NAr couldn’t care less about the greater good. They lobby for their own narrow interests, irrespective of the impact it will have on the housing market, the rental market, or the broader US economy. Their latest self-serving battle is against bulk REO sales. Obviously, they don’t want to lose MLS commission sales to bulk transactions which generate no commissions to them. There is no other reason to oppose these bulk sales.

Bill would stop bulk REO sales in California

NAR backing sponsor Gary Miller’s reelection bid

By Inman News, Friday, May 18, 2012.

California Rep. Gary Miller — who’s getting major backing from the National Association of Realtors as he runs for reelection to Congress in a new district — has introduced a bill that would put the brakes on bulk sales of Fannie Mae real-estate owned (REO) homes in the state.

H.R. 5823, the “Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012,” would prevent Fannie Mae and Freddie Mac’s regulator, the Federal Housing Finance Authority (FHFA), from implementing a pilot program to sell Fannie Mae-owned properties in California to institutional investors for conversion to rentals.

“We are hearing from our members that housing supply is extremely tight, with REO inventory being especially low at only a two-month supply,” California Association of Realtors President LeFrancis Arnold said in a statement welcoming the bill’s introduction. Arnold said California home buyers “already are competing with small investors and encountering multiple offer scenarios.”

Inventories are tight because lenders are withholding REO inventory. It’s also why prices are firming and a short-term bottom is being put in place. If lenders don’t sell these in bulk, and instead release them for sale on the MLS, it will generate more real estate commissions, but it will also put a great deal of distressed property on the market and likely cause prices to go down again. Obviously, realtors care less about rising prices than they do about commissions.

Last month, 19 members of California’s congressional delegation sent a letter to FHFA objecting to bulk sales of repossessed homes to investors for conversion to rentals.

FHFA has said it will only approve bulk sales in markets where there’s no shortage of homes on the market. The first “REO to rental” sale of 2,490 Fannie and Freddie “real estate owned” (REO) properties will be limited to eight markets: Atlanta (572 properties); Los Angeles-Riverside, Calif. (484 properties); Phoenix (341 properties); Las Vegas (219 properties); Chicago (99 properties); Southeast Florida (418 properties); Central and Northeast Florida (190 properties); and Western Florida (167 properties).

Today, there is a shortage of homes for sale in Las Vegas.

Miller, a Republican who currently represents California’s 42nd Congressional District — which includes parts of Los Angeles, Orange, and San Bernardino counties — is seeking reelection in the 31st District, after his current district was redrawn in favor of Democrats.

According to Federal Election Commission filings, the National Association of Realtors has made more than $500,000 in independent expenditures to help Miller establish his name in the district he hopes to represent, which includes Rancho Cucamonga and Redlands.

NAR’s Congressional Fund this year has spent $136,314 on Miller’s behalf through the end of May, including $118,385 on a direct mail campaign. On May 9, NAR’s Realtors Political Action Committee (RPAC) dropped $396,000 on TV ads supporting Miller in the June 5 primary (the expenditure was reported twice, after it was originally filed as an expenditure in the 42nd District by mistake).

The NAr owns Mr. Miller. He has prostituted himself to them in a last gasp to retain a seat in the House of Representatives.

… NAR, which has raised dues for its nearly 1 million members by $40-a-year dues in order to raise $80 million in “soft money” for political advocacy at the local, state and federal level this year and next, held a “Rally to Protect the American Dream” in Washington, D.C. Thursday that attracted an estimated 15,000 Realtors.

Bulk sales of REO to investors would keep house prices from falling because each home sold in the portfolio is one less distressed sale on the MLS. realtors ostensibly want price stability, but based on their vehement opposition to bulk sales, they obviously prefer commissions to rising prices.

Milking the cash cow

The owner of today’s featured fixer bought the property with very little of his own money, made an illiegal conversion to a rental unit, extracted hundreds of thousands in HELOC booty, and skimmed the rent until the bank finally foreclosed. He obtained maximum financial benefit from this property and left the lender holding the bag.

I have a sneaking admiration for this guy. He worked the system and obtained a huge return on his investment. Of course, its unethical, shameful, and in the long run, stupid, but it’s great while the Ponzi scheme lasts. As it stands, this property has great flip potential. It’s an all cash deal, and it requires extensive renovation to restore it to code, but it’s priced about $200,000 under market, so there is room to make improvements.

• The former owner paid $640,000 on 1/14/2004. He used a $511,900 first mortgage, a $95,800 second mortgage, and a $32,300 down payment.
• On 3/7/2006 he refinanced with a $806,250 Option ARM and obtained a $161,250 HELOC.
• Total mortgage debt was $967,500 assuming he maxed out the HELOC.
• Total mortgage equity withdrawal was $359,800. Pretty good money for two years ownership.
• He defaulted in late 2009, and he was able to skim rent for all of 2010 and 2011. According to the listing, the rent on the two units amounted to about $3,000 per month. Consider the $72,000 in skimmed rent a going-to-foreclosure present from the lender.

Dana Point Overview

Median home price is $534,000. Based on a rental parity value of $576,000, this market is fairly valued.

Monthly payment affordability has been worsening over the last 1 month(s). Momentum suggests unchanging affordability.

Resale prices on a $/SF basis declined from $361/SF to $324/SF.

Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months.

Median rental rates increased $218 last month from $2,196 to $2,415.

Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months.

Market rating = 4

Proprietary OC Housing News home purchase analysis

33791 OLINDA Dr Dana Point, CA 92629

$410,000 …….. Asking Price
$640,000 ………. Purchase Price
1/14/2004 ………. Purchase Date

($230,000) ………. Gross Gain (Loss)
($51,200) ………… Commissions and Costs at 8%
============================================
($281,200) ………. Net Gain (Loss)
============================================
-35.9% ………. Gross Percent Change
-43.9% ………. Net Percent Change
-5.2% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$410,000 …….. Asking Price
$14,350 ………… 3.5% Down FHA Financing
3.75% …………. Mortgage Interest Rate
30 ……………… Number of Years
$395,650 …….. Mortgage
$104,605 ………. Income Requirement

$1,832 ………… Monthly Mortgage Payment
$355 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$103 ………… Homeowners Insurance at 0.3%
$412 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,702 ………. Monthly Cash Outlays

($279) ………. Tax Savings
($596) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$123 ………….. Maintenance and Replacement Reserves
============================================
$1,968 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$5,600 ………… Furnishing and Move In at 1% + $1,500
$5,600 ………… Closing Costs at 1% + $1,500
$3,957 ………… Interest Points
$14,350 ………… Down Payment
============================================
$29,507 ………. Total Cash Costs
$30,100 ………. Emergency Cash Reserves
============================================
$59,607 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

33791 Olinda Dr, Dana Point, CA 92629 (MLS # S697843)

Opportunity is knocking!!! Great single family 4 bedroom home in Dana Point just a short walk to the beach. This home has a master bedroom on each living level and is currently configured as 2 units, each unit has own forced air unit, 2 bedrooms and 2 baths, family room with fireplace, dining, kitchen and balcony. 3 car garage with laundry and 3 open spaces.(each unit rented at $1500 each) Property was Built and approved as an SFR and City has issued a notice of violation for non-conforming use as a duplex. Property requires repairs and sold as is and will require a cash buyer.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Custom (CUST)
Year Built	1989	Community	Lantern Village
Garage Spaces	3.0	County	Orange
Total Parking	9	Walk Score ®	78

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with James Eichenbaum DRE# 01411312, A.R.E.A. Realty Group

(view all details for MLS #S697843)

	$599,900 33831 ROBLES Dr		0.12 miles 3 bd / 2.5 ba 2,189 Sq. Ft.
	$652,000 33616 RISING TIDE Ct		0.27 miles 3 bd / 2.5 ba 1,819 Sq. Ft.
	$1,200,000 33852 VALENCIA Pl		0.29 miles 4 bd / 4.5 ba 2,000 Sq. Ft.
	$675,000 33668 SEA POINT Dr		0.36 miles 3 bd / 2.25 ba 2,320 Sq. Ft.
	$1,099,000 34071 BLUE LANTERN St		0.44 miles 4 bd / 3 ba 2,650 Sq. Ft.
	$1,499,000 34081 BLUE LANTERN St		0.45 miles 4 bd / 2.5 ba 2,450 Sq. Ft.
	$724,999 34081 AURELIO Dr		0.48 miles 3 bd / 2.5 ba 1,900 Sq. Ft.
	$1,185,000 24781 ANCHOR LANTERN		0.48 miles 3 bd / 2.5 ba 2,600 Sq. Ft.
	$749,900 34021 MAZO Dr		0.61 miles 3 bd / 2.5 ba 2,100 Sq. Ft.
	$1,950,000 33711 WINDLASS Dr		0.63 miles 4 bd / 2.5 ba 2,250 Sq. Ft.

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See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."

Many market pundits claim lenders should focus on short sales rather than foreclosures. They contend short sales offer better capital recovery than foreclosures and they are less harmful to market pricing. This is not an accurate assessment.

First, not all foreclosures become REO. About a third of all foreclosures are purchased by third parties who either flip them or hold them as cashflow investments. Flippers generally improve the property and sell for full market value, so their activities don’t push prices lower. And obviously, cashflow investors don’t push prices lower because they don’t sell their properties.

Both short sales and REO resales require discounts to sell. REOs require a discount because lenders are loathe to spend any money fixing them up. Short sales require a discount because buyers won’t put up with the arduous process unless there is a reward for their patience. Sales prices of REOs or short sales do not differ much because both require discounts to sell (REOs -34% and short sales -21%). And since short sales and REO don’t differ much, and since both negatively impact prices, whether lenders choose to sell as short sales or as REO is irrelevant to the health of the market. Both short sales and REO are distressed sales.

As Foreclosures Fall, Fears of Crisis Abate

Filings in April hit the lowest level seen since July 2007.

By Claire Easley — From: BUILDER 2012, Posted on: May 17, 2012 12:03:00 PM

After months of ominous warnings that a second title wave of foreclosures was coming, the impending tsunami seems to have been downgraded to something more akin to a tropical storm, thanks in part to an increase in the use of short sales by some of the largest mortgage servicers.

A torrent of short sales will hurt the market just as much as a tsunami of foreclosures.

Foreclosure filings hit the lowest level seen in nearly five years in April, down 5% from the previous month and down 14% year-over-year, according to data released today by RealtyTrac.

While there is still plenty of pain to be felt in many regional markets with backlogs to work through, “More and more, it’s looking like short sales are going to take the air out of that expected bubble in foreclosures we were thinking would happen this year,” said Daren Blomquist, vice president at RealtyTrac, on a call with Builder this week. “At the end of the day, foreclosure activity will be up slightly this year compared to 2011. We’ll still see increases in filings in local markets … but short sales are helping to siphon off a lot of the potential foreclosures that are out there.”

Banks tried to do more short sales in early 2010, but were unsuccessful in resolving more loans that way. Perhaps with more government bailout dollars to pay off second mortgage holders and with requirements for write offs with the mortgage settlement deal, lenders will be in the mood to approve more short sales.

That’s promising news for home prices, which have been pummeled by the onslaught of distressed sales in recent years.

Why? Short sales are also distressed sales requiring a significant discount to sell. This is the kind of poorly reasoned nonsense pervading the mainstream media.

As of January, the latest month for which RealtyTrac has pricing data available, the average price of a short sale was 21% lower than that of a non-distressed sale; meanwhile REOs averaged a 34% price drop compared to non-distressed prices.

If lenders have fewer REOs and begin approving more short sales, the discounts will likely reverse. Short sale discounts will go up, and REO discounts will lessen. There is no reason for short sales and REO to sell for different prices on comparable homes. In the past REOs have sold for deeper discounts merely because lenders were more motivated to liquidate properties they already owned. If they own fewer REOs, their motivation to liquidate will lessen, and with less motivation, they will hold out for higher prices.

The shift may be due in large measure to the deal struck between the states’ attorneys general and mortgage servicers. Among the five largest lenders involved in that settlement—Ally, Bank of America, Chase, Citi, and Wells Fargo—the ratio of REOs to short sales is less than 1.5 to 1. Other lenders are averaging more than 2.5 REOs for every short sale performed. “That to me is an indication that the lenders in the settlement are more motivated” to avoid the foreclosure process, Blomquist said. “Those lenders account for a huge percentage of the loans being serviced. That alone is going to impact the industry, because the way they do things will be repeated by others.”

The lenders in the settlement deal have to write off a large dollar amount through short sale, so they are shifting gears until they reach their write-down targets. This is the kind of politically motivated change that’s very difficult to forecast. If not for the settlement, lenders likely wouldn’t have changed gears.

The post 8.7 years to clear Orange County distressed inventory at stable liquidation rate, had some astute observers who took exception to my numbers because they said many of the REO I said were coming were going to be resolved as short sales. To that I say, “so what?” Both REO and short sales are distressed sales, and both negatively impact the market. Resolving bad loans through short sales does not help the market in any way. As evidenced by articles like the one above, many people don’t understand that basic fact.

Port Street Ponzis

In California if you can leverage yourself into an expensive home, you get prestige, comfort, and a whole lot of HELOC money. There was a time when neighborhoods like this were the exclusive domain of wealthy people, hence the prestige aspect of owning there. You couldn’t borrow your way into neighborhoods like this because no lender would make such a large loan. Then the housing bubble came and the posers invaded.

At first the truly wealthy didn’t mind because the posers drove up the value of their holdings. On paper, these already well off owners became very rich. Unfortunately, it was a Ponzi scheme built on borrowed money, and now that these Ponzis have imploded, lenders are avoiding foreclosing on them, and wealthy people share their neighborhoods with posers who don’t pay their mortgages.

• The former owner of today’s featured property — a realtor — paid $1,590,000 on 12/18/2002. The original mortgage records are not in my database.
• On 8/27/2004 she refinanced with a $1,495,000 Option ARM.
• On 6/10/2005 she obtained a $210,000 HELOC.
• On 8/5/2005 she obtained a $200,000 HELOC.
• On 11/6/2006 she refinanced with a $1,943,500 first mortgage and obtained a $299,000 HELOC.
• On 12/11/2006 she opened a $666,210 HELOC.
• Total property debt was $2,609,710 assuming she maxed out the HELOC.
• Total mortgage equity withdrawal exceeded $1,000,000.
• To sweeten the deal further, the lender allowed her to squat in this beautiful home for well over three years.

I’m not sure if I should be jealous or appalled. I think it’s a little of both. This woman’s fall from entitlement will be extreme. She was making great money as a transaction leech with a house that provided her a $1,000,000 in free money. I suspect times are not as good today.

Newport Beach Overview

Median home price is $1,084,000. Based on a rental parity value of $783,000, this market is over valued.

Monthly payment affordability has been worsening over the last 2 month(s). Momentum suggests unchanging affordability.

Resale prices on a $/SF basis increased to $505/SF to $538/SF.

Resale prices have been weak for 12 month(s). Price momentum suggests weak prices over the next three months.

Median rental rates increased $175 last month from $$3,108 to $$3,283.

Rents have been slowly rising for 12 month(s). Price momentum suggests slowly rising rents over the next three months.

Market rating = 1

Proprietary OC Housing News home purchase analysis

5 MAIDSTONE Dr Newport Beach, CA 92660

$1,995,000 …….. Asking Price
$1,590,000 ………. Purchase Price
8/17/2002 ………. Purchase Date

$405,000 ………. Gross Gain (Loss)
($127,200) ………… Commissions and Costs at 8%
============================================
$277,800 ………. Net Gain (Loss)
============================================
25.5% ………. Gross Percent Change
17.5% ………. Net Percent Change
2.3% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$1,995,000 …….. Asking Price
$399,000 ………… 20% Down Conventional
4.25% …………. Mortgage Interest Rate
30 ……………… Number of Years
$1,596,000 …….. Mortgage
$408,508 ………. Income Requirement

$7,851 ………… Monthly Mortgage Payment
$1,729 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$499 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$474 ………… Homeowners Association Fees
============================================
$10,553 ………. Monthly Cash Outlays

($1,476) ………. Tax Savings
($2,199) ………. Equity Hidden in Payment
$610 ………….. Lost Income to Down Payment
$269 ………….. Maintenance and Replacement Reserves
============================================
$7,757 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$21,450 ………… Furnishing and Move In at 1% + $1,500
$21,450 ………… Closing Costs at 1% + $1,500
$15,960 ………… Interest Points
$399,000 ………… Down Payment
============================================
$457,860 ………. Total Cash Costs
$118,900 ………. Emergency Cash Reserves
============================================
$576,760 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

5 Maidstone Drive, Newport Beach, CA 92660 (MLS # L38873)

A private, gated courtyard leads to this inviting Summer House home,now restored to its original charm.The kitchen has been remodeled from the studs out with crisp white custom cabinets, black honed-granite counters, huge center island with a Viking professional cooktop, and all new stainless steel appliances.The downstairs Master bedroom opens out to a large, 8500 square foot lot with restful gardens, fountain, fireplace, and all new barbeque center.In addition to two, upstairs bedrooms, there is a large bonus room that could easily become a fourth bedroom.At the end of this quiet cul-de-sac is a pathway that leads to the Association pool, state-of-the-art fitness center, tot lot, and putting green. A 24 hour gate-guarded community, One Ford Road offers a secluded lifestyle with easy access to all of the fine amenities that homeowners in this beach-close neighborhood have become accustomed to.

Property Type(s): Single Family, Residential

Last Updated	5/22/2012	Tract	Summer House (OFSH)
Year Built	2000	Community	East Bluff - Harbor View
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	55

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Kathleen Ellis DRE# 01243006, COLDWELL BANKER PREVIEWS INTERNATIONAL

(view all details for MLS #L38873)

	$1,374,500 23 EDGEWOOD		0.17 miles 4 bd / 3.5 ba 3,100 Sq. Ft.
	$2,050,000 23 JUPITER HILLS Dr		0.17 miles 4 bd / 3.75 ba 3,277 Sq. Ft.
	$1,549,000 9 SINGLETREE Dr		0.18 miles 3 bd / 2.5 ba 2,800 Sq. Ft.
	$1,699,000 2201 ALTA VISTA Dr		0.26 miles 5 bd / 3 ba 3,447 Sq. Ft.
	$2,099,000 20 TURNBERRY Dr		0.27 miles 5 bd / 5 ba 3,796 Sq. Ft.
	$1,650,000 907 CITRUS Pl		0.41 miles 5 bd / 4.5 ba 3,627 Sq. Ft.
	$1,799,000 3 RUE BIARRITZ		0.44 miles 3 bd / 2.5 ba 3,011 Sq. Ft.
	$2,395,000 19 BURNING TREE Rd		0.54 miles 4 bd / 2.5 ba 4,000 Sq. Ft.
	$1,474,900 2924 CAROB St		0.67 miles 4 bd / 3.75 ba 3,100 Sq. Ft.
	$1,895,000 1706 PORT SHEFFIELD Pl		0.7 miles 6 bd / 4 ba 4,000 Sq. Ft.

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See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."

Like any business, banks adjust their business plans quarterly based on both internal and external forces. Internally, banks respond their need for additional capital to fund operations. Externally, they cope with a declining housing market, recent regulatory changes, and new conditions imposed by the bank settlement. When banks adjust their business plans, it may have sudden and dramatic effect on their policies. In the first quarter of 2012, the major banks which control most California REO dramatically reduced the number of properties they purchased at auction.

The precipitous declines in REO were not due to improving borrower delinquency. Far too many people are not paying their mortgages, and banks haven’t made significant progress in reducing shadow inventory. In short, they didn’t stop foreclosing because they ran out of people to foreclose on. So why did they?

Two key developments in the first quarter changed bank policy. First, federal regulators forced banks to recognize losses on second mortgages behind a delinquent first mortgage. This caused banks to greatly accelerate their steady write downs of these loans. Over the last several years, the major banks have been writing down a certain amount of first mortgages, second mortgages, and HELOCs each quarter based on their earnings. The regulatory change forced them to take much larger write downs on their second mortgages, so they didn’t have the same capacity to write down first mortgages as they have had in previous quarters. This forced banks to curtail taking losses on first mortgages which in turn forced them to stop taking back REO and processing the sales. After banks digest the losses on the HELOCs, they will likely resume their steady write downs on first mortgages and increase sales of REO or approval of short sales.

The second key development was the agreement between the major banks and states on the Robo-signer scandal. California extorted a significant sum from the banks (which they now want to spend on other bills). To comply with the agreement, the major banks must write down billions of dollars worth of loans. Short sale losses are credited toward their settlement obligations, so lenders are shifting gears to approve more short sales. This changed the incentives for lenders toward short sales and away from REO.

With lenders unable to afford their typical quarterly write downs on first mortgages, and with their changed incentives to favor short sale processing over REO sales, the number of REOs has plummeted in the first quarter. As a result, MLS inventories have shrunk, and the market has turned from a buyer’s market to a seller’s market — at least in the short term. Perhaps 2012 will be the year of the short sale. Of course, this requires the delinquent mortgage squatter to participate, and since most are planning to enjoy the free ride as long as they can, I really don’t expect short sales to increase much. Ultimately, banks will abandon their efforts to encourage short sales and foreclose on the committed squatters.

Foreclosure Radar foreclosure report — April 2012

Foreclosure Activity Declines Hurting Investors

April 2012 Foreclosure Starts declined across our coverage area wiping out the small gains in new foreclosure filings last month. In California, Notice of Default filings are down 69.8 percent from the peak in March 2009, and 15.8 percent from April 2011. Notice of Trustee Sale Filings, the start of Arizona’s foreclosure process, are down 59.4 percent from the peak in March 2009, and down 8.0 percent year-over-year.

CA – Foreclosure Filings

06059 – Foreclosure Filings

Foreclosure Sales also declined, however, foreclosure investors purchased a record percentage of the limited inventory that was actually sold. Nevada investors purchased more than 50 percent of foreclosure sales for the first time at 50.7 percent. Arizona followed with 44.6 percent and California at 41.3 percent. The low number of sales, combined with record percent purchased on the courthouse steps left very little to become Bank Owned (REO). This further depletes the inventory of Bank Owned homes as REO sales continue to outpace the addition of new inventory.

For the last several years, lenders held the ratio of REO to third-party sales at 2:1. In February, lenders began slowing their acquisition of REO, but the number of third-party sales only declined fractionally. As a result, the number of third-party sales is set to overtake the number of REO sales. It’s unclear exactly how lenders intend to process their bad loans, but taking on additional REO doesn’t seem to be part of the plan. Perhaps they will approve more short sales, but there is little evidence of that so far. What is certain is that many more squatters will be given additional time in their free houses.

CA – Foreclosure Outcomes

Banks took back 50% fewer REO in April than they did in January.

06059 – Foreclosure Outcomes

 Despite investors purchasing a higher percentage of foreclosure sales, margins have rapidly declined in recent months. In both Arizona and Nevada winning bids on the courthouse steps on average equal the current estimated value of those properties. In California the discount between market value and winning bid have on average declined to 12.3 percent. This leaves investors who intend to resell their purchases with record low profits after eviction, repairs, and closing costs.

Flipping is on the decline. Aggressive bidders are buying properties for two reasons: first, many believe the bottom is in, and they don’t want to miss the bottom tick. There are many fools chasing the market higher. They may be very disappointed when the inventory liquidation resumes. Second, many new buyers operating on a buy-and-hold business model are acquiring properties, and they don’t need a flip margin to operate. This new demand coupled with reduced supply is causing auction prices to rise significantly.

“Foreclosure declines would be wonderful news if they were being driven by a true market recovery in which hundreds of thousands were no longer unable to make payments, and millions were no longer upside down. That is not the reality today. Instead we are seeing unprecedented government intervention into the foreclosure process leaving underwater homeowners in limbo, while stealing opportunity from investors and first time buyers.” stated Sean O’Toole, Founder & CEO of Foreclosure Radar. “California’s pending legislation, which is similar to laws we previously saw enacted in Nevada, will almost certainly bring foreclosure activity to a near halt there if passed. The reality is that these laws don’t solve anything as they fail to address the real problem – negative equity – while instead they punish real estate professionals, homebuyers, and investors far more than the banks they were aimed at.”

Sean is being kind suggesting “homeowners are in limbo.” It’s more accurately stated as, “delinquent loan owners continue squatting.” This is unquestionably stealing opportunity from investors and first-time buyers. Sean’s statement that the banks aren’t addressing the problem with negative equity isn’t accurate. Banks are addressing the problem. They hope they can force prices higher by withholding inventory. Banks are intent on solving the problem with negative equity by raising prices rather than writing down debt. I can understand their desire, but it won’t work.

This summer lenders will discover that buyers cannot raise their bids due to prudent lending standards. Buyers are limited to loan amounts financeable by verifiable incomes. Plus the recession and foreclosure depleted buyer pool will continue to dampen demand. Basically, prices will not rise as lenders hope, and transaction volumes will begin to taper off due to lack of supply, and the high end will continue to languish due to a lack of a move-up market. We will see another failed attempt to force prices to move higher.

Ponzis infested the high end too

Ponzi borrowing was considered sophisticated financial management during the housing bubble. It’s understandable that the poor took the free money and spent it. That’s their pattern. That’s why many are poor. However, people of greater means also went Ponzi. Like the poor, they simply wanted to live beyond their means and spend more than they earned, and like their subprime brethren, it blew up in their faces as well.

• The owners of today’s featured property paid $1,250,000 on 4/13/1998. Their original loan information is not in my records.
• On 8/21/2000 they obtained a 75,000 stand-alone second.
• On 9/19/2001 they refinanced with a $1,162,500 first mortgage.
• On 2/19/2004 they obtained a $200,000 HELOC.
• On 3/1/2005 they refinanced with a $1,500,000 first mortgage.
• On 4/12/2005 they got a $110,000 HELOC.
• On 9/13/2006 they opened a $426,700 HELOC.
• On 4/10/2007 they refinanced with a $1,590,000 first mortgage.

From the smallest condo to the most upscale mansions. HELOC abuse was everywhere during the housing bubble.

Santa Ana Overview

Median home price is $264,000. Based on a rental parity value of $381,000, this market is under valued.

Monthly payment affordability has been worsening over the last 1 month(s). Momentum suggests unchanging affordability.

Resale prices on a $/SF basis increased to $202/SF to $204/SF.

Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months.

Median rental rates declined $133 last month from $1,733 to $1,600.

Rents have been slowly rising for 1 month(s). Price momentum suggests unchanging rents over the next three months.

Market rating = 10

Proprietary OC Housing News home purchase analysis

1412 STANFORD Ct Santa Ana, CA 92705

$1,549,000 …….. Asking Price
$1,250,000 ………. Purchase Price
4/13/1998 ………. Purchase Date

$299,000 ………. Gross Gain (Loss)
($100,000) ………… Commissions and Costs at 8%
============================================
$199,000 ………. Net Gain (Loss)
============================================
23.9% ………. Gross Percent Change
15.9% ………. Net Percent Change
1.5% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$1,549,000 …….. Asking Price
$309,800 ………… 20% Down Conventional
4.25% …………. Mortgage Interest Rate
30 ……………… Number of Years
$1,239,200 …….. Mortgage
$309,439 ………. Income Requirement

$6,096 ………… Monthly Mortgage Payment
$1,342 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$387 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$168 ………… Homeowners Association Fees
============================================
$7,994 ………. Monthly Cash Outlays

($1,368) ………. Tax Savings
($1,707) ………. Equity Hidden in Payment
$473 ………….. Lost Income to Down Payment
$214 ………….. Maintenance and Replacement Reserves
============================================
$5,606 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$16,990 ………… Furnishing and Move In at 1% + $1,500
$16,990 ………… Closing Costs at 1% + $1,500
$12,392 ………… Interest Points
$309,800 ………… Down Payment
============================================
$356,172 ………. Total Cash Costs
$85,900 ………. Emergency Cash Reserves
============================================
$442,072 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

1412 Stanford Ct, Santa Ana, CA 92705 (MLS # U12001905)

Located in Cowan Heights this custom home is one of 5 homes in this exclusive gated community. It has coastline views from the back yard. With over 5400 sq ft on a 31,777 sq ft lot, it enjoys privacy and a luxurious setting of gardens, views, pool, spa and BBQ area. Enjoy stunning coastline & Catalina Island views while dining with friends and family in your backyard, basking in the warm sun in your pool or relaxing in your spa while overlooking city lights in the warm summer evenings & cool winter nights. The home offers a private living room, spacious kitchen, master bedroom & additional upstairs bedroom rooms. The bonus room, library/sitting area, master suite are all upstairs with balcony and views. The master bedroom has 2 walk-in closet and a luxurious master bath with separate shower & spa tub. This home offers the best of both worlds - a serene & peaceful setting of mountains and canyons while still enjoying ocean views!

Property Type(s): Single Family, Residential

Last Updated	5/21/2012	Tract	Custom (CUST)
Year Built	2000	Community	North Tustin
Garage Spaces	3.0	County	Orange
Total Parking	9	Walk Score ®	8

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Tim Smith DRE# 01346878, Coldwell Banker Previews International

(view all details for MLS #U12001905)

	$1,899,900 10072 HIGHCLIFF Dr		0.06 miles 6 bd / 4.75 ba 6,055 Sq. Ft.
	$1,224,900 9942 FOXRUN Rd		0.14 miles 6 bd / 4.25 ba 4,500 Sq. Ft.
	$2,675,000 1292 KINGS CROWN		0.18 miles 5 bd / 6.5 ba 6,700 Sq. Ft.
	$2,050,000 9922 HIGHCLIFF Dr		0.27 miles 5 bd / 4.25 ba 4,852 Sq. Ft.
	$2,099,900 10071 SUNRISE Ln		0.31 miles 7 bd / 6 ba 7,286 Sq. Ft.
	$2,995,000 10042 RANGEVIEW Dr		0.33 miles 5 bd / 5.25 ba 7,000 Sq. Ft.
	$2,490,000 9902 RANGEVIEW Dr		0.42 miles 5 bd / 4 ba 4,835 Sq. Ft.
	$1,275,000 9801 OVERHILL Dr		0.76 miles 6 bd / 4.25 ba 4,083 Sq. Ft.
	$1,550,000 19672 PINE CANYON Rd		0.89 miles 5 bd / 4.5 ba 5,730 Sq. Ft.
	$1,599,900 494 North EQUESTRIAN Dr		1.11 miles 4 bd / 4.5 ba 5,006 Sq. Ft.

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See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."

Tonight’s cashflow presentation is canceled.

I apologize for the late notice and any inconvenience, but tonight’s cashflow presentation is canceled. Right now it is very difficult to find investment properties in Las Vegas as the inventory had really dried up — at least temporarily.

Many loan owners made mortgage payments over the last few years when they would have benefited more from strategic default. Many of those loan owners were motivated by the false hope of a government bailout bringing principal reduction or other goodies. California led these sheeple down the path and garnered much public attention for the tough stance the Attorney General took in favor of loan owners.

Everyone rejoiced. Loan owners could taste the debt relief. Kamala Harris stoked her political ambitions as a pandering lefty. The banks got relief from further lawsuits.

There was only one problem. Governor Jerry Brown and others in the state legislature decided giving money to loan owners wasn’t the best use of taxpayer funds — thankfully. The State is diverting the extortion booty it garnered from the bank settlement to others leaving loan owners with nothing but their denial and false hope. Loan owners got screwed.

~~ giggles to self ~~

Needy States Use Housing Aid Cash to Plug Budgets

By SHAILA DEWAN — Published: May 15, 2012

Needy states? The only thing needy about the State of California is our overblown sense of entitlement. How does the seventh largest economy in the world get classified as needy? I suppose since the entire economy depends on HELOC abusers, we need house prices to go up to fuel consumer spending.

Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps.

This is a huge slap in the face to loan owners. Hopefully, this will wake them up to their sheeple status. Politicians don’t give a crap about loan owners. They never did. They are interested in saving the banks and banker’s bonuses, but the State couldn’t care less about loan owners.

In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts.

Loan owners were mere pawns in the game of politicians and extortion. Now that the State has its money, the pawns are expendable.

The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.

The settlement, reached in February after a year of talks and intervention by the Obama administration, was the second-largest in history involving the states, trailing the tobacco industry settlement, and represented the first large-scale commitment by banks to provide direct aid to borrowers.

And now they are getting shafted.

As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure surge. But critics complained that this was the only cash the banks were required to pay — the rest comes in the form of “credits” for reducing mortgage debt and other activities. Even that relatively small amount has proved too great a temptation for lawmakers.

The drop in the ocean — the root of false hope for loan owners — was so tiny it would never have materially impacted foreclosure rates, but it was a large enough chunk that politicians wanted to steal it.

Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.

In Texas, $125 million went straight to the general fund. Missouri will use its $40 million to soften cuts to higher education. Indiana is spending more than half its allotment to pay energy bills for low-income families, while Virginia will use most of its $67 million to help revenue-starved local governments.

Like California, some other states with outsize problems from the housing bust are spending the money for something other than homeowner relief. Georgia, where home prices are still falling, will use its $99 million to lure companies to the state.

“The governor has decided to use the discretionary money for economic development,” said a spokesman for Nathan Deal, Georgia’s governor, a Republican. “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”

For as dirty and underhanded as this bait and switch is, the policy is the best use of public funds. Loan owners should never have been given this money. The false promises were a ploy to extort the banks and get loan owners to make a few more payments.

Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”

No, the decision not to give loan owners free money shows a great comprehension of the moral hazard of principal forgiveness.

… In California, Attorney General Kamala D. Harris had played hardball in the settlement negotiations, holding out until the very end for a deal guaranteeing that a large share of the benefits would go to California, and then trumpeting her success in a news conference and a flurry of interviews with national news outlets. So Mr. Brown’s revised budget put her in an awkward position.“While the state is undeniably facing a difficult budget gap,” she said in a statement, “these funds should be used to help Californians stay in their homes.” Both officials are Democrats.

When asked if Mr. Brown could legally appropriate the money, which is supposed to be held in a special fund “for the benefit of California homeowners affected by the mortgage/foreclosure crisis,” a spokesman for Ms. Harris declined to comment.

There’s no way she is going to challenge Jerry Brown. She might bluster for a photo-op, but she will do nothing substantive to make up for this severe embarrassment — which is fine. I don’t want her to succeed in bailing out loan owners.

Just last week, Ms. Harris announced plans to give about half the money to groups that provide housing counseling and legal assistance to homeowners — groups whose budgets have shrunk while demand for their services grows. The other half would be used primarily for investigation of mortgage-related crime.

So much for how she wanted to spend the money.

… Using the money for other purposes is shortsighted, housing advocates warn. “If you leave homeowners hanging out there to dry, then in the short term maybe you help to meet the budget gap this year,” said Maeve Elise Brown, the executive director of Housing and Economic Rights Advocates, based in Oakland. “But in the long term the more people we have going through foreclosure, the worse it’s going to be for our economy as a whole.”

These people just don’t get it. Foreclosures are essential for the economic recovery. The main reason our economy is still sputtering six years after house prices topped is because lenders have consistently delayed the cleansing foreclosures that need to occur. If lenders had foreclosed and cleansed the system of bad debt and pushed prices to very low levels, a new crop of buyers with less debt would be in at lower price points. The recovery from an oversold position is stronger, so those who bought at the bottom would quickly acquire move-up equity, and their move-ups would support the rest of the market. This process was aborted, so instead we have a slow loss of equity, falling prices, and no viable move-up market. Contrary to popular belief, foreclosures are good for the economy, and lower prices would stimulate home sales, and free up disposable income for other expenditures.

Borrowers we don’t want to bail out

The left is disingenuous in its pandering to loan owners. Every borrower is portrayed as some hapless victim of deceitful bankers. In reality, they were victims of their own greed, stupidity, and desire for entitlements they could not afford. These borrowers do not deserve bailouts of any kind for any amount.

As you read through the daily HELOC abuse chronology, ask yourself if this behavior is something you want to subsidize with your tax dollars.

• The property was purchased for $690,000 on 7/2/2002. I don’t have their original loan information, but it didn’t take them long to head straight to the ATM machine.
• On 4/28/2003 they opened a $50,979 HELOC.
• On 8/26/2003 they refinanced with a $605,000 first mortgage.
• On 5/24/2004 they refinanced with a $650,000 first mortgage.
• On 7/16/2004 they obtained a $175,000 stand-alone second.
• On 4/19/2005 they refinanced with a $975,000 first mortgage.
• On 6/8/2005 they obtained a $150,000 HELOC.
• On 7/20/2006 they refinanced with a $1,000,000 first mortgage and obtained a $150,000 HELOC.
• On 8/24/2006 they opened a $250,000 HELOC.
• On 3/14/2007 they refinanced with a $1,000,000 first mortgage and received a $282,500 stand-alone second.
• Total property debt was $1,282,500.
• Total mortgage equity withdrawal was at least $592,500.

Do you want to give people like this such large sums of your tax money? What about their sad state of affairs warrants such compassion?

It think Ponzis like this should adjust to living within their means in a rental for a few years — you know, living like the rest of us did. The shock of their loss of entitlement will be crushing.

San Clemente Overview

Median home price is $627,000. Based on a rental parity value of $552,000, this market is over valued.

Monthly payment affordability has been worsening over the last 4 month(s). Momentum suggests worsening affordability.

Resale prices on a $/SF basis declined from $283/SF to $281/SF.

Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months.

Median rental rates increased $66 last month from $2,250 to $2,316.

Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months.

Market rating = 1

Proprietary OC Housing News home purchase analysis

20 CALLE DE LA LUNA San Clemente, CA 92673

$899,900 …….. Asking Price
$690,000 ………. Purchase Price
7/2/2002 ………. Purchase Date

$209,900 ………. Gross Gain (Loss)
($55,200) ………… Commissions and Costs at 8%
============================================
$154,700 ………. Net Gain (Loss)
============================================
30.4% ………. Gross Percent Change
22.4% ………. Net Percent Change
2.7% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$899,900 …….. Asking Price
$179,980 ………… 20% Down Conventional
3.75% …………. Mortgage Interest Rate
30 ……………… Number of Years
$719,920 …….. Mortgage
$188,398 ………. Income Requirement

$3,334 ………… Monthly Mortgage Payment
$780 ………… Property Tax at 1.04%
$350 ………… Mello Roos & Special Taxes
$225 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$178 ………… Homeowners Association Fees
============================================
$4,867 ………. Monthly Cash Outlays

($757) ………. Tax Savings
($1,084) ………. Equity Hidden in Payment
$225 ………….. Lost Income to Down Payment
$132 ………….. Maintenance and Replacement Reserves
============================================
$3,383 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$10,499 ………… Furnishing and Move In at 1% + $1,500
$10,499 ………… Closing Costs at 1% + $1,500
$7,199 ………… Interest Points
$179,980 ………… Down Payment
============================================
$208,177 ………. Total Cash Costs
$51,800 ………. Emergency Cash Reserves
============================================
$259,977 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

20 Calle De La Luna, San Clemente, CA 92673 (MLS # S698145)

Highly upgraded family home with one of the most amazing back yards in all of Talega! This is a must see!! High end light fixtures inside and out. Water feature with fountain, rock pond with waterfall, firepit, built in BBQ area. And, large grass area. Great entertaining home with spacious open floorplan. Main floor bedroom & Bath. Cul De Sac Street.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Cantabria (CATA)
Year Built	2004	Community	Talega
Garage Spaces	3.0	County	Orange
Total Parking	8	Walk Score ®	34

Location

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Jennifer Blake DRE# 00974839, First Team Real Estate

(view all details for MLS #S698145)

	$889,000 115 VIA SABINAS		0.53 miles 4 bd / 3.5 ba 3,100 Sq. Ft.
	$1,199,000 424 CAMINO VISTA VERDE		0.59 miles 5 bd / 4 ba 4,066 Sq. Ft.
	$1,195,000 426 CAMINO BANDERA		0.62 miles 5 bd / 4.5 ba 3,950 Sq. Ft.
	$1,899,000 37 CALLE CAREYES		0.7 miles 5 bd / 5.25 ba 5,000 Sq. Ft.
	$1,099,000 46 VIA TORINA		0.76 miles 4 bd / 4.5 ba 3,862 Sq. Ft.
	$1,059,900 44 CALLE MATTIS		0.86 miles 4 bd / 4.5 ba 3,683 Sq. Ft.
	$750,000 51 VIA ARMILLA		0.86 miles 4 bd / 4 ba 3,200 Sq. Ft.
	$1,099,999 14 CALLE MATTIS		0.93 miles 5 bd / 5.5 ba 3,928 Sq. Ft.
	$1,159,000 38 CORTE EL BRAZO		0.96 miles 5 bd / 4.25 ba 4,100 Sq. Ft.
	$1,585,900 36 CALLE VIVIANA		1.01 miles 5 bd / 5.5 ba 4,719 Sq. Ft.

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See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."

Many borrowers chose not to struggle with onerous house payments early in the housing bust and strategically defaulted. Most of these borrowers recognized their payments were greater than the cost of a comparable rental, and with falling prices, there was no return for this added investment. The wise choice then as now was to strategically default. Many did.

Early strategic defaulters are being rewarded with much lower ownership costs due to lower house prices and lower interest rates. By the time prices recover to the peak when many of their cohorts will just be emerging from the depths, the early defaulters will have lower payments and significant equity. Strategic default was the best possible decision, and today’s buyers are making the most of it.

Foreclosed Americans find way back to homeownership

By Jilian Mincer — NEW YORK | Wed May 16, 2012 3:00pm EDT

(Reuters) – When Jennifer Anderson’s family could no longer afford their mortgage and lost their home, she expected many years to pass before they would again become property owners.

But less than two years later, in March, they purchased a $297,000 house outside Phoenix, Arizona, after qualifying for a loan backed by the U.S. government.

They joined a small but growing number of Americans who are making a surprisingly quick return to homeownership after defaulting on their loans or being forced into short sales that cost their banks money.

“We didn’t really expect it,” said Anderson, 40. “We were resigned to the fact that we were going to be in a rental property for a while.”

From the beginning of the housing bust, I predicted the government would relax its standards on the waiting period following a foreclosure because they were going to need those recycled buyers to mop up their REO. Not long thereafter, Fannie Mae announced they were reducing the waiting period after a foreclosure from five years to two years despite the obvious incentives to strategically default.

… Data is not available, but interviews with more than 30 lenders, builders, Realtors and consumers suggest that a growing number of Americans are getting back into the housing market, even though they went through a foreclosure, bankruptcy or short sale in recent years.

“Most are not ashamed or bashful about what happened because so many people were forced into that reality in the last six years,” says Graham Epperson, vice president of sales in Arizona for the PulteGroup, a leading U.S. homebuilder.

They want to escape rising rents and take advantage of home prices, which are down by about a third from an April 2006 peak.

Rising rents and prices below rental parity are a strong inducement to buy a home.

…Federal Reserve Chairman Ben Bernanke stressed the point last week, saying banks have become so restrictive that many worthy homebuyers are being frozen out of the market, and lending practices are not likely to loosen any time soon.

What exactly is a “worthy homebuyer?” Isn’t a worthy homebuyer someone who will repay the debt as promised? Does it seem logical that banks, institutions that make money from making loans, would be turning away anyone who will repay the debt as promised? Isn’t is far more likely that banks are prudently avoiding making loans to borrowers who won’t repay them? Therefore, isn’t Bernanke’s statement complete bullshit intended to placate his critics? The real truth in his statement is that lending practices are not likely to loosen any time soon.

… Most of these reentering buyers are using FHA-insured loans, which at the end of 2011 accounted for about 30 percent of loans for home purchases, compared with 4.5 percent in 2005.

The resurgence of FHA loans is primarily due to the fact that FHA insured loans only require 3.5% down.

A conventional mortgage typically carries a lower interest rate than does an FHA-backed loan, but it also requires a credit score of at least 720, proof of income and a significant down payment. In contrast, FHA loans historically have been available to help low and moderate-income families buy homes.

FHA borrowers typically need a credit score of at least 620 and a 3.5 percent down payment. The FHA charges an upfront mortgage insurance premium of 1.75 of the loan (which can be rolled into the mortgage) and an annual 1.25 percent premium on the outstanding loan.

A 620 FICO score is hardly an onerous credit hurdle.

BAD MEMORIES

For some economists, alarm bells are ringing.

… “FHA is putting people back into situations that still have high risk of default,” Pinto said.He noted that a lot of these loans are made to consumers with credit scores well below 720 — the median national score for all households– and that about 15 percent of loans made to people with scores of 620 to 659 are likely to fail.

If the lowest segment of approved FICO scores has a historic default rate of 15%, how much lower should we go? The notion that credit standards are too tight is nonsense. Since we are all backing these loans as taxpayers, I want those standards even tighter.

A SECOND CHANCE

There have been about 4.2 million foreclosures in the United States since 2007, according to data firm RealtyTrac. It expects that number to climb to 6 million by early 2014.

A bankruptcy remains on a consumer’s record for seven years, but that consumer can start raising his or her credit score in several months by decreasing debt, not borrowing more and paying bills on time.

The GSEs and the FHA will both insure loans three years out of bankruptcy. I have heard anecdotal accounts from homebuilders that many transactions are timed to close three years and one day from a buyer’s bankruptcy date.

“Most of the loans that are getting done are for people who have really rebuilt their credit,” says Frank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C. “They have to prove (to the lender that) it was something like a job loss that caused this and not chronic delinquency.”

In other words, Ponzis have to lie. With training from lenders in stated-income loan programs, many Ponzis are experienced liars.

Many people did not strategically default early in the bust because they thought it was immoral. That nonsense faded away by 2011.

By 2008 it was obvious to most underwater borrowers that strategic default was the best financial decision, but many held on with false hope of some massive government bailout program designed to help them. Instead, any bailout money was sent to the banks.

Those who strategically defaulted between 2008 and 2010 are re-entering the housing market at a good time. It’s not too late to benefit from strategic default, but as the market turns the corner and prices begin to rise, the benefit of strategic default diminishes. In fact, this is one of the myriad of reasons lenders are so intent on engineering a market bottom. False hope induced many not to strategically default before, and if they can generate the hope of a recovery — even a false hope — that is nearly as valuable as a real recovery because fewer debt slaves will seek freedom.

A $7,000,000 option ARM?

Lenders inflated the high end just like every other segment of the market. It used to be that homes over $1,000,000 were equity transactions. Few borrowers took out loans over $1,000,000 partly because they couldn’t qualify, but partly because there are no tax breaks on such large loans. If you saw a $2,000,000 loan, you assumed the owner had at least $1,000,000 in equity in the property, and in all likelihood, they paid cash. The housing bubble changed all that.

The owners of today’s featured property borrowed $7,000,000 when they purchased it 2004 (price unknown). Later, they refinanced with a $7,000,000 Option ARM from Countrywide. Nobody is making loans like that today. The air that inflated the bubble is no longer being supplied. There aren’t enough cash buyers to support these prices, so lenders dare not foreclose on them. This property is now an REO. The lender is asking enough money for it to get out at break even. Despite the talk about how hot the market is, $8,100,000 mansions are not selling like hotcakes. This listing will likely languish on the MLS forever because with so many competing properties on the market for the wealthy to choose from, the $8,100,000 doesn’t look like a bargain.

Laguna Beach Overview

Median home price is $1,123,000. Based on a rental parity value of $930,000, this market is over valued.

Monthly payment affordability has been improving over the last 3 month(s). Momentum suggests improving affordability.

Resale prices on a $/SF basis increased to $650/SF to $699/SF.

Resale prices have been weak for 1 month(s). Price momentum suggests weak prices over the next three months.

Median rental rates increased $166 last month from $3,733 to $3,900.

Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months.

Market rating = 1

Proprietary OC Housing News home purchase analysis

989 CLIFF Dr Laguna Beach, CA 92651

$8,100,000 …….. Asking Price
$7,006,347 ………. Purchase Price
12/28/2011 ………. Purchase Date

$1,093,653 ………. Gross Gain (Loss)
($560,508) ………… Commissions and Costs at 8%
============================================
$533,145 ………. Net Gain (Loss)
============================================
15.6% ………. Gross Percent Change
7.6% ………. Net Percent Change
35.3% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$8,100,000 …….. Asking Price
$1,620,000 ………… 20% Down Conventional
4.25% …………. Mortgage Interest Rate
30 ……………… Number of Years
$6,480,000 …….. Mortgage
$1,584,105 ………. Income Requirement

$31,878 ………… Monthly Mortgage Payment
$7,020 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$2,025 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$40,923 ………. Monthly Cash Outlays

($2,957) ………. Tax Savings
($8,928) ………. Equity Hidden in Payment
$2,475 ………….. Lost Income to Down Payment
$2,045 ………….. Maintenance and Replacement Reserves
============================================
$33,558 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$82,500 ………… Furnishing and Move In at 1% + $1,500
$82,500 ………… Closing Costs at 1% + $1,500
$64,800 ………… Interest Points
$1,620,000 ………… Down Payment
============================================
$1,849,800 ………. Total Cash Costs
$514,400 ………. Emergency Cash Reserves
============================================
$2,364,200 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

We're sorry, but we couldn't find MLS # P822296 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$2,377,900 818 HILLCREST Dr		0.25 miles 4 bd / 2.5 ba 2,900 Sq. Ft.
	$4,965,000 177 CRESCENT BAY Dr		0.34 miles 4 bd / 5 ba 3,652 Sq. Ft.
	$2,750,000 483 WINDSOR Pl		0.35 miles 3 bd / 2.25 ba 3,300 Sq. Ft.
	$2,350,000 495 WINDSOR Pl		0.36 miles 4 bd / 3 ba 2,800 Sq. Ft.
	$1,800,000 445 BONVUE Ter		0.39 miles 3 bd / 2.5 ba 3,200 Sq. Ft.
	$4,350,000 590 ALLVIEW Ter		0.49 miles 5 bd / 2.75 ba 3,600 Sq. Ft.
	$2,100,000 209 EMERALD BAY		0.54 miles 5 bd / 4 ba 3,543 Sq. Ft.
	$2,495,000 421 HIGH Dr		0.56 miles 3 bd / 3.75 ba 2,915 Sq. Ft.
	$18,500,000 49 EMERALD BAY		0.6 miles 4 bd / 3.25 ba 3,860 Sq. Ft.
	$4,375,000 326 EMERALD BAY		0.66 miles 4 bd / 4 ba 4,000 Sq. Ft.

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Stonegate is an Irvine Company Village located northeast of Woodbury bounded by Sand Canyon Avenue, Portola Parkway, Jeffrey Road, and Irvine Boulevard. Stonegate has easy access to Highway 133 which provides speedy access to I-5 and I-405. The entire Village is far enough from the major freeways to be very quiet, particularly locations distal from the bounding arterial streets. The only problems with traffic or noise comes from the steady stream to garbage trucks driving up Sand Canyon and down Portola heading to the Bee Canyon landfill. The landfill itself is over the mountain nearly two miles from the housing development. Odor or groundwater contaminants should never be a problem.

The Irvine Company developed Woodbury as the premium community in the area. It has the village center and some preserved windrows of mature Eucalyptus trees. By developing this community first, the Irvine Company planned to create momentum to carry through the buildout of the nearby villages that includes Stonegate. Stonegate has no commercial center. The nearby Woodbury community center is located at the corner Sand Canyon and Irvine Boulevard and serves both Villages.

The Village of Stonegate is composed of five communities: Santa Maria, Santa Clara, San Mateo, Maricopa, San Marcos. Similar to Woodbury, Stonegate is arranged with communities surrounding a large central park. There are also smaller parks located in the various communities. Whereas in Woodbury the premium communities are at the periphery, In Stonegate, the premium communities are located near the central park where the traffic is lightest and the Village is quieter.

The weakness of Stonegate, other than the lack of a community center, is the immaturity of the landscaping. Woodbury had the large windrows of mature trees to provide character from day one. Stonegate is a totally featureless and flat pasture. The Irvine Company planted beautiful landscape plants and many trees, and this community will greatly improve over time, but the newness of the community is hard to ignore.

The house designs are very similar (nearly identical) to the floorplans in Laguna Altura. Stonegate has some smaller product than what’s available at Laguna Altura, and these floorplans look very similar to Irvine Company apartments. Personally, I like many of the Irvine Company Apartment floorplans, but I don’t know that I want to own one.

As with Laguna Altura, each of the larger homes has a similar floorplan. In fact, the downstairs of each model in each community is basically a minor variation on the same general layout. The proportions subtly change, and some areas are expanded in one and curtailed in others, but all of them contain the same basic elements with a large great room with a kitchen and family room with a dining room and covered California room at the back of the house. Notably absent are formal living rooms at the front of the house. The larger homes, which are the ones profiled here are the most comfortable and spacious. The smaller and less expensive products are scaled down and somewhat more awkward versions of these floorplans. It is rather unusual for a homebuilder to create one basic floorplan and create several variations. If a potential customer does not like this floorplan, there is no product offered by the Irvine Company which serves as a viable alternative.

All the new home communities in Irvine are prices above resale comps. The premium asked for Stonegate is not as large as Laguna Altura, and the sales are somewhat better in this community. It benefits from the lower prices, proximity to Woodbury Town Center, better access, and an overall quieter atmosphere.

San Marcos Residence One

Proprietary OC Housing News home purchase analysis

$626,500 …….. Asking Price

Cost of Home Ownership
——————————————————————————
$626,500 …….. Asking Price
$125,300 ………… 20% Down Conventional
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$501,200 …….. Mortgage
$133,601 ………. Income Requirement

$2,330 ………… Monthly Mortgage Payment
$543 ………… Property Tax at 1.04%
$312 ………… Mello Roos & Special Taxes
$157 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$110 ………… Homeowners Association Fees
============================================
$3,451 ………. Monthly Cash Outlays

($371) ………. Tax Savings
($751) ………. Equity Hidden in Payment
$159 ………….. Lost Income to Down Payment
$98 ………….. Maintenance and Replacement Reserves
============================================
$2,586 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,765 ………… Furnishing and Move In at 1% + $1,500
$7,765 ………… Closing Costs at 1% + $1,500
$5,012 ………… Interest Points
$125,300 ………… Down Payment
============================================
$145,842 ………. Total Cash Costs
$39,600 ………. Emergency Cash Reserves
============================================
$185,442 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

San Marcos Residence Three

Proprietary OC Housing News home purchase analysis

$696,500 …….. Asking Price

Cost of Home Ownership
——————————————————————————
$696,500 …….. Asking Price
$139,300 ………… 20% Down Conventional
3.75% …………. Mortgage Interest Rate
30 ……………… Number of Years
$557,200 …….. Mortgage
$146,335 ………. Income Requirement

$2,580 ………… Monthly Mortgage Payment
$604 ………… Property Tax at 1.04%
$312 ………… Mello Roos & Special Taxes
$174 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$110 ………… Homeowners Association Fees
============================================
$3,780 ………. Monthly Cash Outlays

($586) ………. Tax Savings
($839) ………. Equity Hidden in Payment
$174 ………….. Lost Income to Down Payment
$107 ………….. Maintenance and Replacement Reserves
============================================
$2,636 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$8,465 ………… Furnishing and Move In at 1% + $1,500
$8,465 ………… Closing Costs at 1% + $1,500
$5,572 ………… Interest Points
$139,300 ………… Down Payment
============================================
$161,802 ………. Total Cash Costs
$40,400 ………. Emergency Cash Reserves
============================================
$202,202 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

San Marcos Residence Three X

Proprietary OC Housing News home purchase analysis

$676,500 …….. Asking Price

Cost of Home Ownership
——————————————————————————
$676,500 …….. Asking Price
$135,300 ………… 20% Down Conventional
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$541,200 …….. Mortgage
$142,959 ………. Income Requirement

$2,516 ………… Monthly Mortgage Payment
$586 ………… Property Tax at 1.04%
$312 ………… Mello Roos & Special Taxes
$169 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$110 ………… Homeowners Association Fees
============================================
$3,693 ………. Monthly Cash Outlays

($573) ………. Tax Savings
($811) ………. Equity Hidden in Payment
$171 ………….. Lost Income to Down Payment
$105 ………….. Maintenance and Replacement Reserves
============================================
$2,585 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$8,265 ………… Furnishing and Move In at 1% + $1,500
$8,265 ………… Closing Costs at 1% + $1,500
$5,412 ………… Interest Points
$135,300 ………… Down Payment
============================================
$157,242 ………. Total Cash Costs
$39,600 ………. Emergency Cash Reserves
============================================
$196,842 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.

1.5% Rebate on new home construction

We are offering buyers a refund of anything over 1.5% back on new construction from our fee that is paid to us by the builder. From the beginning our goal has to been to provide value to our clients by recommending they rent versus buy during the bubble, discouraging investors from purchasing low cap-rate property, warning about short-term bubbles due to tax incentives, warning buyers of condos regarding HOA issues etc. We have found a new need in the market for those considering new construction.

Most buyers are at a disadvantage on new construction and are often not properly represented or educated in these types of purchases. Many buyers do not know that if they want representation they need to bring their representation the first time that they visit new construction. As a result buyers walk in and are given information from the builders reps only, make a decision, and never have access or are educated with information that may lead to a different decision — perhaps a better decision for the family.

In addition, many of the builders give their reps extensive training in high pressure sales techniques that that we find objectionable. Because many buyers do not have proper representation, many buyers do not realize that the new construction property they buy may not look much like the model without spending thousands on upgrades, the costs associated with landscaping, or the effect that Mello-Roos on their cost of ownership.

Furthermore, builders, particularly in Irvine, have done an excellent job of creating a false sense of urgency amongst buyers by not over building, with excellent multifaceted marketing approaches, the use of waiting lists, and other techniques. Ultimately, we have an extensive initial consultation with buyers. We have come to realize that many buyers that are interested in new construction don’t contact us. They walk-in to model homes without realizing they can have representation on their side. Furthermore, for those buyers that we are working with that convinced that new construction is the right choice for them; we’ve found that assisting buyers with new home transactions is less work than re-sales thus enabling use to offer the rebate.

We find that the builders are not highly negotiable because the builders have done a good job of keeping demand even or slightly higher than supply in Irvine for the most part so the fee refund that we can provide along with some upgrade incentives that are often offered are the limit the discount that they can achieve, without us they may get a few upgrades but little beyond that, and no rebates. Beyond our hefty rebate, we feel that there is value in the information that we can provide. We have already prepared new construction fundamental valuation reports for clients that compare new construction to nearby resales on a cost of ownership basis. We help buyers compare what they can buy new versus resales on a cost of ownership basis, provide advice on the loan process by helping buyers compare lender’s rates and fees, assist buyers negotiate for upgrades, and finally explain to buyers that occasionally deals fall out and that their most leverage will happen on standing inventory, which is relatively rare in Irvine. We believe many buyers make a better decisions with representation.

If readers are interested in new construction and they contact us before they have registered with the builder we will accompany them to the registration and refund them anything over 1.5% offered by the builder, pending we have not been working with them extensively to find a resale. We believe that many buyers may choose resale, however, many will buy new, but they will make a more educated choice and by working with us will save money that would otherwise go to the builder.

The OC Housing News profiles properties for sale each day and presents current market data on each city in Orange County. If you really want to know what’s happening in the OC Housing market, you need to read the OC Housing news and subscribe to the our monthly newsletter.

Sign up for the OC Housing News monthly market newsletter.

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4955 AVIEMORE Dr Yorba Linda, CA 92887 — $950,000

4955 Aviemore Dr, Yorba Linda, CA 92887 (MLS # P821677)

(all data current as of 5/25/2012)

Price	$950,000
Beds	4
Baths	2 full, 2 three-quarter, 1 half
Home size	4,435 sq ft
Lot Size	10,355 sq ft
Days on Market	15

Lusk, semi-custom home, with many outstading features and immaculately maintained both inside and out.Priced for quick sale.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Lusk (OTHR)
Year Built	1991	Community	Yorba Linda
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	34

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with James Thomsen DRE# 760356, First Team Real Estate

(view all details for MLS #P821677)

	$1,224,000 5389 PASEO TORTUGA		1.05 miles 5 bd / 4 ba 4,300 Sq. Ft.
	$1,290,000 5445 CALLE VISTA LINDA		1.31 miles 6 bd / 5 ba 5,000 Sq. Ft.
	$2,295,000 4061 PEPPER Ave		1.51 miles 6 bd / 5.75 ba 6,200 Sq. Ft.
	$1,299,000 3650 SAN ANTONIO Rd		1.53 miles 4 bd / 3.75 ba 3,700 Sq. Ft.
	$1,099,000 20391 VIA VARADERO		1.71 miles 4 bd / 3.5 ba 4,096 Sq. Ft.
	$830,000 20481 Via Trovador		1.78 miles 4 bd / 3 ba 3,800 Sq. Ft.
	$2,199,000 7707 East AUTRY Dr		1.83 miles 5 bd / 4.75 ba 6,000 Sq. Ft.
	$1,099,999 152 South EUCALYPTUS Dr		1.91 miles 4 bd / 6.75 ba 4,192 Sq. Ft.
	$949,000 20430 VIA BURGOS		1.92 miles 4 bd / 2.75 ba 3,850 Sq. Ft.

2559 SKYLINE Dr Brea, CA 92821 — $350,000

2559 Skyline Dr, Brea, CA 92821 (MLS # P821655)

(all data current as of 5/25/2012)

Price	$350,000
Beds	3
Baths	2 full
Home size	1,682 sq ft
Lot Size	2,397 sq ft
Days on Market	16

Welcome to this spacious highly sought after single story townhome in the lovely community of Sommerset...This home offers an open and spacious floorplan with three bedrooms and two bathrooms. Neutral tones throughout and the brick firelplace offer a comforting and inviting atmosphere. The amazing view can be seen through the kitchen, living room and can also be enjoyed from your private balcony. The master bedroom provides and a separate patio retreat. Plenty of parking in your three car garage and even room for the toys or RV in the on-site RV parking. Close to Brea's award winning schools, shopping and easy freeway access. Don't miss this opportunity!

Property Type(s): Single Family, Residential

Last Updated	5/22/2012	Tract	Sommerset (SOMH)
Year Built	1981	Community	Brea
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	43

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Alex Horowitz DRE# 00983521, Coldwell Banker Excellence

(view all details for MLS #P821655)

	$470,000 2015 ARBOR Cir		0.55 miles 3 bd / 2.5 ba 1,932 Sq. Ft.
	$550,000 325 LONGBRANCH Cir		0.6 miles 3 bd / 2.5 ba 1,934 Sq. Ft.
	$520,000 169 WATERFALL Ln		0.65 miles 5 bd / 3 ba 1,913 Sq. Ft.
	$479,900 455 DOVER Cir		0.97 miles 3 bd / 1.75 ba 1,412 Sq. Ft.
	$419,000 3629 MOCKINGBIRD Ln		1.06 miles 2 bd / 2 ba 1,333 Sq. Ft.
	$524,900 563 CRAFTSMAN Cir		1.1 miles 4 bd / 3 ba 1,890 Sq. Ft.
	$419,900 438 CONDOR Ave		1.12 miles 3 bd / 2 ba 1,333 Sq. Ft.
	$410,000 3115 RAVENWOOD Ct		1.33 miles 4 bd / 2 ba 1,407 Sq. Ft.
	$199,000 2851 ROLLING HILLS Dr #101		1.54 miles 2 bd / 2 ba 1,440 Sq. Ft.
	$360,000 726 CACTUS Ct		1.57 miles 3 bd / 2 ba 1,460 Sq. Ft.

31715 VIA PATO Coto de Caza, CA 92679 — $599,000

31715 Via Pato, Coto De Caza, CA 92679 (MLS # S698185)

(all data current as of 5/25/2012)

Price	$599,000
Beds	5
Baths	2 full, 1 half
Home size	2,918 sq ft
Lot Size	6,174 sq ft
Days on Market	10

Beautifully remodeled Custom Village Home for Lease. Upgraded with Modern Amenities, a 5 Bedroom Home, nearly 3,000 sq. ft., with Nature Views of Coto Valley and the Saddleback Mountains. This custom home is designed with Old World Charm and is a desirable Entertainment home with a Private Exterior courtyard and Fireplace. From the Living Room, there is a Balcony and Deck with Wonderful Views of the Village Countryside. It is located on a quiet Family Street and is close to the North Coto Gate with easy access to shopping, entertainment, restaurants and Toll Road. You must see this Beautiful Home nestled in a Natural Setting! Best Value in the Village!

Property Type(s): Single Family, Residential

Last Updated	5/16/2012	Tract	Village (TV)
Year Built	1977	Community	Coto De Caza
Garage Spaces	2.0	County	Orange
Total Parking	8	Walk Score ®	12

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Pattie Kelleher DRE# 01869593, Realty One Group Inc

(view all details for MLS #S698185)

	$859,000 31672 VIA PATITO		0.1 miles 2 bd / 3 ba 3,213 Sq. Ft.
	$749,900 23492 VIA ALONDRA		0.13 miles 5 bd / 4 ba 3,337 Sq. Ft.
	$789,000 23491 VIA ALONDRA		0.16 miles 3 bd / 2.5 ba 2,669 Sq. Ft.
	$699,000 14 MALAQUITA		0.54 miles 4 bd / 3 ba 2,396 Sq. Ft.
	$700,000 8 THORN OAK		0.55 miles 5 bd / 3.25 ba 3,250 Sq. Ft.
	$719,900 -		0.62 miles 4 bd / 3 ba 3,094 Sq. Ft.
	$1,199,000 9 HEATHERWOOD		0.77 miles 4 bd / 3.25 ba 2,961 Sq. Ft.
	$699,000 2 COLUMBINE		0.97 miles 3 bd / 2.5 ba 2,310 Sq. Ft.
	$849,900 14 PROMONTORY		1.21 miles 4 bd / 3.25 ba 3,000 Sq. Ft.
	$749,000 39 HIGHPOINT		1.43 miles 4 bd / 3.5 ba 3,069 Sq. Ft.

59 CALLE GAZAPO Rancho Santa Margarita, CA 92688 — $695,000

59 Calle Gazapo, Rancho Santa Margarita, CA 92688 (MLS # S697767)

(all data current as of 5/25/2012)

Price	$695,000
Beds	4
Baths	2 full, 1 half
Home size	3,500 sq ft
Lot Size	8,110 sq ft
Days on Market	16

Absolutely beautiful Solana Vista 2-story Entertainer's Delight. Completely remodeled inside and out with new flooring, paint, stainless steel appliances, custom travertine shower and bath, landscaping and hardscaping. 3 large additional bedrooms and incredible master with retreat and automatic lighting fireplace. Huge walk in closet. Large backyard with built in BBQ, adobe fireplace and beautiful patio covering. Truly a must see.

Property Type(s): Single Family, Residential

Last Updated	5/16/2012	Tract	Solana Vista (SOLV)
Year Built	1998	Community	Rancho Santa Margarita North
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	25

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Glenn Farmer DRE# 01186688, International Group Iv

(view all details for MLS #S697767)

	$719,900 9 EL CORZO		0.24 miles 5 bd / 2.5 ba 3,007 Sq. Ft.
	$635,000 12 LAS BALAS		0.26 miles 4 bd / 2.5 ba 2,800 Sq. Ft.
	$669,000 8 VIA BELMONTE		1.05 miles 5 bd / 3 ba 3,033 Sq. Ft.
	$885,000 22301 BUTTERFIELD		1.2 miles 5 bd / 4.25 ba 3,520 Sq. Ft.
	$621,900 3 SANTA SOPHIA		1.27 miles 4 bd / 4 ba 3,225 Sq. Ft.
	$950,000 22581 SUMMERFIELD		1.3 miles 6 bd / 3.75 ba 3,702 Sq. Ft.
	$748,000 22291 WAYSIDE		1.35 miles 4 bd / 3 ba 3,443 Sq. Ft.
	$777,000 34 ARADO		1.39 miles 4 bd / 3 ba 2,825 Sq. Ft.
	$2,100,000 22571 TINDAYA		1.6 miles 4 bd / 4.5 ba 4,500 Sq. Ft.
	$749,000 28 CHARCA		1.75 miles 4 bd / 2.5 ba 2,980 Sq. Ft.

509 South VICKI Ln Anaheim, CA 92804 — $510,000

509 S Vicki Ln, Anaheim, CA 92804 (MLS # P821957)

(all data current as of 5/25/2012)

Price	$510,000
Beds	5
Baths	2 full, 1 half
Home size	2,606 sq ft
Lot Size	6,026 sq ft
Days on Market	12

Spacious 5-Bedroom, 2.5-Bathroom home features. Large master bedroom with bath and large closet. Large living room with dining room is off of the living room. Large family room with wet bar. Inside laundry. Direct access garage. Central Air Conditioning & Forced Air Heating. Back yard features a Spa with cover. And a covered patio, great for entertaining.

Property Type(s): Single Family, Residential

Last Updated	5/23/2012	Tract	Other (OTHR)
Year Built	1970	Community	Anaheim West Of Harbor
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	60

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Robert Gaskins DRE# 01707063, Tarbell Realtors

(view all details for MLS #P821957)

	$495,000 613 South VICKI Ln		0.07 miles 5 bd / 2 ba 2,167 Sq. Ft.
	$345,000 721 South MAGNOLIA Ave		0.52 miles 4 bd / 2.75 ba 2,100 Sq. Ft.
	$475,000 2553 West HALFMOON Dr		0.65 miles 4 bd / 2.5 ba 2,035 Sq. Ft.
	$419,900 2559 West EOLA Dr		0.66 miles 4 bd / 2.5 ba 2,079 Sq. Ft.
	$509,900 714 South HALLIDAY St		0.72 miles 4 bd / 2.25 ba 2,619 Sq. Ft.
	$415,000 3072 West TERANIMAR Dr		0.82 miles 4 bd / 1.75 ba 2,033 Sq. Ft.
	$405,900 2700 MADISON Cir		0.86 miles 3 bd / 2.5 ba 2,000 Sq. Ft.
	$445,000 8537 LOCUST Dr		1.02 miles 3 bd / 3 ba 2,332 Sq. Ft.
	$499,900 2474 West CHANTICLEER Rd		1.14 miles 5 bd / 3.75 ba 2,047 Sq. Ft.
	$549,900 531 South GREENWICH St		1.22 miles 4 bd / 3 ba 2,567 Sq. Ft.

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For more news, market analysis and property profiles, please see the OC Beach Housing News.

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24351 North FALCON St Lake Forest, CA 92630 — $450,000

24351 N Falcon St, Lake Forest, CA 92630 (MLS # P822249)

(all data current as of 5/25/2012)

Price	$500,000
Beds	4
Baths	3 full
Home size	2,444 sq ft
Lot Size	6,604 sq ft
Days on Market	10

Quiet neighborhood in Lake Forest Community. Very good schools systems, community parks nearby, nicely landscaped. Geographically convenient to freeways, shopping malls, etc. Great home for a new family. Granite countertops, hardwood flooring, tile floors, new roof (2004).

Property Type(s): Single Family, Residential

Last Updated	5/19/2012	Tract	Other (OTHR)
Year Built	1978	Community	Lake Forest North
Garage Spaces	2.0	County	Orange
Total Parking	6	Walk Score ®	49

Price History

Prior to May 19, '12	$450,000
May 19, '12 - Today	$500,000

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Kevin Fogarty DRE# 01844799, Platinum Financial Services

(view all details for MLS #P822249)

	$595,000 22181 East CRANE St		0.03 miles 4 bd / 3 ba 2,444 Sq. Ft.
	$525,000 22146 CRANE St		0.1 miles 4 bd / 3 ba 2,444 Sq. Ft.
	$875,000 24261 JERONIMO Ln		0.27 miles 4 bd / 2.5 ba 2,700 Sq. Ft.
	$585,000 24821 WINTERWOOD Dr		0.56 miles 4 bd / 2 ba 2,243 Sq. Ft.
	$670,000 24892 ROLLINGWOOD Rd		0.62 miles 5 bd / 2.75 ba 2,957 Sq. Ft.
	$699,900 22266 BRITTLEWOOD Cir		0.78 miles 5 bd / 2.5 ba 2,836 Sq. Ft.
	$465,000 22885 COSTA BELLA		0.81 miles 4 bd / 2.25 ba 2,248 Sq. Ft.
	$610,000 24772 VIA PRINCESA		0.83 miles 4 bd / 2.25 ba 2,474 Sq. Ft.
	$584,900 21581 CALLE OTONO		0.87 miles 4 bd / 2 ba 2,146 Sq. Ft.
	$450,000 22906 WILLARD Ave		1.03 miles 4 bd / 3.5 ba 2,100 Sq. Ft.

3322 South CRAWFORD Gln Santa Ana, CA 92704 — $750,000

3322 S Crawford Gln, Santa Ana, CA 92704 (MLS # S698061)

(all data current as of 5/25/2012)

Price	$750,000
Beds	5
Baths	3 full, 1 three-quarter, 1 half
Home size	4,157 sq ft
Lot Size	6,635 sq ft
Days on Market	16

Best Opportunity for this Armstrong Ranch Home. Guarded Gate. Very Nice Community Pool with very nice neighborhood.LOcation is close to SouthCoast Plaza and restaurants. Easy Free Access to 73 or 405.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Renaissance (ARRE)
Year Built	2004	Community	Santa Ana South Of First
Garage Spaces	2.0	County	Orange
Total Parking	6	Walk Score ®	52

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Hien Nguyen DRE# 01499264, VN Mortgage & Realty Co.

(view all details for MLS #S698061)

	$881,000 3443 South CRAWFORD Gln		0.1 miles 5 bd / 4.25 ba 3,900 Sq. Ft.
	$950,000 1900 West MEADOWBROOK Dr		0.12 miles 4 bd / 4.5 ba 3,850 Sq. Ft.
	$895,600 3318 South SHEFFIELD Rd		0.16 miles 5 bd / 5.5 ba 3,895 Sq. Ft.
	$750,000 1846 West DEEREFIELD Rd		0.2 miles 4 bd / 4 ba 3,733 Sq. Ft.

23541 AVENIDA LA CAZA #121 Trabuco Canyon, CA 92679 — $350,000

23541 Avenida La Caza 121, Trabuco Canyon, CA 92679 (MLS # S698002)

(all data current as of 5/25/2012)

Price	$350,000
Beds	3
Baths	3 full
Home size	2,000 sq ft
Lot Size	n/a
Days on Market	20

RARE END UNIT TOWNHOME. Beautiful country setting with a view of grass and wooded area- just steps away from community pool and spa. Includes 3 bedrooms, 3 bathrooms, balcony off master bedroom, patio/deck off living room and wraps around to downstairs bedroom, vaulted ceiling, loft/gameroom, fireplace, attached 2-car garage with 2 assigned parking spaces and inside laundry area.

Property Type(s): Single Family, Residential

Last Updated	5/22/2012	Tract	Other (OTHR)
Year Built	1975	Community	Trabuco Canyon
Garage Spaces	2.0	County	Orange
Total Parking	6	Walk Score ®	11

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Melinda Lange DRE# 01890912, Regency Real Estate Brokers

(view all details for MLS #S698002)

	$595,000 23392 VIA ALONDRA		0.14 miles 3 bd / 3 ba 2,000 Sq. Ft.
	$499,900 40 VIA ANDORRA		0.44 miles 3 bd / 2 ba 1,606 Sq. Ft.
	$699,000 14 MALAQUITA		0.51 miles 4 bd / 3 ba 2,396 Sq. Ft.
	$699,000 2 COLUMBINE		0.97 miles 3 bd / 2.5 ba 2,310 Sq. Ft.
	$485,000 28 SANTA ISABEL		1.33 miles 3 bd / 2 ba 1,548 Sq. Ft.
	$599,000 26 SANTA CATRINA		1.38 miles 3 bd / 2.5 ba 1,900 Sq. Ft.
	$610,000 43 FOXTAIL Ln		1.47 miles 4 bd / 2.5 ba 2,077 Sq. Ft.
	$409,900 12 CALLE BIELDO		1.53 miles 4 bd / 2.5 ba 1,630 Sq. Ft.
	$649,000 25 MUIRFIELD		1.54 miles 3 bd / 2.75 ba 2,274 Sq. Ft.
	$495,000 48 EL CORAZON		1.54 miles 4 bd / 2.25 ba 1,655 Sq. Ft.

7385 East CALLE GRANADA Anaheim Hills, CA 92808 — $480,000

7385 E Calle Granada, Anaheim Hills, CA 92808 (MLS # P821552)

(all data current as of 5/25/2012)

Price	$480,000
Beds	4
Baths	3 full, 1 half
Home size	3,043 sq ft
Lot Size	7,210 sq ft
Days on Market	16

Look at the size of this home, over 3,000 sqft of living space, 4 bedrooms, 3.5 baths, beautifully remodeled, brand new carpet and paint.Extremly spacious master bedroom with walk-in closet and master bath.Granite kitchen, nice cabinets, family room with fireplace and formail livingroom and family room.

Property Type(s): Single Family, Residential

Last Updated	5/25/2012	Tract	Other (OTHR)
Year Built	1976	Community	Anaheim Hills
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	74

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Paula Aragone DRE# 01364746, Prudential California Realty

(view all details for MLS #P821552)

	$750,000 6164 East PASEO RIO VERDE		0.51 miles 4 bd / 3 ba 2,878 Sq. Ft.
	$1,000,000 250 South MOHLER Dr		0.61 miles 4 bd / 3.5 ba 3,481 Sq. Ft.
	$864,900 20500 CHANNING Ln		0.67 miles 5 bd / 3 ba 2,710 Sq. Ft.
	$799,000 310 South MOHLER Dr		0.74 miles 4 bd / 3.25 ba 3,056 Sq. Ft.
	$799,000 -		0.75 miles 5 bd / 2.25 ba 3,100 Sq. Ft.
	$829,000 20510 VIA TENORIO		0.87 miles 4 bd / 3 ba 2,950 Sq. Ft.
	$580,000 5875 East CAMINO MANZANO		0.89 miles 3 bd / 3.5 ba 2,646 Sq. Ft.
	$1,300,000 471 South CANYON RIDGE Dr		0.91 miles 5 bd / 4 ba 3,000 Sq. Ft.
	$899,900 380 South MOHLER Dr		0.98 miles 5 bd / 3.25 ba 3,142 Sq. Ft.
	$669,000 6101 GLOXINIA Dr		1 miles 3 bd / 2.5 ba 2,688 Sq. Ft.

36 CAPOBELLA Irvine, CA 92614 — $729,900

We're sorry, but we couldn't find MLS # U12001901 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$850,000 8 TERRAZA		0.16 miles 4 bd / 2.5 ba 2,372 Sq. Ft.
	$899,000 16 ALMERIA		0.35 miles 4 bd / 2.75 ba 2,202 Sq. Ft.
	$768,000 32 SORRENTO		0.41 miles 4 bd / 2.75 ba 2,138 Sq. Ft.
	$769,000 22 APRILLA		0.52 miles 4 bd / 2.5 ba 2,068 Sq. Ft.
	$839,000 12 MONTELEGRO		0.62 miles 4 bd / 2.5 ba 2,350 Sq. Ft.
	$864,800 10 ANDALUCIA		0.66 miles 4 bd / 2.5 ba 2,450 Sq. Ft.
	$659,500 17501 TEACHERS Ave		0.74 miles 5 bd / 2.25 ba 2,067 Sq. Ft.
	$849,900 24 WATER LILY		1.03 miles 4 bd / 3 ba 2,803 Sq. Ft.
	$928,000 15 DAYBREAK		1.1 miles 4 bd / 3 ba 2,366 Sq. Ft.

24 WATER LILY Irvine, CA 92606 — $849,900

24 water Lily, Irvine, CA 92606 (MLS # S698186)

(all data current as of 5/25/2012)

Price	$849,900
Beds	4
Baths	2 full, 1 half
Home size	2,803 sq ft
Lot Size	4,195 sq ft
Days on Market	10

WOW!!! Beautiful executive home with over $100K in custom designer upgrades inside and out in prestigious Columbus Grove community. Some of the features are, downstairs marble floor with inlays, mosaic medallion at entry, framed shutters throughout the house, security alarm, custom closet organizers, surround sound sysetm in living room, master bedroom and bath, granite countertops with full back splash, expanded granite kitchen island, upgraded kitchen cabinets, stainless steel appliances and kitchen sink. Expoy floor, custom cabinets and over head storage racks in the garage. The list can go on for ever. A pleasant home to live.

Property Type(s): Single Family, Residential

Last Updated	5/23/2012	Tract	Lantana (LANT)
Year Built	2006	Community	Columbus Grove
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	57

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Karim Salimi DRE# 01078796, Re/Max Premier Realty

(view all details for MLS #S698186)

	$1,050,000 16603 SONORA St		0.47 miles 4 bd / 3.5 ba 2,975 Sq. Ft.
	$999,800 71 FESTIVO		0.49 miles 5 bd / 3 ba 2,616 Sq. Ft.
	$975,000 16608 HONEYBEE Dr		0.5 miles 4 bd / 3.5 ba 3,004 Sq. Ft.
	$925,000 16602 Bayberry Rd		0.51 miles 5 bd / 4 ba 2,872 Sq. Ft.
	$869,000 1334 SUN DIAL Dr		0.81 miles 4 bd / 3.5 ba 2,945 Sq. Ft.
	$960,000 7 PIENZA		0.88 miles 5 bd / 2.75 ba 2,750 Sq. Ft.
	$839,000 12 MONTELEGRO		0.9 miles 4 bd / 2.5 ba 2,350 Sq. Ft.
	$864,800 10 ANDALUCIA		1.01 miles 4 bd / 2.5 ba 2,450 Sq. Ft.
	$729,900 36 CAPOBELLA		1.03 miles 4 bd / 2.5 ba 2,394 Sq. Ft.
	$850,000 8 TERRAZA		1.04 miles 4 bd / 2.5 ba 2,372 Sq. Ft.

35 PEONY Irvine, CA 92618 — $510,000

35 Peony, Irvine, CA 92618 (MLS # S697624)

(all data current as of 5/25/2012)

Price	$500,000
Beds	2
Baths	3 full, 1 half
Home size	1,685 sq ft
Lot Size	n/a
Days on Market	15

Winner of the California Floorplan of the year award! Opportunity to own a spectacular new residence! Courtyard entry with patio, vaulted beamed ceilings, security alarm, surround sound, two very spacious Master bedroom suites with large walk-in closet and Master bath with dual vanities. This is the perfect home for entertaining. There is a huge great room that separates both bedroom areas for enhanced privacy. The gourmet kitchen with granite counter tops and stainless steel appliances is open to the living/dining room and expansive deck. Amenities include clubhouse, pools, tennis and basketball courts, and playgrounds.

Property Type(s): Condominium, Residential

Last Updated	5/25/2012	Tract	Monterey (WEMT)
Year Built	2010	Community	Woodbury East
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	20

Price History

Prior to May 21, '12	$510,000
May 21, '12 - Today	$500,000

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Sherri McEuen DRE# 00926905, Teles Properties

(view all details for MLS #S697624)

	$479,000 54 PEONY		0.03 miles 2 bd / 2.5 ba 1,685 Sq. Ft.
	$449,000 62 HEDGE BLOOM		0.08 miles 3 bd / 2.5 ba 1,394 Sq. Ft.
	$739,000 88 TWIN GABLES		0.58 miles 3 bd / 2.75 ba 1,964 Sq. Ft.
	$699,000 55 PLANTATION		0.58 miles 3 bd / 2.75 ba 1,964 Sq. Ft.
	$475,000 65 MISSION BELL		0.67 miles 2 bd / 2 ba 1,530 Sq. Ft.
	$624,880 114 ALHAMBRA		0.71 miles 3 bd / 2.5 ba 1,640 Sq. Ft.
	$400,000 68 CITY STROLL		0.73 miles 2 bd / 2 ba 1,298 Sq. Ft.
	$513,490 17 CITY STROLL		0.73 miles 2 bd / 2.5 ba 1,858 Sq. Ft.
	$400,000 136 CHANTILLY		0.98 miles 2 bd / 2.5 ba 1,355 Sq. Ft.
	$724,248 49 CIPRESSO #108		1.05 miles 4 bd / 2.5 ba 1,990 Sq. Ft.

1001 ELMHURST Irvine, CA 92618 — $410,000

We're sorry, but we couldn't find MLS # P821550 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$530,000 2 PEARLEAF		0.07 miles 3 bd / 3 ba 1,750 Sq. Ft.
	$347,827 3310 ASPEN GROVE Rd		0.14 miles 2 bd / 2.5 ba 1,200 Sq. Ft.
	$545,000 86 DANBURY Ln		0.3 miles 2 bd / 2.5 ba 1,170 Sq. Ft.
	$315,000 346 LEMON Grv		0.41 miles 2 bd / 2.5 ba 1,154 Sq. Ft.
	$545,000 72 ALEVERA St		0.51 miles 4 bd / 2.5 ba 1,500 Sq. Ft.
	$550,000 388 East YALE Loop #1		0.62 miles 2 bd / 2 ba 1,323 Sq. Ft.
	$314,950 100 EAGLE Pt #52		0.75 miles 3 bd / 1.75 ba 1,088 Sq. Ft.
	$449,000 517 SPRINGBROOK N #81		0.78 miles 3 bd / 2.5 ba 1,408 Sq. Ft.
	$284,900 87 FALLINGSTAR		0.85 miles 2 bd / 2 ba 1,006 Sq. Ft.
	$269,900 33 EASTMONT #19		0.94 miles 2 bd / 1.5 ba 1,124 Sq. Ft.

74 ROYAL VICTORIA Irvine, CA 92606 — $505,000

74 Royal Victoria, Irvine, CA 92606 (MLS # E12059297)

(all data current as of 5/25/2012)

Price	$505,000
Beds	3
Baths	2 full, 1 half
Home size	1,700 sq ft
Lot Size	n/a
Days on Market	25

very nice Condo

Property Type(s): Condominium, Residential

Last Updated	5/23/2012	Tract	Traditions (trad) (Traditions (TRAD))
Year Built	2008	Community	Walnut
Garage Spaces	2.0	County	Orange
Total Parking	2	Walk Score ®	45

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with PETER LE, PETER LE & ASSOCIATES

(view all details for MLS #E12059297)

	$350,000 133 LIBERTY St		0.14 miles 3 bd / 3 ba 1,379 Sq. Ft.
	$629,000 52 TRADE WIND		0.27 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$409,000 4 BUTTERFIELD #2		0.82 miles 3 bd / 2 ba 1,250 Sq. Ft.
	$379,900 1498 VALENCIA Ave		1.24 miles 2 bd / 2.5 ba 1,302 Sq. Ft.
	$395,000 1482 VALENCIA Ave		1.26 miles 2 bd / 2.5 ba 1,308 Sq. Ft.
	$329,000 15205 CAMDEN Way		1.31 miles 2 bd / 2.5 ba 1,465 Sq. Ft.
	$564,500 14 NIGHT BLOOM		1.34 miles 3 bd / 2.5 ba 1,545 Sq. Ft.
	$429,900 1806 LADRILLO AISLE #103		1.35 miles 3 bd / 2 ba 1,344 Sq. Ft.
	$425,000 15233 COLUMBUS Sq		1.37 miles 3 bd / 3 ba 1,900 Sq. Ft.
	$420,000 1223 ABELIA		1.39 miles 3 bd / 3.5 ba 1,670 Sq. Ft.

43 CHOATE Irvine, CA 92620 — $819,900

43 Choate, Irvine, CA 92620 (MLS # S697934)

(all data current as of 5/25/2012)

Price	$819,900
Beds	4
Baths	2 full, 1 half
Home size	2,870 sq ft
Lot Size	4,250 sq ft
Days on Market	12

Welcome Home! This large, upgraded Northwood cul-de-sac home features: a gourmet kitchen with granite countertops and stainless steel appliances, dual pane windows, newer A/C & furnace, formal dining room, living room with cathedral ceilings, large master bedroom with retreat, spa in the backyard with newer equipment, and much more. You're a walk away from three parks, and a short drive to shopping, food, and both the freeway and toll road.

Property Type(s): Single Family, Residential

Last Updated	5/14/2012	Tract	Northwood Place (PL)
Year Built	1978	Community	Northwood
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	49

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Michael Doyle DRE# 01758185, Century 21 Masters

(view all details for MLS #S697934)

	$789,000 77 GRANT		0.16 miles 4 bd / 3.5 ba 2,536 Sq. Ft.
	$879,900 9 HARRISBURG		0.22 miles 4 bd / 3 ba 2,450 Sq. Ft.
	$829,900 25 PLYMOUTH		0.23 miles 4 bd / 2.5 ba 2,828 Sq. Ft.
	$825,000 15 HARRISBURG		0.23 miles 4 bd / 2.75 ba 2,427 Sq. Ft.
	$828,000 44 MONTICELLO		0.26 miles 3 bd / 2.5 ba 2,405 Sq. Ft.
	$879,000 22 TORREY Pne		0.32 miles 4 bd / 2.75 ba 2,350 Sq. Ft.
	$891,999 42 LYNDHURST #82		0.42 miles 4 bd / 3 ba 2,577 Sq. Ft.
	$988,800 52 SECRET Gdn		0.54 miles 5 bd / 4 ba 3,100 Sq. Ft.
	$695,000 38 POTOMAC		0.55 miles 3 bd / 3 ba 2,400 Sq. Ft.
	$865,000 7 WINDSOR		0.61 miles 4 bd / 2.5 ba 2,411 Sq. Ft.

9 ERICSON AISLE Irvine, CA 92620 — $469,900

9 Ericson Aisle, Irvine, CA 92620 (MLS # S698090)

(all data current as of 5/25/2012)

Price	$475,000
Beds	3
Baths	2 full
Home size	1,679 sq ft
Lot Size	n/a
Days on Market	11

Beautiful remodeled condo is very open and spacious. Kitchen features newer white cabinets and remodeled countertops. Bathrooms have newer vanities and new countertops. New carpet and paint throughout. Two balconies, one large one outside the kitchen with gas BBQ hookups and one off the huge master bedroom. Inside laundry room goes to attached one-car garage. Second one-car garage is nearby. Low, low HOA's and NO Mello Roos taxes!

Property Type(s): Condominium, Residential

Last Updated	5/24/2012	Tract	Northwood Villas (NV)
Year Built	1989	Community	Northwood
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	62

Price History

Prior to May 18, '12	$469,900
May 18, '12 - Today	$475,000

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Hanneke Jacobs DRE# 01319135, Harcourts Prime Properties

(view all details for MLS #S698090)

	$488,000 3 ERICSON AISLE		0 miles 3 bd / 3 ba 1,768 Sq. Ft.
	$499,000 7 MONTGOMERY #43		0.35 miles 3 bd / 2 ba 1,639 Sq. Ft.
	$429,000 6 SANTA FE		0.48 miles 3 bd / 2.25 ba 1,639 Sq. Ft.
	$469,900 294 MONROE #107		0.51 miles 3 bd / 2.5 ba 1,360 Sq. Ft.
	$624,880 114 ALHAMBRA		0.85 miles 3 bd / 2.5 ba 1,640 Sq. Ft.
	$631,949 30 SOMERTON #44		0.98 miles 3 bd / 2.5 ba 1,824 Sq. Ft.
	$535,000 62 TOWNSEND		1.07 miles 3 bd / 2.5 ba 1,824 Sq. Ft.
	$198,000 5200 IRVINE Blvd #79		1.11 miles 2 bd / 1.75 ba 1,700 Sq. Ft.
	$280,000 5200 IRVINE Blvd #181		1.11 miles 2 bd / 1.75 ba 1,766 Sq. Ft.
	$189,000 5200 IRVINE Blvd #208		1.11 miles 2 bd / 1.75 ba 1,728 Sq. Ft.

1006 TERRA BELLA Irvine, CA 92602 — $329,000

1006 Terra Bella, Irvine, CA 92602 (MLS # S698244)

(all data current as of 5/25/2012)

Price	$329,000
Beds	2
Baths	2 full, 1 half
Home size	1,208 sq ft
Lot Size	n/a
Days on Market	10

Sharp 2 bedroom 2.5 bath 2 story condo in prestigious Bella Terra development in NorthPark. Wood laminate flooring, fresh interior paint, bright open kitchen. Fridge, washer and dryer to stay with no warranty. 2 car tandem garage plus ample guest parking.

Property Type(s): Condominium, Residential

Last Updated	5/16/2012	Tract	Terra Bella (TERB)
Year Built	2000	Community	Northpark
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	48

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Roni Raczkowski DRE# 01119609, Teles Properties

(view all details for MLS #S698244)

	$372,000 404 TERRA BELLA		0.06 miles 2 bd / 2.5 ba 1,343 Sq. Ft.
	$399,500 77 SAPPHIRE #49		0.16 miles 3 bd / 2.25 ba 1,500 Sq. Ft.
	$469,800 56 SAPPHIRE		0.22 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$439,000 80 TOPAZ		0.22 miles 3 bd / 2.5 ba 1,497 Sq. Ft.
	$374,900 149 TOPAZ #13		0.24 miles 2 bd / 2.5 ba 1,459 Sq. Ft.
	$529,000 74 GLEN ARBOR #116		0.27 miles 3 bd / 2.5 ba 1,435 Sq. Ft.
	$629,000 2981 W BRADLEY Pl		0.63 miles 3 bd / 2.25 ba 1,500 Sq. Ft.
	$670,000 2951 WEST BRADLEY Pl		0.63 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$398,900 191 LOCKFORD		0.72 miles 2 bd / 2 ba 1,449 Sq. Ft.
	$435,000 15 CABAZON #21		0.8 miles 2 bd / 2 ba 1,400 Sq. Ft.

262 LOCKFORD Irvine, CA 92602 — $449,900

262 Lockford, Irvine, CA 92602 (MLS # S12061236)

(all data current as of 5/25/2012)

Price	$449,900
Beds	3
Baths	2 full
Home size	1,752 sq ft
Lot Size	n/a
Days on Market	11

Resort like living in this highly upgraded townhouse! 3 bedrooms and 2 baths, 1,752 SF in an excellent location of this gated community. Open floor plan with all living space on one level. Great room includes media center with surround sound and fireplace. Kitchen has granite counters, maple cabinets and walkin pantry. Beautiful master suite includes walkin closets, master bath has seperate shower and deep soaking tub. Large balcony. Gated community has many resort like amenities pool, spa, barbecue, parks, sport courts and beautiful grounds.

Property Type(s): Condominium, Residential

Last Updated	5/22/2012	Tract	Auburn (aubr) (Auburn (AUBR))
Year Built	2002	Community	Northpark
Garage Spaces	2.0	County	Orange
Total Parking	2	Walk Score ®	52

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Leonard LaRocca, Shorewood Realtors

(view all details for MLS #S12061236)

	$398,900 191 LOCKFORD		0 miles 2 bd / 2 ba 1,449 Sq. Ft.
	$588,800 43 MEADOW Vly		0.16 miles 3 bd / 2.5 ba 1,650 Sq. Ft.
	$648,800 77 MODESTO #94		0.16 miles 3 bd / 2.5 ba 1,650 Sq. Ft.
	$562,500 53 MODESTO #108		0.16 miles 3 bd / 2.5 ba 1,600 Sq. Ft.
	$475,000 89 SPRING Vly #82		0.26 miles 3 bd / 2.5 ba 1,820 Sq. Ft.
	$619,900 81 AVONDALE		0.53 miles 4 bd / 2.75 ba 1,730 Sq. Ft.
	$529,000 74 GLEN ARBOR #116		0.61 miles 3 bd / 2.5 ba 1,435 Sq. Ft.
	$685,000 171 KINGSWOOD #86		0.63 miles 3 bd / 2.5 ba 1,800 Sq. Ft.
	$685,000 154 KINGSWOOD #117		0.64 miles 3 bd / 2.5 ba 1,700 Sq. Ft.
	$475,000 76 BURLINGAME		0.65 miles 2 bd / 2.5 ba 1,670 Sq. Ft.

3 ULTIMO Dr Irvine, CA 92620 — $458,500

3 Ultimo Dr, Irvine, CA 92620 (MLS # P821749)

(all data current as of 5/25/2012)

Price	$458,500
Beds	4
Baths	2 full, 1 three-quarter
Home size	2,135 sq ft
Lot Size	3,220 sq ft
Days on Market	15

Where do we begin? Perfect floor plan with formal living room and cozy fireplace, formal dining room, spacious family room, kitchen with granite counter tops and stainless steel sink, breakfast bar, wet bar, large main floor bedroom and 3/4 bath. Upgraded laminate wood flooring and beautiful plantation shutters. That's just the main floor! Straight run staircase leads to landing area which is open to the downstairs family room. Extra large carpeted storage closet doubles as hide-and-seek hiding place. Private master bedroom is light and bright with private balcony, large closets, and full master-suite bath. The other 2 bedrooms at end of hall share large full bath. Lots of linen closet space both upstairs and downstairs. Large outdoor patio fenced for privacy and deep 2 car garage with washer dryer hook-ups. Association Pool and Spa is 25 yds. from front door. Irvine schools rated some of the best in the nation. Hurry on this one!

Property Type(s): Single Family, Residential

Last Updated	5/24/2012	Tract	Sundance (SD)
Year Built	1978	Community	Northwood
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	52

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Listed with Jerry Bohuslavizki DRE# 00786842, Superior Homes Realty

(view all details for MLS #P821749)

	$879,000 42 COLONIAL		0.45 miles 4 bd / 3 ba 2,427 Sq. Ft.
	$828,800 29 DINUBA		0.61 miles 3 bd / 3 ba 2,265 Sq. Ft.
	$828,000 44 MONTICELLO		0.63 miles 3 bd / 2.5 ba 2,405 Sq. Ft.
	$825,000 15 HARRISBURG		0.63 miles 4 bd / 2.75 ba 2,427 Sq. Ft.
	$865,000 7 WINDSOR		0.64 miles 4 bd / 2.5 ba 2,411 Sq. Ft.
	$879,900 9 HARRISBURG		0.65 miles 4 bd / 3 ba 2,450 Sq. Ft.
	$695,000 38 POTOMAC		0.91 miles 3 bd / 3 ba 2,400 Sq. Ft.
	$998,800 28 LYNNFIELD		1.04 miles 4 bd / 3 ba 2,400 Sq. Ft.
	$660,000 4 LEWIS		1.04 miles 4 bd / 2.5 ba 2,101 Sq. Ft.
	$925,000 15 RIVEROAKS		1.08 miles 3 bd / 2.5 ba 2,200 Sq. Ft.

Lenders hope they can solve all their problems by making the housing market hit bottom. If prices bottom, people who bought at the bottom gain equity with rising prices, and they in turn reignite the move-up market which will allow the banks to sell their high-end shadow inventory. Further, rising prices makes for fewer short sales and fewer foreclosures and distressed sellers become equity sales. Rising prices would be a panacea for lenders, which is why the full weight of our government and the federal reserve is working to make house prices go back up. They tried and failed to create a bottom in 2009. They hoped they had created momentum with tax credits in 2010. They failed.

Lenders and the federal reserve are at it again. Mortgage interest rates are now down to 3.75%, and lenders are withholding inventory from the MLS to prevent further price declines. Again they hope they can create an artificial bottom and momentum to carry them through the liquidation of their distressed inventory. This time around, interest rates are lower, and the economy is better; however, they are still faced with a huge overhead supply that will take years to sell off.

If lenders are successful in engineering a bottom and creating momentum, they will all celebrate their success, but then they will return to the dirty business of selling distressed inventory and recycling the millions of bubble-era loans. Loan modification programs are a proven failure with redefault rates at 50% within a year of initiation, so these houses will eventually have to be sold to new borrowers with income capable of sustaining ownership. Even if prices begin to rebound, many sellers will sell when they get back to breakeven because they can’t afford their payments over the long term without HELOC supplementation. There is no way to avoid millions of distressed sales.

Foreclosures Show No Sign of Decline

By NICK TIMIRAOS — Updated May 16, 2012, 7:57 p.m. ET

At the end of March, 11.8% of all loans were at least 30 days past due or in foreclosure, the report from the Mortgage Bankers Association said. While that is still high by historical standards, it has improved steadily over the past two years, falling from 12.8% a year ago and 14.7% two years ago.

The decline in the share of homeowners late on payments was due almost entirely to fewer new cases of delinquency, a sign that households’ finances are improving. The percentage of borrowers behind on their mortgage but not in foreclosure fell to 7.4% at the end of March from 8.3% a year earlier.

“The drops we continue to see there are the best news out of this. It indicates the speed with which we’re working through the backlog” of bad loans, said Jay Brinkmann, chief economist of the Mortgage Bankers Association. The survey covers about 88% of all U.S. mortgages, or about 43 million loans.

The drop in the delinquency rate does not reflect the speed at which lenders are processing the backlog. Many of these loans were modified which means they will redefault again later. Even at their 0.9% annual rate of decline in delinquency, it will take another three or four years to get back to historic norms. It will take longer than that to process the resulting foreclosures and eliminate the inventory.

Several nonjudicial states that had severe housing problems, such as California and Arizona, have seen foreclosure rates drop below the national average. While there are signs that home prices are beginning to rise in more markets, including hard-hit Phoenix and Miami, those communities with a large “shadow” inventory of potential foreclosures could face renewed price pressure once banks take back and list for sale more of those properties.

In those states, investors have grown more confident that more foreclosures won’t be dumped on the market, said Mr. Brinkmann. There, “the market is stabilizing and people are coming back. …”

Withholding inventory doesn’t make it go away. 8.7 years from now when delinquency and foreclosure rates drop back to historic norms because we are finished processing all the distressed inventory, then I won’t worry about the impact of shadow inventory. Until then, caution is warranted.

Zero down Ponzis yet to be processed

There are still tens of thousands of bad loans to be processed in Orange County. Far too many borrowers were like the former Ponzis behind today’s featured foreclosure. They put no money down, took the free money offered to them, and when the ATM machine shut down, they stopped paying and waited for the bank to boot them out.

•  This property was purchased on 10/18/2002 for $275,000. The owners used a $220,000 first mortgage, a $55,000 second mortgage, and a $0 down payment.
• On 8/31/2004 they refinanced with a $340,000 first mortgage.
• On 3/11/2005 they obtained a $83,000 HELOC.
• On 7/25/2009 they refinanced with a $444,000 first mortgage.
• On 3/27/2007 they refinanced with a $484,000 first mortgage and a $20,000 stand-alone second.
• The defaulted sometime in 2009 and were kicked to the curb in March of 2011.

If housing hadn’t busted, they would still be increasing their mortgage and spending free money. HELOC abuse was a pattern with them. It’s cases like these that make me feel foolish renting during this time. While I was paying my rent, this house was paying these Ponzis $221,000.

Anaheim Overview

Median home price is $309,000. Based on a rental parity value of $457,000, this market is under valued.

Monthly payment affordability has been improving over the last 2 month(s). Momentum suggests unchanging affordability.

Resale prices on a $/SF basis increased to $214/SF to $217/SF.

Resale prices have been weak for 12 month(s). Price momentum suggests weak prices over the next three months.

Median rental rates increased $33 last month from $$1,883 to $$1,916.

Rents have been slowly rising for 12 month(s). Price momentum suggests slowly rising rents over the next three months.

Market rating = 8

Proprietary OC Housing News home purchase analysis

2945 West SKYWOOD Cir Anaheim, CA 92804 

$302,385 …….. Asking Price
$275,000 ………. Purchase Price
10/18/2002 ………. Purchase Date

$27,385 ………. Gross Gain (Loss)
($22,000) ………… Commissions and Costs at 8%
============================================
$5,385 ………. Net Gain (Loss)
============================================
10.0% ………. Gross Percent Change
2.0% ………. Net Percent Change
1.0% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$302,385 …….. Asking Price
$10,583 ………… 3.5% Down FHA Financing
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$291,802 …….. Mortgage
$77,341 ………. Income Requirement

$1,356 ………… Monthly Mortgage Payment
$262 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$76 ………… Homeowners Insurance at 0.3%
$304 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$1,998 ………. Monthly Cash Outlays

($207) ………. Tax Savings
($437) ………. Equity Hidden in Payment
$13 ………….. Lost Income to Down Payment
$96 ………….. Maintenance and Replacement Reserves
============================================
$1,463 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$4,524 ………… Furnishing and Move In at 1% + $1,500
$4,524 ………… Closing Costs at 1% + $1,500
$2,918 ………… Interest Points
$10,583 ………… Down Payment
============================================
$22,549 ………. Total Cash Costs
$22,400 ………. Emergency Cash Reserves
============================================
$44,949 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

We're sorry, but we couldn't find MLS # P821267 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$335,900 3034 West ROME		0.54 miles 3 bd / 2.5 ba 1,486 Sq. Ft.
	$259,000 3130 West POLK Ave		0.62 miles 3 bd / 1 ba 987 Sq. Ft.
	$535,000 2902 East BALL Rd #2		0.72 miles 3 bd / 2.5 ba 1,152 Sq. Ft.
	$320,000 8625 South KENDOR Dr		0.74 miles 3 bd / 1.75 ba 1,178 Sq. Ft.
	$349,000 3160 West TERANIMAR Dr		0.8 miles 3 bd / 2 ba 1,437 Sq. Ft.
	$349,000 2816 RAVENSWOOD		0.86 miles 3 bd / 1.75 ba 1,468 Sq. Ft.
	$449,000 10151 Dale Ave		0.89 miles 3 bd / 2 ba 1,393 Sq. Ft.
	$339,000 3308 W Faircrest Dr		0.93 miles 3 bd / 2 ba 1,292 Sq. Ft.
	$280,000 10272 DALE Ave		1.04 miles 3 bd / 1 ba 987 Sq. Ft.
	$284,900 7304 WILSON Cir		1.1 miles 3 bd / 2 ba 1,108 Sq. Ft.

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See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."

People read this blog for a variety of reasons. Some like the in-depth coverage of housing issues unfettered by bias and bullshit. Some like the entertaining cartoons and HELOC abuse stories of woe. Some like the market information and cogent analysis of current trends in the OC market. This last group usually has one question in mind: is it a good time to buy a house?

The answer to that question is an unequivocal maybe.

There is no perfect time to buy a house. For those who want to buy at the absolute bottom of the market, unfortunately, there is no definitive sign as to when that will be. Further, to actually time the bottom of the market, one must enter escrow while prices are still falling. Most people overlook that fact. By the time the bottom is obvious in retrospect, it is also obvious to everyone else, and many sidelined buyers come to the market to compete for available inventory. In short, timing the bottom is very difficult. It takes much courage and even more luck.

Buying too early means suffering through a period of declining values. This can be quite stressful, particularly if the decline is deeper than anticipated. Because of this likelihood of declines and the potential loss of equity if a sale is necessary, Shevy and I have consistently advised people not to buy unless they plan to hold the property for quite a while to give sufficient time for prices to recover. Further, we recommend people obtain properties where the cost of ownership is at or below rental parity. That way, if they had to move to take a job or for whatever reason, they could rent the house and not be drained by persistent monthly losses. This is the advice we still give today and likely will continue to give for the next several years.

Is Now the Time to Buy Your First House?

May 14, 2012 — Wall Street Journal

It’s been a scary few years for the housing market. But at some point, the nightmare has to end (please?). Is now the time? Should first-time home buyers consider jumping into the market?

After all, home prices have fallen 34% from their 2006 peak and mortgage rates are hovering at or near record lows.

On one side are those who argue that homes are more affordable than they have been in decades, based on how much monthly income a mortgage consumes and whether owning is less costly than renting.

This is true. Houses are trading below rental parity in many markets. This is a precursor to housing finding a bottom. Prices below rental parity are required to motivate new buyers, both owner occupants and investors, to come to the market and absorb the overhanging inventory. The remaining question is how long it will take to absorb this overhead supply?

An uptick in home buying by investors already is under way, they say—an indication that those who wait may miss out on a good buying opportunity.

It infuriates me whenever I read the “buy now or be priced out forever” bullshit. This buying opportunity will be with us for quite some time because liquidating the overhead supply will not happen quickly.

On the other side, pessimists insist that the housing slump is far from over, and that prices will continue falling—perhaps as much as 20% or more.

Excess inventories, they say, are the problem, and some estimate it could be four years before the market absorbs all of that extra supply.

This is also true. Liquidation of excess inventory is the determining factor on when the housing market will bottom.

Eric Lascelles, the chief economist at money-management firm RBC Global Asset Management Inc., says this is a remarkable time to be a first-time home buyer. A. Gary Shilling, president of A. Gary Shilling & Co., an economic consulting firm in Springfield, N.J., says buying now is a terrible idea.

Yes: It’s a Rare Opportunity

By Eric Lascelles

This could be the best time in a generation to be a first-time home buyer.

It is certainly the best time in the last decade or more on a payment affordability basis: O.C. house payments at 10-year low.

Cheery views such as this are out of vogue and easy enough to dismiss as the ravings of a serial optimist. And yet this opinion isn’t based on any heroic economic assumptions. To the contrary, it is constructed upon a more curmudgeonly foundation: In my estimation, the stock market probably underestimates Europe’s woes, U.S. economic growth may fall short of expectations, and—of greatest relevance—the overall housing market is likely still several years from normality.

All of this means even if today is the bottom, significant appreciation is years away. Even the Pollyanna’s aren’t touting rapid appreciation… although I expect realtors will start spouting that nonsense soon enough.

Nevertheless, this is still a remarkable time to be a first-time home buyer. Affordability is the best it has been in 30 years, thanks to the combination of a 34% decline in prices since the 2006 peak and a historically low 4% average rate for a 30-year, fixed-rate mortgage.

The two affordability metrics that truly matter are how much monthly income a mortgage consumes, and whether this is less costly than renting. …

Rock-Bottom Rates

Investors get this. While households dither, investors ramped up their home buying by 64% across 2011. They understand that this is the mother of all buyer’s markets, and won’t last forever. The prospect of making a profit by flipping these properties is still rather distant, so they lay in wait for an eventual rebound and in the meantime make money by renting out their properties for more than the monthly mortgage payment.

I can personally attest to the fact that investors both large and small are buying properties right now for their rental cashflow. It is the activity of these investors which will finally turn the tide of falling prices. It’s only a matter of when and at what price point.

… the situation for first-time home buyers is different. They largely skated through the past few years. They weren’t yet in the housing market, and so escaped that devastating hit. And with an average age of 30, they hadn’t yet accumulated sufficient assets to truly suffer when markets fell.

Unfortunately, this group is overloaded with student loan and credit card debt as a vestige of our loan ownership society of the 00s.

A significant part of this cohort’s savings has been generated in just the past five years, and while markets have been enormously volatile over that period, a monthly savings plan would have generated a 26% return in equities and 22% in bonds. First-time home buyers may not be so hard up for their down payment after all.

That’s just crazy bullshit. The 3.5% down payment requirement on an FHA loan is the biggest impediment to buying today. And with the default rates of low and no down payment loans, the down payment requirement is far more likely to go up than go down.

Heck of a Deal

But is it wise to take the plunge in this era of economic uncertainty? While the economy remains very fragile, it has become less so since the fall. Still, say the worst happens—you buy a home and then immediately lose your job: The foreclosure backlog provides breathing room ….

I am not proud to admit it, but when I bought my first property in Las Vegas, i felt a sense of relief knowing I had a place to crash.

Could home prices fall further? Yes they could. The home-inventory overhang is still quite large and credit availability remains poor. Home prices are unlikely to bloom in earnest for quite some time. …

Arguably, the bigger risk is rising interest rates, which could erode affordability and snuff out this buying opportunity.

Will rising interest rates cause house prices to crash? If interest rates go on a sustained rise, financing home purchases will become more expensive. That is the math. The real question then is whether or not these rising interest rates are compensated for by rising wages. If wages rise as fast as interest rates do, then borrowers will still be able to finance large sums, and house prices can remain stable or even rise. However, if wages do not rise as interest rates go up, then loan balances will decline, and house prices will fall again. Given the choice between inflation and falling house prices, which do you think Bernanke or a future central banker will chose? After the all-out effort they have made to prop up house prices over the last several years, I suspect they will chose inflation, a devalued currency, and steady house prices over a strong currency and falling house prices.

… Mr. Lascelles is the chief economist at money-management firm RBC Global Asset Management Inc. He can be reached at reports@wsj.com.

No: The Fall Isn’t Over

By A. Gary Shilling

Don’t buy your first house now unless you’re willing to lose 20% of its market value in the next several years. Maybe more.

It will take a 22% drop to return median single-family house prices to the trend identified by Robert Shiller of Yale University that stretches back to the 1890s and prevailed until the housing bubble began. (It adjusts for inflation and the tendency of houses to get bigger over time.) And corrections usually overshoot on the downside just as bubbles do on the upside.

This is a compelling argument. No trendline can be drawn which supports such high inflation-adjusted house prices. I explored this issue in depth in the post Real house prices will take 90 years to reach the peak absent another housing bubble.

There is only one reason house prices may bottom at such a high nominal price level. Interest rates declined from 6.5% in 2006 to 3.8% today. That’s an over 40% decline in borrowing costs. This may cause house prices to stabilize at current price points, but over the long term, such low interest rates will create inflation, and in inflation-adjusted terms, prices will revert to the long-term trend, but at today’s higher nominal price.

In short, low interest rates will prevent the 20% decline in aggregate pricing Mr. Shilling believes is coming.

The problem is excess inventories. They are the mortal enemy of prices, and we’ve calculated an excess of two million housing units, over and above normal working levels of inventories of new and existing homes. That is huge, considering that before the housing market collapsed, about 1.5 million new homes were being built annually, a figure that shrank to 568,000 in February. At current rates of housing starts and household formation, it will take four years to work off the excess inventory, plenty of time for those surplus houses to drag down prices.

Excess inventories, of course, were spawned by the earlier housing boom, which was driven by a host of factors—including low interest rates, almost nonexistent lending standards and government attempts to put even those who couldn’t afford chicken coops into four-bedroom houses. But most of all, the housing bubble was driven by the conviction that home prices never fall—they hadn’t on a nationwide basis since the 1930s—so any bad purchase would eventually be reversed.

As such, the homeownership rate expanded to 69.3% by late 2004, from the earlier norm of 64%. But now, homeownership has retreated to 66% as foreclosures mount, lending standards stay tight and many worry about their jobs and/or the responsibilities of homeownership. Everyone knows that house prices can and do fall.

Every point he makes above is accurate, and those will make for substantial market headwinds.

Pushing Up Inventories

The optimists will tell you that home inventories have stabilized, but their thinking is flawed.

The recent decline in MLS inventories of REO are completely artificial manipulations caused by lenders witholding inventory.

Our estimate of two million excess homes takes into account those on the market as well as hidden inventories, such as foreclosed homes not yet listed for sale and those withdrawn from the market because owners couldn’t stomach the bids they received. A U.S. Census Bureau category that measures such hidden inventories has leapt by one million units since 2006.

Additionally, our inventory estimate doesn’t even include future foreclosures, some five million of which are waiting in the wings. …

8.7 years to clear Orange County distressed inventory at stable liquidation rate. Housing bulls largely dismiss the realistically dire estimates of people like me or organizations like S&P who say it will take nearly four years to clear the backlog.

A Disastrous Investment?

Sure, the always optimistic National Association of Realtors tells you that based on mortgage rates, incomes and house prices, single-family houses have never been more affordable. But according to their index, that was also true in December 2008, and prices have fallen 9.2% since then. Ugh! Home prices may have dropped 34% since the peak in early 2006, but that doesn’t make them cheap if prices continue to decline. …

The NAr affordability index is a joke. It is bullshit and propaganda put out to convince people houses are affordable even when they are not. Unfortunately, like the boy who cried wolf, nobody believes them now when prices really are affordable on a monthly payment basis. The virtue of telling the truth escapes them because they are so caught up in spinning their own bullshit.

The homeownership dream of an appreciating asset and huge ATM has been replaced by the nightmare of a liability that is expensive to own and falling in value. Act accordingly.

Mr. Shilling is president of A. Gary Shilling & Co., an economic consulting firm in Springfield, N.J. He can be reached at reports@wsj.com.

That last sentence is the same sound advice Shevy and I have been giving for the last few years. The housing ATM is shut off for a generation. I wish we had smart politicians who would turn it off permanently, but now that our entire economy is dependant upon HELOC spending, the pressures to reflate the Ponzi scheme are too strong for policymakers to resist.

A tale of two bottoms

When thinking about the bottom of the housing market, it is important to keep in mind that there will be two distinct bottoms: a nominal price bottom, and a payment affordability bottom. These may not, probably will not, be at the same time. In all likelihood, the bottom of payment affordability will come first, and the bottom of nominal prices will come later once interest rates begin to rise.

For example, today’s featured property costs $425,000 in nominal dollars, but with 3.78% interest rates, it only costs $2,048 per month to own. We may be looking at the bottom in payment affordability for this property. What happens when interest rates rise?

Imagine two or three years from now, this same property is selling for $375,000, but interest rates are back up to 5%. In such a scenario, the nominal price is $50,000 less, but the monthly cost of ownership is $2,122, nearly 4% higher. As you can see, rising interest rates can make lower house prices have a higher cost of ownership. And since rising interest rates is eventually going to happen, it is also likely that payment affordability may bottom before nominal house prices do. (This is a topic I may revisit in depth in another post.)

So what is better? A lower monthly cost of ownership, or a lower purchase price? There is no clear answer. Personally, I would rather have the lower cost of ownership, particularly if I were looking to own the same property for a decade or more. However, not everyone has the same circumstances. For those who may want to sell and get a different property five years later with move-up equity, they are better off buying at a lower price point even if that means making larger payments to do so. There is no single right answer. It depends on your circumstances.

Option ARM to the rescue

Many late buyers nearly missed their chance for HELOC riches. For example, today’s featured property was purchased for 30% more than its current asking price. Despite how stupid the purchase was in 2004, the owner still managed to extract $211,500 in free money with an Option ARM refinance with a HELOC chaser in 2007. The greater fool theory worked for this former owner. And in this case, the greater fool was a lender.

Garden Grove Overview

Median home price is $323,000. Based on a rental parity value of $457,000, this market is under valued.

Monthly payment affordability has been worsening over the last 2 month(s). Momentum suggests unchanging affordability.

Resale prices on a $/SF basis declined from $235/SF to $231/SF.

Resale prices have been weak for 12 month(s). Price momentum suggests weak prices over the next three months.

Median rental rates increased $50 last month from $$1,866 to $$1,916.

Rents have been slowly rising for 12 month(s). Price momentum suggests slowly rising rents over the next three months.

Market rating = 8

Proprietary OC Housing News home purchase analysis

8622 ORANGEWOOD Ave Garden Grove, CA 92841 

$425,000 …….. Asking Price
$600,000 ………. Purchase Price
4/6/2004 ………. Purchase Date

($175,000) ………. Gross Gain (Loss)
($48,000) ………… Commissions and Costs at 8%
============================================
($223,000) ………. Net Gain (Loss)
============================================
-29.2% ………. Gross Percent Change
-37.2% ………. Net Percent Change
-4.2% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$425,000 …….. Asking Price
$14,875 ………… 3.5% Down FHA Financing
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$410,125 …….. Mortgage
$108,702 ………. Income Requirement

$1,906 ………… Monthly Mortgage Payment
$368 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$106 ………… Homeowners Insurance at 0.3%
$427 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,808 ………. Monthly Cash Outlays

($291) ………. Tax Savings
($614) ………. Equity Hidden in Payment
$19 ………….. Lost Income to Down Payment
$126 ………….. Maintenance and Replacement Reserves
============================================
$2,048 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$5,750 ………… Furnishing and Move In at 1% + $1,500
$5,750 ………… Closing Costs at 1% + $1,500
$4,101 ………… Interest Points
$14,875 ………… Down Payment
============================================
$30,476 ………. Total Cash Costs
$31,300 ………. Emergency Cash Reserves
============================================
$61,776 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

We're sorry, but we couldn't find MLS # P821200 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$748,800 9401 North TOWN AND COUNTRY Dr		0.75 miles 3 bd / 3 ba 3,482 Sq. Ft.
	$319,900 7765 CENTRAL Ave		1.09 miles 3 bd / 1 ba 3,302 Sq. Ft.
	$775,000 12642 GILBERT St		1.41 miles 4 bd / 3 ba 3,000 Sq. Ft.
	$649,900 10702 PAMELA St		1.94 miles 5 bd / 3.5 ba 3,106 Sq. Ft.

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See the enormous foreclosure pipeline for yourself below. Enter location and press search. Scroll through list by pressing "next."

Statistics across most markets show rents are going up. The monthly OC Housing market report has shown steadily declining prices and steadily increasing rents over the last two years. Resale prices are falling because loan owners are being forced out of homes they can’t afford, and the resulting REOs and short sales are deflating the housing bubble. These same former loan owners end up becoming renters which increases demand for rental houses.

Ordinarily, if loan owners were becoming renters, prices in the rental market wouldn’t be disturbed because the REO would be converted to a rental and supply would equal demand. However, since banks have been withholding supply in an effort to hold up prices, the conversion from owner-occupied to renter-occupied has been hindered and delayed. Banks and the GSEs would rather sell their REO to owner occupants. The GSEs want to do this because part of their mandate is to maintain an artificially high home ownership rate. The banks want to sell to owner occupants because they are generally willing to pay more than investors. These biases toward selling to owner occupants has kept prices from falling to market-clearing levels where cashflow investors would buy the property and hold it for rental cashflow; thus the number of rental properties on the market is insufficient to meet demand and rents are going up.

There has been tremendous interest by private equity groups who want to buy REOs and convert them to rentals for their cashflow. These new buyers will deliver enough capital to the most beaten down markets to support resale prices and provide a supply of rentals to blunt the dramatic increases in rent. REO-to-rental investors will restore balance to the housing market.

Rents soar as foreclosure victims, young workers seek housing

Few new units and tight standards for home loans add to the pressure. The average monthly U.S. rent is at an all-time high, and a 10% jump in Los Angeles County over the next two years is forecast.

By Alejandro Lazo, Los Angeles TimesMay 5, 2012, 8:09 p.m.

A nation still struggling to clear up one housing debacle has run smack into another — soaring rents.

The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years.

The push from young workers for rentals is present all the time, but the influx of new rental demand from loa

Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts. USC’s Lusk Center for Real Estate forecasts a 10% jump in Los Angeles County rents over the next two years. In certain markets, it is now cheaper to own a home than rent.

I predicted five years ago that we would reach the bottom once it became cheaper to own than to rent and the overhead supply was cleared from the market by cashflow investors. That is exactly what is coming to pass.

… Units that years ago would have languished for weeks are snapped up in days. The Santa Monica-based listing service Westsiderentals.com is operating 14 hours a day to meet demand from renters. The company has even seen a bump in interest for its “platinum” relocation service, which offers to chauffeur clients to various Southern California listings…. “In L.A., people have gotten so used to how relaxed it was, they are not aware how competitive it’s become,” Balderrama said. “Some people have got it, and some people don’t, and the ones that don’t suffer.”

Rob Magnotta, a real estate agent, recently listed his two-bedroom Irvine condominium for rent on Craigslist for $2,300. He had six applicants within 24 hours, including one who wrote a poignant letter about losing a home to foreclosure.

“It was almost too easy,” said Magnotta, who chose another renter. “I know the rental market was strong. But until you are actually renting the place, I think you are surprised it is that strong.”

Shevy and I talk frequently about the surprising change in the resale market over the last six months. The dwindling supply has completely changed the dynamics from a buyer’s market to a seller’s market. The difference between the resale market and the rental market is important though. The change in the rental market is caused by an increase in demand, whereas the change in the resale market is caused by an artificial restriction of supply. Increasing demand is a sign of strength. Decreasing supply is a temporary market distortion to mask weakness.

… People who’ve lost their homes to foreclosure or short sales are also feeling the sting. Damaged credit means many must pay a premium or put down a bigger deposit to secure a place.Robert Corlette pays about $1,700 a month for a two-bedroom town house in Anaheim Hills that he shares with his wife and five children. The family lost their home to foreclosure in 2009 after Corlette lost his $75,000-a-year job selling insurance. His current job, also in the insurance industry, pays about half that.

If he’s making less than $40,000 per year and spending $1,700 per month on rent while trying to support a wife and five kids, he must be very stressed.

“There is a lot of pressure,” said Corlette, 56. “It wears you down.”

No kidding.

The crash has made owning a home more affordable than renting in some markets. An index by the research firm Green Street Advisors compares buying with renting in 79 metro markets; that index hit its most attractive point last year for buying since 1991, when the firm began tracking the data. Researchers calculate that the after-tax cost of a mortgage is only 10% higher than what it costs to rent nationally after taking into account mortgage rates, property taxes and other factors.

Orange and Los Angeles counties remain more expensive for buyers than renters, though that gap has narrowed, according to the index, while owning a home in the Inland Empire is now more affordable than renting.

Actually, most of Orange County is trading at or below rental parity (see far right column).

Rising rents have converted some renters into buyers. Scott Matulis, 48, recently purchased a town home in Oak Park after enduring two consecutive years of rental increases. His mortgage, taxes and homeowner association fees now total $2,200, just $100 more than what he was paying his former landlord.

Rising rents, falling prices, and prices already below rental parity should be prompting people to buy. Buying in those conditions is usually a wise choice.

“I finally just pulled the trigger and figured I’d be throwing money away on rent,” Matulis said.

He doesn’t mind throwing money away on the rent on money, but he has a problem with spending it on rent? The bullshit “throwing away money on rent” meme may never die. Everyone who spends more to rent money than they do to rent a house is foolish. Any short-term gains from appreciation will get wiped out in the inevitable bust.

Although rising rents may be motivating home purchases by people who are in good shape financially, those increases are walloping working class families and the poor — groups already hard hit by job losses, lost income and stagnant wages.

This is the sad reality of living in coastal California. The Haves have, and the Have-nots live in poverty.

Marisela Alfaro has lived in the same one-bedroom Santa Ana apartment for 28 years. A large bed sits in her living room, where she and her husband sleep; their teenage daughters share the bedroom.

Modest religious art adorns her carefully kept home, but outside Alfaro’s door the building is in disrepair, with tattered screens, broken lights and graffiti. Alfaro said the family pays $820 a month and feels lucky to have the apartment.

“There are other places that cost much more,” she said in Spanish. “It’s been difficult because my husband works in the fields, and that’s the lowest salary that there is, and if there is no rain, there is no work.”

Even for those with better jobs, paying rent can be difficult.

Virginia Villa of Brea, a single mother of four who works as a manager at Disneyland, has doubled up with her adult daughter, who contributes $400 to the monthly household budget. Still, Villa said, about half her take-home pay goes toward rent and utilities.

“I have a decent job and I would love to buy a house, but I don’t think that’s possible to do,” Villa said. “In O.C., it’s even difficult to find a substantial apartment or especially a house to rent — the rental cost for houses is really high.”

The poor who have to rent because they can barely make ends meet are the true victims of the housing bust. The loan owners are getting all the attention and the bailout money, but the working-class poor are getting screwed, and they are watching their tax dollars go toward bailout out people with an overblown sense of entitlement.

Typical Ladera Ranch Ponzis

Everyone in Ladera Ranch was living the dream. They all got beautiful new houses for little or no money down, and the house provided them with abundant and steady Ponzi debt income. The house often made more than the salaries of the people who lived there, certainly on an after-tax basis. Take today’s featured Ponzis for instance. They put just over $15,000 down to get the property, and it the five years that followed they extracted over $250,000 in free spending money. When it all blew up, they handed back the keys.

• This property was purchased on 7/27/2001 for $289,000. The owners used a $230,400 first mortgage, a $43,200 second mortgage, and a $15,400 down payment.
• On 3/28/2002 they refinanced with a $256,000 first mortgage and a $30,000 HELOC.
• On 8/16/2002 they refinanced with a $285,500 first mortgage.
• On 3/27/2003 they refinanced with a $285,000 first mortgage.
• On 5/30/3002 they obtained a $35,000 HELOC.
• On 11/19/2003 they got a $99,000 HELOC.
• On 2/13/2004 they refinanced with a $284,500 first mortgage.
• On 10/14/2004 they opened a $197,000 HELOC.
• On 12/30/2005 they refinanced with a $469,000 Option ARM with a 1.5% teaser rate.
• On 1/6/2006 they opened a $66,500 HELOC.
• The defaulted in late 2010 and squatted for over a year.

These people must have had their mortgage broker on speed dial.

Ladera Ranch Overview

Median home price is $413,000. Based on a rental parity value of $644,000, this market is under valued.

Monthly payment affordability has been worsening over the last 2 month(s). Momentum suggests worsening affordability.

Resale prices on a $/SF basis declined from $229/SF to $224/SF.

Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months.

Median rental rates declined $16 last month from $2,716 to $2,700.

Rents have been rising for 12 month(s). Price momentum suggests rising rents over the next three months.

Market rating = 10

Proprietary OC Housing News home purchase analysis

7 GRANVILLE St Ladera Ranch, CA 92694

$329,900 …….. Asking Price
$289,000 ………. Purchase Price
7/27/2001 ………. Purchase Date

$40,900 ………. Gross Gain (Loss)
($23,120) ………… Commissions and Costs at 8%
============================================
$17,780 ………. Net Gain (Loss)
============================================
14.2% ………. Gross Percent Change
6.2% ………. Net Percent Change
1.2% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$329,900 …….. Asking Price
$11,547 ………… 3.5% Down FHA Financing
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$318,354 …….. Mortgage
$108,236 ………. Income Requirement

$1,480 ………… Monthly Mortgage Payment
$286 ………… Property Tax at 1.04%
$183 ………… Mello Roos & Special Taxes
$82 ………… Homeowners Insurance at 0.3%
$332 ………… Private Mortgage Insurance
$433 ………… Homeowners Association Fees
============================================
$2,796 ………. Monthly Cash Outlays

($226) ………. Tax Savings
($477) ………. Equity Hidden in Payment
$15 ………….. Lost Income to Down Payment
$61 ………….. Maintenance and Replacement Reserves
============================================
$2,169 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$4,799 ………… Furnishing and Move In at 1% + $1,500
$4,799 ………… Closing Costs at 1% + $1,500
$3,184 ………… Interest Points
$11,547 ………… Down Payment
============================================
$24,328 ………. Total Cash Costs
$33,200 ………. Emergency Cash Reserves
============================================
$57,528 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

We're sorry, but we couldn't find MLS # K12057486 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

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