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Milestone
2008-04-10 00:00:00
  . We have reached a new milestone in our documentation of the price decline in the Great Housing Bubble: we have our first property closing at 40% below its previous sale price. That's right, 40% off in Irvine. The median has not declined 40% yet, but individual properties have. Will the median be far behind? We have been watching this property for some time. It was the source for a post that first appeared on March 17, 2007, and was updated on Sep 15th, 2007. We followed up again with the post, Show Me, on January 15, 2008. It was purchased on May 26, 2005 for $565,000 with 100% financing. There was a first mortgage from New Century for $452,000 and a second from New Century for $113,000. Ordinarily, when a property goes up for auction, the lender will bid the property up to the value of the first mortgage, in this case $452,000. This property was purchased at auction by the trustee for a CDO (U S BANK NA, ; STRUCTURED ASSET INVESTMENT LOAN TRUST 2,) for $337...
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Upgrade Complete
2008-04-10 00:00:00
From what I can tell, it looks like the upgrade went well.  All the content from the old platform was brought over and we even used some nifty tricks to make sure that links to the pages on the old platform are now linking to the new pages. Our forums have been expanded and we should have a few more subtle changes on the way.  Your old forum username/password will work on the new software.  If it doesn't, request a new password through the system.  If you are still having trouble, send me an email. As with any project of this size, there are bound to be some issues.  Please let me know if you come across any and we'll do our best to take care of them. Thanks! UPDATE Thank you to those of you who have provided thoughtful responses and constructive criticism.  That being said, ungrateful rants will fall on deaf ears.
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Turtle REOck
2008-04-09 00:00:00
  Welcome to the new Irvine Housing Blog. We have changed from Wordpress to Expression Engine as our blogging software. It is a more powerful platform, and it should allow us to introduce some new and exciting features. There will be some growing pains (as I am experiencing right now in getting to know the new blog entry interface) but in no time, we will all be enjoying the new and improved Irvine Housing Blog. . Its been such a long timeI think I should be goin, yeahAnd time doesnt wait for me, it keeps on rollinSail on, on a distant highwayIve got to keep on chasin a dreamIve gotta be on my wayWish there was something I could say.Well Im takin my time, Im just movin onYoull forget about me after Ive been goneAnd I take what I find, I dont want no moreIts just outside of your front door. Foreplay/Long Time -- Boston . .   . Asking Price: $674,900 Income Requirement: $168,725 Downpayment Needed: $134,980 Monthly Equity Burn: $5,624 Purchase Price: $564,678 ...
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Milestone
2008-04-09 00:00:00
  . We have reached a new milestone in our documentation of the price decline in the Great Housing Bubble: we have our first property closing at 40% below its previous sale price. That's right, 40% off in Irvine. The median has not declined 40% yet, but individual properties have. Will the median be far behind? We have been watching this property for some time. It was the source for a post that first appeared on March 17, 2007, and was updated on Sep 15th, 2007. We followed up again with the post, Show Me, on January 15, 2008. It was purchased on May 26, 2005 for $565,000 with 100% financing. There was a first mortgage from New Century for $452,000 and a second from New Century for $113,000. Ordinarily, when a property goes up for auction, the lender will bid the property up to the value of the first mortgage, in this case $452,000. This property was purchased at auction by the trustee for a CDO (U S BANK NA, ; STRUCTURED ASSET INVESTMENT LOAN TRUST 2,) for $337...
More About: Milestone

A New Season
2008-04-09 00:00:00
. . Today's property is an example of how the market crash hurts ordinary people. This property is owned by a couple, and although I do not know them, I suspect they are a young couple who purchased this as their first home and they were hoping to do a move up later. That is how the real estate game is played around here. I don't see any data on the first mortgage, but there is a HELOC for $116,850. Assuming this is 20% of the purchase price, I have estimated the purchase price at $584,250 which is consistent with the tax assessment. Therefore, they likely have a first mortgage for $467,400. I can't feel too sorry for them as they don't appear to have any money in the transaction. They are priced over the market and praying for a knife catcher to come bail them out. It probably is not going to happen.   Asking Price: $549,000 Income Requirement: $137,250 Downpayment Needed: $109,800 Monthly Equity Burn: $4,575 Purchase Price: $584,250 -- I think. Purchase Dat...
More About: Season

Upgrade Complete
2008-04-06 00:00:00
From what I can tell, it looks like the upgrade went well.  All the content from the old platform was brought over and we even used some nifty tricks to make sure that links to the pages on the old platform are now linking to the new pages. Our forums have been expanded and we should have a few more subtle changes on the way.  Your old forum username/password will work on the new software.  If it doesn't, request a new password through the system.  If you are still having trouble, send me an email. As with any project of this size, there are bound to be some issues.  Please let me know if you come across any and we'll do our best to take care of them. Thanks! UPDATE Thank you to those of you who have provided thoughtful responses and constructive criticism.  That being said, ungrateful rants will fall on deaf ears.
More About: Complete

Flying
2008-04-06 00:00:00
. . Wouldn't it be nice if prices really did go up forever? Wouldn't it be great if none of us had to work, and we could all just live off the appreciation of our houses? There really isn't much difference between believing in the magical kool aid of the bubble and believing in other forms of magical thinking. It is a wonderful fantasy, and believing in endless price appreciation must feel very good. I guess perpetual house price appreciation is the adult version of Santa Claus or the Tooth Fairy. If I had been able to drink the kool aid, I would have been less distressed by what I witnessed in 2004 through 2006. Ignorance really can be bliss. How many homeowners are out there waiting for the good times to come again? I think Tom Petty put it well: . Well the good old days may not return And the rocks might melt, and the sea may burn I'm learning to fly but I ain't got wings Comin' down is the hardest thing Well some say life will beat you down Break your heart, steal your...
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Rose
2008-04-06 00:00:00
. . 'Tis but thy name that is my enemy; Thou art thyself, though not a Montague. What's Montague? it is nor hand, nor foot, Nor arm, nor face, nor any other part Belonging to a man. O, be some other name! What's in a name? that which we call a rose By any other name would smell as sweet; So Romeo would, were he not Romeo call'd, Retain that dear perfection which he owes Without that title. Romeo, doff thy name, And for that name which is no part of thee Take all myself. William Shakespeare -- Romeo and Juliet, 1594 Turtle Ridge is a beautiful community, and although the houses are ridiculously overpriced, it does look like a nice place to live. I know one family who lives there, and they are exceptional people. There are undoubtedly others. What is in a name? Does "Turtle Ridge" mean more than just a name. I suspect many who bought there believe the name carries prestige and the envy of the lower classes. Personally, I associate Turtle Ridge with pretense, nouveau riche co...
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Stealth Rally
2008-04-06 00:00:00
. . F117 Nighthawk There must be a stealth rally happening in the Irvine housing market because I sure don't see it. Perhaps it has just been a stealth market crash because today's seller didn't seem to notice. If you took the rally that lead up to 2006's peak pricing and projected it forward into 2008, you might be able to come up with today's asking price, but in our current market? WTF? Asking Price: $1,999,000 Income Requirement: $499,750 Downpayment Needed: $399,800 Monthly Equity Burn: $16,658 or more Purchase Price: $726,000 Purchase Date: 8/21/1998 Address: 111 Nighthawk, Irvine, CA 92604 Beds: 5 Baths: 4 Sq. Ft.: 3,900 $/Sq. Ft.: $513 Lot Size: - Type: Single Family Residence Style: Contemporary Year Built: 1998 Stories: Two Levels Area: Woodbridge County: Orange MLS#: S526976 Status: Active On Redfin: 3 days Most Spectacular Home in the Woodbridge Reserve. Attention to detail throughout this incredibly gorgeous Home. Livi...
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Fool?s Gold
2008-04-06 00:00:00
. . In retrospect, it is easy to see how many people who bought late in the bubble were chasing fool's gold. The rainbow lead to a pot of gold for many, but many others have been left chasing the rainbow and wondering where their pot of gold lies. The map was easy to follow: you took out a large loan, waited a few months, then sold the property to someone else -- the greater fool. The fool who was also chasing their fool's gold. Everyone is still weighing out their gold as the rest of us watch them sink. The gold is always just around the corner, but in reality a breakdown is just around the bend. We all know where the market is going -- down, down, down. . I'm no clown I wont back down I don't need you to tell me whats going down Down down down down da down down down Down down down down da down down down I'm standing alone I'm watching you all I'm seeing you sinking I'm standing alone You're weighing the gold I'm watching you sinking Fool s gold These boots were made f...
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Investment Value of Residential Real Estate
2008-04-06 00:00:00
. . Investment Value of Residential Real Estate The United States Department of Labor Bureau of Labor Statistics measures the Rent of primary residence (rent) and Owners' equivalent rent of primary residence (rental equivalence). They make this distinction because a house has both a consumptive purpose and an investment purpose. The consumptive value is measured by rent or rental equivalence. There is legitimate financial reason pay more than the rental equivalence price. The normal rate of house appreciation ? not the unsustainable kind witnessed during the Great Housing Bubble ? can provide a return on investment. The source of this added value is the leverage of mortgage financing and the hedge against inflation obtained through a fixed-rate mortgage. The investment premium, which is about 10%, is less than most people think. The rental equivalence value is the fundamental value of real estate, and it is also its consumptive value. This value can be easily measured as demons...
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Flying
2008-04-04 13:30:00
. . Wouldn’t it be nice if prices really did go up forever? Wouldn’t it be great if none of us had to work, and we could all just live off the appreciation of our houses? There really isn’t much difference between believing in the magical kool aid of the bubble and believing in other forms of ...
More About: Flying , Rollback

Rose
2008-04-03 13:30:00
. . ‘Tis but thy name that is my enemy; Thou art thyself, though not a Montague. What’s Montague? it is nor hand, nor foot, Nor arm, nor face, nor any other part Belonging to a man. O, be some other name! What’s in a name? that which we call a rose By any other name would smell as sweet; So Romeo ...
More About: Rose , Rollback

Stealth Rally
2008-04-02 13:30:00
. . F117 Nighthawk There must be a stealth rally happening in the Irvine housing market because I sure don’t see it. Perhaps it has just been a stealth market crash because today’s seller didn’t seem to notice. If you took the rally that lead up to 2006’s peak pricing and projected it forward into 2008, you might ...
More About: Rally , Stealth

Fool?s Gold
2008-04-01 13:30:00
. . In retrospect, it is easy to see how many people who bought late in the bubble were chasing fool’s gold. The rainbow lead to a pot of gold for many, but many others have been left chasing the rainbow and wondering where their pot of gold lies. The map was easy to follow: you took ...
More About: Gold , Fool , Rollback

Investment Value of Residential Real Estate
2008-03-31 13:30:00
. . Investment Value of Residential Real Estate The United States Department of Labor Bureau of Labor Statistics measures the Rent of primary residence (rent) and Owners’ equivalent rent of primary residence (rental equivalence). They make this distinction because a house has both a consumptive purpose and an investment purpose. The consumptive value is measured by rent or ...
More About: Real Estate

IHB Upgrade Planned for Saturday, April 5th
2008-03-29 12:31:00
Yup, IHB is growing up! In order to add more features in the future, we’ve decided to upgrade the site. We’re planning for the upgrade to take place next Saturday (4/5/08). During the upgrade, IHB will not be accessible. The estimate is for ~4 hours of downtime that day. The ...
More About: News , April

Efficient Markets vs Behavioral Finance
2008-03-29 12:30:00
. . A few notes from some of my research for you to ponder over the weekend… . Efficient Markets Theory The efficient markets theory is the idea that speculative asset prices always incorporate the best information about fundamental values and that prices change only because new information enters the market and investors act in an appropriate, rational manner ...
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Illin?
2008-03-28 12:30:00
. One of the unique phenomenons of the Great Housing Bubble was the intense speculative activity, particularly the purchase of multiple properties. When speculators who purchased multiple properties implode financially, they allow multiple properties to fall into foreclosure. One of the reason we have had such a dramatic spike in foreclosures even before the bulk of ...
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Big Time
2008-03-27 12:30:00
. When you run with the big dogs, you have to lift your leg high. Today’s property is a big house for throwing big parties attended by people with big names. This is a property for those who live a big life and spend money big time. When you live here, you don’t have to keep ...
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Mistake
2008-03-26 12:30:00
. . It’s a mistake. What else can you say about the Great Housing Bubble. It is a monumental mistake: testament to the greed and folly of man. A mistake of assuredness. An instance when man’s arrogance is only surpassed by his ignorance. Unfortunately, mistakes have consequences, and we will all pay for the mistakes of ...

Inventory Panic
2008-03-25 12:30:00
.Video from our friends at the South OC Tracker. There has been a lot of talk about the declining inventories. Inventory has been declining, and sales have been increasing, but prices have also been dropping because many of the sales are REOs going at “fire sale” prices. Increasing volume and decreasing prices is not the sign ...
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The Roxbury
2008-03-24 12:30:00
. . . Why spend just a Night at the Roxbury when you can live there? Look at this fantastic property. It comes complete with a hose on the roof, termite damage on the porch, broken concrete, a leaning sidewalk light, an empty milk bottle on the walk, and a pair of statues that looks like a man ...

WOT 3-22-2008
2008-03-22 12:33:00
Thank you, Daniel Gross, for the mention in your latest article: Recession Literature, The best books, articles, and Web sites about the economic collapse. Irvinehousingblog.com is an exemplary Internet mashup. Irvine, the master-planned community in Orange County, Calif., was in many ways the epicenter of the housing boom. Many of the now-defunct ambitious subprime lenders were ...
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That?s Life ** Update **
2008-03-22 12:30:00
 The list price on 78 Sorenson is down t0 $549,000, and the property is in escrow. That’s life (that’s life), that’s what all the people say You’re ridin’ high in April, shot down in May But I know I’m gonna change that tune When I’m back on top, back on top in June I said that’s life (that’s life), ...
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That?s the Spirit ** Update **
2008-03-22 12:29:00
This one went back to the bank on 2/4/2008 for $616,250. Our house, in the middle of our street Our house, in the middle of our Our house, was our castle and our keep Our house, in the middle of our street Our house, that was where we used to sleep Our house, in the middle of our street Our ...
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The Abandonment of Hope
2008-03-21 12:30:00
Through me the way to the city of woe, Through me the way to everlasting pain, Through me the way among the lost. Justice moved my maker on high. Divine power made me, Wisdom supreme, and primal love. Before me nothing was but things eternal, And eternal i endure. Abandon all hope, you who enter here. Dante Alighieri — Divine Comedy . Housing market bulls must ...
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Nothing to Lose
2008-03-20 12:30:00
In the era of 100% financing, speculation was widespread. Why not, speculators had nothing to lose other than their credit score, and if prices had gone up, they would have reaped a huge windfall. We have documented case after case of this behavior right here on this blog. Are we flagellating the equine after it ...

The Millionaire
2008-03-19 12:30:00
. … There are many ways to become a millionaire. You could find oil on your property like Jed Clampett from the Beverly Hillbillies, or you could have your property could go up in value $1,000,000 like today’s owners did. What would you do with $1,000,000? Some people would take the money and invest it and ...
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Bombs Away
2008-03-18 12:30:00
. . All methods of predicting future price action rely on the same basic premise: prices are tethered to some fundamental value, and although prices may deviate from this value for extended periods of time, prices eventually return to fundamental valuations. This premise has been reinforced by market observation; in fact, many estimates of fundamental value are ...
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