OMG Pricing...

[irvinehomeowner]

I know that WTF is the preferred term but I'm trying to make it a little more friendly.

In the last year or so, I noticed that listings tended to be more reasonable although still high for Irvine.

However, in the last month or so... with all these hints of a turnaround in the economy (despite still high unemployment) and all this talk of no Shadow Inventory and already being at the bottom, I'm starting to notice listings that are OMG... almost close to 2006 prices.

Is it just me or are sellers feeling that since the market has such low inventory, that they can start listing at inflated prices again? And even with those few homes that list below market (or what is deemed as market in the still too high area of Irvine), I'm hearing that multiple bids ends up closing the property either at market or above.

Gah.

Is there some way to measure the percentage of short sales in Irvine compared to other cities? Or to Orange County as a whole. It's just weird that in the certain range I'm looking, almost all the lower end priced homes outside of Irvine are short sales, while almost none of the Irvine ones are.

Where is graph to explain this phenomenon to me? Where is that 40% drop? Heck... I don't even see a 15-20% drop in the home I bought in 2005.

[momopi]

The RE market is very competitive right now.  I bought an investment property from Fannie Mae REO and had to bid 10% over asking to get it.  They won't even give me $500 cash back for the 1 year home warranty -- said take it or leave it, there's 11 back-up offers behind me.

[USCTrojanCPA]

I know that WTF is the preferred term but I'm trying to make it a little more friendly.

In the last year or so, I noticed that listings tended to be more reasonable although still high for Irvine.

However, in the last month or so... with all these hints of a turnaround in the economy (despite still high unemployment) and all this talk of no Shadow Inventory and already being at the bottom, I'm starting to notice listings that are OMG... almost close to 2006 prices.

Is it just me or are sellers feeling that since the market has such low inventory, that they can start listing at inflated prices again? And even with those few homes that list below market (or what is deemed as market in the still too high area of Irvine), I'm hearing that multiple bids ends up closing the property either at market or above.

Gah.

Is there some way to measure the percentage of short sales in Irvine compared to other cities? Or to Orange County as a whole. It's just weird that in the certain range I'm looking, almost all the lower end priced homes outside of Irvine are short sales, while almost none of the Irvine ones are.

Where is graph to explain this phenomenon to me? Where is that 40% drop? Heck... I don't even see a 15-20% drop in the home I bought in 2005.

IHO, sellers are listening to their listing agents telling them what kind of zoo it is out there of buying looking for a home in Irvine.  The lack of inventory is the cause of what is going on.  Anyone who prices a property at or slightly above comps in Irvine will have their property fly into escrow in less than 7 days.  Did you see how 2,500sf homes are now being listed for $950,000+?

[roundcorners]

The RE market is very competitive right now.  I bought an investment property from Fannie Mae REO and had to bid 10% over asking to get it.  They won't even give me $500 cash back for the 1 year home warranty -- said take it or leave it, there's 11 back-up offers behind me.

momo, I thought you weren't working? congrats!  Oak Creek?  Are you going to live in it?

[iacrenter]

IHO,

Just let the FCB enjoy and pay inflated prices and compete in multiple bid situations. I for one would rather wait and see what happens in late 2010.

[Anonymous]

I was pretty impressed that this 1,340 sq ft "cottage" in Northwood Pointe went under contract at $450/sq ft.  

http://www.redfin.com/CA/Irvine/53-Middlebury-Ln-92620/home/4791258

This is a great location, but jeez -- $450?  I know Larry and friends on the blog are still pounding their chests about $250 psf (or less) but I don't see it happening.  They always point back to the 90's as a historical benchmark --- but methinks the desireability of Irvine has changed dramatically since the 90's.  I quiz my wife who lived here in the early 90's while attending UCI all the time.  She says "It was ok, but just ok back then --- but now its MUCH better".  BTW, she is Asian --- and does not want any Irvine substitute.  I don't think she is alone.  So let's review:

- Irvine is nicer than it was during the 90's busto
- Irvine is MUCH more desireable to FCB's and AACB's (Asian-American)
- The rest of Southern California has continued to get more sh**ty since the 90's --- increasing the premium on the nice areas

So in summary, IMO Irvine is not heading for $250 psf anytime soon.  Please debate.

[irvinehomeowner]

Good points CK... although some parts of Irvine are just as crappy as the 90s (heh).

I think I read on one of the blog entries that Larry doesn't think $250psf will happen any more. He amended saying that with the low rates, gov intervention and slow REO to market, it's higher... I wish I could find it because I'm not exactly sure what he said.

We'll be lucky if newer areas of Irvine settle around $300psf, how many 2500sft newer homes have you seen listed for $750k? (well, there is one)

[SoCal]

I think I read on one of the blog entries that Larry doesn't think $250psf will happen any more. He amended saying that with the low rates, gov intervention and slow REO to market, it's higher... I wish I could find it because I'm not exactly sure what he said.

We'll be lucky if newer areas of Irvine settle around $300psf, how many 2500sft newer homes have you seen listed for $750k? (well, there is one)

I'm pretty sure you mean this comment from the 12/16 post, IHO:

Q: "Hey IR.  Im sure you've answered this question before:  At what price per sq ft do you see the market bottoming out at for a home like this?"

A: "If interest rates remain low, properties like this should hold above $300/SF. I previously believed Irvine would bottom between $225SF-$250SF. Now with 5% interest rates, prices that low seem less likely."

[irvinehomeowner]

That's it!!!

How did you find that? I was using their search and it was bringing up articles from 2007-2008.

It's pretty interesting that IR is making that statement and I wonder how much of that has to do with him now being a broker.

He is still holding on to the Shadow Inventory theory so that does contradict him a bit as if the REOs do flood the market, they should go below $300/sf. Although currently, the average in Irvine is at about $350 (thanks to IR2's http://www.irvinerealtorsite.com spreadsheet) so a glut of REOs may only knock Irvine down to $300/sf.

[qwerty]

Can someone elaborate on how Irvine is much better now than in the 90s? Ive only lived in Irvine since 2007, so all i know is the current version.  It seems to me though that if the homes/villages from the 90's werent all that great, all they have done is just deteriorate which would take away from irvine's appeal. That has been offset by newer communities such as Woodbury and other newer parts of the northern part of irvine. Is it that there are newer/better shopping centers (like the district)? Better/more stores at the Spectrum and Marketplace? Any insight would be appreciated and would help me understand why people think the prices would remain so high-  i personally dont think they will remain this high. Im curious to see what happens when the FED stops buying MBS and Freddie/Fannie debt. Higher interest rates in the future gotta have downward pressure on prices, how much who the heck knows

[Anonymous]

Can someone elaborate on how Irvine is much better now than in the 90s? Ive only lived in Irvine since 2007, so all i know is the current version.  

Qwery...I've only been here since 2005, so all I have is hearsay as well.  But my wife was not referencing the actual homes --- but the "community".  I can see that argument as it is certainly a much more developed area than it was in the early 90's.  There are certainly many more employment, entertainment, shopping, dining, etc etc option in the 2010 version.  

But I am sure there are others who would say it is worse because of increased congestion and such.  But I suppose perception is reality --- and are there enough people who perceive it to be great and are willing to pay $450 psf?  I hope not, but right now I'm wondering...

[SoCal]

That's it!!!

How did you find that? I was using their search and it was bringing up articles from 2007-2008.

My mind is a steel trap.

...(Just ask my husband.)  

[whatever]

Here's an OMG story.  I have a friend whom I visit in Turtle Rock.  My spouse and I love the neighborhood and would love to buy so we have been keeping track of the market there.  One house we loved was on the market for $1.8 million, and we thought WTF - good luck getting that price since most houses were selling for a little over a million.  I think it eventually sold for $1.5.  The other day we were driving by and it looks like the new owners are completely gutting the place.  I think we now have our sights set on University Park.

[irvinehomeowner]

That's it!!!

How did you find that? I was using their search and it was bringing up articles from 2007-2008.

My mind is a steel trap.

...(Just ask my husband.)  

Note to self: Don't do anything to make "mom" mad. She'll forgive... but never forget.

[iacrenter]

My worry is that all this talk of shadow inventory will never come to pass. Someone on IHB Blog a few weeks ago posted a link from Seeking Alpha. The article talked about a new post bubble equilibrium where we live with significant portions of the RE market in permanent limbo. His analysis looked at previous RE bubbles and how we never fully got rid of the shadow inventory to pre-bubble levels. Interesting thought...