Author Topic: Housing Analysis  (Read 69669 times)

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Offline Liar Loan

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Re: Housing Analysis
« Reply #990 on: September 10, 2019, 03:03:15 PM »
Although some of you may not trust the CAR, their Housing Market Update seems slightly positive for both volume and prices:

https://www.car.org/marketdata/data/countysalesactivity

Chart 13 - The last time the market looked like this was late '06/early '07.  Hmm... Remind me again what happened after that?

If you insinuating that the chart is a precursor for the incoming crash of Irvine real estate, then either you smoking some good stuffs or you pushing the fear factors. Either way as an active investor, I like both options. But I am afraid it ain’t gonna come to fruition. Put that pipe down. We are not in a decade era ago. The pots though might be a progressive movements in a positive direction😯 for dudes like you.

The California Association of Realtors (CAR) shows that existing SFR home prices for Orange County increased by 1.3%, but DECREASED by -4.6% in Irvine.  I would be very worried if I were you.  I'd also give serious thought to selling your investments.

Those that believe Irvine is invincible and will always perform better than the rest of Orange County are about to receive a rude wake up call.

Offline irvinehomeowner

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Re: Housing Analysis
« Reply #991 on: September 10, 2019, 03:05:41 PM »
Those that believe Irvine is invincible and will always perform better than the rest of Orange County are about to receive a rude wake up call.

No one believes Irvine is invincible but I posted data last year that showed Irvine fared better than even your coastal cities during the last crash.

So jelly. :)
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Offline Liar Loan

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Re: Housing Analysis
« Reply #992 on: September 10, 2019, 03:14:31 PM »
Those that believe Irvine is invincible and will always perform better than the rest of Orange County are about to receive a rude wake up call.

No one believes Irvine is invincible but I posted data last year that showed Irvine fared better than even your coastal cities during the last crash.

So jelly. :)

During the last crash, Irvine got bailed out by Chinese buyers.  During this crash, Chinese buyers are drying up.  So the case could be made that Irvine has more excesses built into the market than coastal cities, which accounts for the faster and sharper drop in prices you are experiencing.

Offline Liar Loan

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Re: Housing Analysis
« Reply #993 on: September 10, 2019, 03:36:10 PM »
IHO - You shouldn't really average a median.  The way the OCR does it is compare the median for the full 6-month period to the median for the same 6-month period one year ago.


According to OCR for the first half of 2019:

SFR's ~ Sales -8.5% ~ Median price -2.4%
Condos ~ Sales -10.5% ~ Median price -0.9%
New Homes ~ Sales -34.4% ~ Median price +5.9%
---------------------------------------------------------
TOTAL ~ Sales -12.5% ~ Median price 0.0% (Flat)

Not sure why not. All I did was use the median for each month and average them so you can see what the median is for a 6-month period and a 12-month and compare them.

Median as a data point isn't actually entirely reliable either but that's all the data I have to play with.

Still,  just using your numbers, if sales volume is so low, why aren't prices lower?

Once you average a series of six or twelve medians, they cease to be medians.  You have to pick one or the other, mean or median, because even the lowliest statistics professor at UCI would advise against taking the mean of a series of medians to derive anything meaningful about the data.  The mean, median, and mode are all meant to be summary statistics that capture the "center" of the data.  They are alternatives to one another, not designed to be layered on top of one another.

Sales volume is a leading indicator of the market.  Once sales start to decline, it takes awhile for prices to find a new equilibrium, especially since real estate transactions take a long time to close, and the market then needs time to absorb that new information.
« Last Edit: September 10, 2019, 03:41:33 PM by Liar Loan »

Offline Compressed-Village

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Re: Housing Analysis
« Reply #994 on: September 10, 2019, 03:46:38 PM »
Interesting. So how much longer before we start to see a big drop? You sounds like you know the timing, so fill me in.

Offline Liar Loan

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Re: Housing Analysis
« Reply #995 on: September 10, 2019, 04:05:17 PM »
Interesting. So how much longer before we start to see a big drop? You sounds like you know the timing, so fill me in.

You don't consider 4.6% of your home's value to be a big drop?  That's a $56,000 loss in one year based on Irvine's existing SFR median price. 

We are still in the early innings though.  The "big" drops will probably begin next year once the rest of OC starts declining like Irvine.  There's still a long ways to go before this bottoms out.

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Offline Compressed-Village

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Re: Housing Analysis
« Reply #996 on: September 10, 2019, 06:36:12 PM »
Interesting. So how much longer before we start to see a big drop? You sounds like you know the timing, so fill me in.

You don't consider 4.6% of your home's value to be a big drop?  That's a $56,000 loss in one year based on Irvine's existing SFR median price. 

We are still in the early innings though.  The "big" drops will probably begin next year once the rest of OC starts declining like Irvine.  There's still a long ways to go before this bottoms out.

You talking bullsh--....my same model matched just closed a month ago with a gain of $50K compared to a year ago on the same model sold. So there you have it. You can't take an average of 4.6% for a neighborhood....You clearly don't know what you talking about. The hood that I am in, seeing an increase on average of 3%. There.....

Offline Compressed-Village

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Re: Housing Analysis
« Reply #997 on: September 10, 2019, 06:41:14 PM »
I got you qouted on this, we will revisit this thread next year, again, like the year before that, and the year, year before that.

That's what they keeps sayin....So at let's see if its your turn now to be right.

Offline irvinehomeowner

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Re: Housing Analysis
« Reply #998 on: September 11, 2019, 07:29:22 AM »
During the last crash, Irvine got bailed out by Chinese buyers.  During this crash, Chinese buyers are drying up.  So the case could be made that Irvine has more excesses built into the market than coastal cities, which accounts for the faster and sharper drop in prices you are experiencing.

So you just proved one of my points. Home prices aren't just data points. There are many factors, including non-fundamentals ones, that can affect pricing that the median/mean/average don't reflect or predict. Many were skeptical of my FCB Theory... seems like your are a believer.

Once you average a series of six or twelve medians, they cease to be medians.  You have to pick one or the other, mean or median, because even the lowliest statistics professor at UCI would advise against taking the mean of a series of medians to derive anything meaningful about the data.  The mean, median, and mode are all meant to be summary statistics that capture the "center" of the data.  They are alternatives to one another, not designed to be layered on top of one another.

As I said, "housing analysis" isn't just statistics. Why can't we use averages of medians over time to smooth out the outliers so you can see the trends? Look at the numbers I posted, notice something about those medians? Looks a bit seasonal doesn't it?

And using a median from peak to trough and YOY is flawed. Another poster pointed this out to you before on your usage of "median" to determine actual house to house price comparison doesn't really work. I've said this many times before but it's not the same housing stock unless these numbers are broken down into more micro categories. Just like your 28% drop number from peak to trough during the last crash. A reason the median was so low was during that one month, could be more lower priced housing like condos were sold... and conversely, during the peak, higher priced housing like large SFRs sold (which is usually the case, in a rising market, higher end homes sell from move-up buyers cashing in on equity and during a down market, lower end homes sell to first time buyers jumping in and people looking for bargains).

That's why I prefer to use a rolling month average to smooth out this housing stock factor so you get a more realistic picture of what actual price drops were. This also takes into account that home buying isn't an instant transaction (as you said), it takes months from searching to offers to escrow to closing. I did this before but if you use a 3 or 6 month average around your peak/trough points from the last crash, the number is closer to 20% for Irvine which is closer to what I saw in the housing stock I was looking at.

Quote
Sales volume is a leading indicator of the market.  Once sales start to decline, it takes awhile for prices to find a new equilibrium, especially since real estate transactions take a long time to close, and the market then needs time to absorb that new information.

Yes. Someone else keeps saying this too. But according to you guys, sales volume have been down since March 2018. How long does equilibrium take? And since 2018, prices hit a new high in May/June 2019, how did that happen if volumes were at record lows this past year?

And you want to keep using that whopping 4.6% drop. Isn't that within a seasonal delta? I've posted that YOY prices in the last 5-8 years have experienced drops of 5-15% so isn't anything in that range considered business as usual?

Drops beyond that... to me, is worth talking about. Some have predicted that *prices* will drop over 15%. You said "big"... is that what you mean?

And what factors are you citing that would do this? There are no more ninja loans, everyone is well qualified who bought not just in Irvine but most of SoCal. What events are going to lead to "big" drops in Irvine home prices? 2020 Election? Chinese mass exodus from Irvine real estate? Rising mortgage rates? Earthquake? Lagging price to volume inflection point?

But I'll backtrack here a bit. From what I remember before, real estate usually cycles in 7-9 year time spans and it looks like we are due, so any predictions for future drops are more likely to come true... it's just what is the quantity and length of time.

And again, if you can afford it, buying when you find the right home despite what the timing is, isn't exactly a "don't do it" situation. If you can stay, usually it will cycle within your favor if you are worried about "investment" value.
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Offline OC_relocation

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Re: Housing Analysis
« Reply #999 on: September 11, 2019, 04:45:48 PM »
We moved to Irvine in 2010 during the time of housing crisis. We were new in the country so had no idea about real estate, i wish someone had told us. We had the opportunity to buy SFH in Stonegate for around 500ish, LR for around 800s, PP for around 600K and condos for 300ish. We missed the boat. 

We decided to buy in 2012/13 time frame, looked aggressively in Irvine and around OC. We couldn't compete with cash buyers, finally in 2014 we bought a condo.

Irvine in 2010/11 was very different from what we have now, there was no CV, Stonegate was partially built, PS was half built, no signs of GP/Altair/OH(new)/EW. 

Now you have many options. There is simple supply demand equation, in next slow down, Irvine will be impacted for sure. How much it will be impacted depends on how desperate people are, and job market.

One of my friends just bought a house at Altair, where builder offered them 200K discount.

I am not an expert in RE by any means, but i would not rush to buy now.


 


Offline eyephone

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Re: Housing Analysis
« Reply #1000 on: September 11, 2019, 04:50:42 PM »
We moved to Irvine in 2010 during the time of housing crisis. We were new in the country so had no idea about real estate, i wish someone had told us. We had the opportunity to buy SFH in Stonegate for around 500ish, LR for around 800s, PP for around 600K and condos for 300ish. We missed the boat. 

We decided to buy in 2012/13 time frame, looked aggressively in Irvine and around OC. We couldn't compete with cash buyers, finally in 2014 we bought a condo.

Irvine in 2010/11 was very different from what we have now, there was no CV, Stonegate was partially built, PS was half built, no signs of GP/Altair/OH(new)/EW. 

Now you have many options. There is simple supply demand equation, in next slow down, Irvine will be impacted for sure. How much it will be impacted depends on how desperate people are, and job market.

One of my friends just bought a house at Altair, where builder offered them 200K discount.

I am not an expert in RE by any means, but i would not rush to buy now.


 

Thanks for sharing your story. Not bad $200k discount. Not bad at all.

Offline jamesKirk

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Re: Housing Analysis
« Reply #1001 on: September 11, 2019, 05:20:49 PM »
You can’t control everything mainly time. If you get lucky that’s great, but I’ve come to the decision to not put off buying a home or starting a family because you want to time the market.

My nephew has an argument with his parents whenever he saves up enough to buy whatever new video game is coming out that month. They’ll tell him can’t you wait, they always drop in price like a couple months after they come out. His response is always, but then I didn’t have the game for those months.

So you may have to overpaying retrospect if you want a house at the “wrong” time in the market, but as long as you’re responsible like my nephew who saves up his birthday gifts, allowance, etc. then being able to live in the house and get started with your life is worth more than anything IMO.

We’ve come to grips with this and understand that sure if we were born a couple years later maybe we’d catch a down point in the market. But we are what we are. One thing you can’t control is time. We aren’t getting any younger.

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Offline irvinehomeowner

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Re: Housing Analysis
« Reply #1002 on: September 11, 2019, 06:08:09 PM »
@jameskirk:

Exactly. Some people just want to stop worrying about timing and discounts and live their life.
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Offline moc

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Re: Housing Analysis
« Reply #1003 on: September 12, 2019, 01:40:22 PM »
You can’t control everything mainly time. If you get lucky that’s great, but I’ve come to the decision to not put off buying a home or starting a family because you want to time the market.

My nephew has an argument with his parents whenever he saves up enough to buy whatever new video game is coming out that month. They’ll tell him can’t you wait, they always drop in price like a couple months after they come out. His response is always, but then I didn’t have the game for those months.

So you may have to overpaying retrospect if you want a house at the “wrong” time in the market, but as long as you’re responsible like my nephew who saves up his birthday gifts, allowance, etc. then being able to live in the house and get started with your life is worth more than anything IMO.

We’ve come to grips with this and understand that sure if we were born a couple years later maybe we’d catch a down point in the market. But we are what we are. One thing you can’t control is time. We aren’t getting any younger.

This is how we felt as well! We bought when we were ready to buy, and we're really happy to finally be living in a home we own. Now we feel like we can actually think seriously about having children. There's more to life than ROI!

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Offline eyephone

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Re: Housing Analysis
« Reply #1004 on: September 12, 2019, 02:11:54 PM »
You can’t control everything mainly time. If you get lucky that’s great, but I’ve come to the decision to not put off buying a home or starting a family because you want to time the market.

My nephew has an argument with his parents whenever he saves up enough to buy whatever new video game is coming out that month. They’ll tell him can’t you wait, they always drop in price like a couple months after they come out. His response is always, but then I didn’t have the game for those months.

So you may have to overpaying retrospect if you want a house at the “wrong” time in the market, but as long as you’re responsible like my nephew who saves up his birthday gifts, allowance, etc. then being able to live in the house and get started with your life is worth more than anything IMO.

We’ve come to grips with this and understand that sure if we were born a couple years later maybe we’d catch a down point in the market. But we are what we are. One thing you can’t control is time. We aren’t getting any younger.

This is how we felt as well! We bought when we were ready to buy, and we're really happy to finally be living in a home we own. Now we feel like we can actually think seriously about having children. There's more to life than ROI!

MaxROI 4 life

 

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