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southoctracker_IHB

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From the Register...first part below. There are a few other anecdotal stories in this article.





<strong><a href="http://www.ocregister.com/ocregister/homepage/abox/article_2094304.php">Buyers see discounts of $250,000 or more on foreclosed homes</a></strong>



Dan and Neelam Rusu couldn't afford to buy any type of home during the housing boom, let alone one just four blocks from the beach.



Now they can.



The couple moved over the July 4th weekend into their new house in Huntington Beach, featuring wood floors, cathedral ceilings and sea breezes.



They paid $615,000, a $250,000 savings over the amount paid by the previous resident, who lost it to foreclosure.



"We couldn't have afforded such a house in such a location," said Dan Rusu, 39, a computer engineer. "It came down so much, and that's what allowed us to purchase it."



The Rusus are among a new wave of buyers venturing back into the nearly moribund housing market to pick up some deals in foreclosures. ...
 
Nothing deflates the bubble of enthusiasm over getting a home for $245K less than its last sales price than being on this board. I can really relate to the fatigue from all the work. Ever since we closed on May 9th, there hasn't been a weekend where we weren't doing something on this place. I thought it would be fun, and to a certain extent is has been, but it's tiring. Everything takes so much longer than we had originally thought. It's nice to see the progress coming out, but it's also frustrating to see how much more there is to do.
 
[quote author="stepping_up" date=1216205213]It's going down, but it's not going down another $200K. I hope you think you're just being funny.</blockquote>
Shadax just sipped a little too much off the anti-koolaid. hahaha
 
<blockquote>Kane property, Fountain Valley:



Home: 1,600-square-foot condo, with two stories, three bedrooms, 2.5 baths.



Buyer: Lou Kane, 38, a telephone company training manager, who paid $425,000 in March. Bank received multiple offers after listing it for $417,000.



Prior buyer: Prior owner paid $310,000 in September 2002.



Kane was the only buyer paying more than the pre-foreclosure owner, although the prior sale occurred 3 ? years before the market peak for condos. Based on Orange County condo appreciation rates, Kane's home may have been worth about $580,000 at the peak.</blockquote>




sept 2002, CS = 138. That means that she paid CS = 190. I predict that she will see her condo's equivalent sell at CS = 100, which is $225, so she will see a $200k loss.
 
[quote author="freedomCM" date=1216208198]<blockquote>Kane property, Fountain Valley:



Home: 1,600-square-foot condo, with two stories, three bedrooms, 2.5 baths.



Buyer: Lou Kane, 38, a telephone company training manager, who paid $425,000 in March. Bank received multiple offers after listing it for $417,000.



Prior buyer: Prior owner paid $310,000 in September 2002.



Kane was the only buyer paying more than the pre-foreclosure owner, although the prior sale occurred 3 ? years before the market peak for condos. Based on Orange County condo appreciation rates, Kane's home may have been worth about $580,000 at the peak.</blockquote>




sept 2002, CS = 138. That means that she paid CS = 190. I predict that she will see her condo's equivalent sell at CS = 100, which is $225, so she will see a $200k loss.</blockquote>
Unless the economy goes to hell in a handbasket and/or interest rates goes over 10%, this property won't be worth less than $300k.
 
<blockquote>Price drop: $251,000, or 29%.

Location: 19th Street.

Home: 1,882-square-foot single-family home, with two stories, two bedrooms, a den, 2.5 baths, and a 2,875-square-foot lot.

Winners: Daniel and Neelam Rusu, 39, who paid $615,000 in April. Bank listed home for $680,000.

Loser: Prior owner paid $866,000 in May 2005.</blockquote>




May 2005, CS = 237. new CS = 186 @ $615k. If CS = 100, value will be $330k. only $285k premature.





Of course, even if we only get back to Jan 2002 levels, CS = 121, so value = $402k. only $213k premature.





For both of these properties, CS =~ March 2004 values.
 
Factor in the heck of a job inflation and that place is only worth 2002 levels...mid 4's, tops. But whatever. If they are happy, and will stay there for 5-10 years then good for them.
 
[quote author="freedomCM" date=1216208198]<blockquote>Kane property, Fountain Valley:



Home: 1,600-square-foot condo, with two stories, three bedrooms, 2.5 baths.



Buyer: Lou Kane, 38, a telephone company training manager, who paid $425,000 in March. Bank received multiple offers after listing it for $417,000.



Prior buyer: Prior owner paid $310,000 in September 2002.



Kane was the only buyer paying more than the pre-foreclosure owner, although the prior sale occurred 3 ? years before the market peak for condos. Based on Orange County condo appreciation rates, Kane's home may have been worth about $580,000 at the peak.</blockquote>




sept 2002, CS = 138. That means that she paid CS = 190. I predict that she will see her condo's equivalent sell at CS = 100, which is $225, so she will see a $200k loss.</blockquote>


OK, I don't know FV that well, but $425K for a condo doesn't sound like a bargain to me.
 
Freedom, you monitor our area... Shadax is saying that our house is going to be worth $230K, which I think is just nuts, psycho nuts, like let me arm myself with ammo and food because I"m convinced that the end of the world is coming kind of nuts. I get that you are analyzing the OC reg stories, but even in the worst case uber bear scenario, do you see this house plunging $200K more than we paid?
 
[quote author="stepping_up" date=1216214102]Freedom, you monitor our area... Shadax is saying that our house is going to be worth $230K, which I think is just nuts, psycho nuts, like let me arm myself with ammo and food because I"m convinced that the end of the world is coming kind of nuts. I get that you are analyzing the OC reg stories, but even in the worst case uber bear scenario, do you see this house plunging $200K more than we paid?</blockquote>


It only plunges $200k from what you paid if you sell it for $200k less than you paid. Will homes around you sell for that, and be a true comp? Maybe, but it isn't likely. Even if you had one or two comps sell for that price, they wouldn't be a true comp or they be an anomaly in the market, bringing it down temporarily. While I think some underestimate this crash, there are those that overestimate it when it comes to a neighborhood by neighborhood basis. I could be wrong though, I have underestimated the foreclosures, so anything is possible, but I don't lose sleep over it and nor should you.
 
[quote author="stepping_up" date=1216214102]Freedom, you monitor our area... Shadax is saying that our house is going to be worth $230K, which I think is just nuts, psycho nuts, like let me arm myself with ammo and food because I"m convinced that the end of the world is coming kind of nuts. I get that you are analyzing the OC reg stories, but even in the worst case uber bear scenario, do you see this house plunging $200K more than we paid?</blockquote>


I think Graph is right. I think that's a pretty aggressive estimate to the downside. Will incomes support a higher price? In any event, so long as the tomatoes grow, I think you're in good shape. :)
 
Since the previous buyer paid $310,000 in 2002, I'd say another $100,000 loss is virtually in the bag.



I've been getting steadily more negative on housing. I don't know if it's just me keeping pace with the general market segments or a reaction to seeing the housing market tank and all the empty houses and for rent signs and wondering where people will come from for those units?
 
I pm'd stepping with info for her house.



But I also agree with both Graph and Eva that so long as you enjoy it (tomatoes!!!!) and plan to hold it, what the comps hit for your area don't really matter, so long as you can pay the note.





The other side of me (the potential buyer) agrees with NSR, though. Initially I was thinking return to 2001/2002 prices, maybe 2000 for West-side Costa Mesa since there was more subprime than Irvine.



Now I realize that subprime was the smallest of worries. Alt-A and option stuff is going to kill the nicer areas (EastCM, HB, Irvine). Its going to be very hard to hold up prices on the WestCM if these other areas drop down to 2000 levels.



Then as NSR says, factor in a more dismal economic outlook than I had imagined, which is putting a downward pressure on employment and hence rents, throwing down the price/rent and price/income values



<strong>All this makes me think it is more likely The OC falls to 1998 levels rather than 2002 levels.</strong>
 
[quote author="freedomCM" date=1216259009]



<strong>All this makes me think it is more likely The OC falls to 1998 levels rather than 2002 levels.</strong></blockquote>


Well, that explains your post on the main blog about Northwood Pointe costing $200k.
 
[quote author="freedomCM" date=1216259009]



<strong>All this makes me think it is more likely The OC falls to 1998 levels rather than 2002 levels.</strong></blockquote>


Do you mean adjusted for inflation?
 
[quote author="25w100k+" date=1216267432][quote author="freedomCM" date=1216259009]



<strong>All this makes me think it is more likely The OC falls to 1998 levels rather than 2002 levels.</strong></blockquote>


Do you mean adjusted for inflation?</blockquote>


There's a difference between inflation and wage growth.



We had neither.



We now appear to be getting one.
 
Are you really saying that people did not get annual 3% cost of living increases for the last 10 years? I'll buy that many didn't in '02 and not everyone is getting them this year, but the other years? Wage growth means raises above the rate of inflation, i.e from increased productivity, which is different from cost of living increases.
 
inflation adjusted, household income is essentially flat.



not adjusted, it has only been rising 2%/year so far as i've been able to figure out
 
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