PermaBears from the IHB: Where is the 40% drop?

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snc said:
IHO,
It's true that short sales are shadow inventory technically; however, lenders require short sale homes to be listed on the MLS, so they are visible and not shadow.  In addition, most short sale properties are well priced with multiple offers, so they are spoken for 2X.

The current inventory in Irvine (standard sales and short sales) are approaching next to nothing.  And 10-yr bond rates are dropping everyday.  And summer is approaching.  We should see sharp appreciation in the next few months, for sure.
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Very well put...all those people waiting for a flood of REO homes in Irvine will be waiting forever.  Sure the number of distressed properties in Irvine is increasing, but the number of short sales are getting done is also increasing and REO properties get multiple offers if they are priced right.  One of my FCBs submitted a full priced offer on a short sale that was basically at market price but they got outbid by 3 other buyers, including another cash buyer.  Best case scenario Irvine prices remain flat this year (barring any unforeseen economic/political/terrorist disasters). 
 
IHO,
With short sales, banks pay property taxes directly to the county (to avoid penalties), not collecting interests, and pay for most or all seller closing costs, including delinquent HOA dues.  Why would any one in their right mind pay anything?  Why would anyone eager to turn down free rents?  If short sale seller is not motivated to move, how can banks move quickly?

As far as net appreciation or depreciation, only tomorrow will tell.  The interest rates may drop to 4% range easy and hold steady.  At the saving interest rates of 1%, why would anyone with cash not buy real estates.  The government wants to move the real estate market, and we all know how well the government is as good as god and can move the market.

If you look at the rental market, private leases (SFSs, townhomes, condos) inventory is mirroring that of sales.  I am seeing relocation picking up.  I even see relocation managers are moving into Irvine. 

TIC is building.  First American is forecasting zero underwatered homeowner by 2015 for US.  Irvine will be way before 2015.

It will be interesting in the next few years.

Do you see many unemployed folks around you in Irvine?

Do you see many new schools are being built in Irvine?

What does this mean in term of population growth?  Housing Demand?
 
snc said:
IHO,
With short sales, banks pay property taxes directly to the county (to avoid penalties), not collecting interests, and pay for most or all seller closing costs, including delinquent HOA dues. 
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Wait, I thought the buyers are paying for the delinquent HOA dues.  If the short sale property are getting picked up with multiple offers, why would the bank pay for anything if they can pass that on to the buyer?  Are you a super negotiator?
 
fe9000,
I am an insider.  It has very little to do with negotiating skills.  It's the art of submitting the magic numbers to get the bank to pay for everything, including maximum commissions.  Only those so-called "super negotiators" understand what I meant.
 
snc said:
fe9000,
I am an insider.  It has very little to do with negotiating skills.  It's the art of submitting the magic numbers to get the bank to pay for everything, including maximum commissions.  Only those so-called "super negotiators" understand what I meant.
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Cool.  Thanks for sharing your info.  I guess the realtors that I talked to last year weren't so good then.  Not you usctrojancpa!! 
 
snc said:
Why would anyone eager to turn down free rents?  If short sale seller is not motivated to move, how can banks move quickly?
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Your first question contradicts your second.

If the seller is not paying anything... why be motivated to move? You make it as hard as possible to sell your place. You keep it a mess, don't water your lawn, leave dirty dishes, trash and clothes all over the place. The longer it takes to sell your short, the better for you... not to mention moving is a pain anyways.

I just don't see too much advantage in a short over just going through some extended foreclosure process... or gaming the system and telling the bank you plan to short, don't short, don't pay, get a NOD, promise to pay, promise to short, NOD again... repeat. The banks aren't moving fast enough on foreclosures so why put yourself through the hassle of strangers getting Supra access to your house?

I'm not an insider... but I just don't see shorts moving as fast as you are claiming.
 
IHO,
Without seller cooperation(submitting seller's bank statements, assets, paystubs, tax returns, hardship letter, signed purchase contract) bank can not move forward with the approval of a short pay off.  Without written approval for short pay off, escrow can not close.  Without a short sale application in place, bank will move forward with foreclosing.  Without an accepted offer submitted, bank will move forward with foreclosing.  So you can see actions have to be taken place.  The short sale process is designed by banks to prolong the short sale process (more servicing fees collected, bail out money is already allocated).  It appears that a drawn out short sale process is most profitable to bank.  That's why you see the government is giving incentives to both short sellers and banks to close short sale more quickly.  I do not see it's working yet.  I think the government will have to start giving fines to banks to get things going quicker, which I think very likely to happen soon.
 
I guess I misunderstood you because it seemed like you were saying banks like shorts because they can move them quicker and cost less compared to foreclosures. What I understand now is that banks like shorts because the goverment pays for the cost so even a lengthy short sale is good for the bank.

Interesting. Not only are these people not paying their mortgage... I'm paying it for them.

Where's my 3CWG bailout?
 
IHO,
Your 3CWG bailout is just sitting there for you to grab via short sale (so you are a winner too!).  This opportunity will disappear as soon as the short sellers sees appreciation is being taken place so try not to wait too long.

If I am you, I would get myself in 3 short sale contracts.  One of them will close eventually; you get the option to purchase at a possible bottom price for free.  There is no risk or cost for you to get into a short sale process.  In a short sale, seller and buyer are free to cancel contract any time before full approval from lender(s) as specified in the Short Sale Addendum.  Then I would go and fly a kite with my kids and forget about the market!  I would choose an agent like USC to bat for me.  USC seems like someone who is up for it.  Good luck with your 3CWG bailout.
 
@snc:

Reality trumps theory. There are no newer 3CWG shorts in Irvine for less than $750k. If you see one running around on those insider tracks... let me know.
 
IHO,

Your 3CWG shorts are there.
Do you have an agent?  Your sharp agent would know where to look; just ask him(her).
 
@snc:

Yes I have an agent.

But since shorts are MLS-listed... I don't really need one to see if my dream short exists. Unless there is some secret MLS sub listing I am unaware of (which my agent should be able to access). Maybe you should head over to one of my 3-car garage threads to observe my futility.
 
irvinehomeowner said:
@snc:

Yes I have an agent.

But since shorts are MLS-listed... I don't really need one to see if my dream short exists. Unless there is some secret MLS sub listing I am unaware of (which my agent should be able to access). Maybe you should head over to one of my 3-car garage threads to observe my futility.
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Have IR2 do some digging for you...give him a list of neighborhoods and homes you are interested in and have him check the property loan detail along with foreclosure radar to sniff out possible distressed sellers.  Once you find that shadow inventory, start sending some personalized letters.  Try to find properties that have only one lender (either with one or more loans).  Banks such as Wachovia and IndyMac (errr OneWest) will be more likely to move quicker....Wells and BofA/Countrywide will drag their feet.  In this market, you have to roll your sleeves up a bit to find what you are looking for and your work will be rewarded....ask Iceman about that.
 
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snc said:
IHO,
Your 3CWG bailout is just sitting there for you to grab via short sale (so you are a winner too!).  This opportunity will disappear as soon as the short sellers sees appreciation is being taken place so try not to wait too long.

If I am you, I would get myself in 3 short sale contracts.  One of them will close eventually; you get the option to purchase at a possible bottom price for free.  There is no risk or cost for you to get into a short sale process.  In a short sale, seller and buyer are free to cancel contract any time before full approval from lender(s) as specified in the Short Sale Addendum.  Then I would go and fly a kite with my kids and forget about the market!  I would choose an agent like USC to bat for me.  USC seems like someone who is up for it.  Good luck with your 3CWG bailout.
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I ALWAYS tell my buyers, don't be afraid of short sales.  It takes me all of 20-30 minutes to write an offer and e-mail it over to the listing agent.  With short sales, it's a pure numbers game like you mention....if you throw enough offers out there, one may actually stick.  The problem I see is that many buyers get impatient and don't even want to deal with short sales after they've experienced some long waits.
 
So I haven't had a chance to read through all the posts on this question but the subject caught my attention and I figured I would add what I know.  I have worked in the real estate industry my entire career involving all aspects including real estate sales, mortgages, property management, and finally foreclosures.  I know several people at the Fannie Mae office in Irvine.  Some background on this office.  Only a year to a year and half old.  Was supposed to be a satellite office to deal with some extra foreclosures but it is officially a regional office to stay.  Fannie has added regional offices in Chicago, I want to say Atlanta, and I believe I am missing one more.  There are hiring about 10 additional sales reps per office.  Sales reps/REO Asset Managers can handle roughly 300 properties per person in their inventory.  Some of these sales reps actually manage outsourcing companies that hold anywhere from 2,000 to 30,000 properties.  So one sales rep could represent 30,000 to 50,000 properties.  The reason Fannie is adding all of these sales reps is that their is an onslaught of foreclosures coming.  The general consensus of all the managers in this office is that there is another shoe to drop economically within the next year to two years.  Probably not as big but a drop none the less. 

This shadow inventory is coming due to the moratorium from Obama.  Since it has been released Fannie is slowly getting everything back in gear.  Florida is so bad that they said their analysts calculated that if they were to release all of their foreclosures the entire state of Florida would be worth zero dollars.  Yes, thats right zero dollars (yes, probably not the entire state but all of the properties on Fannie's books would be worth nothing).  The foreclosures are coming in at different paces in different states.  California has not hit yet...  Yes, thats right.  The managers said they are gearing up to hiring 11 sales reps in their Irvine office to handle a majority of the upcoming inventory in other states but mainly California.  They expect California to start hitting later on this year.

Will it be a massive wave to hit?  No.  They are holding them off on purpose to mitigate their losses (they lose on average about $130,000 per property, currently).  It will more likely be a steady flow.  As far as values, probably not a 40% hit, but who knows.  All I know is that I am not buying in OC/Irvine any time soon.  Anyway, I wanted to add what I know to be true.  I get frustrated when I read posts from various sites about the naysayers who say no wave is coming etc.  I don't come on this site often but I will try to answer questions.
 
Bling Bling said:
Florida would be worth zero dollars.  Yes, thats right zero dollars
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I'll give you $1 for Florida.  LOL.  You sound just like that moron from Shea who said the land in Tustin is worth zero. 

Real estate developers don't know how to look past the next 6-12 months.  LOL.

 
Bling Bling said:
Will it be a massive wave to hit?  No.  They are holding them off on purpose to mitigate their losses (they lose on average about $130,000 per property, currently).  It will more likely be a steady flow.  As far as values, probably not a 40% hit, but who knows.  All I know is that I am not buying in OC/Irvine any time soon.  Anyway, I wanted to add what I know to be true.  I get frustrated when I read posts from various sites about the naysayers who say no wave is coming etc.  I don't come on this site often but I will try to answer questions.
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So if it's not a massive wave and just a steady flow, how will that really affect pricing?

Let's put this in perspective here. Part of the reasoning why people said prices will drop is because of all the shadow inventory that will suddenly become available and this will create downward pressure on pricing. I would argue that would be true in normal inventory situations. The problem with Irvine is it seems that we are in a drought inventory situation. While there seems to be a number of homes available, it's not at prices that buyers would prefer. So one would think that if someone dropped a bunch of homes on us at nominal pricing (meaning somewhat below the average per/sf price) THEN prices would drop.

Well... didn't that just happen at the end of January? TIC dropped over 700 new homes into the market and where did the prices go? Not only did they NOT drop... they went up. And they are gearing up to drop hundreds more.

Rates aren't going to go up appreciably... at least not until the job market improves and probably not until the next election so what is going to happen that's going to kill home prices? Rumor has it another financial crisis is on the horizon (look at last week's stock market and VIX fluctuations) but you would think that the freefall of the DOW in 2008 would have done something.

So even if there is tons of waiting inventory out there... I don't know how that will affect the Irvine market specifically. Still trying to see if someone would show me some data on the 90s bubble where new Irvine homes that were built during the peak took a dive similar to surrounding areas. I still think they didn't... my relative bought a brand new home in 1989 and by 1996, it had only dropped 15%. In fact, if he kept it 2 more years, it would have been back up to what he bought it for. And this was in Lake Forest... I assume Irvine was even more resistant.

Is there anyone out there who bought a newly built Irvine home in 1989/90 and knew what it was worth 3 and 7 years later?
 
IHO,
If you bought new construction home in Irvine in 1989 it would of taken you until June of 1995 until you can sell the home for the same price as you purchased in 1989.
If you bought new construction in 1990 it will take you until February 1996. Assuming history repeats itself ... Irvine median home prices will be exactly where they were in 2006 in 2012. What a great deal! You gotta love those Irvine homes.
 
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