[quote author="awgee" date=1256803050][quote author="USCTrojanCPA" date=1256799896][quote author="awgee" date=1256798434][quote author="USCTrojanCPA" date=1256738466][quote author="JCie" date=1256737999]Some thoughts:
So a few weeks ago, I found a beautiful ocean view property in Newport Coast. There were the typical low ball offers and my first go at it was a pretty low offer. When that didn't get me anywhere, I stepped up. I ended up with a great deal on a stunning property in a beautiful community at around 30% - 35% off peak prices . The other buyers that were 5% below my offer ended up with nothing.
I am about to move to Newport Coast into what I'd call, my dream home, and I'm thrilled like a kid before Christmas. If it drops 5% or 10% more, it won't feel good but really, I won't even be thinking about it. Someone could offer me 15% more than I paid and I wouldn't sell. When you find your home, you just find your home. I was surprised that even on a relatively high budget, I had trouble finding a home that was just about perfect for me.
My point is: your home is an emotional purchase, not just a rational one. If you find a home you love and you can afford it, buy it and enjoy it.</blockquote>
Congrats and very well put. The market has turned and it is now a seller's market, that's fact based upon what I'm seeing first hand not only in Irvine but other cities in Orange County and even Vegas. Can prices blip down in 2010 or 2011 by 5-10%? Sure they can, but I just don't see a crash of 20%+ price declines coming. I have been shocked of how many strong buyers with huge amounts of cash looking for homes. The market has stabilized and prices are inching up as we speak. A home purchase for most buyers, including the ones I'm working with, is a very emotional event which has an intangible value for these buyers.</blockquote>
Hogwash.
The over $2,000,000 market is dead. Absolutely dead.
And prices in the under $800,000 market will decline more than another 20%.</blockquote>
The high-end market may decrease 20% or more, all depends on the economy, but the amount of high-end inventory is also declining and sales are picking up. I won't make any predictions on the high-end market because I don't have any buyers looking for properties in that market so I don't really track that market closely. I was speaking more about the middle and low-end market. I'm willing to bet you that the middle and low-end market in Irvine and South County will not decline over 20% from today's prices. I was bearish on housing until the past few months because from what I'm seeing first hand we are currently in a seller's market. Not sure if you heard, but on CNBC this afternoon they said they'll extend the homebuyer's tax credit and expand it for move-up buyers. Add that bank's continue to extend and pretend and you have yourself a seller's market.
Most all of my buyers are telling that things are picking up in their businesses and their companies. It's not just Irvine, the same lack of inventory in Mission Viejo, Laguna Niguel, Huntington Beach, Fullerton, Tustin Ranch, etc is causing multiple offers on homes prices around comps (don't even ask me what happens when the pricing is below market because it gets nuts), Unless inventory (real, non-short inventory) increases 100% from current levels, no way prices decline more than 10% from today's levels. Irvine prices are up 5% from the Spring of this year and other cities are beginning to see slight price increases (price/sf). I'll give you a great example...in all of Irvine there are only 28 detached 4+ bedroom homes (over 1,800sf under $900k) that are active non-short sale listings on MLS and the last 4 homes in Irvine that I put offers on for my buyers had 5-40 other offers. Increase the square footage to 2,000+ and you only have 18 homes that are active listings on MLS in Irvine (excludes short sale listings) For now we are in a seller's market.</blockquote>
The reason you have no buyers in that market is because there are no buyers in that market and sales are not picking up in that market. Do I need to produce Steve Thomas' data? The months of inventory in the over $2mil market has gone from about 24 months to 22 months, not enough to be more than a blip. Ask Delroy how many buyer there are in Coto in the over $2mil market? How many sales over $2mil have there been in the last month? Two months? Six months? One year?
Yes, I saw the homebuyer's credit was extended and that will only produce the same mini bubble you are seeing now, but eventually that will produce more foreclosures when prices head down again and further price declines. Al it has done is put more people in homes who did not have enough of a down payment and now have no skin in the game. More of the same will not produce different results. People are so incredibly short sighted. Look at the big picture. Almost all home purchasing credit is being extended by the FHA. And the FHA is about to get clobbered by defaults. Have the number of NODs and NTSes decreased? Are folks all of a sudden able to afford their recasting mortgages? Has there been an increase in employment? Are wages increasing? Do your really think the economy can improve because the Fed has printed money?
All the government intervention will produce nothing but more misery and an extension of the housing recession in the long run.</blockquote>
Awgee, a few things I need to clarify...
1) I don't track the high-end market at all
2) I don't know the Coto market very well, I've only been out there once with a buyer
3) You and Delroy are the resident experts on Coto and you know you guys will be the first ones that I PM if I have a buyer that is interested in buying in Coto
4) I have only peaked at the high-end markets in Irvine/Shady Canyon and Newport Beach/Coast so that is where I say that is the basic of me saying inventory is down from earlier this year and sales have picked up a little.
So I have no idea how many Coto homes over $2m will sell in the next 6 or 12 months let alone 24 months. I do keep a very close eye on the Irvine, Huntington Beach, Costa Mesa, MV, Laguna Niguel, RSM, Ladera, and Aliso, and Dana Point for my buyers so I can comment on what's going on in the sub $1m SFR market in these areas. The reason the market is so tight right now is because of the lack of real inventory (excluding short sales) as I have mentioned before on several occasions. Have written over 50+ offers and viewed over 100+ properties in the past 6+ months, I say confidently that the market has swung from a buyer's market to a seller's market. I'm neither a housing bear or bull, I'm just telling people what I'm seeing from the front line as a buyer's agent. Irvine is the strongest market out of all the cities I've listed....every single property that I have submitted an offer on for my buyers had other multiple offers on it. Hell, it's so bad that I can't even find a small decent detached condo for one of my Irvine buyers under $550k.
Almost any decent located home that is priced at or below market flies into escrow within about a week of being listed either at slightly under list to significantly over list. What's causing the lack of inventory? I think there are several reasons....1) Banks going in slow motion to foreclose on properties and list them 2) Many potential sellers are still underwater so they can not sell without putting money into escrow 3) Some equity sellers are waiting until prices rebound further before they list their homes 4) Banks are even beginning to actually get short sales done 5) The amount of buyers has increased since the beginning of the year (could be the improving economic conditions, the home buyer credit, and/or a family need to purchase a home). I would agree with you that the majority of the home purchases do use FHA financing, but it is not the choice of most buyers in Irvine and the South County cities that I mentioned as many buyers are putting down 20-30%+ downpayments (Irvine had the most cash buyers). The number of NODs and NTSs has kept increasing and will keep increasing because the gov't has decided to prop up the big banks along with the whole mark-to-market smoke-n-mirrors accounting trick so there is no rush on the banks' part to rush getting those REOs out on the market. I do see the macro economic issues facing us like high and increasing unemployment along with other headwinds and I do read the other blogs and forums that document in detail the shadow inventory levels but I'm just sharing with folks on here what I'm seeing from the front lines. I've been more shocked than anyone else and even poked fun at IPO a bit in the summer when he was posting up that uptick in the CS numbers for Irvine. But the trend has continued which makes it more than a blip. Will the home market be volatile in the few years....of course. Can prices decline from where....hell yeah. But will prices in the low-end and mid-market of Irvine and South County cities plunge over 20%....not unless some real bad things happen in the economy and mortgage rates surge to over 7% (which I don't see happening in the near term). Until inventory levels increase significantly from today or something tragic happens with the economy, you will not see price declines of more than 3-5% in the low and middle housing market in Irvine and South Orange County.
Let me ask you about something else that has really surprised me. I'm sure you see how much debt the gov't is having to auction off to pay for all spending....why is there so much demand for that debt and why are the bid-to-cover ratios so high for that new debt? Are the big banks that got all of that free cash from the Fed/Treasury just parking it in gov't bonds?
