Now I wouldn't consider myself an expert in real estate but I do own a few properties. One in Irvine, one in Long Beach and one in Arizona. But here is my take on it. It really depends. If you have your heart set on Irvine, then I don't think between now and 3-4 months from now, prices are going to keep moving up so drastically as they have the last 6 months. Right now a 3 bedroom 2 bath house in Irvine is going for $550K to $700k depending on SqFt. Rentals for those same homes are around $3000. That's a ~5% return before expenses. After expenses that drops down to 1%-2%. Irvine is special, so returns that low are pretty common around here, but few are willing to go much below a 1% return even if it were as special as everyone says it is. With returns that low, and prices as high as they are, people start looking around. 5 miles away is Foothill Ranch, 7 miles away is Aliso Viejo, Laguna Niguel and Mission Viejo, where people are getting alot more for their money.
What does this all mean? Just like in 2006-2007, Irvine prices started to level out, the rest of the county started to catch up. Then the bottom fell out in 2008 and the rest of the county dropped really fast while Irvine slowly followed suit at a much slower pace.
Understand that this is how our market works and you will see that we probably are in a mini bubble. As inventories rise this summer, prices will start to even out and the rest of the county will start to catch up a bit. Today alone there were 21 new properties on MLS in Irvine. This summer will see a huge rise in inventory because people are just waking up to the WTF prices! Something we here at TI have been tracking for months!
The economy will also slow this summer as the sequester really start to take hold. If you look at Wisconsin or Europe you can see what happens to societies which are subject to austerity measures, unemployment will rise and GDP growth will slow. China is also trying harder to keep money from flowing overseas as their economy slows from 10% GDP growth in the first ten years of the new millenium to 6%-7% in the last couple of years. The new administration is selling the Chinese Dream! They want chinese to reinvest in China. Less money flowing from overseas means less money to buy houses here!
Lastly, all housing cycles are about 10-12 years. We hit bottom in 2009-2010. So that means we are in year 3 of the upswing. We probably have 2-3 more years of upward moving prices. However, I believe that Irvine accelerated the upward movement these past 6 months and while I don't see it going down much, I also don't see prices in Irvine continuing to climb as drastically as they have in the past 6 as inventories rise. I think Irvine will stabilize for a couple of years, moving up at a slower pace as the rest of the county catches up.
TL;DR... You should just not worry and buy whatever house is available at that time because prices probably won't be that different between now and then. But I do think NEW homes will be more WTF than resale at that time because they are always slower to react to changes in prices than resale homes are. There is just slightly higher demand for new homes than resale so builders keep thinking they can charge more.
Sorry... that might have been TMI...