Refinance And Mortgage

Refinance And Mortgage

 prices increased 1.1 percent a year after inflation, according to Mr. Shiller’s research. By the late 1990s, however, the rate was 4 percent a year. Happy homeowners were taking about $100 billion a year out of their houses, which paid for a lot of good times.

“The experience we had from the late 1970s to the late 1990s was an aberration,” said Barry Ritholtz of the equity research firm Fusion IQ. “People shouldn’t be holding their breath waiting for it to happen again.”

Not everyone views the notion of real appreciation in real estate as a lost cause.

realtors will never accept that real estate appreciation is a lost cause, nor will anyone who likes to use this fallacy to generate false urgency in buyers.

Bob Walters, chief economist of the online mortgage firm Quicken, acknowledges that the recent collapse will create a “mind scar” just as the Great Depression did. But he argues that housing remains unique.

“You have to live somewhere,” he said. “In three or four years, people will resume a normal course, and home values will continue to increase.”

Housing is special. Irvine is different. How many times have we heard that bullshit before?

All homes are different, and some neighborhoods and regions will rebound more quickly. On the other hand, areas where there was intense overbuilding, like Arizona, will be extremely slow to show any sign of renewal.

“It’s entirely likely that markets like Arizona will not recover even in the 15- to 20-year time frame,” said Mr. Humphries of Zillow. “The demand doesn’t exist.”

Wrong. Arizona may not see peak prices for quite some time, but it will recover. Of all the distressed markets out there, Phoenix is one of those most likely to make a comeback. The economy is diverse and the population is growing. I would buy cashflow properties there if I had more contacts. I am more excited about Las Vegas mostly because I have the contacts to get cashflow properties there. The economic story in Phoenix is actually more compelling.

Owners in those foreclosure-plagued areas consider themselves lucky if they are still solvent. But that does not prevent the occasional regret that a life-changing sum of money was so briefly within their grasp.

Robert Austin, a Phoenix lawyer, paid $200,000 for his home in 2000. Five years later, his neighbors listed a similar home for $500,000.

Freedom beckoned. “I thought, when my daughter gets out of school, I can sell the house and buy a boat and sail around the world,” said Mr. Austin, 56.

His home is now worth about what he paid for it. As for that cruise, “it may be a while,” Mr. Austin said. Showing the hopefulness that is apparently innate to homeowners, he added: “But I won’t rule it out forever.”

The fantasies of Mr. Austin are shared by homeowners everywhere. He has been forced to let go of his fantasies whereas Orange County and Irvine home owners are still clinging to theirs.

The contrarian view

I would like to believe that stories like today's reflect a positive and permanent change in buyer attitudes, but there is another way to see it.

Housing must be nearing a bottom..

... Because now I'm starting to see more articles about how housing is a lousy investment and no one should buy a house. Anyone who's been paying attention knows that this statement is just a wrong as home ownership is always better than renting. Both statements are just flat out wrong. But that doesn't stop the pundits.

One sign of a market bottom is a change in sentiment. When an asset class is strongly out of favor with the investment community is often a great time to purchase it.

I believe we are about to see a leg down in house prices, but what happens after that is a mystery. There are far too many variables to predict. I am planning a future post to look at some of these scenarios and try to assess the probability of each. One possible scenario is that low interest rates persist until the inventory is absorbed, and the leg down we are about to see is the last one. This may not be the most likely scenario, but this winter should be (1) the bottom of the recession, (2) the peak of inventory, and (3) the bottom of buyer demand. When conditions are at their worst is often when markets find a durable bottom. Only time (and interest rates) will tell.

No money in, much money out 

Houses were a great trading vehicle during the bubble. Lenders were giving houses to people with no money down, and when values went up, lenders gave people this money as well. With that kind of lender behavior, it isn't surprising that houses were in high demand.

• The owner of today's featured property paid $570,000 on 1/9/2004. He used a $456,000 first mortgage, a $114,000 second mortgage, and a $0 down payment.
• On 5/8/2006 he refinanced with a $586,000 Option ARM with a 1.25% teaser rate.
• On 11/26/2007 Wells Fargo refinanced his first mortgage for $604,000 and gave him a $37,750 HELOC. How stupid is that?
• Total property debt is $641,750.
• Total mortgage equity withdrawal is $71,750.
• Total squatting time was about 14 months.

Foreclosure Record
Recording Date: 11/12/2009
Document Type: Notice of Sale (aka Notice of Trustee's Sale)
Click here to get Foreclosure Report.

Foreclosure Record
Recording Date: 08/10/2009
Document Type: Notice of Default

Wells Fargo bought the property back for $663,586 on 6/10/2010. They will lose about $100K on the deal.

 

Irvine Home Address ... 18 BAHIA Irvine, CA 92614

Resale Home Price ... $594,900

Home Purchase Price … $663,586
Home Purchase Date .... 6/10/2010

Net Gain (Loss) .......... $(104,380)
Percent Change .......... -15.7%
Annual Appreciation … -42.9%

Cost of Ownership
-------------------------------------------------
$594,900 .......... Asking Price
$118,980 .......... 20% Down Conventional
4.51% ............... Mortgage Interest Rate
$475,920 .......... 30-Year Mortgage
$116,401 .......... Income Requirement

$2,414 .......... Monthly Mortgage Payment

$516 .......... Property Tax
$67 .......... Special Taxes and Levies (Mello Roos)
$50 .......... Homeowners Insurance
$50 .......... Homeowners Association Fees
============================================
$3,096 .......... Monthly Cash Outlays 

-$403 .......... Tax Savings (% of Interest and Property Tax)
-$626 .......... Equity Hidden in Payment
$199 .......... Lost Income to Down Payment (net of taxes)
$74 .......... Maintenance and Replacement Reserves
============================================
$2,341 .......... Monthly Cost of Ownership 

Cash Acquisition Demands
------------------------------------------------------------------------------
$5,949 .......... Furnishing and Move In @1%
$5,949 .......... Closing Costs @1%
$4,759 ............ Interest Points @1% of Loan
$118,980 .......... Down Payment
============================================
$135,637 .......... Total Cash Costs
$35,800 ............ Emergency Cash Reserves
============================================
$171,437 .......... Total Savings Needed

Property Details for 18 BAHIA Irvine, CA 92614
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Beds: 3
Baths: 3 baths
Home size: 1,599 sq ft
($372 / sq ft)
Lot Size: 4,138 sq ft
Year Built: 1988
Days on Market: 15
Listing Updated: 40415
MLS Number: P747732
Property Type: Single Family, Residential
Community: Westpark
Tract: Pr
------------------------------------------------------------------------------
According to the listing agent, this listing is a bank owned (foreclosed) property.

If your client likes sunlight- loves a well lit home- then this is their home. Dozens of windows in this home and house is sunny and bright and cheery. A place to come home to after the end of a day. Upgraded glazed kitchen countertops. Gazebo/patio cover out back to relax. Centrally located near both freeways and near shopping centers. Lushly landscaped for the gardener in you.