What's going into escrow - Irvine and maybe some Tustin too

NEW -> Contingent Buyer Assistance Program
IPO,

I did not understand how you account for the greater capital gain at sale from the lower purchase price in your B/E calculations. Can you explain?



Example of what I mean:

5% drop ~ assume current price is $800,000, if you waited until next year you could get it for $760,000. If you buy at $760K, when you sell you will have $40,000 more equity. I did not understand how you accounted for the difference in equity?
 
Awesome news for people waiting on the sidelines today:



http://mrmortgage.ml-implode.com/



Some key points:



New Bank REO, or ?Shadow Inventory?,is continuing to surge and in my opinion, is the real threat to values across the nation. On average, banks are discounting this inventory by 25% of the original NOTE value with nearly half experiencing discounts of 30% or more. Remember, most first mortgage note values were originally at 80% loan-to-value, meaning many homes are being discounted nearly 50% from the original appraised value at the time the loan was done. What about all the comparable property owners who bought at the same time and are now 50% upside down in their home, and not in default? Yet.



Bank REO inventory is now ?the market?. Banks are the market maker. According to DataQuick, in March and April 2008 Foreclosure Resale?s were responsible for 38.4% and 37.7% of Total Sales respectively. Last April, Foreclosure Resale?s were 5% of Total Sales.



Even worse, Notices-of-Default (NOD) counts, which is the first stage of forecosure, are also surging. In CA for example. NOD?s stood at a record 44,101 in the month of April. About 70% of these make it all the way to REO, meaning that in four months there should continue to be record REO counts.



Below is from Foreclosure Radar?s April CA Monthly Foreclosure Report.



High-level findings include:



Notices of Default - the filings for the first step in California?s foreclosure process increased only slightly to set a new record of 44,101 new filings.

Notices of Trustee Sale, which are issued approximately 3 months following a Notice of Default, increased 7.8 percent in April surpassing the previous record with a total of 29,892 new filings.

April foreclosure sales at auction jumped 44 percent over March to a record 22,838 sales, with a combined loan value of $9.45 Billion. The majority of these sales received no third party bid and reverted back to the lender despite the largest across the board discounts ever offered at trustee sale auctions.



In a nutshell and simplistically speaking if 10k people get a ?great buy? on REO, 100k home owners could have the value of their homes fall by 30-50% overnight. Of those 100k, 35% get thrown into a negative equity position, 35% of those experience loan default and 75% of those (9,200) go back the bank as REO. The banks sell at a 30-50% discount and the process repeats. Again, no inventory has moved. Values just continue to fall. It is a vicious cycle.



WHEE!
 
[quote author="zigzag" date=1212300936]IPO,

I did not understand how you account for the greater capital gain at sale from the lower purchase price in your B/E calculations. Can you explain?



Example of what I mean:

5% drop ~ assume current price is $800,000, if you waited until next year you could get it for $760,000. If you buy at $760K, when you sell you will have $40,000 more equity. I did not understand how you accounted for the difference in equity?</blockquote>


Not sure what you are referring to zig. Can you quote the post?
 
Bunch of closings at the tale end of last week to report. May prices appear to be undone the depreciation in April and are almost back to March's closing price levels:



<a href="http://www.ipoplaya.com/iposhiller.pdf">Updated IPO-Shiller numbers</a>
 
[quote author="ipoplaya" date=1212456272]Bunch of closings at the tale end of last week to report. May prices appear to be undone the depreciation in April and are almost back to March's closing price levels:



<a href="http://www.ipoplaya.com/iposhiller.pdf">Updated IPO-Shiller numbers</a></blockquote>


What color is the sky in the section of Irvine you live in? :)



The sales in the Irvine/Tustin/Tustin Ranch area that I've been personally involved in were all short sales/REO, and all fighting to the bottom of the listing prices...



Maybe there is a lot of high end movement I'm just not seeing? I dunno.
 
I didn't realize there were so many impatient people in Irvine. :bug:



I spoke with a realtor friend this weekend and he shared with me that every single purchase that he represented or any other transaction he was aware of has been foreign buyers. His opinion is that these foreign buyers have money but more importantly are NOT fully aware of market conditions.
 
To look into Irvine's future, just look south. San Diego's Irvine equivalents are a year ahead. The exact same pattern... low end collapses, high end holds, low end continue the collapse, high end folds.



<a href="http://www.voiceofsandiego.org/articles/2008/05/30/toscano/806marhomepricespast053008.txt">Piggington's</a> has it one the main page. Currently it's posted out on VOSD.



Basically, the high-end did a minor pull back, leveled, people kept snapping up the deals while the low-end proceeded to plunge and then the mid and high ends folded.



Jim the Realtor in SD also touches recently on the high-end losing it's luster.
 
[quote author="irvine123" date=1212461160]Masterofdamoney, keep in mind IPO tracks only the houses 2000 sq ft or larger.</blockquote>


ooooo I didnt know that. That is good to know. Thanks!
 
[quote author="ipoplaya" date=1212456272]Bunch of closings at the tale end of last week to report. May prices appear to be undone the depreciation in April and are almost back to March's closing price levels:



<a href="http://www.ipoplaya.com/iposhiller.pdf">Updated IPO-Shiller numbers</a></blockquote>


It's interesting that not as many of the homes that IPO tracks are distressed properties. It would be interesting to know what the sellers that are staying in the area are doing- buying up or moving into a rental? If they didn't sell in '05 or '06, they obviously weren't keen on making a big bundle, so one would suspect that they are like typical normal buyers.... selling after approximately 7 years and moving up. ??
 
[quote author="Masterofdamoney" date=1212460798][quote author="ipoplaya" date=1212456272]Bunch of closings at the tale end of last week to report. May prices appear to be undone the depreciation in April and are almost back to March's closing price levels:



<a href="http://www.ipoplaya.com/iposhiller.pdf">Updated IPO-Shiller numbers</a></blockquote>


What color is the sky in the section of Irvine you live in? :)



The sales in the Irvine/Tustin/Tustin Ranch area that I've been personally involved in were all short sales/REO, and all fighting to the bottom of the listing prices...



Maybe there is a lot of high end movement I'm just not seeing? I dunno.</blockquote>


What data are you looking at? Your personal involvement in deals or the closing info I am compiling and sharing? The data is what it is. I have 47 closings in May, which is probably a solid 20% of the transactions. That would suggest a relatively small margin of error would it not? You're not one of "MLS is all lies" types are you Master?



Here's my anecdotal evidence, which isn't worth much. The house I tried to buy in Tustin recently was listed at $934K. I offered $935K and it sold for $1.177M. It took all of one weekend to collect 19 offers on that property to sell for almost 26% OVER list. An REO near my place popped on to MLS late last week and there were people lined up on Saturday and Sunday to see it. They already have an offer over list and higher than a very recent REO comp on the same model...



You may not believe it, and I surely wish it wasn't so, but sales and prices have firmed of late, at least that is what the data suggests. I've been suggesting that this would happen for months, but for some reason people refuse to believe it. There is 26% less inventory on the market right now than there was at the same time last year. Firming in prices was bound to occur...



<img src="http://www.ipoplaya.com/irvinv0602.jpg" alt="" />
 
[quote author="irvine123" date=1212461160]Masterofdamoney, keep in mind IPO tracks only the houses 2000 sq ft or larger.</blockquote>


Except in 92602, where I track down to $500K...
 
[quote author="lendingmaestro" date=1212461564]I didn't realize there were so many impatient people in Irvine. :bug:



I spoke with a realtor friend this weekend and he shared with me that every single purchase that he represented or any other transaction he was aware of has been foreign buyers. His opinion is that these foreign buyers have money but more importantly are NOT fully aware of market conditions.</blockquote>


I watched a bunch of people come and go to an open house on my street, and to see an REO around the corner, over the course of the weekend. I'd say 80% of the people I saw were asian...
 
9 Benavente in WP closed and just updated. $1.085M for 3000sf. Went for 5% less than list. I think it took around 30 days from list start to escrow close...
 
[quote author="irvine123" date=1212461160]Masterofdamoney, keep in mind IPO tracks only the houses 2000 sq ft or larger.</blockquote>


I just noticed that the houses on that list are all 700K+ mostly. That makes more sense to me.



The high end is just coming into its own 'vaseline-free backdoor fun!' this year. Won't really take off until next year when the option arm/IO ARM programs really start to recast in full swing. Once you start seeing a lot of REO's hitting those big boys, and the foreign investors get skittish on it, then we'll find out how many 'Irvine Millionaires' are out there with those big, provable incomes to buy them places. :)



IPOPLAYA - Everything I've dealt with recently is in the $250K-600K range. Nothing in the super high end. Most of the places I'm doing now are 30-40% discounts from the peak prices. I've done a few recently in Moreno Valley that are legit 60-70% off peak prices. Hence my views on the market being a little more 'bearish'.



The high end stuff... I just don't see it. I'm guessing they are the cash kinda borrowers from 'out of town'? :)
 
[quote author="Masterofdamoney" date=1212480023][quote author="irvine123" date=1212461160]Masterofdamoney, keep in mind IPO tracks only the houses 2000 sq ft or larger.</blockquote>


I just noticed that the houses on that list are all 700K+ mostly. That makes more sense to me.



The high end is just coming into its own 'vaseline-free backdoor fun!' this year. Won't really take off until next year when the option arm/IO ARM programs really start to recast in full swing. Once you start seeing a lot of REO's hitting those big boys, and the foreign investors get skittish on it, then we'll find out how many 'Irvine Millionaires' are out there with those big, provable incomes to buy them places. :)



IPOPLAYA - Everything I've dealt with recently is in the $250K-600K range. Nothing in the super high end. Most of the places I'm doing now are 30-40% discounts from the peak prices. I've done a few recently in Moreno Valley that are legit 60-70% off peak prices. Hence my views on the market being a little more 'bearish'.



The high end stuff... I just don't see it. I'm guessing they are the cash kinda borrowers from 'out of town'? :)</blockquote>


Yup Master, I am only looking at teeny tiny piece of the RE bloodbath picture. They could be giving away places for free in Norco and I'd be saying prices were flat...



It is kind of surprising to see Irvine firming some but not other areas... Guess we'll see how that shakes out when May Case-Shiller numbers get published in July. I am looking at Aliso Viejo some and it appears on the surface to have some price firming (on higher-end places) going on as well.
 
[quote author="Masterofdamoney" date=1212480023]

The high end is just coming into its own <strong>'vaseline-free </strong>backdoor fun!' this year. </blockquote>


Should I thank you or am I about to be banned?
 
Did someone say high-end? <a href="http://www.zillow.com/HomeDetails.htm?zprop=59726362">Well, 3 Raines went back to the bank today for $900k</a>. A cool little condo in Oak Creek went back to the bank for $459k. There were some good ones outside of Irvine today and yesterday too. One in Santa Ana rolled back to an 2002 price again.
 
Just guessing at the thoughts of the present day knifecatchers:
<em>"Prices have come down and they probably won't come down much more. Better to jump in now than take the risk of the market turning up. Best to buy now while interest rates are low and we can afford the house we want. I do not mind if the home we buy now depreciates by another 5% or 10%. We are buying for the long term. And prices can not go down by more than another 10%."</em>


Do you not wonder how these knife catchers will feel when their $1,000,000 home is worth $600,000? They will not mind, will they? After all, they are buying for the long haul.
 
Awgee, do you think if I were to buy a $ 1 mm home in woodbury/ HQ / NP / NW at today's market price, it will go to $600K any time soon? thanks...
 
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