Watch out
You might get what you’re after
Cool babies
Strange but not a stranger
Im an ordinary guy
Burning down the house

Hold tight wait till the party’s over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house

Burning Down The House — Talking Heads

Link to Music Video

I was reading Mathew Padilla’s Mortgage Insider Blog yesterday when I came across a comment from one of the market bulls who stated “If the tragic SoCal wild fires destroy many homes, there will be a huge housing shortage. Inventory will be falling rapidly… it is a fact. Sales inventory will be absorbed by many looking for shelter. It is fortunate there are homes for sale, but I don’t think there are enough. Hopefully, the available supply does not run out before all get a new residence.”

Hundreds of homes have been damaged, and someone has died due to these fires, and someone actually looks at this event as a positive event that will help out the value of their home. I guess if bulls get desperate enough, they can solve the excess inventory problem by burning down the houses.

Back to our collapsing housing market…

Just in case anyone still thinks the high end is immune, today’s property is another Shady Canyon rollback.

Asking Price: $3,199,000

Income Requirement: $799,750

Downpayment Needed: $639,800

Purchase Price: $3,680,000

Purchase Date: 7/28/2006

Address: 32 Prairie Grass, Irvine, CA 92603

1st Loan $2,628,000
2nd Mtg. $500,000
Downpayment $552,000

Beds: 6
Baths: 6.5
Sq. Ft.: 5,227
$/Sq. Ft.: $612
Lot Size: 0.38 acres
Type: Single Family Residence
Style: Spanish
Year Built: 2004
Stories: Two Levels
View(s): Pool
Area: Turtle Rock
County: Orange
MLS#: S508234
Status: Active
On Redfin: 16 days

From Redfin, “If there was anything else that could have been done to this property it would have been done. Rich Granite, Distressed Hardwood, Stainless Steel, Wrought Iron, Imported Fabrics, flat screen technologies, and peaceful fountains have been meticulously woven together to complete this turnkey masterpiece. Perfectly located on one of the largest lots in the Sycamores this home is a must have for an entertaining lifestyle. 6 bedroom suites means no one has to go home. Come See”

If there was anything else that could have been done to this property it would have been done. WTF?

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If the seller gets their asking price minus a 6% commission, they stand to lose their entire $552,000 downpayment, and the bank stands to lose $120,940 for a total loss of $672,940.

I wonder if it would turn out better for them if they burned it down?

Today is gonna be the day
That they’re gonna throw it back to you
By now you should’ve somehow
Realized what you gotta do
I don’t believe that anybody
Feels the way I do about you now

Wonderwall — Oasis

Link to Music Video

Do the lyrics of that song speak about going through short sales and foreclosures? One thing is certain about housing right now: nobody feels the same way they did about it 2 years ago…

Asking Price: $550,000

Income Requirement: $137,500

Downpayment Needed: $110,000

Purchase Price: $665,000

Purchase Date: 9/12/2005

Address: 43 Ardmore, Irvine, CA 92620

1st Loan $532,000
2nd Mtg. $66,500
Downpayment $66,500

Beds: 3
Baths: 3
Sq. Ft.: –
Lot Size: –
Property Type: Condo/Co-op
Area: Out of Area
County: Orange
MLS#: 07-229191
Status: Active
On Redfin: 2 days

From Redfin, “Short Sale! Seller must sell. Bring all offers. High ceiling. Olympic size community swimming pool. Close to shopping mall. “

High ceiling? Is this the only positive feature the realtor could mention? Does it make you suspect it is a complete dump?

This is perhaps the smallest kitchen I have ever seen.

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Yet another deep, deep rollback. If the property sells for its asking price assuming a 6% commission, the total loss is $148,000: the seller stands to lose their $66,500 downpayment, and the 2nd mortgage holder stands to lose their $66,500, and the primary mortgage holder stands to lose $15,000. Ordinarily, the primary mortgage holder would foreclose rather than take a loss, but for $15,000, they should take the deal and count their blessings. It will be more expensive for them if they foreclose. Alas, since the system is broken, the loan servicer will foreclose and collect their fee, and the mortgage holder will absorb an even greater loss.

Hmmm… Maybe there were reasons we had banks hold their own mortgages in the past…

When I was 17,
I dreamed of being king.
And having everything I wanted.
But that was long ago
and my dreams did not unfold,
so I’m still the King of Nothing.

King of Nothing — Seals & Crofts

Link to Music Video

Link to Metalica King Nothing

An Englishman’s home is his castle, or so the saying goes. Today’s seller is going to take a loss, so that makes him the King of Nothing.

Asking Price: $861,000

Income Requirement: $215,250

Downpayment Needed: $172,200

Purchase Price: $875,000

Purchase Date: 2/27/2006

Address: 10 Mineral King, Irvine, CA 92602

Beds: 4
Baths: 2.5
Sq. Ft.: 2,477
$/Sq. Ft.: $348
Lot Size: –
Type: Single Family Residence
Style: Contemporary
Year Built: 2000
Stories: Two Levels
View(s): Park or Green Belt
Area: Northpark
County: Orange
MLS#: S509200
Status: Active
On Redfin: 4 days

From Redfin, “MODEL PERFECT HOME IN PRESTIGIOUS GUARD GATED NORTHPARK W/ BEAUTIFUL POOLS, TENNIS & TREE LINED PARKS. FABULOUS PLAN OFFERS FORMAL LR & DR WHILE CAPTURING ‘GREAT ROOM FEELING’ FOR ENTERTAINING IN THE FAMILY RM. GOURMET KITCHEN W/ GRANITE, STAINLESS/BLK APPLIANCES. BONUS/4TH BR HAS WALK-IN CLOSET (NOW USED AS A STUDY NICHE). SUMPTUOUS MASTER W/ RETREAT & LUXURIOUS BATH W/ SHOWER, SOAKING TUB & WALK-IN CLOSET. UPGRADED THRUOUT W/ EXTENSIVE TILE FLOORING, SHUTTERS, CUSTOM DRAPES & VALENCES. MUST SEE!”

I AM GETTING REALLY TIRED OF THE CAPS LOCK.

CAPTURING ‘GREAT ROOM FEELING’? — You’ve lost the loving feeling…

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Today’s seller stands to lose $65,660 assuming a 6% commission. Does anyone think they will get the asking price? I don’t.

Not a big loss in the grand scheme of things. When I profile a property with a loss of less than $100,000, it doesn’t seem quite as interesting, does it? I have to imagine, the $65,660 loss will be a big deal to the seller. At this point, the seller is just trying to salvage what’s left of their $150,000 downpayment. Good luck with that.

I hope you have enjoyed your visits to the Irvine Housing Blog this week. It was our pleasure to bring it to you. Please come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.

🙂

Here may we reign secure, and in my choice To reign is worth ambition, though in Hell. Better to reign in hell than serve in heaven.

Paradise Lost — John Milton
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Left a good job in the city,
Workin for the man evry night and day,
And I never lost one minute of sleepin,
Worryin bout the way things might have been.

Big wheel keep on turnin,
Proud mary keep on burnin,
Rollin, rollin, rollin on the river.

Proud Mary — Creedence Clearwater Revival

Link to Music Video

IMO, there are four kinds of people in the market right now:

1. Those who are stressed out and losing sleep because of the housing slump.
2. Those who are in denial and not stressed out yet.
3. Those who can afford their payments and don’t care about prices.
4. Those who are not in a market position and can watch the carnage from the sidelines.

BTW, Group 4 is also sleeping well at night. Big wheel keep on turnin…

Asking Price: $850,000

Income Requirement: $212,500

Downpayment Needed: $170,000

Purchase Price: $880,000

Purchase Date: 9/21/2005

Address: 20 Wheeler, Irvine, CA 92620

1st Loan $650,000
Downpayment $230,000

Beds: 4
Baths: 3
Sq. Ft.: 2,574
$/Sq. Ft.: $330
Lot Size: 5,000 sq. ft.
Type: Single Family Residence
Style: Other
Year Built: 1986
Stories: Two Levels
Area: Northwood
County: Orange
MLS#: S509104
Status: Active
On Redfin: 2 days

From Redfin, “This is a fantastic highly desirable corner lot home in the wonderful city of Irvine. This two floor home is great for entertaining with open areas, beatiful back yard, and a bbq area. This home features 3 bedrooms upstairs, one of which is the master bedroom, and two full bathrooms. Downstairs you will find an additional bedroom with another full bath. The kitchen has been remodeled recently and has a breakfast area. There is an indoor laundry room with room for full size washer and dryer.”

Highly desirable corner lot. You mean the one backing onto the arterial at the main entrance where you will have maximum traffic?

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The seller of this house put up a substantial downpayment, so this is not a short sale. If they get their asking price and pay a 6% commission, they stand to lose $81,000.

I don’t know why they are moving, but I admire that they are selling at a loss when they are not being forced out in a foreclosure. Perhaps they recognize they will lose all their equity if they wait. If so, it is a smart move.

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This has nothing to do with the post, but I am always scared by this graph — updated in September 2007.

From our friend at Piggington’s.