There is good and bad in evryone,
We learn to live, we learn to give
Each other what we need to survive together alive.

Ebony and ivory live together in perfect harmony

Ebony and Ivory — Paul McCartney and Stevie Wonder

Another day another 2004 rollback. Doesn’t the world seem to be in perfect harmony with the bearish predictions we have made on this blog?

Asking Price: $745,000

Income Requirement: $186,250

Downpayment Needed: $149,000

Purchase Price: $752,000

Purchase Date: 9/30/2004

Address: 3462 Eboe, Irvine, CA 92606

First Mortgage $672,000
HELOC $168,000
Total Debt $840,000

Beds: 4
Baths: 2.5
Sq. Ft.: 2,621
$/Sq. Ft.: $284
Lot Size: 5,564 sq. ft.
Type: Single Family Residence
Style: Contemporary
Year Built: 1974
Stories: Two Levels
Area: Walnut
County: Orange
MLS#: S499486
Status: Active
On Redfin: 105 days
Unsold in 90+ days

From Redfin, “BANK SAYS. .SUBMIT!! LARGEST MODEL W/ CUSTOM POOL, SPA, SWIM UP BAR, FIRE PIT, KID’S PLAY POOL, COVERED PATIO. CUSTOMIZED W/ CEASAR STONE COUNTERS, DESINGER TILE BACKSPLASH, CERAMIC GLASS COOKTOP, BUIT-IN FRIDGE & MORE IN KITCHEN. MASTER SUITE W/ CROWN MOLDING, TRAVERTINE COUNTERS & DUAL SINKS, OVERSIZED SPA TUB SURROUND. .. FAMILY ROOM W/ FIREPLACE. BONUS ROOM. .. BAMBOO FLOORS DOWNSTAIRS, 6′ BASEBOARDS, DESIGNER PAINT, SCRAPED CEILINGS. SHORT SALE SUBJECT TO BANK APPROVAL.”

Another ALL CAPS description… {Sigh}

BANK SAYS. .SUBMIT!! — We are your masters. You must submit an offer. Save our Christmas bonuses…

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So how much is the bank going to lose? If they get the asking price, and if there is a 6% commission, the total loss is $139,700.

I know we have stated this before, but it bears repeating (pun intended): 20% downpayments will become the standard again. What lender is going to be willing to loan the remaining 20% given all the losses we are seeing on second mortgages? The credit crunch is going to get much worse before it gets any better.

The main reason I believe we are in for a harder landing (prices dropping below the 160 gross rent multiplier breakeven for an owner occupant) is because nobody has saved the 20% downpayments, and no lenders are going to be willing to loan this 20% or any portion thereof.

Over the last 4 or 5 years, nobody needed to save for a downpayment because 100% financing was available. People respond to incentives, and they were incentivized not to save. Savings must come from income, not from a HELOC on another property.

Until prices drop low enough for entry level buyers to come up with a 20% downpayment, and until people actually start saving for this amount, we will not find a bottom. Without entry level buyers, the whole chain of move ups grinds to a halt. This is why sales are so dismal, and it is also why prices will continue to drop precipitously.

Food for thought on the weekend…

It appears there are houses in hell.

So ends another week at the Irvine Housing Blog. I hope you have had a good time with us. We will bring you more next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.

I dreamed I had a good job and I got well paid.
I blew it all at the penny arcade.
A hundred dollars on a kewpie doll.
No pretty chick is gonna make me crawl.

Get on a TWA to the promised land.
Every woman, child and man
Gets a Cadillac and a great big diamond ring.
Don’t you know you’re riding with the king?

Riding with the King — Eric Clapton

This song reminds me of all the people who took out liar loans to buy houses in Irvine. They dreamed they had a good job and they were well paid. They dreamed their house would take them to the promised land of Cadillacs and diamond rings, but, of course, they end up selling at a loss. A sad and repetitive story.

Asking Price: $679,000

Income Requirement: $169,750

Downpayment Needed: $135,800

Purchase Price: $699,000

Purchase Date: 6/07/2004

Address: 5112 Royale, Irvine, CA 92604

Beds: 3
Baths: 2
Sq. Ft.: 1,723
$/Sq. Ft.: $394
Lot Size: 6,300 sq. ft.
Type: Single Family Residence
Style: Ranch
Year Built: 1969
Stories: One Level
Area: El Camino Real
County: Orange
MLS#: S512070
Status: Active
On Redfin: 4 days

From Redfin, “Nicely upgraded single story , detached home in The Ranch ! Remodeled kitchen w, maple cabinets and corian counters, Large sunny great room , scraped ceilings, dual pane windows, remodeled baths , newer roof. Check out the attic and see the potential!!!!! Storage galore or could be extra bedroom. “

potential!!!!! Five exclamation points worth. Ummm, if it is nicely upgraded, hasn’t it reached its potential?

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Another day, another 2004 rollback. Today’s seller stands to lose $60,740 on their 2004 purchase after commissions. With all these 2004 rollbacks, what does it say about those hoping for a profit on their 2005 and 2006 purchases. They are out there trying. Good luck.

Recently, I went through many of the old posts on the blog to look for properties to update. I kept finding the same two things: 1. Properties with minor price reductions chasing the market down, and 2. Properties taken off the market without selling.

Think about what that says about the true market inventory. During the rally, everyone who put their house for sale ended up selling it. There were no sellers unable to get their asking prices. There was no “overhead supply.” In today’s market, the inventory numbers on the MLS do not represent the true number of potential sellers in the marketplace because there are so many sellers who have given up.

If there was even a small amount of sales activity or price appreciation, these sellers would relist their houses and add their stealth inventory to an already overbloated inventory number. So when you look at the dismal numbers for “months of inventory” on the market, consider that the numbers are much, much worse that the statistics show. If you don’t believe me, go through the old posts on this blog and see for yourself. It is hard not to reach the same conclusion.

Check out the data for Irvine on Altosresearch.

For the Eric Clapton fans out there, I leave you with one of his best guitar solos: Cream — Crossroads

Hold it right there, your attention folks
We came here – to fulfill your hopes
But you better WATCH OUT, it might get ugly
Cause you my friend are beginnin to bug me
So here’s a little smack, goin back to the grill again
Hit you in the hat like Skipper did Gilligan
So get back, before I snap like a Kit Kat
And pop you in the mouth, quicker than a Tic Tac
Bif bam BOOM like a Batman fight scene
You defeatin U.D. that was a pipe dream
Kickin you around like a hackeysack
With the beats and the raps that be action packed
I’m ready to go, I got my foot on the petrol
And if you didn’t know I steal the show like a klepto
I grew up, with the love for rap
But this is combat and you’re about to get smacked

Smacked — Ugly Duckling

Today’s seller got smacked by their property on Sumac. This isn’t the first property we have profiled from this neighborhood. Anyone remember the Sumac Attac?

Asking Price: $559,900

Income Requirement: $149,975

Downpayment Needed: $119,980

Purchase Price: $590,000

Purchase Date: 7/28/2004

Address: 14821 Sumac Ave., Irvine, CA 92606

Mortgage $560,000
1% Neg Am

Beds: 3
Baths: 2
Sq. Ft.: 1,500
$/Sq. Ft.: $373
Lot Size: 5,000 sq. ft.
Type: Single Family Residence
Style: Contemporary
Year Built: 1972
Stories: One Level
Area: Walnut
County: Orange
MLS#: S511568
Status: Active
On Redfin: 8 days

From Redfin, “BEAUTIFUL, LIGHT & BRIGHT SINGLELEVEL HOME ON A SINGLE LOADED ST. IN A VERY DESIRABLE AREA OF IR. W/ walking distance to schools, parks shopping & freways. This contemperary & cute house is what U R looking for. Lots of CUSTOM Touches Thur-out and a great backyard with fruit trees, large patio cover. Wonderful Association Aminities of College Park area W/ Clubhose+ pool & spa just at the end of the steert. Its a real doll house you can call it HOME. “

“cute house is what U R looking for” and a big loser is what I R looking for.

“Its a real doll house you can call it HOME.” Can someone translate that for me? Beyond the poor grammar, is there some kind of secret realtor code when they mention doll houses? Perhaps that means it is a tiny POS?

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Today’s seller stands to lose $63,694 after a 6% commission. Actually, the bank will eat this one because of the Neg Am refi, but, this is a substantial loss on a 2004 purchase.

This is a typical HELOC implosion. Remember when the bulls were claiming everyone in Irvine is sitting on mountains of equity? Us bears claimed people took out their equity and spent it, and these people would end up in foreclosure. In one sense both camps were right. There are a lot of financially prudent Irvine residents; however, there are enough like today’s sellers to smack down prices.

Since our theme today is smacked, and we are in the rap genre, I have another one for you…

I feel you creepin’, I can see you from my shadow.
Wanna jump up in my Lamborghini Gallardo.
Maybe go to my place and just kick it, like Taebo.
And possibly bend you over.
Look back and watch me
smack that, all on the floor,
smack that, give me some more,
smack that, ’till you get sore
smack that, oooh.
smack that, all on the floor,
smack that, give me some more,
smack that, ’till you get sore,
smack that, oooh.

Smack That — Akon

I would like to offer a special thanks to an anonymous IHB reader who alerted me to this property and provided some detail on the mortgage.

This one is for you lendingmaestro…

And every Saturday we work in the yard
Pick up the dog do
Hope that it’s hard (whaf whaf)
Take out the garbage and clean out the garage
My friend’s got a Chrysler
I’ve got a Dodge
We’re just ordinary average guys
Ordinary average guys

Ordinary Guys — Joe Walsh

Link to Music Video

Today’s featured property is extraordinary in its ordinariness. Another home in Irvine selling for a loss. This is no longer the exception, it is the rule.

Is that Joe Walsh’s ordinary car in the driveway?

Asking Price: $620,000

Income Requirement: $155,000

Downpayment Needed: $124,000

Purchase Price: $685,000

Purchase Date: 10/21/2005

Address: 9 Oakdale, Irvine, CA 92604

Beds: 3
Baths: 2
Sq. Ft.: 1,440
$/Sq. Ft.: $431
Lot Size: 4,800 sq. ft.
Type: Single Family Residence
Style: Contemporary
Year Built: 1977
Stories: One Level
Area: Woodbridge
County: Orange
MLS#: P604325
Status: Active
On Redfin: 29 days

From Redfin, “Beautiful 3 bedroom 2 full baths, 1440 Sq Ft, single story home in highly desireable Woodbridge area. Very Quiet, Inner loop location. Remodeled kitchen with newer appliances. Newer concrete tile roof. Very convenient location for shopping, entertainment and excellent schools. Very private back yard with a covered patio. Great woodbridge association ammenities with low HOA Dues ($69.00) and NO MELLO ROOS. PRICE REDUCED TO SELL! Not a short sale.”

Can you find the misspelled word? No description on the MLS is complete without one.

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Today’s seller stands to lose $102,200 after a 6% commission, if they get their asking price. An ordinary house and an ordinary seller taking what has become an ordinary $100K+ loss.