Poll

Choose which range of homes you are looking for in Irvine

Less than $500k (do these exist?)
0 (0%)
$500k to $750k
5 (12.2%)
$750k to $1m
8 (19.5%)
$1m to $1.5m
17 (41.5%)
$1.5m to $2m
7 (17.1%)
$2m+ (baller)
4 (9.8%)
Other
0 (0%)

Total Members Voted: 39

Author Topic: What price range are you shopping for in Irvine?  (Read 1979 times)

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Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #15 on: November 14, 2018, 10:17:41 AM »
I am always fascinated to read the way people discuss real estate on TI. For folks that have purchased multiple homes in their lives and been building equity for years I'm sure this all feels very different than it does to me and my family. As a first time home buyer who is just sick of wasting money on rent every month (and yes - while still paying off student loans! Classic millennial right here), I don't really care where the market is right now or whether we end up in 3 bedrooms or 4 bedrooms (more bedrooms than we have now either way!). I just know I'm not getting any younger and my husband and I want to buy a house.

Thanks for this point of view.

This supports what I've been trying to say when it comes to waiting, whether it be a first time buyers or someone who is moving up/down to their 5th home.

As much as people say you can just rent... there are many people who feel that they would rather put that money into a mortgage instead of a landlord's pocket, even if it's more.

I don't know where rents are now, but I am pretty sure that my monthly mortgage is less than what it costs to rent a similar size house in my neighborhood.

And then there is the factor where people just want to own a home.

Good luck.. I hope you find something good enough within your price range.
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Offline meccos12

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Re: What price range are you shopping for in Irvine?
« Reply #16 on: November 14, 2018, 10:24:54 AM »
And I can be certain that the cost for labor and material continue to climb.

Actually lumber costs are dropping.

You don’t know what you talking about.

CEO Steven Hilton told investors recently that higher lumber prices have this year added about $3,000 on average to the cost of each house it builds. At Home Depot Inc., wood product prices are up about 30% year-over-year.

You are quoting a WSJ article from half a year ago.  Since then, lumber has dropped >50% from its high in June.  Stop looking at old data as things can change quickly.  This is probably the reason why you and IHO still doubt a slowdown.

https://markets.businessinsider.com/commodities/lumber-price

Stop quoting broad market index as a gauge. You have not been into hardware, or HD stores to realize the building materials costs from what you pisted. I know this because I buy materials.

And who doesn’t agree with a slow down. The disagreement is, is it beneficial to wait during the slow down or buy when weakness exist and produce favorable negotiation? That is what using current slow down to gain the upper hands. As far as price drop, you gonna have to wait for a long time if any.

LOL!  I back up my claims with data.  Then you tell me to quit using data as a gauge, but your only evidence is the fact that you buy things at a hardware store and I dont?  WTF?  How can anyone on this blog take you seriously?

As for the slowdown, my only point is that there is a slowdown and contrary to what IHO may imply, it is not seasonal.  I try to avoid making claims on how much prices will move and when as its impossible for anyone to know.  So in reality there is no disagreement as I do not have a stance on the topic of when it is beneficial to buy.
« Last Edit: November 14, 2018, 10:33:30 AM by meccos12 »

Offline SoclosetoIrvine

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Re: What price range are you shopping for in Irvine?
« Reply #17 on: November 14, 2018, 10:25:50 AM »
I'm probably on the opposite fence.  Looking for a 2 bed in the low $400s which is actually quite difficult LOL.  Anything even decent looking is $450k minimum.  As someone who checks redfin pretty regularly, I've seen price decreases of around $5-10k nothing significant even for homes which have been sitting around a month with no offers.  If anyone knows anyone selling, you can pm me (shameless plug) lol..

I've seen some really old 2 bed/1 bath in lake forest in the high 3s but they need a lot of work.  Mission Viejo kind of in the same boat.  I'll keep waiting for now

Offline meccos12

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Re: What price range are you shopping for in Irvine?
« Reply #18 on: November 14, 2018, 10:31:04 AM »

I don't know where rents are now, but I am pretty sure that my monthly mortgage is less than what it costs to rent a similar size house in my neighborhood.

Pointless to compare rents now versus mortgage on a purchase from years ago.  Better question is what are rents now vs cost of buying now.  Although IHO may disagree but costs of renting now are much less than cost of owning (which is more than just mortgage) now.

Offline Mety

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Re: What price range are you shopping for in Irvine?
« Reply #19 on: November 14, 2018, 10:35:49 AM »
A question, when you guys compare owning vs. renting, do you guys include all mello-roos and tax in your monthly cost to compare or just the principal/interest and the HOA?
#fepo

Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #20 on: November 14, 2018, 10:57:17 AM »

I don't know where rents are now, but I am pretty sure that my monthly mortgage is less than what it costs to rent a similar size house in my neighborhood.

Pointless to compare rents now versus mortgage on a purchase from years ago.  Better question is what are rents now vs cost of buying now.

My mortgage when I bought was less than rents back then. Rents have gone up (at least in my area) and my mortgage has not which is how I came to my statement.

Quote
Although IHO may disagree but costs of renting now are much less than cost of owning (which is more than just mortgage) now.

It depends. Renting a 1/2br apartment is probably less than a mortgage on a 2br property, but rent on a 4br house may be the same.

Here are the rental rates for 4/3 SFRs in Irvine:

https://www.realtor.com/apartments/Irvine_CA/beds-4/baths-3/type-single-family-home/affordable

Looks around $3400-$4500 a month depending on size, age, etc.

Mortgage for a $1.1m home with 20% down, $880k loan at 3.75% is about $4000 a month. MRs and taxes increase that cost but writeoffs can decrease it too. And you can even use an OARM to get a lower rate.

And yes, you do have to put $220k down but if you're shopping for a home, that's something you should account for.

And as I did say, people are usually willing to pay more on mortgage than rent... which meccos12 may disagree with.
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Offline moc

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Re: What price range are you shopping for in Irvine?
« Reply #21 on: November 14, 2018, 11:25:49 AM »
A question, when you guys compare owning vs. renting, do you guys include all mello-roos and tax in your monthly cost to compare or just the principal/interest and the HOA?

We do include mello roos, taxes and HOA in addition to P&I when we are running the numbers. But - we are not directly comparing the cost of renting right now (2 bed/2 bath apartment) with owning. We are just looking at how much per month we can afford. In the short term, owning will be more expensive than renting. But - we don't want to pay rent anymore, and owning a home is about more than our monthly payment to us.

We also aren't going to do 20% down. If we were going to need 20% we'd be waiting. We're avoiding PMI through our lender - we've learned there's lots of programs out there for high income buyers with high credit scores to avoid PMI. That surprised us, we thought we were screwed because 20% down on a house in California was years away.

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Offline moc

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Re: What price range are you shopping for in Irvine?
« Reply #22 on: November 14, 2018, 11:36:15 AM »
Also just to give numbers...

We pay $2700 (ish) per month for a 2 bed/2bath apartment currently. Irvine Company apartment complex. There aren't any 3 beds in our complex to compare to - but in other complexes it looks like $2800-$3500 is the range for a 3 bedroom.

We are looking at 3 bedroom homes in the 700k range in Irvine, and with taxes and HOA we're estimating between $4200-$4500 for our monthly payment. If you just look at P&I it's comparable to rent.

So as I said - we're going to spend more per month to own.

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Online Kenkoko

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Re: What price range are you shopping for in Irvine?
« Reply #23 on: November 14, 2018, 11:36:54 AM »

Pointless to compare rents now versus mortgage on a purchase from years ago.  Better question is what are rents now vs cost of buying now. 


Completely agree. I own the exactly model as the home linked below. The cost of ownership vs renting is so out of whack today. It's almost crazy to not consider renting.

https://www.zillow.com/homedetails/74-Ashford-Irvine-CA-92618/25502774_zpid/

To rent my house $3600 a month.

To own my house TODAY $3700 a month... Interest alone. That's with $240k down just sitting there doing nothing. On top of that, you have to endure the extra cost below.
- $150 HOA
- $1300 Property Tax
- $250 Insurance
- $???? Maintenance & Repairs (people often forget to mention this)

Sure you will benefit from some mortgage tax deduction but is worth all the extra cost of ownership? your 240K will get you $600 a month even if you just park it in a 3% CD.

Offline meccos12

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Re: What price range are you shopping for in Irvine?
« Reply #24 on: November 14, 2018, 11:38:14 AM »


My mortgage when I bought was less than rents back then. Rents have gone up (at least in my area) and my mortgage has not which is how I came to my statement.


Again, this is pointless to consider at this time.  What your situation was many years ago has absolutely no bearing on what people are looking at now.  The only thing that is important is now, hence why I said the better question is what is the rent vs owning comparison now. 

Also if you are going to make comparisons, at least use realistic numbers.  Just looking at the rates, I know its BS.  Anyone able to find a 3.75% rate right now?!?!??!?!   A rate change of 1% makes things 11% more expensive.  In reality a 1.1M house with 20% down at realistic rates of 4.75% will be around 6,100 a month.  Those are realistic numbers. 

BTW I dont mind paying more on a mortgage vs rent but thats a whole different story right?

Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #25 on: November 14, 2018, 11:38:49 AM »
@moc:

We didn't put 20% down on our first home either.

In fact, our last home, I didn't want to put 20% down either which was why we were looking at a much lower price range because we wanted to keep more liquidity but like you, we ended up spending more to get what we wanted so we had to put more down to get us into the affordability range.

As long as your are considering affordability and the ability to stay long term, you should be okay*.

*Grain of salt... I'm not a CPA, investment banker, or a real estate expert.
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Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #26 on: November 14, 2018, 11:59:11 AM »
Also if you are going to make comparisons, at least use realistic numbers.  Just looking at the rates, I know its BS.  Anyone able to find a 3.75% rate right now?!?!??!?!   A rate change of 1% makes things 11% more expensive.  In reality a 1.1M house with 20% down at realistic rates of 4.75% will be around 6,100 a month.  Those are realistic numbers. 

I apologize, that's a typo... it should be 4.75 but it's on a 40-year loan. I just used some website and massaged the numbers so that it fell into the $4000 range.

Your numbers seem to be wrong too... 4.75% on a 30-year loan says $4600, not $6100.
Once you go 3-car garage... your junk can never go back.
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Offline Mety

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Re: What price range are you shopping for in Irvine?
« Reply #27 on: November 14, 2018, 01:36:54 PM »
If you deduct the principal and tax advantage, owning is still lower than renting or about the same if you did regular 20% down.

If you inculde all, owning is a lot more than renting. BUT you DO get tax advantage and there IS your principal money in every month so it still is lower or around the same amount as renting.

What do you guys think? Am I missing something?

#fepo

Offline Irvine Dream

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Re: What price range are you shopping for in Irvine?
« Reply #28 on: November 14, 2018, 02:05:14 PM »
If you deduct the principal and tax advantage, owning is still lower than renting or about the same if you did regular 20% down.

If you inculde all, owning is a lot more than renting. BUT you DO get tax advantage and there IS your principal money in every month so it still is lower or around the same amount as renting.

What do you guys think? Am I missing something?

Unless the tax advantage is more than $1,700 per month  rental is better per below since interest alone is $3,700

"To rent my house $3600 a month.

To own my house TODAY $3700 a month... Interest alone. That's with $240k down just sitting there doing nothing. On top of that, you have to endure the extra cost below.
- $150 HOA
- $1300 Property Tax
- $250 Insurance
- $???? Maintenance & Repairs (people often forget to mention this)"

Offline Soylent Green Is People

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Re: What price range are you shopping for in Irvine?
« Reply #29 on: November 14, 2018, 02:21:47 PM »
If appreciation does slow to 1-2%, and savings rate yields rise to 3%, there will be challenges coming on the benefit of home ownership. A $1.0m home at 2% appreciation is worth $1,020,000 however if it costs 2% to sell, you've seen zero net gain in that year - assuming of course you've been compelled to sell. You'll need a good 3 years of 2% appreciation to overcome cost of selling.

If you were putting 20% down on that $1m home, that $200k has a potential 3% rate of return, I'd argue then that it will soon take 3 years of owning to equal the benefit of renting renting, and 4 plus before ownership and appreciation begins to look better than renting.

Most buyers are in for the longer haul, and ownership then begins to make better sense, but if we're in a 5% rate market and a 5% rate of return (stocks, CD's, etc) the enthusiasm to purchase may fade even more.

My .02c

 

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