Stuff of Memories: From Front Page (in 2005) to Short Sale
Submitted by
CalculatedRisk on Fri, 05/02/2008 - 1:36pm (78 comments)
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Busy day today with ABK on the ropes and BAC angling for the exits. At least that's what it seems like to me.
UPDATE 2-S&P cuts Countrywide rating to junk
| Reuters
But what do I know? In the chessgame of bailout finance, maybe both are moving their pieces to position themselves for another Fed bailout?
People lost the ability to judge value, rather than price. This house was never ever worth anything close to $600k, and even in 2005 that was obvious.
When times are good for too long without interruption people make stupid buying decisions.
it is funny to remember all the cheerleading.
I wish I could find a link, but I remember back in 2005 when San Diego RE values (median) were going up $1,000 a day, and the San Diego newspaper would highlight that each day on the front page.
now when the negative side comes in, the NAR talks about how it's the media bringing it all down...
Realtwhores have lost all credibility.
I loved the comps on the Redfin listing. Obviously, Californians and their listing agents are still smoking crack.
It's an econobox with a freeway in the back yard.
I like the contrast between the executive assistant (whatever that is) saying its like "winning the lottery" and the police officer saying he works in Irvine but can't afford to live there.
If that doesn't say it all, I don't know what does.
Berkshire profit sinks 64 pct on derivatives loss
UPDATE 3-Berkshire net off 64 pct on derivatives, insurance
| Reuters
Weapons of wealth destruction I think is what he called them.
It's an econobox with a freeway in the back yard.
and a major airport about a mile away.
Hemmed in by 2 freeways and South Coast Plaza traffic.
Yikes.
The dust from the tires rolling by on the freeway ain't good for yer lungs.
Make sure showings are scheduled "off peak".
Troy- "and a major airport about a mile away."
Yikes! I see it now! I hope the buyer is an aviation enthusiast and enjoys the smell of jet fuel.
CR,
I realize that even without the craziness of the summer of 2005 there is and should be a difference between housing values in CA and the midwest.
That said, a comparable age of home and square footage in a medium sized midwestern city would probably bring 100 to 150K depending on the amenities inside, school district, etc.
Of course in a medium sized midwestern city there is nothing comparable to having the 405 in your backyard.
As an economist, I understand it. As a midwestern homeowner, it still makes me shake my head.
Just a quibble but its the 55 not the 405 in their backyard. I'm sure they could hear the 405 if it wasn't drowned out by the 55.
That must be one of the loudest house locations in Orange County. I guess some people don't care about freeway noise 24/7 but the bank is going to have fun trying to sell this for over $250K.
Cheers to the family that raised 5 kids there and finally found a bagholder in 2005 so they could move out.
484 Traverse Dr. (the featured home) is currently NoD, as of April 4, on a 480k loan. (Check RealtyTrac) I think the owner of the 120k second is pretty much screwed.
I can tell you Costa Mesa real estate is Roasted, Toasted, and Fijoasted. There's lots of equivalent stuff selling in Costa Mesa for the low $400k's, I don't think this place is going to sell for the asking price. Just look 1/2 mile to the west or southwest, lots of properties 200-300k off from last purchase (most are short sales or bank owned). And very little of this crap is actually selling.
My neighborhood of CM has lots and lots of FBs. We're well into 2004 prices, and stuff still ain't selling. Prices are still too high.
(Rather funny, that quip about Jon Lansner's expert at the bottom of the page: "$1 million median". Let me guess, that musta been Gary Watts. What a clown.)
Having bought at the 1990 peak in Costa Mesa, and sold at 3.5 times that price in October 2005 at another, I recognize the buying panic that caused this to look reasonable. In 2005, the house shown above was one of the absolutely cheapest houses available in Costa Mesa; there were cottages nearer the Newport Beach border on the East side of Costa Mesa going for $1.2M, and listings at $1.5M. Extremely desirable neighborhoods in Newport Beach a couple of miles away (The "Port" streets, for example) had prices ranging from $1.5M to $4M. Insanity, but knowing you're in a bubble is a lot different than knowing the top. The saddest thing for me was that the young couple who bought our house for over $900K kept their Irvine condo as an investment property. I'm sure they're a foreclosure statistic by now.
I am actually hearing and reading realtors say, "Don't wait too long, and don't be suprised if you there are other bidders on the house you want."
Is there no shame?
The 405, the 55 and John Wayne airport next door, its all about location. Location, location, location.
At least John Wayne is closed from 11PM to 7AM.
So is it okay for me to LMFAO or is that just too harsh???
The 405, the 55 and John Wayne airport next door, its all about location. Location, location, location.
Great freeway and airport access for that quick weekend getaway! Who could ask for more?!?
Got a backyard picture here:
484 Traverse Drive, Costa Mesa, CA - Google Maps
They had a bit on the LA Times blog a few weeks back that showed an LA Times "Hot Properties" listing from 1997: Brad Pitt had just bought a house in the Hollywood Hills for... 400K. It completely floored me. Despite my frequent reading of this and other like-minded blogs, I had forgotten exactly how crazy prices have risen.
Anonymous:
John Wayne is closed at night for now.
Don't forget with the defeat of El Toro Airport. Thanks retirees at Laguna Woods, Lake Forest, Dana Point, etc.
John Wayne will have a lot more pressure put on it and the nighttime flights will commence.
All it takes is one unfriendly FAA appointee by a populist democrat president. Buh Bye high property values in Newport Beach, hello aircraft noise.
Ain't Democracy grand!
More for the previous article, but: a second house exploded just a while ago in the St. Louis area IN ONE DAY.
The resource cannot be found.
These little towns are lower middle class and hard hit by foreclosures. I'm not saying for sure that the FCs and the explosions are related, but ... the idea that you could get out from under and possibly sue the gas company for Fido's death at the same time is tempting to some, I'm sure.
Really, you guys in OC should be glad they didn't build the El Toro Airport.
If you haven't noticed, airlines are starting to go bankrupt, big time. Air traffic is almost certainly going to drop big time from 1) The Recession just starting (sorry Sebastian...), and 2) the effects of oil supply decline (limited and expensive).
Who needs the added albatross of paying for additional airports nobody needs? We're already doing that with housing!
suechris:
Being that that St. Louis is in Missouri, an exploding house--especially one that is abandoned, has to be suspected of being involved in meth manufacture.
Meth, the "new crack" of the Midwest.
For all of you politicians that can read (there must be some), please take a close look at the article that CR linked to. See the quote from the young policeman who says he can't afford to live in the city where he works? You are hurting that person with your bailout schemes. Who are you "helping"? The person who had such little concept of economic reality that she compared home prices with "winning the lottery".
Thanks, and good luck with re-election.
There's a lot of meth houses out in the boonies, I hear, but both these explosions were in inner-ring suburbs. I did hear about a mobile meth lab not too long ago, though. Maybe gas got too expensive for the long commute or something.
Despite my frequent reading of this and other like-minded blogs, I had forgotten exactly how crazy prices have risen.
Not me. I thought they were crazy when Burbank crackerboxes were only $250K and the 1bd condo I rented was $100K. The former went to $600K+ and the latter went to $400K+. Insane.
We have a long ways yet to fall.
I used to live on State Street - right under the flight path for takeoffs. At 7am, every minute and a half or so, the entire house would shake as planes took off and had to climb rapidly to avoid the hills.
WOW!
After a couple of weeks, though, it didn't even wake me up.
The Dodd/Frank bailout bill passed committee yesterday and will be voted on next week.
Call the U.S. Capitol switchboard at (202) 224-3121 and have them put you through to your Congresscritter to voice your opposition to the Dodd/Frank bailout bill.
Somehow I think there are more republicans than democrats who own private jets that want to land at John Wayne. Wonder why that is.
Larry Ellison up in San Jose strong armed the city to let his jet land at night. I think he showed up with an army of lawyers and said do you want to spend the entire city budget on fighting me or can we deal?
awgee writes:
I am actually hearing and reading realtors say, "Don't wait too long, and don't be suprised if you there are other bidders on the house you want."
It seems the investors (and knife catchers) are out in full force in many of the former bubble areas. I take this to mean that a real bottom is still a few years out.
I see it in my area (DC Metro) where investors are scooping up homes that sold for $500K at the peak for $300K, doing a remodel, and putting them back on the market. Now, fully remodeled homes in the same neighborhood (This is Herndon by the way) are being offered at less than $300K.
Maybe $285K is an over correction, and prices will level out shortly. However, just 9 months ago, there was hardly anything for sale for under $300K. Now, that's 25% of the SFH inventory.
Mass lunacy! That's all I can say about how Americans so grossly overvalued real estate this past decade. WTH were these people thinking?
Aside from Ahhhhnold, are there any Republicans left in California?
(And it is up for debate if Ahhhhnold is a Republican or not)
In April, construction companies slashed 61,000 jobs. Manufacturers cut 46,000 and retailers got rid of 27,000. Those losses were eclipsed by job gains in education and health care, professional and business services, the government and elsewhere.
U.S. Economy Gets Jolt Of Good News - CBS News
elsewhere?
i love this country
I need something a little more reflective of reality in my life, after a week like this.
Off to see Iron Man at 10:00 EST!
It's a dump, it's a dump, it's a dump, dump, dump.
Forget the JWA traffic. The squadrons of Air Copter 9's hovering over this lovely bungalow reporting on the latest Sig Alert will make you design your own SAM.
Cheers,
What's a sig alert? Is that what happens when they find a smoker in CA?
"WTH were these people thinking?"
What everyone with a vested interest wanted them to.
Helen Keller might buy it ...
"Jonathan Lansher: Expert expects 1 million median."
Two years later.
n Jonathan Lasners (O.C. Register) interview with Walter Hahn, on Wednesday November 14, 2007 Lasner asks Hahn, a longtime market watcher, (over 40 years) why he didnt pick up on the huge Real Estate downturn and sub-prime crisis. Hahn, just two plus years ago, predicted that the O.C. median price would hit $1,400,000 by 2014. Hahns answer was that he had had a blind spot, and that the housing market boom from 2003-2006 was caused (according to Hahn) almost exclusively by the introduction and pushing of low teaser rate loans. Then of course, Wall Street provided the money to fund the loans by packaging the loans to support financial instruments that they sold to bigger suckers. Hahn says, Shame on Me for having my head in the sand and (not) paying attention. There are some reasons why Orange County will be less affected than other So Cal counties and other metro areas around the U.S.we have little undeveloped land, a desirable weather climate and business climate, and we are not grossly overbuilt. About 20% of the zip codes in Orange County have relatively few loan defaults and foreclosures.
There were a couple house explosions in Minneapolis recently, thieves broke in took the copper pipes and didn't turn off the gas.
Wow does this bring back memories. This was the very article that made me start thinking I might actually be priced out forever if I didn't buy. I remember reading it and actually started to panic a bit. Fortunately I found Lansner's blog and then CR's and my home search stopped dead in its tracks. Insanity (despite my handle) was banished and cool clarity returned.
And I believe the "expert" was Walter Hahn.
"i love this country"
From Table A-1: Yoy; civilian noninstitutional population +1.945M; civilian labor force +1.415M; employed +618K; unemployed +797K; not in labor force +530K
Yeah only a 1/3 of them are working. Poor bastards.
Oops. Tim beat me to it.
OT:
What's the view of the BAC announcement on CFC's bonds? Wasn't it assumed that BAC would use this stratagey from the beginning?
I am thrilled that prices are coming down. Saddling a young family with a $550K mortgage is obscene. Why not just slap the irons on the babies in the hospital nursery? It's modern day slavery to the banks.
You load sixteen tons an' what do you get?
Another day older deeper and debt.
St Peter don't you call me I cause can't go:
I owe my soul to the company store.
giacutter,
"What's a sig alert? Is that what happens when they find a smoker in CA?"
Short for Sigmund Alert. The guy who developed traffic alerts in the SoCal region. Sig Alerts are one or more freeway lanes closed for more than 30 minutes.
linkage:
Sig Alert - Wikipedia, the free encyclopedia
example:
YouTube - Vera Jimenez - Nov 16 2006
Cheers,
"Disempowered Paper Pusher writes:
OT: What's the view of the BAC announcement on CFC's bonds? Wasn't it assumed that BAC would use this strategy from the beginning?"
S&P apparently didn't think so...
I only have limited knowledge of the credit side of the bond market. However, I'd lean towards this being legal boilerplate - BAC is trying to cover an exit strategy.
Since bondholders are generally non-secured, some kind of asset stripping may be possible. But it's dangerous - you probably don't want to have a committee of major institutional investors dragging you into court in the middle of a credit crisis. It'll be hard to get much investment banking revenue from them, and you sure ain't gonna get funding.
Plus, there's obvious risks it won't work. The change in the identity of the equity holder should not invalidate the bond's covenants. If it were possible to selectively strip the assets, Countrywide could have done it themselves.
I thought they were crazy when Burbank crackerboxes were only $250K and the 1bd condo I rented was $100K. The former went to $600K+ and the latter went to $400K+. Insane.
We have a long ways yet to fall.
I'm being a broken record here, but someone needs to notify L.A. I am stunned by the denial here.
People are still listing houses at a premium to '06 prices. And even more astonishingly. . . some people are still paying these prices. WTF? Inventory up, sales down, FC creeping towards "nicer" areas, recession effects starting to appear, but, hey... it's all good! It's different here.
banging head against wall
Outsider writes:
"I am thrilled that prices are coming down. Saddling a young family with a $550K mortgage is obscene. Why not just slap the irons on the babies in the hospital nursery? It's modern day slavery to the banks."
What? All the $550k was was a no- money-down option that allows you to walk away if prices go down. Irons on babies, my butt. Slavery to the banks occur when they have recourse. Most often banks have nothing. It appears that the buyers had irons on the MBS investors. Now that investors are the ones who are screwed. Facts is facts.
Good stuff
OT
Spent the last two days attending Stormwater compliance conferences in San Mateo and Stockton as a vendor.
Many of the vendor's are large construction companies that have focused on large box retailers and new strip malls for work, needless to say most were suffering much lower volume these days.
Regarding Canseco's walk-away, in the article it quotes him as saying there's a judgement on his house. I thought firsts were non-recourse loans? What gives?
Costa Mesa?
Low end falls faster, farther, and further
Location, location, location.
Then again there is an excellent coin wash two blocks away. I knozzz cause I took a relo to work in Irvine and banked the difference between my daily allowance and the amounts I paid for a smelly room at an inn in Costa Mesa. Oh those were the days
Countrywide Rating Cut to Junk by S&P
Countrywide Rating Cut to `Junk' By Standard & Poor's (Update4) - Bloomberg.com
R.Manhammer, A money Judgement lien (Writ of Attachment)attached to the house is not a Mortgage,it is probably the result of a civil suit,or some fall-out from a divorce.As far as lons in CA being non-recourse,PURCHASE money loans are non-recourse,refi's and seconds are recourse.As far as actually collecting on a deficiency balance,lotsa luck.If the debtors have anything worth attaching they file BK...and if they are clapped out meth heads they are difficult to collect from.
There is no place like Texas!
Houston Chronicle
"Houston homebuilder Bob Perry wins big in Texas Supreme Court
The Texas Supreme Court today overturned an $800,000 judgment that a Dallas-area couple had won against Houston homebuilder Bob Perry and the companies that warranty his home construction business.
The case has brought scrutiny to the court in the past because Perry has donated almost $95,000 to court justices. And the Hillco PAC, which has received almost two-thirds of its funding from Perry, has given the court another $95,000, according to a report compiled last year by Texans for Public Justice.
In the case decided today, Robert and Jane Cull had complained that a home they purchased in 1996 for $233,730 from Perry Homes was defective and should have been repaired under the warranties.
"The defendants (Perry homes and the warranty companies) spent more effort shifting blame than repairing the home," the Supreme Court opinion said, citing allegations by the Culls. CLARIFIED
So in October 2000 the Cull's sued. The warranty companies, but not Perry Homes, asked for arbitration. The Culls turned it down.
But as the case was preparing for trial, the Cull's changed their minds, and the case was set for arbitration. In that process, the arbiter awarded the Culls $800,000, which included the purchase price of their home, $200,000 for mental anguish; $200,000 in exemplary damages; and $110,000 in attorney fees.
Perry Homes then contested the arbitration, claiming the Culls should not get a second chance when they had already turned arbitration down.
The Texas high court agreed and set aside the arbitration award and ordered the case to go to trial."
Considering I live on the opposite coast, my Costa Mesa geography is not that great, but aren't the Ditech headquarters in that satellite image, just the other side of the 405?
mike2, I spent part of my childhood in Herndon. I loved it. I wish I spent my whole childhood there. I imagine it is very different now as that was in the 80's. My parents bought a huge new house with parks and trails right behind it for $160,000. I think the main road there was Dranesvile Rd.
I wouldn't give $100,000 for this house and I'd pay less if I was forced to live there.
Wicked Lad:
Very good, the answer to your question is yes. Ditech is in the office bldgs directly across the 405, along with Quick Loan Funding (gone now).
For anyone that cares to know, Iron Man was probably the best comic book adaptation yet.
The best part was when the character "sebastian" got a repulsor ray to the face.
But seriously, it exceeded expectations. And there is a bonus treat waiting at the end of the credits.
why would this houe sell for more than $250K ???
$600,000! Sheesh. When they put the ad up for this house, it was probably covered with "Pride Of Ownership" --realtor-speak for "you'll be in debt to your ears for this pile of junk, but you'll at least own it"
They must have listened (somewhat) because they lowered the home price $120K to $439K. Zillow, Epraisal and Cyberhomes still have this place appraised for $525K - $635K. Are there any decent online appraisal sites?
Easy Freeway access. Steps to South Coast Plaza. The lifestyle you deserve.
ZMONET, I'm curious how zillow figures the appraisal. We recently sold our home. Zillows zestimate was something like $330,000. Actual appraisal $300,000. We advertised for $276,000. And the price we sold it for: $250,000. With prices falling so much from month to month, zillow seems to be months behind in the pricing. In this market I think anyone pricing their home above the zestimate is either greedy or is hoping for some upgrades to count for something.
Also noted the price drop to 439. My favorite part though is the property tax appraisal - Land = $546K, Additions (e.g. the home) = $77K. No doubt the home value has not declined at all. Which leads to the conclusion that the whole home price balloon/collapse story has been misrepresented. It was largely a buildable land price or home site price bubble that is collapsing.
(OT) Gary said: "For anyone that cares to know, Iron Man was probably the best comic book adaptation yet."
Thanks for that review. I've been really looking forward to the movie, and am especially excited at the prospect of Robert Downey, Jr.'s career getting back to what it ought to be, sans the drug habit.
S.
It was largely a buildable land price or home site price bubble that is collapsing.
My first reading about Georgism ~6 years ago really opened my eyes.
why would this houe sell for more than $250K ???
$250K has a carrying cost of around $1300. Place would rent for more than that; at least $2000/mo (equiv to $400K price).
Irons on babies, my butt. Slavery to the banks occur when they have recourse.
Recourse on what? These people are most like bankrupt. They didn't have the means in the first place. Shame on the banks for lending to them. I beg to differ if you think the past couple of years have been a picnic for this "freeloading" family.
Ahh memories..
Did you see the other report on the illegal condo conversions in Huntington finally getting city permits (after a suitable fee was paid to the city). I remember that case well, several council members went to jail trying to make a fast buck illegally converting apartments to condo's to cash out.
Those were the days!!!!
It's an econobox with a freeway in the back yard.
Doing a quick count, the area on the interior of Mainstee-Ludington-San Diego Fwy, including the cul-de-sacs of what appear to be higher-value structures, but excluding the apartments / condos, contains about 237 structures. At 200k of polish off the apple per, that's 47.4mn in "lost" phantom value in that little area alone.
People are really underestimating the size of this.
Prices in Costa Mesa were already becoming tough for the average person to manage by 1999. This "Triangle" of 405, 55, and 73 was the only part of COsta Mesa were single family housing was still selling for under $200K in 1999.
I thought despite being closer to the coast, it was too high considering the proximity to so many freeways... so I bought a similar California 1950s ranch home in Anaheim for $165K.
The garage is the biggest single feature of that "building".
OT: William Polley wrote Of course in a medium sized midwestern city there is nothing comparable to having the 405 in your backyard.
I'm curious about the highlighted wording. Had CR written it I wouldn't have noticed since he's from southern CA (he wrote "the 405 freeway", where the definite article applies to the word "freeway"). But I've long been curious as to the reasons for the southern California usage of attaching a definite article to a number. Here in northern CA I can spot reporters formerly from southern CA by their usage of that convention. I didn't believe it existed anywhere else.
Yet you're a "midwestern homeowner". I grew up in the midwest, and don't recall this usage there, either.
Is attachment of definite articles to...numbers more common than I'd thought?