Home sales weaken as Chinese investors sour on US real estate!!!

RHOC said:
I LOVE this guy! He has no filter and always explains the unfiltered version of the story.. ::) Your thoughts??!!
http://ochousingnews.com/blog/is-the-chinese-love-affair-with-us-real-estate-turning-sour/

There is a middle path the Chinese government will likely follow. Allowing unrestricted expatriation of money is one extreme, and demanding repatriation of money is the other. In the middle, the Chinese Government and Central bank can slowly allow the Yuan to depreciate versus the dollar, making US real estate more expensive and slowly choking off the flow of capital. This is less shocking to both financial systems, so it?s the course of action the Chinese are mostly likely to follow.


The above lines make sense, would the market correction be more than 10% drop?
 
So the real question is what happens to Irvine real estate when the flow of Chinese money stops?
 
Real estate market in irvine will certainly feel the pinch. I was in the market during last down turn in 2011/12, but with <10% down payment, it was so hard to compete with cash offers for desirable properties. On the other hand, if SOCAL real estate market is so much dependent on foreign cash, then not sure if all the growth is organic. 
 
I think the answer is pretty obvious.  Irvine real estate is very dependent on foreign cash and therefore if chinese buyers dry up, prices will fall. 

I think the more appropriate question to ask is how much of a decrease in chinese buyers will we see?  I suspect whether or not we will see price declines will have a significant relationship to the decrease in the number of chinese buyers.
 
Like I've said in previous posts here on TI, it is already quite difficult to get large amounts of money out of China unless you connections with the underground or government.

Not only are they clamping down on overseas investments and transfers but the conversion of RMB to other currencies such as USD is heavily monitored and restricted. So getting enough to buy a home of decent size either takes time or high risk.
 
Wow... so 10 years later people finally believe the Legend of the FCB.

I think Larry's (IrvineRenter) first paragraph is a bit exaggerated:

Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up.

Not sure if he still lives in Irvine but he does like to predict scenarios where Irvine will end up a desolate ghost town where you can buy real estate for pennies.

For those who don't remember, he was the main author for Irvine Housing Blog (IHB) which turned into TalkIrvine, and there was supposed to be an Option ARMaggedon followed by a Foreclosure Tsunami. These were all predicated on the idea that the government would not interfere and that interest rates were going to go up instead of down. Prices did drop, but in Irvine, it wasn't as bad as surrounding areas... and certainly not the predicted "40%" across the board.

I don't think this will have as huge an effect as Larry does. Chinese are not the only FCBs  who buy in Irvine and there are many non-FCBs who buy here (I think most of TI are non-FCBs).

Long live Irvine!
 
As long as there are jobs and excellent schools, there will always be demand.  And it's SoCal, weather is great.
 
There is definitely demand for Irvine housing by non-FCBs.  There are many non-FCB asians who choose to move/live in Irvine because of the schools, environment, shopping etc.  There are also many caucasians who want to live in Irvine because of schools but cannot afford to do so and instead move to surrounding areas. 

Most of the Caucasians I work with moved to Irvine after they had kids and those who did not have told me that they wish they could afford Irvine.  So if there is a significant decrease in potential FCB buyers in Irvine, and the prices do decrease, there will still be plenty of non-FCB buyers waiting in the wings to buy in Irvine (which of course will ensure that Irvine prices will not dip as much as the surrounding communities.)

 
A big factor for Irvine is the jobs.  Schools and everything else are great, but most everyone in Irvine still works and there are a ton of good jobs in the general vicinity. FCB or not, the demand for Irvine is ultimately there because of the total package of quality jobs (in multiple sectors) along with the safe city, good schools, etc. 

Irvine's challenge is more in the sense that it is just so pricey that a lot of people that would usually live in Irvine have moved south and you are starting to attract less of the white collar work force (as it is getting so pricey).  But then again, everything is and somewhere you need that balance to where companies can actually still attract and hire the right labor force to fit within the area (i.e., young people who are more entry level...cause every company needs entry level, can still afford to live in the area and ultimately grow up and be able to start families, etc. in the area). 
 
AW said:
As long as there are jobs and excellent schools, there will always be demand.  And it's SoCal, weather is great.

Agreed!  I think home selling pace likely won't be as brisk as it has been with the FCB, however, there is still demand for homes Irvine from non-FCBs.  As much as I struggle with the planned community/strict HOA rules, Irvine is a great place to live.  As long as there are good schools and low crime, people will try to stretch themselves financially to move here.

Personally, I don't see it as a bad thing to have a decrease in Chinese buyers.  We need more diversity back in Irvine.
 
And with Vancouver charging 15% real estate transfer tax to foreigners, that money has to go somewhere.

C'mon Vancouver, change it to 30%...we want more FCB moneys.
 
zubs said:
And with Vancouver charging 15% real estate transfer tax to foreigners, that money has to go somewhere.

C'mon Vancouver, change it to 30%...we want more FCB moneys.

Sigh, my dream of retiring in Vancouver is shot.  Friend told me it's even less diverse than Irvine.  We had an interesting time trading FCB stories.
 
irvinehomeowner said:
Wow... so 10 years later people finally believe the Legend of the FCB.

I think Larry's (IrvineRenter) first paragraph is a bit exaggerated:

Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up.

Not sure if he still lives in Irvine but he does like to predict scenarios where Irvine will end up a desolate ghost town where you can buy real estate for pennies.

For those who don't remember, he was the main author for Irvine Housing Blog (IHB) which turned into TalkIrvine, and there was supposed to be an Option ARMaggedon followed by a Foreclosure Tsunami. These were all predicated on the idea that the government would not interfere and that interest rates were going to go up instead of down. Prices did drop, but in Irvine, it wasn't as bad as surrounding areas... and certainly not the predicted "40%" across the board.

I don't think this will have as huge an effect as Larry does. Chinese are not the only FCBs  who buy in Irvine and there are many non-FCBs who buy here (I think most of TI are non-FCBs).

Long live Irvine!

I read larrys other blog on a daily basis.  I can tell you he is not gloom and doom.  He is probably the most fair and balanced real estate blogger I have seen. 
I do not believe he exaggerates when he states that a significant part of homes in Irvine go to Chinese.  That is fact.  He cites an anecdotal "80%" based on what bloggers on his site have written, hence he specifically states "anecdotal". 
I'd love to see anything recent he has written where he is predicting Irvine will be a desolate ghost town where you buy on pennies on the dollar, as I have never read that.    I think you might be exaggerating yourself a bit. 
Most of TI may not be FCB, but isnt picking out TI readers to represent the Irvine demographics a bit of selection bias?  Just look around your neighborhoods... that is a better likely representation of who lives here.  To me, I see a lot of asians, many of them that look like they did not grow up here. 
 
hello said:
irvinehomeowner said:
Wow... so 10 years later people finally believe the Legend of the FCB.

I think Larry's (IrvineRenter) first paragraph is a bit exaggerated:

Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up.

Not sure if he still lives in Irvine but he does like to predict scenarios where Irvine will end up a desolate ghost town where you can buy real estate for pennies.

For those who don't remember, he was the main author for Irvine Housing Blog (IHB) which turned into TalkIrvine, and there was supposed to be an Option ARMaggedon followed by a Foreclosure Tsunami. These were all predicated on the idea that the government would not interfere and that interest rates were going to go up instead of down. Prices did drop, but in Irvine, it wasn't as bad as surrounding areas... and certainly not the predicted "40%" across the board.

I don't think this will have as huge an effect as Larry does. Chinese are not the only FCBs  who buy in Irvine and there are many non-FCBs who buy here (I think most of TI are non-FCBs).

Long live Irvine!

I read larrys other blog on a daily basis.  I can tell you he is not gloom and doom.  He is probably the most fair and balanced real estate blogger I have seen. 
I do not believe he exaggerates when he states that a significant part of homes in Irvine go to Chinese.  That is fact.  He cites an anecdotal "80%" based on what bloggers on his site have written, hence he specifically states "anecdotal". 
I'd love to see anything recent he has written where he is predicting Irvine will be a desolate ghost town where you buy on pennies on the dollar, as I have never read that.    I think you might be exaggerating yourself a bit. 
Most of TI may not be FCB, but isnt picking out TI readers to represent the Irvine demographics a bit of selection bias?  Just look around your neighborhoods... that is a better likely representation of who lives here.  To me, I see a lot of asians, many of them that look like they did not grow up here.

Like I said SGV in the making or it already is.
 
hello said:
irvinehomeowner said:
Wow... so 10 years later people finally believe the Legend of the FCB.

I think Larry's (IrvineRenter) first paragraph is a bit exaggerated:

Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up.

Not sure if he still lives in Irvine but he does like to predict scenarios where Irvine will end up a desolate ghost town where you can buy real estate for pennies.

For those who don't remember, he was the main author for Irvine Housing Blog (IHB) which turned into TalkIrvine, and there was supposed to be an Option ARMaggedon followed by a Foreclosure Tsunami. These were all predicated on the idea that the government would not interfere and that interest rates were going to go up instead of down. Prices did drop, but in Irvine, it wasn't as bad as surrounding areas... and certainly not the predicted "40%" across the board.

I don't think this will have as huge an effect as Larry does. Chinese are not the only FCBs  who buy in Irvine and there are many non-FCBs who buy here (I think most of TI are non-FCBs).

Long live Irvine!

I read larrys other blog on a daily basis.  I can tell you he is not gloom and doom.  He is probably the most fair and balanced real estate blogger I have seen. 
I do not believe he exaggerates when he states that a significant part of homes in Irvine go to Chinese.  That is fact.  He cites an anecdotal "80%" based on what bloggers on his site have written, hence he specifically states "anecdotal". 
I'd love to see anything recent he has written where he is predicting Irvine will be a desolate ghost town where you buy on pennies on the dollar, as I have never read that.    I think you might be exaggerating yourself a bit. 
Most of TI may not be FCB, but isnt picking out TI readers to represent the Irvine demographics a bit of selection bias?  Just look around your neighborhoods... that is a better likely representation of who lives here.  To me, I see a lot of asians, many of them that look like they did not grow up here.

There are a lot of asians, but its not accurate to say they are all chinese, though maybe you can't tell by looking at them from afar. I mean, Asia is a HUGE continent with many many different kinds of people, of all different socioeconomic and educational levels. Irvine has a relatively pan-asian population with a good proportion of south asians and middle easterners, and a good mix of people who are 1, 1.5, 2 or >2 generation. SGV is much more distinctly Chinese, rather than pan-asian. Because people have different native languages, the common language of business transactions is much more likely to be English than in the SGV.  In my daily life in and around Irvine, my experience is people use English, even in Asian owned businesses and restaurants.

I guess its true that there is a relatively small number of "anglo" whites compared to South County. I don't know why people get so hung up on that. I highly doubt there's one nationality with majority  >50%. There's a plurality of different groups.  But that's Southern  California in general.








 
hello said:
irvinehomeowner said:
Wow... so 10 years later people finally believe the Legend of the FCB.

I think Larry's (IrvineRenter) first paragraph is a bit exaggerated:

Chinese investors buy a significant number of homes in Irvine. Anecdotally, 80% of sales in some new home communities are sold to Chinese Nationals. In fact, Irvine homebuilders depend on Chinese buyers to purchase their overpriced houses, which becomes a problem when this flow of money dries up.

Not sure if he still lives in Irvine but he does like to predict scenarios where Irvine will end up a desolate ghost town where you can buy real estate for pennies.

For those who don't remember, he was the main author for Irvine Housing Blog (IHB) which turned into TalkIrvine, and there was supposed to be an Option ARMaggedon followed by a Foreclosure Tsunami. These were all predicated on the idea that the government would not interfere and that interest rates were going to go up instead of down. Prices did drop, but in Irvine, it wasn't as bad as surrounding areas... and certainly not the predicted "40%" across the board.

I don't think this will have as huge an effect as Larry does. Chinese are not the only FCBs  who buy in Irvine and there are many non-FCBs who buy here (I think most of TI are non-FCBs).

Long live Irvine!

I read larrys other blog on a daily basis.  I can tell you he is not gloom and doom.  He is probably the most fair and balanced real estate blogger I have seen. 
I do not believe he exaggerates when he states that a significant part of homes in Irvine go to Chinese.  That is fact.  He cites an anecdotal "80%" based on what bloggers on his site have written, hence he specifically states "anecdotal". 
I'd love to see anything recent he has written where he is predicting Irvine will be a desolate ghost town where you buy on pennies on the dollar, as I have never read that.    I think you might be exaggerating yourself a bit. 
Most of TI may not be FCB, but isnt picking out TI readers to represent the Irvine demographics a bit of selection bias?  Just look around your neighborhoods... that is a better likely representation of who lives here.  To me, I see a lot of asians, many of them that look like they did not grow up here.

The question is, where are they moving to?

My thoughts: moving to southern OC, or out of state, or other parts that are cheaper

 
hello said:
I'd love to see anything recent he has written where he is predicting Irvine will be a desolate ghost town where you buy on pennies on the dollar, as I have never read that.    I think you might be exaggerating yourself a bit. 
Yes, I am being sensational a bit, but did you even read the IHB prior to 2010? Where almost every article featured an Irvine property that he felt was over leveraged until that well ran dry and then he had to go outside of Irvine (hence the birth of OC Housing News). Did you not read the articles of how the OptionARM resets were going to destroy much of the housing prices? Or about the tsunami of shadow inventory due to foreclosures would change the Irvine landscape?

Exaggerate is what exaggerate does.
Most of TI may not be FCB, but isnt picking out TI readers to represent the Irvine demographics a bit of selection bias?
Uh... no. I didn't say that the TI members were representative of the Irvine demographics, I said that the TI members demonstrate that it's not all Chinese FCBs and that there are non-FCBs who would still buy in Irvine (like other posters on this thread have said).
Just look around your neighborhoods... that is a better likely representation of who lives here.  To me, I see a lot of asians, many of them that look like they did not grow up here. 
Yeah, sorry to burst your bubble but in all of the hoods I have lived in Irvine, it's not majority Chinese nationals. But I can't use that as it would be "selection bias" wouldn't it?

And anecdotally, I think I would know more of who is Chinese or not than Larry. :)

I do agree there are more Asians here than ever (not just Chinese) and if you google the IHB, I was the one who coined the term FCB in the first place and also stated that because of them (again, not just Asians, middle Easterners etc) that Irvine would be more stable than other areas.

But if you don't think Larry exaggerates for eyeballs and hits... then you are his target audience.
 
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