Author Topic: Examples of significant savings?  (Read 5355 times)

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Offline Kenkoko

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Re: Examples of significant savings?
« Reply #30 on: April 01, 2019, 11:28:32 AM »
IHO, I always appreciated honest discussions and will gladly admit when I’m proven wrong like you did with our discussion on Woodbridge prices.

I strongly feel the biggest part of the 13% price difference in Marigold plan 3 is due to Market condition, not location, certainly not the minimal backyard. We disagree.

I keep bringing up the 6% transaction cost because it’s something many people do not think about in a bull market. But it will hurt a lot when you must sell in a bear market. It could easily double your loss when market dips 5%.

I already mentioned this in the other thread, but we are buying an investment property ( a 1031 exchange for my parents) The consideration is obviously different than someone buying a primary home. The numbers must make sense therefore my big emphasis on price, transaction cost, and Irvine rental cap rates.

My stance on primary home buying is different than you. While I understand there are other factors in play when deciding on a primary home purchase, I do not think the investment consideration part goes out of the window. Due to high RE prices, many homebuyers in Irvine are buying their primary home as a combination of housing need and investment. Too many people I see are stretching DTI to buy homes in Irvine. This makes them less adaptable to newer economic challenges that I see are coming. We are already 10 years into this recovery / expansion. For Irvine home prices to go up and outperforme inflation significantly, we need the US economy to stay strong and Irvine to become Silicon Valley of the south. Frankly I don’t see that. I see much smaller possible upside going forward and bigger possible downside.

Offline Kenkoko

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Re: Examples of significant savings?
« Reply #31 on: April 01, 2019, 11:31:32 AM »
6%???  Man, that's some old school right there.
Use Redfin and pay 1-1.5% listing fees.

Even if you pay just 1.5% listing fees, you still need to offer 2.5% commission for buyer agent to be competitive. That's 4% already before we consider escrow cost, closing cost, cost to get your home ready, cost to move etc etc.

You can definitely do it of less than 6% but I don't think it's crazy to use 6% to calculate the math.

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Offline Mety

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Re: Examples of significant savings?
« Reply #32 on: April 01, 2019, 12:05:41 PM »
6%???  Man, that's some old school right there.
Use Redfin and pay 1-1.5% listing fees.

Even if you pay just 1.5% listing fees, you still need to offer 2.5% commission for buyer agent to be competitive. That's 4% already before we consider escrow cost, closing cost, cost to get your home ready, cost to move etc etc.

You can definitely do it of less than 6% but I don't think it's crazy to use 6% to calculate the math.

Oh, 6% transaction cost. Gotcha. For some reason, I thought you were saying 6% agent fee. My bad.

Offline irvinehomeowner

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Re: Examples of significant savings?
« Reply #33 on: April 01, 2019, 12:09:49 PM »
I strongly feel the biggest part of the 13% price difference in Marigold plan 3 is due to Market condition, not location, certainly not the minimal backyard. We disagree.
I will agree that there is some price dip due to the cyclical season, but how big? Once again, this is one or two homes, that's why I made this thread, so we can see more examples.

And even if location and upgrades were only 5% of this price difference, 8% to me is not *significant*.

Quote
I keep bringing up the 6% transaction cost because it’s something many people do not think about in a bull market. But it will hurt a lot when you must sell in a bear market. It could easily double your loss when market dips 5%.

Sure, but this throws away my premise that you won't sell. To be fair, you can't just discard my caveats.

Quote
I already mentioned this in the other thread, but we are buying an investment property ( a 1031 exchange for my parents) The consideration is obviously different than someone buying a primary home. The numbers must make sense therefore my big emphasis on price, transaction cost, and Irvine rental cap rates.

I agree.

Quote
My stance on primary home buying is different than you. While I understand there are other factors in play when deciding on a primary home purchase, I do not think the investment consideration part goes out of the window. Due to high RE prices, many homebuyers in Irvine are buying their primary home as a combination of housing need and investment. Too many people I see are stretching DTI to buy homes in Irvine. This makes them less adaptable to newer economic challenges that I see are coming. We are already 10 years into this recovery / expansion. For Irvine home prices to go up and outperforme inflation significantly, we need the US economy to stay strong and Irvine to become Silicon Valley of the south. Frankly I don’t see that. I see much smaller possible upside going forward and bigger possible downside.

I've never said the investment part goes out the window.

But to me, at least in my experience, most real estate in Irvine appreciates over the long haul. I've said before that I've stretched with each home we bought, and each time, it's worked out, so maybe that's a gamble for most, and at today's prices, I'm not sure I would do the same thing. However, if you can afford it, and it's the home you want, small price discounts for 5-10% (the typical drop the last 4 years)... or even 15%, become less of a consideration.

Maybe I'm not as down on the economy as you are. Maybe because you think AI might have a hand in killing tons of jobs but to me I see that as an evolution to create more opportunities and a better life for everyone.
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Offline irvinehomeowner

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Re: Examples of significant savings?
« Reply #34 on: April 01, 2019, 12:18:12 PM »
It's interesting most people no matter where they live, they tend to love where they are currently at especially if you are the home owner. I haven't really seen anyone who would say,
"Man, I live in PS and I hate it here."

They all tend to say,
"I love it here cuz it's so much more chill and far away from than any other Irvine areas."

But then you move out and say,
"I used to live in PS and I hated every moment of it for it was too far from everything."
"I used to live in GP and boy those MR was killing me."
"I used to live in EW and I forgot I was in U.S."

We all love where we are now, but not so much love for the previous one. So my question is do you still think you would say it was the best home even after you move to somewhere else?

So, to clarify, this is the best micro house location (IE not backing a major road/freeway) I've lived in. Previous homes weren't always in the ideal location because we were more concerned about price (well, we did rent a house in nice location at one time). But, for a macro location, I would probably prefer to live in one of 3 places in Irvine: Quail Hill, Woodbridge or Turtle Rock.

But I doubt we are moving anytime soon, maybe when the kids are on their own we will downsize and retire to one of those 3 places... or just move out of Irvine altogether.
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Offline eyephone

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Re: Examples of significant savings?
« Reply #35 on: April 01, 2019, 12:44:35 PM »
6%???  Man, that's some old school right there.
Use Redfin and pay 1-1.5% listing fees.

Even if you pay just 1.5% listing fees, you still need to offer 2.5% commission for buyer agent to be competitive. That's 4% already before we consider escrow cost, closing cost, cost to get your home ready, cost to move etc etc.

You can definitely do it of less than 6% but I don't think it's crazy to use 6% to calculate the math.

Oh, 6% transaction cost. Gotcha. For some reason, I thought you were saying 6% agent fee. My bad.

The cost of selling a home is pricey. It’s not like trading stocks. Maybe someday.

Offline Mety

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Re: Examples of significant savings?
« Reply #36 on: April 01, 2019, 01:15:27 PM »
It's interesting most people no matter where they live, they tend to love where they are currently at especially if you are the home owner. I haven't really seen anyone who would say,
"Man, I live in PS and I hate it here."

They all tend to say,
"I love it here cuz it's so much more chill and far away from than any other Irvine areas."

But then you move out and say,
"I used to live in PS and I hated every moment of it for it was too far from everything."
"I used to live in GP and boy those MR was killing me."
"I used to live in EW and I forgot I was in U.S."

We all love where we are now, but not so much love for the previous one. So my question is do you still think you would say it was the best home even after you move to somewhere else?

So, to clarify, this is the best micro house location (IE not backing a major road/freeway) I've lived in. Previous homes weren't always in the ideal location because we were more concerned about price (well, we did rent a house in nice location at one time). But, for a macro location, I would probably prefer to live in one of 3 places in Irvine: Quail Hill, Woodbridge or Turtle Rock.

But I doubt we are moving anytime soon, maybe when the kids are on their own we will downsize and retire to one of those 3 places... or just move out of Irvine altogether.

My parents were thinking of downsizing, but the cost of monthly pay would actually go up when they move to a smaller house because of the inflation.
This is one of the reasons why boomers are not moving and millennials can't buy resale homes. Thus home builders make new homes with either higher MR price tag or on a toxic wasted land with tri levels.

QH, WB, TR homes prices might end up even higher than what it is today by the time you want to downsize. Do you think you would still move then?

Offline Mety

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Re: Examples of significant savings?
« Reply #37 on: April 01, 2019, 01:22:34 PM »
6%???  Man, that's some old school right there.
Use Redfin and pay 1-1.5% listing fees.

Even if you pay just 1.5% listing fees, you still need to offer 2.5% commission for buyer agent to be competitive. That's 4% already before we consider escrow cost, closing cost, cost to get your home ready, cost to move etc etc.

You can definitely do it of less than 6% but I don't think it's crazy to use 6% to calculate the math.

Oh, 6% transaction cost. Gotcha. For some reason, I thought you were saying 6% agent fee. My bad.

The cost of selling a home is pricey. It’s not like trading stocks. Maybe someday.

That's why people should have sold a year ago when there was MAXROI could've been made.

Offline irvinehomeowner

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Re: Examples of significant savings?
« Reply #38 on: April 01, 2019, 01:39:56 PM »
QH, WB, TR homes prices might end up even higher than what it is today by the time you want to downsize. Do you think you would still move then?

Well, if we stay in our home for at least 10 more years, I figure we should have more than half paid off (if you taken into account appreciation/inflation, the equity is even more so). That difference when we sell should be able to buy a smaller place or at least pay it down where mortgage is very minimal.

But you never know, if attached condos are $1m today, I can imagine a small 1-story 2-3br SFR in Woodbridge or Turtle Rock could be $2m in 2030 (at least even Quail Hill won't have MRs by then). :)
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Offline Mety

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Re: Examples of significant savings?
« Reply #39 on: April 01, 2019, 02:05:29 PM »
QH, WB, TR homes prices might end up even higher than what it is today by the time you want to downsize. Do you think you would still move then?

Well, if we stay in our home for at least 10 more years, I figure we should have more than half paid off (if you taken into account appreciation/inflation, the equity is even more so). That difference when we sell should be able to buy a smaller place or at least pay it down where mortgage is very minimal.

But you never know, if attached condos are $1m today, I can imagine a small 1-story 2-3br SFR in Woodbridge or Turtle Rock could be $2m in 2030 (at least even Quail Hill won't have MRs by then). :)

You kid, but you never know. If no slowdown occurs and only seasonal flows keep happening, $2m for attached Delano by 2030 is actually not an impossibility.

BTW, are you going to stop your kids if they say they will buy Delano?  :)

Also WB and TR's HOAs will be around $600 for townhomes. But you said you would only buy SFH so no worries.


Offline eyephone

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Re: Examples of significant savings?
« Reply #40 on: April 01, 2019, 02:12:40 PM »
QH, WB, TR homes prices might end up even higher than what it is today by the time you want to downsize. Do you think you would still move then?

Well, if we stay in our home for at least 10 more years, I figure we should have more than half paid off (if you taken into account appreciation/inflation, the equity is even more so). That difference when we sell should be able to buy a smaller place or at least pay it down where mortgage is very minimal.

But you never know, if attached condos are $1m today, I can imagine a small 1-story 2-3br SFR in Woodbridge or Turtle Rock could be $2m in 2030 (at least even Quail Hill won't have MRs by then). :)

You kid, but you never know. If no slowdown occurs and only seasonal flows keep happening, $2m for attached Delano by 2030 is actually not an impossibility.

BTW, are you going to stop your kids if they say they will buy Delano?  :)

Also WB and TR's HOAs will be around $600 for townhomes. But you said you would only buy SFH so no worries.

Housing and now the economy slowdown (I don’t know)

Offline Kenkoko

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Re: Examples of significant savings?
« Reply #41 on: April 01, 2019, 03:07:06 PM »

But to me, at least in my experience, most real estate in Irvine appreciates over the long haul. I've said before that I've stretched with each home we bought, and each time, it's worked out, so maybe that's a gamble for most, and at today's prices, I'm not sure I would do the same thing. However, if you can afford it, and it's the home you want, small price discounts for 5-10% (the typical drop the last 4 years)... or even 15%, become less of a consideration.

Maybe I'm not as down on the economy as you are. Maybe because you think AI might have a hand in killing tons of jobs but to me I see that as an evolution to create more opportunities and a better life for everyone.

I often debate with you on this because your premise is very different from the overall trend. Of course, we can continue to buck the trend and discuss not selling at all or staying 10 years (doubling the average), but that doesn’t achieve much else other than your specific situation.

I understand why you would come to your conclusion regarding Irvine home prices, but I disagree with you.

8% drop in a few months is significant to me. Which is why I urge people who are still not fully committed in Irvine RE to exercise caution. My family’s business is in international trading. I feel confident that we have a good pulse on the global economy and it is not doing great. All it took for the recent slowdown in Irvine home price was some marginal reduction of FCB buying and slight mortgage rate increase. What would happen if US economy actually slows down? It's not unthinkable. We are already 10 years into this recovery / expansion and there are already signs showing a slowdown looming. What happens when China and world economy slows down with it?

I have argued before that it’s FCBs that’s propping up Irvine home prices to 2018 levels. What will happen when FCB buying slows to a trickle? Or worse when some FCBs mass exit and sell off in a relative short time span? To me it’s always better to plan for the worst and hope for the best. I am against pushing DTI to max or near max levels to buy homes that have never ending Mello Roos.


I cringe when I hear people say that the great recession of 2008 is once in a life time scenario. Either they don’t expect to live very long which is a bit sad (life expectancy in USA did drop 3 years in a roll) Or they have no idea how profound and widespread the impact of the incoming disruptions we will see from massive adaptation of AI and automation.

I was just at the car dealership over the weekend. The sales rep was showing my 2.5-year-old daughter how to operate the buttons and the steering wheel when it struck me that she will probably never drive a car (or need to)

We are about to decimate 25% - 40% of jobs in the USA by 2030 and most people have given it close to zero consideration on how that will impact our economy. I get that we are protected by many layers of bubbles. We do live in the greatest country on earth and California / Orange county / Irvine are bubbles to the extreme. But this problem will be too big to not have significant economic impact on Irvine.

To your point, yes, I agree we will eventually evolve and find a way. I am not fear mongering that we will see destruction of our country or humanity, but the process will be extremely disruptive and brutal.

Offline bones

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Re: Examples of significant savings?
« Reply #42 on: April 01, 2019, 04:24:53 PM »

8% drop in a few months is significant to me. Which is why I urge people who are still not fully committed in Irvine RE to exercise caution. My family’s business is in international trading. I feel confident that we have a good pulse on the global economy and it is not doing great. All it took for the recent slowdown in Irvine home price was some marginal reduction of FCB buying and slight mortgage rate increase. What would happen if US economy actually slows down? It's not unthinkable. We are already 10 years into this recovery / expansion and there are already signs showing a slowdown looming. What happens when China and world economy slows down with it?

I have argued before that it’s FCBs that’s propping up Irvine home prices to 2018 levels. What will happen when FCB buying slows to a trickle? Or worse when some FCBs mass exit and sell off in a relative short time span? To me it’s always better to plan for the worst and hope for the best. I am against pushing DTI to max or near max levels to buy homes that have never ending Mello Roos.


I think that's basically what this argument boils down to.  There are some people on this board who have been Irvine/OC homeowners for a very long time and have probably built up a fair amount of equity either through a long hold or sale of property through the years.  To those people, 8% drop is probably not that significant (even though I agree with you that it is, especially if you have to transact RIGHT NOW).  But to those who are stretching to buy a $700k condo, 8% is definitely significant.

Offline irvinehomeowner

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Re: Examples of significant savings?
« Reply #43 on: April 01, 2019, 05:03:16 PM »
@kenkoko:

Sorry, I can't imagine a global slowdown. Just like I can't imagine another world war. We are all too connected.

Maybe I'm just too optimistic.
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Offline zubs

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Re: Examples of significant savings?
« Reply #44 on: April 08, 2019, 10:54:49 AM »
A friend sent me this on how the economy works.

https://www.youtube.com/watch?v=PHe0bXAIuk0


If you have 30 min. give it a watch.


In it he mentions the long term debt cycle.  Deleveraging happens every 75 - 100 years.  So 1929, and then again 2008.
If you are to believe this video, we won't have another big de-leveraging for another 75 years, although we'll still have the short term 7-10 years peaks and troughs.




 

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