PermaBears from the IHB: Where is the 40% drop?

fe9000 said:
We (we is just a figure of speech, not referencing to anyone in particular) may have been deemed brain-washed, sheeple, settling for less, not smart, pretenious, close-minded, etc etc etc.....
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Hey... you just channeled BK... next thing you'll be saying is you work in your yard with no pants... oh wait... can't do that in Irvine.
 
qwerty said:
Also, ive owned and rented in Redondo beach and i gained no new market knowledge by becoming an owner.
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Your perspective didn't change at all? I'm not just talking about knowledge, I'm talking about how your experience differed from being an owner and being a renter.

I understand your point because he still lives in Irvine but I do think there is a difference in owning a home or renting an apartment. Maybe if he rented an SFR it would be better but there I do think there is a change in viewpoint. We'll just have to disagree because I do think it is important, especially if you are writing a daily blog about it. Do you still think his business is not relevant to his blog opinions?

And again... I think of Larry in high regard... but at the same time, if we don't question those we respect... then the respect is unwarranted. At least in today's article he did a call out for sellers who did not HELOC that he wants to profile.
 
irvinehomeowner said:
qwerty said:
Also, ive owned and rented in Redondo beach and i gained no new market knowledge by becoming an owner.
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Your perspective didn't change at all? I'm not just talking about knowledge, I'm talking about how your experience differed from being an owner and being a renter.

Do you still think his business is not relevant to his blog opinions?
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My perspective did not change at all, not one bit. Im a very simple person though, im sure for some people the perspective changes. Maybe its because we dont have kids, im sure that can probably change how someone feels.

With regard to Larry and his business impacting his opinions, there is some influence but you can tell he is trying to straddle the line given his bear background, to do a 180 and preach buy buy buy would really make him look bad and lose all credibility.  My guess is he probably struggles with not getting too rosy on the blog and trying to make his business work since they are somewhat opposites.
 
Well, yes and no.  I am the first one to admit that I am a sheeple and took all the punches.  Maybe because that I don't have anything better to say. 

I am generalizing this but that's the feel I get when reading the other site, the old IHB and when they were posting here.  Then again, they are not all incorrect.  They have valid points also.  What I don't understand is why stop posting.  Anyway, it's only internet, no one needs to prove anything to me.
 
fe9000 said:
Well, yes and no.  I am the first one to admit that I am a sheeple and took all the punches.  Maybe because that I don't have anything better to say. 

I am generalizing this but that's the feel I get when reading the other site, the old IHB and when they were posting here.  Then again, they are not all incorrect.  They have valid points also.  What I don't understand is why stop posting.  Anyway, it's only internet, no one needs to prove anything to me.
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Why stop posting?  Because some people take the interweb a little too seriously and get their feelings hurt or let their emotions get the best of them.  There were a few times where I really wanted to go off on Graph but I bit my tongue for the most part because I know he barely knows anything about me and who I am.

Here's the reality...different people have different reasons for buying or not buying a home.  To some it is a very analytical equation while to others it's more of an emotional/personal choice.  At the end of the day, it is up to the buyer to make a good financial decision and not stretch themselves too much when buying their home.
 
The reason Irvine prices are not down by 40% is because 80% of the buyers/owners in Irvine are highly paid and educated Asians with tons of reserve to carry them through this recession. 
 
ak said:
The reason Irvine prices are not down by 40% is because 80% of the buyers/owners in Irvine are highly paid and educated Asians with tons of reserve to carry them through this recession. 
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Not 100% true...three of my Irvine buyers make under $100/yr but have significant down payment funds (50%-100% down payments).  If you look at the property loan details of many recent home closings in Irvine, you'd see an average down payment of around 35%-40%.  You don't need a big income if your loan amount is going to be under $300k-$400k.
 
I agree 100%.  But how do you figure your buyers have that kind of big down payment on hand.  I bet your buyers are not revealing all of their income....only a portion, but enough to qualify for the loan. 
 
ak said:
I agree 100%.  But how do you figure your buyers have that kind of big down payment on hand.  I bet your buyers are not revealing all of their income....only a portion, but enough to qualify for the loan. 
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Some of my buyers are previous home owners who sold and cashed out during the bubble years and have been sitting on the sidelines since then.  One has a paid off townhouse in Irvine and he'll be extracting cash out of it and turn it into a rental.  The other portion of the down payment funds come from savings and family gifts (especially for the younger, first time buyers).  I never ask my buyers their income (some are very open and tell me)...the only thing I ask them to have is a loan pre-approval letter and proof of funds ready to go in case they want to submit an offer. 
 
So I read stuff like this from OCReader (http://www.ocreader.com/forum/viewtopic.php?f=151&t=1050):
Lane said:
5. Over the weekend I had the chance to chat with some deep industry insiders, and the two of them believe this is far from over. They mentioned the shadow inventory, and the loan mod limbo loans that every bank is holding onto. They know what is out there, and they know who has the money and what they are willing to pay for these assets... and they will be able to buy these assets so cheap that they will sell at fire sale prices and still make some serious profits. They will be comp killers, and they will not care, because they will still be making huge money. I hope to meet with one person later this month to get more details, but I already know what is going on because this isn't the first group I have run across in this position. We aren't done yet, and there are several people in the industry who agree with me and people like CR.
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My thing here is how will this affect Irvine specifically? It's evident than Irvine and surrounding cities have been somewhat "immune" to the crash so even if all this shadow inventory exists, does it matter? It's like what IR said on a blog post earlier this week about 845 foreclosures in waiting in Irvine... but will that impact the Irvine market? If TIC can blow through 400 homes in 3 months (on pace for all 800 before year end), I am not too worried if 800+ under priced homes hit the market (which they won't do all at once).
 
irvinehomeowner said:
So I read stuff like this from OCReader (http://www.ocreader.com/forum/viewtopic.php?f=151&t=1050):
Lane said:
5. Over the weekend I had the chance to chat with some deep industry insiders, and the two of them believe this is far from over. They mentioned the shadow inventory, and the loan mod limbo loans that every bank is holding onto. They know what is out there, and they know who has the money and what they are willing to pay for these assets... and they will be able to buy these assets so cheap that they will sell at fire sale prices and still make some serious profits. They will be comp killers, and they will not care, because they will still be making huge money. I hope to meet with one person later this month to get more details, but I already know what is going on because this isn't the first group I have run across in this position. We aren't done yet, and there are several people in the industry who agree with me and people like CR.
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My thing here is how will this affect Irvine specifically? It's evident than Irvine and surrounding cities have been somewhat "immune" to the crash so even if all this shadow inventory exists, does it matter? It's like what IR said on a blog post earlier this week about 845 foreclosures in waiting in Irvine... but will that impact the Irvine market? If TIC can blow through 400 homes in 3 months (on pace for all 800 before year end), I am not too worried if 800+ under priced homes hit the market (which they won't do all at once).
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Well, it is OCR, Orange County Reader.  So I don't think it's specifically about Irvine rather than the market in general.  To kind of add fuel to the fire, the few high position people in my company are still holding out.  They never drank the cool aid in 04 and still won't do it today.  They see the activities in Irvine and just shake their heads saying how is this happening.  But it is.  To the contrary, and maybe sgip can back me up on this.  Lending guideline is still tighting up.  There are new credit overlays coming out from the investors still.  Given the suppose pressure from shadow inventory and foreclosures, I think we won't see anything dramatic in Irvine, when it goes lower, it will be a much slower pace.

As far as buying up the assets for cheap and turning around and sell them in a fire sell?  I doubt that.  If I know I have something cheap, unless I am being forced to "sell" (raise cash for other things?) why would I blow it out and not maximize profits by selling at close to market rate?
 
jumpcut said:
FCBs don't care about "lending guidelines."  And they don't care about resale inventory because they want to buy new.
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Many FCBs don't want to buy the new homes with tiny yards and high Mello Roos and prefer buying lower Mello Roos/HOA properties with yards (at least that's what my 2 FCBs told me they are looking for).
 
I didn't mean to imply that Lane's post was specific to Irvine... what I meant was for this general outlook (which is was)... how would that affect Irvine specifically?

Back on the IHB, everyone always talked in general about stuff like this, but when I specifically pointed out Irvine, the retort was always: "It doesn't matter... Irvine is not different and will suffer just the same." So when IR specifically mentions the foreclosures just in Irvine, my first question is "So?". I've seen those numbers time and time again in the past 2-3 years yet nothing has really changed.

Now if it's reaching a critical mass and all of sudden we will see a flood of REOs on the open Irvine market... maybe we'll see some action... but I don't know if that's going to happen any more because if it will... it should have already. But what do I know... I'm not an industry insider... according to Lane, it just seems like investors will buy up most of that distressed inventory but I think instead of blowing it out with comp killers, the smart approach would be to bleed it out with flip prices so that Irvine RE never adjusts to where it should. With TIC high bumping the benchmark... if I was a cash heavy investment group... I would approach BofA or whoever offer to buy all their Irvine inventory (or move it at no cost to them) and slowly flip them myself to turn a tidy profit since there is so much demand here.
 
jumpcut said:
FCBs don't care about "lending guidelines."  And they don't care about resale inventory because they want to buy new.
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Au contraire... I think there are ton of resale inventory FCBs want. The reason why they like to buy new is they don't have to compete with bids, they can choose their lot, and get to set it up how they like (which in many cases mean "standard"... hehe).

Every open house I go to in Irvine that has the "desired" school district... FCB galore.
 
I think almost everyone "prefers" to buy new... no ghosts to worry about :).

But I think it depends, I am aware of many FCBs who want to buy resale because they like the area better... like Turtle XXX, Quail Hill... even Westpark II with the 99-Ranch around the corner (and highly dense asian businesses in that center). Incidentally, I think that's why Woodbury is getting so much FCB action, the corner of Jeffrey/Walnut looks like places in Monterey Park or Diamond Bar.

(man... now I'm channeling BK)
 
I consider myself an insider and I track Irvine foreclosure inventory for quite some years.  So far, most are or ended up selling through short sales.  Roughly 10% were or will be foreclosed within 4 months of NOD filings (lenders foreclose quickly if there is no short sale application).  The ones made it to auction at the court house were those that the owners did not want to participate in the short sale process (frauds, straw buyers, lazy,...).

Short sales are win-win for everyone.  Short sale owners get rent free for months.  Short sale landlords get free income for months.  And the short sale lenders get more money from proceeds and government.

So, we can all forget about shadow inventory.
 
I didn't realize that while your property is listed as a short sale you don't have to pay your mortgage. If that's the case, what motivation do they have to sell, show or stage their property correctly? They can pull shenanigans with the bank with lowball offers or saying there are none at all.

If it's true that they can stay there "rent-free"... than a short sale IS shadow inventory.
 
IHO,
It's true that short sales are shadow inventory technically; however, lenders require short sale homes to be listed on the MLS, so they are visible and not shadow.  In addition, most short sale properties are well priced with multiple offers, so they are spoken for 2X.

The current inventory in Irvine (standard sales and short sales) are approaching next to nothing.  And 10-yr bond rates are dropping everyday.  And summer is approaching.  We should see sharp appreciation in the next few months, for sure.
 
It may be visible, but if you are correct that the owners don't have to pay... it is almost barely available. Maybe that's why short sales take so long.

If you were the owner... would you be in a hurry to become renter somewhere else,  or to buy a lesser home while leaving the home you put a good chunk of your money into?

I wonder too about the summer season.... according to "those that know"... we will see a run up in pricing but after it will fall... um... it's already high now... so say it goes up another 5% in the summer... and then it falls 10%... for a net of 5%... that's still high. Blargle!!!!
 
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