Observations from the front lines of the Irvine housing market…

[Soylent Green Is People]

There are appraisal issues out there, but some banks are getting realistic. Too bad equity sellers aren't. We had an out of Irvine area property appraise 30k off of the $630k selling price. Per the appraiser there were offers up to $635k. It's possible that some of them had larger down payments than our buyer. The bank holding the property gave up the ghost and lowered the price to the appraisal just to move the property along. This was done without a review appraisal by either party. Talk about a good move for all parties involved. On the other side of the spectrum I've had buyers over pay for properties simply because they feel the value is there, despite what an appraiser says.

All markets have hit an air pocket. If you are a Realtor and have not come to the Irvine Area Broker's Preview held each week at JT Schmidts (sp?) in the District, come on by. It's quite the eye opener. Agents will pitch their tired listings with commonplace phrases like "it's priced well to the market. I just don't understand why we don't have an offer yet" or "Yes, my seller is not in synch with market prices but we're still hoping to get an offer soon". Hope, as they say, is not a plan for success. I go to this event, and others like it for business purposes. Every so often I also wonder if I go because it's akin to driving past a multiple fatality accident on the 405. You don't want to look, but are compelled to do so.

My .02c

Soylent Green Is People.

[abcd1234]

I am not in the market to buy- but I like to see what's going on in University Park and Woodbridge.  I think UP still is pretty hot- especially those 1-level units.  Woodbridge to me is still WTF pricing- esp the 1-level homes.   

There was that auction house http://www.redfin.com/CA/Irvine/40-Meadowgrass-92604/home/4689143 that had a really low price, then now pending.  I wonder what it closes at.

Hopefully it will make these listings with WTF prices come down to earth:
http://www.redfin.com/CA/Irvine/14-Woodsorrel-92604/home/4691318
http://www.redfin.com/CA/Irvine/4-Ponderosa-92604/home/4690082

What do you think these houses should be priced at?  They're asking TRock type $/sq feet.  And even TRock isn't really getting that pricing anymore.

[irvinehomeowner]

Woodsorrel has a nicer lot compared to Ponderosa.

In my opinion, the premium on these are the lot sizes and the ability to add on. Not sure if that is actually what is driving the listing prices but considering 2-story homes in Woodbridge with smaller lots are trading at the same price, that probably has something to do with it.

The central location, pools/lakes/parks of WBridge seems to keep it higher than surrounding 'hoods... but then again... there are many tracts in Irvine that are still at peak.

[USCTrojanCPA]

I am not in the market to buy- but I like to see what's going on in University Park and Woodbridge.  I think UP still is pretty hot- especially those 1-level units.  Woodbridge to me is still WTF pricing- esp the 1-level homes.   

There was that auction house http://www.redfin.com/CA/Irvine/40-Meadowgrass-92604/home/4689143 that had a really low price, then now pending.  I wonder what it closes at.

Hopefully it will make these listings with WTF prices come down to earth:
http://www.redfin.com/CA/Irvine/14-Woodsorrel-92604/home/4691318
http://www.redfin.com/CA/Irvine/4-Ponderosa-92604/home/4690082

What do you think these houses should be priced at?  They're asking TRock type $/sq feet.  And even TRock isn't really getting that pricing anymore.

There's no way that comps support the pricing for 14 Woodsorrel or 4 Ponderosa.  The closest closed comp is 9 Teal which closed for $640k within the past 2 months.

[USCTrojanCPA]

Overall, do you see softening in prices?

Based on my Redfin/IR2 updates and my daily perusal of various real estate sites... it seems like prices are coming down. Not as much as I'd like but the additional inventory is making it harder for people to keep their listings at above comps.

I also see a lot of shorts getting delisted and relisted... or falling out of escrow... which like you said, is probably based on bank/appraisal issues.

Do I see a little softening?  Yes, but not much because as I stated....any nice property that is priced around comps goes into escrow quickly.  One of my buyers had an eye on 101 Mosaic (http://www.redfin.com/CA/Irvine/101-Mosaic-92603/home/5902918) and we were gonna give it a little time before we submitted an offer because it was priced about $30-$40/sf over comps but obviously someone liked it enough to pull the trigger quickly.  Prices are coming down, but they are coming down from the Stupid WTF price levels down to WTF prices levels.  When the tide rolls in after the selling season is over, we'll find out who are real motivated sellers are and who the ones that were looking for a sucker are.

[irvinehomeowner]

So there is an SWTF level of prices? I always wondered what they called those.

[USCTrojanCPA]

There are appraisal issues out there, but some banks are getting realistic. Too bad equity sellers aren't. We had an out of Irvine area property appraise 30k off of the $630k selling price. Per the appraiser there were offers up to $635k. It's possible that some of them had larger down payments than our buyer. The bank holding the property gave up the ghost and lowered the price to the appraisal just to move the property along. This was done without a review appraisal by either party. Talk about a good move for all parties involved. On the other side of the spectrum I've had buyers over pay for properties simply because they feel the value is there, despite what an appraiser says.

All markets have hit an air pocket. If you are a Realtor and have not come to the Irvine Area Broker's Preview held each week at JT Schmidts (sp?) in the District, come on by. It's quite the eye opener. Agents will pitch their tired listings with commonplace phrases like "it's priced well to the market. I just don't understand why we don't have an offer yet" or "Yes, my seller is not in synch with market prices but we're still hoping to get an offer soon". Hope, as they say, is not a plan for success. I go to this event, and others like it for business purposes. Every so often I also wonder if I go because it's akin to driving past a multiple fatality accident on the 405. You don't want to look, but are compelled to do so.

My .02c

Soylent Green Is People.

Ahh yes, the HOPE word....unfortunately HOPE doesn't help a property appraise, it's the closed comps that do.  I might have to drop by one of these days and be the voice of reason throwing some cold water on their HOPE plan.  haha

[USCTrojanCPA]

So there is an SWTF level of prices? I always wondered what they called those.

Well, what else would you call listings that are priced 10%-20% ABOVE comps?  It's the best thing I could come up with because they are just a complete wait of time for everyone.

[irvinehomeowner]

What gets me about 101 Mosaic is it originally sold for $1.1m+ in 2004. It will probably close for $1.4m+ today.

Forget 1999 prices, we can't even get down to 2004... need to go dig up that thread on the IHB where people were saying QH was going to get not only back to their original 2004 prices but lower. Bleh.

[gaab]

I'm not understanding the dynamics of the Irvine market.  Are people "buying the dips"  hoping for a quick gain - or - is there really THAT much interest / demand / in Irvine ?

[USCTrojanCPA]

I'm not understanding the dynamics of the Irvine market.  Are people "buying the dips"  hoping for a quick gain - or - is there really THAT much interest / demand / in Irvine ?

Well, my guess (based upon the Irvine buyers that I'm working with) is that most buyers are buying for the longer term and not to make a quick buck.  I'm pretty confident that there would be more Irvine buyers out there if price levels declined from today.   That is one of the reasons why I believe that the downside risk for price declines in Irvine is limited.

[whatever]

What gets me about 101 Mosaic is it originally sold for $1.1m+ in 2004. It will probably close for $1.4m+ today.

Forget 1999 prices, we can't even get down to 2004... need to go dig up that thread on the IHB where people were saying QH was going to get not only back to their original 2004 prices but lower. Bleh.

I miss the daily updates people posted from foreclosure radar with all of the blue and red dots and comments like this one:  http://www.irvinehousingblog.com/forums/viewthread/4876/P25/#103491.  It made me feel that Irvine had a chance of returning to normal.

[USCTrojanCPA]

What gets me about 101 Mosaic is it originally sold for $1.1m+ in 2004. It will probably close for $1.4m+ today.

Forget 1999 prices, we can't even get down to 2004... need to go dig up that thread on the IHB where people were saying QH was going to get not only back to their original 2004 prices but lower. Bleh.

I miss the daily updates people posted from foreclosure radar with all of the blue and red dots and comments like this one:  http://www.irvinehousingblog.com/forums/viewthread/4876/P25/#103491.  It made me feel that Irvine had a chance of returning to normal.

The problem is that even though the Green and Blue dots are growing in number and piling up, the banks are very slow in actually auctioning off the properties.  In the past 7 weeks, I've tracked about 40 properties that my partner and I were interested in buying and ALL 40 got postponed.

[USCTrojanCPA]

59 Bamboo.....a short sale listing with a decent price, but I got a kid out of reading the agent-to-agent comments:

"PLEASE READ: AS OF 1:00PM 8/19 I HAVE RECEIVED NUMEROUS OFFERS BELOW THE ASKING PRICE. SO IF YOU HAVE AN OFFER YOU WOULD LIKE US TO CONSIDER IT MUST BE ABOVE ASKING PRICE OR DON'T BOTHER. PLEASE MAKE YOUR OFFERS SUBJECT TO INTERIOR INSPECTION. I WILL HAVE AN OPEN HOUSE 8/29 SO YOU CAN PREVIEW THE HOME THEN. ----------------------------------------------- Seller is RE Licensed. This is a short sale subject to lender approval. Any comm discounted by Lender to be equally split by agents. No lockbox. No more showings. "

[USCTrojanCPA]

Looks like there is some softening in the Irvine market, but mostly on the condo and older home side.  Pricing is slightly down (2-3%) from the recent peak earlier this spring, but newer properties (1990 and later) that are priced at or near comps that show well still go into escrow within a week.  Irvine is holding up better than other cities like Laguna Niguel, Mission Viejo, Anaheim Hills, and Yorba Linda who have also seen a rise in inventory but have experienced a larger decline in the number of sales which has pushed prices down 5-10% from the spring.  The market is currently neutral with about 5 months worth of inventory on the market, we'll have to get above 7 months worth of inventory before enter into a buyer's market.  The level of inventory peaked out around 900 homes in late August and is now beginning to come down now that we are no longer in the "selling" season.  The decline in the number of sales has stabilized for now.  Now that TIC is done selling out homes in Woodbury and Woodbury East, they will begin to throw their marketing/PR muscle at Portola Springs.