Author Topic: When would be next housing Bottom?  (Read 18710 times)

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Offline Panda

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Re: When would be next housing Bottom?
« Reply #285 on: April 14, 2019, 07:50:06 PM »
OCLuvr, Are you asking me about Micro (zip codes in OC?) or Macro (across the U.S)



The unemployment in the OC will be a leading indicator. Once you see OC unemployment reach 5%, even "AAA" grade real estate assets like Irvine will start to correct. 



You can see that the San Francisco Market has already started its decline. You may think that Bay Area real estate market is the leading indicator and that the LA market will soon follow.

Lately (starting from Jan 1 2019) ... I've been getting a lot of interest from residents living in zip codes of Cupertino, Palo Alto, Mountainview, Milpitas, etc, not specifically to purchase investment properties in Johns Creek and Alpharetta, but physically relocating their family and their businesses in North Atlanta from the Bay Area. Recently, one my clients sold his home in Fullerton and purchased in the newer gated community in Johns Creek plus a very nice Hi Tech Office Flex Space in the Technology Park. He is a tech entrepreneur and when I asked him why he decided to make such a bold move, his reason was escaping the high cost of living and providing a new and different lifestyle for his family.

Which places do you expect the crash to be in?
« Last Edit: April 14, 2019, 08:06:44 PM by Panda »
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Online OCLuvr

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Re: When would be next housing Bottom?
« Reply #286 on: April 14, 2019, 08:48:09 PM »
Please Share your thoughts on both micro and US level.

Offline meccos12

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Re: When would be next housing Bottom?
« Reply #287 on: April 15, 2019, 03:42:24 PM »
Hoping we dont see a crash in the oc housing but a slow decline like 1989-1993, similar to that of 2019-2023.

this is the time frame i was talking about before that there is hurry for the buyers.....

the marker will shift to the buyer's market in irvine and the deal will get only sweeter as you wait. this is the time for buyers to come out and look for deals. again, there is no rush... and the rates will continue to fall... if you are lucky, the 10 year may even fall below 1.6%. Soon it will be the buyers who will shine in Irvine as they will regain control.

Panda seems like you have had a change of heart in your prediction for Irvine.  Half a year ago, you were singing a different tune.  What changed your mind? 

Offline Panda

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Re: When would be next housing Bottom?
« Reply #288 on: April 15, 2019, 03:58:55 PM »
Meccos,

I didn't see much change in 2018 vs 2017 data, but starting to see some change in data beginning of this year. I don't think we will see a real estate crisis like 2008-2009, but a slow decline of 10-15% in the next 4 years is possible. Again, I do still think that the Irvine housing market will decline less if the recession hits. Sort of like holding a high quality "AAA" Grade Bond Fund. This will give an opportunity for the buyers who have been on the sidelines for a while to enter the market in Irvine. I would advise the Irvine buyers to continue to wait if possible. The 30 year cycle puts us in 1989, which is about where I think we are at in the cycle at the moment.

Hoping we dont see a crash in the oc housing but a slow decline like 1989-1993, similar to that of 2019-2023.

this is the time frame i was talking about before that there is hurry for the buyers.....

the marker will shift to the buyer's market in irvine and the deal will get only sweeter as you wait. this is the time for buyers to come out and look for deals. again, there is no rush... and the rates will continue to fall... if you are lucky, the 10 year may even fall below 1.6%. Soon it will be the buyers who will shine in Irvine as they will regain control.

Panda seems like you have had a change of heart in your prediction for Irvine.  Half a year ago, you were singing a different tune.  What changed your mind? 
James Park, MBA
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Direct: (678) 865-6250
Email: jpark@johnscreekrealtypartners.com

http://www.biggerpockets.com/users/Panda
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Offline Irvinecommuter

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Re: When would be next housing Bottom?
« Reply #289 on: April 15, 2019, 04:06:05 PM »
Meccos,

I didn't see much change in 2018 vs 2017 data, but starting to see some change in data beginning of this year. I don't think we will see a real estate crisis like 2008-2009, but a slow decline of 10-15% in the next 4 years is possible. Again, I do still think that the Irvine housing market will decline less if the recession hits. Sort of like holding a high quality "AAA" Grade Bond Fund. This will give an opportunity for the buyers who have been on the sidelines for a while to purchase in Irvine. I would advise the Irvine buyers to continue to wait if possible. The 30 year cycle puts us in 1989, which is about where I think we are at in the cycle at the moment.

Hoping we dont see a crash in the oc housing but a slow decline like 1989-1993, similar to that of 2019-2023.

this is the time frame i was talking about before that there is hurry for the buyers.....

the marker will shift to the buyer's market in irvine and the deal will get only sweeter as you wait. this is the time for buyers to come out and look for deals. again, there is no rush... and the rates will continue to fall... if you are lucky, the 10 year may even fall below 1.6%. Soon it will be the buyers who will shine in Irvine as they will regain control.

Panda seems like you have had a change of heart in your prediction for Irvine.  Half a year ago, you were singing a different tune.  What changed your mind? 

I am going to say no because

1) most of the growth in Irvine has been fueled by high-equity/low fixed rate purchases.  Unless there is a massive employment drop, I don't see the market going down.

2)  There was a fundamental shift in employment in OC in the late 1980s/early 1990s including the closure of military bases and the aerospace industry leaving the area.

3)  The mortgage market and Savings and Loan scandal were a key reason why OC got hit hard (to the point of BK)...there is a fundamentally different structure in OC demographics now.

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Re: When would be next housing Bottom?
« Reply #290 on: April 15, 2019, 04:14:07 PM »
I posted an unemployment chart in OC currently hovering about 3%. You can see this chart does not move straight horizontal line, but more like a wave. Once the unemployment % surpasses 5%, you will see a shift.
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Offline Irvinecommuter

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Re: When would be next housing Bottom?
« Reply #291 on: April 15, 2019, 04:19:15 PM »
I posted an unemployment chart in OC currently hovering about 3%. You can see this chart does not move straight horizontal line, but more like a wave. Once the unemployment % surpasses 5%, you will see a shift.

Both 1980/1990 and 2008/2012 downturns were global in nature...arguably 1980/1990 was a mini version of 2008/2012 with OC being hit harder because of its reliance on military/aerospace.   OC is now in the driver seat with respect to future jobs because world is reliant on technology and things like AI.

Conversely, I am interested to see how the downturn in telecommunication affects a place like Alpharetta, who is super reliant on Verison, AT&T, and Comcast...even a company like ADP. 

Offline marmott

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Re: When would be next housing Bottom?
« Reply #292 on: April 16, 2019, 09:36:46 PM »
Just heard this today: https://www.marketplace.org/2019/04/16/economy/tax-overhauls-impact-housing-market-its-complicated

I have looked for the articles/studies they quote in the piece but are they right to say that the last 2 times rates increased it had less of an impact on house sales?

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Re: When would be next housing Bottom?
« Reply #293 on: April 17, 2019, 08:35:45 AM »
Just heard this today: https://www.marketplace.org/2019/04/16/economy/tax-overhauls-impact-housing-market-its-complicated

I have looked for the articles/studies they quote in the piece but are they right to say that the last 2 times rates increased it had less of an impact on house sales?

You do have fatigue in the market and banks still have really tight lending practices right now.

Offline meccos12

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Re: When would be next housing Bottom?
« Reply #294 on: April 17, 2019, 09:49:14 AM »

You do have fatigue in the market and banks still have really tight lending practices right now.

What is considered "really tight lending practices"?  Compared to the NINJA days, sure its tight, but that is relative.  I believe lending is not tight at all.  In fact I feel like its become fairly loose.

If the tax overhaul expires in 4 years, will SALT deductions come back? 

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Re: When would be next housing Bottom?
« Reply #295 on: April 17, 2019, 09:51:12 AM »

You do have fatigue in the market and banks still have really tight lending practices right now.

What is considered "really tight lending practices"?  Compared to the NINJA days, sure its tight, but that is relative.  I believe lending is not tight at all.  In fact I feel like its become fairly loose.

If the tax overhaul expires in 4 years, will SALT deductions come back?

Lending for top tier borrowers is decent but you still need to go through a lot of hoops.  Lending is super tight for first time buyers and medium/average borrowers.

https://www.creditrepair.com/blog/uncategorized/fed-study-shows-lending-restrictions-still-too-tight/

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Re: When would be next housing Bottom?
« Reply #296 on: April 17, 2019, 11:47:45 AM »

You do have fatigue in the market and banks still have really tight lending practices right now.

What is considered "really tight lending practices"?  Compared to the NINJA days, sure its tight, but that is relative.  I believe lending is not tight at all.  In fact I feel like its become fairly loose.

If the tax overhaul expires in 4 years, will SALT deductions come back?

Lending for top tier borrowers is decent but you still need to go through a lot of hoops.  Lending is super tight for first time buyers and medium/average borrowers.

https://www.creditrepair.com/blog/uncategorized/fed-study-shows-lending-restrictions-still-too-tight/

+1  Underwriters are VERY thorough going through the entire the underwriting process.  Even A+ borrowers have to provide letters of explanations and updated information to get their loans approved.
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Re: When would be next housing Bottom?
« Reply #297 on: April 17, 2019, 07:29:43 PM »
When (or) do you think prices will go down in the Newport Beach area in the next couple years? Is there a reason to wait or should I purchase now? I am looking to buy near the Lido Marina Village/Newport Peninsula area or Lido Isle. There isn’t much inventory and everything is very pricey. Thank you for your input.

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Re: When would be next housing Bottom?
« Reply #298 on: April 17, 2019, 08:29:15 PM »
When (or) do you think prices will go down in the Newport Beach area in the next couple years? Is there a reason to wait or should I purchase now? I am looking to buy near the Lido Marina Village/Newport Peninsula area or Lido Isle. There isn’t much inventory and everything is very pricey. Thank you for your input.

I am pretty sure NB is about as price proof as you can get for the exactly reason you stated.

Offline Kenkoko

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Re: When would be next housing Bottom?
« Reply #299 on: April 18, 2019, 12:59:39 AM »
I don't think we will see a real estate crisis like 2008-2009, but a slow decline of 10-15% in the next 4 years is possible. Again, I do still think that the Irvine housing market will decline less if the recession hits. Sort of like holding a high quality "AAA" Grade Bond Fund. This will give an opportunity for the buyers who have been on the sidelines for a while to enter the market in Irvine. I would advise the Irvine buyers to continue to wait if possible.

I agree with most of that. I do wonder what you mean when you said the Irvine housing market will decline less if the recession hits. Do you mean in comparison to the overall OC market? Have you taken into consideration of Irvine's low homeownership rate? For reference Yorba Lina is high at 82%, Mission Viejo is 74%, and Irvine is really low at 48%.

High homeonership rate helps to soften recession hits.

To me, a big factor that helped Irvine RE soften the last recession hit was having a lot of foreign investors and a big chuck of that is Chinese FCBs. Last US recession, the chinese economy was booming. Not so this time around.

 

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