Strongest seller's market ever!!

[ak]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

USCTrojan, what is the average selling PSF in Irvine currently and what do you think it will be once all of the Villages of Irvine communities are built out?  Thanks. 

 

[usctrojancpa]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

USCTrojan, what is the average selling PSF in Irvine currently and what do you think it will be once all of the Villages of Irvine communities are built out?  Thanks. 

It varies greatly from village to village...each village is like it's own little city and trades at a different PSF due to things like location, age of the homes, mello roos, HOA, amenities, etc.  But generally speaking, attached condos are trading around $400/sf +/- and detached homes are trading around $450/sf +/-.  Where do I think prices might be when Irvine is built out in 5-7 years (I'm talking about OH, EW, and PS as the Great Park will take decades to build out)?  I think in that time we could easily see prices up another 10-15% from where they are today.  Think about it...if there are no new homes for buyers to go to, they have to go to the resale market which means MORE demand with the same level of inventory which means HIGHER prices.

 

[daedalus]

I can attest to how crazy things are in some areas in LA county.  Around here folks are bidding on SFRs priced similarly to Irvine's but on homes that are usually at least 60 years old, though smaller in SF, on average.  The lots are usually a bit bigger, and most people who don't live in HOAs prefer it that way. 

My heart bleeds for some friends of mine in particular whose kids are getting older, and the family is feeling a bit cramped in their 3/1.  Add in the soft plans of having one set of aging parents move in with them (5BR needed), and there's an increasing sense of house hunting becoming a really unwelcome and unrewarding chore.  Their latest offer had 8 competing offers at the time of submission, with many contingencies waived.  This is for an updated 2/1 for around $1M, which my friends would have to then add onto immediately.  They also heard through the school parent grapevine that another house they had been looking at already had 12 offers.  All within a week of being listed.

At least the crazy overbids are slowing, unless the properties are priced under market.  A couple years ago houses were routinely going for 5-10% over asking.  Now prices are up so much that I'm starting to see houses closing for less than asking again...something that has been very uncommon for several years.  I feel like we surpassed the 2006 peak around 2 years ago, and finally prices are stabilizing a bit.  There's also speculation of how one large business HQ move to another state later this year might have an impact on inventory in a few zip codes.

 

[lnc]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

Agree, these new homes keep Irvine's housing price rise in check. 

Irvine is pretty unique for a relatively centralized city with significant parasols of empty land large enough to build another 11,000 more homes in the coming years.

And once they are done building new homes...... >

 

[freedomcm]

  There's also speculation of how one large business HQ move to another state later this year might have an impact on inventory in a few zip codes.

Any effect in Torrance yet from Toyota decamping to Tejas?

 

[shahshah]

Are you saying that after the new homes get built in Irvine that will put a cap on supply and therefore prices for homes will continue to go up? It seems prices have really increase over the past 20 years and I'm not sure how prices can really increase that much more. Can prices even increase in value to keep up with inflation?

 

[peppy]

  There's also speculation of how one large business HQ move to another state later this year might have an impact on inventory in a few zip codes.

Any effect in Torrance yet from Toyota decamping to Tejas?

Not at all. Torrance is a crazy hot market.

 

[fortune11]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

And that is the essence of why prices move -- inventory , inventory, inventory .  if you had to distill everything down to one word in investing this would be it . 

demand  > supply  - doesn't matter what asset it is, or what actual price level you are at .  we are headed higher .  and conversely  on the way down. 

this is why many smart people who got hung up on metrics like average income , own vs rent , missed some of the best opportunities to own in desirable neighborhoods in a generation during 2009 and then again during 2011. 

this is why there is no real ceiling on areas like Manhattan beach or San Francisco.  as long as people want  to move there and have the means to afford it, prices will head higher.  sure some of the same people may wait for a few months to watch if market goes down, but if seller inventory doesn't rise up , the very same people will fold and grudgingly enter the market again. 

something has to happen to make inventory  go much higher than demand for prices to collapse.  stretched mortgages that people cannot afford => distressed inventory .  is that happening now ?  No .  Do FCBs need to sell. ? No.  I am not saying this cannot change , but this is where we are now. 

 

[usctrojancpa]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

And that is the essence of why prices move -- inventory , inventory, inventory .  if you had to distill everything down to one word in investing this would be it . 

demand  > supply  - doesn't matter what asset it is, or what actual price level you are at .  we are headed higher .  and conversely  on the way down. 

this is why many smart people who got hung up on metrics like average income , own vs rent , missed some of the best opportunities to own in desirable neighborhoods in a generation during 2009 and then again during 2011. 

this is why there is no real ceiling on areas like Manhattan beach or San Francisco.  as long as people want  to move there and have the means to afford it, prices will head higher.  sure some of the same people may wait for a few months to watch if market goes down, but if seller inventory doesn't rise up , the very same people will fold and grudgingly enter the market again. 

something has to happen to make inventory  go much higher than demand for prices to collapse.  stretched mortgages that people cannot afford => distressed inventory .  is that happening now ?  No .  Do FCBs need to sell. ? No.  I am not saying this cannot change , but this is where we are now. 

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

 

[sgip]

The last 3 of my non-new construction accepted purchase offers were from buyers who waived repairs and appraisal contingencies. It's a "jedi-mind trick" tool that gives sellers the idea that the buyer will close no matter the value or condition of the home. Some might, but most quickly get an inspector out and have the appraisal completed within 10 days since they can quit the transaction without penalty if either of these important purchase questions become problematic.

We are approaching the point where offers only have the inspection contingency  - waiving appraisal and loan contingencies as cash buyers do - but still holding out on a 5 day inspection contingency. It all has a whiff of 2007 to it though...

My .02c

Soylent Green Is People
Master Chef of The Soylent Corporation

 

[Irvine Dream]

We know for sure it is a very strong sellers market when houses priced more than 1.5 million can get away with these  listing pictures
https://www.redfin.com/CA/Irvine/6332-Sierra-Elena-Rd-92603/home/4741358

 

[shahshah]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

And that is the essence of why prices move -- inventory , inventory, inventory .  if you had to distill everything down to one word in investing this would be it . 

demand  > supply  - doesn't matter what asset it is, or what actual price level you are at .  we are headed higher .  and conversely  on the way down. 

this is why many smart people who got hung up on metrics like average income , own vs rent , missed some of the best opportunities to own in desirable neighborhoods in a generation during 2009 and then again during 2011. 

this is why there is no real ceiling on areas like Manhattan beach or San Francisco.  as long as people want  to move there and have the means to afford it, prices will head higher.  sure some of the same people may wait for a few months to watch if market goes down, but if seller inventory doesn't rise up , the very same people will fold and grudgingly enter the market again. 

something has to happen to make inventory  go much higher than demand for prices to collapse.  stretched mortgages that people cannot afford => distressed inventory .  is that happening now ?  No .  Do FCBs need to sell. ? No.  I am not saying this cannot change , but this is where we are now. 

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

To clarify are you saying folks are buying new homes over resale because of pricing being similar? Also resale for detached homes is the demand highest below 1 million?

 

[fortune11]

The last 3 of my non-new construction accepted purchase offers were from buyers who waived repairs and appraisal contingencies. It's a "jedi-mind trick" tool that gives sellers the idea that the buyer will close no matter the value or condition of the home. Some might, but most quickly get an inspector out and have the appraisal completed within 10 days since they can quit the transaction without penalty if either of these important purchase questions become problematic.

We are approaching the point where offers only have the inspection contingency  - waiving appraisal and loan contingencies as cash buyers do - but still holding out on a 5 day inspection contingency. It all has a whiff of 2007 to it though...

My .02c

Soylent Green Is People
Master Chef of The Soylent Corporation

Agree on the contingency and it reminds one of late 06 early 07 but with one big difference --- you are not seeing loosening of down payment standards for jumbo and super jumbos . In fact first republic and others very active in the super jumbo market have tightened and lowered the ltv thresholds . One thing to watch would be if ppl like chase that also have big private client focus start to aggressively lower the down payment requirement to win business . To me that would be beginning of the end . Again , not there yet ...

 

[lnc]

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

1 month of inventory!  That's extremely low.

I have a feeling that the under $1M inventory will never exceed 3 month of supply here in Irvine.

Between 2013 to 2016, over 11,000 new home were sold here in Irvine and we have about another 11,000 to go until they run out of land.  However, less than half of future new build will be homes that are under $1 million dollars.

With lack of inventory of under $1M existing homes and limited supply of future new build in this price range, that under $1M market are going to be extreme hot for a very long time.

 

[shahshah]

I read that condos are now the hot item because people are getting priced out of SFR, why would anyone sell a home in Irvine unless they skyballed the price? Prices appear to be going up even if they kept pace with inflation, not many things are keep pace with inflation.

 

[usctrojancpa]

http://www.latimes.com/business/la-fi-spring-market-20170425-htmlstory.html

It just feels home activities near LA are much hotter then Irvine at the moment due to a lack of new construction homes and scarcity of available land.

Yup, Irvine has that "shadow" new home inventory which is keeping prices somewhat contained.  When they are done building new homes in Irvine, we got higher in prices....mark my words.  Watch inventory levels, that'll be your tell of where market prices might be heading.

And that is the essence of why prices move -- inventory , inventory, inventory .  if you had to distill everything down to one word in investing this would be it . 

demand  > supply  - doesn't matter what asset it is, or what actual price level you are at .  we are headed higher .  and conversely  on the way down. 

this is why many smart people who got hung up on metrics like average income , own vs rent , missed some of the best opportunities to own in desirable neighborhoods in a generation during 2009 and then again during 2011. 

this is why there is no real ceiling on areas like Manhattan beach or San Francisco.  as long as people want  to move there and have the means to afford it, prices will head higher.  sure some of the same people may wait for a few months to watch if market goes down, but if seller inventory doesn't rise up , the very same people will fold and grudgingly enter the market again. 

something has to happen to make inventory  go much higher than demand for prices to collapse.  stretched mortgages that people cannot afford => distressed inventory .  is that happening now ?  No .  Do FCBs need to sell. ? No.  I am not saying this cannot change , but this is where we are now. 

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

To clarify are you saying folks are buying new homes over resale because of pricing being similar? Also resale for detached homes is the demand highest below 1 million?

No, I'm saying that several of my buyers use new homes as the Plan B fall back if they can't find a good resale home or if they keep getting outbid (both from a lack of inventory).  I would say the greatest demand is for 3+ bedroom detached properties around the $800s but 3+ bedroom attached properties aren't far behind. 

 

[OCtoSV]

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

1 month of inventory!  That's extremely low.

I have a feeling that the under $1M inventory will never exceed 3 month of supply here in Irvine.

Between 2013 to 2016, over 11,000 new home were sold here in Irvine and we have about another 11,000 to go until they run out of land.  However, less than half of future new build will be homes that are under $1 million dollars.

With lack of inventory of under $1M existing homes and limited supply of future new build in this price range, that under $1M market are going to be extreme hot for a very long time.

As of today there are >100 SFRs <=$1M, almost triple that if you include attached properties. Compared to SV Irvine is drowning in inventory.

 

[lnc]

As of today there are >100 SFRs <=$1M, almost triple that if you include attached properties. Compared to SV Irvine is drowning in inventory.

Well, Irvine does has a lot of inventory compares to some cities.

And unlike many other cities, Irvine also has the empty land to be build even more house.  Builders are planning to build around another 11,000 more new housing units in the coming years. 

Abundance of both new and existing housing inventory are one advantage Irvine has over other cities and contribute to the overall growth of the city. 

In terms of strength of housing market, we need to look at the monthly sale volume relative to inventory.  A neutral housing market should has around 6 month of inventory.  With monthly sale volume of around 450 homes sold a month (April 17's figure, overall range from over 700 during the summer month down to around 450 in the winter month), a 6 month of inventory will put the inventory level at about 2700 homes.

And we have less than 700 home currently listed, still a very tight inventory level and a strong sellers market.

 

[usctrojancpa]

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

1 month of inventory!  That's extremely low.

I have a feeling that the under $1M inventory will never exceed 3 month of supply here in Irvine.

Between 2013 to 2016, over 11,000 new home were sold here in Irvine and we have about another 11,000 to go until they run out of land.  However, less than half of future new build will be homes that are under $1 million dollars.

With lack of inventory of under $1M existing homes and limited supply of future new build in this price range, that under $1M market are going to be extreme hot for a very long time.

As of today there are >100 SFRs <=$1M, almost triple that if you include attached properties. Compared to SV Irvine is drowning in inventory.

You can't compare Irvine to San Jose like that....it's like comparing apples to oranges.  There is about 1 month of resale inventory for Irvine properties under $1m which indicates a strong seller's market.  We were below that back in 2013 when we saw prices rise by about 20%.  It's not as crazy as 2013 but decent properties around comps go into escrow fast today and often times slightly above previous closed comps.  We are currently selling 250+ per month (not including new home sales) and there are only a total of 450ish active MLS listings today (all listings) so you see we are below 2 months of inventory for the entire market on average....still a strong seller's market.

 

[paydawg]

Here's the crazy thing, if I were to exclude Irvine resale homes >$1m we are closer to 1-months of inventory.  Inventory and sales volume numbers don't lie, they give a picture of where supply and demand are.  This is why new home developments like Petaluma, Helena, Avalon, Trellis Court, etc have been selling so well.  Also, part of the resale inventory you see WTF asking prices...those are not real sellers in my opinion just home owners looking to find a sucker given the low level of inventory. 

The people who are Irvine buying home are strong financially and 80-90% of the offers that I have seen in the few years are from buyers who are putting more than 20% down.  The underwriting to get approved for a loan today is legit and probe deep (I speak from personal experience).  Until more inventory comes on board and we get over 3 months of resale homes on the market, don't expect prices to dip because at best they'll stay flat.

1 month of inventory!  That's extremely low.

I have a feeling that the under $1M inventory will never exceed 3 month of supply here in Irvine.

Between 2013 to 2016, over 11,000 new home were sold here in Irvine and we have about another 11,000 to go until they run out of land.  However, less than half of future new build will be homes that are under $1 million dollars.

With lack of inventory of under $1M existing homes and limited supply of future new build in this price range, that under $1M market are going to be extreme hot for a very long time.

As of today there are >100 SFRs <=$1M, almost triple that if you include attached properties. Compared to SV Irvine is drowning in inventory.

You can't compare Irvine to San Jose like that....it's like comparing apples to oranges.  There is about 1 month of resale inventory for Irvine properties under $1m which indicates a strong seller's market.  We were below that back in 2013 when we saw prices rise by about 20%.  It's not as crazy as 2013 but decent properties around comps go into escrow fast today and often times slightly above previous closed comps.  We are currently selling 250+ per month (not including new home sales) and there are only a total of 450ish active MLS listings today (all listings) so you see we are below 2 months of inventory for the entire market on average....still a strong seller's market.

Just for the sake of argument, is there a way to make that an apples to apples comparison?  What if you compare sub-$1M Irvine homes vs sub $1.5M SV homes?  i'm guessing it's not that simple, but thought i'd ask.