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 1977 times)

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Offline Ready2Downsize

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Re: What price range are you shopping for in Irvine?
« Reply #30 on: November 14, 2018, 02:31:43 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

How can it "only" cost 2% to sell? Commish alone (on the entire price, not just price over what was paid or only the mortgage) is way more than that.

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Offline Ready2Downsize

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Re: What price range are you shopping for in Irvine?
« Reply #31 on: November 14, 2018, 02:42:03 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?

If houses don't appreciate significantly, you're "stuck" living in the same house. Renters can just up and move.

If houses drop in price (more supply than demand and don't say it can't happen... houses drop by drip drip drip most often), then you'll see more rentals hit the market and rents will drop.

If you HAVE to sell and the house didn't go up significantly you lose money due to cost to sell which is not a tax deduction, it's just a loss.

If a crappy neighbor moves next door, oh well.

If things start breaking, there is no landlord to pick up the tab.

For many (maybe not here because houses cost so much), but there isn't much in the way of a tax deduction with the increased standard deduction.

Mello and taxes go up 2% every year which can be pretty significant in this area.

But if you like your house, neighborhood and don't have to sell or want to move and don't mind the idea of money doing nothing for you...…. u gotta live somewhere so might as well own where u live.

I always say, buy something u don't mind living in forever...…. something in a good school district which is big enough for the largest family you will have...…… something u can afford if something really goes wrong at the worst time like a bad car accident, big health problem, job lay off, etc.

Then you'll be fine.

But if you bought something with the idea of moving up to what u really need later..... u might not be doing that.

Offline Kenkoko

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Re: What price range are you shopping for in Irvine?
« Reply #32 on: November 14, 2018, 02:54:00 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?

Have you ran the numbers since the new 750k mortgage cap / 10k SALT cap came into play?

The tax benefit does not move the needle very much in today's rent vs buy, even if you are making 400k a year (33% tax bracket) taking full advantage of the tax benefit.

Offline Soylent Green Is People

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Re: What price range are you shopping for in Irvine?
« Reply #33 on: November 14, 2018, 03:16:30 PM »
Ready2,

Yes, it's more than 2%, but was using that figure for ease of explaining the general concept.

My .02c

Offline eyephone

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Re: What price range are you shopping for in Irvine?
« Reply #34 on: November 14, 2018, 03:27:40 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?

Have you ran the numbers since the new 750k mortgage cap / 10k SALT cap came into play?

The tax benefit does not move the needle very much in today's rent vs buy, even if you are making 400k a year (33% tax bracket) taking full advantage of the tax benefit.

I can’t believe I read this on someone’s twitter account. Turbo tax has not come out yet so how do you know the impact of the salt cap? I say it doesn’t take a genius to estimate your tax liability. For those people that don’t know good luck.
« Last Edit: November 14, 2018, 04:16:12 PM by eyephone »

Offline Mety

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Re: What price range are you shopping for in Irvine?
« Reply #35 on: November 14, 2018, 04:20:01 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?

Have you ran the numbers since the new 750k mortgage cap / 10k SALT cap came into play?

The tax benefit does not move the needle very much in today's rent vs buy, even if you are making 400k a year (33% tax bracket) taking full advantage of the tax benefit.

Yes. Many changes were made this year and our tax actually went lower. Strange..

Who would be the most victimized catagory for this new law?  Someone with $750k+ loans with bigger MR tax?
#fepo

Offline meccos12

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Re: What price range are you shopping for in Irvine?
« Reply #36 on: November 14, 2018, 04:29:45 PM »
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.

6100 is correct unless you do not want to factor taxes insurance hoa .  This is not even factoring maintenance costs which we should.

Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #37 on: November 15, 2018, 07:46:01 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.

So based on pure numbers, you would rent today instead of buy?

I understand from a money aspect, people would rent, but just remember that many people buying homes aren't doing a rent vs own comparison. Like moc, they are just seeing what is affordable because they don't want to rent. I think most among us would pay more to own over renting.

I appreciate moc's post because this just shows how personal preferences affect what buyers are looking for, what price they are will to pay and will have some effect on pricing as a whole. These are the non-fundamental factors I referred to years ago during that last crash and contributes to Irvine price stickiness. Whether or not they will have an effect on the current situation is hard to tell but based on history (which some people prefer I not reference), they could.
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Offline Mety

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Re: What price range are you shopping for in Irvine?
« Reply #38 on: November 15, 2018, 10:18:27 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.

So based on pure numbers, you would rent today instead of buy?

I understand from a money aspect, people would rent, but just remember that many people buying homes aren't doing a rent vs own comparison. Like moc, they are just seeing what is affordable because they don't want to rent. I think most among us would pay more to own over renting.

I appreciate moc's post because this just shows how personal preferences affect what buyers are looking for, what price they are will to pay and will have some effect on pricing as a whole. These are the non-fundamental factors I referred to years ago during that last crash and contributes to Irvine price stickiness. Whether or not they will have an effect on the current situation is hard to tell but based on history (which some people prefer I not reference), they could.

I'm sure Kenkoko's $3700 example is PI, not just the interest. The principal would be around $1300. So I think It's fair to subtract that number then the total number becomes around $3850 excluding the the insurance because you would get an insurance even when you rent anyways. So owning would be paying about $250 more per month. But you also get tax return in April so the total number might end up even lower for owning than renting.

I strongly believe owning is still more desirable or you can say slightly cheaper even at this crazy RE market, but this is not to say now is the good time to buy because it seems like the price might drop more and also in case of the huge price drop, the downpayment and the principal might be in danger, but that's a whole another topic. I'm just comparing the current situation of buy vs. rent.


BTW the poll result bars seem like a big middle finger. Maybe I'm just not so innocent.



Edit: Actually my mistake. Kenkoko was right $3700 is the interest alone.
« Last Edit: November 15, 2018, 10:46:14 AM by Mety »
#fepo

Offline paperboyNC

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Re: What price range are you shopping for in Irvine?
« Reply #39 on: November 15, 2018, 12:58:20 PM »
I think a lot of TI'ers are in the move up market.
« Last Edit: November 16, 2018, 07:36:11 AM by paperboyNC »

Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #40 on: November 16, 2018, 06:58:28 AM »
I don't think I need to screencap this but it looks like more members here are shopping in the $1m+ range... which is contrary to the sentiment that more TI members are shopping just for starter homes.

At least I think that's what this means... it could be that TI members that are shopping for starter homes have not voted.
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Offline Mety

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Re: What price range are you shopping for in Irvine?
« Reply #41 on: November 16, 2018, 09:53:30 AM »
I don't think I need to screencap this but it looks like more members here are shopping in the $1m+ range... which is contrary to the sentiment that more TI members are shopping just for starter homes.

At least I think that's what this means... it could be that TI members that are shopping for starter homes have not voted.

Yeah, looks like the majority of TI members are move up buyers who don’t need us to predict the % of upcoming price fall. They know what they’re doing with their well balance financial situation. Just look how they are so confident of what they believe from political threads.
#fepo

Offline Kenkoko

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Re: What price range are you shopping for in Irvine?
« Reply #42 on: November 16, 2018, 10:42:09 AM »
So based on pure numbers, you would rent today instead of buy?

I understand from a money aspect, people would rent, but just remember that many people buying homes aren't doing a rent vs own comparison. Like moc, they are just seeing what is affordable because they don't want to rent. I think most among us would pay more to own over renting.

I appreciate moc's post because this just shows how personal preferences affect what buyers are looking for, what price they are will to pay and will have some effect on pricing as a whole. These are the non-fundamental factors I referred to years ago during that last crash and contributes to Irvine price stickiness. Whether or not they will have an effect on the current situation is hard to tell but based on history (which some people prefer I not reference), they could.

IHO, I would not sell my house and become a renter. I’ve been fortunate to benefit from the biggest stock rally in my lifetime, so the extra cost of ownership would not make me a renter.

But if I were a first-time homebuyer or a first time move up buyer, it’d be enough to make me reconsider. If your long-term goal is to be a homeowner, then go for it. But if your long-term goal is to achieve financial freedom, you would benefit from being able to separate your needs and wants. You have a housing need, and you want to own your house. If renting the same home can get you to your financial freedom years or decade ahead, it’s worth considering.

Ready2downsize mentioned several good points of the advantage of being a renter. One of them is the “stuck” factor. I would add to that by adding our personal experience. About 10 years ago, my wife was offered a great job opportunity in Irvine, but we lived in Arcadia and was already home shopping in Arcadia. Looking back, my wife most likely would have turned it down if we already owned a home in Arcadia. That would have been a big missed opportunity.

The poll really does look like a giant middle finger.

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Offline irvinehomeowner

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Re: What price range are you shopping for in Irvine?
« Reply #43 on: November 16, 2018, 10:45:42 AM »
The poll really does look like a giant middle finger.

Yes... it's being pointed at the "slowdown"... and the caption is:

"This is Irvine!!"

:)
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Offline Kings

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Re: What price range are you shopping for in Irvine?
« Reply #44 on: November 16, 2018, 10:49:38 AM »
just want to say that i'm not shopping right now, but i voted for $750 to $1m to help even out the middle finger.  you're welcome.

 

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