Author Topic: Observations of Irvine RE market  (Read 17228 times)

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Offline novaseline

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« Reply #15 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.

Offline IrvineRealtor

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« Reply #16 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.
« Last Edit: December 09, 2009, 03:35:00 PM by Anonymous »
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Offline irvinehomeowner

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« Reply #17 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.
« Last Edit: December 09, 2009, 03:30:00 PM by Anonymous »
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Online qwerty

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« Reply #18 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.

Offline irvinehomeowner

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« Reply #19 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.
« Last Edit: December 09, 2009, 03:34:00 PM by Anonymous »
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Offline nosuchreality

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« Reply #20 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.

Online qwerty

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« Reply #21 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.

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« Reply #22 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!

Offline USCTrojanCPA

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« Reply #23 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.
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Offline USCTrojanCPA

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« Reply #24 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.
« Last Edit: December 09, 2009, 05:11:00 PM by Anonymous »
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Offline USCTrojanCPA

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« Reply #25 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
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Offline nosuchreality

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« Reply #26 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.

Offline jvna

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« Reply #27 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.

Offline reason

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« Reply #28 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.
« Last Edit: December 10, 2009, 10:46:00 AM by Anonymous »

Offline reason

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« Reply #29 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?
« Last Edit: December 10, 2009, 10:59:00 AM by Anonymous »

 

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