homer_simpson
Well-known member
irvinehomeowner said:
Bingo!
Observations from the front lines of the Irvine housing market?
- Thread starter usctrojancpa
- Start date
Bingo!
usctrojancpa
Well-known member
Most of the buyers are owner-occupants, but I'm starting to see more and more investors come into the equation (rental listings pop up right after sales are closed). That is supported by the fact that there are over 2x more rental listings in Irvine than for-sale listings.irvinehomeowner said:
irvinehomeowner
Well-known member
Have rental listings really gone up... or have they stayed the same and for-sales have just dropped?
usctrojancpa
Well-known member
They've ticked up about 20% since the end of last year. The rental market, especially above the $3,000, has softened up a bit with all of the rental inventory hitting the market.irvinehomeowner said:
usctrojancpa
Well-known member
It's been a while since I provided an update so it'd figure that it was time to do so. July turned out to have the second highest sales volume in Irvine history at 260 sales which was an increase of over 35% from July 2012 (April 2013 had a record sales volume of 261). My theory that sales volume was being held back by ultra low inventory turned out to be true since inventory levels at 7/31/13 were about 35% higher than that back on 7/31/12. Doesn't seem like the increase of interest rates by 1% have put a dent in the sales volume. What the higher rates have done, along with the 20-30% YOY price increases and increasing inventory levels, is they have causes the pace of price increases to slow down dramatically. That being said, don't think that prices will be coming down in the near future because we have approximately 2.1 months worth of inventory (with the current 550 active listings on MLS) because anything less than 3 months of inventory is considered a seller's market. However, that is a big improvement from where we were back in Feb/March when there was about .75 months of inventory. Looking back on things, we hit a low with inventory levels back in mid-March when there were 174 active listings. We need inventory levels to increase another 50% from current levels for us to reach 3 months worth of inventory which would be a more neutral market. Prices for homes in good neighborhoods with desirable floor plans are still flying into escrow with multiple offers but most other properties aren't seem as many bidders due to the combination of prices and rates haven risen (I few of my clients have decided to put a hold on their home search because of these two things). Short sales and REOs are almost non-existent in this market and I'm seeing NODs and NTSs on foreclosureradar dropping as well. Guess that flood of foreclosures isn't coming.
On the interest rate front, we have seen rates pop from around 3.25% back in April to as high as 4.50% in early July. Today, rates are dipped down a bit to around 4.25%. It'll be interesting to see where rates will go as the FED beings to taper their bond buying program later on this year. I personally don't think we'll see rates with a 5 handle for a while....I think we'll see a 3 handle before we see a 5 handle, but it all depends on the economic data (especially the jobs numbers) as well as how well China and Europe are doing. If rates continue to increase, I can see more buyers being priced out and heading to the sidelines which would push us more into a neutral market as on average homes would take longer to see with a smaller buyer pool. So the bust is not coming anytime soon, even if rates go into the 5s since Irvine has so many cash buyers and most of the financed buyers putting down big downpayments (40%+).
On the interest rate front, we have seen rates pop from around 3.25% back in April to as high as 4.50% in early July. Today, rates are dipped down a bit to around 4.25%. It'll be interesting to see where rates will go as the FED beings to taper their bond buying program later on this year. I personally don't think we'll see rates with a 5 handle for a while....I think we'll see a 3 handle before we see a 5 handle, but it all depends on the economic data (especially the jobs numbers) as well as how well China and Europe are doing. If rates continue to increase, I can see more buyers being priced out and heading to the sidelines which would push us more into a neutral market as on average homes would take longer to see with a smaller buyer pool. So the bust is not coming anytime soon, even if rates go into the 5s since Irvine has so many cash buyers and most of the financed buyers putting down big downpayments (40%+).
usctrojancpa
Well-known member
It's been a while so I figured it was high time to post some updated data and my sense of what it means and more importantly what I'm seeing. We started to see the market cool off and price levels stabilize starting in the late fall of 2013. By that time, prices had already run up about 20-25% in a year and interest rates increased by 1-1.25% for a 30-year mortgage. Looking back at the data, it appears that we hit the peak of the market back in April 2013 when both sales volume peaked and inventory levels bottomed to basically one month's of inventory (white hot seller's market). As we ended Jan. 2014, we are near 3 months worth of inventory which is a very weak seller's market. That being said, inventory levels low and there is a test of wills in the current market with stubborn sellers and more picky/patient buyers. You guys will get a kick out of this....I submitted an offer from a very strong buyer looking to purchase a rental property in Irvine...the offer was within 4% of the listing price and here is the response that I got from the listing agent....
"Thank you for the offer, my client was not pleased about the offer. We are going to wait for higher offer."
Yeak OK, good luck with that. This offer was for an older attached condo that needed some TLC and a listing that had all of one picture that was already listed with no offers for over 2 weeks. I almost fell off my lazyboy laughing when I read it. Not even try to counter and split the difference, huh? I told my client that if the property is still linger on the market, we should re-submit a $5k lower offer just for chits and giggles. haha
Buyers have a lot more options to pick from today versus in late 2012/early 2013 with all of the new construction home activity. Gone are the days of the 6-month wait lists at new home developments. The more popular developments (like Sagewood in Pavilion Park) still have wait listings but it's more like a few dozen people instead of hundreds of people. Looks like Irvine Pacific now has some competition and looks like buyers are voting with their wallets buying resulting in strong sales at Pavilion Park. Before anyone thinks that the sky is falling or the Irvine real estate market is going off a cliff, it's not. Properties that are listed at non-WTF prices are still selling pretty quickly. Prices are flatish and we still lack re-sale inventory to push prices down as there's a good percentage of active listings that aren't real sellers with WTF prices looking to snag a sucker. It's very safe to assume that new home sales are taking away sales from re-sale homes but again inventory levels need to rise significant before we begin to see materially lower prices.
On the rate front, we hit a high of around 4.75% and then we fell back to 4.125/4.25% with the recent stock market correction. Now we are back to around 4.375%. My guess is that rates will probably bounce around between 4% to 5% this year so I don't see rates really having a big impact on sales and prices this year. Back in Jan. 2014, lenders implemented new lending requirements but those will only effect marginal Irvine buyers (most are very strong financially and tend to under buy).
"Thank you for the offer, my client was not pleased about the offer. We are going to wait for higher offer."
Yeak OK, good luck with that. This offer was for an older attached condo that needed some TLC and a listing that had all of one picture that was already listed with no offers for over 2 weeks. I almost fell off my lazyboy laughing when I read it. Not even try to counter and split the difference, huh? I told my client that if the property is still linger on the market, we should re-submit a $5k lower offer just for chits and giggles. haha
Buyers have a lot more options to pick from today versus in late 2012/early 2013 with all of the new construction home activity. Gone are the days of the 6-month wait lists at new home developments. The more popular developments (like Sagewood in Pavilion Park) still have wait listings but it's more like a few dozen people instead of hundreds of people. Looks like Irvine Pacific now has some competition and looks like buyers are voting with their wallets buying resulting in strong sales at Pavilion Park. Before anyone thinks that the sky is falling or the Irvine real estate market is going off a cliff, it's not. Properties that are listed at non-WTF prices are still selling pretty quickly. Prices are flatish and we still lack re-sale inventory to push prices down as there's a good percentage of active listings that aren't real sellers with WTF prices looking to snag a sucker. It's very safe to assume that new home sales are taking away sales from re-sale homes but again inventory levels need to rise significant before we begin to see materially lower prices.
On the rate front, we hit a high of around 4.75% and then we fell back to 4.125/4.25% with the recent stock market correction. Now we are back to around 4.375%. My guess is that rates will probably bounce around between 4% to 5% this year so I don't see rates really having a big impact on sales and prices this year. Back in Jan. 2014, lenders implemented new lending requirements but those will only effect marginal Irvine buyers (most are very strong financially and tend to under buy).
nosuchreality
Well-known member
The reality is with three months of inventory, it is still a sellers market.
It is starting to turn towards a balanced market. But a buyer's market is far, far off.
It is starting to turn towards a balanced market. But a buyer's market is far, far off.
paperboyNC
New member
USCTrojanCPA said:
Agreed. If I listed my place for 30% more ($367/ft) than I paid for it ($283/ft) two years ago it'd probably sell in a week. This is only active listing in Irvine that is detached, under $370/ft for an over 2000 sq ft, 4bd under $800k home:http://www.redfin.com/CA/Irvine/64-Royal-Victoria-92606/home/5918229.The rest are all pending.
But most sellers in Portola Springs are asking WTF prices because they are not in an hurry to sell and only want to sell if they can get a WTF price.
usctrojancpa
Well-known member
Bingo! Numbers never lie and the reality is we are still just under 3 months worth of re-sale inventory. Open Sky, make sure to get that pen ready for the check to my charity....I'll provide a matching contribution.nosuchreality said:
usctrojancpa
Well-known member
I know the basics of it, for specifics I'd PM Soylent. But my understanding is that the DTI % has come down and underwriters will more closely look at the borrower's ability to make the monthly payments and repay the loan.SoCal said:
usctrojancpa
Well-known member
Yeah, most entry level detached properties in Irvine are trading at $400/sf or more. If you listed your property for $367/sf you'd probably have multiple offers on it.paperboyNC said:
usctrojancpa
Well-known member
Buyer see that prices have stabilized (as have interest rates) so the panic to buy is gone. They are taking their time since they have more options now and more coming in the near future. We'll see how long some of those WTF priced sellers stay delusional thinking that it's still 2013.bones said:
quattroporte
New member
paperboyNC said:
It will sell soon now. The price now has the magic numbers....8,8,8,8.....
furioussugar
New member
Thanks for the update
What about all cash buyers- has there been much change in sales closed with all cash in the last 2 months?
What about all cash buyers- has there been much change in sales closed with all cash in the last 2 months?
paperboyNC
New member
USCTrojanCPA said:
Yup. I'm tempted to sell my home for $400/sf once I pass the 2yr tax window because I just don't see prices going up to $1mm for this kind of home even in 10 years and could make more on my money in stocks / bonds. I also swear that the noise from the toll roads keeps getting louder and eventually my area will trade at a significant discount to Irvine - especially in dozens of years when the tolls go away and they widen the 133/241 to accommodate the increased traffic.
For now though I can't afford to move up to a nicer home so I figure I'll wait until I'm either ready to move out of Irvine or my income has increased substantially.
I could sell and rent in the area and wait for the next time prices come down. But there is no guarantee that will ever happen and I don't think it's fair to my kids to move them around any more than necessary.