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…..

2945 W Skywood Cir, Anaheim, CA 92804 (MLS # P821267)

Opportunity Knocks!!! This spacious 3 bedroom, 2 bathroom one story, single family homes is in move-in condition and has been remodeled with interior paint, carpet, tile, kitchen appliances, furnace, and has updated bathrooms. This home features a living room with fireplace, enclosed patio, master bedroom with private bathroom, and a 2-car attached garage with laundry hook-ups. This home is located on a cul-de-sac street and has good curb appeal. This is a must see property.

Property Type(s): Single Family, Residential

Last Updated	5/14/2012	Tract	Custom (CUST)
Year Built	1956	Community	Anaheim West Of Harbor
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	63

Location

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

Listed with David Geiger DRE# 01194739, CA Real Estate Network

(view all details for MLS #P821267)

	$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.

Sign up for the OC Housing News monthly market newsletter.

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…..

8622 Orangewood Ave, Garden Grove, CA 92841 (MLS # P821200)

This two story home has plenty of bedrooms.... original house was 4 bedrooms. The house has been remodeled at some point (unknown if permitted) and now has 6 BEDROOMS! and 4 Bathrooms.... Home needs carpet and paint - bring your paint brush. A great deal for a home this size.

Property Type(s): Single Family, Residential

Last Updated	5/7/2012	Tract	* (OTHR)
Year Built	1954	Community	Garden Grove S Of Chapman, W Of Euclid
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	49

Location

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

Listed with Bart Smith DRE# 414684, Evergreen Realty

(view all details for MLS #P821200)

	$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…..

7 Granville Street, Ladera Ranch, CA 92694 (MLS # K12057486)

Beautiful 3bedroom/2.5 bath two story condo located in Alden House neighborhood in Ladera Ranch. Exterior features brick and stucco. Interior shows open with color co-ordinated tile, carpet and cabinetry. Enter into the living room and then continue on back to the spacious family room with fireplace and built-in cabinet. Adjacent is the kitchen and dining area. Kitchen features white cabinetry, white countertop with color coordinated tile surrounds, stainless steel microsave, dishwasher and black stove and walk-in pantry. There is also a powder bath. Upstairs is a very large master suite with adjacent bathroom featuring dual sinks and separate tub and shower and a walk-in closet with closet organizer and cedar paneling. There are two remaining secondary bedrooms with plenty of closet space and a large bonus/family room. A laundry room and secondary bathroom complete the upstairs. Needs paint and TLC. Close to parks, schools and shopping, this community offers an association pool and spa.

Property Type(s): Condominium, Residential

Last Updated	5/14/2012	Tract	Aldenhouse (aldh) (Aldenhouse (ALDH))
Year Built	2001	Community	Ladera Ranch
Garage Spaces	2.0	County	Orange
Total Parking	2	Walk Score ®	71

Location

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

Listed with Kenneth Kellermann, Sales Advantage Group, Inc.

(view all details for MLS #K12057486)

	$328,888 34 LANSDALE Ct		0.53 miles 3 bd / 2.5 ba 1,520 Sq. Ft.
	$259,900 40 GARRISON Loop		0.81 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$310,000 143 SKLAR St #49		0.9 miles 3 bd / 2.5 ba 1,600 Sq. Ft.
	$435,000 59 ORANGE BLOSSOM Cir		1.29 miles 3 bd / 2.5 ba 1,838 Sq. Ft.
	$549,000 47 TUSCANY		1.59 miles 3 bd / 2.5 ba 2,100 Sq. Ft.
	$439,000 32 TARLETON Ln		1.66 miles 4 bd / 2.5 ba 1,914 Sq. Ft.
	$335,000 7 CLIFFORD Ln		1.73 miles 2 bd / 2.25 ba 1,617 Sq. Ft.
	$469,000 16 MELROSE Dr		1.96 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$399,000 26691 Dulcinea		1.98 miles 3 bd / 3 ba 1,830 Sq. Ft.

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John McMonigle fully embraced the California housing Ponzi scheme. He claims to have represented $2.1 billion in real estate transactions during the housing bubble. If he made 3% of that figure, that’s $63,000,000 in real estate commissions. In a game of financial football, that is a powerful offense. Unfortunately, his defense wasn’t quite as good.

Falling from housing peak: John McMonigle’s ride

According to bankruptcy court papers, McMonigle, 46, has amassed some $50 million in debts. His assets – even after selling his Newport Beach condo, his cars and personal effects – total $2.4 million – plus the value of the properties he owns that are facing foreclosure.

Critics say McMonigle let his ego get the best of him, that he got reckless, spent excessively and failed to see the housing market’s looming day of reckoning.

He gambled on a lavish – and perhaps impractical – lakeside palace in Newport Coast, once valued as high as $87 million. He borrowed $13.4 million to build a shiny, new office for himself near Fashion Island.

Now both properties are on the verge of foreclosure.

Making matters worse, McMonigle’s wife of 16 years filed for divorce. A week later, he filed for bankruptcy.

That is a crushing defeat. In losing his entitlements, he got to discover what he really needs.

McMonigle and his supporters maintain that the charming, soft-spoken salesman is just the latest victim of the housing slump.

McMonigle, they say, will bounce back.

I hope he does. He did a lot of thing right to get to where he was. With his ability to make money selling real estate, if he sticks to that and learns to control his spending, he could be successful again.

The Rise

John McMonigle arrived in Orange County with just $73 in his pocket in 1989.

Within four years the Oklahoma native was grossing $100,000 a year as a Newport Beach real estate agent. In 15 years, he was the top U.S. salesman in dollar terms in the Coldwell Banker chain.

That is an amazing rise. Of course, Daniel Sadek was a salesman who rose quickly too with an unsustainable business model and uncontrolled spending. He was later robbed in his Newport Beach home, then he lost it in foreclosure. I don’t see him making a big comeback, but anything is possible.

McMonigle also had branched out into high-end spec homes, and in 2003, he bought an odd-shaped, inland parcel in Newport Coast.

Soon a plan emerged for a luxury estate fit for an oil baron: The Villa del Lago property would include a three-story, 17,000-square-foot mansion, private lake, vineyard and horse stables. At one point, McMonigle’s asking price rose to $87 million.

The initial asking price was $87M, and the final sale price was $18.5M. That’s a 79% reduction in the asking price to consummate a sale. Do you think it was a bit overpriced?

… Speculation about McMonigle’s finances surfaced after he sold his home in Shady Canyon in October 2008 and became a renter.

At the time, McMonigle said he and his wife wanted to build a bigger home. Now, McMonigle concedes he sold his home because he was nervous about the market.

LOL! I wonder if he was reading the old IHB. His instincts were correct. He market was due to fall, and the high end will continue to struggle for many more years to come.

Cote, who’s seen numerous real estate downturns in his 40 years, wondered if McMonigle failed to foresee this latest slump.

“I think he overreached,” Cote said. “I think he didn’t think it would come to an end.”

Pride and arrogance often precede a fall.

Another critic, luxury home salesman Mark Whitehead, maintains that McMonigle consistently overpriced his homes.

Portabello and Villa del Lago were prime examples, Whitehead said.

Portabello took 4 ½ years to sell and fetched less than half its original $75 million price tag.

Villa del Lago remains unsold even after the price fell to $37 million – a $50 million price chop.

The price would cut in half again before it finally sold.

Newport Beach Mansion, Once Listed for $57 Million, Sells at Auction

May 14, 2012, 10:07 AM

An unfinished, 16,600-square-foot mansion in Southern California once listed for $57 million has sold at auction for just $18.5 million, according to the property owners’ lawyer.

It was actually listed at $87 million, not $57 million. Could it be any more overpriced?

Located in the upscale city of Newport Beach, Calif., the mansion was last listed for $37 million before being brought to auction in the last week of April. If the deal is accepted by all parties, including the lender and a list of subcontractors, the sale will draw to a close one of the most ambitious homes to break ground in Orange County during the housing boom. The buyer has not yet been revealed.

This project illustrates just how foolish our real estate market had become. Nobody speculates on $87M mansions. The buyer pool for such a property is very, very thin. People with that kind of money are not tract home buyers. Sales of such expensive homes are generally between other very rich people who paid cash and held the property for a number of years. A speculator using financing is likely to get eaten alive by interest payments waiting for a sale — which is what happened here. Any buyer who wanted this property would be wiser to just wait until McMonigle imploded and negotiate with the bank. A buyer at this price point can afford to be patient. A financed seller cannot. This was a dumb idea at its inception.

The property includes a private lake, a horse stable and riding area, a 17-car garage, a private vineyard and a “wine cave,” among other amenities.

In 2003, well-known real-estate agent John McMonigle formed a limited partnership to buy the 12.5-acre parcel of land for $3.42 million, according to attorney Sean O’Keefe, who represents the current owners. Mr. McMonigle did not return calls for comment, and he is no longer represented by Mr. O’Keefe. Mr. McMonigle’s current attorney, Michael Nicastro, declined to comment on the sale.

To build the colossal eight-bedroom, 17-bathroom estate, the partnership took out several loans against the property, including a $21.6 million loan in 2007 from La Jolla Bank, according to court records. The Wall Street Journal has reported that La Jolla Bank, which had a large concentration of residential real-estate loans, was shuttered by regulators in 2010 as the housing crisis reverberated.

That was a really, really stupid loan. It’s bank managers like these who should be shut out of banking for life.

By early 2011, One West Bank, which had acquired the loans, filed for foreclosure on the property, according to court records. The owners then filed for Chapter 11 bankruptcy protection; Mr. McMonigle left the partnership shortly before the filing, according to Mr. O’Keefe. Corey Gulbranson, a current managing member of the partnership selling the property, said Mr. McMonigle resigned, but would not comment on his reasons.

Abandon ship! Abandon ship!

The auction was held with an undisclosed reserve price, which represented a settlement among the property owners, the lender, and a committee that represents the property’s more than 200 creditors, Mr. O’Keefe said. In addition to the $18.5 million sales price, the buyer will pay a 5% premium to the auction company, Auction.com.

A $925,000 commission? I’m in the wrong business.

After the sale, Mr. Gulbranson said “everyone seemed satisfied with the outcome.” Mr. Gulbranson would not name the other members of the partnership.

Still, the deal must still be finalized in court. The property is still unfinished, and listing agent Rob Giem, of HOM Sotheby’s International Realty, estimates that the buyer will have to put in another $3 million to complete the original plans for the property. He said the home is about “90% to 95%” complete.

$18.5M and it’s not even done. Realistically, any buyer would probably tear out much of McMonigle’s handiwork and renovate the property to their taste. I used to work for a real estate developer who sold his Laguna Beach estate for $35M in 2008. The first thing the new buyer did was gut the flawless interior and redo the whole house.

What can we learn from McMonigle’s wild ride?

John McMonigle had it all, or so he thought. He made large sums of money, but he kept speculating on real estate rather than diversifying his holdings and picking up cashflowing investments. He financed his investments and his lifestyle with ever-increasing debt. If he had made other decisions. If he had bought cashflow properties and invested in dividend paying stocks and bonds, he would have weathered the downfall in much better shape. He may have still lost some wealth, but he would have avoided bankruptcy and a dramatic fall from entitlement from the utter collapse of his real estate empire.

Ponzis who rivaled McMonigle

The former owners of today’s featured property graduated from the John McMonigle school of Ponzi borrowing. The property records are a bit unclear, but the former owners had $1,817,323 in property debt on 11/30/2004. By 11/14/2006, just two years later, they managed to extract $699,077 in HELOC booty. That’s nearly $350,000 per year in tax-free income. That’s livin’ large.

Their $2,166,400 Option ARM blew up — yes, that’s a $2,166,400 Option ARM — and they were allowed to squat for over four years.

Four years squatting in a plush Newport Beach estate.

For their two years of ownership, these people were given $700,000 and allowed to stay rent and payment free for over four years.

I want one of those houses.

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

3 WINGED FOOT Ln Newport Beach, CA 92660

$1,724,900 …….. Asking Price
$1,450,000 ………. Purchase Price
3/28/2002 ………. Purchase Date

$274,900 ………. Gross Gain (Loss)
($116,000) ………… Commissions and Costs at 8%
============================================
$158,900 ………. Net Gain (Loss)
============================================
19.0% ………. Gross Percent Change
11.0% ………. Net Percent Change
1.7% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$1,724,900 …….. Asking Price
$344,980 ………… 20% Down Conventional
4.28% …………. Mortgage Interest Rate
30 ……………… Number of Years
$1,379,920 …….. Mortgage
$346,675 ………. Income Requirement

$6,813 ………… Monthly Mortgage Payment
$1,495 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$431 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$217 ………… Homeowners Association Fees
============================================
$8,956 ………. Monthly Cash Outlays

($1,417) ………. Tax Savings
($1,891) ………. Equity Hidden in Payment
$533 ………….. Lost Income to Down Payment
$236 ………….. Maintenance and Replacement Reserves
============================================
$6,416 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$18,749 ………… Furnishing and Move In at 1% + $1,500
$18,749 ………… Closing Costs at 1% + $1,500
$13,799 ………… Interest Points
$344,980 ………… Down Payment
============================================
$396,277 ………. Total Cash Costs
$98,300 ………. Emergency Cash Reserves
============================================
$494,577 ………. 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 # P821473 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$2,395,000 19 BURNING TREE Rd		0.09 miles 4 bd / 2.5 ba 4,000 Sq. Ft.
	$1,799,000 3 RUE BIARRITZ		0.15 miles 3 bd / 2.5 ba 3,011 Sq. Ft.
	$2,189,000 20 TURNBERRY Dr		0.32 miles 5 bd / 5 ba 3,796 Sq. Ft.
	$1,749,000 11 CROOKED STICK Dr		0.52 miles 4 bd / 4 ba 3,150 Sq. Ft.
	$1,799,000 28 RUE GRAND VALLEE		0.57 miles 3 bd / 3 ba 3,819 Sq. Ft.
	$1,895,000 1706 PORT SHEFFIELD Pl		0.61 miles 6 bd / 4 ba 4,000 Sq. Ft.
	$1,749,000 2201 ALTA VISTA Dr		0.61 miles 5 bd / 3 ba 3,447 Sq. Ft.
	$1,374,500 23 EDGEWOOD		0.73 miles 4 bd / 3.5 ba 3,100 Sq. Ft.
	$2,049,900 1806 PORT STANHOPE Pl		0.73 miles 5 bd / 4 ba 3,867 Sq. Ft.
	$1,549,000 9 SINGLETREE Dr		0.76 miles 3 bd / 2.5 ba 2,800 Sq. Ft.

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President Obama has lost his mind. I guess I shouldn’t be too surprised that Obama would embrace HELOC abuse as a good idea. After all, Obama HELOCed his home in Illinios before he became president.

Personally, I find this outrageous.

Our commander-in-chief, the leader of our nation, has embraced HELOC abuse as a noble behavior that should be encouraged by a taxpayer bailout. The dipshits who lose their home from excessive borrowing should be given a pass, and everyone who chose not to participate in the madness should pay for it.

I think that sucks.

Obama’s ‘Responsible’ Reno Homeowners: Are They?

Published: Friday, 11 May 2012 | 3:06 PM ET

By: Diana Olick — CNBC Real Estate Reporter

As part of his “To Do List,” President Barack Obama visited Val and Paul Keller on Friday. The White House described them as “responsible” homeowners who owe more on their mortgage than their Nevada home is currently worth.

They owe $168,000 on their mortgage, but their Reno home is currently valued at $100,000.

The president is doing so to, “help demonstrate a concrete and tangible example as to why this broader push [to refinance] is so important not only for millions of Americans but for our economy,” said Shaun Donovan, secretary of Housing and Urban Development, in a conference call with reporters before the event.

These people, like the hundreds I have profiled over the years, demonstrate concrete and tangible examples as to why this broader push to refinance is so ghastly, unfair, unnecessary, and absolutely the wrong thing to do.

During that call, Donovan used the words “responsible homeowners” more than a dozen times, in describing whom the administration’s proposed refinance programs should help.

It is not the Kellers’ fault that home prices in Reno are down 52 percent from the peak, right? The Kellers bought their house 14 years ago, and they have not been late on a mortgage payment, according to Donovan. They were able to take advantage of the newly expanded government refinance program through Fannie Mae and Freddie Mac for severely underwater borrowers, and they are in fact putting some of their savings on the monthly mortgage toward paying down principal.

But were they responsible?

Responsible Homeowners are NOT Losing Their Homes:

A “responsible homeowner” is a buyer who, if they utilized financing, did not stray from the conservative parameters set forth by lenders (prior to the bubble) and financial planners. This includes using a maximum 28% debt-to-income ratio on the mortgage, at least a 20% down payment and fixed-rate conventionally amortizing financing.

Few who fit this definition are going to lose their homes; although, some of them may chose to walk away from the debt because they are hopelessly underwater. The only ones who fit the above definition who are in danger of losing their homes are those who lose jobs; they are the truly sad casualties of the housing bubble. Unfortunately, this is becoming more common due to the financial crisis caused by all the homeowners who borrowed irresponsibly.

Responsible borrowers are not the ones defaulting on their mortgages; irresponsible homeowners are.

If “responsible homeowner” is defined as a buyer who believed they could manage their monthly payment and did so until the loan terms changed, then by this definition, many responsible homeowners are going to lose their homes.

Almost everyone who signed up for a toxic loan thought they could make the payment; most did for a while. Many were convinced they could make the payments by a predatory lender out to make a few bucks on the origination. Many more believed they could supplement their incomes with the rapid appreciation they would enjoy as their house values rose to infinity. Does ignorance to their inability to sustain their housing payments make them responsible?

In the political debate surrounding foreclosure moratoriums and homeowner bailouts, the politicians are using the latter definition of “responsible homeowner.” The ignorant and those who knowingly took excessive risk are being rewarded with a government bailout. The prudent are the ones paying the bill.

The Kellers bought their home before the height of the housing boom. The trouble I’m having understanding this whole scenario is that the median home price in Reno is actually 7 percent higher today than it was 14 years ago. If the Kellers had a “responsible” loan, that would be a 30-year fixed, in which case they should have paid at least some principal on the loan over the last 14 years. And didn’t these “responsible” borrowers, the Kellers, put some money down on the home?

We went looking: According to Washoe County records, the Kellers purchased their home in June 1998 for $127,000. So why do they have, according to the White House, a $168,000 mortgage?

So what did these “responsible” loan owners need the HELOC money for? Did they have a personal family catastrophe for which there is no insurance? What makes their borrowing okay? And if it is okay, shouldn’t the government then sponsor a similar loan programs for renters?

White House officials now confirm to CNBC that the Kellers did a cash-out refinance in 2007, when their home had appreciated to $250,000.

I hope this is a huge embarrassment for them (I know I am doing my part to make it so). Someone didn’t do their homework when researching the perfect “responsible” loan owner to pick for their bailout poster child. Perhaps, as I pointed out above, the task was made more difficult by the fact that responsible homeowners are not losing their homes.

Again, it’s not illegal, but are these the “responsible” borrowers that the administration is looking to help? They took out a $178,000 loan, using the $51,000 to pay down debt on the family construction business, so Paul could retire.

This is their justification for the loan? They were substituting one debt for another? The guy didn’t manage his business well enough to retire without debt, so he piles it on his house? What kind of dumbass takes on a huge debt as they go into retirement?

Had they not taken that money out, and continued paying on the original mortgage, they would not be underwater today.

Exactly. Responsible homeowners are not losing their homes, irresponsible loan owners are.

Think about it. If this guy had paid down his debt and enjoyed fewer entitlements, he could have paid off his house and his business loans. It’s done every day by ordinary people who really are responsible. Those people don’t need bailouts.

“This is a family, first and foremost, that has met their responsibility, remained on time with their mortgage and used their equity in their home in a way that so many Americans do, to send their kids to college, support a small business or save for retirement,” said Donovan, whom we contacted after learning of the refinance. “They deserve the chance to benefit from these record low interest rates because they have met their responsibilities.”

Just because a lot of people do it doesn’t make it right. If everyone wanted to embark on a personal Ponzi scheme and inflate a massive housing bubble which crippled the economy for a decade, would that make it right? Oh wait, we did that, didn’t we?

Another administration official familiar with the Kellers’ case says the couple were responsible because despite the incredible runup in home prices, they did not take all the equity out of the house. “She did not use her home as an ATM in the sense that we saw during the crisis, because she didn’t cash out all of the equity leaving her no cushion.”

Oh, I see. She didn’t take it all, so that makes her responsible? I can’t believe someone on the White House staff actually said something that stupid. A lot of HELOC abuse is bad, but a little is okay?

She had a 71 percent LTV (loan to value ratio), or 30 percent equity in her home. That is by almost any definition a very responsible position to be in,” he added.

If they are so responsible, why are they losing their house? It isn’t the LTV that’s the problem. The fact that the guy was retiring and giving up his source of income just prior to taking on a large debt is the issue. There are many homeowners in Orange County who couldn’t afford to take on the debt required to purchase their homes at peak prices. That’s why so many who went to the housing ATM lost their homes.

In the past, Obama has criticized borrowers, who at the peak of the housing bubble, pulled money out, referring to it as using their house as an ATM.

I hope Obama has the good sense to fire the staffer who picked this family as an example of “responsible” homeowners.

LTV, Donovan and the other administration official claim, is not a minor issue. So it seems they are defining “responsible” as a borrower who maintains an equity cushion in the house, even when that house price has nearly doubled in just eight years.

Again from Responsible Homeowners are NOT Losing Their Homes:

To see the truth in the importance of these definitions, we need to look no further than the astute observations on this blog. One of our frequent commenters is a responsible homeowner. He purchased near the peak, but he did so with terms that his family can afford. He meets the parameters in the first definition. He is in no danger of losing his house in foreclosure. Yes, he is annoyed that the values have dropped–who wouldn’t be–but he is not going to become a foreclosure statistic.

If you want to know what the lenders really worry about it is that guys like him may chose to go into foreclosure and walk away from the debt. There are already enough irresponsible homeowners on their way to the meat grinder. A wave of walkaways would make sausage of the entire banking industry.

The reality is responsible homeowners are not losing their homes; some may lose their houses because of a job loss, and some may chose to walk away, but very few truly responsible homeowners are endangered. The foreclosure crisis is caused by the irresponsible.

“This was truly 100 year flood, and so lots of people who had 20, 30, 40 percent equity in their homes now find themselves underwater,” says the White House official, who also commends the Kellers for not walking away from their mortgage.

There it is, their biggest fear is the walkaways yet to come.

Is this behavior really acceptable?

Am I the only one who thinks doubling a home mortgage and losing the family home is a bad idea? Is this now considered a wise idea, a sophisticated debt-management system? Are the HELOC abusers who spend all their equity merely victims of a down market? Would the virtue of their innovative and enlightened financial management become apparent if that pesky recession hadn’t intervened?

Apparently our current president does not understand what a Ponzi scheme is. The economy flourished briefly in the 00s because the growth of borrowing created a false prosperity. Politicians no longer seem to care if prosperity is durable and based on fundamentals. Any prosperity — even the completely false and unsustainable variety built on Ponzi debt — is acceptable as long as politicians get reelected.

I say no.

This is wrong. We cannot have a prosperous society built on a foundation of borrowed money. Debt is not wealth. Consumption is not production.

This needs to be called out and exposed for what it is. HELOC abuse is an outrage. It’s villainy perpetrated on savers and producers by lazy and entitled fools who want something for nothing.

When it was merely borrowers stiffing lenders, the two parties to the transaction had to wrestle with the ramifications of their decisions. Borrowers experienced a fall from entitlement, and lenders experience the loss of their loaned capital. This put a natural check and balance in the system which made it function. However, once the US taxpayer got dragged into this mess in massive bailouts of both lenders and loan owners, then the vile Ponzi scheme being perpetrated became a theft of public funds. The parties to this private transaction reached into our pockets and stole our money, and there is nothing we can do to stop it.

What are we to do? If we can’t beat them, should we join them? Will our home lending system degrade into a contest to see who can steal the most from the US taxpayer? At this point, everyone has incentive to max out their debts and leave taxpayers holding the bailout bag. Why not? That policy now has Obama’s endorsement.

Perhaps they had a good reason…

The former owners of today’s featured property were very similar to the “responsible” loan owners Obama wants to bail out. They only refinanced a few times near the peak, and I’m sure they had a noble reason for pissing away their home equity.

• Today’s featured property was purchased on 6/29/1998 for $450,000. The owners used a $337,500 first mortgage and a $112,500 down payment. Very responsible.
• On 6/24/2003 they obtained a stand-alone second mortgage for $58,000. About what the “responsible” loan owners borrowed. They undoubtedly had a great reason.
• On 4/11/2005 they refinanced with a $550,000 first mortgage.
• On 6/11/2007 they refinanced with a 650,000 Option ARM.

They must have had a good reason they pulled $312,000 out of their house, didn’t they?

The renters who didn’t have access to money like this, well… they should be asked to pay back these people’s debts because… well… I guess because those homeowners were so responsible.

Rancho Santa Margarita Overview

Median home price is $366,000. Based on a rental parity value of $564,000, this market is fairly 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 $225/SF to $229/SF.

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

Median rental rates increased $83 last month from $2,283 to $2,366.

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

Market rating = 5

Proprietary OC Housing News home purchase analysis

21831 VIA DEL LAGO Rancho Santa Margarita, CA 92679

$599,900 …….. Asking Price
$450,000 ………. Purchase Price
6/29/1998 ………. Purchase Date

$149,900 ………. Gross Gain (Loss)
($36,000) ………… Commissions and Costs at 8%
============================================
$113,900 ………. Net Gain (Loss)
============================================
33.3% ………. Gross Percent Change
25.3% ………. Net Percent Change
2.1% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$599,900 …….. Asking Price
$119,980 ………… 20% Down Conventional
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$479,920 …….. Mortgage
$134,928 ………. Income Requirement

$2,231 ………… Monthly Mortgage Payment
$520 ………… Property Tax at 1.04%
$325 ………… Mello Roos & Special Taxes
$150 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$260 ………… Homeowners Association Fees
============================================
$3,486 ………. Monthly Cash Outlays

($356) ………. Tax Savings
($719) ………. Equity Hidden in Payment
$152 ………….. Lost Income to Down Payment
$95 ………….. Maintenance and Replacement Reserves
============================================
$2,658 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,499 ………… Furnishing and Move In at 1% + $1,500
$7,499 ………… Closing Costs at 1% + $1,500
$4,799 ………… Interest Points
$119,980 ………… Down Payment
============================================
$139,777 ………. Total Cash Costs
$40,700 ………. Emergency Cash Reserves
============================================
$180,477 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

21831 Via Del Lago, Rancho Santa Margarita, CA 92679 (MLS # S697268)

New paint & carpet highlight this hilltop beauty in the gated community of Rancho Cielo. It sits on the highest street so on a clear day you can see the coastline, plus city lights & panoramic view! There are 4 bedrooms (all up), 2.5 baths, kitchen with breakfast nook and breakfast bar area, living & family rooms that share a fireplace, master bedroom with fireplace and balcony to enjoy the view, plus a loft area & 3 other bedrooms. There is an addition next to the master bedroom & buyer must verify if it was permitted.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Brighton Summit (BS)
Year Built	1992	Community	Rancho Cielo
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	49

Location

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

Listed with Susan Miller DRE# 00998508, Coldwell Banker

(view all details for MLS #S697268)

	$619,000 21822 VIA DEL LAGO		0.03 miles 4 bd / 2.5 ba 3,184 Sq. Ft.
	$549,900 32031 LOMITA Dr		0.2 miles 4 bd / 3 ba 2,522 Sq. Ft.
	$575,000 21831 CAMINITO Dr		0.27 miles 5 bd / 3 ba 2,733 Sq. Ft.
	$749,000 39 HIGHPOINT		0.36 miles 4 bd / 3.5 ba 3,069 Sq. Ft.
	$669,000 43 SUMMITCREST		0.41 miles 4 bd / 2.75 ba 2,900 Sq. Ft.
	$600,000 21412 SILVERTREE Ln		0.52 miles 5 bd / 3 ba 3,000 Sq. Ft.
	$649,000 36 GREENSPRING		0.59 miles 4 bd / 2.75 ba 2,900 Sq. Ft.
	$699,000 27 BANSTEAD		0.76 miles 5 bd / 3 ba 2,750 Sq. Ft.
	$849,900 14 PROMONTORY		0.8 miles 4 bd / 3.25 ba 3,000 Sq. Ft.
	$835,000 21341 HUNTKNOLL Ln		0.86 miles 4 bd / 3 ba 3,000 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 Mateo Residence One

Proprietary OC Housing News home purchase analysis

$567,000 …….. Asking Price

Cost of Home Ownership
——————————————————————————
$567,000 …….. Asking Price
$113,400 ………… 20% Down Conventional
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$453,600 …….. Mortgage
$121,771 ………. Income Requirement

$2,108 ………… Monthly Mortgage Payment
$491 ………… Property Tax at 1.04%
$294 ………… Mello Roos & Special Taxes
$142 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$110 ………… Homeowners Association Fees
============================================
$3,146 ………. Monthly Cash Outlays

($336) ………. Tax Savings
($680) ………. Equity Hidden in Payment
$144 ………….. Lost Income to Down Payment
$91 ………….. Maintenance and Replacement Reserves
============================================
$2,365 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,170 ………… Furnishing and Move In at 1% + $1,500
$7,170 ………… Closing Costs at 1% + $1,500
$4,536 ………… Interest Points
$113,400 ………… Down Payment
============================================
$132,276 ………. Total Cash Costs
$36,200 ………. Emergency Cash Reserves
============================================
$168,476 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

San Mateo Residence Two

Proprietary OC Housing News home purchase analysis

$577,000 …….. Asking Price

Cost of Home Ownership
——————————————————————————
$577,000 …….. Asking Price
$115,400 ………… 20% Down Conventional
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$461,600 …….. Mortgage
$123,642 ………. Income Requirement

$2,146 ………… Monthly Mortgage Payment
$500 ………… Property Tax at 1.04%
$294 ………… Mello Roos & Special Taxes
$144 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$110 ………… Homeowners Association Fees
============================================
$3,194 ………. Monthly Cash Outlays

($342) ………. Tax Savings
($692) ………. Equity Hidden in Payment
$146 ………….. Lost Income to Down Payment
$92 ………….. Maintenance and Replacement Reserves
============================================
$2,399 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,270 ………… Furnishing and Move In at 1% + $1,500
$7,270 ………… Closing Costs at 1% + $1,500
$4,616 ………… Interest Points
$115,400 ………… Down Payment
============================================
$134,556 ………. Total Cash Costs
$36,700 ………. Emergency Cash Reserves
============================================
$171,256 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

San Mateo Residence Three

Proprietary OC Housing News home purchase analysis

$603,000 …….. Asking Price

Cost of Home Ownership
——————————————————————————
$603,000 …….. Asking Price
$120,600 ………… 20% Down Conventional
3.78% …………. Mortgage Interest Rate
30 ……………… Number of Years
$482,400 …….. Mortgage
$128,509 ………. Income Requirement

$2,242 ………… Monthly Mortgage Payment
$523 ………… Property Tax at 1.04%
$294 ………… Mello Roos & Special Taxes
$151 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$110 ………… Homeowners Association Fees
============================================
$3,320 ………. Monthly Cash Outlays

($357) ………. Tax Savings
($723) ………. Equity Hidden in Payment
$153 ………….. Lost Income to Down Payment
$95 ………….. Maintenance and Replacement Reserves
============================================
$2,488 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,530 ………… Furnishing and Move In at 1% + $1,500
$7,530 ………… Closing Costs at 1% + $1,500
$4,824 ………… Interest Points
$120,600 ………… Down Payment
============================================
$140,484 ………. Total Cash Costs
$38,100 ………. Emergency Cash Reserves
============================================
$178,584 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

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.

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Redfin is the most popular real estate search site in Southern California. They track the most popular listings based on the number of views each receives. Below are some of the most viewed property listings in Orange County. Check them out.

6911 SAN JOAQUIN Cir Buena Park, CA 90620 — $380,000

6911 San Joaquin Cir, Buena Park, CA 90620 (MLS # P821192)

(all data current as of 5/18/2012)

Price	$380,000
Beds	4
Baths	2 full
Home size	1,670 sq ft
Lot Size	6,600 sq ft
Days on Market	13

This is a regular sale and not a 'flip'. The home is very cozy, open, and in the desirable 'San' tract. The location is fantastic, close to shopping and Knotts Berry Farm. The schools are great as well. Owner says they have permits on the room addition. Please verify.

Property Type(s): Single Family, Residential

Last Updated	5/9/2012	Tract	999 (OTHR)
Year Built	1955	Community	Buena Park
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	77

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

Listed with James Birmingham DRE# 01120287, 22nd Century Mortgage & Financ

(view all details for MLS #P821192)

	$350,000 8171 HOLDER St		0.13 miles 3 bd / 1.75 ba 1,400 Sq. Ft.
	$355,500 6178 FREMONT Way		0.91 miles 4 bd / 2 ba 1,497 Sq. Ft.
	$358,900 7054 ALBATROSS Dr		0.98 miles 3 bd / 2 ba 1,580 Sq. Ft.
	$369,900 5940 LOS ARCOS Way		1.05 miles 4 bd / 1.75 ba 1,370 Sq. Ft.
	$360,000 6788 Whitman Dr		1.1 miles 3 bd / 2 ba 1,268 Sq. Ft.
	$317,999 5909 East LOS SANTOS Way		1.14 miles 3 bd / 2 ba 1,287 Sq. Ft.
	$339,000 7899 CYCLAMEN Way		1.15 miles 3 bd / 1.75 ba 1,510 Sq. Ft.
	$378,900 7670 LARKSPUR Dr		1.17 miles 3 bd / 2 ba 1,293 Sq. Ft.
	$385,000 7970 CYCLAMEN Way		1.2 miles 3 bd / 2 ba 1,425 Sq. Ft.
	$349,900 5905 BOLIVIA Dr		1.21 miles 3 bd / 2.5 ba 1,368 Sq. Ft.

36 Greenspring, Rancho Santa Margarita, CA 92679 (MLS # S697346)

Beautiful and inviting home in the prestigious country club gated community of Dove Canyon. This a 4 bedroom plus an office that can be converted into a 5th bedroom(downstairs). One of the bedrooms upstairs may be converted into a bonus room (option from previous models). Enter the formal living room with soaring ceilings with high windows that offer great natural sunlight. Separate formal dining room. State of the art gourmet kitchen with upgraded counters, custom beautiful cabinetry and eating area opens to family room with fireplace. The upstairs has a master suite that overlooks the private backyard. The other bedrooms upstairs have built in shelving in the closets for extra storage. 24 hr. guard gated community includes four lighted tennis courts, Jr. Olympic swimming pool, spa, sport park, toddler park and access to miles of horse/hiking trails to Cleveland National Forest. Optional social or golf course membership. Enjoy cansual dining/barbecues to elegant galas! Must see!

Property Type(s): Single Family, Residential

Last Updated	5/12/2012	Tract	Waterford Crest (DWFC)
Year Built	1994	Community	Dove Canyon
Garage Spaces	3.0	County	Orange
Total Parking	9	Walk Score ®	17

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

Listed with BullockRuss TEAM DRE# 01343119, Keller Williams Realty

(view all details for MLS #S697346)

	$849,900 14 PROMONTORY		0.35 miles 4 bd / 3.25 ba 3,000 Sq. Ft.
	$749,000 39 HIGHPOINT		0.52 miles 4 bd / 3.5 ba 3,069 Sq. Ft.
	$619,000 21822 VIA DEL LAGO		0.57 miles 4 bd / 2.5 ba 3,184 Sq. Ft.
	$599,900 21831 VIA DEL LAGO		0.59 miles 4 bd / 2.5 ba 3,005 Sq. Ft.
	$699,000 27 BANSTEAD		0.66 miles 5 bd / 3 ba 2,750 Sq. Ft.
	$669,000 43 SUMMITCREST		0.66 miles 4 bd / 2.75 ba 2,900 Sq. Ft.
	$549,900 32031 LOMITA Dr		0.67 miles 4 bd / 3 ba 2,522 Sq. Ft.
	$575,000 21831 CAMINITO Dr		0.8 miles 5 bd / 3 ba 2,733 Sq. Ft.
	$600,000 21412 SILVERTREE Ln		0.88 miles 5 bd / 3 ba 3,000 Sq. Ft.
	$835,000 21341 HUNTKNOLL Ln		0.99 miles 4 bd / 3 ba 3,000 Sq. Ft.

26221 BEACHCOMBER Ln San Juan Capistrano, CA 92675 — $510,000

26221 Beachcomber Ln, San Juan Capistrano, CA 92675 (MLS # S697070)

(all data current as of 5/18/2012)

Price	$510,000
Beds	4
Baths	3 full, 1 half
Home size	2,517 sq ft
Lot Size	4,706 sq ft
Days on Market	13

Situated in an exclusive gated community of only 26 homes. This home boasts the second largest lot and the best location, with a private park behind. Close to schools, park and walking trails that take you to the beach. This home offers 4 bedrooms, 3.5 baths. Upgrades throughout including granite counters, hardwood floors and shutters, built in entertainment center, high ceilings, new carpet in bedrooms and newly installed wood stairs. The master suite has a large bath w/walk in closet. Two rooms are jack and jill, the 3rd has it's own bathroom. Private park is accessed at the end of the street. Seller is motivated!

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Summerwalk (SUMW)
Year Built	2000	Community	San Juan 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 Shari Miscione DRE# 01486252, Coldwell Banker Beachside

(view all details for MLS #S697070)

	$410,000 29822 SUMMER WALK Dr		0.04 miles 4 bd / 2.5 ba 2,300 Sq. Ft.
	$899,000 18 CIRCLE HILL Ct		0.82 miles 4 bd / 3 ba 2,500 Sq. Ft.
	$740,000 2 FAIR ELMS		0.9 miles 4 bd / 3 ba 2,604 Sq. Ft.
	$661,000 28922 DE LA LUNA Dr		0.95 miles 4 bd / 3.25 ba 2,881 Sq. Ft.
	$639,000 29822 SANDLING Ct		1.13 miles 4 bd / 2.5 ba 2,302 Sq. Ft.
	$775,000 25701 LA CIMA		1.17 miles 4 bd / 2.5 ba 3,000 Sq. Ft.
	$899,000 30431 MARBELLA Vis		1.21 miles 3 bd / 3.5 ba 2,987 Sq. Ft.
	$739,900 18 VISTAMAR Dr		1.5 miles 4 bd / 2.5 ba 2,535 Sq. Ft.
	$769,000 31281 PASEO SERENO		1.54 miles 3 bd / 2.5 ba 2,022 Sq. Ft.
	$630,000 1 DUFFIELD Ln		1.55 miles 4 bd / 2.5 ba 2,400 Sq. Ft.

5570 SOUTHWIND Ln Yorba Linda, CA 92887 — $545,000

5570 Southwind LN, Yorba Linda, CA 92887 (MLS # P821425)

(all data current as of 5/18/2012)

Price	$545,000
Beds	4
Baths	2 full, 1 three-quarter
Home size	2,700 sq ft
Lot Size	7,899 sq ft
Days on Market	9

LIVE IN THE NEW YORBA LINDA HIGH SCHOOL DISTRICT. Short Sale Approved in the past, call for details. This open and airy home offers so much wonderful living space, including a formal living room & formal dining room, as well as a downstairs office for your business or a place for the kids to study. With just a little bit of TLC this home would be amazing. In addition, the home offers 4 generously sized bedrooms as well as 3 full bathrooms, including a master bed & bath with a double sided fireplace! Bring your highest and best offer and we'll work it.

Property Type(s): Single Family, Residential

Last Updated	5/9/2012	Tract	Custom (CUST)
Year Built	1989	Community	Yorba Linda
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	8

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

Listed with Stephen Mortensen DRE# 01813078, Exotic Properties Realty Co.

(view all details for MLS #P821425)

	$800,000 5475 BAYBERRY Way		0.82 miles 4 bd / 3 ba 2,821 Sq. Ft.
	$589,000 5740 BERNARDO YORBA Ln		1.21 miles 4 bd / 2.5 ba 2,470 Sq. Ft.
	$1,069,000 5580 CAMINO DE BRYANT		1.28 miles 4 bd / 3 ba 3,023 Sq. Ft.

22472 HUMMINGBIRD Ln Lake Forest, CA 92630 — $400,000

22472 Hummingbird Ln, Lake Forest, CA 92630 (MLS # S697169)

(all data current as of 5/18/2012)

Price	$400,000
Beds	4
Baths	2 full
Home size	2,032 sq ft
Lot Size	7,125 sq ft
Days on Market	15

Spacious 3 bedroom + Den/office Home in the Woods. Property is single Story with High Ceilings, step down Family Room and Living Room. This is a fixer upper but has newer Dual Pane Windows, French Sliding Doors lead to back yard. Recently Upgraded hardwood flooring and baseboards. Central Air. Inside Laundry, walking distance to elementary, middle and high schools. Large covered patio with plenty of storage in 2 car garage. Sun and Sail Club Member, Association Pool and Spa with many other amenities

Property Type(s): Single Family, Residential

Last Updated	5/14/2012	Tract	Woods (TW)
Year Built	1977	Community	Lake Forest South
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	42

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

Listed with Robert Williams DRE# 00865263, Robert Lee Williams, Broker

(view all details for MLS #S697169)

	$495,000 22635 CLAUDE Cir		0.42 miles 3 bd / 2 ba 1,800 Sq. Ft.
	$450,000 22906 WILLARD Ave		0.43 miles 4 bd / 3.5 ba 2,100 Sq. Ft.
	$470,000 22932 SPRINGWATER		0.64 miles 4 bd / 2.5 ba 1,860 Sq. Ft.
	$429,999 21882 SIOUX Dr		0.65 miles 3 bd / 2.5 ba 1,789 Sq. Ft.
	$595,000 22181 East CRANE St		0.79 miles 4 bd / 3 ba 2,444 Sq. Ft.
	$465,000 22885 COSTA BELLA		0.81 miles 4 bd / 2.25 ba 2,248 Sq. Ft.
	$510,000 25432 ESROSE Ct		0.81 miles 4 bd / 2.5 ba 2,072 Sq. Ft.
	$610,000 23181 TULIP St		0.84 miles 6 bd / 2.75 ba 2,500 Sq. Ft.
	$584,900 21581 CALLE OTONO		0.9 miles 4 bd / 2 ba 2,146 Sq. Ft.
	$525,000 25866 VICAR Way		0.96 miles 4 bd / 2.5 ba 2,000 Sq. Ft.

23646 VIA HALCON Coto de Caza, CA 92679 — $939,000

23646 Via Halcon, Coto De Caza, CA 92679 (MLS # S697527)

(all data current as of 5/18/2012)

Price	$939,000
Beds	4
Baths	4 full, 1 half
Home size	5,100 sq ft
Lot Size	6,000 sq ft
Days on Market	8

Breathtaking panoramic views provide the perfect backdrop to this custom home located in the highly desired Village of Coto de Caza. The 5,100 sqft. home reflects true craftsmanship and attention to details. The 4 bedroom, 4.5 bath property offers wonderful curb appeal and an inviting floor plan that is highly upgraded. Among the homes features include a large gourmet kitchen with custom cabinets, a Wolfe Stove, 3 centimeter granite counter tops, formal living and dining areas, family room and separate media room. The home s 10 ft. ceilings help accentuate the imported porcelain flooring and new carpet. Low HOA fees and no mello-roos make the property very attractive for the discriminating buyer. Coto De Caza is one of the premiere gated communities in Orange County, with miles of hiking trials, an equestrian center, two championship caliber golf courses, a wonderful fitness and much more.

Property Type(s): Single Family, Residential

Last Updated	5/16/2012	Tract	Village (TV)
Year Built	1998	Community	Coto De Caza
Garage Spaces	3.0	County	Orange
Total Parking	9	Walk Score ®	11

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

Listed with BullockRuss TEAM DRE# 01343119, Keller Williams Realty

(view all details for MLS #S697527)

	$899,900 32011 VIA BUHO		0.06 miles 5 bd / 3.75 ba 4,600 Sq. Ft.
	$849,000 32041 VIA BUHO		0.09 miles 5 bd / 3.5 ba 4,000 Sq. Ft.
	$929,000 31942 VIA COYOTE		0.19 miles 4 bd / 5 ba 4,012 Sq. Ft.
	$929,000 31761 VIA PATO		0.21 miles 4 bd / 3.5 ba 3,800 Sq. Ft.
	$835,000 23581 VIA AGUILA		0.23 miles 4 bd / 3.5 ba 3,761 Sq. Ft.
	$859,000 31672 VIA PATITO		0.28 miles 2 bd / 3 ba 3,213 Sq. Ft.
	$595,000 23392 VIA ALONDRA		0.35 miles 3 bd / 3 ba 2,000 Sq. Ft.
	$749,900 23492 VIA ALONDRA		0.38 miles 5 bd / 4 ba 3,337 Sq. Ft.
	$700,000 8 THORN OAK		0.38 miles 5 bd / 3.25 ba 3,250 Sq. Ft.
	$789,000 23491 VIA ALONDRA		0.41 miles 3 bd / 2.5 ba 2,669 Sq. Ft.

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

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25262 PACIFICA Ave Mission Viejo, CA 92691 — $450,000

25262 Pacifica Ave, Mission Viejo, CA 92691 (MLS # S697468)

(all data current as of 5/18/2012)

Price	$450,000
Beds	5
Baths	3 full
Home size	2,570 sq ft
Lot Size	9,211 sq ft
Days on Market	9

Investors come quick! This home is an investors dream. 5 bedrooms 3 baths on a great lot located in the peaceful Aegean Hills North Neighborhood. This home is a major fixer, but also a major opportunity.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Aegean Hills North (AH)
Year Built	1969	Community	Mission Viejo North
Garage Spaces	2.0	County	Orange
Total Parking	6	Walk Score ®	58

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

Listed with Tanetha Corbin DRE# 01845875, Keller Williams OCC Realty

(view all details for MLS #S697468)

	$615,000 23702 BRASILIA St		0.36 miles 4 bd / 2.5 ba 2,415 Sq. Ft.
	$530,000 23942 WARSAW St		0.41 miles 4 bd / 3 ba 2,800 Sq. Ft.
	$450,000 24081 ANKARA St		0.45 miles 4 bd / 2.75 ba 2,606 Sq. Ft.
	$500,000 25732 PO Ave		0.47 miles 3 bd / 3 ba 2,875 Sq. Ft.
	$430,000 24851 STEM Ave		0.49 miles 4 bd / 2.5 ba 2,156 Sq. Ft.
	$649,000 24382 AUGUSTIN St		0.53 miles 4 bd / 2 ba 2,167 Sq. Ft.
	$525,000 24952 HON Ave		0.76 miles 4 bd / 2.5 ba 2,434 Sq. Ft.
	$510,000 25432 ESROSE Ct		0.87 miles 4 bd / 2.5 ba 2,072 Sq. Ft.
	$559,000 24812 ARGUS Dr		0.99 miles 5 bd / 2.75 ba 2,583 Sq. Ft.
	$610,000 23181 TULIP St		1 miles 6 bd / 2.75 ba 2,500 Sq. Ft.

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

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1050 BONNIE ANN Ct La Habra, CA 90631 — $374,000

1050 Bonnie Ann Court, La Habra, CA 90631 (MLS # T12057443)

(all data current as of 5/18/2012)

Price	$374,000
Beds	3
Baths	3 full, 1 half
Home size	2,145 sq ft
Lot Size	4,590 sq ft
Days on Market	14

This Beautyfull Home is Located in a Corner Lot in a nice area of La Habra. 2 Storie House with tile through-out, Nice size living Room, Spacious Living-Room, nice size Kitchen, 1/2 size bathroom downstairs, Laundry area downstairs, All Rooms Upstairs. Good size private-back. Located very close to freeway, Restaurants, Shopping centers.

Property Type(s): Single Family, Residential

Last Updated	5/10/2012	Tract	La Habra Hills Estates (lhle) (La Habra Hills Esta
Year Built	1979	Community	La Habra
Garage Spaces	2.0	County	Orange
Total Parking	2	Walk Score ®	72

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

Listed with Marcos Zeledon, Reliance Bay Realty

(view all details for MLS #T12057443)

	$520,000 910 NANTUCKET St		0.41 miles 4 bd / 2.25 ba 1,987 Sq. Ft.
	$350,000 510 North FONDA St		0.53 miles 4 bd / 3 ba 1,880 Sq. Ft.
	$335,000 617 East FLORENCE Ave		0.54 miles 3 bd / 1.75 ba 1,779 Sq. Ft.
	$685,900 2390 VISTA Rd		0.76 miles 3 bd / 2.75 ba 2,280 Sq. Ft.
	$925,000 1362 DOROTHEA Rd		1.03 miles 3 bd / 2 ba 2,400 Sq. Ft.
	$264,751 610 ORCHARD Pl		1.08 miles 3 bd / 2 ba 1,800 Sq. Ft.
	$678,000 1351 WARDMAN Dr		1.22 miles 5 bd / 2 ba 2,123 Sq. Ft.
	$445,000 1516 ZACHARY Ct		1.22 miles 4 bd / 2.75 ba 1,792 Sq. Ft.
	$429,000 1251 CITRUS Dr		1.32 miles 4 bd / 2.5 ba 2,055 Sq. Ft.
	$525,000 865 STARCREST St		1.41 miles 4 bd / 3 ba 2,460 Sq. Ft.

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

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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 5/18/2012)

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	8

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	5/11/2012	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)

	$445,000 158 North AVENIDA BARCA		0.5 miles 4 bd / 2.5 ba 2,369 Sq. Ft.
	$750,000 6164 East PASEO RIO VERDE		0.51 miles 4 bd / 3 ba 2,878 Sq. Ft.
	$1,289,000 230 S COUNTRY HILL Rd		0.57 miles 4 bd / 2.5 ba 3,500 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.
	$649,000 195 South EUCALYPTUS Dr		0.7 miles 3 bd / 1.75 ba 2,300 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.
	$949,000 6641 East CANYON HILLS Rd		0.82 miles 4 bd / 2.5 ba 3,232 Sq. Ft.
	$829,000 20510 VIA TENORIO		0.87 miles 4 bd / 3 ba 2,950 Sq. Ft.

1936 CELESTE Ln Fullerton, CA 92833 — $519,000

1936 Celeste Ln, Fullerton, CA 92833 (MLS # S696862)

(all data current as of 5/18/2012)

Price	$519,000
Beds	5
Baths	3 full, 1 half
Home size	3,392 sq ft
Lot Size	8,282 sq ft
Days on Market	14

House is nice with 5 bed rooms and 3.5 baths. House is in good neighbor. This house is shortsale. Drive by only. Please don't disturn owner or tenants in the house. House is subject to Lender approval and contigency to Buyer's inspection.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Fullerton Heights (FULH)
Year Built	1967	Community	Fullerton
Garage Spaces	3.0	County	Orange
Total Parking	6	Walk Score ®	40

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

Listed with Tam Nguyen DRE# 01759600, New Century Realty and Lending

(view all details for MLS #S696862)

	$789,000 1708 CALAVERA Pl		0.18 miles 4 bd / 4 ba 3,228 Sq. Ft.
	$629,000 2108 CALAVERA Pl		0.22 miles 6 bd / 3.25 ba 2,833 Sq. Ft.
	$899,000 1879 CATLIN St		0.29 miles 5 bd / 3.75 ba 3,850 Sq. Ft.
	$849,000 2253 CAMINO REY		0.29 miles 5 bd / 4 ba 3,525 Sq. Ft.
	$889,000 1477 THATCHER St		0.41 miles 4 bd / 3 ba 3,192 Sq. Ft.
	$950,000 1451 STEIN STRAUSS St		0.66 miles 5 bd / 4.5 ba 3,202 Sq. Ft.
	$814,800 2566 CAMINO DEL SOL		0.67 miles 5 bd / 3 ba 3,592 Sq. Ft.
	$959,000 2292 SHAPIRO St		0.71 miles 5 bd / 4.25 ba 3,229 Sq. Ft.
	$810,000 2508 CROWN Way		0.77 miles 4 bd / 2.5 ba 2,976 Sq. Ft.
	$777,000 1315 West VALLEY VIEW Dr		0.8 miles 4 bd / 2.5 ba 3,000 Sq. Ft.

18795 PASEO PICASSO Irvine, CA 92603 — $675,000

18795 Paseo Picasso, Irvine, CA 92603 (MLS # S697332)

(all data current as of 5/18/2012)

Price	$675,000
Beds	3
Baths	1 full, 1 three-quarter
Home size	1,500 sq ft
Lot Size	4,600 sq ft
Days on Market	10

Where else would the legacy of Pablo Picasso live on but this inspired, relaxing, rejuvenating sanctuary! The roses welcome as you glide up to the front brick patio flanked by a quiet fountain and spotless built in BBQ. The front doors are impossible! Gorgeous double door leaded glass with intricate beveling. Open into the LIGHT! High westward AND eastward windows snatch sunlight igniting the decadent distressed hardwood floors through out the living areas, showcasing the dining area wainscoting & artistic touches. Of course the kitchen's remodeled and the windows are dual paned! 3rd bedroom/office/den off the living room spills through the slider and into the side yard garden. 2nd bedroom complete with updated closets and sneak preview of the back yard! Glorious Master bedroom, dual vanity, plenty of mirrored closets and slider to the back yard! Magazine perfect! Entertain or nap in style! What a gem! Yes there's a youtube VIDEO, but make a visit to tantalize all your senses!

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Campus View (CV)
Year Built	1973	Community	Turtle Rock
Garage Spaces	2.0	County	Orange
Total Parking	6	Walk Score ®	43

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

Listed with Gregory Wakeham DRE# 01454067, Re/Max Premier Realty

(view all details for MLS #S697332)

	$659,000 18711 PASEO CORTEZ		0.1 miles 3 bd / 2 ba 1,419 Sq. Ft.
	$518,000 1 KLAMATH		0.75 miles 2 bd / 2 ba 1,457 Sq. Ft.
	$729,000 6 HAGGERSTON AISLE		0.93 miles 3 bd / 2.5 ba 1,730 Sq. Ft.
	$825,000 5462 SIERRA ROJA Rd		0.98 miles 3 bd / 2 ba 1,640 Sq. Ft.
	$525,000 34 ACACIA TREE Ln		1.04 miles 3 bd / 1.75 ba 1,560 Sq. Ft.
	$585,000 71 OAK TREE Ln		1.13 miles 2 bd / 1.75 ba 1,500 Sq. Ft.
	$619,000 10 SENISA		1.23 miles 3 bd / 2.25 ba 1,741 Sq. Ft.
	$549,000 12 REDWOOD TREE Ln		1.23 miles 3 bd / 1.75 ba 1,560 Sq. Ft.
	$609,000 13 BANYAN TREE		1.31 miles 3 bd / 1.75 ba 1,714 Sq. Ft.
	$849,900 6246 SIERRA PALOS Rd		1.39 miles 3 bd / 1.75 ba 1,549 Sq. Ft.

80 TOPAZ Irvine, CA 92602 — $439,000

80 Topaz, Irvine, CA 92602 (MLS # P820847)

(all data current as of 5/18/2012)

Price	$439,000
Beds	3
Baths	2 full, 1 half
Home size	1,497 sq ft
Lot Size	n/a
Days on Market	17

Highly sought after home in West Irvine Mandeville Tract. This 3 bedroom 2 1/2 bath,1500 Sg. Ft two story home has a loft (computer station). Kitchen with gas range,oven- microwave and dishwasher. Up-stairs laundry room, with storage. Stone tiles, wood flooring, and carpet with 2 inch wood shutters. Nook off kitchen with recessed lighting and sound and cozy fire place. End unit with Large,slate patio perfect for those summer BBQ's. Attached, direct access 2 car garage, community pool, tennis courts, and parks.

Property Type(s): Condominium, Residential

Last Updated	5/11/2012	Tract	Mandeville (MAND)
Year Built	2002	Community	West Irvine
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	60

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

Listed with Edward Bonilla DRE# 00752861, Realty One Group, Inc

(view all details for MLS #P820847)

	$469,800 56 SAPPHIRE		0 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$374,900 149 TOPAZ #13		0.05 miles 2 bd / 2.5 ba 1,459 Sq. Ft.
	$499,900 71 WATERMAN		0.07 miles 2 bd / 2 ba 1,640 Sq. Ft.
	$525,000 47 GRANADA		0.12 miles 2 bd / 2 ba 1,640 Sq. Ft.
	$439,000 22 STARWOOD #75		0.13 miles 3 bd / 2.5 ba 1,400 Sq. Ft.
	$399,898 1703 TERRA BELLA		0.18 miles 2 bd / 2.5 ba 1,343 Sq. Ft.
	$438,000 1302 TERRA BELLA #1		0.22 miles 3 bd / 2.5 ba 1,614 Sq. Ft.
	$372,000 404 TERRA BELLA		0.23 miles 2 bd / 2.5 ba 1,343 Sq. Ft.
	$475,000 76 BURLINGAME		0.26 miles 2 bd / 2.5 ba 1,670 Sq. Ft.
	$629,000 2981 W BRADLEY Pl		0.45 miles 3 bd / 2.25 ba 1,500 Sq. Ft.

1236 SCHOLARSHIP Irvine, CA 92612 — $300,000

We're sorry, but we couldn't find MLS # P821352 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

	$224,900 1142 SCHOLARSHIP		0 miles 1 bd / 1 ba 750 Sq. Ft.
	$430,000 2305 WATERMARKE Pl		0.1 miles 2 bd / 2 ba 1,123 Sq. Ft.
	$429,000 2349 WATERMARKE Pl		0.1 miles 1 bd / 1 ba 818 Sq. Ft.
	$594,000 5034 SCHOLARSHIP		0.21 miles 1 bd / 1.25 ba 1,175 Sq. Ft.
	$524,700 5045 SCHOLARSHIP		0.21 miles 1 bd / 1.5 ba 1,175 Sq. Ft.
	$405,000 3132 WATERMARKE Pl		0.21 miles 2 bd / 2 ba 1,123 Sq. Ft.
	$289,000 3147 WATERMARKE Pl		0.21 miles 1 bd / 1 ba 842 Sq. Ft.
	$445,000 3222 WATERMARKE Pl		0.21 miles 2 bd / 2 ba 1,250 Sq. Ft.
	$318,888 2253 MARTIN #115		0.51 miles 1 bd / 1 ba 934 Sq. Ft.
	$328,000 2253 MARTIN #408		0.51 miles 1 bd / 1 ba 934 Sq. Ft.

1007 SOLVAY AISLE Irvine, CA 92606 — $265,900

1007 Solvay Aisle, Irvine, CA 92606 (MLS # S697154)

(all data current as of 5/18/2012)

Price	$265,900
Beds	1
Baths	1 full
Home size	925 sq ft
Lot Size	n/a
Days on Market	11

Private interior location. Bright, light and airy floor plan, with no one above or below, upgraded wood flooring, stacked slate accent wall, built in storage space with granite counter top, fresh paint & carpeting, upgraded lighting, fireplace in living room, master includes walk in closet with built in organizer & dresser, inside laundry, balcony, and detached 1 car garage. Sparkling association amenities include pool, spa, parks, basketball court, tennis, tot lots, greenbelts and more! Close to great schools including UCI, Plaza Vista Elementary, shopping, entertainment and more!

Property Type(s): Condominium, Residential

Last Updated	5/15/2012	Tract	Brio (BRIO)
Year Built	1996	Community	Westpark
Garage Spaces	1.0	County	Orange
Total Parking	3	Walk Score ®	77

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

Listed with Fred Stepanian DRE# 00792314, Prudential California Realty

(view all details for MLS #S697154)

	$275,000 1305 SOLVAY AISLE		0 miles 1 bd / 1 ba 785 Sq. Ft.
	$369,900 428 SILK TREE		0.55 miles 2 bd / 2 ba 1,056 Sq. Ft.
	$399,000 436 SILK TREE		0.55 miles 2 bd / 2.5 ba 1,209 Sq. Ft.
	$349,900 10 GREENLEAF #16		0.83 miles 2 bd / 1.5 ba 1,022 Sq. Ft.
	$439,900 19 CREEKWOOD #65		0.84 miles 2 bd / 2 ba 1,235 Sq. Ft.
	$369,000 9 FOX HOLLOW Holw #13		1.03 miles 3 bd / 2 ba 1,114 Sq. Ft.
	$332,900 22 MARBELLA AISLE #12		1.05 miles 2 bd / 2 ba 890 Sq. Ft.
	$314,900 100 ALICANTE AISLE #142		1.09 miles 2 bd / 2 ba 840 Sq. Ft.
	$448,500 31 GIOVANNI AISLE		1.14 miles 2 bd / 2 ba 1,032 Sq. Ft.
	$399,000 4 BUTTERFIELD #2		1.28 miles 3 bd / 2 ba 1,250 Sq. Ft.

76 BURLINGAME Irvine, CA 92602 — $475,000

76 Burlingame, Irvine, CA 92602 (MLS # S696755)

(all data current as of 5/18/2012)

Price	$475,000
Beds	2
Baths	2 full, 1 half
Home size	1,670 sq ft
Lot Size	n/a
Days on Market	17

Great Northpark 2 story home w/ cul de sac location, near shopping and restaurants. Greenbelt area, with many ammenities. Travertine flooring, granite kitchen w/ full splash, plantation shutters. Ceiling fans, and maple cabinets. Backyard backs up to greenbelt. Direct acess 2 car garage, gated community, pool, spa, sport court, greenbelts, clubhouse, plus more.

Property Type(s): Condominium, Residential

Last Updated	5/4/2012	Tract	Brisbane (BRIB)
Year Built	2000	Community	Northpark
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	40

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

Listed with Adam Alcaraz DRE# 01225657, Regency Real Estate Brokers

(view all details for MLS #S696755)

	$372,000 404 TERRA BELLA		0.03 miles 2 bd / 2.5 ba 1,343 Sq. Ft.
	$399,898 1703 TERRA BELLA		0.08 miles 2 bd / 2.5 ba 1,343 Sq. Ft.
	$438,000 1302 TERRA BELLA #1		0.08 miles 3 bd / 2.5 ba 1,614 Sq. Ft.
	$469,800 56 SAPPHIRE		0.26 miles 3 bd / 2.5 ba 1,500 Sq. Ft.
	$439,000 80 TOPAZ		0.26 miles 3 bd / 2.5 ba 1,497 Sq. Ft.
	$374,900 149 TOPAZ #13		0.29 miles 2 bd / 2.5 ba 1,459 Sq. Ft.
	$499,900 71 WATERMAN		0.32 miles 2 bd / 2 ba 1,640 Sq. Ft.
	$439,000 22 STARWOOD #75		0.32 miles 3 bd / 2.5 ba 1,400 Sq. Ft.
	$564,900 56 AUTUMN		0.34 miles 3 bd / 2.75 ba 1,858 Sq. Ft.
	$525,000 47 GRANADA		0.35 miles 2 bd / 2 ba 1,640 Sq. Ft.

17 CITY STROLL Irvine, CA 92620 — $513,490

17 City Stroll, Irvine, CA 92620 (MLS # S696916)

(all data current as of 5/18/2012)

Price	$513,490
Beds	2
Baths	2 full, 1 half
Home size	1,858 sq ft
Lot Size	n/a
Days on Market	14

Enjoy loft like living in this gorgeous home with 12 spacious 12 foot ceilings! This single level attached home is well appointed with an open kitchen and dining area looking out to a covered exterior patio. Dual masters, plus an office or den make this home ideal for any family. Fixtures include gourmet kitchen with granite countertops, stainless steel appliances and more included options! This home has an oversized interior laundry room with sink and cabinets and oversized two car garage, as well as ample storage space. Located in the desirable Village of Woodbury, just outside your door is shopping, parks, pools and more. One of the last opportunities to own a brand-new home in Woodbury. Charming motor courts provide access to oversized 2 car attached garages. Within walking distance to stores, restaurants, entertainment at Woodbury Town Center, and it's less than two miles from the I-5 and even closer to the 133 Toll Road.

Property Type(s): Condominium, Residential

Last Updated	5/7/2012	Tract	Esplanade (OTHR)
Year Built	2012	Community	Woodbury
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	58

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

Listed with Philip Bodem DRE# 00968975, Taylor Morrison Services, Inc.

(view all details for MLS #S696916)

	$475,000 65 MISSION BELL		0.08 miles 2 bd / 2 ba 1,530 Sq. Ft.
	$699,000 55 PLANTATION		0.25 miles 3 bd / 2.75 ba 1,964 Sq. Ft.
	$739,000 88 TWIN GABLES		0.26 miles 3 bd / 2.75 ba 1,964 Sq. Ft.
	$535,000 62 TOWNSEND		0.52 miles 3 bd / 2.5 ba 1,824 Sq. Ft.
	$547,000 57 CONCIERTO		0.62 miles 3 bd / 3.25 ba 2,165 Sq. Ft.
	$545,000 59 CONCIERTO		0.62 miles 3 bd / 2.75 ba 2,026 Sq. Ft.
	$515,000 35 PEONY		0.73 miles 2 bd / 2.5 ba 1,685 Sq. Ft.
	$479,000 54 PEONY		0.74 miles 2 bd / 2.5 ba 1,685 Sq. Ft.
	$199,000 5200 IRVINE Blvd #115		1.02 miles 2 bd / 1.75 ba 2,040 Sq. Ft.
	$198,000 5200 IRVINE Blvd #79		1.02 miles 2 bd / 1.75 ba 1,700 Sq. Ft.

28 Wintersweet Way, Irvine, CA 92612 (MLS # S697460)

Beautiful expanded Fordham model features 4 bedrooms, 2.5 baths in private location in desirable University Park. Remodeled gourmet kitchen with granite counters, stainless appliances, and chic metal tile backsplash. Two bedrooms are enlarged and share a bonus retreat. Master also enlarged, features a retreat, walk-in closet, and fireplace Added den area off kitchen and living room makes for a spacious open floor plan. Huge backyard, great for entertaining backs to greenbelt. Other upgrades include built in Flat Screen with all components, new certified roof, scraped ceilings, recessed lighting, tankless water heater, newer AC, new landscaping, mature fruit trees.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Village I (V1)
Year Built	1966	Community	University Park
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	75

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

Listed with Tania Grindeman DRE# 01249709, RE/MAX Select One

(view all details for MLS #S697460)

28 WINTERSWEET Way Irvine, CA 92612 — $614,900

28 Wintersweet Way, Irvine, CA 92612 (MLS # S697460)

(all data current as of 5/18/2012)

Price	$614,900
Beds	4
Baths	2 full, 1 half
Home size	2,400 sq ft
Lot Size	3,200 sq ft
Days on Market	9

Beautiful expanded Fordham model features 4 bedrooms, 2.5 baths in private location in desirable University Park. Remodeled gourmet kitchen with granite counters, stainless appliances, and chic metal tile backsplash. Two bedrooms are enlarged and share a bonus retreat. Master also enlarged, features a retreat, walk-in closet, and fireplace Added den area off kitchen and living room makes for a spacious open floor plan. Huge backyard, great for entertaining backs to greenbelt. Other upgrades include built in Flat Screen with all components, new certified roof, scraped ceilings, recessed lighting, tankless water heater, newer AC, new landscaping, mature fruit trees.

Property Type(s): Single Family, Residential

Last Updated	5/15/2012	Tract	Village I (V1)
Year Built	1966	Community	University Park
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	75

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

Listed with Tania Grindeman DRE# 01249709, RE/MAX Select One

(view all details for MLS #S697460)

	$659,000 34 REDWOOD TREE Ln		0.36 miles 4 bd / 2.5 ba 2,200 Sq. Ft.
	$765,000 18 FOXGLOVE Way		0.42 miles 4 bd / 2.5 ba 2,862 Sq. Ft.
	$659,500 17501 TEACHERS Ave		0.54 miles 5 bd / 2.25 ba 2,067 Sq. Ft.
	$769,000 4882 RAIN TREE Ln		0.64 miles 5 bd / 2.75 ba 2,511 Sq. Ft.
	$1,060,000 15 WATERSIDE		0.85 miles 4 bd / 3 ba 2,366 Sq. Ft.
	$768,000 32 SORRENTO		0.87 miles 4 bd / 2.75 ba 2,138 Sq. Ft.
	$889,000 8 RAINSTAR		0.9 miles 4 bd / 2.5 ba 2,500 Sq. Ft.
	$928,000 15 DAYBREAK		0.97 miles 4 bd / 3 ba 2,366 Sq. Ft.
	$864,800 10 ANDALUCIA		1.06 miles 4 bd / 2.5 ba 2,450 Sq. Ft.

53 CARTIER AISLE Irvine, CA 92620 — $399,000

53 Cartier Aisle, Irvine, CA 92620 (MLS # L38810)

(all data current as of 5/18/2012)

Price	$399,000
Beds	3
Baths	2 full
Home size	1,679 sq ft
Lot Size	n/a
Days on Market	9

**SHORT SALE** 2 story condo with all rooms on top floor. Hardwood floors throughout. Steps to the assoc. pool and spa. 1 car attached garage, with another 1 car detached garage. Granite counter tops in kitchen. End unit.

Property Type(s): Condominium, Residential

Last Updated	5/15/2012	Tract	Northwood Villas (NV)
Year Built	1989	Community	Northwood
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	68

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

Listed with Randy Benson DRE# 00946856, South Coast Real Estate Investments

(view all details for MLS #L38810)

	$488,000 3 ERICSON AISLE		0 miles 3 bd / 3 ba 1,768 Sq. Ft.
	$439,000 12 HELENA #76		0.43 miles 3 bd / 2.5 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.
	$631,949 30 SOMERTON #44		0.98 miles 3 bd / 2.5 ba 1,824 Sq. Ft.
	$599,000 70 PENDANT		0.98 miles 3 bd / 2.5 ba 1,636 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.

Sign up for the OC Housing News monthly market newsletter.

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

As the author of The Great Housing Bubble, I am an authority on the housing bubble. As someone who has written daily about the myriad of circumstances and consequences of the bubble, I have examined this phenomenon from every conceivable perspective. One of the great features of blogging is the constant exposure to other points of view on these issues. If there is something I miss, a reader usually points it out. The astute observations have greatly increased my understanding of these issues. For all these reasons, I would compare my understanding of the housing bubble with anyone, and from what I read coming from the economists at the federal reserve, they are still years behind what the readers of this blog already understand.

The federal reserve paper below that is the focus of today’s post is a major leap forward for the federal reserve’s understanding of the housing bubble. The authors conclude the bubble was a financial mania based on the erroneous beliefs of market participants. This is a huge step forward. The paper dispels many of the popular myths surrounding the housing bubble, but they also discount some of its basic truths. In the end, they reveal they have no idea why market participants lost their minds, and thereby erroneously conclude nothing can be done to prevent housing bubbles. As a result of their failure to understand the causal mechanism, they propose policies to mitigate the impact of bubble rather than to try to prevent them. This is very wrong and very dangerous. The result of this ignorance will likely be another housing bubble.

Download (PDF, 1.66MB)

The weakness of this study is its failure to provide a causal mechanism for the bubble. Economists tend to break down into two camps, those that understand large-scale issues, and those that understand the impact of individual incentives: the macro and the micro. This schism in economics is a hindrance to understanding the housing bubble. The reason participants in the housing bubble lost their minds is because they had individual incentive to do so.

Borrowers and buyers saw the opportunity for unlimited wealth and spending power (please see: Desire for mortgage equity withdrawal inflated the housing bubble). Investors saw an opportunity for relatively high yields with little risk. Lenders and loan originators saw opportunity for large fees, and realtors went along for the free ride as they always do. Everyone was making money, even the parties taking on the risk through credit default swaps. Underlying it all was a steadfast belief house prices cannot go down — a delusion reinforced by 60 years of steadily rising house prices. Since no parties to the transaction perceived any risk, and since everyone was profiting from the transactions, the individual incentives were bound to spark demand.

The federal reserve paper fails to understand the incentives of the parties as outlined above. With a huge demand for real estate from everyone concerned, the only thing preventing a bubble was the checks and balances in the system. These include appraisals, underwriting, and government regulation. Each of these was systematically dismantled by the relentless push of high demand. A body of regulations are required to prevent the incentives in the system from removing the barriers in the system that prevent housing bubbles from forming.

For example, when appraisers were made independent, a valuable restraint was put into the system. If appraisers are paid to provide an impartial estimation of value rather than being pressured to “hit the number,” they will function as a natural restraint against exuberant market participants. As another example, in Texas, mortgage equity withdrawal cannot exceed 80% of the value of the property. This effectively shuts down the housing ATM and kills the incentive of buyers and borrowers to overpay for HELOC booty because the free money was not forthcoming. Texas did not participate in the housing bubble for this reason. And as an example of the federal reserve’s failure, the lack of regulations on credit default swaps caused a dramatic mis-pricing of risk which gave investors a false sense of security on their investment. It wasn’t just that investors didn’t think prices could go down, they believed they had insurance against loss if they did. Each of the above examples demonstrate where regulations impact the individual incentives, and changing those incentives would change the behaviors of the participants in a way that lessens the likelihood of a future housing bubble.

In the end, the biggest barrier the federal reserve will have in preventing another housing bubble will come from its own member banks. Preventing a housing bubble ultimately means limiting lending. Housing bubble are inflated with air provided by lenders. This paper draws erroneous conclusions largely because the authors don’t want to rock the boat and propose any solution which would inhibit lending. Unfortunately, inhibiting lending is exactly what’s required to prevent another housing bubble.

Twelve Facts That May Surprise You About the Housing Bust

By Nick Timiraos — May 4, 2012

What if the conventional wisdom about the mortgage crisis is all wrong?

That’s the implication of a new paper from economists at the Federal Reserve Banks of Atlanta and Boston that’s bound to spark debate because, if their premises are correct, it sharply undercuts the justification for much of the new regulation that’s been erected over the past two years.

Three economists, Christopher Foote, Kristopher Gerardi, and Paul Willen, present two narratives of the financial crisis in trying to answer why so many people made so many dumb decisions.

The first view is that the financial crisis was an “inside job” where various industry players, from the mortgage lenders to mortgage traders, took advantage of unsophisticated rubes, from homeowners to mortgage investors.

This isn’t as much a coherent theory as it is a politically expedient argument used by both sides for supporting different agendas. The political left uses this as a justification for its pandering to loan owners. The political right uses this theory as a reason to shut down the GSEs. Both use sides use half-truths to further their agenda as all politicians do.

They largely discard that view for a second one—the “bubble theory” where delusional attitudes about home prices, not distorted incentives, fueled poor decision making.

No one doubts that mortgage credit expanded, the authors concede, or that many borrowers received loans that they wouldn’t normally have qualified for. “The only question is why the credit expansion took place,” they write. Securitization, for example, didn’t by itself cause the crisis, but instead channeled money “with ruthless efficiency” that “may have allowed speculation on a scale that would have been impossible to sustain” in the past.

The paper is correct in identifying a rapid credit expansion fueled by excessive optimism as the reason house prices went up; however, they utter fail to identify the individual incentives that created the excessive optimism, and therefore they fail to craft useful policy proposals to change those incentives.

The entire paper is worth reading, but here’s a synopsis of the “12 facts” that help shape their view:

Fact 1: Resets of adjustable-rate mortgages did not cause the foreclosure crisis. The authors find that the 84% of these borrowers who went into foreclosure were making the same payment when they first defaulted as when they took out their loan. The conclusion: adjustable-rate loans performed worse than fixed-rate loans because they attracted less creditworthy borrowers, “not because of something inherent in the ARM contract itself.”

This is half true. ARM resets did not cause problems. They would have, but they didn’t get the chance. First, many borrowers couldn’t afford the teaser rates, so they were doomed to implode even before the reset. Second, falling interest rates made the payment shock much less for many borrowers. The real problem was going to be when the loans recast to fully amortizing loans, but since so few survived to see the payments recast, this ended up not being a problem. In other words, what would have been a problem failed to become one because even more serious problems intervened first. It’s like Lee Harvey Oswald being shot on his way to trial. He was doomed at trial, but he was killed before he even got there.

Fact 2: No mortgage was “designed to fail.” Instead, the products weren’t designed to sustain a drastic decline in home prices.

This is dangerously stupid. Option ARMs can only succeed in a market where prices appreciate faster than the debt accumulates. This is a Ponzi loan, and it should be recognized as such. Both interest-only and negative amortization loans are designed to fail, not by choice, but by the fact they have embedded within them the necessity of increasing prices to sustain the Ponzi scheme.

Fact 3: There was little innovation in mortgage markets in the 2000s. Loans that required reduced documentation (what became known as the “liar’s loan”) or that had negative amortization (the “pick-a-payment” loan) had been around in the 1980s and 1990s. Instead, what happened during the last decade was that these niche products became mainstream.

This is true, but why were these loans allowed to go mainstream? That is a failure of regulation and underwriting.

Fact 4: Government policy toward the mortgage market did not change much from 1990 to 2005. Low down payment loans were introduced by the government…in the 1940s. “It is impossible to find any government housing initiative in recent years that is remotely comparable” to the expansion of government’s expansion in the post-World War II period, the authors write.

This is true, and it’s one of the reasons the political right’s arguments against the GSEs are disingenuous bullshit. Personally, I believe the GSEs should go away, but not for the reasons given by the political right.

Fact 5: The originate-to-distribute model was not new. Secondary mortgage markets, where investors bought loans from originators, had been around since the 1970s. And before that, mortgage companies had sold their loans to insurance companies.

The mechanism that delivered capital to the housing bubble was not the culprit. We need a secondary mortgage market to ensure the nationwide flow of capital where it is needed.

Fact 6: MBS, CDOs, and other “complex financial products” had been widely used for decades. “The idea that the boom in securitization was some exogenous event that sparked the housing boom receives no support from the institutional history of the American mortgage market,” the authors write, though the types of collateral backing those products certainly did change.

CDOs themselves were not the problem. The mis-pricing of risk and thereby the mis-pricing of these assets was the problem. Captured ratings agencies and unregulated credit default swaps were a big part of the problem here.

Fact 7: Mortgage investors had lots of information. Of course, investors may simply have paid less attention to this information because many securities received triple-A ratings. (Some may take issue with this point due to the level of fraud that surprised many of the most well-informed market analysts).

Fact 8: Investors understood the risks. Some mortgage analysts had published “remarkably accurate predictions about losses” if home prices turned down. The bigger question, the authors raise, is that “given how badly these loans were expected to perform, why did investors buy them?”

Investors did have good information, and they did understand the theoretical risk, but they had no concept of the actual risk they took on. Rating agency rubber stamps, and a faith in ever-increasing prices caused them to ignore the risks as a very low probability event.

Fact 9: Investors were optimistic about house prices. This helps answer the aforementioned question.

Everyone was overly optimistic about house prices. This was the central problem of the housing bubble.

Fact 10: Mortgage market insiders were the biggest losers. The firms that were the most involved in the market and which retained the most risk on their balance sheet, either via whole loans (option adjustable-rate mortgages at Wachovia) or securitized loans (at Bear Stearns), fared the worst.

Only stupid mortgage market insiders retained risk. Most cashed out and took their fees. Anthony Mozilo comes to mind.

Fact 11: Mortgage market outsiders were the biggest winners. The “big shorts” such as John Paulson and Michael Burry were relative newcomers to the mortgage market. Their insight about a housing bubble and “not any fact about credit, the origination process, or moral hazard” led them to make their winning bets.

A few brilliant and insightful investors did well, but most outsiders — which includes the clueless sheeple who bought the fantasy — got cleaned out.

Fact 12: Top-rated bonds backed by mortgages did not turn out to be “toxic.” Top-rated bonds in collateralized debt obligations (CDOs) did.

This is an unimportant semantic distinction. Everyone who bought mortgage bonds had poorer returns than they anticipated. How much poorer depended on the degree of leverage and the priority of returns.

So what are the implications of these 12 facts? In sum, the housing-finance universe of the future—for both banks and borrowers—should be prepared to withstand greater home-price volatility.

This is their dangerously ignorant conclusion. They are throwing their hands up and saying we can’t prevent bubbles. Nothing could be further from the truth. Many common sense policies could change the incentives in a way to prevent the market participants from either wanting or allowing a new bubble to form. In surrendering when regulators should be fighting practically ensures future housing bubbles. That makes me angry because as a taxpayer, I will undoubtedly be on the hook to pay for the next one.

Does this mean regulators spooning out the wrong medicine? Possibly. “Unfortunately,” the authors write, “none of the new mortgage disclosure forms proposed by regulators includes the critical piece of information that borrowers need to know: There is a chance that the house they are buying will soon be worth substantially less than the outstanding balance on the mortgage.”

Disclosures wouldn’t matter anyway. I told people not to buy homes for nearly five years, and gave detailed explanations of why, and most still didn’t believe me. Any routine disclosure will be routinely ignored by a borrower who believes their house prices will go up and they will get unlimited HELOC spending money.

The only way to prevent future housing bubbles is to change the incentives of the parties. Right now, not just do we lack the political will to do the right things, this federal reserve paper clearly demonstrates policymakers don’t have the requisite understanding to prevent housing bubbles even if they wanted to.

Half a million reasons to overpay for real estate

Personally, I don’t see what is so difficult to understand about how individual buyer’s incentives drove people to pay any price for real estate. Perhaps the concept of mortgage equity withdrawal is too abstract. Readers of this blog have seen documented cases day after day of people like today’s former owners who put $20,000 into a property and got to take $500,000 out. No other investment offers such a lucrative payout. Plus, the loan owner get’s to live in a nice house too. It’s the best of both worlds. As long as the ability to get so much for so little exists, people will have a strong incentive to inflate housing bubbles.

• The former owners of today’s featured property paid $195,000 on 12/20/1993. They used a $175,00 first mortgage and a $20,000 down payment.
• On 6/9/1999 they got their first taste of HELOC booty with a $50,000 bank gift. It must have been well received.
• On 10/6/1999, a scant 4 months later, they went to the housing ATM for another $83,800.
• On 6/29/2001 they obtained a $142,115 HELOC.
• On 7/11/2003 they obtained a $300,000 first mortgage.
• On 10/31/2003 they opened a $99,000 HELOC.
• On 1/3/2005 they obtained a $250,000 HELOC.
• On 8/11/2006 they refinanced with a $570,000 first mortgage.
• On 8/27/2007 they got a $108,100 HELOC.
• Total mortgage debt was $678,100.
• Total mortgage equity withdrawal was $503,100.
• They quit paying in mid 2009 and got to squat for over two years.

This isn’t rocket science. Look at how these people lived. The desire to turn $20,000 into $500,000 is what fueled the housing bubble.

Lake Forest Overview

Median home price is $345,000. Based on a rental parity value of $488,000, this market is under valued.

Monthly payment affordability has been improving over the last 5 month(s). Momentum suggests improving affordability.

Resale prices on a $/SF basis increased to $221/SF to $223/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 $2,066 to $2,050.

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

Market rating = 9

Proprietary OC Housing News home purchase analysis

12 FAIRFIELD Lake Forest, CA 92610

$500,000 …….. Asking Price
$195,000 ………. Purchase Price
8/2/1993 ………. Purchase Date

$305,000 ………. Gross Gain (Loss)
($15,600) ………… Commissions and Costs at 8%
============================================
$289,400 ………. Net Gain (Loss)
============================================
156.4% ………. Gross Percent Change
148.4% ………. Net Percent Change
5.1% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$500,000 …….. Asking Price
$17,500 ………… 3.5% Down FHA Financing
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$482,500 …….. Mortgage
$136,936 ………. Income Requirement

$2,248 ………… Monthly Mortgage Payment
$433 ………… Property Tax at 1.04%
$158 ………… Mello Roos & Special Taxes
$125 ………… Homeowners Insurance at 0.3%
$503 ………… Private Mortgage Insurance
$70 ………… Homeowners Association Fees
============================================
$3,538 ………. Monthly Cash Outlays

($343) ………. Tax Savings
($720) ………. Equity Hidden in Payment
$22 ………….. Lost Income to Down Payment
$83 ………….. Maintenance and Replacement Reserves
============================================
$2,579 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$6,500 ………… Furnishing and Move In at 1% + $1,500
$6,500 ………… Closing Costs at 1% + $1,500
$4,825 ………… Interest Points
$17,500 ………… Down Payment
============================================
$35,325 ………. Total Cash Costs
$39,500 ………. Emergency Cash Reserves
============================================
$74,825 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

12 Fairfield, Lake Forest, CA 92610 (MLS # S696613)

FOOTHILL RANCH BEAUTY LOOKING FOR SOMEONE TO LOVE IT AND MAKE IT A HOME!! OPEN, LIGHT & AIRY FLOOR PLAN! 4 BEDROOMS & A LOFT W/2.5 BATHS JUST WAITING FOR YOU TO BE ALL MOVED IN BY SUMMER TIME TO ENJOY ALL THAT FOOTHILL RANCH HAS TO OFFER!!

Property Type(s): Single Family, Residential

Last Updated	5/2/2012	Tract	Vintage Promenade (FHVP)
Year Built	1992	Community	Foothill Ranch
Garage Spaces	2.0	County	Orange
Total Parking	4	Walk Score ®	57

Location

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

Listed with Stacie Cunningham DRE# 01294045, Allison James Estates & Homes

(view all details for MLS #S696613)

	$475,000 54 CARRIAGE Dr		0.19 miles 3 bd / 2.5 ba 1,406 Sq. Ft.
	$409,900 23 KENDALL Pl		0.21 miles 3 bd / 2.5 ba 1,350 Sq. Ft.
	$599,900 8 MONTECILO		0.21 miles 4 bd / 2.5 ba 1,920 Sq. Ft.
	$434,900 10 CAMERON Cir		0.22 miles 4 bd / 2.5 ba 1,600 Sq. Ft.
	$720,000 4 Montecilo		0.23 miles 3 bd / 2 ba 1,700 Sq. Ft.
	$445,000 -		0.76 miles 4 bd / 2.5 ba 1,650 Sq. Ft.
	$460,000 2 TAMBOUR Pl		0.86 miles 4 bd / 2.75 ba 1,809 Sq. Ft.
	$475,000 12 BALISE Ln		0.87 miles 3 bd / 2.5 ba 1,625 Sq. Ft.
	$566,000 2 PARTERRE Ave		1.25 miles 4 bd / 2.75 ba 1,900 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."

For those planning on a long term of ownership, interest rates below 4% have made payment affordability the best its been in years, perhaps ever. The prices still seem ridiculously inflated, but record low interest rates make borrowing such large sums possible. Those low rates even drive the cost of ownership below the cost of comparable rentals, in some markets substantially below.

It should be no surprise that many of the bubble-era communities and the less desirable older communities have prices well below rental parity. The less desirable communities always have a slight discount to rental parity, so when mortgage distress is added in, prices get pushed even farther below. The bubble-era communities were loaded with toxic mortgages and HELOC abusing Ponzis. The foreclosure rates in those areas are much higher than more established desirable communities. However, this does create a unique opportunity today’s homebuyers should consider. For example, Columbus Grove in Irvine is much nicer than the pricing would suggest, and the same is true of Ladera Ranch. In fact, I would say Ladera Ranch is one of the best values for the money today in Orange County real estate.

The problem in Orange County right now is a lack of inventory. Discretionary sellers are unwilling to sell at current pricing (although they don’t mind polluting the MLS with their WTF asking prices), and lenders stopped putting REO on the market. Lenders approved a few more short sales, and fewer new short sale listings have come on to take their place. The result is an astonishing decline in for-sale inventory.

Ordinarily, the first business day of the year is the low for the year of for-sale inventory. The dramatic decline we have seen this year is unprecedented — and completely artificial. Lenders are not out of delinquent mortgage squatters they can foreclose on. They have just decided to slow their foreclosures and slow their release of MLS inventory until prices bottom.

Perhaps lenders hope they can cause people to up their bids or substitute to lesser quality housing and house prices will go up. Early signs are that a typical spring rally pattern has set in, but the rally is not as robust as realtors would lead you to believe.

The spring rally is more of a blip than a burst, not that sellers believe that. The kool aid flowing into the market is rather amusing. What’s actually closing is much less dramatic.

The result of the banks withholding inventory is many frustrated buyers. Prices may bounce for a while as lenders continue withholding supply, but prices will not go up too far too fast because buyers have limited ability to raise their bids. People today have to qualify based on their real and verifiable income, and very few have any equity or savings to put into the deal. Further, appraisers are not playing the “hit the numbers” game, so many deals are falling out of escrow because the appraised values are not there.

With so many houses falling out of escrow, the successful buyers in today’s market are putting in back-up offers on several properties. There is a good chance the buyer in first position will not be able to close the deal, so many back-up offers end up going into escrow later. With so many buyers bidding on multiple properties, and with so few available on the MLS, nearly every property is receiving multiple offers. In such an environment, few good deals are to be had. That being said, the closing prices on properties may not represent good deals in today’s market, but in areas where the market is undervalued, these sales are good deals in the big picture. The trick is knowing where the markets are undervalued. That’s where our monthly market newsletter comes in.

Even the valuations in Irvine are becoming attractive.

As I have expressed on numerous occasions, I doubt we have seen the nominal bottom in house prices. There are still thousands of bad loans to process. It will take 8.7 years to clear Orange County distressed inventory at a stable liquidation rate. While it’s possible this spring was the nominal low, it’s equally possible it will be next spring or the spring after that. Far too many headwinds face the market to start worrying about being priced out for another housing bubble.

From Ponzi, to squatter, to shadow inventory, to the MLS

The journey of this property is typical of many in Orange County. It was purchased by a Ponzi near the bottom of the last recession, and when prices started going up, the Ponzi borrowing began. After imploding, the bank let the owners squat in the house for a long time, then they finally foreclosed and took it back. Then the bank sat on it for a long time hoping values would come back. They haven’t. So now the bank is finally ready to liquidate. Nobody has made a payment on this house since 2008.

• Today’s featured property was purchased for $198,000 on 11/4/1994. The owners used a $188,100 first mortgage and a $9,900 down payment.
• On 1/4/2001 they refinanced with a $206,250 first mortgage.
• On 4/19/2006 they refinanced with a $400,000 first mortgage. They were probably good with the 2001 mortgage, but doubling it at the peak of the housing bubble caused them to implode.
• Total mortgage equity withdrawal was $211,900.
• They defaulted in 2008 and were served notice on 12/10/2008. They didn’t get booted until 9/8/2010 giving them at least two years without payments.
• The bank then sat on this property for 18 months while prices collapsed. It wasn’t their brightest move.

Anaheim Hills Overview

Median home price is $419,000. Based on a rental parity value of $548,000, 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 $242/SF to $243/SF.

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

Median rental rates increased $33 last month from $2,266 to $2,300.

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

Market rating = 6

Proprietary OC Housing News home purchase analysis

6127 East PASEO RIO AZUL Anaheim Hills, CA 92807

$410,000 …….. Asking Price
$198,000 ………. Purchase Price
11/4/1994 ………. Purchase Date

$212,000 ………. Gross Gain (Loss)
($15,840) ………… Commissions and Costs at 8%
============================================
$196,160 ………. Net Gain (Loss)
============================================
107.1% ………. Gross Percent Change
99.1% ………. Net Percent Change
4.1% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$410,000 …….. Asking Price
$14,350 ………… 3.5% Down FHA Financing
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$395,650 …….. Mortgage
$105,040 ………. Income Requirement

$1,844 ………… 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
============================================
$2,714 ………. Monthly Cash Outlays

($281) ………. Tax Savings
($591) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$123 ………….. Maintenance and Replacement Reserves
============================================
$1,982 ………. 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
$30,300 ………. Emergency Cash Reserves
============================================
$59,807 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

6127 E Paseo Rio Azul, Anaheim Hills, CA 92807 (MLS # P820722)

Lovely two-story home on a quiet cul-de-sac street with some incredible upgrades! New A/C unit, new furnace, new granite kitchen countertops, new stainless steel double-ovens, new electric stovetop, new paint and carpet throughout, and more! Along with three bedrooms, it has a large living room with vaulted ceilings, family room with recessed lighting and a wood/gas fireplace, and a beautiful kitchen bay window with mutton window panes overlooking a spacious backyard. From the formal dining area, French doors lead you out back where there is plenty of room to entertain. Great location with Eucalyptus Park, shops including the Canyon Plaza Shopping Center, schools, 91 Freeway and the 241 Toll Road all nearby! All this with NO HOA and NO MELLO ROOS! MUST SEE!!

Property Type(s): Single Family, Residential

Last Updated	5/14/2012	Tract	Two-Story Home (OTHR)
Year Built	1973	Community	Anaheim Hills
Garage Spaces	2.0	County	Orange
Total Parking	6	Walk Score ®	65

Location

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

Listed with Carole Love Mancini DRE# 01406920, First Team Real Estate

(view all details for MLS #P820722)

	$500,000 6201 East E. CAMINO MANZANO		0.23 miles 3 bd / 2.5 ba 1,748 Sq. Ft.
	$475,000 157 South PUEBLO Pl		0.26 miles 3 bd / 2.5 ba 1,667 Sq. Ft.
	$399,900 241 South CALLE DIAZ		0.73 miles 4 bd / 2.5 ba 1,965 Sq. Ft.
	$2,100,000 198 South MOHLER Dr		0.84 miles 3 bd / 1.75 ba 2,000 Sq. Ft.
	$485,000 6000 East RIDGEWOOD Ct		0.94 miles 3 bd / 2 ba 1,900 Sq. Ft.
	$424,000 1251 North DOLORES St		1 miles 3 bd / 2 ba 1,325 Sq. Ft.
	$429,000 555 South INDIAN Trl #46		1.09 miles 3 bd / 3 ba 1,752 Sq. Ft.
	$525,000 19862 CANYON Dr		1.17 miles 3 bd / 1.75 ba 1,487 Sq. Ft.
	$340,000 1715 North OAK KNOLL Dr		1.24 miles 4 bd / 1 ba 1,459 Sq. Ft.
	$439,000 6050 East LADERA Ln		1.27 miles 3 bd / 2.5 ba 1,538 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."

David Richard Sparks is going to prison. I first wrote about this realtor last June in Orange County realtor lied to clients, stole their money, and admitted to massive Ponzi scheme. According to his confession, he forged bank documents, used non-existent escrow companies, provided bogus status updates and falsely reported significant profits. Victims said if they did not want to reinvest their money with him, Sparks made up excuses for why he could not give it back. He’s quite a piece of work.

Mr. Sparks embodies the character and ethics many have come to expect from realtors. The following is from his Active Rain profile:

I have been a full-time, professional REALTOR® since 1987 specializing in the sales and marketing of homes in Orange County, Long Beach and Coastal San Diego County. As a licensed broker, I am the owner of Sparks Realty, Inc.

Honest and full of integrity, I work to achieve a win/win situation in my transactions. While always keeping my clients’ best interests in the forefront, I know that a truly successful transaction is one in which everyone feels as though they were treated fairly. As an excellent and open communicator, I owe much of my success to the fact that my clients always know exactly what is happening with their sale or purchase. By keeping everyone fully informed at every step, I makes the real estate process easy and stress-free. My constant accessibility as well as my knowledge of the industry and its affiliated services makes me the perfect choice for the real estate consumer interested in total service.

If you are seeking an honest real estate professional who is committed to your satisfaction and peace of mind, call Dave Sparks today.

The bold text is not added by me for emphasis. That was from Mr. Sparks. His honesty and integrity are beyond reproach since he is a realtor.

“We look forward to serving screwing you, your friends and your family for many years to come.”

For as much as I enjoy bashing realtors for its own sake, there is another valuable lesson David Sparks can teach us. The series of bad decisions leading to Mr. Sparks downfall all come from one very important, very bad decision: he speculated on appreciation rather than invested for cashflow. If his real estate acquisitions had been cashflow positive, he would not have needed more money to cover the negative cashflow, and his entire Ponzi scheme would have been unnecessary. This fool is going to jail because he let one catastrophic error in judgment balloon out of control.

Irvine realtor sentenced in $4.3 million real estate fraud

By BRIAN MARTINEZ / THE ORANGE COUNTY REGISTER — May 7, 2012

Sex, pride and booze were among the factors that drove an Irvine real estate broker to cheat 34 of his friends, family and acquaintances out of their life savings, retirement accounts, inheritances and college-education funds.

That’s according to comments made by attorneys, victims and the judge at the man’s sentencing hearing Monday.

In the end, Judge Cormac J. Carney sentenced David Richard Sparks – a former Irvine Planning Commissioner who resigned that position when the FBI started investigating him – to six and a half years in federal prison.

Apparently the judge took a very dim view of this man’s behavior, and he should. Those investors would never have given their money to this guy if they knew he was going to spend it on himself, his debauchery, and his family’s entitlements.

The sentence was 15 months longer than the government prosecutor recommended and argued in favor of under a plea agreement Sparks had made. It was the longest term possible under federal sentencing guidelines. He pleaded guilty in July to one count of felony interstate wire fraud, and he technically faced a maximum of 20 years in federal prison.

Sparks was ordered to pay back the $4.3 million he swindled by paying at least 10 percent of his income after he is released from prison. Authorities say Sparks no longer has the money he stole, a notion his victims don’t fully believe.

It doesn’t seem very likely this guy will make $43 million after he gets out of jail to make his investors whole with a 10% wage garnishment. As a realtor, he will likely find a way to take money under the table to avoid paying anything.

That $4.3 million figure does not include taxes victims paid on false profits, costs incurred in the ordeal or interest payments and late fees promised in investment agreements.

“This is not a white collar criminal ripping off investors, this is a guy who destroyed the lives of his family and friends,” victim Debra Parent told the court. She knew Sparks from kindergarten.

“I hope you rot in hell,” one victim said directly to Sparks before the judge asked that all comments be directed at him.

Wow! This guy really pissed people off. I suppose if I were ripped off by a friend from kindergarten, I would be pissed off too.

Several victims spoke, telling the court about broken marriages, retirement plans destroyed, personal homes in foreclosure, ravished credit scores and health issues resulting from Sparks’ fraud and their lost money. Most of the victims were middle class families who personally knew Sparks, did their due diligence in considering the investment and could not afford to lose their principal investment amounts.

If they really did their due diligence, they should have known their investment was at risk. However, they didn’t think they were at risk of this guy stealing their money.

Court records paint a picture of Sparks as a charming man and talented liar who claimed to be buying, rehabbing and selling foreclosed or pre-foreclosure homes that he never actually purchased. He forged bank documents, used non-existent escrow companies, provided bogus status updates and falsely reported significant profits. If the investors did not want to reinvest their money with him, Sparks gave them “lulling payments” or just made up excuses for why he could not give it back.

He went to extremes to cover his crime. He should get a stiff sentence for that kind of behavior.

In calculating the sentencing guideline, the judge added aggravating points for what he said was Sparks’ abusing a position of trust and using “special skill” in knowing how real estate and its related documentation worked.

Testimony at the hearing indicated that Spark’s was under distress when he started cheating people. That stress included having lost his own money and that of his wife and children, having serious marital problems, having a child out of wedlock, health challenges and alcoholism.

I hope this guy finds religion in jail. He has few redeeming qualities at this point.

Prosecutors said they believed Sparks was not motivated out of greed but rather out of his ego, not wanting to own up to losing his friends and families’ money when the real estate bubble crashed. Before that, he had much success in investing others’ money, and he was looked at with admiration.

Sparks started speculative real estate investing in the late 1980s and in 2005 he believed that real property in Utah’s Cedar City was likely to see a dramatic increase in value, so he used his own funds and investor cash to buy 35 properties for about $7 million in Utah and California. That’s according to the plea agreement Sparks signed.

By 2007, the rents Sparks was collecting from the properties were no longer sufficient to cover the debt service. Sparks began soliciting cash from investors to cover the debts – deliberately lying to them by telling them the funds would be used to buy new properties. To back up his lies to investors, Sparks created false paperwork.

This is the educational part of this story. The root of all his problems wasn’t the crash in resale values, it was the negative cashflow. If he had positively cashflowing real estate, the loss of resale value may have been unsettling, but with positive cashflow, it wouldn’t have been a catastrophe. Declining values and a cashflow drain is an investment death sentence, and it was the cause of all of Mr. Sparks troubles.

DON’T BUY PROPERTIES WITH A NEGATIVE CASHFLOW.

… The judge on Monday ordered that Sparks surrender himself to U.S. Marshalls no later than noon on June 11, 2012, to begin his prison sentence. After he is released, he must also serve three years of probation.

Everyone who speculated on real estate during the bubble paid a price. The price paid by David Sparks investors was quite high, and thanks to a thoughtful judge, the price paid by David Sparks himself will be even higher.

David Sparks Ponzi scheme might have worked if lenders had allowed him to borrow against the ever-increasing value of his holdings to supplement the negative cashflow. Unfortunately, borrowing money to service debt is the essence of a Ponzi scheme certain to fall apart once lenders stop the music.

Ordinary citizens were just as involved in running Ponzi schemes as David Sparks, although most didn’t go to such extreme lengths to cover it up. In many cases, the results were just as lucrative. For example, the owners of today’s featured property paid $830,000 back on 1/29/2002, but only $83,000 of that money was their own down payment — money that likely came from a previous sale. They parlayed that $83,000 into $653,000 in HELOC booty in just over four years. To make it an even better deal, the lender allowed them to squat for about 18 months.

Corona Del Mar Overview

Median home price is $1,283,000. Based on a rental parity value of $965,000, 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 $711/SF to $747/SF.

Resale prices have been weak for 2 month(s). Price momentum suggests unchanging prices over the next three months.

Median rental rates increased $248 last month from $3,800 to $4,048.

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

712 K THANGA Dr Corona Del Mar, CA 92625

$1,399,900 …….. Asking Price
$830,000 ………. Purchase Price
1/29/2002 ………. Purchase Date

$569,900 ………. Gross Gain (Loss)
($66,400) ………… Commissions and Costs at 8%
============================================
$503,500 ………. Net Gain (Loss)
============================================
68.7% ………. Gross Percent Change
60.7% ………. Net Percent Change
5.0% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$1,399,900 …….. Asking Price
$279,980 ………… 20% Down Conventional
4.30% …………. Mortgage Interest Rate
30 ……………… Number of Years
$1,119,920 …….. Mortgage
$276,596 ………. Income Requirement

$5,542 ………… Monthly Mortgage Payment
$1,213 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$350 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$40 ………… Homeowners Association Fees
============================================
$7,145 ………. Monthly Cash Outlays

($1,343) ………. Tax Savings
($1,529) ………. Equity Hidden in Payment
$436 ………….. Lost Income to Down Payment
$195 ………….. Maintenance and Replacement Reserves
============================================
$4,904 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$15,499 ………… Furnishing and Move In at 1% + $1,500
$15,499 ………… Closing Costs at 1% + $1,500
$11,199 ………… Interest Points
$279,980 ………… Down Payment
============================================
$322,177 ………. Total Cash Costs
$75,100 ………. Emergency Cash Reserves
============================================
$397,277 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

712 K Thanga Drive, Corona Del Mar, CA 92625 (MLS # T12056000)

**REO - Great Investment opportunity in Irvine Terrace. Tear down, build new, or fix up. Great central location. Private courtyard, Open floor plan, Great pool in private backyard oasis. House was last remodeled in 2002. Two fireplaces, 3 bedrooms, 2 full baths. Great deal for Irvine TerraceStrictly AS-IS - Seller will not make any repairs, pay for Termite or Home Warranty. **REO Listing** We can do quick escrow.

Property Type(s): Single Family, Residential

Last Updated	5/12/2012	Tract	Irvine Terrace (irvt) (Irvine Terrace (IRVT))
Year Built	1955	Community	Corona Del Mar - Spyglass
Garage Spaces	2.0	County	Orange
Total Parking	2	Walk Score ®	68

Location

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

Listed with Craig Way, Seaway Properties Real Estate

(view all details for MLS #T12056000)

	$3,400,000 341 East BAY FRONT		0.24 miles 4 bd / 1.75 ba 1,645 Sq. Ft.
	$2,588,000 1520 ABALONE Pl		0.29 miles 5 bd / 4 ba 2,090 Sq. Ft.
	$2,395,000 126 ABALONE Ave		0.42 miles 4 bd / 2.25 ba 2,220 Sq. Ft.
	$1,850,000 303 SAPPHIRE		0.44 miles 4 bd / 3.5 ba 2,000 Sq. Ft.
	$1,395,000 213 TOPAZ Ave		0.56 miles 4 bd / 2.75 ba 1,778 Sq. Ft.
	$4,695,000 804 South BAYFRONT		0.59 miles 3 bd / 2.5 ba 2,100 Sq. Ft.
	$1,950,000 214 PEARL Ave		0.59 miles 2 bd / 2.5 ba 2,185 Sq. Ft.
	$4,599,000 508 SOUTH BAY FRONT		0.71 miles 3 bd / 2 ba - Sq. Ft.
	$1,150,000 1425 SEA RIDGE Dr		0.75 miles 3 bd / 2.25 ba 2,460 Sq. Ft.
	$1,595,000 1602 East BALBOA Blvd		0.86 miles 4 bd / 2.75 ba 2,500 Sq. Ft.

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