Author Topic: Observations of Irvine RE market  (Read 17584 times)

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Offline USCTrojanCPA

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Observations of Irvine RE market
« 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.
« Last Edit: December 08, 2009, 12:22:00 AM by Anonymous »
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Offline iacrenter

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« Reply #1 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?

Offline USCTrojanCPA

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« Reply #2 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.
« Last Edit: December 09, 2009, 12:54:00 AM by Anonymous »
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Offline iacrenter

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« Reply #3 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...
« Last Edit: December 09, 2009, 09:10:00 AM by Anonymous »

Offline irvinehomeowner

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« Reply #4 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?
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Offline IrvineRealtor

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« Reply #5 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
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Offline qwerty

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« Reply #6 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.

Offline IrvineRealtor

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« Reply #7 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
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Offline octrends

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« Reply #8 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.

Offline iacrenter

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« Reply #9 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.

Offline USCTrojanCPA

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« Reply #10 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.
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Offline qwerty

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« Reply #11 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.

Offline novaseline

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« Reply #12 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...

Offline qwerty

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« Reply #13 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.

Offline irvinehomeowner

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« Reply #14 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.
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