[Poll] Mini bubble deflating?

Now that we are in the middle of 2014, which way will prices go?

  • Flat

    Votes: 13 30.2%

  • Slightly declining

    Votes: 17 39.5%

  • Slightly higher

    Votes: 9 20.9%

  • No where but through the roof, buy now!

    Votes: 2 4.7%

  • "Prices will drop 40% in Irvine!"

    Votes: 2 4.7%

  • Other

    Votes: 0 0.0%
  • Total voters
    43
irvinehomeowner

irvinehomeowner

Well-known member
I still think the sudden run up from end of 2012 through 2013 was some sort of bubble... most likely due to pent up demand waiting out the late 2000s crash.

It seems like sales are slowing now, the OC Reg has an article in today's paper called the "The Hard Sell" on how homes that used to sell quickly are now sitting on the market:
http://www.ocregister.com/articles/market-630531-home-sellers.html

With Irvine inventory hitting the high 700s, a number we haven't seen for over 3 years, and all the new build inventory, are we finally going to see a drop again in prices? Or will it just be flat until all the FCBs chew up what's out there and then it will jump again?
 
The funny thing is when I went to Orchid Hills Grove and talked to the sales reps.  They all mentioned that their lender (usually Wells Fargo), has a 10% down program.  I'm thinking to myself, "these houses are $1.6 - $1.8 million, how in the world are banks going to let you loan $1.4 mil on a $1.6m house?"  Something is not adding up.  Somebody is desperate and I don't know who it is.  Any amount over $675,000 is already a super non-conforming jumbo loan.  This is a figure that is double that.  If you need to borrow that much, most likely you can't afford it. 

I didn't bother pre-qualifying because I assume the rules would still be the same.  You would need at least an net income of $200,000 to qualify.  At a conservative 4.5% fixed apr 30 year that would run you $10,530/mo.

What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights? 
 
With Irvine being an Asian hotspot to buy homes a lot rides on the foreign real estate market.  As long as homes in Irvine are cheaper than Asia, people will continue buying.

As much as we complain about small houses and lot sizes .. What we have are considered mansions to the wealthy city slickers in Asia.  So as long as homes are expensive in Asia, there will be continued buyers and investors in Irvine.

Same reason why Asians all buy what we consider to be expensive cars ... What we consider as expensive ... They consider a super bargain.  For the price of a corolla in Asia, a person can buy a Mecedes SUV or BMW SUV in the US.

So think macro economics ...
 
I think there is still demand out there.. just that the pricing has gone up too high.  The last few years didn't have those first time home buyers that would keep the market healthy.  I would expect to see those condo/townhomes drop in price first.. then the smaller SFRs. 
 
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
 
Maserson said:
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
Click to expand...

Don't start the my friend story. Cuz this can go on and on.  ;)
 
Maserson said:
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
Click to expand...
At $50k/mo they can swing a Trevi plan 3.  ;)
 
LOL - yes, it could snowball. Ironically, this couple live in SF where they're finding it hard to keep up with the Joneses (aka tech sector).
 
Maserson said:
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
Click to expand...

It's possible.. but I'm guessing most people with that type of income won't do it.  They'll wait to put more money down. 
 
USCTrojanCPA said:
Maserson said:
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
Click to expand...
At $50k/mo they can swing a Trevi plan 3.  ;)
Click to expand...

Unfortunately, these professional's income most likely are W2 and almost half of it goes to tax.  After tax, student loan etc, their net is still high but not as high as it seems to be. :(
 
lnc said:
USCTrojanCPA said:
Maserson said:
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
Click to expand...
At $50k/mo they can swing a Trevi plan 3.  ;)
Click to expand...

Unfortunately, these professional's income most likely are W2 and almost half of it goes to tax.  After tax, student loan etc, their net is still high but not as high as it seems to be. :(
Click to expand...

Yeah it must suck netting 600K a year.
 
Price are likely going to stay flat.  High prices and low interests place the market on the edge...if interest rates go up, sales will go down.  People who are seeking to sell now will just pull back and wait.

Most the chaff have been taken out so there is no prospect of sell offs.  New homes may hang around for awhile.  It will be interesting to see what happens with the rest of GP.
 
I agree with IC, I think the sales will remain flat.  I don't see it as a declining market especially in Irvine.  To echo what IC mentioned, going to get real interesting when the rest of GP gets built out.  I think PP's prices will be safe as their positives do out weigh their negatives (15 minutes away from WTC)...  ::)
 
jmoney74 said:
lnc said:
USCTrojanCPA said:
Maserson said:
MFWIC said:
What I don't get is why would they even bother with buyers who could only afford 10% down?  It is not as easy getting a loan now.  Any insights?
Click to expand...

Maybe young dual-income couples I'm guessing?

My two friends, a married physician couple, fit this bill. They're one year out from completing their medical training. Both are in surgical subspecialties. Because it's only been one year, they have a small downpayment but their combined income is >600k.
Click to expand...
At $50k/mo they can swing a Trevi plan 3.  ;)
Click to expand...

Unfortunately, these professional's income most likely are W2 and almost half of it goes to tax.  After tax, student loan etc, their net is still high but not as high as it seems to be. :(
Click to expand...

Yeah it must suck netting 600K a year.
Click to expand...

Most likely netting 300K a year off 600K gross. How would you feel about being in that situation.
 
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