Will I ever be able to buy?

NEW -> Contingent Buyer Assistance Program
<u>Ode to the Common Man</u>

<p class="MsoNormal" style="LINE-HEIGHT: normal">Reason strikes me as your average “Joe Six Pack” who will be a casualty of the Implosion in the following years, but was part of its cause too, albeit somewhat unwittingly.</p>

<p class="MsoNormal" style="LINE-HEIGHT: normal">He evokes sympathy because he isn’t an excessively greedy person. He states that like everyone else, he just wanted a SFR. He was doing what every normal person does after marriage – look for a place to live. He had enough “reason” to know that he couldn’t afford a SFR or even one of the really nice condos on Sand Canyon for 750K. I’ll bet in 2005 there were lenders willing to give him the loan to get those places, but he declined. Instead, he was instructed to start small, build equity and move up, which in living memory has always been sound advice (until recently, of course).</p>

<p class="MsoNormal" style="LINE-HEIGHT: normal">Unfortunately, the time for his first home purchase coincided with the housing bubble and loose lending practices. To get what he thought was a place commensurate to a man of his stature, he got a loan with some creative financing. I doubt he fully understands the terms of the loan. What he does understand is that he is suppose to sell the home at about the time the loan resets because at that point the home will be worth a lot more “since real estate never depreciates in southern California”, as I’m sure his parents and realtor told him. This would, in turn, fund the purchase of a larger home.</p>

<p class="MsoNormal" style="LINE-HEIGHT: normal">Reason, I understand that you’re pad has appreciated, but as you can see, the prices are starting to decline. And the odd thing about real estate prices is that they tend to move like locomotives – once they start rolling in one direction, they keep going that way. I’m guessing you’re a young man who still listens to his parents/guardians with an uncritical ear. They are of a different era and what was true for them is not true for us (the meaning of Mathew 10:34-36?). </p>

<p class="MsoNormal" style="LINE-HEIGHT: normal">Read “How Inflated are House Prices?” (archives March 3, 2007) and the “Anatomy of a Credit Bubble” (May 14, 2007) to educate yourself on what houses should normally cost and how we got into this mess. If you don’t understand words, look them up in a good dictionary. I’m not trying to be condescending, as you are never too old to learn and your situation demands it. If you don’t understand concepts, post them on the blog, as there are a lot of helpful people here. Additionally, endeavor to thoroughly understand the terms of your loan. I’ll bet there are a lot of people here who could help you with that too. Figure out the consequences of if your loan resets at a higher rate and the comps in your neighborhood are selling for less than your purchase price. Accept the possibility that your current assessment may be wrong (and the bears right - even if they seem grouchy). “Never lose hope. Where there's a will there's a way. Be happy. “ is not a valid answer.</p>

<p class="MsoNormal" style="LINE-HEIGHT: normal">After analyzing the situation, you may conclude that the right thing to do is to sell your place (at a profit!), save your money for the next 5 years, and then buy a place you can truly afford. However, you have to come to that decision by yourself after researching the facts and critically thinking about it. Obviously our views here are biased (for sound reasons), but so are the realtors’ (for bad reasons) and so are your parents’ (for the wrong reasons).</p>

<p class="MsoNormal" style="LINE-HEIGHT: normal">The fate that awaits the unpretentious common man who just happened to be at the wrong place at the wrong time for their first home purchase will be more terrible than they rightly deserve – and that is sad.</p>
 
The only one I could find on is 113 Chantilly, a 2/2.5, 1355sf for $539.9K. Upgraded with wood floors in living areas, appears to have fairly well-upgraded kitchen, and painted in neutral colors. No sales history. Redfin shows that nothing has really sold out there in a while… Assuming it sells at this price, after a discounted 5% commission, they will earn a tidy profit of $5,000, assuming a $510K purchase price. I imagine this is the same community, it was built in 2005. Areas around it are less expensive in general, and North Park is similar. And NP has always been higher than others. I’m definitely not seeing any condos/townhouses in or around the area for $575K+ for that size. The ones in the low $600’s ($612K, $616K) are the 1700sf models.



It’s not that I don’t believe you, Reason, I believe you did buy that unit for $510K, and I also think you honestly believe the comps you quoted for those homes. But the fact of the matter is that those comps just don’t exist today. Bigger, newer units are coming out near those comps, and nowhere in that area are any 1300sf units selling for within $20K of those comps. More typically, they are on the market at $40-50K under those figures, and they’re still not selling.



I hope you don’t have to worry about any of that because you are planning on staying there for 5+ years. I don’t know when your rate resets but if you bought in ’05, you probably caught the rates near bottom. That means it will be sticker shock for you when that resets. If you put 10% down, that is going to be around $3,800/mo total. You said you make much less than $100K, so I’ll assume $75K, or $6200/mo. As you can see, that is almost 60% of your GROSS income. What are you paying currently, $2500/mo or so on interest only? That $2000 disposable after mortgage is going to shrink to $700/mo. Do you think prices will be coming back up so that when that time comes, you can just sell it - even at no profit - and not get caught with that obligation? That may happen, but I think even you are sensing this is probably not going to happen anytime soon.



Good luck to you, Reason, because if what you are telling us is true about your income, house, etc., you are going to need it. And you can’t just rest on your wishful thinking that the inflated comps you saw somewhere will save you. I’m not trying to be mean or critical, I think you have been very polite and patient despite being in a hostile environment. I just hope you are making the most informed decision when it comes to housing, and are not letting those decisions be dictated by the emotion of what you hope to be true.
 
<p>Good morning,</p>

<p>Hoping everyone feels well today. I think we're all here to understand one another. Whether our views are bearish or bullish. I don't think it's healthy to insult, criticize, name calling, being sarcastic just because you might not agree with another person's view. </p>

<p>And I am really concern when someone uses incorrect data to support his or her bearish view. I read these posting hoping that I can rely on the information dissimated and to make sound decisions. Unfortunately, this has not been the case. </p>

<p>Gepetoh: the address you had mentioned is correct. I do know the details but respect the privacy of the owner. The status on that one is "backup offers"</p>

<p>There's another identical unit on "pending" status at 618k. It used to be a builder unit. It was sold approx. 5 - 6 months ago for 588K. I admit to not knowing what's going on there. I would rather not make assumptions or conjectures.</p>

<p> </p>
 
<p>Reason, The one pending at 618K sounds like fraud to me. How can they justify buying 6 months ago at 588K, now selling for a profit? I don't know what's going on either, but it smells fishy to me.</p>

<p>I have to admit, you instantly raised the hairs on the back of my bear neck with your earlier postings. And in calling IR a liar, now that's just a downright blog felony.</p>

<p>I will try to be nicer as I believe you need all the help you can get right now. </p>

<p> </p>
 
<p>The unit was a model home by the builder. Listed at 618k for nearly 8 mos. or so . The builder sold it at 588k in Jan/Feb. Now it's pending 618k and only have been on the market for 8 days. So, yeah, I don't know what's going on there. </p>

<p>Hahaha....IR? you mean graphrix? Ok if Liar is too harsh then I apologize. But out of the 9 addresses: 2 correct. and the rest were not valid and the comps. were not the same with the unit in question. </p>

<p>I think I will stop posting anything regarding numbers. It gets too involving and time consuming. But thank you for your time in responding. Take care and good luck in all that you do. </p>

<p> </p>
 
<p>Reason,</p>

<p>You keep saying incorrect data, but we are getting our data from very common public sources, such as Ziprealty and Redfin, and saying so. They are realty companies, and you can check them yourself by going into their websites. I don't understand your assertion that these are inaccurate data. For that matter, you have not divulged the sources of your data, other than to say these things "occurred" in your neighborhood. Can you provide us with references for where you are getting YOUR numbers so that we can check them out ourselves? I think we've sufficiently done that; if you choose not to divulge yours, I think you should back off with the "incorrect data" statements.</p>
 
<p>reason,</p>

<p>Did you see my response as to why the addresses for 182 and 184 may actually exist? I may have been a bit harsh but you were quick to claim that I was lying. If I am wrong then I will admit it and I will apologize. I do think there might be an issue with the addresses do you?</p>
 
wow... interesting... a few comments to chime in with. i dont think Reason is lying but we should all admit theres going to be some bias on both sides. i happen to live in the same neighborhood as Reason and bought a condo in 05 as well. and it sounds we possibly live on the same relative few blocks (although different development). A number of the treo and garland park units in the area have been on sale for a LONG time so as much as i hate to admit it, there must have been some REAL depreciation in these condos.





i say REAL because it may not show up in the comps. builder comps are probably not appropriate since we all know there are incentives given that dont reflect true sales prices. a relative recently purchased a home and broker tried to get them to pay 100k more which they would receive back as a rebate at closing. that way the sales prices could be kept up. she was told by the broker that its a fairly common practice now to keep the prices up.





i see several problems with this practice. is the broker pushing this to inflate the commission? why would the buy want the higher tax basis? even if the rebate accounted for some sort of future value of the higher tax basis, it still sounds completely shady if not outright illegal.


anyway maybe i was getting exaggerated stories but the point is there is no way for us to really know whats going on out there without being involved in the actual transactions. it just leads me to believe that comps are understating the actual REAL declines in property values.
 
Graphrix,


Hello. Umm, I did check on addresses, 182 and 184. I looked twice. And I don't see it.





Gepetoh,


Thank you for disclosing the sources of your research. But I can tell you, based on the addresses that graphrix supplied are non-existent. And graphrix, I apologize for calling you a liar. It was a knee jerk reaction since your previous posts appeared to be condescending. But I shouldn't have called u a liar but rather that you have supplied the wrong information. I am sure it's not intentional, but rather that is what you have researched through your source(s).
 
<p>acpme,</p>

<p>Hello. At issue, is not how long these units have been the market. I agree. There is one unit that have been on the market for nearly a year now. </p>

<p>What we have here is the addresses given. And the comparables given were not the same. As you have stated, that you might be in the same community. You will know that a Garland unit is not the same as a Cortile and that a Cortile unit is not the same as a Lombard Court unit. And the comparables were made here between different developments. Which do not have the same sq ft.I didn't want to get into the details regarding the various developments with the other posters. But since you have joined and happen to live in the same community, I am sure you understand.</p>
 
From the time I have coming here, I have noticed that both the information and analysis given by IR and Graphrix is forthright, accurate, cogent, and timely. No one is immune to mistakes, but if I thought I disagreed with some info either Graphrix or IR included in a post, I would probably question my own thought processess or information source. And that is something, because I am fairly cocky when I think I know something. As Bill Fleckenstein likes to say, "Often wrong, but never in doubt."<p>

I have thought that a few intentional lies have been told on this blog, and it seems it is best to confront the questionable information without calling the poster of the hogwash a liar or any other names. Maybe it is best not to make any personal comments at someone else other than ourselves.
 
<p>awgee,</p>

<p>I like your courage to bring up the possible intentional lies. Your are alright! </p>

<p>I believe 99.8% of posters here are honest, and I am glad to see that. I do see a few misinformation from IR; however, I strongly believe that IR is very sincere.</p>
 
<p>Unfortunately my afternoon appointment rescheduled but fortunately it freed up my afternoon. Since it was such a nice day I decided to take a field trip over to Woodbury. As I drove down Groveland what I found was 184 and 182 Groveland do exist. They are part of <a href="http://www.calpacifichomes.com/bowencourt.php">Bowen Court by CalPac</a>. They still have two models left a plan 1X a fully furnished 975 sqft studio for $474k and a plan 4 a fully furnished 1405 sqft 3bd 2&1/2 bath with unique red brick flooring and granite counters that do not match the brick flooring for $657k. I actually liked this unit but I would have chosen a different type of flooring. I asked the busy sales agent if the units facing Groveland had Groveland addresses and she said that they did and the units that are for sale are iceberg rose. She looked perplexed when I asked that question and it seemed that she was thinking to herself "Is this that pesky graphrix from the IHB forums who keeps on spreading the truth of the RE market?".</p>

<p>Here is the sign for Groveland and Iceberg Rose. 184 is the corner unit and 182 is to the right. 184 is a plan 1 which is a 990 sqft studio and 182 is plan 2 which is a 1030 sqft 2bd 1&1/2 bath home. </p>

<p><img alt="" src="http://img101.mytextgraphics.com/photolava/2007/06/15/img00022-46ttubowe.jpg" /></p>

<p>Here is a more direct shot.</p>

<p><img alt="" src="http://img106.mytextgraphics.com/photolava/2007/06/15/img00023-46ttw2nbd.jpg" /></p>

<p>Here is a closer look where you can see 184 some what clearly (it is very clear when the image hasn't been reduced) but since it was a camera phone shot 182 didn't come out. </p>

<p><img alt="" src="http://img105.mytextgraphics.com/photolava/2007/06/15/img00024-f2ze2nf2.jpg" /></p>

<p>And here is 181 an attached unit complex.</p>

<p><img alt="" src="http://img101.mytextgraphics.com/photolava/2007/06/15/img00025-46ttxn0z5.jpg" /></p>

<p>Sorry if the picture quality isn't the best because it is my camera phone. For those that live over by there feel free to take a better picture. Now are these good comps for what reason supposedly owns? Probably not but that isn't the point. The point is I do not make things up and for someone who doesn't live in that area it was pretty easy to see that the addresses do exist. As I explained in a previous post the county is slow at getting things done when it comes to the homebuilders and having things recorded quickly. It was obvious to me when the APN was the same for 178, 180, 182 and 184 with the taxes being $17k a year and the other APNs were completely different for the other units.</p>

<p>Now I don't mean to be condescending but when a newbie questions my credibility I become defensive and the sarcasm volume gets turned up on high. Especially if you have read more of my posts you would know by my background that I have a lot of industry knowledge. I still have friends in the homebuilding industry so as long as they are not laid off I will continue to have inside knowledge. </p>

<p>With all that being said I thought the neighborhood was really nice. The only flaw were the way people drove like it was a formula1 course in there. I really liked the facade of <a href="http://www.standardpacifichomes.com/findhome/NeighborhoodIntro.aspx?NID=1157">StanPac's Mille Fleurs</a> plan 2 and plan 3. It was very unique which is not always the norm in Irvine. But the mello roos and HOA dues are killer in there. The home in BK 49 Chantilly can afford a dog since they have a warning sign for it and 174 Vintage isn't up for sale yet.</p>
 
<p>Graphrix, </p>

<p>Wow! I am impress. Earlier when you ask, "Did you find 182 or 184?" I said, "No." And here's where the misunderstanding lies. When I said "No, I don't see them". I was referring to MLS. And as to the other addresses that you had used as comparables. And I said they don't exist. Again, I was referring to the fact that they're not on MLS. Hence, if they do exist physically. I apologize for the confusion and misunderstanding.</p>

<p>But from the pictures you have taken, that reiterate the fact that those are not the same comparables. These unit are not the same in the sense that they're not the same sq. footage. They're by different builders and certain ones are attach while other are detach.</p>

<p> Thank you for taking the time out of your day to visit my neighborhood. Good work. </p>
 
<p>Nirvinerealtor,</p>

<p>I need your advise. I often here people say things like "I am going to use my equity to purchase a rental property." How is that done? Are they referring to refinancing their existing mortgage and cashing out? Or are they talking about taking out a home equity line of credit?</p>

<p>Also, would you inform me of how I can go about researching if the property is a good buy. And the demographics surrounding such property, where do I find that? Pardon my naivity.</p>
 
<p>Oh boy. It is late so the sarcasm is on full blast.</p>

<p>reason - You should call Quick Loan Funding at 800-500-0000 (yes that really is their phone number) and ask for Daniel Sadek. He will take care of you. I hear he has great deal on a penthouse at the condo towers of Marquee for $1.9mil. It's a great investment and Daniel will show you why. He may have an exotic car or two you can pick up at below market price too so don't forget to ask about that. Make sure he gets you some comp'd dinners at Ten too if you do a loan through them. </p>
 
<p>graphrix</p>

<p>I believe I was asking Nirvinerealtor. I am honestly considering a rental property. I am free to do that, right? I am free to ask for advise and learn from others, right? Am I using your money? And what made u think I am looking for Marquee 1.9 mil? </p>

<p>As I recall, this is a forum to discuss housing and real estate in Irvine. It is not a forum for bears only. If your view is bearish, then that's your opinion. You need not get uptight just because someone doesn't share your view. It just seem to me, you want to shove your view down other people's throat. Too bad this forum doesn't have an "ignore" button. That way, I can ignore you and you can ignore me.</p>

<p>I suppose if it makes you happy. I will just find another forum to discuss and learn freely. Take care and lighten up.</p>
 
reason,





I think graphix was being sarcastic because you are traveling a well beaten trail to financial ruin. There are many, many people out there who cashed out their equity to buy multiple properties in 2004 through 2006. These people are hanging on by a hope, denial and even more borrowed money. Rentals don't positively cashflow in this market, so these people are spending money each month to keep their investments afloat while these investments are losing value. Eventually, each of these people will succumb to the cashflow drain adding to their debt each month, and they they will financially implode. After the collapse, they will dump multiple properties -- including their primary residence -- on the market in a series of foreclosure fire sales just prior to their bankruptcy. None of us here want to see this happen to you.





Please hear what we are saying. The idea of cashing out to finance investment properties was overdone in the past -- which is one of the reasons prices are inflated. Those that did this during the bubble are just now receiving the bitter fruits of their foolish actions. Doing so now will get you to bankruptcy quicker than these people because the inflating bubble gave them a few years of denial. The deflating bubble will wipe you out that much quicker.





Ask yourself how you would feel if you were the owner of an investment property that was costing you $1000 a month more than the rental income and it had declined $200,000 in value below your mortgage? You couldn't sell because you would have to pay the bank $200,000 to get out of the loan, so you would have to endure the $1000 a month cashflow drain indefinitely or sell and go bankrupt (or pray for a short sale). If you are comfortable with that, go buy a rental. I hope the thought of that gives you pause. If not, you at least were told of the risks before you did it.
 
You must log in or register to reply here.
Back
Top