New Home Inventory: Demand or Price?

irvinehomeowner

Well-known member
It seems like we are getting more of the attached/duplex/small condo products rather than the SFR ones in the new offerings by TIC. Is this based on demand or price?

Are there that many buyers out there who want the smaller product or is it because it's more affordable? I would like to see more SFRs starting at $600k (I know I'm dreaming) but it doesn't seem like that's even a remote possibility.

I gather it's because TIC is waiting for more of a recovery so they can start hawking SFRs at $900k+ levels and that's why Stonegate East is breaking ground before Stonegate, why Orchard Hills will be last on the list and why the rest of Portola still needs to be built out. But other than Montecito II and Carmel II, it doesn't seem like we'll see any other new/different SFR projects for a while.

I'm just wondering if this focus on the more dense type neighborhoods is due to market demand or is being driven by profit margins.
 
irvinehomeowner said:
It seems like we are getting more of the attached/duplex/small condo products rather than the SFR ones in the new offerings by TIC. Is this based on demand or price?

Are there that many buyers out there who want the smaller product or is it because it's more affordable? I would like to see more SFRs starting at $600k (I know I'm dreaming) but it doesn't seem like that's even a remote possibility.

I gather it's because TIC is waiting for more of a recovery so they can start hawking SFRs at $900k+ levels and that's why Stonegate East is breaking ground before Stonegate, why Orchard Hills will be last on the list and why the rest of Portola still needs to be built out. But other than Montecito II and Carmel II, it doesn't seem like we'll see any other new/different SFR projects for a while.

I'm just wondering if this focus on the more dense type neighborhoods is due to market demand or is being driven by profit margins.

I think it's both.  Because of the price, demand is higher on lower priced homes.  People are not willing to pay extra to have SFR over townhomes and detached condos.

Just look at the 2010 collection.  There were a lot more townhomes and detached condo units than SFR for sale and the SFR were the last to sell out.


 
I2I - I would not say SFR were the last to sell out, Coronado inventory FLEW out the gate and that was "SFR-like"
 
LAtoOC said:
I2I - I would not say SFR were the last to sell out, Coronado inventory FLEW out the gate and that was "SFR-like"

Plus, Montecito has been selling like hotcakes.  And they are SFR.
 
LAtoOC said:
I2I - I would not say SFR were the last to sell out, Coronado inventory FLEW out the gate and that was "SFR-like"

Coronado does not have a driveway, so it is not SFR.  You said yourself it's "SFR-like", which means it isn't.

Montecito is SFR, but does have the motorcourt, so some may argue it's not a traditional SFR.

 
TIC is looking to maximize profits while meeting market demand. There is a lot less demand for the $800-900K+ traditional SFR versus $500K+ attached products. Yes they could drop prices on the Sonoma type homes but that is not going to happen.

They will instead pack in the homes on smaller lots, build third levels, and pretend they are giving great value per sqft (i.e. not calculating in the MR and dual HOA fees). So far this formula seems pretty successful. I do not see them changing plans much for Stonegate or early phases of Laguna Crossing. OH is further off, so they may still achieve their goal of $1M+ SFR at that location.
 
I understand the difference in ratios but I wonder if there is a saturation point where there are not many buyers left for the smaller type homes and there is more buyers left for the SFR product but it doesn't exist.

I would think that the 30+ adults with kids is a large market that got priced out during the boom and is ready to buy now.
 
irvinehomeowner said:
I understand the difference in ratios but I wonder if there is a saturation point where there are not many buyers left for the smaller type homes and there is more buyers left for the SFR product but it doesn't exist.

I would think that the 30+ adults with kids is a large market that got priced out during the boom and is ready to buy now.

The problem is that the same 30+ adults with kids are still priced out of Irvine SFR since they are going to build only the supersized ones.  I don't think we will ever see 2200sq ft "traditional" SFR in Irvine again.

 
Exactly.

I think the market would be huge for traditional style < 2000sft SFRs on small lots as long as they were 4br and were priced less than $700k. Even make them 3-story if you have to make room for the more traditional driveway setup. You can do Sonoma/Montecito style homes in probably more efficient square footage and a smaller footprint to accommodate for the more space for the outside.

I think TIC is missing out here.
 
I agree.  I've lived in condos for more than 20 years now and when I make the move, I want to be in a stand-alone SFR with some land, maybe a little grassy area all around and a reasonable entrance-way.  Not really feeling the vibe on all these duplex-triplex offerings.



Gaab
 
Yeah... I'm with PatStar... if I don't see some good stuff going up soon (like in Laguna Crossing) or prices drop in resale homes, there are some homes I'm looking at in South County that may sway me from Irvine.

We'll still keep our Irvine properties so we can ninja our kids into the holy Irvine school district (and since I work in this area, they'll just commute with me) but as this drags on... and prices drop outside of Irvine... the 3CWG monster wants out.
 
irvinehomeowner said:
Yeah... I'm with PatStar... if I don't see some good stuff going up soon (like in Laguna Crossing) or prices drop in resale homes, there are some homes I'm looking at in South County that may sway me from Irvine.

We'll still keep our Irvine properties so we can ninja our kids into the holy Irvine school district (and since I work in this area, they'll just commute with me) but as this drags on... and prices drop outside of Irvine... the 3CWG monster wants out.

There is still more pricing pressure for Irvine ahead of us but the real question is how much and over what period of time. As I've said numerous times in the past, I love Irvine but it is not special (maybe a little price stubborn). In the long run, the market will force serious sellers to adjust their WTF prices. TIC will also need to adjust accordingly.

I believe we are in a temporary phase of low interest rates, relatively low MLS supply, and maybe some FCB factors mixed in. Interest rates will rise and degrade purchasing power of potential buyers. The increasing shadow inventory held by banks will eventually need to be cleared. FCBs alone will not prop up demand. Add into the mix anemic job growth and you have a recipe for further price declines.

Given all of the above, I'm still not convinced TIC will be selling $600K-700K traditional SFR, even on small lots, anytime soon. Higher density/attached products are the only new construction game in Irvine and probably for the foreseeable future.
 
iacrenter said:
irvinehomeowner said:
Yeah... I'm with PatStar... if I don't see some good stuff going up soon (like in Laguna Crossing) or prices drop in resale homes, there are some homes I'm looking at in South County that may sway me from Irvine.

We'll still keep our Irvine properties so we can ninja our kids into the holy Irvine school district (and since I work in this area, they'll just commute with me) but as this drags on... and prices drop outside of Irvine... the 3CWG monster wants out.

There is still more pricing pressure for Irvine ahead of us but the real question is how much and over what period of time. As I've said numerous times in the past, I love Irvine but it is not special (maybe a little price stubborn). In the long run, the market will force serious sellers to adjust their WTF prices. TIC will also need to adjust accordingly.

I believe we are in a temporary phase of low interest rates, relatively low MLS supply, and maybe some FCB factors mixed in. Interest rates will rise and degrade purchasing power of potential buyers. The increasing shadow inventory held by banks will eventually need to be cleared. FCBs alone will not prop up demand. Add into the mix anemic job growth and you have a recipe for further price declines.

Given all of the above, I'm still not convinced TIC will be selling $600K-700K traditional SFR, even on small lots, anytime soon. Higher density/attached products are the only new construction game in Irvine and probably for the foreseeable future.

IACrenter, the problem i see is that loans are getting very difficult to borrow for the most qualified borrowers. I only see the loan standard getting tougher as times goes by. Let's say that rates rise to 7% in 2013 and Sonoma home prices do drop $100,000 to $750,000. If you can't qualify for a loan, your only option is to pay cash. If we go through the Great Depression like the 1930s and lose your jobs no banks will loan to you even if you have $2Million dollars sitting in the bank. They don't care that you made $300k on your last job. If you have $600k - $800k in cash than wait for the rates to rise.. but if you have $100k - $300k in savings and need to borrow to purchase, I would not wait. 
 
Mmm shik do rak.....

Mmmm asian-bakery cake.....

Also I can't believe IHO just said he's seriously looking outside Irvine.  *shock*    What exactly do you people stuff in your garages anyway?  I think we could get by very comfortably with just the extra space around the edges of a 2 car garage (Except in the newer homes where there IS no extra space around a 2 car garage) but my mom has accumulated a 1cg sized pile of STUFF...despite having all these cabinets lining the walls to store stuff.

Regarding 30+ adults with kids...  I happen to work with (or worked with previously) an assortment of people in that general age range and the problem is that most of them DIDN'T actually get priced out, they just stretched like crazy and chose  cities outside Irvine to make it work.  It pretty much went like this:

Person A) working couple, might actually be more like 40+ with a 14 year old, had been living in a 1br apt and saving cash, bought at the peak and got a 760k townhouse in Tustin (its ALMOST Irvine!).    Huge downpayment.  Probably not moving anytime soon.

Person B) Couple with 1 full time worker, one not.  chosen in the lottery for one of those subsidized homes where you pay some much smaller amount like 350k for an 800k house but you can't sell it for a profit.  Couldn't afford a 600k home, probably.

Person C) Working couple, baby on the way, felt they had to buy now (prices are down, rates are down, want a place for the baby i assume) and bought a townhouse in tustin.  Love Irvine, didn't wait for it and felt tustin would be just as good.

Person D) early 30s, 2 babies, bought in non-Irvine south county a year or two back

Person E) same as D

Person F) wife lost her job and they just had a baby, he bought a house in 2003 ish in Corona and now they are moving into it because they can't afford to maintain both the house and a place down here.

and a couple single moms that couldn't afford 600k but bought townhouses outside irvine where they COULD afford something.

I guess my point is, I don't actually know anyone in that demographic who COULD afford something in the 600-700 range and didn't buy already.  If they could afford that much, they just went outside of Irvine and purchased.  And they are mostly either happy with or resigned to their purchases. I don't think anyone is considering the possibility of giving up even MORE cash for the privilege of moving to Irvine.  Even if those properties were available, they'd probably just go "eh, wish that had been on the market when I was looking" and get over it.

Of people my age (late 20s) who are going to be those other people in 5 years or so, I know one couple that is buying a 1000 sqft condo in irvine (its the limit of what they can afford) and a bunch  of single people who don't make enough to buy anything, and a few single people who might make enough but are apparently all going back to grad school or traveling around working for wierd startups or something  (this must just be the people I know), another guy looking to buy but can only afford something small in an area like buena park or stanton, a few couples who don't make enough to buy anything ......  and the two of us who aren't looking yet but are planning to go for a 15 year loan that we can afford on one salary (uh as long as the one salary isn't mine) instead of a 30 year loan that we can only afford together so that our housing costs are 18% or so of our income.    (we're paying about 16% now).       

i suppose in 2 years if we were going to take on a 28% dti for our housing expense, we could buy one of those 600k sfrs.  But neither of us feels that comfortable with that much  -- probably because I don't have a budget  :-X so I stay within my means by just not spending much.  I don't know how prevalent that feeling is among our peers because we don't have many peers (that we know) in similar financial circumstances.    The couple in situation f would have been almost in the same boat as us (just a few years older) but they were saddled with the house in corona (a very cheap house nbut not one they can sell) and she felt very strongly that she needed to have the baby NOW -- and babies are selfish jerks, they suck down tons of money you could be spending on sushi and at Memphis and on booze.

Er so to sum up - its demand AND price.  That demographic wanted houses and bought them, or ended up in situations where they couldn't, and the slightly younger demographic can't afford it but might want it.
 
Patrick Star said:
Irvine2Irvine said:
The problem is that the same 30+ adults with kids are still priced out of Irvine SFR since they are going to build only the supersized ones.  I don't think we will ever see 2200sq ft "traditional" SFR in Irvine again.

And that is why we are leaving.  Somewhere along the way, our bullish stance on Irvine softened.  Saying "I have to pay that for THAT" too many times got us considering other options, and suddenly we realized there were plenty of people surviving (and thriving) who do not live in Irvine. 

Disappointing, as I still like Irvine the best --- and I completely understand why those who have a big downpayment would choose Irvine.  But for those of us just doing regular old 20% or less down purchases, Irvine just does not make sense.  The upside to Irvine is not worth the financial stretch.  Elsewhere I can have my cake and eat it, too --- with little compromise.  Actually, the compromise isn't that much --- because we compromise on our top location choice, but we don't compromise by my wife having to go back to work full time.  And all that lack of compromise will get us a 5 bed 3CWG in a guard-gated community with a 920 API elementary for the same price as Coronado.  Actually, less....they have never heard of Mello Roos there.

And no, that cake won't be from JJ Bakery on Jeffrey, but that's ok.  There is a great Korean bakery down the street.  And a Shik Do Rak across from that.  I think we will be ok.  If we ever miss Irvine, we can just order one of those packages at Shik Do Rak which come with the bottle of soju.  Nothing cheers you up like grilled meat and soju bombs.  And $600 in monthly mello roos would buy a lot of that.

Foreclosure Radar lists four others just like this recent close scheduled for auction.  We are ready to pounce. 

http://www.redfin.com/CA/Northridge/11970-Mariposa-Bay-Ln-91326/home/5771868

I will drink a bottle of soju for that post! CK, check out this site http://us.megamart.com/jsp/02_store.jsp and http://thorndykerealty.com/megamart/index.htm. Mega Mart is a huge retailer in Korea and will take over a 3 story Macys location in Gwinnett Place Mall next month, sort of like the Galleria in K-Town. This place is like 5 minutes away from my Atlanta home.  If i can't live in Irvine, I want something very similar for 1/3 the price :) 
 
Panda's favorite Super Market :)

348obr7.jpg
 
Panda said:
iacrenter said:
irvinehomeowner said:
Yeah... I'm with PatStar... if I don't see some good stuff going up soon (like in Laguna Crossing) or prices drop in resale homes, there are some homes I'm looking at in South County that may sway me from Irvine.

We'll still keep our Irvine properties so we can ninja our kids into the holy Irvine school district (and since I work in this area, they'll just commute with me) but as this drags on... and prices drop outside of Irvine... the 3CWG monster wants out.

There is still more pricing pressure for Irvine ahead of us but the real question is how much and over what period of time. As I've said numerous times in the past, I love Irvine but it is not special (maybe a little price stubborn). In the long run, the market will force serious sellers to adjust their WTF prices. TIC will also need to adjust accordingly.

I believe we are in a temporary phase of low interest rates, relatively low MLS supply, and maybe some FCB factors mixed in. Interest rates will rise and degrade purchasing power of potential buyers. The increasing shadow inventory held by banks will eventually need to be cleared. FCBs alone will not prop up demand. Add into the mix anemic job growth and you have a recipe for further price declines.

Given all of the above, I'm still not convinced TIC will be selling $600K-700K traditional SFR, even on small lots, anytime soon. Higher density/attached products are the only new construction game in Irvine and probably for the foreseeable future.

IACrenter, the problem i see is that loans are getting very difficult to borrow for the most qualified borrowers. I only see the loan standard getting tougher as times goes by. Let's say that rates rise to 7% in 2013 and Sonoma home prices do drop $100,000 to $750,000. If you can't qualify for a loan, your only option is to pay cash. If we go through the Great Depression like the 1930s and lose your jobs no banks will loan to you even if you have $2Million dollars sitting in the bank. They don't care that you made $300k on your last job. If you have $600k - $800k in cash than wait for the rates to rise.. but if you have $100k - $300k in savings and need to borrow to purchase, I would not wait. 
Loans aren't that difficult to get if you are a high salaried individual without any rental properties or other high obligation monthly payments.  It is a pain in the butt for the self employed folks to get loans.  Btw, we'll see interest rates in the 3% range before we see them in the 7% range. 
 
Pat Star, speaking of Shik Do Rak. What is up with Irvine K BBQ place with All You Can Eat Option?  Have you noticed?  The price is higher per person (Compare to Garden Grove) and they would only offer bacon strips instead of the thicker pork belly pieces?  I pay that to get THAT???

Oh wait!!!  I shouldn't complaint, I paid that to get NO TV WALL!!!
 
I actually like Korean BBQ House (if that's the one fe9k is talking about). But we don't do the AYCE, we just order either Bulgolgi, Kalbi or Mulluk-something or other (it's boneless Kalbi).

We love KBBQ... does that mean our stomachs have "yellow fever"?*

*OCR reference
 
Regarding pricing and demographics - one thing that is hurting us (late 20s couple, just had a kid) is the student loan situation.

We both work but my wife has a ton of loans from college/grad school. But because we both are working, we got 0 deductions on our taxes as we are those evil rich people. We looked into buying this summer but decided against it just for the simple fact that we can rent an extra year, save on our monthly expenses and pay down debt. If we had some money that we could use for a down payment from a relative that probably would have changed our situation somewhat, but right now Irvine is not in our plans.
 
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