Talk Irvine

General => Real Estate => Irvine Real Estate => Topic started by: octrends on December 01, 2009, 11:39:00 PM

Title: Irvine market in 2010!!!!
Post by: octrends on December 01, 2009, 11:39:00 PM
Now we are kicked out of the IHB forums, i am thinking to start a new thread to discuss, how irvine house market will look like in 2010. Given the current Govt intervention, low interest rates and all possible ways to keep foreclosure low it seems it won't go down much, may be 5-10%. Also today there was news about forcing banks to reduce the principals to avoid foreclosure at any cost. I don't think bottom is near or possible in the next 2-3 years.
Title: Irvine market in 2010!!!!
Post by: novaseline on December 01, 2009, 11:41:00 PM
Quote from: "octrends"
Also today there was news about forcing banks to reduce the principals to avoid foreclosure at any cost.


Yeah, [bovine excrement].
Title: Irvine market in 2010!!!!
Post by: irvinehomeowner on December 02, 2009, 12:05:00 AM
See... you can take the forums out of the IHB... but you can't take the RE out of the forums.

I think it's going to be very hard to avoid discussing RE before Friday (is that the deadline?).

Also... is the closure of the IHB forums a subtle nod that we are near the bottom?
Title: Irvine market in 2010!!!!
Post by: SoCal on December 02, 2009, 12:15:00 AM
Quote from: "irvinehomeowner"
I think it's going to be very hard to avoid discussing RE before Friday (is that the deadline?)


You may discuss RE. IHB does not permit me to create any categories for it right now, in exchange for our link being up in their announcement temporarily. However, RE posts will not be removed.
Title: Irvine market in 2010!!!!
Post by: reason on December 02, 2009, 12:25:00 AM
The RE market is so stale right now. I don't know anymore.
Title: Irvine market in 2010!!!!
Post by: octrends on December 02, 2009, 12:39:00 AM
Quote from: "irvinehomeowner"
See... you can take the forums out of the IHB... but you can't take the RE out of the forums.

I think it's going to be very hard to avoid discussing RE before Friday (is that the deadline?).

Also... is the closure of the IHB forums a subtle nod that we are near the bottom?

good point, i never thought of it. also it's quite possible TIC might have bought it so that they can sell their homes without the IHB intervention.
Title: Irvine market in 2010!!!!
Post by: Soylent Green Is People on December 02, 2009, 01:22:00 PM
Good Dr. Housing Bubble has a fantastic chart in his last post called "the eye of the hurricane". One look at it and you'd probably surmise that 2010 will be a deja vu event of the 2007-2008 market. The Fed and Treasury has run out of silver bullets. My guess is that the monster will rise from the dead and kill off any housing recovery/green shoots people are hoping for.
Title: Irvine market in 2010!!!!
Post by: USCTrojanCPA on December 02, 2009, 10:25:00 PM
It's all about the inventory levels.  Until inventory increases significantly from current levels, Irvine home prices will be very stable to slightly increasing.  The only way Irvine home prices drop from today's levels are if one or more of 3 things happen:  1) significant increase in inventory, 2) interest rates above 6%, and/or 3) the economy takes a turn for the worse and unemployment keeps rising higher and higher.

I'll give you guys a great example, there was a new listing in Irvine that hit MLS at 10am this morning and I submitted an offer for one of my buyers at 6pm (without seeing the home as the home will not be shown until Saturday).  The listing agent indicated that they had already received 4 other offers.  The craziness continues....
Title: Irvine market in 2010!!!!
Post by: octrends on December 02, 2009, 10:50:00 PM
What do you think, all of these are real buyers or investors or both. another point is to see if these are investors and they are grabbing all the properties at WTF prices, that means prices won't go down.
Title: Irvine market in 2010!!!!
Post by: USCTrojanCPA on December 02, 2009, 10:54:00 PM
Quote from: "octrends"
What do you think, all of these are real buyers or investors or both. another point is to see if these are investors and they are grabbing all the properties at WTF prices, that means prices won't go down.

From what I've seen going to view new listings, most all are real buyers who plan on occupying the homes.  The investors are sticking with the courthouse foreclosure auctions.  From the closing information on MLS, most of the buyers are putting 30-50% down and there's a fair number of homes purchased in the past 2-3 months for cash.

I'll post up my monthly update of Irvine real estate on Saturday as soon as the official ban of real estate discussion expires and share some more thoughts and observations.
Title: Irvine market in 2010!!!!
Post by: trrenter on December 04, 2009, 04:55:00 PM
Can someone post a foreclosure radar map?  That may give us some idea of what is in the pipeline as far as pent up supply.
Title: Irvine market in 2010!!!!
Post by: lnc on December 05, 2009, 10:53:00 AM
I can't speculate the Irvine market in 2010.  However, overall housing market in CA beyond 2010 does not look so good.  Here's graph posted in Calculated Risk today.  http://www.calculatedriskblog.com/ (http://www.calculatedriskblog.com/)  
CA has 54% of total option ARM loans, and these loans are due to recast in next few years.  With CA's high unemployment rate and negative equity on these loans, strategic default can be even more popular in the next few years.  That wills definite made impact on Irvine housing prices.  
 http://www.housingwire.com/wp-content/uploads/2009/12/outstanding-option-arms.png (http://www.housingwire.com/wp-content/uploads/2009/12/outstanding-option-arms.png)
Title: Irvine market in 2010!!!!
Post by: nosuchreality on December 05, 2009, 12:35:00 PM
Quote from: "USCTrojanCPA"
It's all about the inventory levels.  Until inventory increases significantly from current levels, Irvine home prices will be very stable to slightly increasing.



You nailed that one.  The inventory county wide is on par with a grocery store at the height of the cold war in the USSR's Warsaw Pact States.

If you strip out the short sales and the wishing, there is very little there.
Title: Irvine market in 2010!!!!
Post by: octrends on December 05, 2009, 12:45:00 PM
Quote from: "lnc"
I can't speculate the Irvine market in 2010.  However, overall housing market in CA beyond 2010 does not look so good.  Here's graph posted in Calculated Risk today.  http://www.calculatedriskblog.com/ (http://www.calculatedriskblog.com/)  
CA has 54% of total option ARM loans, and these loans are due to recast in next few years.  With CA's high unemployment rate and negative equity on these loans, strategic default can be even more popular in the next few years.  That wills definite made impact on Irvine housing prices.  
 http://www.housingwire.com/wp-content/uploads/2009/12/outstanding-option-arms.png (http://www.housingwire.com/wp-content/uploads/2009/12/outstanding-option-arms.png)  


don't expect reset to cause any big issues, since there are so much govt intervention. its quite possible banks/lenders will work with all the mrtg holders to keep the same payment for another 3-5 yrs, expand the loan to 35 or 40 years to keep the same payment, reduce the principal or give the lowest possible APR. ofcourse it won't work on those cases where the mrtg holder is out of job. i don't expect mkt to go down in double digits, it will be dragging down in single digits quite possible 5%-7% range for the next 5-10 yrs.
Title: Irvine market in 2010!!!!
Post by: USCTrojanCPA on December 05, 2009, 01:57:00 PM
Quote from: "nosuchreality"
Quote from: "USCTrojanCPA"
It's all about the inventory levels.  Until inventory increases significantly from current levels, Irvine home prices will be very stable to slightly increasing.


You nailed that one.  The inventory county wide is on par with a grocery store at the height of the cold war in the USSR's Warsaw Pact States.

If you strip out the short sales and the wishing, there is very little there.

That's a great analogy as it brought back the memories of how my parents used to tell me that they had to stand in line for hours just to get their ration of cold cuts for the month back in Poland in the 70s.
Title: Irvine market in 2010!!!!
Post by: nefron on December 06, 2009, 07:25:00 PM
I've continued to watch University Park very closely and it's looking a lot like last winter to me.  I saw the 3-bedroom bank owned foreclosure around the corner from me sit for weeks at $599,000, and as soon as the price dropped to $549,000 it was snapped up.  There is now a For Rent sign in the front.   I think that's the 7th University Park property I saw that happen to since May.  

Anything 3-bedroom within 10% of $500,000 is still considered investment property, looks to me.   I think the only way prices are going to go lower, besides interest rates starting up, is for those investors, whoever they are, to decide that a half a mil for an Irvine 3-bedroom is a poor investment.  What is THAT going to take?
Title: Irvine market in 2010!!!!
Post by: morekaos on December 07, 2009, 01:28:00 PM
Is this the future of Irvine luxury condos?

http://www.redfin.com/CA/Irvine/3141-Michelson-Dr-92612/unit-404/home/7219078 (http://www.redfin.com/CA/Irvine/3141-Michelson-Dr-92612/unit-404/home/7219078)

Sep 28, 2009  Price Changed $374,000  --  SoCalMLS #S543946  
Sep 09, 2009  Relisted --  --  SoCalMLS #S543946  
Aug 14, 2009  Sold (MLS) --  --  SoCalMLS #S543946  
Jun 12, 2009  Price Changed $450,000  --  SoCalMLS #S543946  
Feb 18, 2009  Price Changed $499,999  --  SoCalMLS #S543946  
Oct 30, 2008  Relisted --  --  SoCalMLS #S543946  
Oct 29, 2008  Delisted --  --  SoCalMLS #S543946  
Oct 23, 2008  Price Changed $539,000  --  SoCalMLS #S543946  
Oct 23, 2008  Relisted --  --  SoCalMLS #S543946  
Oct 16, 2008  Delisted --  --  SoCalMLS #S543946  
Aug 13, 2008  Listed $675,000  --  SoCalMLS #S543946  
Feb 15, 2006  Sold (Public Records) $781,000  --  Public Records
Title: Irvine market in 2010!!!!
Post by: icey on December 07, 2009, 02:31:00 PM
Great price!

But then...$1,125 HOA!!!!!!? WTF...
Title: Irvine market in 2010!!!!
Post by: trrenter on December 08, 2009, 10:05:00 AM
Between the government and the banks actions the bubble will deflate slowly so the decrease anywhere especially Irvine will not be as dramtic as it should be.  

I think people will loose their equity slowly.

RE historically has increased in value between 2% and 5% a year.  I think buyers can forget about that.  I personally believe that Real estate will probably decline between 4% and 8% in 2010.

What is lost in that is if you take a $500,000 home (box in Irvine) and in 2010 it appreciates by 3% the home will be worth $515,000 but if you take that same home and it depreciates 4% it will be worth $480,000 at the end of 2010.

I think housing will continue to decrease until prices adjust back to the historic norms.  I don't think Irvine will be any different.
Title: Irvine market in 2010!!!!
Post by: irvinehomeowner on December 08, 2009, 10:25:00 AM
But what is historic norms? 2003? 1998?

In 1998-2000, 1800-2000sft *new* SFRs in Irvine sold for $300-350k. These were 3/4 br homes in areas like Oak Creek, Harvard Square and West Irvine.

Do you think they will get that low? I just did a quick RedFin search and the lowest similarly sized houses go is mid to high $500k. When I change the year build to 1995+, the lowest is high $600k.

It's those darn FCBs!
Title: Irvine market in 2010!!!!
Post by: trrenter on December 08, 2009, 10:44:00 AM
Quote from: "irvinehomeowner"
But what is historic norms? 2003? 1998?

In 1998-2000, 1800-2000sft *new* SFRs in Irvine sold for $300-350k. These were 3/4 br homes in areas like Oak Creek, Harvard Square and West Irvine.

Do you think they will get that low? I just did a quick RedFin search and the lowest similarly sized houses go is mid to high $500k. When I change the year build to 1995+, the lowest is high $600k.

It's those darn FCBs!


I would say pre bubble is 98-99 so lets take a 300k home in 98 add 3% per year and in 2009 under non bubble appreciation that home would be worth about $403k.

So if you keep adding the 3% appreciation to the 98-99 price and then deduct the 4% I think it will go down per year wait for the two numbers to intersect.

That will happen in late 2014 when the homes will be worth about  $475k.

Now if a wave of foreclosures come that could increase the deflation.  Or if the government and the banks keep the inventory artificially low this could drag out much longer.

The could conceivably just keep the homes at the value to day until the normal appreciation catches up to the price.
Title: Irvine market in 2010!!!!
Post by: bltserv on December 08, 2009, 11:05:00 AM
Quote from: "morekaos"
Is this the future of Irvine luxury condos?

http://www.redfin.com/CA/Irvine/3141-Michelson-Dr-92612/unit-404/home/7219078 (http://www.redfin.com/CA/Irvine/3141-Michelson-Dr-92612/unit-404/home/7219078)

Sep 28, 2009  Price Changed $374,000  --  SoCalMLS #S543946  
Sep 09, 2009  Relisted --  --  SoCalMLS #S543946  
Aug 14, 2009  Sold (MLS) --  --  SoCalMLS #S543946  
Jun 12, 2009  Price Changed $450,000  --  SoCalMLS #S543946  
Feb 18, 2009  Price Changed $499,999  --  SoCalMLS #S543946  
Oct 30, 2008  Relisted --  --  SoCalMLS #S543946  
Oct 29, 2008  Delisted --  --  SoCalMLS #S543946  
Oct 23, 2008  Price Changed $539,000  --  SoCalMLS #S543946  
Oct 23, 2008  Relisted --  --  SoCalMLS #S543946  
Oct 16, 2008  Delisted --  --  SoCalMLS #S543946  
Aug 13, 2008  Listed $675,000  --  SoCalMLS #S543946  
Feb 15, 2006  Sold (Public Records) $781,000  --  Public Records


morekaos

You need to start another "North Korea Towers" thread so we can keep track of it separately.

I really wonder what will happen with the HOA.  Its just killing any chance for these condos.  Its almost like a Spiral that cant stop.  Like a black hole sucking them into oblivion.
Title: Irvine market in 2010!!!!
Post by: irvinehomeowner on December 08, 2009, 11:09:00 AM
So in 2014, you think an 2000sft 4br SFR will be about $475k? I would hope so but I can't see that.

That's a pretty long drop from $675k.

What will that home be priced at in 2010? Especially with TIC benchmarking at the high $500ks to low $600ks for similarly sized homes.
Title: Irvine market in 2010!!!!
Post by: trrenter on December 08, 2009, 11:27:00 AM
Quote from: "irvinehomeowner"
So in 2014, you think an 2000sft 4br SFR will be about $475k? I would hope so but I can't see that.

That's a pretty long drop from $675k.

What will that home be priced at in 2010? Especially with TIC benchmarking at the high $500ks to low $600ks for similarly sized homes.


Sorry I should have said that I started the depreciation at 600k not 675k.  

So that number would be a depreciation of 4% per year from 600k.

Starting again from 600k a 4% depreciation would be about 582k in 2010.

I could be completely wrong and homes may not depreciate at all they just won't appreciate.

It that scenario the home would sell for 600k until 2030 or so.
Title: Irvine market in 2010!!!!
Post by: greencactus on December 08, 2009, 12:31:00 PM
Don't you also need to account for the different interest rates when going back in time. A house that was worth $300K in 98 was in a market where 30 year fixed was about 7%.

Similarly, in your projections shouldn't you make an assumption on what the interest rate will be. By 2014 it is very possible that we can see an upswing in interest rates. This will exert a negative pressure on home prices.

On top of that there is the inflation component (which is somewhat tied to interest rates).

In any case, I think that it boils down to monthly payment as a fraction of income. This would be an actual measure of "affordability".
Title: Irvine market in 2010!!!!
Post by: trrenter on December 08, 2009, 01:03:00 PM
Quote from: "greencactus"
Don't you also need to account for the different interest rates when going back in time. A house that was worth $300K in 98 was in a market where 30 year fixed was about 7%.

Similarly, in your projections shouldn't you make an assumption on what the interest rate will be. By 2014 it is very possible that we can see an upswing in interest rates. This will exert a negative pressure on home prices.

On top of that there is the inflation component (which is somewhat tied to interest rates).

In any case, I think that it boils down to monthly payment as a fraction of income. This would be an actual measure of "affordability".


I agree completely. Again I am just guessing and this is my guess as to what is going to happen.

If interest rates were to climb to double digits then depreciation could come quickly.

There are a lot of what if's involved.  What if unemployment stays the same or gets worse.

What if taxes go up significantly to reduce deficits in CA and the US.

The point is that through inflation, interest rate changes, recessions etc Real Estate historically apreciates at around 3%.

I don't see anything that happened between 1999 to 2009 except for loose lending standards that would indicate that houses should have appreciated more then the historical 3%.  

So my guess is through one mechanism or another we will hit those historical norms eventually.
Title: Irvine market in 2010!!!!
Post by: novaseline on December 08, 2009, 01:34:00 PM
Quote from: "trrenter"
If interest rates were to climb to double digits then depreciation could come quickly.


That's just silly talk.   It can never happen because Bernanke doesn't have the "guts" to raise rates.  

I know this because both Awgee and Winex say it's so, and they "know" because they don't "believe".    >:(
Title: Irvine market in 2010!!!!
Post by: trrenter on December 08, 2009, 01:46:00 PM
Quote from: "novaseline"
Quote from: "trrenter"
If interest rates were to climb to double digits then depreciation could come quickly.

That's just silly talk.   It can never happen because Bernanke doesn't have the "guts" to raise rates.  

I know this because both Awgee and Winex say it's so, and they "know" because they don't "believe".    >:(



I don't really think it will happen either.

If Bernake raised the interest rates to double digits it would undo all the manipulation they have already done to keep the bubble from bursting.

That is why I am convinced at this point the plan is to slowly deflate the bubble.
Title: Irvine market in 2010!!!!
Post by: novaseline on December 08, 2009, 02:20:00 PM
I wasn't serious in my remark, but I suspect you're right.  I think the plan is to start raising rates later in 2010 and keep on tightening till they get them back where they want them "around" 6%.
Title: Irvine market in 2010!!!!
Post by: greencactus on December 08, 2009, 02:50:00 PM
It depends what the inflationary pressure is down the road. The Fed targets 3-4% inflation. If you were to peg the interest rate at 6% but it doesn't slow down inflation to the desired levels, policy changes may be needed to slow down economic growth. Let's say taxes end up shooting up to stem rapid growth. What's worse ... 10%+ interest rates and lower taxes or 6% interest rates and higher taxes? (assume they both achieve the same inflation rate) Either scenario would push home prices down. I can't foresee a situation where both interest rates AND taxes are kept low.
Title: Irvine market in 2010!!!!
Post by: biscuitninja on December 12, 2009, 01:11:00 PM
If anything it is my belief we will see both interest rates and taxes going up (taxes more than interest rate).  Kinda the monster feeding on its own tail because the villagers were insufficent.

I wonder if the banks are going to keep riding the credit cruch and squeeze each and every creditee.... not just squeeze, but pulverize.  Anyways good luck

-bix
Title: Irvine market in 2010!!!!
Post by: trrenter on December 15, 2009, 10:46:00 AM
http://realestate.msn.com/article.aspx?cp-documentid=22780195 (http://realestate.msn.com/article.aspx?cp-documentid=22780195)

The housing picture is complex ? and frightening. House prices have plunged 30%, on average, from their 2006 peak. But from 2000 to 2006, average prices nearly doubled. That means average house prices are still almost 40% higher than they were a decade ago. Forty percent is a healthy increase ? even in a robust economy.
Title: Irvine market in 2010!!!!
Post by: octrends on December 15, 2009, 05:53:00 PM
Housing outlook for the next year.

http://money.cnn.com/2009/12/08/real_estate/housing_outlook.fortune/index.htm (http://money.cnn.com/2009/12/08/real_estate/housing_outlook.fortune/index.htm)

LA is expected to go down by 19%, Riverside by 18%, no mention of Irvine/OC though
Title: Irvine market in 2010!!!!
Post by: Cubic Zirconia on December 15, 2009, 06:04:00 PM
My neighbors sold their house for a good price. Actually a good 80k above what we paid last year for our house which is similar. You never know! I was surprised. (and happy too)
Title: Irvine market in 2010!!!!
Post by: USCTrojanCPA on December 15, 2009, 07:37:00 PM
Quote from: "Cubic Zirconia"
My neighbors sold their house for a good price. Actually a good 80k above what we paid last year for our house which is similar. You never know! I was surprised. (and happy too)

With such a low lack of inventory, it is a great time to sell (particularly 3+ bedroom detached condos and SFRs) in Irvine especially if you don't plan on owning a home for at least the next 5+ years.
Title: Irvine market in 2010!!!!
Post by: Cubic Zirconia on December 16, 2009, 10:57:00 AM
True. That is the reason people are just buying I think. The long will just be too looong.. and then there is a possibility that 3 bed/2.5 bath houses might not fall that much after all in Irvine.
Title: Irvine market in 2010!!!!
Post by: davenlei on December 18, 2009, 05:14:00 PM
Quote from: "USCTrojanCPA"
Quote from: "Cubic Zirconia"
My neighbors sold their house for a good price. Actually a good 80k above what we paid last year for our house which is similar. You never know! I was surprised. (and happy too)
With such a low lack of inventory, it is a great time to sell (particularly 3+ bedroom detached condos and SFRs) in Irvine especially if you don't plan on owning a home for at least the next 5+ years.


I agree.  I sold my house in Irvine earlier this year (3 Bed, 3 Bath SFR built in 1987) for around $416 a sq. ft.
Title: Irvine market in 2010!!!!
Post by: peteruk on December 18, 2009, 08:47:00 PM
I was overhearing a Lady at the Coffee shop a couple of weeks ago who was talking really loud on her cell, she said something like "We are going to look at another House today, we missed the last four, you have to be really quick and see them as soon as they come on the market otherwise they're gone"
Title: Irvine market in 2010!!!!
Post by: USCTrojanCPA on December 18, 2009, 09:33:00 PM
Quote from: "peteruk"
I was overhearing a Lady at the Coffee shop a couple of weeks ago who was talking really loud on her cell, she said something like "We are going to look at another House today, we missed the last four, you have to be really quick and see them as soon as they come on the market otherwise they're gone"

That's exactly how of my Irvine buyers are...as soon as something hits the market that fits what they are looking for we go see it (many times even the same day).
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