Author Topic: Observations from the front lines of the Irvine housing market…  (Read 201788 times)

0 Members and 1 Guest are viewing this topic.

Offline kpatnps

  • Tourist
  • *
  • Thanks
  • -Given: 12
  • -Received: 13
  • Posts: 73
Re: Observations from the front lines of the Irvine housing market…
« Reply #750 on: March 06, 2021, 12:44:31 PM »
I'll keep saying this....inventory levels are your tell where prices are going. 

You'll be waiting a long, long time for mortgage rates going back up to 5% and well as a 10% price correction.  Trying to time the real estate market is just as easy as trying to time the stock market. Did anyone think that prices were going to be up about 10% from pre-covid (Jan/Feb 2020) to today?  I know I didn't.

Am I the only person who caught the contradiction here?  In one sentence you claim that inventory levels will tell you where prices are going but in the very next paragraph you imply timing the real estate market is impossible. 

Truth is there is no one great indicator of future prices.  Everything is a guess in my opinion.  Furthermore I would argue that inventory and prices are inversely related but one is not a future indicator of another. 

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2522
  • -Received: 2020
  • Posts: 9791
  • Gender: Male
Re: Observations from the front lines of the Irvine housing market…
« Reply #751 on: March 07, 2021, 01:58:58 AM »
I'll keep saying this....inventory levels are your tell where prices are going. 

You'll be waiting a long, long time for mortgage rates going back up to 5% and well as a 10% price correction.  Trying to time the real estate market is just as easy as trying to time the stock market. Did anyone think that prices were going to be up about 10% from pre-covid (Jan/Feb 2020) to today?  I know I didn't.

Am I the only person who caught the contradiction here?  In one sentence you claim that inventory levels will tell you where prices are going but in the very next paragraph you imply timing the real estate market is impossible. 

Truth is there is no one great indicator of future prices.  Everything is a guess in my opinion.  Furthermore I would argue that inventory and prices are inversely related but one is not a future indicator of another. 


Let me clarify, I don't know where prices are going in the intermediate-term (3 months to 1-2 years) because inventory levels can change dramatically like they did during the lockdown in March/April 2020.  In the short term, I believe that inventory levels (1-3 months) are a good indicator of where prices may go in the next several months.  In April/May of 2020, I would have said that prices are going to be slightly down to flattish given what was happening with inventory levels but then they turned quickly with the strong demand probably driven by low rates.  Low inventory levels (more specifically # of months of inventory) imply a mismatch where there is more demand and supply (aka a seller's market) which means that prices have to increase for supply and demand to get into balance, that's simple economics.  I never would have predicted that prices would be up 10%+ from pre-covid to the end of 2020.
Martin Mania, CPA
AgencyOne
CA BRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!

Offline irvinehomeowner

  • The Unicorn Hunter
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2640
  • -Received: 3984
  • Posts: 22895
  • 3CWG
Re: Observations from the front lines of the Irvine housing market…
« Reply #752 on: March 07, 2021, 11:24:15 AM »
Here are the 5-year charts for active listings, closed sales, median per SF, and Days On Market (DOM) through December 2020.

Looks like peak prices for Irvine were mid-2018.  Everybody that missed that chance to sell can still get out now with about the same $'s in net proceeds (factoring in loan amortization).  If realtors had a fiduciary duty to advise their clients, USC would have failed in that duty by not advising his clients to avoid Irvine.  Every other city in Orange County has had better price performance over the past three years.

IHO likes to ask "Where's Liar Loan?" every time the chart fails to regain the prior peak.  He'll never acknowledge that I was right to call this Irvine price drop.  I was the first to call it back in 2018 when IHO thought a YoY decline in Irvine prices was an impossibility.  He was wrong about Irvine values being special and now he can't let it go.

By USC's own admission, it took a massive rate drop from 5% to 2.5% just to keep Irvine prices flattish to slightly down.  I wonder what happens when post-pandemic rates start to normalize again?  tic, tic, tic...

How much was this "painful" Irvine price drop you predicted? 5%, 10% 20%?

Do you even know what the prices are now compared to 2018?

Prices ebb and flow all the time. Could it have been seasonal?

Boom!
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
member: Soylent Green Is People (loans/refis)

Offline Kenkoko

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 171
  • -Received: 269
  • Posts: 918
Re: Observations from the front lines of the Irvine housing market…
« Reply #753 on: March 07, 2021, 02:27:17 PM »
My opinion is probably going to be very unpopular on TI. But I very much disagree with the popular notion that it's hard to time the market so don't.

It's such a defeatist attitude and frankly why would you apply that kind of attitude to one of the largest investment you're going to make ?

And to me, that advise is only good if you are an extremely risk averse first time home buyer who has parked your down payment in cash or cash like savings account generating near 0% return.

Even if you are just buying a starter home/condo in Irvine, 20% down is 150k-200k. Are there many home buyers who would really have 200k sitting in cash savings? This is 2021 not 1995.

Even if they did, that's not the smart thing to do, especially given what the federal fiscal and monetary policy had been for the past 10 + years. 

Much of the opinions offered and the RE discourse on TI tend to treat home buying as if it is in a vacuum. I mean it's fun to debate whether peak price point was in 2018 or 2021 and get an internet dunk on LiarLoan  ;)

But other than that, it seems like a rather pointless academic discussion.

S&P 500 has gone up 30-40% since 2018 and the Nasdaq has gone up 100% since 2018.

If you are a smart home buyer who didn't park your down payment in cash or cash like accounts and just invested in index fund like an average person. Then whether 2018 or 2021 was the RE price peak becomes quite pointless.

Offline zubs

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 75
  • -Received: 477
  • Posts: 2258
Re: Observations from the front lines of the Irvine housing market…
« Reply #754 on: March 07, 2021, 02:46:23 PM »
Lets keep dunking on LiarLoan until he's right!....any year now.
u know if we wait long enuf....it'll be his time to shine.

Offline irvinehomeowner

  • The Unicorn Hunter
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2640
  • -Received: 3984
  • Posts: 22895
  • 3CWG
Re: Observations from the front lines of the Irvine housing market…
« Reply #755 on: March 07, 2021, 05:12:34 PM »
My opinion is probably going to be very unpopular on TI. But I very much disagree with the popular notion that it's hard to time the market so don't.

It's such a defeatist attitude and frankly why would you apply that kind of attitude to one of the largest investment you're going to make ?

I don't think anyone is saying try not to be prudent with your timing... just to be aware that sometimes you can't wait for timing or... can't accurately guess to point where you get paralysis by analysis.

As I've said, you you just need to look at your affordability and long term ability to stay and then make your decision. I know people like to counter back with "average move time is less than 5 years" but who knows what your situation is 5 years from now... maybe you lucked out and can afford a bigger home so you sell and move up.

As for Liar Loan, that's a different subject.  He doesn't think Irvine is a good place to make the "largest investment of your life"... which seems contrary to why everyone tends to buy in Irvine in the first place. He always thinks prices in Irvine is dropping every 2 to 3 years... and that everywhere else it's better but who here agrees with that? Where is TalkHB or TalkAlisoVideo or TalkSanCelemente?
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
member: Soylent Green Is People (loans/refis)

Offline Cornflakes

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 2
  • -Received: 87
  • Posts: 513
Re: Observations from the front lines of the Irvine housing market…
« Reply #756 on: March 07, 2021, 06:23:14 PM »
It is somewhat possible to time the market. If you follow general rule of thumb that when you are about to purchase a home and you have to offer over asking price, then worry that you might be still outbid, or when you as a buyer pretty much have no negotiating power...you are late to the party. ALmost guaranteed that you are buying into a peak. Things might get better from here for a little while, but only little. The seller you bought from banked most of those hefty gains.

IF you had time on your side and can wait out, the dip will come and offer you better price. The issue is that wait can be too long for some of us, and we all have a finite amount of time to live. What is the point if I have to wait 5-10 years only to hope that I might get lower price on the home...?

Weather stock market or real estate, those who has long term view and capacity to ride out high or low waves will do better.

The following member(s) thanked this post:


Offline Kenkoko

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 171
  • -Received: 269
  • Posts: 918
Re: Observations from the front lines of the Irvine housing market…
« Reply #757 on: March 08, 2021, 10:00:21 AM »

I don't think anyone is saying try not to be prudent with your timing... just to be aware that sometimes you can't wait for timing or... can't accurately guess to point where you get paralysis by analysis.


IMO that's what people should avoid doing -

Pulling the trigger on a big investment, not because of conviction but to avoid getting paralysis by analysis - is most likely a terrible financial decision.

But, I agree this is commonly seen. Real life is more complicated and I fully agree buying a home is more than just a financial decision for many people.

To me, part of the solution is to learn to invest. Make the home purchase / investment a smaller slice of your portfolio.

Instead of just hoping "maybe you lucked out and can afford a bigger home so you sell and move up"

The following member(s) thanked this post:


Offline Kenkoko

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 171
  • -Received: 269
  • Posts: 918
Re: Observations from the front lines of the Irvine housing market…
« Reply #758 on: March 08, 2021, 10:41:17 AM »

IF you had time on your side and can wait out, the dip will come and offer you better price. The issue is that wait can be too long for some of us, and we all have a finite amount of time to live. What is the point if I have to wait 5-10 years only to hope that I might get lower price on the home...?



The point is if you invested properly, in 5-10 years, you could afford the same home regardless whether the home price went up or down.

When we bought our home in 2016, a coworker of mine almost followed. His family loved the layout and the builder had a cancellation & offered a discount.

But they eventually decided not to pull the trigger because it was very close the their max affordability and they would have to liquidate their entire stock portfolio to make down payment.

It turned out great for them. Their stock portfolio has gone up 350% since 2016 while the Irvine RE gone up less than 30%.

I get that many people feel like they don't have 5-10 years to wait / waste. But immediate gratification has opportunity costs.

And with proper investment, a 5-10 years wait could lead to many more years of financial freedom on the back end.

Offline Mety

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 211
  • -Received: 268
  • Posts: 2462
Re: Observations from the front lines of the Irvine housing market…
« Reply #759 on: March 08, 2021, 11:19:31 AM »
It comes down to whether you see the home as a place you live or an investment tool. You can think of it as both, but you can't always think of it as an investment solely. Not saying anyone here does that or anything.

As for stocks, that's another risk you have to take. Sure it grew 360% from 2016 as Kenkoko says, but it could have gone to 0. Whereas for homes which grew only 30%, you at least have a place to live even in case it depreciates. 

If you already own a home and thinking of buying an investment property, then I think timing kind of matters more. But for your primary residential home, I think finding the home where your family feels happy is what matters the most. If you think you will feel horrible when the home price is going down, then maybe buying a home is not for you no matter what time or season.

Offline GenericIrvineResident

  • Tourist
  • *
  • Thanks
  • -Given: 4
  • -Received: 8
  • Posts: 62
Re: Observations from the front lines of the Irvine housing market…
« Reply #760 on: March 08, 2021, 12:04:13 PM »
Also, real estate gives you pretty great leverage akin to trading options.

You put in 20% of, let's say 1 mil, which is 200k. In one year, if your house appreciates 4% (which is likely in these markets) you can get 40k back from your 200k investment. That's like 20% returns. Obviously, I'm glossing over a lot of things like property taxes etc, but in general you get the idea.

Makes most sense to diversify, though. Invest in stocks/real estate/crypto/etc.

Not everything is about maximizing profits. Everybody needs a home and those that have bought homes in the past have rarely regretted it in the long run.

The following member(s) thanked this post:


Offline Kenkoko

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 171
  • -Received: 269
  • Posts: 918
Re: Observations from the front lines of the Irvine housing market…
« Reply #761 on: March 08, 2021, 12:41:49 PM »
It comes down to whether you see the home as a place you live or an investment tool. You can think of it as both, but you can't always think of it as an investment solely. Not saying anyone here does that or anything.

As for stocks, that's another risk you have to take. Sure it grew 360% from 2016 as Kenkoko says, but it could have gone to 0. Whereas for homes which grew only 30%, you at least have a place to live even in case it depreciates. 

If you already own a home and thinking of buying an investment property, then I think timing kind of matters more. But for your primary residential home, I think finding the home where your family feels happy is what matters the most. If you think you will feel horrible when the home price is going down, then maybe buying a home is not for you no matter what time or season.

Agree with much of what's already being said about the positives about buying a home. I took the plunge myself too.

My point really was that the home buying discussion on TI tends to only focus on the RE market as if it's isolated in a vacuum. Not what the RE market is doing relative to other markets. Conclusions are often drawn as if down payments are parked in 0% return cash. Makes very little sense to me.

You brought up a couple points often used to make the home buying case that I disagree with.

Stocks could have gone to 0 seems like a hyperbole to me. We're talking about average investors investing in major index funds. There's no evidence of such in the past 4+ decade. Equities has significantly outperformed Irvine RE in any 5 year period in the past 2 + decade.

And this "you at least have a place to live even in case it depreciates" makes even less sense to me. Do people who have not yet bought homes live in the streets? I am a firm believer that one do not need to own a home to be happy in life.



Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2522
  • -Received: 2020
  • Posts: 9791
  • Gender: Male
Re: Observations from the front lines of the Irvine housing market…
« Reply #762 on: March 08, 2021, 01:05:50 PM »

IF you had time on your side and can wait out, the dip will come and offer you better price. The issue is that wait can be too long for some of us, and we all have a finite amount of time to live. What is the point if I have to wait 5-10 years only to hope that I might get lower price on the home...?



The point is if you invested properly, in 5-10 years, you could afford the same home regardless whether the home price went up or down.

When we bought our home in 2016, a coworker of mine almost followed. His family loved the layout and the builder had a cancellation & offered a discount.

But they eventually decided not to pull the trigger because it was very close the their max affordability and they would have to liquidate their entire stock portfolio to make down payment.

It turned out great for them. Their stock portfolio has gone up 350% since 2016 while the Irvine RE gone up less than 30%.

I get that many people feel like they don't have 5-10 years to wait / waste. But immediate gratification has opportunity costs.

And with proper investment, a 5-10 years wait could lead to many more years of financial freedom on the back end.

I'll keep saying it, a home is a place to live first and a potential long-term investment second. You are not factoring in the leverage on real estate returns.  If the price of the home has gone up 30% and they had bought with an 80% LTV loan their leveraged return would have been 150%.  Some people don't have the time or knowledge to invest like you or I, everyone's risk tolerance is different.
Martin Mania, CPA
AgencyOne
CA BRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2522
  • -Received: 2020
  • Posts: 9791
  • Gender: Male
Re: Observations from the front lines of the Irvine housing market…
« Reply #763 on: March 08, 2021, 01:07:55 PM »
It comes down to whether you see the home as a place you live or an investment tool. You can think of it as both, but you can't always think of it as an investment solely. Not saying anyone here does that or anything.

As for stocks, that's another risk you have to take. Sure it grew 360% from 2016 as Kenkoko says, but it could have gone to 0. Whereas for homes which grew only 30%, you at least have a place to live even in case it depreciates. 

If you already own a home and thinking of buying an investment property, then I think timing kind of matters more. But for your primary residential home, I think finding the home where your family feels happy is what matters the most. If you think you will feel horrible when the home price is going down, then maybe buying a home is not for you no matter what time or season.

Well said Mety.  An investment property is a better comparison to investing in stocks.  A home is a commodity first because people need to live somewhere.  You either pay rent or you pay a mortgage (unless you are living at home saving up with family).
Martin Mania, CPA
AgencyOne
CA BRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!

Offline irvinehomeowner

  • The Unicorn Hunter
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2640
  • -Received: 3984
  • Posts: 22895
  • 3CWG
Re: Observations from the front lines of the Irvine housing market…
« Reply #764 on: March 08, 2021, 01:30:25 PM »

I don't think anyone is saying try not to be prudent with your timing... just to be aware that sometimes you can't wait for timing or... can't accurately guess to point where you get paralysis by analysis.


IMO that's what people should avoid doing -

Pulling the trigger on a big investment, not because of conviction but to avoid getting paralysis by analysis - is most likely a terrible financial decision.

But, I agree this is commonly seen. Real life is more complicated and I fully agree buying a home is more than just a financial decision for many people.

To me, part of the solution is to learn to invest. Make the home purchase / investment a smaller slice of your portfolio.

Instead of just hoping "maybe you lucked out and can afford a bigger home so you sell and move up"



That's not exactly what I'm saying. You are approaching this from more of an investment angle... I am talking about just a "buying a place to live in" scenario.

And there is no "hoping" here... what I referenced is people saying you can't use residence stability as a caveat when people move all the time.
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
member: Soylent Green Is People (loans/refis)

The following member(s) thanked this post:


 

Talk Irvine Links

[Recent Posts]
[FAQ / Rules]

Site Supporters


Recent Posts

Re: Apple New Products by aquabliss
[Today at 02:03:13 AM]


Re: Where the market is - Buyer Offers by USCTrojanCPA
[Today at 12:15:59 AM]


Re: Where the market is - Buyer Offers by USCTrojanCPA
[Today at 12:11:18 AM]


Re: Apple New Products by zovall
[Yesterday at 10:59:08 PM]


Re: Where the market is - Buyer Offers by zovall
[Yesterday at 10:50:44 PM]

SimplePortal 2.3.7 © 2008-2021, SimplePortal