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General => Real Estate => Irvine Real Estate => Topic started by: USCTrojanCPA on December 08, 2009, 12:13:00 AM

Title: Observations of Irvine RE market
Post by: USCTrojanCPA on December 08, 2009, 12:13:00 AM
Ok Irvine RE market sports fan, here's the current summary of the Irvine real estate market.  There were 169 sales in November in Irvine.  That is up significantly from 77 last year when all hell was breaking loose in the credit markets and the stock market.  Inventory levels continue to decline and have been below 500 for the past 2+ months (less than 3 months worth of inventory).  As today, the number of properties that show as active is 464.  As you guys can see, the number of sales dropped off from October (212) but my sense is that was due to the lack of inventory on the market and people trying to close before the home buyer tax credit was set to expire (before it was extended).  

Now for some first hand experience to give you guys an idea of how much of a seller's market it is out there in Irvine.  There was a 2,000sf home in West Irvine listed (regular sale) in Irvine last week at 10am with a price around comps.  After having talked to one of my buyers, we submitted an offer to the listing agent by 5pm that same day (property was not available to see viewed until Saturday).  So I called the listing agent to let her know I emailed her the offer and she told me that she had gotten 4 other offers already (remember, no one got to see this property inside).  This says that there are more buyers than properties available for these buyers...a strong seller's market.
Title: Observations of Irvine RE market
Post by: iacrenter on December 09, 2009, 12:26:00 AM
Quote from: "USCTrojanCPA"
Now for some first hand experience to give you guys an idea of how much of a seller's market it is out there in Irvine.  There was a 2,000sf home in West Irvine listed (regular sale) in Irvine last week at 10am with a price around comps.  After having talked to one of my buyers, we submitted an offer to the listing agent by 5pm that same day (property was not available to see viewed until Saturday).  So I called the listing agent to let her know I emailed her the offer and she told me that she had gotten 4 other offers already (remember, no one got to see this property inside).  This says that there are more buyers than properties available for these buyers...a strong seller's market.


So if you were my RE agent and I wanted to buy a detached 2500+sqft SFH in Irvine, when would you say is a good time to buy? Would you advise clients to wait or not wait?
Title: Observations of Irvine RE market
Post by: USCTrojanCPA on December 09, 2009, 12:53:00 AM
Quote from: "IACRenter"
Quote from: "USCTrojanCPA"
Now for some first hand experience to give you guys an idea of how much of a seller's market it is out there in Irvine.  There was a 2,000sf home in West Irvine listed (regular sale) in Irvine last week at 10am with a price around comps.  After having talked to one of my buyers, we submitted an offer to the listing agent by 5pm that same day (property was not available to see viewed until Saturday).  So I called the listing agent to let her know I emailed her the offer and she told me that she had gotten 4 other offers already (remember, no one got to see this property inside).  This says that there are more buyers than properties available for these buyers...a strong seller's market.

So if you were my RE agent and I wanted to buy a detached 2500+sqft SFH in Irvine, when would you say is a good time to buy? Would you advise clients to wait or not wait?

I would tell you to wait if you could because there is almost NOTHING out there and any decent property priced right will fly into escrow within days of being listed getting bid up by multiple bidders.  If you weren't able to wait (due to family and/or personal reasons), I would see if you would be open to expanding your search to other cities in OC like Yorba Linda, Anaheim Hills, Laguna Niguel, Aliso Viejo, etc.  If you could wait and only wanted an Irvine home, I would say to wait AT THE VERY LEAST until the Spring and Summer of 2010 to see how the inventory picture will look in the sales season after the tax credit expires.  I would also tell you that I hope you have a longer term hold period if you plan on buying an Irvine home (7-10+ years) because the price levels are very steep compared to other nice cities in Orange County.
Title: Observations of Irvine RE market
Post by: iacrenter on December 09, 2009, 09:06:00 AM
Quote from: "USCTrojanCPA"
Quote from: "IACRenter"

So if you were my RE agent and I wanted to buy a detached 2500+sqft SFH in Irvine, when would you say is a good time to buy? Would you advise clients to wait or not wait?
I would tell you to wait if you could because there is almost NOTHING out there and any decent property priced right will fly into escrow within days of being listed getting bid up by multiple bidders.  If you weren't able to wait (due to family and/or personal reasons), I would see if you would be open to expanding your search to other cities in OC like Yorba Linda, Anaheim Hills, Laguna Niguel, Aliso Viejo, etc.  If you could wait and only wanted an Irvine home, I would say to wait AT THE VERY LEAST until the Spring and Summer of 2010 to see how the inventory picture will look in the sales season after the tax credit expires.  I would also tell you that I hope you have a longer term hold period if you plan on buying an Irvine home (7-10+ years) because the price levels are very steep compared to other nice cities in Orange County.


Well based on everything I'm reading in the news and from local RE agents such as yourself, it sounds like waiting a bit longer makes sense if I am only looking at Irvine for homes. Like IHO, I might take a look at other nearby cities for comparison.

My hopes for a glut of Irvine REOs is just not panning out. The banks are letting shadow inventory pool and the Obama administration along with the Fed are propping up this sinking RE ship. This will only serve to prolong the pain and make any meaningful recovery take several years.

Well 2010 should see more pressure on RE: Option ARMS will start to reset, significant job growth might be 1-2 yrs away, Fed purchase of mortgages paper will end...i.e. higher mortgage rates the second half of 2010, and expiration of home buyer credit in the spring. We shall see...
Title: Observations of Irvine RE market
Post by: irvinehomeowner on December 09, 2009, 10:34:00 AM
I think the tighter lending guidelines is making it easier for the FCBs. In this weak economy, there aren't many buyers who are willing to put down 20% and putting down less than that is close to impossible (except FHA I guess).

This puts any party with a large down in control and looking at IR2's spreadsheet, the average was over 40% down. Considering how high the average price in Irvine is... that's an ridiculous statistic.

Maybe Graph has to come in here and slap me but there really is some strange stuff happening in Irvine.

I do a RedFin search almost daily looking at houses with 3-car garages and while Irvine has 1 or 2 in the sub $700k, they are really old homes in the older neighborhoods... when I expand this search to Laguna Hills, Aliso, Laguna Niguel or Mission Viejo, the number shoots up quite a bit. But I also notice the number of Short Sales outside of Irvine are higher... and not by a small amount.

The one thing that remains stubborn is new home pricing. Although a little more reasonable in the South OC cities (esp San Clemente) they are still higher than the resale homes in those areas by a noticeable margin.

As for the OptionARM resets/recasts... how long are we waiting on those? Even when they do, with the rates so low, the payment isn't much more and if many of the loans were actually done by people who could afford it (ie make more money now than when they first financed), it's not going to do anything.

I'm sorry if I'm sounding bullish here but considering how "successful" the gov has been at slowing the freefall... what would make me think it's going to be any different until the next election year?
Title: Observations of Irvine RE market
Post by: IrvineRealtor on December 09, 2009, 11:45:00 AM
Quote from: "IACRenter"
So if you were my RE agent and I wanted to buy a detached 2500+sqft SFH in Irvine, when would you say is a good time to buy?


1998. Any answer going forward is speculation and nothing more.


Quote from: "IACRenter"
Would you advise clients to wait or not wait?


Repeat after me: "I don't know what the market will do."
Is it really that hard to admit?  

-IR2
Title: Observations of Irvine RE market
Post by: qwerty on December 09, 2009, 12:01:00 PM
Quote from: "IrvineRealtor"
Quote from: "IACRenter"
So if you were my RE agent and I wanted to buy a detached 2500+sqft SFH in Irvine, when would you say is a good time to buy?


1998. Any answer going forward is speculation and nothing more.


Quote from: "IACRenter"
Would you advise clients to wait or not wait?

Repeat after me: "I don't know what the market will do."
Is it really that hard to admit?  

-IR2


it doesnt mean that you cant make an educated guess. Interest rates will go up, which will make monthly payments higher unless buyers bring a larger down payment to the table. From a pure financial perspective it probably makes sense to wait.
Title: Observations of Irvine RE market
Post by: IrvineRealtor on December 09, 2009, 12:25:00 PM
Quote from: "qwerty"
Quote from: "IrvineRealtor"


1998. Any answer going forward is speculation and nothing more.



Repeat after me: "I don't know what the market will do."
Is it really that hard to admit?  

-IR2

it doesnt mean that you cant make an educated guess. Interest rates will go up, which will make monthly payments higher unless buyers bring a larger down payment to the table. From a pure financial perspective it probably makes sense to wait.


Devil's advocate:

Ahhh... but do we know when interest rates will go up?  Or how much? Isn't that important?

Do you know the income level of the buyer?  Isn't that important?

Do we know the savings level of the buyer, and how much they plan to use towards the down payment? Isn't that important?

Do we know how much the government will continue to intervene? Or for how long? Isn't that important?

Rooting for or against the market is just cheerleading, and it seems that you can always find someone on either side to follow.

IMHO, the agent's job is not to predict the future.  It is to ask these types of questions of the client, and ask the client what they would like to do, advise them of the risks/benefits... and then get the work done.

-IR2
Title: Observations of Irvine RE market
Post by: octrends on December 09, 2009, 02:03:00 PM
Quote from: "qwerty"

it doesnt mean that you cant make an educated guess. Interest rates will go up, which will make monthly payments higher unless buyers bring a larger down payment to the table. From a pure financial perspective it probably makes sense to wait.


don't worry, if the interst rates go up, price will come down accordingly to keep the payment same. no need to have more down payment.
Title: Observations of Irvine RE market
Post by: iacrenter on December 09, 2009, 02:08:00 PM
Quote from: "IrvineRealtor"
Quote from: "qwerty"

it doesnt mean that you cant make an educated guess. Interest rates will go up, which will make monthly payments higher unless buyers bring a larger down payment to the table. From a pure financial perspective it probably makes sense to wait.

Devil's advocate:

Ahhh... but do we know when interest rates will go up?  Or how much? Isn't that important?

Do you know the income level of the buyer?  Isn't that important?

Do we know the savings level of the buyer, and how much they plan to use towards the down payment? Isn't that important?

Do we know how much the government will continue to intervene? Or for how long? Isn't that important?

Rooting for or against the market is just cheerleading, and it seems that you can always find someone on either side to follow.

IMHO, the agent's job is not to predict the future.  It is to ask these types of questions of the client, and ask the client what they would like to do, advise them of the risks/benefits... and then get the work done.

-IR2


I certainly appreciate everyone's feedback/opinions. There is just so much uncertainty right now about the market direction. Although I can comfortably put 20% down now and still have a significant emergency fund, I still feel uneasy about dropping such a large amount of cash in Irvine RE. I don't need to necessarily buy at THE Bottom but I certainly don't want to buy at the middle of a double dip RE market. Sounds like I need more data points before making the jump. In the mean time I will keep saving my pennies.
Title: Observations of Irvine RE market
Post by: USCTrojanCPA on December 09, 2009, 02:21:00 PM
Quote from: "IACRenter"
Quote from: "IrvineRealtor"

Devil's advocate:

Ahhh... but do we know when interest rates will go up?  Or how much? Isn't that important?

Do you know the income level of the buyer?  Isn't that important?

Do we know the savings level of the buyer, and how much they plan to use towards the down payment? Isn't that important?

Do we know how much the government will continue to intervene? Or for how long? Isn't that important?

Rooting for or against the market is just cheerleading, and it seems that you can always find someone on either side to follow.

IMHO, the agent's job is not to predict the future.  It is to ask these types of questions of the client, and ask the client what they would like to do, advise them of the risks/benefits... and then get the work done.

-IR2

I certainly appreciate everyone's feedback/opinions. There is just so much uncertainty right now about the market direction. Although I can comfortably put 20% down now and still have a significant emergency fund, I still feel uneasy about dropping such a large amount of cash in Irvine RE. I don't need to necessarily buy at THE Bottom but I certainly don't want to buy at the middle of a double dip RE market. Sounds like I need more data points before making the jump. In the mean time I will keep saving my pennies.

You, the other cities that I mentioned are performing a little more predictably with losses from the peak of 30-40% but Irvine seems to be doing its own thing.  Many of those other cities have homes that are within 0-10% of rental parity while Irvine is not even close to rental parity.  All those cities have lower inventory levels compared to the spring/summer time but not to the extent of Irvine.  Also, decently priced properties in those cities do not have multiple offers within days of being listed and not many properties get purchased by cash buyers.  So there is a disconnect between Irvine and the cities that I named off as we speak.  

As you mentioned, there is so much government intervention and people are holding on for dear life to their Irvine homes (remember the thread on IHB where I mentioned there were tons of rooms for rent in Irvine?).  We will see what happens when the real estate market comes off the gov't sugar rush.
Title: Observations of Irvine RE market
Post by: qwerty on December 09, 2009, 02:25:00 PM
Quote from: "octrends"
Quote from: "qwerty"

it doesnt mean that you cant make an educated guess. Interest rates will go up, which will make monthly payments higher unless buyers bring a larger down payment to the table. From a pure financial perspective it probably makes sense to wait.

don't worry, if the interst rates go up, price will come down accordingly to keep the payment same. no need to have more down payment.


Theoretically this makes sense, but im guessing that the stubborn ass sellers will still keep their prices high without regard for interest rates. I think even after rates go up, prices will stay high until time shows the sellers that their asking prices are out of whack.
Title: Observations of Irvine RE market
Post by: novaseline on December 09, 2009, 02:38:00 PM
Quote from: "octrends"
Quote from: "qwerty"

it doesnt mean that you cant make an educated guess. Interest rates will go up, which will make monthly payments higher unless buyers bring a larger down payment to the table. From a pure financial perspective it probably makes sense to wait.

don't worry, if the interst rates go up, price will come down accordingly to keep the payment same. no need to have more down payment.


If that is true, your down payment will go DOWN in real dollars while remaining constant as a %.  Think about that for a minute...
Title: Observations of Irvine RE market
Post by: qwerty on December 09, 2009, 02:39:00 PM
Quote from: "IrvineRealtor"

Devil's advocate:

Ahhh... but do we know when interest rates will go up?  Or how much? Isn't that important?

Do you know the income level of the buyer?  Isn't that important?

Do we know the savings level of the buyer, and how much they plan to use towards the down payment? Isn't that important?

Do we know how much the government will continue to intervene? Or for how long? Isn't that important?

Rooting for or against the market is just cheerleading, and it seems that you can always find someone on either side to follow.

IMHO, the agent's job is not to predict the future.  It is to ask these types of questions of the client, and ask the client what they would like to do, advise them of the risks/benefits... and then get the work done.

-IR2


The answers to these questions is somewhat irrelevant, all i know is that if i pay 800K for a house in irvine right now there is a good chance of it being worth much less in 3 to 5 years. Just because i can afford to overpay for something doesnt mean it makes sense. If i overpay for something it doesnt matter if i make 500K/year and pay cash for the house - it wont change the fact that i overpaid.

Ive never understood the rationale that if you can afford it and you plan on living there for 10 years then go ahead and buy. Like i told Trojanman, just because i can pay 50K for a Honda Civic, doesnt mean it makes.

In general, asking a realtor if someone should buy right now is like asking them if they want a pay check or not (excluding USC and IR2 - you guys have a conscience). Now if a person has made up their mind to buy right now then by all means help them out as much as you can.
Title: Observations of Irvine RE market
Post by: irvinehomeowner on December 09, 2009, 03:15:00 PM
Quote from: "qwerty"
Ive never understood the rationale that if you can afford it and you plan on living there for 10 years then go ahead and buy. Like i told Trojanman, just because i can pay 50K for a Honda Civic, doesnt mean it makes.

I believe the rationale here is that whatever loss you may take in the next 3-5 years, it will recover in 10.

So that if you need/want to move, when you sell, you can recoup your 20% back (hopefully) and put that towards your next house.

The real question is if prices do drop from here, will they return to where they are now in 10 years? Historically, that should be a good chance, but in recent history, I don't think we've ever seen a bubble of this magnitude.
Title: Observations of Irvine RE market
Post by: novaseline on December 09, 2009, 03:22:00 PM
Quote from: "IrvineRealtor"
IMHO, the agent's job is not to predict the future.  It is to ask these types of questions of the client, and ask the client what they would like to do, advise them of the risks/benefits... and then get the work done.

-IR2


Which is why you have an excellent reputation.  You don't try to make up the clients mind for them, you ask them what they want to do and perform accordingly.  That doesn't mean you are devoid of an opinion, but it means your opinion isn't relative to somebody doing or not doing something.  That is their choice, your responsibility to facilitate it.

The definition of a true professional.
Title: Observations of Irvine RE market
Post by: IrvineRealtor on December 09, 2009, 03:23:00 PM
Quote from: "qwerty"
In general, asking a realtor if someone should buy right now is like asking them if they want a pay check or not.


If we ever meet - I owe you $5.  I'm using that exact wording next time someone asks the question.  For now, all I can do is bump your karma.
Title: Observations of Irvine RE market
Post by: irvinehomeowner on December 09, 2009, 03:26:00 PM
Quote from: "novaseline"
Quote from: "IrvineRealtor"
IMHO, the agent's job is not to predict the future.  It is to ask these types of questions of the client, and ask the client what they would like to do, advise them of the risks/benefits... and then get the work done.

-IR2

Which is why you have an excellent reputation.  You don't try to make up the clients mind for them, you ask them what they want to do and perform accordingly.  That doesn't mean you are devoid of an opinion, but it means your opinion isn't relative to somebody doing or not doing something.  That is their choice, your responsibility to facilitate it.

The definition of a true professional.
Yeah... he used that Jedi mind trick on me.

Made me decide to do the thing would save me the most money even though he didn't make a single penny from it.

He could have recommended that I sell my house, he could have steered me into another rental... but in the end, he always said:

"You should decide what's best for you based on the information you have asked for."

Man... I hate his conniving ways.

EDIT: IR2 got between my response to NoVas.
Title: Observations of Irvine RE market
Post by: qwerty on December 09, 2009, 03:27:00 PM
Quote from: "irvinehomeowner"
Quote from: "qwerty"
Ive never understood the rationale that if you can afford it and you plan on living there for 10 years then go ahead and buy. Like i told Trojanman, just because i can pay 50K for a Honda Civic, doesnt mean it makes.
I believe the rationale here is that whatever loss you may take in the next 3-5 years, it will recover in 10.

So that if you need/want to move, when you sell, you can recoup your 20% back (hopefully) and put that towards your next house.

The real question is if prices do drop from here, will they return to where they are now in 10 years? Historically, that should be a good chance, but in recent history, I don't think we've ever seen a bubble of this magnitude.


I agree, but it also means your gain will be reduced by the amount that you overpaid. if one's goal is maximum financial gain (and i know for most of you its not) then it probably does not make sense to buy in irvine for at least a year, probably longer.
Title: Observations of Irvine RE market
Post by: irvinehomeowner on December 09, 2009, 03:33:00 PM
Quote from: "qwerty"
I agree, but it also means your gain will be reduced by the amount that you overpaid. if one's goal is maximum financial gain (and i know for most of you its not) then it probably does not make sense to buy in irvine for at least a year, probably longer.

For people who actually just want to buy a home to live in (not to "invest") and especially in these uncertain times, I think any financial gain from their home isn't the primary concern.

Many will be glad to be able to move-up with at least a break-even.

And I really don't know what to expect from Irvine in year or more. The shadow inventory seems to indicate that downward pressure will result in lower prices but why haven't we seen it across the board? For all I know, prices will stay here for the next 5 years.

Gah.
Title: Observations of Irvine RE market
Post by: nosuchreality on December 09, 2009, 03:37:00 PM
Quote from: "USCTrojanCPA"
...  Many of those other cities have homes that are within 0-10% of rental parity while Irvine is not even close to rental parity.  ...


While this is correct, it is dependent on a feature that will have a surprise as much fun as having had one two many drinks and missing the large hands and adams apple of the hot chick you brought home.

The rental parity is based on interest rates at 4.75%.  So you better make sure when you buy it that you're keeping it because when interest rates go up, you might be able to rent it, but you won't sell it without a lot of skin.
Title: Observations of Irvine RE market
Post by: qwerty on December 09, 2009, 03:48:00 PM
Quote from: "IrvineRealtor"
Quote from: "qwerty"
In general, asking a realtor if someone should buy right now is like asking them if they want a pay check or not.

If we ever meet - I owe you $5.  I'm using that exact wording next time someone asks the question.  For now, all I can do is bump your karma.


I just recorded a receivable from you for $5.
Title: Observations of Irvine RE market
Post by: Anonymous on December 09, 2009, 04:04:00 PM
Just anecdotally, I sure felt like it was a seller's market when I was looking for a house earlier this year. When I first started looking (back in December of 08), I thought it would be a buyer's market, because that's what everyone told me. My friends and family all said it was a great time to buy, but that was probably because they were coming from a homeowner's perspective, knowing their properties had dropped in value. I would learn as I searched that because prices had dropped, fewer sellers were selling, and the competition for a house would be crazy.

Just to show you how naive I was: we found a house we liked in March of this year. The asking price was pretty low for its comps, but even so, we put in a really lowball offer, thinking it would be accepted since it was such a "buyer's market." Our offer wasn't accepted, but we weren't willing to go any higher, even though our budget would have allowed us to pay more. Our realtor at the time thought we were doing the right thing. And honestly I was annoyed that the seller had the nerve to turn down our offer. As it turns out, somebody got a really good deal on that house. Plus it ended up selling for less than the house we ended up buying! I still sometimes regret not making a higher offer on that house.

I still hear people saying it's such a great time to buy a house, and I just shake my head. I don't know if it's just Irvine or if it's like this all over, but there are so few houses and so much competition. Definitely not the walk in the park I thought it would be!
Title: Observations of Irvine RE market
Post by: USCTrojanCPA on December 09, 2009, 04:59:00 PM
The reality is that the amount of buyers is probably down from the bubble years, but the reality is that the amount of homes on the market is down even more in most cities in Orange County.  For example, we are down from about 1,300 homes on the market back in July of 2007 in Irvine to about 465 homes today or about a 2/3 decrease from the peak.  Couple that with sales volume that is near 2006 levels and you have a strong seller's market with less than 3 months worth of inventory.  I will say that today is a great time to be a seller if you don't plan on owning your property for at least the next 7+ years in Irvine.

There are a few things that have worked very well for me with me my buyers.  First, I hate pushy people so I'm never pushy with anyone.  My job is to provide my buyers with all the information available to me and give them as many options as possible.  Then I tell them that it is their call on what they would like to do.  We have a "pull-push" relationship where they pull me in when they are ready to go after a property and I push to get it for them at the most advantageous terms.  If I get asked what I think a property is worth I typically use comps to say that a fair price today based upon comps is $x.  I do share with all of my buyers the possible risks of buying today and owning in the next few years because I think the real estate market will be volatile but if they have a longer term perspective then they should be fine, especially if a property is selling near rental parity.  In my eyes, the closer a property sells towards its rental parity the lower the possible risk of loss in equity there will be in owning it over the next 3-5 years.
Title: Observations of Irvine RE market
Post by: USCTrojanCPA on December 09, 2009, 05:08:00 PM
Quote from: "nosuchreality"
Quote from: "USCTrojanCPA"
...  Many of those other cities have homes that are within 0-10% of rental parity while Irvine is not even close to rental parity.  ...

While this is correct, it is dependent on a feature that will have a surprise as much fun as having had one two many drinks and missing the large hands and adams apple of the hot chick you brought home.

The rental parity is based on interest rates at 4.75%.  So you better make sure when you buy it that you're keeping it because when interest rates go up, you might be able to rent it, but you won't sell it without a lot of skin.

Haha...I like that analogy.    :P    But what will happen if rates stay around 5% or go lower like they did in Japan.  If my memory serves me right, Japan has had mortgage interest rates of 2-4% for the past 15+ years.  What's to say the same thing can't happen in the US???  Sure, we are all preparing for a big uptick in inflation but long term bonds sure aren't acting like a big inflation spike is right around the corner.  I'm in the camp that's leaning towards higher than normal inflation BUT I can see a scenario where inflation stays around 0% for a long while and mortgage rates stay between 4-5%.  Just food for thought.
Title: Observations of Irvine RE market
Post by: USCTrojanCPA on December 09, 2009, 05:09:00 PM
Quote from: "qwerty"
Quote from: "IrvineRealtor"

If we ever meet - I owe you $5.  I'm using that exact wording next time someone asks the question.  For now, all I can do is bump your karma.

I just recorded a receivable from you for $5.

Is that in accordance with GAAP?    :P
Title: Observations of Irvine RE market
Post by: nosuchreality on December 09, 2009, 06:18:00 PM
Quote from: "USCTrojanCPA"
Quote from: "nosuchreality"

While this is correct, it is dependent on a feature that will have a surprise as much fun as having had one two many drinks and missing the large hands and adams apple of the hot chick you brought home.

The rental parity is based on interest rates at 4.75%.  So you better make sure when you buy it that you're keeping it because when interest rates go up, you might be able to rent it, but you won't sell it without a lot of skin.
Haha...I like that analogy.    :P    But what will happen if rates stay around 5% or go lower like they did in Japan.  If my memory serves me right, Japan has had mortgage interest rates of 2-4% for the past 15+ years.  What's to say the same thing can't happen in the US???  Sure, we are all preparing for a big uptick in inflation but long term bonds sure aren't acting like a big inflation spike is right around the corner.  I'm in the camp that's leaning towards higher than normal inflation BUT I can see a scenario where inflation stays around 0% for a long while and mortgage rates stay between 4-5%.  Just food for thought.


Hence we're looking but looking very closely for rental parity and something we'll be comfortable in and be comfortable using as a rental if the market turns and our ability to buy better comes in the next two-three years or 7-10 years.
Title: Observations of Irvine RE market
Post by: jvna on December 09, 2009, 10:44:00 PM
Quote from: "irvinehomeowner"
Quote from: "qwerty"
I agree, but it also means your gain will be reduced by the amount that you overpaid. if one's goal is maximum financial gain (and i know for most of you its not) then it probably does not make sense to buy in irvine for at least a year, probably longer.
For people who actually just want to buy a home to live in (not to "invest") and especially in these uncertain times, I think any financial gain from their home isn't the primary concern.

Many will be glad to be able to move-up with at least a break-even.

And I really don't know what to expect from Irvine in year or more. The shadow inventory seems to indicate that downward pressure will result in lower prices but why haven't we seen it across the board? For all I know, prices will stay here for the next 5 years.

Gah.


I tend to agree that there are a lot of people that aren't looking at it from a purely financial gain perspective.  Their primary concern is to find a home or move up home to live in and break-even far down the road should they need/want to sell.  It's a balance of financial responsibility and happiness with their respective personal situation.
Title: Observations of Irvine RE market
Post by: reason on December 10, 2009, 10:42:00 AM
Quote from: "novaseline"
Quote from: "octrends"

don't worry, if the interst rates go up, price will come down accordingly to keep the payment same. no need to have more down payment.

If that is true, your down payment will go DOWN in real dollars while remaining constant as a %.  Think about that for a minute...


Does anyone know how to calculate the devaluation of the Dollar since the last 3 years as it applies to the current housing prices?

In other words, a gallon of unleaded gasoline currently is above $3.00. But 2-3 yrs. ago, the same gallon was around $1.90.  Yes, partly it's due to oil prices. But there's the other part, the "devaluation" of the US Dollar.

So lets say the Irvine Co. prices the new homes at lets say $700k. Is it truly $700k?  I mean if you factor in the devaluation of the US Dollar. Would that $700k really is $600k ....3 yrs ago. Is it that prices have gone up? Or that the value of the US currency have lost it's value.

I sure wish there's someone on the forum with knowledge of the effect of the declining US $.

Here's another analogy, lets say you have been saving for the last 3 years. And you finally saved up $100k. Would you be able to buy more stuffs currently with your 100k vs. 3 yrs. ago? Pondering.
Title: Observations of Irvine RE market
Post by: reason on December 10, 2009, 10:50:00 AM
I am looking out and seeing these new homes being built. Due to the decline in the $US. Do you think that it's costing the Irvine Co. more to pay for the cement, wood, pipes, labor, etc? Or do you think it cost less?

And if it cost the Irvine Co. more to build these new homes. Wouldn't they pass that on to the pricing? Of course, there's a perceived 'special premium' added on. But lets look at where the value of the US$ is currently.

One last analogy. If you compare your grocery cost of the last 3 yrs. Is a gallon of milk the same price currently? How about a lb. of beef? Or what about your favorite veggies? The answer is it takes more dollars to buy these things as compare to 3 yrs ago. Why? Is there a conspiracy amongst farmers to prop up the prices? Or is it costing them more dollars to produce and transport? And why is it costing them more dollars now to operate? Could it be partly due to ....?  So a new house is a product just like your groceries. Should the price of new homes go down while your groceries cost goes up?
Title: Observations of Irvine RE market
Post by: novaseline on December 10, 2009, 08:21:00 PM
Quote from: "reason"
Quote from: "novaseline"

If that is true, your down payment will go DOWN in real dollars while remaining constant as a %.  Think about that for a minute...

Does anyone know how to calculate the devaluation of the Dollar since the last 3 years as it applies to the current housing prices?

In other words, a gallon of unleaded gasoline currently is above $3.00. But 2-3 yrs. ago, the same gallon was around $1.90.  


No it wasn't.

http://www.californiagasprices.com/retail_price_chart.aspx (http://www.californiagasprices.com/retail_price_chart.aspx)

12/08 - $1.99
12/7 - $3.15
12/06 - $3.43
12/05 - $2.35

I understand the point you're trying to make, but your data points don't work out so good with said point.
Title: Observations of Irvine RE market
Post by: reason on December 10, 2009, 11:27:00 PM
Quote from: "novaseline"
Quote from: "reason"

Does anyone know how to calculate the devaluation of the Dollar since the last 3 years as it applies to the current housing prices?

In other words, a gallon of unleaded gasoline currently is above $3.00. But 2-3 yrs. ago, the same gallon was around $1.90.  

No it wasn't.

http://www.californiagasprices.com/retail_price_chart.aspx (http://www.californiagasprices.com/retail_price_chart.aspx)

12/08 - $1.99
12/7 - $3.15
12/06 - $3.43
12/05 - $2.35

I understand the point you're trying to make, but your data points don't work out so good with said point.


I knew the data was not accurate (too lazy to type in approx.) But as long as you know the point that I am getting at   :D

I was going to use the value of an oz. of gold of 2 yrs ago vs. current. It was "roughly" $400/oz. and currently it's "roughly" $1000/oz. Now, it's still an oz. of gold. So why is it costing more now?  But somehow, I get this feeling Awgee would come in to correct the dollar amount.

I hope someone would provide the data of the US Dollar at the beginning of the RE crash vs. its current value. Then compare that to the current prices of homes. I find it interesting that as we saw the housing market crash. The value of the dollar also went down.

Since the buying power of the Dollar is not what it was 2 - 3 yrs prior. What effect does that have on the current housing price. Lets say a house price now is $500k. Is it really $500k? or is it really $400k if you factor in the declining value of the Dollar. Gosh, I hope someone is understanding my jibberish. Nevermind.
Title: Observations of Irvine RE market
Post by: nosuchreality on December 11, 2009, 06:37:00 PM
Decling price of the dollar is irrelevant.

It's growth in income that matters.

Unless you have enough money that your country of living is a realistic choice.

$500,000 yesterday and $500,000 today, still take $500,000.

Now if the incomes in the area have changed from $83,000 to $106,000.  Then $500,000 is correspondingly cheaper.

But, choose your poison.    If the house is an investment, compare the price then compared to other investments:  Gold, diamonds, spiders, oil, pork belly futures...

If it's a necessity, compare to necessities: a cart of groceries.

If it's a discretion, compare to discretinary items: trips to Europe, price of movie tickets, cost of cable, flights to hawaii and a week a Hulalai etc...
Title: Observations of Irvine RE market
Post by: reason on December 13, 2009, 09:35:00 AM
Quote from: "nosuchreality"
Decling price of the dollar is irrelevant.

It's growth in income that matters.

Unless you have enough money that your country of living is a realistic choice.

$500,000 yesterday and $500,000 today, still take $500,000.

Now if the incomes in the area have changed from $83,000 to $106,000.  Then $500,000 is correspondingly cheaper.

But, choose your poison.    If the house is an investment, compare the price then compared to other investments:  Gold, diamonds, spiders, oil, pork belly futures...

If it's a necessity, compare to necessities: a cart of groceries.

If it's a discretion, compare to discretinary items: trips to Europe, price of movie tickets, cost of cable, flights to hawaii and a week a Hulalai etc...



Oh, no. I have to disagree. $500k yesterday is not the same as $500k today. Lets say a candy bar cost 10 cents back in the 70's and that same candy bar is now $1.25. It takes $1.25 to buy that candy bar. Not 10 cents of 3 decades ago. So no, the current value of the dollar is not the same as years past.

And although income might increase. It's not the same dollar value. A person can make $40k, 5 years ago. And is now making $50k, the current $50k is not going to buy the same amount of goods as 5 years ago.

Furthermore, I understand the mention of "growth in income" makes the declining dollar irrevelant. But how many average American workers' income increased to outpace the rapid declining value of the dollar?

In the last 3 years, the job market have deteriorated. Where most workers are lucky to have a job. Most are afraid to ask for a raise. Some companies won't give raises due to market competitiveness. Many workers had their hours reduced. This, of course, lower their income.

Hence, to speak of "growth in income" in the current market condition is irrelevant. If we were in a perfect economy, maybe.