What the bubble?!?

Is Irvine feeling a bit bubble-licious to you lately?

  • Yes... buy now are be priced out forever.

    Votes: 23 27.4%
  • No... it's just there are only 3 houses on the MLS and interest rates are .00000888%

    Votes: 9 10.7%
  • Maybe... but it's short term... just a mini-bubble that will pop in several months

    Votes: 30 35.7%
  • I have no idea... but I think I just saw a unicorn

    Votes: 19 22.6%
  • Other

    Votes: 3 3.6%

  • Total voters
    84

irvinehomeowner

Well-known member
So what is going on here? Stuff that sold in the last two years is being listed for $100k+ or more?

Does Larry have to make a return to the IHB to tell everyone we are in Bubble 2.0?

Or do we hope for the banks to release the Kraken and get all that shadow inventory on the market?

It was very easy to say we were bubbling when there was so much inventory, new home tracts and higher interest rates... but is this latest "run-up" just a product of record low inventory and interest rates?

Is it tied to stocks or the price of gold?

And is it just Irvine? I've seen listings of 3CWGs in Aliso Viejo that were $600-700k last year but now are in the $800-900k range.

Serenity now!!!
 
Voted for mini-bubble. As soon as the suitcase people understand that they can buy a house on low interest mortgage and invest that money into donuts, this bubble will burst.
 
Not quite a Hubba Bubba bubble; more like a Dentyne bubble but a bubble nonetheless.  I've been looking to buy something a bit larger in NW / WB, and it seems that every house gets bought cash (something like 80% of the time).  Then I see many of the newly bought houses on the rental market the next day.

Low inventory + speculative cash buyers = Dentyne bubble

If not for the higher loan qualification requirements, I think we'd be in a Hubba Bubba bubble right now.


 
hrcp said:
Not quite a Hubba Bubba bubble; more like a Dentyne bubble but a bubble nonetheless.  I've been looking to buy something a bit larger in NW / WB, and it seems that every house gets bought cash (something like 80% of the time).  Then I see many of the newly bought houses on the rental market the next day.

Low inventory + speculative cash buyers = Dentyne bubble

If not for the higher loan qualification requirements, I think we'd be in a Hubba Bubba bubble right now.
Good way of putting it.  We will keep going higher in price until their is an equilibrium between supply and demand.
 
USCTrojanCPA said:
hrcp said:
Not quite a Hubba Bubba bubble; more like a Dentyne bubble but a bubble nonetheless.  I've been looking to buy something a bit larger in NW / WB, and it seems that every house gets bought cash (something like 80% of the time).  Then I see many of the newly bought houses on the rental market the next day.

Low inventory + speculative cash buyers = Dentyne bubble

If not for the higher loan qualification requirements, I think we'd be in a Hubba Bubba bubble right now.
Good way of putting it.  We will keep going higher in price until their is an equilibrium between supply and demand.

Simple supply-demand economics at work. Also the fact that most buyers are putting a lot of their own money (20-30%+, if you are a FCB or investor then 100%) into the purchase, this one is very different than the last bubble.

In fact there are a lot of investors and hedge funds investing in real estate due to yields higher. On a side note this article has some good data points  - http://www.moneyandmarkets.com/is-the-housing-market-rebound-petering-out-plus-where-to-find-better-than-bonds-returns-with-less-risk-51727
 
homeshopper said:
USCTrojanCPA said:
hrcp said:
Not quite a Hubba Bubba bubble; more like a Dentyne bubble but a bubble nonetheless.  I've been looking to buy something a bit larger in NW / WB, and it seems that every house gets bought cash (something like 80% of the time).  Then I see many of the newly bought houses on the rental market the next day.

Low inventory + speculative cash buyers = Dentyne bubble

If not for the higher loan qualification requirements, I think we'd be in a Hubba Bubba bubble right now.
Good way of putting it.  We will keep going higher in price until their is an equilibrium between supply and demand.

Simple supply-demand economics at work. Also the fact that most buyers are putting a lot of their own money (20-30%+, if you are a FCB or investor then 100%) into the purchase, this one is very different than the last bubble.

In fact there are a lot of investors and hedge funds investing in real estate due to yields higher. On a side note this article has some good data points  - http://www.moneyandmarkets.com/is-the-housing-market-rebound-petering-out-plus-where-to-find-better-than-bonds-returns-with-less-risk-51727

Good read. I was impressed by the writer until till the last few paragraphs where he was trying to sell his report for $99 in pre-order.
 
I thought I would share this.  This home sold for $815,000 just recently and was originally sold for $680,000 in 2011.  It's a new construction from Van Daele homes in Portola Springs.  No driveway, on a motorcourt and an Irvine-sized backyard.  Quite an appreciation for 1.5 years.  I knew about it because I got a flyer on my door from the realtor who sold that home asking if I wanted to sell mine as well...
http://www.redfin.com/CA/Irvine/38-Prickly-Pear-92618/home/40125498
 
kubert13 said:
I thought I would share this.  This home sold for $815,000 just recently and was originally sold for $680,000 in 2011.  It's a new construction from Van Daele homes in Portola Springs.  No driveway, on a motorcourt and an Irvine-sized backyard.  Quite an appreciation for 1.5 years.  I knew about it because I got a flyer on my door from the realtor who sold that home asking if I wanted to sell mine as well...
http://www.redfin.com/CA/Irvine/38-Prickly-Pear-92618/home/40125498

Looks like the seller initially didnt know how hot the market was.

It was listed for $719,000 on Feb. 21, 2013 and then it was delisted and relisted for $810,000 four days later on Feb. 25, 2013. Relisted again for $799,000 on Mar. 25, 2013 and sold for $815,000 a month later. They must have had a bidding war.

Also, it states "Buyer Financing: Private". I wonder what that is...........
 
quattroporte said:
Also, it states "Buyer Financing: Private". I wonder what that is...........

Sounds like "none o' yo beeswax" to me.  Probably some rich person who wants privacy.
 
kubert13 said:
I thought I would share this.  This home sold for $815,000 just recently and was originally sold for $680,000 in 2011.  It's a new construction from Van Daele homes in Portola Springs.  No driveway, on a motorcourt and an Irvine-sized backyard.  Quite an appreciation for 1.5 years.  I knew about it because I got a flyer on my door from the realtor who sold that home asking if I wanted to sell mine as well...
http://www.redfin.com/CA/Irvine/38-Prickly-Pear-92618/home/40125498

Oh no, not again.  Realtors are asking current homeowners if they are willing to sell their homes.  Deja Vu ....

I live in Woodbridge.  We bought ours in 2004.  For 2 years we got constant pestering from realtors (literally, knock on our door and having 10 minute conversations because they would not take no as an answer) and endless phone calls asking if we want to sell our home.  After 2008, they all went away.  We've been pestered-free since. 
 
ZeroLot said:
I live in Woodbridge.  We bought ours in 2004.  For 2 years we got constant pestering from realtors (literally, knock on our door and having 10 minute conversations because they would not take no as an answer) and endless phone calls asking if we want to sell our home.  After 2008, they all went away.  We've been pestered-free since. 

The pestering agents never stopped in Woodbury.  During the downturn they would knock to see if you wanted to do a short sale.  Everyone was a "short sale specialist" even though most probably had no experience when the downturn first started.
 
There is a very high correlation (decades) between the Lumber prices and New Housing Construction Market.  Lumber prices plummeted by 30%+ in the past few months and there is 12-18 months lag between the movement in lumber prices and when the housing market reacts. 

That means, we will most likely see a slow down in middle to second half of 2014.  Also, institutions will start unloading on their inventory probably in the next few years as investment holding periods for PE are about 5 years.  However, for the near-term, we probably can expect the market to remain hot (as lumber prices climbed 40% in the past 2 years before it plummeted recently) until end of the year and then plateau and then soften a little sometime next year as rates increase and inventory shoots up (both new and existing).

However, who knows when the bubble will pop.  Problem with the bubble is that it can be a huge titanic bubble or small blimp bubble.  No one can predict the timing.  Also, this market is driven by hot money from China, Taiwan, and Korea with significant cash downpayments.  It could be sustainable at this high level for a while unless overseas market in Asia tanks.  To the Asians who are used to paying $1 million in cash for 950 sqft condo in Seoul, Beijing, Shanghai, Hong Kong, homes in Irvine are dirt cheap for the property they are buying.  Chinese and other foreigners are swallowing up the Manhattan, Seattle, Miami, and other markets near the west and east coast.

With the entire globe running their money printing press overtime, the money will continue to flow to real estate and stock market until rates spike up significantly higher not only in the U.S. but Asia (Japan is doing 3 times more money printing then U.S) and Europe as well.  I doubt this can happen in the near term with all of the countries still long way from completing their de-leveraging process and running budget deficits.
 
H        O        M        E        R said:
irvinehomeowner said:
So what is going to pop this bubble? More inventory... rising rates... crashing stock market?

More inventory and rising rates.

The main drivers of long-term demand for housing are:
- The Job Market
- Population Growth

This housing need can be filled by renting or by buying. If you buy, you are basically renting to yourself. In the long run, housing prices and housing demand is very similar to rental prices / demand.  Right now Irvine is having very strong job growth. Also, as families are achieving better financial health they might be looking to move from their long commute in Corona to a shorter commute in Irvine. On the flip side, they are building thousands of new homes in Irvine. Ultimately the question will be whether the job market can continue to grow enough to provide families to live in all of the existing homes and new homes.

Things like interest rates, investors, etc. are pretty irrelevant.
 
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