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Please Help Me Get Published
2008-04-22 00:00:00
    The Great Housing Bubble Book Proposal -- Irvine Housing Blog.pdf I have completed my manuscript on The Great Housing Bubble. I have never published a book, and I know very little about the publishing industry. It was suggested to me that I use the power of the blog to get some help. Please, help me. My first attempt at a book proposal is contained in the PDF link above. It contains the information typical of a submission including a table to contents, a list of tables and exhibits, the preface explaining why I wrote the book, and introduction describing the book in more detail, and 2 sample chapters. Advice on writing a good book proposal would also be appreciated. If any of you know publishers or agents who could help me get my manuscript in print, I would appreciate any advice or contacts you can offer. My first choice would be a large, commercial publisher. I would like this book to reach the widest possible audience. Smaller publishers, niche publishers or Univers...
More About: Published

WOT 4-19-2008
2008-04-20 00:00:00
Lurker's Post For all you readers out there who have never posted before, please say hello. We know you are out there. This is your chance to break the ice...    
More About: 2008

Rental Parity?
2008-04-19 00:00:00
Savin' Me -- Nickelback   Today's property has been featured before, but the price reduction is so significant, I thought it worthy of a new post. This property may be selling for rental parity. One of the key concepts we have been espousing here at the Irvine Housing Blog is the idea that prices will bottom at rental parity. When a potential homebuyer can save money versus renting, it makes sense to own. A homeowner does not need appreciation for real estate to be a sound financial investment. If you are saving money versus renting, you are coming out ahead. This property can likely be owned for its rental value. If you are willing to live there long term, you will see substantial savings over renters who face subsequent rental increases. Of course, you have to want to live there, and that is the problem with this property and all apartment-like condos for that matter: They are transitory housing. These units will likely fall below rental parity. They should bottom out at pr...
More About: Rental

What Goes Up?
2008-04-17 00:00:00
What Goes Around... Comes Around -- Justin Timberlake What goes up must go down, and what goes around comes around. Markets move in cycles, and although they can trend for significant periods of time, all price trends eventually reverse. Real estate markets usually trend for very long periods, and we are only 2 years into what is likely to be a 6-8 year decline. We are nowhere near the bottom. I imagine most people with toxic financing who need to refinance really don't want to think about it. It is probably making them sick, and they can't believe it is ending this way. They are shocked it is going down. As Justin Timberlake points out, "What Goes Around... Comes Around." Today's property is part of the ongoing carnage in the Collage complex in Northwood. We have profiled this neighborhood before. It is one neighborhood in Northwood showing serious distress. The featured property is a toxic financing victim (and we even have a new graphic to go with it.) The owner purchased in e...

WOT 4-12-2008
2008-04-16 00:00:00
  Just in case any of you forgot, about 1/3 of all loans originated in 2005 and 2006 in California were Option ARMS. Very few if any of the people with those loans will be able to refinance.
More About: 2008

Greed Killing
2008-04-16 00:00:00
Greed Killing -- Napalm Death . Financial manias are built by greed and fear: the two motivations driving the fluctuation of prices in all financial markets. When prices get greatly detached from fundamental valuations, the market is poised for a dramatic fall. There is a phenomenon in residential real estate markets where foreclosures become bank-owned properties (REO) that causes prices to drop. Today's post explores the impact of a single REO in a neighborhood as it lowers the values for everyone else. Asking Price: $614,900 Income Requirement: $153,725 Downpayment Needed: $122,980 Monthly Equity Burn: $5,124 Lender Purchase Price: $606,300 Buyer Purchase Price: $758,000 Purchase Date: 6/13/2005 Address: 116 Tall Oak, Irvine, CA 92603 Beds: 3 Baths: 3 Sq. Ft.: 1,766 $/Sq. Ft.: $348 Lot Size: - Type: Condominium Style: Other Year Built: 2004 Stories: Three or More Levels Area: Quail Hill County: Orange MLS#: P631509 Status: Active On Redfin: 3...
More About: Greed

Levee Breaks
2008-04-16 00:00:00
When the Levee Breaks -- Led Zeppelin . Today's featured property is another mortgage equity withdrawal casualty. Properties like this underscore the dangers of partaking in the appreciation kool aid of the Great Housing Bubble. Most, if not all, of the people who believed in endless appreciation and serial refinancing took out their equity. Many utilized Option ARMs, and they are going to lose their homes. Think about the ramifications of that belief and the decision it influenced: Homeowners who did not take out their equity and refinance with Option ARMs are not going to be in financial trouble, and they will keep their homes. Those that did take out their equity are going to lose their homes. This is one very important life decision supported by a bevy of fallacious beliefs with very serious consequences. Financial bubbles are only fun when they are inflating... Mortgage Equity Withdrawal 1991-2007 There could be any of a number of reasons this house is for sale no...

Vintage
2008-04-16 00:00:00
  . Another day, another market crushing REO. I have to wonder when the knife catchers will start to realize there is a steady flow of these properties entering the market. It isn't like you need to buy this one because it is the only good deal in the market, and it isn't going to be the only one we will see in the future. In fact, as each one of these comes on the market, they lower the comps and cause a whole new wave of foreclosures as all the overextended homeowners in the area lose their ability to refinance. We are witnessing the first stage of the market's downward spiral.   Asking Price: $601,400 Income Requirement: $150,350 Downpayment Needed: $120,280 Monthly Equity Burn: $5,011 Lender Purchase Price: $625,338 Borrower Purchase Price: $745,000 Lender Purchase Date: 3/27/2008 Borrower Purchase Date: 11/30/2006 Address: 176 Vintage , Irvine, CA 92620 Beds: 3 Baths: 3 Sq. Ft.: 1,580 $/Sq. Ft.: $381 Lot Size: - Type: Condominium Sty...

Jefferson
2008-04-12 00:00:00
. Thomas Jefferson believed "Financiers, bankers and industrialists make cities the cesspools of corruption, and should be avoided." It is hard to argue with him given it is the actions of lenders that enabled the Great Housing Bubble. Today's property illustrates why something needs to be done to prevent irrational exuberance from creating volatility in our real estate markets. The family that bought this property put 25% down, and although they started with an Option ARM, they refinanced in 2006 into a fixed-rate mortgage. They tasted the kool aid and did not find it palatable. Families like this should not get screwed based on the timing of their purchases due to life's circumstances. From the photos, it appears they have young children. They probably bought this as a family house. People should be able to do this without losing their life savings. If lenders did not enable people to overborrow, prices would rise about 4.5% a year, and people wouldn't have to worry about when ...

WOT 4-12-2008
2008-04-12 00:00:00
Just in case any of you forgot, about 1/3 of all loans originated in 2005 and 2006 in California were Option ARMS. Very few if any of the people with those loans will be able to refinance.
More About: 2008

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.
More About: Complete

American Idiots
2008-04-10 00:00:00
. . The National Association of Realtors hopes that the American sheople are American idiots. They control the media message nearly everywhere, and they constantly push their self-serving agenda: it is always a good time to buy or sell and generate a commission. Unfortunately, you can't even find the truth in newspapers anymore. Does anyone think the OC Register would be willing to write stories about how and why the market is tanking? If they did, I suspect their real estate advertising section would get a lot smaller. People come to the Irvine Housing Blog because we tell them the truth about falling prices, and we explain why prices will continue to fall. Last week I wrote a post called Inventory Panic. In that post, I mentioned that there are a large number of bank owned properties not yet for sale on the MLS. When these get listed and sold, they will continue to push prices lower. Currently, there are more foreclosures each month than there are sales, and Irvine is ...
More About: Idiots

A New Season
2008-04-10 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

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...
More About: Milestone

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 ...
More About: Turtle

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

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

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...
More About: Real Estate

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...
More About: Rally , Stealth

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...
More About: Rose

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...
More About: Gold

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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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 ...
More About: News , Finance