Trump win: Impact on Irvine housing

NewtoIrvine1 said:
USCTrojanCPA said:
NewtoIrvine1 said:
I work in an industry that deals with rates... won't mention which but the general belief is now that we are going to see an actual functioning government that will provide fiscal stimulus in the form of infrastructure spending and tax cuts

Those two factors paired together will provide a net boost to GDP of 1.5-3% a year in the short term as corporate taxes get shifted to 15% and infrastructure spending flow into the economy. At the end of the day that will also add 5 trillion more onto the national debt notionally and drive rates further upwards as we balloon out the deficit.

By also boosting GDP it will spark inflation especially with the anti trade talks trump has suggested during the campaign so with rising inflation and rising GDP the fed will be able to raise rates at a much faster pace than anticipated by the market and you can see the reaction the last few days. The Chinese will also be labeled a currency manipulator and overall that effect will be interesting to see what happens there.

What does that mean for Irvine real estate.... Rates going up. We are already up 20 BP in the last 2 days and it will go much higher rates will probably go to the 5-6% area if i had to guess and that will put pressure on home prices as affordability collapses and incomes still hadn't caught up. The Chinese buying should also slow down as well especially if Trump's currency manipulator rhetoric come to fruition but we will see. I see this as a net drag on housing as the biggest effect will be interest rate going up faster than anyone expected. The base case was for lower for longer and slower rate hikes in washington gridlock and now we might actually have meaningful fiscal policy
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To have sustainable inflation, you need wage inflation.  No wage inflation = not enough dollars chasing the same goods to drive up prices.  Don't expect a lot of get done, despite Trump winning.  Unless the rest of the world's economies improve and move off of their zero interest rate policies, don't expect the fed funds rate to go that much higher.  I expect growth to stay around 2-2.5% per year on average going forward.
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That exactly is part of Trump's plan it will cause wage inflation. The USA has never embarked on large scale infrastructure spending when unemployment has been at 5% , that will put pressure on wages as construction job get created in en mass across the country. As i said it has been 6 year since we have actually seen meaningful fiscal policy and this time around it won't be in the middle of the biggest financial crisis since the great depression.

The fed will be forced to act to counteract the fiscal stimulus running inflation up. It's no coincidence that the market reacted the way it did. 20% tax cut to corporation=more profit for SP500 companies= equities rally. Part of Trump's plan is to borrow heavily to build infrastructure and lower taxes creating more debt thus selling off treasuries.

On top of that the Chinese have already started to devalue the Yuan in anticipation of tariff and headwinds which will put pressure on Irvine FCB as their cash devalues furtherhttp://finance.yahoo.com/quote/usdcny=x?ltr=1. The currency is now back to where it was before they removed the peg
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Until I see large infrastructure spending bills passed, I won't hold my breathe.  Remember that the Republican congress will keep Trump at bay.  One thing I can see getting approved is the Keystone pipeline and that will put pressure on oil prices as it will increase supply.  I also hardly doubt that they'll cut the corporate tax rate by 20%....maybe 10% or less is what I think will happen.  What they'll push for is to bring back the cash that all these companies have sitting in other countries back here.  Just because Trump said that he was going to do those things doesn't mean that he'll get his way with them...things have to be run through the congress.
 
If Trump indeed owns many properties, he could pursue policies to pump up the value of his  properties.

Also, while not directly affecting Irvine housing, Fannie and Freddie stocks are on a tear since his election.  They are penny stocks, so tread carefully.
 
The wall will limit the workforce. Construction prices will continue to skyrocket. That will either translate to higher direst prices and the homes will get boxier and stripped of exterior details and cheapen interior spec to compensate out of sync inflated selling price. Soon there will be a bunch of $million dollar boxes devoid of architectural details with only side yard that privacy is completely compromised where neighbors stare into each other's windows and balconies.

The multilayered plane facades with abundance of shadow effect will be all gone to make it simple for entry level and new unskilled construction workers to construct new homes in order to keeping price down.

We will see prices get higher and homes get boxier under the Trump presidency.
 
irvinehomeshopper said:
Soon there will be a bunch of $million dollar boxes devoid of architectural details with only side yard that privacy is completely compromised where neighbors stare into each other's windows and balconies.

We will see prices get higher and homes get boxier under the Trump presidency.
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Well it's already happened and Obama is still president.  You've described Somerset by Lennar at Parasol Park just perfectly -- Million dollar three story boxes where you can easily pass your neighbor the Grey Poupon.
 
Let's wait and see when he becomes president.

irvinehomeshopper said:
The wall will limit the workforce. Construction prices will continue to skyrocket. That will either translate to higher direst prices and the homes will get boxier and stripped of exterior details and cheapen interior spec to compensate out of sync inflated selling price. Soon there will be a bunch of $million dollar boxes devoid of architectural details with only side yard that privacy is completely compromised where neighbors stare into each other's windows and balconies.

The multilayered plane facades with abundance of shadow effect will be all gone to make it simple for entry level and new unskilled construction workers to construct new homes in order to keeping price down.

We will see prices get higher and homes get boxier under the Trump presidency.
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Then everyone who owns a home now comes out a winner.

But..... I thought the economy was supposed to go in a tailspin and then no one could afford to buy a house. In that case maybe we don't need any more construction workers, no?
 
The big short-term effect will be interest rates as 10 years treasuries crossed 2.20% overnight and will continue selling off in the morning potentially, the highest level since Janaury and January rates was 3.87%

If we have a sustained move in the 10 year treasury and in turn mortgage rates then home prices will face immediate price pressure as affordability drops dramatically as interest go up...

Just keep in mind.. See Attachment.... a 1% increase in rates effect 10% off the purchasing power. We are already up 50 BP in the last month so shave off 5% right off the top
 

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Ready2Downsize said:
Then everyone who owns a home now comes out a winner.

But..... I thought the economy was supposed to go in a tailspin and then no one could afford to buy a house. In that case maybe we don't need any more construction workers, no?
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Sorry to burst your bubble, but the REAL WINNERS ARE THE ONES WHO BOUGHT IN 2011
 
Wouldn't say it's a bubble.

My post was in response to this:

"Soon there will be a bunch of $million dollar boxes devoid of architectural details with only side yard that privacy is completely compromised where neighbors stare into each other's windows and balconies.

We will see prices get higher and homes get boxier under the Trump presidency."

IF that is true, then current homeowners come out winners. Of course those who bought in 2011 are better off than those who purchased recently. Those who bought in 1996 are even better off than those who bought in 2011, wouldn't you say?

Now I say IF that is true because if rates just keep rising, housing prices could just sit where they are or even drop. We could sink into a downturn in the economy (the fed cannot completely repeal the business cycle). In that case the losers are gong to be those who bought houses they didn't intend to stay in for longer than x number of years........ those who see growing families and a house that becomes too small or those who wanted to live somewhere else but this was a stepping stone not meant to be permanent. They could be in a position where they really want or have to sell and not be able to due to those rising rates and slipping prices.

We'll see what happens. No one has a crystal ball and sometimes things just don't go the way we expected.
 
Those who bought earlier benefitted with more land but the developers are constantly creating more gimmicks in the floor plans like fad that consumers are chasing after. Those who bought earlier are constantly reminded that their floor plan is obsolete. Can we say those who bought in El Camino were luckier than those who bought in PP just because El Camino offered the biggest lot in 1964 ? Floor plans get updated every 5 years. This is why Irvinites are constantly selling and buying.

Take for instance the older homes without the opened kitchen are not as desirable as the great room concept. Consumers are looking for cool features like California room, 16' wide sliders to the backyard, third flooor deck, corner window, neighborhood without walls, modern exterior or many other new differentiators that older homes would have. Of course selling at a higher price on less land.
 
irvinehomeshopper said:
Those who bought earlier benefitted with more land but the developers are constantly creating more gimmicks in the floor plans like fad that consumers are chasing after. Those who bought earlier are constantly reminded that their floor plan is obsolete. Can we say those who bought in El Camino were luckier than those who bought in PP just because El Camino offered the biggest lot in 1964 ? Floor plans get updated every 5 years. This is why Irvinites are constantly selling and buying.

Take for instance the older homes without the opened kitchen are not as desirable as the great room concept. Consumers are looking for cool features like California room, 16' wide sliders to the backyard, third floor deck, corner window, neighborhood without walls, modern exterior or many other new differentiators that older homes would have. Of course selling at a higher price on less land.
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These houseplan trends are fads and I believe are cyclical. If I had the time and energy to do a complete overhaul of an older classic house with a large lot, I would have preferred to do that, because you can never change your lot/location and arguably, the older neighborhoods are in the better locations.  If you get tired of your old outdated floorplan on a large lot, you can always tear down, rebuild or do an extension. But with these newer shoe horn houses, there's no room for that flexibility.
 
Excellent point. Most consumers don't have a clue when come to rebuilt or tear down. Since they can't afford the creative architect so hiring those bargain architect/drafting service they got instead a new home much worse than what they tore down. Drive by Irvine and you can see for yourself the newer rebuilt never fit into context and frankly few would risk spending more than the comp. It sounds good but makes little sense on return on investment. This is why people rather sell and repurchase.
 
irvinehomeshopper said:
Excellent point. Most consumers don't have a clue when come to rebuilt or tear down. Since they can't afford the creative architect so hiring those bargain architect/drafting service they got instead a new home much worse than what they tore down. Drive by Irvine and you can see for yourself the newer rebuilt never fit into context and frankly few would risk spending more than the comp. It sounds good but makes little sense on return on investment. This is why people rather sell and repurchase.
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From my understanding, the land value makes up the majority of the total value of the home.  How much does it cost to build a home for a 2,500-3,000sf home?  $200/sf?
 
This place has been selling since the last boom started in 2005. Over a decade, and this development is still in the middle of completion. I would NOT put my money here, even though its dirt cheap. You will be trapped.
 
Compressed-Village said:
This place has been selling since the last boom started in 2005. Over a decade, and this development is still in the middle of completion. I would NOT put my money here, even though its dirt cheap. You will be trapped.
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I agree. I wouldn't buy there also. It's all about location.
There's so many better investment options out there. 
 
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